Subject: File No. S7-12-06
From: Colin Starr, Ph.D.

April 29, 2007

The FTD issue is simply unnacceptable and inexcusable, especially at the current levels. I see two (fairly simple to execute, I think) partial solutions that may help.

1) There should never be a naked short sale of a stock allowed. (This still leaves plenty of naked options plays that can be an issue, but it is a start.) Every short sale should specifically identify whose shares are being borrowed. The key to making this work is to make lending of shares on an "opt-in" basis, too: "Mr. Starr, do we have your permission to lend your shares to short sellers?" (Yes or no.) If no, then that simply reduces the number of shares that market maker has available to short. (And when those run out, all other short sales must be refused.)

2) A short sale of a stock should not be counted against the bid/ask sizes. That is, short-selling a stock should never drive the price down. That is tantamount to driving the price down simply by wishing it to go down. If lots of people are trying to sell a stock they own, supply and demand dictates a drop in price. If people are trying to borrow a stock so they can sell it, they are creating an artificial supply/demand scenario that should not impact the stock price. Certainly, naked short-selling creates a false "supply."

I realize that neither of these suggestions has much chance of occurring, but I appreciate the chance to vent my ire. Regardless, it is important not only for the economy but also for our health and happiness as a nation. Companies fail for these artificial reasons, and some of them are companies in medical fields -- what have we lost by allowing this to go on?

Thank you.

Colin Starr