Subject: File No. S7-08-08
From: David McDaniel

May 19, 2008


After buying into a company 5 years ago that has been naked shorted and proven by Lawyers, with still no payment of damages or action taken against those Brokage firms/MMs and other who are responsible for selling and letting the shares to be sold on the market, it sure would be satisfying to see lasting and corrective action taken by Government Agencies to ensure robbing of the the American people does NOT keep happening
People have died since there investment in companies they were sure would have a return on their investment after studying and doing Due Diligence on the company, just to have company go under because of the NSS. How many good start up compnaies have gone under because of the illegal selling of NSS. How much money was made by the overseers looking the other way.
NOW is the time to make changes in the Market system to guarantee the pillaging stops

Once again the SEC seeks comments about proposed legislation related to naked short selling and settlement of trades. And once again the SEC proves itself to be the most useless bunch of bureaucrats ever assembled.

The proposed legislation is a farce from the first pages. How about enforcing the laws demanding settlement, instead of seeking comments for new ways to delay or escape settlement by ALL parties. On page 4 of the proposal, the SEC says the proposed law 'could help reduce manipulation'. Why not shoot for ELIMINATING the manipulation, instead of 'helping to reduce' it? The reduction of market manipulation via this proposal will prove as effective as the chocolate cake diet is at reducing weight long term.

On page 4 the SEC strains credulity with the comment 'Those fails can have a negative effect on shareholders...'. Is the SEC attempting to imply that Naked Short Selling doesn't ALWAYS have a negative effect on the shareholders? That the stock price goes down rapidly and rarely recovers (since settlement is rarely required while the victimized companies are still 'alive'). And the negative effects are not merely felt by the shareholders. The victimized companies are hurt, denied the capital that they came to the market to get. They face unnecessary struggles and their employees have their paychecks affected (even if the company survives). Many companies do not survive and the investors lose all their investment capital, the employees lose their jobs, the towns and states lose their tax revenues and eventually their bases, and the trickle down effect of that is felt by all especially where this abuse has been systemic, wide spread and long term.

Page 16 shows the lack of a moral center at the SEC. It asks what kinds of securities should be included or excluded from settlement, If the scope of the law should be narrowed. Why not ask what kinds of stocks should we allow to continue to be manipulated? What special groups can we cater to and what victims will complain the least? The SEC is no friend to retail investors, the companies who come to the market to find capital for expansion or development, or to the American Public who has seen their former jobs go overseas, their opportunities for new employment severely limited by the systemic fraud aided and perpetuated by the SEC and the other self regulating agencies that are here for their protection.

The SEC asks those commenting on whether the scope of the law should be narrowed or not, to give their opinion, and say why or why not. I believe that the proposed law should be broadened to require ALL trades to be settled within 3 days or be reversed. There is either stock available or there isn't. The law should include brokerage firms taking money from clients for 'electronic' shares that don't exist. This is also naked shorting aka counterfeit shares. 'Desked trades', 'Phantom Shares', 'Markers', etc, are no substitution for delivery of what was paid for. No one should be paid money for the sale of something that does not exist. The SEC needs to stop being a party to market fraud. Does the public really need to tell you that taking money under false pretenses is wrong? That it is stealing? OK. I'll tell you. That's why the law should not be narrowed. Stealing is wrong. Allowing some groups to steal and others to be punished for similar behavior is wrong on so many levels that we'd need a sea full of ink, to fully comment why.

The Sunshine laws were created to give investors a clear view of what is happening in the market. Yet the SEC continues to have it's closed door meetings and the shareholders of multiple companies continue to be left in the dark. This needs to change.

The derivatives market is closely related to the Naked Short selling of securities. Investors deserve to be fully informed about the parties who are making money from 'lending' the securities owned by them especially where fails to deliver have existed long term. They should be fully informed of the value of their stocks. Especially non trading securities that continue to be on loan even after the SEC makes a pretense of shutting the companies down for fraud. CMKX and Casavant International Mining are examples of companies that appear to have no value, but hundreds of billions of shares (and possibly Trillions of shares) were naked shorted. IF there is any derivatives related value on these securities the investors holding stock certificates should be entitled to know that information. The SEC has gagged companies from disclosing information that investors deserve to know. It's morally wrong to keep investors in the dark about their financial affairs. Some of these stocks are held in retirement accounts. Our Senior citizens deserve full disclosure when planning their financial futures. Why should they have additional (and possibly unwarranted) stress placed on them, when disclosure would remove it? And even if full disclosure showed there to be no hope of a return on their investment, the benefit of being able to appropriately plan would be a welcome event.

Disclosure related to naked short selling should be required by all brokerage firms, hedge funds and banks on their financial statements. On the Refco bankruptcy filing there was a line item entitled: Cost of stocks sold - not yet borrowed = $10 Billion - Marked to Market. The present value of the securities naked shorted was 10 Billion Dollars marked to market. I wonder what the value of those securities were before they (and probably the company's they represent) were run into the ground?

- The 1976 Security Processing Laws gives the SEC all the authority it needs to enforce the rules. The SEC has oversight over ALL clearing agencies to ensure the accurate settlement of security transactions. Any party who decides to do otherwise can and SHOULD be revoked by the SEC (yes, the SEC has the power to do so).

- In a world where almost all financial transactions are done via computers this whole 'naked' short selling fiasco is a simple software programming problem and its solution should thus be very easy to accomplish. Any 'authority' who denies this should be instantly fired for their incompetence.

- The SEC can and likely will be held responsible for their actions due to the fact that the SEC has done everything possible to ensure the non-implementation of solutions and thereby has become partners in crime with the counterfeiters. Punitive effects can be awarded to damaged parties by the SEC for their gross negligence and willful misconduct. By means of the Bivens Claim these government officials can be held responsible for their actions and receive their just reward.

The SEC continues to prove it's incompetence at eliminating market fraud via naked short selling, or even worse it's complicity with the manipulators. The fact that it aims to reduce the manipulation instead of eliminating it, shows it's true intentions. To truly eliminate naked short selling, we probably need to eliminate the SEC.