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Mr. Jonathan G. Katz Securitiesand Exchange Commission March 12,2004

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primary. Nonetheless, NSCP does not believe that employeesof all advisers should be prohibited from investing in POs or limited offerings.

The Commission has noted that the businesses of advisers are varied and the types and degrees of risk presented by those businesses are equally varied. For example, some advisers give advice exclusivelywith respect to fixed-income instruments,while others emphasizeequity securitiesof small capitalizationor emerging companies. The potential for conflict between these two types of businesses and their respective clients with respect to both IPOs and limited offeringsis of different magnitudes. NSCP believes that an appropriatebalancing of the interests of clients of these two types of businesses and the interests of the businesses themselves would and should result in different types of controls. For example, NSCP believes that advisers that give investment advice exclusivelywith respect to fixed-income instruments present a low risk of conflict with the interests of their clients and that a ban on personal investing in IPOs or limited offeringswould be inappropriate. NSCP believes that other business models (e.g., advisers that advise clientsto invest exclusivelyin investment companies managed by other advisers)present a similar low level of risk.

Because the risk of conflict between clients and advisers varies greatly and because of the great variation of business models among advisers,NSCP does not believe that the Proposed Rule should prohibit all advisers and their Access Persons from participatingin initial public offerings or limited offerings. Instead, NSCP believes that advisers should assess the nature and level of the risk of conflict that is presented by such investmentsand should craft procedures that are appropriate to that risk. 8. Reporting of Violations

NSCP believes that all employees should be encouraged, as part of an adviser's business environment, to report actual and apparent violations of firm policies and procedures, especially those that may involve a breach of fiduciaryduty. However, NSCP strongly opposesthe mandatory reporting of "apparent" violations. Such a requirement could lead to liability for violation of firm policy and federal law in the absence of any underlying behavior that was inappropriate. Moreover, it may be difficultfor experts to determine whether a particular set of facts constitutesa violation or the appearance of a violation. For non-expert employees, this burden would be so great as to render compliance impractical. For example, the proposed Rule provides that advisers' codes of ethics contain provisions requiring the firms' supervised persons to comply with applicable federal securities laws. If a requirement mandating the reporting of apparent violations of a firm's code of ethics were included within the Proposed Rule, it would be unreasonable to expect a supervised person who is not an attorneypracticing in the securities area to be able to determine whether an apparent violation of the federal securities laws has occurred. NSCP believes that creating liability in such circumstancesis fundamentally unfair and that the Proposed Rule should not require the reporting of apparent violations. 9. Other Code of Ethics Provisions

The Commission has requested comment on whether codes of ethics should include procedures dealing with receipt of gifts, service as a director of a public company, penalties for violating and adviser's code. NSCP believes that many of these provisionshave merit, but that the decision whether to include them in a code of ethics (or another fim policy) and what their

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