2. Claim regarding industry leadership of Momentum Securities:

Momentum feels it is able to base its industry leadership claim on three factors: (1) Discounted commissions: One would pay $15 to execute a trade of 1,000 shares, at Momentum, for example, that Merrill Lynch, say, might charge $300 to execute. (2) Volume: Momentum, as you know, is a high volume order entry firm. In fact, Momentum is likely the largest brokerdealer in Texas based on volume. Further, a proposed strategic partnership combination will certainly mean that Momentum is one of the largest order entry firms in the day-trading community; (3) Technology: Few brokerdealers offer their customers enhanced price discovery, as does Momentum, through access to Nasdaq Level II quotes, along with access to multiple ECNs. Taken together we feel that the above noted factors place Momentum in an industry leadership position and that by these factors customers are greatly able to benefit. In response to the comment in your letter, however, Momentum will now say that, "Given its volume capacity and technical capabilities Momentum Securities offers the electronic day-trading community one of the best order routing and order execution systems in the industry." The preceding sentence will replace the statement that Momentum Securities Management Company and its affiliated companies “are leaders in virtually every aspect of the electronic day-trading industry, proprietary software development and order delivery systems."

Article Reprints

1.

News Articles with associated risk disclosure: In accordance with NASD Conduct Rule 2210(d)(1)(A) cited, Momentum will accompany such article reprints with its separate risk disclosure statement. However, having provided the article sources as per NASD Conduct Rule 2210(d)(2)(K) Momentum does not feel as though the articles themselves or their respective content indicate that Momentum has engaged in misleading communication. Further, Momentum's penchant toward risk disclosure should be evident in that such articles entitled The Risk Averse Need Not Apply have been included.

Momentum will, on all future

NASD member name to be included:
distribution of such article reprint material, include the name of the broker-
dealer, in accordance with NASD Conduct Rule 2210(d)(2)(A).

Other Advertisements

1.

Separating "Member: NASD and SIPC" from www.soes.com: On all such
future correspondence, and as footing, in ad copy "Member. NASD and
SIPC" will be separated from the firm's web-site address.

2. "Exciting World of Day Trading" - Direct Access to SelectNet: The
referenced ad has been pulled and will not run again.

6.

S.

4.

3.

"Free Stock Day Trading Seminar" Advertisement: The advertisement appears to be a legacy copy from the time when Momentum's Irvine branch was affiliated with Block Trading. No such ads will be used in the future. We thank the Association for the specific references to the particular Notice to Members and Regulatory and Compliance Alert.

"Schedule of Commission Fees" Flyer: Please be apprised that Momentum no longer uses the referenced commission schedule. Further, the dissemination of commission structure information to customers will now contain a much more thorough explanation of how fees are calculated, so as not to be ambiguous or misleading.

“July 29, 1998 The Renard Group News Release":

In the future Momentum will not present any such ad copy, for a seminar, which is unbalanced or implies that the seminar speaker, a consultant, will have any direct impact on the success of any particular trader, as a customer of Momentum. Further, accurate risk disclosure will be presented in any such seminar advertisements. We thank the Association for the specific references to the particular Notice to Members and Regulatory and Compliance Alert.

"Trade Today for Tomorrow's Tuition" Advertisement:

In the future Momentum will not present any such ad copy, which is unbalanced or implies that market volatility and price fluctuations are not a factor in the outcome of a trader's performance. Further, accurate risk disclosure will be presented in any advertisements to present proper balance.

7. October 30, 1998 The Renard Group News Release:

In the future Momentum will not present any such ad copy, for a seminar, which is unbalanced or implies that the seminar speaker endorses the specific practices of day-trading if not directly involved the field of day-trading. Further, accurate risk disclosure will be presented in any such seminar advertisements to properly balance the expectations of the audience. Momentum will not seek to imply any NASD endorsement, in the future, with reference to the speaker's titles or positions held, with the Association. We thank the Association for the specific references to the particular Notice to Members and Regulatory and Compliance Alert.

8. Web Site Automated Reply to Inquiry – March 25, 1999:

Momentum has ceased to use automated, e-mail responses to inquiries generated by it's website. All such inquiries are now logged into a database and forwarded to brokers at particular branch office locations for any necessary follow-up discussion by telephone or in writing.

9. Web Site Automated Reply to Inquiry – January 2, 1998: This appears to be

the same comment as noted in the preceding # 8 above. Correspondingly, Momentum has halted such automated inquiry responses as noted in the answer to #8 above.

10. Web Site Risk Disclosure Statement on New Account Information Form, February 28, 1999. We appreciate the comments regarding an addition to Momentum's existing Risk Disclosure Statement. Specifically, Momentum will add a portion to its Statement apprising readers that should they have questions or concerns regarding any aspects of risks involving day-trading, they should consult a Momentum Securities licensed broker.

I trust the above answers and comments to the points in your letter are fully responsive to the Association's concerns. However, should you require further information or need additional materials, please do not hesitate to contact me, at 713-706-3300.