July 19, 2008
Gentlemen and/or Ladies
As a history buff of sorts I have an historical memory of the efforts of Joseph Kennedy to protect investors from predatory short selling raids, having himself been one of the more successful of the breed of predators.
The abandonment of the uptick rule was an egregious mistake and allowing any form of naked short selling in any security is an even graver one. No security of any stripe in any market in the world should be subject to naked short selling. In the extremity it would be possible for more stock to be sold short than is issued by the corporation. A naked short seller is avoiding the obligation to pay the stock dividend. The small investor or any real investor in a security has no defence against predatory short selling under current conditions. Only the short swing speculator is advantaged by current SEC policies regarding short sales and the proposed rule does not go far enough to rebalance the markets.
It is my opinion that naked short selling should be outlawed entirely and that all securities should be included, not just a favored small group of major financials. In addition some form of uptick rule should also be reinstated as studies done during the greatest bull market of all time are less than adequate to measure effect in all types of markets be they bull or bear.
Thank you for your kind attention to my brief comments.
Respectfully yours,
Herbert G Spielman