SR-DTC-2003-02From: John Petersen [jlp@ipo-law.com]
Sent: Wednesday, March 12, 2003 3:44 AM
To: rule-comments@sec.gov
Cc: Patrick Gouverneur
Subject: SR-DTC-2003-02
Ladies and Gentlemen,

          This office serves as securities counsel for Blue Industries, Inc, 
a Nevada corporation (the “Company”) that recently amended its Articles of 
Incorporation to prohibit the registration of certificates representing shares 
of common or preferred stock:


  “(I)n the name of Depository Trust Company or any other securities 
  clearinghouse that provides book entry transaction clearing services 
  for member banks and broker dealers.”


           When DTC first became aware of the Company’s decision to exit their 
clearing system, DTC demanded a fee of $20,000 for “the expenses they would 
incur” in connection with the allocation of the Company’s shares to the various 
DTC participants. When I requested a detailed explanation of why DTC believed 
the exit fee was justified, I received no response. When the Company refused 
to agree to an arbitrary and patently unreasonable exit fee demand, DTC 
responded by contacting the NASD and instigating a change in the trading status 
of the Company’s securities. In a Uniform Practice Advisory dated December 19, 
2002 (UPC# 188-2002), the Nasdaq Market Integrity unit advised members that as 
a consequence of the Company’s decision to exit the DTC system, the trading and 
quotation of the Company’s common stock would be immediately changed to a 
“when-issued” basis.

          At the time of this action, DTC advised me that they would promptly 
return the stock certificates registered in their name to the Company’s transfer 
agent for reissuance in the names of the various DTC participants. Despite DTC’s 
assurances of prompt action, the certificates were not actually sent to the 
Company’s transfer agent for 4 weeks. While we were also assured that DTC would 
promptly notify Nasdaq Market Integrity when the stock certificates had been 
received and distributed to the various DTC participants, the promised notice 
was apparently never sent. I am presently working with the Nasdaq Market 
Integrity unit to restore the “regular way” trading status of the Company’s 
securities.

         The change to when issued trading status was made at the instigation 
of DTC and the issue was not discussed with the Company before the symbol change 
decision was made. We believe that DTC instigated the change to when issued 
status as part of a ongoing harassment campaign directed against small issuers 
who have the temerity to:

*      complain that holes in the DTC system permit Canadian brokers to engage 
in naked short selling; and

*      take reasonable remedial action to protect their stockholders.

       While DTC is quick to protest that the problem is not their fault because 
it arises from operating differences between DTC and its Canadian counterpart, 
the National Securities Clearing Corporation (“NSCC”), the fact is that DTC is 
aware of the problem with naked short selling among NSCC participants and has 
taken no action to find an appropriate remedy.

        I find the DTC argument specious. No court would agree that a U.S. bank
was blameless for accepting wire transfer deposits from a third world country 
without ensuring that the transaction complied with U.S. money laundering laws. 
But DTC self-righteously defends its relationship with NSCC, a known haven for 
“stock launderers” who are engaging in manipulative conduct that would be impossible 
in transactions between domestic brokers.

        Blue Industries and the other small companies that have recently elected 
to exit the DTC system are doing so in an effort to prevent fraud and manipulation 
in the penny stock market; a goal the Commission has aggressively pursued for years. 
The proposed DTC rule change, on the other hand, is expressly designed to preserve 
a system that is known to perpetuate and foster fraud and manipulation in the penny 
stock market.

         We have no quarrel with brokers who believe a stock is overvalued and 
engage in covered short selling. Our objections relate solely to the ability of 
NSCC members to sell unlimited quantities of non-existent stock into thinly traded 
markets, and receive payment for the counterfeit shares without making good delivery 
to investors who purchased stock in good faith.

         For the foregoing reasons, we believe the proposed rule change set forth 
in SR-DTC-2003-02 should be rejected by the Commission.

John L. Petersen, Esq.
Petersen & Fefer
Attorneys at Law

Château de Barberêche
CH 1783 Barberêche

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