Investment Corp Rushes to Assure Clients It Hasn’t Become Responsible

Here’s a good one. Fidelity Investments, a mutual funds outfit headquartered in Boston, was recently praised for divesting itself of stocks in companies that are either accused or guilty of human rights violations and have ties to the regime in Khartoum. In a panic, it called a press conference to reassure its clients that it hadn’t suddenly developed a social conscience.

Fidelity Investments, which has long sought to distance its investment choices from political questions, said yesterday its sharp reductions of holdings in oil companies targeted by human-rights activists over their ties to Sudan’s rulers were not a coordinated corporate response to the criticism.

Rather, said Anne Crowley, a spokeswoman for the Boston mutual-fund giant, the sales were decided by the managers of individual Fidelity funds. Each “works to take into account factors that could have an appreciable impact on the potential return of the stock in the short term or the long term,” Crowley said. “Fidelity doesn’t tell fund managers how or when to buy or sell any given stock,” she said.

Those “account factors”, Crowley insisted, did NOT include irrelevant matters such as whether or not the corporations they invested in bankrolled genocide, torture, and assassination – although she didn’t use those words, of course.

But critics weren’t buying it.

For the past two decades, human-rights groups have successfully pressured university endowments and public-pension funds to divest their holdings in politically sensitive regions, such as South Africa during apartheid. More recently, activists have also begun to pressure mutual funds over the same kinds of investments, as well as on other issues, such as global warming and gay marriage, reasoning the funds should respond to the wishes of investors who put billions of dollars a year under their control.

While 54.9 million American households owned mutual funds last year, these funds face fewer requirements to explain their decisions compared with publicly traded companies.

That’s especially true in the case of Fidelity, controlled by its founding Johnson family whose leaders rarely grant interviews.

John Bonnanzio, who edits a newsletter for Fidelity fund shareholders, said pressure over the PetroChina holdings amounted to a special case Fidelity had to address. “It would be very unusual for Fidelity to fold on this kind of an issue, but there’s really no precedent for this situation in Sudan,” Bonnanzio said in an interview. He said the activists’ campaign likely contributed to the managers’ decisions to sell the shares. “It would certainly be an extraordinary coincidence for them to have sold these shares otherwise,” he said.

So did they or didn’t they fold to pressure, develop a conscience, or dump the stock because it wasn’t doing all that well?

We don’t know, but it’s typical of the US corporatocracy that even if it did the right thing just because it was the right thing, it wouldn’t want its action to be seen in that light because investors don’t give a damn about anything but the rate of return, the hell with how you got it. Corporate America has never seen “humanity” or “ethics” as elements of the equations they use to make investing decisions, and they’re terrified their clients might think they do. Ergo, la press conference.

So fwiw, I don’t believe in co-incidence. I think we can chalk one up for the Good Guys even if Fidelity won’t admit it.

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