Securities Exchange Act of 1934 – Rules 14a-8(e), 14a-8(i)(2), (i)(3), (i)(4) and (i)(6)

Securities Exchange Act of 1934 – Rules 14a-8(e), 14a-8(i)(2), (i)(3), (i)(4) and (i)(6)

Liberty All-star Growth Fund, Inc.

May 10, 2012

Clifford J. Alexander, Esq.

K&L Gates LLP

1601 K Street NW

Washington DC 20006

Re:

Liberty All-Star Growth Fund, Inc. (the “Fund”)

Stockholder Proposal of Robert H. Daniels

Dear Mr. Alexander:

By letter dated February 24, 2012, on behalf of the Fund, you requested confirmation from the

staff of the Division of Investment Management (the “Division”) that we would not recommend

enforcement action to the Securities and Exchange Commission if the Fund omits a stockholder proposal

and supporting statement (the “Proposal”) submitted by Robert H. Daniels (the “Proponent”) from the

proxy materials for its 2012 Annual Meeting of Stockholders. By letter dated March 6, 2012, the

Proponent responded to the Fund’s request, and by letter dated March 14, 2012, you replied, on behalf

of the Fund, to the Proponent’s March 6th letter.

The Proposal (exclusive of the supporting statement) states:

RESOLVED: the Shareholders request that the Board promptly initiate a self-tender under

which the Fund shall offer to repurchase all of its outstanding Shares for cash at 98% of net asset

value per Share.

You assert that the Proposal may be excluded: (1) pursuant to Rule 14a-8(i)(3) under the

Securities Exchange Act of 1934 because (i) it is vague and indefinite in violation of Rule 14a-5, and (ii) it

contains false and misleading statements in violation of Rule 14a-9; (2) pursuant to Rule 14a-8 (i)(2) and

Rule 14a-8(i)(6) because implementation of the Proposal would violate Maryland law and the board of

directors lacks authority to implement the Proposal under Maryland law; (3) pursuant to Rule 14a-8(i)(4)

because it is designed to benefit the Proponent and does not further an interest shared by Fund

stockholders at large; and (4) pursuant to Rule 14a-8(e) because the submission was incomplete and the

Proponent did not complete the submission until the deadline for the receipt by the Fund of stockholder

proposals had passed.

We are unable to concur in your view that the Fund may exclude the Proposal pursuant to Rule

14a-8(i)(3). We note that the Fund will have an opportunity to include in its proxy statement arguments

reflecting its own point of view on the Proposal. See Rule 14a-8(m)(1); Division of Corporation Finance,

Staff Legal Bulletin No. 14B, Section B (Sept. 15, 2004). We are also unable to concur in your view that

the Fund may exclude the Proposal pursuant to Rule 14a-8(e) or to Rules 14a-8(i)(2), (i)(4), or (i)(6).

Accordingly, we do not believe that the Fund may omit the Proposal from the proxy materials for its

2012 Annual Meeting of Stockholders.

-2Attached for your information is a description of the informal procedures the Division follows in

responding to shareholder proposals. If you have any questions or comments regarding this matter,

please call me at 202-551-6968.

Sincerely,

H.R. Hallock, Jr.

Senior Counsel

Attachment

cc: Robert H. Daniels

K&L IGATES

February 24, 2012

VIAE-MAIL

Securities and Exchange Commission

Office of Chief Counsel

Division of Investment Management

100 F Street, N.E.

Washington, DC 20549

Re:

Stockholder Proposal Submitted by Robert H. Daniels

Ladies and Gentlemen:

Pursuant to Rule 14a-8 promulgated under the Securities Exchange Act of 1934, as amended (the

"Exchange Act"), and as counsel to Liberty All-Star Growth Fund, Inc., a Maryland corporation

(the "Fund"), we request confirmation that the staff of the Division of Investment Management

will not recommend an enforcement action if the Fund omits from its proxy materials for the

Fund's 2012 Annual Meeting of Stockholders (the "2012 Annual Meeting") the proposal

described below for the reasons set forth herein. The statements of fact included herein represent

our understanding of such facts.

Background

The deadline for stockholders to submit proposals to be included in the proxy materials for the

Fund's 2012 Annual Meeting was December 17, 2011. On December 15, 2011, the Fund

received a proposal and supporting statement dated December 14, 2011 (the "Proposal") from

Robert H. Daniels (the "Proponent") for inclusion in the proxy materials for the 2012 Annual

Meeting. The letter acknowledged that information confirming securities ownership was

missing. The Fund received a second letter from the Proponent dated December 23,2011, which

included a written statement from the record holder of the Proponent's securities confirming the

Proponent's ownership of Fund shares. The Fund responded to the Proponent in a letter dated

January 6, 2012, notifying the Proponent of the Fund's intention to exclude the Proposal. The

Proponent responded to the Fund in a letter dated January 13, 2012, providing proof of the

delivery date for the Proposal and contesting the Fund's exclusion of the Proposal.

The Proposal and all related correspondence between the Fund and the Proponent are attached

hereto as Exhibit A. A copy of this letter is also being sent to the Proponent as additional notice

of the Fund's intent to omit the Proposal from the Fund's proxy materials for the 2012 Annual

Meeting.

