Oct. 29, 2022
I emphatically support transaction-by-transaction reporting of securities based lending because it eliminates the ability to "hide within the aggregate"; transparency means transparency and aggregates are not transparent. Secret short selling could dissuade actual investment as funds and firms attempt to glean profit off the backs of true investors. For this reason I emphatically support the 15-minute reporting requirement, the cost and effort are justified to prevent fraud and prevent firms and funds from hiding in loopholes. Working families and everyday people are currently victimized by financial predators. The SEC's new strategic plan (https://www.sec.gov/news/press-release/2022-148) puts "working families" front and center. This is good and I value this new direction, therefore I seek to hold the Commission to this commitment. Companies that have been victimized by these financial predators need a greater ability to defend themselves, as short selling in the dark harms true market 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. Secret short selling hurts individual investors in the name of greater profits for hedge funds. Timely detection of fraudulent and abusive activity comes before Wall Street profiteering. A short seller is not an investor, but the opposite.The Commission seems to be prioritizing hedge fund comfort and profiteering over investor protection and market transparency. While short sellers might be afraid of ‘short squeezes’ that can follow the identification of their short selling strategy, that is not a reason for the Commission to decide against greater transparency, rather the exact opposite! If short selling is chilled, then short squeezes and dangerous volatility become less common. ‘Sophisticated investors’ will quickly learn to avoid positions that could result in such dangerous volatility, which will clearly benefit the market overall. It is my opinion that short selling, and therefore securities lending ought to be banned entirely, as it brings wild speculative gambling into the market. The market ought to be about investment into businesses that show promise to those investors willing to invest, and should they change their mind they ought to have the ability to sell said position to someone else wishing to buy it. There are casinos widely available for these gamblers, we ought not continue to degrade our market stability, and economic growth by allowing such gambling to further degenerate the markets worldwide. Further, it is my opinion that designated market makers should not be allowed to sell securities which they do not own to provide “infinite liquidity” as this practice destroys any notion of true price discovery. If there is no buyer or seller then the order ought to stay until expired, cancelled, or a real counter-party desires to enter the transaction. It is absurd that such basic functions as supply and demand have been destroyed by these ridiculous practices being allowed within our market. End them NOW! Barring the outright banning of short selling and securities lending, I believe the common investor will benefit immensely from increased transparency, and this proposed rule represents a step in the right direct for our markets. Everyone will have a much better idea of the risks of our decisions and transactions if we can see who is targeting which companies. If funds are allowed to short in the dark, retail investors remain dangerously unaware of the risks they take on when purchasing securities. More timely reporting allows for more timely reactions; slower reporting prevents retail investors and working families from protecting themselves from abusive and predatory short selling practices. I cannot stress this enough: Working families and the individual investors need to be able to look both ways before they cross Wall Street. No one wants working families to get run over in the name of superior returns for hedge funds. I would also like to call to attention the new and very desirable phenomenon of the public 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 Commission must not behave as though they are ignorant of how greater data provision empowers whistleblowers, who extend the Commission’s reach and greater empower it to meet its strategic goals. - A concerned investor