Subject: File No. S7-09-04
From: Kent A. Meredith

March 29, 2004

This rule should properly be called Prohibition on the Use of Brokerage Commissions to Finance Client Service.

John Bogel is a good man who has fashioned a very good mutual fund family. His funds serve a particular niche within the investing community, but his argument that 12b-1 fees somehow cheat novice investors can not withstand scrutiny, unless SEC takes the position that registered representatives are under some moral duty to provide on-going help and counsel to clients without pay. There certainly are fund families that do not charge 12b-1 fees, and they are available to potential investors that seek such an arrangement.

I do not believe, as mentioned in some prior comments, that R.R.s will churn mutual fund positions, but I very much believe that they will simply stop servicing an investor after the initial sale, and will devote their efforts to placing new business.

I am of the opinion that reasonable 12b-1 fees have done more for the industry in helping R.R.s help investors make good long-term investment choices that anything SEC has done in my memory. Be careful: the spectre of inexpensive, but bad investment choices may visit SEC with the adoption of this rule.