Subject: File No. 4-557
From: Mary Helburn

April 10, 2008

The SEC has allowed "security entitlements" to reside in customers accounts past the T+3 settlement cycle. This violates the Securities Act and the mandate of the SEC to protect investors.

The brokers using the "UCC rule" instead of existing law to excuse this illegal behavior is now public knowledge. They must cover their naked positions and put real shares in customer accounts. No grandfathering, no special add-on clauses sneaked in by SIFMA lawyers in secret, unrecorded meetings to protect illegal short positions. Naked shorting and violating the settlement cycle are already illegal. Calling naked short-selling and intentional failing to deliver "illegal" and making it more difficult to prove by demanding scienter and protecting the broker by laying all the fails on the customer will make enforcement harder. It is already illegal. Just enforce the existing... real laws.

The Director of Enforcement recently spoke addressing how complaints about naked shorting have been handled in the past. A company who suspects manipulation and complains is then subjected to an investigation. That seems like a complete waste of time. Investigate the complaint and if there is nothing there, report that, but don't make anyone who brings a complaint the target of an investigation. Since the company has to report that publicly, it can only damage their reputation and their shareholders and would discourage companies from reporting aberrant trading in that security.

By enforcing the 3 day settlement cycle, the evidence of manipulation, either by company insiders issuing more shares or someone failing to deliver as a strategy to drive the stock price down would be very apparent if only real shares were trading. It would be far easier for Enforcement and less likely for the criminal manipulators to go undetected. Pump and dump scamsters could not use the excuse that they were being naked shorted and short and distort manipulators would not have the extra tool of manufacturing fraudulent shares to drive stocks down.

We have the law and it worked fine until criminals tried to override them with inapplicable rules that are in direct apposition to the law and the SEC failed to enforce the law or was somehow co-opted to turn a blind eye as to what was happening.

Bring some integrity back to the SEC. Bring some integrity back to the markets. It is a poor reflection on the SEC for outsiders to have to point out where the loophole is while the SEC's best effort has been grandfathering of fails, giving the option market maker the ability to create unlimited phantom shares, allowing market maker exemptions that are abused, investigating those who complain about manipulation of their securities and removing the uptick rule. These all favor market manipulators and harm equity investors and issuers. The grandfathering of fails to avoid short squeezes was a blatant example of incompetence on the part of a regulatory agency to circumvent honest market forces. Allowing counterfeit shares into the market also stops natural market forces in price discovery. How these rules were popularized and used should be investigated, as well as, the people who facilitated these rules and the methods of sneaking them in without proper public scrutiny and discussion.

If the SEC fails on this petition, the next one will request that all companies have to include in their disclosure of risk that the rule of law is not enforced and the greatest risk is market manipulation and regulator-encouraged bear raids.

I am tired of the SEC looking more like a criminal conspirator than a regulator.

Mary Helburn