Date:    3/24/98  10:47 AM

Mr. Jonathan G. Katz
Secretary
Securities and Exchange Commission
rule-comments@sec.gov
     
Re: Proposed changes to Rule 701, File No. S7-5-98
     
Dear Secretary Katz,
     
Ben E. Keith Company is a closely-held Texas corporation engaged in 
wholesale distribution of food, restaurant supplies and equipment, and 
beverages. Your initiative to revise Rule 701 is highly commendable and 
I welcome the proposed changes.  I have the following comments.
     
Rule 701 has particular advantages for the closely-held unregistered 
company which wishes to provide incentives to its employees, but which 
does not engage in stock transactions for the purpose of raising capital 
and, therefore, has few or no other stock issuances.  That advantage has, 
in the past, been restricted by many of the provisions which are proposed 
to be eased or eliminated in the proposed rule.  Certain proposed 
additions to the rule complicate that  advantage for the small firm which 
is not - and does not desire to be - sophisticated in securities law 
matters.
     
For example, the requirement that disclosure be made of the risk factors 
associated with investment in the securities will be, without more 
definition, daunting to a firm which has never before been required to 
analyze and formulate those risks.  It is a task which, of course, 
should be undertaken only by persons with securities law experience, 
whether attorneys or laymen.  As such, it may very well prevent some 
firms from utilizing Rule 701 because of that expense or may lead others 
to attempt to satisfy that requirement without experienced assistance, 
thus risking unintended misrepresentation or omission.  While the thrust 
of recent S.E.C. rulemaking has been away from standardized or 
boilerplate language, technical assistance and a safe harbor rule for 
stating risks would be of great assistance to many small firms if 
disclosure of risks is required.
     
I would recommend elimination of the disclosure requirement for all 
officers (not merely executive officers), directors, and general 
partners and the issuance of a guide and safe harbor for the rest.  Such 
a guide could, perhaps, take the form of an elaboration upon the Risk 
Factors section and Appendix B of the instructions for the SCOR form.
     
The combination of the requirements that the disclosed financial 
statements must be those "required to be furnished by Part F/S of Form 
1-A" and that the statements must as of a date no more than 180 days 
prior to the date of sale would seem to clash with the requirement in 
Part F/S that the required balance sheet be not less than 90 days old. 
One would presume that the Rule 701 requirements were intended to 
supplant the 90 day requirement, but clarification would be helpful. 
Similarly, Part F/S requires audited financial statements to be used if 
available for other purposes, but Release 33-7511 would seem to 
contemplate that audited statements would never be required.  This point 
should also be clarified.  If audited statements are required if 
otherwise available, but are prepared for such other purposes only 
annually, when an audited statement is more than 180 days old it is not 
clear from Part F/S or the proposed rule whether the audited statement 
should be used or whether a more recent unaudited statement should be 
used.  This should also be clarified in the final Rule 701.
     
In relation to the Part F/S requirement that GAAP-compliant financial 
statements be provided I believe a more substantive objection can be 
credibly heard that while many smaller companies have an annual 
GAAP-compliant audited financial statement, their interim statements are 
not entirely GAAP-compliant.  For these companies, the requirement of 
GAAP-compliant statements may require them to expend substantial extra 
sums in bringing their interim statements to GAAP compliance or may cause 
them to limit sales under their options or other arrangements to the 180 
day period following the GAAP-compliant statement.  For companies which 
have an annual GAAP-compliant audited statement, the rule might provide 
for delivery of that annual statement, plus a more recent non-GAAP interim 
statement accompanied by a statement of how the interim statement varies 
from GAAP without quantification of those variations.
     
Additional guidance would also be appropriate for the timing and 
amendment of disclosure in relationship to stock options.  Such options 
may not vest for a number of years after issuance and may be exercisable 
over a long period of time in one or more exercises.  Disclosures made 
at the time of the issuance of an option may not be sufficient some 
years later prior to the first exercise.  Disclosures made prior to the 
first exercise may not be sufficient for exercises made some years 
later.  The proposed rule would appear to require disclosure prior to 
each sale, if the last prior disclosure made in connection with such 
arrangement was more than a reasonable period of time in the past.  The 
financial statement section of the disclosure provision would seem to 
limit that period to not more than 180 days.
     
A transition provision should be added to the rule to clarify whether 
the disclosure requirements or other requirements added or which might 
be added by the revision (e.g. use of Form 701) affect sales made under 
stock options issued pursuant to Rule 701 prior to revision.  Due to the 
considerations noted above, especially the GAAP requirement, it would be 
my recommendation that sales pursuant to existing options be expressly 
grandfathered by the rule.
     
I strongly recommend against imposing any filing requirement.  Many 
privately-held companies do not wish to publicize any facts about their 
companies.  Sales of stock under Rule 701 are by their nature non-public 
events and public disclosure would add little or nothing to protect the 
transferees.  If there is a concern that the consultant and advisor 
provisions of the rule could be used as a sham and that a filing 
requirement might help prevent such a sham (I express no opinion on that 
issue), perhaps filing could be required only when sales are to be made 
to consultants or advisors.
     
Thank you for the opportunity to comment.
     
     
Sincerely,
     
Stewart David Greenlee
General Counsel
     
Ben E. Keith Company
Post Office Box 2628
Fort Worth, TX 76113
817-877-5700
daveg@benekeith.com