April 7, 2007
It is implausible that the SEC alleges that concerns about creating volatility through short squeezes were the reasons to validate the grandfather clause. James Brigagliano, the supervisor responsible for this miscarriage of justice and this latest delay, informed a group of Hedge Fund Managers at a recent Managed Fund Association seminar that The Securities and Exchange Commission is stepping gingerly into the issue of short-selling abuse and is following a carefully honed approach so that it does not impose too many restrictions on prime users of shortselling, namely hedge funds.
This is outrageous. Mr. Brigagliano needs to resign. The unwarranted bias of the SEC toward hedge funds and their clients cannot be allowed to continue. The hedge funds represent at most 1% of the investors. Why has the SEC refused to any take steps to protect more than 99% of the investing public? Are these activities an unlawful "secret government-within-a-government"? It appears so. Its no wonder that the divide between the richest 1% of the people and the rest of us is increasing exponentially.
It is unfortunate that the Commission is using short squeeze (footnote 16) in the context of requiring brokers to deliver to investors that which they have purchased. The
phrase illegal short squeeze should be reserved for intentional acts of manipulation that drive investors to buy the stock in the first place, not actions taken AFTER the purchase in an attempt to gain delivery of bought and paid for shares.
Hedge funds clearly know or should know the risk involved in short selling. Why would the SEC take the risk out of short selling for hedge funds (at our expense), especially the ones that have chronically abused the system with strategic naked short selling and failure to delivers?