JAPAN FEDERATION OF BAR ASSOCIATIONS
1-3, KASUMIGASEKI 1-CHOME, CHIYODA-KU, TOKYO 100-0013 JAPAN
TEL: +81 (0) 3 3580 9841 FAX: +81 (0) 3 3580 2866 (International) TEL: 03 3580 9841 FAX: 03 3580 2866 (Japan)
IN/ 56 /2002
March 31, 2003
Jonathan G. Katz
Securities and Exchange Commission
450 Fifth Street, NW
Washington, DC, USA
Dear Mr. Secretary:
Re: File No. S7-45-02
Proposed Rule: Implementation of Standards of Professional Conduct for Attorneys (Release Nos. 33-8186; 34-47282; IC-25920)
The Japan Federation of Bar Associations (Nihon Bengoshi Rengokai) is a mandatory membership organization of all attorneys registered to practice law in Japan ("Japan Attorneys").
We refer you to our comments and concerns regarding the rules under Section 307 of the Sarbanes-Oxley Act of 2002 set out in our letter to the Commission dated December 14, 2002. We would first like to express our gratitude to the Commission for its efforts to address our concerns by exempting in most cases Japan Attorneys from the application of the Final Rule. However, we continue to have the same concerns in relation to the Commission's proposed rules regarding "noisy withdrawal" and the alternative proposal described in Section III.C. of the Commission's proposals (the "Alternative Proposal"). Because in some cases Japan Attorneys will not be exempt from Section 307 insofar as some would not satisfy the definition of a "non-appearing foreign attorney", we write to express our objection to the Commission's noisy withdrawal proposal and the Alternative Proposal.
We strongly oppose the Commission's noisy withdrawal proposal for the same reasons stated in our December 14 letter. Furthermore, the Alternative Proposal does not offer an acceptable solution. Although, unlike the noisy withdrawal proposal, the Alternative Proposal does not result in a direct conflict with the duty of confidentiality under Article 23 of Chapter IV of the Practicing Attorney Law of Japan, we are still concerned that under the Alternative Proposal an attorney's notice of withdrawal would force the issuer to disclose the circumstances related to such withdrawal to the Commission and thus may, in a minority view, encroach on the duty of confidentiality placed on Japan Attorneys. While we understand that Section 205.6(d) of the Final Rule exempts Japan Attorneys from the requirements of the Final Rule to the extent compliance therewith would be prohibited by Japanese law, under Japanese law, Japan Attorneys would, in a majority view, not be prohibited from notifying an issuer of his or her withdrawal from representing an issuer based on professional considerations. In that event, the issuer is required to report such withdrawal and the circumstances to the Commission and thus the Alternative Proposal may have practically the same effect as the noisy withdrawal proposal to the extent that a client would be disincentivized from consulting freely with its attorney. For these reasons, we respectfully recommend that the Commission not adopt the noisy withdrawal proposal or the Alternative Proposal in the current forms of those rules.
Should you have any questions concerning this letter, please feel free to contact us, as we would welcome the opportunity to discuss this matter further.
Japan Federation of Bar Associations