From: Frederick G. Ferrara, CFA
Sent: December 20, 2006
Subject: File No. SR-NASD-2006-124

To Whom It May Concern:

With respect to the proposed new NASD Rule 2342, I believe the requirement to provide the proposed SIPC notices to new clients should only apply to those member firms which provide investment products which are subject to SIPC protection. It would seem to serve no regulatory purpose for members which only provide investment products which would not be covered by SIPC to be required to provide the proposed notices to clients who would not be able to avail themselves of SIPC protection.

In fact SIPC Bylaws Article 11, Sections 4(d)(2) and 4(g)(2) would appear to prohibit SIPC members from displaying the SIPC symbol in situations in which it could mislead a client into believing that the investments offered by member firms are covered by SIPC when in fact they are not. By way of example, our firm only markets private placements in real estate direct participation programs, and therefore it seems doubtful that SIPC would ever provide protection to any of our clients. Accordingly, we notified SIPC that we would no longer make reference to SIPC in our correspondence, business cards, and would not display the SIPC symbol in our office. It would seem that our firm, as well as others like us, would be able to continue to act in a manner consistent with the aforementioned SIPC Bylaws only if the proposed Rule 2342 is amended to create an exemption for those firms which only provide investment products which would not be subject to SIPC coverage.

Please do not hesitate to contact me if you should require any additional information.


Frederick G. Ferrara, CFA
Chief Compliance Officer
Panattoni Securities, Inc.
8401 Jackson Road
Sacramento, CA 95826