Subject: File No. 4-581
From: sung c cha
Affiliation: day trader

May 5, 2009

I watch newsprograms such as bloomberg and CNBC all day long, and have yet to hear one person address the main problem specifically.

Problem: For an investor to purchase a stock with a bull bias, they can not keep pushing it up alone because they are limited by their limited cash on hand to purchase more of that stock even if it is moving up. As much as they want to push the price up, their limited cash on hand acts as a market limiter on the upside. On the other hand, "uncovered naked short" sellers do not need to have cash in order to keep selling more and more shares down, and can sell more and more even without having additional cash. There is no limit to how much and how fast a person can sell on the downside since uncovered naked short selling is currently allowed due to the poor regulation of this practice and the failure to stop people from doing this. For this reason, an uptick rule helps to minimize the downside avalanche effect. This avalanche effect is not possible on the upside because it is controlled by that person's limited finances. For this reason, to stop this potential for an avalanche effect, the uptick rule and better regulation against uncovered naked short selling is an absolute must unless the SEC is going to do a much better job against "uncovered naked short sellers".
Sung Cha