July 18, 2008
Re: Comments on Proposed Amendments to Regulation SHO File No. S7-19-07
I am a shareholder of a company that has been negatively impacted by illegal short selling of stock on a regular basis.
I support the Commission's proposed elimination of Regulations SHO option market maker exception and encourage the Commission to complete the administrative steps to accomplish this change as quickly as possible. The options market marker exception has been a well known tool of manipulation and must be eliminated promptly to ensure a level playing field for public companies and shareholders.
I support the Commission's proposal to strengthen Regulation SHO through elimination of Regulations SHO's grandfather provision. I appreciate Chairman Cox's recent efforts to address abuses of naked short selling practices and the need to eliminate this manipulative practice.
I am concerned,however,that these abuses continue. NAKED short selling is illegal. Equity investors are being harmed from mismarked sales as "long" when they are NAKED short which counterfeits shares - an illegal activity.
I am also concerned that Reg. SHO fails to require broker dealers to assure delivery by borrowing the shorted shares. Accepting the assurance of hedge funds is useless in preventing illegal naked short selling. SHO should require fails to deliver to be bought in on the fail date plus one day.
Reg. SHO is rendered ineffective if foreign exchanges can be used to gain advantage in violation of SHO.
Naked short selling is a violation of present regulations. Exempting primary dealers from SHO regulations is unfair to public investors and should not be allowed to continue.
David R. Major