Company Name: Bank of America Corp.
Public Availability Date: January 12, 2007
Document Sections:
INQUIRY LETTER
APPENDIX
STAFF REPLY LETTER
[INQUIRY LETTER]
December 6, 2006
BY OVERNIGHT DELIVERY
Securities and Exchange Commission
Office of Chief Counsel
Division of Corporation Finance
100 F. Street, N.E.
Washington, DC 20549
Re: Stockholder Proposal Submitted by John Jennings Crapo
Ladies and Gentlemen:
Bank of America Corporation (the "Corporation") has received a proposal and
supporting statement on July 24, 2006 (the "Proposal") from John Jennings Crapo
for inclusion in the proxy materials for the Corporation's 2007 Annual Meeting
of Stockholders (the "2007 Annual Meeting"). The Proposal is attached hereto as
Exhibit A. The Proposal is handwritten and, in some instances, illegible. For
your convenience, a good faith transcription is attached as Exhibit B hereto.
The Corporation hereby requests confirmation that the staff of the Division of
Corporation Finance (the "Division") will not recommend enforcement action if
the Corporation omits the Proposal from its proxy materials for the 2007 Annual
Meeting for the reasons set forth herein.
GENERAL
The 2007 Annual Meeting is scheduled to be held on or about April 25, 2007. The
Corporation intends to file its definitive proxy materials with the Securities
and Exchange Commission (the "Commission") on or about March 19, 2007 and to
commence mailing to its stockholders on or about such date.
Pursuant to Rule 14a-8(j) promulgated under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), enclosed are:
1. Six copies of this letter, which includes an explanation of why the
Corporation believes that it may exclude the Proposal; and
2. Six copies of the Proposal.
A copy of this letter is also being sent to the Proponent as notice of the
Corporation's intent to omit the Proposal from the Corporation's proxy materials
for the 2007 Annual Meeting.
SUMMARY OF PROPOSAL
The Proposal requests that the Board of Directors "institute a policy of
reducing investments of the Corporation by five (05) percent annually until such
time as the State of Israel ceases its military, economic, and other political
attacks on the Palestinian Authority and League of Arab States." The Proposal
also asks for a report in future proxy statements regarding such reductions.
REASONS FOR EXCLUSION OF PROPOSAL
The Corporation believes that the Proposal may be properly omitted from the
proxy materials for the 2007 Annual Meeting pursuant to Rule 14a-8(i)(3), Rule
14a-8(i)(5), Rule 14a-8(i)(7) and Rules 14a-8(d) and (f). The Proposal may be
excluded pursuant to Rule 14a-8(i)(3) because it is in violation of the proxy
rules. The Proposal may be excluded pursuant to Rule 14a-8(i)(5) because it is
not economically or otherwise significantly related to the business of the
Corporation. The Proposal may be excluded pursuant to Rule 14a-8(i)(7) because
it deals with a matter relating to the Corporation's ordinary business
operations. Finally, the Proposal may be excluded pursuant to Rule 14a-8(d) and
(f) because the Proposal, including its supporting statement, exceed the
500-word limitation.
1. The Corporation may omit the Proposal pursuant to Rule 14a-8(i)(3) because it
is in violation of the proxy rules.
The Division has recognized that a proposal and/or supporting statement may be
excluded under Rule 14a-8(i)(3) if it is so vague and indefinite that
shareholders voting on the proposal would not be able to determine with
reasonable certainty exactly what action or measures would be required in the
event the proposal was adopted. See Bank of America (February 17, 1006) ("Bank
of America I"); Sara Lee Corporation (March 31, 2004) ("Sara Lee"); Bank of
America (March 10, 2004); Philadelphia Electric Co. (July 30, 1992); IDACORP,
Inc. (January 9, 2001); and Northeast Utility Service Company (April 9, 2001).
Rule 14a-8(i)(3) also permits the exclusion of a proposal if it or its
supporting statement is contrary to any of the Commission's proxy rules and
regulations, including 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, and Rule 14a-5, which requires that information in a proxy statement
be "clearly presented." In addition, Staff Legal Bulletin No. 14B (CF)
(September 15, 2004) ("SLAB 14B") states that "[i]t is important to note that
rule 14a-8(i)(3), unlike the other bases for exclusion under rule 14a-8, refers
explicitly to the supporting statement as well as the proposal as a whole." This
Proponent has repeatedly submitted proposals and supporting statements that have
been excludable under Rule 14a-8(i)(3). See Bank of America I; The Proctor &
Gamble Company (June 30, 2005) ("Proctor & Gamble"); American International
Group, Inc. (March 21, 2002); and Tri-Continental Corporation (March 14, 2000).