K&L IGATES

February 24,2012

Page 2

The Proposal

RESOLVED: the Shareholders request that the Board promptly

initiate a self-tender under which the Fund shall offer to repurchase

all of its outstanding Shares for cash at 98% of net asset value per

Share.

Reasons for Exclusion of the Proposal

The Fund believes that it may properly omit the Proposal from the proxy materials for the 2012

Annual Meeting for the following reasons:

1.

•

The Proposal is Vague and Indefinite. The Fund may exclude the Proposal

pursuant to Rule 14a-8(i)(3) because it is vague and indefinite in violation of Rule

14a-5.

•

The Proposal Contains False, Misleading and Irrelevant Statements. The Fund

may exclude the Proposal pursuant to Rule 14a-8(i)(3) because it contains false

and misleading statements in violation of Rule 14a-9.

•

The Implementation of the Proposal would Violate Maryland Law and the Board

Lacks the Authority to Implement the Proposal under Maryland Law. The Fund

may exclude the Proposal pursuant to Rule 14a-8(i)(2) because its implementation

would violate Maryland law. The Fund may also exclude the Proposal under Rule

14a-8(i)(6) because its board of directors (the "Board") lacks the authority to

implement the Proposal under Maryland law.

•

The Proposal is Designed to Benefit the Proponent. The Fund may exclude the

Proposal pursuant to Rule 14a-8(i)(4) because it is designed to benefit the

Proponent and does not further an interest shared by Fund stockholders at large.

•

The Proposal was Incomplete. The Fund may exclude the Proposal pursuant to

Rule 14a-8(e) because the submission was incomplete and the Proponent did not

complete the submission until the deadline for the receipt by the Fund of

stockholder proposals had passed.

The Proposal may be excluded pursuant to Rule 14a-8(i)(3) because it is vague and

indefmite.

Rule 14a-8(i)(3) permits a company to exclude a proposal from the company's proxy materials if

the proposal or its supporting statement is contrary to any of the proxy rules and regulations,

including Rule 14a-5, of Securities and Exchange Commission ("Commission"). Rule 14a-5

requires that information in proxies be "clearly stated" and the Commission staff ("Staff') has

recognized that a proposal may be excluded if it is so inherently vague and indefinite that neither

stockholders voting on the proposal nor the company in implementing the proposal (if adopted)

K&L IGATES

February 24,2012

Page 3

would be able to determine with any reasonable certainty exactly what actions or measures the

proposal requires. I The Fund believes that the Proposal may be properly omitted from the proxy

materials for the 2012 Annual Meeting pursuant to Rule 14a-8(i)(3) because it is vague and

indefinite, in violation of Rule 14a-5.

The Staff has allowed the exclusion of vague and indefinite proposals. For example, in

Occidental Petroleum Corporation (Feb. 11, 1991), the Staff granted no-action relief to a

company seeking to exclude a proposal related to the "buyback" of shares because it was

"unclear exactly what action any stockholders voting for the proposal would expect the

Company to take" and it was "unclear what action the Company would be required to take if the

proposal were adopted." The Staff stated that ambiguities made the Occidental proposal

misleading because "any action(s) ultimately taken by the Company upon implementation of this

proposal could be significantly different from the action(s) envisioned by stockholders voting on

the proposal." Similarly, in Verizon Communications Inc. (Jan. 27, 2012), the Staff granted

relief to a company seeking to exclude a proposal regarding vesting of equity awards to senior

executives where "neither stockholders nor the company would be able to determine with any

reasonable certainty exactly what actions or measures the proposal requires." And, in R.R.

Donnelley & Sons Company (Mar. 23, 2010), the Staff granted relief to a company seeking to

exclude a proposal regarding the rights of stockholders at special meetings because it was

unclear to what "rights" the proposal was referring.

The Proposal requests that the Fund's Board initiate a tender offer pursuant to which the Fund

would offer to purchase all of its outstanding shares. The Fund believes that the Proposal is

vague and indefinite because the Proposal does not disclose or address the possible effect on the

Fund of the proposed tender offer and, as a result, stockholders voting on the Proposal would not

know what they are voting for. There are three potential outcomes associated with the proposed

tender offer, depending upon the percentage of stockholder participation. In the first case, Fund

stockholders tender a small enough percentage of Fund shares that the Fund remains

economically viable without making any changes to its new strategy or structure. In this case,

the percentage ownership of the non-tendering stockholders will increase and these stockholders

will bear a greater proportion of the Fund's expenses than they did prior to the tender offer.

They could also incur a greater tax burden due to additional capital gain distributions caused by

the Fund realizing capital gains when it sells portfolio securities to raise the proceeds necessary

to pay for the tendered shares. In the second case, Fund stockholders tender a larger percentage

of Fund shares and the Fund remains economically viable but is too small to maintain its unique

actively managed multi-manager investment strategy. In this instance, the Fund would have to

change its investment strategy and non-tendering stockholders would bear an even greater

proportion of the Fund's expenses, would be more likely to incur more taxable distributions and

would wind up in an investment vehicle that does not have the investment strategy for which

they bought Fund shares (an investment strategy non-tendering stockholders clearly preferred

since they chose to hold their Fund shares rather than tender them). In the third case, Fund

Staff Legal Bulletin No. 14B (eF) (September 15,2004) ("SLB 14B").

