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EXECUTIVE COUNCIL815 Sixteenth Street, N.W. JOHN J. SWEENEY RICHARD L. TRUMKA LINDA CHAVEZ-THOMPSONWashington, D.C. 20006 PRESIDENT SECRETARY-TREASURER EXECUTIVE VICE PRESIDENT(202) 637-5000http://www.aflcio.org Vincent R. Sombrotto Gerald W. McEntee Morton Bahr Gene UpshawFrank Hanley Michael Sacco Frank Hurt Gloria T. JohnsonDouglas H. Dority Stephen P . Yokich Clayola Brown M.A. “Mac” FlemingPatricia Friend Michael Goodwin Joe L. Greene Sonny HallCarroll Haynes James La Sala William Lucy Leon LynchArturo S. Rodriguez Robert A. Scardelletti Andrew L. Stern Edward L. FireMartin J. Maddaloni John M. Bowers Sandra Feldman R. Thomas BuffenbargerBoyd D. Young Dennis Rivera Bobby L. Harnage Sr. Stuart AppelbaumJohn W. Wilhelm Elizabeth Bunn Michael E. Monroe Michael J. SullivanJames P. Hoffa Capt. Duane Woerth Terence O’Sullivan Harold SchaitbergerEdwin D. Hill Joseph J. Hunt Cheryl Johnson Bruce RaynorClyde Rivers Cecil Roberts Edward C. Sullivan William BurrusLeo W. Gerard Melissa Gilbert Edward J. McElroy Jr. December 6, 2002 BY ELECTRONIC AND U.S. MAIL 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 American Federation of Labor and Congress of Industrial Organizations (the “AFL-CIO”), I welcome this opportunity to offer our comments on the Securities and Exchange Commission (the “Commission”) proposal, S7-36-02, to ...
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815 Sixteenth Street, N.W.
Washington, D.C. 20006
(202) 637-5000
http://www.aflcio.org
EXECUTIVE COUNCIL
JOHN J. SWEENEY
PRESIDENT
RICHARD L. TRUMKA
SECRETARY-TREASURER
LINDA CHAVEZ-THOMPSON
EXECUTIVE VICE PRESIDENT
Vincent R. Sombrotto
Gerald W. McEntee
Morton Bahr
Gene Upshaw
Frank Hanley
Michael Sacco
Frank Hurt
Gloria T. Johnson
Douglas H. Dority
Stephen P.Yokich
Clayola Brown
M.A. “Mac” Fleming
Patricia Friend
Michael Goodwin
Joe L. Greene
Sonny Hall
Carroll Haynes
James La Sala
William Lucy
Leon Lynch
Arturo S. Rodriguez
Robert A. Scardelletti
Andrew L. Stern
Edward L. Fire
Martin J. Maddaloni
John M. Bowers
Sandra Feldman
R.Thomas Buffenbarger
Boyd D.Young
Dennis Rivera
Bobby L. Harnage Sr.
Stuart Appelbaum
John W.Wilhelm
Elizabeth Bunn
Michael E. Monroe
Michael J. Sullivan
James P. Hoffa
Capt. Duane Woerth
Terence O’Sullivan
Harold Schaitberger
Edwin D. Hill
Joseph J. Hunt
Cheryl Johnson
Bruce Raynor
Clyde Rivers
Cecil Roberts
Edward C. Sullivan
William Burrus
Leo W. Gerard
Melissa Gilbert
Edward J. McElroy Jr.
December 6, 2002
BY ELECTRONIC AND U.S. MAIL
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 American Federation of Labor and Congress of Industrial Organizations
(the “AFL-CIO”), I welcome this opportunity to offer our comments on the Securities and
Exchange Commission (the “Commission”) proposal, S7-36-02, to require mutual funds to
disclose their proxy voting policies and individual proxy voting decisions.
As you know, the AFL-CIO first petitioned the Commission on December 20, 2000 to
adopt rules to improve the quality of mutual fund disclosure on issues such as proxy voting
records and fund holdings (SEC File No. 4-439). In the wake of scandals at companies
like Enron, WorldCom and Tyco, and the appointment of a new Commission, we
submitted a second petition on July 31, 2002 focusing exclusively on the urgent need for
rules requiring mutual funds to disclose their individual proxy votes.
