May 6, 2011
Regulation of short selling, especially naked short selling is long overdue. The cost to consumer must be considered when calculating the cost of enforcing what was already the law. How can the SEC sit by and let giant investors ruin retail investors and small public companies?
The retail investor is at a huge disadvantage without short selling controls and enforcement. And then there is the matter of information. We need more visibility into what is being traded at the hedge funds. The golden rule - those with the gold make the rules, is at the crux of the problem. The lack of enforcement permitted naked short sellers to ravage the retail investor far too long. Short sale statics need to be timely and more frequent so trends can be seen by everyone.
Allowing more shares to be sold than even exist makes sense only if it is the government's goal to enable hedge funds to seek and kill vulnerable stocks. The excess volatility in the market has made millions for the industrial strength investors that see-saw the market at will, and often have control over the trend.
A little stability please. The international investors in Europe are figuring this out and will vote with their EUROs to invest outside the US if you do not get a handle on this. SEC regulations call for a three day halt on my funds for 24 hour trades, so lets share the regulatory control and level the playing field just a little. If this does not get fixed don't blame the retail investors for going elsewhere to invest.
We already have so little faith that the government is working to protect our interests. It would be nice to see some regulatory changes that negate the public's current distrust of government. It is not about class war, it is about honest ethical administration. No one should be able to sell something they do not own, and do not intend to buy until they have controlled the price. And we all know this is the result of the current system. Big money can by forcing the supply and demand curve down buy low and sell high. The game is rigged - it is just like knowing the lottery numbers before the ticket sales are cutoff. The brokerages enable this and are now whinning about cost. They already know if the shares are available to borrow or not and have to bear the cost of accounting managing this balance if they expect to reap the commission, it is just the cost of doing this business. Make sure everyone has the skin in the game when you are done putting the next regulations in place. Without risk there is only unlimited appetite and greed.
Copyrighted material redacted. Author cites Deep Capture blog, "Michael Milken and Dendreon", available at http://www.deepcapture.com/wp-content/uploads/story-of-dendreon.pdf