The American Civil Liberties Union of Alaska says the state’s financial regulator is chilling voices critical of Native corporations. Now, the Alaska Supreme Court is set to hear a legal challenge that could decide how much power the state has to police shareholders’ speech.
The Nome Nugget‘s editor Diana Haecker has worked at the paper since 2003. She received a letter to the editor in early 2017 about Sitnasuak Native Corporation’s upcoming board elections.
Related: For Alaska Native shareholders, criticism on Facebook during board elections can trigger state fines
It wasn’t an endorsement of any one candidate, the newspaper — as a rule — doesn’t print those.
“We don’t want to end up with 50 letters to the editor endorsing the same candidate,” she said.
Instead, this letter criticized the election process which has been the subject of ongoing controversy and even lawsuits.
“To me voicing an opinion on process is exactly what letters to the editor are all about,” she said. “You voice your opinion and so I didn’t think twice about it, because to me that falls under the First Amendment rights of free speech.”
But the state of Alaska’s financial regulator sees it differently. The Division of Banking & Securities regulates Alaska’s native corporations including shareholder elections. It’s empowered to police online and written speech in a way designed to ensure fairness and transparency.
One of those ways is to require shareholders to file disclosures before making statements that could sway shareholders in an election.
After receiving a complaint from a member of the Native corporation’s board, the state investigated and fined letter writer Austin Ahmasuk $1,500 and ordered him not to do it again.
ACLU of Alaska’s Legal Director Stephen Koteff says there are good reasons for states to regulate shareholder conduct.
“Courts have almost universally agreed that these sorts of limitations are supported by compelling government interest and the interest in having fair and open elections among corporate entities,” he told CoastAlaska.
But Koteff says in this case, the state went too far. The gist of Austin Ahmusak’s letter was that shareholders shouldn’t give their voting power to the board’s majority.
The state claimed the letter was misleading, something he denies and remains unresolved. But the legality of this case isn’t over whether his letter was factual or not. It hinges on whether he should’ve filed a disclosure outlining his relationship with other shareholders with the division before writing in the newspaper.
Division of Banking & Securities has broadly defined what is considered a solicitation for shareholder votes. That’s extended to social media chatter as well as more traditional media like the Nome Nugget newspaper.
“The statutes and regulations relating to ANCSA corporations and shareholders are intended to promote transparency in the solicitation process and the fairness of elections,” the division wrote in a statement.
No one from the state Attorney General’s office — which is representing the division in court — would be interviewed. But Assistant Attorney General Robert Schmidt wrote in a short statement to CoastAlaska that “the state is interested in making sure proxy statements do not contain material misstatements so shareholders can have accurate information.”
The ACLU maintains that the state is using its corporate speech policing power too broadly. Koteff says it was the general leadership of Sitnasuak Native Corporation that the criticism was aimed at.
“And if the state is in the business of telling citizens or squelching citizens’ speech that is meant to criticize the corporate entity,” Koteff said, “then we have crossed the line and we are on our way well down that slippery slope.”
In 2019, the division says it received 27 complaints and issued enforcement orders in five cases. Four of those involved posts on Facebook, one of which remains under challenge.
This state Supreme Court case is a legal fight between a state regulator and a civil liberties group. But a friend of the court brief prepared by former Attorney General Jahna Lindemuth was submitted on behalf of four regional Native corporations.
It backs up the state and cautions the court from forcing the division to change its rules.
“This is not a situation where the court should legislate from the bench, and change a regulation that has worked well for decades,” the former attorney general wrote on behalf of Doyon Limited, Bristol Bay Native Corporation, Calista Corporation and Cook Inlet Regional, Inc.
The Supreme Court case is Austin Ahmasuk v. Division of Banking and Securities. Oral arguments are scheduled for 11 a.m. Wednesday, January 22. It’ll be carried live online by Gavel Alaska.
Jacob Resneck is CoastAlaska's regional news director in Juneau.
