International Brotherhood of Electrical Workers, Local 769
December 2, 2002
Mr. Jonathan G. Katz, Secretary
Re: File No. S7-36-02
Dear Mr. Katz:
On behalf of the two thousand (members/beneficiaries) of the International Brotherhood of Electrical Workers, Local 769 (union/pension fund), I am writing to express strong support for the Securities and Exchange Commission's recent proposal, S7-36-02, Disclosure of Proxy Voting Policies and Proxy Voting Records by Registered Management Investment Companies. Most importantly, I strongly support those provisions that would require mutual funds to disclose their actual votes cast.
Our (beneficiaries/members) invest both individually, often through mutual funds, and through a variety of benefit plans, including 401(k) plans that offer mutual fund investment options. Like other investment managers that manage our (members'/beneficiaries') pension assets, mutual funds face conflicts of interest in voting proxies that could lead them to vote with management even if such votes are not in the best interest of our (members/beneficiaries). But unlike our other investment managers-which are required under ERISA to tell us how they vote-mutual funds have until now shielded their proxy voting from investor and regulatory scrutiny.
I commend the Commission for proposing a rule that will end this double standard-a double standard that has allowed mutual funds to turn a blind eye to the kinds of corporate governance failures that have cost our (members/beneficiaries) dearly at Enron, Tyco and WorldCom among others. Mutual funds own roughly 20 percent of U.S. corporate equity, so their proxy-voting power can be instrumental in protecting our (beneficiaries'/members') retirement savings from the consequences of weak corporate governance. Full disclosure of mutual fund proxy votes is the only way to ensure that mutual funds don't allow their corporate client relationships to influence their proxy votes in support of runaway executive pay, conflicted auditors, and entrenched boards of directors. The Commission's proposed rule would give investors the information they need to ensure that their mutual funds take this fiduciary responsibility seriously.
I thank you for the opportunity to comment on this proposal on behalf of I.B.E.W. Local 769.