May 5, 2009
Dear Mrs Schapiro,
I am writing you today to express my humble opinion that the proposals to regulate short selling appear totally off base. Short selling plays an integral role in maintaining an efficient market. You yourself have stated publicly that there is no empirical evidence that the removal of the uptick rule contributed to market volatility, so it concerns me greatly that you have recently stated that new rules regulating short selling are your top priority. Just going through the list of companies that have urged you to make this a top priority raises some serious concerns... do you believe that those same companies would be petitioning your support on behalf of rules keeping stocks from going UP day after day? I doubt that to be the case. Companies whose shares are under pressure from short selling are under that pressure because there is something fundamentally wrong with the health of the company itself. That is the role of short selling in the free market. Furthermore, we are all well aware that the only way to close a short position is to buy back the shares, which provides the seeds for a healthy rebound in the shares when conditions have improved. This is historically proven to be the case. These kind of reactionary regulatory responses are precisely the same kind of responses that helped to get us into this mess. Please consider my point of view when making your decision. I am not a professional short seller, or a hedge fund manager. I am just an average guy who believes in free markets, and believes the capital markets to be a place where I can ultimately grab a piece of the American Dream for my family and I. It's not short sellers who are to blame for this mess, it is the executives of the companies in question.
Thanks for your time, and best of luck to you!