From: C. Gary Rupp
Sent: March 27, 2007
Subject: File No. S7-12-06

With regards to the extension of the Commenting Period for the proposed amendments to Rule 203 of Regulation SHO [17 CFR 242.200 and 242.203] under the Exchange Act, and to the options market maker exception:

We need new regulation to stop so-called Naked Short Selling and the issuance of “Phantom Shares”. Regardless of the cause, it’s pretty clear that at least some market makers have failed to deliver stock certificates when requested to do so - well past the authorized time limits allowed by Regulation SHO. Moreover, some companies have seen trading volumes that far exceed the authorized shares authorized by the Executive Boards of the companies affected.

There is a reason why companies only issue so many shares… so that the value of each share falls within a cost range preferred by their targeted/ prospective buyers. Allowing unregulated selling of unauthorized shares, and shares not properly borrowed and backed with real certificates, subverts the intentions of the Executive Board. In extreme situations, supply quickly exceeds demand, driving the prices down. Many investors and company executives believe there are unscrupulous market makers who have intentionally used these tactics for their own economic gain, at the expense of the targeted companies and its “Long” investors.

Please act now to curtail these failures to deliver. I think there is more than enough evidence to show that the current Regulation SHO laws have been ineffective at curtailing the unscrupulous practices of Naked Short Selling and issuing Phantom Shares.

In closing, I can’t image the SEC has failed to have noticed the Bloomberg Articles on this subject, and Jim Cramer’s comments on how Hedge Fund Managers have been able to manipulate the market for their own self interests. If not, here are the links:

Cramer’s discussion at on “methods” used to move a market as a Hedge Fund Manager:

Bloomberg News Special Report: Phantom Shares by Mike Schneider


C. Gary Rupp