Subject: File No. S7-08-08
From: Al Ball
Affiliation: Retired Banker

April 27, 2008

April 28, 2008

The following information is being provided to the SEC as a case study which highlights several inequities in the marketplace but focuses on SHORT SELLING.

The information provided relates to a company called SCIELE PHARMACEUTICAL (SCRX) listed on the NASDAQ market. SCRX has a SHORT INTEREST of 34.7% of the float. That is in excess of 11,000,000 shares. This stock is not listed on the REG SHO list. Notwithstanding the level of short interest in the stock, Charles Schwab has a "MARKET PERFORM" rating commenting on the short interest as a "NEGATIVE" and adding the statement short sellers can be considered "SMART MONEY". Zacks has given SCRX a 2 BUY rating up to $28 but their commentary mentions nothing about the short interest. Standard and Poors has issued a 4 star rating and a price target of $31. The SP advisory mentions nothing about the huge short interest.

In spite of the glowing endorsements of this stock, most investment advisors I know advise staying away from any stock that has this large a short interest. The 2 primary reasons are 1) The "Smart Money" is aware of a serious deficiency in the company that has not been disclosed to the general public and 2) Trading volume in the stock will drop over time as potential buyers are scared away by the short interest thereby increasing the potential volatility and increasing the opportunities for short sellers to further manipulate the stock price. Additionally, though, a company can rapidly become "Tainted" and lose prospective advantage in the marketplace.

Occasionally, sophisticated investors will look at the stock of a company like SCRX as an opportunity for a "Short Squeeze" in the event that positive news is released which would tend to cement the near term future of the company. One wonders, however, how the market would handle this covering of 34% of a companies stock.

The SEC can glean from recent trading patterns in the stock of SCRX that it is being controlled. When the stock price recently fell to $17.77 there was little short covering motivation even though those short had profits from a previous high of $28.83 on October 11, 2007. SCRX has recently increased to $19.27 on a decent market and slightly positive news releases although there is strong selling into any lack of buying interest.

At this time there is over $20,000,000 invested in the likelihood that the stock of SCRX will go down. These short sellers are apparently aware of "Insider information" to which I am not privvy and, most importantly, is not apparent from an analysis of the financial condition publicly disclosed.

Neither the SEC nor any reasonable person reviewing the information included here can rationalize there is a "level playing field" in the trading of this stock. I own this stock. If negative "Undisclosed information" comes out I will stand to lose thousands of dollars. The important question is how the SEC can allow the marketplace to get this far out of hand without taking action. Short selling in the open market should not be allowed. Period.

Interestingly, I can still sell this stock short through my Schwab trading platform as there are apparently shares available to borrow. I don't have to make any calls or attempt to locate stock to borrow. I just enter my order and click the "SHORT' button and it's done.

Schwab Equity Rating "C"

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Zack's Investment Advice As of April 4, 2008

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Standard and Poors Investment comments February 27, 2008

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