JPMorgan Chase Should Lobby for Litigation Reform, Not Global Warming, Says Mutual Fund in Letter to Bank Shareholders
For more info contact: Steve Milloy, 301-258-2852, steve@feafund.com
Washington DC, May 11, 2006 (PR Newswire) – The following letter is being issued by the Free Enterprise Action Fund prior to JPMorgan Chase & Co.'s annual shareholder meeting on May 16:
Dear JPMorgan Chase Shareholder:
We seek your support for Shareholder Proposal #8, entitled “Lobbying Priorities Report,” on JPMorgan Chase’s 2006 Proxy Statement. The Proposal asks management to report on the Company’s process for identifying and prioritizing the legislative and regulatory public policy issues it pursues.
The Free Enterprise Action Fund is an institutional shareholder of JPMorgan Chase (JPM). We support Shareholder Proposal # 8 that will be voted on at JPM’s annual meeting on May 16, 2006.
We are concerned that JPM’s process for identifying and prioritizing its public policy advocacy is flawed in that the policy seems unduly influenced, if not driven, by anti-business activists, rather that management’s use of due diligence and sound business judgment.
JPM management, for example, announced with fanfare in 2005 that it would lobby for limits on greenhouse gas emissions – laws and regulations that could potentially harm the economy and, as a result, JPM and its shareholders, all while providing little or no benefit to the environment. (1)
Meanwhile, JPM has spent hundreds of millions of dollars on legal fees and billions of dollars on lawsuit settlements that the company claims are without merit. When asked by a shareholder at last year’s annual meeting about these costs, then CEO-William Harrison shrugged his shoulders and brushed off the question stating, “We live in a litigious society.”
Rather than lobbying for greenhouse gas regulation – a subject that we believe JPM has no apparent expertise in and a policy that may harm shareholders – JPM ought to be lobbying for litigation reform to reduce the expensive phenomena of unmeritorious and frivolous litigation.
Pursuing policy issues not central to JPM’s business while ignoring serious risks to JPM’s bottom line raises serious questions regarding the company’s leadership, judgment and the decision making process. Management should have prioritized litigation reform over advocacy for greenhouse gas regulation.
Even more disturbing, is the genesis of JPM’s lobbying for greenhouse gas regulation. The company’s action was its response to an intimidation campaign by the Rainforest Action Network – a notorious anti-business activist organization, which organized a protest of second graders graders at JPM’s Manhattan headquarters and which hung “wanted posters” of the then CEO Harrison in his neighborhood.
In succumbing to such intimidation, management has allowed JPM to be transformed into an agent and lobbyist for the social and political agenda of an organization that has no business interest in JPM. Management placed the agenda of a non-shareholder special interest group ahead of the legitimate business priorities of its shareholders.
Further, by showing the company is vulnerable to intimidation tactics, JPM’s management has positioned itself as an inviting target for future noisy social activists.
To increase transparency concerning JPM’s lobbying priorities so as to prevent harm to shareholders interests, we ask that you join us in voting for Shareholder Proposal # 8, “Lobbying Priorities Report.”
Sincerely,
Tom Borelli & Steve Milloy
Action Fund Management, LLC
Advisor to the Free Enterprise Action Fund
The Free Enterprise Action Fund (FEAF) is a mutual fund seeking to provide investors with financial returns while defending and advocating for the American system of free enterprise. The FEAF owns less than one percent of the outstanding shares of Goldman Sachs.
The Free Enterprise Action Fund seeks long-term capital appreciation through investment and advocacy that promote the American system of free enterprise. 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 www.FreeEnterpriseActionFund.com. Please read the prospectus carefully before investing.
Equity securities (stocks) are more volatile and carry more risk than other forms of investments, including investments in high-grade fixed income securities. The net asset value per share of this Fund will fluctuate as the value of the securities in the portfolio changes. The Free Enterprise Action Fund is a new fund with limited investment history and there is no guarantee that it will achieve its investment objectives.
The Free Enterprise Action Fund is advised by Action Fund Management, LLC., which receives a fee for its services, and is distributed by BISYS Fund Services Limited Partnership, which is not affiliated with Action Fund Management, LLC.
References:
- Letter to GE Shareowners, March 17, 2006. http://www.freeenterpriseactionfund.com/
GE_shareholder_letter_3-17-06.pdf
