BOSTON Jan 9 U.S. regulators rejected a request
by investment firm Franklin Resources Inc to skip a
shareholder vote pressuring it to sell off holdings in companies
linked to Sudan, whose president faces international war crimes
The decision made public on Thursday by the U.S. Securities
and Exchange Commission made it more likely that the company
will put the measure on proxy materials to be mailed to
shareholders in coming weeks.
Shareholder activists praised the SEC's decision in part
because it called their human-rights concerns a "significant
policy issue." This wording was stronger than the agency has
used when evaluating similar proposals in the past.
"This is big news for us, that we got an explicit
endorsement," Eric Cohen, chairperson of resolution sponsor
Investors Against Genocide, said in an interview.
A spokeswoman for Franklin Resources said executives were
not immediately available to comment on the SEC decision.
Cohen's group has pressed financial companies for years over
their investments related to Sudan with mixed results, often
facing opposition from executives who say their firms already
comply with international law.
But the measures could draw new attention this spring
because of recent violence in the oil-rich nation of South Sudan
that broke away from Sudan in 2011.
Franklin, of San Mateo, California, had $870.6 billion under
management at Nov. 30 and is known for funds that invest in
developing markets through firms like the Chinese oil company
PetroChina's parent China National Petroleum Corp
operates facilities like oil fields and pipelines in Sudan,
where leaders face charges of human-rights violations. Sudan's
president Omar Hassan al-Bashir is wanted by the International
Criminal Court on genocide charges and other crimes in
connection with bloodshed in Sudan's Darfur region.
Citing PetroChina and its parent, the activists' proposal
calls on Franklin's board to adopt procedures to avoid
investments in companies that "contribute to genocide or crimes
Last year Cohen's group got a similar measure on Franklin's
proxy ballot, but it won just 9 percent support at the company's
annual meeting in March. Franklin had recommended shareholders
vote against the measure but had not tried to block the measure
In November, however, attorneys for Franklin asked the SEC
for permission to skip the measure at its 2014 meeting. They
argued among other things that the proposal would micro manage
the company's decisions and that Franklin has already adopted
principles for responsible investing.
The SEC rejected all of the company's arguments, according
to a Dec. 30 letter posted to the SEC's website on Thursday and
signed by attorney Evan Jacobson.
Jacobson wrote that "In our view, the proposal focuses on
the significant policy issue of human rights and does not seek
to micro manage the company" so much that Franklin could leave
the measure off its 2014 proxy statement.
Jacobson referred questions to the SEC's press office, where
a spokeswoman said officials would not comment beyond the