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John Gunter Comment On Regulatory Notice 21-19

John Gunter
Engineer

Confidence and faith in the US stock market is decaying rapidly. I'm the poster child for this decay. Up until this year, I really wasn’t paying attention. I was under the mistaken impression that the market was fair for all participants. Over the past year, I’ve realized that this game is rigged, primarily through the essentially unregulated use of illegal synthetic (naked) shares by key market players. Illegal synthetic (naked) shorting allows the key market players to “play god” and bankrupt otherwise capable companies by diluting their shares with illegal naked shares. To date, FINRA hasn’t done much more than look the other way. FINRA’s short interest reporting system is a joke. The key market players have numerous tools at their disposal to sidestep reporting deadlines and misrepresent the true short interest. You’re essentially relying on the liars to tell the truth about their lies….good luck with that. Notice 21-19 is a step in the right direction to correcting FINRA’s archaic short interest reporting policy. It is critical that FINRA use Notice 21-19 to close ALL the possible loopholes/workarounds in reporting short percentage so that investors get an honest report. Short positions, synthetic or not, should NOT be allowed to age beyond the short position reporting deadline. The cost of implementing a robust and honest short position reporting system via Notice 21-19 should NOT be a factor in upgrading the short interest reporting system. The key market players have plenty of money to support this new reporting system. Leaving even 1 loophole in this revised short interest reporting system will mean you wasted your time and you’ll will be responsible for the loss of investor confidence in the US stock market. Over the past year, I’ve taken my first peak behind the curtain of how the US stock market operates and I’ve been stunned at the level of corruption. I’ve been investing for over 30 years and I really had no idea about how our market operated. If the events of the past year were enough to get me to look under the hood, imagine how many others are also getting their eyes opened…. Finally, when will FINRA apply significant penalties for bad behavior? If a market player makes millions in profit with an illegal move, hitting them with a nominal fine does not change their behavior…it just becomes the cost of doing business. As a minimum, fines should be AT LEAST equal to the profit gained from their illegal behavior.