Subject: File No. S7-20-08
From: Michael Shaw

July 28, 2008

Dear SEC professionals,
I want to applaud the recent Emergency Order amending the Securities Exchange Act of 1934 to enforce the naked short selling rules in the stock market. I was surprised to learn that the up tick rule was abolished last year and the stock market has certainly shown that without that circuit breaker in place, shorting individual weak stocks into a panic and then covering after the panic move is the best trade of the current period.

CNBC reported on Friday, July 25, 2008 that traders were trying to short Fannie May and Freddie Mac, on downgrade news, but could not get the shares due to the temporary naked short selling rules. That situation may indicate that the new amendment is at least working in keeping the traders from causing the panic that we have seen in the past.

I have to wonder if abolishing the up tick rule has made shorting the market the best play indefinitely for market traders and the normal consumer that has to bank on stocks increasing in value, for 401K and IRA type investments, are at a significant disadvantage. I believe that if the normal working individual actually knew about the up-tick rule change they would consider not investing at all in a market where clearly the short sellers have an advantage over the normal retirement investor. The retirement investor doesnt have the luxury of fast market trades and they dont have access to the short side of the market. If this short selling environment continues they may not be able to retire on time due to massive losses in their 401K and IRA accounts.

I personally feel that the Stock Market is now a game that is fixed and the referees are not enforcing fair play. The Stock Market is now simply gabling and doesnt have a true connection to individual company performance due to the vast fortunes now able to be made by short selling companies into a panic and in some cases causing them to have to declare bankruptcy.

If I understand the Market as it is, I might own a particular stock like GM and the market could short sell more shares than exist, using my shares over and over to satisfy the locate rule, cause the market to panic and sell off, and nothing to stop the collapse because the up tick rule is no longer in place, and GM gets sold off in 1 day to the point where the stock losses a large portion of its value. The sort sellers cover at the end of the day and I come home to find out I better plan on working another year before retiring. Clearly that should be illegal and stopped or it makes no sense for any long-term investor to participate in the Market.

If the SEC reinstated the up tick rule and made the Emergency Order for naked short selling permanent and made the rules apply to all stocks, the public might be willing to invest in companies again, and the Market might behave like normal. If not we will have to consider another Great Depression kind of effect due to massive destruction of wealth in the retirement funds. The idea that the naked short selling amendment rules are causing market manipulation is ridiculous, and the fact is the current state with no up tick rule and no naked short selling enforcement, creates another set of loopholes the traders are exploiting. We better stop this game fair before it is too late.

Michael J. Shaw