The Proposal is vague and indefinite. The Proposal seeks to link certain
corporate action (i.e., investments in Israel) to the cessation of certain
alleged actions taken by the State of Israel against the Palestinian Authority
and the League of Arab States that the Proponent characterizes as "military,"
"economic" and "political." However, the Proposal does not define what actions
must cease, or what actions are considered military, economic or political. The
Corporation has no clear instructions regarding when investments in Israel are
permissible. As a result, the Proposal is vague and indefinite and neither the
Corporation nor stockholders voting on the Proposal would be able to determine
with reasonable certainty exactly what action or measures would be required in
the event the Proposal was adopted.
In addition, the supporting statement is rambling, illegible, false and
misleading, offensive, anti-Semitic and is generally filled with paranoia and
verbiage unrelated and irrelevant to the subject matter of the Proposal. The
Corporation does not believe the supporting statement (and the Proposal) are
suitable for presentation in the proxy materials for the 2007 Annual Meeting.
The supporting statement includes a paragraph tracing the history of the
Proponent's stock ownership. In addition, a sampling of the supporting statement
includes the following points:
that the Proponent is hated for being a stockholder activist and that "Board
Chairmen, Presidents and Directors and other such Trustees detest and loathe
him."
that the Proponent "has long been a victim of oppression for his compassion
for Arabs inconvenienced by invasion of their homelands by Jews. Jews have hated
him the most - many have been social workers who have intimidated and threatened
him with professional job and housing retaliation and other reprisals for his
not violating national security as agents in Israel may steal atomic weapons";
that the Proponent's "mother worked on the nuclear submarine and proponent
like most has admired and revered that submarines inventor who lived and worked
a long time one (01) of America's great heroes";
that "Proponent was a victim of an unsuccessful by Jews who saw him using a
urinal and saw he was circumcised. It was an elementary school latrine and he
was told he was to be killed the succeeding day. He fled to his family for help
and was denied help. One (01) of them was school department employee. He was
chased into a corner and couldn't find a gate to escape. A neighbor of the
elementary school rescued him from the gang"; and that "[t]hese Jews have
relentlessly pursued him for a long time";
That the Proponent has "habitated in conditions worse than one (01) might
find in the Third World and Jews have failed to provide him with acceptable
housing" and that the Proponent "has been homeless long time and frequently he's
a victim of anti-Semitic talk which he's objected to and has said a more
appropriate solution for the surviving Jews is to return to Europe and to be
welcomed by the successors there of Herr Hitler and the forum to do that is not
a stockholder meeting and presumably the Hague tribunal of Arbitration which
Tsar Nicholas 2nd
helped formed would be that form. Proponent resides in a shelter with recovering
alcoholics, narcotic addicts, men in wheelchairs, etc. and one wheel chair man
who whispers in ears when he tries to rest thereby making him not!!!";
That "Anti Aryan hatred towards proponent was demonstrated by his alma mater
when as sophomore he tried to introduce the President of the League of Arab
States ("Arab League") to the membership of his organization and who was willing
to travel there at his own expense from the Arabian peninsula. The organizations
rebuffed and proponent was made to exit the university"; that "Proponent
attempted to introduce a similar proposal at another major national corporation
and the no-action letters that came from the Commission said it was a
humanitarian gesture worthy but about the great work Marshall Stalin whose
courageous [illegible] prevented the invasion of Russia rendering it impossible
for his legions to sweep across Europe and Asia to [illegible] with Herr
Hitler's allies to liquidate every Chinese person living in China during the
1930's and 1940's"; and
that the Proponent's "proposal is the correct route to pursue a final solution
to the horrible and terminate the violence that is about the world that has it's
genesis in the 1930's and 1940's."