We were extremely pleased, therefore, that less than three weeks later the Commission
announced its proposed rule requiring full disclosure of mutual fund proxy voting policies
and records. We commend the Chairman, commissioners and staff for formulating a rule
that addresses the important issues of mutual proxy voting disclosure in a substantive,
thoughtful and comprehensive manner.
We do not believe it necessary to detail in this letter why we believe the disclosure of
mutual fund proxy votes is so vital to mutual fund shareholders and, for that matter, to all
investors. We have already articulated our views in our July 31, 2002 petition. More
importantly, the Commission clearly appreciates the importance of this issue as evidenced
by the following factors cited in the proposal’s Introduction and Background:
Jonathon G. Katz, Secretary
December 6, 2002, p. 2
1. The potential for mutual funds to have enormous influence on corporate
accountability given their substantial equity holdings.
2. The fact that the interests of a mutual fund’s shareholders may conflict with those
of its investment adviser with respect to proxy voting.
3. The fact that a fund’s adviser may have an incentive to support management
recommendations to further its business interests, even if the resulting vote is not in
shareholders’ best interests.
4. The opportunity to encourage funds to become more engaged in corporate
governance of issuers held in their portfolios by requiring greater transparency of
proxy voting by funds.
5. The potential to address conflicts of interest and discourage voting that is
inconsistent with fund shareholders’ best interests by shedding light on mutual fund
proxy voting.
We therefore want to take this opportunity to voice our strong support for the rule as
proposed, and to respond to arguments expressed by those in mutual fund industry that
oppose disclosing their proxy voting records. We would also like to offer a
recommendation for how the Commission could enhance the rule to more effectively
address potential conflicts of interest.
I. Response to Industry Arguments Opposing Proxy Vote Disclosure
Representatives of the mutual fund industry, and Fidelity Investments and the Investment
Company Institute in particular, have cited a variety of reasons why they should not be
required to disclose their proxy voting records. We do not believe that these arguments
fairly reflect the best interests of mutual fund shareholders. Below, we respond to (A)
industry arguments relating specifically to issues of confidentiality, and (B) the various
other arguments put forth by the opponents of the proposed rule.
A. Industry Arguments Regarding Importance of Confidentiality
1. Compliance with the rule would violate the principle of confidential voting
Opponents of proxy voting have stated that disclosure of their proxy voting records
conflicts with the principle of confidential voting, a principle that the AFL-CIO and other
advocates of good corporate governance strongly support.
1
This argument intentionally
misconstrues both the definition and spirit of confidential voting in order to justify
opposition to the proposed rule. In their comprehensive textbook entitled Corporate
Governance, Robert A.G. Monks and Nell Minow define confidential voting as follows:
1
AFL-CIO Proxy Voting Guidelines
on confidential voting state “The voting fiduciary’s analysis must
consider the interest in assuring that proxy voting be protected from potential management coercion and
management’s use of corporate funds to lobby shareholders to change their votes.”
Jonathon G. Katz, Secretary
December 6, 2002, p. 3
Conflicts of interest, both political and commercial, make confidential
voting an important issue to many shareholders. These conflicts are
inherent in any situation where management (or its agents) is counting the
non-confidential votes. This is the practice that prevails in the vast (though
shrinking) majority of corporations. Thus, corporate managers know as
soon as the votes come in who has voted and how they voted. Since new
proxies can be submitted at any time up to the moment votes are counted,
intense pressure can be placed on shareholders who also happen to have a
close business relationship with the company in question. It is common
practice for companies to call dissident shareholders and persuade them to
change their votes to support management.
2
The purpose of confidential voting, in other words, is to protect shareholders and their
proxy voting agents from management pressure to change their votes
before
the
shareholder meeting at which those votes are cast. The fact is that the SEC’s proposed rule
would only require that mutual funds disclose their proxy voting records
after
the
shareholder meeting, and thus in no way violates the principle of confidential voting.
2. Mutual funds prefer “candid” conversations with management
Fidelity and TIAA-CREF are among the mutual fund companies that argue that keeping
proxy votes confidential allows them to have candid conversations with companies on
important issues regarding company management. According to Fidelity spokesman Vin
Loporchio, "We've long believed in quiet diplomacy, where we work directly with
companies to exert influence for the best interest of our mutual fund shareholders."
3
This argument is based on the fallacious assumption that companies do not already know
how their large shareholders vote. In fact, 73% of the companies in the S&P 500 have not
adopted confidential voting policies, and thus know how Fidelity and TIAA-CREF among
other shareholders cast their proxy votes.
