May 4, 2009
One important step the SEC should take now is to reinstate the substance of its former uptick rule. The uptick rule served us well for 70 years until the SEC rescinded it in July 2007.
It required short sellers to take a breath and wait for a sale at a higher price before continuing to sell short in declining markets. Fed Chairman Ben Bernanke, bipartisan members of Congress and former regulators favor reinstating it.
To alter fundamentally the way stocks trade today, the SEC must also require — and enforce — short sellers to possess at the time of the sale a demonstrable legally enforceable right to deliver the shares — a so-called pre-borrow requirement.
We simply cant tolerate a market that permits short sellers to create phantom shares that dilute a companys value, erode the value of citizens stockholdings and manipulate share prices downward.
And finally ,put some Enforcement into your Rules. Fine the Broker who does not Buy in the Fail after T+4,noexceptions,period