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May 31, 2013 4:34 pm

TIAA-CREF Decision Sets Precedent to Block BDS Motions – Legal Analysts

avatar by Joshua Levitt

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Wall Street, New York City. Photo: WikiCommons

A decision by the Securities and Exchange Commission (SEC) to allow a major financial services group to keep Boycott, Divestment and Sanctions off the agenda at their shareholders’ meeting, created new precedent to counter BDS assaults on the financial community, legal analysts told The Algemeiner.

The SEC’s decision on Thursday was a relief for TIAA-CREF, officially Teachers Insurance and Annuity Association – College Retirement Equities Fund, which manages $520 billion on behalf of millions of teachers and other union members, many of them Jewish. The BDS motion demanded divestment from Israel as part of a new human rights policy it wanted shareholders to adopt. The SEC chose to ignore the first part of the argument, simply ruling that the BDS motion would interfere with the company’s ordinary business.

The BDS motion was filed by Jewish Voice of Peace in the names of 200 signed shareholders requesting to be heard at TIAA-CREF’s annual shareholder meeting in July and put their motion to a proxy vote.

TIAA-CREF said no.

A spokesman for TIAA-CREF explained the three pillars of its argument to the SEC: that it would be inappropriate for the financial services company to involve itself and its other shareholders in a complex political debate; that the BDS motion interfered with its operations, essentially micro-managing its management’s job of buying and selling securities; and that the company already had an internal operation system to asses human rights conditions in every country where it invests.

In its decision, the SEC was convinced by the final point: “There appears to be some basis for your view that the Fund may omit the proposal from the Fund’s proxy materials pursuant to Rule 14a-8(i)(10) under the Securities Exchange Act of 1934, which permits omission of a proposal that has been substantially implemented.”

In other words, any investment company in the same position, being asked questions about the “human rights” where it invests can inform the SEC that it has “substantially implemented” an internal process to make those judgements, and case closed.

In its brief, the investment firm reminded the SEC that the operational question has already been tested two years ago, when the same BDS group first attempted their maneuver:

“We respectfully submit that, with the 2011 No-Action Letter, the [SEC] Staff already has confirmed that a shareholder proposal along these lines may be excluded from CREF’s proxy materials because it deals with a matter relating to CREF’s ordinary business operations.”

Human rights lawyers lauded the “creativity” of the decision, but were disappointed that an even stronger case precedent was not set based on the law rather than a technical question.

“This is a creative solution for this type of case, but it sidesteps the real issue,” said Brooke Goldstein, human rights lawyer and director of The Lawfare Project, a non-profit legal think tank that exposes and combats lawfare, asymmetric warfare that covertly threatens democracy through the manipulation of laws.

“Yes, this was an easy way to end it; TIAA-CREF already has an internal system to judge human rights issues, end of story. But, in the motion, itself, BDS is asking shareholders and management of a US corporation to do something unlawful.”

In the BDS petition, they “request that the [TIAA-CREF] Board end investments in companies that, in the trustees’ judgment, substantially contribute to or enable egregious violations of human rights, including companies whose business supports Israel ‘s occupation.”

Goldstein says: “That is discriminatory targeting of a person, group or company because of national origin, in this case, people from Israel, which is simply illegal in New York state.”

New York state law defines boycotts as “unlawful discriminatory practice” and that any decision to “refuse to buy from, sell to or trade with, or otherwise discriminate against any person, because of the…creed…[or] national origin” was unlawful and even secondary actors can be liable, according to Nitsana Darshan-Leitner, director of Shurat HaDin – Israel Law Center, a vocal defender of Israel in the courts.

At the US federal level, the Tax Reform Act of 1976 makes it a federal violation to “participate in or cooperate with an international boycott.”

“BDS movements claim to be against discrimination, but that is exactly what they’re asking people to do here; it’s illegal, hypocritical and a disgrace,” attorney Goldstein said.

“What I don’t get is how can the BDS movement be taken seriously as they ignore real human rights violations across the rest of the world; why is this about Israel and not about Syria, or Sudan for that matter; there is the hypocrisy.”

In its brief, TIAA-CREF answered their human rights question by spelling out the regulations that inform its corporate policy, beginning with Sudan, and the US government’s Anti-Genocide Proposals:

“The Anti-Genocide Proposals are aimed principally at companies who, through their business dealings in Sudan or otherwise, are viewed as having substantially contributed to genocide and egregious human rights violations.”

“There exists a broad consensus that the activities targeted in the Anti-Genocide Proposals – genocide and egregious human rights violations in Sudan – are abhorrent, and deserving of universal condemnation.”

“In fact, the human rights violations in Sudan are so extreme that U.S. companies are prohibited from doing business in Sudan. Moreover, the U.S. Congress has passed a law — the Sudan Accountability and Divestment Act of 2007 — that is designed to make it easier for fiduciaries to divest from companies deemed to support human rights atrocities in Sudan.”

