From: Peacock, Dexter [DexterPeacock@akllp.com]
Sent: Friday, November 15, 2002 2:33 PM
To: SEC (E-mail)
Subject: File No. S7-40-02

	Gentlemen and Ladies:  I have practiced securities law at a large law 
firm for 35 years.  I have also served as a director of three NYSE companies 
and two banks, and am currently a director of a NYSE-listed company.  I have 
served on the audit committees of two of the NYSE companies and chaired one 
of them.

	I am concerned that the Commission greatly overestimates the number of 
people who can meet the requirements of Section 407 of Sarbanes-Oxley and who 
will be willing to serve in the capacity of a "financial expert" on an audit 
committee.  I understand that the basic attributes of "financial expert" are 
set forth in federal law, and that the Commission cannot change them by rule.  
But the Commission does have considerable lattitude in how to interpret this 
law, and it needs to do so as broadly as it can.  I will not undertake an 
exhaustive discussion of the interpretative issues, but will call two to your 
attention.

	1.  Knowledgeable people who are considering whether to make themselves 
available as "financial experts" are  worried about the first attribute--"under-
standing generally accepted accounting principles".  A retired partner with 
30 years of public company auditing experience at a Final Four accounting firm 
recently remarked to me that he was afraid he could not meet the "understanding 
of GAAP..." test, because he had been out of public accounting for two years and 
was "rusty" on some GAAP principles.  Will this attribute be interpreted to 
require a current ability to pass the GAAP portion of the CPA exam?  This question 
is not as absurd as it may sound; if the Commission is going to focus on substantive 
knowledge of GAAP, it is going to be propelled some distance down this very road.  
In my opinion, "knowledge of GAAP" ought to be interpreted the same way that we 
mean when we speak of a lawyer's "knowledge of the law"--which does not mean that 
the lawyer knows off the top of his head what the answer to a specific legal question 
is, but rather that he is familiar with the area, knows where to find the answer 
quickly and knows how to interpret what he finds.  I strongly urge the Commission 
to issue a reasonable interpretation of this attribute so that most retired auditors 
and virtually all CFO's are not disqualified out of hand.

	2.  What does experience in the preparation or auditing of financial statements 
of "generally comparable" issuers mean?  I would suggest the Commission limit its 
elaboration of these words to its already-proposed requirement that  such experience  
have been acquired in a public company, and specifically reject the interpretation 
that such experience must have been obtained in the same or a similar industry.  
Otherwise, we are going to find ourselves with not only a small pool of people but 
one further stratified by the industries in which they work or worked.

	My principal concern, however, is that the stock exchanges appear to be headed 
for an incorporation of the SEC's definition of "financial expert" in the audit 
committee requirements contained in their listing agreements (see, e.g., NASDAQ's
October 9, 2002 Rule 19b-4 filing).  If this development proceeds in the direction 
it appears to be going, it will mean that every listed company will have to have a 
"financial expert" on its board.  I simply do not think there are enough people who 
can meet these requirements to provide every listed company with a "financial expert."  
In fact, I think the Commission may be dismayed at how small the pool of "financial 
experts" turns out to be, even if it takes a liberal approach to the Section 407 rules.  

	In any case, there is an alternative.  The market can decide for itself how 
important the presence of a financial expert is, on a company-by-company basis.  If 
companies are unable, despite a continuing and good faith effort, to attract a financial 
expert to their board, then we should leave them to the discipline of the securities 
markets.   I can find nothing in Sarbanes-Oxley that requires a different result. I 
think the Commission at least needs to contemplate the possibility (I think the 
probability) that hundreds of companies will face the theoretical requirement that 
they delist if all companies have to find a "financial expert", which would have a 
catastrophic result on their stockholders.  I say "theoretical", because this will 
never be permitted to happen.  But it will embarrass the exchanges and the Commission, 
will set back corporate reform, and can be avoided with the application of a reality 
check.

										Dexter Peacock