As we have stated elsewhere in this submission, we believe that attorney noisy withdrawal proposals neither are required by Section 307 of Sarbanes-Oxley nor are they in the public interest or for the protection of investors. Thus, our comments on the proposed alternative to that proposal should not be taken to mean that we, in any way, support that proposal. Unfortunately, the alternatives to noisy withdrawal are so onerous that we think they will be very seldom used.

The Commission has proposed that an attorney, including a "chief legal officer" (CLO), who reports what the attorney responsibly believes is evidence of a material violation of "the securities laws," breach of fiduciary duty or "similar material violation" (which term is undefined), would not be required to withdraw from representing the issuer and, except as provided in proposed Part 205.3(b)(3), applicable only to CLOs, would not be subject to the proposed "noisy withdrawal." 15

While proposed Part 205.3(c) may be a viable alternative for an outside attorney, it is not a meaningful alternative for the attorney’s client, the issuer, the members of the QLCC or CLOs. The proposed alternative merely shifts burdens to the Commission from the attorney to the issuer, the individual members of the QLCC and the CLO. If they fail to report to the Commission as required by the proposed rules, they are subject to enforcement proceedings, based on no element of scienter, for failure to report, even if, in fact, there has been no violation of law.

We believe that the substantive thrust of the "noisy withdrawal" proposals, including the proposed QLCC alternative, which would require self-reporting of possible, but unadjudicated violations of law and state law fiduciary duties, is unprecedented and is not an appropriate exercise of the authority under Section 307 of Sarbanes-Oxley or any provision of the federal securities laws.      Moreover, we believe that an issuer may be reluctant to confer on the QLCC, the authority required under proposed Part 205.2(j). Proposed Part 205.2(j) requires that the QLCC be authorized, not only to conduct any "necessary" inquiry into the reported evidence, but also to require the issuer to take "appropriate" remedial measures to prevent ongoing or to alleviate past material violations (albeit unadjudicated) and to notify the Commission of the material violation and disaffirm in writing any tainted document submitted to the Commission, if the issuer, in any material respect, fails to take any remedial measure directed by the QLCC. Further, we question whether the Commission has the statutory authority to require self-reporting by issuers or individual directors of unadjudicated violations of law or breaches of state law fiduciary duties.

The proposed requirement that each member of the QLCC, individually, have the responsibility to so notify the Commission and to disaffirm documents submitted to it would place an extremely heavy burden on the directors who serve on the QLCC. We believe that an issuer would have great difficulty in attracting directors to serve on a QLCC under these circumstances.      We also question the Commission’s basis for prescriptive qualification requirements for eligibility to serve on a QLCC. We would have no objection to a requirement that all members of the QLCC not be employed, directly or "indirectly" (if the Commission provides appropriate guidance on the term "indirectly"), by the issuer or that they all must be "independent," as defined in Section 301(a) of Sarbanes-Oxley and Section 10A(m)(3) of the Exchange Act or any applicable national securities exchange or NASD listing standard. However, in light of the substantial obligations that the Sarbanes-Oxley Act, existing and proposed SEC rules, and SRO listing standards and proposed listing standards place on members of audit committees, we see no reason to require, as the Commission proposes, that at least one member of the QLCC also be a member of the issuer’s audit committee. We believe this would only be yet another barrier to an issuer attracting qualified individuals to serve on a QLCC. We, however, would have no objection to a proposal for the QLCC advising or reporting to the audit committee with respect to the QLCC’s actions.

In addition, the Commission’s proposal in Part 205.3(c) permits an attorney to report evidence of a material violation or breach of fiduciary duty to the QLCC, as an alternative to reporting to the Commission, only if the issuer has "duly formed" (an undefined term) the QLCC. This requirement would appear to nullify the attorney’s alternative if the QLCC was not "duly formed." It is not clear whether this puts a burden on an attorney to determine whether the QLCC was duly formed. Such a burden would be inappropriate, since, for example, the outside attorney may not know whether the member of the audit committee serving on the QLCC is qualified to be a member of the audit committee; may not know whether the QLCC has the authority and responsibility required by the proposed part; and may not know whether the members of the QLCC are "indirectly" employed by the issuer. Even if the attorney inquires and receives satisfactory answers, the QLCC still may not in fact be "duly formed" and, as drafted, the alternative would not be available. We suggest, instead, that an attorney be permitted to satisfy the proposed alternative, if the attorney reports to a QLCC designated by the issuer and the attorney does not know, without any inquiry requirement, that the QLCC was not "duly formed."

We also believe that the Commission should provide guidance in the final rules as to whether the attorney must report to the QLCC in writing and whether the attorney is subject to the proposed documentation and record retention proposals in this regard.