Helen W. Melman
attorney at law
815 moraga drive
los angeles, california 90049
telephone (310) 472-4191
facsimile (310) 472-4091
email hmelman@msn.com

May 16, 2002


Mr. Jonathan G. Katz
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549-0609

Re: File No. S7-08-02

Dear Mr. Katz:

I am writing to comment on the proposed acceleration of periodic report deadlines as set forth in Securities Act Release No. 8089. I am a corporate and securities attorney in private practice who has represented public companies for over 20 years. The following comments are my own.

The SEC has proposed shortening the filing deadlines for Forms 10-K and 10-Q to 60 and 30 days after period-end, respectively, for entities having a public float of $75,000,000 or more. The SEC's proposal is based on certain understandings concerning companies' abilities to prepare these reports within the accelerated deadlines and perceived benefits of the shorter deadlines to investors. I disagree with the SEC's premises and urge the SEC not to adopt this proposal.

The SEC cites advances in communications and information technology over the last 30 years to support the imposition of accelerated deadlines. While the SEC does acknowledge the increase in required disclosures and the greater complexity of the accounting rules which has occurred during this period, it does not believe that these complexities outweigh the technological advances. In arriving at this conclusion, I do not believe that the SEC has sufficiently taken into consideration the logistics and time required not only to complete the financial statements, but also to coordinate with management, counsel, auditors, audit committee members and Edgar filing agents to finalize and actually file the reports. Auditors, for example, typically require one week to complete their review of the completed Form 10-K after the audit is complete. Also, the great majority of issuers use financial printers or other filing agents to "Edgarize" and file their reports. A widely used and well respected filing agent recommends that its customers deliver their Forms 10-K five days prior to the due date to ensure a timely filing. Issuers typically must allow two or three days to format their quarterly reports for Edgar filing, in addition to the time needed for auditor and audit committee review. With only about 43 business days in a 60 calendar day period and only about 21 business days in a 30 calendar day period, the actual number of days available to issuers to prepare their reports (which the SEC continues to make more detailed and complex) is much less than the proposed 60 and 30 days.

Another assumption is that larger companies are better able to meet the accelerated deadlines than smaller companies. In fact, larger companies often have much more complicated and time-consuming financial reporting than do smaller issuers due to, for example, numerous consolidated and unconsolidated entities, segment reporting, international operations, foreign currency translations, complicated financing transactions, etc. The SEC also assumes that companies with a public float of $75 million have the financial and technological resources to collect the necessary data in a shorter time. One of my clients with a public float over $800 million will have considerable difficulty collecting the financial data from its dozen foreign subsidiaries within the shorter time frames even after adding staff and computer capabilities.

Market capitalization, therefore, is not necessarily indicative of a company's ability to meet the accelerated deadlines. Since I oppose any acceleration of the filing deadlines, I am unable to offer any alternative criteria. At a minimum, however, the $75 million threshold is much too low. The threshold should also not be tied to the Form S-3 eligibility requirements, which, in my view, are irrelevant to the definition of "accelerated filer" if its purpose is to identify issuers which have the financial and technology resources to file earlier.

According to the Release, the SEC understands that a company's audit is substantially complete by the time it issues its earnings announcement so that little work remains to be done to complete the financial statements for the Form 10-K. My experience is that since the earnings release focuses on the income statement, after their earnings are released companies must still complete their balance sheet, cash flow statement, financial notes, MD&A and the non-financial portions of their reports. Also, while Footnote 26 of the Release cites a study which indicates that issuers on average make earnings announcements 43 days after fiscal year-end, and 27 days after the quarter-end, many companies do not release earnings until much later. These companies will find it very difficult to complete and file their reports within the proposed accelerated deadlines.

Given the complexity of the financial reporting rules and the importance of having complete and accurate information for investors, I see no reason to put the added pressure and expense on companies which would result from the shorter deadlines. Issuers that are under these time pressures may be forced to rely more on estimates and accruals in preparing the financials and may not have the time to evaluate and resolve difficult accounting or disclosure issues with their auditors and counsel. The costs to auditors and filing agents for beefing-up staff during a more compressed "filing season" will inevitably be passed on to issuers.

Finally, I question the validity of the SEC's stated premise that the more timely filing of reports will enable investors to more easily make informed investment decisions. An informed decision depends on the quality of the information, not the speed in which it is disseminated. Issuers that desire to mislead or obfuscate can do so in little time; issuers that want to provide complete and accurate information need the time to do it right.

Thank you for your consideration.

Very truly yours,