January 12, 2007
Ms. Nancy M. Moms Securities and Exchange Commission 100F Street, NE Washington D. C., 20549-1090
As a follow-up to my previous memo regarding this proposal to eliminate the tick test/ price test, I would like to further emphasize the concerns the public has with regards to the regulations of market making activities as they pertain to this proposed and all other short sale regulations.
As now presented in several comment of the memos to the SEC, bear raids do in fact exist in our markets despite the assertions by the panel of “experts” the SEC created to evaluate this very rule change and despite the assertions of certain members of the Commission staff. Because the bear raid exists as a trading strategy of these markets, the SEC must keep every current tool in their arsenal active to slow down abuses until such time as real reform is considered and ultimately created.
Today however, the SEC is not only looking to remove present short sale restrictions that have the intent to reduce sell side abuses, archaic as they may be, but the SEC is also failing to take appropriate steps to beef up the exemption laws and enforcement activities against market members who are executing their own style of a market raid using present day exemptions to do so.
PDF (3 Pages): SEC Norris Letter Tick Test
Comment: The loophole even after Reg Sho Market makers and option market makers can sell stock without a borrow (naked shorting) as you can see the NASD was concerned what would happen many years ago.