From: Jeff Rutowski [Jeff.Rutowski@integratedfundservices.com] Sent: Tuesday, July 01, 2003 1:28 PM To: rule-comments@sec.gov Cc: BRIAN E HIRSCH; SCOTT A ENGLEHART Subject: S7-13-03 June 30, 2003 Jonathan G. Katz, Secretary Securities and Exchange Commission 450 Fifth Street, NW Washington, DC 20549-0609 RE: File No. S7-13-03 Dear Mr. Katz: Integrated Fund Services appreciates this opportunity to comment on the Commission's proposed amendment to Rule 17Ad-7. Our comment pertains to the provision that would require that certain types of software be placed into escrow with an independent escrow agent. Specifically, the proposed rule would require transfer agents to place third party licensed software with an independent escrow agent if access to the source code is not available. We understand the Commission’s concern regarding their ability to access the software should the transfer agent become uncooperative during an investigative proceeding or inquiry, however we support a slightly different approach. It is our belief that the Commission originally drafted Rule 17Ad-7 with the intent to encourage the use of electronic, microfilm, and microfiche media as a substitute for hard copy records, for purposes of complying with the Commission's transfer agent recordkeeping rules. We feel the proposed amendment as it is presently drafted will have the opposite effect for the reasons set forth below. We also believe that the requirement that an escrow agent be independent of both the transfer agent and the third party software provider exceeds the reasonable intent of the Rule and makes it more likely that other transfer agents will not pursue the retention of records electronically. We suggest that the certification language proposed for escrow agents would also meet the Commission’s intent if the third party software provider provided the certification in lieu of an independent escrow agent. Integrated’s reluctance to take advantage of the electronic record storage alternatives provided by the rule is directly due to this particular provision. Escrow agents add additional expense to the operation of a software agreement which will ultimately be passed on to investors. In addition, software developers have been traditionally reluctant to provide their source code to a customer or an unrelated third party, because they consider the source code the essence of their product. Furthermore, we believe that sufficient legal and regulatory remedies already exist that would provide the Commission access to the software should the transfer agent become uncooperative or otherwise fail to do so. Finally most, if not all, license arrangements between software providers and their licensees already require the parties to respond to governmental inquiries or in any other instances required by law. We would also argue that the escrow agent would present unnecessary impedance to the Commission’s work in an investigative situation. It is also likely that the third party software provider would be in a position to support the Commission’s request in a much more timely manner than an escrow agent, and that the Commission would likely need support from the third-party software provider to initiate the software in any event. We recommend that the Commission amend the current proposal to allow third party providers to certify to the Commission and the transfer agent’s ARA that they will furnish promptly upon request, a current copy of the physical and logical format of the electronic storage or micrographic media, the field format of all different information types written on the electronic storage media and source code, and the appropriate documentation and information necessary to access the records and indexes of the transfer agent for whom they provide these services. We thank you for the opportunity to make the foregoing comments. Please contact me at (513) 362-8076 if you need any additional information, or have questions or comments regarding the above. Respectfully submitted, Jeffery G. Rutowski Vice President Integrated Fund Services