From: scottcom []
Sent: Tuesday, February 24, 2004 1:34 PM
Subject: 2520 rule (s7-23-03)

I just wanted to tell someone at the SEC how your rule 2520 has effected the average investor. First off, let me speculate a bit. I assume that the rule was put in place as a defense mechanism for volatility in the marketplace. Recent fraud and trading infractions has caused a sort of instability within the "day trading" market. The rule states that if I, an average investor, with a below than $25,000 liquidation value within a respective account "day trades" more than 4 times in a 5 day period that he/she will be limited to cash trading for 90 days. It seems to me that I am not a threat to the market place with my less than $25,000 where as someone with much more money can really do some damage to a low volume stock intraday.

Well, the punishment doesn't seem to fit the crime. I have never qualified for the limited-trading punishment before this February, when I mistakenly entered a trade, then reversed it. then the other three trades that qualified me as a "day trader" were rarities. Now I have been limited unjustly to cash-only trading and it has cost me and my family over $2100 so far and 17% of our portfolio. I sold my AWE after they announced a buy-out and wanted to use the proceeds to purchase another stock that was down sharply that day. As it turns out, I was right about the purchase, but since I couldn't use my proceeds to purchase the stock I didn't get to enjoy those gains. Three days later another similar situation, another correct prediction and another opportunity down the drain.

Why is it, that if for 5 days I "look" like a "day trader" that I am punished so severely for 3 months? Shouldn't this 5-day period be a little longer so that you can actually be established as a "day trader" rather than taking a small cross section of someone's activity for 2% of the time? Who is actually being protected by this rule? Shouldn't the rule be the exact opposite. That if someone has more than $25,000 they are day trading with, they should be the "threat" to the market place.

I think Mr. Paul S. Sarbanes may be interested in knowing just how this rule is effecting the majority of small investors. I think the rule stinks and I will do everything in my power to remove it or set up several accounts to move the money around and avoid the rule. Thanks for screwing us again SEC. You people could really use my help, but I would never work for such a bunch of crooks and swine.


Small Investors Everywhere