Subject: File No. S7-12-06
From: Robert Almy

April 4, 2007

Naked Short Selling / Failing to Deliver

Naked short selling occurs when a seller sells a share of stock, and then fails to deliver it. A naked short sale is a manipulative trading technique. It takes advantage of a structural deficiency in the system that allows a transaction to occur, and all moneys to be paid, before delivery occurs. So a transaction goes by on the tape - a sale - and it is processed, and has an effect on the price of the stock, but the delivery portion of the transaction is left for days later. Meanwhile, the depressive effect of thousands of these sales extracts it toll on the price - the naked sales are still sales, and are treated as legitimate by the system.

At some point after the checks have been cashed and the commissions distributed and the fees paid, the share never shows up and the SEC never investigates.

The so-called limited-time frame exception is sham. Its merely a frivolous excuse for creating phantom shares in a thinly traded security. Its a total fabrication of market makers and again the shares never show up and the SEC never investigates. You simply cannot create liquidity where it never existed by using naked short selling and failure to delivers.

There has never been a legitimate reason to allow naked short selling and there never will be one.

Further, it is necessary for the market makers to use the corrupt stock borrow program at the NSCC/DTCC. The stock borrow program robs the accounts of unwitting retail investors. That is the NSCC/DTCC arbitrarily grants itself power of attorney over the retail investors protected property rights and steals the security without the knowledge or permission of the rightful owner.

What ever happened to the congressional mandate of Rule 17A of the 1934 Securities Exchange Act that our markets have prompt, accurate clearance and delivery. It reads, "The prompt and accurate clearance and settlement of securities transactions, including the transfer of record ownership and the safeguarding of securities and funds related thereto, are necessary for the protection of investors and persons facilitating transactions by and acting on behalf of investors.

Clearly, naked short selling/failing to deliver, the stock borrow program and Reg SHO violate rule 17A. What is even more disturbing is that the SEC turns a blind eye to Wall Street placing itself above the law and looting the accounts of the investing public.