Over the last few weeks, several readers dropped me lines to say they had been surprised by ugly calls from Fidelity Investments about their mutual-fund accounts.
Fidelity wasn't really checking up on shareholders and trying to make sure everything is OK -- which is how some of the investors first took the call -- but rather was calling to drum up proxy votes.
Fidelity needs shareholders in many of its mutual funds to vote on a shareholder proposal that would make the firm's investments "genocide-free," avoiding companies known for extreme abuses of human rights. The proposal in question was filed with more than two dozen Fidelity funds. Specifically, the proposal requests that fund boards "institute oversight procedures to screen out investments in companies that, in the judgment of the Board, substantially contribute to genocide, patterns of extraordinary and egregious violations of human rights, or crimes against humanity."
The investors I spoke with -- including MarketWatch colleague David Weidner, who wrote about his experience -- all said they were given little information, no chance to have a new proxy sent to them and almost no information on precisely what they were being asked to decide. They were asked to decide over the phone, on the spot.
All felt a bit wronged. A few said they voted against Fidelity just to spite it for not giving them much to go on, though they acknowledged having not read the proxy they were sent.
Had they truly wanted to show their displeasure with the vote-solicitation process, however, they should have hung up without voting.
Typically, a fund needs to get votes representing half of its outstanding shares; two-thirds of that pool is needed to approve a change. Funds usually use a solicitor when it needs to reach a quorum.
Solicitors want votes, preferably going the company's way, but mostly anything that gets the company enough shares to make the election valid. Investors who get a proxy solicitation and feel a bit mistreated by their fund should withhold their vote. Don't abstain (that counts too); just refuse to vote your shares. Then dig out the proxy or go online to see what the issue is and decide on your own time and with full information whether and how to vote.