March 7, 2009
To: Mary Schapiro (please forward if necessary)
Hello Miss Schapiro. I'm a small investor who has seen his personal savings dramatically shrink, his stress levels dramatically increase, and his life's direction dramatically changed in the past few several months. I'm sure I share these negative changes with many others...and I can't help but feel it is all so unnecessary. I recognize some pain was needed due to our (Americans) recent consumption levels that exceeded our production levels, but I can't help but feel that much of the pain is being caused by large short selling entities who are manipulating the process and laws. By using momentum they are sending somewhat weak, but very viable companies, into death spirals. They understand that if they can drive a company's stock to a certain level then that will trigger other unwarranted actions by rating agencies, debt holders, and the companies themselves that just reinforces the spiral.
Short selling itself seems like an odd concept that has few, if any, parrallels in the real world that I can think of. You borrow something from somebody, sell it to somebody else, and then return something exactly the same to the original owner? These people who have no relationship with the company come in and specifically seek to destroy it. In the real world they would have to become a competitor and convince the user's they are the better option. I understand short selling may help with a market's liquidity but it seems like we are still making it too easy to make money by destruction versus creation.
I really can't fault these entities since we live in a capitalist environment and the current laws seemingly allow this type of behavior, although I imagine many of them may also be engaging in unsubstantiated rumor mongering and naked short selling. I'd please ask you to rapidly consider actions that will keep these entities in check and playing by the rules. The immediate redeployment of the uptick rule, which for some reason was removed in 2007, and is curiously enough the same year the markets started their plunge, might be a good start in getting our economy out of this negative cycle. Every day they continue to run wild brings more destruction.
Please Help,
Brian Castles