Jonathan G. Katz, Secretary
U. S. Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549-0609

Dear Mr. Katz:

I am a business lawyer who advises clients on both public and private securities law matters, and therefore 'appear' and 'practice' before the Commission as those terms are used in § 307 of the Sarbanes-Oxley Act and the Commission's proposed Part 205. Please note that I submit these comments as an individual and that this letter does not necessarily reflect the views of my law firm.

Many distinguished attorneys and law firms have already submitted to the Commission well-reasoned comments on the merits of proposed Part 205 and on the inadvisability of rushing to release broad regulations by the January 26, 2003, deadline. I echo and support many of these comments: it would be unwise to hurriedly release unnecessarily broad regulations governing an area that is so critically important both to the Commission's role as regulator of the U.S. securities markets and to the dedicated and able attorneys who serve clients in this area.

The goals of Sarbanes-Oxley Act § 307 and proposed Part 205 are laudable. Setting clear rules to govern the behavior of attorneys who advise clients on federal securities law matters will be fundamentally important to restoring investor confidence in the U.S. public securities markets. Nearly 70 years of experience have demonstrated that uniform federal rules can better accomplish such goals than can state rules, although the active participation and cooperation of the state securities commissions will continue to be extremely important. In the same way, coordinating the new federal rules with the ethical rules and obligations of the various state bars will be essential to ensuring that securities practitioners clearly understand their obligations and, equally importantly, are not subject to inconsistent or contradictory rules and ethical obligations. Neither issuer clients nor the investing public would be well served by a federal rule that requires an attorney to violate ethical obligations established by his or her state bar.

Therefore, in the spirit of Commissioner Paul S. Atkins's plea that members of the bar offer constructive suggestions rather than simply blanket objections to the Commission's efforts on proposed Part 205, I respectfully submit the following further comments:

1. The Commission should expand these proposed rules to their logical conclusion by expanding Part 205 to establish a new Federal Securities Bar (hereinafter, the "Securities Bar") and to set forth rules governing its members.
    
2. All attorneys who 'appear' or 'practice' before the Commission, as those terms are ultimately defined, would be required to be members of the Securities Bar, although junior or less-experienced attorneys would be permitted to participate in related client representations under the direct supervision of a Securities Bar member. This would include foreign attorneys who fit the definitions of 'appearing' and 'practicing' before the Commission. All documents or communications submitted to the Commission would have to be submitted by a Securities Bar member.
    
3. Each issuer of publicly-traded securities would be required to identify the Securities Bar member or members on which that issuer relies for securities law representation, and to promptly disclose changes in such representation much in the same way that issuers are required under Item 304 of Regulation S-K to report changes in and disagreements with accountants on Form 8-K. This requirement would be in lieu of the currently proposed "noisy withdrawal" obligation, which, as many comment letters have argued, may run afoul of attorneys' ethical obligations. By giving the disclosure responsibility to the issuer, this rule would still permit Securities Bar members to withdraw from the representation upon unsatisfactory outcome of the "up-the-ladder" reporting procedure, but would allow them to do so without revealing client confidences. Moreover, the prospect of public disclosure of the withdrawal may have the added effect of helping to compel the issuer to respond appropriately to the attorney's internal reporting efforts, which serves the larger goals of the Sarbanes-Oxley Act.
    
4. Provision would be made for the creation and administration of a Securities Bar exam in order to qualify attorneys as members of the Securities Bar, and also (to avoid unnecessary administrative problems and to provide for a smooth transition to the new system) for "grandfathering" current securities practitioners who demonstrate a certain minimum level of expertise regarding the federal securities laws and rules. Only attorneys who are admitted to at least one state bar, or foreign attorneys with equivalent credentials, would be eligible to become members of the Securities Bar.
    
5. The rules of the Securities Bar would be explicitly tailored to govern the behavior of Securities Bar members in advising clients regarding federal securities law matters and in appearing before and submitting documents to the Commission. The Securities Bar rules would not generally attempt to govern the relationship between the attorney and his or her client, as this relationship is already the subject of the quite capable oversight mechanisms of the various state bars.
    
6. In order to ensure that Securities Bar members continue to develop professionally, the Securities Bar could require its members to participate in a certain minimum amount of continuing legal education each year.
    
7. Only members of the Securities Bar would be permitted to refer to themselves as such.
    
8. A member of the Securities Bar who violates its rules could, with due process, be suspended or disbarred from the Securities Bar. This suspension or disbarment would only apply to the attorney's eligibility to 'appear' or 'practice' before the Commission. Although a notice regarding such a suspension or disbarment might be sent to the attorney's state bar or bars, the state bar would continue to have jurisdiction over the attorney's overall professional fitness and eligibility to practice law generally.

Establishing a Securities Bar with specific and limited jurisdiction as preliminarily described above would (a) reduce or eliminate the conflict between state bar rules and some of the obligations imposed by proposed Part 205 (by removing the "noisy withdrawal" requirement); (b) create a separate and very clear set of rules to govern the behavior of securities attorneys; (c) create a valuable credential that members of the Securities Bar could offer their clients; and (d) offer to issuers the assurance that their federal securities matters are being handled by a certified securities law expert.

As other comment letters have also stated, this letter it is not intended to be a comprehensive analysis of all the problems inherent in Part 205 as proposed. It simply is intended to suggest a new way of approaching the Commission's obligations under the § 307 of Sarbanes-Oxley Act and, at the same time, avoiding unnecessary conflict with the rules of the state bars.

Respectfully submitted,
 
/s/ Daniel W. Pugh
 
Daniel W. Pugh, Esq.