November 19, 2007

Release Number 34-56779 was of great interest to me because a majority of the business of my small, niche broker-dealer is the offering and sale of TIC/1031 real estate securities transactions. It is difficult to predict whether the proposed exemption will adequately protect the public interest and investors which is stated to be the primary objective of the SEC. Although the proposed exemption has a number of requirements, restrictions, limitations and disclosures, the real estate industry is relatively unregulated, certainly, when compared to the broker-dealer industry. Therefore, it is my belief that additional requirements should be considered by the SEC as follows:

• There should be consequences of Real Estate Professionals and RE Participants
  who violate the proposed exemption.
   
• Real Estate Professionals and RE Participants should consent to unannounced inspections
  by the FINRA and the SEC for the purpose of determining compliance with the exemption.
   
• Real Estate Professionals should have annual firm CE element requirements in the
  area of compliance and regulations which are relevant to the TIC/1031 real estate
  securities industry.
   
• RE Participants should have written supervisory procedures and be required
  to conduct annual compliance reviews of their firm and RE Participants who make referrals
  and receive real estate advisory fees.
   
• The Lead Placement Agents should be prohibited from conducting the suitability
  determination for the prospective investors because of the inherent conflict of interest.
   
• The proposed exemption should not be retroactive, and any real estate firms who
  have been engaged in sponsoring or selling TIC/1301 real estate securities should be prohibited
  from relying on the proposed exemption.
   

Thank you for your kind consideration.

Respectfully,

Richard A. Leach
INVESTMENT SECURITY CORPORATION