August 15, 2007
Dear SEC Officials,
I personally want to thank you for your recent revisions to Reg SHO and the removal of the "Grandfather Clause" and other restriction you have taken to eliminate naked short selling abuses. I am also endorsing this regulation of taking away the option MM exemtion for Reg SHO stocks. I think both you, congress, and most of the investing community now know how the options are used by abusive short sellers to manipulate stock prices.
I do have one question though. Why if this was not allowed by the original Reg SHO regulations and you clearly say that you are doing this to clear up a "misunderstanding" regarding the previous regulations then why are you not enforcing the current regulations? Enacting more regulations that will be ingnored seems counter productive.
There are stocks with more put options placed than there are shares outstanding. One such stock is NFI. This seems to be a clear case of trading in unregistered securities since the option MM has not and can not locate the shares to trade or short. While options are not in my area of expertise and I may have some of the terminology incorrect I am sure you know what I am referring to.
Why do you not enforce the current laws including Reg SHO as well as the sale of unregistered securities? With NFI there are more shares shorted, FTD's, etc. than there are shares outstanding.
So in closing I endorse the proposed rule and also would ask the the SEC "take the gloves off" and penalize those who abuse the laws.