December 18, 2002
Via E-Mail: email@example.com
Mr. Jonathan G. Katz, Secretary,
Re: Sarbanes-Oxley Act § 307 - Implementation
Dear Mr. Katz:
We are submitting this letter in response to the request by the U.S. Securities and Exchange Commission for comments on the Commission's proposed Part 205 of Title 17, Chapter II of the Code of Federal Regulations, which would establish standards of professional conduct for attorneys who appear and practice before the Commission in the representation of an issuer.
We are members of the Brazilian Bar Association ("OAB"). Accordingly, our comments focus on those aspects of the proposed rules that raise the greatest concern from the perspective of attorneys licensed to practice law in Brazil.
There are a number of companies organized under the laws of Brazil that are, or over the next several years may become, issuers within the meaning of proposed Part 205.2(g). Accordingly, the Commission's rules, if implemented as proposed, would potentially apply to many attorneys practicing law in Brazil and to the relationship between those attorneys and their clients. As discussed below, we believe the Commission should not attempt to regulate the legal profession in countries other than the United States. In addition, we are concerned that application of the proposed rules to attorneys practicing law in Brazil would be unnecessarily disruptive to the relationship between them and their clients without significantly enhancing the protection of investors. It would also be unfair, given the fact that non-U.S. attorneys most likely will not be conversant with U.S. securities laws.
Historically, the regulation of the legal profession in Brazil has been the responsibility of OAB. Given the central role of the legal profession for the functioning of the court system in Brazil, the adoption of standards of professional conduct for attorneys practicing law in Brazil should remain the exclusive responsibility of OAB. We believe it would be inappropriate for the Commission to regulate attorneys admitted to practice and practicing law in Brazil solely because they may from time to time act on behalf of clients whose securities are listed on a U.S. stock exchange or traded on a U.S. inter-dealer quotation system or because they are in the process of conducting a public offering of securities in the United States. Therefore, we urge the Commission, in deference to long-standing principles of international comity, to refrain from attempting to exercise jurisdiction over the legal profession in Brazil or in other jurisdictions outside the United States.
If the Commission were to include non-U.S. attorneys practicing law outside the United States within the scope of its final rules, attorneys practicing law in these jurisdictions would be faced with two sets of potentially conflicting standards of professional conduct. For example, the rules applicable to attorneys practicing law in Brazil contain detailed provisions that apply when an attorney becomes aware that a client seeks to employ the services of the attorney in the commission of an illegal act. However, while these provisions contain safeguards to ensure that the attorney does not participate in the act, it contains restrictions on the "noisy withdrawal" procedure and/or notification to third parties or regulators of the illegal act in breach of the attorney's duty of confidentiality to the client. In Brazil the withdrawal causes the attorney to omit his professionals reasons and to continue with his professional responsibility for the 10 (ten) days following the date of the notice of withdrawal. OAB is unlikely to defer to the Commission's statements in the release proposing the new rules that these rules preempt conflicting bar regulations on this point. Accordingly, if the rules were adopted as proposed, attorneys practicing law in Brazil would be faced with irreconcilable conflicts.
In addition, there are a number of other reasons why non-U.S. attorneys practicing law outside the United States should not be subject to the rules, including the following:
Notwithstanding the above, article 14 (fourteen) of the Introductory Law to The Brazilian Civil Code determines that the laws, acts and decisions from other countries, as well as statements of will shall not be effective in Brazil when violating national sovereignty, public policy and good moral conduct.
For the reasons explained above, we strongly urge the Commission not to include non-U.S. attorneys admitted to practice law outside the United States in the definition of "attorney". We also would like to suggest that the burden, instead, be shifted to U.S. admitted attorneys that actually advise and review the work of non-U.S. attorneys in relation to non-U.S. issuers' dealings.
The comments reflected herein represent solely the views, comments and concerns of the undersigned and do not necessarily represent the views of OAB, the undersigned's law firm or any of the members or clients of such firm. If you have any questions regarding this letter, feel free to contact the undersigned.
Nadine S. M. Baleeiro Teixeira
Maria Fernanda L.de Mello