Ahmasuk prevails as Supreme Court ruled in proxy solicitation case
A year after oral arguments were heard in the Alaska Supreme Court, the state’s highest court issued a ruling last week in favor of Austin Ahmasuk who was fined $1,500 by the state’s Division of Banking and Securities for penning a letter to the editor published in February 2017 in The Nome Nugget, that criticized the use of discretionary proxy votes in Sitnasuak Native Corporation elections.
The crux of the matter was not the content of the letter, but that Ahmasuk did not file paperwork with the Division that he would submit the letter to the Nome Nugget as regulations require shareholders of Native corporations to disclose such communications for proxy solicitations. However, Ahmasuk argued in court that he wasn’t soliciting votes for or against specific people, but he was against the procedural use of discretionary proxies. “I believe SNC shareholders are realizing that discretionary proxies are harmful to our election process and are realizing in greater numbers such practices are disrespectful to our traditions,” wrote Ahmasuk in the letter. “Discretionary proxies have allowed single persons to use discretionary proxies to dramatically alter the outcome of an election for their singular goal.
After the Alaska Division of Banking and Securities fined SNC shareholder Ahmasuk, the ACLU brought the lawsuit on Ahmasuk’s behalf. Ahmasuk filed an appeal with the division, arguing that the division wrongly interpreted its proxy solicitation regulation to cover his letter and violated his constitutional due process and free speech rights. An administrative law judge upheld the division’s sanction in an order that became the final agency decision, and the superior court upheld that decision in a subsequent appeal, according to court documents. “Ahmasuk raises his same arguments on appeal to us,” reads the Supreme Court ruling. “We conclude that Ahmasuk’s opinion letter is not a proxy solicitation under the Division’s controlling regulations, and we therefore reverse the superior court’s decision upholding the Division’s civil sanction against Ahmasuk without reaching the constitutional arguments.”
“The (state financial regulator’s) interpretation and application of its proxy solicitation regulation are unreasonable on the facts of this case,” the justices wrote.
SNC was not part of the lawsuit, but other regional Native corporations like Doyon, Calista and Bristol Bay Native Corp. filed briefs in support of the state’s power to regulate shareholder speech.
Asked his reaction to the Supreme Court ruling, Ahmasuk told the Nome Nugget, “I am very happy for this win in Alaska’s highest court.”
He said that he had sacrificed years of time and effort “to ensure better corporate governance debate for my fellow shareholders.”
He added that, a broad application of regulations unfortunately has had the effect of penalizing speech using a system of laws which shields corporations and gave them or their directors a way to penalize the person. “I know from talking to many of my fellow shareholders that shareholders felt this chilling effect on speech and it may take more years to improve trust, the supreme court’s decision was decided on the facts and upheld a form of speech we all may enjoy,” Ahmasuk said. “The win does not give free reign to publish any and all speech because there are still complex laws that govern ANCSA corporate elections. Thankfully, the supreme court’s decision that my letter to the Nome Nugget was not a proxy solicitation changes the landscape for speech of this kind for thousands of shareholders across Alaska which will hopefully improve corporate governance.”