June 22, 2009
Dear Chairman Shapiro,
Our markets are at a cross-road in a politically heated environment. Our citizens are demanding action and the SEC is clearly seeking to respond in ways that restore confidence in our market. It is crucial that the Agency is not influenced by the emotion of the moment and that it maintain the integrity of its analytical rigor. The Agency's proud history of maintaining a stable and trustworthy market and its legacy of regulatory success is based on a commitment to deep and thorough analysis of all available data. Maintaining this data driven approach to rulemaking along with maintaining the SECs steadfast commitment to standing above politics and populism must be a focus of this moment.
Stamping out fraud in our markets should be the top priority of the SEC and adopting rule 10b-21 is a serious and effective tool in doing so. Naked short selling too must be eliminated and rule 204-T has been an effective deterrent and should be made permanent.
With regards to short selling, After carefully reviewing the dozens of reports submitted by academics, market participants, and others on short selling and I am struck, as the Agency must be, by the one-sided conclusions these reports have come to regarding the critical role short selling plays in our markets. In fact, it appears that the most convincing argument against re-regulating short selling is made by the SECs own studies that concluded the uptick rule was ineffective and negatively effected market liquidity and price transparency. I will not attempt to make a case here because I am sure the Agency is privy to the same research I am. I am simply appealing to the SEC to give the ample evidence the weight it deserves.
I appreciate the opportunity to share my concerns and strenuously urge the Agency to continue to hold on dearly to its obligation to remain above politics and populist pressure and to carry on its legacy of rule making based on rigorous analytical discipline.