Subject: File No. S7-08-09
From: Patrick McGehearty

May 12, 2009

I ask that the SEC reinstitute the uptick rule, being sure to not water down its function of reducing market manipulation. Multiple options have been proposed, some of which are inadequate to the purpose. In addition to only allowing short selling on an uptick, an additional rule which forbids short-selling of any stock that has a current decline of more than 10% since the day's open would be beneficial.

Naked short selling should be disallowed at all times. To do otherwise is to make a travesty of the market. Examples have occurred where short sells have exceeded the available non-closely held stock of a company. Allowing such practice holds the market up to ridicule.

The public purpose of the stock market is to encourage capital formation. Short selling can contribute to that process when a stock price becomes irrationally exhuberant, reducing the future price correction by supplying stock on a temporary basis. Once a stock is in decline, further short selling does not contribute to the public policy goal, and should be restricted.

Some trends, including funds which claim to offer double shorting or even triple shorting of a group of stocks seem to be nothing more than methods to get around margin rules so that fewer dollars can be used to manipulate the market in times of panic, to the deteriment of investor confidence. These trends need to be stopped. Declining investor confidence as we have seen since September 2008 will hinder future capital formation and cause a general slowdown in our economic growth.

The decisions you make here are important to the future
our national economy.

Patrick McGehearty