Rosenfeld's Letter to the SEC on Strategic Planning

William L. Rosenfeld, Director, Strategic Initiatives Investors Against Genocide wrote a letter to the SEC for consideration in developing their strategic plan. I think many who are working on proxy "plumbing" or "mechanics" issues will also find it useful. Read the November 13th letter.

I'll just touch on a few key highlights to perk your interest.

1. Require Prompt Consideration of Proposals by Mutual Funds - Regulations should require mutual funds, who often don't hold annual shareowner meetings, promptly consider shareowner proposals either through a shareholder meeting or alternate process.
2. Level the Playing Field on Shareholder Proposals - Eliminate the "vote with management" option; Standardize procedures and costs for accessing shareholder lists and consider alternatives such as an SEC supported web sites where material could be posted; Require audits of voting and outreach procedures.
3. Additional disclosures, such as a record of individual trustee votes on shareholder issues
4. Clarification of Responsibilities for Intermediaries. Broadridge and others shouldn't be able to circumvent Rule 14a-4(a)(3) of the Securities Exchange Act of 1934 (requiring clear and impartial representation of shareholder proposals).
5. Companies shouldn't be allowed to end voting without reaching a quorum on selected issues before the shareholders, allowing them to encourage voting only on issues favored by management.
6. Apply Restrictions Consistently. For example, Executive Order 13412 prohibits American oil companies from doing business with Sudan. However, there is no restriction against American mutual funds directing billions of dollars of American capital to Chinese and other oil companies that support Khartoum and help fund the genocide in Darfur.
7. The SEC should consider a "blue ribbon panel" to evaluate the merits of the SEC working with other government agencies to maintain a list of problem companies and suspending or limiting privileges of companies complicit in genocide from markets under U.S. jurisdiction.

Each of these recommendations deserves consideration by the SEC. Several should be taken up with proxy "plumbing" or "mechanics" issues.

For example, #2 and #4 above are similar to our petition on "blank votes." Rule 14a-4(b)(1) requires proxies to include boldface type where discretionary authority to change blank votes is granted. Similar to their argument with regard to Rule 14a-4(a)(3), Broadridge claims they do not have to comply with these "proxy" requirements when using a "voter information form."

We don't agree with the existence of such a legal loophole but would go further by amending the rule to count blank votes as abstentions. See petition File 4-583, at http://www.sec.gov/rules/petitions.shtml. Send comments to rule-comments@sec.gov with File 4-583 in the subject line. We look forward to the SEC's expected concept release on "proxy plumbing" issues and hope readers will consider raising the issues outlined by William Rosenfeld at that time and at every other opportunity until they are addressed.