SEC Concept Release:
The following information was submitted by 36 individuals.
Subject: Short Sales (Release No. 34-42037; File No. S7-24-99)
Comments: I urge you to consider regulating short sales by OTCBB Market Makers.
At present, OTCBB Market Makers have no reporting requirements
whatsoever concerning short sales. Short selling serves many
useful purposes in keeping our financial markets in check. However, if
it is unregulated it can be subject to massive abuse.
I believe that the values of all OTCBB companies are controlled by the
market makers. Because the present rules allow them to
naked short a security with no reporting requirement the market makers
can continue to short a security indefinitely, essentially
betting that they can outlast private investors. If the market maker
succeeds in "beating the will" out of private investors, the market
maker never has to cover its short position.
I am an active investor and I have seen countless abuses by the market
makers. Activities which should be criminal are
commonplace. I have seen companies report block-buster earnings and
news only to have its share price decline. I have
reviewed numerous time and sales reports and have seen day after day
of investors buying shares of a security and the price of
the security drop lower and lower.
There is no justifiable reason to allow OTCBB market makers to
continue to short sell without regulation. There should be
reporting requirements as to how many shares each market maker is
short and limits should be set so that a market maker
cannot continue to short millions upon millions of naked shares.
Please keep me informed as to the status of any proposed regulations.