The Jeffrey Matthews Financial Group, LLC
290 Millburn Avenue
Millburn, New Jersey 07041
(973) 467-1223

March 30, 1999


Securities and Exchange Commission
Jonathan G. Katz, Secretary
450 Fifth Street,  N.W. Mail Stop 0609
Washington, D.C. 20549-0609

                                                                                 
RE: File No.  S7-8-99

Gentlemen:

We reply to the request for comment. In an effort to protect the public and the 
vitality of the securities 
markets the SEC has taken an appropriate pro-active stance. In considering 
regulation(s) the Commission 
proposes we are concerned that the execution of these regulations could become 
"heavy-handed'. Under the 
rules we are a $100,000 B/D, but not a $250,000 B/D. Yet, our capital exceeds 
$500,000 and therefore we 
do not qualify for "Small Business" treatment even though we are assuredly a 
"small" B/D that clears its 
trades fully disclosed through a very large B/D. Thus, we are covered under some 
requirements, exempted 
under others and not covered by another. 

Specifically, at III, A, proposed rule 15b7-2 the Commission "notes that such 
agreements do not relieve 
either broker-dealer of its responsibilities under the federal securities laws, 
including this proposed rule and 
proposed temporary Rule 15b7-3T discussed below... if an introducing broker-
dealer becomes aware that 
its clearing broker-dealer is experiencing operational difficulty, the 
introducing broker-dealer should 
promptly make other arrangements to assure appropriate processing of its 
trades". 

While the above reads as a prosaic response to the issue, it is impractical, 
na‹ve and unrealistic to expect 
that were our clearing firm to have problems that we could move our accounts. If 
that situation were to 
obtain, the operational difficulties would preclude us, never mind the business 
implications. What is 
troubling to us is, relative to our clearing broker we are but a flea. Are we to 
be put in the same legal 
position and face liability claims for some occurrence wholly outside our 
control? 

The presumption that all exceptions in an independent accountant's report must 
be remedied or it will be 
presumed to be a Y2K problem should be rethought. Smaller B/Ds use smaller CPA 
firms whose technical 
expertise probably is not in computer science or in Wall Street operations.  
Therefore, since the language of 
"mission critical" is open to interpretation it is conceivable that a CPA firm, 
while erring on the side of 
caution, may identify an "exception" that would not in fact be "mission 
critical". The phrase "depending on 
the nature of the business" while designed to mitigate and provide flexibility 
could suffer in its 
interpretation.  

Perhaps the familiar market concept of "best efforts" would be helpful here. 
Therefore if the CPA firm felt 
that the B/D was not making its "best efforts" to deal with an issue, it could 
then specifically identify the 
problem and explain its probable effect. That circumstance would then become an 
exception event. 

It is our hope that the Commission would find a means to identify true problem 
areas without creating 
burdensome paperwork. 

Very truly yours,


Scott L. Fagin
Chief Compliance Officer