Subject: File No. S7-08-09
From: Charles A Trzcinka
Affiliation: Professor of Finance and Chairman of IU's Finance Department

May 10, 2009

The uptick rule should NOT be reinstated. There is a long list of academic studies showing short selling constraints impose costs on capital allocation. While I understand that at times those costs may be justified, such as during last fall's short selling ban, there is no excuse for placing permanent constraints on those with information that the stock is overvalued. Nobody is contemplating a "down tick" rule where buyers can only buy when the stock falls a "tick". It sounds ridiculous just proposing it, so how can an "uptick" rule be justified? Why are those who believe a stock is overvalued so vilified?