Date:    06/21/2000  2:58 PM

Subject: S7-24-99

To whom it may concern,
     
First off, I would like to applaud the SEC for taking action to improve a 
system that obviously has some "short falls".
     
I would like to respond to one of the eight proposed rules concerning short 
sales.
     
G.  Extending the Short Sale Rule to Non-Exchange Listed Securities
     
Question 35:  Should we consider extending short sale regulation to cover 
non-exchange listed securities?
     
Answer:  Yes.  An investor, whether listed on an exchange, Nasdaq NMS, 
Nasdaq Small Cap, OTCBB, or Pink Sheets, deserves to invest in a fairly 
traded market.  "Efficient markets require that prices fully reflect all buy 
and sell interest."  Without short sale regulation to cover non-exchange 
listed securities, these 'unregulated' markets have become "inefficient".  
     
Short selling should be a crutch for market makers in a heavy volume 
situation, and in my opinion, should be flatted out in a matter of days to 
truly reflect the buy and sell interests.  The NASD has agreed on this, but 
they do not account for market makers (MM) shorting stock indefinitely, and 
only closing out the position when it benefits them instead of reflecting an 
efficient market.  The MM's take investor's money by shorting, and the NASD 
has no idea of where that money goes.  Do the MM's take that money and put 
it in an interest bearing account?  Do they buy other stocks with it?  The 
NASD doesn't seem to know which is unacceptable in my opinion and am 
grateful someone is finally looking into this system which gives too much 
'room' for manipulation.
     
Question 36:  If so, how should the new regulation restrict short sales? 
Does the current NASD short sales rule provide an applicable model for this 
purpose?
     
Answer:  The current NASD rule does not provide an applicable model for this 
purpose, and I will give some suggested 'possible improvements'.  
     
(1)   The NASD requires members to regularly report their total short 
positions in all customer and proprietary firm accounts.  This should be 
required in all trading venues.  The investor deserves to see what he/she is 
buying, and the shares that are being traded.  Shorting without reporting 
skews the float, and therefore the investor does not have all the 
information in the investment decision.  A right all investors should be 
entitled to.  If a MM can short a stock, the least they can do is report it.
     
(2)   MM positions should be flatten out in 3 days after heavy trading, or 
at least limited in share or dollar amounts.  Large short positions should 
not be carried forward for extended periods of time.  
     
Instead of using short selling in the OTCBB as a temporary assistance, it 
has being used as a way of trading which is unacceptable.  The MM is not 
entitled to make investment decisions for any investor, other than himself. 
By that, I mean the MM should truly reflect the price of the buy and sell 
interest, and not "judge" whether a stock is overvalued or undervalued.  
     
Asking to invest in a market that truly reflects buys and sells is not a lot 
to ask, and the fact that the SEC is trying to get there as soon as possible 
is appreciated by millions.  Thank you.
     
James Mareno
Private Investor