April 2, 2007
Regulation SHO includes two exceptions to the mandatory closeout requirement.
They are the grandfather provision and the options market maker exception. Neither should have ever been approved. The plain language of mandatory closeout requirement is self-explanatory. Both exceptions have been misused by Wall Street. Self-regulation can never succeed when there is trillions of dollars ripe for the taking. It is unreasonable, arbitrary and capricious to allow either exception to continue.
The 35 day settlement phase in is also unreasonable arbitrary and capricious. To grant more financial favors to those with relentless illegal fails to deliver is outrageous. They should get 35 days in jail for every share they failed to deliver. Where was the SEC when these parties destroyed over 6000 companies, put over a million people out of work and depleted the accounts of investing public of billions of dollars? They need to settle as soon as possible and not more than 3 days.
The SEC must impose a mandatory pre-borrow requirement, which would prohibit a participant of a registered clearing agency, or any broker-dealer for which it clears transactions, from accepting any short sale order or effecting further short sales in the particular threshold security without borrowing, or entering into a bona-fide arrangement to borrow, the security. The owner of said security(s) must have given his/her informed consent for such a transaction to take place.
The SEC can no longer let the corrupt stock borrow program raid the accounts of unwitting retail investors. This is clearly unreasonable, arbitrary and capricious and violates protected property rights. No one can claim absurd liquidity claims when they no right to the securities in the first place. The only liquidity problem is caused to the accounts of the retail investor being robbed. There are no compelling reasons that can override the rights of the investing public.
Records for all short sales must be required and be maintained for a period of not less than 7 years and must be made available to everyone on a weekly basis. Its ironic that the SEC is overwhelmed for concern of the hedge funds and brokers, when these parties never conducted due diligence or bought the security. Yet they are allowed to short the security and reap the profits with daily bear raids without the knowledge or permission of the rightful owners of the security.
I find nothing in your proposals that even considers the rights or protection of the investing public. Why and what are you going to do about it?