February 25, 2022
Let me begin by clarifying an error in the proposal posted to the SEC website. It states that short squeezes are a \"abusive trading practice\". This is simply not true. Short squeezes are a free market's natural defense against excessive short selling. The truly abusive trading practices, are of course the ones frequently used by manipulatory short sellers, backed by the Securities Exchange Commission.
Rule 13f-2 is another classic fake-transparency rule that simply adds another layer of raw aggregate data, aka data that is made sure to be an incomprehensible mess and published in timeframes that render it useless to discern suspicious activities.
Rule 13f-2 does nothing to address any of the widely known mechanisms used by predatory short sellers in their short distort schemes:
Shortsellers use spoofing and wash sales to manipulate stock prices.
Shortsellers misreport positions and deliberately mislabel short positions as longs.
Shortsellers use commoditized news to spread misinformation about companies and manipulate sentiment against the stock, especially around earnings announcements.
Shortsellers use option conversions to create phantom shares, to artificially dilute the float and drive the price down, in collusion with market makers and other shortsellers.
Meanwhile RegSHO still targets the victims of manipulative shortselling instead of the perpetrators, the existing problems persist and Rule 13f-2 does nothing to address any of them.
Rule 13f-2 does not increase transparency, it adds complexity and makes it harder for individual investors to keep up. A sincere push for transparency would aim to _reduce_ complexity of the market, and put an end to dark pools, street name shares and the outrageous infinite phantom share creation under the guise of liquidity, share lending and options conversions.
The SEC is not trying to level the playing field between big institutions and small investors. The SEC is trying to make sure small investors can never get ahead, and they distract from this fact with fluffy sounding titles for their criminal proposals.
With its outspoken intent to fight short squeezes at all costs, the SEC has long shown their true colors as an adversary of the free market and the investing public. Shame on you Mr. Gensler.