July 17, 2008
I'm sorry but you really must be kidding about Reg SHO. I have never in my life, in the study of political and financial history, seen anything like it. Shorting is fine, legal and valuable. It's absolutely clear, however, that to short, you need to have clear ownership of the stock certificate in question. In the internet age of near-instant transactions, even 3 days is a truck-sized hole. That there is no need to prove ownership for months or years, no penaties for flauting Reg-SHO, and loopholes to kite short-ownership between colluding parties, is tanatmount to--no, actually IS--fraud and counterfeiting. One that is stealing money from every investor, same as if the thieves were forging checks.
The laws already exist and are already clear. Close every loophole and stop naked short selling. The alternative is a total loss of confidence in an already shaky market. Doubly bad in loss of confidence in American markets vs Asia and Europe.
And very, very bad when questions arrive from Congress about how it was allowed to get this far.
Thank you for the opportunity to speak. I know you're in a difficult position and do the best you can. Please help keep the American markets free and open. We are at a point where history itself is at stake, and not just today's crisis.