Subject: File No. S7-19-07
From: Stephen B Wilson, Ph.D
Affiliation: Professor Emeritus,Psychology Triton College

July 19, 2008

I recommend that regulation SHO be enforced. Micro-cap stocks can be held down and easily manipulated by hedge funds. This prevents the small companies from raising cash to grow their business. Manipulation is done by hedge funds paying a journalist to write an article about a micro-ap company. The article describes the company in mostly glowing ways and projects great financial potential. The stock price of this company quickly goes up. The hedge fund starts selling naked shorts and drives the price down and down. This could easily turn 75% profit in eight months.
My recommendation? For companies capitalized at 100 million dollars or less the individual must own the stock in order to short the stock.