Securities and Exchange Commission
San Francisco District Office

Dear Sir:

I wrote your office on October 31, 1994 about a run-up in Namic U.S.A. Corp. common stock. The run-up was not supported by any public news announcements until it had doubled in price.

I wrote your office about this issue because I am concerned about equal opportunity as as investor. That is, when I trade stocks I expect to be able to trade on the same information all other investors are trading on.

I am also concerned with the problems that are apparent in our financial markets: 1) the billion dollar insider trading scandal that went on for years during the Eighties that finally ended with the arrest of Milken, 2) the collapse of the junk bond market, 3) the collapse of our S&Ls, and now, 4) the Orange County meltdown. On top of all this, an investor can not even trust the most reputable of financial institutions: 1) Drexel Burnham Lambert - insider trading, 2) Salomon Brothers - government securities, 3) Merrill Lynch - the Orange County problems, and 4) many institutions that have lost their credibility with investors: Kidder Peabody & Co., Prudential, and the NASDAQ stock market, just to name a few.

I wrote your office because of the above concerns, but I also wrote because the SEC has publicly stated that they investigate unsupported run-ups in stocks, i.e., they too are concerned. The July/August 1994 issue of Worth Magazine (page 66) stated: "To enforce the law, the SEC routinely monitors trading on the nation's security exchanges. When companies make major announcements that affect the price of their stock, the agency often will look back at the activity in the period preceding the public dissemination of the news. Most major events will trigger a commission inquiry of some kind. We have computers that can sort massive amounts of data in a nanosecond, says Walker, describing the agency's first line of defense against insider trading."

The book Den of Thieves stated: "As the merger boom unfolded, Lynch [chief of enforcement with the SEC] was appalled by the persistent run-ups in stock prices on takeover rumors [as I am now]. Obviously, confidential information was leaking into the market on an unprecedented scale, to the detriment of investors who waited for public announcements. Average investors were becoming alienated and distrustful [not to mention that the average investor would not recieve any money from the fines imposed on the insiders]. Soon after Lynch assumed his new position, in April 1985, Business Week ran a cover story with the headline, The Epidemic of Insider Trading: The SEC is Fighting a Losing Battle to Halt Stock-Market Abuses [interesting to note that Business Week ran another story last month on insider trading December 12, 1994]. The article only underscored Lynch's own concerns. He vowed to step up insider-trading enforcement, to increase the staff assigned to it, and to follow up every lead vigorously. Public confidence in the markets, he felt, was at stake."

All this tells me that the SEC does not like insider trading any more than I do. Which is what I am confused about now. I wrote you over ten weeks ago telling you about a run-up in a stock that had not been supported by any public news announcements until the stock had doubled in price. You responded by saying "We have reviewed your letter and written the entity requesting that they look into the issues you raised and to provide you with a written response, with a copy to us." First it is strange that you would ask the entity to look into the issues, you must be very trusting of the entity. Second, after ten weeks I have still not received any explanation form the entity.

I have several reasons for writing you this time:

1) Is possible insider trading something that an investor should notify the SEC about?

2) If the above is true and an investor reports possible insider trading should the investor expect an explanation in a reasonable amount of time?

3) Can the SEC effectively control insider trading or is this an impossible task with the limited resources the SEC has?

4) Should an investor, like myself who is fed up with all the insider trading going on, forget about the SEC and write their congressman instead?

As a consumer affairs specialist you are trained in talking around the questions. That is why I have put my questions in a straight forward manner: 1-4 above. I am going to close with another quote from the Den of Thieves:

"At the most basic level, American capitalism has flourished because everyone, rich and poor alike, has seen the marketplace reward merit-enterprise, innovation, hard work, and intelligence. The securities laws were implemented to help protect that process, to guard the intergrity of the markets and to encourage capital formation, by providing a level playing field on which everyone might pursue their fortunes. Violation of the securities laws are not victimless crimes. When insider traders gain windfall stock profits because they have bribed someone to leak confidential business secrets, when prices are manipulated and blocks of stock secretly accumulated, our confidence in the underlying fairness of the market is shattered. We are all victims."

Sincerely,