Washington -- A nonprofit watchdog group, Citizens for Responsibility and Ethics in Washington, filed a lawsuit Tuesday accusing Aetna of sending “false and misleading” proxy statements in 2012 and 2013 that hid millions of dollars of political donations.
“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 Melanie Sloan, CREW's executive director. “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?”
Aetna denies the allegations.
Filed on behalf of shareholder Stephen W. Silberstein, the CREW lawsuit says Aetna violated the Securities Exchange Act of 1934, which prohibits companies from providing inaccurate information in proxy statements to procure votes for or against shareholder proposals.
CREW says Aetna’s proxy statements included inaccurate information and omitted information about the company’s political activities to persuade shareholders to oppose proposals offered by the Service Employees International Union Master Trust (SEIU) in 2012 and by the Unitarian Universalist Association of Congregations (UUAC) in 2013.
The shareholder proposals asked the company to fully disclose its political spending and sought increased board oversight of political activities. But Aetna told its shareholders that wasn’t necessary because it had reached an agreement in 2007 with Mercy Investment Services to its political donations on its website or in a special report on its political contributions.X
But CREW says Aetna is hiding much of its political spending.
Among the donations that have not been disclosed, CREW said, is $3.3 million Aetna gave to the American Action Network, a conservative group fighting the Affordable Care Act, and $4.5 million to a Chamber of Commerce’s political fund in 2012.
Unlike other federal political donations, the contributions went to a political fund that reports its activities to the IRS, not the Federal Election Commission. The IRS filings do not require the reporting of individual donors. CREW found out about these contributions when Aetna inadvertently disclosed them in a filing with the National Association of Insurance Commissioners.
The CREW lawsuit also says Aetna failed to report hundreds of thousands of dollars donated to the Democratic Governors Association and the Republican Governors Association since 2007.
Named in the suit are Aetna CEO Mark T. Bertolini and the company’s board of directors. The lawsuit was filed in the U.S. District Court for the Southern District of New York.
“We intend to vigorously defend against this lawsuit. Aetna meets or exceeds disclosure requirements of current laws and regulations,” said Aetna spokeswoman Cynthia Michener.
Aetna declined to further discuss the charges in the lawsuit.
The lawsuit asks Aetna to void the votes in 2012 and 2013 against the shareholder proposals seeking greater transparency and to accurately report all of the company’s political contributions since 2006.
The lawsuit is the first of its kind in that it seeks to use SEC laws to force disclosures of political contributions.
The SEC does not require companies to disclose their political spending.
But a coalition of campaign finance reform advocates have been pressing the SEC to require those disclosures, especially after the Supreme Court’s Citizens United ruling allowed corporations greater involvement in federal political campaigns.
“This is a big issue and kind of a pushback to Citizens United," said Common Cause spokeswoman Mary Boyle. “Shareholders have a right to know if a company is spending money on politics and what they are spending it on.”