Washington, D.C. — Today, Citizens for Responsibility and Ethics in Washington (CREW), on behalf of Stephen W. Silberstein, an Aetna, Inc. shareholder, filed a lawsuit against Aetna, its chairman, CEO, and president Mark T. Bertolini, and its board of directors in the United States District Court for the Southern District of New York for violating the Securities Exchange Act of 1934 by sending out false and misleading proxy statements to shareholders in 2012 and 2013.
Section 14a of the Exchange Act prohibits companies from providing inaccurate information in proxy statements to procure votes for or against shareholder proposals. Aetna’s proxy statements included inaccurate information and omitted material information about the company’s political activities to persuade shareholders to oppose a proposal offered by the Service Employees International Union Master Trust (SEIU) in 2012 and another offered by the Unitarian Universalist Association of Congregations (UUAC) in 2013.
“Aetna pretends to be a model of corporate transparency, but in truth, shareholders have almost no idea which dark money groups the company is funding or how much it is contributing,” said CREW Executive Director Melanie Sloan. “Aetna tried to hide its nearly $8 million in contributions to the American Action Network and the Chamber of Commerce to influence the 2012 elections. Who knows where else Aetna has been funneling money?”
In recommending a vote against SEIU’s proposal, Aetna agreed “transparency and accountability with respect to political expenditures are important,” but explained this “is why the Company publishes its Political Contributions and Related Activity Report” on its website. Aetna also claims its board of directors reviews those reports and that the reports are easily discovered on the company’s website.
In reality, Aetna has disclosed inaccurate information in those reports, which are hard to locate on the company’s website. The tax forms of the Republican and Democratic Governors Associations indicate Aetna contributed far more to those groups than it reported between 2006 and 2012. Aetna also claimed its 2011 contribution to the Chamber of Commerce was for “voter education,” when the money was spent to run negative ads in hotly contested congressional elections, and the contribution to the American Action Network was not reported at all. Additionally, Aetna’s board reviews only that information included in the reports, meaning the board — like the public — remains in the dark about all contributions not specifically listed in the reports.
“Securities law requires proxy statements to honestly, openly, and candidly state all the material facts. By directing shareholders to inaccurate contribution reports to persuade them the offered resolutions were unnecessary, Aetna crossed the line and violated the law,” continued Sloan.
The lawsuit asks the court to order Aetna to fully disclose its political contributions, to void the 2012 and 2013 shareholder votes, and to require the company to include the proposals offered by SEIU and UUAC in its 2014 proxy statement.
10/12/12: Aetna’s Transparency Problem