Subject: File No. S7-3-98
     
23 April 98
     
Jonathan G. Katz, Secretary, 
Securities and Exchange Commission,
Mail Stop 6-9, 450 Fifth Street, N.W., 
Washington, D.C. 20549
     
Dear Mr. Katz:
     
I am very disturbed about the potential effect of the proposed rule 
changes your Commission is presently considering. My understanding is 
that while the SEC's intentions are good, the National Quotation Bureau 
believes the rule will have unintended consequences that will be highly 
detrimental to investors, issuers and the secondary markets.
As a small investor who invests in small cap companies, I and millions 
of other investors would be devastated if either there were:
     
1)  No prices in the Pink Sheets or on the OTC Bulletin Board 
     
The National Quotation Bureau has been informed by some of our largest 
market makers that they will not publish prices in the Pink Sheets or on 
the OTC Bulletin Board if the rule proposal is passed.
     
2) Huge potential liability for OTC market makers
     
The rule proposal will create an ongoing liability for market makers in 
all corporate securities that are traded OTC. Market makers will be 
liable for third party actions by investors if there is any issuer fraud 
or manipulation in the securities they trade. Even if the market maker 
had nothing to do with the fraud or manipulation. The rule would not only 
cover securities quoted in the Pink Sheets and on the OTC Bulletin Board, 
but all corporate securities traded over the counter such as foreign 
equities, high yield bonds, corporate bonds and convertible securities. 
Market makers will be the new deep pockets
for class action lawyers.
     
The Commission is re-introducing a proposal that was overwhelmingly 
opposed by the vast majority of public comment letters in 1991. The new 
proposal is more burdensome than the 1991 proposal. In 1991, according 
to the SEC proposing release "The vast majority of commenters opposed 
the Commissions proposal. These commenters believed that the proposal 
would discourage or even eliminate market making for many non-Nasdaq 
securities. They claimed that the proposed
amendments would have impaired liquidity, reduced market value and 
harmed the capital raising process. Several commenters believed that the 
proposed changes would have hurt the market for the securities of many 
substantial and legitimate companies, but would have little effect on 
fraud in worthless stocks."
     
     
While the current proposal is the wrong answer to a legitimate problem, 
the end result of the proposal should be rules and regulations that 
work. The best way to control fraud is to concentrate on the following 
areas: 
     
Education; increase investor awareness through education and disclosure. 
     
Efficiency; increase the competition, ease of entry, transparency and 
efficiency while lowering costs to investors of OTC trading. The 
National Quotation Bureau has proposed to automate our service to 
increase the transparency and efficiency of OTC markets. 
     
Enforcement; give enforcement agencies the tools and staffing to keep 
the markets honest. 
     
Regulation should protect investors from those who wish to defraud them 
while not limiting their opportunities.
     
I am hopeful that you will consider appointing a committee made up of 
investors, marketmakers, the SEC, the NASD to work together to create 
rules that work for all parties.
     
Thank you for your consideration.
     
     
Sincerely,
     
     
Jeff Hutner