Subject: File No. S7-06-04
From: Thomas Kennett

June 9, 2004

I have 30+ years experience in financial services, including banking, securities brokerage, investment management. I am licensed series 7, 24, 66, and was formerly an RIA.

My general comment is that the investment industry would be better served if all securities and insurance firms converted from rep commission structures to salaries with score card bonuses, the scorecard value-weighted for client service, compliance, job performance, etc.

The extant commission structures drive rep conflict of interest. This argument is old, but on point.

The Commission should step up, push for revision, make commission payments in re a violation of client protection rules. I am not unaware of the economic ramifications for the industry of such a move. Sometimes big change pushes big efficiencies.

Until a Federal agency makes the case, the compliance problems will persist, and billions of industry, client, and Federal dollars will be spent arguing the obvious.

Do your best.


Thomas Kennett