From: Hartland Paterson [hartland@cae.com]
Sent: Monday, October 21, 2002 3:28 PM
To: 'Rule-Comments'
Subject: Sarbanes-Oxley rule-making by the SEC (s7-21-02)

I participated in a multinational videoconference with senior SEC staff last
week in which participants were urged to provide the SEC with comments in
respect of rule-making to come under the Sarbanes-Oxley legislation (the
"Act"). So here goes.

I work with CAE Inc., a TSX/NYSE-listed Canadian company. We've been public
in Canada for over 50 years but only in 2002 became a reporting issuer in
the US.

A couple of concerns that I'd like to share regarding the Act and the
forthcoming rules to be promulgated by the SEC thereunder:

1.	S. 302 of the Act indicates that the audit committee should appoint
and compensate etc. external auditors. CAE is incorporated under a statute
called the Canada Business Corporations Act (CBCA). It tells us (S. 162
CBCA) that the shareholders, not the directors or any committee thereof,
will appoint the company's auditors. And it tells us that the shareholders
may fix the auditors' remuneration or, failing that, the directors. CAE
normally follows the latter course and invites the shareholders in the
annual proxy circular to let the board fix our external auditors'
remuneration. Our practice is that the Audit Committee of CAE's board
recommends the appointment of our external auditors to the Board which,
assuming it accepts that recommendation as to my knowledge it always has,
recommends the auditors to the shareholders. CAE is expecting the SEC
rule-making to create an exemption for foreign issuers to follow the laws of
their own jurisdiction in respect of appointment of auditors. Failing that,
the SEC, by failing to create such an exemption, will be putting every
CBCA-incorporated US reporting issuer issuer in breach of the Act.

2.	S. 306 of the Act prohibits CAE directors and officers from trading
in CAE shares during "pension plan blackout periods". However the
application of the s. 306 (4) definition of a blackout period would appear
to be nonsensical to non- US companies like CAE inasmuch as we don't have
such blackout periods under our pension plan. What we do have is multiple
requirements from Canadian securities administrators to impose blackouts -
for example, from each quarter-end to 2 business days after we publicly
release our interim/annual results, plus of course blackouts during any
period when insiders may have access to material but undisclosed
information. In the case of CAE, blackouts prevailed for much of 2001 such
that senior officers were seldom able to buy or sell CAE shares. Similarly,
CAE has imposed, in addition to the standard quarterly blackouts, extensive
further blackouts during 2002. CAE hopes that rule-making in respect of s.
306 will take into account both the obvious inapplicability of the defined
blackout period to non-US issuers and perhaps the requirement that such
issuers follow their local rules and disclose publicly any failure so to do.
At least in the case of Canada, I would be surprised if the Act or other US
legislation/regulation on this point was more severe in its protection of
the public interest than the existing Canadian regulatory regime within
which we operate.

Regards,

Hartland Paterson, Vice-President, Legal & General Counsel
CAE Inc.
8585 Côte de Liesse, C.P. 1800 Saint Laurent
Québec, Canada H4L 4X4
514-734-5779 (Tel) / 340-5530 (fax) / 923-2885 (cell)

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