Act now!  The deadline is December 6, 2002…

Email the SEC directly from this site to support the proposed rule!

Every year, your mutual fund casts proxy votes for each company in its portfolio on a broad range of issues from executive compensation to social and environmental performance. Currently, there are no rules requiring that these funds disclose to their investors how the are voting. We believe that shareholders have an absolute right to know how the voting rights in the stocks they own through mutual funds are being used. The SEC has stated very clearly that proxy voting is a fiduciary duty mutual funds owe to their investors. Are these votes being used to encourage greater diversity on boards of directors or more responsible environmental practices? Or are they being used to rubberstamp excessive executive compensation packages or to permit corporations to avoid paying their fair share of taxes by reincorporating in Bermuda?

[PLEASE CONFIRM WITH TOBY SERKIN AT BINGHAM THAT THIS PRACTICES IS STILL PERMITTED.]

When voting no longer happens in secret, shareholders will be able to identify those fund managers that are doing their part to encourage greater corporate accountability, and those who simply rubberstamp management, to the detriment of shareholders and other stakeholders. When funds need to disclose their proxy voting policies, investors will be able to judge whether they are acting in their shareholder’s best interests, or are bowing to corporate pressure when, for example, they are seeking admission to the firm’s 401(k) plan. Proxy voting transparency is critical to good mutual fund governance and is critical to protecting shareholders’ interests. That is why Domini has been a pioneer in the fight for proxy voting disclosure.

In 1999 we set out to try to reform our corner of the block — the mutual fund industry — by publishing our proxy votes on our website, and encouraging others to do the same. We became the first mutual fund manager in America to reveal its proxy votes. That same year, the California Public Employees’ Retirement System became the first public retirement system to do so. Since then, others including the Calvert Group, MMA Praxis, Pax World Funds, the University of Wisconsin, and Walden Asset Management have decided to reveal how they vote. 

The rest of the mutual fund industry, however, responded to our challenge with silence. Some argued that there is simply no demand for this type of information.

We responded by filing a rulemaking petition with the SEC in 2001, asking them to require that all mutual funds publish their proxy voting policies and votes. The SEC received rulemaking petitions on this issue from the AFL-CIO and the International Brotherhood of Teamsters as well.

On September 19, 2002, the SEC responded to these petitions, announcing a proposed rule that would require mutual funds to disclose their proxy voting policies, procedures, and votes. The SEC praised Domini and other mutual fund managers that took the initiative to voluntarily disclose this information.  On the same day, the SEC issued a companion rule regarding proxy voting disclosure by investment advisers.

“Several mutual fund complexes voluntarily provide information to investors, often on their websites, and, in some cases, their actual proxy voting decisions,” the SEC wrote. “The Internet provides a medium for these funds to make information about their proxy voting available to shareholders quickly and in a cost-effective manner. We applaud these voluntary efforts of mutual funds to disclose proxy voting information to shareholders, and we encourage all funds to provide similar information without delay.”

What You Can Do

We urge our shareholders and all other concerned investors to submit comments in support of the proposed rules. The deadline for comments is December 6, 2002.

The text of the proposed rules, “Disclosure of Proxy Voting Policies and Proxy Voting Records by Registered Management Investment Companies,” and “Proxy Voting by Investment Advisers” is published in the Federal Register and is available on the SEC’s website. Mail your comments (in triplicate) to the following address, or submit them by email to rule-comments@sec.gov:

Jonathan G. Katz, Secretary
Securities and Exchange Commission
450 Fifth Street, NW
Washington, DC 20549-0609

Refer in your letter to File No. S7-36-02 (and File No. S7-38-02 for the investment adviser rule) and include the file number in the subject line of email messages. Electronically submitted comment letters will be posted on the SEC’s website. For more information on how to submit comments to the SEC, visit http://www.sec.gov/rules/submitcomments.htm

Links and Resources:

Securities and Exchange Commission (www.sec.gov)

The Securities and Exchange Commission is the federal agency responsible for protecting investors and maintaining the integrity of the securities markets.

Shareholder Action Network (www.shareholderaction.org)

The Shareholder Action Network (SAN) serves as a clearinghouse of information and analysis on shareholder advocacy to the socially responsible investing community. Their website includes a discussion of proxy voting, including a comprehensive list of financial institutions that post their votes and voting guidelines. SAN is a project of the Social Investment Forum, the trade association for the socially responsible investment industry.Domini Social Investments is a sponsor of the Shareholder Action Network (SAN), and a member of the Social Investment Forum.