From: vincent_g []
Sent: Monday, March 22, 2004 11:14 AM
Subject: S7-23-03 - Shorting / Naked Shorting

RE: S7-23-03

I have looked into the problems and claims that Naked Shorting needs to be addressed.

There are those that claim shorting is needed for market correction. So the question becomes do we need market correction with shorting as the tool to effect it on those stocks where shorting is not allowed.

I feel this is a all or nothing situation where as you either allow everyone to effect a short or no one is allowed to effect a short of any kind.

I have read some of the comments from the DTC, Market Makers and others. The basic problem is the question of Naked Shorting and this is where the real problem exists.

I do not think the answer is solely more rules to keep in check abuses in Naked Shorting.

The answer to this problem is transparency. Rules must be adopted to disclose current shorting of any kind on Small Cap and OTCBB stocks.

If rules are not created to disclose this information then any other rule put into effect will be ineffective.

A system much like the ASX of the Australian stock exchange which keeps track of all short positions must be adopted and put into place.

Without disclosure of short positions on Small Cap and Over the Counter stocks it becomes near impossible to prove a short exists and this presents a major burden on those companies that feel they are effected by such a problem.

Worse it allow unscrupulous corporate officials to mislead it's shareholders into believing that such a short exists and due to the current systems this can not be disputed.

There is no solution to this problem other than transparency to once and for all put this claim to rest.

The SEC can not police the Market Makers, Brokers and so on.

With disclosure rules the shareholders and other that are effected by improper shorting can be relied on to keep things in order.

This passes the cost over to the Exchanges and the DTC where through present technology it can do this job without excessive cost or man power.

In closing I ask this question: How can you catch someone breaking a rule if no proof exists that such a rule was broken?

Vincent Gabriele