July 25, 2008
I am writing to urge the SEC to extend mandatory, enforced pre-borrow requirements to all short-sellers of all stocks.
Right now, the temporary rule is narrowly applied to protect the stocks of investment banks and some large banks. The supreme irony is these protected entities are among the most prolific naked-shorters. Now sheltered from threats to their own stocks, the trading departments of the same hyena banks are free to direct their illegal naked-shorting tactics against the rest of the market. On a daily basis they are carpet-bombing stocks and entire sectors with massive naked-short volume, abetted by the absence of an up-tick rule.
These predatory tactics victimize even solid companies and dramatically diminish the confidence of ordinary investors and the public. Bear raids used to be occasional events, taken in stride now they perpetrated across the market on a daily basis.
This situation is grossly unfair and un-American. I urge immediate extension of the short-sale pre-borrow rule to all stock and all traders and investors.
Moreover, we need the up-tick rule reinstated to diminish the hyenas ability to put stocks into literal free-fall. Put up a two-year daily chart of any of the major indexes. Look at the volatility that began the day after the repeal of the up-tick rule. The evidence is quite plain that elimination of the up-tick rule has dramatically increased volatility.
The SEC has a lot of distracters. I am not one of them. But I will become one if the SEC permits these rules to continue to countenance predatory systematic attacks on stocks and sectors, undercutting fairness and public confidence.