New Rules on Lawyer's Responsibilities, Proxy Disc

Heine, an SEC spokesperson. The noisy withdrawal provision, which lawyers

have opposed, would require lawyers to snitch on corporate clients by

telling the SEC of a securities infraction at the firm, and then resign from

advising that firm if it failed to heed the lawyer's warnings.

The SEC extended the comment period on the noisy withdrawal provision for

60 days, and proposed an alternative rule that would require a corporation,

not a lawyer, to report a lawyer's resignation to the SEC. "Notice to the

public [of a lawyer's withdrawal] would come by way of the issuer [company]

filing an 8-K form" with the SEC, Heine says. The alternative proposal is

also open for a 60-day comment period.

Gene Cauley, a partner with the law firm Cauley Geller Bowman Coates &

Redman in Little Rock, Arkansas, says the SEC is being "cautious and

deliberate" by extending the comment period on the noisy withdrawal

provision "because it's such an important issue," and so many lawyers

"object to it."

The SEC also approved its rule requiring mutual funds and other

registered management investment companies to disclose their proxy voting

policies and procedures and their actual proxy votes cast. David Tittsworth,

executive director of the Investment Counsel Association of America (ICAA)

in Washington, D.C., clarified his group's objections to the rule. "We don't

argue with the broad principal that an advisor who has the authority to vote

proxies has a fiduciary duty to vote those proxies on behalf of the client,"

Tittsworth says. What's worrisome, he says, is the rule's nitty-gritty

details. "The [SEC's] proposed rule, for example, required advisors to keep

all records relating to even verbal communications that were material to any

proxy voting decision. That's really burdensome and unnecessary."

Tittsworth says he won't know if that requirement remains in the final

rule until it's released this week. "This is one where the devil is truly in

the details."