From: Jspears@tweedy.com
Sent: Wednesday, May 08, 2002 5:22 PM
To: rule-comments@sec.gov
Subject: Comments concerning File No. S7-09-02: Proposed Rule: Form 8-K
Disclosure of Certain Management Transactions

Ladies and Gentlemen:

I am a Managing Director and analyst/portfolio manager at an investment
counseling firm, Tweedy, Browne Company LLC, which manages approximately
$8.5 billion of equity portfolio assets for individuals and institutions,
of which approximately $3.7 billion is U.S. equity assets.  I and other
analysts at Tweedy, Browne  are frequent users of information pertaining to
transactions by "insiders" in their own companies' shares.

I support proposed changes that would decrease the amount of time between
an insider's transaction and the public disclosure of that transaction, and
increase the level of disclosure concerning insider transactions.  The
proposed "8-K Disclosure of Certain Management Transactions" would increase
the timeliness, depth of disclosure and general transparency of insiders'
transactions, and I support this proposal.  I applaud and wish to thank the
SEC for proposing major improvements in the disclosure of insider
transactions.  As an investor in equities throughout the world, I believe
that the new insider disclosure proposals, if enacted, will "raise the bar"
and set a new high standard that I hope other countries will emulate.

With respect to some details, here are some comments:

1.  The "Sample Item 10 Disclosure (a) (3) Exercises/Conversions of
Derivative Securities" does not include the date of expiration of the
option or other security that is being converted into common stock.  I
believe that it would be beneficial to investors to have the expiration
date included in this disclosure.  Here is why: Useful inferences or useful
questions can be gleaned by, for example,  observing that the CEO of a
particular company is exercising an option on , say, May 5, 2002, and
immediately selling his/her shares, even though the option expires on ,
say, May 5 , 2010.  An inference here would be that the particular insider
is  making an active decision to sell the stock:  In this example, the
insider,  who is exercising the option 8 years before the option is to
expire, is forfeiting a "free" 8-year call option, and forfeiting, in
effect,  the possible future gain from the option over the next 8 years in
order to  exercise the option on May 5, 2002, buy the stock, and then sell
it immediatlely.    Why would the insider be giving up 8 years of possible
upside potential on an option unless he/she thought the stock should be
sold? ( of course, this example leaves aside possible personal reasons for
selling a stock such as need for funds to buy a house, etc.)   Exercises of
options and immediate sale of shares several years before expiration of the
option provides an interesting clue as part of an overall assessment of a
public company and its stock.  ( By comparison, in the preceding example,
an exercise of the option near the time of expiration would not suggest an
active sale decision by the particular insider because the exercise of the
option would be required or, in a sense, involuntary, if there was an
unrealized gain in the particular option that was to expire in the near
future :  The insider would forfeit the gain on the option if he/ she did
not exercise before the expiration date. )

Similarly, it is interesting to observe insiders who exercise options to
buy stock  at a time that is several years before the expiration of the
option and then continue to hold onto their acquired shares.  An inference
in this case would be that the particular insider made an active decision
to buy the stock and have subsequent prospective gains be treated at
favorable long term capital gains tax rates instead of the typically much
higher ordinary income tax rates that apply to gains from the exercise of
an option and the immediate sale of the acquired shares.   The insider
would be giving up a free option that extended many years into the future
in order to obtain capital gains treatment on the hoped-for increases in
the value of his/her acquired shares, and this would suggest a very
positive opinion concerning the particular company's prospects and
valuation by that insider.

2.  The $100,000 threshold for required reporting of insider transactions
in two days:    I wonder if this could be "gamed" by insiders who could
purchase just under $100,000 worth of stock each day for several days?

3.  It wasn't clear to me why the existing Section 16(a) disclosure of
insider transactions by the tenth day following the end of the month would
still be required if the proposed swifter reporting of insider transactions
under "Form 8-K Disclosure of Certain Management Transactions" went into
effect.   It would be more convenient and efficient-- for both investors
and the preparers of the insider information-- to have all of the
information that is contained in the Form 4 and the proposed Form 8-K
incorporated all in one place in the proposed 8-K.   It would be
inconvenient to have to investigate a transaction that was reported 2 days
after the transaction occurred and then have to look again for some
additional details concerning the same transaction that would be reported
in a Form 4 that would be filed within 10 days after the end of the month.
I support fast disclosure of insider transactions--all in one filing, or ,
perhaps as suggested, by attaching a Form 4 to the company's Item 10 Form
8-K that reports the same transaction.


Additional comments that are somewhat related to the general topic of
disclosure of insider transactions:

1. It would be useful to see disclosure of acquisitions of a particular
company's debt by its insiders.  For example, if the CEO of, say, a telecom
company  whose debt trades at 30 cents on the dollar is buying that debt
with his own money and , at the same time, selling his own company's stock,
that would be interesting to know. Required disclosure of debt transactions
could provide useful information to investors.

2.  It would be useful, in attempting to assess a public company's
management and its Board of Directors,to have easier-to-obtain  disclosure
of the "re-setting" of option exercise prices upon a decline in the price
of the particular company's stock.  Of course, re-set information can be
unearthed by reviewing historical documents, but it would be handy if the
disclosure of this practice was all in one place in a filing each year.  It
would be good to have a plain record of historical re-set behavior in one
easy-to-find place.


Sincerely,



John D. Spears