Here is the reply that I got from the OSC when I issued my concern that naked short selling of LBE shares may be taking place:

Dear -------------:

I appreciate the time you have taken to share with the Ontario Securities Commission (OSC) your concern about short selling.

The OSC’s statutory responsibility is to administer and enforce Ontario securities law. We take our responsibilities seriously and we take action, including action with respect to manipulative trading, to insure the continued integrity of the market. We also work closely with the Investment Industry Regulatory Organization of Canada (IIROC) to ensure continued market integrity.

As permitted by Ontario securities law, the OSC has recognized IIROC as a self-regulatory organization. IIROC regulates operations and standards of practice for debt and equity marketplaces in Canada and enforces the Universal Market Integrity Rules (UMIR). UMIR is a common set of equities trading rules designed to ensure fairness and maintain investor confidence. These rules create the framework for the integrity of trading activity on marketplaces in Canada, including the TSX and the TSX Venture Exchange, and allow for the competitive operation of exchanges, quotation and trade reporting systems, and alternative trading systems. UMIR has provisions relating to various trading practices, including manipulative or deceptive methods of trading, short selling, front running, best execution obligations, order entry and order exposure, as well as trading halts, delays and suspensions.

Staff of the Canadian Securities Administrators members, including the OSC, are currently reviewing proposed changes to UMIR concerning short selling and failed trades. You may wish to review the proposal which is available on the OSC website at www.osc.gov.on.ca. From the homepage –

· Under the heading “Market Regulation” choose “Self-Regulatory Organizations”
· Scroll down to “Market Regulation Services Inc (RS)” and click on “Rule Review”
· Under “2007” open “September 7, 007 RS Market Integrity Notice – Request for Comments – Provisions Respecting Short Sales and Failed Trades in PDF”

While the comment period officially ended October 9, 2007, if you have an opinion about the proposal you would like the OSC to consider as it reviews this matter, you may send your comments to inquiries@osc.gov.on.ca. We will ensure they are forwarded to the appropriate staff.

IIROC has regulatory responsibility for setting and enforcing rules for the proficiency, business and financial conduct of investment dealer firms and their registered representatives.

IIROC's Market Surveillance department has robust systems and processes for detecting and investigating inappropriate market activities. This surveillance facility has state-of-the-art systems and software that detect price or volume anomalies in stock trading patterns. In addition, the IIROC Trading Review & Analysis department conducts post-trade reviews of trading data using a variety of tools to look for trading that violates UMIR, including manipulative trading patterns. If warranted, preliminary investigations regarding insider trading by persons over whom IIROC has no jurisdiction are forwarded to the appropriate securities commission, including the OSC, for additional investigation and possible enforcement action.

If you have evidence of a specific breach of its trading rules, you may wish submit your documentation to IIROC directly by e-mail sent to enforcement@iiroc.ca.

Of course, you may always send the information to the OSC. We welcome the submission to us of specific facts and circumstances that are potentially contrary to Ontario securities law. If you have such evidence, you may submit it by sending it as an attachment to a covering e-mail to inquiries@osc.gov.on.ca.

Alternatively, if you prefer to send your evidence by mail, it may be addressed to -

Ontario Securities Commission
20 Queen Street West, Suite 1903
Toronto, ON N5H 3S8

Attention: Manager, Inquiries

I appreciate the time you have taken to bring your concerns to the attention of the Ontario Securities Commission.

Sincerely,

Jeff Fennell
Senior Inquiries Officer
Ontario Securities Commission
inquiries@oc.gov.on.ca
416-593-8314
or toll free (within North America) at 1-877-785-1555


ANYONE HAVE ANY COMMENTS ON THIS RESPONSE?

-- R.