December 17, 2021
Comment on S7-18-21 (proposed SEC Rule 10c-1)
I have worked extremely hard to obtain a solid education, and I am now a scientist who values data over bias. Now that I finally have money to save and put away for retirement, I have had the opportunity to invest in several markets. I had to learn complicated rules of finance and technology for each investment. Recently, I decided I would like to diversify some of my income into the stock market. I have been horrified to learn that naked shorting, which is essentially counterfeiting money, is tolerated, and even hidden by SEC rules. This business model is only for the ultra rich, able to run or contribute to hedge funds. I have learned so much about this market and it is so complicated that another Ph.D would be required to understand what happens when you buy a stock and place it in a brokerage account. I am truly saddened by the society that we could have had allowing innovations to move forward, instead of market manipulation to drive prices of stock down in order to ruin those same innovative companies. Currently, I have no faith in the traditional stock market, and I see blockchain technology arising to create a fair and transparent system, which is also saddening to me because it means that many millions of Americans will have their stocks become worthless during their retirement. All for the greed of the rich, who never seem to be punished, exposed, or accountable in any way. I believe that if the SEC served the people instead of the financial markets, many of the problems that we face as a society would be non-existent. I think with a few simple changes the practice of naked shorting and dark pools would disappear and result in a robust market.
Notify shareholders when their shares are being lent.
Revenue sharing to the individual whose shares are lent by brokerages
Borrowers must purchase the stocks before lending for short positions
Borrowers must have a due date when the shares must be returned, or face fines in excess of the value of the shares at the due date. Otherwise, it will continue to be a profitable business model to naked short stocks and risk a small fine on billion dollar counterfeiting schemes
Tracking of all shares by simple serial numbers or barcodes associated with every share, and its current ownership (if borrowed).
Deadlines for the transition to this fair market, with external experts that are not associated with the financial markets (scientists and engineers) to be available to help with the transition
There is simply no excuse for the inability to track all stocks. Computational scientists have solved these issues long ago and are regularly used in next-gen combinatorial resolution experiments where cellular data is multiplexed. I can easily be implemented, and as this issue becomes more illuminate all investors will begin to have doubts in the NYSE and move their assets into more transparent and fair markets, again to the great detriment of American citizens.
I do hope the SEC takes my consideration and those of other commenters very seriously by addressing the massive fraud before it is publicly realized by the masses. Swift action will only bolster our economy and allow America to regain our position as a beacon of free market and upward financial mobility.
Respectfully,
Dan Liefwalker