Subject: File No. S7-21-11
From: Leonard W. Burningham, Esq.

June 29, 2011

Dear Ladies and Gentlemen:

While I have no issue with the intended purpose of denying the safe harbor exemption in Rule 506 to "Bad Actors" as pronounced, I am concerned that any broad limitation that prevents an issuer that has become the subject of one of the prohibited disciplinary actions from using Rule 506. Actions of directors and excutive officers often result in sanctions against the issuer; and if the issuer, in good faith, has taken the necessary action to remove those Bad Actors (including 10% holders), it should not be prohibited from using this exemption. This is especially true of smaller reporting companies. The cost and expense of an S-1 Registration Statement for small capital raises is usually so high that the registration process is cost prohibitive. Perhaps you should consider some dollar limitation under which an issuer would not be subject to these prohibitions, only with respect to the issuer as a prior Bad Actor. This seems to be another area where we are going backward, in a society where there is more public information and disclosure available than ever before. Here, we are returning to requiring the review of all applicable blue sky disqualifications, where Section 18 of the Securities Act, with Rule 506, was intended to and has preempted state laws and regulations and provided a great deal of simplicity and uniformity, in document preparation and notice filings; and in the Rule 144 amendments of February 15, 2008, attorneys and issuers have gone back to respectively writing and accepting legal opinions under Section 4(1) of the Securities Act, a practice that had essentially died when Rule 144 was adopted in 1972, because of potentially unanswerable questions about whether an issuer was ever a "shell company."

Smaller reporting companies have always gotten all of the press about being the center of fraud in the securities markets, but one only has to look at the headlines of the dotcom decline, the credit crisis, Madoff and others to see that while we are slaying the dragon, we have little care that when it falls, if will kill everyone it would have killed if we had not taken any action at all. That is a knee jerk response! Any one of these named events caused more losses in the trillions and million than all of the smaller companies taken together have caused in 30 years. This country was founded on invention, enterprise and the individual.It is time that we remembered that.

Leonard W. Burningham