From: Gregory R. Manning
Sent: July 24, 2005
Subject: File No. S7-12-06


The proposed changes to Regulation SHO are a marginal improvement, but will be insufficient to end the illegal practice of naked shorting for manipulative purposes. You don't need me to point out the loopholes.

Penalizing failure to deliver should not be taken off the table. I believe it to be the only remedy sufficient to "insure the maintenance of fair and honest markets" as required by the Securities Exchange Act. Out here in the real world, sellers are not permitted to keep my money while failing to deliver what I purchased.

Regarding the specific issues on which you were willing to ask feedback, I am only prepared to remind you that efficient markets require full disclosure to all investors of all relevant information, and to point out that for the locate requirements to permit a share to be borrowed more than once is Kafkaesque.

Respectfully submitted,

Gregory R. Manning
Centreville, Virginia