Subject: File No. 4-606
From: Jonathon W Sanning

July 31, 2010

It's not a question of creating new laws and oversight. More paperwork and regulations will not increase compliance or reduce problems. Rules and regulations addressing all the problems that have occurred over the recent past are already in place. When the game is constantly changing the people that want to cheat will find a way and the ones who are trying to do it right become confused and frustrated. If the goal is to protect the clients from illegal or unethical behavior then the best bet is to merely enforce the current statutes.

Take the time and effort and taxpayers dollars that are being spent on all this arguing and debate and funnel it to the regulatory agencies to do their jobs more effectively. Having been on both sides of the financial services industry I can say with great certainty that a bigger prospectus or another piece of paper to sign or paying upfront for services rather than paying the fees through commissions will not improve the clients situation.

In short, reputable companies are already heavily involved in compliance and spend an amazing amount of time and money to keep their brokers and agents on the right track. Reputable brokers and agents spend an amazing amount of time and money providing consumer education on every sales and service call. The few companies or individuals who choose to act in an unethical or illegal manner will not be deterred by new rules or regulations, any more than they were deterred by the rules and regulations currently inforce. And the reason they will not be deterred is that there is little concern with enforcement.

Focus your debate on enforcing current rules and improving methods for detecting the Bernie Madoff or the Allen Stanford, both of whom were frankly rather obvious. I lived in Memphis while Stanford Financial was operating, listened to their spiel, and knew right then that it was too good to be true. Why didnt the SEC? Too little resources directed to detection.

I spoke to a number of college finance majors during the time of the sub-prime mortgage loans. They asked the simple question, What happens when rates go up? They were able to answer their own question and the answer was foreclosure. If college sophomores and juniors can figure it out why didnt the agencies? Everyone was making money and no one wanted to rock the boat.

Spend more and more money on rules and regulations. Force the already ethical and reputable to spend even more time and money on compliance, (which ends up hurting the consumer via higher prices to cover the increased costs). Dont bother spending any more time and effort on enforcement and youll repeat the follies of the past. Madoff and Stanford and sub-prime loans will be reincarnated.