BlankFrom: Quinn, Richard D. [Richard.Quinn@pseg.com] Sent: Monday, December 15, 2003 9:30 AM To: 'rule-comments@sec.gov' Subject: File No. S7-27-03 Jonathan G. Katz Secretary Securities and Exchange Commission 450 Fifth Street, NW Washington, DC 20549-0609 I wish to comment with regard to the proposed rules that will have the affect of placing 401(k) plan participants at a tremendous disadvantage with regard to management of their plan account. Specifically, the hard and fast 4:00PM trading deadline rule, as it would apply to 401(k) and similar plans is unfair and unnecessary. Not too long ago the cry from Washington was all about the infamous blackout periods, those periods of time when a plan participant was unable to trade and thus would be locked into investments in the event bad news became evident. You are in effect doing the same thing with this proposed rule. A 401(k) plan participant will effectively be prevented from moving their money among plan funds within his or her account from several hours to several days before market closing. What will happen for example if a company (perhaps the employer) issues poor earnings late in the day or other bad news presents itself? Non 401(k) investors have time to react while plan participants do not. This is blatantly unfair and unnecessary. 401(k) plans typically account for their assets using unit values not mutual fund prices. While the two are closely aligned, they are not the same. When a plan participant moves money from one fund to another, all transactions for the day are sent to the plan trustee and then to the mutual funds on a aggregate basis, not on an individual basis. Thus the fund receives one order to buy or sell a certain number of shares that is composed of scores and perhaps hundreds of transactions by participants that include both sell and buy orders. There is no problem with late trading within the administration of 401(k) plans, why “fix” something that is not broken? These rules will do a great disservice to 401(k) plans and unfortunately may have the added affect of dampening interest in such plans or at the very least may move plan investors away from mutual funds into more fixed income vehicles, a problem which already exists where plan participants are not well diversified or are invested in such a way that they will not be able to meet retirement income objectives. Clearly there are alternatives that can be applied to 401(k) record keepers that will assure that late trading never does become a problem. There can be electronic monitoring of trade orders, audits, and stiff fines for those who may in the future violate procedures, but certainly there is no need to heavily penalize the average employee and to place them at a disadvantage to non 401(k) investors. Aren't there enough rules and regulations that discourage the establishment and administration of retirement plans? Why generate more unnecessary rules that will increase the cost of administration and communication, place employees at a disadvantage in managing their retirement assets and perhaps cause employees to lose some of those assets because of a defacto blackout period? 401(k) plan participants are long term savers, they are not typically high volume day traders nor are they inclined to abuse the system. These plans are sponsored by employers seeking to provide a retirement benefit for their participants, not to assist them in after hours trading. Both employer plan sponsors and record keepers have a strong incentive now to assure that their plans are operated fairly and by the rules. We just don't need more rules that will make 401(k) investing less attractive to the average worker. Richard D. Quinn Director-Compensation and Benefits Public Service Enterprise Group 80 Park Plaza, Newark NJ 07101 -------------------------------------------------------------------------------- The information contained in this e-mail, including any attachment(s), is intended solely for use by the named addressee(s). If you are not the intended recipient, or a person designated as responsible for delivering such messages to the intended recipient, you are not authorized to disclose, copy, distribute or retain this message, in whole or in part, without written authorization from PSEG. This e-mail may contain proprietary, confidential or privileged information. If you have received this message in error, please notify the sender immediately. This notice is included in all e-mail messages leaving PSEG. Thank you for your cooperation.