Activist investors cast doubt on Smith & Wesson donations to gun lobby

An activist group of investors said last week Smith & Wesson’s explanation for writing off $1.5 million in donations to gun rights lobbyists raises more questions than it answers.

Majority Action filed regulatory documents with the Securities and Exchange Commission Wednesday, criticizing the gun maker’s defense as “insufficient” and “impossible to reconcile” with reality after top executives said unreported contributions to the National Rifle Association and the National Shooting Sports Foundation didn’t break any disclosure laws.

American Outdoor Brands, the gun maker’s parent company, said in regulatory filings earlier this month the money never supported political projects for either group. Guns.com reached out to AOBC last week for comment, but never received any response.

“AOBC’s conclusory explanation for the above omissions — that the payments were tax deductible and not made for political purposes — is difficult to square with publicly-available information about the NRA-ILA and NSSF, their activities during the 2016 election cycle, and the regulations governing the deductibility of payments to tax-exempt organizations that engage in political activity,” Majority Action’s Sept. 19 filing concluded.

The group’s filing also castes further doubt on Mitchell Saltz — one of AOBC’s five board nominees — and his connections to VirTra Systems, a company specializing in virtual reality gun training simulators. