From: Gary Evans
Dear Sir or Madam
As a humble private investor I was utterly appalled after watching the Bloomberg Special Report on the abusive nature of 'naked short sales'. I thank youtube.com for providing this report and for yahoo finance blogs for pointing me in the right direction. The SEC must do better in advertising such important changes to regulations affecting millions of private investors. I had no knowledge of your proposals to change the law until stumbling across the youtube.com video of Bloomberg's Special Report.
As a private investor who has very little experience or detailed understanding of the mechanisms involving stock trading I really was horrified to learn about 'naked short sales' - a situation where traders borrow shares that actually do not exist in the hope that they make money if the stock price declines. I understand this practice has been banned in many European and other foreign exchanges and in my view, rightly so.
How can a trader 'borrow' stock and then never pay for it or borrow stock that actually does not exist? In other words, trading in more shares than have been official issued? This situation is ripe for tremendous abuse, threatening the existence of small cap companies even when their fundamentals indicate a strong and secure situation, one that investors would actually want to invest in because of the growth potential. Yet naked short selling attacks those companies, driving prices down when the opposite should be true.
Naked short selling or any form of 'borrowing shares' MUST be stopped. How many loopholes in the law will the SEC ignore because it is at the beck and call of powerful internal interests?
When the SEC starts to represent and enforce ETHICAL standards in the stock market, then perhaps I and millions of other private investors might feel we are not swimming with sharks.