  We present two newly-discovered compact elliptical (cE) galaxies, exhibiting
clear evidence of tidal steams, and found during a search of SDSS DR7 for cE
candidates. The structural parameters of the cEs are derived using GALFIT,
giving effective radii, Re, of 388 and 263 parsecs, and B-band mean surface
brightnesses within Re of 19.4 and 19.2 magnitudes per arcsec squared. We have
re-analysed the SDSS spectra, which indicate that they possess young to
intermediate-age stellar populations. These two cEs provide direct evidence, a
"smoking gun", for the process of tidal stripping that is believed to be the
origin of M32-type galaxies. Both are in small groups with a large spiral
fraction, suggesting that we may be seeing the formation of such cE galaxies in
dynamically young environments. The more compact of the galaxies is found in a
small group not unlike the Local Group, and thus provides an additional model
for understanding M32.
