Naked Short Sales Comment to SEC - Jan04

January 5, 2004 Jonathan Katz, Secretary Via e-mail to: rule-comments@sec.gov U.S. Securities and Exchange Commission th450 5 Street NW Washington, DC 20005 RE: SEC Release No: 34-48709, File No. S7-23-03 Short Sales: Proposed Rule Dear Mr. Katz: Please accept the following comments from the North American Securities Administrators 1Association (NASAA) regarding Release No: 34-48709: “Short Sales: Proposed Rule.” The Commission approved seeking comment on the proposal for a new Regulation SHO, as well as amendments to Rule 105 of Regulation M, on October 29, 2003. The proposal was published in the Federal Register on November 6, 2003 (Vol. 68, No. 215, 62972). NASAA commends the Commission for its initiative in this area. From the time the so-called “naked short selling” controversy was initially identified in early 2003 by national commentators, a NASAA Project Group has monitored this issue from the perspective of its impact on small-business issuers, the securities of which are traded in the over-the-counter market, as well as their public stockholders, who have contended that the trading market for their shares has been adversely affected by manipulative short selling activity. While the issue involves national trading markets such as the Over-the-Counter Bulletin Board and the Pink Sheets, every state has small-business issuers whose securities trade in the over-the-counter marketplace, as well as public ...