Subject: File No. S7-09-04
From: James M. Poindexter
July 6, 2004
If you eliminate trail fees for brokers you will take away an ongoing source of servicing income and force financial advisors like my self to raise fees to clients. Consumers always pay the cost of overzealous regulators in their zeal to accommodate trial lawyers. If you want to eliminate Mutual Funds as a vehicle for investors your on the right track. Maybe small and medium size individual investors will only be best served managing their own investments with no guidance or a proper way of diversifying. Iím sure that is not your intention in the long run, is it? Charging 12B-1 fees as trail fees on Mutual Funds is not a criminal activity; it is just a cost of doing business (and a very low one). I donít use Mutual Funds exclusively and as far as Iím concerned I am underpaid as it is when using Mutual Funds. With reduced sales loads for A Share investors, they are getting one heck of a deal if they are using a professional firm like mine. Already Mutual Fund Investors are likely to have higher costs passed on to them just in the legal fees Companies are going to experience from increased lawsuits. Small individual retail brokers and small investors did not break the law, the NYSE and Mutual Fund executives did, and maybe even some SEC regulators by turning the other eye. Donít punish the innocent for the guilty.
Whatever you decide is what we will have to live with, but I think the small investor is better served with lower fees like 12B-1 fees.
Thank you for kind consideration of this message
James M. Poindexter CFP, CLU, ChFC, LUTCF, AEP