March 18, 2008
This rule is not nearly strong enough. You need to put real teeth in the rule, and once enacted you need to actively enforce it by commencing prosecution of serial offenders. Most of all you need to do something for the hundreds of mostly small to medium sized companies that have suffered at the hands of some professional shorts who will bend any rule in order to make more money for themselves.
While I do not believe naked shorting is near the problem your abandonment of the uptick rule last July is, it is a problem that undermines confidence and smooth functioning in our markets. Buyers have every right to expect their brokerage firm to obtain on their behalf real shares of the stocks they purchase. Inflating a small company's float by double digit percentages hurts small investors most, and it is long long overdue that our government agency, the SEC, does something firm to strongly discourage this practice by professional shorts and their prime brokerages.
Please act soon.