August 19, 2008
RE: Naked short selling
Dear SEC,
Please alter SEC regulations to end once and for all the practice of naked short selling. Specifically, please eliminate -- for all securities not just a few -- the provision that allows short selling to occur if the following exists:
"the equivalent of having reasonable grounds to believe that the security can be borrowed"
I personally find this requirement in Rule 203(b)(1) of Regulation SHO -- with its nebulously weak wording -- especially: "equivalent", " reasonable" "believe" -- to be an open invitation for abuse.
Selling something you do not own constitutes fraud, larceny and theft among other infractions of law. A perpetrator's "belief" that they could hypothetically borrow goods they had stolen and sold -- after the fact -- would be laughed out as ludicrous in any Court of this land.
The purpose of American capital markets is to allow the raising of funds for investment to further a way of life that began with the Declaration Of Independence centuries ago.
The SEC, by allowing naked short selling, has:
(1) allowed grave harm to American capitalism and
(2) also been lax in its purpose of individual investor protection by furthering the practice of 'short raids" utilizing naked short selling against individual stocks -- to the benefit of a few sophisticated speculators and the detriment of millions of individual investors
Please immediately end the practice of naked short selling in American markets and take steps to penalize those who try to would utilize foreign markets for naked short selling of securities listed in the U.S.
Thank you.