Securities Exchange Act of 1934 — Rule 14a-8(i)(2)
Boulder Total Return Fund, Inc.
March 5, 2010
Joel L. Terwilliger, Associate General Counsel
Boulder Total Return Fund, Inc.
2344 Spruce Street, Suite A
Boulder, Colorado 80302
Dear Mr. Terwilliger:
In a letter dated December 17, 2009, you notified the Securities and Exchange Commission (the "Commission') of the intent of Boulder Total Return Fund ("Fund") to omit from its 2010 proxy material a shareholder proposal ("Proposal") submitted by Gramercy Global Optimization Fund, Inc.1 The proposal states:
RESOLVED, Pursuant to Article XIII of the amended and restated bylaws ("Bylaws") of Boulder Total Return Fund, Inc. ("BTF"), the stockholders of BTF hereby amend the Bylaws to add the following new Article XIV:
ARTICLE XIV VALUATION OF SECURITIES — If it shall be determined by a federal or state court or regulatory authority that the Corporation, in connection with its determination of net asset value as of any fiscal quarter in 2008 or 2009, has overvalued an aggregate of no less than $1,000,000 of the auction rate preferred securities it holds, by a margin of greater than 5%, then the Board shall, subject to its fiduciary duties, terminate the Corporation's investment advisory agreement as soon as reasonably practicable.
You requested our assurance that we would not recommend enforcement action to the Commission if the Fund excludes the Proposal in reliance upon paragraphs (1), (2), (5) and (7) of Rule 14a-8(i) under the Securities Exchange Act of 1934. Your arguments are addressed below.
Rule 14a-8(i) (2)
You argue that the Proposal may be omitted under Rule 14a-8(i) (2) because if implemented, it would violate federal securities laws. You characterize the Proposal as an attempt to "end-run" the shareholder voting requirements of the Investment Company Act of 1940 (the "1940 Act") by "essentially amending the termination provisions of the Advisory Agreement through a change to the Fund's bylaws rather than via the Advisory Agreements themselves."
The Proposal does not constitute an amendment to the Fund's advisory agreement; rather, it provides for a bylaw amendment that would direct the Board to take action subject to its fiduciary duties. Accordingly, we cannot assure you that we would not recommend enforcement action if the Fund omits the Proposal in reliance upon Rule 14a-8(i) (2).
Rule 14a-8(i) (1)
You argue that the Proposal may be omitted under Rule 14a-8(i) (1) because it is not a proper subject under Maryland law. Rule 14a-8(j) (2) (iii) requires the Fund to provide a supporting opinion of counsel when basing its reasons for omitting a proposal on a matter of state law. In analyzing such an opinion of counsel, the staff considers whether counsel is licensed to practice law in the jurisdiction where the law is at issue. (Staff Legal Bulletin No. 14B (CF) dated September 15, 2004). Your December 17, 2009 letter does not represent that you are a member of the Maryland bar. Accordingly, we cannot assure you that we would not recommend enforcement action if the Fund omits the Proposal in reliance upon Rule 14a-8(i) (1).
Rule 14a-8(i) (5) and (7)
You argue that the Proposal may be omitted under Rule 14a-8(i) (5) because it is not relevant to the Fund's operations. Alternatively, you argue that the Proposal may be omitted under Rule 14a-8(i) (7) because it deals with a matter relating to the Fund's ordinary business operations. The Proposal concerns termination of the advisory contract in the event a court or regulatory authority determines that the Fund overpriced securities it held and thus is relevant to the Fund's operations and goes beyond ordinary business operations. We are thus unable to concur in your view that the Fund may exclude the Proposal under Rule 14a-8(i)(5) or (7), and cannot assure you that we would not recommend enforcement action if the Fund omits the Proposal in reliance upon Rule 14a-8(i)(5) or (7).
In connection with the foregoing, please see the enclosure, which sets forth a brief discussion of the Division's procedures regarding shareholder proposals. If you have any questions concerning this matter, please telephone me at 202.551.6965.
Vincent J. Di Stefano
Office of Disclosure and Review
cc: Adam W. Finerman, Esq. (w/encl.)
The Incoming Letter is in Acrobat format.