Subject: File No. S7-26-07
From: Thomas J. Berthel
Affiliation: CEO, Berthel Fisher Company

November 20, 2007

In regards to the National Association of Realtors application to attain relief under Sec. 15 and Sec. 36 of the Exchange Act I would offer the following comments:

Allowing Real Estate Participants, (RE Participants), to receive compensation for assistance and advice provided to investors contemplating an investment in a securitized TIC offering would lead to the dilution of the high standards and regulatory oversight provided by the Act. Registered Representatives, (RR), must pass applicable licenses provided by FINRA, and State Securities Law, respectively Series 22 or 7, and Series 63. To my knowledge securitized TIC offerings are sold under exemption from registration using Regulation D, (Reg D, Sec. 506). Reg D requires offerings to meet certain standards and comply with definitive rules placed on the offering by the SEC, most commonly, Sec. 506, 502, and 501. To that end RR are monitored for compliance by their own Broker Dealers Compliance staff, FINRA regulations, State Securities Administrators, and the SEC. The amount of compliance and oversight provided in the offering of a security far exceeds any that is required in the sale of real estate as a whole. Full and Fair disclosure in all offering materials, including a multitude of risk factors pertaining to any investment as well as reasonable investigation with regard to due diligence of an offering including the costs associated with the investment again exceed any required in the sale of real estate. To allow an unregistered person to bypass these types of investor protections and to be compensated for the same would be a very dangerous precedent and could lead to the further erosion of these protections in other offerings. To compensate unregistered persons selling securities would be like charging fees for providing legal advice without a law degree.

There are many issues in the exemption request which must be more defined. As written the exemption is fraught with ambiguity. What or who will define substantial experience of the Commercial Real Estate Professional, (CREP)? How will the SEC monitor and regulate these qualifications once defined? What actions can be taken against a CREP who violates these qualifications and who will administer and enforce these violations? Sec. A (1) of the exemption request states that the RE Participant must introduce a Selling Broker Dealer once a client has indicated an interest in a TIC Security. How did the client become aware of the TIC Security and who introduced the TIC Security to the client? If it was the RE Participant, then clearly the RE Participant must understand and be cognizant of the requirements and restrictions of Reg D offerings. This also brings in questions of accredited vs. non-accredited investors, (Sec. 501), and general solicitation and advertising restrictions, (Sec. 502). In addition to these issues there is the NTM -05-18 from FINRA regarding contemplation of Reg D offerings. In our experience with CREPs they are clearly lacking in the knowledge or understanding of issues such as suitability of an investment, advertising, solicitation, and accreditation. This would most certainly lead to the very real possibility of the exemption from registration safe harbor provided under Reg D to be violated. This could have potentially devastating effects to Broker Dealers, Registered Reps and Sponsors of these offerings. These issues are taken very seriously by our Compliance Staff in our continued efforts to follow the regulations of our SRO and the SEC. It is unlikely that the CREP would be able to provide the same kind of oversight since the CREP is not a registered person. Who will monitor their actions with regard to securities law and the Act?

Many sponsors also have their own registered Broker Dealer who also acts as the Managing Broker Dealer, (Lead Placement Agent). What is to stop these Sponsors from cutting out the Selling Group Member and marketing directly to the CREP? This could lead to further erosion of the protections for investors that the Act and the prohibition against paying commissions to unregistered persons was meant to defend.

In our opinion the request for exemption from registration should be denied at this time. Until further assurances that current securities laws can be maintained, monitored, complied with and regulated we should not proceed down this slippery slope. If a CREP wants to sell a Direct Participation Program then they should pass the Series 22 and Series 63 and register with a licensed Broker Dealer.