July 18, 2008
I am writing to urge you to close the current loopholes open under Reg SHO. The regulation must require firms to borrow shares rather than receive just an assurance that shares are available. It must also require that fails be bought in within a certain amount of time. Under the present regulation, failures to deliver can exist for months with no buy-ins occuring. The loopholes have allowed abusive market practices in some situations, depriving firms of the ability to raise capital and injuring shareholders, and should be closed across the market, rather than to just a few specific securities.