Subject: File No. S7-19-07
From: Jim Carnes

November 9, 2007

It has been noted the Staff continues to meet in private meetings with various companies and associations who, no doubt have a vested interest in continuing the Option Market Maker's exemption, thus maintaining the status quo. The status quo being rampant options activity in selected companies, much to the detriment of those selected companies and their retail stockholders. Of course, while this takes place the SEC does not notice anything awry, after all the important thing in the market is not the individual investors, but wall street broker/dealers, hedge funds and those with "juice", because they are providing all important liquidity.
I suggest you meet with the OMM(s) who are handling all or much of the options activity of one or more of the companies being adversely affected by excessive options activity, possibly much of which may not actually be legal. One such company could well be Novastar Financial (NFI), which seems to be something of a poster child for such activity, yet the SEC continues to ignore it. Find out from the OMMs just what their benefit is in not pre-borrowing the stock, other than nearly all of the authorized outstanding shares are already "legally" shorted, so naked shorting seems to be a good solution to the lack of available shares. Ask them if they think this activity is determinal to the retail investors of such companies and is generally doing long term harm to the affected companies and to the markets in general, although profitable to them. Perhaps a meeting of this kind could actually provide the SEC with some much needed information, which they seemed to have totally lacked or ignored in the past when considering changes to the OMM exemption rules.
Thank you for this opportunity to comment.