Subject: File No. S7-08-09
From: John F Del Gaizo
Affiliation: NYS Professional Engineer

August 25, 2009

The modified short sale uptick rule appears advantageous and should be implemented, at least on a significant variety of stocks (i.e. SP 500).

Circuit breakers alone, in the past, have not been effective in damping market volatility and only prolong severe price collapse resulting from massive unrestricted short selling and panic selling. Without an uptick rule in place, and enforced, the circuit breakers favored by the exchanges would only kick-in after very severe (10%) declines. Without an impediment to short selling the collapse proceeds on subsequent days, even if the breakers kick in. Primarily, circuit breakers only work for a day and only after a stock run has already begun. On following days the factors for initiating the circuit breaker reoccur.

During the market collapse of last Fall, short selling was open to massive abuse including naked shorting, repeated short selling of the same stock and deliberate market manipulation (rumor mongering)to benefit short sales. The exchanges did nothing to stop this activity as they profited from the massive selling. Also, the SEC was too slow to quell this abuse. In fact, the SEC may not ever have resources sufficient to act in a timely manner once the programed short selling starts.

Therefore, the SEC should have strong, enforced rules to control and limit the negative effect short sales have on the market to preclude a panic. Let's start with the modified uptick rule. For the benefit of the country and the economy, the SEC should be most concerned about protecting an "investing" not a "speculation" market.