Carrying signs asking “What Is Fidelity Hiding?” hundreds of union and community activists nationwide leafleted and rallied at Fidelity Investments retail outlets and at its Boston headquarters Dec. 4, demanding the company drop its opposition to proposed U.S. Securities and Exchange Commission (SEC) rules that would require mutual funds to disclose proxy votes.
With the Dec. 6 deadline for comments on the proposed federal rules fast approaching, activists are seeking to focus national attention on the need to hold mutual funds accountable. Mutual funds, such as Fidelity, manage trillions in capital—including many union pension funds—and union members and leaders are demanding the right to know whether fund managers are voting for proposals that will benefit or damage working families’ interests.
Once a year, each publicly held corporation holds a meeting for shareholders at which critical decisions shaping a company's governance are made—such decisions as who will serve on the board of directors, how the CEO will be paid and which general policies the shareholders will recommend to the company’s board. Shareholders, such as Fidelity, vote at these meetings on ballots—otherwise known as proxies—provided to them by the company.
In response to a petition filed in December 2000 by the AFL-CIO, the SEC has proposed a new rule to require Fidelity—the world’s largest mutual fund company—and all mutual fund companies to disclose how they vote their equity holdings. The new rule will enable investors to ensure their mutual funds use their enormous proxy voting power to promote corporate accountability rather than to protect corporate clients.
The call for Fidelity to disclose its proxy votes is part of the union movement’s No More Business As Usual campaign, which seeks to improve corporate accountability and provide retirement security in the wake of recent corporate scandals.
In Washington, D.C., where dozens of activists rallied outside a downtown Fidelity retail outlet, Metropolitan Washington Council President Joslyn Williams said, “Working people are watching to see what Fidelity does with their money. We must not let Fidelity block corporate reform.”
At Fidelity’s Boston headquarters, several state legislators joined more than 50 activists who passed out leaflets and delivered a letter to the company urging it to disclose its votes.
Fidelity manages a total of $1.5 trillion in assets. As a top shareholder of such scandal-ridden companies as Enron Corp., WorldCom Inc., Qwest Communications International Inc., Tyco International Ltd., Haliburton Co. and Kmart Corp., Fidelity may have voted to support moving corporations offshore and permitting conflicts of interest by auditing firms at some of these companies, according to AFL-CIO Secretary-Treasurer Richard Trumka, who wrote his concerns in a letter to the SEC. But these votes cannot be confirmed because Fidelity refuses to disclose them.
“It is ludicrous for the nation’s largest mutual fund to hide shareholder votes from their own investors,” AFL-CIO President John Sweeney said.
The actions at Fidelity come one year after the collapse of Enron, in which thousands of workers lost their jobs, health care, life savings and retirement security while top corporate executives walked away with millions. Enron workers were not the only losers: When Enron’s stock plummeted, union pension funds lost an estimated $10 billion.
Other corporate scandals also have jeopardized workers’ retirement security. When WorldCom stock took a nosedive, the California Public Employees’ Retirement System and the California State Teachers’ Retirement System—the nation’s largest and second largest such public pensions—lost a combined $830 million since January 2001. Overall, the nation’s collectively bargained public pension funds, covering more than 5 million public employees, have lost about $240 billion or 15 percent of their value, according to Rich Ferlauto, AFSCME’s director of pension investment policy.
The November actions urging Fidelity to disclose its proxy votes follow a July protest in Boston in which Trumka joined activists telling Fidelity: “Stop propping up CEO salaries. Stop propping up runaway companies. Stop doing this with our money and stop hiding.”
Other grassroots activities were held Dec. 4 in Atlanta; Chicago; Cincinnati; Denver; Houston; Indianapolis; Los Angeles; Minneapolis; New York City; Pittsburgh; Portland, Maine; St. Louis; San Antonio; San Diego; San Francisco; Scottsdale, Ariz.; Seattle; Stamford, Conn.; Tampa, Fla.; and Washington, D.C.
Take Action Now!
E-mail the SEC to support proxy vote disclosure rules. The deadline is Dec. 6.
More
