Subject: File No. S7-12-06
From: Mark Santos
Affiliation: Babson College Honor Graduate

January 15, 2007

In the late 1920s, a then little known statistician from Wellesley, MA by the name of Roger Babson accurately predicted the 1929 stock market crash and great depression that followed.

At the time, Babson based his predictions on two criminal forces that he was sure would ultimately crash the equity markets.

The first unnatural trading practice that Babson detected and measured involved large trades by groups of powerful and well-connected investors he called "pools" or "syndicates." And the second evil force Babson focused on was a dilutive and manipulative practice he called "watering."

In the opinion of this writer, who incidentally not only graduated with honors from the reputable business college Babson founded but who has also read every book Babson wrote, America right now is facing the very same problems that plagued Wall Street nearly 80 years ago.

Specifically, the burgeoning hedge funds industry now manipulates stock prices today in precisely the same way that pools and syndicates rigged the equity markets in the late 1920s. And just as manipulative, the unchecked naked shorting of many stocks is now exaggerating the market's supply side, which has created a self-fulfilling prophecy and crashed many stock prices; much the same way "watering" did nearly 8 decades ago.

So looking ahead, it is my humble opinion the SEC needs to start looking more at the big picture, needs to start looking out for the interests of the investing public, and needs to stop protecting the wealthy and well-connected criminals who are obviously the ones behind these evil practices.

To accomplish this end, I sincerely suggest that the SEC consider the following points:

1) Why is it that the SEC seems so terribly fearful of short squeezes? Specifically, why does it always seem to be a non-issue when market-making manipulators short stocks into the ground; but whenever there's even a treat of a short squeeze, the SEC is always concerned about market disruption. In a nutshell, why does the SEC invariably ignore 80 - 90% manipulated price slides; but then always seem to view forced covering as a market disruption? Where is the equality here?

2) If it is not the deliberate intention of short sellers to cause "strategic" delivery failures, FTDs they never intend to cover; then why don't they instead write call options of buy put options? The answer is simple: Option contracts have expiration dates; but shorters naked shorting shares always seem hell bent on destroying capital value, and more often than not they have no intention of ever covering anyway. And surely the SEC can see this

3) If accuracy and transparency are in fact the true objectives of Sabarne Oxley; then what good are audited financial results if the investing public is clueless about the size of the underlying company's actual trading float? In other words, if a company's stock appears on the Reg SHO Threshold Securities list, what good does it do an analyst to know how much the company earned if the trading float remains an unknown variable? And similarly, if the actual size of a company's trading float is unknown, then how can analysts be expected to compute actual pre-share earnings, or even an accurate P/E ratio for that matter?

4) And what about shareholder voting rights? How can a shareholder's voice be properly heard and counted if the outstanding share count and trading float have been artificially inflated by "phantom" naked shorted shares?

5) Grandfathering, in the opinion of this writer, is simply an evil, unfair, and orchestrated way for a privileged few to circumvent the very laws to which the majority must adhere. In the interest of fairness and equality, Wall Street is not a place where Grandfathering should be tolerated. In my opinion, Grandfathering is an outdated practice whose use should be limited to procedural matters such as building and zoning variances.

6) The SEC should examine its old-time mission statement and stop protecting the powerful and well-connected wealthy and start protecting private investors. And they should do this promptly; before it's too late

To conclude, since we are now suddenly living in a computerized information age, the obvious corruption that has plagued Wall Street for decades now can no longer be successfully hidden from the masses. And for this reason, not to mention the public's expanding Freedom of Information rights, past crimes are becoming easier and easier to document and prove.

So the choice is clearly yours SEC; either step up to the plate and clean up this filthy mess you have helped create, or just keep protecting the slippery minority as you have been doing and watch global confidence in the US equity markets continue to slide.

With Due Disrespect,

Mark Santos