From: John Polanskey [johnpolanskey@HASBARCO.ORG]
Sent: December 19, 2003
Subject: File No. S7-23-03

I strongly support the immediate full implementation of proposed Regulation SHO. Our government allowing unlimited, unreported, often-manipulative “naked” short selling of equity securities is the same as if it allowed the counterfeiting of US dollars to ensure an “orderly” currency market. Where else can you get money for selling something you not only don’t own, but which doesn’t exist, because it hasn’t even been issued or created by the subject company? Most “naked” targets are small companies in need of capital, but they never see the proceeds from the “naked” sale of their stock to unsuspecting investors. Even worse, unethical “naked” short sellers have created new ways to defraud investors, i.e., CD “death spiral financing”. After “naked” shorting multiples of a company’s authorized shares, many “naked” short sellers find it easier, and much more lucrative, to kill a company so they never have to cover. It is likely that most comments opposing this change are from those, ethical or not, who have benefited most by the status quo, not the thousands of small investors who have been defrauded through this practice. Current regs allow the selling of an unlimited number of “naked” shares, with the sales never needing to be reported or covered. It is not surprising that the SEC is beginning to uncover persons who have acted illegally when it has been made so easy for them. People and groups who take money from small investors through “naked” selling are international, perhaps criminal organizations and terrorist groups are being funded this way. They can make an unlimited amount of money with very little cost because they can constantly sell and never buy. Finally, if one assumes that some “naked” short selling is required to maintain an orderly, liquid market, that doesn’t explain why it never has to be reported or covered and is limitless. Requiring short sellers to locate securities to borrow before selling gives companies back the control of when, and how many, shares are issued and floating among investors. I have purchased stock in several small companies that I now believe was sold “naked” and where the sellers have failed to deliver the securities for over 3 years, while flooding the market with billions of “naked” shares, resulting in crashing per share prices. I’m happy to share my personal experiences as a victim of “naked” short selling with SEC officials or Congress in support of Regulation SHO. Thank you for this opportunity to comment and for your consideration.

John P