Request for Rulemaking for
Concerning Corporate Elections
September 24, 2002
Jonathan G. Katz
Securities and Exchange Commission
450 Fifth Street. N.W.
Washington, DC 20549-0609
Petition to U.S. Securities and Exchange Commission for Free and Fair Corporate Elections submitted by eRaider.com Inc. and supporters
Dear Mr. Katz:
eRaider.com Inc. ("eRaider") and supporters hereby petition the Commission to mandate that public companies place the names of all legitimate director candidates on ballots distributed to shareholders. To further encourage open and fair elections, we urge the Commission to disallow counting uninstructed shares ("broker votes") for any candidate, to ban the use of corporate funds for campaigning for any candidate and to strike down unreasonable qualification tests for director candidates. These actions will help restore integrity to corporate elections and increase corporate accountability to shareholders.
Interest and reasons
eRaider's interest in this proposal is to increase shareholder return of investments in the Allied Owners Action Fund Inc. through more effective organizing of shareholders on the Internet. We are not currently conducting a campaign that would be affected by these rules, but expect to do so frequently in the future. We also support this proposal on general principles. The supporters share one or both of these rationales.
Specific rule changes requested
The proposal is deliberately open-ended because such a major change will naturally require consideration of the views of many constituencies and evaluation of extensive public comments. There are several approaches to rule amendment that would accomplish our goal. We have outlined one here for illustrative purposes.
Add subpoints to Rule 14a-13 promulgated under the Securities Exchange Act of 1934 to specify the new duties of registrants only: "(e) Any registrant communication that relates to a board election must list all legitimate director candidates" and "(f) All registrant communications with regard to elections must present issues in a neutral manner, providing to a reasonable extent the same type of information and amount of space, for those positions recommended by the board and those not recommended." An explanatory note will make clear that the board is entitled to make written arguments for or against any proposal, but not to use its control of the proxy materials for partisan advantage. This note applies only to issues in which non-recommended positions appear in the registrant's proxy, normally director elections and shareholder proposals.
Rule 14a-4(b2) is amended to add the bracketed words: "A form of proxy which provides for the election of directors shall set forth the names of [all] persons [legitimately] nominated for election as directors." For the definition of "legitimate" we favor anyone on whose behalf a definitive section 14 filing as a director candidate, and is not legally prohibited from serving. This definition should specifically prohibit unreasonable director qualifications.
Rule 14a-5(a) is amended to add the bracketed works "All printed proxy statements shall be in roman type at least as large and as legible as 10-point modern type [without using typeface, presentation order, size, color, placement, design or similar means to favor board recommended positions over non-recommended]."
Add a new section to Rule 14b-1, "(d) Brokers and dealers who do not receive specific voting instructions from beneficial owners must either abstain or vote present on all items."
eRaider has been soliciting support for this petition on the Internet and by other means. We intend to follow up this submission with a list of signers and letters of support.
By Deborah Pastor
Portfolio Manager, eRaider.com Inc.
New York, New York 10025
Tel.: (646) 505-0215