Taken as a whole, the Proposal and supporting statement are anything but
"clearly presented." The supporting statement in Proctor & Gamble contained
several similar statements. The Proposal makes statements as if they were
factually correctthat the State of Israel has inflicted "military, economic,
and other political attacks on the Palestinian Authority and League of Arab
States" but the Proponent provides no factual or other support. As cited above,
the Division has regularly permitted exclusion of all or portions of a proposal
and supporting statement. In this instant, the Corporation believes that the
entire Proposal and supporting statement should be excluded.
As discussed in SLAB 14B, the Proposal and its supporting statement have
numerous defects that support their exclusion under Rule 14a-8(i)(3). Under SLAB
14B, the Division will continue to permit the exclusions of proposals under Rule
14a-8(i)(3) that include:
"statements directly or indirectly impugn character, integrity, or personal
reputation, or directly or indirectly make charges concerning improper, illegal,
or immoral conduct or association, without factual foundation;..."
"the resolution contained in the proposal is so inherently vague or indefinite
that neither the stockholders voting on the proposal, nor the company in
implementing the proposal (if adopted), would be able to determine with any
reasonable certainty exactly what actions or measures the proposal requiresthis
objection also may be appropriate where the proposal and the supporting
statement, when read together, have the same result; and
substantial portions of the supporting statement are irrelevant to a
consideration of the subject matter of the proposal, such that there is a strong
likelihood that a reasonable shareholder would be uncertain as to the matter on
which she is being asked to vote."
Based on the foregoing, the Corporation believe that the Proposal and supporting
statement are clearly contrary to the proxy rules, including Rule 14a-9, which
prohibits materially false or misleading statements and may be omitted under
Rule 14a-8(i)(3), in violation of both Rule 14a-9 and Rule 14a-5.
2. The Corporation may omit the Proposal pursuant to Rule 14a-8(i)(5) because
The Proposal is not significantly related to the business of the Corporation
Rule 14a-8(i)(5) permits exclusion of a proposal which relates to operations
which (i) account for less than 5 percent of the company's total assets at the
end of its most recent fiscal year, (ii) account for less than 5 percent of its
net earnings for the most recent fiscal year, (iii) account for less than 5
percent of its gross sales for its most recent fiscal year and (iv) is not
otherwise significantly related to the company's business. See Merck & Co., Inc.
(January 4, 2006); The Proctor & Gamble Company (August 11, 2003); and
Hewlett-Packard Company (January 7, 2003) ("HPC").
As of and for the year ended December 31, 2005 and the nine months ended
September 30, 2005, the Corporation, on a consolidated basis, had total assets
of $1.3 trillion and $1.45 trillion, respectively, revenues of $56.1 billion and
$54.6 billion, respectively, and net income of $16.5 billion and $15.9 billion.
For the most recent fiscal year end December 31, 2005 and the nine months ended
September 30, 2006, the Corporation generated no revenues or net income from
operations present in Israel.1 The Corporations has no employees, branches or
automated teller machines (ATMs) in Israel. The Corporation has de minimus
assets in Israel, its only two Israel based subsidiaries having been dormant for
a number of years. Those two subsidiaries are in the process of being liquidated
and that process is expected to be completed by June 30, 2007. Based on these
facts, the Proposal is not economically or otherwise significant to the
Corporation's business inside or outside of Israel.
In HPC, a similar proposal required the company to "relocate or close its
offices in Israel, divest itself of any land owned in Israel and send a letter
regarding Israel's violations of U.N. resolutions and international human rights
standards." In HPC, the company's operations that related to Israel accounted
for less than one percent of its assets at the end of its most recent fiscal
year, under 3.5% of its net earnings (net loss) for its most recent fiscal year
and approximately 0.1% of its net revenues for its most recent fiscal year. In
addition, the proposal also related to operations of the company which it argued
were not otherwise significantly related to its business. The Division found
that the proposal in HPC was excludable under Rule 14a-8(i)(5) and noted the
company's representation that the amount of revenues, earnings and assets
attributable to the company's operations in Israel were less than five percent
and the proposal was not otherwise significantly related to the company's
business.
