Subject: File No. S7-08-09
From: Anthony Kalantzis
Affiliation: Professor of Economics

May 12, 2009

Laws were created to control the sale of unregistered securities, to prohibit the counterfeiting of commercial securities, and to federally criminalize as conspiracy any act done in concert to manipulate financial assets of the United States. I refer you all to Sections 5 and 6 of the Securities Act of 1933, to USC Title 18, Sections 513 and 514, and finally, to CJS Sections 22, 22A and 46, the latter being the supporting law behind the Sherman Anti-Trust Act, the Holding Company Act, the Investment Company Act of 1940, and more recently, the RICO statutes.

Sections 5 and 6 made such causes the basis for civil and limited criminal complaints for enforcement penalties, while Title 18 was used to attack the counterfeiting of commercial securities by making it a Class B Federal Felony, and finally, the CJS sections caused such conspiracy conduct between two or more parties to be judged as Insurrection and Sedition, a form of Treason

The SEC came under so much pressure to clean up this disgrace, that finally, they issued a piece of window dressing rule making called Regulation SHO. After doing it, they realized the market could not clean up its past without wiping the operators out, so they initiated a "Grandfathering" proviso, saying that shorts existing prior to SHO would be exempted from immediate settlement, the latter which was highly cushioned.

Then came another wave of indignation from investors, and the SEC had to switch its position from there being no such thing, to it not having any effect on markets, to now, that it is really negative for the market, and adversely affects capital formation. They have said so many things about so many positions, that they have now said everything and taken every position so well that they can refer back to being right, and having acted prudently, no matter what happens.

In the late 1990's and early 2000s, market makers at broker-dealers had a 10 day fail rule, which mandated a charge to their net capital for any fail over 10 days. They would roll their positions within the system by kiting trades known by several names, including whip calls, and rolls. Reg SHO changed that effectively to 13 days. Re-enter rolls/whip calls, but now, not put through the clearing system, but rather done directly broker to broker in what is called Ex-Clearing.

Shorts and their related counterfeit longs would sit in Ex-clearing, invisible and unreported anywhere. Taking things a step further, the short players would take to intentionally miss-marking tickets to reflect short sales as actually "Long Sales" when they weren't, and no one was the wiser. Well, not exactly no one.

Everyone needs to realize that calling naked shorting anything other than counterfeiting, albeit by virtual electronic journal entries rather than a printing process, is simply WRONG. It is the intent of the perpetrators to delude the longs into thinking that they have bought real shares from a real seller, when in fact, the longs only know this when they themselves are dirty, such as when a manipulator wants the counterfeit proxies attached to the counterfeit longs to manipulate actions at a target company.

One well known company would call for a Proxy vote at their annual board meeting. They had a legally outstanding number of shares according to their stock record book of 60 Million shares. How many proxies showed up? 80 MILLION. I am shocked, SHOCKED, that such a thing could happen in America. Counterfeit proxies are the most serious corporate governance issue coming out of this scandal, a concern to every major corporate counsel in this country and overseas