Subject: File No. S7-06-04
From: Craig A Finch

February 20, 2004

I would like to highlight a related problem that is not mentioned in your proposed changes. I recently closed an IRA account with Charles Schwab and transferred the assets to another broker. Charles Schwab charged me a 95 dollar account transfer fee. When I first opened my Schwab account, the transfer fee was much lower. Although Schwab did notify me about the increased transfer fee, I could do nothing about it, since closing my account would result in being charged the transfer fee.

The reason that brokers have to disclose fees is so that consumers have the option to not open an account or to close an existing account and move to another brokerage. However, there is no way to opt out of an account closing fee. In principle, a brokerage could notify all its clients that the account closing fee is now one thousand dollars, and the clients would be forced to stay with the broker or pay the fee. This is an anti-competitive tactic that brokers use to discourage clients from moving to another broker. I suggest that you require brokers to notify clients about such fees BEFORE implementing them, and give the clients three months to close their accounts under the terms of the previous fee structure.

I appreciate your consideration of my comments.