Subject: File No. 4-590
From: L.A. T.C.
Affiliation: Individual Investor

October 21, 2009

I have a concern regarding the potential abuse of short selling transactions traded through the dark pools.

Dark pools started to proliferate just before the beginning of the 2008 bear market. The essence of the dark pools is that institutional investors have been able to trade anonymously in them. Moreover, when I read the web site of the SEC ( The following is stated on point I, D:

D. Are short sales legal?
Although the vast majority of short sales are legal, abusive short sale practices are illegal. For example, it is prohibited for any person to engage in a series of transactions in order to create actual or apparent active trading in a security or to depress the price of a security for the purpose of inducing the purchase or sale of the security by others. Thus, short sales effected to manipulate the price of a stock are prohibited.

Based on the above, it seems to me that it is impossible to monitor if a person is engaged in a series of transactions when those transactions are done anonymously using the so called dark pools. How are retail investors assured that the system has not been abused by a person or institution conducting anonymously short selling in these dark pools?

It would be greatly appreciated if the SEC investigates the short selling activity conducted in the dark pools, especially the activity during 2008. Moreover, short selling should be regulated in dark pools in order to prevent abusive short sale practices.

Best regards,