July 17, 2008
Your proposed 30 day rule pertaining only to certain financial stocks that "no person may effect a short sale in these securities using the means or instrumentalities of interstate commerce unless such person or its agent has borrowed or arranged to borrow the security or otherwise has the security available to borrow in its inventory prior to effecting such short sale and delivers the security on settlement date" is a good start, but why limit the rule to 30 days and why regulate the "naked" short selling only to certain stocks? This illegal practice is spread across the whole spectrum of publicly traded stocks, and results in serious disruption of more than just the financial sector. It is a very good idea to promulgate a uniform 'locate' rule applicable to all equity securities, wherever they are traded. This is an absolute necessity if the SEC wants to minimize the egregious practice of "naked" short selling. I urge you to make a permanent change to the rule to encompass the entire stock market.
The SEC, in proposed Regulation SHO, has the opportunity to take the lead in correcting this problem, if the SEC will publish an effective regulation that is clear cut, with no "wiggle room" for those who would use loopholes and gray areas to continue their abusive activities, and with sufficient penalties against violators to deter wrongdoing.
The SEC has the opportunity to do the right thing and put an end to these abusive and destructive practices. Please do it now, so that it won't have to be done again later after still more companies have been destroyed and still more investor wealth has been stolen by market manipulators and their enabling industry partners.