From: WALSCHOT@aol.com
Sent: Monday, July 01, 2002 1:05 PM
To: Rule-comments@sec.gov
Cc: fpa@fpanet.org
Subject: File No. S7-25-99 

July 1, 2002



To:     Mr. Harvey Pitt
    Chairman 
    Securities Exchange Commission


From:   Frederick W. Walschot
    Financial Planner   
    
Subject: File No. S7-25-99  


This letter is in reference to your proposed rule “Certain Broker-Dealers
Deemed Not To Be Investment Advisers”. I am strongly against the adoption
of the reference rule. I request the rule be withdrawn.

Should the SEC adopt the rule it would be a significant abrogation of your 
oversight responsibilities to protect the investing public. What is the 
motivation behind the so-called “Merrill Lynch Rule”?  Is it greed along 
with certain Broker-Dealers who do not want to be held accountable for doing 
a disservice to their clients for poor financial planning and poor asset 
allocation?

I have clients who used to be clients of “certain Broker-Dealers deemed not 
to be investment advisers”. A common theme I find among their portfolios, 
when they come to me for my assistance, is that their portfolios are not 
consistent with their needs and their tolerance to risk. Their former 
broker-dealer had them in unnecessary risky positions. Often these clients 
are moderately conservative investors who only need a modest rate of return 
from their portfolios in order for them to be financial secure during their 
retirements. However their brokers had populated the client’s portfolios with 
heavy concentrations of higher risk stocks and mutual funds.  Often the clients 
do not have any bonds, fixed income mutual funds, insufficient amount of cash 
and do not have the proper small-mid-large cap and growth vs. value concentrations.  
Now these same brokers want to collect fees for providing the same poor advise 
and not be held accountable at the same time.

How can the SEC justify giving preferential treatment to “Certain Broker-Dealers 
Deemed Not To Be Investment Advisers” who at the same time are subject to frequent 
news reports where they have put their investment banking and underwriting 
interests ahead of their client’s interest.  I am just enough of a cynic to 
suspect that these “certain broker-dealers deemed not to be investment advisers” 
want to continue their past practices of dumping stocks in which the have a 
conflict-of-interest onto clients and then not be held accountable for improper 
asset allocation.  

How can the SEC justify treating financial planners working for smaller 
broker-dealers differently than certain broker-dealers deemed not to be 
investment advisers? Why is there a double standard? Does this not violate 
the equal protection clause of the Constitution of the United States of 
America?

In conclusion I recommend against the adoption of your proposed rule 
“Certain Broker-Dealers Deemed Not To Be Investment Advisers”. Adoption 
of the rule will ultimately hurt the investing public.