Keck Graduate Institute
November 25, 2002
Jonathan G. Katz, Secretary
Re: File No. S7-40-02
Dear Mr. Katz:
Thank you for the opportunity to comment on Section 407 of the recently enacted Sarbannes-Oxley Act. My perspective is that of an independent director of four mutual funds managed by Capital Research and Management Company, Los Angeles. My concern is that the proposed requirements to qualify as an "audit committee financial expert" precludes too many individuals who would seem to be fully capable of exercising appropriate judgment on matters that come before a fund's audit committee.
Please excuse me for using myself as an example. At times I have been a member, and committee chair, of audit committees of the funds that I serve. Based upon the following qualifications, I have felt fully capable of rendering appropriate judgments:
As I read the proposed regulations, these experiences of mine would not qualify me as a "financial expert" as required by the Act. That being the case, I submit that the proposed qualifications are simply drawn too narrowly.
However, were the proposed qualifications redrawn so that I did qualify as a "financial expert," I would be very reluctant to serve in such a capacity were I to be so identified in filed documents and published reports. Such a designation would, it seems to me, greatly increase the liability to which a single director would be exposed. I would suggest, instead, that the SEC simply charge the fund directors to assure themselves that audit committee membership includes one or more such financial experts, unidentified by name.
Thank you for considering my views.