Subject: SR-23-99
Author:  Laura Anne Corsell 
Date:    04/12/2000 7:39 PM
     
     
My name is Laura Anne Corsell and I am an attorney specializing in mutual 
fund and investment adviser matters.  I recognize that the comment period 
on this proposal has ended.  In my review of certain of the comment letters 
submitted to the Commission on this proposal,  however,  I  noticed that 
the following point was not raised.
     
The SEC's recent governance initiative proposed, among many other things, 
that only those investment companies with "majority independent boards" be 
permitted to rely upon rule 15a-4 under the 1940 Act.  The policy 
underlying the proposed amendment may be appropriate in cases where an 
"interium contract" results from the sale of an investment adviser or a 
control affiliate of that adviser.  If amended as proposed, however, the 
rule would also eliminate the single device that  would permit directors to
 terminate the contract of an investment adviser without orphaning the fund
they serve.  It is, of course, true that, in order to comply with Section 
15(a), independent directors who serve "40% funds"  would have to get one 
or more of their interested colleagues to vote with them.  But it is 
important to remember that not all "interested directors" are affiliated 
with the investment adviser of the fund they serve, that not all such 
directors would choose in every case to vote "against" the position taken 
by their independent colleagues, and finally, that all directors have a 
fiduciary duty to the shareholders in considering advisory agreements.   I 
recognize that dismissals of advisers, not to say 40% boards, are hardly 
the norm in the industry.  I would seem, however, that the Commission would 
not want, inadvertantly, to make the job of an independent director who 
serves on a 40% board even more difficult.