Subject: File No. S7-08-09
From: Gunther Karger
Affiliation: President, Discovery Group

May 19, 2009

Recommendations on short selling:
1. All short selling should be banned for stocks under $2.00 on Bid
2. Naked shorts totally banned with an effective enforcement and penalty for violations by principals and transaction facilitators.
3. Short selling suspended for all securities subject to a reverse split effective on announcement date through six months after the effective date.
4. Guidelines be established whereby the SEC may issue total ban on all short sales for such times as when the markets are deemed to be in a crisis mode to include specifically times when downside circuit breakers are triggered and remain effective.
5. All short sales must be executed in a margin account with the initial equity set at 75% and maintenance at 50%.
6. Financial reporters and investment newsletter editors/publishers must disclose short positions for their personal and closely related accounts.