Israel Bar
Ethics Committee
10 Daniel Frish Street
Tel Aviv 64731, Israel

December 18, 2002

Via e-mail:

U.S. Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Attention: Jonathan G. Katz, Secretary

      Re: File No. S7-45-02
      Release Nos. 33-8150, 34-46868, IC-25829
      Comments re Proposed Rule: Implementation of
      Standards of Professional Conduct for Attorneys

Mr. Chairman and Honorable Commissioners:

Thank you for the opportunity to comment on the impact of the Commission's proposed Part 205 on attorneys practicing in Israel. I understand that over 120 Israeli companies are registered with the Commission and many Israeli attorneys would be covered by Part 205, as proposed. The National Ethics Committee of the Israel Bar has discussed proposed Part 205 at its latest meeting and has authorized me to write to you on its behalf.

The Israel Bar is a statutory entity, established by the Israeli Parliament via the Israel Bar Law, 5721-1961 (the "Law"). Membership in the Israel Bar is a prerequisite for practicing law in Israel. The Israel Bar is authorized to set ethical standards for attorneys and to discipline attorneys who violate them. The Israel Bar's principal code of legal ethics is the Israel Bar Rules (Professional Ethics), 5746-1986. The Law also contains several rules of professional ethics. These standards apply to all attorneys who practice law in Israel.

Each judicial district in Israel has a Disciplinary Court in which the Israel Bar, through its national committee or one of its district committees, brings disciplinary actions against attorneys who practice in that district. Appeals can be brought before a National Disciplinary Court. Appeals from the National Disciplinary Court can be brought to the Israeli Supreme Court. The judgments of the Supreme Court are published and form a body of case law interpreting the Israel Bar's rules of professional ethics. In addition, the Israel Bar publishes the positions of its Ethics Committees interpreting the rules of professional ethics.

In short, attorneys practicing in Israel are subject to a rigorous regime of rules of professional ethics, some of which overlap with those of Part 205 and some of which conflict with provisions of Part 205. (We refer you to the comment letter of Gross, Kleinhandler, Hodak, Halevy, Greenberg & Co., dated December 18, 2002, for details on the areas of conflict, in their view) Accordingly, the Ethics Committee believes that it would be unnecessary and inappropriate for the Commission to apply its own rules of professional ethics to attorneys based in Israel.

The proposed definition of "appearing and practicing before the Commission" is so broad that it would apply the requirements of Part 205 to many Israeli attorneys who know little about U.S. law in general or Part 205 in particular, such as attorneys who draft summaries of Israeli laws or contracts that are included in reports filed with the Commission. Even Israeli attorneys who are somewhat familiar with the applicable U.S. laws typically serve in the capacity of "local counsel" alongside U.S. counsel. In that capacity, they provide information and assistance to the U.S. attorneys, rely on them with respect to issues of U.S. law and are not in a position to determine whether any action or omission by the issuer would constitute a "material breach" of U.S. law. Accordingly, they should be exempt from the requirements of Part 205.

Even with respect to those attorneys whose practice is based is Israel and who are also admitted to practice law in a U.S. jurisdiction, there may arise conflicts between the ethical duties arising under the Israeli rules of professional ethics and those arising under Part 205. This would place the Israeli attorney in the untenable situation of being forced to choose which set of rules to obey and which to violate, with the threat of penalties in any event.

Finally, please consider the precedent that would be created by applying Part 205 to attorneys based outside the United States. If the Commission adopts Part 205 as proposed, then the corresponding bodies in other jurisdictions may be encouraged to regulate attorneys based in the United States and elsewhere. Attorneys who work on transnational transactions would then be forced to navigate multiple sets of rules of professional ethics to avoid penalty and possibly be faced with irreconcilable rules.

Accordingly, the Ethics Committee respectfully requests that attorneys based in Israel, at least to the extent that they are not acting as the U.S. counsel on the matter in question, be exempt from the requirements of Part 205.

Very truly yours,

Alex Hertman, Adv.
Chairman, Ethics Committee
of the Israel Bar