STA Supports Enhanced Reg SHO Rule Proposal--S7-08-08

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22 May 2008

Dear Ms. Morris:

The Security Trader’s Association (the “STA” or the “Association”) welcomes this opportunity to comment on the proposal of the Securities and Exchange Commission (the “SEC” or the “Commission”) to promulgate Rule 10b-21, a new anti-fraud rule under the Securities Exchange Act of 1934 (the “Exchange Act”). Specifically, new Rule 10b-21 would address fails-to-deliver securities that are associated with naked short selling.1 With the new rule, the Commission intends to highlight the liability of persons that deceive specified persons about their intention or ability to deliver securities in time for settlement, including persons that deceive their broker-dealer about their locate, source, or ownership of shares and that fail to deliver securities by settlement date. The Commission is concerned that fails-to-deliver associated with naked short selling may have a negative effect on the market and shareholders, and thus seeks to add proposed Rule 10b-21 to its arsenal of tools to combat manipulative short selling.

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