Subject: File No. S7-12-06
From: Rick Puglisi

April 20, 2007

I urge the commission to require a pre-borrow to restore credibility and regulation to our financial system.

The requirement to find a stock lender is necessary to insure that the entity shorting does not get to keep the proceeds of the short sale (but must send the proceeds to the stock lender and maintain collateral). To allow the entity shorting a stock to keep the proceeds is to legalize counterfeiting.

Given this fact, I would not be surprised if some broker-dealers defaulted or took customer credit losses when faced with having to deliver the proceeds or their short sales to a third-party.

A commission with a moral compass and historical perspective on financial fraud would require a pre-borrow. It's simple.