From: Doyle Beaty [doyleb@hotmail.com]
Sent: Friday, November 14, 2003 12:15 PM
To: rule-comments@sec.gov
Subject: Regulation SHO (s7-23-03)

Dear SEC:

I believe Regulation SHO will cause unintended consequences for both the 
small BB companies and the investors that invest in them.

1. It will cause increased volatility in the penny stocks as stock promoters 
pull the stock out of DTC. Without short sellers to regulate price action, 
these stocks will increase from pennies to dollars overnight. Once the price 
is sky high, the promoters and company insiders will dump their stock on mom 
and pop, leaving them holding the bag.

2. Many of the small BB companies, (some lobbying for Regulation SHO) fund 
their operations thru shady financiers that "pump" the stock price up. The 
financiers short the stock then cover their shares with a low priced private 
placement from the company. If these financiers are unable to locate shares 
to short the company, they will not bother financing the company, hence the 
company loses also. Since these companies are so small and or in financial 
distress, this is the only option available to them

In summary, as I see it, the SEC doesn't have the man power now to monitor 
BB stock fraud and if this Regulation, as written, gets implemented, the SEC 
will be deluged by small investors wanting to know what happened to their money.

Thank You,

Doyle Beaty



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