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SECRET COMMUNICATIONS LOOPHOLE ATTACKED BY ROUNDTABLE

 SECRET COMMUNICATIONS LOOPHOLE ATTACKED BY ROUNDTABLE
 WASHINGTON, Oct. 16 /PRNewswire/ -- While giving the Securities


and Exchange Commission good marks for a balanced set of proposals on executive compensation, The Business Roundtable sharply criticized the commission's radical proposal to allow secret undisclosed solicitations by powerful institutional investors, or corporate raiders.
 Under the new rules, it would be perfectly permissible for a corporate raider planning to launch a proxy contest for control of a target company's board to phone or meet personally with large, powerful institutional investors and solicit their support for his effort without disclosing his activity until much later when he actually sent out proxy cards. "Given the huge concentration of equity holdings in the hands of a relatively small number of institutional investors," Bruce Atwater, chairman of the Business Roundtable's Corporate Governance Task Force, said, "the ball game could be over, as a practical matter, before anyone else even knew there was to be a contest."
 Atwater criticized the SEC for its failure to recognize the drastic changes in equity ownership that have occurred over the past ten to fifteen years. "By the end of this decade," he said, "20 to 30 large institutions will own more than 30 percent of the 10 largest companies in America and institutional investors as a group will own two-thirds of the top 1,000 companies. That's an enormous concentration of economic power. By continuing to act as if the world consists mainly of small individual investors, the SEC has opened a gaping loophole in an otherwise sound set of proxy rules that will allow that power to be abused."
 Citing the "human and economic wreckage from the manipulative corporate raids of the '80s," Mr. Atwater, who is chairman and CEO of General Mills, said that it was "hard to fathom why the commission would allow big, powerful investors the right to line up votes for a proxy contest, including a contest for control of a company's board, without some kind of public disclosure to the other shareholders."
 Atwater pointed out that the commission recognized the need for disclosure by retaining its current requirement for public disclosure of written solicitations. "What they're saying is inconsistent," Atwater said. "If it's important for public disclosure to occur when the solicitation is written, it's no less important just because the solicitation is made over the phone."
 Atwater acknowledged that most of the other proxy rules changes proposed by the commission were balanced. "I don't agree with all of them, but you can at least understand and appreciate the commission's rationale," he said. "The failure to require at least some minimal public disclosure of solicitations among large shareholders, however, is beyond comprehension."
 The Roundtable is an association of 200 chief executives of leading U.S. corporations who examine public issues that affect the economy and develop positions which seek to reflect sound economic and social principles.
 -0- 10/16/92
 /CONTACT: Richard W. Anthony, 212-682-6370, or Austin Sullivan, 612-540-7264, both of the Business Roundtable/ CO: The Business Roundtable ST: District of Columbia IN: SU: ECO


TS-AH -- NY017 -- 0849 10/16/92 10:19 EDT
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Publication:PR Newswire
Date:Oct 16, 1992
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