K&L IGATES

February 24,2012

Page 4

stockholders tender a still larger percentage of Fund shares and the Fund is no longer

economically viable and has to liquidate and dissolve, merge or convert to an open-end mutual

fund, again leaving non-tendering stockholders bearing greater expenses, incurring more tax

burdens and losing access to the Fund's unique investment strategy.

The second and third outcomes described above are materially different from what stockholders

would expect when they are voting on a proposal about a tender offer. However, each is a real

possibility. In the current market, the vast majority of partial common share tender offers

conducted by closed-end funds have been oversubscribed. 2 If the Fund were to offer to

repurchase all of its outstanding shares, there is a chance that a large enough percentage of the

outstanding shares would be tendered that the Fund would have to liquidate and dissolve, merge

or convert to an open-end mutual fund. The Proposal's supporting statement concedes this

possibility, calling for "an orderly winding-up in case so many shares are tendered that the

remaining Fund would not be viable." Even if a significant percentage of Fund shares are not

tendered, there is a good chance that enough shares would be tendered to threaten the ability of

the Fund to continue to pursue its unique multi-manager investment strategy. Neither the

Proposal nor the supporting statement sufficiently discloses this outcome. Hence, stockholders

voting on the Proposal would not know whether they are voting for a tender offer or, de facto, for

a different management style or the liquidation, dissolution, merger or conversion of the Fund.

This lack of clarity distinguishes the Proposal from the tender offer proposal in The Adams

Express Company (Jan. 26, 2011), which had two clearly defined outcomes: (1) a tender offer

with a de facto maximum participation rate of 50%; or (2) if more than 50% of the fund's shares

were tendered, the liquidation of the fund. 3 Hence, the Adams Express proposal disclosed to the

fund's stockholders the parameters and possible consequences of the proposal on which they

would be asked to vote and put them on notice that the fund might not continue in its present

form if the tender offer proposal was approved. The Staff granted Adams Express no-action

relief to exclude that tender offer proposal because it could not be implemented under state law.

In contrast, the purpose, parameters and possible consequences of the Proposal are

indeterminate. Unlike the Adams Express proposal, the Proposal does not contemplate that a

high participation rate in the tender offer could threaten the viability of the Fund. The Proposal

2

See, e.g., The Swiss Helvetia Fund (July 7, 2011) (5% offer, 49% tendered); Korea Equity Fund,

Inc. (Dec. 23, 2010) (20% offer, 70% tendered); DWS High Income Opportunities Fund, Inc. and DWS

Global High Income Fund, Inc. (Nov. 26, 2010) (25% offer, 47% and 33% tendered, respectively);

SunAmerica Focused Alpha Large-Cap Fund, Inc. (Nov. 24, 2010) (25% offer, 75% tendered); Aberdeen

Chile Fund, Inc. (June 4,2010) (25% offer, 60% tendered).

3

In the Adams Express letter, the Staff considered the following proposal: "RESOLVED: The

stockholders ... request the Board of Directors ... to authorize the Fund to conduct a self-tender offer for

all outstanding shares of the Fund at [NAV] or within 1% thereof (to cover expenses). If more than 50%

of the Fund's outstanding shares are tendered, the tender offer should be cancelled and the Fund should be

liquidated or, at the discretion of the Board, merged or converted into an open-end mutual fund."

K&L IGATES

February 24, 2012

Page 5

does not disclose the distinct possibilities that the asset size of the Fund could diminish to the

point that the Fund could no longer be managed pursuant to the Fund's unique multi-manager

investment strategy or that the Fund may have to liquidate and dissolve, merge or convert to an

open-end mutual fund.

The terms of the tender offer contemplated by the Proposal are also inherently vague and

indefinite. For example, the Proposal does not state the date as of which the net asset value per

share ("NAV"), and therefore the price to be paid for tendered shares, would be determined.

Depending on what date is used, and what happens in the market, the Fund may wind up paying

more than the full NAV of the shares on the date the shares are purchased. 4 Moreover, because

most shares are tendered at the very end of the tender offer, the Fund will not be able to calculate

in advance with any precision the percentage of its assets that it will need to sell in order to

purchase tendered shares and, therefore, may not be able to time the sale of portfolio securities to

obtain the best price. This, in combination with the transaction costs and potential downward

pressure on the market price of the Fund's portfolio securities, could result in the Fund not

having the resources to pay stockholders 98% of NAV for tendered shares, the price

contemplated in the Proposal. Conversely, if all stockholders fully participate in the tender offer,

and the Fund can successfully dispose of all its portfolio securities, the tender offer would

require the Fund to payout only 98% of the NAV to stockholders and the Proposal contains no

provision for the disposition of the residual value after expenses are paid.

