Against the backdrop of no participation by shareholders, the looming changes to the market administration with respect to the gross imbalances by wall street insiders, and their present momentum to facilitate Chinese buying of the US market, this letter is offered up as another example of how the proactive masses will bust the fraud in the markets.
Supply and demand, not broker dealer obfuscation, is the only system that guarantees that laws governing stock issuance and subsequent valuation by market participants are enforced.Currently, the market is captive to the systemic fraud of its largest participants.
September 13,2007
Ms. Nancy M. Morris
Secretary
U.S. Secuities and Exchange Commission
100 F Street, NE
Washington, DC 20549-1 090
Re: Release No. 34-56213: File No. S7-19-07
Dear Ms. Morris:
The U.S. Chamber of Commerce is the world's largest business
federation, representing more than 3 million businesses and organizations of every size, sector, and region. We believe that fraudulent naked short selling remains a serious problem for a number of small and medium public companies and their shareholders.
First, we'd like to applaud the U.S. Secuities and Exchange
Commission's (SEC) recent decision to amend Regulation SHO to eliminate the grandfather provision. In addition, we appreciate the opportunity to offer comments to the SEC on its proposal to further reduce the number of persistent fads to deliver in certain equity securities by eliminating the options market maker exception.
The Chamber supports the proposed elimination of the options market maker exception. Thirteen days should be sufficient time to close-out a failure to deliver related to an options position that has expired or been liquidated.
Unfortunately, we believe that the proposed reforms do not extend far enough to resolve the issues related to fraudulent naked short selling. As mentioned in our previous letters dated April 26,2007, January 23,2007, and
September 13,2006, we remain convinced that serious settlement failures will persist and companies will remain on the Threshold list for too long if the SEC
does not implement additional reforms.
Ms. Nancy M. Morris
September 13,2007
Page 2
Accordingly,we reiterate our support for the implementation of these additional reforms:
First, we support a requirement that all short sellers of threshold securities either (i) have possession of the stock in question or (ii) have entered into a bona fide contract to borrow in advance of the sale.
Second, we believe that the SEC should provide issuers with
increased transparency by reporting the aggregate daily volume of fails included on the Threshold list. There are companies that have a limited capacity to redress the situation due to the lack of transparency regarding the failures that are affecting their stock. We
remain concerned about the companies who continue on the list for extended periods of time and believe that increased disclosure is necessary to fully remedy the situation.
Third, we believe that the SEC should make sure that institutional investors include short positions as part of their Form 13F disclosures. We urge the SEC to clarify that 13Fincludes shoa as well as long positions and to enforce 13F. This will provide issuers and investors with a greater understanding of trading activity without
compromising the proprietary trading strategies of institutional investors.
Without these supplementary refonns, certain companies will not fully realize the intended benefits of the recent amendments to Regulation SHO.
Although the current rule supports the legitimate short selling which plays an important role in our capital markets, it does not extend far enough to protect
many companies and their shareholders against abusive naked short selling.
These practices will continue to piague smaller and mid-size companies if the
SEC does not take action to regulate more tightly the pre-borrow requirements
and increase transparency and disclosure regarding the practice of short selling.
Thank you for your consideration.
Sincerely,
Michael J. Ryan, Jr.
Senior Vice President and Executive Director
U.S. Chamber Center for Capital Markets Competitiveness
cc: Christopher Cox, Chairman, U.S. Securities and Exchange Commission
Paul S. Atkins, Commissioner, U.S. Securities and Exchange Commission
Roe1 C. Carnpos, Commissioner, U.S. Securities and Exchange Commission
Kathleen L. Casey, Commissioner, U.S. Securities and Exchange Commission
Annette L. Nazareth, Commissioner, U.S. Securities and Exchange Commission |
