Subject: File No. S7-30-04
From: W. Nieves

October 26, 2004

To the Commission:

While the SEC (the "Commission") is proposing a new rule and rule amendments under the Investment Advisers Act of 1940 relating to Hedge Funds, I believe the following considerations should be made before these changes are implemented:

  1. Before the Commission enacts these changes, it should not hastily move forward until it takes a serious look at the long-term impact these new rules will have on the Hedge Fund industry, good or bad. When Congress enacted the Sarbones-Oxley Act, for instance, it never foresaw the loopholes and the regulatory burdens the act created for financial companies and nonfinancial companies alike.

  2. The Commission should consider whether it has the staff and financial resources necessary to enforce these rules effectively. One might look at the Mutual Fund industry. While the mutual fund business is highly regulated, the Commission was unable to curtail some of the improper business activities (e.g., market timing) until recently, when it was determined that it was an industry-wide problem and some States and other governmental entities put pressure on regulatory agencies to take action.

Lastly, I believe there has to be a balance between regulation and the ability of firms to conduct business in a manner that works within our free market system, and yet protect the investing public.

Thank you for your time.


Note: The information contained in this message and any attachment to it is privileged, confidential and protected from disclosure. If the reader of this message is not the intended recipient, or an employee or agent responsible for delivering this message to the intended recipient, you are hereby notified that any dissemination, distribution or copying of this communication is strictly prohibited. If you have received this communication in error, please notify the sender immediately by replying to the message, and please delete it from your system. Thank you. NYSE.