Sign the Market Reform Petition Now!: View it here.
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Without too much preamble, I would strongly advise everyone to read this comment letter from NASAA to the SEC.
Contrast it to the self-serving demands for special consideration coming from the industry.
Contrast it to the idiotic, one-sided spin from "trusted sources" like Wikipedia, or Herb's buddy Dick Sauer at Rocker Partners, who recently wrote his short seller apologist piece for the NY Times (covered a few blogs ago).
This is the product of the entity that represents the state securities regulators - NASAA. It is an organization of specialists in securities regulation, who are more than able to differentiate between imaginary, trivial voodoo, and legitimate and very real threats to the market.
What to make of the letter's blunt statement that the DTCC is obstructing justice and the investigation into NSS? How to reconcile the DTCC and SEC's statements that Reg SHO is "working" with NASAA's point blank admission that FTDs are now on the increase - something we've been aware of since Dave Patch got the FOIA data in? Where do the liars and industry scammers hide, now that NASAA highlights, in black and white, that this is a very real, very serious threat to any faith in the integrity of the markets? How do we reconcile the market reform movement's having been called a "cult" of "conspiracy theorists" by the industry's lapdogs, when the organization of securities regulators is saying that we have been 100% accurate in our assessment? Do you think we will be reading any articles in the WSJ or NY Times or Barron's on that...?
How many articles do you think we will see that highlight this letter's concerns and recommendations? Do you think it will be allowed to be linked at Wiki? Will the NY Times run an op ed column saying enough is enough, citing this remarkable document?
Folks, send this link to every reporter and elected official out there, and demand coverage and action. The states spell it out in no uncertain terms. This isn't the Easter Bunny's comment letter. There really is no more qualified group out there, and the letter is unambiguous in its conclusions - the problem is getting worse, not better, under Reg SHO, it significantly damages the integrity of our market system, it is a real problem, and it must be addressed or the whole house of cards can come tumbling down.
That should sober even the most glib apologist. But it is up to us to get it out there to journalists, and elected officials. So do your part.
And sign the damned petition, already...
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A poster on InvestorVillage highlighted the following passage from the letter, that says what should be obvious to even the dimmest bulb at the SEC, and yet which is so studiously avoided by those "experts":
"If we were to choose between the risk of customers not receiving shares they have purchased (along with the related consequences of deliver failures) and the risk that traders might be the subject of a short squeeze, we will choose the latter. Traders are in a much better position to protect themselves than the investors who have relied on market participants to execute their orders. The fear of being a victim of a short squeeze or the possibility that volatility will make it more expensive to cover a short position are the "natural consequences" of the conduct of these traders. To the extent that the current regulations protect traders from the risks and attendant consequences of short selling conduct, the regulations encourage abusive conduct. Short squeezes would be an effective palliative for sellers who have failed to deliver on contracts they have made. Volatility is the market’s natural and proper response to uncertainty regarding secret conduct of short sellers."
Well, hallelujah, and no sh$t. Being a fraudster can be corrected by the market, which will punish it, if allowed. What a novel idea.
Of course, Wall Street's fraudsters are dead set against that idea, as is the SEC. What does that tell you?