From: Skip Raymond [slraymond@raymondwesley.com]
Sent: Wednesday, May 05, 2004 6:26 PM
To: rule-comments@sec.gov
Subject: IC 26356 (S7-09-04)

To Whom It May Concern:


This proposed change to the rules is, at best ill- conceived.  

1.      12b-1 fees allow for many favorable benefits and positive elements to 
occur for the investor.  Over the years since the adoption of Rule 12b-1 which 
we believe is of substantial benefit to fund shareholders, particularly those 
shareholders with relatively smaller mutual fund investments.  The receipt by 
broker-dealers and their representatives of 12b-1 fees has enabled these 
shareholders to receive ongoing professional services which would otherwise 
not be available to them or only available at additional costs to these 
shareholders.  Rescission of Rule 12b-1 would Increase the Incentive to Churn.  
Generally, when regulations are proposed the one missing element in the 
analysis is what will the party who is providing the service do to replace the 
loss of income?  You don’t think he is going to work for free do you?  What he 
may very well do is not service clients who have smaller accounts.  Who will 
take them on?  Not a quality advisor who knows the value of his services.  The 
industry has spent many years trying to get our colleagues on the same side of 
the table as the client, by going to a fee for services model.  Many have used 
“C” shares with the 12-b1 trail as a way to transition to this model.       

2.      I believe that the interests of fund shareholders are best served by 
aligning the interests of the broker with the interests of their fund 
shareholder clients.  This is best achieved through the receipt of Rule 12b-1 
Fees as opposed to incentives for transaction based commissions or the need 
for additional charges to fund shareholders for these valuable services.

Let’s not let the actions of a few cause an overreaction which will damage the 
many.  This change will have a tremendously negative consequence on the very 
people the change is designed to protect, the investing public.  




Skip Raymond
Raymond Wesley
1001 Dove Street 
Suite 190
Newport Beach,  CA 92660
(949) 553-8040 x104
(949) 553-2466 Fax
slraymond@raymondwesley.com




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