Transportation Communications Union

December 4, 2002

Mr. Jonathan G. Katz, Secretary
Securities and Exchange Commission
450 Fifth Street, NW
Washington, DC 20549

Re: File No. S7-36-02

Dear Mr. Katz:

On behalf of the more than one hundred thousand active and retired members of the Transportation Communications Union (TCU) and the beneficiaries of the TCU Staff Retirement Plan, which is an ERISA-qualified pension plan, 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 and 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' and 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 and 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. The corporate scandals of the past few years have led to a severe erosion of confidence in the broad investment community. And that in turn has been a major factor in the dramatic losses in the equity markets, which have negatively affected our members' and beneficiaries' retirement security. There is no good reason for mutual funds to conceal their proxy voting records. 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 TCU.


Robert A. Scardelletti
International President
Transportation Communications Int'l Union
3 Research Place
Rockville, MD 20850

Why is disclosure of mutual fund proxy votes so important to your fund and its beneficiaries?

  • Because mutual funds hold large stakes in virtually every public company (mutual funds own 21% of U.S. corporate equity), their proxy voting power can be decisive in protecting the workers' retirement savings from the consequences of weak corporate governance.

  • Mutual funds face a conflict of interest since they sell financial services to the same companies at which they vote proxies on behalf of investors. Thus mutual funds may have an economic interest in voting with management even if such votes may not be in the interest of fund investors.

  • The tendency of mutual funds to reflexively vote with management has contributed to the destruction of $1.5 trillion in worker savings since the collapse of Enron.

  • 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.

  • Mutual funds have a fiduciary duty to vote proxies in the best interests of their investors. The SEC's proposed rule would give investors the information they need to ensure that their mutual funds take this fiduciary responsibility seriously.

  • Need for transparency to restore investor confidence -"sunlight remains the best disinfectant".