December 16, 2002
Mr. Jonathan G. Katz. Secretary
U.S. Securities and Exchange Commission
450 Fifth Street, NW
Washington, D.C. 20549-0609
Re: Sarbanes-Oxley and the SEC Rules (17 CFR Part 205)
Dear Mr. Katz,
Professional Responsibility Counselors is a non-profit corporation whose members are Michigan lawyers who represent private clients in malpractice, risk management, discipline, and other professional responsibility matters. PRC recently had an opportunity to review and discuss the referenced development, and I have been asked to submit comments for your consideration.
Although the SEC has authority to set standards and to discipline lawyers who practice before it, the SEC does not otherwise have authority to regulate lawyers. Any extension of SEC authority, even as purportedly granted by Congressional Act, violates the doctrine of separation of powers.
2. REGULATORY CONFLICTS
Even if Congress and the SEC had the authority to regulate lawyers, rules adopted by Congress or the SEC should not be inconsistent with the rules of professional conduct adopted by the states. A lawyer should not be placed in the position where compliance under one rule constitutes disciplinable misconduct under another rule.
3. LAW ENFORCEMENT CO-OPTION OF LAWYERS
The lawyer is the last bastion of protection for a client accused of wrongdoing by the government. Under no circumstances should the lawyer-client relationship be invaded to assist government, which opposes the client, in performing governmental functions. A lawyer's duties to the administration of justice do not extend to requiring the lawyer to "switch sides" against the lawyer's client.
4. DUTIES OF DISCLOSURE
Ethics rules adopted in most jurisdictions already require a lawyer to "go up the corporate ladder" in resolving client conduct. The ethics rules specifically recognize that the conduct triggering the lawyer's duty to be a violation of law which reasonably might be imputed to the organization. Current ethics rules even permit, under certain circumstances, the lawyer to disclose information outside the client organization. The ethics rules are the result of national research, analysis and debate, and should be accorded great weight in balancing the lawyer's duties to clients and to the administration of justice. PRC opposes the imposition (by statue, SEC Rule, or amendments to ethics rules) of any duties of disclosure of protected information by lawyer that has not been subjected to comparable high scrutiny.
5. SEC RULEMAKING UNDER THE SARBANES-OXLEY ACT AND THE EDWARDS AMENDMENT SHOULD:
If necessary, we encourage the American Bar Association and other interested organizations and individuals to institute litigation to prevent enforcement of the provisions of the Edwards Amendment, the proposed SEC Rules, and the assumption of federal jurisdiction over the regulation of lawyers and the attorney-client relationship.
If you desire additional information, please do not hesitate to contact me or one of the other board members reflected on this letterhead.
Marcia L. Proctor
cc: PRC Board Members
R . Larson Frisby
M. Peter Moser
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