From: michael holcomb [peace_for_all@tellthat.com]
Sent: Tuesday, November 18, 2003 8:10 PM
To: rule-comments@sec.gov
Subject: File No. S7-23-03


I am all for the new rules to end naked shorting.  If you decide to pass 
these rules, please make sure they get followed.

I do not know how we got to this point but the act of selling unlimited shares 
that do not legally exists must stop.  It is dilluting companies to the brink 
of ruin and costing both shareholders and taxpayers BILLIONS AND BILLIONS of 
dollars.  

I agree with this answer from another person who sent in comments and I hope 
it is read by all Government poeple as this should be a wake up call.  Maybe 
if the Government realizes that Naked Shorting is costing them money as well, 
they will do something about it.

Thank you for your consideration.
Michael

"Q. Are there negative tax consequences associated with naked short selling, in 
terms of dividends paid or otherwise?"

"A. There are ASTRONOMICAL negative and ILLEGAL tax consequences to both our 
Local, State, and Federal Government in several ways. The first being that on 
a naked short sale, the person who has engaged the naked short sale only has to 
pay taxes when or if they ever “cover” that security in the open market. As stated 
by the SEC in this proposal, it is often not the intention of these naked short 
sellers to EVER cover there naked short positions. This in and of itself has a 
constant negative effect on the stock price and in many instances makes it 
impossible for these companies to raise future capital needed to stay in business, 
thus forcing them into bankruptcy. When this happens the naked shorter never 
covers his position and never pays taxes on his gains. 

When a company is a victim of such abuses they often can no longer raise funds 
and are forced to close up shop thereby laying people off. People that were 
working and paying taxes. Some of those same people will be forced to file 
unemployment claims and will not longer be part of the working class paying 
taxes, but instead they will be receiving benefits from our Government.

Also, the company itself, if it were not destroyed, could have been able to 
grow and become profitable and yet with naked shorting, those taxes that the 
company could have paid to our Government will never be realized.

Another negative tax consequence that Illegal Naked Shorting places on our Local, 
State, and Federal Government, is the tax write off that all the shareholders can 
now claim. This is also exacerbated by the fact that, by its nature, naked 
shorting of shares results in countless more shares then were OFFICIALLY 
authorized by the company, meaning that many people are taking a write off on 
shares that actually did not exist.
 
So as well as the naked short draining equity from the common shareholders, 
they are in effect, STEALING from the Government by “counterfeiting” shares and 
thus creating losses that do not and should not exist and they steal from the 
Govt tax base by destroying companies who could have continued to employ tax 
paying workers.
I think the IRS should be involved in this as the losses to our Government no 
doubt reach the billions of dollars."



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