March 2, 2004
I would like to remind you as you consider the changes under proposed rules 15c2-2 and 15c2-3 that you cannot make rules and procedures to teach ethics. Either representatives have them or they do not. Instead of trying to make everyones life so procedural that you create stagnate or discourage registered reps from staying in the business will not create what you want. There are all ready so many rules, regulations and procedures along with all the compliance that to increase that will be counterproductive. Just trying to dig through another 100 page document seems incredible. Registered Representatives do not sit in an office and get paid by the hour. Please remember that. Also, no matter how many rules you make individuals, for the most part, dont care about all these rules and regulations. They endure them. What they care about is the advice they are getting, what their end result is and very little about the journey. If you require all these transaction disclosures their eyes will glass over and not remmember a thing you told them. While individual investors are more aware and cognizant they do not care if an auto has ten bearings in the axle shaft. What they care about is the engine performance and the ride. Secondly, by eliminating 12b-1 fees you are essence cutting at the core of income for registered reps. This is where most reps get the income to continue thier offices and staff. What they sell is primarily thier personal income. Dont forget that reps have many expenses that must be met. If you eliminate 12b-1s then you must eliminate interest income that banks impose, renewal commissions from insurance companies, profits from Broker/Dealer, investment companies and the list would go on. Do NOT add any additional requirements and you will achieve the same results as what you are trying to do. Just have the broker/dealers examine their registered reps for performance and you will accomplish the same thing as what you are trying to accomplish with an additional 100 pages of regulations.