Subject: File No. S7-20-08
From: Ronald R McDermott
Affiliation: Retired Executive of $1Billion business investor

July 27, 2008

This rule should be extended permanently and arrangements to "borrow" stocks should be in place before any stock can be sold short. I really don't care that it requires extra work for the short seller to actually go through the process of making arrangements to borrow the stock before selling it short - if this requirement is relaxed, the short sellers (and hedge funds) have won and they can collectively destroy the value of any company with less than about $10 billion in market cap. And the rule should be broadened to cover all companies. I have noticed that short sellers can dramatically drive stocks of companies with market caps of less than $0.5-10 Billion into the ground. The short sellers act in concert like a wolf pack and destroy smaller market cap companies.

Another aspect of this issue is that brokerage firms loan out my stock shares to short sellers without my knowledge or consent. I am a long term investor and when the stock that I own in my brokerage account is loaned out to a short seller, the short seller is borrowing my stock without my knowledge or consent to destroy the value of my stock. The brokerage firm gets a fee for loaning out my stock and I do not share in this fee. The SEC should require that all brokerage firms get the consent from the owners of the stock and not the holders of the stock (the brokerage firms) in a brokerage account before loaning the stock shares to a short seller. Said another way, I should have the ability to say that I do not want to loan out the shares of my stock held in a brokerage account to a short seller. Today the only way that I can accomplish this is to have the company issue actual stock certificates in my name which is extremely cumbersome from a transaction perspective.