Subject: File No. S7-08-09
From: Ryan Stine
Affiliation: Vice President Portfolio Strategist, Chlebina Capital Management, LLC

May 29, 2009

Dear Chairman Schapiro,

The market is in desperate need of increased oversight. Checks and balances must exist to ensure an orderly market. The market exists to give companies the ability to raise capital for productive uses, which has been forgotten over the last decade as the market has been transformed into a casino. This transformation has forced important companies into bankruptcy, helped the economy into a deep recession, and wiped out long-term investors. One small step in reversing the idea of laissez-faire regulation is to reinstate the original Uptick Rule.

The Uptick Rule was eliminated, coincidentally, just months before the market began the worst decline since the crash of 1929. Volatility, as shown by the CBOE Volatility Index, increased immediately after the elimination of the Uptick Rule. The market would have still declined, but I argue that the speed and depth of the decline were increased by the lack of a checks and balances in the form of the Uptick Rule

I prefer the reinstatement of the original Uptick Rule over the other proposals because it would be the most effective. The Modified Uptick Rule relies on bids, and even Erik Sirri, director of the SECs Trading and Markets Division, has acknowledged that bids can be manipulated. The Circuit Breaker proposals make absolutely no sense. The purpose of the new rule is to restrict manipulative short sellers Bear Raiders. Allowing a Bear Raider to manipulate a stock down 10% before placing any restrictions defeats the purpose of the proposals. Im sure manipulators love the idea of a Circuit Breaker because it allows them to make 10% a day, everyday, unchecked versus the Uptick Rule which would prohibit them from repeatedly shorting a stock down. The manipulator wouldnt be limited to a 10% per day gain because they could Bear Raid multiple stocks over the course of a day.

In determining the final rule, please consider the motive of the commenter. The exchanges like the idea of a circuit breaker because they enjoy the increased volume created by the manipulators. Day traders and hedge fund managers prefer the idea of a circuit breaker because many of them use questionable trading practices that would be restricted if the original Uptick Rule were put back in place. Its all about greed From the prospective of a long-term investor, I would just like to have a fair playing field in which I dont have to fear being preyed upon.

The implementation of the Uptick Rule would be the first step in bringing order back to the market. Other areas that are in need of increased regulation include naked short selling, dark pools, the trading of US based futures contracts on foreign markets, rating agencies, and CDS contracts to name a few. I urge you to do what your predecessor would not, which is to put the cop back on the beat. Without an overhaul of the regulatory environment long-term investors will be unwilling to reenter the market.

Ryan Stine
Vice President Portfolio Strategist, Chlebina Capital Management, LLC