April 19, 2009
-Subject: File S7-08-09 Amendments to Reg SHO
I believe the Uptick rule should be reimposed. The parameters of the rule should in no case be less than they had been for YEARS.
Of extreme additional importance should be the enforcement of the requirement that all short sales must have borrowed shares in order to short. The use of locates simple results in the significant abuses that have accelerated over the past several years. Reg SHO is unnecessary if the requirement to have borrowed shares is enforced as required by law, and significant penalties imposed if violated. I still have never seen anything that authorizes the SEC to allow shorts using the locate method of suggesting they are legal. Obviously the reason for Reg SHO resulted from the continual violation of the legitimate short using borrowed shares.
Even with Reg SHO in place shorts can illegally attack a company to drive the price down and if caught, not able to prove a borrow, they then have days to correct the problem with no damage to themselves, only to the stock price and the honest shareholders.
The actions of the SEC over the past several years demonstrates, through negligence, complicity with those wishing to manipulate the market.