Subject: File No. 4-573
From: Jeffrey A Miller, Ph.D.
Affiliation: Investment Manager, former Professor

October 28, 2008

I am a former public policy college professor who is now an investment manager.

I have written extensively on the problems in implementing FAS 157. (See this article as an example: Like many other critics of the death spiral induced by the implementation of this plan, I strongly embrace market pricing when it generates accurate values.

The problem is that these values do not accurately portray the actual performance of the underlying loans.

Many others have noted the liquidity issues, so my comment takes a different approach.

I hope that the SEC will examine carefully the interaction between trading in the Credit Default Swap market and the resulting marks for "innocent" financial institutions. Some of the marks, including the ABX, are drawn directly from the CDS markets. If these markets are flawed or manipulated, the widespread implications should be considered.

As an experienced market professional, trading equity options for over twenty years, I have noted a pattern of trading. This pattern targeted various firms through the CDS market, included the purchase of put options, and probably included short sales in the targeted financial stocks.

There are two problems:

1) The trading in the specific companies, possibly involving manipulation. I can only observe what I see. The resources of the SEC can investigate this.

2) The implications for "innocent" institutions, whose holdings are marked down, despite performance of the loans and the ability to hold to maturity.

The failure to accurately evaluate assets of financial institutions is a contributing cause for the massive, and possibly exaggerated, de-leveraging in financial markets.

It is possible that these factors have contributed to a misplaced loss of confidence in the entire financial system. The cost to the average retirement investor is enormous.

I understand the principle of mark-to-market, but the implementation must be done accurately. A wise accountant told me that if this had been introduced fifteen years ago, there would have been no problem.

Perhaps it is time to suspend this process while we learn how to do it right.