Subject: File No. S7-12-06
From: Don Shields, Esq.
Affiliation: Attorney

March 27, 2007

I agree with Chairman Cox's comments that Regulation SHO is failing and the illehgal Grandfather Clause must be revoked - yesterday. I disagree with Annette Nazareth who claimed short selling does not exist and her comment that people are complaining because their stock has lost value.

Here are Cox's comments, which I agree with:

"CHAIRMAN COX: Abusive naked short selling is of great concern to the entire Commission, to all of our members and the professional staff at the SEC. The regulation that was first adopted to get after this and related problems, Reg SHO, has proven insufficient to stop the problem. One of the reasons is the Grandfather provision in the rule as it was originally adopted, so we are now setting out, as you know, to eliminate that grandfather provision. And we will do more. Just as Congress may well have hearings on this issue and seek to get more information, so too are we looking at this. As you know, there's a technological side to this. This is very closely connected to our system of clearing and settlement in a very very big market, and we want to make sure that we use technology as our friend in relating, potentially and at all times, ownership and particular shares rather than waiting until the end of an arbitrary period of time to match those things up. It's those sorts of things that I think will eventually help us, I think, put an end to this kind of abuse. And I know that people victimized by it have a great deal of right on their side to complain about it."