January 15, 2007
The problem with Reg SHO is quite simple. If you continue to let traders sell shares without borrowing and delivering them (ie "failed to deliver" or "naked short selling") you are allowing shares of a company to be manufactured from thin air. You are permitting counterfeiting. If a company officer sold shares that did not exist, you would put him in jail as a fraud or counterfeiter. But the SEC has chosen to regulate fraudulent activity. This is a moral outrage. How do you allow this activity to continue to be legally sanctioned? Should banks be allowed to print fake $100 bills?
The simple answer is that we have the means to end this practice. It should be ended. The practice of borrowing shares and shorting them already creates two potential voting shareholders where there should only be one. The FTDs just magnifies this problem.
Please put a stop to this silly practice that only exists to allow Wall Street professionals to profit at the expense of the companies who seek capital from the public.
Respectfully,
William Deaton
Norman, Oklahoma