December 24, 1996

Jonathan G. Katz, Secretary
Securities and Exchange Commission
450 Fifth St. , NW, Stop 6-9
Washington, DC  20549

re:  File No. S7-27-96

Dear Secretary Katz:

In NASD Notice to Members 96-80 the SEC invited comment on
elements of the proposed SEC amendments to Rules 17-a-3 and
17a-4.  Our firm is doing much of what the NASAA requests,
so the regulations, in some cases, is congruent with what we
are already doing.   There are several portions of the
amendments that appear to be "ill conceived,"  however.

Those areas include:

1. The "comprehensive update" for ALL customer account forms
2. The "annual update" of customer account forms
3. The keeping of document at "office" locations and
potential conflict with current NASD regulations
4.  The recording of specific commission remuneration
allocated to the registered representative (broker) on EACH
transaction (ticket)
5.  The requirement to keep "client trading records for each
associated person"

          1.  COMPREHENSIVE  UPDATE OF ALL ACCOUNTS

It appears that he SEC wishes firms to update ALL account
forms to reflect the new "investment objective" information
regarding risk and a required "annual update" thereafter.
This requirement is obviously "burdensome," expensive, and
somewhat impractical for our firm and others.  These
requirements would force us to ADD ADDITIONAL STAFF to our
broker-dealer.  We are staffed to meet the day-to-day needs
of our brokerage business, but NOT STAFFED TO HANDLE such a
large undertaking as these proposed changes would require.
These two items could seriously impact the capital structure
of the firm, and, if we see a severe market downturn, may
impact the survival of the firm.

The man-hours in registered representative time as well as
necessity to increase the home staff will have a direct
impact on profitability of my firm because of this large
undertaking.  Our firm has over 4,000 active accounts.  At
an estimated cost (which includes postage, handling, and
time spent by administrative personal handling inquiries and
performing "follow-up" tasks) is conservatively estimated at
$3 per account.  This would result in a cost to the firm of
over $12,000 just to "update" all the firm's active
accounts.  That amount of money equates to 23% of 1995 net
profits (as per 1995 Audited Financials and before taxes).
This clearly demonstrates this requirement's significant
impact on our firm.

As far as the updating of ALL past clients and ALL current
clients for a new account form, that would prove to be a
VERY LARGE task, given our current level of staffing.  This
large endeavor is like doing the past 10 years of new
account work in one year!  I think it is unfair that the SEC
force such a large undertaking on smaller firms with small
staffs.  In addition, the SEC is making us update
information on clients that MAY NEVER TRADE WITH US AGAIN.
Why should information be gather, on an "after the fact"
basis from clients who were "one time trades," died, or went
to a discounted broker after their trade with us (which
would result in DUPLICATION of effort!)?

Furthermore, if the client fails to respond to our request
for the updated new account form and does not wish to
perform another trade with us, we have no "leverage" to get
the client to comply.  That would possibly put our firm in
jeopardy of being in violation of the new proposed rule when
we have no "control" over the persons expected to bring us
into compliance.  Perhaps an updating procedure every 5
years would have more meaning and  make more "sense" to
obtain updated client information or at the time of each
trade the new account form could  be updated.

To make the rule simple and CLEAR it should achieve the
SEC's policy to require any NEW customers to have completed
the updated new account form.  This would make the rule
clear, give us some "leverage" to achieve customer
cooperation in completing the updated account form, and
alleviate significant effort for questionable results in
getting updated account forms from people who are no longer
customers.  Please strongly consider making changes in the
current proposed changes.

                2.  ANNUAL UPDATE OF ACCOUNTS

The annual update of all client accounts is "overkill."
Clients objectives, in my humble experience,  DO NOT CHANGE
EACH and EVERY YEAR.  It normally takes a significant event
in a customer's life to alter their investment objectives.
An ANNUAL update of those new account forms is unwarranted
and merely a "paperwork"  burden on my firm, my staff AND my
customers.  Most broker-dealers will simply send a "negative
response" notice to all the existing customers to notify
them of any investment objective changes and  consider the
lack of response a to mean that they have no changes.  I
would expect a return from customers to be considerably less
than 1% each year.  With such a small amount of change, I
feel that the expense and effort to achieve less then a 1%
response to be unjustified.

