Faith investors force AGM vote on Goldman Sachs corporate lobbying activity

SEC declines ‘no action’ petition by US bank.

A shareholder resolution calling for transparency from Goldman Sachs on corporate lobbying will likely be voted on at its 2018 AGM after the US Securities and Exchange Commission (SEC) said it should be included on the ballot, despite an attempt by the bank to remove it. The resolution, filed by the Unitarian Universalist Association, the Benedictine Sisters of Monasterio Pan de Vida and the Missionary Oblates of Mary Immaculate, requests enhanced disclosure from Goldman on its lobbying policy, payments and trade organisation membership. The investors say Goldman should be more open on lobbying because of support from the government during the financial crisis: “History is important here. Federal government assistance […] saved Goldman from the fate that befell peers Lehman Brothers, Merrill Lynch and Bear Stearns […] Goldman was on the “verge of collapse” before the bailout […] Goldman lobbied extensively on the bailout, both directly and indirectly,” the investors say in their petition to the SEC.
Goldman’s lawyers had objected to the resolution and sought to have it taken off the ballot under a ‘no action’ response to SEC Rule 14a-8. The bank argued that lobbying represents less than 5% of total assets, gross sales and net earnings as required by the SEC’s so-called ‘quantitative test’ that can mean a shareholder proposal is excluded. Goldman also argued that lobbying “is not otherwise significantly related” to its business: “There would be no difference between companies rarely engaging in lobbying and companies devoting substantial resources to lobbying,” Goldman’s counsel stated.The bank’s lawyers said similar resolutions were “resoundingly rejected” by shareholders in 2012 and 2013, which “reconfirms […] that shareholders do not view the Company’s reporting on lobbying expenditures as significantly related to the Company’s business.”
Tim Brennan, Treasurer & CFO at the Unitarian Universalist Association, told RI that lobbying is significant to Goldman’s business and that there were risks involved: “To be clear, no one is saying that they should not lobby or engage with regulators. We are looking for more board transparency and oversight. In his correspondence with the SEC, Brennan said these risks included Goldman’s continued lobbying post-financial crisis to mitigate the impact on revenues from derivatives regulation and the Dodd-Frank Act’s Volcker Rule.
In the resolution’s supporting statement, the faith investors say they “encourage accountability in Goldman’s use of corporate funds to influence legislation in states, where Goldman lobbies but disclosure is uneven or absent.” As an example, they reference its lobbying, which attracted significant media attention, after the bank purchased so-called “hunger bonds” – a term coined by Harvard economist Ricardo Hausmann – in Venezuela. Goldman faced mounting pressure from the Latin American community in Florida, and State State Senator José Javier Rodríguez proposed divestment legislation calling on the state’s pension fund, the SBA, to sell Goldman’s stock. See related RI story here