On 18 September 2008, amidst worsening market turmoil following the recent bankruptcy filing of Lehman

Brothers, the US government bail-out of AIG, and the impending rescue takeover of the UK?s largest mortgage

lender HBOS by Lloyds TSB, the UK?s Financial Services Authority (FSA) announced1 an emergency ban on all

short-selling in publicly quoted UK financial sector companies2 (i.e., UK banks or insurers, or their UKincorporated parent companies) in effect from midnight on 18 September 2008.

Whilst still regarding short-selling as ?a legitimate investment technique in normal market conditions,? the FSA

has determined that the current ?extreme circumstances? necessitate the ban and a heightened disclosure

obligation in order to forestall any further instability and loss of confidence in the financial sector.

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