July 29, 2008
The rules restricting Naked Shorts has a time tested history from FDR to Clinton. The market did well, better
than either the period before (without the rules) and
better than recently (again, without the rules).
Those rules need to be reinstated, and extended.
As the law specifies their existence, the failure of the
current Commission to enforce them as they have been understood for the past 70 years, does not serve the nation or the markets.
The short-sighted brokers that complain about the burden of the rules face the much worse danger that too many investors will simply conclude that lack of these rules lead to a fixed-house, and place their money elsewhere. The depth of the US market is at stake, and the Commission bears the responsibility to protect that market.
Enforce the law on naket shorts, as it was understood during the previous 70 years of wealth-creation.