From: Ken Weiss [kweiss1@tampabay.rr.com]
Sent: Thursday, July 25, 2002 11:40 AM
To: rule-comments@sec.gov
Subject: File No. S7-21-02


Attached is my comment letter for the above rule.
Thanks for your consideration.

kenweiss@stockholderaction.com

July 25, 2002

RE: RULE NO S7-21-02

For fifteen years I worked as in house counsel for four public companies. I
was also deeply involved with acquisitions and financing during the Drexel
era. That experience made it clear to me that proposed rule S7-21-02
requires some modification. In summary my suggested changes are as follows:

€In addition to the CEO and CFO, the rule should require the general counsel
of the company (and perhaps even its outside law firm) to certify the
disclosure documents. An exclusion related to the actual numbers in the
financial statements might be appropriate.

€The certification should be absolute and not limited to the Œknowledge¹ of
the certifying officers.

€The burden of proof in resolving an inaccurate certification or proving the
lack of knowledge should be on the certifying officer, not the SEC.

€ Small cap and foreign companies should not be excluded from the
certification requirement.


Certification Standards and Burden of Proof

The SEC has proposed that the CEO and CFO ³Šcertify to his or her knowledge,
the information in the report of which he or she is aware or that he or she
believes is important to a reasonable investorŠis true² or for annual
reports that such report ³contains all information about the issuerŠ²

I take exception to that proposed standard because it is limited to the
officer¹s ³knowledge². It is far too lenient in the breadth of the
certification, which still provides the executive with the ³I didn¹t know²
defense. More importantly, the allocation of the burden of proving actual
knowledge remains with the SEC.

The company¹s SEC disclosure documents provide the public with information
of the corporation¹s transactions, business entities, operations, and
financial condition. They are the only documents that analysts and investors
are provided to allow them to make an informed investment decision about the
company. It is inconceivable that the executive officers should not or could
not understand completely every word and transaction described in those
documents. It also stretches the bounds of reality to imagine that the CEO,
CFO and general counsel do not have actual knowledge of every material
transaction required to be reported.

If it is decided that the certifying officer is given the leeway of the
Œknowledge¹ representation standard then the burden of proof should be on
the executive to prove that he did not have knowledge of a questionable
disclosure issue. Remember, the reality of the world of these officers is
that they have total control of the content of the documents and over every
single financial statement and transaction disclosed in the documents. Those
officers are the most highly compensated class of individuals in the world.
They are paid millions of dollars, given huge option grants, and private
jets. It is their absolute obligation to the shareholders to insure that the
disclosures are correct in all material respects. They should be held
strictly liable for misstatements. If they don¹t have actual knowledge of
those transactions they are the wrong people for the job.

General Counsel Certification

Public companies, the economic ships of every American, are now on the
rocks. While the captains of those ships may have been the CEOs, it is
clearly the lawyers who have been at the helm. Yet they have neither borne
nor accepted any responsibility for their actions that led us to the
precipice.

It is absolutely inconceivable that the abuses recently revealed by Enron,
Tyco, Worldcom, Global Crossing and many others could have been accomplished
without the direct cooperation and complicity (or negligence) of the general
counsel and outside counsel for the companies involved. In every public
company the lawyers are far more involved and responsible for the creation
and review of SEC filings than the CEO. It is therefore, obvious, that the
lawyers who prepared and reviewed the documents should be held responsible
for their accuracy.

Every SEC filing is reviewed by the company¹s general counsel and other in
house counsel as well as by its outside counsel. Not only are the lawyers
the final arbiters of the substance of the SEC documents but also in most
cases, except for the financial statements themselves, lawyers draft the
majority of the language included the filings. It is their responsibility to
ensure that the information included in those filings is accurate in all
material respects and does not mislead investors either by misstatements or
by failure to disclose material facts. For this reason alone, the general
counsel of the company at the very minimum should be required to certify the
facts (if not the numbers) of every SEC filing. But there are more reasons.

Any lawyer who has ever worked in house for a public company knows that
there are few, if any, Œsecret transactions¹. While it may be true that the
board of directors is occasionally misled, the company¹s in house lawyers
and outside counsel know the details of each and every transaction, bar
none. Yet not one SEC action, not one headline, not one news report has
focused on the perpetration of this fraud by the legal professionals who
actually create and draft the transactions themselves and are responsible
for the public disclosures of those transactions.

This modus operandi of disguised off balance sheet financing, egregious
executive compensation, and the plethora of arcane revenue creating
transactions have not only been countenanced by the lawyers involved but
have been created by them. Every single fraudulent transaction, every
compensation package, every misleading SEC document had legions of lawyers
twisting and contorting the letters of the law to accommodate the egos and
wallets of the CEO and his cadre.

I believe that it is essential that the lawyers who are responsible for SEC
documents and the related disclosure face disbarment for the violation of
this certification requirement. None of this fraud would have been possible
if any of the lawyers involved had refused to participate in the misleading
disclosures. 

Lawyers are currently not at risk for their cooperation and complicity in
permitting such disclosures. They are, in fact, at more personal risk, if
they fail to cooperate with the CEO¹s directives. Only with a bright line
test such as certification will the disincentive be clearly defined.

Small Entities and Foreign Registrants
 
The burden on the officers of smaller public companies is even less and the
control over day-to-day operations and transactions even greater for small
entities than for the included group. I see no credible reason to provide an
exclusion for these or foreign entities. If a CEO, CFO or general counsel is
unable or unwilling to read, understand, and certify that the company¹s
disclosure documents are accurate, they are the wrong individuals to serve
in those offices and the board should find people who are.

For all the reasons set forth above I would urge that Proposed Rule S7-21-02
be modified in accordance with these comments.

Respectfully submitted,

Kenneth L. Weiss, Esq.
kenweiss@stockholderaction.com

-- 
Kenneth L. Weiss, Esq.
11085 9th St. E.
Treasure Island, FL 33706
727-367-8829
727-367-9512-Fax
kweiss1@tampabay.rr.com