Subject: restrictions on manipulation and naked short selling S7-19-07

July 16, 2008

Mr. Christopher Cox
Chairman, Securities and Exchange Commission
Washington, DC

Dear Mr. Cox,

In addition to being a research physician, I am an individual investor and I am active in the equity markets, watching and participating every day.

I feel the urgent need to comment on the SEC's press release and emergency rule regarding stock manipulation and naked short selling entitled:


and published on-line at:

First, I wish to thank and commend the SEC for finally bringing thoughtful attention to this serious and very widespread injustice.

However, the action described falls FAR SHORT of what is required. This is because the order is limited in scope to certain equity issues and also limited to a brief period of time. This problem is pervasive, longstanding, and it threatens the very integrity of our free markets. I am asking you, as a citizen, to please straighten this out - not just for the biggest financial firms and not just during July 2008, but for ALL publicly traded firms and PERMANENTLY.

Honest and proper short selling (where the shares must be borrowed first and there is no "failure to deliver") is a positive and healthy part of "price-finding" in a well-functioning market. However, NAKED short selling, on the large scale that it exists, is absolutely nothing other than counterfeiting stock; it increases supply artificially and consequently, and intentionally, depresses share price below the level that would occur with the normal supply of stock available to the market participants. It affects many stocks, especially issues from junior mining companies and thinly traded new issues from innovative companies who are dependent on the fair functioning of the equity markets for their very survival. This is true regardless of whether there is spreading of false rumor with the intent to suppress price, although as the Rule notes, this practice (which has been openly acknowledged by none other than Jim Cramer) usually accompanies the naked short selling in a coordinated deliberate manipulation scheme.

Here is a resource from James Puplava's - Mr. Puplava is a highly respected financial expert, author, and advisor based in San Diego. His group has been very interested in, and has covered in great detail, how false rumor and the naked short selling process are affecting junior mining companies in particular. (they do a weekly extended podcast and have had many knowledgable guests, including industry vererans and attorneys working on securities manipulation cases involving naked short selling). I strongly encourage you to take advantage of these resources - and to contact Mr. Puplava if you would like his assistance.

Please take firmer and wider and more long-lasting action by adopting the four simple rules described on the link above:

The FTD problem can be solved by four rules ("GOLD"). All are simple, easy to implement, and fair:

G: eliminate the Grandfather provision of Regulation SHO
O: eliminate the Options market maker exception
L: require those who sell short to first Locate and actually borrow bona fide shares
D: require full and prompt Disclosure of FTDs by broker-dealer and by company

Thank you very much for your time and attention. I am grateful that SEC is paying attention to this and I do sincerely hope that the present crisis in the financial markets becomes a catalyst to curb stock manipulation by rumor and naked short selling practice generally - it is extremely important for our capital markets' function, stability, and reputation.

I look forward to your detailed reply.

Sincerely yours,

William Reed, MD

cc: California Senator Barbara Boxer (by direct web message)
California Representative Barbara Lee (by direct web message)
Mr. James Puplava, (by direct web message)