The Staff has stated explicitly that a proposal should be drafted with precision. In a November

26,2001 teleconference titled Stockholder Proposals: What to Expect in the 2002 Proxy Season,

the Associate Director (Legal) of the Division of Corporation Finance emphasized the

importance of precision in drafting a proposal, citing Staff Legal Bulletin No. 14 (eF) (July 13,

2(01) ("SLB 14"). He stated, "you really need to read the exact wording of the proposal .... We

really wanted to explain that to folks, and we took a lot of time to make it very, very clear in

[SLB 14]" (emphasis added). SLB 14 states that the Staffs determination of no-action requests

under Rule 14a-8 of the Exchange Act is based on, among other things, the "way in which a

proposal is drafted."

The Proposal, however, is not drafted with precision. It fails to align the purpose of the tender

offer with the potential concomitant change in the Fund's management style or a full liquidation,

merger or conversion of the Fund; explain the terms and potential consequences of the tender

offer; or provide for the disposition of residual assets. The result is a scenario where "any

action(s) ultimately taken by the [Fund] upon implementation of [the Proposal] could be

significantly different from the actions envisioned by the stockholders voting on the

4

For example, if the price is based on the NAV at the beginning of the tender offer and the NAV

on that date is $10 per share, the purchase price would be $9.80 per share. If during the tender offer

period the Fund's NAV falls to $9.50, the Fund would have to pay more than NAV for each share. In this

scenario, if a high percentage of shares are tendered, the Fund may not be able to purchase all tendered

shares.

K&L IGATES

February 24, 2012

Page 6

[P]roposal."S For these reasons, the Fund is seeking no-action relief to exclude the Proposal for

being materially vague and indefinite.

2.

The Proposal may be excluded pursuant to Rule 14a·8(i)(3) because it contains false.

misleading and irrelevant statements.

Rule 14a-8(i)(3) also allows the exclusion of a stockholder proposal if the proposal or its

supporting statement is contrary to Rule 14a-9, which prohibits the making of false or misleading

statements in proxy soliciting materials or the omission of any material fact necessary to make

statements contained therein not false or misleading. 6 The Fund believes that both the Proposal

and the supporting statement may be properly omitted from the proxy materials for the 2012

Annual Meeting pursuant to Rule 14a-8(i)(3) because they contain false, misleading and

irrelevant statements, in violation of Rule 14a-9.

The Proposal is per se misleading because it frames the tender offer as an opportunity for a quick

profit but omits disclosure regarding potential consequences of the tender offer discussed above. 7

The purpose of issuer tender offers, among other things, is to provide liquidity to shareholders,

but not at the expense of maintaining the issuer as a viabie entity. As a result, shareholders

voting on the Proposal may not anticipate the potential consequences or suspect that they may

unwittingly be voting to dismantle the Fund. The Proposal also omits material information by

failing to disclose the effect of the tender offer on non-tendering stockholders. In the event that

the Fund remains viable after the tender offer, it is the non-tendering stockholders who would

bear the transactional expenses and receive distributions of capital gains incurred by the Fund in

connection with the sale of securities to raise the cash necessary to repurchase the tendered

shares.

The Fund also believes that the Proposal's supporting statement may be excluded under Rule

14a-8(i)(3) because it contains statements that impugn the character of the Fund's Board and its

investment adviser without factual foundation. Rule 14a-9 provides several examples of

statements deemed to be misleading because they "directly or indirectly impugn[s] character,

integrity or personal reputation, or directly or indirectly makers] char~es concerning improper,

illegal or immoral conduct or associations, without factual foundation." The Staff has permitted

the exclusion of stockholder proposals on this basis. For example, in The Swiss Helvetia Fund,

Inc. (Mar. 6, 2001), the Staff permitted a company to exclude a stockholder proposal that

improperly impugned the character of a fund's directors. The Staff stated that "the proposal

5

See Occidental.

6

See SLB 14B.

7

The Proposal is also misleading because, as discussed in Section 3 below, the Board cannot

independently wind up the Fund if the Fund would not be viable after the tender offer.

8

Rule 14a-9, note (b).

K&L IGATES

February 24,2012

Page 7

implie[d] that the directors of the fund have violated, or may choose to violate, their fiduciary

duty." The Staff also pennitted companies to exclude proposals based on similar violations of

Rule 14a-9 in Phoenix Gold International, Inc. (Nov. 21, 2000) (proposal and its supporting

statement questioned independence of directors) and CCBT Bancorp, Inc. (Apr. 20, 1999)

(proposal's supporting statement stated that directors violated their fiduciary duty).

The Proposal's supporting statement includes several statements that impugn the character of the

Fund's investment adviser and Board. In this regard, the supporting statement references

transactions between two Fund stockholders and DST Systems, Inc. ("DST"). Statements

regarding these transactions are irrelevant because the transactions were between private parties,

did not involve the Fund and were not approved by the Fund's Board. The supporting statement

offers no explanation why the Fund, its Board or its investment adviser should be responsible for

transactions between these parties or how the referenced transactions would affect the Fund. The

supporting statement impugns the character and integrity of the Fund's investment adviser when

it asks whether "any investor [can] now feel confident that the Fund's investment adviser, as a

DST subsidiary, will always treat all stockholders fairly and equally, and not favor the interests

of some over others."

