From: Howard Sherman [HSherman@gmiratings.com]
Sent: Thursday, December 04, 2003 4:03 PM
To: rule-comments@sec.gov
Cc: Howard Sherman
Subject: File No. S7-19-03 

To the Commission,

The SEC is to be commended for taking a look at this important and timely issue.   
The proposed rule change deserves your unanimous support on three levels.  

Legal: Even though their ownership is diffuse and protected by limited liability, 
the shareowners of public companies deserve the fundamental right to influence 
corporate governance when events so warrant.  The proxy voting mechanism has become 
a key tool for shareowner participation in corporate governance, but it is simply 
not effective enough in certain situations, including those where the management 
ignores majority votes on shareholder proposals.  Shareowners should have the 
fundamental right to effect changes at the board level when their agents are not 
performing.  

Financial: A growing number of studies demonstrate that when sophisticated 
institutions are concerned enough to get involved in governance matters, their 
activities – even the announcement effect of their activities – can result in 
positive and profitable change. With investor trust at a cyclical bottom, it would 
seem clear that the ability for large shareowners to exert influence when so required 
would do much to improve trust and market valuations.  

Practical:   Concerns that boardrooms will be run over by active institutions are 
wildly exaggerated. Owing to political and business conflicts, there actually are 
a fairly limited number of institutions who are likely to take advantage of the 
proposed rule change, and then only in exceptional situations.  

If passed, institutional investors can be trusted to use this new - and frankly 
incremental - change carefully, responsibly, and for the benefit of all market 
participants.  I urge you to move ahead with this important change.

Respectfully submittted,

Howard Sherman
25 Broad Street
Apt 15F
New York, NY 10004