On Fri Jul  7 11:12:43 2000,
The following information was submitted: 
Host: 205.230.159.47
submit_by = dneuman@sark.com
Name = Derek L. Neuman
Professional_Affiliation = Investor
Subject = Short Sales (Release No. 34-42037; File No. S7-24-99) 
Comments = 
I am writing you this letter to show that I am in favor of the proposed Concept 
Release (No. 34-42037; File No. S7-24-99).  The letter below clearly illustrates
my concerns as an investor in OTCBB Listed Securities.  Although I have much 
experience as an investor, I still do not understand why OTCBB stocks do not 
fall under the same guidelines as those listed on Major Markets.  Although small
and generally fledgling, These are still FULLY REPORTING companies.  Should not 
those who make the markets for these companies also be FULLY REPORTING in terms 
of FULL DISCLOSURE of HOW they are making the markets?  If a Market Maker for a 
NASDAQ listed Security takes a short position in that Security, he is required 
to disclose his position, and by no means is he allowed to "Naked Short" that 
Security.  So why allow this on the OTCBB?  I always thought the SEC was 
incepted to Protect the interests of both Investor and Company such that fair 
and equitable trading and investment could take!
 place without the worry of corruption, theft, deception, manipulation, etc.
could not take place.  I am encouraged by the recent arrest and indigtment of 
persons involved in alleged market manipulation by the MOB, and am confident 
that the your organazation will do the right thing with regard to this obvious 
loophole in the OTCBB Market Maker Reporting and Disclosure process. 
     
It is known that the life blood of a small company is access to capital for 
creation and growth. It is also known that investors who place funds in such 
companies expect and deserve protection from fraud and manipulation. Small 
business is a critical building block for jobs and wealth in our economy. MMs 
have steadily been selling more shares than they have bought, defying the laws 
of supply and demand, solid company fundamentals and favorable company press 
releases, resulting in plummeting stock prices. The laws of supply and demand 
have been denied and investors deprived of fair value. Meanwhile, the company 
valuation of stock has been greatly reduced and with it, access to investment 
capital for acquisitions and growth. 
     
The MMs are supposed to provide a fair market trading mechanism, yet ,when they 
become invested through shorting, they actually have a vested interest in seeing
the price fall. This practice must be brought under some form of control. 
     
The Securities Act provides certain protective language as it relates to 
investors. Section 15A(b)(6) of the Securities Act says that the rules of a 
national securities association must be designed, among other things to prevent 
fraudulent and manipulative acts and practices and to protect investors and the 
public interest, and perfect the mechanism of a free and open market. Section 
15A(b)(11) requires that association rules be designed to produce fair and 
information quotations, and to prevent fictitious and misleading quotations. In 
spite of the intent expressed by these two sections of the Securities Act, and 
unlike the Nasdaq, NYSE and AMEX, MMs are not required by the SEC to disclose 
short positions on OTCBB stocks. 
     
The MMs can short, even naked short, at will with no checks and balances on 
OTCBB stocks. This leaves the OTCBB listed companies prey to market manipulation
on a scale only limited by the greed and imagination of the MMs. The MMs just 
keep selling the targeted companies stocks with the idea that they will never 
have to produce real shares. Their apparent goal is to force the company to fail
by depriving it of working capital and discouraging investment. It is my belief 
billions of dollars are being stolen from investors in this manner. For the MMs,
it's a wonderful business; sort of like selling insurance, but never having to 
pay claims. They get the money, but have no expense or expectation of delivering
anything tangible in return. This unfair and counter productive practice cannot 
go on. 
     
MMs must be held accountable by requiring mandatory disclosure of MM short 
positions on all OTCBB listed stocks. In this manner, excessive shorting can be 
made known to the investing public, monitored for excess and corrected by the 
SEC/NASD. Then and only then can investors in these stocks be treated with the 
appropriate protection against fraud and manipulation.