Date:    04/26/2000  5:56 AM

Subject: SEC Proposed Regulation FD: File No. S7-31-99
 


Although I am only an individual investor, I am nevertheless eager to comment 
on your consideration of the above-captioned regulatory proposal. The SEC has 
made laudable progress in promoting more fairness in the financial industry. I 
see your consideration of this proposal as another indication of this wise 
direction and consideration of protocol as the markets continue to evolve.

We have entered a phase in our markets when the linkage between research 
and execution services of a brokerage are undeniably less important.  
More trading venues and options are available to investors -- both 
individual, institutional and retail -- which allow greater anonymity and 
control of order flow to the buyside. These two very separate and distinct 
functions of the sell side are wisely being considered more and more on 
their own merits.  Research that adds value will always be sought and 
gladly paid for because of the contribution to success of the funds 
managers and individuals alike. Without a doubt, many well-educated, 
intelligent individuals fill the roles as analysts and bring a high degree 
of professionalism to their responsibilities. Their ability to thoroughly 
analyze investment alternatives is aided by their concentration of the 
most scarce resource, time, to a more singular focus.

The foregoing notwithstanding, should this justify their privilege to obtain 
information more exclusively than individual investors, let alone those who 
have fiduciary responsibilities for billions of dollars as managers of 
clients' funds?

Do those analysts deserve more privilege than those of us in the public
who have the will and initiative to do our own research, and whose interest 
could never be matched by anyone who hasn't a personal stake in the good 
stewardship of hard-won assets?  I think not.  What advantage
to the efficiency and stability of our markets is added by that 
exclusivity?

In what way is it appropriate for a system -- reputedly one that is 
striving to be efficient, let alone to promote issue price accuracy -- 
to allow and subsidize a great trading advantage for any select group?

I read with great interest the comments made by the SIA in their testimony 
to the SEC, and in particular, the following:  "We believe that 
communications between [a company] and individual analysts or small groups 
of analysts contribute to the overall mix of information in the marketplace, 
greater accuracy of market prices, less volatility and, in general, greater 
efficiency...." Why would this not take place if the information is 
distributed to everyone at the same time?  How insulting is it to tell 
investors that we're incapable of coming to our own conclusions without Wall 
Street expertise?

It would seem to me that the more information the public has, the more 
efficient and accurate market pricing would be for everyone. I realize that 
their "efficiency" includes them being able to make a few dollars before 
anyone else can, but true efficiency and accuracy in pricing results from 
full and total dissimination to everyone and not just to a select
few who plan on giving us "non-professionals" their particular (self-serving) 
spin on reality.

The individual investor has been mislead by analysts so many times that it 
nauseates me to even think about it. I've never picked a stock solely on the 
basis of an analyst recommendation or report ... in fact, I don't pay much 
attention to analysts' ratings at all because many of them are only rating the 
companies for whom their employers also make a market.  This, in my 
opinion, presents a large bias in favor of a "buy" or "strong buy" rating.

Moreover, I'm amazed that the SIA would claim, as one of its reasons for 
not allowing individual investors access to information at the same time 
as analysts, that analysts would then not have the advantages that lead 
to their reputation and financial reward! While this is probably the most 
accurate reason they can give, it is also probably the worst possible 
reason of all. How can leveling a playing field for analysts and the 
public undermine any great advantage in the current system? Answer: the 
only possible advantage that can be undermined is the ability of full 
service brokers and their analysts to make a quick buck before the 
individual investor even knows what is happening.  Let the analysts 
make their money as analysts
-- interpreters of data -- rather than as gatekeepers of it.

In a country built on equal opportunity and the reward of excellence and 
innovation, I think our national and individual interests are best served by 
offering the best and most knowledge to all who would utilize it and compete for
a more perfect understanding. To artificially benefit one group over another, 
especially to augment possible financial gain, is in conflict with the 
directions that have created one of the most viable economic industries that 
history has ever witnessed.

The role of analysts, even without special privilege and access to information, 
will remain valuable to the financial community.  To those who offer excellence 
over their peers, financial rewards will always be available.  For excellence 
to be recognized, sought and paid for is foundational in democracy and forms 
the primary basis for its success.  Professional athletes achieve their 
compensation levels through extraordinary ability, hard work,
and persistence, not because some members of society are denied the opportunity 
to use a basketball, football, or whatever.

I believe that I fully understand the importance (and patently self-serving 
nature) of this issue to the analysts and full service brokers. However, it is 
time that the select few are no longer privileged with information prior
to full disclosure of the same to the general public. If market efficiency and 
greater transparency of information is truly desired, then there can
be no better way than to require -- among other things -- that companies 
no longer engage in the practice of selectively and discreetly disclosing 
important information to Wall Street analysts without also giving that 
information to the public at large. As we continue to evolve in this
era of global economic growth, let us insure that all minds, all contributions 
are nurtured and encouraged, and that privileges not be granted which would
-- in the final analysis -- have the purpose and effect to stymie healthy 
competitive progress.


Thank you for your kind consideration in these regards.  I trust that you 
will make the correct decision -- that is, in favor of mandatory full 
disclosure by publicly-held companies of all their significant operating 
information to their shareholders as well as to the public at large rather than 
only to the self-proclaimed elite.

Very truly yours,

     Philip A Krautwurst, EA ATA