The Division has found that proposals regarding divestment from Israel are not
otherwise significantly related to a company's business. See American Telephone
and Telegraph Co. (January 30, 1992) ("AT&T"); and Motorola, Inc. (February 21,
1995). In AT&T, the proposal at issue requested the company's board of directors
"take the necessary steps to phase out all sales of AT&T products and services
to the state of Israel and Israeli businesses." The Division, in permitting
omission of the proposal noted that the company satisfied the economic tests and
that the policy issue raised by the proposal, "Israel's treatment of
Palestinians, is not significant, and in fact is not related, to AT&T's
business." Subsequently, the Commission declined a request to review the
position taken by the Division. In Motorola a proposal requested that the
company's board establish a policy to prohibit the sale of products or provision
of services to any settlement, including persons residing in those settlements,
located in the "Occupied Territories" where Israeli settlements exist. In
finding that the proposal was excludable, the Division noted that the company
satisfied the economic tests and reiterated that "the policy issue raised by the
proposal, Israeli settlements in the Occupied Territories, is not otherwise
significantly related to the Company's business." Similarly, in J.P. Morgan &
Co. Incorporated (February 5, 1999) ("J.P. Morgan") a proposal mandated that the
company discontinue banking services with Swiss entities "until such time as all
the claims are settled by financial institutions of Switzerland and complete and
total restitution is made to other heirs of the victims of the homicides by the
government of the Third Reich and it's (sic) partner (sic) the Kingdom of Italy
and the Empire of Japan." While the J.P. Morgan proposal raised a serious social
issue, it was an issue that bore no direct connection to the company's
relatively minor Swiss operations. The Division found the J.P. Morgan proposal
excludable under Rule 14a-8(i)(5).
As was the case in the situations referenced above, the Corporation clearly
satisfies the economic tests of Rule 14a-8(i)(5) and the policy issue raised by
the proposal, Israel's alleged "military, economic, and other political attacks
on the Palestinian Authority and League of Arab States" is not significant, and
in fact is not in any way related, to the Corporation's business as a whole.
Rather, the Proposal only addresses the general concerns of the Proponent. For
the reasons set forth above, the Corporation believes the Proposal may be
omitted from the proxy materials for the 2007 Annual Meeting pursuant to Rule
14a-8(i)(5).
3. The Corporation may omit the Proposal under Rule 14a-8(i)(7) because it deals
with a matter relating to the Corporation's ordinary business operations.
Rule 14a-8(i)(7) allows a company to omit a proposal that deals with a matter
relating to the conduct of the ordinary business operations of the company. The
Proposal amounts to a request that the shareholders be able to block the
directors and management from exercising discretion as to the location where the
Company and its subsidiaries may do business. The management of these issues
constitute the day-to-day ordinary business of the Corporation.
The Corporation has operations around the world. The determination of where to
operate its business and provide client services is within the scope of the
Corporation's management, as part of the normal or routine practice in running
the Corporation's operations. In addition, the locations where Corporation
chooses to conduct its business operations is a matter of ordinary business and
does not raise significant social policy issues. The Division precedent
discussed above under Rule 14a-8(i)(5) lend further support to this view. These
day-to-day choices are exactly the type contemplated by the Commission as
fundamental to management's ability to run a company on a day-to-day basis. See
AT&T Corp. (March 6, 2001) (excluding a proposal related to the placement of
operating equipment); MCI Worldcom, Inc. (April 20, 2001) (excluding a proposal
related to the determination of the location of office or operating facilities);
and McDonald's Corporation (March 3, 1997) (excluding a proposal related to
plant location under Rule 14a-8(c)(7).
The Corporation believes that it is clear that the Proposal addresses ordinary
business matters that are part of the day-to day exercise of management
responsibility. Accordingly, the Corporation believes that the Proposal may be
omitted from its proxy materials for its 2007 Annual Meeting based on Rule
14a-8(i)(7).
4. The Corporation may omit the Proposal pursuant to Rules 14a-8(d) and (f)
because the Proposal, including its supporting statement, exceeds the 500 word
limitation.
The Corporation believes that the Proposal may be properly omitted from its
proxy materials for the 2007 Annual Meeting pursuant to Rules 14a-8(d) and
14a-8(f). Under Rule 14a-8(d) a stockholder proposal, including any accompanying
supporting statement, may not exceed 500 words. In addition, the Division has
routinely permitted the omission of a stockholder proposal from proxy materials
where a proponent failed to revise a proposal to comply with the 500-word
limitation. See Bank of America Corporation (January 27, 2005); Proctor & Gamble
Company (August 10, 2004); and Amgen, Inc. (January 12, 2004).
