"[9] "In 2004, the Commission initiated a year-long pilot that eliminated short sale price test restrictions from approximately one-third of the largest stocks.
[11] The SEC concluded from the study cited above: "The general consensus from these analyses and the roundtable was that the Commission should remove price test restrictions because they modestly reduce liquidity and do not appear necessary to prevent manipulation.
"[8] In addition, the Commission stated its belief that the amendments would bring increased uniformity to short sale regulation, level the playing field for market participants, and remove an opportunity for regulatory arbitrage.
[5][8] Commenting on the scrapping of the uptick rule, The Economist reported that "short-sellers argue [it] was largely symbolic, and it remains in place at only a few of the world's big stock exchanges.
[14] On July 3, 2008 Wachtell, Lipton, Rosen & Katz, an adviser on mergers and acquisitions, said short-selling was at record levels and asked the SEC to take urgent action and reinstate the 70-year-old uptick rule.
[18] On October 6, 2008, Erik Sirri, director of the Securities and Exchange Commission's Division of Trading and Markets, said that the SEC is considering bringing back the uptick rule, stating, "It's something we have talked about and it may be something that we in fact do.
"[19] On October 17, 2008, the New York Stock Exchange reported a survey with 85% of its members being in favor of reinstating the uptick rule with the dominant reason to "help instill market confidence".
[20] On November 18, 2008, The Wall Street Journal published an opinion editorial by Robert Pozen and Yaneer Bar-Yam describing an analysis of the difference between regulated and unregulated stocks during the SEC pilot program.
By using an analysis they claimed to be more comprehensive than the SEC's original study, they showed that unregulated stocks have lower returns, with a difference that is both statistically and economically significant.
I sincerely hope that the commission, in the year ahead, continues to reassess this issue in light of the extraordinary market events of the last several months, with a view to implementing a modernized version of the uptick rule.
"[23] On February 25, 2009, Chairman of the Federal Reserve, Ben Bernanke in testimony before the House Financial Services Committee stated he favored the SEC examining restoring the uptick-rule.
[24] On March 10, 2009, the SEC and Congressman Barney Frank (D-MA), Chairman of the Financial Services Committee announced plans to restore the uptick rule.
[25][26] A paper from the New England Complex Systems Institute claims that they have found evidence that suggests the 2008 financial crisis was triggered by a "Bear Raid" market manipulation by short sellers against Citigroup late in 2007.
[27] This paper has an addendum based on additional data provided by the NYSE for short sells during the time period that in fact the uptick rule would not have prevented what occurred.
A more detailed inquiry into the means by which such selling could have been done is beyond the current work.On April 8, 2009, the SEC voted to seek public comment on the following proposals to restore a form of the uptick rule.