Subject: File No. S7-11-04
From: Gerald D Staffin, Ph.D

April 20, 2004

I think it is ironic that the Mutual Fund Industry is now
about to take advantage of the individual investor again by rushing to add early redemption fees well in excess of any reasonable cost to the fund for frequent trading. The problem was originally with illegal trading involving the exploitation of stale pricing or preferential frequent trading whereby some large investors were allowed to make frequent trades while small investors were not afforded the identical privileges on identical terms.

The big lie was to call these illegal practices market timing whereas market timing is a reasonable and legitimate practice to manage risk. Adding these fees makes the investment in a mutual fund more risky rather than less risky. As test of reasonableness, would it make sense to have an early redemption fee for simple stock trading? I think not and nobody is proposing such a fee.
I suggest that we give logic and fairness a chance to operate and not provide cover for the mutual fund industry to add unnecessary fees.