Subject: File No. S7-08-09
From: Don W McClure, P.E.
Affiliation: Administrator, University of North Texas

May 8, 2009

The current short-selling situation has displayed all the instability of a completely random control system, highly undesirable under most conditions, and blatantly unacceptable where retirement investments are involved in any manner. As a professor of engineering, I taught control-system theory which aims at moderating undesired wanderings, while allowing for responses to proper stimuli.

I believe two 'response moderators' are desirable:
1. some variant of the 'uptick rule'--preferably requiring a gain of one-half percent on the last measured trend and
2. a limit on the aggregate option positions taken by proposed transaction: total of all options and other derivatives (at any one time for any one SSN or ID number) cannot exceed a small proportion of total value of investor's portfolio, as currently valued by the SEC. I would propose something around ONE PERCENT.

The latter should limit total down-pressure on most issues--and return major market emphasis to END USAGE of accumulated capital, rather than the machinations of transactions to arrive at capitalization.


Don W. McClure