Subject: Short Sales S7-08-08

September 11, 2008

Dear SEC.

How many more financial institutions will go out of business as a result of aggressive short selling (Bear Raids) before the SEC realizes they need to act? The promises of Naked Short Rules and the reinstatement of an Uptick rule that was repealed in July 2007, seems to be just that; as we watch Fannie, Freddie and now Lehman circling the drain. August 19th Christopher Cox stated proposals would be coming in a few weeks.

This is madness.

Terrorism takes many forms and the ability to crush our Banking system through Bear Raids is quite effective. Liquidity has been crushed as financial institutions have been robbed of their ability to raise much needed capital through the sale of equity. The aggressive shorting has suffocated these companies leaving liquidation of assets as the only remaining recourse. (or take over by the government as in the case of FNM and FRE)

The resulting liquidations then results in depressed prices in numerous other asset classes (CDO, Bonds, Preferreds, Auction Rate Securities) that ripples through other balance sheets due to the nutty Mark to the Market rules. The selling begets selling and the spiral continues. It is a perfect storm that is most likely being orchestrated by some of our enemies via hedge and sovereign wealth funds (whom have no transparency rules). The trade of “buy oil and short the banks” all began in July 2007 when the uptick rule was repealed. Oil went from $70 to $145 and the Banks lost 70% or more of value during this period. Kill our economy, destroy the financials and influence an election….seems more than plausible when you consider who has the capacity to orchestrate such a move. (Dubai sovereign wealth fund is over a trillion dollars)

Short Sale Rules do not prevent shorting, they just prevent manipulation. (Which is supposed to be illegal) Other than the hedge funds and a handful of broker dealers, who benefits from the repeal? This is irresponsible to allow this to continue. The jobs lost and impact to our economy has already been tragic. Please stop this madness. The lessons of the 1930’s and the testimony by Joe Kennedy and JP Morgan do not need to be relearned.

J. Keith Stucker
RBC Wealth Management
Senior Vice President – Private Client Group
Branch Director
Senior Portfolio Manager – Portfolio Focus