From: Jeanne [Jeanne@DoctorAtomic.org]
Sent: Thursday, November 13, 2003 2:50 PM
To: rule-comments@sec.gov
Subject: File No. S7-23-03 Regulation SHO

Dear SEC:

I am very concerned about the new proposed SHO ruling.  It virtually
eliminates shorting of BB stocks which is going to allow promoters a field
day.  We already know that a lot of these BB companies are marginal at best
and outright scams at worst.  The short sellers perform a policing action
with regard to these companies by searching out the negatives on
significantly over-valued companies, as well as scams, and publishing
information on bulletin boards.  With no incentive to investigate these
companies and bring negative information to light, they can be pumped with
impunity.  Once the price is sky high, the insiders and scammers will dump
their shares leaving “mom and pop” investor, who believed all the hype,
wondering what happened to their stock and their money.

In summary, I do not see how implementing this rule as it is written is
going to protect the investing public.  You are being deluged with
complaints from some of these BB companies but  if you will look at the
companies who are complaining the loudest, you will see companies that were
hit by shorts because they were marginal companies with excessive market
caps, many had paid stock and money to advertising companies to put out
supposedly unbiased “reports” on the company, and some put out just plain
incorrect and misleading press releases.   Take a look at the Stocklemon
report on GMXX:  http://www.stocklemon.com/articles/08_23_02.html or the one
on EPXR:  http://www.stocklemon.com/articles/06_02_03.html.   Both of these
companies are involved with a group lobbying the SEC to stop naked short
selling abuses.  These types of scams are going to become much more
commonplace, and much more extreme, with the implementation of your new
ruling and there will be no watchdogs like Stocklemon protecting the
investor.

You are also receiving a lot of complaints from small investors who have
lost money in the BB market and are looking for someone to blame.  The short
sellers are the easiest target, particularly when the companies themselves
are encouraging this belief. It is much easier to blame the short sellers
than admit one made a bad investment and the company you thought was going
to make you rich just made a sap out of you.

I sincerely hope you will consider the full implications of the SHO ruling
before adopting such a plan.  You may end up creating far more of a problem
than you could imagine.

Sincerely,
Jeanne Martin