From: William.Minucci@sunlife.com Sent: Friday, November 29, 2002 9:48 AM To: rule-comments@sec.gov Subject: File No. S7-40-02 Proposed rule implementing section 407 of the Sarbanes-Oxley Act of 2002 Release No.: 34-46701; IC-25775; File No.: S7-40-02 Sun Life Financial Services of Canada Inc. is a Canadian foreign private issuer listed on the Toronto and New York Stock Exchanges. This letter is in response to the SEC's request for comments on the above-captioned proposed rule implementing section 407 of the Sarbanes-Oxley Act. We are concerned that the proposed attributes of a "financial expert" may significantly limit the pool of qualified individuals and may result in many issuers with highly qualified audit committees being put in the undesirable position of having to make public disclosure that they do not have a "financial expert" on their audit committee. The substantive issues arising out of the recent governance failures do not arise from lack of qualification, they arise from a failure of implementation. In our view, requirements similar to those in the New York Stock Exchange listing rules that require that audit committee members be financially literate, and that at least one member of the committee have accounting or related financial management expertise, are preferable. If the proposed criteria are to be maintained, we recommend clarification in particular of the requirement that the GAAP experience of the financial expert be referable to accounting matters and experience preparing or auditing statements that present accounting issues that are, in each case, "generally comparable" to those in the registrant's financial statements. We are concerned that a literal interpretation of the current draft could result in an overly narrow view of qualifying background, the result of which, as noted above, could be to unnecessarily limit the number of available candidates and perhaps lead to the undesirable result that many issuers with highly qualified audit committee members will nevertheless feel that they are required to disclose the lack of a financial expert. The proposed Rule states that the financial expert must understand and be able to apply US GAAP and that, in the case of a foreign private issuer, the Board should also consider the person's experience with public companies in its home country, GAAP used by the issuer, and the reconciliation of financial statements with US GAAP. However, note 2 to instruction B.(8) of Form 40-F refers to the financial expert understanding financial statements, and "GAAP used by the registrant in its primary financial statements." The instruction also lists factors that the board should consider, including the person's experience with reconciliation to US GAAP. We read Form 40-F as requiring the registrant's financial expert to be expert with regard to the registrant's financial statements prepared in accordance with the GAAP of its home jurisdiction, rather than expert with regard to US GAAP, and that experience with US GAAP is a factor to be considered by the board but not required. Additional clarification would be desirable. We would be concerned if the intention of the drafting is to require expertise in multi-jurisdictional GAAP reconciliation, again for the reason that this may unnecessarily limit the number of available candidates. Thank you for the opportunity to provide you with these comments. Yours truly, Wiliam R. Minucci Vice-President, Law Sun Life Financial Services of Canada Inc. 416-979-4827 --------------------------------------------------------------------------- This e-mail message (including attachments, if any) is intended for the use of the individual or entity to which it is addressed and may contain information that is privileged, proprietary , confidential and exempt from disclosure. If you are not the intended recipient, you are notified that any dissemination, distribution or copying of this communication is strictly prohibited. If you have received this communication in error, please notify the sender and erase this e-mail message immediately. --------------------------------------------------------------------------- Le présent message électronique (y compris les pièces qui y sont annexées, le cas échéant) s'adresse au destinataire indiqué et peut contenir des renseignements de caractère privé ou confidentiel. Si vous n'êtes pas le destinataire de ce document, nous vous signalons qu'il est strictement interdit de le diffuser, de le distribuer ou de le reproduire. Si ce message vous a été transmis par erreur, veuillez en informer l'expéditeur et le supprimer immédiatement. ---------------------------------------------------------------------------