From: John O'Brien
Sent: Friday, March 19, 2004 12:15 PM

Senator,

Naked shorting = share counterfeiting ..


= selling a computer byte, masquerading as a share.

= securities fraud.

= trading dilution.

= lower share prices.

= company bankruptcies.

= huge investor losses.

= huge criminal profits.

This is theft!


Our Country and our Economy are under siege. The siege is not
from foreign countries or terrorist, it is from our Wall Street
institutions and the fraud they perpetrate against the retail
investor.

In recent months both the Securities and Exchange Commission and
the National Association of Securities Dealers (NASD) have
quietly made reform proposals that validate the fraud taking
place against small investors. The SEC, in Regulation SHO
proposal dated October 2003 (http://www.sec.gov/rules/proposed/34-
48709.htm) has identified that abusive short selling is taking
place in our markets and is used to manipulate stocks. In March
of 2004, the NASD came out with their own reform package
(http://www.nasdr.com/filings/rf04_44.asp) tha t made similar
claims. In both these reform packages they highlighted that the
failures in trade settlements due to naked short positions
exceeds the entire public floats of companies. What they don't
tell you us by how much. Fact is, the settlement failures can and
do exceed the entire public float by multiples of 2, 3, and even
greater than 5X the public float. These companies stocks are
trading with an apparent unlimited supply of stock as investors
put their money into their broker's hands. In economics, with
this type of imbalance the value of this stock has only one
direction it can take. A negative direction.

The siege on our economy comes from Wall Street because it is
Wall Street that has carefully hidden this secret from every
investor of every stock being traded under these conditions. The
SEC has been tracking this data for nearly a decade and has
selectively decided to ignore it. Many within the SEC blame the
investors for buying these stocks being abused highl ighting that
the stocks are worthless and thus you get what you deserve. What
the SEC forgets to acknowledge is that every Wall Street Firm
that accepts a Commission for trading these stock is actually
doing so with full knowledge that they will be cheating their
client out of their rights. These firms have allowed the
unsettled trades to accumulate without any attempts on
settlement. The result, their client will be guaranteed to lose
their investment because Wall Street never balanced the supply
vs. demand on the stock in settlement. The stock they purchased
was under a continual process of dilution with a never ending
supply to fulfill the demand. Now, how does this affect our
economy?

Daily, I am besieged with phone calls from people who have had to
file for personal bankruptcy over their losses. Others call to
tell me how they lost their jobs as the Companies they worked for
had to close due to a their inability to raise capital. Or from
people who have had to push back their retirements because they
can no longer afford to retire. All of these people who have put
their burdens into our economy due to this fraud. They have lost
their re-investment power into the economy. They have absorbed
jobs that are no longer available for the next generation hires,
or they have absorbed tax dollars to cover their unemployment and
bankruptcy losses. If this were 1 or 2 people it would a sad
story but it is not, it is a story that hundreds of thousands
could tell and thus it is economic terrorism.

I am frustrated at Congress and Wall Street because you all seem
to think the average citizen doesn't matter. It's about politics,
power, and money. The SEC and NASD have been delaying these
reforms for years because they hoped the concerned investors
would go away. Instead we united and became stronger. Now, forced
into action Congress and our Securities Regulators seek an easy
way out that leaves the Wall Street Institutions whole. It is
these institutions that elected to take the risks by continuing
to take these trades with higher and higher probabilities of
settlement failures and yet they did so because it generated
revenues. Now that it is time to come clean, Congress and the SEC
seek to protect them. We should only get half that courtesy and
respect. If it is my fault for taking the risk, and many
suffered, it is now time for Wall Street to suffer for having to
pay the piper for their many years of ill-gotten gains. We cannot
have two sets of standards when it comes to black and white right
and wrong.

I believe that these two reforms are very clear in what it is
that the SEC and NASD are trying to stop. Manipulation and abuse.
These are criminal activities that are being perpetrated against
every retail investor who is not provided with the realities of
how are brokers are handling our accounts. The very fact that
settlement failures can exceed public floats by such numbers is a
clear indication that at some point the se are nothing more than
counterfeit shares in our accounts put there by Wall Street
themselves. For the SEC to hide this fact puts in question the
conflicts of interest of those in charge at the SEC. Chairman
Donaldson being the career Wall Street person himself.

I urge each of you to review carefully the wording of each
document and ask yourselves a few questions:

1. Why is the SEC and NASD dragging their feet on implementing
these reforms? The verbiage in these reforms make solid
accusations of fraud and manipulation taking place. We have
present regulations that need to be enforced and yet the SEC is
waiting until reforms are in place before they start to take
action.


2. If the reason that this time allotment has been given is for
Wall Street to be given time to clean up their problems, what
kind of a message is being sent? I believe the problem is massive
and could bring down the financial markets. If that is so, how
did it get this big? What lesson have we learned and what
messages are we sending out to the violators? If it is this big,
how are these liabilities accounted for on the books of these
brokerage firms? Are we also protecting those who filed false
financials as well as support fraud?

The NASD reform package is nearly 1 year from incorporation. How
much fraud and manipulation will take place over this allotment
of time? How much more revenues will our Wall Street firms rake
in committing this fraud before they come clean and settle the
trades? Finally, how can the SEC and Congress protect these firms
financial well being as these firms continue to pay their
executives ungodly salaries for defrauding the US Taxpay er. It
has been Wall Street that has taken away investor confidence but
it has also been Wall Street that has been handing out 7 and 8
figure bonuses. Maybe their executive pay should be used to
compensate for some of these losses.

Please do not allow this fraud to continue indefinitely as it has
already. Do not allow the SEC to passively attack this issue in
order to protect the very firms that steal from us with every
opportunity they get. Stop the financial terrorism that Wall
Street is and put our confidence and our trust back into our
Government.

Thank You,


J. J. O'Brien