September 25, 2008
PORTFOLIO RECOVERY ASSOCIATES
OFFICE OF GENERAL COUNSEL
120 CORPORATE BLVD.
NORFOLK, VA 23502
September 25, 2008
The Honorable Christopher Cox, Chairman
Securities and Exchange Commission
450 Fifth Street NW
Washington, DC 20549-0609
Dear Mr. Cox:
This letter follows my prior letter to you in July of this year concerning our request for additional restrictions on short sales. Since then, the Securities and Exchange Commission (SEC) issued its emergency order barring short selling of the stock of certain financial institutions.
Our company, Portfolio Recovery Associates, Inc. (NASDAQ "PRAA") purchases and liquidates portfolios consisting of a variety of types of consumer credit obligations. As a result, PRAA is by statutory definition, a financial institution, pursuant to the provisions of a number of federal statutes. These include the Gramm Leach Bliley Act, Section 1.6050P-2(e) of the Internal Revenue Code, Section 114 of the Fair and Accurate Credit Transactions Act and its Identity Theft Red Flag amendments, and other similar federal regulations. Thus, PRAA is generally classified as a company in the financial services sector. Even though PRAA is included in NASDAQs "Other Finance Index" and its "Financial 100 Index," PRAA was not on NASDAQs listing of the financial institutions selected for protection pursuant to the SECs emergency short sale order. The emergency order has caused PRAA stock to be even more susceptible to short activity, since so many of the previous targets of short sellers are now on the protected list.
As I understand the spirit of the agreement that was reached today by Congress, it is now contemplated that the government of the United States will provide insurance to the companies that agree to purchase the assets that will be made available for sale as a result of the bailout, rather than purchase the assets directly, as originally contemplated. Since it will be companies such as PRAA that will purchase these distressed assets, it is now even more critical that debt buyers be insulated from the volatility of short sale activity. For these reasons, we request that debt buyers such as PRAA be included on the list of institutional types that are protected by the SECs emergency order. One of our direct competitors, has been included on the SECs no shorting list since its inception.
In this connection, I will be pleased to provide any information you may need concerning our company and our industry. Please feel free to contact me at 757-961-3534, or at my email address: jsscott@portfoliorecovery.com.
Sincerely yours,
Judith S. Scott
Executive Vice President and General Counsel