From: Paul Floto
Sent: March 26, 2007
Subject: File No. S7-12-06

It is now clear that the SEC is an active participant in a criminal scheme to defraud public investors in the US securities market.

The options market maker exemption has been used to counterfeit millions of shares of numerous companies as part of criminal conspiracies to manipulate securities prices.

Since the SEC has allowed hedge funds to purchase unlimited numbers of puts, and the options market makers to sell, but not deliver, unlimited numbers of shares, the price of many companies shares have been driven down by 90% or more, to the point that some companies have been forced to severely curtail operations, at a cost of thousands of US jobs, and billions of dollars of losses to individual investors.

It is clear to any first year economics student that dumping millions of "extra" shares into a market will severely impact the market price of those shares.

It is not clear to anyone why the SEC believes that guaranteed profits for options market makers should take precedence over the integrity of our securities markets.

Paul Floto

Dallas, OR