Subject: Regulation SHO

July 9, 2008

Despite changes made this rule is being highly abused. With your records showing 1.5 billion FTD a daily. I have suffered greatly from this abuse. I own a company called ON2 technologies that was at $3.99 cents and got below .50 in a bit over a year. Regular shorts piled right before and added up to 19 million shorts. Then the naked shorting started. ON2 was on the SHO list for 200+ days. Since there is no current information I had seen March had 1.4 million naked shorts. I'm not sure what it got up to. Now right after they drove the price down under $1 and we got booted off the Russell and about 14 million shares traded in a few days (way over the normal volume) these naked shorts were gone and I suspect most of the shorts. They seemed to be working in conjunction to take the stock down so they could cover most of the regular shorts. I believe the naked shorts began about the same time as the PIPE in January.

This along with the CEO pumping the stock by saying ON2 was in the 'catbird seat' at $3.90 led many investors like me to hold on and loose 90% of their value. This while the shorts and later naked shorts piled on. So I'd like to know just who was involved. I know Oppenheimer(the consultant on the Hantro acquisition) was allowed to short for themselves and clients. Also, both MCF and TE who were both analyst at the time and handled the PIPE were allowed to short and naked short. Now why would they allow insiders to do this basically betting against the interest of their long term shareholders. This is especially true sine they had inside information as to what the deal would be most likely closed at. We did not. They also knew what the PIPE would be at . We did not.

In regard to the rule there should never be any naked shorting at all by anyone. I have 3 days to pay and so should they. I don't like shorting period. They should have to report just like a buyer that is long and not every few weeks. If you want a more open market that is a more level playing filed you need to have equal access to information.

I would like to see if any criminal behavior between On2 Mgt., Oppenheimer,MCF and TE occurred. I have lost over $100,000 due to these rules and abuse the SEC allowed to continue in my opinion.

Steve Rein