October 7, 2005

Subject: Re File No. 265-23 (requests for comments)

To Whom It May Concern:

I am writing this in response to the SEC's request for comments pertaining to File No. 265-23 (smaller businesses), and wish to record my utter disgust with the SEC for its failure to maintain even a semblance of fairness in its enforcement practices, with consequences unjustly detrimental to many smaller (and some larger) companies and to those invested long in those companies. Following is a brief list of specific grievances.

1) The SEC is miserably failing to enforce existing securities law requiring the timely settling of stocks sold naked short. It is this failure that has resulted in the scandalous FTD problem currently plaguing a sizable segment of our markets. The Reg. SHO list merely highlights this problem, but does little or nothing to solve it. Any company appearing on that list for longer than thirteen days has already been egregiously victimized, and the illegalities resulting in its continuing appearance on the list should be thoroughly investigated and punished.

2) The SEC has blithely grandfathered all FTDs incurred prior to the issuance of the SHO list, giving a free pass to those market entities whose violations of law resulted in the FTD problem in the first place.

3) The SEC has refused to publish the number of fails accruing to specific companies, making it virtually impossible for investors in those companies to access the dimension of the problem or their own responses to it. The SEC's rationale for this has been that if it releases such information, that information might be used by long investors to cause an improper "short squeeze." For years the SEC did nothing to prevent the illegal downward manipulation of targeted stocks via massive naked short selling; now, when the shoe is on the other foot and the manipulators might themselves be forced to eat the market consequences of their own outlawry, the SEC declares such resulting short squeezes "improper" and issues its pernicious exemption. The exemption itself raises an interesting question: Can the SEC determine which existing security law it will enforce, and which ignore? Apparently it can and does, and that observation only undermines any pretense that the Agency is maintaining an honest marketplace.

4) If the SEC seriously wants a cleaner, fairer marketplace--and I doubt that it does--then I suggest the following:

A. Stop rationalizing and facilitating the market crimes already alluded to above.

B. Compel timely buy-ins by brokers of all FTDs in strict compliance with existing law.

C. Publish daily figures on short sales, instead of only once per month.

D. Take action to curtail the tape striping which occurs with appalling regularity.

E. Inform the CEOs of companies which have been the subject of informal SEC inquiries when those inquiries have been concluded without further action, allowing the dissemination of that information. (The present arrangement leaves companies hanging in limbo for months, sometimes years, without even a yes or no answer pertaining to the status of an inquiry--and this policy unfairly favors those short the stock.)

F. Monitor more carefully the hedge funds which increasingly dominate our markets. Many of the illegal shenanigans now ongoing involve hedge funds operating in collusion with financial "journalists," stock "analysts," and rouge law firms specializing in bogus lawsuits. Working together, they can and often do contrive illegally to take down the market value of a targeted stock, criminally enriching themselves at the expense of others.

These are serious abuses which the SEC, if it truly wants a cleaner and fairer marketplace, must find the means and the will to combat and correct. I will conclude by saying that I am not hopeful, as the SEC has made its present biases only too clear. I wonder if anyone there is reading this letter with other than a snort or a laugh, and doubt if it will make a whit of difference in the grand scheme of things. I would love, simply love, to be proven wrong in my doubts. The ball is in your court now.

Sincerely, Michael V. Williams (retail investor in a small company)

, via email to rule-comments@sec.gov with the file number in the subject line