From: bob shealor [bshealor@swbell.net]
Sent: Wednesday, November 20, 2002 6:03 PM
To: rule-comments@sec.gov
Subject: Sarbanes-Oxley Act Comments

Wednesday, November 20, 2002
Re: File No. S7-57-40-02
Dear Sirs:

I am a consultant in the international field.  I have had several 
discussions with clients regarding provisions of the Sarbanes-Oxley Act 
of 2002 which seem particularly disturbing and I believe represent 
unintended consequences of otherwise positive legislation.

The Act was passed to prevent re-occurrences of the violations 
promulgated by companies such as Enron, Tyco and WorldCom in the misuse 
of corporate funds.  The American economy will be well served if this 
prevents future business fraud.

On the other hand, the sweeping language of the Act seems to prohibit 
certain common business practices that have been implemented simply to 
improve the efficiency of internal company administration.  The business 
practices we are concerned about are tangentially related to executive / 
officer loans, namely:

Company Credit Card: A company-sponsored card allows business expense 
debt to be credited to the account until it is cleared by the 
cardholder.  The issuer of the card is usually protected in that the 
company guarantees the debt.  This could be construed to be a company loan.

Cashless Stock Option Exercise: Although this process does not involve 
an accounting charge to the company, a cashless SO exercise is performed 
by a stock broker only after the implied understanding that the company 
is underwriting the transaction costs and promising to deliver 
underlying securities to complete the transaction.  This also could be 
construed to be a company loan.

Relocation Allowances / Advances: Home equity loans and / or relocation 
expense advances made to expedite the relocation process.  This also 
could be construed to be a company loan.

International Assignment Tax Equalization:  American companies generally 
assign employees oversees on the understanding that their ultimate 
global tax liability will be no greater or less than they have if they 
were to remain in the United States earning the same level of income.  
This is the only way that a company can obtain the talent needed to 
staff foreign operations.  Because of the myriad of tax jurisdictions 
and fiscal periods associated with an international assignment, there 
are inevitably company payments made to cover gaps between filing 
dates.   This also could be construed to be a company loan.

Solution:

The simple solution to these apparent officer / executive loan 
situations is to insist that the company cash advance benefit that would 
be available to the officer / executive is equally available to all 
company employees and made in accordance to a company policy that 
applies to all company employees.

With that administrative interpretation, the Sarbanes-Oxley Act of 2002 
will protect corporate coffers from being plundered by executives while 
concurrently allowing efficient corporate administrative activities to 
continue.

I would be happy to discuss any and all of these suggestions if you want 
further background data.

Cordially,

Bob Shealor
HR Sense         
Houston, Texas

713 977 8552