August 27, 2008
Dear SEC:
I charge you to carry out your mission to "protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation. As more and more first-time investors turn to the markets to help secure their futures, pay for homes, and send children to college, our investor protection mission is more compelling than ever." (from your website)
The deletion of the uptick rule to short a stock simply enabled hedge funds and other large institutions to control and manipulate stocks even more than ever before. One asks the question: What were you thinking? Also, naked shorting has yet to be monitored.
Please investigate Elan's (ELN) recent afterhours activity on July 29th and again on July 31st. On July 29, afterhours Elan's price dropped from $36 to 20. Then on the 31st it dropped another $10 in the afterhours.
Who were these shorters? How much did they make? Did the Reuter's negative news article contribute to the shorters success?
In your Mission Statement you say you wish to procect first-time investors, then please diligently inspect the activities surrounding Elan on the aforementioned days. In addition, other stocks have been hit hard by hedge funds, negative news media articles and large institutions which benefit from this uncontrolled selling pressure. The Reg SHO was supposed to control naked shorting but does not get enforced by the SEC.
Recently, the SEC chose to protect some financial institutions from naked shorting. Investors would like to see all companies protected from such attacks not just a select few that receive the SEC's blessing.
As a small investor, this matter needs broader attention. I am sending a copy of this letter to my Senators, Patty Murray and Maria Cantwell as well as to my WA State Governor C. Gregoire with the hope of eliciting further support for honest market supervision. The SEC needs to stop protecting the interests of corruption and start protecting the interests of small investors.