Apr. 20, 2022
To whom it may concern, For some context before my comment I would like to say: I am an international retail investor and I have been long Gamestop stock since early february 2021. After all that has been exposed with available public information, first in form of Due Diligence posts on r/superstonk subreddit (later sent to SEC by many of those retail investors in emails and comment letters), by HBO's gamestop documentary (many experts on naked shorting interviewed), seeing this proposed rule makes me wonder if saving institutions who made bad and illegal bets is more important that how the whole world sees the US equity markets going foward. Like other recently proposed and passed rules, this one has to do with how gamestop exposed the vulnerabilities in the system. And all the system has been doing is protect itself instead of correct itself. This rule has gamestop as its catalyst and that is undeniable. It is well known that GME short interest as % of float before the end of 2020 was well above the permitted 140%. In fact there are screenshots of Finra reporting 226% just like it was discovered in a class action lawsuit against Robinhood. That is impossible without naked shorting. So it is also well known it exists and runs rampant. In the SEC report about GME it was also stated that price improvement was due to positive sentiment and not really because of buying to cover short positions. It is well known that GME has a grassrots movement behind it with hundreads of thousands of investors maybe millions all over the word who have been pressure buying the stock since late february 2021. No only the majority of those retail investors did not go away but they increased their long positions by many times over. It was in fact mention in the SEC GME report that in January 900k investors had long positions on GME and that number has only increased over the following 15 months. It is well know that there isnt really price discovery with 90-95% retail market orders going throught the dark pools as Mr. Gary Gensler said on live TV. It is also well known that GME has been in these regular cycles that have everything to do with the derivatives market and there isnt really a normal stock price behaviour since january 2021. It is known and documented that buy orders go throught dark pools and sell orders go to lit exchanges in GME's case. Theres no price discovery there, there is only price supression. And that supression is because there are a bunch of institutions who made bad bets against GME and refused to cover back in the end of 2020 and still do refuse to cover and instead are selling naked shorts to retail buyers. It is also well known and documented that those institutions use complex derivative strategies to kick the can down the road and reset the timer on FTD's. Strategies like buy writes, married puts among others. It is speculated that there is something about ISDA contracts and swaps that is going throught a 2 year public information blackout. I dont need to go over the details here because all this information was made public in r/superstonk reddit and sent to SEC by many other retail investors. There were literally experts who worked on the inside of institutons who do naked shorting in the latest GME HBO documentary, exposing all of this. So all this was just context for my following comment on this rule: This rule is just a means to protect institutions who made bad bets against some companies and are now in risk of defaulting if they lose the collateral they are using to maintain their short and naked short positions in GME and other companies. This rule is a means to can kick FTD's down the road forever. This rule is not meant to correct the system. It is meant to protect those who made bad risky bets and they will continue making bad risky bets in the future with rules like these that protect them. The small retail investor is going to once again harmed by yet another rule that was suppose to increase fairness and transparency in the markets. This rule is the opposite of fairness. It hurts the retail investor who is long in the securities these institutions are naked shorting and Fail to Delivering. This rule is meant to protect the US financial markets from collapse from the domino effect started by those same institutions at risk. It will not prevent a future problem of occuring. It will instead help to maintain the problem. After this there will never be a retail movement for decades to come for market fairness and transparency like the current one. All that will be left is distrust at the global scale on the US financial markets whose regulators protect the rich even when they make bad risky bets and that are losing against the poors. If this rule passes, the SEC can be assured that a big percentage of the international and US investors will lose faith and will withdrawn from investing in the US markets. Imagine losing 2 entire generations of investors overnight. We talking about some 10 million as a start that will scale many times over the following years. Specially in the middle of yet another financial and economic crisis at the door. In sum, i hope this rule does not pass in light of market fairness and transparency and specially in light of trust in US equity markets. You can be assured that this rule is the hurricane in tailand started by the wings of a bee in the US. Regards, A concerned investor