June 24, 2002

Jonathan G. Katz
Secretary
U.S. Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549

Re: File No. S7-09-02

Dear Mr. Katz:

The Association for Financial Professionals (AFP) welcomes the opportunity to comment on the Securities and Exchange Commission's (SEC) Form 8-K Disclosure of Certain Management Transactions. The proposal would require public companies to file Form 8-K reports describing directors' and executive officers' (1) transactions in company stock, including derivatives, (2) arrangements to purchase or sell company stock to satisfy the affirmative defense conditions of Exchange Act Rule 10b5-1 and (3) loans made or guaranteed by the company or an affiliate. The proposal would change the filing date and reporting format for transactions in company stocks and derivatives. It also would establish new reporting requirements for the other two items noted above. AFP will comment on certain aspects of the proposal.

The membership of our Association includes approximately 14,000 financial executives employed by over 5,000 corporations and other organizations. Our members represent a broad spectrum of financial disciplines and their organizations are drawn generally from the Fortune 1000 and middle-market companies in a wide variety of industries, including manufacturing, retail, energy, financial services, and technology.

Currently, there are a variety of reporting dates, depending on the type of insider transaction. Generally, for a transaction in company stock, a Form 4 must be filed by the 10^th day after the end of the month in which the transaction occurred. The proposed rule would require that a Form 8-K be filed instead within two business days following a transaction or loan with an aggregate value of $100,000 or more, with respect to a director or executive officer. For those transactions and loans under $100,000, the proposed rule requires that companies file a Form 8-K by close of business on the second business day of the week following the week in which the transaction occurred.

AFP opposes the proposed two business day filing requirement and the variable filing dates. Many reportable company stock transactions are in the form of derivative arrangements, structured as a hedge against fluctuations in stock price. A driver of our opposition is concern over the impact on the quality of the information reported, as a result of the proposed tight time constraint. Also, because of the complex nature of derivatives transactions involving sales of company stock that directors and executive officers may transact, compressing reporting to two business days could result in significant inadvertent SEC violations, as well as potential compromises in the quality of reporting. Regarding filing dates, there should be one time period for all transaction types, which should not vary based on which day of the week that the transaction occurred.

The following process for a derivatives transaction illustrates the complexity and time involved. There may be a long lead time to set up the transaction and make the trade. Because of the length of time for the process, the actual date of the transaction may not be immediately known. There also will be a delay between the trade date and when the broker informs the director or executive officer. After the director or executive officer notifies the company compliance-reporting department, there will be an additional delay while the compliance-reporting department reviews the filing with the general or outside counsel and subsequently files the Form 8-K with the SEC.

AFP recommends that proposed filing date for the Form 8-K be within seven days after each specified measurement date for all events covered by the proposed rule. This addresses our concern that the two business day filing requirement could decrease the quality of reporting and result in inadvertent SEC violations. It also reduces filing variability caused by the proposed requirement to file the Form 8-K by close of business on the second business day of the week, for transactions and loans under $100,000. For example, under the proposed rules, a company would have up to seven business days to report an event occurring on a Monday. However, a company would have less than three business days to file for an identical event that occurred late on a Friday. In addition, it simplifies the reporting process if there is one filing requirement for all events.

The proposed rules also establish a de minimus amount whereby company stock transactions and loans under $10,000 could be deferred from filing until the cumulative amount per director or executive officer exceeds $10,000. We oppose the de minimus cumulative amount of $10,000 per director or executive officer because such an amount is not of significant interest to investors and, as proposed, may require reporting of company-matched stock in a 401(k) plan. AFP therefore recommends that the de minimus cumulative amount be increased to $25,000. Such an amount would be consistent with the policies of many companies, with regard to reporting insider transactions and loans to the SEC.

The proposed rules require that companies also report on Form 8-K information about employee benefit plan grants and awards. Section III.B.1. on reportable and exempt transactions provides an exemption to the requirement for "routine acquisitions (e.g., through payroll deduction) pursuant to broad-based, tax-conditioned employee benefit plans and related excess benefit plans." It is not clear, however, whether an employer's matching contribution to an executive officer's 401(k) plan, and other benefit plan transactions, would be an exempt transaction. We recommend that the SEC clarify the proposed Form 8-K reporting requirements for employee benefit plan grants and awards.

We understand and appreciate the SEC's efforts to provide investors with timely disclosures of potentially useful information regarding management's views of the performance or prospects of the company. However, the filing deadlines for transactions and loans over $100,000 could result in decreased quality of information and inadvertent SEC reporting violations, and the $10,000 de minimus amount would result in excessive administrative burdens and costs on public companies. We therefore summarize our recommendations to improve the SEC's proposed rules, as follows:

• Require the filing of the Form 8-K for all covered events be within seven days of the transaction date.

• Increase the de minimus cumulative amount for deferral of the filing requirements to $25,000.

• Clarify the proposed reporting requirement for employee benefit plan grants and awards.

AFP appreciates the opportunity to comment on the SEC's proposed rule and welcomes the opportunity to meet with you to discuss any of our positions. If you have any questions, please contact Gregory Fletcher, AFP's Director of Financial Accounting and Reporting, at (301) 961-8869.

Sincerely,

Alvin C. Rodack, CCM Associate Treasurer The Ohio State University Chairman Government Relations Committee

James R. Haddad, CCM Vice President Corporate Finance Cadence Design Systems, Inc. Chairman, Financial Accounting and Investor Relations (FAIR) Task Force