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Office of the Chief Accountant:
Letter from SEC Chief Accountant to FASB and AcSEC Regarding Fair Value Accounting for the Securities Industry

May 11, 2001

Mr. Timothy S. Lucas
Director, Research and Technical Activities
Financial Accounting Standards Board
401 Merritt 7
P.O. Box 5116
Norwalk, CT 06856-5116

Mr. Mark V. Sever
Chair, Accounting Standards Executive Committee
American Institute of Certified Public Accountants
1211 Avenue of the Americas
New York, NY 10036-8775

Dear Tim and Mark:

Jackson Day and I recently met with members of the Dealer Accounting Committee of the Securities Industry Association (DAC) and an item we discussed was fair value accounting. The DAC asked us if we would support a project by the Financial Accounting Standards Board, which would require fair value accounting for trading and market-making activities for those in the securities industry. The staff expressed support for a project that would advance a fair value accounting model for the securities industry provided it included all financial instruments (that is, we believe the project should not be limited solely to trading or market-making activities).

We also suggested, given the industry nature of the potential project, that the DAC also contact the Accounting Standards Executive Committee of the AICPA. If you would like to discuss this further, please do not hesitate to call Jackson Day or me at (202) 942-4400.

Yours truly,

Lynn E. Turner
Chief Accountant

cc: Ed Jenkins, Chairman, FASB
Ms. Joanne Pace, Chair, DAC


Modified: 07/20/2001