From: Christian King [christianking111@hotmail.com]
Sent: Monday, January 05, 2004 4:51 PM
To: rule-comments@sec.gov
Subject: File No. S7-23-03

Mr. Jonathan G Katz
Securities and Exchange Commission
450 Fifth Street, NW
Washington, DC 20549-0609

Dear Mr. Katz:

I'm writing this letter to express my opposition to the proposed Regulation 
SHO.  I have been active in the stock market during past 10 years both in 
Nasdaq and OTCBB stocks, and I've noticed a prevalence of manipulation and 
overvalued stocks in the OTCBB markets.


The overvalued stocks tend to spend very little money on their
infrastructure or development, and have very little revenue.  Their main
business appears to be printing new stock, manipuluate the price up, and 
then distributing the profits among officers, consultants, and other related 
parties. These stocks are manipulated either by false or exaggerated news 
releases, fax and mail pumps, or using the message boards. During this 
pumping period, a lot of innocent investors take bait and get involved in 
buying the stock, which is tightly controlled by the manipulators. The stock 
price will climb up until the
manipulators decide to dump their stock and take the profits. In the end, 
the
retail investors are left holding the bag.

The short-sellers are working on the other side to counter balance the pump 
mechanisms by identifying the dubious companies, sending out research 
reports, verifying and countering the baseless news releases, and  by 
shorting the stock. During this process, the short-sellers help to keep in 
check the escalating stock price before it gets dumped by the manipulators, 
and make the innocent investors aware of the situation.


A major issue with these dubious bulletin board companies is liquidity.  
Since their shares are tightly controlled, it is difficult to borrow shares, 
leaving naked short selling as the only recourse. By banning this mechanism, 
I believe that we are leaving the over-the-counter market wide open to 
manipulators to dictate the markets, which will result in more investors 
losing money due to a very unbalanced market condition. The only voice and 
activity left in the over-the-counter market to fight the manipulation 
should be preserved, and so this is why I oppose on the regulation SHO.

Christian King

_________________________________________________________________
Make your home warm and cozy this winter with tips from MSN House & Home.  
http://special.msn.com/home/warmhome.armx