Comments Concerning Proposed Rule Relating to
To Investment Adviser Codes of Ethics (the "Proposed Rule")
17 CFR Parts 270. 275 and 279

Robert M. Berger
Capri Capital Advisors. LLC
875 N. Michigan Avenue, Suite 3340
Chicago, Illinois 60611

Tel. 312/573-5268


Capri Capital Advisors, LLC ("Capri") is an SEC-registered investment adviser. All of its advisory clients are institutional in nature (i.e., pension funds, university endowments and the like). The only assets in which Capri invests for its advisory clients are commercial real estate, interests in real estate (e.g., joint venture interests in real properties), ownership interests in closely-held (and not publicly-traded) real estate companies, and loans secured directly or indirectly by interests in real estate or privately-held real estate companies. Capri does not invest in securities for any of its advisory clients.


Read literally, the Proposed Rule appears to require that all of Capri's directors, officers, partners and other "access persons" (and their respective spouses, children and any others for whom they make or influence personal investment decisions) be subject to all of the Proposed Rule's reporting requirements relating to their personal securities holdings and transactions. This is because, inter alia, the Proposed Rule states that a registered investment adviser "must establish, maintain and enforce a written code of ethics that, at a minimum, includes . . . provisions that require all of your access persons to report, and you to review, their personal securities transactions and holdings periodically as provided below . . . ." [Section 275.204A-1(a)(4)] Subsection (e) defines "access person" presumptively to mean, in the case of a company whose primary business is providing investment advice, all of that company's directors, officers and partners, presumably regardless of whether or not the company or any of its directors, officers or partners had or exercised any authority to make investment decisions concerning securities for any of its advisory clients.

In other words, all of those people - Capri's directors, officers, partners and other "access persons" and their respective spouses, children and any others for whom they make or influence personal investment decisions - would be required, among other things, to file with Capri's compliance officer, on a regular basis, detailed reports of all their personal securities holdings and transactions, and Capri's compliance officer would be required to review all of those reports. This would be extremely burdensome to all of the people affected and bears no relationship of any kind to the purposes, goals and objectives of the Rule.

The objective of the Proposed Rule is to protect a registered adviser's clients from any conflict of interest that could be involved if an "access person" (i.e., an employee of the adviser who participates in the clients' investment decisions) were to own, or trade for his or her own account, the same securities in which he/she is trading for or advising the client. However, because Capri does not invest (or dispose of investments) for any of its advisory clients in, or advise any of its clients concerning, any securities, the securities investments held or traded by Capri's officers for their own personal account cannot possibly create any conflict of interest in the investment decisions Capri makes for its clients.

Capri's existing code of ethics deals in significant detail with any possible conflict of interest that may arise from any of its officers', directors' or other access persons' investment holdings in, dealings in, and officerships or other responsible positions in, real estate or real estate companies. Among other things, such persons are required to file detailed reports with Capri's compliance officer identifying all their holdings, transactions and positions in real estate or real estate companies. Having such information assists the compliance officer in identifying any possible conflict of interest that may be involved in any investment-related recommendation or decision Capri may make for or recommend to its advisory clients. In this way, Capri's existing code of ethics focuses on the types of assets as to which Capri actually makes investment decisions for or recommendations to its advisory clients and adequately protects those clients' interests. Requiring all of Capri's key personnel also to file detailed reports concerning their securities holdings and trades would impose a very substantial burden on them individually and on Capri as an enterprise without adding one whit of protection to Capri's advisory clients.


The Proposed Rule should be modified so as to make absolutely clear that an adviser who does not provide investment advice to clients relating to securities investments is not subject to the provisions of subsection (a)(4) of Section 275.204A-1 and, further, is not required by any other provision of the Rules or Regulations applicable to registered advisers to compel any of its directors, officers, partners or other access persons to report (and the adviser's compliance officer is not required to review or be familiar with) their personal securities transactions or holdings.

This result must be made clear in the text of the final rule itself. It is not sufficient to assume that the SEC's compliance staff will use their judgment and discretion, in applying and enforcing the rule, so as to achieve the appropriate result here. That is attested by the fact that, even before the Proposed Rule was promulgated, the SEC staff, in its most recent audit of Capri, required Capri to include in its code of ethics provisions requiring all of its "access persons" to file personal securities holdings and reports such as those called for in the Proposed Rule despite the fact that Capri made clear to them all of the facts set out above and the fact that such requirements could have no reasonable relation to any of the conflict-of-interest policy objectives of the existing rules.


We would be pleased to clarify our concerns, or to discuss any aspect of our comments or suggestions set out here, with you at any mutually convenient time. Please feel free to contact the undersigned at any time if you wish to do so.

Respectfully submitted,

Robert M. Berger
Executive Vice President and General Counsel
Capri Capital Advisors, LLC