Subject: File No. S7-5-99: Amendments to Rule 15c-11 Proposed by the Author: "Henry Tang" Date: 5/4/99 11:39 AM Dear Honorable Senator Boxer, Honorable Senator Feinstein, Mr. Chairman Levitt, Mesdames, and Sirs; As the Chief Financial Officer and Secretary of Unico, Inc., a publicly held company traded on the NASD OTC Bulletin Board, I would like to register Unico's and its shareholders' concerns about and opposition to the proposed amendments to Rule 15c-11. Our concerns are that the proposed amendments shift, in part, the responsibility of detecting fraud in small companies from the SEC to the market makers for the companies' stocks which, in our belief, renders the function ineffective: (1) The market makers are not motivated to carry this important function. The primary objective of the market makers is to be profitable over the long-term. An effective means of responsibly meeting their objectives would be to select those companies which will provide them with the highest profitability and ignore the rest, avoiding any liability for the companies ignored. Any ongoing fraud in the companies not selected will continue undetected. (2) The market makers are not equipped to detect fraud. As the SEC well knows, vigilance for fraud requires expertise, resources and staff committed to public service. Market makers have none of these. At most, it would be reasonable to expect the market makers to develop expertise and acquire the resources to perform these functions only to the extent it will enhance their profitability. They will not be comprehensive nor persistent. They will not have the public service nor the legal enforcement orientations of the SEC. The investor public will be short changed in that fraud will not be delt with effectively. (3) Market makers will find it more profitable to refuse to make markets for many small companies, charge them fees, or find some other mechanism to ensure profitability. These mechanisms will not effectively reduce fraud but will certainly reduce the liquidity provided by market makers to the vast majority of small companies which are not engaged in fraud and will not be selected by market makers. Again, the public will be short changed as liquidity is an essential component in the growth and success of small companies. With impaired liquidity, it will be far more difficult for investors to obtain adequate return on the investment in their shareholdings. Without the liquidity facilitated by market makers, companies will die. (4) It is one of the SEC's primary responsibilities to ferret out fraud from the US securities markets. Overall, the SEC has been performing quite effectively, despite a severe lack of resources. The large number of small companies places considerable demands on the SEC's resources, which is noticeably strained at the moment. The solution, however, is not to off-load the SEC's responsibilities, as we believe the proposed amendment does, but to ensure that the SEC has adequate resources to continue to perform its responsibilities. In addition to the concerns listed above, our opposition to the proposed amendments is based on our analysis that they will adversely affect Unico's liquidity and will therefore impair the value of the company to its shareholders. We believe that it will be more costly to retain market makers for Unico, if at all possible, and far more difficult to grow our company and provide a satisfactory return to our shareholders. We urge the SEC to reject the proposed amendments. We urge our Honorable Senators to ensure that the SEC continues to perform its valuable functions (with both small and large companies) with adequate resources . Should you wish to discuss or clarify any points, please call me at 510/770-3990 during Pacific business hours, write me at: Unico, Inc. 2925 Bayview Drive Fremont, CA 94538 or e-mail me. Thank you for your attention. Sincerely yours, Henry Tang Secretary and Chief Financial Officer Unico, Inc.