Subject: File No. S7-19-07
From: Thomas Moran
Affiliation: Professional Investor

July 18, 2008

I have been in the business and traded since 1985. Every firm I have ever worked for or fund I have traded for has required me to borrow shares before I have entered a short sale. I have never found it necessary to spread false rumors and bomb stocks to make money. There was a reason these laws were put in the first place (Joseph Kennedy made a fortune using these tactics that is why he banned them). Eliminating the uptick rule and allowing market makers and hedge funds to increase the float through naked short sales has opened the small cap market to the largest manipulation I have ever seen. Indeed many long term individual investors are leaving the stock market never to come back partly because they feel the SEC has once again favored the big boys over the public.

Personally, I trade very lightly during option expiration week because the amount of manipulation occuring during that period is out of control. Giving the option sellers/market makers special rights is absurd. If the stock isn't available why should they be allowed to drive it lower so there naked short option positions expire worthless. The right to naked short on downticks is an invitation for manipulation during expiration. Regulate the options market or eliminate it. While I trade options occasionally I have a hard time understanding how they benefit the American Financial System it is quite clear how profitable of a business naked shorting of options is to Wall Street.

There is no doubt that hedge funds are targeting companies who need financing with naked short sales. They are driving stock prices lower in order to acquire a larger stake in the company when the market recovers or to cover their short during financing. That is harmful to well run corporations, individual shareholders and capital formation in America. Once again you are protecting the big boys at the expense of who you are supposed to be protecting. Every one should play by the same rules that is American. For the sake of the American financial system eliminate and criminalize all naked short sales. It is time for the SEC to fine a major Wall Street firm for the manipulation of securities that most of us professional investors know in our heart is occuring regularly.