From: Leonard Burningham [lwb@burninglaw.com]
Sent: Monday, May 17, 2004 5:05 PM
To: rule-comments@sec.gov
Subject: S7-13-04:

Dear Gentlemen:

With the naked shorting that goes on in the securities markets, this type of a 
rule is preposterous for OTC Bulletin Board companies.  With the DTC before you 
last year, you had an opportunity to question them about the DTC's practice of 
lending out more securities than it had in its inventory, but I do not think 
that issue was ever explored.  In every instance where an issuer pulled out of 
DTC, the DTC was required to balance its books, which resulted in a substantial 
short position for various brokers who had been loaned securities by DTC.  What 
the DTC was trying to get you to do was stop issuers from pulling out of their 
system so that they did not have to balance their books.  You never resolved 
this, and now you are just giving them a blanket authority to do it without ever 
having to balance their books!

I intend to respond in writing further, and I intend to point this problem out 
to Eliot Spitzer, the New York Attorney General, who seems to be more willing to 
take on issues like this.

Leonard
Leonard W. Burningham, Esq.
455 East 500 South, Suite 205
Salt Lake City, UT  84111
Phone: 801-363-7411
Fax: 801-355-7126

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