Subject: File No. S7-20-08
From: James O Carnes
Affiliation: Retired

July 24, 2008

Finally, finally, finally the SEC took some action, however limited, regarding the counterfeiting of shares of certain companies, commonly referred to as "naked shorting". This order needs to be strengthened by requiring all transactions, be they long or short to be settled properly at T+3, either by a definitive bonafide borrow or by cash. If settlement is not made on T+3, buyins should be mandatory and specifically ordered by this rule. The rule should be extended to ALL COMPANIES. How is the world can the SEC justify the protection of a few broker-dealers (who is the past have no doubt been some of those doing the illegal shorting) but not extend that protection to all companies. Anything less certainly does nothing toward the SEC's mandate by law to promulgate rules for the protection of the investors. Please fullfill your responsibilities under the law, which you are presumably sworn to uphold, requiring that the markets be made to operate in an honest fashion and which provide reasonable protection to the investor against manipulation. All of the "unbiased" data developed reflect that Reg SHO is not working and that "fails" have materially increased since it adoption, particularly the provision permitting unlimited shorting by the Options Market Makers and the extension of those "fails" into infinity without settlement. Extended fails however created should be accurately described for what they really are .... "counterfeit shares", ... and as with any counterfeiting...FRAUD....pure and simple.