Subject: File No. S7-19-07
From: David W. Lasser
Affiliation: Private Investor

July 16, 2008


I strongly support the proposed amendment to Regulation SHO. As a private investor I have been asking the SEC, the Senate Banking Committee, and my Congressman for years to clean up the abuse of short selling, but alas, to no avail.

Once a short attack starts it's almost too late for those on the outside of the scheme to recover. The objective is to hit the targeted company hard and quick. Sometimes on the smallest bit of negative news a targeted company can have its stock price dropped by 40% or greater within days. The massive selling required to do this can only be done by a planned and coordinated maneuver. At times allies in the financial press write negative stories on the company and class action law firms begin to file what can only be described as bogus lawsuits against the company. Even paid bashers on stock trading message boards are employed to put a negative slant on the company.

I have personally witnessed short selling attacks on companies in which I was invested. I have personally watched on Level II what can only be described as computer based manipulation of the stock price of small cap stocks. All it takes is two separate trading desks, acting in tandem, the seller side undercutting the bid as the buyer simultaneously dropping his bid. Some call it walking the price down. Legitimate investors are overwhelmed and easily panicked into selling into this wave. It happens all the time. Several examples are: Navarre Corporation (NAVR) Amylin Pharmaceuticals (AMLN) Jos. A. Bank Clothiers, Inc. (JOSB) Blue Coat Systems, Inc (BCSI), and Arena Pharmaceuticals (ARNA). In the case of JOSB how can a company's stock have a legitimate short interest at 92%?

In the case of Navarre, about a year to 18 months ago there were no shares available for borrowing according to Rule SHO. The hedge fund involved in the manipulation simply started selling massive amounts of PUTs to create artificial shorts. Millions of shares were involved in the PUT positions. The CBOE Options Market Maker was forced to buy the PUTs being sold, to make the market, and with the exception in place he then hedged his trade by massively shorting shares equivalent to the PUTs purchased by the hedge fund. Millions of naked short shares were created by this maneuver keeping selling pressure on the stock. It happened, I watched it happen, complained loudly, again to no avail. The companies, with few exceptions, are too frightened to take on the hedge funds because class action lawyers are usually in league with the hedge funds. They are too fearful of bogus class action lawsuits used to punish them and keep them in line. SEC for years has been pooh-poohing this as the cries of conspiracy advocates and "whiners" and has allowed this activity to go on and on. The capital structure of hundreds of companies has been very badly damaged and many small investors have been greatly harmed.

Now that the cat's coming out of the bag, and the hedge funds are running wild, I suppose it's better late than never to take care of this problem. For goodness sake DO SOMETHING ABOUT THIS PROBLEM and get the market straightened out. The manipulators are eating the market up from within.

Yours truly,

David W. Lasser
Poulsbo, Washington