In addition, the supporting statement impugns the character of the Fund's Board by referring to

the stockholders who sold Fund shares to DST as "favored institutions" and questioning whether

the Board will be "fair and open-minded ... rather than retreating behind a barrage of negative

objections." This statement implies that the Board violated its fiduciary duty to stockholders by

approving transactions that involved neither the Fund nor its Board. However, there is no factual

basis offered, nor is there any, that would support the proffered implication that the Fund's

Board and its investment adviser would not act in the best interests of the Fund and its

stockholders. Indeed, the Board never approved the referenced transactions. These statements

conflate actions of the Fund, its Board and its investment adviser with the private actions of

DST, which was, at the time, not affiliated with any of these parties. When the private

transactions involving Fund stockholders and DST occurred, DST was a potential purchaser of

the holding company that owned the Fund's investment adviser. Nothing in the supporting

statement offers a basis to believe that the Fund, its Board or its investment adviser should have

acted differently before or would act differently in the future (now that DST owns the parent of

the Fund's investment adviser) in fulfilling their responsibilities to shareholders.

The Proposal's supporting statement is also misleading because it states that the Fund's trading

discount "represent[s] a deadweight loss to us as investors." This statement has no factual basis

and is a red herring that could mislead shareholders. Trading discounts and premiums are

inherent to investing in closed-end funds and do not detennine whether shareholders realize a

gain or loss on their investment. Each Fund stockholder purchased Fund shares at a different

market price and discount or premium, and each individual is impacted differently. Many Fund

stockholders have likely experienced a decrease in the discount (compared to the discount at

which they purchased the shares) and an increase in the value of their investment despite there

being a discount. The Proponent, for example, purchased his shares when the Fund was trading

at a discount of nearly 13%. At that time, the Fund's NAV per share was $4.01 and the market

K&L 'I GATES

February 24, 2012

Page 8

price was $3.49 per share. As of February 17, 2012, the Fund's shares were trading at a smaller

discount of 9.7%, and had a NAV of $4.74 and a market price of $4.28 per share. If the

Proponent were to sell his shares on the open market, he would realize a total return (including

reinvestment of dividends) of more than 38% on his investment, hardly a deadweight loss.

Whether individual investors realize a gain or loss on their investments in a closed-end fund

depends solely on the fund's market price at the time of purchase and at the time of sale, and

emphasizing the discount as "a deadweight loss" is misleading.

The Proposal and its supporting statement include false, misleading and irrelevant statements and

for these reasons the Fund seeks no-action relief to exclude the Proposal and the supporting

statement.

3.

The Proposal may be excluded pursuant to Rules 14a-8(i)(2) and 14a-8(i)(6) because

its implementation would violate Maryland law and the Fund's Board lacks the

authority to implement the Proposal under Maryland law.

Rule 14a-8(i)(2) allows a company to exclude a stockholder proposal that, if implemented,

would cause the company to violate state law. Rule 14a-8(i)(6) provides that a stockholder

proposal may be excluded if a company's board does not have authority to implement the

proposal. In Staff Legal Bulletin No. 14D (eF) (Nov. 7, 2008) ("SLB 14D"), the Staff

recognized that when a proposal recommends, requests, or requires corporate action that state

law mandates "be initiated by the board and then approved by stockholders," that proposal may

be excluded under either Rule 14a-8(i)(2) or Rule 14a-8(i)(6).9 The Staff likewise has

recognized the appropriateness of excluding a proposal that seeks to bypass this two-step

process. IO The Fund believes that the Proposal may be properly omitted from the proxy

materials for the 2012 Annual Meeting pursuant to Rules 14a-8(i)(2) and 14a-8(i)(6) because the

Proposal would cause the Fund to violate Maryland law and neither the Fund nor its Board has

the authority to fully implement the Proposal.

In determining whether to conduct the tender offer described in the Proposal, the Fund's Board

would have to evaluate the potential outcomes and consequences of the tender offer; it could not

restrict itself to considering the tender offer in isolation. As discussed above, if implemented as

9

While SLB 140 referred specifically to the example of a proposal seeking a charter amendment,

the two-step process for a charter amendment under Maryland General Corporation Law (the "MGCL") is

the same as the two-step process required for the Fund to liquidate: the corporation's board must approve

the proposal and then must submit the proposal to the corporation's stockholders for their approval.

MGCL Section 2-604 addresses charter amendments. MGCL Section 3-105 addresses a sale of all or

substantially all of a company's assets. Excluding specific references to amendments as opposed to

transactions, the procedures set forth in these sections are almost identical.

10

See, e.g., Adams Express (recognizing that a board lacks the authority under Maryland law to

unilaterally liquidate a company and that implementing a proposal to liquidate a company would violate

Maryland law).

K&L IGATES

February 24, 2012

Page 9

proposed the Proposal could result in the need to liquidate and dissolve, merge or convert the

Fund if a significant percentage of Fund shares are tendered. Understanding, therefore, that such

a tender offer is in essence a liquidation or merger effort, the Fund's Board would have to

consider whether it could authorize that kind of transaction without stockholder approval. Under

Maryland law, the Fund would not be able to take any of these actions without stockholder

approval. The MGCL defines a specific procedure for a corporation to sell all or substantially all

of its assets in Section 3-105, to dissolve in Section 3-403 and to merge with another entity in

Section 3-105. The statutory procedures involve the same two steps. First, the majority of the

Fund's Board must adopt a resolution declaring the proposed action to be advisable. Second, the

proposed action must be approved by Fund stockholders. Thus, under Maryland law, the sale of

all of the Fund's assets and dissolution of the Fund and the merger of the Fund require both

Board and stockholder approval. II The Fund simply lacks the authority to act unilaterally on

these matters and could be in danger of violating Maryland law l2 if it attempted to implement the

Proposal as submitted.

