JJC:   We've been on a crusade on this show... Finally everyone has woken up to it... Crusade to bring back honest short selling... Meaning asking the government of the United States to enforce the rules, where money managers can bet against companys in a fair regulated way... Today we heard something good, but something also uniformed from the SEC that might help the cause... Right now, hedge funds, if they don't like a stock, can just attack it by calling brokers and punishing the stocks by blitzing them down endlessly with sell orders... Knock 'em down, knock 'em down, knock 'em down... In the old days, when I sold stocks short... I had to pick up the phone and borrow stock first from a broker, before I could sell it...

Obviously you can't sell something you don't have, so you borrow it... If I didn't locate the stock to borrow it and then sell it short, okay, and I sold it, I would therefore fail to deliver... I didn't have any stock in my account, so if I failed to deliver because it tturns out there was no stock to borrow, then I would be bought in... That's right... The broker I sold the stock with would simply buy it right back in my face, paying up because I failed to deliver... He would basically do the trade over and make me pay up and lose money, because obviously, when you sell short you want it to go down... It was devastating... I wrote about it in my books... It's devastating to be bought in... Now here's what you need to know... When you bet against a stock that is heavily shorted, you should run the risk of being bought in... It's frightening... In fact, it's the short sellers biggest fear... No, it was the short sellers biggest fear... Okay?... Today, Chris Cox, who is the SEC Chairman, said he will no longer allow people to short stocks without borrowing them first when it comes to Fannie Mae (FNM), Freddie Mac (FRE) and maybe other dealers... He said he will ban naked shorting... That's what it is called when you short without borrowing the stock first, okay... He said he would ban it for Fannie and Freddie...

Okay, that's terrific, thanks commissioner... There is only one problem... It's already illegal... You, Mr. Commissioner, just simply haven't bothered to enforce the law... I can not believe this commissioner came on national tv and said he was doing something special... All he is doing is enforcing the law that I lived by, that everybody lived by until this laize faire administration came in and said you know what, people can short without having to borrow first, people don't need to have the stock...

There are literally hundreds of stocks that are being shorted into oblivion that can't be borrowed... But nobody is being bought in... No short sellers are being punished because the US government doesn't enforce the failure to deliver rules that govern naked shorting... You don't deliver, who cares, because the government doesn't care either... Maybe they woke up... The SEC shouldn't just go over the people who have shorted Fannie Mae and Freddie Mac, and failed to deliver, it should go after all those hedgefunds who have shorted dozens of hard to borrow stocks and then leaned on them... All the SEC has to do is enforce its own law and that would be huge for the market, huge for you who own the stocks... Will it?... I don't know... This is the same SEC that got rid of another crusade of mine... The uptick rule... I wanted that back... It was created because of all the short selling that was done '30's the bear raids... Our fore-fathers of that year knew much more than we did... Getting rid of the uptick was another mistake... That's the one where hedgefunds no longer have to wait for buyers to pay higher prices before they can short and blitz a stock down...

They used to have to wait... The stock was at $32, it'd have to wait until $32 and a quarter... Someone taking me up before I short it... Now I can knock it down... $32, $31, $30, $29, $28, $27... Just crush it, and scare everybody... That's what happens now, because the SEC got rid of the rule... Kudos, by the way, to Senator Charles Schumer, for suggesting that the rule be brought back... This is the same SEC that has done mroe to empower the shorts, to destroy stocks and colusion in history... This is the SEC that has been on the short sellers side... They have been the shorts' biggest friend... It is time for the SEC to realize the error of its ways, and recognize what they have done to abet the shorts to push down stocks and knock them into oblivion is wrong...

Let this be the first step, Commissioner Cox, to recognize that you have underregulated and failed to prosecute your own laws, to the detriment of all the Mad Money viewers who own stocks as a method to save for retirment, for school and for life... Mad Money viewers, write, email the Commissioner... Tell them they don't need special powers... Tell them they just need to enforce the law against the bad guys... Do it today.