Date: 4/6/99 1:20 PM Subject: S7-5-99 To Jonathon G. Katz Secretary, Securities and Exchange Commission 450 Fifth Street, NW Washington, DC 20549 Reference: File Number S7-5-99 Re: Changes proposed for Rule 15c2-11. To the Commission To the Reviewers of Comments Also to: Chairman Arthur Levitt Commissioners: Isaac C. Hunt, Jr., Norman Johnson, Paul r. Carey, Laura Unger. Well, now, you've done it again. In proposing to change Rule 15c2-11 to give the burden of studying financial statements of the companies in which they make a market, you've given the stockbrokers the job of a securities analyst without being able to charge an advisory fee, without the training and education you require of an investment advisor (under the Investment advisory Act), and without the necessary investigatory tools to do proper diligence. They will have unlimited power with accompanying unlimited risk if they venture an opinion as to the accuracy and truthfulness of a company's information. Think of the massive amount of litigation it will engender (you're all attorneys...think seriously...it won't take a load of imagination). It's lawyer's retirement fund. Ain't it great? You gotta be kidding. Frankly, I don't know one single stock broker (and that includes a lot of brokers in the big NYSE houses) who I would trust to give me an objective, learned, relevant investment opinion. Have you forgotten so quickly the description that a stock broker is substantially a sales transacter, not - repeat, not - an investment adviser? I hire investment advisers, pay them well, and receive the best of their objective analysis without being afraid that they're trying to sell me something. Not so with brokers. Are you guys out of your everlovin' minds? How can you even consider that any legitimate market maker is going to accept such a non-paid responsibility. What you're going to see is all the small cap/micro cap/mini cap/miniature cap/mom-pop cap companies not be able to sell or trade their stock. Finally, after many, many years, the fear of Mr. Joseph P. Kennedy, first Chairman of the Securities and Exchange Commission will come to pass - that of the BIG exchanges and brokerage houses, trading BIG stock, literally owning and controlling the Commission. No more start-up ventures such as Microsoft, Apple Computers, IBM, Marathon Oil, Xerox (all of which began as penny stocks). Little stocks will be gone, gone, gone. Think it can't happen? Pass this rule and it will. But....before you do, go down in the bowels of your own library, venture back in the older stacks, blow off the dust, get some help from your excellent librarians, and find some of the first writings, speeches and reports of Mr. Kennedy during 19333, 1934, and 1935. They're all there. I've read most of them. Read `em. Understand.'em. If you don't and can't, God help us all. Small companies will become dodo birds of the investment industry. And do just one more thing for me. Get a stock broker to analyzed and explain to me why Amazon.com is trading a 200 times earnings or whatever and hasn't had a profit since inception. Under your newly proposed 15c2&11 (ugh) rule, a market maker would have to refuse to trade its stock. Whoop! Wouldn't that be a interesting challenge for the boys and girls over at NASD Regulation. But in the end (sigh), you will do whatever you wish, regardless of what small companies want. As you know, 80 percent of the commenters said "don't change the Rule 504." You did it anyway. You've read my comments on this pile of trash. So, what the hey. Go for it, boys and girls. Down here in the Southwest we try to ignore you anyway. Regards, Charles Edwards.