Subject: File No. S7-08-09
From: Torin J Cunningham, MD
Affiliation: Pediatric Orthopedic Surgeon

May 10, 2009

While the practice of equity short selling has it's role in maintaining market supply-demand balance, the elimination of the "uptick" rule in 2007 has played a significant role in the market volatility of 2008-9. The vast sums of money directed by institutions such as hedge funds and ETFs in short selling efforts can rapidly erode the value of individual stocks or entire sectors based on their purely speculative whims. Without appropriate constraints on these practices, short selling quickly led to the market crash in Oct-Nov 2008. The temporary moratorium on short selling then allowed regular investors to feel safe again leading to a temporary recovery before the regulations were lifted leading to yet another decline this year. Reinstatement of the "uptick" rule will help diminish the downward pressure generated by large short selling moves by institutions and restore the confidence of individual investors moving forward.