August 23, 2007
Dear Commissioners
I am pleased to see the revocation of the grandfather clause of Regulation SHO. I have never understood why the commission found it necessary to do this, and provide an advantage to those who might use loopholes in our stock settlement system to manipulate the prices lower for their personal profit.
I am concerned about the recent change of the uptick test for short sales. Once again, it seems as if the commission is providing new advantage for short sellers who no longer have to wait for an uptick to execute a short sale.
I am not against legal short selling. It is, after all, a viable trading mechanism that can be used to take advantage of a perceived overvaluation. But why has the commission deemed it appropriate to undo a rule that has been on the books for 70 years, and furthermore to do it in advance of the revocation of the grandfather clause in Rgulation SHO?
The American stock markets should be based upon fairness for all investors. I have heard arguments that those who complain about naked short selling are just interested in seeing the price of their company's shares go up.
My response - of course we are. But, moreover, all we are asking for is that the market, not market makers, decide what a company's value is. We ask that hedge funds play by the same rules and if I have 3 days to pay for stock that I buy, it should be delivered, without exception, in a time period that is reasonable - days or weeks- not months or years.
Without a guarantee of fair markets, there is little incentive for people like myself to invest, and most Americans would feel this way, if they were aware of the manipulations that can and do take place.
Thanks for your continued efforts to make the markets a level playing field for all of us.