From: Michael Kelley [KCM@peak.org]
Sent: Monday, January 05, 2004 4:38 PM
To: rule-comments@sec.gov
Subject: S7-23-03

 Comments on Proposed Rule: S7-23-03 SHO
 
     Dear sirs, Imposing an affirmative borrow for BB and Pink sheet stocks 
with out increasing any other listing requirements for these kind of stocks 
has to be the most short sighted thinking I have ever heard of. I trade stocks 
in this arena for a living, and I constantly run across stocks with 25, 50, 
and even 100 million dollar market caps, that have NO business Plan, NO product, 
and NO capital. The one thing these stocks do have in common is a lack of float, 
often there are one or two people that control the whole float. Making it very 
easy to print a few fluffy press releases, pay some promoters to issue glowing 
reports on future potential, and then sell some shares back and forth between 
themselves, and you have the stock price of your choice. (email me for a list 
of examples)
    The only viable system of checks and balances for the BBs and Pinks has 
been short sellers, and because these small companies can eliminate the 
availability of shares to borrow, If you go to an affirmative borrow, you will 
be eliminating short selling, thus emilinating any sanity in these markets. 
    If you are serious about making changes, why not require (and enforce) the 
same listing requirements as for Small Cap stocks. If the Penny stocks want to 
be treated like a real company, make them adhere to the same guidelines. 
    Thank You, Michael Kelley