STATEMENT BY SECURITIES AND EXCHANGE COMMISSION CHAIRMAN ARTHUR LEVITT CONCERNING ABA PROPOSED PAY-TO-PLAY ETHICS RULE JUNE 3, 1999

“I am pleased that the ABA Ethics Committee has
recommended a strong rule for adoption by the House of
Delegates and hope that the House will continue to
demonstrate its commitment to end pay-to-play by adopting
this proposal in August.  We are convinced that such
measures can be implemented without interfering with
cherished constitutional privileges and I am glad the Ethics
Committee has found its way to agreeing with us.”

     Pay-to-play is the practice of making political
contributions to elected officials or to candidates for
local office to influence the award of contracts to bring
municipal bonds to market. Both municipal securities dealers
and independent financial advisers have signed voluntary
bans on the practice. Municipal Securities Rulemaking Board
Rule G-37, in effect for five years, restricts pay-to-play
activity by municipal securities dealers.  Lawyers remain
the only group of professionals retained to bring municipal
securities to market that have failed to adopt effective
proscriptions of pay-to-play.

     The American Bar Association House of Delegates
condemned the practice of pay-to-play by lawyers at its
Annual Meeting in 1997 and at last year’s annual meeting,
directed the Standing Committee on Ethics and Professional
Responsibility (“Ethics Committee”) to report to the House,
by the 1999 Annual Meeting, a Model Rule addressing pay-to-
play.

     The Ethics Committee has recommended the House of
Delegates add a new Rule 7.6 to the ABA Model Rules of
Professional Conduct: “A lawyer or law firm shall not accept
a governmental legal engagement or an appointment by a judge
if the lawyer or law firm makes a political contribution or
solicits political contributions for the purpose of
obtaining or being considered for that type of legal
engagement or appointment.”