March 31, 2008
Dear Mr. Cox,
It is very important that the Naked Shorting anti-fraud rule S7-08-08 is made permanent
Stock shares in electronic form held in brokerage accounts as well as stock certificates are a form of legal tender and under security laws of 1934 are illegal to counterfeit. Stringent penalties such as those applied to criminals who counterfeit MONEY should also be imposed to those who counterfeit stock and stock certificates. Penalties should include compensation to shareholders under rico laws , heavy fines, disgorgement,and Jail time should be applicable to those involved.
The rules for Legal shorting should be enforced and only stocks that are considered marginable securities via the Federal Reserve board should be shorted. This eliminates virtually all micro-cap penny stocks on the OTC and bulletin board exchanges as these are the most abused by Illegal Naked Shorting. Brokerages should never be allowed to short these penny stocks even if they hold them in house accounts as they are NON marginable securities.
In the past shorting a stock has always been a very risky trade and mostly done by professionals. But, by not enforcing existing rules and allowing Naked shorting through the market makers exemption clause lead to massive fraud in the marketplace. When you minimize risk you maximize the potential of abuses and in this case FRAUD
Again I ask the SEC to make this Naked Shorting Anti-Fraud rule S7-08-08 a permanent rule
Sincerely,
Charles McNeely