Subject: File No. S7-12-06
From: Concerned Investor

February 1, 2007

All that needs to be said can be said by reading the transcripts of a December 2004 Conference Call by Bear Stearns in which the General Counsel states to clients:

"To give you that brief introduction in Reg SHO, the history (of) how we got to where we are today. For the past few years we have been hearing from many different regulators regarding their concerns about the increase in the level of fails that they are seeing. They believe, and they have stated on numerous occasions, that one of the primary causes of the high level of fails was that various participants in the short sale process, prime brokers, executing brokers, clients, were not following already established rules."

And then follow up this alarming dialogue with recent press reports out of Washington:

Senators Question SEC Handling of Probe
Wednesday January 31, 9:40 pm ET
By Marcy Gordon, AP Business Writer
2 Senators Say Review Raises Serious Questions About SEC's Handling of Probe

WASHINGTON (AP) -- Two senior senators said Wednesday that an official review raises serious questions about the Securities and Exchange Commission's handling of an insider-trading investigation and the possibility of a cover-up amid allegations of political interference by SEC officials.
Sen. Arlen Specter, R-Pa., the Senate Judiciary Committee chairman in the last Congress, and Sen. Charles Grassley, R-Iowa, a member of the panel, made the statements on the Senate floor in the matter of a fired former SEC attorney who has alleged political meddling in the agency's investigation touching on Wall Street executive John Mack and a major hedge fund.

After taking testimony and reviewing thousands of documents, many of them provided by the SEC, the judiciary panel's preliminary findings show "extraordinarily lax enforcement by the SEC and ... may even indicate a cover-up by the SEC," Specter said. The SEC's handling of the matter, including a review of the attorney's allegations by the agency's inspector general, "has all of the earmarks of the obstruction of justice," he said.


So, the question that concerned investors have is, has the SEC aided and abetted short selling fraud by witnessing the securities fraud related to settlement failures? Did the agency the other way because of the industry professionals involved?

As each day passes it is becoming abundantly clear that the Prime Brokers are abusing the system and by the allegations of the General Counsel of Bear Stearns, the SEC let it continue to happen. It is time the SEC represent the tax paying people of this country and protect our markets from the Wall Street abuses from the system itself.

Get rid of the grandfather clause, firm up the guidelines for trade settlement, strengthen the limitations on market making exemptions and most importantly, start holding individuals and not companies accountable for the fraud against the public.