April 24, 1998
     
Jonathon G. Katz, Secretary
Securities and Exchange Commission
450 Fifth Street NW
Washington DC20549      

File # S7-3-98
     
Dear Mr. Katz:
     
While the SEC's intentions are good for reducing fraud in the microcap 
companies whose shares are primarily quoted in the Pink Sheets an the OTC 
Bulletin Board, it appears that your proposed regulations that focus on the 
market makers as the policemen are misdirected.
     
I am not an expert in securities and exchange regulations by any means but it 
seems to me that your proposed regulatory efforts put more responsibility on 
the market makers for due diligence of the companies traded.  This seems like 
putting the fox in charge of the henhouse.  It makes no sense.  Many of the 
majority of market makers in this area who are honest and try to make the best 
markets that they can will decide that the potential liability from these 
proposed regulations and the extra work necessary to comply, just isn't worth 
it.  They will pull out of these markets.  Who will be left but the 
unscrupulous characters that are the ones causing all the problems?
     
If there is not enough information available about the issuer, it is the 
responsibility of the issuer, their auditors and SEC reporting/disclosure 
regulations to insure that adequate information is available for more informed 
decision making.  The market maker's job is just to provide an orderly way to 
match buyers with sellers.
     
Spectacular frauds are not relegated to microcaps.  My recent recall says that 
Cendant, BreX, Centennial, Health Management, Oxford Health and many recent 
frauds or accounting "irregularities" where shareholders have had massive 
losses, occurred in listed and Nasdaq national market issues.  From the 
infamous McKesson case which triggered many new regulations, it has been the 
job of the auditors and the SEC to insure that disclosure is fair and 
accurate, according to generally accepted accounting principles.  Shifting the 
burden now to market makers in this one small market segment seems to be worse 
than bad regulation.  There is a strong possibility that the situation will go 
from bad to worse.
     
The solution should be to create regulations that put the responsibility of 
adequate disclosure on the issuer, their auditors and attorneys to routinely 
file the necessary information with the SEC so that it is readily available.
     
Don't make the messengers responsible for the quality of the message content. 
If you do, the messengers will seek another line of work.
     
Sincerely,
     
     
Raymond Noveck, M.B.A.,C.P.A.