Subject: File No. S7-08-09
From: Phil Smith

August 18, 2009

Dear Chairman Shapiro,

I am a Canadian with an equity portfolio and have all but exited the US markets due to the extended rigging of same markets.

I understand that you are still soliciting commentary on the matter of the Uptick Rule (above bid rule) and short selling. Illegal short selling persists and investors and small companies are being unduly punished for the benefit of the corrupt not so few. Small public companies (the hope of your economy going forward as they are the creators of the majority of new jobs) are particularly vulnerable.

When the number of outstanding shares of a company " in play" can rise by 50 to 75% or more due to naked shorting I have a problem. In Canada, when you sell something that you don't own, it is called conversion and you can be criminally charged. These counterfeit shares unfairly distort the market and fair price discovery not to mention the vote distortions at annual meetings. I guess it comes down to supply and demand, in short...increased supply, lower prices...artificially increased supply, artificially lower prices. Where is your price discovery. Your market seems to be a lot of smoke and mirrors supported by the politically connected and their lobbiests

Add to this the mountain of naked short derivatives (see the Comex), front running, frequency trading and insider trading by the likes of Goldman Sachs, and J.P.Morgan and the small investor has as fair a chance of getting his money back as a Bernie Madoff investor.

Reinstituting the Uptick Rule and future enforcement of the rules would be a good start at repairing your rigged markets.
At one time the rest of the world looked to America as the bastion of free trade and the rule of law. Now....not so much. I look forward to a day when I can once again confidently invest my money in the US.

Phil Smith.