Subject: File No. S7-31-08
From: Eric Tyson
Affiliation: Author, Investing for Dummies

November 7, 2008

Short selling, particularly by hedge funds may have contributed to the recent decline and bankruptcy of some major financial institutions. Surprisingly, until recently, the SEC only required hedge funds to report their long positions (quarterly) to the SEC. Hedge funds and other investment managers didn't have to report short positions.

Hedge funds, particularly those which focus on short selling have argued against increased SEC oversight and regulation of short selling and hedge fund reporting. In a September 22nd Wall Street Journal opinion piece by hedge fund shortseller Chanos, note that at the end of his piece he was attributed in part as "chairman of the Coalition of Private Investment Companies (CPIC)." When I web searched this organization, I was unable to find a web site for this organization. Interestingly, in the web search results, this organization's numerous comments with the Securities and Exchange Commission came up. On CPIC's letterhead with these comments, there was an address and phone number which I called and found that it is the number solely for Porterfield and Lowenthal, a Washington lobbyist company I left messages at their number seeking comment and got no calls returned.

A number of financial firms including AIG, Bear Stearns, Fannie Mae, Freddie Mac, Lehman Brothers, Washington Mutual were targeted by short sellers earlier in 2008. The increased selling of these stocks and accompanying rapid decline in their share prices accelerated a loss of investor, depositor and customer confidence in these firms which appears to have snowballed their decline and demise.