September 24, 1991
TO: SEC RULES COMMITTEE NO. 60-91
INVESTMENT ISSUES COMMITTEE NO. 16-91
INVESTMENT ADVISERS COMMITTEE NO. 49-91
CLOSED-END FUND COMMITTEE NO. 24-91
RE: INSTITUTE COMMENT LETTER ON PROXY REFORM
__________________________________________________________
Attached is a copy of the Institute's comment letter to the
SEC on the SEC's proposed amendments to the proxy rules under the
Securities Exchange Act of 1934, which were proposed in June.
(See Memorandum to SEC Rules Committee No. 35-91, Investment
Issues Committee No. 4-91, Investment Advisers Committee No. 25-
91 and Closed-End Fund Committee No. 14-91, dated June 19, 1991.)
The Institute's principal comments concern the proposed
amendment to allow securityholders open access to shareholder
lists for purposes of making solicitations. The letter opposes
applying this amendment to mutual funds on the grounds that
mutual fund shareholders differ in many important respects from
stockholders of publicly traded corporations. These include that
a fund's shareholders constitute the customers of the fund's
adviser, in which the adviser has a proprietary interest, and
that mutual fund shareholders have greater privacy interests with
respect to their account information.
The letter also argues that certain provisions of the
Investment Company Act satisfactorily respond to the policy
concerns that underlie the proposed rule change. The letter also
states that the alternative suggested in the Commission's release
-- allowing registrants to retain control over their shareholder
lists if they agree to assume the costs of mailing the materials
-- is inadequate since it would expose funds and their
shareholders to potentially unlimited costs.
The SEC had also proposed an exemption from the proxy rules
for certain solicitations by disinterested persons. The
Institute's letter opposed the proposal and instead recommended a
narrower exemption, which would exempt only those communications
disseminated to institutional investors. The letter also
contained a technical comment concerning the status of
"interested persons" of investment companies (as defined in the
1940 Act) as "disinterested persons" for purposes of the
exemption.
We will keep you informed of developments.
Craig S. Tyle
Associate General Counsel
Attachment