July 28, 2008
Dear SECers,
Naked short selling with its combinant FTD is, in essence, fraud. It is pervasive in the market today, and it is a deliberate attempt to make profit through counterfeiting shares. All companies need to be protected from this, not just 19 select financial institutions, many of whom are practitioners of the above described dark arts.
If it is just too complicated to sort the cheaters from the legal shorters, I have a solution for you: Outlaw short selling. Perhaps this is not necessary, but it is easily enforceable.
At the very least these steps need to be taken to try to bring back some confidence to the American Markets:
1. Eliminate the Market Makers exemption to the NSS rule.
2. Legally define NSS and make it Illegal, with real criminal punishment (JAIL).
3. Reinstate the uptick rule at $.10 level, minimum.
4. Short sales if allowed must take stock out of circulation, and if shorts are borrowing a high percentage of stock, those borrows must be reported, just as a long would have to report.
5. Short sales of companies that go bankrupt must be declared closed when the company declares bankruptcy, thereby triggering a taxable event.
Thank you