Subject: File No.  S7-26-98
Author:  "Koutris; Thomas P." 
Date:    10/26/98 3:48 PM
     
     
I am providing comments related to the proposed books and records 
requirements for broker-dealers.   It is not clear to me from reading the 
rule whether it applies to mutual funds, variable annuities and variable life 
insurance sold on an application basis (no brokerage account established).   
If there is no account, then how can there be account records?  This should 
be made clear because the burden of updating client account records and 
maintaining transactions records  at local locations would be significant  
for insurance-affiliated broker-dealers who operate primarily on a plan 
application basis for packaged products.  The terminology used throughout the 
rule seems to indicate the rule only applies to brokerage accounts.  
Clarifying if the rule applies to packaged products which are not part of a 
brokerage account, including mutual funds, variable annuities and variable 
life insurance sold on an application basis, is essential.  The proposed 
changes would require significant changes in recordkeeping systems. The 
enormous financial burden this rule would impose on firms would also have 
significant competitive consequences for minimum service, high payout firms.