From: joe hoofnagle [joehoofnagle@yahoo.com]
Sent: Tuesday, December 02, 2003 12:44 AM
To: rule-comments@sec.gov
Subject: Comments on File No. S7-23-03

Greetings!!

I am a US citizen and have been an investor in the US capital markets for 
over 30 years.  Nowadays, this short selling phenomenon seems to have gotten 
out of control.  Widespread failure by brokers to settle trades (deliver 
securities) distorts the capital markets and undermines investor protection.  
Every undelivered share represents a fictitious uncollateralized inflation 
of capital float.  Unchecked, this lack of collateral will cause the collapse 
of huge broker dealers and other financial institutions right under the SECs 
nose.  Many many investors will be irreparably harmed and confidence in the 
capital markets will be forever eroded.  Rule S7-23-03 needs strong sanctions 
for failure to deliver.

This is even more important in this age of terrorism and terrorist financing.  
Think about it.  The terrorist, through a foreign broker, short sells shares 
of stock and is never required to deliver.  She gets free money to devote to 
her terrorist cause of destruction of the very society that, through lack of 
oversight, provided her the free money in the first place.  If she is successful 
in finding small, under financed companies to exploit, she can then manipulate 
the total destruction in the marketability of that company's stock, and thus, 
never have to cover her naked position.  Just read the Internet chat boards 
and you can find numerous examples of such blatant manipulation today.  Dig a 
little, and you find posters, using aliases, who are connected to brokerage 
houses having significant short positions in the target company's shares.  Add 
this to the alarming increase in naked positions out there and you have a 
formula for an impe nding disaster.

The rule should be, broker/dealers deliver the shares in 2 days, or face 
significant sanctions against future use of the markets for any shorting 
until they deliver.

Thank you for the opportunity to comment on File no. S7-23-03.

Sincerely,

Joe Hoofnagle, CPA, CMA




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