Subject: Comment on File No. S7-25-97

Date:    11/23/97 11:13 PM
     
     
     
     
     
            November 24, 1997
     
VIA E-MAIL
     
Jonathan G. Katz, Secretary
Arthur Levitt, Chairman
U.S. Securities and Exchange Commission 
450 Fifth Street, N.W.
Washington, D.C. 20549
     
RE:     Comment Opposing the SEC's Proposed Amendments to Rules on      
            Shareholder Proposals, File No. S7-25-97; IC-22828
     
Dear Secretary Katz, Chairman Levitt, and others at the SEC:
     
        On behalf of Inner City Press/Community on the Move and its members and
affiliates, including the Inner City Public Interest Law Project ("ICP"), 
this letter provides timely public comments in opposition to the Securities 
and Exchange Commission's (the "SEC's") proposed amendments to Rule 14a-8 
concerning shareholder proposals.
     
        ICP has in recent years participated in a number of SEC proceedings. 
See,
e.g., the record underlying the Commission's Order of May 31, 1995, granting 
ICP interested person status as to an application under the Investment 
Company Act of 1940 (the "ICA"), ICA Release No. 21101 (May 31, 1995).  Most 
recently (and, as explained below, relevant here), ICP has commented to the 
SEC in opposition to a large  investment advisor's application to be allowed 
to switch investment advisory contracts without having the approval of the 
shareholders of affected investment companies.  See record in File # 
812-10948; ICA Release # 22873, an application for an exemption from section 
15(a) of the ICA.  As ICP has stated therein, the SEC's staff's decision to 
even publish for comment that application, stating that the exemption would 
be granted unless a timely hearing request was received, reflects the SEC on 
the precipice of making decisions for investment companies' shareholders.  We 
have timely opposed that application, and our hearing request is pending -- 
but note, as it relates to this rule-making proposal, that since the 
Commission has established an exemptive process that can bypass shareholders 
and their views on particular decisions, it is imperative that the Commission 
not, as it now proposes, make it more difficult for shareholders to speak 
through the resolution/proposal process.
     
        Shareholder resolutions are one of the few ways that investors,
particularly
small investors and Americans with pension funds, can voice their concerns to 
and regarding the corporations they own.  The SEC's current proposal 
undermines this vehicle for participation, and we oppose it.  We are 
particularly concerned about, and strenuously oppose, the following specifics 
of the proposal:
     
        The SEC's proposal to apply a rigid, $10 million in sale or costs or 3%
of
total sale or cost "relevance" test is arbitrary, and would result in the 
exclusion of proposals that relate to a quantitatively small part of a 
corporation, but one which either might give rise to large future liabilities 
for the corporation, or involves social issues which are of broad concern to 
shareholders.
     
        The resubmission thresholds that you propose (6% in the first year, 15%
in
the second, and 30% in the third year) are absurdly high, and would exclude 
many of the types of proposals which have in recent years led to greater 
corporate responsibility and accountability to shareholders.
     
        We oppose the proposed raising of the dollar value threshold required to
even be able to submit a shareholder proposal from $1,000 to $2,000.  This 
proposal appears particularly targeted at smaller investors, including the 
more recent working class investors whose interests the SEC and its current 
Chairman have, in other contexts, spoken out in favor of.  
     
        The SEC proposes to allow corporations to exclude shareholder proposals
under Section c(4) with no review by Commission staff. This would force 
proponents to expend resources suing in federal court.  Many smaller 
proponents do not have the resources to vindicate their rights through the 
expensive judicial process; furthermore, the Commission's and its staff's 
expertise (for example, in the appropriate application of the "four-corners" 
rule) would be wasted.
     
        For the foregoing reasons, and for the other reasons submitted in
opposition
to this proposal, and those set forth and acknowledged in 
retiring-Commissioner Wallman's statement accompanying the proposal, this 
rule should not go forward.
     
        Thank you for this opportunity to comment. If you have any questions,
please
telephone the undersigned at (718) 716-3540.
     
Very Truly Yours,
     
Matthew Lee, Esq.
Executive Director
Inner City Press/
Community on the Move
and Inner City Public Interest Law Projecy 
1919 Washington Avenue
Bronx, NY 10457
     
(T)  718 716-3540
(fx) 718 716-3161
E-mail: innercity1@aol.com