Subject: File No. S7-12-06
From: Rex Wu
Affiliation: Senior Business Analyst

July 20, 2006

The root problem to Regulation SHO is the grandfater clause. First as an average american researching on the grandfather clause, I am not sure if its legal for the SEC to make such a grant. The grandfather clause allows the perpetrators of naked short selling to never or take years to close out short positions. This hurts the company and the perception of the US markets being a fair market. It is not fair to the companies who are naked shorted and not fair to the investors of the company. How do we know who has the rights to vote on their shares when there can be more shares outstanding than the comapny planned. Wont this destroy the integrity of the company and the market.

Also, isnt it a problem if the SEC admits that the grandfather clause is needed to stablilze the market once SHO was enacted? If its a problem, what has the SEC done to fix it? Nothing until now. I hope the SEC is willing to really willing to take a look at this issue seriously aside from the special interest that is going on. From the recent hearings, its disturbing to hear the SEC stopped an investigation into a company because the person involved is well connected. As a citizen, I ask the SEC to do what is right. The grandafter clause needs to be eliminated....Thank you for the time.