(The news featured below is a selection from the news covered in the Federal Securities Report Letter, which is distributed to subscribers of the Federal Securities Law Reports.)

Proxy Disclosure, Communications Rules Adopted

The SEC adopted rules intended to improve disclosure to investors regarding the nominating committee processes of public companies and the ways by which security holders may communicate with directors at the companies in which they invest. The new disclosure standards require companies to disclose important additional information regarding a company's process of nominating directors.

The disclosures would include 1) whether a company has a separate nominating committee and, if not, the reasons why it does not, 2) who determines nominees for director, 3) whether members of the nominating committee satisfy independence requirements, 4) a company's process for identifying and evaluating candidates to be nominated as directors, 5) whether a company pays any third party a fee to assist in the process or identifying and evaluating candidates, 6) minimum qualifications and standards that a company seeks for director nominees, 7) whether a company considers candidates for director nominees put forward by shareholders and, if so, its process for considering such candidates and 8) whether a company has rejected candidates put forward by large, long-term security holders or groups of security holders.

The new disclosure standards also require companies to disclose new information regarding shareholder communications with directors, including 1) whether a company has a process for communications by shareholders to directors and, if not, the reasons why it does not, 2) the procedures for communications by shareholders with directors, 3) whether such communications are screened and, if so, by what process and 4) the company's policy regarding director attendance at annual meetings and the number of directors that attended the prior year's annual meeting.

The changes are effective January 1, 2004. Registrants must comply with these disclosure requirements in proxy or information statements delivered to security holders on or after January 1, 2004, and in Forms 10-Q, 10-QSB, 10-K, 10-KSB and N-CSR for the first reporting period ending after January 1, 2004. Registrants may comply voluntarily with these disclosure requirements before the compliance date. Comments regarding the collection of information requirements under the Paperwork Reduction Act of Regulations S-B and S-K and Forms 10-Q, 10-QSB, 10-K, 10-KSB and N-CSR are due by January 1, 2004.

¨ Release No. 33-8340 is reported at ¶87,116 .