Subject: File Number: S7-19-07

July 21, 2008

Dear Sirs,

I am grateful for the opportunity to submit for your consideration the following comments on Regulation SHO. In general, I believe that the current Regulation requires significant amendment in order to better protect the legitimate interests of ordinary investors. At present, it is far too easy for certain market participants to operate illegally and manipulate prices without detection. Overall, these may be relatively small in number. Yet the damage they are causing to investors’ portfolios and confidence in financial markets is extreme. It is therefore essential that Regulators effectively address naked short selling quickly and aggressively through tighter legislation and rules, truly onerous fines and penalties and by promptly prosecuting individuals and firms who act prejudicially to open and fair markets.

Comments are as follows:

1) Notwithstanding what may appear to be legitimate reasons (excuses) to deliver securities on time, Parties who fail to deliver should be penalized significantly at progressive rates. The longer it takes to deliver, the greater the penalty. A reasonable exception would be where securities are being transferred in physical certificate form. However, beyond this, exceptions should be few and infrequent. Examples cited of “justifiable” reasons for delivery failures such as “delays in customers delivering their shares to a broker-dealer” should not be accepted. If the customer does not deliver on time, that is between the customer and the broker-dealer to resolve. With enforcement of more serious penalties, brokerage firms will be motivated to tighten their own clearing and settlement procedures to ensure compliance. This may require that additional resources have to be allocated by these firms but the cost of doing so will be more than offset by the benefits of a more transparent and efficient market. Failure to deliver within 3 days by brokers-dealers must be penalized sufficiently to change current market behavior. No excuses!

2) The 3rd paragraph of the SEC document “Division of Market Regulation: Key Points About Regulation SHO” includes the following: “Thus, market makers must sell a security to a buyer even when there are temporary shortages of that security available in the market.” I respectfully disagree. At some price, there will be no shortage of any security. Granting market makers allowance to engage in naked short selling is prejudicial to the interests of “long” investors and effectively sanctions price manipulation by deemed market makers. Buyers and sellers should be permitted to set the price at all times without such interference (manipulation) even if this implies greater price volatility and exposes the inherent risks of investing. After all, caveat emptor is a basic tenet of free markets.

3) The 2nd bullet under Section III of the above SEC document provides: “Locate Requirement: Regulation SHO requires a broker-dealer to have reasonable grounds to believe that the security can be borrowed so that it can be delivered on the date delivery is due before effecting a short sale order in any equity security.” In my opinion, it would be far preferable to state that a broker dealer is “responsible to ensure” that the security can be borrowed rather than having “reasonable grounds to believe”. If the security can’t be delivered by the time required for settlement, the broker-dealer should be required, by statute, to immediately purchase the security in the open market at then prevailing prices and deliver same. Penalties for late delivery should also apply. This would have the effect of ensuring that broker-dealers have every incentive to be cautious before executing a short sale.

4) The 3rd bullet under Section III indicates that Regulation SHO requires brokers and dealers to “close-out” failure-to-deliver positions (“open fails”) in threshold securities that have persisted for 13 consecutive settlement days.” Again, in my view, this is far too lenient and encourages a lax approach to this entire matter. “Close-out” should be required immediately following the 3 day delivery period – with few or no exceptions.

5) Under Section V, the 3rd bullet of part 1. differentiates selling stock short and failing to deliver shares at the time of settlement with the purpose of driving down the security’s price as being a violation of the Exchange Act. In practice, it will always be very difficult, if not generally impossible, to prove that the purpose of a short sale was to drive down the price. By attempting to draw such distinctions, too much room for maneuvering is permitted market manipulators. Better to simply focus on the need to promptly invoke punitive measures for all failures to deliver and rectify each and every failure immediately.

Yours truly,

Larry Lindland