Subject: File No. S7-08-09
From: John DeMasi
Affiliation: CFA, CPA

February 20, 2010

I think there should be no restrictions on legitimate short selling when borrowed stock has been obtained with which to make the short sell. There are no restrictions on buying long, so it would be assymetrical (and unfair) to make selling short more difficult than buying long.

Despite the tendancy for the media and uninformed commentators to blame short sellers for all the evils of the world, short sellers actually perform a legimitate service in the markets. They increase liquidity and aid in price discovery both very important elements in the proper functioning of the financial markets.

Not all short selling is done for the same reason, and not all is a directional bet (not that there is anything wrong with making directional bets). Quite often it is done for hedging purposes.

For many, many years short selling in all major European markets was done with no restrictions, and these markets did not suffer as a result. It wasn't until the recent (2007/2008) financial crisis that some European markets restricted short selling on certain financial and other shares. I think this was a mistake, though in times of unprecedented crisis, governments and regulators feel the need to be seen doing something to head off criticism. I do not think this is a legitimate reason for action. Any action should be based on the reality of how the markets function, not on the perceptions in the popular press.

I hope the SEC will not impose restrictions on short selling as it would be unfair, unnecessary and would interfere with the normal, healthy functioning of the equity markets.

Respectfully submmitted.