April 29, 1997

Jonathan G. Katz, Secretary,

Securities and Exchange Commission,

450 Fifth Street, N.W.,

Washington, D.C. 20549.

Re:Revision of Rule 144, Rule 145 and Form 144 — Release No. 33-7391; File No. S7-07-97 (62 FR 9246, February 20, 1997)

Dear Mr. Katz:

We are pleased to comment on the above-referenced release (the "Release") soliciting comment on proposed amendments to Rules 144 and 145 under the Securities Act of 1933.

This letter contains: (1) substantive comments on certain of the proposals in the Release or regarding certain issues on which comments are expressly sought in the Release and (2) technical comments on how the proposed rules might be modified to better effectuate the Commission’s rule-making objectives.

1.Proposed Amendments to Rule 144

a.Change to the Rule 144 Definition of "Affiliate"

Rule 144 under the Act uses the control relationship standard of affiliation contained in Section 2(11) of the Act, which requires consideration of relevant facts and circumstances in determining whether a person is an affiliate of an issuer. The proposed amendment would exclude from the definition of affiliate set forth in Rule 144 persons who are not executive officers, directors or 10% shareholders.

We support the Commission’s efforts to clarify and limit the scope of the term "affiliate". However, the proposed change will not have the intended effect unless it limits the reach of the concept of "control" as it is used in Section 2(11) of the Securities Act. In narrowing the definition of "affiliate" in Rule 144, the Commission is simply limiting the scope of those who may rely on the safe harbor for sales of control securities, without affecting who is an underwriter within the meaning of Section 2(11). Consequently, it is possible for a person to be regarded as an underwriter under Section 2(11) subject to the registration requirements of the Act, but not to be able torely upon the Rule 144 safe harbor for sales of control securities by virtue of the new bright-line exclusion. For example, a person holding 9% of a class of equity securities of an issuer and having one or more representatives on the board of the issuer may be a "controlling person" under Section 2(11) but not an "affiliate" entitled to rely on Rule 144 to sell control securities.

We believe this result would be anomalous and is unintended. Accordingly, we recommend that the Commission adopt the limitation on affiliate status in such a way that it applies to Section 2(11) as well as Rule 144.

b.Elimination of "Manner-of-Sale" Requirements

We support the Commission’s proposal to eliminate the manner-of-sale requirements for resales of securities in reliance on Rule 144. We agree that the current requirements impose restrictions that do not appear to be in any way related to the purposes of Rule 144. In this regard, we believe that the remaining requirements of Rule 144, particularly the holding period requirement for restricted securities and the volume limitation for both control and restricted securities, are sufficient to achieve the "non-distribution" purpose of the Rule and that theemployment of special selling efforts or privately negotiated transactions should not change the characterization of a sale as not involving a distribution. Further, in our view, elimination of the manner of sale requirement will not adversely impact compliance with Rule 144 because most sales will continue to be effected with or through professional intermediaries and, in any event, the seller will continue to be responsible for compliance with the registration requirements of the Securities Act.

c.Notice of Sale Requirement

The proposed rules would increase the threshold requirements for filing notice with the Commission of transactions made in reliance on Rule 144 from 500 shares or $10,000 to 1,000 shares or $40,000. We agree that, at the very least, the threshold requirements for filing notice should be raised. We believe, however, that the number of shares sold is not particularly meaningful in determining whether a transaction is significant from a regulatory standpoint. Therefore, we would further suggest that the threshold be based entirely upon the dollar amount of securities to be sold in reliance on Rule 144. In addition,we believe that it might be appropriate to eliminate the notice requirement entirely because in most cases the information to be provided in the filing would be required to be reported on Forms 3 and 4.

d.SEC Staff Interpretations of Rule 144

The Commission has further proposed in the Release to codify certain staff interpretive positions. We commend the Commission’s efforts to simplify the use of Rule 144 by codifying existing staff positions in the text of the Rule itself. We suggest, however, that the Commission consider updating the interpretive release relating to Rule 144 (Release No. 33-6099) or, alternatively, publish a list of those no-action letters that the Commission regards as significant in relation to the different paragraphs of Rule 144.

2.Proposed Amendments to Rule 145

Eliminating Rule 145 Presumptive Underwriter Provision

We support the proposal to amend Rule 145 to eliminate the "presumptive underwriter" provisions of that Rule. In our experience, transactions in which affiliates of the acquired company do not become affiliates of the acquiring company should not present any real issue ofunderwriter status; in any particularly abusive cases, traditional factors applied in determining such status should be sufficient to resolve the matter. Where affiliates of the acquired company become affiliates of the acquiring company, the restrictions of Rule 144 will continue to apply.

3.Additional Requests for Comment

a.Revisions to Rule 144 to Further Change the Holding Periods Adopted in the Companion Release.

The Commission’s adoption of amendments to Rule 144 [Release No. 33-7390; File No. S7-17-95 (62 FR 9242, February 20, 1997).] to shorten the holding period requirements applicable to resales of restricted securities will certainly enhance the utility of the Rule. However, as stated in our comment letter, dated September 8, 1995, relating to Release No. 33-7187, we continue to believe that, given the volatility existing in the securities markets, the holding period in Rule 144(d) should be six months, and not one year, and the holding period in Rule 144(k) should be one year, and not two years. In both cases, we believe that such holding periods are sufficient to ensure that persons relying upon Rule 144 are not engagedin a public distribution of securities inconsistent with the Section 4(1) ordinary trading transaction exemption under the Act, and that the periods are long enough to subject the holder to the full economic risks of investment. We do not believe that a reduction in the holding periods would require a correlative restriction in the volume limitations. Nor do we believe it is a useful exercise to impose restrictions based on the size of the issuer or relative holdings of the seller; such restrictions would be burdensome to verify and would likely increase transaction costs without any significant increase in investor protection.

b.Advisability of Eliminating the Trading Volume Tests under Rule 144

The Commission has requested comment on whether Rule 144 should be amended to eliminate the trading volume tests for determination of the amount of restricted securities that may be sold within any three-month period prior to the end of the two-year holding period, and the amount of control securities that may be sold within any three-month period. Elimination of the trading-volume tests would leave the percentage-of-securities-outstanding test as the sole volume limitation. While we generally support theCommission’s efforts to simplify the operation of Rule 144, we believe that the proposed elimination of the trading-volume tests would have the unfortunate effect of limiting the usefulness of the Rule 144 safe harbor. The current volume limitations imposed by Rule 144(e) limit sales under the safe harbor to the greater of the volume of securities specified by the three separate tests set forth therein. Deletion of two of those tests would reduce the utility of the Rule without any correlative benefit. Any benefits to be gained from simplifying the text of Rule 144 as proposed are outweighed by the costs of reducing the Rule’s usefulness in this manner.

c.Hedging Transactions

We are not commenting on Part B of the Release, relating to possible regulatory approaches to hedging transactions, because our Firm, consistent with past practice and in recognition of the diverse interests of our clients, generally does not comment on matters raising broad policy questions under the securities laws.

* * * *

Thank you for this opportunity to comment on the proposed amendments to Rule 144 and Rule 145 and Form 144. We would be pleased to discuss further any questions that the Commission may have in respect of our comments. Please direct any questions to Daniel Dunson at (212) 558-3644, Charles F. Rechlin at (213) 955-8050, Mary C. Moynihan at (202) 956-7680 or David B. Rockwell at (011-44171-710-6565).

Very truly yours,