April 8, 2009
Dear SEC,
I have heard the SEC is taking comments on reinstating some form of uptick rules before short selling shares.
I have managed several hundred client accounts for 28 years and live and work in Warrenton, Virginia. I am a long only manager. I have no problem with short selling of shares, but feel strongly there needs to be better rules. Naked short selling needs to be stopped. The stock should have to be borrowable before the sale can take place and the shares must be delivered. Also, I think some form of uptick needs to be reinstated. Remember that many years ago the spread was 1/8th or maybe a 1/16th but now may be as low as one cent. This needs to be taken into account so the stock cannot be manipulated with a small purchase followed by a large sell, all by the same entity. While I do believe that the fundamentals will eventually determine the level of share pricing, my watching for many years leaves me to strongly believe that short term manipulation can take place with naked shorting and no reasonable uptick rule. This can trigger stops and cause all sorts of havoc and uncertainty for the fundamental investor.
The markets need to be places the retail investor feels are fair or he will not participate. I can tell you that most retail investors absolutely to do not “trade the market”. They believe that hard working people will go to work and over time will cause their companies to prosper and the shares will appreciate in value. Dividends have been cut or eliminated with the downturn in the economy, but dividends are important, especially to the boomers and older looking at retirement. Eliminating risk should not be the goal, but markets that are good places for long term investors should be our most important focus. We owe it to the middle class.
Thank you for taking my comments and if I can be of further benefit please do not hesitate to ask. Although I am employed in the financial services industry, I am writing to you strictly on a personal basis to share my thoughts and observations.
I am copying my Congressman’s assistant, Cindy Klapmust, as she has been interested in the past in knowing what is on constituent minds.
Sincerely,
Dave Gerrish
Branch Manager for Wachovia Securities