Bernard E. Klein
3000 Stirling Road
Hollywood, FL 33021
954-981-8800    Fax 954-981-8800

July 29, 2002
Page 1 of 2

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

Re: File No. S7-29-02
Proposed Exemption for Standardized Options From Provisions of the Securities Act of 1933 and From the Registration Requirements of the Securities Exchange Act of 1934

Dear Mr. Katz:

Great move! Larger companies may be able to offer standardized options with the same parameters they offer to their employees, and get a real-world valuation at issuance, if they don't want to use the Black-Scholes valuation. Then stockholders, too, could buy or sell those same options.

What I would also like you (and the Congress) to consider is for management/employee/director ("EMD") options to be subject to the same swing profit rules as apply for equity transactions. That is, a profit made within six months should be returned to the company. This would lead to EMD exercisers holding their options or shares (upon exercise) for at least 6 months and a day, which would lead to exercising at lower prices (to reduce the tax outlay), and reduce the incentive to push the financials or excessively spin the news releases.

Much of the problem we have had with not expensing options has been because the options were allowed to be exercised and the shares immediately sold. We wanted the option holders to have their interests aligned with shareholders, which could be enhanced again if the incentive is to exercise at a low price with a long-term horizon.

Option holders perhaps should be allowed to sell enough shares to cover current taxes on the exercise, along the lines of Citigroup's plan. I don't really like cashless exercises, but if shares are sold only in an amount needed to pay taxes on the current exercise, maybe I'd look past the conflict with stockholders' interests (I want exercisers to hold). I'd prefer to see smaller exercises at first, which over the length of a career would pay for subsequent exercises, and so on, without selling any of the shares obtained from a current exercise.

Although expensing options seems to be where we are headed, and today I would expense all, there may be an argument (that would also satisfy the opponents of expensing) to reduce or amortize or eliminate the expensing calculation, if the interests of the option exercisers are truly aligned with long-term shareholder interests. To reduce or eliminate expensing should require, at a minimum that no shares received upon exercise are sold for some minimum period of time. Choices of time periods could be 6 months and a day, 3 years, and lifetime of service at that company. Shares could be sold at a loss without any time restriction, overcoming the current advice that employees sell to cover their tax liability.

Thank you.


/s/ Bernard E Klein

Bernard E Klein