Subject: File No. 4-538
From: Gregory A. Gallo, CPA/PFS, CRPC

May 31, 2007

I am a financial advisor. I utilize both commission products as well as fee-based accounts in meeting clients' investment objectives. When 12b-1 funds come into play in our mutual fund selection, we simply include the fee as part of the overall fee structure. For example, if we agree on a 75 bps annual fee for managing an account, then the external fee is set at 50 bps, and the 25 bps gets paid to us directly from the fund companies. If you change the 12b-1 arrangement, we will have to raise our external fees by 25 bps, and although the reality is the same, the PERCEPTION IS NOT. Working for a small broker dealer, it is difficult enough to compete against the industry behemoths. If you push through these changes in the 12b-1 fees, on top of all the ther regulations that have been pushed through over the past 10 years, YOU WILL ESSENTIALLY CLOSE THE DOORS OF EVERY SMALL BROKERAGE FIRM ON THE STREET. That will hurt competition and, more importantly, service to the very people you are trying to benefit - the average investor.
Greg Gallo