From: dpatch@inspex.com Sent: Thursday, May 20, 2004 9:50 AM To: rule-comments@sec.gov Subject: File No. S7-23-03 Commissioners, Mr. Chairman, What exactly are you waiting for with the release of this reform? Since the time that Reg SHO was put out for Comment in October of 2003 we have had significant events take place that satisfy the need for this reform to be put into place immediately. Yet instead of taking action, the SEC is dragging their feet in providing the necessary protection to those being abused. December 2003 - Department of Justice initiates Criminal Arrests of Thomas and Andreas Badian for securities fraud and manipulation where by teh arrest warrant provides evidence of Brokers being bribed to assist in teh manipulation. 2004 - USXP Sues SEC for Harassment in their attempts to identify and resolve the allegations of naked shorting abuses to their stock. April 1 2004 - NASD Initiates Changes to rule 3370 to shut down loophole associated with naked shorting abuses. Ironically, A Broker in Germany suddenly lists over 300 of the small troubled companies on the Berlin Exchange in what appears to be an attempt to circumvent this recent rule change by using the Arbitrage exemption. The Broker being directly linked to a US Wall Street firm associated with Rhino Advisors and the SEC confirmed "Short Selling manipulation scheme" referenced in SHO. May 2004 - DTCC/NSCC Sued for manifestation of illegal shares to settle trades for non-delivery by seller. I believe based on this filing that many more lawsuits will be following. I am also aware that the SEC/NASD has created a joint task force in January 2004 to review the naked shorting abuses as was identified by a Senate Banking Committee member and that the SEC is repeatedly questioned by the House Financial Services Committee about the completion and release of this reform package. Finally, at a recent NASD Conference Chairman Donaldson was asked, first question out, about what was happening with Reg SHO. This is a clear indication that it is on the minds of the NASD who, in March, submitted their own package to the SEC for approval and release to comment. The SEC has had two seperate opportunities to seek public comments to short selling reforms and abuses. These opportunities come 5 years apart with the first being a concept review and this latest SHO proposal. Both opportunities yielded tremendous investor criticism regarding the SEC actions and willingness to be fair and impartial to the small business operations. Wall Street is riddled with fraud and Wall Street continues to benefit from their actions. Naked Shorting abuses addressed by this reform package is a direct line to Wall Street Revenues and a direct correlation to Wall Street executive pay. The flip side to this reform package is being addressed by Wall Street who claim that this issue is not as large in magnitude as being addressed. I would state that the SEC could easily resolve this metter by releasing SHO immediately and forcing all trade settlement failures to be settled. The SEC should start by insuring that no "Stock Borrowing" for settlement extends beyond a 10 day window of opportunity. Any loan beyond that must be called in. If the issue is not large in size this will be of no great harm to the Industry Firms. If it is, as many belive it to be, very large the forced settlements will simply be the payback restitution to those defrauded by Wall street as wall Street would be liable for the costs of buy-in proceedings. This, unlike the previous settlements, is instant restitution to the investor where previous settlements have yet to yield restitutions at teh investor levels. It is time for the SEC to take action and take it swiftly. The stalling that has taken place on this issue, a reported $500 Billion to $1 Trillion Issue as reported by a Former Under Secretary of Commerce, has far reaching affects on our economy and our tax base and yet the SEC appears willing to ignore their responsibilities towards an end to this abuse. An abuse many at the SEC agrees takes place and an abuse that Director Nazareth had stated she was finally pleased to be able to provide a reform for. She provided it, now get off your butts and release it. It appears EVERYBODY wants it released. Dave Patch www.investigatethesec.com