SEC notice supports Farmer Bros. investors who seek company split. (Up Front).The Securities and Exchange Commission has told Farmer Bros BROS Brothers BROS Benefits and Retirement Operations Section (King County, Washington) BROS Barnes and Richmond Operatic Society (London, UK) . Co., the secretive coffee company run by 86-year-old Roy F. Farmer, that it cannot deny dissident shareholders dissident shareholders Shareholders who oppose a firm's management or management policy. For example, dissident shareholders of Hewlett-Packard opposed that firm's offer to purchase Compaq Computer. the right to vote on a proposal that could split the company in two. The notice, which came in a Nov. 15 letter, keeps alive a proposal by Franklin Mutual Advisers LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control to have shareholders decide if they want the company to register with the SEC as an investment company. An investment company designation would change how Torrance-based Farmer Bros. reports its results and would require the company to hire investment professionals to oversee investment funds, which totaled $295 million, or 71 percent of Farmer Bros. total assets as of Sept. 30. In August, Farmer Bros. asked the SEC to rule on its effort to keep the motion off the agenda at its annual shareholder meeting in December. Under the Investment Company Act of 1940, companies with at least 40 percent of corporate assets in investment securities, such as a mutual fund, must register with the SEC as an investment company. Government securities are exempt from the 40 percent calculation. The move to split the company came in June, when Franklin Mutual Advisers, the company's largest institutional shareholder, submitted a shareholder request for the vote on splitting Farmer Bros. into a coffee company and an investment fund. Franklin argued that Farmer's large pool of funds had turned the company into "a de facto [Latin, In fact.] In fact, in deed, actually. This phrase is used to characterize an officer, a government, a past action, or a state of affairs that must be accepted for all practical purposes, but is illegal or illegitimate. investment company, but without the benefits of being registered as one." Since March, Farmer Bros. has moved more than $100 million in corporate funds into government securities, according to an SEC filing. The shift has reduced Fanner Bros. investment company funds to 30.2 percent of total assets as of Sept. 30, down from 44.1 percent at the beginning of the year, and raised investor suspicions that that the company is moving its money as a means to sidestep side·step v. side·stepped, side·step·ping, side·steps v.intr. 1. To step aside: sidestepped to make way for the runner. 2. them and the SEC regulations. The company's quarterly report for the period ended Sept. 30 shows $234 million in U.S. Treasury U.S. Treasury Created in 1798, the United States Department of the Treasury is the government (Cabinet) department responsible for issuing all Treasury bonds, notes and bills. Some of the government branches operating under the U.S. Treasury umbrella include the IRS, U.S. and U.S. Agency obligations, or 56 percent of corporate assets. As of March 31, the company had $129 million, 32 percent of corporate assets, in government securities. "I am not aware of any reasons consistent with conventional standards of business judgment to invest over $200 million in U.S. government obligations when they could earn millions of dollars more in alternative investment grade securities' said Gary Lutin, a New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of investment banker Investment Banker A person representing a financial institution that is in the business of raising capital for corporations and municipalities. Notes: An investment banker may not accept deposits or make commercial loans. who chairs an online forum for Farmer Bros.' shareholders. Franklin Mutual declined comment; Farmer Bros. did not return calls. Franklin Mutual, a unit of Menlo Park-based Franklin Resources Inc. with $252 billion in assets under management Assets Under Management (AUM) is a term used by financial services companies in the mutual fund and money management or investment management business to gauge how much money they are managing. , owns 9.6 percent of Fanner Bros.' stock. Experts said Franklin Mutual's investment company proposal might be for naught, as the SEC's definition of what constitutes an investment company is cut and dried cut and dried cut adj (also: cut-and-dry) (answer) → eindeutig: (solution) → einfach . "If (Farmer Bros.) wanted to move their assets into T-bills or any kind of government securities so that (total investment company funds) came down below 40 percent, then they would no longer meet the definition," said Ken Scott, a professor of law at Stanford University. "You can challenge their violating their fiduciary duty by holding a huge amount of low risk securities in the absence of some appropriate business purpose, but that's coming at it a different way." |
|
||||||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion