Subject: File No. SR-NASD-2006-124
From: John Harris
Affiliation: Chief Executive Officer, BondMart, Inc.

December 30, 2006

The proposed rule fails to contemplate that some firms are excluded from SIPC membership. For such firms to disseminate SIPC information to their customers would create a false or misleading impression. Mandating such dissemination is therefore unreasonable.

As proposed, the rule requires each firm to implement, maintain, and track compliance with new procedures, on an account-by-account basis; to expend time and money on paper, printing, postage, and a mail merge with its name and address system; and, to bear new liabilities for claims related to compliance with the rule. Does deposit of the written advice in first-class mail constitute sufficient notice or must a higher standard of notice be met?

As proposed, this rule mandates new consumption of energy and trees.

The prospective benefits of this proposed rule are dubious. The proposal presumes a level of ignorance by consumers or incompetence in the management of their affairs that is practically insulting to them. Few among them whose accounts bear SIPC coverage could possibly be unaware of this fact. If those who are aware lack sufficient curiosity to make the most basic inquiry as to the nature of this coverage, a safe assumption is that the coverage is of little or no consequence to them.

If made effective, the proposed rule adds insult to injury for those opposed to mandated insurance. Not only must they bear the cost of coverage they oppose, they must bear a new cost for the promotion of that coverage. Moral hazard is already implicit in SIPA; the proposed rule worsens the hazard.

The proposed rule obligates member firms that communicate regularly with customers solely by electronic means to implement a regular, paper-based communication system that is contrary to their mode of operation and value proposition.

More effective, regular, and economical means are available to disseminate SIPC's phone number and web address to owners of accounts covered by SIPC. These include websites of member firms (which may also include a copy of the SIPC brochure), trade confirmations, and account statements. On a net-cost and -benefits basis members firms would be better off if SIPC undertook an advertising program to the same effect.

The Commission should reject the rule in the form proposed.