Oct. 08, 2022
October 8, 2022
I am in favor of transaction-by-transaction reporting as it eliminates the ability to \"hide within the aggregate\". Aggregates are not transparent and the SEC should enforce transparency in the securities lending operations.
\"Short selling in the dark\" harms true competition and price discovery. The idea that a small number of short-selling funds \"know best\" and can hammer unsuspecting companies in the dark is shameful. Because of this, victimized companies need a greater ability to defend themselves against predatory short selling practices.
Shortening of reporting timeframes will also power the ongoing phenomenon where the public is serving as first-line watchdogs in monitoring short selling data for securities fraud, strengthening the SEC and better enabling it to fulfill its mandate, at no cost. More timely, higher-resolution reporting would create a waterfall effect whereby some individual investors analyze the data and make that analysis publicly available for free, which is then disseminated widely and re-analyzed, spurring more activity. This allows individual investors to help each other, and allows busy working families to be the recipient of aid for free. Working families do not have the resources to buy data and analysis, nor do they have the time to analyze data themselves. Greater transparency has positive effects on investor protection that go far beyond the obvious. The Commission must not remain ignorant of how social media facilitates a protective web of information sharing that protects investors. The C
ommission must not behave as though they are ignorant of how greater data provision empowers whistleblowers, who extend the Commissions reach and greater empower it to meet its strategic goals.
Talking about working families: the Commission, in proposed rule 13f-2, explicitly noted its awareness of the myriad ways in which short selling can be used to abuse individual investors and working families. In proposed rule 13f-2, the Commission said it is ...mindful of concerns that certain short selling activity can be carried out pursuant to potentially abusive or manipulative schemes. For instance, market manipulators may seek to spread false information about an issuer whose stock they sold short in order to profit from a resulting decline in the stocks price. The Commission has previously noted various other forms of manipulation that can be advanced by short sellers to illegally manipulate stock prices, such as bear raids.