Date:    01/31/2000  6:21 PM

Subject: Subject:  File No. S7-24-99 Comments
 
To Whom It May Concern:
     
I am a retired member of the Wall Street Community after spending years in the 
Operation & Compliance (as both a senior member and director of both 
departments) sides of NASD member firms.  This included the oversight of the 
trading activities of numerous branches, registered representatives, and the 
actual Trading Departments of the last two firms I worked for.  As part of these
activities I have spent numerous hours reviewing trading operations and 
compliance as well as immeasurable amounts of contact with both NASD and SEC 
regulatory officials.
     
I am writing this to you regarding the above referenced matter as I feel 
compelled to offer my comments on the subject at hand.
     
It is my persona belief that it is of the utmost importance to maintain, and 
strive for, the concept of "fair markets".  To that extent I believe that it is 
absolutely necessary that you level the playing field for the investing public 
with regard to the trading strategy of short selling. 
     
It is time to create, and enforce, a single set of short-selling rules which 
will apply to specialists, market makers, broker/dealers, and the investing 
public.  As such, I urge you to remove what I believe to be the inequitable and 
discriminatory regulations that restrict the public investor's ability to 
short-sell stocks, while providing preferential treatment only
for the market makers and broker/dealers.
     
While I understand that most novice investors do not understand, or appreciate, 
the critical check-and-balance afforded by the action of short selling in the 
exercise of free markets.  Since the industry itself makes no effort whatsoever 
to educate the public with regard to short selling (this is one of the more 
sophisticated investing strategies that they fail on, much less the proper use 
of margin and/or the trading of options), the public is left to draw the 
erroneous conclusion that it is short sellers who should be blamed when a stock 
goes down in price.  
     
Regrettably, this lack of understanding applies most directly to the new 
generation of "do-it-yourself" investors spawned by the proliferation of access 
to information and gossip enabled by the internet. Many treat the  internet as a
tool to generate "momentum" for stocks as though it is a  football game. Rapid 
runups are easily fabricated for reasons having nothing whatever to do with the 
value of the underlying security.  Furthermore, as I know the SEC actively is 
monitoring "chat rooms" on various internet investing websites this should be 
quite apparent to regulatory officials.  It is extremely disheartening when you 
see this in those rooms dedicated to the trading (loosely defined in some 
occasions) of stocks that trade on the NASDAQ Small Cap and/or OTCBB markets. 
In these cases the promoters, and/or the issuers paid posters who hype the 
stock, use the specter of short sellers to soothe the long stock holders who are
being materially damaged when the insiders in these stocks liquidate their 
shares into the buying of the unsuspecting public.  For example, most OTCBB 
investors on these sites are completely unaware that, in the US, you cannot 
short sell an OTCBB stock, yet this blaming of the short sellers routinely 
occurs.  A better educated public would not be so susceptible to this tactic.
     
However, on the flip side, market makers and broker/dealers have rigged the game
so they can play by a different set of rules than the general public and, to 
date, this ha been protected by the regulatory bodies.  These market makers and 
broker/dealers have done this for no other reason than to line their own 
pockets, under the sham of maintaining "fairness" in the market.  Every day, 
market pros short sell IPO's, short sell on downticks, and short sell without 
regard to the availability of certificates, all things done at the expense of 
individual investors, who do not have the right to do the same.  They do it 
quietly, without regulation, and without a requirement for disclosure; often in 
direct contradiction to the public "recommendations" of analysts
from the very same firms which I believe is another area that the regulatory 
bodies should be aware of (for example look at the recent action in AMZN where 
outlandish price targets were placed on the stock creating a price run right 
before the stock pre-announced a financial warning).  The public will be best 
served by administering the markets so that every investor wishing to place 
their own money in an "at-risk" trade be allowed to do so under the same rules.
     
Therefore, I urge you to eliminate current restrictions on short selling, and 
allow the public to sell short by the same rules as market makers.
     
I thank you for your time and consideration and would be more than happy to 
discuss this with anyone on your staff.
     
Sincerely,
     
J. Bernard LoVerde, Jr.