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SEC Decision Sets Creative Precedent to Block BDS Motions – Legal Analysts

A decision by the Securities and Exchange Commission (SEC) to allow a major financial services group to ignore requests from Boycott, Divestment and Sanctions activists to block investment in Israel set a precedent that could effectively end the BDS movement’s onslaught of the financial community, legal analysts told The Algemeiner.

Rather than a legal precedent in a court of law, the SEC’s decision to allow Teachers Insurance and Annuity Association – College Retirement Equities Fund (TIAA-CREF), which manages $520 billion for 3.7 million people, to “take no action” on the BDS request to hear a motion at a shareholders meeting on operational grounds would offer the same protection for other major financial firms with investments in Israel.

A petition from the BDS movement, filed by Jewish Voice of Peace and signed by 200 shareholders requested that a motion be heard at TIAA-CREF’s annual shareholder meeting in July and put to a proxy vote. In their petition, they “request that the Board end investments in companies that, in the trustees’ judgment, substantially contribute to or enable egregious violations of human rights, including companies whose business supports Israel ‘s occupation.”

A spokesman for TIAA-CREF explained the three pillars of its argument to the SEC: that it would be inappropriate for the financial services company to involve itself in a complex political debate; that the BDS motion was tantamount to micro-managing its management function of buying and selling stocks; and that the company already had an internal system for assessing any human rights concerns of countries where it invests.

In its decision, the SEC agreed with the final point: “There appears to be some basis for your view that the Fund may omit the proposal from the Fund’s proxy materials pursuant to Rule 14a-8(i)(10) under the Securities Exchange Act of 1934, which permits omission of a proposal that has been substantially implemented.”

In other words, any investment company faced with BDS pressure based on questions of “human rights” where it invests only needs to inform the SEC that it already has an internal process for making those judgements; there is no reason to hear a motion at an AGM that would be redundant to an operations policy a firm already has in place.

In its brief, the investment firm reminded the SEC that the operational question has already been tested in 2011, when the BDS group first attempted their maneuver: “We respectfully submit that, with the 2011 No-Action Letter, the Staff already has confirmed that a shareholder proposal along these lines may be excluded from CREF’s proxy materials because it deals with a matter relating to CREF’s ordinary business operations.”

Human rights lawyers lauded the “creativity” of the decision, but were disappointed that an even stronger case precedent was not set based on the law rather than an operational loophole.

“This is a creative solution for this type of case, but it sidesteps the real issue,” Brooke Goldstein, human rights attorney and founder and director of The Lawfare Project, said. The Lawfare Project is a non-profit legal think tank …read more
Source: The Algemeiner

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Posted by on June 3, 2013. Filed under In This Week's Edition,Israeli News,U.S. News. You can follow any responses to this entry through the RSS 2.0. Both comments and pings are currently closed.