Subject: File No. S7-08-08
From: C Rice

June 4, 2008

The NSCC, via their counterpart DTC's Stock Borrow Program, is automatically clearing unmatched trades, also known as Fails To Deliver.

In her letter to former SEC Chairman Katz, on June 23, 2004, DTCC CEO Jill Considine wrote that the industry needs to dramatically improve its handling of unmatched trades and that the NSCC automatically clears unmatched trades.

May I point out that Congress' SEA of 1934, section 17A, clearly mandates that the SEC must pursue "perfect mechanism" for "accurate" securities trade settlement.

There is no excuse offered for achievable accurate trade settlement to be sacrificed in any way. The SEA of 1934 clearly allows for forced buy-ins of all securities after the now T+3 settlement period, as the solution.

As Dr Leslie Boni's report for the SEC concluded in 2005, the industry contains pervasive "strategic fails", due to participant choice.

While the NSCC continues to clear unmatched trades, a loophole is created through which it's participants are allowed to use excuses for strategic FTDs. Unmatched trade clearance subverts the existing option for perfect mechanism in trade settlement which is the immediate broker buy-in. This loophole opens the door for abuse and trade deception such as market manipulation via naked shorting. Phantom shares are created and company stock is diluted. Voting rights are diluted as is evident with TASR. The entire US economy is negatively effected as trade clearing occurs for unmatched trades.

Congress and the Senate Banking Committee must act immediately through the SEC to stop all clearing of unmatched trades. Or, the SEC must start proceedings to revoke the NSCC's registration as a clearing agency. This is clearly spelled out as the only acceptable option fully within the SEA of 1934 and section 17A. The SEC is mandated by section 17A to pursue perfect mechanism in accurate trade settlement. Any clearing agency acting outside of the most perfect mechanism that the SEC is charged to pursue must have their registration revoked. Clearing unmatched trades in lieu of broker buy-ins is an activity that impedes the pursuit of perfect mechanism for accurate trade settlement. It clearly contradicts section 17A of SEA 1934.

I implore the SEC and SBC to act upon this issue immediately. The FBI's 2000 Operation Uptick and the Eagletech case detail the extent to which our markets have become manipulated by the Mob and corrupt individuals within our largest Financial Institutions.

DR Leslie Boni's report concludes that participants strategically use FTDs for their own profit at the expense of accurate trade settlement. And, the DTCC itself has admitted that unmatched trades are automatically cleared by the NSCC.

The solution is simple. The SEC must enforce that all brokers meet full and immediate buy-ins for all securities past T+3. No exceptions. And the NSCC must account to the SEC for all FTD's in all securities for forced participant buy-ins and any retribution due to manipulation of our markets.

Thank you,

US Citizen and Investor