Subject: File No. 4-627
From: Walter W. Cruttenden
Affiliation: Former Chairman CEO of Two Brokerage Firms

May 28, 2011

Re: Section 417 of the Dodd-Frank Act

As a 40-year veteran of the securities industry with extensive operational experience, and CEO of two brokerage firms, I can attest the short selling problem is real, unfair to individual investors, and aggravating the capital markets processes for young innovative companies.

There is a simple solution to short sale abuses, which would also cure the over-voting problem that now exists when proxies are issued to the holder of borrowed shares (causing more shares to be voted than the officially reported number of outstanding shares), and it does not require any additional forms to be filed by short sellers or the trading community. Most importantly it is easy to implement by modifying the language in the standard brokerage hypothecation agreement.

The solution relies on transparency and the understanding that short selling was naturally regulated when we all held our own certificates by the simple fact that few of us would willingly loan our shares to someone that wants to bet against us. However, with the advent of technology, clearing houses, commingled securities and the paperless back office, short selling has become all too easy, aided by the fact that most investors are unaware that their shares are being loaned to traders, and abetted by overly broad language in the hypothecation agreements.

Giving shareholders back their original rights, to determine the use and disposition of their securities, through an opt-in clause in the margin agreement, will curtail unabashed short selling in a natural manner. Indeed, an electronic opt-in clause will return shareholder transparency (as if shareholders physically held their own certificates), and thereby self regulate the markets far more efficiently, fairly, and cost effectively than any layer of new rules now under consideration.

If the SEC is going to allow a shareholder's property to be borrowed in the middle of the night and loaned to traders without the shareholder's permission then I am all for the 417 proposals, especially requiring short sellers to make the same disclosures that are now required of institutional long side investors. But a more just and effective solution can be found in simply protecting shareholders original rights do not allow their certificates to be loaned without their permission. I urge the Commission to work towards this goal.

The attached paper entitled "Shorting America" looks deeper into the history and mechanics of the issue.

Walter Cruttenden

(Attached File #1: 4627-95.pdf)