August 6, 1998


          Jonathan G. Katz, Secretary
          Securities & Exchange Commission
          450 Fifth Street, NW
          Washington DC  20549
          Via e-mail

          Dear Mr. Katz:

          Avalon Research Group Inc. is a relatively small fully disclosed NASD BD having
          a minimum net capital requirement of $100,000.  Avalon strongly opposes the
          proposal to force NASD BDs to engage an independent public accountant to attest
          to the Y2K reports required by the NASD or SEC.

          First,  this is a technical issue and in most cases accountants have little
          relevant technology background or expertise, so the effort in reality will be of
          very marginal effect.  The testing of software, hardware and the integration of
          systems is not an appropriate role for accountants to supervise or report on.
          Qualified consultants are the proper parties to be used as needed, on an ad hoc
          basis, as determined by the reporting firm itself.

          Second, this requirement would cause a misallocation of resources at smaller
          firms; namely, money that could be used directly in upgrading, conforming and
          testing systems would be diverted to accountants' fees with no actual benefit.

          Third, since the Y2K problem is not capable of being rectified with 100%
          certainty because of the complex interactions of electronic systems from outside
          the reporting firm, among other things, and due to the unyielding time frame
          involved, accountants will rightly feel entitled to charge substantial fees to
          cover their potential liability.  Such fees, which BDs will have no choice but
          to pay, will unfairly burden smaller firms.

          Fourth, there are clearly better ways to accomplish the objective than by this
          proposal which squanders limited resources, like simply educating and properly
          supporting member firms and keeping managements directly responsible for their
          own businesses.


          Based on the foregoing, Avalon respectfully prays that the SEC rejects this
          proposal in full.

          Very truly yours,
          Adam B. Cohen
          Senior Vice President