This is it, the last time to make your voice heard if you want the playing field to be the same level as it was before the Bush administration decided to give the edge to the shorts by getting rid of the uptick rule.
For a month now, we have been circulating a petition to bring back the uptick rule, in full, without any loopholes that shorts can then drive a truck through.
Why is this so important? I think the deregulation of the securities markets by President Bush and now the most discredited
chairman in history, Chris Cox, produced the lax environment that ultimately ended up costing taxpayers billions of dollars because many good banks were not able to refinance using equity capital because shorts were able, systematically, to knock down stocks to absurd levels simply because they didn't have to wait for a buyer to surface.
Now, I know there are many people here who want to debate the merits of the rule. I can tell you that as someone who made multiple tens of millions short with the rule in place, it is simply not an imperative that this government allows the shorts a chance to bash down the longs. The short-sellers never needed this edge.
They got it because, somehow, Bush and his cronies actually believed that the real reason why the government instituted the rule -- the ease with which bears could scare and intimidate longs into panicking and selling and thus wrecking the ability of the capital markets to perform their primary function -- had somehow been repealed.
Worse, the SEC relied on academic studies done at the absolute top of the greatest bull market ever by professors who have never been on a trading desk and had no idea what can really happen, and what kind of havoc a seller can inflict on a market, particularly a rabid one who needs prices lower to perform.
Is the uptick the answer to the market's problems? Of course not. The market's not trusted by retail for a host of reasons, including no prosecutions of bad guys, the recognition that the SEC let a Madoff slip right under its noses, that insider trading was no longer prosecuted and that shorts were allowed to sell stock naked even as the law said they couldn't. The retail investor has come to view the market for the mug's game it can be if rules are not written and enforced that are meant to check rapacious capitalism.
I think the rule is more than symbolic. It slows the selling down. It lets the market take its breath. It should put the triple-levered ETFs that are weapons of mass destruction out of business. Those have no place in this market, because they have deluded thousands of investors into thinking they are long-term hedges when they are anything but that.
I do believe we will have a huge problem getting the uptick rule reinstated. The people who checked off on this lunacy are still with the SEC. The academics are unwilling to admit they are
wrong. The entrenched interests at the brokerage houses and the exchanges need the volumes, and the rule inhibits volumes.
But all of these arguments are, to me, fly specks, vs. the need to get retail investors back into this market by making them understand that the government knows they have been betrayed.
The uptick rule is a tangible sign that the betrayal is over.
Sign the petition
. Put your weight behind
reinstatement of the rule
. Help make the market safe for people who have left it because they know it is too dangerous and too easily manipulated. Without more signatures, I presume they will simply ignore the groundswell and bow to the wishes of the big institutional elements that couldn't care less about you or about the integrity of the markets.
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