March 4, 2009

Subject: uptick rule

Dear Chairman Blair,

I wanted to respond to the Bloomberg article stating thatDaniel Aromi and Cecilia Caglio, economists at the SEC in Washington, said in a December report to former Chairman Christopher Cox that the so-called uptick rule was less effective when needed most, during panics that drive prices down and volatility up. Bloomber

I would like to know what they were looking at? Also, dot they understand that the short selling is just one part of a grand plan to decimate the stock market. Take GE as an example. First they short the GE common stock. Then they work to widen the CDS spreads on GE bonds to spook the bond market. The bond market responds by selling off the bonds and increasing the cost of capital for GE. Then the ratings agencies and the stock market start to worry about the profitability of the company given the higher interest rates they need to pay for future bonds. The stock starts to sell off. Then the rating agencies continue to worry about the rating before finally giving in the fear and downgrading the debt ratings. The lower debt ratings increases the cost of capital even further and further enhances the downward spiral.

I dot know if you realize this but the destruction of companies, capital, and shareholder wealth in this manner is significantly hurting our economy. For the sake of the country you need to do something to stop this cycle of destruction. One way would be to bring back the uptick rule. Another would be to suspend shorting for the next year to give companies breathing room to raise capital under better conditions. A final important step would be to suspend mark-to-market accounting.

You have the power to stop this cycle. Please seriously consider these actions.


David Risgaard, CFA