April 22, 2009
Once again we have a comment period on Reg SHO. We have had thousands of comments over the last four years regarding the failures of Reg SHO and the failing associated regulatory actions by the SEC. And now we have more delays as the SEC contemplates writing new regulations that will not be enforced.
With the newly proposed changes in Reg SHO, we do not see any actions that would effectively deal with stock delivery fails, improved clearing requirements, the elimination of the market maker exception (that allows sales of non-issued "synthetic" shares), borrowing requirements for all short sales, and serialization of all security shares (whereby all sale transactions could be traced and verified by regulatory agencies.)
The temporary test by Chairman Cox to protect certain companies from the ongoing bear raids on the nation's financial companies was successful. Why hasn't action been taken to eliminate the abuse? Valuable time has been lost over the last six months as abusive short positions are continuing to drive companies into bankruptcy. And the taxpayer's equity shares are now being devalued as short attacks persist.
The stock market is being operated like a casino. The retail investor has been sold the idea that the stock markets are places where a person's savings can been invested to share in the growth and profits of corporations. The truth is that most of the trading that goes on every day is not for the purposes of investing. It is activity designed to make a profit by taking value out of the markets through manipulation and shorting. Let us take regulatory actions that will restore honesty to the markets and protect the interests of the investors instead of protecting the traders.