From: alange@bankofny.com
Sent: Tuesday, May 21, 2002 12:12 PM
To: chairmanoffice@sec.gov; marketreg@sec.gov; rule-comments@sec.gov;
newyork@sec.gov; chicago@sec.gov
Cc: alexlange@mailandnews.com
Subject: Rules to Address Analyst Conflicts

Dear Mr. Chairman and Commissioners,

I am writing in response to the Commission's approval of the "Rules to
Address Analyst Conflicts" published on May 8th, 2002.

The eight points addressed in these rules are certainly a move in the
right direction, however there is room for improvement.

One very important point should be added:  An analyst's employer and all
affiliates must be required to report their **** NET DELTA LONG or SHORT
POSITION at the time of the analyst's report.  It is not enough to
restrict personal trading by analysts and leave their employer in an
undisclosed position of benefit, which in most cases, far surpasses any
personal benefit that an individual analyst might have.  It is also not
enough to require firms to disclose ownership of 1% or more of a
company's equity securities as of month end.  In a security such as
Microsoft, for example, this means that an investment bank can own just
over fifty million shares (2.5 billion USD worth) and still avoid
disclosure.  It also means that as long as an investment bank executes a
swap over month end to reduce their technical long position, for
reporting purposes, the investment bank will be able to skirt the SEC
requirement while maintaining a LONG DELTA POSITION in excess of 1% of
the outstanding shares.  Lastly, the requirements do not address the
possibility that an investment bank might have a short position in an
equity they are covering.

In the final analysis, the only way to correct the huge conflicts of
interest that remain, is to  prohibit Investment Bank's/Advisor's and
their affiliates (or partially owned subsidiaries) from publishing or
distributing any research reports and or buy/sell advice when they have
or will receive any compensation from the company (which is the target
of their report) over a 360 day period.  I understand however, that this
may be an impossible and impractical task.

The suggested amendment to the published rules stated in the first
paragraph is a necessity!  Without it, one of the most critical issues
in this matter will remain outstanding, for it is certainly in the
investment bank's interest to abstain from providing truly insightful
guidance.

I hope the above comments prove to be helpful.
Please feel free to reply if I can be of further assistance.

regards,

Alexander Lange

Note:       ****  "NET DELTA LONG or SHORT POSITION" stated in the first
paragraph is a necessity because sophisticated investment banks will
enter into swaps to flatten out their positions over an analyst report
date if the reporting requirement is stated as their "long or short
position".  "Net Delta Long or Short Position" will take into account
all synthetic derivative positions that can be used to create or hedge
exposure which does not show up in a reported "Share Position".



------------The views and opinions expressed above do not reflect those
of the Bank of New York Co. or any of its affiliates.
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