International Longshoremen's Association, AFL-CIO
December 4, 2002
VIA EMAIL (email@example.com) & UPS
Mr. Jonathan G. Katz, Secretary
Re: Your File No. S7-36-02
Dear Mr. Katz:
On behalf of many thousands of workers in longshoring and related crafts and in miscellaneous other industries who are represented by the International Longshoremen's Association, AFL-CIO ("ILA"), I am writing to record the ILA's endorsement in support of your Agency's proposed rule to require Mutual Funds and other registered management investment companies to disclose their proxy voting policies and procedures as well as their votes on motions and issues raised by those corporate entities in which they hold interests and to urge its finalization.
There's an old expression that goes: "Big trees from little acorns grow." At each step of the corporate governance process, including by means of proxies, decisions are made, or those of management are condoned and ratified, whether singly or in combination with others, that over time can - and do - have serious business/legal/ethical implications and effects. The virtually daily disclosures over the past half-year of a litany of devious, clandestine, arrogant and self-aggrandizing malfeasance by individual officers and of misfeasance and nonfeasance by collusive or just plain indifferent auditors and Boards of Directors have undermined the import and export markets that support the U.S.'s economy to which our members and their employers look for their wherewithal. Even more to the point: They have crippled and lost the once-universal confidence in the capital markets to which their pensions and personal savings effectively are tied.
Unfortunately, the events that led to these debacles did not evolve or surface overnight. They were abetted by the Mutual Funds that are primed to sell profitable financial services to the very managements that they avidly court. Yet, they can be either unmindful or thoughtless of the incremental, long-range consequences of their votes - whether it be in the selection of directors with conflicting or self-interested agendas, or in approving/ratifying management proposals that are questionable or even irregular, or in sanctioning payments and options that are out-of-line-and-time with an official's true impact on his company's fortunes.
The one-and-only solution is "transparency". As investors or shareholders in the Mutuals, our members' pension funds, no less than others like them and individuals too, have interests and stakes in the manners in which the power that they, through their hefty assets, effectively confer on the Mutuals' managements whenever they exercise their votes. We also have standing, as the beneficiaries - and victims - of the ultimate upshots of the votes that are cast for persons and proposals in each of the above-described scenarios, to be privy, through disclosure, to the ways that the Mutuals' agents are exerting prerogatives that would not exist but for their representative capacities.
Any argument by the Mutuals touting their costs in order to comply with your Agency's proposed rule are made of whole cloth. Not only do a number of such Funds already provide this sought-after information; it is readily available to the respective Funds and can be recorded methodically and transmitted electronically in today's high-tech business environment.
In the final analysis, the public-at-large and we, as the Union's trustees and fiduciaries for our pensioners and members whose hard-won and hard-earned benefits we are obliged to protect and preserve, will be better able to do so when the proposed rule is finalized. The ILA therefore urges the Commission to stand-fast and to bring it on for early and serious implementation.
cc: Mr. John Bowers, Pres., ILA, AFL-CIO