Note: This filing consists of the following three messages which were posted on
an Internet bulletin board. I posted the first message in order to provide
interested persons with my views about management's lengthy adjournment of the
annual meeting for MXE. The second posting is the text of a complaint letter
about my first posting from Leonard B. Mackey, Jr. of Clifford Chance Rogers &
Wells to the SEC. Another shareholder of MXE posted the third message. Although
I do not believe that my postings are solicitations, I am filing them so that
the shareholders of MXE will not be burdened with further legal expenses
relating to this matter.
*******
MXE Status Report
(Posted by Phil on December 20, 1999 at 17:10:00)
Memorandum
To: Alan Rappaport, Chairman
The Mexico Equity and Income Fund, Inc.
From: Phillip Goldstein
Date: December 20, 1999
I believe a six-week adjournment of the 1999 annual meeting until
February 4, 2000 is inappropriate. For one, Section 16 of the Investment Company
Act states that the term of office of at least one class of directors shall
expire each year. Since Dr. Rubio's term must expire in 1999, his status as of
January 1, 2000 is questionable. Furthermore, delaying the vote for an such an
long period of time does a disservice to most if not all shareholders who would
like to wrap this meeting up as soon as possible.
Nevertheless, there is a silver lining to delaying the meeting for six
weeks. By that time, shareholders will have had a better idea of whether or not
they want to support continuation of the Fund's repurchase plan. Thus, such a
late vote will give the board a more meaningful indication of the desires of the
shareholders than a vote taken now.
This year, the shareholders have a rare opportunity to choose between
alternatives and thereby determine the destiny of their Fund. If they indicate
that they want the Fund to continue its current purchase/tender offer program,
then I will have no choice but to accept that. If, on the other hand, the
shareholders vote for a nominee who is committed to afford them an opportunity
to realize net asset value as soon as possible, then I believe the board should
take action to achieve that end. As you know, I am committed to deliver net
asset value quickly and if I am elected as a director, I will do everything in
my power to make that happen. I hope you agree that that would be the right
thing to do even if it is not the course of action you would prefer.
I am sorry that you chose not to respond to my offer to explore a
negotiated settlement. Only time will tell whether or not that was a wise
decision. At this point, it seems that the shareholders have little choice but
to wait until February to have their votes counted. Then, it will be up to the
board to take its cue from the results of the meeting. Win or lose, I look
forward to seeing what the shareholders will do after they have had additional
time to evaluate the Fund's repurchase program.
<PAGE>
*******
Vigilant Lawyer Protects MXE Shareholders From Dangerous Postings
(Posted by Phil on January 06, 2000 at 16:04:50)
Here is a letter I received today complaining about my December 20th posting:
Clifford Chance Rogers & Wells
January 3, 2000
Ms. Mary Cole
Division of Investment Management
Securities and Exchange commission
450 Fifth Street N.W.
Washington, D.C. 20549
Re: The Mexico Equity and Income Fund, inc.
Dear Ms. Cole:
As we discussed today, I am writing on behalf of the above-referenced Fund to
express the Fund's concern that, notwithstanding that there continues to be a
proxy contest involving the Fund, Mr. Phil Goldstein, the contesting stockholder
of the Fund, has posted the attached letter to an Internet web site
(wwwlinkindia.com/icefi/wwwboard/messages/1475html) without having filed the
letter as soliciting materials under Rule 14a-6 of the Securities Exchange Act
of 1934. As you are aware, Mr. Goldstein is conducting his own proxy
solicitation for purposes of obtaining proxies authorizing him to vote in favor
of his election as a Director of the Fund and in favor of four additional
proposals that he has indicated he intends to make. The Fund's 1999 Annual
Meeting of Stockholders was convened on December 3, 1999 and has now been
adjourned three times for lack of a quorum. The Meeting will be reconvened on
February 4, 2000, with the hope that a quorum will be obtained at that time.
The Fund believes that it is important to bring to the attention of the Staff
this blatant violation by Mr. Goldstein of the proxy rules. This is of
particular concern to the Fund since Mr. Goldstein's use of the proxy machinery
to achieve his personal objectives forces the Fund to incur substantial expenses
to the detriment of all of its stockholders. We would, therefore, hope that the
Staff would give careful attention to this violation and consider appropriate
steps.
Sincerely,
Leonard B. Mackey, Jr.
