In analyzing the new attorney conduct rules, the application to chief legal officers remains murky if that person uncovers the problem – as that person then must report to him/herself and get back to him/herself, etc. There are other issues like this that undoubtably will become grist for a staff legal bulletin.

Corporate governance reforms may not always be what they seem – check out this Washington Post article on Disney – http://www.washingtonpost.com/wp-dyn/articles/A20824-2003Feb3.html.

The SEC has posted the adopting release regarding disclosure of voting policies and records by mutual funds at http://www.sec.gov/rules/final/33-8188.htm.

On TheCorporateCounsel.net, we are putting the finishing touches on our final redesign of the site – let us know if further tweaks are needed – send suggestions to broc.romanek@thecorporatecounsel.net. We have also posted our February E-Minders at http://www.thecorporatecounsel.net/E-minders/.

On Wednesday, the Senate will consider the confirmation of William Donaldson as SEC chair. Mr. Donaldson has been busy selling his multi-million dollar portfolio of securities in anticipation.

Reflecting the slow deal market, after a failed attempt to merge with Morgan Lewis and a defection by many top partners, it appears that Brobeck, Phleger & Harrison is close to disbanding.

At a conference in San Diego today, Marty Dunn, Corp Fin Deputy Director, revealed that the staff already has received over 450 requests for no-action relief regarding shareholder proposals – which equals the near record amount received during all of last proxy season. At this rate – because February and March are very heavy months to process these requests – it appears that the staff might process more than 50% more than they have at any other time.

The SEC has posted the adopting release regarding attorney conduct – along with a second release seeking additional comments on the proposed noisy withdrawal provisions and an alternative approach.The adopting release is at http://www.sec.gov/rules/final/33-8185.htm – and the proposing release is at http://www.sec.gov/rules/proposed/33-8186.htm.

In connection with the audit of Xerox, the SEC has filed fraud charges against KPMG – and four partners of KPMG – in a NY federal district court – see http://www.sec.gov/news/press/2003-16.htm.

The SEC has posted the final rules on auditor independence implementing SOX 208, 201-204 and 206 at http://www.sec.gov/rules/final/33-8183.htm.

Later today, we will post our “Sarbanes Oxley Scorecard” on the home page of TheCorporateCounsel.net – to facilitate your ability to access each proposing and adopting release. In addition, we will post a checklist of disclosure items to consider for this year’s 10-K early next week as part of the February E-Minders.

In the Division of Corporation Finance, Shelley Parratt has been promoted to Deputy Director (Operations) – and Marty Dunn’s title changes a little to Deputy Director (Legal). This is the first time in memory that Corp Fin has had dual deputy directors.

Paula Dubberly has been promoted to Associate Director (Legal) – my former and wonderful boss – leaving the Chief Counsel slot open. Congrats to both!!!

Tommorrow, former CSX chair John Snow – and President Bush’s nominee for Treasurer – faces a potential challenging confirmation hearing in the Senate. Mr. Snow also co-chaired The Conference Board’s Commission regarding corporate governance reform that issued its final report a few weeks ago.

In response to subscriber demand, we have posted a sample whistleblowing policy – courtesy of Sharon Hendricks and Venture Law Group – on TheCorporateCounsel.net.

Another crazy week…we are busying posting hordes of law firm memos in our Sarbanes-Oxley portal and that should continue unabated for the next few weeks.

In addition, today we launched a new site – GreatGovernance.com. The new site is for TheCorporateCounsel.net subscribers and has hundreds of FAQs on governance topics as well as a host of other governance related materials. We will be conducting webcast programs and interviews with experts over the coming year. See the new site at http://www.greatgovernance.com/.

The SEC’s press release on the Investment Company Amendments and the Investment Adviser Amendments adopted at its meeting today is now available at http://www.sec.gov/news/press/2003-12.htm.

This is a guest blog by Mike Holliday

The final rules on conditions for use of non-GAAP financial measures, and insider trades during pension fund blackout periods are now available on the SEC’s website.

Non-GAAP is at http://www.sec.gov/rules/final/33-8176.htm.

Insider trading is at http://www.sec.gov/rules/final/34-47225.htm.

The following are quick notes from the SEC’s meeting today, and are subject to the actual wording of the adopting Releases and final rules.

A. Standards of Professional Conduct for Attorneys, Sarbanes-Oxley Section 307. Certain changes in the proposed rules were discussed at the meeting. The definition of appearing and practicing before the Commission to be subject to the rules was modified. The rules will not apply to attorneys who are licensed to practice law but are not providing legal services to issuers. Most foreign attorneys who are not admitted in the US and do not advise clients on U.S. law would not be subject to the rules. Non-US attorneys who provide legal advice on US law without consulting with US counsel would be subject to the rules if their activities constitute appearing and practicing before the Commission. It will be necessary to check the adopting Release and final rules to see exactly how this treatment of foreign attorneys is worded.

To be covered by the rules, the attorney must be providing legal services to the issuer and have an attorney/client relationship with the issuer. In addition, the attorney would have to have notice that a document the attorney is preparing or assisting in preparing will be filed with or submitted to the SEC. Again, it will be necessary to check the actual language.

Modifications to the final rule will insure that issuers can direct counsel to conduct internal investigations and defend them in litigation without compromising the attorney/client relationship.

The rules have an objective standard. The meeting discussion referred to using the concept of “credible evidence” of a violation; a prudent and competent attorney under the circumstances; and a reasonable likelihood standard that a material violation has occurred, is ongoing or is about to occur.

The requirement for the attorney to document the report of evidence of a material violation and the response has been eliminated. Also, the rules adopted do not include the proposed “noisy withdrawal” provision. The Commission is extending the comment period on that issue for 60 days, and then will consider the proposal. The proposal has not been eliminated but will be considered at a later time after the extended comment period.

B. Disclosure of Mutual Fund Proxy Voting Policies and Procedures and how the Fund Voted on Specific Issues. The proposals were adopted with modifications to reduce the costs of the new requirements.

C. Requirement for Registered Investment Advisers to Adopt and Disclose to Clients Proxy Voting Policies and Procedures and how the Adviser Addresses Conflicts of Interest. The rules do not require public disclosure of how the adviser voted, but to tell clients how they can obtain the actual voting record from the adviser.