From: Wayne Jr [wayne_jr@pacbell.net]
Sent: Tuesday, November 25, 2003 12:05 AM
To: rule-comments@sec.gov
Subject: File No. S7-23-03

Attention: Securities and Exchange Commission.
RE:  Proposed SHO rules.

    I thought the SEC was supposed to try to regulate the financial markets 
in a fair manner.  But it seems that I am naive.

    As a stock investor I have learned that whether any stock I own may or 
may not be able to be lent out to a short seller depends on the kind of 
account I have and also on the particular policies of each individual 
broker and/or clearing house.

    I think that the short selling process is an "anti free market" process.  
Why do I say that?  Because apparently the owner of the stock has no say in 
whether his stock is sold short or not, at least not when the stock is held 
by a broker or clearing house rather than in the investor's physical possession.  
It's not like I put some stock that I own on a 'short sale market' and offered 
it to short sellers for some compensation.  The general investor has no idea 
of whether any stock that he owns may have been lent out to a short seller or 
not.  Is that right or fair?  No!

    My recommendation is that the rules for the short sale market be totally 
reworked so that owners of stock are somehow compensated for their stock being 
'borrowed'.  It's not fair that my stock can be borrowed and I get nothing 
in return.  

    Such a rule would also make it harder for people to sell stock short and 
that might be good for investors.  In particular, it is dreadful when powerful 
and greedy short sellers are able to drive down the prices of securities to 
the detriment of many small stock owners.

    Here's an idea: if brokers and clearing houses were required to have 
"electronic vaults" figuratively speaking, in which they would put our stock 
and not remove it without our permission or due to margin calls and the like, 
then if would be a lot harder for short sellers to try to manipulate the market.  
If we wanted to allow our stock to be sold short then we would give our 
permission to the broker or clearing house to move that stock into a short 
seller market vault where we could bid on what price our stock was sold short 
at.  Another BIG advantage of a process of this type is that short selling 
volume would be general market information and not known just to the specialists 
and such, and people would be able to instantly see if large short positions 
were being accumulated for a particular stock.  The way the markets run now 
investors are not allowed to have very much information as to how the trading 
is going.  Why not let the trading process become transparent and even out 
the playing field?

    As far as naked short selling goes, isn't this just the opposite side of 
buying stock without taking possession or paying for it and hoping to 'sell' 
for a profit, sort of like getting something for nothing?  It sounds like a 
perpetual motion machine to me.

    Any kind of scheme that allows people to get something for nothing is 
going to cause a lot of problems in the long run because the 'something' that 
is being received is coming out of somebody's pockets and that person is not 
be fairly compensated.

Sincerely,
Wayne P. Lill Jr