Subject: Rule 15c2-11 Amendments, File No. S7-5-99 Author: "Aron Stern" Date: 4/6/99 4:30 PM I have recently been informed of the proposed amendments to the subject Rule. I am CFO of a promising, very legitimate bulletin board listed company, Biomagnetic Technologies, Inc. Our goal here is to diagnose medical conditions that up until now have not had a reliable and objective tool for such a purpose. Our near-term objective is to focus on mental disorders - epilepsy, phantom pain, ADD, dyslexia, Parkinson's and Alzheimers, for example. The superconducting technology relies on josephson junctions and intensive software development. GE, Siemens, Hitachi and others have ventured into this market and abandoned it, because the health care industry changes that have occurred in the 1990s couldn't support the purchase of multi-million dollar diagnosis equipment. We, a Finnish firm and a Canadian firm are the flag carriers; they receive substantial government support. We don't. Our product works; we are funding our own clinical testing right now so that we can publish the (hopefully positive) results that help establish the market demand. Paine Webber did our initial public offering in 1989. Our current investors are European, primarily because biotech is currently not in favor as a category in the eyes of Wall Street - too many failures. It would be a travesty if regulations prevented companies like ours from maintaining whatever liquidity they currently have. The potential for companies and technology to remake themselves might not be there. This is the risk your proposal presents to companies like us. The road to failure is paved by the best of intentions. Make sure that these regulatory actions correlate highly with your intended results. These results should include: higher ethical and legal standards for marginal companies to live up to; a means of policing for shareholder fraud; and the encouragement and fulfillment of efficient equity markets for bulletin board companies. I have many recommendations that I would be happy to discuss if asked as to how to accomplish this, including a government regulated Internet based trading system that has full traceability on every transaction, and caps on lawsuit judgements. However, I would certainly not recommend that the market makers self-regulate for this risk. You cannot let lawsuits against unscrupulous CEOs, brokers and dealers close down the only legitimate marketplace for trading bulletin board stocks. You have to do more and be smarter, otherwise the best of intentions can adversely affect the economic health of the nation. Highly risky ventures are - by definition - gambling that there is a big payback for taking that risk. However, taking a risk and failing is not a crime. Our type of innovation needs to be encouraged and protected, not punished. My hope is that you take these comments in the constructive manner in which they are intended. Sincerely, Aron Stern, Vice-President and Chief Financial Officer