April 18, 2002

Mr. Jonathan G. Katz
Secretary, United States Securities and Exchange Commission
450 Fifth Street NW
Washington, D.C. 20549-0609

Re: Securities Exchange Act of 1934 Release No 45526 (March 8, 2002)
File Nos. SR-NASD-2002-21 and SRNYSE-2002-09
Relating to Research Analyst Conflicts of Interest

Dear Mr. Katz:

Thank you for the opportunity to comment on the above-referenced proposed regulations related to research analysts employed by broker-dealers such as SunTrust Capital Markets, Inc. SunTrust Capital Markets, Inc. is a full service broker-dealer headquartered in Atlanta, Georgia with offices located in the Eastern United States. We maintain a large and well-respected research department covering approximately 300 issuers, an active investment banking department, institutional and retail sales and trading functions. We appreciate the efforts of the National Association of Securities Dealers ("NASD") and the New York Stock Exchange ("NYSE") to ensure the integrity of our markets and maintain the confidence of investors.

Although SunTrust Capital Markets, Inc. supports the goals of the proposals, we do have concerns related to the following issues:

Applicability of the proposals - Definition of "research"

We recommend that the proposed rules specifically apply only to "fundamental research on equity securities", excluding research reports of a technical, quantitative or strategic nature as well as research on fixed income and other (non-equity) securities.

Restrictions on Issuance of Research Reports

NYSE Rule 472(f)(1) & (2) We recommend the rules conform to Rule 139 under the Securities Act and allow research immediately following secondary offerings for S-3 eligible companies and that the rules impose a 25 day quiet period for initial public offerings.

Analysts' Compensation

NYSE Rule 472(h) proposing "An associated person may not receive an incentive or bonus that is based on a specific investment banking services transaction." We suggest that the prohibition relate only to transactions for public company clients versus private companies.

Disclosure of Compensation

NYSE Rule 472(k)(1)(ii) The requirement that firms disclose any form of compensation from an investment banking client received by any affiliate of the firm is an onerous and expensive one, particularly for large financial institutions. A bank affiliated with a broker-dealer (and isolated by Chinese Walls) might issue a corporate credit card to a company covered by the broker-dealer's research department. Currently, in part because of information barriers, these arrangements are difficult to discover. However, under the current proposal, disclosure would be required. We suggest a materiality standard be applied.

Disclosure of Ownership

NYSE Rule 472(k)(1)(i)a. We recommend requiring that disclosure be consistent with Section 13(d) and (g) of the Securities Exchange Act of 1934 with respect to reporting of ownership as of the end of the previous quarter and having the reporting minimum set at 5% (instead of the proposed 1%).

Personal Trading

NYSE Rule 472(e)(4)(v) conflicts with NASD 2711(h)(1)(A) in that the NASD proposal imposes restrictions on not only the analyst's accounts but on accounts of members of the "analyst's household." The NYSE approach is far superior in only addressing accounts the analyst controls or holds a beneficial interest in. We view as problematic applying industry rules to persons not employed or controlled by the broker-dealer, such as an independent spouse, an au pair, or an analyst living with parents. Further, we question whether the authority of the NASD and NYSE extends to circumscribe conduct or otherwise require disclosure for these persons not affiliated with or controlled by a registered entity. NYSE Rule 407 which would aid NYSE member broker-dealers in the enforcement of these proposed rules is significantly more narrow than the proposed NASD rule in that it applies inter alia to accounts "which such person has a financial interest or the power, directly or indirectly, to make investment decisions." We strongly recommend the NASD proposed rule conform with the proposed NYSE rule on this point.

Investment Banking and Research Communications

While we whole-heartedly support the independence of our research analysts, NYSE Rule 472(b)(2) as proposed would pose significant expense for our firm in its day-to-day activities. The requirement that "any ...communication concerning the accuracy of research reports between Investment Banking and Research Departments must be made either through the Legal or Compliance Department or in a transmission copied to Legal or Compliance" is simply not practical because: 1) a Compliance Officer may not be available at all times for meetings; for a given time frame; 2) the back-up of a "written notice" of the discussion is difficult to execute given that the conversation may have taken place while one or more of the parties was traveling or otherwise not in a position to stop and document the event. We recommend consideration be given to having the Supervisory Analyst take a stronger role in assuring the accuracy of the report, referring to the Legal or Compliance Department if requiring additional guidance.

Further, it will be difficult to differentiate between a discussion about a company and "approval of the research report." Research analysts traveling with bankers on business trips would be required to make a determination about whether their communications warranted Legal or Compliance involvement. Guidelines in this area are unclear.

Editorial Note

NYSE Rule 472(b)(1) The last sentence reads: "Research reports may not be subject to review or approval prior to distribution by the Investment Banking Department." We suggest: "Research reports may not be subject to review or approval by the Investment Banking Department prior to distribution."

Again, we appreciate the opportunity to provide input regarding this important initiative.

Sincerely,

David C. Prince
Chief Legal & Compliance Officer
SunTrust Capital Markets, Inc.