4
The shareholders of Fidelity and TIAA-CREF
mutual funds, however, do not have this knowledge.
Even those companies that have adopted confidential voting policies are able to spot when
a particularly large shareholder (e.g. Fidelity) casts its votes, and to identify that
shareholder by comparing the size of the voting block to their shareholder list. Many
companies hire proxy solicitors who specialize in this type of analysis as a key tool of their
trade. Moreover, according to IRRC research,
2
Monks, Robert A.G. and Nell Minow. Corporate Governance. Malden, Massachusetts: Blackwell
Publishers Inc., 1995.
3
Pope, Justin
, With deadline approaching, mutual fund companies under pressure on proxies
, Associated
Press, December 4, 2002.
4
Hunt, Timothy M. IRRC Corporate Governance Service 2002 Background Report F. Investor
Responsibility Research Center (IRRC), January 2002. The referenced percentage of 73% rises to 89% when
the population is expanded to the 1,906 companies in the IRRC research universe.
Jonathon G. Katz, Secretary
December 6, 2002, p. 4
…holding shares in a street name does not really protect proxy voters since
most companies are able to identify parties with proxy voting authority
(beneficial owners and fiduciaries) quite successfully. Proxy solicitors tell
IRRC that upwards of 90 percent of these institutions and individuals can
be identified.
5
Similar to Fidelity and TIAA-CREF, the AFL-CIO and many worker pension funds value,
and engage in, constructive dialogue between shareholders and company management.
However, these conversations are separate from, and not a substitute for, voting proxies in
the best interests of fund beneficiaries. Given the potential for conflicts of interest, we are
especially concerned that major mutual fund firms like Fidelity prefer to represent their
investors through “candid conversations” behind closed doors, rather than by exercising
their proxy voting rights in a responsible and transparent manner consistent with their
fiduciary duty. The fact is that mutual fund investors have no way of knowing whether
these closed door conversations are good faith efforts by their fund companies to represent
shareholder interests, or schemes to trade proxy votes in order to win business managing
the company’s 401(k) plan.
3. Disclosing proxy votes will politicize the investment process
The ICI has argued that the Commission’s rule would “politicize” the investment process.
If we understand this argument correctly, the mutual fund industry is concerned that
mutual fund investors may put pressure on their fund companies if they are able to
determine that these companies are casting proxy votes they do not support.
We believe that it is a good thing if mutual funds come under market pressure for behavior
that their investors disapprove of. Our securities laws are founded on the premise that
investors should have all of the information relevant to their decision-making process. It
seems to us, therefore, that a mutual fund that casts its proxy vote in the best interests of its
shareholders has no reason to resist disclosing those votes.
Given that a mutual fund company’s business depends on its investors, it is hard to
imagine what mutual fund firms fear from assuming that they are voting in mutual fund
investors’ interests and then telling them about those votes. However, if they are not
voting in their investors’ interests, one could see why that might fear disclosure of their
voting records.
We strongly encourage the Commission to evaluate actual experience with proxy voting
disclosure by the money managers of private pension plans. As you know, investment
managers that manage private pension plans are already required under ERISA to disclose
how they cast their proxy votes to the plan trustees. As a result of this disclosure
requirement, the AFL-CIO is able to publish an annual survey that includes how these
managers voted on roughly 30 shareholders votes that we believe are emblematic of issues
important to worker-shareholders.
5
Ibid.
Jonathon G. Katz, Secretary
December 6, 2002, p. 5
We have published the
AFL-CIO Key Votes Survey
for the past five years, and believe it to
be the first and only systematic review of investment manager proxy voting records. The
most recent survey, covering the 2001 proxy season, included 167 money managers and
proxy consultants. Excluding mutual fund companies, which are conspicuously absent
from the report, the report includes virtually all of the large institutional investment firms.
Contrary to concerns expressed the mutual fund industry, we believe that the
AFL-CIO
Key Votes Survey
has had a positive influence on the proxy voting practices of the money
managers in the survey. We look forward to adoption of the Commission’s proposal so
that we can include the mutual fund companies in the survey as well.
