Subject: File No. S7-18-09
From: Budge Collins
Affiliation: President, Collins / Bay Island Securities

September 30, 2009

Securities and Exchange Commission
100 F. Street, NE
Washington, DC 205-1090
Re: File Number S7-18-19

September 28, 2009

Dear Commission Members,

I oppose the ban on third party marketers.

I have spent 29 years bringing hedge funds together with institutional investors. I began as a consultant, then ran a fund of hedge funds and am now a third party marketer or a placement agent. Based on my long experience in this industry, I would like to make the following observations:

Some of the best investment results frequently come early in a managers investment life cycle, when the manager is hungry, competitive and managing less than $200 million in assets.

These young managers have small operations, too small to afford a marketing and sales person.

These best young managers do well because they are fiercely focused and not distracted by marketing demands.

Not only do these emerging managers need third party marketers to raise funds, but the institutional investors need third party marketers to vet the managers. My recent Op-Ed article (enclosed) that appeared in Institutional Investors sister publication, Alpha Magazine, gives kudos to the sophisticated approach California Public Employee Retirement System (CalPERS) is taking toward placement agents--in sharp contrast to New Yorks.

Finally, you should realize that third party marketers play an important role helping to align interests between investors and managers. We are trusted go-betweens who help negotiate fees, performance hurdles and lock-up provisions.

I welcome your proposed ban on campaign contributions by placement agents or investment advisers. Such a ban would level the playing field for the rest of us who have never made contributions to elected officials who also sit on investment management committees.

The real loser will be pensioners if the proposed ban is adopted. Simply put, over three-year periods, retirement funds invested in hedge funds have consistently outperformed those that were not invested in hedge funds. Thats because most of the best investment minds reside in the hedge fund sector of the investment management industry.

A ban on placement agents will not affect my business because most of the money we have raised came from other types of institutional investors, not domestic government sponsored, defined benefit plans. The ban could harm the efforts of public employee retirement plans, however. Without placement agents, investment executives of these retirement plans will find it difficult to identify some of the best and the brightest emerging hedge fund managers.

Sincerely yours,

Budge Collins
Collins / Bay Island Securities

Copyright material redacted. Author cites: Collins, Budge, "Unhedged Commentary: California Wisdom," Institutional Investor's Alpha, July/August 2009.