Subject: File Number S7-19-07, please ban naked shorting including MM abuses, foreign and domestic

July 17, 2008

To SEC,

I am reading Bloomberg news stating that options dealers want exemptions from the naked shorting rules. In my humble opinion, the true abuses in naked shorting and manipulation originate at the level of the market makers, and thus, exempts them from credibility in the matter. Of course these gents want to keep such a money maker for them. If they can scam the system legally, why would they want to surrender to new regulations that basically enforce the intent of previous SEC rules? They will scream at the top of their lungs, with every excuse in the book to keep their criminal privileges. It's not that much different from the eighth's rule vs. decimalization. Yeah, that lost them some collusive money as well.

They scream that liquidity will suffer if they must abide by the rules everyone else is forced to abide by. Well, I say if their idea of liquidity comes at the cost of manipulating market sentiment and downright fraud, then please give me illiquidity, maybe I'd have a chance. The abuses are clear and compelling in my book. Many, many stocks are made to close at prices on options expiration essentially on the strike price that most benefits options writers. This affects more than the options markets. It hits the equity markets where mom and pop have their retirement funds. Let the abusers find new employment if they can't make a living honestly. There is simply no logic to compromising with those who clearly are abusing the system by undermining the intent of Reg SHO.

These abusers are fairly cavalier about the manipulation because they know the rules are written poorly and that the SEC is basically not enforcing any but the most egregious cases. We need to tighten the rules and punishment to the extent that they are no longer tempted to game the system.

To me, grace periods for failure to deliver basically give them all, including the backers of the market makers, the ability to hit market sentiment in a large way on key days, at key levels of support. It is particularly abused as options expiration approaches, which to me signals that abuse is in fact rampant in the very people asking for an exemption.

Rather than an exemption, many of these folks should be looking at jail time. It just angers me to no end that the main regulating body considers their lobbying to the extent it does. Mom and Pop retirements are on the line, and we consistently leave loopholes for the criminals on Wall St.

Let's put an end to a practice that really undermines confidence on Wall St. Let's end naked shorting once and for all (for all meaning not just the 19 big financial institutions in the emergency order).

Thanks for reading,

Richard Depp