Subject: File No. S7-19-04
From: Robert Stevens

April 21, 2004

While the intention of the Commission may be to increase disclosure and reduce fraud in reporting shell companies, the proposed rule will do little more than increase the costs involved in legitimate reverse takeover RTO transactions. The astronomical costs that would be involved in this rule change would, once again, ruin the opportunity for legitimate small business to access the public markets, and encourage the ongoing fraud perpetrated by major corporations like Enron and Worldcom.

An RTO can, in many cases, resurrect the public value for shares in earlier offerings, and as such provide the public an opportunity to make money on their holdings in these companies. Making it next to impossible to engage in this type of transaction without spending an SEC estimated 628,425 dollars would simply raise the bar while attracting a higher class of thief, and will not address the fraud items the Commission is truly concerned with.

To state that employees of a shell company are not entitled to S-8 registration due to nominal business activity is simply not acceptable. There are numerous legitimate activities that must be performed for any reporting company, and the size of the underlying business should have no bearing whatsoever on the compensation of its employees. It is commonplace and practical to compensate employees and consultants in stock, and many small companies do not have the liquid resources to pay these individuals in cash.

In closing, it is disappointing that with the accounting abuses taking place in major public companies and the continued clearing fraud perpetrated by DTC the Commission continues its attack on small business. Over 85 of Americans work for small business and this rule change could continue to restrict the flow of investment capital to these businesses.