From: John Sosnowy [john@lastingwealth.com]
Sent: Tuesday, April 20, 2004 1:57 PM
To: rule-comments@sec.gov
Subject: File No. S7-11-04, Mandatory 2% Redemption Fee

April 20, 2004

Jonathan G. Katz, Secretary 
Securities and Exchange Commission 
450 Fifth Street, NW 
Washington, DC  20549-0609.  

Dear Mr. Katz:

During my thirty five year career as an investment professional, until now,  
the SEC has always led the way in lowering the costs of investing for investors. 
Therefore, it is inconceivable to me that the SEC would do a total about-face 
and vote to impose a mandatory redemption fee. The only people I can see that 
will benefit are the mutual fund companies that allowed the abuses that you 
are attempting to correct occur in the first place.

I believe that imposing a mandatory redemption fee is equivalent to instituting 
a tax on mutual fund investors. Should you still go ahead and impose a mandatory 
redemption fee, I believe that it will be the beginning of a trend that will 
take redemption fees to include all tranactions within 6 to 12 months in a 
relatively short period of time, further harming our clients, the individual 
investor who often has a legitimate and/or unexpected need for funds out of 
their mutual fund accounts, and/or a legitimate desire to rebalance their 
account.

My educated observation is that most of the so-called abusive short term trading 
in mutual funds is due to stale pricing of fund shares. Fair value pricing is a 
much more effective tool in quashing this trading of funds than a redemption fee 
ever will be, because it gets right to the source of the problem, instead of 
increasing costs for individual investors while further lining the pockets of 
the funds who allowed the abuses to occur in the first place. 

Mutual Funds have all the tools they need right now to control abusive trading 
of their fund shares. They simply need to use them consistently across the board 
to be effective. We all know it was special exceptions for favored clients that 
created this mess in the first place. 

Imposing mandatory redemption fees would let mutual funds use the SEC to legitimize 
ripping off the individual investor under the guise of solving trading abuse. I'm 
amazed that the SEC has not seen through this thinly veiled sham led by the 
Investment Company Institute. 

Please take your time-honored stance for the individual investor and vote against 
the mandatory 2% redemption fee.

Sincerely yours,


John K Sosnowy,
President
Sosnowy Investment Management Company


john@lastingwealth.com
1-800-682-0506 





   


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