From: John O'Brien []
Sent: Monday, February 23, 2004 9:44 PM
Subject: SHO File S7-23-03

Dear Mr. Katz,

Let me begin by expressing my disgust for having to endure a further 5 weeks of trading abuse.

Beginning April 1st 2004, OTC:BB security traders will be required to ask non-member (offshore) dealers to confirm that all short sales they wish to make for themselves or their clients have been borrowed and can be delivered in 3 days. If the answer is "no", the trader is not to accept the short sale. If the answer is "yes", he will accept the order and the trade will take place. This is my understanding of a part of the revised rule SHO. I trade long and usually long term through a dealer in Canada, and I've had problems in the past receiving stock certificates. I'm told the shares aren't readily available although shares appear to trade quite readily on the OTC. It usually takes 3 weeks from the time I place an order for certificates for my broker to locate enough shares and a further week to reregister and deliver them to me. This suggest to me stock I think I have as a credit in my account might not be there, nor readily available when I want to sell.

When it takes my broker 3 weeks to borrow 2,000 shares of a small cap OTC stock that showed up in my account as a credit the day I bought it, how will my broker borrow it in 3 days when I want to sell? I have read in these SHO comments of an instance where one investor continues to wait years to take delivery shares he bought and wants registered in his name. Obviously, if he can't get them and tries to sells his credits, who's going confirm delivery?

If by being a long sale the broker doesn't have to confirm that stock can be borrowed and delivered in 3 days, doesn't this proposed new rule provide a loophole that permits the continued trading of what must be non-existent stock? This can't go on, something must be done immediately to remove all the bogus shares from the system. What is being done in this regard? - I see nothing.

John O'Brien