Wall Street WARZONE

Jack Bogle Warns Investors: Fight Supreme Court’s “Unwise Decision” Allowing Unrestricted Money Donations to Politicians, Demand 75% Vote

by Paul B Farrell, JD, PhD
| | 4/30/2010

David versus Goliath, you vs Corporate America, with “them” spending billions to control “us” voters, consumers and investors, thanks to the Supreme Court’s recent decision. Now, Jack Bogle gives us a way to stand up to corporate goliaths. Writing in Bloomberg/BusinessWeek the  founder of Vanguard Funds says “It’s Time to Stand Up to the Supreme Court:

The court’s decision to let public companies spend freely on elections simply isn’t fair to shareholders. But there’s a way to push back. …”The First Amendment confirms the freedom to think for ourselves,” wrote Justice Anthony M. Kennedy … But public companies aren’t people. As Justice John Paul Stevens, writing for the minority, observed, the court committed a grave error in treating corporate speech the same as that of human beings. The notion that the same freedoms should apply when a public company, often with tens of thousands of owners, speaks in matters beyond the scope of its business affairs offends common sense.

Those investors who share my concerns aren’t powerless against the Supreme Court’s decision. Their first order of business is the submission of a resolution such as this for inclusion in the next proxy statement for each corporation in which they’ve invested: Resolved: that the corporation shall make no political contributions without the approval of the holders of at least 75% of its shares outstanding. … Delaware corporate law [requires] a unanimous shareholder vote to ratify a gift of corporate assets. …

Most institutional money managers today are owned by giant U.S. and global financial conglomerates with their own shareholders. Of America’s 40 largest, 23 are owned by conglomerates, 8 are publicly held, and only 9 remain privately owned. Money managers … must publicly pledge a no-political-contribution policy of their own. This may sound like a tall order, but it’s the only avenue that presents itself for, in effect, overriding the Supreme Court’s unwise decision.

No doubt there’ll be many other attempts to limit the Supreme Court’s decision, but whether Bogle’s or another, something will be done. For now, however, Bogle got a great “keep-it-simple” solution and his integrity is impeccable, think he’s got a great way to solve the obvious conflict of interest here.

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