May 10, 1999



Mr. Jonathan G. Katz

Secretary, Securities and Exchange Commission

Mail Stop 6-9

450 Fifth Street, NW

Washington, DC 20549



Re: Proposed Amendments to Rule 15c2-11



Dear Sir:


The proposed changes to Rule 15c2-11 would be crippling to the liquidity of our Company’s stock. KENETECH Corporation went public in 1993. Merrill Lynch, Morgan Stanley and Smith Barney led our underwriting team. We had high hopes for the company and were listed on NASDAQ’s NMS. Three years ago the fortunes of the Company reversed course and we were delisted. (By then we had a series of preferred stock also listed on NMS.) Our stock has continued to trade on the bulletin board for the last three years without disruption. We have several market makers in our common stock and the market is relatively efficient. None of the original underwriters continue to make a market in the stock. In fact, as President and CEO of the Company, I have never spoken with any representative of any of our current market makers. Nevertheless, several funds track our stock and trade in it when pricing imbalances exist.


Here is the crux of my opposition to the proposed rules. Our Company has again reversed its fortunes. We turned the Company around. Now, more than ever, we need an efficient market in our Company’s securities. When we were failing, there was very little, if any, incentive for a market maker to look behind our financial statements. We had negative working capital and negative retained earnings. In fact, we could have looked like a "questionable security." But we were not and we are not. If the market had dried up for our stock two years ago, countless individuals and fund would have been effected, both positively and negatively. The funds that worked hard and did their homework will do very well in our common stock. They would not have been rewarded if there were no market for our stock.


Don’t change the Rule. By forcing the market makers to police the small cap arena you throw the baby, KENETECH Corporation, out with the bathwater, outwardly bogus small OTC stocks.


Very truly yours,



Mark D. Lerdal

President and CEO


Cc: SEC Commissioners- Arthur Levitt (Chairman)

Isaac C. Hunt, Jr.

Norman Johnson

Paul R. Carey

Laura Simone Unger