May 4, 2009
At least bring back the old up tick rule. A better solution for stopping corporate raiding and inappropriately devaluing a stock is to ban short selling all together. The argument to ban it:
1. Stop the sham of borrowing shares. It's a fraud against the investors at large. The big boys have a clear advantage here, with their contacts and fact they don't pay to borrow at any price.
2. What these investors are doing is selling what they don't own. This practice outside of the stock market is a form of fraud. Could I sell a bridge I don't own, or have paid for the right to buy it? If you let them continue this practice the borrower should pay a price to the lender. I suggest 10% of market value of the shares borrowed, with name of lender and borrower made public along with the details of the transaction. This would discourage the arrangement.
Other beefs I have with the SEC:
The oil market, and many other markets have been driven to levels far beyond what their realistically value. Hence the market fall. What caused this is investors being permitted to borrow on margin funds to buy positions. In some cases it was 40 to 1. The rule in all markets should be that an investor cannot borrow more than 5 times the confirmed cash balance on hand to cover the margin. Period . No exceptions.