The Fund believes that its position is consistent with the Staff's decisions in similar situations

where proposals would have circumvented similar statutory two-step processes. The Staff has

applied this principle regardless of the jurisdiction in question-excluding, for example, a tender

offer proposal because the possible consequential need to liquidate the fund would have violated

Maryland law in Adams Express, a proposal to amend organizational documents that would have

violated Delaware law in Northrop Grumman Corporation (Feb. 29, 2008) and a charter

amendment proposal that would have violated New York law in Xerox Corporation (Feb. 23,

2004). In each of these situations, the proposal at issue would have required both board

resolution and stockholder approval in order to be implemented in 90mpliance with state law. As

the Proposal could result in the Fund needing to take actions that require a two-step statutory

process, including stockholder approval, the Fund seeks to exclude the Proposal under Rules

14a-8(i)(2) and 14a-8(i)(6).

4.

The Proposal may be excluded pursuant to Rule 14a-80)(4) because it is designed to

benefit the Proponent and does not further an interest shared by Fund stockholders

at large.

Rule 14a-8(i)(4) allows for the exclusion of a stockholder proposal if the proposal is designed to

"achieve personal ends that are not necessarily in the common interest of ... shareholders

generally.,,13 Indeed, the Staff has recognized that Rule 14a-8(i)(4) was adopted in order to

II

The exception to the stockholder approval requirement in MGCL Section 3-104 does not apply in

the Fund's circumstances because liquidation is not a transaction in the "ordinary course of business" and

the Fund is not an open-end investment company.

12

The Fund would also violate Section 13 of the Investment Company Act of 1940, as amended, if

it attempted to convert to an open-end fund without a stockholder vote.

13

Securities Exchange Act Release No. 20091 (Aug. 16, 1983).

K&L IGATES

February 24, 2012

Page 10

ensure "that the security holder proposal process would not be abused by proponents attempting

to achieve personal ends that are not necessarily in the common interest of the [company's]

shareholders generally.,,14 Absent this rule, minority stockholders could advance their interest at

the expense of other stockholders by forcing the inclusion of their proposals in a company's

proxy materials.

The Proposal is in the best interests of the Proponent, and the implementation of the Proposal

would be at the expense of the Fund's other stockholders. The Proponent seeks to have the Fund

conduct a tender offer for all of its outstanding shares using a purchase price of 98% of NAV.

As noted above, when the Proponent purchased his shares on February 22, 2010, the Fund's

shares were trading at a discount of nearly 13%, and had a NAV of $4.01 and a market price of

$3.49 per share. As of February 17, 2012, the Fund's shares were trading at a discount of 9.7%,

with a NAV of $4.74 and a market price of $4.28. Thus, by proposing a tender offer at 98% of

NAV, the Proponent is trying to force the Fund to purchase his shares at a price that is higher

than the price he currently can obtain in the open market (and thereby obtain a profit even greater

than the 38% total return he could obtain in the market).

The Proposal is designed to confer a benefit on the Proponent at the expense of other

stockholders and should be excluded under Rule 14a-8(i)(4). The Proposal would benefit the

Proponent because the Proponent wants to exit the Fund at a price greater than he could currently

obtain in the market without paying his share of the expenses and tax burdens associated with the

tender offer and its possible consequences. As discussed above, if the Fund makes the proposed

tender offer, the long-term investors who do not tender their shares will bear the significant

expenses associated with the tender offer as well as the tax burdens. Moreover, if the

participation rate in a tender offer is high, the Fund could no longer be viable and could be

forced to liquidate, which would eradicate the ownership interest of non-tendering shareholders.

In this case, the very stockholders who wanted to continue to invest in the Fund would be forced

to vote on the Fund's liquidation or merger and again incur the solicitation and transactional

expenses. Unless all stockholders tendered all their Fund shares, stockholders could be impacted

dramatically differently if the Proposal is implemented. As the Fund is promoted as an allcapitalization growth fund that emphasizes diversification, consistent returns and a long-term

outlook, the Fund anticipates that not all stockholders will tender their Fund shares. 15 These

non-tendering stockholders could bear significant cost and their interests clearly would not be

furthered by the Proposal. As the Proposal would benefit the Proponent but would not further

the interests of all stockholders, the Fund seeks to exclude the Proposal.

14

ld.

15

In fact, for the period ended December 31, 2011, on a NAV reinvested basis, the Fund

outperformed its Lipper peer group average for the 1, 3, and 5 year periods and for the period since

inception as a multi-cap growth fund (May 1,2(00).

K&L IGATES

February 24,2012

Page 11

5.

The Proposal may be excluded pursuant to Rule 14a-8(e) because the Proponent

intentionally submitted an incomplete Proposal and did not complete his submission

until after the deadline for submitting proposals had passed.

