Subject: File No. SR-NASD-2007-023
From: Joel Blumenschein
Affiliation: President, EZ Stocks, Inc.

March 29, 2007

First I would like to thank the Commission for giving me the opportunity to comment without reprisals. While the combination of the two regulatory agencies would be a good thing, the way it is being proposed is troublesome.

Members were told the SEC preferred this combination and if they did not vote for the proposed change, the SEC would take matters into its own hands. Further members were offered $35,000 if and when the proposal passed and went into effect. On these two items alone I feel there are motives, which were not presented to the members. By knowing revenues of all the firms allowed to vote, the NASD was able to pick a number that was large enough to entice a large group of smaller firms to vote for their proposal. There are a large number of voting firms which generate less than $100,000 in revenue and this payment would be a substantial increase in profit for these firms.

With the proposed board makeup, the new national board would be made up of non-industry persons, which would defeat the S in SRO. There is no proposed new definition or qualifications of Non-industry or Public Directors/Governors other than being appointed by the Board,(Article I (aa)and (bb) have been deleted, Exhibit 5, page 8), yet the will have oversight of the proposed SRO. While there have been troubles in the past with other SRO's the NASD has been efficient and has not raised the specter of largess as the others had. With the proposed Board appointing the "Public" Directors/Governors, without qualification standards, this would allow for any ex-industry official or ex-industry regulator to become a "Public" person and thus hold majority vote of the board, with no possible check or balance.

The proposed rule change would restrict the members in their ability for internal oversight and change. We then would be in the position that the NYSE was in just a few years ago, the ability of a chosen few to set the compensation, benefits, perks, for the executives, and rules for the many.

While it is being stated that everyone would have fair representation, consider these facts.
Currently there are 5000 about member firms: The new rule proposal will have a direct effect on 200 firms or less than 4% of the membership, 94% will be effected because of the 4%.

The large firms employ 80% or more of the registered persons in the industry, and contribute the largest portion of the operating budget to the NASD in terms of fines and fees collected: While this is impressive, this change would give those firms the ability to shape the industry in ways they see fit. The By Laws of membership state Firms not number of representatives or revenues collected dictate the vote, one firm one vote.

The majority of proposed Board would be appointed not elected and even if all of the members voted alike they would not be able to effect change in the board or with the agency. The United States of America is based on one person one vote, no matter what their background, why should the NASD be any different.

Going past the above there are some legal challenges that could occur if the proposed merger were to take place, specifically:

The NASD and NYSE are proposing a merger. This could violate 2 Sherman Act,15 U.S.C. 2

By combining under current unknown bylaws the proposed merger violates the charter of the NASD as stated August 7, 1936.

The merger could create a monopoly of larger firms holding sway and biased voting rights over all of the members. Which could be a violation of CLAYTON ACT, 15 U.S.C. 12-27, 29 U.S.C. 52-53

It would violate the bylaws of the NASD specifically section 2(b)(5)which "Requires that the rules of the association assure each member a fair representation in various phases of the administration of its affairs. The applicants rules provide that each member shall have one vote in the election of the governor (or governors) from the member's district and in the election of members to the local district committee; and that amendments to the bylaws an rules of fair practice must be submitted to the whole membership for a vote and will become effective 30 days after such submission only if at least a majority has voted and a majority of those voting has signified its approval".

In its current form this merger will not provide one vote per member nor will the merger require a majority of members voting. It can and has been argued that the new national board would be a fair representation. As previously noted, the new board would be dominated by non-industry or hand selected persons with a majority of the vote.

The vote was past the 30-day period and therefore by statute the vote was not conducted within the bylaws.

The $35,000 payment to the members could bring RICO allegations, as some may take this renumeration as a bribe for their vote.

While there could be serious ethical and legal issues here I believe that Commission should approve the merger with the stipulation that one firm has one vote for all positions, local and national. Without that stipulation I do not believe the Commission should approve the merger.

Joel Blumenschein
EZ Stocks Inc.