“In contrast, the Proposal here attempts to embroil CREF in a highly controversial geopolitical dispute of enormous complexity where — unlike the Anti-Genocide Proposals — there is no broad consensus. United States companies are permitted to engage in business dealings in Israel and the West Bank.”

“Indeed, the United States adopted laws designed to discourage and, in some circumstances, prohibit U.S. companies from furthering or supporting foreign boycotts of Israel.”

Sam Nunberg, director of the Middle East Forum’s Legal Project said, “This is a small victory for America in that our firms can go about their business, but it is a tremendous failure that more has not been done to end the BDS movement from twisting our system, ignoring our laws and lying to the good citizens of this country.”

As for future attempts to inspire Israeli boycotts by investment funds, a spokesman for the SEC said that its decision was based on the operational grounds and redundancy question, which could be applicable for any firm.

The primary responsibility of the SEC is to guaranty shareholders’ rights, including their ability to propose motions at an AGM, which is why the regulator investigated the claim. But the content of their request violated the company’s rights, which is why BDS lost.

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  • keef

    Interesting (if that’s the word) to note the vehemence of the comments condemning any boycott of Israel so far.

    Equally interesting to note their complete absence of reference to the number of UN resolutions Israel is currently in breach of, or their failure to acknowledge that this isn’t motivated by racism as much as by a determination to ensure politicians and corporations support respect for international law – or, more specifically, don’t support the flouting of it.

    For that matter, neither is there mention of the many Jewish groups who support a boycott of Israel partly in light of the continuing illegal settlements in the West Bank (or, rather, Palestine if we are to use terms recognized in the UN), demonstrating that this is not so much about Judaism as much as zionism. Indeed, I imagine many will deny such groups exist with the same vehemence that they will deny any reference to the recent withholding of tax revenues and what is effectively a boycott of Palestinian goods and services by Israelis.

    Whilst a great many Jews recognize the difference between Judaism and zionism, very few zionists are willing do so. Playing the “outraged at such racism” card is too essential, effective and convenient a strategy for them to abandon. Any recognition of the difference undermines their stance, hence their quickness to label anyone who disagrees with them as “racist”, “antisemitic”, “nazi”, “sick”, “blasphemous”, etc. even if that person may, themselves, be Jewish. They know that, when dealing with such an emotive issue, these emotive terms are far more effective and appealing, by virtue of their facade of moral righteousness, than any reasoned debate.

    Now nobody in their right mind will deny that Hamas is little more than a bunch of thugs at very best but, increasingly, these same apologists appear to be “photoshopping” out of history the fact that the State of Israel itself was both brought into being and expanded largely though terrorism too – no doubt they will refute any connection between the assassination of Folk Bernadotte (with his wife) and former Israeli PM Yitsak Shamir or between the Qibya Massacre (aka Operation Shashona) and former Israeli general and PM Ariel Sharon amongst others. Acceptance of this denial is vital to the perceived legitimacy of Israel “proper” and its expansion eastwards.

    Also omitted is the fact that, in the US, individuals can already be fined and imprisoned for boycotting Israel specifically – regardless of the fact that their actions may stem from a sence of right from wrong rather than from any kind of antisemitism – and the special interests exerted to bring this about … well, so much for democracy through freedom of choice within a free market.

    • Lynne T

      The overwhelming majority of the UN myriad resolutions passed against Israel were passed by the GA by nations with terribly human rights and have little substance.

      If anything has been photoshopped out of the Israel / Palestine equation, it’s the continuing presence of Jews within the territory between the Med and the Jordan and the expulsion of Jews from the surrounding countries.

      Partition left 80% of Mandatory Palestine as an “Arab homeland” and this was enshrined by the UN resolution that recognized the State of Israel, a resolution that the same countries that routinely pass resolutions against Israel themselves violate.

      • keef

        So no Jewish settlements have been built in the West Bank and no Palestinians have been displaced since 1967?

        .. oh well then, my apologies.

        But then in what way do the countries with terrible human rights records, having recognized the State of Israel, violate Mandatory Palestine?

    • Lautaro

      Interesting (if that’s the word) that you bring up racism when it is not even mentioned in the article. The meaning is simply that by American Law, Israeli companies can’t be discriminated against because of what their government does, which only makes sense.

  • Kris Kristian

    BDS campaign

    Time for the world to wake up as to who the worst offender
    of the B DS campain is, and to make it an offence for anyone to try to boycott Israel, because of his hatred of Jews and Israel. I refer to Archbishop Tutu who promoted himself to god.
    Remember he said “G-D favours the Palestinians”
    That is a very sick mind to make such a blasphemous sstatement

    He is also telling sportsmen and artists to boycot Israel

    Thank Heaven that some people have told him to mind his own business.

