From: Tony Luzzi [arluzzi@comcast.net]
Sent: Saturday, May 08, 2004 2:13 PM
To: rule-comments@sec.gov
Subject: File Number S7-09-04

The proposed elimination of 12b-1 fees paid to brokers as service fees would 
have several negative results, hurting investors instead of helping them:

1)  brokers can't work for free - if 12b-1 fees are eliminated, brokers will 
have to replace their lost income with either more reliance on "wrap accounts" - 
which will cost investors a lot more than the 0.25% - 0.75% they now pay in 
12b-1 fees for essentially the same service. Wrap accounts, especially for small 
investors, tend to be priced at 1 - 1.5%, at least DOUBLE the annual cost to the 
investor.

2)  brokers can't work for free - if 12b-1 fees are eliminated, then up-front 
commissions will have to be increased to replace our lost income. This will 
either be by a reversion to the  8 - 9 % front end loads that existed before 
rule 12b-1, or by brokers being more likely to look for reasons to move clients 
money for a new commission.

Also, if 12b-1 fees are to be removed, it should only be done on future 
business. Many brokers such as me, who have sold a lot of large ticket "A" 
shares (at discounted loads of 3.5% or less) depend on the 0.25% (minimal) 12b-1 
fee to compensate us for the ongoing service to these  "large" accounts.  We 
would be ruined financially, or be forced to move our clients to more lucrative
(and more costly to the investor) "wrap" accounts to ensure we could afford to 
stay in business. Neither prospect is attractive nor fair. And in both cases, 
the investor loses - exactly what the SEC is trying to avoid.

12b-1 fees are a low cost way to align broker and investor interests. Leave them 
alone!!!! Everyone loses if you eliminate 12b-1 fees. What is needed is a focus 
on appropriate disclosure!

Anthony R. Luzzi
Mutual Service Corp.
Registered Rep. 3528