Subject: File No. S7-5-99 Author: Dan Weston Date: 5/7/99 11:50 PM The League of American Investors 25,000+ League Members are TRIAL SHAREHOLDERS of 300+ Participating Companies http:InvestorsLeague.com mailto: in1@InvestorsLeague.com 2804 CAMINO DOS RIOS#205 THOUSAND OAKS, CA 91320 805.375.1400 Fax 805.375.1437 May 7, 1999 Jonathan G. Katz, Secretary Securities and Exchange Commission 450 Fifth Street, Northwest Washington, D.C. 20549 Re: File No. S7-5-99 Submitted by: Daniel D. Weston, COB, The League of American Investors Dear Mr. Katz: This brief letter is in response to the request of the Securities and Exchange Commission (the "SEC") for comments on Release No. 41110 regarding certain proposed amendments to Rule 15c2-11 (the "Proposed Amendments") under the Securities Exchange Act of 1934 (the "Exchange Act"). I vigorously oppose substantial parts of the Proposed Amendments on the grounds that imposing an increased duty on Marketmakers to review issuer disclosure will only serve as an additional impediment to the liquidity of the Investor. I have read many of the Comments previously submitted, most of which eloquently expound the valid reasons NOT to adopt Rule 15c2-11, so I will not reiterate them. But I have several recommendations: The First is to mitigate the prime objection cited, i.e., the Brokers duty to enter the Reporting business and prepare information for dissemination upon request. 1. Require both the Filing and non-Filing non-Nasdaq Companies to include ALL the items you are requiring the Broker to ascertain (the Flags) in the Information Statement they presently must file with a Market-maker 2. Permit the Marketmaker to utilize a competent third-party, whose opinion they will accept, to do the "Fraud search." 3. To rely completly on third party, independent Repositorys to fulfill and update the Reports. The Second is a non Rule 15c2-11 "anti-fraud" suggestion: EDUCATE THE POTENTIAL FRAUD PERPETRATORS AND THE POTENTIAL VICTIMS 1. ALL the Officers of small public Companies who hold Shares or Options should be required to Certify in their Filings to the Marketmaker that they are aware of what constitutes a "Fraud." Reading the SEC's newly issued MicroCap Stock: A Guide for Investors, plus the additional readings provided should be required. 2. Make the Investor aware of how to detect "Fraud." All 25,000+ League Members are now being offered a Copy of the above mentioned Guide. We are also formulating a Certification Program for certain League Members to be able to designate to a Broker that they are able to exercise the "Right of Self-determination" in purchasing a SmallCap Stock. By satisfying and agreeing to Terms similar to those found in a Private Placement Document, i.e., the ability to obtain and understand available information, awareness of Fraud potential, to afford the potential loss of investment, a Member may be designated to be a Qualified SmallCap Buyer. 3. The League Membership is rapidly expanding due to our TRIAL SHAREHOLDER policy wherein all 300 of our Participating Companies have agreed to regard those League Members who request it to become their TRIAL SHAREHOLDERS. All TRIAL SHAREHOLDERS will be informed as Shareholders for up to six months. In effect, they receive a "holding period" to be able to "get to know" a Company, its profit potential, its Management, and, if they so desire, to obtain Stockbroker opinions, --all before they commit their funds. We heartily advocate that SmallCap Companies adopt this Plan, independently or through the League. ABOUT THE LEAGUE OF AMERICAN INVESTORS *Since 1983, the League has been an Advocate on behalf of the small investor. *Publisher of the Weston Manual of Corporate Digests since 1969. *Online sponsors of nVESTOR, the Stockmarket Simulator. *Creator of the TRIAL SHAREHOLDERS Concept. +--------------Dan Weston, Pres.-------------+ Use our $100,000 to "Play the Stockmarket" +--Register at nVESTOR: --+ send e-Mail to