From: Quinlivan, Stephen [stephen.quinlivan@leonard.com]
Sent: Monday, August 05, 2002 7:41 PM
To: SEC Comments (E-mail)
Subject: File No. S7-21-02

To: 	Jonathan G. Katz
	Secretary
	U.S. Securities and Exchange Commission
	450 Fifth Street NW
	Washington DC 20549-0609

Date: August 5, 2002

Re:  Comments on Proposed Rule - Certification of Disclosure in Companies' 
Quarterly and Annual Reports 
      File No: S7-21-02

My name is Steve Quinlivan and I am a practicing securities lawyer, and the 
views expressed herein are my own and not those of any firm or client.  

Section 302 of the Sarbanes-Oxley Act of 2002 is unclear in its operation 
immediately following an acquisition of a business by a reporting company. 
Take for instance, this hypothetical --  Company A, which is a public reporting 
company, acquires Company B, a non-reporting company, one day prior to the 
end of its fiscal quarter.  The CEO and CFO have not designed the internal 
controls of Company B nor evaluated their effectiveness and it would not have 
been practical to do so prior to completion of the acquisition.  Thus the 
required certification could not be given.  Another example: in a hostile 
acquisition of a reporting company, there would be no possible way to design 
and evaluate internal controls with respect to the target.  Again, the required 
certifications could not be given.  It would seem the intent of the Act was not 
to impede acquisitions, and the Commission should provide relief by rule making.

Section 302 of the Sarbanes-Oxley Act is unclear as to whether the certification 
is applicable to Form 8-K and guidance should be provided in the rule making 
process. Certainly, given the various proposals for accelerated reporting made 
by the Commission and others for two-day filing windows, in many cases diligence 
required for the certification could not be completed. Thus Form 8-K should be 
excluded from the required certifications.  There simply has to be a trade-off 
between requiring rapid filing and onerous certifications.

The SEC should reaffirm its proposal in Release No. 34-46079 that there are no 
required procedures for conducting the evaluation of internal controls and that 
each company should develop a process that is consistent with its business and 
internal management and supervisory practices.  Specifically, the SEC should 
provide that statistical sampling of a sample of transactions is not required 
to evaluate internal controls.

Guidance should be given with respect to the certification required Section 302(a)(5) 
of the Act. In particular, the form of the certification should be "knowledge" 
based.  For instance, the statute states the signing officers must certify they 
have disclosed to the audit committee "any fraud, whether or not material".  
Certainly, Congress only meant to require disclosure of fraud which the signing 
officers had knowledge, and Congress was not imposing a duty to detect all frauds, 
even immaterial frauds.  Further, what time periods are required by paragraph (5)?  
There does not be appear to be any intent to "look back" to any prior periods built 
into the statute, and that should be made clear - the required certification only 
relates to events since the last certification. In addition, relief must be provided 
for the newly hired CEO or CFO.  The time period should only cover the time since 
employment-certainly Congress did not mean that executives have to conduct diligence 
for the period prior to the employment of the signing officer.

How will the proposed certifications be affected by the bankruptcy of the issuer?  
Certainly as issuers approach liquidation, it is anticipated it would be difficult 
to make assertions regarding maintenance of adequate internal controls.  The SEC 
should look to bankruptcy court oversight for comfort, and carve out any issuer 
subject to bankruptcy court jurisdiction.

Finally, the SEC should provide guidance with respect to the certification required 
by Section 906 of the Act, including the manner of filing.  This should be done as 
soon as possible, by update to the telephone interpretations manual or a "frequently 
asked questions" format.  If the Department of Justice is responsible for administering 
this provision, then that Department should provide guidance. The same issues with 
respect to acquisitions, Form 8-K and bankruptcy apply to the Section 906 certification.


Very truly yours,


Steve Quinlivan