Subject: File #S7-5-99

Date:    4/6/99 10:33 AM
     
     
Dear SEC:
     
Having commented fairly extensively on your original amendments to Rule 
15c2-11, I will keep my comments on the revised proposal brief.  
     
I am President of Athena Capital Management, an investment advisory firm 
which specializes in smaller stocks trading at discounts to asset value 
and/or low multiples to cash flow and earnings.  My experience spans almost 
two decades, during which time i have seen several market cycles, but also a 
secular decline in interest in microcap investing.  During this period 
trading spreads have narrowed and many market-makers have limited the number 
of markets they make and the amount of capital they are willing to risk to 
make a market in these thinly traded stocks.
     
This proposal will, I believe, serve to accelerate this trend to the 
detriment of both investors and issuers.  As I said in my previous comments, 
transparency is vitally important in attracting not only investor interest 
but also investor scrutiny.  Such scrutiny should help the Commission do its 
job better.  I do not believe that the availability of quotations "raises the 
profile" of securities;  rather it makes it easier for investors to evaluate 
existing and potential investments and should consequently improve liquidity.
     
It is an unhappy fact of life that rising public interest in the stock market 
will engender increased fraud and manipulation.  Beyond educating the public 
and policing unfair sales tactics, however, there are limits to what the SEC 
can effectively accomplish.  It strikes me that the highest profile frauds of 
the recent years involved companies which would have been exempt under the 
proposed exclusions;  fraudulent accounting has probably cost investors far 
more than penny-stock manipulation.  Furthermore, its victims likely did more 
research before buying and are more worthy of protection. 
     
 The Federal Register points out that average asset size of recent trading 
suspensions was $3.5 million and the median only $225,000, suggesting that 
relatively few larger companies skewed the average.  It is unclear why the 
net tangible assets threshold should be set at $10 million, so far above the 
median.  
Particularly since there is already a definition of a penny stock, it seems 
unnecessarily confusing to introduce a second definition for the purposes of 
this rule.  If such a definition is adopted, perhaps issuers with profitable 
operations, significant revenues or a clean opinion from a national 
accounting firm could be exempted.
     
In conclusion let me add that from my vantage point, it should not be the 
market maker's responsibility to patrol its "merchandise" and more than it is 
a supermarket's responsibility to test the safety of the food it sells.  Such 
regulation will serve primarily to increase prices to consumer/investors and 
decrease the options available to them.  In the case currently under 
discussion, it will also serve to decrease the value of investments they have 
already made during a time of great market stress in the microcap sector.
     
Thanks for your consideration,
     
David P. Cohen
Athena Capital Management