MARKET REFORM MOVEMENT-NSS/FTDS&RELATED ISSUES

[NYBob]

Will Shanley Article on Naked Shorting -

'Naked' stock tactic blasted "Crooks,"
"scoundrels" engage in naked short-selling,
some claim. The SEC eyes new rules.
By Will Shanley

Denver Post Staff Writer
DenverPost.com
Article Last Updated:10/10/2006 02:59:43 PM MDT

Dozens of investors, small public companies and elected
officials across the country are raising questions about
how the U.S. Securities and Exchange Commission regulates? -
a controversial investment strategy called -
naked short-selling.

"Stop these counterfeiting crooks," Dan Heilman of Golden
wrote in a Sept. 15 note to the SEC, according to
the agency's website.

"Anybody who thinks that naked short-selling is
(acceptable) is probably being paid by the crooks."

Wrote Bonnie Lavoie of Lakewood: "Without exception,
you are being admonished to do right by the small investor
and quit protecting and or profiting from -
Wall Street scoundrels."

Some Wall Street investment banks counter that additional
regulation would disrupt the market and make short sells
more difficult.
They also argue that naked short-selling affects only
a small swath of companies.

Short selling is when an investor borrows a company's shares
from an investment bank, sells them and hopes to buy them
back at a lower price.
Naked short-sellers do not actually borrow the shares,
which can cause an imbalance in the supply and demand
of shares and result in a decline in share price.

The practice is regulated by the SEC.
But critics say the tactic is rife with abuse if
short-sellers are intending to profit by artificially
depressing a company's share price.

"The interests of abusive short-selling hedge funds must
not be placed ahead of investors and employees who often
depend on these companies for their livelihood and
retirement," wrote state Rep. Joe Stengel, R-Littleton,
in an Aug. 19 letter to SEC Chairman Christopher Cox.

Naked short-sellers often target companies with revenues
below $200 million or speculative stocks such as technology
or biotech firms, whose share prices can swing wildly.

Denver-based Vyta Corp., formerly known as NanoPierce
Technologies Inc., was part of a failed lawsuit against
the Depository Trust & Clearing Corp., which settles
equity trades in the U.S.

The lawsuit, decided in 2005, alleged that Vyta's share
price was hurt by naked short-sellers.

On April 10, Denver-based Metre tek, which sells
commercial electricity-backup systems, was added to
the American Stock Exchange's list of companies
possibly targeted by naked short-sellers.
The company was removed from the list July 25.

Phillip Marcum, chief executive of Metretek, told Bloomberg
News in August that there "ought to be severe penalties"
for naked short-sellers.
Marcum was unavailable for comment Monday.

The SEC is considering toughening Regulation SHO,
a slew of 2004 changes aimed at curbing
naked short-selling.

Possible changes include shorter settlement deadlines
of naked short-trading and mandating greater transparency
for hedge funds, said Peter Chepucavage, a securities
lawyer who has worked at the SEC and is now at
Plexus Consulting Group in Washington.
Chepucavage, who helped write Regulation SHO, said
new rules may come within the next six months.


Join The Denver Post's online discussion about
naked short-selling.

Staff writer Will Shanley can be reached at
303-954-1260 or [e-mail].


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negative bashers - the 9/11 terror pawn-clownz?