July 19, 2007

I am writing to express my concerns about the SEC's ongoing review of Rule 12b-1. I would urge you not to eliminate them. In my opinion, they provide a valid trade-off between the adviser and the customer. Let me explain.

In my practice, I believe strongly in helping clients achieve lower commissions by selling Class A shares of mutual funds at a breakpoint where appropriate. These Class A shares then provide much lower expense ratio's than other share classes. In the long run, it is often the least expensive way for the client to invest and still receive the aid of a professional invesment adviser.

Many clients ask me, "Why will you still be interested in me five years from now if I don't have any new money to invest since you are paid by a front-end commission?" When I explain the 12b-1 fee to them, they are actually happy to hear about it. I explain that it is part of the "expense ratio" that they are ultimately paying, but that it provides me compensation in future years to continue to service their account. They like that!

So add my voice to those requesting a fair consideration of the benefits of 12b-1 fees. Life itself is full of paradoxes. Sometimes the thing that may at first glance seem good has an unintended consequence. The elimination of reasonable 12b-1 fees fits this category. I believe it would result in diminished service over time to small to medium sized investors, the very people you (and we) are charged to protect and to serve.

Sincerely,

Mr. Richard Brown
CPA
RL Brown Financial