April 23, 1997
     
     
Mr. Jonathan G. Katz, Secretary,
Securities and Exchange Commission
450 5th Street, NW
Washington, DC
     
Re: Securities Uniformity; Annual Conference on Uniformity of Securities Laws, 
Request For Comments---File No. S7-15-97
     
Dear Mr. Katz:
     
        The Surety Association (SAA) is a voluntary, non-profit, unincorporated 
association of companies engaged in the business of suretyship.  It presently 
has approximately six hundred fifty member companies which collectively 
underwrite the overwhelming majority of surety bonds written in the United 
States.  SAA is licensed as a rating or advisory organization in all states, as 
well as in the District of Columbia and Puerto Rico, and it has been designated 
by all state insurance departments except Texas as a statistical agent for the 
reporting of fidelity and surety experience.  The SAA represents its member 
companies in matters of common interest before various federal, state and local 
government agencies. Accordingly, we offer the following comments. 
     
        Our primary concern is the apparent elimination of a state's ability to
protect the interests of its citizens by requiring that brokers-dealers and 
investment advisers file a surety bond as part of the state's licensing 
requirements. As the above notice accurately points out: "A dual system of 
federal-state securities regulation has existed since the adoption of the 
federal regulatory structure in the Securities Act of 1933." 
However, with the passage of the "National Securities Markets Improvement Act of
1996" (NSMI Act), an important element of a state's ability to protect the 
interests of its investing public may have been inadvertently sacrificed.
     
        The NSMI Act appears to prohibit a state from imposing bonding
requirements on registered broker-dealers that differ from, or are in addition 
to, the requirements established under the Securities Act of 1933. Also under 
the NSMI Act, states may not require an investment adviser to post any bond 
which is in addition to any that is required under the laws of the state in 
which it maintains its principal place of business. However, neither the 
Securities Act of 1933, nor the Investment Advisers Act of 1940, nor the NSMI 
Act appear to provide for the type and level of surety bond  protection that was
generally provided  to the investing public under the various state bonding 
programs which were in place prior to 1996.
     
     
     
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        In the ten years from 1986 to 1995, the surety industry has paid more
than one million dollars ($1,000,000) in claims under the various state operated
broker-dealer, investment adviser surety bond programs. These claims payments 
represent reimbursements to the investing public which would have suffered the 
losses had it not been for the protection provided by the surety bonds required 
by the various states.
     
        Consequently, in light of the above, we believe that the states should
be allowed to establish surety bond provisions for the protection of the 
investing public as part of their state licensing requirements. The ability of 
the states to establish surety bond provisions  need not entail all 
broker-dealers and investment advisers, but rather only those broker-dealers and
investment advisers who become subject to state regulation under the dual 
federal-state regulatory system.
     
           We thank you for this opportunity to offer these comments for the
Conferees' consideration, and would be pleased to discuss the matter further 
if you so desire.
     
                                                        Very Truly Yours,       
     
     
                                                        William L. Kelly
WLK:poh