I am wondering if it would better for Corporate America to file such a class action lawsuit, since it is their stock that the SEC is allowing market makers to counterfeit?

Wachtell Lipton Calls for Return of Uptick Rule
NOVEMBER 20, 2008, 12:34 PM Link to This
E-mail This TOPICS Legal INDUSTRIES Financial Services As shares of Citigroup, Blackstone and other heavyweights of the finance industry slumped to new lows on Thursday, a prominent law firm passionately repeated its call for the reinstatement of the “uptick rule.”

Wachtell, Lipton, Rosen & Katz, a firm whose client list reads like a Who’s Who of corporate America, said in a memo to clients that the “very same conditions that led to the adoption of the Rule in 1938 exist today” and sharply criticized the Securities and Exchange Commission, and its chairman, Christopher Cox, for failing to act sooner. “There is no tomorrow,” the memo said.

The uptick rule was created in an attempt to prevent short-sellers — who bet that a given stock will fall — from causing a selloff in shares that were already declining. The rule, which only allowed short sales on a stock whose last trade was higher than the previous one, was abolished last year. Many believe its removal has seriously destabilized the markets, though there is not universal agreement on this point.

Read the full text of the memo below:

November 20, 2008

Reinstate the “Uptick Rule”

The worldwide securities and credit markets continue to experience unprecedented meltdowns and volatility. Millions of investors are losing their life savings and retirement assets. There continues to be widespread manipulative short selling and bear raids. The investing public is losing confidence in the integrity of our markets.

For the past 5 months, we have called on the SEC to reinstate the “Uptick Rule” which helps limit downward spirals by allowing a stock to be sold short only after a rise from its immediately prior price. Despite widespread market participants’ calls to do so, the SEC has failed to act. The SEC must reinstate the Uptick Rule now to address the short selling, bear raids, and the spreading of false rumors. Nearly all the reasons that the SEC gave for repealing the Uptick Rule in July 2007 are not valid in today’s turbulent markets. In fact, the very same conditions that led to the adoption of the Rule in 1938 exist today.

Historically, the SEC has placed a leadership role during market crises to assure that the markets are fair and orderly. The SEC has not hesitated in the past to be creative and innovative in protecting the securities markets and the financial intermediaries from manipulative conduct. Decisive action cannot await the appointment of a new SEC Chairman. The SEC must take a leadership role in restoring investor confidence. It is long overdue. The SEC and Chairman Cox must act now. There is no tomorrow. The failure to reinstate the Uptick Rule is not acceptable.

Edward D. Herlihy

Theodore A. Levine
http://amlawdaily.typepad.com/amlawdaily/files/reinstate_the_uptick_rule.pdf

I too would like to thank you for your continuing effort to expose the counterfeiting hedge funds industry and the SEC support they have been receiving.

When I ask myself HOW any member of Congress could ever think that the Rich and Powerful who setup the hedge fund industry did not need any regulation, and would not be affect by greed, and would never do anything illegal to increase the value of their bank accounts, I come to the conclusion that no sane Congress person would ever conclude any of these things were true. Yet we see that Congress continue to support the non-regulation of the hedge funds by their actions. And we see the SEC continuing to put band-aids on the acknowledged counterfeit shorting problem, which actions show us they refuse to take concrete steps to stop this counterfeiting.

With your efforts and those of many others, such as, Dr. Byrne, there is some hope that justice may one day prevail.

Thank you.

We cry out for mainstream coverage to expose these criminals…but sometimes we just need to cry out.

http://www.dailypaul.com/node/55223#comment-784769

Relish the catharsis.

AMG

I am certainly pleased to see that you are still bird-dogging this issue and agree with you that short-selling and naked short selling are totally destabilizing the financial markets in the US and elsewhere as the SEC turns a blind eye, or aids and abets the process as we have discussed previously. I also agree with your comment that, “Last month – after naked short selling and other hedge fund tricks contributed to the biggest financial cataclysm since 1929 – the SEC inspector general issued a 191-page report confirming just about everything in the U.S. Senate reports. It is impossible to read these reports without concluding that this is the biggest scandal in the history of the SEC–a scandal that entailed a cover-up of precisely those same crimes that “severely injured” (or rather, nearly vaporized) our financial markets.” As you know, I think that the Chairman of the SEC is a lamebrain and in the pocket of the hedge funds which began with his removal of Rule 10(a) from the SEC Act of 1934 to allow unrestricted short selling.

The so-called “de-leveraging” that the hedge funds are going through recently to try to recoup asset values for their wealthy clients is a coverup for their continued short-selling and naked short selling as evidenced by the explosion in FTD’s. Why else would the DOW have declined by 9.67% in the month of October alone if the hedge funds were only dumping securities they already owned long?

How do we get your information in front of the investing public that the SEC’s inaction is depleting their 401(k) accounts, destroying their pension funds, and destroying their retirement plans? Hopefully, the federal district court that you mentioned will get to the facts in the SEC scandal (even though the SEC is doctoring evidence), but is there any way to get it into the press? I would think that the liberal press (i.e. NY Times, Washington Post) would love a story about scandal at this level of government. Another concern is Eric Holder as the new Attorney General. I doubt if he would pursue this issue.

What a quandry, but keep up the good work.

Bill Gardner

If what they ‘did’ at the SEC entitles them to this size payday, how much money is involved in naked shorting?

(I already know the answer.)