4. Disclosing proxy votes could depress stock prices
In a recent letter to Bruce Raynor, Trustee of the Textile Workers Pension Fund, Fidelity
argues that it has “long been concerned that compelled disclosure of votes against a
company’s management on particular proposals could well be misconstrued to signal
disapproval of the overall stewardship of a company by its management, and could lead to
a drop of the company’s stock price to the detriment of funds owning shares.
6
Fidelity appears to assume that investors, especially large institutional holders with the
ability to move markets, are unsophisticated or incapable of rationally processing
information available in the marketplace. Thus, the Commission should allow them to
withhold this information from the marketplace. Alternatively, they may be arguing that
proxy voting information is not relevant to the investment process. In the wake of recent
corporate scandals, however, it seems ridiculous to argue that independent boards and
other corporate governance matters that are subject to shareholder votes do not impact
shareholder value.
In our view, all investors benefit from the availability of more information in the
marketplace. A vote against management on a particular proposal, while not an indictment
of that management’s overall stewardship, likely reflects governance or other concerns that
are legitimate factors in share price valuation.
Fidelity also appears to believe that its vote is more influential than the total shareholder
vote at a particular company, which is already a matter of public record, or the votes of the
roughly 167 money managers and proxy voting services that currently disclose their votes
through the AFL-CIO Key Votes Survey. Notably, the California Public Employees'
Retirement System (CalPERS), the nation’s largest public pension fund with $135 billion
in assets, discloses its votes—including those against management—prior to a company’s
shareholder meeting and believes that its active approach to corporate governance
enhances long-term shareholder value.
6
Letter from Janice Spillane, Assistant to the Chairman, Fidelity Investments, to Bruce Raynor, Trustee,
Textile Workers Pension Fund, dated September 4, 2002.
Jonathon G. Katz, Secretary
December 6, 2002, p. 6
Finally, from a practical perspective, the Commission’s proposal would only require
disclosure twice per year, which is likely to be too long after the shareholder meeting at
which the votes were cast to influence the share price.
A. Other Industry Arguments for Opposing the Proposed Rule
1. Worker pension funds are not required to disclose their proxy votes
In our July 31, 2002 petition, we stated “The Commission’s current position that
investment advisers have a fiduciary duty to vote proxies in the interests of their investors
is incomplete without a corresponding requirement, similar to the one the DOL requires of
ERISA fiduciaries, that investment advisers disclose individual proxy voting decisions.”
We understand that representatives of the mutual fund industry are now attempting to cite
these same ERISA requirements to oppose the disclosure of their proxy votes.
If we understand correctly, they assert that the disclosure of a mutual fund’s proxy votes to
its board of trustees is equivalent to the requirement under ERISA that a money manager
disclose its proxy votes to the trustees of a private pension plan. Moreover, since the
trustees of the private pension plan are not required to disclose proxy votes to plan
beneficiaries, neither should mutual funds or their trustees be required to disclose proxy
votes to their shareholders.
This argument is legally and economically flawed. The vast majority of the pension plans
with which we are familiar delegate proxy voting authority to their money managers or to
an independent proxy voting service. Under ERISA, the pension plan trustees are legally
responsible for monitoring their voting agents to ensure that they comply with their
fiduciary duty to vote proxies in the best interests of plan beneficiaries. This is essential
since these money managers, like mutual fund companies, confront serious conflicts of
interest in casting proxy votes at companies with which they have or seek a business
relationship. If the pension plan trustees are not satisfied with the performance of their
proxy voting agent, it is the trustees, not the individual plan participants, that have the
authority to terminate their business relationship with that money manager or proxy voting
service.
In the mutual fund context, it is the mutual fund shareholders, not the mutual fund trustees,
that are analogous to the pension plan trustees in the ERISA context. The appropriate
analogy to the mutual fund board of trustees is the board of directors of a money manager.
As the Commission’s proposal makes clear, a mutual fund (or the investment adviser that
votes proxies on behalf of the fund their investment adviser) must vote proxies in a manner
consistent with the best interests of the fund and its shareholders. If a mutual fund
shareholder is not satisfied with the proxy votes cast by his mutual fund (assuming he has
access to his fund’s proxy voting record), he has the right to sell his investment.
