voting powers to more of their stock at the end of last year than your Trust and Investment Division reported. It is our understanding, from studying your "Nominees" publication and from Mr. Reinemer's conversation with Mr. Brugger, that Morgan does not have voting rights to the stock attributed to Morgan nominees by Florida Power Corporation, Southern California Edison and Long Island Lighting, but that Morgan does have voting rights in all three companies, through other accounts. I understand that Mr. Brugger is preparing a commentary on this point, which I shall appreciate receiving. We would also, as Mr. Reinemer indicated, appreciate knowing the dollar value, as of the end of last year, of Morgan Guaranty common stock holdings in each of the other holding categories-custodial, corporate trust, loan and stock transfer. In addition, I would appreciate an elaboration of Morgan's relationship to the principals behind custodial and corporate trust accounts. Your "Nominees" brochure indicates that Morgan has no voting rights in such accounts. Does Morgan, however, serve as the investment adviser regarding some of these accounts, rendering advice as to voting as well as purchase or sale of the stock? I note, for example, that Morgan Guaranty Trust serves as the investment adviser and custodial agent for securities owned by the Battelle Investment Corporation. Are such accounts held in custodial accounts, even though Morgan functions as the investment advisor? I am enclosing, in addition to the security holders and voting powers forms filed this year by the three above-mentioned utilities, a summary of information filed by electric utility companies this year regarding holdings of Morgan nominees. This summary deals with thirty-five nominee accounts, under nine different nominee names, in twenty-six utilities. The holdings are concentrated, however, in two custodial accounts (eight in Stawis & Co. and five in Schmidt & Co.) and two corporate trust accounts (nine in Douglass & Co. and six in Lynn & Co.). This summary suggests the following questions regarding each of those four nominee accounts: Is one institution, or individual, eligible to cast a significant portion of the votes within each nominee account? Is it likely that whoever has voting rights to stock in a nominee account in one company also has voting rights to the stock listed under the same nominee in another company? For example, Stawis & Co. holds more than one percent of the stock in Wisconsin Electric Power, Wisconsin Power & Light and Wisconsin Public Service. Is the same person or institution entitled to vote most of the Stawis account in all three companies? Are the holdings within each of the two custodial accounts--Stawis and Schmidt-beneficially owned primarily by individuals or institutions? We understand from Mr. Brugger that Morgan does not wish to testify at our forthcoming (14 August) hearing on corporate disclosure. I was sorry to hear that. The invitation will be formally extended at a future date. Very truly yours, Enclosures: (4). MORGAN HOLDINGS AMONG TOP 10 ELECTRIC UTILITY SECURITY HOLDERS-Continued 1 Account types are: C-Custodial accounts, T-Trust and investment division account, CT-Corporate trust department account. Note: Holdings as of Dec. 31, 1973, derived from annual form 1 reports filed in 1974 by electric utilities with the Federal Power Commission. Hon. LEE METCALF, MORGAN GUARANTY TRUST Co. OF NEW YORK, DEAR SENATOR METCALF: I have been out of the office the past two weeks and thus am only now replying to your letter of August 9. My associates and I have reviewed the specific points you have raised, along with the enclosed material, and I will respond to them in sequence. With respect to the holdings by four of our nominees on December 31, 1973 of shares of Florida Power Corporation. Long Island Lighting Co., and Southern California Edison Co. as shown on the eples you have sent us of forms filed with the Federal Power Commission by those companies, Morgan Guaranty did not have voting power for any of the shares. Morgan Guaranty on that date, however, did have voting power for other shares in those companies, said shares being held by our Trust and Investment Denson on behalf of clients and registered in the names of other nominees. In the case of Southern Califorms Edve and Long Island Lighting, the number of shares for which we had sove roting pre-i apegated in Morgan Guaranty's name would bot tame beet efsent to cause Morgan Guaranty to be included among the ten largest boldens of voting power. In the case of Florida Power, where we bed scue with power fe 185.164 Khares the aggregated number would have caused Morgan Fury to be to Diese The company, of more had a WET of Koowing the stimate loens of voting power for shares held in 17 rates times. To bap empatles which make this type of report in the FPC se ane to do a more meeting, we are prepared on request by any fun tmpany s firm ima anatement as of future rearends showing the number of ra vours for with Morgan Guaranty Las sove voting authority. This woolid state the eompany