Letters to the Editor: Rampant Day-Trading Needs Some Reining In
Your Sept. 17 article "SEC Sweep of 45 Day-Trading Firms" highlights the unhealthy and irresponsible speculation taking place in the stock market. In light of the day-trading information already possessed by securities industry regulators, it is time this activity was closely regulated. Unless day trading is checked, this widespread speculative fever may well lead to social, economic and financial disasters.</br></br>The Federal Reserve should prohibit the extension of margin loans to day traders and limit commercial banks' lending to day-trading brokerage firms. Special higher capital requirements on day-trading brokerage firms should be imposed by the SEC and the NASD. Regulators should mandate that the funds devoted to day trading by any day trader should be restricted by that individual's overall net financial resources. Finally, regulators ought to limit the number of trades by an individual day trader and his brokerage firm on any given day. Moreover, legislation should be passed making it a criminal offense to post information on the Web that is unsubstantiated and unverified.</br></br>It is irresponsible for regulators not to have begun imposing restrictions on day-trading individuals and firms. They are the new "boiler shops" of this seven-to-eight-year bull market.</br></br>E. Magnus Oppenheim</br></br>President