Subject: File No. S7-25-06
From: Dave Patch

January 1, 2007

Forgive me for being a skeptic but are you guys serious?

The commission is spending critical man hours creating new laws that make it unlawful to make false or misleading statements to investors in hedge funds? It seems to me that these very laws already exist for all those that want to be protected by the Commission so why this law and this resource?

As for hedge funds that want no part of being protected by the Commission by not registering with the Commission - let them seek out their own levels of enforcement. It seems that the Hedge Fund community want the best of both worlds. They want the Commission to protect them from fraud, fraud by the very advisors they invested with, and yet they want no part of paying the price for such luxuries. The level of SEC activities spent recently investigating fraud against hedge fund investors, by the managers themselves, seems hypocritical since each chose to invest into a fund that failed to register with the Commission in order to stay secretive.

Hedge Funds presently rule our markets and impact each and every investor - regardless of whether the investor is in a fund or not. Hedge Funds control our major brokerage firms as the value of their fees has created a conflict of interest between profits and securities regulations (late trading, illegal shorting, preferential inside information, etc...). Yet the Hedge funds continue to be a focus of regulatory protections while snubbing their responsibilities as major market participants.

Hedge Funds has elected not to invest in the expense(profits) to insure the public is not being injured and yet each continues to get the Commission to spend valuable time protecting them. The Commission is prioritizing the protection of the wealthy as the wealthy rob the average investor.

It is my opinion that this law - unlawful to make false and misleading statements - is ludicroius as it relates to a hedge fund. Those who invest is such pools should do so with or without risk at their own perils. If these investors want to invest in a crook they would do so at their own risk since each apparently wants the profit without taking the expense to find out who they are investing with.

If a hedge fund does not register with the Commission, those who invest in such funds must not be afforded the manpower expense of the Commission to seek out enforcement cases against violations of this nature. This resource of staff labor should be better served investigating the crimes against those who want to play under the laws and the protections of the Commission.

Too much of the Commissions time is being spent serving those who want to remain secretive. Instead of protecting these pools of the wealthy, why not dedicate the time to protect the people injured by these pools and their proprietary trading strategies. If you create this law, you will then be obligated to monitor the advisors and seek out enforcement when a violation occurs. The Commission would be better served to bring the fund advisors into the present umbrella of laws as opposed to creating new ones specific to their wants and needs.

As always, it is a pleasure being able to comment on the activities and priorities of the Commission.