Subject: S7-19-99 Political Contributions by Certain Advisers

Date:    11/1/99 6:52 PM
     
     
To: Jonathan G. Katz, Secretary
     
Securities and Exchange Commission
     
450 Fifth Street, NW
     
Washington, DC 20549-0609
     
Re: File No. S7-19-99   
     
We applaud the Commission's efforts in addressing "pay-to-play" practices in 
regard to the awarding of public pension plan contracts. These contracts need 
be awarded to investment advisers based on merit, as was established by the 
public pension plan, and not as a result of monetary influence. We believe 
political contributions, to those responsible of awarding public pension plan 
contracts, by investment advisers gives them a status of preferential 
treatment that should not be allowed to exist. The threat of inferior 
management of pension plan funds necessitates that advisers' qualifications be 
the significant measure by which their selection is based upon.
     
Furthermore, we believe the rule should be extended to include those small, 
state-registered advisers who have been left out in the rule's current form. 
Though they may consist of a small minority of advisers to public funds, we 
believe all prospective candidates for these should operate on a level 
playing field. The practice of pay-to-play must be discouraged at all levels 
when the public's interest is at stake.
     
As for the Commission's consideration of an alternate approach to addressing 
pay-to-play, which required only the disclosure of information pertaining to 
political contributions by investment advisers. We agree that it would be 
insufficient in deterring the practice of obtaining future considerations as 
a result of political contributions. Moreover, the fact that previous 
attempts of using disclosure to prevent pay-to-play have proven ineffective 
signifies that an alternative approach may be better equipped to address the 
issue.
     
To avoid requiring an adviser to abandon a government client immediately 
after the adviser or any of its partners, executive officers or solicitors 
make a political contribution that triggers the prohibitions in the rule, we 
support the establishment of a time period which upon expiration would no 
longer allow said adviser to continue to provide advisory services. We find 
this to be preferential to obligating the adviser to continue providing 
advisory services without compensation while a successor is selected for the 
government client.
     
In addition we suggest the Commission provide a transition period of no more 
than 60 days after the rule's effective date, in the event that the rule is 
adopted. This transition period would allow investment firms an adequate 
opportunity to develop, and put into effect, the necessary procedures to be 
in compliance of the new rule.
     
In regard to the "look-back" provision, which under it's proposed form, 
states that a contribution would be attributed to any adviser that employs 
or engages the person who made the contribution within two years after the 
date the contribution was made. We find the provision to be necessary so as 
to prevent the circumventing of the rule by channeling contributions through 
departing employees, or the hiring of contributors in an attempt at 
influencing the selection process. However, we feel a shorter period of one 
year would be sufficient in discouraging these practices.
     
Sincerely,
     
Giovanna Justo Navarro & Anibal Zuniga (Private citizens)
     
Miami, FL