Securities Exchange Act of 1934 — Rule 14a-8
First Trust Mortgage Income Fund
January 25, 2018
Mr. Jonathan A. Koff, Esq.
Chapman and Cutler LLP
111 West Monroe Street
Chicago, IL 60603-4080
First Trust Mortgage Income Fund
Omission of Shareholder Proposal Submitted by Richard Wachterman
Dear Mr. Koff:
In a letter dated December 12, 2017, on behalf of First Trust Mortgage Income Fund (the “Fund”), you requested confirmation from the staff of the Division of Investment Management that it would not recommend enforcement action to the Securities and Exchange Commission if a shareholder proposal and supporting statement (the “Proposal”) submitted by Richard Wachterman (the “Proponent”) is excluded from the proxy materials for the Fund’s 2018 Annual Meeting (the “Proxy Materials”). The Proposal provides:
RESOLVED, that the shareholders of First Trust Mortgage Income Fund (“Fund”) request that the Board of Trustees authorize a self-tender offer for all outstanding common shares of the Fund at or within 2% of net asset value. If more than 50% of the Fund’s outstanding common shares are submitted for tender, the Board is requested to cancel the tender offer and take those steps that the Board is required to take to cause the Fund to be liquidated or converted to (or merged with) an exchange traded fund or an open-end mutual fund.
The Fund maintains that the Proposal may be excluded from the Proxy Materials: (1) pursuant to Rule 14a-8(i)(3), because the Supporting Statement contains statements that are materially false or misleading, including statements that impugn the integrity of the Fund’s Trustees; (2) pursuant to Rule 14a-8(i)(4), because the Proposal is designed to benefit the Proponent rather than other shareholders at large; and (3) pursuant to Rule 14a 8(i)(7), because the Proposal deals with matters relating to the Fund’s ordinary business operations.
We are unable to concur in your view that the Fund may exclude the Proposal from the Proxy Materials under Rule 14a-8(i)(3), (4) or (7). We are unable to conclude that you have demonstrated objectively that the proposal is materially false or misleading, including by impugning the integrity of the Trustees. We are also unable to conclude that the Proposal would result in a benefit to the Proponent not shared by other shareholders at large or that the Proposal deals with a matter relating to the Fund’s ordinary business operations. Accordingly, we cannot assure the Fund that we would not recommend Enforcement action if the Fund excludes the Proposal from its Proxy Materials in reliance on Rule 14a 8(i)(3), (4) or (7).
Attached is a description of the informal procedures the Division follows in responding to shareholder proposals. You may contact me at (202) 551-3503 if you have any questions.
/s/ David L. Orlic
David L. Orlic
Division of Investment Management
Informal Procedures Regarding Shareholder Proposals
The Division of Investment Management believes that its responsibility with respect to matters arising under Rule 14a-8 [17 CFR 240.14a-8], as with other matters under the proxy rules, is to aid those who must comply with the rule by offering informal advice and suggestions and to determine, initially, whether or not it may be appropriate in a particular matter to recommend enforcement action to the Commission. In connection with a shareholder proposal under Rule 14a-8, the Division’s staff considers the information furnished to it by an investment company in support of its intention to exclude the proposals from the investment company’s proxy material, as well as any information furnished by the proponent or the proponent’s representative.
The staff will always consider information concerning alleged violations of the statutes administered by the Commission, including arguments as to whether or not activities proposed to be taken would be violative of the statute or rule involved. The receipt by the staff of such information, however, should not be construed as changing the staff’s informal procedures and proxy review into a formal or adversary procedure.
The determination reached by the staff in connection with a shareholder proposal submitted to the Division under Rule 14a-8 does not and cannot purport to “adjudicate” the merits of an investment company’s position with respect to the proposal. Only a court, such as a U.S. District Court, can decide whether an investment company is obligated to include shareholder proposals in its proxy material. Accordingly a discretionary determination not to recommend or take Commission enforcement action does not preclude a proponent, or any shareholder of an investment company, from pursuing any rights he or she may have against the investment company in court should management omit the proposal from the investment company’s proxy material.
The Incoming Letters from the fund and proponent are in Acrobat format.