Subject: File No. S7-32-10
From: F. S.

December 14, 2010

Fraud and manipulation, in all their forms, should be prohibited. That being said, I fully agree with the proposed rule to prohibit the fraud, manipulation, and deception in connection with security-based swaps.

By affecting the underlying value of the securities in a swap, one party can have a negative effect on the counterparty and/or positively affect the stream of income or fees it takes on. The only thing a counterparty would be able to do would be to hedge against this risk somehow. This would mean that this party would assume increased costs of doing business as well as it would mean it assumes the other party has bad intentions. If this were the case, why even do business in the first place?

If parties were allowed to set up security-based swaps while at the same time attempt to gain an unfair payout, the end result would be the termination of swap contracts as we know it.