I would like to clarify some of the points made in your April 5 article regarding the proposed changes to the governance structure of the Association for Investment Management and Research, contained in the proxy that AIMR recently distributed to its voting members ("Debate rages between financial societies"). The purpose is to consolidate an unnecessarily cumbersome governance structure that was created when AIMR was formed by the merger of the Financial Analysts Federation and the Institute of Chartered Financial Analysts in 1990.
As your article correctly suggests, three of AIMR's 87 member societies are opposing the proposed changes. They are doing so based on inaccurate interpretations of language in the proxy. Proposed changes to AIMR, FAF and ICFA bylaws are intended only to integrate the rules and regulations of three organizations. If the changes are adopted -- and I cannot emphasize this point strongly enough -- they will in no way alter any of the rights and privileges of CFA charterholders, AIMR members or AIMR member societies. That is why AIMR regional directors, whose sole purpose is to represent the interests of member societies, voted unanimously in favor of the changes.
As Lynn Mander, president of our Philadelphia society, suggests in your article, the analysts who comprise AIMR's membership are trained to read between the lines in evaluating the implications of complex documents such as the AIMR proxy. In this case, however, any skepticism is unfounded.
Thank you for the opportunity to set the record straight.
Frank K. Reilly
chair, AIMR Board of Governors
Association for Investment Management and Research
Charlottesville, Va.
Indexing error
In the May 17 special report on the largest money managers, one category ranking for Northern Trust Global Investments is understated. Our domestic bond index assets should have been listed at $9.681 billion, which would have placed NTGI as the third-largest in that category.
Thank you for your assistance.
Stephen N. Potter
senior vice president
Northern Trust Global Investments
Chicago
Professor's rebuttal
I must take strong exception to the May 17 article discussing efforts to get TIAA-CREF to begin "positive investing" of some of the assets in their socially responsible fund, the Social Choice Account. This entails placing limited assets in companies doing an exemplary job on various social concerns.
The third paragraph, stating that I said such investing could lower the return on the fund (and then giving reasons why), was totally fabricated. (I will assume it was a mistake.) In fact, the literature, which the writer possessed, specifically stated there was no reason to expect this.
Statements in the story that were made by TIAA-CREF about a survey of SCA participants are very deceptive. Their spokesperson, Claire Sheehan, is quoted as saying that my statement that over 80% of SCA participants support our proposal was "interpreting it out of context. It was an internal survey that went only to a few hundred participants."
How does one take out of context the following survey question, with which 81% of participants agreed: "In addition, the Social Choice Account's policy is not to invest in companies whose activities are objectionable to some people. Another approach, in addition to such screening criteria, is to seek out for investment companies with an outstanding record of good performance on social issues. Would you be in favor of that action, not in favor, or wouldn't that make any difference to you?"
In the "Implications" section of the report, such a proposal is even recommended. It reads: "Targeting for investment companies with outstanding records for good performance on social issues would also strengthen the concept of the Social Choice Account." Furthermore, the survey was conducted by the Total Research Corp. of Princeton, N.J., an outside research firm that conducted a scientific, randomized survey. Not only was TIAA-CREF deceptive here, but it is clearly not following the expressed interests of its clientele -- nor of the 200 people involved at some level in the campaign.
Ms. Sheehan further states that our proposal for positive investing is too impractical for TIAA-CREF to pursue. As we have pointed out to TIAA-CREF many times, several funds, including prominent funds such as one managed by Salomon Smith Barney, already do positive investing. We also presented TIAA-CREF with the specific criteria used by several funds for such investing. The writer even spoke to Steve Schueth, head of the Social Investment Forum and one of the foremost authorities in the field of socially responsible investing, who attested to the feasibility of positive investing.
The sad part of the whole situation is that TIAA-CREF made the same arguments concerning practicality and financial return in our five-year effort to persuade them to set up the SCA in the first place. They fought it all the way, yet now boast of its success. It is time for TIAA-CREF to stop resisting, please their participants, and invest in companies that are actually trying to make the world a little better while making a profit.
Neil Wollman
co-chair, Social Choice for Social Change
Manchester College
North Manchester, Ind.
