Although the 2016 election is still more than three years away, asset manager John Harrington can't help but think the name "President Sachs" has a certain ring to it. Goldman Sachs, that is.
Harrington, president of the California-based Harrington Investments, submitted a shareholder proposal to Goldman seeking to have the company explore the possibility of running for elected office. You heard that right: Harrington wants Goldman Sachs--the company itself, not its individual officers--to appear on ballots in state and federal elections.
For Harrington, whose firm focuses on socially responsible investing, the proposal was a way of venting his frustration both at Goldman's extensive contributions to political campaigns and at the Supreme Court's 2010 Citizens United decision, which opened the door for corporations to expand their political influence.
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"Based on the ludicrous Supreme Court decision in 2010 that corporations should be protected ... as natural persons, then I felt it was only right for Goldman to officially declare its candidacy for public office and fulfill what is probably a lifelong dream for Goldman," Harrington told U.S. News.
Though defended by Harrington in a tongue-in-cheek manner, the proposal was the subject of a nothing-if-not-serious exchange between Goldman's lawyers and Harrington's legal counsel over whether Goldman had to pass the proposal along to shareholders so they could vote on it.
Sanford Lewis, Harrington's attorney, wrote in a letter to the Securities and Exchange Commission that Goldman's political contributions have tainted the company's reputation and that having the company run for office rather than donating money would do less harm to its public image.
"Public outcry over corporate involvement in politics is ubiquitous," he wrote. "In the case of Goldman Sachs, the phrase 'Government Sachs' has been coined to express the notion that the company has overwhelming and inappropriate levels of control and influence both via its enormous donations, with its employees constituting one of the largest bloc campaign funders in the U.S.[,] and by the number of employees that come and go through the revolving door between the government and this company."
For its part, Goldman took aim at Harrington's sarcastic interpretation of Citizens United. "In fact, nothing in the Supreme Court's Citizens United decision regarding the scope of a corporation's freedom of speech under the First and Fourteenth Amendments to spend money in support of or opposition to political candidates remotely suggests that a corporation possesses the ability to be those political candidates or to serve in elected office," the company told the SEC.
In February, the SEC expressed its opinion that Goldman had the right to refuse to include the proposal on the list of proposals it passes along to shareholders for a vote. In particular, the Commission cited a provision that allows companies to exclude irrelevant proposals. Relying on that, the Commission issued a "no-action letter" in which it indicated that it would not undertake an enforcement action against Goldman if the company decides to leave the proposal off the ballot. That leaves Harrington with only one other remedy to force Goldman to include the proposal: filing a lawsuit and seeking a court order.