Andrew Ross Sorkin’s New York Times Dealbook completely shreds the corporate-funded, lobbyist-led, climate change-denying “Main Street Investors Coalition” as a fake astroturf (artificial grassroots) group misrepresenting itself and its agenda. It’s rather hypocritical of them to call Sorkin’s piece “a hit job,” considering that it is merely a statement of facts about a group that has been deliberately obfuscatory in its portrayal of its identity and one that has itself been engaging in full-on slanted and slanderous accusations about financial services firms and pension funds.
MSIC has done what slick K Street lobbyists do instead of being honest about who they are and what they stand for: they are desperately trying to spin the “hit job” article as support. Like the Wizard of Oz telling Dorothy to “pay no attention to the man behind the curtain,” they are claiming that this was what they intended all along and there’s nothing to see here. Their desperation would be funny if it wasn’t so virulent and mendacious.
First they say that they have been transparent all along about who they are and who they represent. No, in reality their very name is a lie. They are not from “Main Street” and they are not a coalition of investors. And yet they consistently use “we” in their tweets to refer to retail investors instead of the real “we,” their corporate funders. If they want to be transparent (as they are urging on proxy advisors) they should call themselves the “K Street CEO-funded Front Group for Suppression of Shareholder Votes.” Now that they have been busted, they are are acknowledging that they do not actually represent investors but claim to simply “align” with investor interests. That clarification seems overdue. The fact that not one group advocating for shareholder rights, retail or institutional, has come forward to support them makes it clear that their agenda is not aligned with the interests of shareholders. Their effort to undermine the market of ideas is as bogus as their effort to undermine the actual market.
They like to argue that economic risk is connected to interest, and yet their economic interest is entirely from corporate executives. Investment managers have a direct economic interest in the value of the portfolios they manage as well as the legal obligations imposed on them as fiduciaries.
MSIC engages in the slimiest of rhetorical tactics, creating straw men to rebut arguments that no one made, distorting the data, and changing the vocabulary instead of addressing the substance. They say that Sorkin “tries to make out the interests of our group and retail investors to be diametrically opposed, stating that because we are funded by a coalition of business associations we have “nothing to do with mom-and-pop investors.” Actually, what he did do was show the gulf between who this group says they are and who they really are and what they stand for. As a general matter, people who honestly believe in their positions understand that being forthcoming about who they are and what their possible conflicts of interest might be adds, rather than subtracts, from the power of their arguments.
Like politicians yelling “fake news” when a story exposes their lies, MSIC whines that the NY Times article is a “hit piece.” Yet they are unable to show any factual errors. If they want to respond with any credibility, they should answer the following questions:
Are you underwriting or helping to place advocacy articles in publications like the recent essays by Sean Di Somma and Jeff Patch? Wouldn’t transparency require that support to be disclosed?
Do you believe corporations contribute to climate change?
According to PWC, 78 percent of public company boards do not examine sustainability issues in developing strategy. Is that adequate?
Is any of the “research” you underwrite and circulate peer-reviewed? If not, why not?
Have you ever polled investors, the people you say you represent, on whether they think it is a legitimate use of corporate assets to try to prevent non-binding shareholder resolutions from being voted on by the heavily regulated financial institutions with expertise, resources, and obligation as fiduciaries they entrust with their money?
Have you ever documented a single instance in which a proxy advisor’s recommendation played a decisive role in a detrimental non-binding vote on a shareholder proposal or a shareholder vote on a management proposal?
What data do you have concerning retail investors’ comprehension of proxy issues or interest in/willingness to vote on proxies for portfolio companies they do not select?
Have you ever evaluated the actual votes cast by financial institutions, as disclosed each year by the SEC’s Rule 206(4)-6? I suggest you take a look at the 5050 group’s Key Vote Survey, which shows a significant number of votes against shareholder resolutions on climate change. It also shows significant granularity in the assessment of individual proposals. How does that affect your assertions that voting has become “political” (in your use of the term, unrelated to quantifiable financial returns)?
What percentage of ISS and Glass Lewis recommendations are to vote as corporate management recommends? Do you object to their “power” in advising on votes then?
Are you aware that a corporate-backed competitor proxy advisory service failed? Why do you think that is?
What do you consider to be the legitimate oversight role of shareholders?
Why should investors who make a rational choice to entrust the buy/sell/hold decisions to financial institutions with more expertise and better resources, with both economic (fees based on assets under management) and legal (fiduciary obligation and extended government regulation) requirements not trust these same managers to cast proxy votes?
We believe that informed shareholder oversight is the ultimate foundation of capitalism, necessary for the integrity and credibility of the markets. It is absurd for the very business executives who themselves insist they want want minimal regulation to protect the integrity of the free market to try to kill the messenger by cutting off this very limited shareholder oversight. We note that Main Street Investors Coalition (which, again, is not from Main Street and has no connection to investors beyond the fact that its board members own stock) has been unable to present any documentation whatsoever other than inflated, unverified, self-reported “expenses” to show any harm from the fact that financial institutions like to have access to independent analysis of proxy issues.