From: Mark Barnes [markbbarnes@yahoo.com]
Sent: Wednesday, December 18, 2002 7:24 PM
To: rule-comments@sec.gov
Subject: File No. S7-45-02 

Regarding the proposed rule, "Implementation of
Standards of Professional Conduct for Attorneys,"
proposed by Release Nos. 33-8150; 34-46868; and
IC-25829:   

The Commission, if it adopts Rule 205.3 as proposed,
will impose upon attorneys who practice before the
Commission in the representation of an issuer a duty 
to "act in the best interest of the issuer and its
shareholders."    I respectfully submit that the
quoted language should be deleted from Rule 205.3.

Existing ethical rules in most states provide that the
lawyer for an entity represents the entity (this is
repeated by proposed Rule 205.3) and not any of its
constituents.   Adoption of this rule would therefore
seem to create a conflict of ethical standards for
attorneys who practice before the Commission.

In addition, many corporate statutory codes authorize
the board of directors to consider the interests of
non-shareholder constituencies in determining what is
in the best interests of the corporate entity.  Since
a board of directors for a corporation incorporated
under the laws of such a state is not necessarily
bound to act exclusively in the best interests of
corporate shareholders, the proposed SEC requirement
that the corporate attorneys act in the best interests
of shareholders may interfere with counsel's ability
to advise directors concerning the proper exercise of
their business judgment.  

Further, for which shareholders is counsel for an
issuer to act under the proposed rule?   The ones with
the largest interest?  The institutional shareholders?
 The common shareholders?  The voting shareholders?  

Finally, boards of directors have been held to owe
duties to sensecurity holdersders that are superior to
any duties owed to shareholders when a corporation
nears insolvency;  in such cases, is counsel for an
issuer to act in such senior securityholders'
interests?  

I submit that Rule 205.3 accomplishes its essential
mission by stating in the first sentence that the
attorney "represents the issuer as an organization,"
and that adding a requirement to "act in the best
interests of shareholders" would only create confusion
and uncertainty for issuers and their directors and 
counsel without any increased benefit for investors.

Respectfully submitted,

Mark B. Barnes



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