<PAGE>
*******
Re: The Devil's Work
Posted by Gwailo on January 09, 2000 at 12:38:23:
The following letter has been sent to Ms. Cole of the SEC staff:
"I am a small individual shareholder in this closed-end fund ("MXE"). I am
writing because I think the January 3rd letter to you from Leonard B. Mackey,
Jr., Esq., of Clifford Chance Rogers & Wells, counsel for MXE, represents abuse
of the legal process.
The incumbent Directors of MXE are battling proxy proposals made by Mr. Philip
Goldstein which are designed to give stockholders an opportunity to promptly
realize net asset value for all their shares. These proposals appear to have
widespread support. Not only have the incumbents adjourned the 1999 shareholders
meeting three times - most recently, until next February 4 -- but in addition,
MXE's self-tender last Spring, offering to pay only 90% of net asset value and
limited to 10% of each shareholder's holdings, was subscribed by 39.2% of the
shares. (Indeed, on October 11th, MXE's Board adopted its own value creation
repurchase and self-tender program featuring a complexity somewhere between
Byzantine and Baroque.)
Counselor Mackey huffs and puffs that Mr. Goldstein violated the proxy rules by
posting, on a 3rd party Internet public comment board, a Dec. 20 memo to Mr.
Rappaport, MXE's Board Chairman and the President of its Co-Advisor. When I read
that memo, I see no request for a proxy, nor any false statements of fact: it
just expresses Mr. Goldstein's view that the postponement was inappropriate (an
incumbent Director now sits past the expiration of his term) and a willingness
to abide by the outcome, win or lose. Rule 14a-6 does not require that
everything be prefiled: Counselor Mackey's own incumbents issued a press release
at 5:11 P.M. on Dec. 20th announcing the meeting postponement, with no Rule
14a-6 filing.
The Commission currently has its hands full trying to update procedures and
policies that are the legacy of the Age of Paper. Internet financial discussions
involve free speech as well as antifraud concerns. Section VII of Commissioner
Unger's November, 1999 study of On-Line Brokerage explains how such discussion
can give individual investors access to useful information they could not have
had in the past, while describing the enforcement issues posed by anonymous
deceit. There are real problems to be addressed, and requiring the Commission to
screen, pre-clear or censor all Internet news releases in proxy contests does
not solve them at all.
The concern expressed by the MXE incumbents is not real, but fake. The real
abuse here is how Counselor Mackey is wasting the time of the Commission and its
staff, is forcing Mr. Goldstein to bear additional legal expenses in
self-defense, and is consuming MXE shareholder wealth in the process. Counselor
Mackey sanctimoniously urges necessity:
"Mr. Goldstein's use of the proxy machinery to achieve his personal objectives
forces the Fund to incur substantial expenses to the detriment of all of its
stockholders."
<PAGE>
How fitting that those "substantial expenses" inure to the benefit of Counselor
Mackey and his firm. One needs legal training to perceive that "giving
stockholders an opportunity to promptly realize net asset value for all their
shares" is just one man's personal objective. One needs skill in legal argument
to see that shareholders should prefer a market price of $8.56 per share to an
asset value of $10.30 per share (as of 11/7/00). One needs experience in client
relations to discern why redemptions that could shrink the portfolio - and the
$375,000 per year sinecure that Mr. Rappaport's firm receives for vaguely worded
co-advisory services, "as appropriate" - must be fought with the Fund itself as
the arsenal. And one needs practice in legal billing so that every argument or
tactic, no matter how meritless, gets charged for, since it is the shareholders'
own investment that pays for obstructing their access to the full value of that
investment.
There is a sad truth about the legal profession. Many of its members have chosen
law because they enjoy bullying others (and being well paid for doing so) under
the lofty rhetoric of "zealous client advocacy." It must be especially enjoyable
to have a portfolio, an abstract bundle, as a client, for counsel can then
pretend that "the Fund believes", "the Fund is concerned", and "the Fund is
forced to incur expenses", all in the best interests of the shareholders.
Get real. Pull back the curtain. It's only Counselor Mackey, turning the dials
to gin up some fees. Toss the phony complaint letter in the round file, and warn
him not to do it again. And if he bills the Fund (i.e. shareholders like me) in
response, he'd better watch out for the lawyer jokes. You know, the ones that
begin "Lawyer dies and he goes to Hell...."
I appreciate your consideration. Please note: I have no business, financial or
family affiliation with Mr. Goldstein or his partnership. I am, however and
alas, a lawyer."
'Gwailo ("Well, you know ... idle hands, and all that...")
