SEC Requires Closed-End Fund to Publish Proxy Proposal that Could Require Partial Liquidation (with Lofchie Comment)

The SEC declined to grant no-action comfort to Ellsworth Fund Ltd. (the "Fund), a closed-end fund registered with the SEC under the Investment Company Act that intended to omit a shareholder proposal from its proxy materials because the proposal failed to comply with Exchange Act Rule 14a-8. The proxy proposal, if adopted by shareholders, would require the Fund to make a self-tender if its market value fell below its net asset value by a specified amount.

Lofchie Comment: The proxy proposal is of a type that could be inserted into the documents for any number of closed-end funds, effectively giving shareholders the means to force the liquidation of closed-end funds that are trading materially below market value.

See: SEC Response to Ellsworth; Incoming Letter to SEC and Exhibits.