Subject: File No. S7-12-06
From: Michael S Learmonth, B.Sc, CFP, CIM
Affiliation: Investment Professional

September 13, 2006

I am an investment professional residing in Vancouver, BC, Canada. I am truly amazed at the SEC's complete lack of integrity, ethics, and fiduciary duty to protect stock market investor's.

When Reg Sho was first established in 2005, it was written with two deliberately calculated, and bent clauses. The "grandfathering" clause, as well as the "locate" clause.

Both served only one purpose. To protect all those who had previously abused the naked short selling rules, and to provide a loophole that in essence would allow this abuse to continue.

In a ludicrous explantion of the "grandfathering" provision, the SEC has articulated concern about the potential for market volatility (short squeeze) should the rules actually be enforced. It mentions nothing about the market volatility (tanking stock prices) due to the lack of enforcement of the rules.

When exactly did the SEC decide to take sides?

The "locate" provision can only be described as a vast loophole. In a perfectly functioning market, the number of shares sold short should never exceed the number of shares that are readily available to borrow. This loophole needs to be closed immediately. The SEC needs to be able to track this process to ensure compliance.

I hope that the current ammendments to Reg Sho, are quickly accepted and enforced. The SEC has some work to do if their goal is have the market participants regain confidence in your institution.


Michael Learmonth