Citizens United: U.S. Supreme Court decision

Last month’s U.S. Supreme Court decision in the Citizens United case has given corporate management considerable latitude to use corporate funds in political campaigns. Many are concerned that corporate political spending often influences public policy in ways that harm the public interest. So the individual investor advocacy organization ShareOwners.org has launched a campaign to reduce the potentially harmful effects of corporate money on politics. ShareOwners.org is focusing on disclosure of political spending, and using investors’ voice to restrain management abuse of this power — details in the ShareOwners.org press release and this SocialFunds.com article.

I applaud the ShareOwners.org initiative, and would like to suggest an additional strategy. The voter funded media (VFM) system is designed to help us voters use our power in corporations (where we own shares) and democracies (where we are voting citizens) so as to serve our interests, which are generally close to the broad public interest. An important reason why corporate political spending can fool us into voting for politicians who do not serve the public interest, is that we lack well-funded media loyal to the public interest. Letting voters allocate public funds to competing media would fill this gap, thus undercutting the influence of campaigns that try to fool us.

Similarly, VFM applied to corporations would help us shareowners keep management accountable to our interests, e.g. ensuring that they do not spend our corporation’s funds on political campaigns that harm us. To see why management’s political interests diverge from ours, see pages 98-99 of “Democracy and Infomediaries” at votermedia.org/publications.

Thus I recommend supporting the spread of voter funded media implementations in democracies (e.g. votermedia.org/communities/82-ubc-ams) and corporations (e.g. Proxy Advisor proposals), as well as for investor education.

Comments to FCC on the Future of Media

I posted this on the VoterMedia Democracy Blog on January 25, but it may be of interest to readers of this blog too:

Four days ago, the U.S. Federal Communications Commission announced their request for comments on “the future of media and the information needs of communities in a digital age”, along with 42 specific questions. I submitted my comments this morning, which are already linked on the FCC website page for “Proceeding 10-25″. I’ve also posted these links at votermedia.org/publications.

Mainly I pitched the benefits of voter funded media, with the UBC Continuous VFM competition as an example.

Investor Education on Proxy Voting

Like my previous post on January 23, this is an update for individual investors on how I am representing them on the SEC Investor Advisory Committee. I submitted the report below to the Investor Education subcommittee earlier this month:

TO: SEC Investor Advisory Committee’s Investor Education Subcommittee
FROM: Mark Latham
RE: Recommendations for investor education on proxy voting
Date: January 7, 2010

1. Proxy voting is important.

This almost goes without saying, but deserves emphasis because it is so fundamental. Voting is the primary means for holding corporate directors and management accountable to shareowners. It is the cornerstone of good corporate governance, essential for the performance of our economy.

2. Proxy voting by retail investors is important.

It’s important in principle, and we should make it important in practice.

Voter Funded Investor Education Proposal

Since I represent individual investors on the SEC Investor Advisory Committee (SECIAC), I will give updates in this blog about what I am doing to fulfill that mission. The proposal below is one such project. I drafted it for consideration by the Investor Education subcommittee, hoping to see it forwarded to the full SECIAC and from there submitted to the SEC. Unfortunately that didn’t happen, as I explain below after the proposal text:

Voter Funded Investor Education Proposal – draft 20091130

TO: Securities and Exchange Commission
FROM: SEC Investor Advisory Committee
RE: Letting individual investors vote to allocate some education program funding

We recommend that the Commission have its Office of Investor Education and Advocacy (OIEA) explore the potential for letting individual investors vote to allocate some funding for investor education programs. If the OIEA determines that such an approach could play an effective role in advancing investor education, it could then implement a pilot program of limited scale.

On2 Shareowners Rebellion

In the past three days I’ve received emails and comments (here, here, here & here) from shareowners of On2 Technologies – see the Yahoo Finance On2 message board, especially this post. Here is my response:

Thank you for contacting me.

Your horse has escaped, and you are chasing it through the forest. You want me to help chase your horse. I’m not good at chasing horses. I’m good at locking barn doors, and that’s what I’m doing. If I stop doing that to chase your horse instead, I won’t be much help at catching it, and meanwhile more horses will be escaping. But I do wish you success in catching your horse!

Jim McRitchie’s corpgov.net news now in blog form

Good news! Jim McRitchie has just created a corporate governance blog, so you can now subscribe to his insightful news feed there. You no longer have to keep checking his news page for updates.

If you’re not using a blog reader (like Google Reader), you could instead subscribe via email using feedmyinbox.com.

MoxyVote.com has launched: “Let your voice be heard!”

Capping months of anticipation, moxyvote.com launched last week. It connects individual investors to opinion leaders on proxy voting. Jim McRitchie wrote a good article on it, but he doesn’t have a direct link so gave me permission to quote it here:

MoxyVote.com launched on November 20, 2009 in Beta and has already attracted considerable attention. Philly.com jumped right in with West Chester’s Moxy Vote boosts rebel shareholders on opening day. Cari Tuna did something a little more substantial with her Proxy-Voting Advocates Pool Resources on the Web (WSJ/11/23/09).

