Tim's Speech on Proposal III - 2022 CREF Meeting (5 minute limitation)
I hereby move the proposal. I’m disappointed that CREF decided to omit my name and contact information from the Proxy, making it look tentative and furtive. This is not your mother’s CREF!
The reason I started with the 1989 SEC “Settlement” is that it’s the little-known basis of the CREF company we have today. Once you’ve read it, you’ll never suffer any nagging suspicion that unit-holder input like this is mischievous or a waste of time.
CREF has implied, as they did in 2005, that Section 25 of the Investment Company Act of 1940 would only apply to a limited spectrum of reorganizations. Actually, the Act says “any such plan”. Further, the term “Reorganization” is defined to include the unqualified term, “a merger.” CREF’s Opposing Statement treads near the line of “False and Misleading” when they write, “Proponent’s resolution is purely speculative”.
In fact, the legislative history of Section 25(c) suggests the section was to “erect a safeguard to protect investors in investment companies from unfair treatment in the case of voluntary and involuntary reorganizations of their companies, and the rights, preferences, incidents and values of their securities.” [1] [2]
No good deed goes unpunished. Speaking on my Proposal in 2005, I commented that, “you don’t ask the three guys who pull the strings in Albany to just eliminate an excess board from a 1952 law. You get them to make all of the modernization changes you might want for the next 50 years.”
Although it is perfectly true that there have not been any healthcare conversions lately, it’s significant that the SEC itself has, recently, made use of Section 25 of the Investment Company Act. They intervened during 2009 disputes over The Reserve Primary Fund, when it “broke the buck.” [3]
(Ironic sidebar: TIAA briefly imposed a Reserve Fund MMF product on my TIAA Brokerage Account! TIAA did dump them before I lost any money.)
In February, 2022, CREF took my 2005 advice, and encouraged the simultaneous introduction of Assembly Bill 9330 [4] and Senate Bill 8126 [5]. “Authorizes and empowers the College Retirement Equities Fund (CREF) to merge with the Teachers Insurance and Annuity Association (TIAA) with CREF ceasing to be a corporate entity and TIAA as the surviving entity.”
Since the sponsors of those bills are the Chairmen of the respective Insurance Committees, it seems likely that the bills will be enacted. The Senate bill has already moved on from the Insurance Committee to the Rules Committee. It’s interesting to speculate whether TIAA, CREF, or perhaps their registered lobbyists, have some obligation under Section 25(a) to file a notice with the SEC of their lobbying in Albany. May we see that notice, please? By the way, the proposed legislation says "shall be deemed a merger”, a term I mentioned a moment ago.
It is reasonable to assume that this is the last Participant Proxy, and the last Annual Meeting of the College Retirement Equity Fund. [Note: Their reply indicates that this statement is NOT correct.] I don’t feel bad about reintroducing my Proposal for only the second time! This stealthy scheme in Albany only makes it more important for CREF unit-holders to support Proposal III. CREF, “so long, it’s been good to know you.”
[1] https://www.dechert.com/knowledge/onpoint/2009/5/sec-invokes-seldom-used-power-in-reserve-primary-fund-case.html
[2] Investment Trusts and Investment Companies: Hearings on S. 3580 Before the Subcomm. on Banking and Currency United States Senate, 76th Cong. 975 (1940) (Statement of the Securi- ties and Exchange Commission with Reference to Section 25 of the Proposed Investment Company Bill).
[3] SEC v. Reserve Management Co., Civil Action No.09-CV-4346 (S.D.N.Y. filed May 5, 2009).