Subject: File No. 4-500
From: Donald Scott

May 6, 2005

Mr Katz/Ms Sweeney,

I am writing to alert you of a very important rule change that is needed to improve the marketplace of stocks trading the OTC market. I believe the time has come for regulators to turn on the lights and protect investors from the menace of hidden short selling in the OTC market.

There is a crisis facing the OTC market today in the lack of short sale position reporting and disclosure for OTC issues. This lack of transparency regarding short selling in the OTC market allows fraudulent acts to go undiscovered and manipulative short sellers to hide.

I believe regulators should fix the problem. Small issuers traded on the Pink Sheets and the OTCBB deserve the same transparency and regulatory oversight of short selling as those listed on Exchanges or NASDAQ.

I certainly understand that investing in these "upstart" companies involves an increased level of risk in today's environment. However, I do believe that these publicly traded companies are at a distinct disadvantage in today's investment environment due to lack of federal regulatory oversight afforded companies listed on the NASDAQ or Dow Exchanges.

I am asking that you please consider an amend to NASD Rule 3360 NASD requiring broker dealers to maintain a record of total "short" positions in all customer and proprietary firm accounts in all publicly traded equity securities as well as report this information to the NASD for public dissemination of the short positions by security. The SEC's action is urgently needed to prevent fraudulent acts, expose market manipulation, promote fair principles of trade and protect investors.

Thank you for your consideration.

Donald Scott