SEC targets conservative investors just as IRS targeted Tea Party orgs, shareholder group claims

Conservative activist organization says bias causes SEC to support rejection of its shareholder proposals

The National Center for Public Policy Research's Free Enterprise Project, a conservative shareholder activist organization, is alleging that the Securities and Exchange Commission displayed anti-conservative bias in allowing companies to reject its shareholder proposals.

"I guarantee you that somewhere in the SEC's posh D.C. headquarters, there is a letter directing staff to blacklist our proposals," Justin Danhof, executive vice president at FEP, told Fox News.

He alleged that the SEC's bias in rejecting FEP proposals echoes the Internal Revenue Service's targeting of Tea Party organizations for adverse treatment in the tax exemption application process under the Obama administration. He mentioned Lois Lerner, the IRS staffer in charge of processing the Tea Party applications and whose emails revealed a devastating cover-up


"The IRS did it to Tea Party groups under Lois Lerner; now the SEC is doing the same thing to conservative investors under the Biden regime," Danhof claimed.

The FEP has been filing shareholder resolutions with public companies in which FEP invests to protect its investments and counter the impact of left-leaning interest groups for the past twelve years. On average, the organization files 25 resolutions in the October-December window, during which most companies allow shareholders to file resolutions, some of which proceed to a vote among shareholders in the following spring. 

When shareholders submit a resolution, the company's board has three options: It can place the resolution on an annual proxy statement, in which case the proposal goes to a shareholder vote in the spring; it can negotiate with the investor, agreeing to implement part of the resolution in exchange for the withdrawal of the resolution; or it can reject the resolution, in which case the company has to request that the SEC take "no action" against the company for refusing an investor's request.

The SEC encourages the second option, so most proposals end in negotiation and withdrawal, Danhof told Fox News. He claimed that leftist groups file "98 percent of all negotiating resolutions," pressuring public companies in a liberal direction.

The SEC sets specific parameters by which a company can reject a proposal, and those parameters are ostensibly value-neutral.


Yet FEP's recent experience suggests extreme bias against the conservative group, Danhof claimed.

About half of FEP's resolutions enter the "no-action" process. Danhof claimed that the SEC defends FEP's resolutions about 50% of the time. Yet after Biden got elected, the SEC allowed companies to drop all 14 of the FEP resolutions that the companies challenged.

"All of them were good proposals, meaning we had prior precedent that the SEC had allowed very similar language in the past," Danhof explained.

He shared multiple examples with Fox News. In one case, FEP filed a resolution that AT&T should prepare an annual report "listing and analyzing charitable contributions made or committed during the prior year." The company asked the SEC for permission to reject the proposal, claiming that it would require AT&T to alter its "ordinary business." Yet FEP cited a nearly identical 2010 proposal involving Wells Fargo, which the SEC defended.

As FEP noted in its letter to the SEC, commission staff have "established that charitable contributions ‘involve a matter of corporate policy which is extraordinary in nature and beyond a company’s ordinary business operations; and that proposals seeking reporting about them do not represent micromanagement of the company." Even so, the SEC granted the no-action request.

FEP has filed many shareholder resolutions, urging public companies to adopt viewpoint diversity goals, just as liberal groups have urged them to adopt racial diversity goals. Resolutions for transparency when it comes to charitable contributions may shine a light on a company's bias, whether liberal or conservative.

While the FEP expects pushback, the SEC's decision to greenlight the rejection of all 14 proposals seems suspicious, Danhof told Fox News.


"Biden gets elected, and we go from average year 50 percent success rate to zero. There’s no plausible explanation for zero," he said. "The only explanation would be anti-conservative bias of your decisionmakers."

He noted that most of these decisions do not rise to the level of the commissioners, many of whom former President Donald Trump appointed. As he put it, "The bureaucratic, everyday staff that lives in the swamp" makes these decisions.

The SEC did not respond to multiple requests for comment from Fox News.