By certified letter dated October 19, 2006 (the "Request Letter"), the
Corporation requested that the Proponent revise the Proposal and supporting
statement to comply with the 500-word limitation.2 The Request Letter
specifically stated that the revised Proposal must be provided to the
Corporation within 14 calendar days of the Proponent's receipt of the Request
Letter. In addition, the Request Letter provided the relevant provisions of Rule
14a-8. Based on the return receipt, the Request Letter was received by the
Proponent on October 24, 2006. A copy of the Request Letter and evidence of its
receipt by the Proponent are attached hereto as Exhibit C. As of the date of
this letter, the Proponent has not revised his Proposal to comply with the 500
word limitation.
Although the Corporation's Request Letter was not initially sent within 14 days
of its receipt of the Proposal, the Proponent was given the full benefit of Rule
14a-8(f). In effect, the Proponent had several months, in addition to the 14
days provided in the Request Letter, to revise his Proposal to comply with the
500 word limitation. In addition, we note that the Proponent is a seasoned
veteran in Rule 14a-8 and shareholder proposal submissions. The Proponent was
not prejudiced in anyway by the delayed Request Letter. We are quite confident
that the Proponent knows or should have known that Rule 14a-8 proposals must not
exceed 500 words. Accordingly, because the Proponent failed to cure, in a timely
manner, the deficiency noted above, the Corporation believes it may omit the
Proposal from its proxy materials for the 2007 Annual Meeting pursuant to Rule
14a-8(f).
CONCLUSION
On the basis of the foregoing, the Corporation respectfully requests the
concurrence of the Division that the Proposal may be excluded from the
Corporation's proxy materials for the 2007 Annual Meeting. Based on the
Corporation's timetable for the 2007 Annual Meeting, a response from the
Division by February 3, 2007 would be of great assistance.
If you have any questions or would like any additional information regarding the
foregoing, please do not hesitate to contact the undersigned at 704-386-9036.
Please acknowledge receipt of this letter by stamping and returning the enclosed
receipt copy of this letter. Thank you for your prompt attention to this matter.
Very truly yours,
/s/
Kenneth L. Wagner
Associate General Counsel
cc: William J. Mostyn III
John Jennings Crapo This graphic not available in DOS This graphic not available
in DOS This graphic not available in DOS This graphic not available in DOS This
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-----FOOTNOTES-----
1 The Corporation does generate an insignificant amount of cross-border revenues
from clients based in Israel, but does not have active operations based in
Israel. Obviously the Corporation cannot control where its clients live or
operate.
2 The Request Letter also requested that the Proponent provided a written
statement of his intention to continue to hold his securities through the 2007
Annual Meeting as required by Rule 14a-8(b). However, after deciphering the
Proponent's submission, it was determined that the required statement was
provided in the original submission.
[APPENDIX]
EXHIBIT B
Good Faith Translation of Crapo Proposal
We shareholders and proxies convened as an assembled of shareholders do herby
request the Board of Directors ("Directors") of Bank of America Corporation do
as follows:
Institute an annual policy of reducing investments of the Corporation by five
(05) percent annually until such time as the State of Israel ceases it's
military, economic and other political attacks on the Palestinian Authority and
League of Arab States ("Arab League") members.
We ask in proxy statements as the Corporation for a complete report of each five
(05) per cent reduction or decisions not to so reduce.
Reasons
Shareholder proponent is well known in the area of stockholder activism in
having proposed introduced and submitted shareholder proposals to numerous
national corporations, and introductions and presenting them for long time, and
he's hated for doing that although it's fiduciary duty of all shareholders to do
this the law mandates this shareholder activism. Board Chairmen, Presidents and
Directors and other such Trustees detest and loathe him. For a long time his
ownership has been [illegible] in stockownership this corporation and its
predecessors qualifying his shareholder proposals for more for introducing him
in the proxy statement. He's owner of qualifying stock in New Bedford
Institution for Savings headquartered in city where he was born, Fleet Financial
Corp. (headquartered in city where his parents were married). First National
Bank of Boston, etc. the stock ownership is more than the U.S. Securities and
Exchange Commission ("Commission") threshold for introduction such proposals and
he plans to continue the stock ownerships until at least thirteen (13) months
have expired after the shareholder meeting has adjourned that balloted on his
proposal. Proponent plans to present the shareholder proposal.
