September 30, 2009
I am full-time investor who trades both the long and short side of the market. I advise the commission to avoid adding further sand into the gears of the short selling process.
In the last several years, starting with the implementation of Reg SHO, shorting has become increasingly difficult due to the difficulty of obtaining a borrow. Thus the extent of my own shorting has declined considerably in the low quality stocks such as bankrupt companies, firms with small floats, and firms traded on the OTCBB or Pinksheets. Furthermore, the fees I pay to borrow stock have soared in the last two years. I think it is fair to say that the proponents of restricting short selling have already met with much success.
To add further to the restrictions on short selling by adding a hard borrow requirement would do more harm than good as other submissions have made clear.
It is my view that the proponents of restricting short selling will not be satisfied until all short selling is banned. I hope the commission will keep in mind the well known benefits of short selling and not succumb to a lobby effort of stock touts and promoters who are more concerned with selling their shares to unsuspecting retail buyers than in leading their firms into profitable enterprises.
Regards,
John Rideout