From: Cox SMTP west [opticalseti@cox.net]
Sent: Tuesday, November 18, 2003 9:14 PM
To: rule-comments@sec.gov
Subject: Regulation SHO s7-23-03

What a sad state of affairs we find ourselves in, when the SEC is continually 
taken in by con artists.   The arguement being made by some that naked shorting 
is neccessary in order to keep stock prices from becoming "overinflated", ignores 
two simple rules of economic theory that investors have relied upon as sacred.  
These two rules are understood in the supply and demand model which is taught in 
elementary economics.  The first rule is that no one individual's opinion of 
"over-inflated" should be used to describe the inherent value of a stock.  The 
inherent value of a stock is arbitrary, being defined by numerous economic 
valuation models, and should thus not be used as an argumentative basis for 
taking a stance that a stock price may or may not be "over-inflated". 
 
Let's assume for example that the authors of these illogical arguments were 
homeowners who had seen the value of their homes go up dramatically over a 
period of time.  Should they consider the inherent value of their homes to be 
over-inflated and thus in need of some unatural and possibly illegal market 
supply in order to correct such an over-inflated price?  My guess is that 
they would consider the price to be a dirtect reflection of a true supply and 
demand model that all reasonable people have come to expect as an intgral part 
of economics.  The truth is that in our example, more and more people want to 
buy the houses in a certain area and the the rise in price is thus a reflection 
of the increased demand with a limited supply.  Now, should I be allowed to 
sell virtual houses in that same neighborhood to anyone who wants to buy one, 
never having to settle the transaction?  What would happen to the market value 
of the "real" homes if I could sell fake ones and thereby introduce an artificial 
supply?  My guess would be that the owners of the "real" homes would not be very 
happy, and perhaps if ignored by regulators long enough, would begin to scream, 
"ENOUGH IS ENOUGH"! 
 
Supply and demand is the cornerstone of the economic pricing model upon which 
our economy is based.  If you continue to allow the artificial supply of stock 
into our marketplace without enforced trade settlement, you are even worse than 
the crooks and con artists who practice this theivery.  You have been instrumental 
in constituting the environment of inneficient securities regulation, and are 
thus charged by the public with the culpability that accompanies gross negligence 
in the face of rampant crime, enabled through the practice of not requiring trade 
settlement.  You, the SEC, are on trial in the public's eyes.  You do not need 
our comments any longer.... YOU need to convince US that we should not replace 
you with a more efficient organization.  If I were in your shoes, I believe I 
would immediately restore the integrity of the supply and demand model of the 
stock market.  Force trade settlement of all stock transactions on the books 
of all brokers and the DTCC. 
 
You tell the public that you are suprised by the levels of corruption, and yet 
you actually do nothing to correct it unless it passes the approval of the very 
industry which you were chosen to regulate.  We see who is in charge of our 
markets... it's the big money of Wall Street.  You have the chance to do 
something good for our country. Along with having the power however, you also 
must have the integrity to implement change that is is the best interest of 
the public which you were charged to protect.  You know what the problem is... 
have the courage to take care of it.
 
Sincerely,
 
Michael Montague