Shareholder proponents has long been a victim of oppression for his compassion
for Arabs inconvenienced by invasion of their homelands by Jews. Jews have hated
him the most - many have been social workers who have intimidated and threatened
him with professional job and housing retaliation and other reprisals for his
not violating national security as agents in Israel may steal atomic weapons.
His mother worked on the nuclear submarine and proponent like most has admired
and revered that submarines inventor who lived and worked a long time one (01)
of America's great heroes.
Briefly we state
Proponent was a victim of an unsuccessful by Jews who saw him using a urinal and
saw he was circumcised. It was an elementary school latrine and he was told he
was to be killed the succeeding day. He fled to his family for help and was
denied help. One (01) of them was school department employee. He was chased into
a corner and couldn't' find a gate to escape. A neighbor of the elementary
school rescued him from the gang.
These Jews have relentlessly pursued him for a long time. He's habitated in
conditions worse than one (01) might find in the Third World and Jews have
failed to provide him with acceptable housing. He's been homeless long time and
frequently he's a victim of anti-Semitic talk which he's objected to and has
said a more appropriate solution for the surviving Jews is to return to Europe
and to be welcomed by the successors there of Herr Hitler and the forum to do
that is not a stockholder meeting and presumably the Hague tribunal of
Arbitration which Tsar Nicholas 2nd helped formed would be that form.
Proponent resides in a shelter with recovering alcoholics, narcotic addicts, men
in wheelchairs, etc. and one wheel chair man who whispers in ears when he tries
to rest thereby making him not!!!
Anti Aryan hatred towards proponent was demonstrated by his alma mater when as
sophomore he tried to introduce the President of the League of Arab States
("Arab League") to the membership of his organization and who was willing to
travel there at his own expense from the Arabian peninsula. The organizations
rebuffed and proponent was made to exit the university. Proponent attempted to
introduce a similar proposal at another major national corporation and the
no-action letters that came from the Commission said it was a humanitarian
gesture worthy but about the great work Marshall Stalin whose courageous
[illegible] prevented the invasion of Russia rendering it impossible for his
legions to sweep across Europe and Asia to [illegible] with Herr Hitler's allies
to liquidate every Chinese person living in China during the 1930's and 1940's.
We think that shareholders proponent's proposal is the correct route to pursue a
final solution to the horrible and terminate the violence that is about the
world that has it's genesis in the 1930's and 1940's.
End of Reasons.
[STAFF REPLY LETTER]
January 12, 2007
Response of the Office of Chief Counsel Division of Corporation Finance
Re: Bank of America Corporation Incoming letter dated December 6, 2006
The proposal requests that the board institute an annual policy of "reducing
investments of the Corporation by five (05) percent annually" until Israel
ceases certain "attacks on the Palestinian Authority and League of Arab States."
We are unable to concur in your view that Bank of America may exclude the entire
proposal under rule 14a-8(i)(3). There appears to be some basis for your view,
however, that portions of the supporting statement may be materially false or
misleading under rule 14a-9. In our view, the entire discussion that begins with
the heading "Reasons" and ends "End of Reasons" may be excluded under rule
14a-8(i)(3). Accordingly, we will not recommend enforcement action to the
Commission if Bank of America omits only these portions of the supporting
statement from its proxy materials in reliance on rule 14a-8(i)(3).
We are unable to concur in your view that Bank of America may exclude the
proposal under rule 14a-8(i)(5). Accordingly, we do not believe that Bank of
America may omit the proposal from its proxy materials in reliance on rule
14a-8(i)(5).
We are unable to concur in your view that Bank of America may exclude the
proposal under rule 14a-8(i)(7). Accordingly, we do not believe that Bank of
America may omit the proposal from its proxy materials in reliance on rule
14a-8(i)(7).
We are unable to concur in your view that Bank of America may exclude the
proposal under rule 14a-8(d). Accordingly, we do not believe that Bank of
America may omit the proposal from its proxy materials in reliance on rule
14a-8(d).
Sincerely,
/s/
Gregory Belliston
Attorney-Adviser
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