Subject: File No. S7-08-09
From: Patrick J Churcill
Affiliation: Director, Churchill Capital Ltd

May 11, 2009

Reading many of the comments, I get the feeling that many investors are blaming the bad economy and the volatile market conditions on Short Selling.

I think that over-reacting to such a simplification would be a huge mistake.

In my mind, there is nothing wrong with non-restricted (i.e. no plus bid or plus tick) short selling as long as the short seller has borrow in place and is fined heavily if he or she fails to deliver on T+3.
This would eliminate naked short selling, which I think everyone now believes is detrimental to the markets and especially to companies heavily dependent on their investment ratings (which are somewhat dependant on stock price)

This is the way that it works in many other markets around the world, and it has done so for many years.
Covered short selling does serve a useful purpose to keep bubbles from developing in stocks. The last thing America needs at this time is another bubble. The only thing any plus tick rule allows is partial development of this bubble.

In summary: focus your time, attention, regulation, and fines on naked short sellers. Let covered short sellers provide the counter-point to unrestrained optimism in stocks