Pink Sheets Short Sale Comment

June 9, 2004 Mr. Jonathan G. Katz Secretary Securities and Exchange Commission 450 Fifth Street, NW Washington, DC 20549-0609 Subject: Proposed Rule on Short Sales File No. S7-23-03 Dear Mr. Katz, Pink Sheets LLC (“Pink Sheets”) provides the following comments on proposed new Regulation SHO under the Securities Exchange Act of 1934 (the “Exchange Act”), which would replace Rules 3b-3, 10a-1, and 10a-2. Pink Sheets is the leading provider of pricing and financial information for the over-the-counter (OTC) securities markets and, among other things, operates an Internet-based, real-time quotation service for OTC equities and bonds for market makers and other broker-dealers registered under the Exchange Act. We applaud the Commission’s efforts to revise its existing short-sales rules in light of modern trading practices. We are particularly encouraged by the Commission’s focus on the problem of naked short selling, which from time to time raises serious issues with respect to settlement and clearing of certain relatively illiquid securities quoted in the Pink Sheets and on the OTCBB. Our comments on proposed Regulation SHO concern four important issues: (1) short interest disclosure, (2) bona fide market making activities (3) uniform reporting and trading rules and (4) increased regulatory and enforcement focus on actions that dilute shareholders. Pink Sheets LLC nd304 Hudson Street, 2 Floor, New ...