Control Share Acquisition Statutes - James McRitchie

The Investment Company Act says that every share of stock issued by a closed-end fund must have equal voting rights. I read the Boulder letter at https://www.sec.gov/divisions/investment/noaction/2010/bouldertotalreturn111510.htm. It explained why opting into a state control share statute limiting a shareholder’s ability to vote all of his or her shares would violate the Act. I do not understand how the SEC can change its mind and say, without giving any reason, that it is OK for a fund to prevent a shareholder from voting all of his or her shares.

Activists are needed to hold the management of closed-end funds accountable for poor performance and wide discounts. However, activists will be deterred if they cannot vote all of their shares. And the law is supposed to protect investors, not management.

Was Staff pressured by the politically powerful fund management industry to withdraw the Boulder letter? It should have resisted that pressure. Please have the moral courage to do the right thing and reissue the Boulder letter.

Please do not hesitate to contact me, if further clarification of my comment is needed.

James McRitchie
Shareholder Advocate
Corporate Governance
Site: http://www.corpgov.net