Subject: File No. S7-30-04
From: Rosalind D. Herman

August 10, 2004

I am President/CEO of a small federally registered RIA. We currently manage approximatly 60,000,000. We work with closely held business owners primarily. Many of these individuals meet the standards as accredited investors. However, because someone is a succesful business owner they do not automatically become a sophisticated investors. Without the proposed regulation hedge fund managers can solicit individuals such as these business owners without being required to provide similar disclosure as to performance, fees, expenses and potential conflicts that RIAs, mutual funds and Reg D stock and real estate offerings are required to provide. Hedge funds are now marketing to much less sophisticated investors. The SEC must insure a uniform level of disclosure and protection. While the mutual fund industry has recently paid large fines for failure to disclose or participation in market timing one cannot point to cases of theft or fidelity problems. These events have clearly happened in the hedge fund arena. Hedge funds should be required to use third party custodians, provide audited financials and to be registered if they manage more then 25,000,000. They also should be required to show trasparancy in their transactions, particularly in the area of shorts and naked shorts. If hedge funds are allowed to manipulate the markets they do so to at the expense of individual investors, mutual funds and RIAs client and to benefit the few.