From: rhtroy@troylegal.com
Sent: Friday, January 02, 2004 6:10 PM
To: rule-comments@sec.gov
Cc: chairmanoffice@sec.gov

                    Richard H. Troy, Esq.
                    1177 High Ridge Road
                Stamford, Connecticut 06905
							
		                             January 2, 2004
Mr. Jonathan G. Katz, Secretary
Securities and Exchange Commission
450 Fifth Street
Washington, D.C. 20549-0609   
		
              Re:     File No. S7-23-03 - Short Sales	
	
Dear Mr. Katz:

	By letter of December 29, 1999 (copy attached) it 
was noted that short sale abuses were depriving individual 
investors of essential investor protection and were making 
it more expensive for issuers to raise capital. The letter 
proposed that “all short sales be instantly reported on a 
universal Internet reporting system which simultaneously 
records the net long position of each account participating 
in a short sale and flags naked shorting, down-tick shorting 
and other bear raid shorting.” Regulatory incorporation of 
this approach would have the benefits listed below.

	1.	Naked Shorting.  Immediate transparent 
Internet reporting of properly “marked” transactions would 
facilitate SEC and SRO enforcement and would discourage 
abuse.

	2.	“Pricing Efficiency.”   To the extent that 
the “pricing efficiency” rationalization (n.1) retains its 
current cachet, immediate transparent Internet reporting of 
each transaction properly marked as “long,” “short” 
or “short exempt” in accordance with proposed Rule 201 would 
confer a material benefit: it would facilitate accurate 
analysis of whether short selling has moderated a market 
rise, aggravated a market decline or otherwise affected 
pricing.

	3.	The Current Disenfranchisement Scandal.  
Under current practice, each DTC participant instructs ADP 
to issue voting instruction forms equal in number to the 
aggregate of long and short positions within that 
participant’s accounts – an aggregate number which 
substantially exceeds the number of shares actually held by 
such DTC participant. Over-voting does not occur because 
votes in excess of each DTC participant’s actual holdings 
are not counted. Thus, early voters succeed in having their 
votes counted, while later voters risk disenfranchisement. 
Immediate reporting of properly marked transactions would 
properly allocate voting rights and put an end to this 
current Skandal and its disenfranchising effects.(n.2) 

			Respectfully submitted,	
			Richard H. Troy 		
					

Footnotes:
1.  The grinding rationalism of the West indulges artificial 
constructs to create, deny or otherwise substitute for 
reality – often in an attempt to benefit or burden an 
interest group. The letter of December 29, 1999 noted the 
following. Short selling multiplies shares and depreciates 
their value. Multiplication of $20 bills is not allowed. 
Markets in options, futures and derivatives provide ample 
efficient pricing sentiment. Short selling contributes 
directly to inefficient pricing by artificially inflating 
the number of shares available. The artificially 
depressing/stimulating effects of short selling aggravate 
market moves, harming stockholders. Would you permit third 
parties to sell your house short? Experience under the 18th 
Amendment counsels regulation rather than abolition of 
powerfully supported popular activity. The “efficient 
pricing” rationalization should not weigh heavily in the 
balance of the current regulatory proposals.  

2.  Other commentators are studying and/or addressing: 
allocation of voting rights among borrowers and lenders of 
stock; documentation of the consent of stock lenders to 
losing their voting rights; and the effects of improper 
allocation on annual voting, merger voting, tender offers 
and other special situations.



Attachment may be found at http://www.sec.gov/rules/concept/s72499/troy1.htm