May 5, 2009
The uptick rule should be reinstated as it previously existed. It served well as a stabilizing influence on stock prices, and helped to prevent wild swings in prices that existed during the depression and following its suspension.
Large investors used the freedom provided by the suspension to drive down stock prices to their own benefit. Their justification was that it revealed the inherent weaknesses in the victimized stocks and helped investors to realize that they needed to get out. The real result, however, was a rapid and devastating effect on 401K accounts and other important investment accounts that the managers could not respond to fast enough to prevent large losses.
Large funds should not have the capability to manipulate prices in this manner and at this speed. The uptick rule worked well for the many years it was in effect. It should be reinstated to protect small investors, pension funds, and charitable funds from the greed of the manipulative hedge funds. Let's not be unduly influenced by the opinions of the fund managers that exploited this loophole to the detriment of the rest of us. Remember that the 401K was created to help us reduce our dependence on the dwindling Social Security trust fund. Handing over a suspension of the uptick rule to the large hedge funds weakens that program and threatens the retirement of many Americans.