Major brokerage firms have surrendered to bullying and intimidation by extremist animal rights activists. They should not have.
The extremist protesters in the United Kingdom have forced some brokerage firms, including the U.K. unit of Charles Schwab Corp., to stop trading in the stock of Huntingdon Life Sciences Group PLC. The groups protesting use of animals by Huntingdon in research took their threats to the company and then to securities firms that deal in the stock. Protesters marched into the offices of securities firms, disrupting business, and then invaded neighborhoods where executives live to demonstrate at their homes, all to intimidate them into stopping trading in the stock. The actions of the protesters are reprehensible, but also successful. They have limited trading in the stock.
"We don't hire soldiers," Brian Winterflood, chairman of Winterflood Securities Ltd., London, said in an interview. "We hire brokers." His firm gave up trading, fearing for the safety of employees. "We could not get protection" from protests at its office or at its executives' homes.
At Charles Schwab Europe, Birmingham, England, the demonstrations have been disruptive and frightening, said Michael Durand, a spokesman in for the parent organization in San Francisco. At least one board member of Schwab Europe has been subject to protests and threats at his residence, Mr. Durand said.
Schwab Europe announced this month it will bar its clients from dealing in Huntingdon securities. "We agree with their right to protest" until they overstep lines of civility, he said. "But we can't risk the safety of our employees."
Even without the intimidation, he said, "we found ourselves without the normal market-making channels" when Winterflood, and Dresdner Kleinwort Wasserstein, the main market makers, stopped trading in the stock. TD Waterhouse Group Inc.'s U.K. arm also declared it will not trade in the stock, citing intimidation by animal-rights protestors. Officials of the unit of Toronto-Dominion Bank couldn't be reached for comment.
Brokerage representatives are taking the issue of lax protection up with authorities.
In the United States, the intimidation caused the company's U.S. unit, Huntingdon Life Sciences Inc., to join this month in a lawsuit its parent filed against a number of animal-rights groups over what the plaintiffs say is a campaign of violence, intimidation and harassment directed at the company and Stephens Group of Little Rock, one of Huntingdon's significant shareholders.
The anarchistic tendencies of protesters in Seattle last year or Quebec this month, both over international trade policies, now have spread to the level of portfolio investment. It's disturbing, too, that a group trying to get TIAA-CREF, New York, to use positive screening for its social investment fund took its protest this month to the high-rise residence of John H. Biggs, its chief executive officer. A leader of the group believed such a peaceful but personal protest might be more persuasive than the unsuccessful meetings it had with him in his office. What next? Will protesters target other institutional investors, or individual investors?
Freedom to protest by so-called socially aware investors has an honorable, if controversial, place in asset management, such as in helping to end apartheid in South Africa. But the Huntingdon protestors' tactics engender no sympathy from social investors in this country like Matthew Kiernan, executive managing director of Innovest Strategic Value Investors, and Peter D. Kinder, president of KLD & Co., who criticized the personal intimidation.
The surrender of the brokerage firms to this intimidation is regrettable. It will only encourage more anarchistic behavior by activists opposed to this company or that. Today it is Huntingdon. Tomorrow it may well be Microsoft Corp. or ExxonMobil Corp. What will the brokerage firms do then?
As Mr. Winterflood noted, brokers are not soldiers. But the companies can and must demand more protection from the authorities. It is up to the authorities to intervene when protests threaten personal safety. The brokers also must use every weapon in their legal arsenals to sue those leading or involved in these anarchic acts.