July 16, 2008
Given that you have banned naked short selling on the shares of 19 large issuers, clearly SEC knows the practice is being used manipulatively and can be harmful to shareholders.
While I commend you for finally acknowledging a problem that has been destroying small companies and making crooks rich for years, I find it strange that you would only ban naked short selling for 19 huge companies who, with their enormous floats, are generally not in danger of being driven out of business by this tactic.
If it is not acceptable for crooks to make a fortune driving Lehman Brothers' stock price down, why is it acceptable for crooks to make a fortune driving down the stock price of Novastar Financial or Overstock or any of the dozens of other, smaller companies on the Regulation SHO Threshold List who may be driven out of existence because they cannot raise capital with their artificially deflated shares? Are you not aware small companies are more vulnerable to abusive naked short selling than large companies? Do only large banks deserve access to fair markets? Are small companies and individual investors irrelevant? Is this a wink and a nod to manipulators that the other companies on the Reg SHO Threshold List are fair game?
Why make new rules protecting a few elite issuers when abusive naked short selling of ANY stock is already illegal? Why should we or the crooks believe SEC will enforce this new rule any more effectively than you have enforced existing laws, including fraud provisions of the US code, the Securities and Exchange Acts, Regulation SHO, etc.?
Enforce existing laws against manipulation of share prices.
Identify the brokers allowing crooks to manipulate ANY stock by systematically failing to deliver, identify the crooks engaging in abusive naked short selling on a large scale, round them all up, force them to deliver the shares they sold without borrowing, take their remaining illicit profits, and throw them in prison.
To do anything less than the above is utter dereliction of your duty.
Thank you.