Administrative Offices

William A. Calvo, III LL.M

Business Consultants & Advisors


                                                            1941 Southeast 51st
          G.  Richard Chamberlin,                           Terrace
          Esquire                                           Ocala, Florida 34471
          General Counsel                                   Telephones (352) 694-9179
                                                            (352) 368-6525
                                                            Mobile Number (352)
                                                            Fax Number (352) 694-9178

Jonathan G. Katz


Securities and Exchange Commission

450 Fifth Street, N.W.; Mail Stop 6-9

Washington, D.C. 20549

Re.:File Number S7-5-99


We have the following comments, observations and suggestions concerning the proposed revisions to SEC Rules 15c2-11 and 17a-4.

1.The recent series of amendments designed to combat microcap fraud have a legitimate objective which must be balanced with the Congressional mandate to facilitate capital formation for small businesses. They must not take away what the Commission has granted by easing regulatory burdens through increasing the thresholds for attaining mandatory reporting status. The objectives must and can be reconciled.

2.The proposed amendments will clearly damage small capital formation by rendering investments illiquid. NASD firms are not permitted to charge for filing Forms 211 and initiating quotations and are therefore unwilling to assume the resulting potential liabilities. Neither issuers nor selling stockholders currently have any means for independently submitting forms 211 and thus must rely on persuading brokerage firms to do so. This creates an atmosphere conducive to violations of restrictions on compensation and the attendant disclosure which could be easily remedied by providing issuers and selling stockholders with the ability to independently file forms 211 with either the NASD or another responsible regulatory or self regulatory organization, with the forms declared effective after appropriate review and brokers thereafter permitted to rely on such filings. This shift in the initial filing burden would eliminate a source for violations of compensation restrictions while brokers could still be required to conduct due diligence functions and maintain supporting documentation. No additional burden would be placed on the Form 211 reviewers.

3.The Commission correctly notes that availability of information is critical to fair and liquid capital markets. We believe that this can be attained by permitting smaller issuers to participate in SEC reporting on forms that would permit filing of compiled or reviewed financial statements, with the balance of the requirements of SEC Regulation SB modified to meet minimum standards consistent with keeping reporting costs affordable while providing the information envisioned by the proposed amendments. The EDGAR system could therefor be expanded to include a probable majority of currently non-reporting issuers, without unduly increasing costs of compliance.

4.The continued Commission antipathy towards smaller issuers and lower priced stocks needs to be examined internally. In many instances, it does not have a logical base and the solutions proposed are easily circumvented without violations of law. This is especially true as to stock price based restrictions. The price of a stock should be meaningless from a regulatory perspective while net tangible values are clearly appropriate guidelines. The proposed $10,000,000 net tangible asset requirement seems excessive, when compared with the lower requirements for NASDAQ listing which would provide an automatic exemption. We suggest that the $2,000,000 threshold currently applied in conjunction with the anti-penny stock rules would be the most appropriate threshold.

5.The designated information depository concept is very positive unless the Commission finds our suggestion of lower threshold reporting on the current EDGAR system a better alternative.

6.As an aside, we note that the small business section of the Commission's web site has been utterly neglected, with postings having been virtually discontinued. It appears that staffing in that area has been neglected for some time. The site was very competently designed and provided an effective medium to assist smaller issuers. We urge the Commission to revitalize its small business components, especially since the recent series of initiatives do not appear to reflect small business advocacy by the Commission's staff.

We applaud the Commissions continuing efforts to eliminate fraud but hope that they can be more appropriately tailored so as to avoid unnecessary discrimination against legitimate smaller issuers and interference with other Commission initiatives whose goal is to be supportive of smaller businesses.

Very truly yours

William A. Calvo, III

G. Richard Chamberlin, Esquire


William A. Calvo, III, LL.M.