Subject: File No. S7-12-06
From: Peter J Stevenson

January 23, 2007

Please eliminate the grandfather clause.
It is allowing brokerages to maintain counterfeit shares of stock on their books.

The "grandfathering" of failures to deliver within Reg. SHO has caused irrepareable harm to the market's average investors who don't even know what is taking place. While it has been beneficial to inside market makers, major brokerages can opportunistically - and, unbeknownst to the average investor - control the price of a company's stock by creating fake shares to sell sort...without ever "owning" the shares.

This is counterfieting and the SEC should not permit this to continue and should repeal the grandfather clause "retroactive" to the day it was included in Reg. SHO. If it is not eliminated, then the SEC should consider themselves open to claims of being complicit in a scheme with broker dealers to sell bogus shares in the open market and collect not only the shareprice deposits but also the associated commissions while never delivering the assets correctly into the investors' accounts.

These activities are an outrageous abuse of Congress' mandated regulations guaranteeing a fair reliable clearance settlement system. I find it utterly appalling this has been allowed in the first place.

Please try to restore confidence in the US Markets before it is too late. Do it NOW Don't wait until the last minute because it will be better to demonstrate that you are taking responsibility and demonstrating a leadership position. There is no alternative.