Subject: SHO naked short selling

July 19, 2008

As a member of famed investor, Mr. Jim Sinclair, the CIGA (Comrades In Golden Arms) The members of CIGA has had enough from illegal naked short selling.

Do we need more rules, emergency or otherwise? Doesn’t the SEC already have the ability to take action against abusive naked shorting by simply enforcing the rules already on the books? And shouldn’t this enforcement be across the entire stock market, not just for a select group of big Wall Street firms and government-backed companies?
Wouldn’t it make more sense for the regulators to spend their time and resources going down the list of Regulation SHO companies (readily available from the respective stock exchanges) and addressing their improper short sales?
While hedge funds are generally outside the SEC’s reach, their prime brokerages are subject to regulation. Among the most lucrative services provided by prime brokers is stock lending to hedge funds, so the SEC should examine these practices to determine whether the prime brokers are aiding and abetting abusive naked shorting. These abusive short sellers are a cancer that is threatening the health of America’s financial system. I believe that making sure the prime brokers follow the rules for borrowing and lending shares, and extending the protection beyond a few select firms to all public companies regardless of size, would go a long way toward reaching a cure.

I remain,

Michael Pfeiffer