Letter opposing Amendment (#3), offered by Representative Maxine Waters, to H.R. 3817, the Investor Protection Act of 2009 ("IPA")

October 28, 2009

The Honorable Barney Frank

Chairman

Committee on Financial Services

U.S. House of Representatives

Washington, DC 20515

The Honorable Spencer Bachus
Ranking Member
Committee on Financial Services
U.S. House of Representatives
Washington, DC 20515

Dear Chairman Frank and Ranking Member Bachus:

The undersigned organizations, representing a diverse spectrum of industries and public interest groups across the economy, strongly oppose the Amendment (#3), offered by Representative Maxine Waters, to H.R. 3817, the Investor Protection Act of 2009 ("IPA"). We appreciate current efforts by policy makers towards legislative improvements to protect investors, improve the effectiveness of financial regulators, and assist capital formation. Those efforts are an important response to the financial crisis and necessary to spur real economic growth. However, we have serious concerns that the Waters Amendment will lead to unintended consequences which will inhibit job creation, endanger economic recovery, and allow special interests and corporate raiders to interfere with corporate elections, thus thwarting the will from the majority of investors and preventing the American economy from reaching its full potential.

As written, the Waters Amendment will create a right to proxy access that will federalize corporate law, overturning 150 years of state corporate law and endangering the free enterprise model that bred the most productive economy in world history. If enacted, the Waters Amendment will devastate state corporate law expertise and distract the Securities and Exchange Commission ("SEC") from regulating financial markets and further strain its resources at a time when it is struggling to effectively perform its existing missions. This also goes against reforms undertaken by Delaware and the Model Business Corporation Act, which impacts 30 states. Furthermore, by making the SEC the federal elections commission for all corporate elections, the core missions of the SEC will suffer and the destruction of the state corporate model will undermine the efficiency and accuracy of corporate voting.

In addition, the Waters Amendment will place select special interests at the front of the line for director elections. This will further marginalize the role of 100 million individual retail investors who have a right to be heard and not be drowned out by special interests.

The above serious unintended consequences will cause capital formation to suffer, stifling the ability for businesses to grow and create jobs, and undermine American competitiveness in the global economy. Again, we strongly encourage a vote against the Waters (#3) Amendment to the Investor Protection Act and appreciate your consideration of our views.

Sincerely,

American Insurance Association
Competitive Enterprise Institute
Financial Services Roundtable
National Association of Wholesale Distributors
U.S. Chamber of Commerce

cc: The Members of the House Committee on Financial Services