From: Steve Van Scoik
Sent: July 9, 2007
Subject: File No. 4-538

To Ms Nancy Morris,

I would like to comment on the elimination of the 12b-1 fees. You would be hurting the people you think you are trying to help. Individuals, who do not have large sums of money to pay advisors, can more afford to pay their advisors from the “internal” fee structure than those who have the ability to pay for such services. This is exactly why Mutual Funds became so popular in the first place. Low fees, expert investors, and counseling from the advisor community, with limited costs, has made Mutual Fund buying a great tool for the common person. Why tear apart an area that has made so many common investors wealthy? While 12b-1 fees are disclosed in the prospectus’ and most good advisors explain those fees, your typical mutual fund buyer could not afford to pay for the advice they would be getting, if charged by the hour, or for the advice they would have to pay for. If you remove the 12b-1 fees then advisors are going to charge a fee for consulting services. Advisors have office expenses, secretaries, benefits and all the normal operating expenses, it has to come from somewhere.

This preposterous consideration would be similar to saying that anyone who works for the SEC would only receive compensation for the first year of their employment, from that point forward they would be expected to work for free. If you apply the same logic to advisors who sell, receive a first year fee and then be expected to properly service that account for the rest of that person’s life, without compensation, is ridiculous. You will hurt especially the lower echelon investor who gets serviced by advisors, for minimal fees. Would you expect that other insurance products be treated in this manner? How about Life Insurance products that have ongoing "service" fees? Would you expect your auto or homeowners insured to pay a commission once to an agent and then never compensate that agent for his servicing of that account for the remainder of their lives? Would you expect a business insurance agent who receives compensation to only receive a new business commission then be expected to service that client for the rest of their business life with no compensation? I hardly think so. How about the computer people who sell a computers or printers, then sell a service contract on top of that. Would you expect them to service that computer/printer for the rest of its life without a fee? Perhaps you could enforce that when a car salesman sells a new car that the dealership be forced to service that car for the remainder of the car’s life without a fee. I am sure the automotive industry would love you for that. You would put them out of business, just like you run the risk of putting advisors out of business.

If you pass this restriction you are taking the free enterprise system to its knees. You are taking away the ability of individuals to make decisions about how they are to be serviced. You will eliminate the small investor from the market place both from individual investing and 401k investing. The advisor plays a critical role in their planning and continued service of their investing. Why did you recently pass a rule that allows advisors to assist in the investment decisions of 401k participants? Because they need the help. If you take away the ongoing service fees from mutual funds then the small investor will be in the same position. The wealthy will always have options and the ability to pay for them.

Keep in mind, for our small compensation, if our client does not think we are doing the job, they can go to another advisor. We are expected to service this client for the remainder of their life, and to stay on top of what is happening in their accounts on a daily basis. Who could really afford this level of service for what we are paid? You remove 12b-1's you just cut the amount of advice that will be offered to most small to medium size investor.

Steve Van Scoik
PO Box 1886
Elkhart, IN 46515-1886
Registered Representative