Thanks to a recent ruling by the Securities and Exchange Commission (SEC), shareholders at JPMorgan Chase (NYSE:JPM) will have the opportunity to vote on whether they want the company to avoid investments in companies with ties to genocide. JPMorgan’s “no action” request asked the SEC to allow the company to exclude the proposal from the proxy ballot for this year’s annual meeting on May 17 in Columbus, Ohio. The SEC’s rejection of JPMorgan’s request clears the way for the shareholder proposal on genocide-free investing to appear on the proxy ballot.
The genocide-free investing shareholder proposal “requests that the board institute transparent procedures to prevent holding investments in companies that, in management's judgment, substantially contribute to genocide or crimes against humanity, the most egregious violations of human rights.”
JPMorgan’s “no action” request presented technical arguments that essentially maintained that shareholders voting on the proposal would not understand the proposal’s requirements. The SEC disagreed and concluded, “Accordingly, we do not believe that JPMorgan Chase may omit the proposal from its proxy materials in reliance on rule 14a-8(i)(3).”
The shareholder proposal cites a market research study conducted by KRC Research in 2010 indicating that 88% of Americans would like their mutual funds to be genocide-free. The study showed that for those earning $50,000 or more, that percentage climbs to 95%. The shareholder proposal says that the problem of investments tied to genocide “is particularly important” to JP Morgan shareholders because JPMorgan “has been a large holder of PetroChina for years” and noted that a recent filing by JPMorgan showed holdings of 1,070,760,070 H-shares, worth $1.3 billion. The proposal further states, “PetroChina, through its closely related parent, China National Petroleum Company, is internationally recognized as the worst offender helping fund the Government of Sudan's genocide in Darfur.”
“Americans, once they become aware, do not want their pensions and family savings connected to genocide,” states Eric Cohen, chairperson of Investors Against Genocide. “While financial institutions may oppose it, ordinary investors who see the proposal will vote their values and support genocide-free investing. Thanks to the ruling by the Securities and Exchange Commission, shareholders at JPMorgan Chase will have a rare opportunity to vote on this important social issue.”
The genocide-free investing proposal was submitted to JPMorgan Chase as part of an ongoing shareholder action led by Investors Against Genocide (IAG), a citizen-led initiative, dedicated to convincing mutual funds and other investment firms to make an ongoing commitment to genocide-free investing.
Previous shareholder votes on similar proposals coordinated by IAG and submitted to a variety of mutual funds from companies such as Fidelity and Vanguard have earned as much as 31% of the votes despite strong opposition from management and voting rules which significantly favor management. IAG withdrew its shareholder proposal at TIAA-CREF when it adopted a public policy against investments connected to genocide. TIAA-CREF subsequently divested holdings in oil companies that are helping to support the genocide in Darfur, Sudan. American Funds divested its holdings in PetroChina (NYSE:PTR) following a well-publicized shareholder vote on genocide-free investing there. In contrast, Vanguard and Fidelity continue to make large investments in the same problem oil companies.
JPMorgan is IAG’s first shareholder proposal submitted to a corporation, rather than individual mutual funds. “Since JPMorgan holds a shareholder meeting every year, unlike most mutual funds, we’ll now have an annual opportunity to raise awareness of the problem of JP Morgan’s large holdings in PetroChina and the absence of a policy at JP Morgan to avoid investments tied to genocide.”
Investors Against Genocide is a citizen-led initiative, dedicated to convincing mutual funds and other investment firms to make an ongoing commitment to genocide-free investing. Investors Against Genocide works with individuals, organizations, financial institutions, the press, and government agencies to build awareness and create financial, public relations, and regulatory pressure for investment firms to change their investing strategy to avoid investments in companies which substantially contribute to genocide or crimes against humanity. Investors Against Genocide is staffed by volunteers and is a project of the Massachusetts Coalition to Save Darfur Inc., a 501(c)(3) non-profit charitable organization, incorporated in the state of Massachusetts. For more information, visit www.investorsagainstgenocide.org.