Subject: File No. S7-08-09
From: Ryan T Milakovich

May 6, 2009

The debate on the short selling, naked short selling and the uptick rule has been passionate by both sides. I am a market novice and would classify myself as a very small retail investor. Ive read arguments from both sides of the debate, and there are valid points. I do however have a problem with those advocating against the uptick rule and circuit breakers. Setting aside for a moment those who purposefully influence a stock to sell lower through various practices and focusing on honest investors both large and small. In the age we live in its everyone would agree all investors have access to the same information. The SEC goes to great lengths to make sure this is true. There is however an imbalance between the effect of information that would raises a stock price and the effect of information that would lower a stock price. As an example I point to a mistake that Bloomberg made with the reprinting of a six year old news story on United Airlines a while ago. This one incorrect piece of information lead to an initial 75 percent drop in the stock price, which after the error was identified resulted in a net drop of 12 percent. The negative news had greater affect on the price then the positive, if both pieces of information where equal in value, the stock would have been unchanged. Yes, this isnt scientific, the idea that negative information has a greater effect then positive is probably just a gut feeling. My point is this more then anything the last year has shown how quickly confidence can erode in the market, because everyone knows how quickly trust is lost and how hard it is to regain it. Given this fact of human nature there are going to be slides in stock prices from both factual and erroneous information. These slides should not be exacerbated by short-selling pressures, but should be a result of market information. Short-selling is a necessary market component, but should not be an influence on the market. Those opposed to the rule will argue that these rules will not remove the influence of short selling and/or argue that short-selling is not an influencing factor. However and equal number will argue for the rules. Err on the side of caution, reinstate the uptick rule as it stood before repeal but do so for say three years. During which time the effect of the short-selling over this last year can be thoroughly reviewed. After this review then either repeal the rule, replace it with an alternative and/or institute circuit breakers. At this point in time I dont believe anyone would say they completely understand how or if short-selling influenced the markets loses in value and added to the current recession/depression. In such a situation it is wise to reinstate the uptick rule as it was and give the debate more time.