June 3, 2008
Nancy M. Morris
Secretary, US Securities and Exchange Commission 100 F St, N.E.
Washington, DC 20549
Re: Release No. 34-57511 – Proposed Rule 10b-21
Dear Ms. Morris:
In their defense of naked short selling, several commenters have noted that the Reg SHO Pilot Study failed to reveal any adverse effects of removal of the uptick rule on the general health and liquidity of the markets. These commenters fail to mention that the Pilot Study DID reveal increased volatility in share prices of small cap companies, the very companies whose growth and viability are most fragile, yet whose existence is most critical to the United States economy.
In a similar vein, it could be argued that the removal of laws which prevent the physical abuse of children has no measurable effect on the overall health of the population in aggregate. Any observed increase in the frequency of deliberate injury to children could easily be obscured from view if one chooses to analyze only the aggregate health of the population. This, in essence, is what the defenders of naked short selling use as a rationale to continue with the status quo.
Naked short selling is thievery plain and simple. Any failure by the Securities and Exchange Commission to uphold its mission to prevent such criminal acts makes The Commission, and the employees who populate it, complicit in the crime. The SEC must stop being part of the problem, and become part of the solution.