From: jennifermichaels@hotmail.com
Sent: Sunday, December 01, 2002 11:23 AM
To: rule-comments@sec.gov
Cc: san@socialinvest.org
Subject: FILE NUMBER S7-36-02 and S7-38-02
Re: File Numbers S7-36-02 and S7-38-02
Mr. Jonathan G. Katz, Secretary
Securities and Exchange Commission
450 Fifth Street NW,
Washington, DC 20549-0609
Dear Secretary Katz:
I am writing in support of the Security and Exchange Commission's recently
proposed rules regarding proxy voting guidelines and vote disclosure by
mutual funds and investment advisers, File Numbers S7-36-02 and S7-38-02.
It is important to me to know how my mutual fund managers are voting.
Voting records can help me determine where I want my money invested and
I strongly support the recommendations set forth in these proposed rules.
The rules are a major step forward in providing greater transparency to
investors whose proxy assets are held in mutual funds or entrusted to
investment advisers. The SEC is making a clear statement that proxy
voting is a fiduciary duty and should be exercised with the best interests
of fund holders in mind. This is consistent with the fiduciary standard
already applied to private pension plans under the 1974 Employee Retirement
Income Security Act (ERISA).
Mutual funds and advisers have enormous potential to shape corporate
governance and social policies at portfolio companies. Yet since the
1970s, fund participants and regulators have noted a tendency among
mutual funds and advisers to automatically vote with management, wondering
whether this tendency was influenced in part by a desire to win profitable
401(k) and other business from companies where proxies are being cast. It
is time this potential conflict of interest was eliminated.
Greater disclosure of proxy-voting policies and practices would pressure
fund managers and advisers to refrain from unilateral rubberstamping of
management's decisions, and would provide investors additional tools to
distinguish among funds in the market. Indeed, the proposed rules would
not only help investors identify those funds and advisers that carefully
examine proxy proposals before voting on them, but also those who emphasize
strong corporate governance or high standards of corporate social
responsibility. The amendments would also allow for fund owners to be
alerted when fund managers vote counter to established voting guidelines,
and in essence, would pressure mutual funds and investment advisers to
take seriously their voting duties.
In 1999, Domini Social Investments, manager of the Domini Social Equity
Fund, became the first mutual fund in America to begin posting its proxy
votes and guidelines on its web site. (That same year, the California
Public Employees Retirement System, the largest public pension fund in
the world, also began posting its votes and guidelines.) Since then,
several dozen mutual funds, advisers, and other institutional investors
have instituted such disclosures--through posting their votes or articulating
detailed voting policies on their web sites. It is time such disclosure be
made by every mutual fund and investment adviser whose fiduciary duties
include the voting of proxies on behalf of their investors.
Engaged proxy voting helps bring increased managerial accountability and
social responsibility to many companies, and there is mounting academic
evidence that progress on social, environmental, and corporate governance
issues is linked to positive, long-term corporate performance. When all
mutual funds and investment advisers reveal how they cast proxy votes,
enabling shareholders to know what is being done in their name, we can
expect corporate governance and accountability to greatly improve.
Thank you for the opportunity to comment on the proposed rules.
Sincerely,
Jennifer Michaels
jennifermichaels@hotmail.com