From: AlAlbion1@aol.com
Sent: Sunday, September 16, 2001 10:43 PM
To: rule-comments@sec.gov
Subject: File No. S7-24-99

Short Selling of stocks:

Short selling I believe should not be allowed. It is contrary to having a 
good investing environment that encourages individuals to investment in 
American companies.  As good Americans we should encourage investment in its 
companies and thereby strengthening America by strengthening its under 
pinning.  

Short selling a stock is not an investment, individuals or organizations that 
practice short selling owns nothing; this is no more than gambling.  A 
speculator or gambler does this for negative reasons in the hope that the 
stock will fall and investors will lose money.  Often these individuals 
spread rumors, lies, and half-truths on the Internet in the hope of scaring 
investors into selling and incurring loses.  Their motives are all negative, 
is a zero-sum game and is patently destructive and contrary to positive 
values of our good Country.

Shorting Against the box:

Although short selling should not be allowed, "Shorting Against the Box" is 
the most destructive form of short selling and circumvents the "Up Tick Rule" 
or "Bid Test Rule".    These individuals or organizations often known as 
Hedge Funds have both a long and a short position in the same stock, equal 
but separate.  Their goal is to ride the price of the stock up in a boxed 
position, and once they determine the price has risen to a point where in 
their opinion exhibits a slow down in the upward movement or temporary 
weakness, they then post an onslaught of negative and destructive statements 
on the Internet which are often lies. Simultaneously to this they commence a 
vigorous round of selling, selling the long side of their positions by 
continually hitting the bid and forcing the stock price down.  They now have 
a position that circumvented the up-tick or bid test rules, leaving them with 
a naked short position.  This often creates a down draft by scaring the small 
investors into selling, triggering everyone's "Stop Loss", and continuing the 
downward spiral. At some point in time the stock hits bottom and then they 
commence their usual steady and well-disciplined buying program to re-box 
their shorts.  As the stock price starts to rise once again, new buying comes 
in, the stock rises further and this game starts all over again.  This form 
of manufactured gamesmanship is stock manipulations and very destructive to 
the backbone to investing, the small individual investor.  This is a very 
sure way of discouraging the small investor from investing in stocks, who is 
absolutely necessary for capital formation to have a strong America.    

I know of one company in particular and I'm sure there are almost countless 
examples of these. This one individual admitted on the Internet that he was a 
Hedge Fund Manager and practiced this form of speculating.  He posted on this 
company's message board what most would call Lies, Fabrications and 
Distortions that were interlaced with some items of truth that gave his 
postings some credibility.  These assertions were indented to create panic 
selling thereby reaping gains at the expense of the small investor.   
Fortunately, this particular company had him and others subpoenaed for their 
malfeasants. All further postings by short sellers intending to do harm have 
been much more guarded since then.  Although this company took action to 
prevent outright lies, the practice of distortions and half-truths continues 
all across the Internet.

Lastly, shorting against the boxed was available to investors and taxpayers 
as a means of deferring gains to a subsequent year.  This option is no longer 
available to taxpayers; the Taxpayer Relief Act of 1997 not longer recognizes 
this method of deferring gains.  

Conclusion:  Short selling should not be allowed and boxed short selling as 
described above is stock manipulation and should be illegal; both of these 
methods of short positioning are destructive to our American economy.

Allain A. Roy
Private Investor