May 18, 2009
1.WHY was the uptick rule rescinded?
2.WHO at the SEC supported the rescindment?
3.WHO in the investment industry supported the rescindment?
Other than the hedge fund thieves, I can think of no market participant who might benefit from the removal of this 60 year-old rule.
If the uptick rule had been in place and enforced, I sincerely believe that the debacle we've just gone through would have been half as bad.
Someone at the SEC and/or influential traders is responsible for destroying the financial lives of millions of Americans.
For example, five years ago BAC was $42 and traded 15mm shares per day. Recently, BAC at $10 trades 500mm shares per day. Expressed in dollar terms, today BAC trades 8 times more than five years ago.
Does anyone really think that the 500mm sellers each day today are legitimate sellers of long positions or short sellers with a negative view of the future value of BAC (the company)? No, this massive wall of sellers are out of control short sellers, most often naked short sellers, pounding a vulneralbe stock.
Put the uptick rule back in place and rigorously enforce it.
Delmar L. Newman, CFA