From: MV Bunyip [jeff_yates@email.msn.com]
Sent: Thursday, November 27, 2003 11:55 PM
To: rule-comments@sec.gov
Subject: File No. S7-23-03

Dear Sirs,

Regulation SHO.

I have suffered losses due to non-delivery of stock purchased in 2002
through Advanced Clearing , a division of Ameritrade. The reason given for
the non-delivery by Ameritrade's senior compliance attorney was that
open-fails existed and that apparently no market maker of the 19 approached
would accept an order that required delivery of actual stock.  All 19 of
those market makers were still making a market and "appearing" to be selling
stock to the public.  In fact they all knew that what they were selling was
a sham and couldn't be delivered, but they continued to sell what in effect
were counterfeit electronic entries.   If this had been any other service or
product the transaction would have been  called a fraud in any court in
almost any country.  These facts have been confirmed by correspondence from
the Ameritrade's senior compliance attorney and verified by officials from
both NASD and the SEC.

All the facts concerning this were given to both the SEC and NASD as formal
complaints in late 2002 and early 2003.  The NASD opened an Examination No.
E04020595.  The officer in charge of this Examination was Mr.Sean Gatz.
Also involved were Ms. Amy Chambers, Ms Pat Clem.   The information I passed
on to them regarding the details of the issues were quite detailed and
documented.  Despite assurances that I would be informed of any actions, I
understand that the issue was closed and I was never even informed of the
fact.  Subsequent emails from me asking for further information have been
ignored.

The SEC was informed by an on-line complaint which I made and it was
acknowledged by Merrily W. Katz ,      Investor Assistance Specialist  and
given reference numbers  HO00831123  and   HO 384155.  I also spoke on the
telephone to Mr. Brent R. Baker,  Special Counsel, U.S. Securities and
Exchange Commission.  While all were familiar with the issues, nothing was
ever resolved and I was never informed of any outcome.  In fact Mr Baker's
approach was to quiz me as to why I bought stock in the first place and to
offer his opinion that buying stock on the OTCBB was foolish and I should
expect to be defrauded!

I know that some OTCBB stocks are risky and certainly frauds concerning
companies listed there and elsewhere have occurred,  but I expected that the
risk would be limited to the actions and operations of the listed company
itself or its officers or major shareholders.   I did not expect a risk
caused by fraudulent sales of non existent stock from seeming reputable and
apparently officially regulated major brokerages and market makers.  The
"turning a blind eye" to these fraudulent practices is so obvious that it
could easily be assumed to an unbiased observer that the regulators were
being pressured or induced to allow such abuses.  I know that "naked
shorting" of OTCBB stocks is presently "allowed" under the rules but
non-delivery of any stock within the prescribed period. and failure to
observe the affirmative determination  rule are both most definitely an
infringement under securities law and actionable by the regulators.   The
rules on "buy-ins" are being ignored and flaunted by the broker/dealers, and
obviously this is condoned by the regulators.  If these rules, as they
exist, were enforced then there would be no problem.  If the broker dealers
were forced to comply with the delivery rules then they would also
voluntarily comply with the affirmative determination rules or suffer the
financial penalty.

In my opinion, this abuse of naked short selling, and the selling of
undeliverable securities can only be stopped by making the market makers and
the brokers who handle these transactions liable for the consequences.  As a
retail customer my broker insists that I have sufficient funds in margin to
cover all orders to sell short and I am liable to cover that sale on demand
or pay up.   Obviously some broker dealers have client accounts either real
accounts of dummy "house" accounts, that don't have to make good short
positions or ever be called to deliver the stock.  If any broker dealer
sells stock that can't be delivered they should be prohibited from trading
in any security, indefinitely until the deficiency is made good or if they
fail their license to trade should be revoked.  To knowingly sell anything
that doesn't exist or cannot be delivered is a felony, except it seems for
members of NASD and firms regulated by the SEC.  If the DTC is so
inefficient that it cannot determine where the short sales are coming from
then it should be scrapped.  Please look at the Australian CHESS system if
you want to see how a proper depository, settlement system should be
operated.  While not perfect, when compared with CHESS the DTC is either
just a bad joke or a institutionalized fraud.

Jeffrey Yates.....