July 21, 2008
The recent emergency order shows that the Chairman has the authority to do something and is willing to use that authority, but it is selective and violates equal protection in our Constitution and the Securities Act.
The SEC's own study shows that those securities with options traded have increased in fails while those without options have decreased fails. Common sense would tell you that the fails are coming from the OMM exemption.
Question: Why is the Chairman being selective in whom he is willing to protect from bear raids?
An emergency order to eliminate the OMM exemption permanently would meet with approval from the investors the Chairman is sworn to protect.
700 letters have come in from investors in 10 days asking for the elimination of the OMM exemption. In the previous 11 months, 400 letters came in. Investors see that this is an emergency and want the Commission to act.. and act now.
Anything less than an immediate and permanent rescission of the OMM exemption is Mr. Cox fiddling while the market burns.
Every day that the OMM exemption is in place creates more fails. Stop the fails and clean up the old ones, but stop new ones from being created.
The Commission has fiddled in the market with the grandfather clause and removing the uptick rule. Too much has already been lost.
Foisting the OMM exemption upon the market at the last minute without proper discussion is reason enough to rescind it, but instead of the SEC making things right, we are still discussing the rescission when the statistics show that the fails are being generated by the renting out of the OMM exemption.
A columnist for Barron's compared the SEC to a ferocious Chihuhua. The latest emergency order protecting the biggest banks and brokerages makes the SEC look like a lapdog owned by those banks and brokerages. Why would the retail investor have any confidence in a regulator who so blatently protects its masters, while letting the rest of the market be targeted for bear raids and be left completely unprotected?
The dual standard is completely unacceptable when there is a simple solution of removing the OMM exemption for all securities.
Thank you for the opportunity to comment.