From: Bart_Schwartz@mony.com
Sent: Tuesday, December 10, 2002 6:03 PM
To: rule-comments@sec.gov
Subject: Comments on Section 307 Rules -- File No. 33-8150.wp (s7-45-02)

By E-Mail


Securities and Exchange Commission
450 Fifth Street, NW
Washington, DC 20549-0609

Attention:  Mr. Jonathan G. Katz
          Secretary

Dear Mr. Chairman and Honorable Commissioners:

I am Senior Vice President and General Counsel of The MONY Group Inc., a
New York Stock Exchange-traded financial services and insurance company
headquartered in New York City.  I write to comment on your proposed rules
implementing section 307 of the Sarbanes-Oxley Act of 2002 (the "Proposed
Section 307 Regulations").

As explained more fully below, the Proposed Section 307 Regulations are
unjustifiably and dangerously overbroad.  They exceed the requirements of
Sarbanes-Oxley section 307 and the manifest congressional intent of that
provision.  Most importantly, if adopted in their proposed form, they would
disserve the investing public.

What Is Good About the Proposed Section 307 Regulations

Section 307 of the Sarbanes-Oxley Act of 2002 mandates that the
Commission's minimum attorney-conduct standards include a rule requiring
lawyers representing issuers before the Commission to report to specified,
successively higher authorities within the corporation evidence of material
violations of securities law, breaches of fiduciary duties and similar
violations.  In keeping with the thrust of many corporate governance
reforms now under consideration, the procedure set forth in section 307, as
implemented by the Commission's regulations, will result in the ultimate
referral of issues to directors who are independent of corporate management
when senior management does not respond appropriately.

That will be an important and meaningful safeguard.  It will also bring
about a significant and salutary change in the way many lawyers approach
their duties.  The "up-the-ladder" requirement will give real meaning and
substance to the general principle that corporate lawyers represent the
entity, not its managers.

Of course, other reforms (including the proposed SRO corporate governance
rules now before the Commission) will bolster the conditions for directors
to be considered independent and will strengthen the hand of the
independent directors in the governance of the corporation.  Thus, the
procedure mandated by section 307 is entirely in accord with pending and
recently adopted corporate governance reforms, which depend on staunchly
independent outside directors to protect the interests of  the company and
its shareholders.  In this regard, the "up the ladder" rule represents an
elegant and useful evolution of the law to meet new exigencies.

Where the Proposed Section 307 Regulations go too far ? although clearly
with the right motivation (namely, the protection of the investing public)
? is in attempting to address other aspects of the attorney-client
relationship, which Congress did not intend the SEC to regulate, and which
are now under very active and searching debate within the American Bar
Association and the 50 states.

The Legislative Intent of Section 307

That the legislative intent behind section 307 was limited to
"up-the-ladder" reporting, ultimately to independent directors, is clear
from the remarks on the Senate Floor of Senator Edwards himself:

            "Let me be a little more specific about what this amendment
      does and what the responsibility of a lawyer is and should be. . . .

            .     .     .     .

      "If you find out that the managers are breaking the law, you must
      tell them to stop. . . . If they won't act responsibly and in
      compliance with the law, then you go to the board and say something
      has to be done; there is a violation of the law occurring. It is
      basically going up the ladder, up the chain of command."

148 Cong. Rec. S6524, at S6551-S6552 (July 10, 2002).

Neither the text nor the legislative history indicates that Congress
intended or required the Commission to undertake more sweeping reforms of
the rules governing lawyers' conduct.

What Is Bad About the Proposed Section 307 Regulations

Yet the Proposed Section 307 Regulations go significantly beyond the
requirements of the Edwards Amendment by inappropriately addressing other,
far-reaching aspects of the attorney-client relationship.  In so doing, the
proposed regulations would usurp much of the ground previously covered, and
currently being energetically reviewed and debated, within the American Bar
Association (the "ABA") in connection with model rules of professional
conduct that are ultimately applied, modified or rejected within each
state.

If the Proposed Section 307 Regulations are adopted in their current form,
the resulting harm would be not primarily to lawyers or corporate
executives, but to investors in public corporations, which will have less,
not more, guidance from corporate lawyers ? the vast majority of whom are
well-meaning people of high integrity ?when corporate executives face
difficult issues concerning disclosure and other matters.  While one can
debate how extensive would be the chilling effect on attorney-client
communications of the "noisy withdrawal" requirement, the key point is that
a vigorous and searching debate ? involving shareholder watchdogs,
corporate governance experts, and institutional investors, as well as
issuers and the lawyers who represent them ? is currently underway on this
very issue within the ABA and in the states.  It should not be
short-circuited by a federal regulatory agency in the absence of a
congressional mandate to do so.

The Current Debate

As you know, in March 2002, then-ABA president Robert Hirshon appointed a
task force to "examine systemic issues relating to corporate responsibility
arising out of Enron and other Enron-like situations."  The task force
issued a preliminary report dated July 16, 2002 (the "Cheek Committee
Report" ), which includes recommendations addressing attorney conduct in
the case of corporate wrongdoing.

