From: Brad Biemesderfer [bbbiemer@yahoo.com]
Sent: Wednesday, May 07, 2003 11:25 PM
To: rule-comments@sec.gov
Subject: Petition for Rulemaking (SEC File No. 4-461)

Dear Sir/Madam,

I support the Petition for Rulemaking (SEC File No.
4-461) submitted by the Committee and James McRitchie.

We're all brought up with a pro-capitalist belief that
a free market is good (although harsh at times). And
yet, all corporations are a social creation. A select
few are bestowed with a fictional entity by
legislative fiat. The corporate entity is as legally
real as you or I. But, exists only through public law
which defines how that entity shall be animated
(officers, charter, required meetings and minutes). 

On the surface, it looks as superficial as a masonic
lodge ritual. A bunch of grown men taking on the
mantle of a pretend entity. Some meaningless rules
about required meetings and duties. Throw in some
secret handshakes and a curtain, and they could be
another chapter of the Masons.

My point is: what is society getting out of this
involvement in business? These guys could have entered
into a private agreement and conducted a
sole-proprietorship. They could have worn beaver-skin
caps and pranced around in togas for all I care. 

But what *they* get out of society's creation of
corporate law is evident. They get immunity from
personal responsibility among other things. They can
vote themselves gifts just after the secret handshake.

I've seen this at a "dot" com startup. Two weeks
before they cut the staff by 70%, the top 8 guys gave
themselves *huge* bonuses. The CEO regularly took
personal trips to N.Y. and was reimbursed. Maybe the
Board "agreed" (the color of law) that it was a form
of compensation. A short while later, the company
closed its doors. 

Without this "color of law" which places nearly all
Board actions beyond the reach of complaint, most
people who believed the participants were sincere
could have sued and let a jury of peers decide if
these actions were "reasonable" in the face of a dying
company.

I agree that society benefits generally when business
thrives. I'm not opposed to legislative creation of
corporate charters. But, it seems very imbalanced when
it legitimizes a power structure at only one end of
the created institution. It seems like we're not
getting enough in return when businesses act the way
MOT does (obscene pay raise, moving jobs offshore).

If CEOs and their partners could be sued for
defrauding investors (if anything was open to
challenge in court) they would be much more careful.
With immunity from liability, or the bar set higher
for what constitutes actionable behavior, they can do
anything they want.

I can think of three things that might ameliorate this
situation.

1. Corporate law creates an office for employees (at
the same time an office of executive is created).
Should include everyone. Not non-management low-rung
individuals.

2. Enhance corporation commissions to decide and
revoke corporate charters based upon excesses like
MOT's.

3. Federalize corporate creation. It is a checkerboard
of state laws. Each trying to underbid the other. It
is obviously interstate commerce when a company based
in Illinois incorporates in Delaware. Move it all to
the federal level for uniformity. (Another example of
states screwing themselves).

Brad Biemesderfer
630-985-2470


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