4009 West 49th Street, #300
Sioux Falls, SD 57106-3784
June 11, 2003
Mr. Jonathan G. Katz, Secretary
Securities and Exchange Commission
450 Fifth Street NW
Washington, DC 20549-0609
Re: File No. S7-10-03
Dear Mr. Katz:
In the past year there have been a number of important initiatives to address areas of concern regarding general and specific practices of corporations. These practices have become all too common in the past decade. Four examples include:
- The Commission on Public Trust and Private Enterprise has recently produced a significant study on many areas of corporate governance.
- Much attention has been focused on the need to strengthen the Securities and Exchange Commission to allow them to properly fulfill the many crucial regulatory responsibilities that even the most free capitalistic society in the world needs to help assure that all participants play fairly. Fair play in an otherwise unfettered marketplace is the best known model to assure the greatest amount of prosperity for the greatest amount of people.
- Many participants in the investment community are focusing greater attention on a thoroughness of research. This hopefully will include Wall Street firms, yet alone independent research boutiques, as well as investment management organizations around the country. Investors are returning to a scrutiny of balance sheets, cash flow statements and a refocus on core earnings rather than the various levels of pro forma earnings increasingly suggested and used by America's corporations in the past decade.
- The newly constituted Public Company Accounting Oversight Board appears to be a very potent source of accounting scrutiny to oversee the essential job of accurately auditing America's publicly traded companies. If this responsibility is successfully fulfilled, it will add greatly to investor confidence with important potential consequences for required equity risk premiums.
Now the Securities and Exchange Commission is in the process of pursuing an in-depth review of current proxy rules. The South Dakota Investment Council, which manages many trust funds aggregating more than $6.5 billion for the 755,000 citizens of South Dakota, including South Dakota's retirement system plans for over 62,000 members, strongly supports the Securities and Exchange Commission's revisions to the rules and regulations regarding the proxy process. Review and revision of rules and regulations that would improve shareholders' rights and strengthen shareholders' positions on corporate governance and related matters are strongly supported by the South Dakota Investment Council.
We implemented a proxy voting policy in 1990 that attempted to guide us in fulfilling our responsibilities to thoughtfully vote all proxies. Over the years, though this duty was fulfilled, we felt a general sense of frustration regarding the regulations within which the proxy process operated. We also felt that, in many instances, the casting of our proxy votes, though seriously undertaken, were not going to have a serious effect on important issues. We are not experts in rules and regulations governing the proxy process. We do deeply believe that strengthening shareholders' rights will provide an ultimate win win for all participants in America's democratic society.
Stephen R. Myers
State Investment Officer