November 21, 1997
     
Mr. Jonathan Katz, Secretary
Securities and Exchange Commission
450 5th Street NW
Washington, DC 20549
     
Re:     File #S7-25-97
     
Dear Mr. Katz:
     
I am the Controller for the Sisters of Mercy, Regional Community of 
Providence, with responsibility for monitoring investments for the 
Congregation.  I write to comment on the proposed Amendments to Rules on 
Shareholder Proposals under File No. S7-25-97.
     
I do not act only on my own but rather for the more than 400 members of this 
Religious Order and the thousands of constituents they serve in Rhode Island, 
Massachusetts and several other states.  While the Sisters of Mercy are 
dependent on their investments to support their works they also deeply value 
principles relating to justice and equity.  Through the shareholder process 
they have been able to support those principles in the policies of 
corporations in which they hold an interest.
     
This process has been one crucial way we have employed to assist companies to 
meet their civic and fiduciary responsibilities.  There are multiple examples 
over the years in which shareholder action has prompted companies to review 
their positions on important policies and practices - from support of 
apartheid to domestic fair employment practices.  The enviable strength of 
U.S. corporations and the attractiveness of their stock on world-wide markets 
would seem to indicate that shareholder activity is a positive force which 
impels our companies to accountability and responsibility.  It ought to be 
encouraged. 
     
Consequently, we are dismayed at the prospect of any Rule change which 
unfairly penalizes shareholder initiatives.  We believe the proposed Rules 
contained in S7-25-97 unfairly and unnecessarily restrict the ability of 
individual or institutional investors such as the Sisters of Mercy to file 
resolutions.  They represent an enforced retreat from shareholder 
participation and , I believe, do a disservice not only to investors but 
also, in the long run, to corporations and the economy at large.
     
We concur with the following objections which have been articulated by ICCR 
and we desire the Commissioners, in their role as guardian of shareholder 
rights, to consider the following changes to the proposed Rules:
     
· .Personal Grievance - The new rule would allow a company to argue that a 
resolution sponsor was motivated by a "personal grievance" or some other 
hidden motive and the SEC could then simply issue "no opinion".  We believe 
the SEC is abdicating its' responsibility and should allow any resolution 
that was acceptable on its' own merits to be included on a proxy.
     
· The Override Provision - The proposal that a shareholder can file a 
resolution by gathering 3% of the votes to support its' filing is a proposal 
that will be virtually impossible for most individual and institutional 
investors.  This proposal is only viable for huge pension funds.
     
Since that vast majority of corporate governance resolutions usually get on a 
proxy automatically, this provision primarily affects social and 
environmental resolutions.
     
The proposed 3% override would become a rule with no practical application.
 If the SEC supports an override plan, the percent of shares backing a
proposal needs to be much less.
     
 An issue must deal with $10 million of a company's business.  This proposal
leaves open a number of unanswered questions.  Ironically, no corporate 
governance resolution has to meet this test so it establishes a double 
standard?
     
Also how does a company, the SEC or a sponsor decide if an issue like child 
labor or a pattern of discrimination in employment relates to $10 million of 
a company's business?  Or what if a company was about to make a new 
investment, perhaps a country with a horrendous human rights record (like 
apartheid South Africa) but hadn't invested a dollar yet?  This Rule would 
prevent a resolution on this issue.  
     
· Discretionary voting by management - Under Rule 14 (a) (4) a shareholder 
can present a resolution at the company's stockholder meeting for a vote and 
solicit votes independently but not put it in the company proxy.
     
· The resubmission threshold - the proposed jump to 6%, 15% and 30% is a 
monstrous and unfair increase which particularly penalizes shareholders 
working on social and environmental issues.  This increase would further 
insulate management by making it more difficult for investors.
     
Most thoughtful corporations are well aware that a 10% vote is a significant 
indication of concern about an issue especially when many institutional 
investors follow the tradition of automatically voting for management.
 Imagine the number of shares of EXXON necessary to reach a 15% or 30% vote -
it's overwhelming.
     
Management already has the proxy voting process stacked in their favor.  In 
addition all resolutions are advisory not binding on a company whatever the 
vote total should be.
     
The 6%, 15%, 30% note level is unnecessary and unfair to investors
However the proposed rule allows management to seek discretionary authority 
to vote against such a resolution and any other business brought up at the 
stockholders meeting without giving the shareholder the right to vote for the 
resolution on the proxy.  This is unfair and undemocratic.
     
· Right to review Management's statement against a resolution - the new rule 
would strip shareholders of their right to review a proposed management 
statement opposing a resolution to see if there was any false or misleading 
statements.  This means that a company has no accountability for a veracity of 
the statements in the proxy while shareholders have to defend the accuracy of 
every word in their resolutions.
     
The Rule should be even handed and balanced providing for checks and balances 
for investors and companies.
     
We gratefully anticipate the consideration of the Commissioners with respect 
to these proposals.
     
     
Sincerely yours,
     
     
     
Edward P. McDonagh
Controller
     
     
     
cc:  Sr. Barbara Glendon, OSU