Managed Funds Association (MFA) and the Coalition of Private Investment Companies (CPIC) today sent a letter to SEC Chairman Christopher Cox urging the Commission to not extend the emergency order on short selling beyond the announced expiration date of 11:59 pm on July 29, 2008, or beyond the current list of designated securities.
“While we recognize that the financial sector is undergoing an extraordinarily difficult period, we believe that these difficulties are the result of poor fundamental conditions and not a mysterious conspiracy or, more to the point, the inadequacy of current rules related to short selling,” says Richard H. Baker, MFA president and CEO. “The Commissions action here stands in stark contrast to its actions to protect retail investors from abusive short selling practices through the adoption of Regulation SHO, which was subject to extensive notice and comment. Short selling is a legitimate and valuable trading strategy as well as a vital component of providing price discovery and promoting efficient markets.
“We respectfully urge the Commission not to extend this Order in duration or scope,” says James S. Chanos, CPIC Chairman. “Such action would severely burden short selling activity, which the SEC itself repeatedly has acknowledged plays a vital role in the stability of securities markets. Artificial restrictions on short sales undermine the integrity of prices in our markets because they remove liquidity and, more importantly, healthy skepticism from the marketplace.
The MFA and CPIC letter is posted on MFAs web site at www.managedfunds.org.