February 28, 2000
Mr. Jonathan G. Katz, Secretary
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549-0609
Re: Comments on Proposed Rule Regarding Independent Directors of Investment Companies; Release Nos. 33-7754; 34-42007; IC-24082; File No. S7-23-99
Dear Mr. Katz:
As the independent trustees of the Driehaus Mutual Funds, we commend the efforts of the Commission to improve the effectiveness of independent directors of investment companies. However, we have concerns about some aspects of the proposals. Specifically, we would like to express our concerns regarding proposed requirements for disclosure about directors.
In general, the required disclosure about directors will place extensive burdens on directors without, we believe, commensurate benefits to shareholders. Among out greatest concerns is the expansive definition of "immediate family member," which would cover a wide range of individuals. We do not believe that personal information about more distant relatives will be particularly useful to shareholders. Yet the burdens to directors can be extreme. We are concerned that many persons classified as "immediate family members" may be unwilling to provide the information or directors will be unwilling to gather such information. As a result, existing directors may be unable to continue to serve the fund, and funds may experience substantial difficulty in recruiting new directors. This would be particularly true for small funds such as ours where the compensation for service is modest.
Our strong belief is that the harm to shareholders from these disclosure requirements will outweigh any benefits. Therefore, we urge the Commission to carefully consider the negative impact of their proposals and to only implement those provisions where the benefits clearly outweigh the detriments. Although the goal of the Commission is to enhance the effectiveness of independent directors, it should be mindful that increasing the burdens on such directors may not be an effective way of achieving these goals.
We appreciate this opportunity to comment on the proposed rules and urge the Commission to consider appropriate revisions to the rules prior to their adoption.
The Independent Trustees of the
Driehaus Mutual Funds
/s/ FRANCIS J. HARMON
Francis J. Harmon
/s/ A.R. UMANS
/s/ DANIEL F. ZEMANEK
Daniel F. Zemanek