Securities Exchange Act of 1934 - Rule 14a-8(i)(3) and 14a-8(1)
Putnam High Income Securities Fund
Dear Mr. Raine:
In a letter dated January 31, 2006, you notified the staff of the Securities and Exchange Commission that the Putnam High Income Securities Fund ("the Fund") proposes to omit from its proxy materials for its 2006 annual meeting the supporting statement ("Supporting Statement") to a shareholder proposal ("the Proposal") submitted by Mr. Robert P. Laukat (the "Proponent").1 The Proposal provides:
RESOLVE; that the shareholders of the Putnam High Income Bond Fund2 assembled in annual meeting in person and by proxy, hereby request the Board of Directors to take the necessary action to provide for cumulative voting in the election of directors, which means each shareholder shall be entitled to as many votes as shall equal the number of shares he or she owns multiplied by the number of directors to be elected, and he or she may cast all of such votes for a single candidate or any two or more candidates as he or she may see fit.
You request our assurances that we would not recommend enforcement action if the Fund omits the Supporting Statement in reliance on Rules 14a-8(i)(3) and 14a-8(l) under the Securities Exchange Act of 1934 (the "1934 Act").
You assert that because various portions of the Supporting Statement are false or misleading, the Fund may omit them pursuant to Rule 14a-8(i)(3). This rule allows a company to exclude a proposal that violates any of the Commission's proxy rules, including Rule 14a-9 under the 1934 Act, which prohibits materially false and misleading statements in proxy soliciting materials. You argue that the supporting statement contains material inaccuracies and omissions, and is otherwise vague, indefinite and/or incomprehensible, particularly in paragraphs two through five.3
We cannot assure you that we would not recommend enforcement action if the Fund excludes the Supporting Statement in reliance upon Rule 14a-8(i)(3). We do not believe that any statement in the Supporting Statement rises to the level of materially misleading, and many are simply statements of the Proponent's opinion. The Fund will have an opportunity to include in its proxy statement arguments reflecting its own point of view on the proposal. See Rule 14a-8(m)(1); Staff Legal Bulletin 14B (companies should address in their statements of opposition objections to opinions or factual assertions that may be disputed or countered even though not materially false or misleading). Therefore, we are unable to concur with your view that the Fund may omit the Supporting Statement under Rule 14a-8(i)(3).
You assert that the Fund may omit paragraph six because that paragraph contains the Proponent's address and phone number pursuant to Rule 14a-8(l)(1). This rule allows a company to omit a proponent's name and address so long as the company includes a statement that it will provide the information to shareholders promptly upon receiving an oral or written request.
There appears to be some basis for your view that you may omit the Proponent's name, address and telephone number from the supporting statement in reliance on Rule 14a-8(l)(1). This position assumes that the Fund will include in its proxy materials a statement that the name and address will be furnished by the Fund to any person, promptly upon request. See Strategic Global Income Fund, Inc. (pub. avail. March 24, 2000). Accordingly, the staff would not recommend enforcement action against the Fund if it omits the sixth paragraph of the supporting statement in reliance upon Rule 14a-8(l) (1), provided that it provides the Proponent's name and address (including his telephone number) to shareholders who request it.
Attached is a description of the informal procedures the Division follows in responding to shareholder proposals. If you have any questions or comments regarding this matter, please contact the undersigned at (202) 551-6941.
Linda B. Stirling
cc: Robert P. Laukat
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