December 17, 2002

Via E-Mail:
and Regular Mail

Johnathon G. Katz, Secretary
Securities and Exchange Commission
450 Fifth Street, NW
Washington, DC 20549-0609

Re: Limited, but absolutely necessary comments
respecting the draft proposed rule mandated by
Section 307 of the Sarbanes-Oxley Act of 2002.

Dear Mr. Katz:

We are most interested in the development of the new, proposed rules, as they progress to establish new norms of conduct in a very complex arena, that is also part of a very litigious, contentious and "in your face" environment.

Section 307 of the Sarbanes-Oxley Act directs the Commission to establish minimum standards of professional conduct for attorneys appearing and practicing before the Commission in any way in the representation of issuers, which require attorneys to report material violations of the securities laws, breaches of fiduciary duties, or the like to (1) the client's chief legal officer or its CEO, and (2) if appropriate responses do not occur, requiring the attorney to report the evidence to the audit committee or the board.

It appears the Commission has strayed from the mandate, leaving itself open to future attack, by attempting to continue to promulgate rules that are broader, more harsh, and different than the enabling statute permits. Aaron v. SEC. Moreover, many of the provisions of the proposed rule are too broad, contain undefined terms, and fail to differentiate between the very different types of attorney-practitioners it is intended to cover.

In our zeal to be expansive, creative and responsive matinely manner, we had best collectively "stop, look and listen," with our "thinking caps on," before we create an environment that makes the attorney/gatekeeper provisions so unworkable that the entire corporate governance apparatus is mired in lawsuits, bar complaints, and Rule 102 (e) proceedings. In our humble view, as former Enforcement staff attorneys and trial counsel, and practitioners in this field every day for the past five to thirty-five years, we believe the following two items must be further addressed, defined, and otherwise re-thought and re-engineered:

  1. Differentiation, by definition, responsibility, and potential penalty, between (a) in-house Jr. versus Sr. counsel; (b) Jr., Sr., and/or principal outside securities counsel (and, then, how do you differentiate responsibilities in those circumstances where there are more than one outside firm giving securities advice); and, (c) "defensive" regulatory/investigative/enforcement action teams (whose duties, responsibilities, actions, and advocacy derives from the Fifth Amendment prongs of due process and protection against self-incrimination standards).

  2. Notwithstanding the context (see categories above) in which alleged improper conduct occurs, the attorney's duties should be confined to disclosure limits within the client only. A requirement to disclose improper, illegal, civil and/or criminal conduct of a public company client and/or its officers, directors or employees, to the Commission and/or the public, severely runs afoul of all state legal ethic rules, and client confidentiality provisions. Moreover, so-called "noisy exits" can only be challenged and debated as proper or improper, and sufficient or insufficient - - leaving the attorney(s) and firm(s) at risk of a client suit for unethical misconduct, while being prosecuted by the Commission under Rule 102 (e) - - or, perhaps, under Rule 10 b-5 - - for insufficient disclosure, or worse.

Until the basic problems are unraveled, identified, defined, and evaluated in the separate contexts in which future fact-patterns will arise, the current proposed rule is fatally flawed, and has the potential for creating chaos, not consumer confidence.

The ultimate responsibility for SEC compliance has to stay at, and continue to be the responsibility of the public company issuer and its designated officers, directors and committees. Special rules for other, or outside professionals must, first, recognize that basic tenant. Thereafter, we must carefully dissect the duties and responsibilities of lawyers, as a segment of these "gatekeepers, professionals," in the context of their particular employment duties to their clients.

Very truly yours,

Barton S. Sacher, P.A.
Nancy Van Sant, Esquire
Roy M. Hartman, Esquire
Stan Beiley, Esquire
Marty Doyle, Esquire
Joseph Sacher, Esquire
Individually, and
For the Firm