My Response to CV Payne from Occupy SEC 2023

I heard CV Payne say it. I put aside all judgment. We all need to do that to move forward as a nation. He was right though, Ken Griffin is smoking a cigar and laughing at the 99%. 

He was on a live feed with the organizer of the first Occupy SEC 2023, Mike “The Marine”. He was discussing the plight of the retail investor in today's capitalist driven society.

“Mike, keep it going, get a little more organized, stop all the infighting… and keep doing this… they’ll hear your voice sooner or later.” 

Grassroots movements are a double edged sword. While the community aspect of these movements is key to creating the authenticity necessary to effect change, it is also the greatest obstacle to ultimate success, which I define as the achievement of sustained impact and measurable accomplishments.

Occupy SEC 2023 is a perfect example of this principle. The very fact that nearly 100 hard-working Americans traveled to DC from as far away as Arizona, Michigan, Florida, and New York to come together for a cause was a defining moment in my career. 

The key to success, as CV had alluded to, was organization. He was also right that the key to organization for a movement such as ours was to first stop focusing on the things that divide us. Only then will we fully understand what unites us. 

And so we did just that. We left all of our differences at the door. There was no single race, ethnicity, age, religion, sexual orientation, gender identity, disability, economic status, or political party that defined this community; there was just a spirit of camaraderie as we united around a common cause. Our diversity was forgotten as we embraced the common hurt that we all felt having been betrayed by a system we had been taught to trust. 

CV, while you are right that it is time to put down our differences in favor of a common good, I ask you this: Then what? 

If we do unite, what will you do? What will the media do? 

Will you finally help us reveal a broken system? Will you help us expose those behind the curtains? 

The greed goes deeper than most of us realize. I have watched it my whole life. My biggest weakness is my numbness to it all. Even despite that numbness, every time I see the homeless on the streets of NYC, the veterans who have lost their savings in the stock market, and good people fighting over lies from the fringes of society, I ask myself how we as a society let this all happen. 

The battle against stock market manipulation became personal for me when I couldn't protect the investors in my company, some of whom are family and friends. The underlying greed that had become a systemic part of doing business in the microcap space shocked me, and at the time I wasn’t yet sure how to fight back. I hadn’t found my voice. I was truly overwhelmed by the extent to which any purpose of a collective good had given way to an exploitation of the weak by the strong.

Now we need a revolution. And as in all revolutions, those corrupted by power will fall when the strength of the crowd overwhelms them. 

So to be clear, CV, I can assure you we are doing our best to unify. We are interviewing lobbyists and legislative experts to advise us on our path to change. We have hired the marketing and communications specialists to help formulate our message. But we can only get so far without the help of the media. What we need from you and your colleagues is to continue to give the mission the attention it deserves. It is your viewers, the 99%, who need to know the press will help deliver our message to Congress.

The first step should be the formation of a special Congressional Committee to assess the often deplorable conditions for investors and good companies in the retail marketplace and the insurmountable damage that has been caused due to these conditions. This committee must move its focus from the singular catalytic event of Gamestop and support a broader investigation into the SEC’s ability to enforce the laws as they were meant to be. There are laws on the book that were written for a different century. Technology has left them ambiguous and in need of radical change.

This committee’s mission should include launching an investigation into all the mechanics of short selling in our markets, as well as how quickly short selling can turn into naked shorting. Equally important is the study of the numerous industries such as lending, banking, and legal services that take advantage of entrepreneurial companies and prey on the retail investors that believe in these companies. By allowing these practices to continue, not updating the legacy SEC enforcement apparatus is tantamount to giving up on the American dream.

The investigation must track shorting from the first share location to the final close out of the open trade. It is in the interest of the short players to never close out a trade. Too many loopholes have formed in the rules Congress passed regarding FTDs and RegSHO. While we are paying close attention to the rules the SEC is seeking to place on Payment for Order Flow and Best Execution, the implementation of these rules is months or years away, and has fallen 10 years behind in regards to the underlying issues they were meant to resolve. We would like to see an investigation into the points of failure for the rules that already exist. One of the worst points of failure is the Bernie Madoff exemption called “securities sold, not yet purchased.” With the technology we have today, this rule is one of the most outdated and damaging to the system.

The committee must look into a progressive disciplinary approach. If I get too many parking tickets, eventually it escalates and I can be arrested, but the broker dealer community can consistently break the law, pay the fine, then do it again, without compounding repercussions. Where else in American society does this exemption from escalation exist other than on Wall Street?

Truth be told, the only way to solve these compounding problems immediately would be for the SEC to temporarily ban short selling while Congress investigates, as they did during the financial crisis in 2008. It would be a temporary shock to the system that would expose all the points of systemic failure. A less radical position would be to limit shorting to particular trading activities and rolling back Flash Boy era rules that allow the exploitation of the market making business model as well as exotic pools of anonymous liquidity overseen by a few key people at a few key institutions. It is almost oligarchical in structure, and must be dealt with. If not now, when?

The world is in a state of flux and regular Americans, as they always have, need to step up and demand change from our leaders. We cannot sit by as a generation only to look back when things get worse and say we were quiet. People can be different, but the voice must be united. You are right CV, the path to having our voices be heard is a unified group that has put aside differences for the common good.

And so I ask you, what will you do when we stand united? Will you help us?

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