Direct sulfonation of bis(diphenylphosphino)ethane, DPPE, leads to a complicated mixture of sulfonated products which includes 1,2-bis[bis (m-sodiosulfonatophenyl) phosphino] ethane, DPPETS. DPPETS is isolated in gram quantities by fractional precipitation; the overall yield is 30%. The ligand is more electron accepting than its nonsulfonated analog, DPPE, as judged by the nickel complexes Ni(L)(CO)(2) where L = DPPE and DPPETS. Several coordination compounds of Ph, Pd, and Pt are reported. Water-soluble rhodium compounds prepared in situ from Rh(acac)(CO)(2) and DPPETS show poor activity but selectivity similar to that of Rh(acac)(CO)(2) + trisulfonated triphenylphosphine in the two-phase hydroformylation of octene-1. Under two-phase reaction conditions n/b ratios of 2.2-3.2 are observed for the hydroformylation of octene-1 at 120 degrees C and 200 psig of CO/H-2. Conversions in the range of 5-25% were observed. Maximum activity with DPPETS occurs at a P/Rh ratio of 3/1; at high P/Rh ratios, catalysts derived from the monodentate water-soluble ligand, TPPTS, are more active.