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Free Enterprise Action Fund Requests Review of Goldman Sachs’
Environmental Policy
Mutual fund says Goldman CEO may have had a conflict of interest and breached
his fiduciary duty to shareholders by adopting the policy.
Washington DC (PRWEB) November 30, 2005 – Action Fund Management LLC (AFM),
investment adviser to the Free Enterprise Action Fund (www.FreeEnterpriseActionFund.com), requested that Goldman
Sachs’ (NYSE: GS) Audit and Corporate Governance Committees review the firm’s
recently announced Environmental Policy.
“We are concerned that CEO Henry
Paulson may have had a material conflict of interest and management may have
breached its fiduciary duty to shareholders by adopting the policy,” said AFM’s
Steve Milloy.
“We believe the policy, if actually implemented, will not
only harm Goldman’s shareholders and clients,” added AFM’s Tom Borelli, “but
will also aid environmental activists in depriving poverty-stricken populations
around the world of the financial services and resources necessary for crucial
economic development.”
The Free Enterprise Action Fund (FEAF) is a mutual
fund seeking to provide investors with financial returns while defending and
advocating for the American system of free enterprise. The FEAF owns less than
one percent of the outstanding shares of Goldman Sachs.
The FEAF
requested that the Audit Committee and Corporate Governance and Nominating
Committee conduct an immediate review of Goldman’s recently announced
Environmental Policy (EP) and report the results to shareholders.
AFM’s
letter to Goldman's Audit and Corporate Governance Committees states, in
part:
“We are concerned that the EP: (1) will harm shareholders and
clients; (2) was adopted without adequate or customary due diligence concerning
its scientific and economic bases, or its costs and benefits to shareholders and
Goldman clients; (3) was promoted by CEO Henry Paulson, who may have a
conflict-of-interest that inappropriately influenced Goldman’s decision-making
process; (4) represents a surrender to demands from external environmental
pressure groups, a capitulation that breaches management’s fiduciary duty to its
shareholders and violates Goldman’s stated Business Principles; and (5) is
counter-productive in that it will actually do more harm than good to the
environment and to poverty-stricken populations in developing
nations.”
CEO Paulson is also chairman of the Nature Conservancy, an
environmental activist group. “While the Paulson-approved EP is consistent with
the Nature Conservancy’s environmental activist agenda, it is not necessarily
consistent with the interests of Goldman’s shareholders and clients,” said
Milloy. “At a minimum, Paulson should have recused himself from the
decision-making process and safeguards should have been implemented to ensure
that undue influence was not directly or indirectly exercised in adopting the
policy.”
The environmental activist group Rainforest Action Network has
been pressuring Goldman to adopt a policy similar to the EP since 2004 and
immediately took credit for its adoption when it was announced on November 22,
2005. (1-2)
“Corporate management should ensure business decisions are
based on thorough analyzes and appropriate concern for shareholders and clients
– not on external political or activist pressures, “ said AFM’s Tom Borelli.
“Making decisions simply to please activists, we believe, constitutes a breach
of management’s fiduciary duty to its shareholders and undermines our system of
free enterprise.”
“The first of Goldman’s Business Principles states
that, ‘Our clients' interests always come first,’ noted Milloy. “But the EP
appears to give environmentalists precedence at Goldman – that is, unless,
management can show it has conducted adequate due diligence demonstrating the EP
prioritizes client interests. We eagerly await Goldman’s response.” he
added.
The Free Enterprise Action Fund seeks long-term capital
appreciation through investment and advocacy that promote the American system of
free enterprise. An investor should consider the fund's investment objectives,
risks, and charges and expenses carefully before investing or sending money.
This and other important information about the Free Enterprise Action Fund can
be found in the fund's prospectus. To obtain a prospectus, please call
1-800-766-3960 or visit www.FreeEnterpriseActionFund.com. Please read the prospectus
carefully before investing.
Equity securities (stocks) are more volatile
and carry more risk than other forms of investments, including investments in
high-grade fixed income securities. The net asset value per share of this Fund
will fluctuate as the value of the securities in the portfolio changes. The Free
Enterprise Action Fund is a new fund with limited investment history and there
is no guarantee that it will achieve its investment objectives.
The Free
Enterprise Action Fund is advised by Action Fund Management, LLC., which
receives a fee for its services, and is distributed by BISYS Fund Services
Limited Partnership, which is not affiliated with Action Fund Management,
LLC.
References:
1. Rainforest Action Network. Letter to
Goldman Sachs (March 10, 2004). http://www.ran.org/ran_campaigns/global_finance/earthday-goldman.html
2.
Rainforest Action Network, Media Release (November 22, 2005). http://www.ran.org/news/newsitem.php?id=1682&area=press
© 2005 - 2008 H. Vanoy Barton, all rights reserved.
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