I am the founder and leader of Asensio &
Company, Inc. ("ACO"). I have recieved by email from
several subscribers to asensio.com copies of your comments on
short selling. I am involved in lobbying efforts to reform securities
legislation and short selling regulation.
ACO was, from early 1996 until
it ceased operations in late 2003, the nation's
largest dedicated short selling organization. ACO operated as a
member of the NASD and was the first and remains the only SEC/NASD registered
brokerage firm that regularly took trading short positions, advised large
institutional clients on short positions and established and maintained a free
internet web site to publish, distribute and promote reports that advocated
short selling shares and opposed the stock promotions of our short selling
targets.
This activity produced an annual
compounded return in our managed account of 71.125% from 1996 thru 2003 (the
entire period of the operation). This also generated over a
billion dollars of potential civil liabilities from first ammendment and
securities litigation filed by 7 of the 30 short selling candidates, all of
which was dismissed, settled without any payment by us or
tried to a jury where
we won the verdict. Along the way, the conversaries led to bad press, conflicted
regulatory retaliation, the forced resignation of Richard Syron as Chairman of
the AMEX after a congressional investigation into a fight between us and the
AMEX, fines and sanctions (and bad press) for Dreyfus, Fidelity and Merrill, and
even the resignation of Alaska's Republican Attroney General who we discovered
to be invested in the promotion a penny stock scheme doing business in his own
state.
These unquie experiences allow me to understand the cost to
society of ineffective and biased short selling regulation. I am involved in
lobbying for the complete de-regulation of short selling. This includes the
elimination of the down tick and borrowing rules, strict restriction on the
ability of managers of public companies ability to use their public funds to sue
member of the media and securities analysts who critize their stock promotion
partices, and the incorporation of holders of short positions into the
protections granted all other investors under SEC rule 10-b. This last reform
would eliminate harmful class action suits by plaintiff attroney who add no
value to markets and allow short sellers to defend themselves against the worse
elements of our society--those that abuse our nation's free enterprise system
and misallocate capital from our markets.
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