New Analysis Reveals How SEC Staff Ignores Requests that Would Ensure Protection of Political Minorities

A new analysis by the National Center for Public Policy Research’s Free Enterprise Project (FEP) suggests a trend of increasing discrimination against right-of-center shareholder initiatives at the U.S. Securities & Exchange Commission (SEC).

According to a National Policy Analysis (NPA) white paper, written by FEP Coordinator Scott Shepard, SEC staff have increasingly – and inappropriately – picked sides in determining which shareholder proposals are allowed to be placed before corporate shareholders and which proposals it will allow companies to exclude.

For example, the SEC staff has permitted proposals to proceed to shareholders if the proposals sought to forbid discrimination on the basis of sexual orientation – even when no concerns were raised that such discrimination might be occurring at the company targeted by the proposal. At the same time, the staff has allowed exclusion of proposals that sought to forbid discrimination on the basis of viewpoint despite significant evidence that such discrimination is both occurring and is perceived to be occurring.

New interpretive rules, Shepard argued, also make the SEC staff’s decision-making process much less transparent for no beneficial purpose – noting that the staff is wielding rule waivers, time limits and other technicalities in ways that benefit the companies that are fighting to maintain viewpoint discrimination.

“Workplace discrimination is always wrong,” said Shepard. “It’s wrong when it’s done on the basis of sex and race, and it’s wrong when it’s done on the basis of viewpoint and political affiliation. We as a country decided in the 1950s to leave viewpoint discrimination behind, even to the extent of protecting Communists in the workplace at the height of the Cold War. For such discrimination to be raising its ugly head again – this time against those of us on the right – is astonishing. For the SEC staff to be assisting that discrimination is insupportable. It must be stopped.”

If the SEC staff continues in this direction, the NPA argues:

[E]executive or congressional oversight operations will become necessary. The SEC cannot be permitted to allow a reasonable inference to arise that its staff’s personal policy preferences dictate relations between shareholders and corporate boards, and thus the fate of markets, investors and employees nationwide.

In a recent Federalist op-ed, FEP Director Justin Danhof reinforced these points:

Rather than making decisions based on objective criteria, the SEC is now deciding the fate of shareholder resolutions based on subjective and decidedly left-leaning biases. In rejecting our resolution, the SEC made a mockery of the shareholder proposal process. It’s time for Congress to take notice of the role the SEC plays in shaping corporate proxy ballots — and how that process is empowering corporate America’s march to the left.

“The SEC staff has been biased against conservative proposals for more than a decade now,” noted Danhof. “On issues such as corporate charitable giving, state-level religious freedom laws, health care, workplace discrimination and more, the SEC routinely allows liberal proposals on these topics while blocking ours. The SEC’s commissioners are derelict in their duties if they allow such chicanery to continue.”

Launched in 2007, the National Center’s Free Enterprise Project focuses on shareholder activism and the confluence of big government and big business. Over the past four years alone, FEP representatives have participated in over 100 shareholder meetings – advancing free-market ideals about health care, energy, taxes, subsidies, regulations, religious freedom, food policies, media bias, gun rights, workers’ rights and other important public policy issues. As the leading voice for conservative-minded investors, it annually files more than 90 percent of all right-of-center shareholder resolutions. Dozens of liberal organizations, however, annually file more than 95 percent of all policy-oriented shareholder resolutions and continue to exert undue influence over corporate America.

The National Center for Public Policy Research, founded in 1982, is a non-partisan, free-market, independent conservative think-tank. Ninety-four percent of its support comes from individuals, less than four percent from foundations and less than two percent from corporations. It receives over 350,000 individual contributions a year from over 60,000 active recent contributors. Sign up for email updates here. Follow us on Twitter at @FreeEntProject and @NationalCenter for general announcements. To be alerted to upcoming media appearances by National Center staff, follow our media appearances Twitter account at @NCPPRMedia.


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