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<TYPE>EX-99.77E LEGAL
<SEQUENCE>4
<FILENAME>item77e.txt
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Item 77E
Salomon Brothers High Income Fund II Inc.


Regulatory Matters
On May 31, 2005, the U.S. Securities and Exchange Commission
("SEC") issued an order
in connection with the settlement of an administrative
proceeding against Smith Barney
Fund Management LLC ("SBFM") and Citigroup Global Markets
Inc. ("CGM") relating
to the appointment of an affiliated transfer agent for the
Smith Barney family of mutual
funds (the "Affected Funds").
The SEC order finds that SBFM and CGM willfully violated
Section 206(1) of the
Investment Advisers Act of 1940 ("Advisers Act").
Specifically, the order finds that SBFM
and CGM knowingly or recklessly failed to disclose to the
boards of the Affected Funds in
1999 when proposing a new transfer agent arrangement with an
affiliated transfer agent
that: First Data Investors Services Group ("First Data"),
the Affected Funds' then-existing
transfer agent, had offered to continue as transfer agent
and do the same work for substantially
less money than before; and that Citigroup Asset Management
("CAM"), the
Citigroup business unit that, at the time, included the
Fund's investment manager and
other investment advisory companies, had entered into a side
letter with First Data under
which CAM agreed to recommend the appointment of First Data
as sub-transfer agent to
the affiliated transfer agent in exchange for, among other
things, a guarantee by First Data
of specified amounts of asset management and investment
banking fees to CAM and
CGM. The order also finds that SBFM and CGM willfully
violated Section 206(2) of the
Advisers Act by virtue of the omissions discussed above and
other misrepresentations and
omissions in the materials provided to the Affected Funds'
boards, including the failure to
make clear that the affiliated transfer agent would earn a
high profit for performing limited
functions while First Data continued to perform almost all
of the transfer agent functions,
and the suggestion that the proposed arrangement was in the
Affected Funds' best interests
and that no viable alternatives existed. SBFM and CGM do not
admit or deny any
wrongdoing or liability. The settlement does not establish
wrongdoing or liability for
purposes of any other proceeding.
The SEC censured SBFM and CGM and ordered them to cease and
desist from
violations of Sections 206(1) and 206(2) of the Advisers
Act. The order requires Citigroup
to pay $208.1 million, including $109 million in
disgorgement of profits, $19.1 million in
interest, and a civil money penalty of $80 million.
Approximately $24.4 million has
already been paid to the Affected Funds, primarily through
fee waivers. The remaining
$183.7 million, including the penalty, has been paid to the
U.S. Treasury and will be distributed
pursuant to a plan submitted for the approval of the SEC. At
this time, there is no
certainty as to how the above-described proceeds of the
settlement will be distributed, to
whom such distributions will be made, the methodology by
which such distributions will
be allocated, and when such distributions will be made.
The order also required that transfer agency fees received
from the Affected Funds since
December 1, 2004 less certain expenses be placed in escrow
and provided that a portion of
such fees might be subsequently distributed in accordance
with the terms of the order. On
April 3, 2006, an aggregate amount of approximately $9
million was distributed to the
Affected Funds.
The order required SBFM to recommend a new transfer agent
contract to the Affected
Funds' boards within 180 days of the entry of the order; if
a Citigroup affiliate submitted a
proposal to serve as transfer agent or sub-transfer agent,
SBFM and CGM would have
been required, at their expense, to engage an independent
monitor to oversee a competitive
bidding process. On November 21, 2005, and within the
specified timeframe, the Fund's
Board selected a new transfer agent for the Fund. No
Citigroup affiliate submitted a proposal
to serve as transfer agent. Under the order, SBFM also must
comply with an
amended version of a vendor policy that Citigroup instituted
in August 2004.
Although there can be no assurance, SBFM does not believe
that this matter will have a
material adverse effect on the Affected Funds.
This Fund is not one of the Affected Funds and therefore did
not implement the
transfer agent arrangement described above and therefore has
not received and will not
receive any portion of the distributions.
On December 1, 2005, Citigroup completed the sale of
substantially all of its global
asset management business, including SBFM, to Legg Mason
Inc.
Other Matters
On September 16, 2005, the staff of the SEC informed SBFM
and Salomon Brothers
Asset Management Inc ("SBAM") that the staff is considering
recommending that the
SEC institute administrative proceedings against SBFM and
SBAM for alleged violations
of Section 19(a) and 34(b) of the Investment Company Act
(and related Rule 19a-1). The
notification is a result of an industry wide inspection by
the SEC and is based upon alleged
deficiencies in disclosures regarding dividends and
distributions paid to shareholders of
certain funds. Section 19(a) and related Rule 19a-1 of the
Investment Company Act generally
require funds that are making dividend and distribution
payments to provide shareholders
with a written statement disclosing the source of the
dividends and distributions,
and, in particular, the portion of the payments made from
each of net investment income,
undistributed net profits and/ or paid-in capital. In
connection with the contemplated
proceedings, the staff may seek a cease and desist order
and/or monetary damages from
SBFM or SBAM.
Although there can be no assurance, SBAM believes that this
matter is not likely to have
a material adverse effect on the Fund or SBAM's ability to
perform investment management
services relating to the Fund.
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