The U.S. Chamber of Commerce is the world’s largest business federation representing 3 million businesses of all sizes, sectors, and regions, as well as state and local chambers and industry associations. More than 96% of U.S. Chamber members are small businesses with 100 employees or fewer. Today, they are challenging the SEC’s power to grant investors equal access to the proxy and supporting the efforts of convicted criminals. If you are a member, you might consider if the Chamber reflects your values.
A December 2008 public opinion survey conducted by Harris Interactive found that Americans rank the U.S. Chamber of Commerce among the top five best-known and respected organizations in Washington. The Chamber consistently leads the pack on lobbying expenditures. Will these activities help the Chamber increase its reputation with the public? I doubt it.
The Chamber’s avowed mission is "to advance human progress through an economic, political and social system based on individual freedom, incentive, initiative, opportunity, and responsibility." From recent news reports, it looks like the Chamber may be instead fighting for the freedom of entrenched boards to maintain their positions and of CEOs to take the opportunity to initiate fraudulent short-term trading. Responsibility appears an outmoded concept at the Chamber, perhaps better left to taxpayers.
Thanks to Lynn E. Turner, a senior advisor and managing director in the forensic accounting practice at LECG, for bringing three articles to my attention. "Despite all the damage that has been done to American consumers, investors and taxpayers as a result of the current subprime and economic crisis, the following articles seem to indicate, in my opinion, the Chamber of Commerce is not on their side," says Turner.
Bloomberg reports, U.S. Business Lobby Challenges SEC Power to Grant Proxy Access (4/29), "the U.S. Chamber of Commerce wrote SEC Chairman Mary Schapiro yesterday, saying the states have responsibility for director elections and shareholder rights. The SEC’s federal powers are limited to proxy disclosure rules, the chamber said."
"No compelling reason exists to overturn the long-standing state law role in controlling the substantive rules regarding director election," wrote Richard Murray, chairman of the Chamber’s Center for Capital Markets Competitiveness. This is a right investors have been fighting for since the inception of the SEC. How can directors be considered shareowner representatives when we are denied an efficient mechanism to ensure entrenched board members can be replaced with directors of our own choosing? Most corporate "elections" are more similar to elections in North Korea than to anything most US citizens are familiar with.
Bloomberg reports the Chamber is in discussions with Gibson, Dunn & Crutcher LLP, the same firm that successfully challenged the SEC rule that required independent chairs at mutual funds. Any challenge to proxy access is unlikely to win, especially with Congress working on legislation to "confirm the SEC’s authority to grant shareholders access to the corporate proxy."
Investment News reports, Chamber of Commerce asks court to reverse securities decision (4/24/09). The Chamber "urged the 1st U.S. Circuit Court of Appeals to reject the ruling handed up in December by a three-judge panel in Securities and Exchange Commission v. James Tambone and Robert Hussey and rehear the case." Tambone and Hussey are former executives of a distributor for about 140 mutual funds in the Columbia Funds complex. "They were charged with fraud by the SEC in 2005 for participating in a scheme to allow preferred customers to engage in frequent short-term trading, despite fund disclosures claiming such trades were not permitted."
The Denver Post reports, U.S. Chamber of Commerce backs Nacchio (4/28/09). "Former Qwest chief executive Joe Nacchio, serving a six-year federal prison term for illegal insider trading, has a new ally in his appeal: the U.S. Chamber of Commerce."
"Nacchio was convicted in 2007 of selling $52 million in Qwest stock in early 2001 based on private warnings about the company’s revenue projections. In one instance, former Qwest chief financial officer Robin Szeliga cautioned Nacchio that the company might miss revenue targets for 2001 by $900 million, or 4.2 percent."
Nacchio argued the warnings were not "material." "The chamber agrees: ‘The notion that doubts about revenue projections can be material as a matter of law — without a rigorous threshold establishing the certainty of such information — is fundamentally misguided.’"
Perhaps continued membership in the Chamber is really what is misguided or continuation of current leadership at the Chamber. Will Americans, who don’t seem thrilled with entrenched or convicted CEOs, continue to view the Chamber as one of the "top five best-known and respected organizations in Washington." If they do, maybe that says more about other Washington-based organizations than it does about the Chamber. Watch out for swinging pitchforks.
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