April 2, 2008
Subject: File Number S7-08-08
April 2, 2008
Why do you need comments about naked short selling and a proposed anti-fraud rule you propose to implement? These activities are already in violation of established law. Fraud is fraud and NSS is manipulation through fraudulent activities.
This appears to be just another extension of time for the miscreants to avoid charges for activities they have engaged in.
RegSHO identified to the world that there was a problem with trade settlements. When more shares were traded in a single day than the float could possible support, those of us who owned these shares and watched the price per share erode away were angry. When day after day the same companies are listed it makes sense to me that somebody is not doing their job. I believe it is currently estimated that there is about 6 billion dollars a day of failure to deliver trades.
When I read that the SROs reporting procedures are not uniform and not easily searched by SEC investigators I wonder about the effectiveness of your organization. I have read about what I believe is criminal activity that the SEC has uncovered and the perpetrators are made to promise not to do it anymore and dont even have to admit to wrong doing. Then they are given a slap on the wrist rather than a very serious financial hit in their wallets. The penalty should be something on the order of $2.00 to $5.00 per share per incidence which would certainly cause them to pause before committing to an activity that if discovered will hurt. Collected funds should be distributed to the investors and could be coordinated with an unbiased observer, possibly the transfer agent.
Then there is the opinion, held by many, that confession is good for the soul.
Your removal of the uptick rule for shorting stocks obviously favored those who short stocks for profit. It does promote volatility and offers an easy avenue for conspirators to make bear raids. There is nothing wrong with legally shorting stocks. The market place is supposed to be a flat system without favoritism anywhere. Where we are failing is when investors, often hedge funds, use tactics that manipulate information in a false manner. They have been known to post false information on stock message boards, send phony fax messages, and gang together to bring the share price down. This is a conspiracy which becomes stock manipulation and is a fraudulent activity. In this regard we private investors can not short stocks in the marketplace where many new startup companies obtain their financing. As long as this condition exists, I believe there should not be permitted any short sales where fledgling companies are traded. These companies desperately need to be protected during their early days and in return for this protection they should be required to post regular quarterly financial statements and progress statements that are not protected by the forward looking statements and sworn to be true by the CEO, CFO, and the Corporate Attorney.