Subject: File No. S7-09-04
From: Kent Meredith

March 23, 2004

This inquiry should properly be called Prohibition on the Use of Brokerage Commissions to Finance Client Service.

The payment of a 12b-1 fees allows a registered representative to service a client after being properly paid for the effort in the placement of a particular mutual fund product. Absent that small on-going fee, the Commission must believe that NASD expects that a representative is under some sort of moral compunction to service that client without compensation for as long as the client holds that particular mutual fund.

In the case where a client initially seeks counsel, it would seem likely that that same client would expect or want on-going help and counsel. It seems to me that reasonable on-going 12b-1 fees have greatly contributed to helping those investors most of need of help.