Subject: File No. S7-20-08
From: Stephen Weldon

July 21, 2008

I can't believe the SEC is not going to close off all the loop holes and not enforce market makers, etc, from having to comply with having the long shares on hand in order before they can issue short sells. It's like you're inviting the continuous opportunity of manipulation to keep going.

You have to know that wherever there is a opportunity to exploit it will be exploited. I'm in favor of shorting as you indicated and I and so many others agree it is the naked short selling that is the issue. Unfortunately, the system relies on honesty by brokers/brokerages/market makers, etc, to not exploit the system. Well, they do. I believe the big brokerage houses do comply (although they should always be kept an eye on too) and it's the market makers and hedge funds, the ones everyone says are the sellers of last resort but they're the ones that aren't being held accountable and are the ones that can get away with the naked short selling the easiest. Take HANS for example, this stock is being hammered by the market makers and hedge funds selling naked shorts.

I don't care if liquidity would be impaired if it meant that the straight forward honesty factor of knowing that naked shorting can't occur and that this form of manipulation couldn't occur. That should be the real goal, preventing manipulation and dishonesty. I want an honest environment and not one with loopholes that can be exploited. I don't care if you have to require serial numbers to accompany every stock and it's movements so that they can be accounted for. That's what computers are for.

The honesty and integrity needs to be the highest consideration. Liquidity will always be worked out by the pricing mechanism whereas exploitation and manipulation will always win out because enforcement is never on top of the situation especially when the rules provide exceptions which will be like a magnet for sources to exploit. It happens every single stinking loophole or wiggle room provided. People will always buy and sell unless they see that it's all rigged which the stock market surely is and continues to be.