Subject: File No. S7-25-99
From: Arthur S Pesner, CFA

February 3, 2005

P.R. Herzig Co. Inc. is a small broker-dealer that has been in business for almost 50 years. We are currently not registered as investment advisers IA, but we maintain discretionary trading authority over the majority of our accounts.

We take objection to the proposed rule change for the following reasons:

1. As a small firm, regulation as an IA would entail significant costs. Our compliance staff consists of one person, and additional burdens would be placed on him. We believe the continually increasing rules and regulations are placing an unfair strain on the resources of small firms.

2. Where is the benefit to our clients? We are already subject to broker-dealer rules, have a clean regulatory record, and are routinely examined by the NASD. How would this rule change in any way add benefits above the costs incurred?

3. The proposed rule release states on page 62, ...Altough we acknowledge that the costs of registration and compliance under the Advisers Act are significant, we believe that such costs would be mitigated by the fact that these firms could build upon the infrastructure they already have in place as broker-dealers, much of which overlaps with Adviser Act requirements. You are acknowledging in the release the overlap of rules, so why create additional rules in the first place? All this proposed rule would do is increase the cost of doing business, without providing any additional benefit to our clients.

Arthur Pesner, CFA
Chief Financial Officer
P.R. Herzig Co. Inc.