PAM letter to OMB
March 6, 2003
Office of Management and Budget
Desk Officer for the Securities and Exchange Commission
Office of Information and Regulatory Affairs
Room 3208
New Executive Office Building
Washington, DC 20503
Mr. Jonathan G. Katz, Secretary
Securities and Exchange Commission
450 Fifth Street, NW
Washington, DC 20549-0609
Re: RIN 3235-AI64/SEC File No. S7-36-02
Dear SEC Desk Officer and Secretary Katz:
Progressive Asset Management submits the following comments, in response to the OMB's request for information related to the Paperwork Reduction Act of 1995, and the cost and burdens of compliance with SEC Final Rule 30b1-4 [17 CFR 270.30b1-4], concerning proxy voting guidelines and vote disclosures by registered management investment companies.
We support the recommendations set forth by the SEC staff and commissioners in their finalized ruling, and believe they do not burden fund companies or investors with excessive costs or staff labor. The finalized proxy disclosure rule, while already having gone through an extensive comment period related to costs, paperwork burdens, and efficiencies, was also supported by the public at large, for some 8,000 investors wrote to the Commission, with the overwhelming majority in support of the rule before it was modified to reduce paperwork and cost estimates.
Progressive Asset Management feels that the final rule makes every effort to provide a level of disclosure that would allow investors and the market at large to scrutinize any conflicts of interest within the industry, while simultaneously encouraging accurate proxy voting record keeping and reporting with minimal expense to investors. Several fund companies and investment advisers already provide proxy voting reports to the public, and they agree that doing so is inexpensive, and that the costs of tabulating and disclosing votes and guidelines decline over time.
The final rule provides numerous cost savings and benefits, including elimination of the "inconsistent vote" reporting requirement; annual, rather than semi-annual disclosure of voting
records; the ability to post guidelines, procedures, and voting records on a fund company's web site, or on EDGAR; and the flexibility of fund companies to meet shareholder requests for voting records and complete voting guidelines through web site disclosures.
This collection of information will not only set best practice standards for the fund industry, but will have practical utility as well, for the disclosures empower individual investors, media, and research organizations to scrutinize inconsistent votes, conflicts of interest, and rubberstamping of management proposals--which lessens the burden on regulators to do so. The rule also manages to protect the integrity of the voting process, as funds do not have to disclose their actual votes until well after an annual general meeting has taken place. Additionally, the expense ratios of funds that currently disclose proxy voting records are not higher than those of funds in general [Fund Democracy Comment Letter to SEC on S7-36-02, (Oct. 21, 2002)]. The benefits of transparency therefore seem to outweigh the minimal direct and indirect costs of the rule.
Sincerely,
Neil C. Stallings
Director of Shareholder Advocacy
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