July 16, 2008
To Whom It May Concern:
First off, I would like to express my gratitude for the announcement yesterday by Commissioner Cox that the SEC would no longer allow the execution of naked shorts on Freddie Mac, Fannie Mae, and other financial stocks. For the millions of stockholders and employees of these companies, who have suffered through the recent market downturn – naked shorts have only exacerbated the devastation of their investments and financial health.
As I understand the SEC rules, the above action is not a new ruling but instead, an enforcement of existing rules. I wholeheartedly support this enforcement and encourage both the commissioner and the SEC to expand this enforcement to all SEC registered stocks and exchanges. Additionally, I ask that the SEC return to its pre-2007 enforcement posture for the “up-tick” rule, which requires short sellers to wait for the target stock to experience a rise in stock price before the short can be executed. Clearly, the enforcement of this depression-era rule has been well tested and proven to provide protection for the average investor from the attack on a stock by large trading firms such as hedge funds. Please communicate to the enforcement division and to the commissioner, the need to return to the pre-2007 “up-tick” enforcement posture – especially in this time of unprecedented market volatility.
Thanks in advance for your consideration of these points.
Jon O. Fox