July 9, 2008
Dear Chairman Cox,
I appreciate the opportunity to provide comments on the Commissions proposed amendments to Regulation SHO. I am a shareholder of a company (CMKX) that has been the victim of Naked Shorting. I have always believed that the SEC was there to safeguard investors and would not allow Naked Shorting to take place. Needless to say, as I have learned more about the stock market, I have lost faith in the SEC’s ability to safeguard the investors in the stock market. I have learned that Naked Shorting is common in the marketplace and happens all the time.
I welcome and support the Commissions proposed elimination of Regulation SHOs options market maker exception and encourage the Commission to complete the administrative steps to accomplish the change as quickly as possible. The options market maker exception has been the tool of manipulation used to cause fraudulent behavior in the market. I was encouraged with the Commissions action to strengthen Regulation SHO through the elimination of Regulation SHO’s grandfather provision. However, while the elimination of the options market maker exception and the grandfather provision will significantly strengthen Regulation SHO, these changes alone will not adequately solve the problem that results in continued naked short selling and failures-to-deliver. I would like to see the Commission (1) impose in Regulation SHO a requirement of a firm location of shares to be borrowed so that a short sale cannot be executed, and (2) enable transparency by requiring the timely disclosure of the volume of failures-to deliver shares of companies on the Regulation SHO threshold list. The Commission should issue and promptly complete a notice of proposed rulemaking to implement these two critical components of effective Regulation SHO reform.