The Cheek Committee Report discusses the February 2002 ABA Commission on
Evaluation of the Rules of Professional Conduct ("Ethics 2000"), which
proposed certain exceptions to the confidentiality requirements.  Although
the ABA House of Delegates ultimately rejected two of these exceptions, the
Cheek Committee Report recommends reconsideration and adoption of the
Ethics 2000 proposal that would allow (but not require) disclosure "to
prevent or rectify the consequences of a crime or fraud in which the client
has used or is using the lawyer's services" and that is reasonably certain
to result, or has resulted, "in substantial injury to the financial
interests or property of another."   The Cheek Committee Report also
recommends requiring disclosure under Rule 1.6 to prevent clients from
committing crimes, including violation of the federal securities laws, in
furtherance of which the client has used the lawyer's services, and which
are reasonably certain to result in substantial financial injury.

Just in the past few months, from September 20 through November 11, the
Cheek Committee has held public hearings around the country to give
interested parties an opportunity to comment on its proposed
recommendations.  The hearings have included testimony from representatives
of institutional investors and organized labor, as well as leading lawyers,
law professors and other interested parties.  While the issues that the
Cheek Committee is considering require a difficult balance, the Cheek
Committee is conducting its process openly, thoroughly and with all
deliberate speed.

The current debate over "noisy withdrawal" and the exceptions to the
attorney-client privilege, if allowed to run its course, will result in a
deliberate but appropriately expeditious re-examination and revision of
policy within each state in a manner that balances a lawyer's duties to his
or her clients and to the public at large.  The debate, though thorough, is
being driven by a sense of real urgency, in light of the events of the past
year, to ensure that corporate lawyers' duties are calibrated in a way most
likely to protect their clients (by which I mean the companies and their
shareholders, not their executives).

It is important to emphasize that the attorney-client privilege is intended
not for the protection of attorneys but, rather, to avoid deterring clients
from consulting with lawyers and receiving legal advice.  Frequently, a
full and frank consultation with a lawyer provides the best clear chance
that a corporate client will do the right thing, rather than allowing the
self-interest of executives to dictate a course of action that conflicts
with the interests of the corporation and its shareholders.

Reach of the Proposed Section 307 Regulations and Potential Intrusion on
the Attorney-Client Privilege

By defining practicing before the SEC extraordinarily broadly to include
"preparing or participation in the preparation of" any document that the
lawyer has "reason to believe" will be "filed with or incorporated into"
any document or communication filed with or submitted to the SEC or its
staff , the Proposed Section 307 Rules would cover virtually all corporate
lawyers representing public company (given the requirement, for example,
that issuers' material contracts be filed as exhibits to the Annual Report
on Form 10-K), as well as employee benefits lawyers who prepare plans that
are filed with the SEC and litigators who represent clients in adversary
proceedings before the SEC. Further, practicing before the Commission would
include, quite counterintuitively, advising clients that documents need not
be filed with the SEC.  The Commission should reconsider this aspect of the
Proposed Section 307 Regulations, as well.

Legal scholars more knowledgeable than I have commented on the provision
that, "Where an issuer, through its attorney, shares with the Commission
information related to a material violation, pursuant to a confidentiality
agreement, such sharing of information shall not constitute a waiver of any
otherwise applicable attorney-client privilege or protection as to other
persons."  On this point, I observe only that it is highly questionable
whether any court applying state or even federal common law privilege rules
would be bound by this pronouncement of a federal agency on an issue
arguably outside its area of expertise and I therefore urge careful study
of the legal issue involving waiver of the attorney-client privilege before
the Commission takes any action that may put lawyers in an untenable
conflict in this regard.

Conclusion

There is no evidence in the legislative record that "Congress intended for
the agency's rule to 'occupy the field' on this issue . . . [or to] preempt
any state rules governing the reporting of evidence of a material violation
by attorneys representing issuers before the Commission" ? an issue the
Commission has said it is considering.  Implementation of Standards of
Professional Conduct for Attorneys, Securities and Exchange Commission
Release Nos. 33-8150; 34-46868; IC-25829 (November 21, 2002), at 57.

I urge the Commission to limit the regulations it adopts, pursuant to
Sarbanes-Oxley section 307, to the specific lawyer-conduct issues Congress
has required the Commission to address.  The required "up-the-ladder" rule
will be a significant reform in itself and is wholly consistent with much
other important work being done in the corporate governance area.  More
far-reaching aspects of the attorney-client relationship, including the
attorney-client privilege, are certainly critical to the integrity of the
financial markets and the protection of the investing public, but they
involve difficult issues that are now being urgently and effectively
addressed through the traditional process of adoption and evolution of ABA
Model Rules of Professional Conduct for the guidance of policy-making
within each state, which the Commission should not pre-empt.

On a procedural note, section 307 requires only that, no later than 180
days after the enactment of Sarbanes-Oxley, the Commission issue minimum
standards of professional conduct for attorneys representing issuers before
the Commission, including the "up-the-ladder" procedure set forth in the
statute.  I respectfully submit that, if the Commission is interested in
pursuing rule-making affecting the attorney-client relationship in a
broader manner, it would be prudent, by the 180-day-deadline, for the
Commission to adopt the required minimum standards including the specified
procedure and then to allow more time for study and input from a
cross-section of investors, corporate clients and the bar on other
rule-making that may conflict with or pre-empt the policy-making efforts
now underway in the ABA and within the states.  In this regard, I would be
pleased to meet with Commission and staff to discuss these comments.

Respectfully submitted,


Bart Schwartz
Senior Vice President and General Counsel
The MONY Group Inc.
1740 Broadway
New York, NY 10019