Tri-Continental Corp (NYSE:TY), a closed-end mutual fund, may have a new board come September 28th if Art Lipson's Western Investment Hedge Partners is able to convince shareholders to nominate their slate of directors. On August 9th, Mr. Lipson sent a letter to shareholders, also filed with the SEC in form 14A, to inform shareholders of his intentions. In this letter, Mr. Lipson gives for reasons for change:

• William Morris, Tri-Continental's Chairman, is named in an investigation by the New York State Attorney General. As you probably know, the New York State Attorney General has determined to commence against Seligman an action for fraud relating to alleged mutual fund timing activities in certain funds managed by Seligman. The Attorney General has alleged that in excess of $80 million was "diluted" from the value of these funds during Mr. Morris's tenure. Moreover, Morningstar, the well-respected rating company for mutual funds, recently rated the Seligman family of open-end mutual funds with an "F" for corporate governance, the lowest possible grade.
  
• Tri-Continental underperformed the S&P 500 index in 12 of the last 15 years. The performance by Seligman as manager during the last 15 years, under Mr. Morris's direction, has been abysmal. During this period, the S&P 500 index returns were 56% higher than Tri-Continental's returns.
  
• Tri-Continental's proxy fails to disclose, (a) the cost to stockholders of the last election; (b) the actual investment performance of Tri-Continental for the first six months of 2006 (which again lags the S&P 500 index); and (c) the fact that its Chairman, William Morris, and its President, Chief Executive Officer and Director, Brian Zino, have been named in the investigation by the New York State Attorney General.
• The Company needs an independent set of eyes to protect our investment and to see to it that Seligman does the job that it is paid to do.

The company fired back by accusing Art of attempting to open-end or liquidate the company. Mr. Lipson insists that this is a scare-tactic, and he has no intention of open-ending or liquidating Tri-Continental, alleging that the company is intentionally misrepresenting his position. In his letter, Art stated:

"I am a fellow stockholder and I am leading a group that has owned Tri-Continental stock since 1999. We care about Tri-Continental's performance certainly as much as anyone else since we are the largest stockholder ... I have listened to stockholder concerns and want to make it clear that, despite statements made by the Tri-Continental Board, my goal is not to open-end or liquidate Tri-Continental. When Tri-Continental tells you to the contrary it is misstating my position. I am committed to improving Tri-Continental to return it to being an excellent company rather than being sub-par."

If Mr. Lipson is successful in overtaking the board, it will be good new to shareholders, who have been forced to suffer through years of sub-par returns under the old board. The new candidates are all well qualified and could help turn around the company.

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