Of the systems utilizing the internet to increase retail investor participation in proxy voting by providing guidance on proxy issues from institutional investors, advocates or analysts, MoxyVote.com is the only one attempting to do so as a profit-making business, except perhaps FundVotes and CorpGov.net. The others – Investor Suffrage Movement, ProxyDemocracy.org, Shareowners.org, TransparentDemocracy.org, and VoterMedia.org – are all using some sort of non-profit form.

Giving talks at Stanford & Berkeley

I’ve recently scheduled to give these three talks:

Nov. 16 at Stanford Law School’s Rock Center for Corporate Governance, mainly on the paper “Proxy Voting Brand Competition”, my work on the SEC Investor Advisory Committee, and ProxyDemocracy.

Nov. 17 at U C Berkeley’s Institute of Governmental Studies, mainly on the paper “Global Voter Media Platform” and VoterMedia.org.

Dec. 10 at the 2009 British Columbia Pension Forum, mainly on the paper “Proxy Voting Brand Competition”, my work on the SEC Investor Advisory Committee, and ProxyDemocracy.

More info on the talks at votermedia.org/presentations. The papers are available at votermedia.org/publications.

SECIAC meetings: videos & minutes

The SEC Investor Advisory Committee web page has links to videos and minutes of our meetings (+ other info). Videos for the 2009-07-27 meeting and the 2009-10-05 meeting have been posted. Minutes for 2009-07-27 are posted, but not for 2009-10-05 yet.

If you’d like to see where on each video I spoke up, here are the times and summaries of what I said:

2009-07-27 video 1 (morning):

0:35:25 I introduced myself — my background and some views on investor education.

1:52:34 I suggested consideration of an investor education pilot program using a competitive voting system to allocate public funds.

2009-07-27 video 2 (afternoon):

0:15:00 I agreed with Mr. Salisbury that our advice should take into account other existing and proposed investor education initiatives.

0:41:12 I described new tools for individual investors to vote by copying the votes of institutional investors, being developed by ProxyDemocracy, a non-profit group at which I serve as a director. I noted that newcomer MoxyVote plans to offer something similar.

0:57:45 I suggested that shareowner resolutions relating to auditor selection should not be deemed ‘ordinary business’ and thus excludable from the proxy. I noted a parallel with director elections, which are now being considered fair game for shareowner involvement.

2009-10-05 video 1 (morning):

2:52:40 I suggested that our ability to submit both majority and minority views as advice to the SEC makes the proposed recusal policy less necessary.

SECIAC Members, Subcommittees & Constituencies

Here is a list of the SEC Investor Advisory Committee members, our subcommittee assignments, affiliations, and constituencies that (according to SEC staff) we represent:

		Subcommittees
FirstName	LastName	Education	Purchaser	Owner	Title	Organization	Representing
Mark	Anson		1	1	President and Executive Director of Investment Services	Nuveen Investments	institutional and high net worth clients
Jeff	Brown	1	1	1	Senior VP, Office of Legislative & Regulatory Affairs	The Charles Schwab Corporation	from a regulatory and customer-service perspective, providers of tools to retail investors who elect to make their own investment decisions
Mercer	Bullard		1		Founder	Fund Democracy	individual mutual fund investors
Hye-Won	Choi			1	Senior VP & Head of Corp. Governance	TIAA-CREF	those involved in retirement planning for investors who work in academic, medical, cultural and research institutions
Stephen	Davis			1	Executive Director, Millstein Center for Corporate Governance	Yale University School of Management	international institutional investors
Abe	Friedman			1	Managing Director	Barclays Global Investors	very large global institutional investors
Mac	Hisey		1		President	AARP Financial Inc.	senior investors
Mellody	Hobson	1			President	Ariel Investments	smaller, as well as minority-owned, institutional investors
Dennis	Johnson	1		1	Managing Director	Shamrock Capital Advisors	hedge funds
Fred J.	Joseph	1	1		Colorado Securities Commissioner & Acting State Bank Commissioner	Colorado Department of Regulatory Agencies	State Securities Regulators
Adam	Kanzer			1	Managing Director & General Counsel	Domini Social Investments	social investors
Mark	Latham	1		1	Executive Director	VoterMedia.org	individual investors, particularly with respect to their role in corporate governance
Barbara	Roper		1		Director, Investor Protection	Consumer Federation of America	individual investors, with a particular focus on investor protection
Dallas	Salisbury	1	1		President and CEO	Employee Benefit Research Institute	individual investors, especially with respect to employee retirement issues
Kurt	Schacht		1		Managing Director	CFA Institute	investment professionals
Damon	Silvers			1	Associate General Counsel	AFL-CIO	institutional labor investors
Kurt P.	Stocker	1		1	Member of the Board	NYSE	individual investors
Ann	Yerger			1	Executive Director	Council of Institutional Investors	pension funds and those who depend upon them
Total #:	18	7	8	11	[Subcommittee chairs flagged in bold red]