March 1, 2004
I am really concerned about the proposed regulations that are being reviewed by the SEC concerning the sale of Mutual Funds. I agree with the disclosure aspects of the legislation because I am already preforming those duties now, but I am concerned about the removal of 12b-1 fees. These fees are an important part of my business and I have built my business around this fee structure. I think the 12b-1 fees are fare because as an investment representative, I dont invest the clients money and then forget about them. I spend a lot of time reviewing their portfoilio as well as keeping them informed throughout the life of the investment. If the 12b-1 fees are eliminated then I will be preforming the service for free which will make my job take on a new direction of always searching for new monies and I will be forced to move away from servicing my current customers. The 12b-1 fees are incentive to service my current customer base to ensure they feel comfortable with their investment choices so that the investments will stay on the books, if their is no incentive I dont think brokers will service the exsisting customer base.
I also dont agree with the clause that a customer will have the right to revoke a trade if they are not property disclosed. I feel this will open an opportunity for customers to back out of trades because they changed their minds or something else came along that they would rather spend the money on. I understand your concern for the customer having an understanding of what they are investing in, but I think once they sign a form saying that they were told and that they understand their purchase, they should not have a right to cancel without penality. If they are not informed and do not sign a form I think they should have full rights to cancel the transaction and the broker should be held responsible for any losses incurred.
The only other comment I have is that I wish the SEC would extend the review period to 120 days instead on 60 so that I would have time to review the 100 page document a little closer.
Thank you for your time and attention
Sincerely,
Jeffery L Smith