Subject: File No. S7-08-08
From: Kevin M McCormick

July 2, 2008

I believe some of my investments have been impaired by naked short selling. I further believe that the existing regulatory framework is inadequate to protect against this abuse because accounting or delivery procedures can be abused by a calculated minimal compliance or non-compliance such that share prices are manipulated, but the individual violations are not seen as serious enough to warrant prosecution. It is clear that selling of counterfeit shares is widespread and harmful to investors. I respectfully submit that the present regulation is totally inadequate and the SEC commentary on the topic is superficial, self-serving, and misleading.

I believe that stockbrokers are allowed to charge commissions when a trade is completed, even though valid stock has not been delivered. I think this is one key element that allows naked short sales to continue. The regulation should be amended to provide that broker's commissions can only be collected upon delivery of valid shares to the buyer's account. I believe it is well within the abilities of modern information systems to accommodate this requirement. For example, shares could be numbered and existing share numbers could be verified for each transaction. Duplicate or invalid numbers would be immediately identified by computer. The key point is that stockbrokers must verify that the shares they obtain are valid before they can charge a commission on a stock purchase. I submit that this amendment would have a beneficial effect and reduce naked short selling fraud in the securities markets.

Thank you