May 6, 2009
I am writing you to express my deep concern about what I believe to be one of the greatest crimes and frauds in American history. I have become convinced that there are serious abuses of various loopholes that allow Short Sellers to conduct bear raids on otherwise sound companies and cause these companies irreparable harm and, in some cases, their absolute demise. Many of these companies, including one that has provided income to my family, have appeared regularly on the RegSHO list over the past several months. I have read, among many other sources, the story of Deep Capture (http://www.deepcapture.com) and many details of these loopholes can be best digested through a thorough review of the evidence that has been accumulated there. People far more intelligent and eloquent than I have presented some convincing data and arguments that I have yet to see refuted anywhere in an honest and open debate.
I am also very concerned that the Financial media has been, at best, negligent in their duties to investigate and report the truth and, at worst, criminally complicit in a much larger conspiracy. They have most certainly allowed the power of their media to be manipulated to facilitate the rapid dissemination of rumors and innuendo about companies while various private, unregulated funds have been conspiring to drive share prices lower. Any time that someone has raised the issue of Naked Short Selling, they are attacked, ignored, or quickly dismissed as "wacky" people who are buying into "internet conspiracy theories" that are "a cross between Where's Waldo and the DaVinci Code". And now, suddenly, after the near-collapse of the global economy, the harm caused by naked short selling has been clearly exposed. And those who were warning that Failures To Deliver and other cracks in the settlement system could cause significant damage to the markets have been vindicated, even if not publicly.
Unfortunately, the organization which is entrusted to protect the investing public, which is tasked with helping to maintain confidence in our markets, and the organization to which I am writing this plea has also been roundly and appropriately criticized for its failure to adequately address many of the cracks in the system and even enforce existing restrictions. It has been proven that the SEC is either unwilling or unable to curb these abuses. My fear is that whatever individual within the SEC that does take up the case of the people who would like to see Naked Short Selling abuses curtailed will be treated much in the same manner as Gary Aguirre. However, and perhaps most sadly, it seems that the the promise of more lucrative opportunities for life after the SEC can be found by following the path ignorance and inaction (much like Linda Thomsen).
Therefore, I guess I probably shouldn't be holding my breath.