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Goldman Sachs avoids resolution calling for it to run for office directly

Citizens United-related shareholder motion rejected by SEC

Goldman Sachs, the US investment bank, has avoided having to face an acerbic shareholder resolution calling on it to explore the opportunities for running for political office as a person in its own right.

The proponents of the motion, governance activists John Harrington and Sanford Lewis, had argued that by running directly for office, the bank “would do less to undermine the integrity of the national political process and the company’s reputation than the manner in which the company currently wields influence over the US government”.

The proposal sought to oblige Goldman to conduct a review of the opportunities for it to run for office as a “corporate person” and report back to shareholders by the end of the year.

Sanford and Harrington argue that the Supreme Court’s landmark Citizens United ruling in 2010 “unleashed the corporation as a person” for political purposes.

As such, they say, it is more appropriate for the corporation to “forthrightly participate” in the political process rather than behind-the-scenes and anonymously.

“This proposal is aimed at the integrity of our electoral system, addressing the very significant social policy issue of finding alternatives to the corrupting influence of corporate money in politics,” Lewis told the Office of Chief Counsel at the Securities and Exchange Commission.But the SEC agreed with Goldman’s assertion that it “currently has no involvement, never has had any involvement, and has no plans to become involved in the business of running for political office” and says it will take no action if the resolution is not included on the agenda for its annual general meeting later this year.

“This proposal is aimed at the integrity of our electoral system”

“The notion that its form of political participation has ‘no bearing on reputational risk’ as stated… should be offensive to every shareholder,” wrote Lewis to the SEC on January 28.

Goldman’s Associate General Counsel Beverly O’Toole responded that the bank does take reputational risk related to political participation very seriously – adding that it does not make any political contributions in the US from corporate funds.

Goldman, in its latest Statement on Policy Engagement and Political Participation, says its regulatory and political advocacy efforts “are in our shareholders’ best interests, as well as the interests of the broader marketplace”. And it says its role in the public policy arena is subject to robust regulation at both the federal and state levels.

At last year’s AGM, Goldman faced a proposal on political lobbying expenditures from the Needmor Fund, which was rejected by shareholders.