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Attorneys cautioned on Sarbanes-Oxley disclosure

In implementing the Sarbanes-Oxley Act of 2002, the Securities and Exchange Commission recently approved a rule permitting attorneys practicing before the SEC to disclose certain confidential information to the SEC without their client's consent.

In July, the SEC's general counsel released a letter stating that state bar associations were pre-empted from disciplining an attorney who made voluntary disclosure of client confidences to the SEC in reliance on its rules.

In California, however, the ethical obligation of an attorney to maintain client confidences "at every peril to himself or herself" is required by statute, §6068(e) of the Business & Professions Code.

In response to the new rule, the Corporations Committee of the State Bar's Business Law Section sent a letter to the SEC notifying it that the new rule (17 CFR 205.3(d)(2)), conflicts with California law. The committee also notified the SEC that in the absence of an appellate judgment in favor of the SEC's pre-emption claim, the California State Bar may not refuse to enforce §6068(e).

Full text of the letter to the SEC is at http://dwalliance.com/sbar/SEC.PDF.

The committee has asked the State Bar's committee on professional responsibility to assist in preparing an educational ethics alert on the issue. The alert is expected to be completed before the end of the year.

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