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

August 29, 2006

I am a simple retail investor. I have been watching the debate unfold regarding FTD's and their significance, for the past 2 years.

Who was it from the SEC that stated 2 years ago how "Naked shorting is only the cry of investors that want their stock to go up"? Now it is officially recognized as a serious problem by Commissioner Cox. My, how the tides seem to have turned.

As stated in the SEC Act of 1934, the SEC is charged by Congress with the responsibility "to remove impediments to and perfect the mechanisms of a national market system for securities and a national system for the clearance and settlement of securities transactions and the safeguarding of securities.... to insure the maintenance of fair and honest markets in such transactions."

The Reg SHO Grandfather clause clearly is an impediment to the timely clearance and settlement of securities. The Grandfather clause effectively protected those responsible to settle FTD's from what should be the natural market consequences of their accumulated FTD laden positions. The SEC sited market volatility as a reason to grandfather the accumulated FTD's prior to Reg SHO. It appears, the SEC was protecting those responsible for the FTD's from a market squeeze on those significantly FTD securities.

There is nothing unfair about a squeeze taking place after a significant amount of FTD's have accumulated and are called upon to be delivered. The unfairness lies with the original actions of the entity who's failure to deliver has led to such securities positions duplication. In truth, a squeeze is the fair markets natural consequence to the immediate and just clearance of securities accumulated as FTDs. In this case, market stability should not be placed above fair market delivery. Unjust trading practitioners are being protected at the expense of the innocent purchasing investor by the Reg SHO grandfather clause.

Clearly REG SHO was ineffective at forcing fair markets within the stocks that persisted on that list. I am concerned at how the SEC seemingly acted to protect those responsible to deliver with such weakly crafted REg SHO rules, rather than enforce the spirit of the Securities Act of 1934 as promptly as possible.

It is my opinion that there has been rampant market manipulation deliberately affected through intentional FTD's, be it through the use of the DTCC's stock borrow program, brokerage ex-clearing trades, or other means of naked shorting. I believe the truth of this corrupted situation is too large to allow the public to openly know about it. I would suggest that the situation of present FTD's in our markets today may well be severe enough to be considered a national security issue. And those who are suspected to be responsible and/or in the chain of profits from such deliberate fraudulent securities sales be investigated for financial terrorism against the United States.

Looking forward, might I suggest that no buyer of securities should be charged for the purchase of any security, nor should any brokerage fee be assessed for that purchase, until that security is verified delivered into that buyers name and account.

- C. Rice, US citizen and investor