Short selling remains in the SEC’s crosshairs. New Rule 13f‑2 will require institutional investment managers to report certain short position data. Additionally, the SEC has brought multiple enforcement proceedings for violations of Rule 105, which prohibits a short seller from purchasing, within a specified period, the subject shares in a public offering by the issuer. It has also used its anti-fraud powers to pursue abusive practices, including so‑called “short and distort” schemes. The SEC recently took aim at a private fund adviser and exempt reporting adviser that allegedly worked with an activist short publisher, shorted the securities targeted in the publisher’s bearish reports and then shared trading profits with the publisher. The SEC, however, did not claim the advisers had engaged in any manipulative or improper trading. Instead, it charged them with misrepresenting their short-selling strategy in their fund’s private placement memorandum. This article details the facts underlying the enforcement proceeding and the settlement’s terms, with commentary from Stephen L. Cohen, partner at Sidley Austin, which represented the advisers in the proceeding. See “SEC Charges Recidivist Adviser in Abusive Short-Selling Scheme” (Mar. 14, 2024); and “First Circuit Upholds SEC Injunction Against Short‑Selling Priest” (Jun. 8, 2023).