    He has tried to get the soccer body not to have the U21 soccer in Israel, He was told that it will be held in Israel.
    He has caused so much hatred of Jews across the globe, that students at universities are afraid to say that they are Jews and that they support Israel.

    He has twisted the minds of university professor to hate Israel.
    He has caused cultural and every other type of boycot against Israel.

    That man is no holy man. He is evil.
    He will have to answer to G-D one day. It wont be pleasant for him.

  • Bernard Ross

    when pockets are hit there will be results. the BDS movement libels the state of Israel and should be made to pay, this is also true of individuals. They should be made to prove their allegations or pay damages. The al durah libels cost danny pearl his life. payement is due from BDS members.

  • Larry A. Singleton

    “Jewish Voice of Peace”

    Don’t be fooled by the “peace” moniker. These people are terrorists and bullies in their own right. All you have to do is read the facts. Check out Campus Watch as well as Jihad Watch and especially the Middle East Forum/Quarterly and read people Raymond Ibrahim. Read these three books to get the skinny on Academia and how it is rotten to the core and totally infested and influenced by the radical Left:

    The Professors: The 101 Most Dangerous Academics in America by David Horowitz
    Ivory Towers On Sand: The Failure of Middle Eastern Studies in America by Martin Kramer
    Indoctrination U: The Left’s War Against Academic Freedom by David Horowitz

    You don’t even have to read the whole book Professors. It’s basically a bunch of profiles but what you do read is ass kicking.

    Also here’s my “education” on Islam:

    Want to know about this “right of return” nonsense? Read The Haj by Leon Uris

    The Source by James Michener
    Muslim Mafia: Inside the Secret Underworld, (CAIR and the Muslim Brotherhood), That’s Conspiring to Islamize America by Gaubatz and Sperry
    CAIR: Islamists Fooling the Establishment by Daniel Pipes and Sharon Chadha (MEQ article)
    Because They Hate: A Survivor of Islamic Terror Warns America by Brigitte Gabriel
    Slavery, Terrorism and Islam, (and Holocaust in Rwanda), by Peter Hammond
    The Legacy of Islamic Antisemitism by Andrew G. Bostom
    The Legacy of Jihad by Andrew G. Bostom MD
    A Concise History of the Crusades by Thomas F. Madden
    Invasion: How America Still Welcomes Terrorists, Criminals and Other Foreign Menaces to Our Shores by Michelle (the hottest woman on the planet) Malkin
    Infiltration: How Muslim Spies and Subversives have Penetrated Washington by Paul Sperry
    American Jihad: The Terrorists Living Among Us by Steven Emerson
    The Grand Jihad: How Islam and the Left Sabotage America by Andre C. McCarthy
    Stop the Islamization of America: A Practical Guide to the Resistance by Pamela Geller
    Infidel by Ayaan Hirsi Ali
    The Book of Jewish Knowledge by Nathan Ausubel
    Justice Not Vengeance by Simon Wiesenthal
    The Forsaken: An American Tragedy in Stalin’s Russia by Tim Tzouliadis
    The New Moody Atlas of the Bible by Barry J. Beitzel
    The Al Qaeda Reader by Raymond Ibrahim
    Reliance of the Traveller: A Classic Manual of Islamic Sacred Law

    You think Islam is a “religion of peace”? Read the article mentioned below
    Sahih al-Bukhari (With Sheikh Humaid’s article on Jihad and plug by Imam Abdul Malik Mujahid)

    The Koran: Pickthall
    Quran: Yusuf Ali: Translated by Prof. Syed Vickar Ahmed
    Holy Qur’an with Commentary: Maulana Muhammad Ali
    The Second Message of Islam by Mahmoud Mohamed Taha
    ‘How Saudi Publications on Hate Ideology invade American Mosques’ -Testimony of Freedom House director before Senate Committee

    • Larry A. Singleton

      How have we allowed the moral and ideological equivelent of the Hitler Youth to infest our campuses and allowed radical teachers to indoctrinate our kids with absolutely no oversight? The Muslim Student Association is as seditious and worse than the Communists ever were. This BDS Jew hating group has totally taken over our campuses and now bully and intimidate teachers, students and everybody else who lives in fear of these Nazis.

    • Jacqueline

      What I have a hard time understanding is these Israel Jew haters that are Jewish There was a time when is thought educated people were smarter but now I realize they are just educated dummies.

    • Roberta E. Dzubow

      Larry, YOU ARE A TREASURE!!

      40 years ago I read “Arab Reach” by Hoag Levins. (I was in a bookmobile with my son and casually just grabbed the book)… it started my enormous interest and made me a true Zionist). (I had read “The Source” years earlier, that made me more interested in Judaism).

      Islam and its Leftist apologists – including so many Jews- make me crazy. This p.c. world, the media, all combine to endanger civilization by their enormous ignorance and stupidity. Islam is on the march – met by rose petals.