Posts tagged with: U.S. Securities and Exchange Commission

This past Friday, I blogged about the U.S. Securities and Exchange Commission’s recent decision to allow a vaguely worded proxy resolution proceed to a vote. The resolution was submitted by, among others, members of the religious shareholder activist group the Interfaith Center on Corporate Responsibility.

The ICCR resolution calls upon ExxonMobil Corporation to take action intended to mitigate climate change. ExxonMobil requested the SEC deny the ICCR resolution on the grounds it was based mainly on nonspecific greenhouse-gas reduction targets and unclear strategies to achieve them.

Since that post, I received an email from a subject matter expert that helps place the SEC’s decision in perspective. Legal Director Allen Dickerson from the Center for Competitive Politics, a free-speech nonprofit, commented:

The SEC’s decision was routine. It is extraordinarily easy, under U.S. securities laws, to put a proposal before a company’s shareholders, and politically active groups have done so with increasing frequency in recent years. But these policy proposals are seldom adopted. Shareholders generally want corporations to maximize the value of their investment, as management is legally obligated to do, and rebuff attempts to turn the annual meeting into an extension of the broader political arena.


The U.S. Securities and Exchange Commission determined March 22 that ExxonMobil Corporation must for the first time ever allow a vote to proceed on a proxy shareholder resolution submitted by members of the Interfaith Center on Corporate Responsibility. ExxonMobil had attempted to block the resolution with the SEC on the grounds it was vaguely written, the company’s current business practices already aligned with the ICCR resolution and current U.S. regulations. Because any plans for climate-change mitigation in the near future inherently remains vague until specific policies are enacted, the company argued, the SEC should honor ExxonMobil’s No Action Letter on the resolution.

The resolution was filed by ICCR members the Sisters of St. Dominic of Caldwell, NJ, and other faith-based investment groups. If passed, the resolution would require ExxonMobil adopt a “Policy to Limit Global Warming to 2°C.” The passive-aggressive resolution even goes so far as to accuse the company of funding “climate denial” while at the same time sending the company hunting for unicorns:

As a large GHG [greenhouse gas] emitter with carbon intensive products, ExxonMobil should robustly support the global framework to address climate change resulting from the 21st Conference of Parties of the United Nations Framework Convention on Climate Change in December 2015. Constructive engagement on climate policy is especially important given Exxon’s historical role in financing climate denial and misinformation campaigns on climate change. Failing to address this could present reputational risk for ExxonMobil. In contrast to ExxonMobil, ten oil industry peers including Total, Shell, BP, and Saudi Aramco, and business leaders in other industries, support an international agreement to limit warming to 2°C. (more…)

Sometimes clearer heads prevail, but at considerable costs to individual stock portfolios and corporations who have to mount a defense against uninformed, nuisance shareholder resolutions. Last week the Securities and Exchange Commission slowed the progressive roll of religious activist group As You Sow by denying an AYS proxy resolution seeking a detailed nanoparticle risk assessment by Mondelēz International Foodservice.

Mondelēz successfully convinced the SEC that its use of food whitener titanium dioxide (TiO2) in its Dentyne Ice chewing gum does not meet the dimensional criteria of nanoparticles as established by the U.S. Food and Drug Administration. Furthermore, the company hedged its bet by asserting that TiO2 use is “ordinary business, preventing shareholders from requesting information about the risk of these materials,” according to the AYS press release.

AYS’s resolution was predicated on two 2014 studies that concluded all food-grade TiO2 contained “a significant proportion of nanoparticles,” that AYS claims “may also result in greater toxicity for human health and the environment.” Note the qualifier “may,” which sums up the degree of scientific accuracy and disingenuousness throughout the AYS’s fear-mongering release. But there are others: (more…)

tradingplacesFor most of my life, much of what I’ve learned about the world came from watching movies. This was especially true in 1983, when I was in junior high. That was the year I learned about astronauts (The Right Stuff), thermonuclear war (War Games), and ewoks (Return of the Jedi). I also learned about financial crimes—specifically insider trading— from the Eddie Murphy/Dan Akroyd comedy, Trading Places.

If you’ve forgotten the plot, here’s a brief summary by Gary Gensler, the former Chairperson of the Commodity Futures Trading Commission. In testimony before Congress, Gensler said,

In the movie “Trading Places,” starring Eddie Murphy, the Duke brothers intended to profit from trades in frozen concentrated orange juice futures contracts using an illicitly obtained and not yet public Department of Agriculture orange crop report. Characters played by Eddie Murphy and Dan Aykroyd intercept the misappropriated report and trade on it to profit and ruin the Duke brothers. In real life, using such misappropriated government information actually is not illegal under our statute. To protect our markets, we have recommended what we call the “Eddie Murphy” rule to ban insider trading using nonpublic information misappropriated from a government source.

