From: Alexandria DonAngelo [Alexandria.DonAngelo@kswny.com]
Sent: Monday, January 05, 2004 7:44 PM
To: rule-comments@sec.gov
Subject: File S7-23-03

Comments of John M. O’Quinn, Esq. on Proposed Regulation SHO

January 5, 2004

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

Re:   Proposed Regulation SHO

Dear Mr. Katz:

Over the last couple of years, I have been representing people who have been 
devastated by predatory and illegal short-selling. This illegal securities 
misconduct has been cleverly concealed by the perpetrators for years.  Recently, 
the S.E.C. has acknowledged this reoccurring illegal conduct and taken some action.  
While those actions are a step in the right direction, they do not go far enough 
to protect vulnerable corporations and their legitimate stockholders from this 
pernicious activity.  If, as a nation of laws, we do not act now and forcefully 
to stop this pernicious illegality and to protect such corporations and stockholders 
from it, our stock markets will be viewed by investors as corrupt and faith will 
be lost in our markets, both here and abroad. Naked short-selling destroys the 
value of the small innovative companies that have historically been the powerhouse 
of our American economy.

      When we speak of “naked” shorting, we are referring the practice of selling 
shares short without fulfilling the obligation to deliver the shares to the purchaser.  
Opportunistic traders have learned how to take advantage of an overworked regulatory 
system to manipulate stock prices and profit from virtually riskless trading strategies.

      These current recommendations are not strong enough to give the protection 
and relief to the hundreds of companies that have been, and continue to be, 
victimized by unscrupulous naked-shorting.  Unless the system assures the public 
that every short position taken is backed by actual shares of the issuer there 
will be no effective restraint imposed upon these manipulators.  We depend on the 
S.E.C. to protect these companies and ensure the integrity of the market. The time 
has come for true reform in this area.
 

Sincerely, 

 

John M. O’Quinn, Esq.
O’Quinn, Laminack & Pirtle
Houston, Texas