Subject: File No. S7-25-06
From: Kirk L Hartness
Affiliation: registered representative

March 16, 2007

I recently read an article on changes to minimum requirements for hedge fund investors. In essence, the SEC is considering raising the minimum net worth requirements for hedge fund investors, effectively removing the vast majority of those currently investing in hedge fund arena. While I understand the SEC's desire to protect the investor, it seems unfortunate that the very wealthy are being given access to better investments than the less wealthy based simply on net worth. I am relatively sure that net worth is not the best determinate in assessing suitablity. The current president of the broker dealer under which I serve lost a huge percentage of his net worth in the .com craze in 2000. One of the most sophisticated private investors I know heads a huge division for a major retailer. He lost nearly 60% of his net worth at the same time.
It seems that the criteria for selecting an investment should be between the representative and his client. I have investments in my offerings that have significantly higher returns than, e.g., the SP 500 with betas close to that of a bond fund. Suitability requirments make them unavailable to many of my lower net worth investors. What a shame that the economic assessment excludes lower net worth investors who desperately need these types of investments.