Turns out I wasn’t wasting my time on a silly comedy—I was learning about a future commodities regulation.

Yet aside from the “Eddie Murphy” rule, I don’t actually know that much about insider trading. I also hadn’t given it much thought since watching Gordon Gekko get rich off inside information in Wall Street (1987). But this week I listened to an intriguing Planet Money podcast about the topic. The show’s hosts, David Kestenbaum and Jacob Goldstein, ask a question that I hadn’t considered before: What makes insider trading wrong?

Let’s first define what we mean by the term. As the Securities and Exchange Commission explains,

As noted here and here, Interfaith Center on Corporate Responsibility Executive Director Laura Berry was one representative of several groups asking the Securities and Exchange Commission to adopt new corporate political disclosure rules in October. Ms. Berry was joined by Sen. Elizabeth Warren (D-Mass.) and numerous other liberal/progressive advocates who wanted to put up regulatory roadblocks to corporate political speech guaranteed by the U.S. Supreme Court’s Citizens United ruling.

The SEC, however, determined it would not proceed with stifling free speech despite what the Washington Post described as

A groundswell of support … with retail investors, union pension funds and elected officials at the state and federal levels writing to the agency in favor of such a requirement. The idea attracted more than 600,000 mostly favorable written comments from the public — a record response for the agency. And with Mary Jo White’s arrival as SEC chairman in April, the initiative’s supporters hoped for action.

‘But she obviously did not really recognize the significance of this,’ said Bruce Freed, president of the Center for Political Accountability, which has pioneered the push for political spending disclosures. ‘She is not looking at investor protection and corporate governance broadly. You do not see those as primary drivers of her agenda.’ (more…)


Liberal Dark Money in your wallet?

Your writer possesses well-meaning friends forever vigilant in my best interests. Most recently, one such kind soul sent an email alerting me to the dangers of so-called “dark money” in the political process. Believing himself on the side of the angels – and fully onside with activist nuns, priests and other religious – my friend sought my assistance in the fight against “evil” corporations participating in the political process.

So I got the following in my inbox. And all I had to do for America’s campaign finance salvation was sign a petition circulated by The Daily Kos and People for the American Way:

Bruce, join Daily Kos and People for the American Way in urging the SEC to require that publicly traded corporations disclose their political spending….

The Supreme Court’s Citizens United ruling was a travesty, which has opened the floodgate to corporate money in our political spending. Repealing it via a constitutional amendment will take years, but there’s something we can do in the meantime that will go a long way.

The Securities & Exchange Commission (SEC) is the federal agency with the job of protecting investors from corporate abuse. It is well within its authority to require that publicly traded corporations disclose their political spending—but it won’t happen without a fight.

End the shroud of secrecy. Join Daily Kos and People For the American Way in urging the SEC to require that publicly traded corporations disclose their political spending. (more…)

Readers following my series of blog posts on shareholder proxy resolutions submitted by religious groups such as As You Sow and the Interfaith Council of Corporate Responsibility already know these resolutions have little to do with issues of faith. In fact, an overwhelming majority of these resolutions concern corporate speech and attempts to stifle it.

Your shareholders want to know more about your political spending. Really.

Your shareholders want to know more about your political spending. Really.

AYS and ICCR – as well as a host of other religious shareholders – submit proposals drafted by Bruce Freed, head of the Center for Political Accountability. Freed’s CPA and the Wharton Business School’s Zicklin Center, readers will recall, issued its annual index late last month. My last post detailed in part the wrongheadedness of shareholders pushing a political agenda at the expense of their fellow shareholders. However, I anticipate most readers require a bit more than your lowly scribe’s word that the CPA-Zicklin Index not only inflates the results of its shareholder resolutions but as well operates on behalf of groups more interested in shutting down corporate political speech.

The Center for Competitive Politics, a First Amendment nonprofit think tank located in Alexandria, Va., brings more firepower to arguments I’ve already made regarding the efforts of CPA and the proxy shareholders for whom Mr. Freed drafts resolutions. Regarding the CPA-Zicklin Index, CCP issued a statement by CCP Chairman Brad Smith, former Federal Election Commission Chairman:

To look at the CPA-Zicklin Index as a measure of ‘best corporate practices’ is like asking a wolf to describe ‘best practices’ for sheep … Corporations have an obligation to do what is in the best interest of their shareholders, not comply with the demands of a non- profit that opposes speech by the business community. (more…)