From: Mhat McCane
Sent: July 22, 2006
Subject: Re: Reg SHO, File Number S7-12-06

Eliminate the exception for market makers. The reason for the exception is stated as "Market Makers sell short thinly-traded, illiquid stock in response to customer demand".

The reason is obviously nonsense. If a Market Maker is selling short, nothing of value is sold, a counterfeit "something" is produced and, worse yet, this "something" can then be sold by the buyer.

If a customer were to demand a twenty dollar bill be sold for a dollar, and the market maker were to comply, the customer could then sell twenty dollar bills for five dollars and make a tidy profit. As more and more twenty dollar bills get sold, ALL twenty dollar bills decrease in value, the real ones along with the fake ones.

Using "liquidity" to justify fraud may increase fees for the Brokers but what does it do to the Market and the Public's perseption of the Market. And, what does it do to the Public's perseption of the SEC.