Control Share Acquisition Statutes - Gerald Hellerman

Re: Control Share Statutes

Years ago when I worked in the Division of Corporate Regulation, now called the Division of  Investment Management, the Staff and the Commission were of one mind regarding protecting investors in registered investment companies. Among other areas, we looked at voting rights. I spent substantial time reviewing what at that time was a new product being offered to the general public - variable annuities. One provision that we examined closely was voting rights. We worked to protect all investors and I am not aware of a registered investment company during the 5-6 years that I was involved in the RIC area of of a fund issuing shares with voting restrictions.  

The Introduction of the SEC's "What We Do"  article begins with "The mission of the U.S. Securities and Exchange Commission is to protect investors - - -." The 40 Act exists to protect fund shareholders - not fund investment advisers. The Commission and Staff should not provide managers with ways to avoid being accountable to all fund shareholders. The Boulder letter made it clear that RIC shareholders should be allowed to vote all their shares and to authorize and approve restrictions on such a basic right would be a breach of the fiduciary responsibility of officers and directors. Bill Carey and Manny Cohen would roll over in their graves for the Commission or Staff to even indicate otherwise. 

The Boulder letter should be re-instated. 

Gerald Hellerman

Fund Director - 1993 to present
SEC 1962 - 1972