The Staff has strictly interpreted Rule 14a-8's requirements for timely submission by

stockholders and emphasized that stockholders should submit proposals "well in advance of the

deadline."I6 Additionally, the Staff has advised that a "stockholder who intends to submit a

written statement from the record holder of the stockholder's securities to verify continuous

ownership of the securities should contact the record holder before submitting a proposal to

ensure that the record holder will provide the written statement and knows how to provide a

written statement that will satisfy the requirements of rule 14a-8(b)."I7 Companies have been

permitted to exclude proposals if they have been submitted just one day past the established

deadline. 18

The Proponent knowingly submitted an incomplete Proposal. The deadline for submitting a

proposal for the Fund's 2012 Annual Meeting was December 17,2011. 19 Rule 14a-8(b) allows

stockholders who have held at least $2,000 in market value, or 1%, of a company's securities for

at least one year to submit a proposal. This subsection of Rule 14a-8 also explicitly states that

"at the time you submit your proposal, you must prove your eligibility to the company"

(emphasis added). In his letter dated December 14, 2011, which was received by the Fund a

mere two days before the deadline, the Proponent acknowledged that he was not including proof

of his eligibility to submit a proposal. Specifically, he stated: "I am obtaining and will send

separately a confirmation from Charles Schwab & Co. that 1 have owned at least $2,000 worth of

Fund shares continuously for at least one year ...."

Despite being aware of the deadline and the omission of required information, the Proponent did

not include any of his own brokerage statements or any other type of interim proof of his

ownership of Fund shares with his initial letter and did not provide proof of his eligibility until

his letter dated December 23, 2011-six days after the deadline and before the close of the

14-day window during which the Fund would have notified the Proponent of the deficiency.

Thus, there was no need for the Fund to notify the Proponent of the failure to supply information.

The Fund believes that the Proponent's knowing and intentional failure to provide proof of his

eligibility to submit the Proposal until after the deadline allows the Fund to exclude the Proposal.

The Fund believes that the Proposal may be excluded for being submitted past the deadline

because Rule 14a-8(t)(I) and past Staff interpretations of this provision that permitted late

16

See SLB 14.

17

Id. (emphasis added).

18

See, e.g., Datastream Systems, Inc. (March 9, 2005) and American Express Co. (Dec. 21, 2004).

19

This deadline was provided in the Fund's proxy statement filed on April 15, 2011.

K&L IGATES

February 24, 2012

Page 12

submissions do not fit the facts of this situation. The Proponent has been an attorney since 1973,

and an investor in closed-end funds for over 30 years. He has a documented association with the

well-known stockholder activist group Western Investment LLC, and has himself submitted 14a8 proposals in the past, including at least one self-tender proposal. 20 Most notably, the

correspondence that the Fund received from the Proponent clearly demonstrates his knowledge

and understanding of the requirements in Rule 14a-8 and his conscious disregard for these

requirements.

The Fund believes that the circumstances surrounding the Proposal differ from situations in prior

no-action requests such as Templeton Vietnam and Southeast Asia Fund (Sept. 28,2001), where

the Staff determined that a letter supplementing a proposal after the deadline was sufficient to

satisfy the procedural requirements of Rule 14a-8. In Templeton, the proposal was submitted

without proof of eligibility. The fund then wrote to the proponent and requested proof of

ownership, which was provided in a subsequent letter from the proponent's broker. In

Templeton, the fund's notice of deficiency served a real purpose in alerting the proponent to the

deficiency and allowing him the opportunity to remedy the situation in a timely manner.

The Fund asserts that in this case, a .deficiency notice from the Fund would have served no

purpose as the Proponent already knew of the deficiency at the time he submitted the Proposal.

As quoted above, the Proponent's initial letter recited the eligibility requirements of Rule 14a-8

and acknowledged that the initial submission was deficient. Then, without any notification by

the Fund, the Proponent sent a follow-up letter in an attempt to cure this deficiency, which was

dated and received after the established deadline for stockholder proposals. Rule 14a-8(f)(1)

provides that the Fund "need not provide [the Proponent] such notice of a deficiency if the

deficiency cannot be remedied, such as if [the Proponent] fail[s] to submit a proposal by the

company's properly determined deadline." Given these facts, notice from the Fund would not

have cured the deficiency in the Proposal. The Proponent's first submission was incomplete, and

his subsequent submission was late. Thus, the Fund asks the Staff to concur with its view that

the Proposal was late, and that the Proponent, with his demonstrated knowledge and

understanding of Rule 14a-8' s requirements, should be held to the requirement stated in Rule

14a-8(b)(2) that stockholders prove their eligibility "at the time" a proposal is submitted and, in

any event, certainly before the deadline for the stockholder proposals has passed. The Fund

believes that its position is consistent with the Staffs long-standing emphasis on stockholders

submitting their proposals in a timely manner and well in advance of a deadline.

Conclusion

We recognize that the Staff, on occasion, will permit proponents to revise their proposals to

correct errors that are "minor in nature and do not alter the substance of the proposal." 21 The

20

See LMP Capital & Income Fund Inc., Form 8-K, Exhibit 99.1 (filed March 9, 2011).

21

See SLB 14B.

