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The SEC announced that it will fine Pax World Management $500,000 for violating its own restrictions on buying stocks. Pax World is a 'socially responsible' investment company, operating mutual funds that do not invest in companies which produce harmful things like weapons, alcohol and tobacco.
I guess the return on cluster bombs and cancer sticks was just too tempting.
Pax has issued a statement in which CEO Joseph F. Keefe apologizes for the violation of its self-imposed rules. (He also makes it clear that it occurred before he became CEO). Keefe states that investors were not harmed financially.
By way of explanation, Pax cites the SEC's Settlement Order, which states that between 2001 and 2005, two of Pax's mutual funds bought stocks "that either were not socially screened prior to purchase or had failed a screen. Of these, 10 securities (out of approximately 650 purchased by Pax World Funds during that time period) actually failed the social screens and therefore should never have been purchased."
Socially responsible investing is a growing field with an interesting history. Some historians argue that its roots lie in moral objections to the slave trade in the 1700s, especially among Quakers. In 1758, the Philadelphia Yearly Meeting of Quakers formally banned investing in the slave trade, thereby creating the first investment restriction aimed at improving society. Following John Wesley, some Methodists have long avoided investing in "sinful" companies. And more recently, both liberal and conservative moralists have railed against investing in evils as diverse as diamonds, children's clothing and gay cartoon characters.
Morality and money making have always been uneasy bedfellows. Admirable as it is, the problem with socially responsible investing is that sin continues to pay handsomely, and its hard to imagine that changing any time soon. (For a good example of this sad fact, see Peter's Cohan's W-Industrial Complex, a basket of stocks focused on the oil and arms industries, right-wing media and luxury goods for the rich; needless to say, these stocks have done very well over the last few years.)
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Reader Comments (Page 1 of 1)
8-06-2008 @ 12:11AM
Jeff said...
Funny, CEO Joe Keefe claims to have made changes. I wonder why Joe, or the Pax
World Board never disclosed to their shareholders that one of its owners Thomas F. Shadek is a convicted sex offender,[pedophile] and is listed on the Dept. of Justice National Sex Offender Public Registry. He is listed in both California and Florida. Shadek was found guilty on 5/23/06, in Florida. He was the treasurer of Pax World at the time. I wonder how the SEC missed this in it's investigation?
8-14-2008 @ 11:43AM
Jeff said...
CORRECTION TO MY PREIVIOUS POST
Please note this correction of my previous post concerning the position and relationship of Thomas Shadek to Pax World Mutual Funds.
On the proxy statement and notice of special meeting of shareholders dated Friday September 27, 1996 Thomas Shadek is listed with a proposed percentage of ownership of Pax World Management Corporation at 25 %.
On a Proxy from August 2006 the following is stated.
Substantially all of the issued and outstanding shares of capital stock of Pax World Management are currently owned by Mr. Laurence A. Shadek and his three siblings, Messrs. Thomas F. Shadek and James M. Shadek and Ms. Katherine Shadek Boyle.
Also note that on the September 1996 Proxy and other filings with the SEC that Thomas Shadek is listed as Vice President of Marketing. It appears that Thomas Shadek never served as Treasurer.
Thomas Shadek was adjudication guilty/convict on 5-23-2006 for the following crimes In the State of Florida. Court Case number 0503330.
[1] Lewd or lascivious exhibition with a victim under 16 years of age [F.S. 800.04 [7] [C] [PRINCIPAL]
[2] Use computer sex with a minor [F.S. 847.0135] [2] [PRINCIPAL]
I apologize for the confusion.