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TWO EMAILS TO THE SEC

http://www.sec.gov/comments/4-590/4590-82.htm
Subject: File No. 4-590

9 October 2009

Dear Madam Chairman Schapiro:

While I enormously admire your spirit of change, enjoy your remarks and speeches, and support your initiatives to rein in on the abusers of the financial systems, I am disappointed at the composition of the recent panel on short selling and pre-borrow. The panels that discussed these topics were comprised largely of supporters of short selling, short sellers themselves, and academics who are obviously using their lop-sided research which ignore the realities of short selling that Main Street faces every day (e.g. Short & Distort) in favor of large hedge funds who are ruining the economy, specially small innovative companies, and Main Street investors.

I found it insulting to the honor of the SEC for these guys to sit there and lecture the SEC about short selling being "a force of good" while completely ignoring the very practices that many short sellers are involved in which are highly immoral, unethical, disruptive to the economy, extremely harmful to small innovative companies that are the future of the world economy -- actions which are in my opinion and legal philosophy, criminal.

Nobody spoke about a well known and widely utilized practice of short-and-distort which small companies and Main Street investors have to face every single day. I will elaborate on this theme and give you more detailed feedback at a later date but since I feel this issue is urgent, I had to write to you before finding the time to review and research all the submitted material. As I said in previous letters, the house is on fire -- Main Street needs protection now. Many small innovative companies are abused by short sellers every day and we need your protection against these abuses.

The problem is not only with naked shorting. Reduction in number of fails-to-deliver does not mean the problem of abusive short selling is solved.

Secondly, I found the discussion on whether pre-borrow and hard-locate should be mandated or not a philosophically false question. According to every legal philosophy it is a crime to sell something that is not yours and you have not borrowed. Except of course in this case where we discuss at length whether people should be allowed to sell something that is not theirs and have not concretely borrowed. What an unintelligent and pitiful discussion. This is a core aspect of the corrupted financial markets which the SEC needs to take control of and resolve by mandating immediately -- not after years of discussion and getting lectures from the short sellers themselves how they should be left alone.

Thirdly, regarding disclosure, again, a facet of our corrupted financial system is that short sellers get preferential treatment -- the people who are inherently interested in destruction of hard-working innovative companies are getting preferential treatment to those who invest in those companies and help the economy by doing so.  Another very crooked feature of our markets that the small companies that have to rely on equity markets to raise needed capital have to live with every day is that the SEC is protecting the names of large short sellers who are mostly there, and many are lobbying every day, to have those companies destroyed. This is a fact Madam Chairman. The SEC should disclose large short sellers just as it does large shareholders without any more delay than required for long positions. The current protection is very much against the Main Street which you have said you like to protect. Let's see those words turn into action.

Fourthly, what happened to the uptick rule? Lots of talk but no action.

Lastly, exempting market makers from further regulation is a very bad idea because we have concrete proof that market makers are sometimes in bed with short sellers and large hedgefunds and themselves are engaged in "short and distort". Do not every think that market makers are good boys. There are many instances of their highly immoral and unethical and criminal behavior in the practice of short-and-distort. I can think of one instance of a market maker, whose analyst was publishing faulty research reports to support their large hedgefund short clients. The corruption runs deep. Allowing market makers off the hook will not help the cleanup which is urgently needed.

I will send in a more detailed feedback in writing or video at a later date.

Many thanks for your kind consideration. We need help Madam Chairman. Small companies need help. Small company investors need help against abusive short sellers -- not just naked short sellers but all short sellers. They can still play their supposed "force of good" in the market within much more stringent regulation and not just direction by the SEC. For too long they've gotten used to raping, raiding and abusing Main Street and now they're heavily opposed to any regulation. Using a lot of arguments and their academics, they're simply trying to distract the SEC from the job that you must do: to clean this mess up, now, and not later. We need urgent immediate action. Please help protect Main Street from short sellers -- not just naked short sellers.

Best Regards
Reza Ganjavi
<phone snipped for web posting>

PS -- here's my new song written for an environmental campaigne against littering -- I should add a verse about cleaning the financial markets too !! Let me know if you like the song :)

http://home.datacomm.ch/rezamusic/Lets_Keep_Our_Planet_Clean.html
http://www.sec.gov/comments/s7-08-09/s70809-4590.htm
Your comments for file number S7-08-09 were received on September 13, 2009.

For God's sake SEC, it's time to do something now, after years of being a completely useless organization in not just not catching Madoff but many many criminals who naked short stocks, run great companies to the ground, sell what is not theirs, sell what they have not even borrowed, etc..

I reiterate my call that "the house is on fire" and instead of your bureaucracy and delay after delay, for God's sake SEC, do something for a change.

What is it going to take for you to enforce illegal naked shorting? You don't need to invent a rocket science to reinstate the uptick rule and you don't need the comments of the hedge fund industry and naked shorts to tell you what you shouldn't be doing. You need to instate and reinstate every tool, rule, and regulation that you can think of to tie up the hands of criminals who steal the money of honest hard working companies and investors by manipulative methods.

The SEC has protected Wall Street for way too long and it is now time to get off its seat and do something for Main Street. Hello, anybody listening or is the cop still asleep at the wheel like it has been for way too long.

Reference:

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Also Visit Reza Ganjavi's:
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If you like this page or have other feedback, please contact me: (info {at} rezamusic {dot} com)

Return to Rezamusic.com