Subject: File No. 4-581
From: Michael W Crum
Affiliation: Deputy Executive Director, U S Merit Systems Protection Board (retired)

August 18, 2009

It seems to me that the SEC is trying to fix a problem that doesn't exist, and their solution will wreck the markets even further. In order to fix problems, you have to correctly identify the cause(s) of the problem. The stock losses and financial system breakdown that were incurred last year and the beginning of 2009 were not caused by Shorting Stocks, Exchanged Traded Funds (ETF's), or options. It was caused by 1) the normal business cycle 2) a normal pull back to the markets after hitting all time highs (Dow Jones, $14100) (which has been occurring since the beginning of the stock markets 3) a crazy Democrat idea that everyone, no matter what their income or financial situation should own their own home (easy credit) 4 the U.S. governments intervention into the market place by injecting huge sums of money into numerous spending programs (ones that were not needed because the markets would have corrected by themselves) 5) the huge spending programs to save the automobile manufacturers and related auto businesses that had been mismanaged and had incurred huge legacy costs because of union demands 6) bad lending and other financial excesses by banks and other financial institutions.

Short selling had nothing to do with the drop in the markets but you want to further intervene which will cause more arbitrary losses to investors and traders. In my case, I am in my second career and make my living as a securities trader. Fully 50% of my income comes from short selling stocks, options or ETFs. It has nothing to do with driving companies to go out of business. It has to do with shorting the security when the charts and indicators tell me that the price of a stock is oversold. Any intervention on your part to eliminate short selling will cause another huge financial crisis. The markets work best when the government leaves them alone. Please note, that with no changes to the short selling practices, the markets have rebounded 50% since the March low. Surely that shows that there is no need to change short sales.

Since you are considering eliminating short sales, you obviously dont understand what happened to the financial markets and you dont understand short sales. In the first instance it is now clear to me that you are trying to fix something you dont even understand you just want to do something. Thats what got us into trouble in the first place. In the second place, the idea that stocks can only go up will wreak havoc with the markets. In both cases it will be catastrophic. Yet, you dont seem to care.

This is one reason I just wish Congress was still a part time position and Government Agencies need to hire people who know what they are doing. What you are doing is a tragedy.