From: Christopher Halligan [challigan2001@yahoo.com]
Sent: Wednesday, November 19, 2003 8:04 PM
To: rule-comments@sec.gov
Subject: SHO Proposal File No. S7-23-03

I find the SEC faced with a daunting task. For the first time in recent 
history you are faced with abuses that have caused severe damage to hundreds 
and hundreds of companies and countless investors. The biggest difference 
between this current abuse and the past wall street scandals, is that this 
illegal trading of Naked Short Selling is one of failed trade settlements and 
those failed settlements exist on the books today. With the past scandals of 
late, you have had to deal with imposing fines and curtailing the abuse from 
continuing. Those abuses and illegal conduct were ones that did not carry over 
and perpetuate a negative consequence, unlike what you faced with when we talk 
about illegal naked shorting. The problem with the current abuse is that it is 
like no other that you have been faced with. Not only must you stop the abuse 
from continuing but you are faced with having to figure out a way to correct 
the imbalance of unsettled trades.

The way I see it, there is only one way to do this and that is to reconcile all 
shares with the DTC and match these numbers to the affected companies total 
outstanding shares. The repercussions are mind boggling and the cost will no 
doubt be in the billions of dollars for many firms and individuals who have 
engaged in this form of manipulative trading. You can not allow this to go on 
any longer. Laws and rules need to be enforced and new rules and laws must be 
implemented to curb this abuse.

How can you fix the current failed settlement issues?

I would suggest that the commission allow for a grace period for all market 
makers, broker dealers, and individuals who have facilitated naked short sales 
to come within compliance. And by compliance, I mean covering all naked short 
sales to balance the books. Once this grace period is over, I would suggest that 
the SEC investigate the affected companies and if it is found that these abuses 
have not been rectified, in the time allotted, that the SEC facilitate an 
immediate covering on behalf of the individuals and entities that are in non-
compliance. Further more, these individuals that continue to defy the laws and 
rules governed by the SEC should be barred from trading any security until all 
their books are clean and should face stiff financial penalties.  I would 
reccomend that this grace period be no longer then 90 days.

Thank you for your consideration,

Chris Halligan



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