Subject: File No. S7-20-08
From: Douglas G Walker, CPA
Affiliation: Private Investor

July 24, 2008

Novastar Financial NOVS has been on REG SHO since compliance date Jan 3 2008 (except for two short manipulated weeks).
It is a shame for you to treat 19 institutions differently. All public companies have a right to be treated fairly and consistently under the law. Liquidity is no excuse for destruction of lives, value and breach of the law.
Novastar had 8.6 m legal shorts in Dec 07 + under the FOIA we learned at this time another approximate 5M shares were naked shorted or Failed to Deliver basically counterfeited this totals 13.6M + 9,391,000 shares were issued and outstanding that is almost 25M shares floating PLUS in Jan and Mar 2008 over 10M additional shares were put all in the money on expired put contracts (as you appreciated it is put contracts that rent the OMM option maker out) not all these shares could have been legitimately put because the shares did not exist as you can see from Dec status. Let's be fair and stop the non sense that has hurt so many. REG SHO has accomplished little if anything to stop Naked Shorting and in fact the OMM option maker exemption rule 104 has provided the gray loop hole to further exploit so many for the benefit of so few. If you look at REFCO and Bear Stearn's and the steps your commission has taken with Fannie Mae and Freddie Mac the patterns are clear. Treat all US public companies consistently.
Respectively submitted,