December 9, 1998

Jonathan G. Katz, Secretary

U.S. Securities and Exchange Commission

450 5th Street N. W.

Mail Stop 6-9

Washington, DC 20549

Re: File No. S7-26-98

Dear Secretary Katz:

I am writing in response to the SEC's request for comments on the above-referenced rule filing. We appreciate the extension of time for receiving comments on this important proposal. John Hancock Distributors, Inc. ("JHD") is the wholly-owned retail broker-dealer of John Hancock Mutual Life Insurance Company. JHD has approximately 4,500 registered representatives selling securities and insurance products in the fifty states, District of Columbia, Puerto Rico, and Guam. Its sales force is geographically dispersed in approximately 150 large field sales offices in addition to approximately 450 offices of four or fewer salespersons.

As proposed, these new requirements would significantly impact the way JHD organizes its field sales offices and the cost of operating them. Although we agree with the intention and support the underlying purposes of the proposed rules, we are not certain that the additional burdens and costs of the proposal justify the benefits to investors or increase the regulators' ability to regulate.

One of our basic concerns with the proposal is that it seems to be founded on the premise that if additional records are required to be created and maintained in "local offices", then examination and regulatory personnel will necessarily have prompt access to them on demand. JHD's experience demonstrates that the smaller the office, the more likely it is that the salespersons who constitute the office could be absent from the office while engaged in outside sales activities. Hence, a regulator or examiner might make an unannounced visit to an empty office.

During the course of any business day, from our largest to our smallest offices, JHD salespersons are engaged in meetings with clients and selling insurance and securities products. Most JHD offices which would qualify as "local offices" do not have support or other office staff that would be available to assist examiners or regulators, in the event of an unannounced visit. There are periods when no one, associated person or not, is in the office to receive inquiries by regulators or examiners. We also believe this circumstance holds true for many other insurance company affiliated broker-dealers and independent contractor operations as well.

Since JHD agents are engaged in the sale of both securities and insurance products, appointments with customers and potential customers frequently involve home visits and client conferences outside of the office. This is in contrast to salespersons engaged solely in the sale of securities. Securities only salespersons are more likely to be located at a traditional branch office due to the need for timely price and volume information and the ability to execute transactions involving general securities. These activities occur at registered branch offices for the most part. As registered branch offices or offices of supervisory jurisdiction ("OSJs"), they would not be as greatly affected by the proposed rule changes.

The rule proposal is designed to bolster compliance and regulatory oversight at small offices. Ironically, as the number of associated persons defining "local office" decreases, the probability of an examiner or regulator gaining access to these records on an unannounced basis decreases significantly. Perhaps this situation is peculiar to insurance company affiliated broker dealers due to the dual role of their agents. In JHD's case, the added burden of the proposed rules will be keenly felt, and, in our opinion, with little or no incremental benefit to the investing public or the regulatory community.

Therefore, if the proposal does not adequately serve investors or the needs of examiners and regulators in conducting unannounced visits to "local offices", then the benefits of the proposed rule changes appear to be limited. Home offices, OSJs , and branch offices can, and regularly do, provide information regarding offices fitting the definition of "local office" on a timely basis.

Provision for Alternative Means of Record Retention

We appreciate the Commission's observation that some firms have the ability and inclination to store vital books and records information electronically. We also appreciate the flexibility in the reproposed rules to allow firms which store information in this manner an alternative means of producing the information. Reproposed Rule 17a-4 (k) (1) (ii). Although, strictly speaking, JHD is not opposed to the "same business day" requirement under this option, we would request that the Commission consider providing additional relief in its interpretation of "unusual circumstances" (Id.) and "promptly" under Section III.F.5. of the reproposing release.

The Reproposing release states in Section V. that "[l]arger broker dealers would have correspondingly greater obligations under the amendments." We do not agree. The largest broker-dealers in the country, the "wire-house" firms, will be virtually unaffected by this proposal. In general, those firms have very very few offices which would be considered "local offices" under the new rules. Most of the wire-house offices operate as registered branch offices and have very few unregistered offices. Therefore, when evaluating the effects on competition and the incidence of regulatory burden, JHD urges the Commission to observe that the proposed rules do not apply across the board.

We also would submit that the additional costs imposed by the proposed changes could result in significant economic waste. As discussed above, it seems to us there are limited chances of the proposed rule changes achieving their stated purpose, especially if applied to two person offices.

Currently registered branch offices and OSJs are required to create and maintain certain books and records of the firm. It would seem more sensible to redefine these existing functional entities to provide for the desired level of recordkeeping than to, in effect, create a new entity, the "local office, " whose main function is to serve as a books and records repository to be useful in very limited circumstances. We believe that a better result would obtain if the same objectives and underlying purposes of the proposed rule changes was revisited with input from, and coordination with, the self regulatory organizations.

In summary, we favor the concept of increasing the availability of books and records to regulators. As proposed, however, we do not believe that the rules will necessarily result in increased access; and are not convinced that the benefits to investors and regulatory bodies are greater than the total costs which will be sustained by only a segment of the broker-dealer community.

We believe that regulation predicated on the functions of regulated persons and locations continues to be an effective means of regulation. It is sensible, predictable, and historically has been successful in fostering compliance among participants in the securities industry. The proposed rules, which are based primarily on the number of persons in an office and the state in which an office is located, with less regard to function, can be improved. We believe that coordination of the proposed rule changes with the self regulatory organizations would result in a better set of rules and more meaningful regulation.

Thank you very much for receiving and considering comments on this important matter.

Sincerely,

Robert H. Watts

Senior Vice President & Chief Compliance Officer

John Hancock Mutual Life Insurance Company

Boston, Massachusetts 02117