Protests Erupt After CME Chair Lies to Shareholders
Chairman Terrence Duffy lied to shareholders during the Chicago Mercantile Exchange’s annual shareholders meeting, held downtown on May 23. Protesters holding proxy shares attempted to probe Duffy with questions pertaining to CME’s lobbying for state tax breaks and their massive profits. Duffy rebuffed the questions as out of order because they did not address items on the agenda while telling them they could be asked during the open question and answer session at the end of the meeting.
Roughly 50 protesters scattered themselves around the room prior to the meeting but stood in solidarity with each other as proxy after proxy attempted to question CME’s profitable lobbying for a state tax break last fall. The company threatened to leave the state after more than 100 years of operation if it did not get its way. Duffy tried to hedge against the protesters’ concerns at the beginning of the meeting in his opening remarks.
“We are a global company, and we asked to be taxed like every other major company based in Illinois, many of which are much larger than CME Group,” said Duffy. “The Illinois Legislature recognized and corrected the unfair treatment by giving us an apportionment that is equitable and puts us closer to other Illinois companies.”
The supposed correction in the unfair treatment will deprive the state of nearly $1 billion over the next decade. The impact of this correction is severe as Stand Up! Chicago’s Elizabeth Parisan noted in the Huffington Post:
The cuts to these programs are so deep that they actually go back in time. Earlier this month, the state notified 40,000 childcare providers that they might not get paid for the last three months of services they provided because their program was underfunded by $73 million. The announcement thrust thousands of families into turmoil as providers wondered how they would keep their doors open and working parents wondered if they would lose the safe and affordable childcare they depend upon in order to make a living.
“CME made $1.9 billion in profit last year. At the same time, CME is benefiting from millions of public dollars. That makes every taxpayer a shareholder in CME,” said Janet Edberg, an unemployed CME shareholder. “As an official shareholder in CME, I went to the meeting today to say enough is enough. Give back our tax dollars to the people and communities that desperately need help.”
Protestors interrupted in chanting after continually being denied answers to their questions. Less than an hour into the start of the meeting, those chanting were escorted out of the building by security. The meeting continued but chants of “pay your fair share” could be heard from outside as more than 500 protestors gathered in solidarity. Thousands of people participated in coordinated actions throughout the day, all aimed at the avoidable devastation to crucial social safety net programs if CME did not receive the tax break.
Most of the remaining questions came from traders at the exchange and focused on the collapse of MF Global. Putting myself into the story, I decided to interject with a couple questions of my own. Admittedly, I could have stood with more resolve and feel I allowed the presence in the room to intimidate me. With that said, I questioned Duffy on the campaign contribution to Mayor Rahm Emanuel and the proposal to place a financial transaction tax of a mere quarter per trade.
Armed with prepped answers and facing an inferiorly informed questioner, Duffy snuffed the suspicion right out of me.
“We gave Mayor Emanuel $200,000, Mayor Emanuel gave us back $200,000,” said Duffy. “He could not accept the contribution from CME.”
But he did accept it. Until the election was over with and he had won.
While campaign disclosures might list this transaction as a campaign refund the fact is that it came after the election was already completed. Emanuel returned $198,500 of the $200,000 donation on the last day of February 2011, nearly four months after the initial donation. The Exchange has donated nearly a quarter of a million dollars to various politicians since the beginning of 2010.
Emanuel’s returning of the CME donation is not a refund as Duffy states. It is a repayment on a loan because the money was given in order to help win an election and the return came after the successful purchase of the Chicago mayoral race. On a financial transaction tax:
We’ve done this exercise with politicians when they propose a financial transaction tax…You have people trading fourteen cents out of their own account and you want to charge them twenty-five cents and they’re only making eighteen cents per trade. So every trade they make they lose six cents [sic].
Actually the math would be seven cents but that’s not the point. It’s that Duffy lied on the first answer and misleads on the second.
The average trade at the exchange actually comes in at more than $200,000, according to Stand Up! Chicago. That’s more than enough to cover a single quarter tax on that one trade. Unfortunately, a Pew Center report from April showed that Illinois is one of 26 states that do not sufficiently track the efficiency of corporate tax break programs.
So, how are state legislators supposed to know if these types of bills have any positive long-term effects? Moreover, how are shareholders to know what the company is doing with its money when its spokesperson does not tell the full truth? The CME and Duffy must be held accountable to the people of Illinois and cannot justify their behavior to tax payers and shareholders by avoiding the hard questions. Corporate lobbying efforts should not override the hard work of other organizations and individuals in the state. Correcting the abuse of power will help bring transparency and equity to the process and the people.