Locke Liddell & Sapp, LLP

November 26, 2002

Mr. Jonathan G. Katz
U.S. Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549-0609

    Re: File No. S7-40-02

    Comments on Proposed Disclosure About Financial Experts

Dear Mr. Katz:

Based upon a review of the rules proposed pursuant to Section 407 of the Sarbanes-Oxley Act of 2002, it is unclear when the proposed disclosure requirements regarding financial experts will go into effect. For the reasons discussed below, we believe that the proposed disclosure requirements should be phased-in over a reasonable period of time.

In preparing this comment letter, we have performed a cursory review of the composition of the boards of directors of reporting companies comprising the S&P 100. Based on this review, we have determined that only approximately 10% of these reporting companies appear to have a current director with experience as a public accountant or auditor or a principal financial officer, controller, or principal accounting officer of a reporting company. Without further background information, we are unable to determine whether these directors will actually qualify as a financial expert. While such directors may have the requisite background, they may not satisfy all of the attributes of the financial expert definition, or their experience may be in different industries than the reporting company. Furthermore, we understand that the proposed rules give a board of directors the ability to conclude that, in lieu of experience as a public accountant, auditor, principal financial officer, principal accounting officer or controller, the director has similar expertise and experience based on service in another capacity. We, however, are concerned that this may be of limited use due to the narrow definition of financial expert.

Based on the foregoing, we believe that a substantial number of reporting companies do not currently have a director that qualifies as a financial expert under the proposed definition. If the financial expert disclosure requirement goes into effect without a phase-in period, numerous reporting companies (most of which have competent boards that for years have diligently and effectively served the company and its shareholders) will be required to make a potentially embarrassing disclosure in their upcoming annual reports. We believe this would be an unintended and unfair result.

We propose that reporting companies be required to provide the disclosure regarding financial experts no earlier than their first fiscal year ending on or after December 15, 2003. This will provide the board of directors of each reporting company a reasonable amount of time to evaluate whether any its current independent directors qualify as a financial expert and, if not, to locate, nominate and elect a qualified director to the board. In the alternative, it might be appropriate to link the effective date of the financial expert disclosure requirements to the phase-in periods proposed by the self-regulatory organizations (SROs) with respect to the proposed rules regarding the independence of a company's board of directors and its various committees. By including these phase-in periods, the SROs have recognized the difficulty of quickly changing the composition of a company's board of directors.

Best regards,

Gregory C. Hill