From: jeff.fisher@bt.com Sent: Wednesday, December 11, 2002 5:13 AM To: rule-comments@sec.gov Subject: File No. 33-8150.wp- (s7-45-02) Comments on Proposed Rule: Implementation of Standards of Professional Conduct for Attorneys 1. Definition of "Material Violation" - it is stated that the Commission believes that the term covers violations of the federal securities laws, as well as violations of state securities laws. The Commission will appreciate that lawyers in overseas jurisdictions have a limited knowledge of US federal and states securities laws. They rely on advice provided by US law firms. In the section entitled "Reporting within the Issuer Evidence of a Material Violation" it is acknowledged that: "Attorneys are not necessarily expected to identify issues they are equipped to see. What the reasonable, experienced securities lawyer might regard, as a clear violation of the law may appear different - or not appear at all - to an unseasoned attorney with a different level of expertise". It would be helpful if the Commission would acknowledge in the release that overseas lawyers are unlikely to have an extensive knowledge of US securities laws and will not be expected to have the knowledge of an experienced US securities lawyer. The Commission might also consider specifying the provision or provisions of US securities laws that it would expect an overseas lawyer to be acquainted with. For example, if would be possible to state that an overseas lawyer would be expected to recognise a material violation of the obligation in rule 10b-5. A material violation also occurs where there is a "material breach of fiduciary duty". The draft rules define this to mean breach of fiduciary duty at common law, including, misfeasance, nonfeasance, abdication of duty, abuse of trust, and the approval of unlawful transactions. The common law of breach of fiduciary duty has developed in different ways in different jurisdictions and English concepts of "breach of fiduciary duty" by directors are not the same as those in the US. The Commission should recognise that UK directors will be judged against domestic standards of "breach of fiduciary duty" and not US standards. It is not, therefore, appropriate to expect overseas lawyers to judge directors of foreign issuers by the standards of US common law relating to "breach of fiduciary duty", as directors of foreign issuers have no obligation to comply with those requirements. Material violation also includes "a similar material violation". It would be helpful if the Commission could clarify whether the term "similar violation" would extend to violations of law in the legal jurisdiction of the foreign issuer. 2. Breach of confidence - Attorneys who have not received an appropriate response and who reasonably believe that the reported material violation is ongoing or is about to occur and is likely to result in substantial injury to the financial interest of the issuer or of investors are required to disaffirm any submission to the Commission. The draft rules also allow an attorney to reveal confidential information to the extent necessary to prevent the commission of an illegal act which the attorney reasonably believes will result in either perpetration of a fraud upon the Commission or in substantial injury to the financial or property interests of the issuer or investors. The Commission will appreciate that a provision which exempts an attorney from liability in the US for breach of confidentiality would not necessarily protect an attorney in an overseas jurisdiction. The rules of the Law Society of England and Wales provide that disclosure of a client's confidences which is unauthorised by the client or by the law could lead to disciplinary proceedings against a solicitor and could also render a solicitor liable, in certain circumstances, to a civil action by the client arising out of the misuse of confidential information. The rules also make it clear that the duty of confidentiality does not apply to information acquired by a solicitor where he or she is being used by the client to facilitate the commission of a crime or fraud. Similarly the English courts have allowed a defence of public interest in an action for breach of confidence where there has been "serious misdeeds or grave misconduct". As it is unclear whether the Law Society and the English courts would allow a breach of confidence to take place in the circumstances described in the Commission's draft rules, I would request that the Commission consider exempting overseas lawyers from the requirement to disaffirm submissions to the Commission Jeff Fisher Solicitor Head of Corporate Law BT Group Legal Tel: +44 020 7356 4830 Fax: +44 020 7356 6447 E-mail: jeff.fisher@bt.com BT Group plc Registered Office: 81 Newgate Street London EC1A 7AJ Registered in England No. 4190816 This electronic message contains information from BT Group plc which may be privileged or confidential. The information is intended to be for the use of the individual(s) or entity named above. If you are not the intended recipient be aware that any disclosure, copying, distribution or use of the contents of this information is prohibited. 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