Ga Bard,
Since your last post was made with a reasonable tone, I'll offer my honest opinion in direct answer to your query asking why any reasonable person would oppose your petition.
I personally have no issue with some of the complaints you've aired regarding abuses of 144 shares and convertibles. If you are the author of that post describing the short selling of unsigned 144 shares on deposit, you did a fine job describing the problem. I have to agree that it is very unfair for shares which cannot otherwise be sold to be viewed as "borrowable" for shorting. I also think that under no circumstances should shares in cash accounts enable borrowing.
Regarding providing remedies for what you perceive are the problems relating to shorting, I strongly disagree that suspending shorting overall for any period of time is a reasonable action to take. I think shorting is a legitimate way to risk one's capital in the market and that suspending shorting would cause immediate harm to fair markets.
As far as naked shorting goes, I'd agree that it causes immediate dilution of stock and in that regard distorts the market. I'd suggest, however, that it is not broadly a problem.
If you look at the average number of days' volume that most shorted stocks have, it is difficult to accept that the shorting activity in fairly liquid stocks has much impact on them. For thin stocks, it can influence the trading significantly, but I'd argue against restrictions here as well for the following reasons. When a person invests in thin stocks, they are fully aware of the risks and volatility of such issues. If you believe in the "story" of the stock, you should rejoice in having the opportunity to buy more shares at a lower price and the fundamentals of the company will ultimately win out. If the shorts are there because the "story" is bad in the first place, then they have every right to risk their capital in that direction. I just cannot muster much sympathy for people who invest in thin stocks then cry "manipulation" when things don't go their way. Do they cry "manipulation" when they are the beneficiaries of massive short squeezes? Hell no! They squeal with joy.
One change in rules that might offer you some relief with your complaint would be to track borrows directly back to shares on deposit. If the share holder sells the long shares, an immediate notice would be made to the short share seller to do a fresh "borrow" or "cover" to make the long holder "whole". I'd prefer that such a "borrow" be an administrative action so that it would not cause a transaction fee unless shares couldn't be borrowed and the short seller covers.
In any case, with those opinions in mind, my complaint about your petition is that you take great license in the style of your writing and I cannot subscribe to the underlying assumptions with which you present the petition. Your very first sentence illustrates the point:
We, the undersigned, request immediate action to halt the destruction of our national financial system.
Do you really expect me to subscribe to your assertion that our national financial system is in danger of immediate destruction? That is absurd on its face. With that one sentence, I am already turned off on aligning myself with someone who takes such an irrational stance from that outset when presenting their case. Since the rest if your text pretty much follows the tone of that sentence, I have no interest in supporting your petition.
You would have been much more successful had you taken the hysteria out of your prose and just presented the facts and arguments straight on in the first place.
Best of luck with your cause. Sorry, but I can't hop aboard. |
