From: Stephanie B. Kelly [SKelly@olsenguidry.com]
Sent: Monday, May 10, 2004 4:56 PM
To: rule-comments@sec.gov
Subject: File No. S7-11-04


Johnathan G. Katz, Secretary
Securities and Exchange Commission
450 Fifth Street, NW
Washington, DC 20549-0609

Dear Secretary Katz:

There has been much talk lately about the abuses within the mutual fund 
industry relating to late trading and "market timing."  One suggestion to 
correct this problem is to implement a redemption fee of 2% for mutual fund 
purchases held for less than the minimum standard set by the SEC or the fund 
company.  I believe this redemption fee is an inadequate solution to the 
problems within the mutual fund industry.  Most importantly, the mutual fund 
"scandal" involved portfolio managers and institutional investors - not the 
average investor.  I find it quite hypocritical to punish the average mutual 
fund investor with a 2% redemption fee - especially when that fee is awarded 
to the mutual fund company that caused the "scandal" in the first place.  

Please keep in mind that a redemption fee will impact people facing a family 
emergency, anyone making monthly automatic investments into a mutual fund 
(namely all 401(k) investors), and anyone frightened by the impact of events 
such as Black Monday or 9/11.  The average investor should not be the one to 
pay for the misdeeds of the mutual fund industry representatives.

When it comes time to take action regarding this issue, please consider the 
following:

There is no study that indicates that there is an industry wide problem of 
abusive mutual fund trading that passes higher costs onto buy and hold 
investors. 

· There is no academic study that concludes that a mandatory redemption fee 
will eliminate abusive trading of mutual funds. 

· Therefore there is no logic in making the 90% of funds who do not now have 
redemption fees, most likely because they have concluded they have no abusive 
trading problem, impose redemption fees. 

· Imposing a mandatory redemption fee is equivalent to instituting a tax on 
mutual fund investors. 

· The SEC has for 30 years led the way in lowering the costs of investing for 
investors and it would be a radical reversal in policy should the SEC vote to 
impose a mandatory redemption fee. 

· Should the SEC impose a mandatory redemption fee, it will be the beginning 
of a trend that will take redemption fees out to 6 to 12 months in a 
relatively short period of time.~ This is also due to the fact that there is 
little competitive pressure in the mutual fund market place to encourage 
keeping the fees on for only a few days. 

· A great deal of short term trading of mutual funds is due to stale pricing 
of fund shares.~ To this end, fair value pricing is much more effective in 
quashing short term trading of funds than a redemption fee ever will be. 

· Funds have all the tools they need to control abusive trading of their fund 
shares.~ They need only use them to be effective.~ The solution is not 
mandatory redemption fees.

Thank you for your time and consideration.  


Stephanie Kelly
Olsen & Guidry, L.L.C.
1112 Engineers Road
Belle Chasse, LA 70037
PH:  (504) 361-7788
FAX: (504) 361-8844