SEC denies Lehman Brothers bid to block global warming shareholder proposal; Lehman climate policy based on erroneous information says Free Enterprise Action Fund (Ticker: FEAOX)
For more info contact: Steve Milloy, 301-258-2852, steve@feafund.com
Washington DC, February 6, 2008 - The U.S. Securities and Exchange Commission denied a bid by Lehman Brothers to block shareholders from voting on a global warming-related shareholder proposal from the Free Enterprise Action Fund (Ticker: FEAOX).
“Lehman Brothers says it wants to make money from global warming, but basic information on which the firm relies and presents to shareholders is clearly erroneous,” said Steve Milloy, portfolio manager of Action Fund Management (AFM), the FEAOX’s investment adviser.
“When a $34 billion company is touting misinformation as a basis for its actions, it makes you wonder about the soundness of its business plan,” Milloy added.
Lehman Brothers’ management uses the so-called “hockey stick” chart, for example, to support the notion that “the Earth’s mean temperature has risen sharply in recent decades.” (1)
But the hockey stick graph was scientifically discredited long before Lehman issued its February 2007 report. (2)
“As shareholders, we expect that management will undertake reasonable due diligence before undertaking action with corporate assets,” said AFM’s Tom Borelli. “Corporate action and statements based on erroneous information may not be ‘sustainable’ for shareholders or the environment,” Borelli added.
“Lehman Brothers should also be concerned about potential legal liability for false and misleading statements,” said Milloy.
Based on the 2003 California case of Nike v. Kasky, citizens may sue businesses over false or misleading statements. (3) The California Supreme Court ruled that statements made on company websites are considered commercial speech and therefore subjected to legal challenge.
“We think that Lehman is in way over its head when it comes to global warming and that management is recklessly risking shareholder value,” said Milloy. “Shareholders will be looking for an explanation from CEO Richard Fuld at the annual shareholder meeting,” Milloy concluded.
By investing in the FEAOX (http://www.FEAOX.com), individuals can participate in the global warming debate while having an opportunity to earn a financial return through ownership of a large-cap mutual fund. With a minimum investment of $2,500, individuals can join FEAOX’s effort to make CEOs justify their positions on global warming. FEAOX is available exclusively through Foreside Distribution Services L.P., (applications may be obtained at http://www.FEAOX.com/how.html), and through E*Trade Financial, Scottrade, TD Ameritrade and HSBC.
An investor should consider the fund's investment objectives, risks, and charges and expenses carefully before investing or sending money. This and other important information about the Free Enterprise Action Fund can be found in the fund's prospectus. To obtain a prospectus, please call 1-800-766-3960 or visit http://www.FEAOX.com. Please read the prospectus carefully before investing.
Mutual fund investing involves risk, including loss of principal. The Free Enterprise Action Fund is advised by Action Fund Management, LLC, which receives a fee for its services, and is distributed by Foreside Distribution Services, L.P., which is not affiliated with Action Fund Management, LLC.
References:
- See Lehman’s “The Business of Climate Change: Challenges and Opportunities,” p.6 (February 2007).
- See e.g., U.S. Senate Committee on Environment and Public Works, “Inhofe Says NAS Report Reaffirms ‘Hockey Stick’ Is Broken” (June 22, 2006), http://epw.senate.gov/pressitem.cfm?id=257697&party=rep.
- Kasky v. Nike, Inc., 27 Cal.4th 939, 947, 45 P.3d 243, 248, 119 Cal.Rptr.2d 296, 302 (Cal. 2002)
