SEC petitioned to issue ‘BP rule’; U.S. investors should have traditional shareholder rights in foreign companies that lobby or have significant social impacts, Free Enterprise Action Fund (Ticker: FEAOX) says
For more info contact: Steve Milloy, 301-258-2852, email@example.com
Washington DC, September 5, 2006 (PR Newswire) – Action Fund Management, LLC (AFM), investment advisor to the Free Enterprise Action Fund (Ticker: FEAOX), announced today that it has petitioned the U.S. Securities and Exchange Commission (SEC) to commence a rulemaking that would enable U.S. investors in certain foreign corporations – those that advocate on public policy or significantly impact national security, the economy and the environment – to vote in director elections and to submit shareowner proposals.
“The purpose of the petition is to ensure that U.S. investors in certain foreign companies have the same opportunities to participate in corporate governance as the shareholders of domestic companies already enjoy under SEC rules,” said AFM’s Steve Milloy. “U.S. investors should not be relegated by their government to second-class status,” Milloy added.
Although this rule is long past due given the increasing involvement of foreign corporations in U.S. domestic affairs, we call this the ‘BP rule,’” said AFM’s Tom Borelli. “Given BP’s current legal problems that have caused adverse economic and environmental impacts, and advocacy for greenhouse gas regulation, all of which could harm U.S. investors, we consider BP to be the ‘poster child’ for what happens when corporate management is distracted from traditional business affairs by a desire to be perceived as “socially responsible,” Borelli added.
Foreign corporations subject to the rule would be those for which American Depositary Receipts (ADRs) are available to U.S. investors, and that engage in lobbying or other advocacy on significant U.S. social policy issues or that have significant national security, economic, environmental or other social impacts on the public. Other foreign corporations that would be subject to the rule include Sony Corp., Toyota Motor Corp, Honda Motor Corp., Royal Dutch Shell, and Deutsch Telekom.
“Although foreign corporations may impact public policy and society in the same ways as domestic corporations, SEC rules effectively block ADR owners from submitting shareowner proposals and participating in elections of directors,” said Milloy. “We do not believe the SEC should shield foreign corporations from their U.S. investors who would like to exercise traditional shareholder rights with respect to corporate governance,” Milloy added.
“Foreign companies should not be immune from shareholders who believe good corporate governance is good business,” said Borelli. “Shareholder pressure is the best way to keep CEOs in line,” said Borelli.
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.
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