From: olson@lafn.org Sent: Thursday, October 31, 2002 9:01 PM To: rule-comments@sec.gov Subject: File No.S7-38-02 Comment on "Proxy Voting by Investment Advisers" Fund For Stockowners Rights Carl Olson, Chairman National Headquarters P.O. Box 65563 Washington, D. C. 20035 703-241-3700 West Coast Office P.O. Box 6102 Woodland Hills, California 91365 818-223-8080 Fund For Stockowners Rights is a nonprofit research and education group that promotes the involvement of stockowners in the governance of their corporations. The proposed rule is long overdue. Stockowners have been shortchanged with their investment advisers due to the lack of knowledge of how the advisers vote the stock in their portfolios. The damage has been two-fold: 1. It is unreasonable for an adviser to keep secret from the clients this information about the very important voting power of stockholdings. 2. Because of the secrecy about proxy voting, investment advisers tend either to be arbitrary to vote always with management, or to avoid making any analysis of the voting, or to bend toward managements due to a conflict of interest with another part of the firm containing the investment advisers. Voting of shares is an integral part of stock management. It is a potent way for stockowners to improve their corporations. Much of the current wave of corporate corruption exposures can be attributed to the lack of effective oversight by interested parties. For too long the investment advisers have not been using their day-to-day professional ability to analyze corporate behavior toward the ends of turning around poor financial performance and discouraging outright fraud. Not only do the clients suffer. The whole economy suffers from this currently untapped potentially-powerful force for better economic performance. Unexamined managements are like mice who play while the cat's away. Good investment advisers will gain a competitive advantage by adopting and exercising active proxy voting policies to benefit the stockowners. Those active investment advisers will undoubtedly benefit by positively influencing the financial performance of the corporations in their portfolios--and thus attract more clients. Success breeds success. As a whole, investment advisers have voting powers over billions of shares of stock in thousands of companies. This power, when exercised in a thoughtful manner, will work wonders. Again, the rule is long overdue.