K&L IGATES

February 24,2012

Page 13

Fund, however, believes that in this case if the Proposal is revised to address the deficiencies

discussed herein, the revision would constitute a substantive alteration of the Proposal,

inconsistent with the Staffs long-standing practice. On the basis of the foregoing and on behalf

of the Fund, we respectfully request the concurrence of the Staff that the Proposal may be

excluded from the Fund's proxy materials for the 2012 Annual Meeting.

If you have any questions or would like any additional information regarding the foregoing,

please do not hesitate to contact me at 202-778-9068 or, in my absence, Kathy Ingber or Jennifer

Gonzalez at 202-778-9015 and 202-778-9286, respectively. If you do not agree with the

conclusions set forth herein, we respectfully request the opportunity to confer with you before

any determination is finalized. Thank you for your attention to this matter.

Very truly yours,

Clifford J. Alexander

cc:

Robert H. Daniels, Esq.

Exhibit A Attached hereto

Exhibit A

..

K&LIGATES

K&L Gates UP

1601 K Street NW

Washington. DC 20006-1600

T 202.778.9000 www.klgates.com

C1iiiord.l. i\k:¡;1ncÌtr

202. 77x. 9tJ6X

i~'a.\: 102. 77X.l.j toO

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March 14,2012

VIA E-MAIL

Securties and Exchange Commission

Counsel

Investment Management

100 F Street, N.R

Washington, D.C. 20549

Offce of

the Chief

Division of

Re: Stockholder Proposal Submitted by Robert H. Daniels

Ladies and Gentlemen:

Pursuant to Rule 14a-8 promulgated under the Securities Exchange Act of1934, as

amended (the "Exchange Act"), and as counsel to Libert All-Star Growth Fund, Inc., a

Maryland corporation (the "Fund"), by letter dated Februar 24, 2012, we requested

confirmation that the staff of the Division ofInvestment Management will not recommend an

enforcement action if

the Fund omits from its proxy materials for the Fund's 2012 Annual

Meeting of

Stockholders (the "2012 Anual Meeting") the proposal described below for the

reasons set forth herein.

By letter dated March 6, 2012, Mr. Daniels responded to the February 24 letter we

submitted on behalf of the Fund. There is no need, and we do not intend, to discuss all of

Mr. Daniels' comments. However, we do believe it is important to reemphasize the fundamental

legal defects in the proposal.

1. Mr. Daniels' proposal is entirely vague and indefinite. Adoption and

the tender offer he proposes would almost certainly require a major change in

the Fund and very possibly liquidation. Despite Mr. Daniels' assertions, it is not a simple

proposal to provide liquidity to some minority set of shareholders. His proposal does not enable

shareholders to understand the potential serious consequences of

what they are voting on.

implementation of

Mr. Daniels tries to argue that his proposal is mer(1IY "precatory." But the words cannot

support that interpretation. The proposal does not direct the Board to "consider" a tender offer.

It requests "that the Board promptly initiate a self-tender offer." Even if it were interpreted to be

precatory, proposals must be drafted with precision so stockholders know what they are voting

on.

DC-9607306 v I

..

K&LIGATES

Securities and Exchange Commission

March 14,2012

Page 2

2. For the same reasons the proposal is inherently false and misleading. It leads

stockholders to believe that the proposal is merely requiring a liquidity event. In fact, it may

require the liquidation of the Fund.

3. Mr. Daniels does not provide any legal rationale in response to our objection that

the proposal would violate Maryland law. He admits that "this objection may very well be

valid.. ." His proposal solution, which is to simply revise his supporting statement, does not

solve the legal problem or cure the deficiency in his proposal. Moreover, he states that, in the

event the proposal is adopted, "the board could provide for an orderly winding-up" of the Fund the Fund.

an admssion that the proposal may very well result in liquidation of

4. Mr. Daniels does not deny that the objective of

his

proposal is to benefit himself.

He only argues that it would benefit all shareholders. However, this ignores the detrimental

effect on shareholders who would like to continue to be invested in this Fund.

5. Mr. Daniels misinterprets our reference to the Adams Express letter. Our letter

pointed out that Mr. Daniels failed to meet the standard discussed in Adams Express. That letter

included a proposal for a tender offer with adequate disclosure that the tender offer could result

in radical changes to a fud, including liquidation. In contrast, Mr. Daniels fails to disclose the

possible consequences.

In conclusion, we would like to reiterate that, in this case, if the Proposal is revised to

address the deficiencies discussed 'herein, the revision would constitute a substantive alteration of

the Proposal, inconsistent with the Staffs long-standing practice. On behalf ofthe Fund, we

again respectfully request the concurrence of

the Staffthat the Proposal may be excluded from

the Fund's proxy materials for the 2012 Anual ~eeting.

If you have any questions or would like any additional information regarding the

foregoing, please do not hesitate to contact me at 202-778-9068 or, in my absence, Kathy Ingber

or Jennifer Gonzalez at 202-778-9015 and 202-778-9286, respectively. If you do not agree with

the conclusions set forth herein, we respectfully request the opportunity to confer with you

before any determnation is finalized. Thank you for your attention to this matter.

Very truly yours,

t?N~~H

Clifford J. Alexander

cc: Robert H. Daniels, Esquire