The following comment on Letter Type H, or variations thereof, was submitted by
Letter Type H
Chairman Donaldson and SEC Commissioners
RE: File No. S7-23-03
I am sending you my comments re your recent proposals to clean up naked short selling. I am a Canadian who purchases Canadian and US securities markets from time to time. I own shares in several OTCBB and pinksheet companies that are being attacked by naked short selling. I have never seen such outright manipulation of the share price of these companies, who have complained to the SEC who up to now has done nothing.
The US microcap market is seriously flawed and these recent proposals are the first step to reforming them. What else needs to be reformed and enforced is trade settlement. Naked short selling cannot occur if trade settlement rules are in place and enforced. It is very obvious that trade settlement in the microcap market is not in any way enforced. It is outrageous that a company can have 200 million shares issued and outstanding and when the shareholders do a share count among themselves they own 900 million shares. If there was proper trade settlement these additional 700 million "counterfeit shares" could never be sold. By failing to act upto now the SEC is complicit in a massive share counterfeiting operation.
If the US wants ot maintain the image that its securities markets are fair and balanced naked short selling must be eliminate so that microcap companies have a fair change to raise money and build their business and not be subject to naked short selling. Naked short sellers are nothing more than white collar criminals who make money by destroying companies.
In closing I hope this is the first step in cleaning up a very abusive practice and I encourage the SEC to enact and enforce rules regarding trade settlement as part of this process. I along with many shareholders of microcap companies have sent letters to Eliot Spitzer regarding naked short selling and asked him to look into it. If the SEC fails to act promptly and forcefully I suspect Mr. Spitzer may be again forced to clean up abuses in the securities markets.