(212) 474-1100

May 6, 1998

File No. S7-5-98

Dear Sirs:

With regard to 1933 Act Rule 701 and Release No. 33-7511, you have asked for comments whether non-reporting foreign issuers should be subject to an annual limit on securities sold to employees as part of a compensatory arrangement.

In my experience, there are a number of large non-reporting foreign issuers which currently are limited in offering equity incentives to their U.S. employees because of inability to come within Rule 701 because their U.S. employees number in the thousands.

Although a strong case can be made for a much lower limit, at the very least Rule 701 should not apply to non-reporting foreign issuers with a large market capitalization or if, as defined in Regulation S, there is no "substantial US market interest".

The current rule is too tight and causes U.S. employees to miss the advantage of equity based compensation. And it deters non-reporting foreign issuers from extending their equity based employee plans to U.S. employees on a comparable basis to what is made available to their employees outside the United States.

Accordingly, I urge that the Release points in the wrong direction by using a $10 million annual limit as an illustration and by raising the possibility of making an issuer ineligible for the Rule 12g3-2(b) exemption. As the principal market for these securities is outside the United States, any resale by employees is likely to be made outside the United States so that no valid purpose is served by attempting to coerce the issuer to register fully with the SEC merely in order to be able to offer equity incentive compensation to its employees in the United States. This is especially so in the absence of any facts in the Release indicating that large non-reporting foreign issuers have abused either the 1933 Act or the 1934 Act in making equity available to their employees in the United States.

In conclusion, I urge that Rule 701 be revised (a) to omit any ceiling on the amount of securities issued thereunder by non-reporting foreign issuers if they have a large market capitalization or if their stock lacks "substantial US market interest" and (b) to omit any curtailment of the exemption under Rule 12g3-2(b).

Faithfully yours,

Melvin L. Bedrick

Mr. Jonathan G. Katz

Secretary

Securities and Exchange Commission

450 Fifth Street, N.W.

Washington, D.C. 20549

Copy to:

Mr. Richard K. Wulff

Office of Small Business

Division of Corporation Finance

Securities and Exchange Commission

450 Fifth Street, N.W.

Washington, D.C. 20549