As over 29% of our business is "mutual funds," (as per 1995
Audited Financials) our expected holding period is longer
than ONE YEAR.  Many of the customers expect to hold the
mutual fund investment for over 5 years.  It seems that
annual updating of these client accounts is a wasted
exercise with only RARE exceptions.  Those "rare exceptions"
usually contact the representative and that change is made
known to the representative at that time.  A complete
revision of all accounts yearly is not necessary to find
these "exceptions."

A regulation to require an annual update of the new account
form, especially in the investment objective area, seems to
be an antithesis to the investment philosophy normally
espoused by regulators and experts.  Generally this group
recommends "long term" investment objectives to be
implemented for customers.  Should the orientation of firms
now be focused on short term time horizons for investing?

Given that 29% of our business is mutual funds, the
Amendments should, at the VERY LEAST,  make exception for
customers of Series 6 registered representatives.  This
group of brokers should not be required to make an annual
update given the nature of the investment product that they
are limited to selling. There is a tendency to "lump" all
registered representatives together while their selling
activity and products differ significantly, there is often
no distinction by the regulators in promulgating
regulations.

Sometimes, as a regulator "removed" from the populace, it is
not understood that people here in the midwest do not wished
to be "bothered" for paperwork that they view as useless or
unnecessary.  Essentially ALL of my clients would view this
and an unwelcome intrusion to collect paperwork that they
completed once.  As this is an intrusion on the time of the
investor, it is expected that many clients will not respond
to the request for the updating.

 3. REQUIRING DOCUMENTS TO BE KEPT AT OFFICE OR ORIGINATION

The new Amendments appear to conflict with what the NASD
already has in place.  The NASD defines what an "OSJ" and a
"Branch" office is an what records are to be kept at these
locations.  It appears that the amendments are inconsistent
with the current definitions and requirements.  With records
kept at the office location (which is never defined as a
Branch or OSJ), it appears that significant duplication
would be made by keeping those same records in both an OSJ
and a "home office" location would be extremely redundant.
NASAA's admitted problem with not having the records at the
location was delays and difficulties in getting said records
from the "home office."  It would seem to make sense to
promulgate a rule giving the state commissioners more
"clout" in obtaining the records needed and the time frame
in which they receive them than to add redundancy to the
broker-dealer system.

Our firm has many Series 6 representatives whose primary
business is selling insurance products through their own
businesses.  The securities sales they DO perform are often
done from these offices.  The level of sophistication with
regard to record-keeping of the "occasional" sellers of
mutual funds/variable annuities if very minimal.  If fact,
the Series 26 is designed for that very purpose.  It appears
that we are attempting to make "Series 26 Principals" out of
Series 6 licensed persons.  I think that is improper and the
retention and record requirements delegated to these persons
is not in keeping with quality regulatory procedures.

   4.  INDIVIDUAL COMMISSION "PAYOUT" NOTED ON EACH ORDER
                     MEMORANDUM (TICKET)

 Putting the commission paid to the registered
representative on EACH "ticket" is simply UNWARRANTED.  That
information can be calculated for an examiner on request so
there is no need to put it on each TICKET.  As a small firm,
to implement this procedure into an automated computer
system would be HIGHLY EXPENSIVE and have a direct affect on
the viability of our business.  The information is already
available to regulators, the insistence to make it available
on EACH TICKET  for a regulators review results in VERY
COSTLY expense to our broker-dealer.   As quickly as orders
move sometimes, it enhances the chance of errors on other
areas of the ticket and may delay entry of other orders due
to the delay of calculating the commission each time for
each broker when the order ticket is entered.

