May 8, 2009
1. "Naked short selling" and "failure to deliver" must be made explicitly illegal, with harsh penalties for violators.
2. The DTCC (and its subsidiaries) must be compelled to disclose "failure to deliver" information to the SEC on a frequent, detailed, and accurate basis. Failure to do so must subject DTCC personnel to harsh penalties.
3. The SEC must press hard for the legislative and administrative initiatives necessary to implement Points 1 and 2 and insure real oversight and enforcement.
It would be instructive to have senior SEC officials from three or four previous administrations testify as to their experiences with the DTCC.
Someone once observed that we are often so busy trying to avoid the mistakes of our fathers that we repeat the mistakes of our grandfathers. There were good reasons for Glass-Stegall, the uptick rule, and the pre-1981 rules on "failure to deliver."