Oct. 29, 2022
Comment Letter for File Number S7-08-22 Short Position and Short Activity Reporting by Institutional Investment Managers One of the biggest existential threats to our future is the discrepancy between the financial elites and the average person (retail investor). Aside from the inherent disadvantages of having less capital, political and social influence; we also lack complicated algorithms / supercomputers / and data scientists to help us in our investing decisions. Despite all of those advantages Institutional Investors are still given additional major advantages in terms of reporting requirements. Historically market crashes have been either caused or exacerbated by speculative short selling as well as illegal naked shorting. To address this the Frank Dodd act was initiated with the goal of decreasing the risk to retail investors from predatory / speculative short sellers (but was later gutted and now protects the institutions rather than the retail investors). Because of the aforementioned political influence of these institutional short sellers, and a general lack of knowledge or action by retail investors, these protections have been rolled back and we again find ourselves in a frothy market with rampant illegal naked shorting and overleveraged short positions with huge party risk exposure. While I believe this rule does not go far enough in addressing the risks created by the purposeful obfuscation of information / laws related to the reporting of short positions, I do believe it is a necessary first step. As a retail investor, I currently have no confidence in the equities market. Knowing that I am often being provided with outdated, falsified/mismarked, incomplete information related to the stocks I am interested in, how can I determine with any confidence the relative risk associated with the stock? This should be contrasted with the same short sellers, who as previously mentioned, already enjoy significant advantages in stock market data and analytics. While the short sellers have a pretty clear idea of retail investor positions, we essentially have no useful information regarding their short positions. This puts us at a major unnecessary disadvantage. Regarding the proposal to increase “transparency through the publication of short sale related data”: This would not only benefit retail investors as additional data points and insight into the sentiments of larger players in the market, but it would also help the SEC in determining if illegal naked shorting is occuring (which I absolutely believe it is, and believe there is already ample evidence of). The illumination of institutional short seller positions could help expose the systemic risk they’ve introduced and help us address / decrease these risks in the future. The fact that this reporting isn’t already a requirement is ridiculous, and increasing transparency / position disclosures is long overdue. Regarding the reporting of “buy to cover” proposed new order marking requirement and amending of the CAT system I again support it as a first step but believe it does not go far enough. Buy to cover would be helpful for retail investors in understanding short interest as well as volume / market moves within securities. As daily trade volume is a direct function of both long term investors purchasing securities and short sellers covering or closing their positions, it would be useful to know what amount of trade volume is related to each. While the large institutional investors can see retail trade data and public sentiment, we (retail traders) often have no idea whether the moves being made by the institutions are long or short which obviously has implications for stock price and volatility. Again we are placed at a huge disadvantage. This system is broken. It is rife with overleveraged institutional positions (often taking the opposite of retail trades), hidden shorts, and obfuscation through purposefully inadequate “reporting” of trades / positions. Anything we can do to increase transparency is welcome and necessary. As an aside to whoever reads this. We the retail investors, the global population are watching this all unfold. Our eyes have been opened and Pandora’s box can’t be closed again. This is the man in the cave walking out and seeing the world. We see the fraud and we see the corruption. We are watching the financial institutions, we are watching the politicians, we are watching the SEC rules / proposals and “actions” (inactions), the CFTC hiding swaps (only to benefit institutions and at the expense of retail traders), the actions of CEOs of the hedgefunds, and so on. We will not be silenced. We are the majority, not the minority (however the majority is only finally starting to realize it). As the financial elites have raided the public coffers (pension plans invested in hedgefunds etc) we have taken notice. We won’t go quietly away like we did during the last financial crisis because WE have a voice. You helped to both create this mess and continue enabling it and you will be held accountable. As billions of people worldwide realize the amount of wealth that has been stolen from them, they will respond. While a majority of people are beginning to see this, only a minority is currently vocal. Soon the majority will be bellowing for justice, and I would not want to be on the wrong side of it. I say the last comments because I want you to know that when we have the next financial crisis and they are looking for those responsible, I will point to these hundreds of comments you have received. I will point to my other comment letters, my emails to SEC officials, my phone calls to Senator Sinema / Kelly of Arizona (my home state) as well as our local representatives. I will point out the absurdity of a “technological error” causing hundreds of public comments on recent SEC rule proposals to disappear (this is ridiculous and you all know it). I will go to court and point out that you were made aware. There was no ignorance as to what was occuring, it was purposeful to protect those who rob us of our wealth and retirements. I am keeping copies of all my comments, I will continue commenting, and I will make sure everyone I know is aware of the situation as well. I hope you understand how angry I am. I am one person and these are my opinions, but I can anecdotally say that these feelings are shared by many. This is not the end, it’s only the beginning and I suggest you get on the right side of history before the whole world sees it.