In addition, the argument that it is only the mutual fund trustees that should be responsible
for monitoring the fund’s proxy voting record does not take into account the heterogeneous
nature of mutual fund investors. Mutual fund trustees may be able to represent the
Jonathon G. Katz, Secretary
December 6, 2002, p. 7
interests of mutual fund investors as a class, but they are not in a position to represent
investor interests in matters where those interests may differ. With regard to proxy voting,
for example, shareholders of a particular mutual fund may have widely differing interests
and preferences (e.g. due to time horizon, appetite for risk, concerns with conflicts of
interest) with regard to specific proxy votes. In these situations only the individual
shareholder, not the mutual fund trustees, is in a position to evaluate which votes are
consistent with his or her best interests. But they cannot do unless they know how the
votes were cast.
2. Investors don’t need to know or don’t care
The ICI has argued that, “shareholders don't need to know how their funds vote since it is
already part of a fund's fiduciary duty to vote in the interest of its shareholders.” They
have also asserted that many shareholders may not care”
7
.
We do not believe that a mass investor outcry is a prerequisite for adopting worthwhile
regulatory reforms that will better protect investors. In the case of the proposed rule,
however, more than 7,000 individual and institutional investors have submitted comments
to the SEC in which they express strong support for full disclosure of mutual fund proxy
voting policies and records. We believe that this is a record for number of comments
received by the SEC on rulemaking proposal.
8
Excluding expected comments from the
mutual fund industry itself, we are aware of less than ten letters opposing full disclosure of
mutual fund proxy voting records.
3. Disclosure of proxy votes is unnecessary given no conflicts of interest
A Fidelity spokesman has said “the suggestion of a possible conflict between 401(k)
management and proxy votes is ‘absurd.’”
9
The Commission’s view, however, is clear
with regard to these potential conflicts:
Moreover, in some situations the interests of a mutual fund's shareholders
may conflict with those of its investment adviser with respect to proxy
voting. This may occur, for example, when a fund's adviser also manages
or seeks to manage the retirement plan assets of a company whose
securities are held by the fund. In these situations, a fund's adviser may
have an incentive to support management recommendations to further its
business interests.
10
7
Lauricella, Tom and Michael Schroeder,
SEC to Consider Regulation on Voting by Mutual Funds
, Wall
Street Journal, September 16, 2002.
8
The SEC does not officially track comment totals, but we were told by Commission staff that the highest
previous total that the staff can recall was “over 6,000”.
9
Hansard, Sara
, Mutual funds feel the heat from Enron; SEC sees merit in call for proxy-vote disclosure,
Investment News, May 20, 2002.
10
Disclosure of Proxy Voting Policies and Proxy Voting Records by Registered Management Investment
Companies
, Securities and Exchange Commission, September 20, 2002.
Jonathon G. Katz, Secretary
December 6, 2002, p. 8
This is exactly the conflict that Fidelity confronted at Tyco International in 1998, when it
cast its proxy votes against a shareholder proposal calling for a majority of independent
directors on Tyco’s board.
11
Fidelity’s vote may have furthered its own interests, as
Fidelity earned $2 million in 1999 administering Tyco’s employee benefit plans.
12
But we
do not believe that this vote was in the best interests of Fidelity’s mutual fund
shareholders, particularly in light of subsequent events at Tyco.
This year shares of Tyco have dropped more than 70 percent amid allegations of improper
accounting practices and financial wrongdoing by several top former executives. In
September 2002, in response to pressure to resign from New Hampshire's director of
securities regulation, nine Tyco board members voted not to re-nominate themselves for
election as directors next year.
John Bogle, founder and former chairman of The Vanguard Group, the nation’s second-
largest fund company, is one of the few industry insiders that has acknowledged that
mutual fund companies face an “extraordinary conflict” of interest. Bogle said “These
corporations whose shares we’re voting are also the source of our 401(k) and pension
business. We don’t want to offend the corporations we own.”
13
4. Disclosing proxy votes is too expensive and burdensome
Representatives from numerous mutual fund companies, including giants such as Fidelity
and the Vanguard Group, argue that the semi-annual disclosure of proxy voting records is
too burdensome and expensive, and that fund shareholders must bear these costs.
14
The Commission has estimated the total cost of its proposal at $2,408 per investment
company. Even if the industry were able to demonstrate that the costs were several times
this figure, which we think is extremely unlikely, we believe these costs are insignificant
relative to both the resulting benefits and to the assets and revenues of even the smallest
mutual funds.
