Subject: Rule 102(e)(1)(ii)
Author:  Nancy L. Ryder
Date:    8/11/98 8:31 PM
     
     
I would like to express my reservations about paragraph (B)(1) of the 
Rule 102(e) amendment.  The paragraph is worded so vaguely that it could 
be interpreted in widely different manners by individual courts.
     
While on the face of the text, it seems to refer to a gross error or 
oversight, the words "known or should have known" phrase could be open 
to abuse.  Also, I think that the words "unreasonable violation" are not 
specific enough (not to mention redundant--whoever heard of a reasonable 
violation?).  I think that there should be some description of the 
extent of impaired information that would constitute negligence.  Also, 
the paragraph appears to read that the accountant could be guilty of 
negligence for APPEARING to have misleading content, or for RISKING the 
appearance of misleading content, regardless of whether or not the 
content is finally determined by a court or other body to be ACTUALLY 
misleading.  I think that this paragraph's wording is going to open a 
floodgate of lawsuits from every institutional investor whose hot tip 
didn't become the next Microsoft!
     
Finally, I also think that it is unreasonable to hold accountants to a 
different standard than lawyers dealing with the same material.  Lawyers 
have more extensive schooling, often have better research material (not 
to mention numerous clerks to collect it).  In my corporation, they often 
have the final review of all SEC documents, as they are considered to be 
the experts in corporate law.  How then, are they less liable for 
misinformation than the accountant, whose knowledge is held by most 
corporations to be less than that of the lawyer?
     
In conclusion, I hope you will take my comments into consideration and 
refine paragraph (B)(1), as well as extend the entire amendment to other 
professionals involved in SEC document preparation.