From: Douglas Marvod [douglas_marvode3@yahoo.com]
Sent: Wednesday, November 12, 2003 10:19 PM
To: rule-comments@sec.gov
Subject: S7-23-03

I hope the commission does not mind me submitting and excerpt from my previous 
response. I think it is very important and I want to reiterate it for all the 
Government agencies that might be reading these responses. 

Thank you,

Douglas Marvode III

Question. Are there negative tax consequences associated with naked short 
selling, in terms of dividends paid or otherwise?

Answer. There are ASTRONOMICAL negative and ILLEGAL tax consequences to both 
our Local, State, and Federal Governments in several ways. The first being that 
on a naked short sale, the person who has engaged the naked short sale only has 
to pay taxes when or if they ever "cover" that security in the open market. As 
stated by the SEC in this proposal, it is often not the intention of these naked 
short sellers to EVER cover there naked short positions. This in and of itself 
has a constant negative effect on the stock price and in many instances makes 
it impossible for these companies to raise future capital needed to stay in 
business, thus forcing them into bankruptcy. When this happens the naked shorter 
never covers his position and never pays taxes on his gains. 

When a company is a victim of such abuses they o ften can no longer raise funds 
and are forced to close up shop, thereby laying people off. These are people that 
were working and paying taxes. Some of those same people will be forced to file 
unemployment claims and will not longer be part of the working class paying taxes, 
but instead they will be receiving benefits from our Government.

Also, the company itself, if it were not destroyed, could have been able to grow 
and become profitable and yet with naked shorting, those taxes that the company 
could have paid to our Government will never be realized.

Another negative tax consequence that Illegal Naked Shorting places on our Local, 
State, and Federal Government, is the tax write off that all the shareholders can 
now claim. This is also exacerbated by the fact that, by its nature, naked shorting 
of shares results in countless more shares then were OFFICIALLY authorized by the 
company, meaning that many people are taking a tax write off of losses on shares 
that actually did not exist but were counterfieted by the naked shorts. 

So as well as the naked short draining equity from the common shareholders, they 
are in effect, STEALING from the Government by "counterfeiting" shares and thus 
creating losses that do not and should not exist and they steal from the Governments 
tax base by destroying companies who could have continued to employ tax paying 
workers.

I think the IRS should be involved in this issue of naked shorting as the losses 
to our Government no doubt reach the billions of dollars.

Thank you again,

Douglas Marvode III





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