Subject: File No. S7-19-07
From: David NMN Nugent

August 31, 2007

I support the Alternative where they must do so within 13 consecutive settlement days from the last date on which all options series in the portfolio that were created before the security hit the list expire or are liquidated.

Here is part of a letter I have sent to Senator Robert F. Bennett on Naked Short Selling.

Dear Senator Bennett:
I am writing you to today to express my appreciation for your recent Floor speech on the Senate Floor on Naked Short Selling.
(Audio Podcast - 15:29 minutes),channeldedupe=1y=0channel=41x=0e=7909995

I am encouraged by your efforts with Senator Dodd to have a Banking, Housing, and Urban Affairs Committee hearing with the Securities and Exchange Commission (SEC) and the Depository Trust Clearing Corporation (DTCC) on the Naked Short Selling dilemma that many small investors and small companies are facing.

I wholeheartedly support your three recommendations to limit Naked Short Selling:
(1) The SEC should get Broker Dealers to identify the source and exclusively commit shares loaned out to cover short sales by other Broker Dealers.
(2) The DTCC should not be allowed to make available, as loans, to short sellers, more shares than are on deposit with the DTCC. (This common sense requirement would go a long way in leveling the playing field for small investors and small companies.)
(3) Brokers should not be paid commissions or receive profits on the short sale of stocks, until the shares are identified and an exclusive commitment has been established.

I am thankful to Mr. Byrne for his contributions in the fight against Naked Short Selling by Hedge Funds. He has been combating the Naked Short Selling of Overstock shares since January 2005 and has recently made great progress in his battle by receiving a favorable ruling in his lawsuit against several large prime brokerage firms that have been Naked Short Selling Overstock shares.

A positive ruling in this case will go a long way to correcting the Naked Short Selling problem and be most helpful to the financial futures of retail investors.

Also, I would like to pass on some additional URLs as background material for you and your staff s use. I hope you find them useful in preparing for future Banking Committee hearings on the Naked Short Selling issue.

The next video is another contribution by Mr. Patrick Byrne, an excellent primer on Naked Short Selling, narrated by him and entitled The Darkside of the looking glass. Its a rather long video. I recommend viewing at least Slides #21 through #60 (minutes 11:48 through 37:02).
(Video - 79:44 minutes)

Is the SEC dysfunctional? I have a number of friends who believe so. The SECs failure to properly implement and enforce Reg. SHO and the Gary Aguirre versus John J. Mack incident are prime examples. The Financial Service Industry and Hedge Funds have great influence with the SEC due to their enormous stake in the markets. They also have tremendous influence in the political process with their large contributions to political campaigns. Who is the Regulator and who is the Regulatee? I sometimes wonder.
The Gary Aguirre Story (NOW video):
Video (Under Program Resources, click on Video watch - minutes 2:30 to 18:00)

That concludes my letter.

I hope you and your Staff find some use from the information Ive provided.
I would also, like you to know that I have sent a message to the Producers of CSPANs Washington Journal, suggesting they have you on some time after the Senates Summer Recess to discuss your efforts to properly control Naked Short Selling.
Please let me know if you have any questions or would like additional comments or material.

Respectfully yours,

David Nugent
Clermont, Florida