March 28, 2008
Your proposal states that "scienter" would have to be proven before any conviction for abusive naked short selling could stand.
That implies costly and time consuming court decisions. And it allows for a loophole for manipulators to escape through unless a costly and time consuming investigation and prosecution occurs.
Please set a fine relative to share price for all FTD's, per day that they remain. Then you will see FTD's decline. Fine payable to purchaser,as they are directly harmed by FTD.
Also, your proposal states
"Thus, at the time of submitting an order to sell short, market makers that have an exception from the locate requirement of Regulation SHO may know that they may not be able to deliver securities on the date delivery is due."
Do away with the market maker exception, please. And slap heavy fines on all naked short sales...i.e. a fine of 15% share price, per day of FTD payable to purchaser, as they are directly harmed by FTD.
All FTD's harm ALL long investors as upward pressure upon the markets is differed, and in many cases eliminated and replaced with substitute "phantom shares" which exist in accounts outside of legitimate corporate share structures.
As the Reg SHO threshold list demonstrates, FTD's may exist indefinately. This is wrong for the SEC to allow to any degree. It blatently is contradictory to the Spirit of Honest and Fair markets intended by the Securities Act of 1934.
The markets are diluted by every FTD. Our economy is hurt by every FTD.
The SEC must stop protecting those who are responsible for FTDs with the lack of penalty, with loopholes, and with the lack of enforcement of the Spirit of the Securities Act.
No matter how much "juice" the offenders may have.