Subject: File No. S7-12-06
From: C R

February 20, 2007

As an investor and US citizen, I would like to comment that I am greatly concerned that the repeal of the Reg SHO grandfather clause, as voted and supported in July of 2006, has still yet not been given final approval.

It is my position that the SEC should have not had the right in the first place to grandfather any Fails To Deliver (FTD) positions, as that action is in direct contradiction with the Securities Exchange Acts which require settlement of trades within T+3.

The SEC stated that avoiding market volatility was the reason for creating the Reg SHO grandfather clause.
The DTCC stated that FTD's are not a significant problem.
If the amount of FTD's hidden from the Reg SHO list by the grandfather clause are not that significant, then neither should any potential market volatility be, due to their becoming listed on Reg SHO and the subsequent buy-in of those FTDs. The logic behind the creation of the grandfather clause as put forth by the SEC to the public is flawed.

What is the real reason why these FTD's have been hidden from the Reg SHO list by that grandfather clause? Who is really being protected from a forced prompt settlement of these amassed FTD trades?

Certainly, the companies' stocks in which FTDs have occured have already had to absorb the dilution effects of all extra FTD positions open and in the market place. Certainly, proxy votes have been effected by these persistent FTDs remaining "grandfathered" by the SEC.
And certainly, the "buy pressure" that should have brought upward pressure to those stocks' PPS was negated by the FTDs as those new positions are created out of thin air and only served to dilute the float. Who benefits from this? (Someone does.)

Why does the grandfather clause continue to shield the presence of FTDs from the Reg SHO list, as those FTDs continue to negatively effect the respective companies, their shareholders, and in turn, the national economy,
......... and again, in turn, our national security..?

I hope our Congressmen and Senators will get to the bottom of this apparent foot-dragging. I hope the SEC will promptly enforce ALL market settlements as they are charged to oversee and enforce the United States' laws of the Securities Exchange Acts, ...not circumvent them.

C.R. US citizen and investor