Subject: File No. S7-19-07
From: David J Branch

July 21, 2008

Dear Sirs,

re SHO rule change

I don't have a long pedigree of the financial institutions I've worked at or the prestigious Universities I've attended. I'm just a plumbing contractor trying to make a better life for my family. But it sure looks like the deck is stacked against the little guy when we have to play by one set of rules and the big boys each get their turn at us. How come the prisons aren't already full of individuals engaged in naked short selling? Why are you not enforcing the laws already on the books? It looks to me like these new laws are designed for one purpose To give the lawyers of the guilty parties an out. I can see it now..."My client is innocent because his trades were done before the rules were clarified".

Stop the new rules now. Enforce the existing laws now. Send them to jail NOW

Alas I am a realist. I can't stop the procedings and send these naked short selling thieves to jail. And I am not schooled enough in economics to make an informed comment. I am however, a student of those who can articulate my feelings. The comments by Jim Sinclair say it best. Please publish my feelings as a stand alone comment and do not lump them together with one of the blanket chain letters.

Reg. SHO as written is ineffectual for the following reasons:

It fails to place the onus on the broker dealer to assure delivery by borrowing the shorted shares. Simply accepting the assurance of the hedge fund and dropping the matter entirely at that point is useless in preventing naked short selling.

SHO must require fails to deliver to be bought in on the fail date plus one day.

Using foreign exchanges to gain advantage in violation of the Reg. SHO, especially German and Canadian exchanges, must be stopped or Reg. SHO is rendered totally ineffective.

Exempting primary dealers results in a giant loophole in any regulation honestly desirous of enforcing the already in place regulations. A primary dealer is by definition a trader who makes both bids and offers on a continuous basis. Because of this a primary dealer will be short but not for investment. The short in the primary dealer's position will rotate between short and even, possibly short on balance. A primary dealer will then be able to make delivery on the short without borrowing because when bids are hit (and they will be) he moves either to flat (even) or turns the short by purchasing voluntarily or involuntary. If this entity does not maintain a constant two way bid and ask then this entity is NOT a primary dealer. Giving the primary dealer 21 days to deliver before buy in is reasonable but any longer and you are supporting a camouflaged naked short.

Naked short selling is a long time violation of present regulations prior to Reg. SHO. As recent attempt to ban Naked Short selling by using an emergency declaration on selected financial entities shows the ineffectual nature of Reg. SHO It is highly prejudicial and has the apparent effect of blessing naked short selling against all other investment sectors.

Selective application of law is a total violation of the need of all forms of jurisprudence to deal equally with all it regulates.

David Branch

50 Indian Ruin Rd

Sedona, AZ 86351