Nighthawk

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    • Sat Jul 19th 17:08 PM
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      The SEC's Campaign Against Naked Shorting: Misguided or Right On?
      Interesting that no-one's commented on the impact that the rescission of Rule 10a-1 might have had. Bring up a historic chart for the VIX. You'll note a huge spike in volatility following the rescission of this rule by the SEC who, last year, caved into the hedge funds and bought their argument that they could self-regulate and wouldn't engage in naked short selling unless exempted. Yeh, right.

      If you want rational investors who are the backbone of American capitalism and are the folks who invest in the capital markets, to pull up stakes and go elsewhere, just continue to allow unchecked short-selling. Profit is great but when the rules allow the plundering of companies by speculators to the detriment and in this case, near collapse of a critical element of our capitalist culture, then it's gone a bit far, don't you think. Try refinancing your Home Equity Line of Credit to make your Escalade payment if you manage to allow a "few" short sellers to "kill" the major banks through unchecked short selling.

      The real winners in this debacle will be the private equity sponsors who are going to capture capital from investors who are tired of making fundamental investments only to see themselves being screwed over by a bunch of kids with momentum indicators who begin to pile on by pushing the SELL button, knowing that they don't have to wait for an up-tick and knowing that the SEC enforcement of naked short selling has been rather loose.
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    • Sat Jul 19th 16:53 PM
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      Can We Short the SEC?
      You might care to look at the regulatory history behind the rescission of Rule 10a-1, the up-tick rule which was in place for roughly 70 years. You might also care to look at the VIX chart before...and after... Rule 10a-1 was rescinded by the SEC last year. Lastly, you might wish to look at the SHO report.

      Finally, you might wish to consider the impact of naked short selling which does occur both legally and illegally, if it is abused to undermine companiesthat are integral to the healthy functioning of this economy. If traders are unfettered in their ability to drive them into oblivion, which they will do without restraints or control, then you will lose the "Main Street" investor who risks his/her capital by investing based upon fundamentals. When you allow the capital markets to function as nothing other than a gambling pit, you'll quickly find that sane people simply remove themselves from this game and go elsewhere to invest their capital.

      Unfortunately, the history of "Wall St." is that greed, like fear, if it is not regulated, has the capacity to destroy an orderly and rational market. So, while many of us advocate "free markets" those of us who've been around for a while recognize that shiny shoe kids fresh out of B-school with whiz-bang computer programs that identify stock price momentum are going to try to exploit the system for personal profit, at the expense of anyone else. If you do it within the bounds of the law, that's cool...if you don't, you can expect that you're about to get an SEC subpoena and spend a lot of your ill-begotton earnings on attorney's fees.
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