Even considering a simple FLAT percentage payout, to do it
on EACH "TICKET" is REDUNDANT and unnecessary, as all one
would have to do is provide the percentage payout for that
rep and it could be easily calculated for any regulatory
inquiry.  Even a more complicated system would lend itself
well to such a computation, but to require repeated
computations on each order ticket is an additional burden to
broker dealers that is entirely UNNECESSARY!

                              
   5.  KEEPING CLIENT TRADING RECORDS BY INDIVIDUAL BROKER

The requirement for keeping trading records on each
associated person (broker or registered representative) as a
separate, chronological ordered record creates an undue
burden on our firm.  We do not keep records on an automated
system, but manually.  The NASD/SEC requirements are
currently met by filing each trade confirmation and order
ticket in chronological order.  Another copy of the trade
ticked it placed in an individual client FILE.  The clients
files are grouped by "associated person" so that we have
access to any information regarding that "associated
persons" customers.  To require that we institute yet
another "system" and keep a record by each "associated
person's" activities is adding time and significant COST to
our operation.  IF we were automated, this task MIGHT be
simpler, but we are NOT automated, so a whole NEW set of
additional records would require considerable time and
effort by the staff that is already "strained" by record
keeping requirements currently in existence.  As each trade
is approved by a principal, that "associated persons"
activities are already currently monitored by that system, a
new one is NOT needed.

                   F. Request for Comment

As per your request for comment found on page 669 of the
November 27, 1996 NASD Notice to Members, I would like to
respond to each paragraph.

(i)  The proposed collection of information is NOT necessary
in regard to the aforementioned.  The state agencies, in my
humble opinion, can function with the information currently
provided by NASD/SEC regulations.  The State Agencies are
often headed by political appointees that change frequently.
These Agencies are sometimes staffed by less sophisticated
and untrained personnel.  It seems that other SRO's (NASD
and SEC) are able to derive the information needed for
regulation from information currently required, so it would
follow that the states should be able to perform the same
function under current regulations.

(ii)  As stated earlier, the proposed 12 month update of new
accounts would cost our firm over 23% of last year's profits
to perform this requirement.  The mandate for records for
each "associated persons" would almost force automation of
records versus the manual system we currently use
successfully.  This would mean spending between 20% and 80%
of last year's profit to accomplish automation.  If an
addition five minutes (due to our "manual system") are spent
calculating the individual registered representative's
commission on each order memorandum (ticket), and we do 500
tickets per month, that equates to over 40 additional hours
of work per month or 480 hours per year.  This would cost
our firm over 10% of last year's net profits.  The net
results would be to cost our firm over 50% of last year's
net profits from the proposed amendments.  By any objective
measure, that is a SIGNIFICANT IMPACT on our small brokerage
firm, as, I am sure, it will be on other small firms.

(iii)  Firms could enhance the quality, clarity, and utility
of information with more minor changes than those proposed
in the Amendment.

(iv)  The burden of collection could be minimized through
information technology, but that technology comes at a
significant cost.  For firms that have never been visited by
a State Regulatory Agency, these additional costs seem
superfluous.  Again, the information is there and can be
addressed upon request of the regulatory agency.  To create
large expenditures of money and manpower to have it
"instantaneously" available, when it is available with
reasonable notice, is NON-PRODUCTIVE.  Perhaps the other
thing that need be noted here is that if more regulations
would create less customer problems, then we should have
fewer criminals in our country  because we have more laws on
the books than ever before!  I have been told that the
securities industry is the 2nd industry with respect to the
amount of pages of regulation at the federal level--I was
told that the number one spot belongs to regulation of
firearms (no factual basis, just "heard" this from a
friend).

Please take the preceding comments into consideration BEFORE
implementing the Amendments to 17a-3 and 17a-4.  Feel free
to contact me by phone or letter with any questions or
comments you might have.

Sincerely,

Robert L. Hamman
President

cc:  Office of Management and Budget
Attention: Desk Officer for the Securities and Exchange
Commission