to determine wherber Karpuz Guaranty brzo se toes tong the top ten doubený để voting power. We would ask the company to let in Í ve kes ANJAA Morgad Guy Trust Company of New Yoru a Bounary I The % make near the capacTT 11 which we brod wining MORGAN HOLDINGS AMONG TOP 10 ELECTRIC UTILITY SECURITY HOLDERS-Continued 18, 449, 554 13, 601, 511 Douglas & Co. 18, 449, 554 CT 206, 000 1.41 179,000 2.00 CT 135,000 2.10 CT 160,000 1.34 134, 835 1.84 ст CT 180,000 .93 28, 180 .54 1 Account types are: C-Custodial accounts, T-Trust and investment division account, CT-Corporate trust department account. Note: Holdings as of Dec. 31, 1973, derived from annual form 1 reports filed in 1974 by electric utilities with the Federal Power Commission. Hon. LEE METCALF, MORGAN GUARANTY TRUST Co. OF NEW YORK, DEAR SENATOR METCALF: I have been out of the office the past two weeks and thus am only now replying to your letter of August 9. My associates and I have reviewed the specific points you have raised, along with the enclosed material, and I will respond to them in sequence. With respect to the holdings by four of our nominees on December 31, 1973 of shares of Florida Power Corporation, Long Island Lighting Co., and Southern California Edison Co. as shown on the copies you have sent us of forms filed with the Federal Power Commission by those companies, Morgan Guaranty did not have voting power for any of the shares. Morgan Guaranty on that date, however, did have voting power for other shares in those companies, said shares being held by our Trust and Investment Division on behalf of clients and registered in the names of other nominees. In the case of Southern California Edison and Long Island Lighting, the number of shares for which we had sole voting power-if aggregated in Morgan Guaranty's name-would not have been sufficient to cause Morgan Guaranty to be included among the ten largest holders of voting power. In the case of Florida Power, where we held sole voting power for 185,154 shares, the aggregated number would have caused Morgan Guaranty to be so listed. The company, of course, had no way of knowing the ultimate locus of voting power for shares held in our nominees' names. To help companies which make this type of report to the FPC be able to do so more meaningfully, we are prepared on request by any such company to furnish it with a statement as of future yearends showing the number of its shares for which Morgan Guaranty has sole voting authority. This would enable the company to determine whether Morgan Guaranty should be listed among the top ten holders of voting power. We would ask the company to list us, if we are to be so listed, as "Morgan Guaranty Trust Company of New York, as Fiduciary" in order to make clear the capacity in which we hold voting power. We also would furnish the company with a list of the nominees in whose names the shares for which we hold sole voting authority are registered. This would enable the company to avoid double-reporting of those shares (which could occur if the number of shares registered in the name of any one of those nominees should be sufficient by itself to appear among the top ten). If this proposal is deemed useful (and I assume this would be a matter on which the FPC would have a view), it would be our suggestion that the FPC notify the companies potentially concerned of the availability of this information. We would ask that companies wishing the information notify us before December 1 of a given year, and we would undertake to furnish the information to the requesting company within 90 days after the end of the calendar year. Taking up the next item in your letter, namely, the total dollar value of all stocks registered in the names of nominees used by departments other than Trust and Investment, compiling such an aggregate would be a job of major proportions and the resulting figure would not have practical use or meaning for us; thus we have never done it. If Mr. Brugger correctly understood Mr. Reinemer's interest in a dollar total-namely, as a rough indication, by comparison with the $17.7 billion market value of common stocks held in Trust and Investment Division accounts at last year-end, of some ratio between the Trust and Investment holding of a given stock and holdings by Morgan Guaranty in other capacities any such formula would have no reliability whatever as applied to any individual security. You have asked about Morgan Guaranty's relationship to clients on whose behalf securities are registered in the names of nominees used for custodial holdings and for holdings in the Corporate Trust Department. The bank does not furnish investment advice as to any of these shares, nor does it have voting authority for any of them, except that in a very few cases relating to shares of foreign companies for which we issue American Depositary Receipts as a service to investors while holding the actual shares as depositary, we may be obligated to vote shares when the holder of the corresponding American Depositary Receipt does not respond to our solicitation of voting instructions. |