Subject: File No. S7-12-06
From: howard rosenfeld

March 29, 2007

revision of SHO greatly needed. the amount of manipulation can be compared to the excesses of Jay Gould and other legendary manipulators. Short sales need regulation-FTD shares should be COVERED with real shares not IOUs within a short time. the huge amount of shorts in some stocks equals more than the amount of tradeable shares-in effect the excesses produce counterfeit or non-existent shares. these trades are made for manipulation. for example, a stock selling for $5.00 has 10 million shorts, including 208,000 puts.
i must caution regulators, in trying to overturn SHO abuses,you are bucking against big money-Lehman,Gildman,Morgan et al. they run a business locating shares to short and substituting IOUs for FTD shares. this is a billion dollar business. you will have formidable adversaries.

you must also regulate to some extent-the option market-ex.-sellers of puts can issue puts without regulating the covering shorts.

howard rosenfeld