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

April 11, 2007

Liquidity is the degree to which an asset or security can be bought or sold in the market without affecting the asset's price. Applying the Plain Meaning Rule, that would dictate an asset or or security which is bought or sold buy the rightful owners.

Neither short selling nor naked short selling is included in the plain meaning of liquidity. Further, they are done to knock down the assets price and draining liquidity from the asset or security.

Thus short selling may only be considered as a privilege and not a right. This privilege can only be extended if the rightful owner (with his/her knowledge and consent) loans the asset or security to another party to sell short.

The SEC claims they want to maintain liquidity. Then they must ensure that there is no infringement of the property rights of the rightful owners or others long in the asset or security. A verified pre-borrow requirement is mandatory to place a short sale and delivery of the asset or security is mandatory to execute the trade.

Nothing less would be sufficient to protect the rights and property of the rightful owners and retail investor.

The SEC must amend Reg SHO accordingly and include that no broker/margin agreement can be allowed to force a retail investor to waive his/her property rights to open an account. Buried within lengthy agreements and confusing legalese is fine print enabling borrowing assets or securities without knowledge or consent. This is unconscionable.

First it should never be allowed. But any agreement like that must be in plain language so that even the least knowledgeable can fully understand. Next if it was done anywhere else it would be Bait and Switch or in case of margin Predatory Lending.

If you bought a house or a car, could the bank come borrow them without your permission? Then when or if they were ever returned to you be in such a rundown and damaged condition to be nearly worthless. Plus you would still be stuck with the tab for the full value. Yet this type of unbridled fraud is status quo for Wall Street.

The SEC has left the retail investor trapped in a miscarriage of justice called Reg SHO. Its time to take the reasonable steps necessary to finally start protecting the retail investor.