July 26, 2008
Just as buyer of stock must have the necessary funds in their account or the ability to borrow the necessary funds on margin before equity can be purchased, those who wish to short stock should be required to actually borrow the shares, and the borrowed shares must be set aside by the lending broker, so they cannot be borrowed multiple times. The entire system as it now exists permits the shorting process to "work" very loosely, with no real controls, enabling shorts to borrow shares with impugnity. The small investor must be protected by the SEC against this activity.
By limiting the current restrictions to a few financial companies, the SEC is in essence protecting those companies while permitting them to initiate naked shorts against all other companies -- it is like the bank robbers getting police protection while they carry out the heist and get away.
Please protect the retail investor and all public companies from naked shorting. Please require borrowed shares to be earmarked and set aside, with a simple accounting system, so they cannot be borrowed multiple times concurrently.
It is time for the SEC to protect retail shareholders who have had enough abuse. Thank you.