I am writing to request that FINRA reform their short-sale and FTD reporting to the highest enforcement standards possible. Specifically, I am concerned that FINRA's current blindness with regard to alternate formations of short interest through "married puts" and arranged financing leads to unquantifiable systemic risk which can then be rolled over indefinitely with low borrow rates until one (or many) grossly overexposed broker's default becomes everyone's problem. To clarify my position, I think brokers should be able to maintain legal short positions, but as you've acknowledged there are several ways that they skirt regulation and dilute securities with counterfeit shares, which siphons money from retail investors, prevents companies from raising capital, and costs thousands of jobs as these targeted companies are shorted (and then shuttered) into oblivion via cellar boxing. FINRA should not be soft on brokers and simply requesting they self report their short position is naive and ineffective. FINRA should seek to enforce daily reporting on all short positions, synthetic and otherwise, at the account-level basis. This is so FINRA can more readily identify bad actors and be proactive in their enforcement, rather than relying on brokers to submit information that may present a conflict of interest. I apologize for not being able to answer more of the well-thought out questions presented in this notice. I am a regular, retail investor who until this year would never have been involved in something like this, but I worry for the health of our markets should no action be taken. I worry for the wealth I am trying to build for me and my family, and I worry for the pensions and retirement funds of my grandparents and friends. Naked shorting is illegal and destroys livelihoods. It has been a tool for SHF's, MM's, and large brokers to rig the market and transfer wealth to themselves. Please do something big about it. Something small is not enough.
Anonymous-BJ Comment On Regulatory Notice 21-19
I am writing to request that FINRA reform their short-sale and FTD reporting to the highest enforcement standards possible. Specifically, I am concerned that FINRA's current blindness with regard to alternate formations of short interest through "married puts" and arranged financing leads to unquantifiable systemic risk which can then be rolled over indefinitely with low borrow rates until one (or many) grossly overexposed broker's default becomes everyone's problem. To clarify my position, I think brokers should be able to maintain legal short positions, but as you've acknowledged there are several ways that they skirt regulation and dilute securities with counterfeit shares, which siphons money from retail investors, prevents companies from raising capital, and costs thousands of jobs as these targeted companies are shorted (and then shuttered) into oblivion via cellar boxing. FINRA should not be soft on brokers and simply requesting they self report their short position is naive and ineffective. FINRA should seek to enforce daily reporting on all short positions, synthetic and otherwise, at the account-level basis. This is so FINRA can more readily identify bad actors and be proactive in their enforcement, rather than relying on brokers to submit information that may present a conflict of interest. I apologize for not being able to answer more of the well-thought out questions presented in this notice. I am a regular, retail investor who until this year would never have been involved in something like this, but I worry for the health of our markets should no action be taken. I worry for the wealth I am trying to build for me and my family, and I worry for the pensions and retirement funds of my grandparents and friends. Naked shorting is illegal and destroys livelihoods. It has been a tool for SHF's, MM's, and large brokers to rig the market and transfer wealth to themselves. Please do something big about it. Something small is not enough.