July 27, 2008
Clearly permitting naked short selling has had an adverse affect on share prices, and allows people with financial means the ability to collude, force prices down, and through rumor mongering, cause companies to either not be able to raise capital at all, or be forced to raised capital at levels severely dilutive to existing shareholders. In the case of banks, a sharply lower share price may create a fear or panic which will lead depositors to withdraw their money, leading to collapse of the bank, takeover by the feds, and loss of taxpayer, or alternatively, purchase by a a foreign institution at a fire sale price.
Therefore I was dismayed to see that the priorities of the SEC were screwed up. why would you be trying to protect foreign banks who have a small deposit base, as well as GS perceived as the strongest investment bank, at the expense of washington mutual, wachovia and other reigional banks, whose shares seem to be at the mercy of short sellers?
I would urge you to extend the prohibition against naked short selling to all financial intermediaries immediately and to criminally prosecute violators and their managers.
time is of the essence