From: Dennis Heffernan [dnhconsult@cox.net] Sent: Wednesday, January 14, 2004 11:10 AM To: rule-comments@sec.gov Subject: File No: S7-27-03 File No: S7-27-03 Efforts to stop late trading are to be encouraged. However, the method would place an undue burden on 401k participants, perhaps even causing them to hold non-interest-bearing cash for one day when switching investments. The proposed rule works on the wrong end of the problem and as a result is likely to harm investors who were never in a position to make late trades. A far better solution would be to enforce improper late trading rules at the financial intermediary level. All brokerage or fund companies time-stamp their orders. The SEC should mandate that the annual external audit should include a comprehensive review of order time-stamps covering all trades after 4:00 pm for at least 15 days in 8 separate months. The 15 days might be random or the auditor might have a list derived from large market moves. Special attention to be given to employee transactions. The results to be disclosed in the audit certification letter, with details of any suspicious/questionable activity forwarded directly to the SEC. The penalties for late trading must be more severe - six month suspension for being employed in the financial industry for a first offense, followed by a lifetime bar for a second offense. Thank you. -------------------------- Dennis N. Heffernan 619 501 1415 5250 Adams Ave San Diego, CA 92115 --------------------------