Subject: File No. S7-26-04
From: Philip A Feigin
Affiliation: Rothgerber Johnson Lyons LLP

September 8, 2004

I recognize this comment is submitted after the deadline, but hope you will consider it on its merits nonetheless. I am writing regarding Proposed Reg. B Rule 775, after a helpful and informative telephone conversation with Linda Stamp Sundberg of the staff.

In very brief summary, pursuant to Rule 775, a bank that receives orders for mutual fund transactions from customers and then forwards them on to a broker-dealer, the NSCC directly or to the funds transfer agent that does not receive extra compensation will not be construed as a broker itself in engaging in such conduct.

I suggested to Ms. Sundberg that the Commission might consider adding to another bank to the list. I represent a group of companies engaged in clearing mutual fund transactions for employee plans, 401k plans and the like through third party administrators. In many of those cases, the broker-dealer of the group serves as broker of record on the transactions. However, in some cases, the trades come from the trust department of banks, and there is no broker of record. The money flows through a bank affiliated with the broker-dealer, the bank being the NSCC member. For those cases, it would appear that the trustee bank clearing the mutual fund trades with the NSCC member bank would not qualify for exemption under Rule 775 because the trades were not placed through either a broker-dealer, directly with the NSCC meaning the trustee bank was a member or directly with the fund transfer agent. It would seem to me that nothing is lost as far as investor protection in allowing a non-NSCC member bank to clear mutual fund transactions through another bank that is a member.

Thank you for your time and consideration.