JPMorgan Chase agrees to discuss global warming lobbying with mutual fund; Support for shareowner proposal key to bank decision, says Free Enterprise Action Fund
For more info contact: Steve Milloy, 301-258-2852, steve@feafund.com
Washington DC, May 18, 2006 (PR Newswire) – Twenty-four percent (24%) of JPMorgan Chase & Co. (JPM) shareholders supported the Free Enterprise Action Fund’s shareholder proposal concerning the bank’s lobbying priorities at JPM’s annual general meeting on May 16.
Following the vote, JPM Chairman William Harrison agreed to engage in dialogue with the Free Enterprise Action Fund regarding the company’s pursuit of greenhouse gas regulations.
Tom Borelli, a portfolio manager of the Free Enterprise Action Fund (www.FreeEnterpriseActionFund.com) and Deneen Moore, an individual investor in the FEAF, pressed JPM’s chairman to justify the company’s lobbying priorities. In 2005, JPM voluntarily agreed to take a leadership position in lobbying for greenhouse gas regulations even though the company has no expertise in the scientific, economic, legal and public policy aspects of climate change. Meanwhile the company is paying outside lawyers over $500 million annually to manage lawsuits that the company feels are without merit. The FEAF’s shareholder proposal on Lobbying Priorities asked the company to justify its decision to lobbying for greenhouse gas regulations rather than for litigation reform.
Meeting highlights were as follows.
Borelli questioned the appropriateness of the company taking a leadership role on climate change including consideration supporting a tax on energy use to reduce greenhouse gas emissions. He raised concerns about the negative impact of such an energy tax on the economy, JPM shareholders and people living on fixed incomes. Borelli requested that JPMs board of directors conduct a cost-benefit analysis of the energy tax proposal to ensure the recommendations would not harm shareholder interests. Mr. Harrison said that the board would look at its policy recommendation and that it advise company management concerning the energy tax proposal. Upon further questioning, Mr. Harrison said he would continue to discuss this matter with FEAF.
Deneen Moore presented Shareholder Proposal #8 entitled, “Lobbying Priorities Report.” Ms. Moore stated that the company’s decision to lobby for greenhouse gas emissions limits and an energy tax was a direct result of intimidation tactics of the activist group Rainforest Action Network which organized a protest of JPM by second graders at company headquarters in New York City and hung “wanted posters” of Mr. Harrison in his neighborhood. Ms. Moore commented that JPM should instead be pursing litigation reform because those costs are draining shareholder assets.
Mr. Harrison responded that JPM is pursing legal reform and company interest in greenhouse gas emissions is not fixed. Borelli challenged Mr. Harrison by stating that JPM’s environmental policy is a published 10-page document while JPM’s litigation reform goals remain secret and unpublished. In subsequent discussion, Mr. Harrison said he would like to pursue a dialogue with FEAF.
In response to another shareholder’s question on litigation costs, Mr. Harrison revealed that JPM spent a total of $775 million on lawyers’ fees ($240 million, internally, and $515 million externally) during 2005.
A labor union representative presented shareholder proposal #9, entitled “Political Contributions Report.” The proposal requested that the company disclose its policies, procedures and contributions to political organizations including those classified under Sec. 527 of the Internal Revenue Code. The proposal also requested the identity of JPM personnel participating in decisions on political contributions.
During the presentation, the labor representative noted that JPM had supported the Cato Institute, American Enterprise Institute, Manhattan Institute and the American Legislative Exchange Council (ALEC), all of whom played partisan roles in opposing defined pension benefits and supporting social security reform – issues that organized labor opposes.
As a counter to the union proposal, Borelli asked shareholders to vote with management against this proposal because the labor union was: (1) an advocacy group with a history of harming business interests such as the auto and airline industries; and (2) trying to identify individuals within the company with political decision making responsibility so the union could attempt to personally intimidate these persons in public.
Borelli encouraged the company to continue to support the public policy organizations who promoted social security reform because permitting retirement money to be managed by the private sector was better than ceding control of it to the government.
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.
