STA Comments on Short Sales

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24 September 2008

September 24, 2008

The Honorable Christopher Cox
Chairman
Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549

Re: SEC Release No 34-58592/Sept. 18, 2008
Emergency Order Pursuant to Section 12(k)(2) of The Securities Exchange Act of 1934 Taking Temporary Action to Respond to Market Developments.

Dear Chairman Cox:

With the current crisis in the financial markets, and based on our long-standing, productive dialogue with legislators and regulators, the Security Traders Association has been patient with and supportive of the SEC’s actions relative to short sales. However, given continued market stress, it is clear that the continued emphasis on short selling, without rigorous analysis and the opportunity for public comment, is not serving the intended purpose of supporting market integrity.

The securities industry is experiencing burdensome expenses in system adjustments and altered procedures in order to conform with the new orders. At the same time there is confusion as to what is expected, in what timeframe, and by which market participants. At a minimum, greater clarity is required. As a result of current confusion regarding regulatory and operating requirements for affected firms, we are witnessing increased investor and industry confusion and loss of confidence in our markets – the exact opposite of our collective objective.

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