Investors Research Institute, Inc.
P.O. 750471, Forest Hills, NY 11375-0471 
Telephone 212-484-4747, Fax 718-523-2137 
E-mail: iri@pipeline.com
     
April 17, 1998
     
Via E-mail: rule-comments@sec.gov     
     
Jonathan G. Katz, 
SecretarySecurities and Exchange Commission 
Mail Stop 6-9
450 Fifth Street, N.W.
Washington, D.C.  20549     
     
Re:     File Number S7-2-98
     
Hon. Commissioners:     
     
        On February 17, 1998 the Commission published certain proposed
amendments to Form S-8 and related rules and solicited public comments. 
Release No. 33-7506.
     
        The purpose of these comments is to address certain practical
aspects and applications of the S-8 Rulemaking process.
     
        First, the non-profit Institute, whose missions advocated on behalf
of its small but diverse Membership include high standards for "disclosure" 
and "accessibility" of information about public equities to public 
shareholders and potential shareholders, was established during an 
environment in which there has been insufficient guidelines for disclosure 
of dilutive events, and far too many abuses of the S-8 rule whereby shares 
appear to have been issued in many instances in amounts which far exceed the 
monetary value of the services rendered to the issuer.
     
        The Institute applauds the Commissioners for revisiting these
guidelines for the purpose of curing these inefficiencies of the present 
rule.   Public companies which enroll as Members of the Institute already 
must agree to voluntarily adhere to such higher standards.   Of course, the 
Institute has no enforcement power nor staff to monitor abuses.  It is 
limited to the withdrawal of Membership privileges should a Member or the 
public bring an abuse or instance of non-compliance with its standards to 
its attention.   And unfortunately, the investing public does not presently 
have a commitment re: these "best practices in investor relations" standards 
from the vast majority of public companies which have not to date adopted 
the Institute's standards.
     
        However, we would propose that the Commission move cautiously so as
not to "throw out the baby with the bath water."        
     
        More specifically, we are talking about the huge disparity between
the financial and resource-rich "blue chip" companies and the financial and 
resource-poor "small capitalization" and "micro-cap" companies.   In the 
former instance, such companies often have entire departments devoted to 
development and distributions of company information to investors and 
potential investors.  In the latter instance, some companies have no 
assigned staff whatsoever for this purpose, and it remains in the best 
interests of investors and potential investors for there to be a means by 
which such companies and their investors to achieve a level of information 
parity with their larger-capitalization peers.
     
        It does not serve the investing public if such companies are left
without the necessary resources to pay for quality opportunities to present, 
achieve professional scrutiny and distribute information in a timely and 
enriched fashion.
     
        We would argue that the rule here should be on what is reasonable
and proper in terms of compensation guidelines, what is reasonable and 
proper in terms of investor relations activities, and what is reasonable and 
proper in terms of disclosure as to whether products, services and resources 
are paid through equity distributions where the investor's holdings are 
diluted or are paid through operational expenditures where the investor's 
holdings may be impacted by lesser profit margins.    
     
        It should be up to the management of the company to decide which of
these means to inform investors is in the best interests of the 
shareholders, as the shareholders have remedies should management 
subsequently make an inefficient choice.
     
        Where the shareholder and investor needs protection is in the
issuance of stock for exhorbitant fees and compensation or to directly or 
indirectly enrich insiders.  
     
        We would also ask the Commission to distinguish between
"promotional" activities by a Company which coincide with stock trading by 
recipients of S-8 stock, perhaps putting limits on sales of stock during 
periods that the recipients are in the process of aggressively distributing 
information, and the strictly "informational" activities where services 
designed to enhance exposure and investor scrutiny, such as conferences, 
exhibitions, reviews and other means where the investor public has an 
opportunity for dialogue and interaction with company executives is the 
primary usage of S-8 distributions.
     
        Also, a company may have legitimate purposes for S-8 distributions
to suppliers of non-investment related products and services, and the 
Commission may wish to survey small capitalization public companies to 
determine whether undue restrictions on the usage of such stock not 
considering the appropriateness or comparative valuation of the products and 
services received for operational purposes or for professional services, 
such as legal, etc., may in some instances disserve the shareholder by 
undermining the ongoing financial solvency of borderline entrepreneurial 
enterprises in which members of the public have acquired an equity stake.
     
        Thank you for your consideration, and we hope that we have given you
additional insights to assist you in your final determination on this matter.
     
Sincerely,
     
Gayle Essary
Executive Director
Investors Research Institute, Inc.