MessageFrom: Information Desk [info@401khelpcenter.com] Sent: Wednesday, February 04, 2004 1:41 PM To: rule-comments@sec.gov Subject: File No. S7-27-03 - Comments in Support VIA EMAIL rule-comments@sec.gov February 3, 2003 Jonathan G. Katz, Secretary Securities and Exchange Commission 450 Fifth Street, NW Washington, DC 20549-0609 Re: Comment on proposed amendment to rules governing pricing of mutual fund shares; File No. S7-27-03. Dear Mr. Katz: 401khelpcenter.com is a leading provider of information, opinion, analysis, news, rules, and other 401k resources for plan sponsors, retirement professionals, small businesses, and employees. As a nationally recognized authority on 401k retirement plans, I have a practical working knowledge having successful founded and run a number of retirement companies. I am co-author of the "401(k) Plan Participants Survival Guide," co-editor of the "401(k) Plan Sponsors Fiduciary Toolkit," and co-host of the radio show "The Retirement Hour." My comments and articles have appeared in many publications including: The New York Times, Wall Street Journal, San Francisco Chronicle, The Street.com, CFO Magazine, and Entrepreneur magazine. The 401khelpcenter.com supports the SEC "hard 4 p.m." proposal. It will help ensure the absolute integrity of mutual fund trading in the public's eye and is necessary to rebuild investor confidence. No exceptions to the 4:00 p.m. deadline should be made for retirement plan trades. To do so would leave a means for continued abuse since there is no effective way to ensure that trades were properly received by the intermediaries prior to 4:00 p.m. Technology to time stamp transactions can be hacked and is not a foolproof solution. Many within the retirement industry claim that the proposed SEC regulations would place 401(k) investors at an unfair disadvantage relative to other investors, effectively subjecting them to different trading rules. I don't believe this would be the case. Think about it. Who has the "unfair" advantage today? a.. Today, 401(k) investors have an advantage over retail investors in that they can place trades up to 4 p.m. ET with their plan recordkeeper. The recordkeeper is able to submit these trades "late" to the mutual funds and still obtain that day's price. Retail investors do not have this advantage. For example, according to their website, a retail mutual fund trade placed with Ameritrade must be submitted by 2:00 p.m. ET to obtain that day's price. b.. Today, 401(k) investors have an advantage over retail investors in that they can both sell and purchase shares of different mutual funds simultaneously. Retail investors must first sell one mutual fund and wait for the funds to be deposited to their brokerage account before they are able to purchase another fund. There can be a one to three day lag between trades in which the retail investor is "out of the market." The proposed SEC "hard 4 p.m." rule might actually "level the playing field." Many claim that under the proposed rule the best case scenario would result in a trading deadline for participants as early as 10 a.m. ET (or 7 a.m. PT) in order to meet a mutual fund’s hard 4 p.m. ET deadline. Why? The answer is simple. The retirement industry doesn’t want to invest the necessary dollar to improve their system. The technology and process exist today to overcome this issue. Even if 401(k) investors should be disadvantaged, the proposed regulations would impact only a small minority of 401(k) investors because they simply are not active traders. According to Hewitt Associates, only 16.8 percent of 401(k) participants made any form of trade in 2002 (June 17, 2003 Hewitt press release). And remember, 401(k) retirement plans are designed for long-term investing. Having the ability to make quick, same day trades does not reinforce this savings objective and should not be structurally supported. Making an easily enforceable absolute 4:00 p.m. deadline is the right thing to do. Sincerely, Rick Meigs Rick Meigs, President 401khelpcenter.com, LLC 7032 SW 26th Avenue Portland, OR 97219