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[FRANKLIN MUTUAL SERIES FUND INC. LETTERHEAD]
September 26, 2002
Keir D. Gumbs, Esquire
Division of Corporation Finance
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Farmer Bros. Co.
- Shareholder proposal
for investment company controls and disclosures
- August 26, 2002
letter addressing Rule 14a-8
Dear Mr. Gumbs:
In response to the August 26, 2002 letter
from Wilmer Cutler & Pickering on behalf of Farmer Bros. Co. (the
“Company”), we, Mutual Beacon Fund and Mutual Discovery Fund (together, the
“Funds”), each a series of Franklin Mutual Series Fund Inc., do not believe
that the Company’s stated intention to exclude our proposal for investment
company controls and disclosures ("Proposal") is consistent with either Rule
14a-8 or the interests of shareholders.
We also note that the Company’s August 26th
letter raises concerns which we addressed in a September 19, 2002 letter to
the chairman of the Company’s board of directors, a copy of which is
enclosed for your reference. We have received no response to that letter,
and must therefore assume that the Company will not resolve those concerns
by seeking the Staff’s concurrence with its position.
Under these circumstances, we think it is
particularly important that shareholders not be deprived of their suffrage
rights to require their Company’s reporting of relevant information and
compliance with laws. We disagree with the Company’s arguments to justify
excluding our Proposal, and in fact consider those arguments as additional
evidence of the need to present our Proposal to shareholders.
The Company’s first argument, that our
Proposal may be excluded under Rule 14a-8(i)(3) because it is overly vague,
suggests that the Company’s board of directors is unable to engage expert
advisers and/or is incapable of exercising business judgment. We hope this
is not the case. But if it is, the solution is not to refrain from
demanding that board members perform their duties. In formulating our
Proposal, we had assumed that more detailed provisions would deprive the
board of appropriate discretion over ordinary business matters. However, if
the Staff believes shareholders would be better served by providing more
specific instructions as the Company suggests in this part of their
argument, we would be pleased to revise our Proposal accordingly.
The Company next argues that our Proposal
may be excluded under Rule 14a-8(i)(2) because it would result in the
Company violating securities laws, suggesting that the act of registering
would itself cause the Company to be in violation of laws applicable to
investment companies. We assume that the Company could not register unless
it was an investment company, and that if it was an investment company the
laws would apply to it whether it was registered or not. This argument
certainly does not present any reason why a shareholder vote would create
any new violations. The intent of our Proposal, in fact, is to terminate or
prevent violations of laws applicable to investment companies.
The Company’s final argument is that our
Proposal may be excluded under Rule 14a-8(i)(7) because it involves
“ordinary business” decisions, seemingly contradicting their first argument
that our Proposal should provide more detailed instructions. We do not
believe that a resolution to provide shareholders with the financial
reporting and other benefits of the Investment Company Act of 1940
constitutes “ordinary business.” But, even if the Staff does consider it to
be “ordinary business,” we do not believe that shareholders should be
prevented from voting on the Proposal for that reason.
Regarding those issues of state law raised
by the Company, we note that the Company has not provided any California
legal opinions in support of their interpretations. We therefore assume
that there is no need for us to address those interpretations.
Please let us know what additional
information you may find useful. It is our objective to present a Proposal
that will provide shareholders with an opportunity to exercise their rights,
and we would appreciate your advice on how best to achieve that objective.
Very truly yours,
MUTUAL BEACON FUND
MUTUAL DISCOVERY FUND
By: FRANKLIN MUTUAL ADVISERS, LLC
_________________________________
Name: Bradley Takahashi
Title: Vice President
Ph: 973.912.2152
Enclosure
cc: Matthew Chambers
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