Subject: File No. S7-20-08
From: Roger L. Hawley
Affiliation: CEO and Director of 2 public and 2 private companies

August 20, 2008

Naked short selling must be stopped. It should be a crime and SEC should do their job and not limit fair trading to a few select financial stocks. Jim Cramer's taped admission shows just how common-place "gangster activities" have become business as usual for hedge funds on Wall Street. And from my point of view SEC does very little to protect the market or small investors.

Over the past few years the combination of naked short selling, shorth selling on down ticks, short sellers using rumors/press/CNBC/"analysts" have all been employed by unregualted hedge funds. This "game" has caused great harm to the shares of hundreds of good companies and thousands of investors. Most small-cap companies in biopharma are now held hostage to these hedge funds who use fear, manipulation and greed to dive down share prices company after company to a point where the real value of the stocks no longer make any sense.

We have now officially turned our stock markets for emerging companies were investments are the lifeblood of the ecomnomy into a casino for hedge funds to feed off small and mid-cap companies' invetsors. The hedge funds that feed off these startegies based on fear and making profits from the pain and losses of others is so out of control that now the SEC has openly admitted just how terrible it has become by having to protect even the investment bankers from the very customers that they used to court and protect (hedge funds).

When things get this far out of line with the primary purpose of a stock market (and that is for investments --not manipulation to make movey from fear and short selling) average people start to ask basic questions about the fundamentals of government and the basic fairness of the system. Now many smart business people are losing faith in public stock markets and see private equity as the only save place to build a small business. When most of the money in the markets is being made only by the hedge funds that short stocks, use the press to plant negative stories and then profit from the overreaction, you know we have lost control of the very market that helped fuel the growth of America by providing capital to growing business. When normal business risks are manipulated and fear is used to magnify downside movements in stock prices, the forces of evil have won.

And just to make it all worse, at the worst possible time the SEC handed these criminals who work in the darkness and cover of unregulated hedge funds their last gift to make their manipulation a piece of cake: removing the up-tick rule was removed and price swings have increased. We have created a market of gamblers and day traders, not a market for investments to be made.

The above are based on my personal views, not as the CEO or Director on any company. Just few days ago the Board of Directors of a company were I am CEO pulled our S-1 and the hopes of an IPO sank along with many other small-cap young companies this year. Small-cap biopharms stock prices on company after company have been driven into the ground and prices so low that there has not been an IPO in our sector for many months. Serving on the Boards of 2 other public companies and speaking with Direcors of many other companies, our real fear is seeing when certain hedge funds take a major position in the stock of a small you know you are in for a long ride down. Short positions are taken,fear is spread by press stories and "analyst reports" and the fear game is on. It is the some of all these "tools" that are driving investors away from small-cap stocks and the SEC does nothing. It is much easier today to drive prices down using fear and stock price manipulation than it is to make investments in small and mid-cap companie sin the US stock market. Large mutual fund money managers ahve told me they would be happy to invest in good sssmall-cap cmpnaies, but only with private money and have told me they can't in vest in a public IPO because they can't stand the pressure of the hedge funds for small-cap stocks as prices are just driven into the ground regardless of valuations and they have to mark to market those IPO investments that would take months or even years to recover form the downside drive of hedge fund stock price attacks.

Again, on a personal basis, I am starting to support state legislation that can begin protecting investors from the manipulation in the markets as the SEC as done very little for years to stem the tide of the fear mongers who systematically destroy one small company after another. At last count there are 19 states looking to put in place basic rules that SEC has ignored. I can only hope states take a more active role as all my past efforts and letter to elected federal officials and the SEC have been ignored.

The good news is that the truth of unregulated hedge funds and short selling games are finally coming out in the open and we will not stand by as our system is being destroyed from within under the blind eyes of the SEC. Naked shorting is just the most obvious tool used and for 5 years the SEC has done very, very little even to try to stop what must be an illegal activity that is being conducted daily by organized criminals who steal money from investors in the full light of day under the watchful eye of the SEC.

It is pretty sad when the CEO of has had to spend years begging for the SEC to do their job, but the truth is finally getting out, so SEC can either become part of a solution or they will open the door for other government solutions.

Thank you for offering a place to comment on this site. I keep trying every method possible to end this madness on Wall Street.

May God bless America