Subject: File No. S7-16-98
Author:  David Malloy 
Date:    8/12/98 8:01 AM
     
     
I am offering my comments to the proposed amendment to Rule 102(e) of 
the SEC Rules of Practice.  I support the position of the American 
Institute of Certified Public Accountants (AICPA) express my concern 
that the proposed amendment would diminish the effectiveness of 
accountants in their discharge of fiduciary responsibilities before the 
SEC.
     
I reiterate the concerns expressed by the AICPA:
     
1)  A single act of simple negligence should not constitute "improper 
professional conduct" for purposes of Rule 102(e).  The state boards of 
accountancy and professional organizations discharge that responsibility 
in an effective manner.
     
2)  The public is best served by accountants free from bias and by 
accountants willing to take a stance on issues regarding financial 
matters.  The punitive measures drastically imposed by the amendment 
obviously restricts accounts in the free exercise of their judgement to 
the detriment of our financial reporting system.
     
3)  Rule 102(e) provides no basis for sanctioning simple acts of 
negligence.  The rule is supposed to serve a remedial, not punitive, 
purpose.  The issue relative to Rule 102(e) is to protect the integrity 
of the Commission's processes, not to serve as an enforcement mechanism. 
Because a single act of negligence does not give rise to a reasonable 
expectation concerning future behavior, or misbehavior, such an act 
cannot pose a threat to the Commission's processes.
     
4)  The proposed rule does not directly further the SEC's purpose of 
ensuring accurate and complete disclosure insofar as the proposed rule 
would only require the presence of a "substantial risk" that a document 
might be materially misstated.  The proposed rule thus adopts a standard 
that could result in an enforcement proceeding against the professional 
even where no misstatement has occurred.
     
5)  The proposed amendment unfairly singles out accountants to a more 
stringent standard of practice and diligence than any other type of 
professional that practices before the Commission.  This is 
discriminatory.  
     
In summary, the Commission should reconsider the amendment proposed for 
Rule 102(e).  The intent of the Commission to create greater consistency 
regarding the application of Rule 102(e) is commendable, however, the 
language and practical application of this amendment is discriminatory 
and will harm accountants seek to practice before the SEC with integrity 
and independence.
     
Thank you for your consideration.
     
Sincerely,
     
David S. Malloy
Controller
     
KIDS II, INC.
1015 Windward Ridge Parkway, Alpharetta, GA 30005