From: idpatch [idpatch@attbi.com] Sent: Tuesday, March 04, 2003 4:54 PM To: rule-comments@sec.gov Cc: Steve-D.Jones@wsj.com; sletzler@dtcc.com; sgoldstein@dtcc.com; SCrane; Pat Clem; marketreg@sec.gov; lynn.cowan@dowjones.com; enforcement@sec.gov; chairmanoffice@sec.gov; carol.remond@dowjones.com; aalizzi@dtcc.com Subject: Release No. 34-47365; File No. SR-DTC-2003-02 To whom it may concern I have read much of the DTC Rule change submitted and believe that until the SEC has validated the true and proper performance of the DTC at Trade settlements that they should not continue to allow such a tight monopoly on trade settlement including the approval of this request. The DTC's own statement is; DTC believes that the proposed rule filing is consistent with Section 17A of the Act and the rules and regulations thereunder because it will promote the prompt and accurate clearance and settlement of securities transactions. and yet there is no data to confirm the actual performance on Trade settlement across all markets (NYSE, NASDAQ, AMEX, OTCBB, and Pink Sheet). Recently the SEC fined Rhino Advisors $1M for stock manipulation through the "Naked Short" Process on teh OTCBB stock SDNA. "Naked Shorting" involving process of shorting of a stock without borrowing or making delivery by the seller. The only way that this can be abusive is to not have settlement through the DTC which is in direct contrast to the DTC charter of "prompt and accurate clearance and settlement of securities transaction". A contrast that is at the detriment of the Investor for the betterment of the institutions themselves. At the present time there are as many as 63 Companies seeking some form of corrrection due to excessive abuses of shorting on their stocks. These companies primarily coming from the OTCBB and Pink Sheet sectors but some at the Nasdaq levels. One of the mechanisms they choose to combat the abuse is to exit the DTC and go to the "Custody Only" trading process. This would force a settlement of the trades; slower but at least they get settled. To date the DTC has halted most of their exit attempts even though this policy they request has not even been approved. One could question such a movement. The reasons are unsubstantiated vs. the potential risks of these companies complaints being true and factual. Imagine 63 Companies having substantiated proof of a Market Manipulation gone undiagnosed and uncorrected. It really comes down to money. Not money for the investor but money for the Institutions that operate wall Street. I am against any future allowances of abuse by the inside institutions until they have cleaned up the processes in which they themselves have created loopholes for this abuse. Companies must be capable of finding ways to remain fully functional companies for their shareholders and by instituting this policy the "Naked Short" issue remains a tool for continued institutional abuses. The DTC is not settling these trades and thus continues to allow a never ending summation on the float of a company. If the DTC does not stop the manipulative actions than they must step aside and let a different tact be taken by those companies and shareholders suffering under this abuse. I think that the DTC should be forced conduct a thorough study of the companies presently listed for request to exit and provide validations against the excessive short problems. They should run studies by requesting Brokers to submit the number of shares on their books they have for each stock listed and then compare them to the number of O/S in that company. They will not give the Brokers numbers but instead will compare the numbers teh brokers provide vs. their own. That data should then be scrutinized for abuses and the cause for the allowances resolved within the DTC. Once the DTC is held accountible for trade settlements then they can take such a position. They have in fact recently made T+3 settlement no longer mandatory in the NSCC process. This is a step in the wrong direction as it allows for more of this same type of abuse to take place. The DTC is a self-regulatory agency run by the very firms in question for Naked Shorting. Because this is so crucial a move, the DTC should be held to a very high level of expectation of performance and proof before such a luxury as this is provided. If there is only 1 DTC (A Monopoly of sorts) than this operation must be flawless not a work in process as it is today. Thank You David E. Patch 21 Pheasant lane Topsfield, Ma 01983