Although we are not in the position to offer specific cost data, we note that mutual funds
already track their proxy votes. We believe they have a legal obligation to do so. The fact
that a small number of mutual funds already disclose this information demonstrates that it
can be done simply and inexpensively. Domini Social Investments, for example, manages
about $1.6 billion in assets and is able to post its proxy voting decisions for its 400
portfolio companies on its web site. Since Domini started posting its proxy votes in 1999,
11
Fidelity responded to our AFL-CIO Key Votes Survey in 1998, which included this Tyco vote. It is unclear
to us why they responded in 1998, and have not responded since.
12
Calculated by the AFL-CIO from Form 5500 data filed with the IRS by Tyco International and its
subsidiaries.
13
Hansard, Sara
, Conference Call – Bogle
:
Big Investors should use clout to curb fund abuses,
Investment
News, May 13, 2002.
14
see Lauricella, Tom and Michael Schroeder,
SEC to Consider Regulation on Voting by Mutual Funds
,
Wall Street Journal, September 16, 2002, and Hershey, Jr., Robert D
., Investor Angst Prompts Funds to
Speak Up
, New York Times, July 7, 2002.
Jonathon G. Katz, Secretary
December 6, 2002, p. 9
at least seven other socially responsible mutual fund companies have also started
disclosing their proxy voting decisions. Similarly, CalPERS, with $135 billion in assets,
posts its proxy voting decisions on its Web site.
We refer the Commission to the comment letters submitted by CalPERS, Domini and
Walden Asset Management, all of which strongly support the proposed rule, for more
detailed information on the low costs required to comply with the rule.
II. Recommended Change to Strengthen Rule with Regard to Conflicts of Interest
The one area in which we believe that the Commission can strengthen the proposed rule is
with regard to conflicts of interest. The Commission explicitly recognizes that the interests
of a mutual fund’s shareholders may conflict with those of its investment adviser with
respect to proxy voting, and that a fund’s adviser may have an incentive to support
management recommendations to further its business interests, even if such a vote is not in
the best interest of fund shareholders.
To address this potential conflict, the proposed rule would require funds to disclose their
policies and procedures used to address conflicts of interest, and to disclose specific votes
that are inconsistent with the fund’s proxy-voting procedures. Although these disclosures
provide investors with important information, we do not believe they are sufficient to
address the potential conflicts of interest. In particular, we share the concern raised by
Fund Democracy, Inc. that:
…the proposed rule will require disclosure of an inconsistent vote when
there is no conflict of interest, and not require disclosure a consistent vote
when there is a conflict of interest. This will only deter tightly drafted
proxy-voting policies, and will not afford “shareholders with the best
opportunity to evaluate the propriety of the proxy voting decision.”
15
We believe that the most straightforward and effective means to address conflicts of
interest is to require their full disclosure. Appropriately, the proposed rule already would
require disclosure of key information for each matter relating to a portfolio security
considered at any shareholder meeting, such as the name of the issuer of the portfolio
security, a brief description of the matter voted on, how the fund cast its vote, and whether
the fund cast its vote for or against management.
We ask the Commission to also require mutual funds to disclose any conflicts of interest
between the fund, its adviser and affiliates, and the issuer of the portfolio security. We
recommend that this disclosure include the nature of the service provided (e.g. plan
management, custodial services, etc.) to the issuer and all fees received by fund affiliates
from the issuer during the past three years.
15
Comment letter from Mercer Bullard, President of Fund Democracy, Inc. to Jonathan Katz, Secretary,
Securities and Exchange Commission, dated October 21, 2002.
Jonathon G. Katz, Secretary
December 6, 2002, p. 10
III. Conclusion
We commend the Commission for proposing this important and well-developed rule. We
strongly support this rule, and most importantly those aspects of the rule that pertain to the
disclosure of proxy voting records. We would not support a rule that did not include these
provisions. Therefore we strongly recommend that Commission move swiftly to
implement the rule as proposed together with enhanced disclosure regarding conflicts of
interest. We are confident that enactment of the rule will be an important step in the
Commission’s efforts to restore investor confidence in our financial markets by promoting
greater transparency and accountability.
Sincerely,
Richard L. Trumka
cc (U.S. Mail only)
Harvey L. Pitt, Chairman
Cynthia A. Glassman, Commissioner
Harvey J. Goldschmid, Commissioner
Paul S. Atkins, Commissioner
Roel C. Campos, Commissioner
Paul F. Roye, Director, Division of Investment Management
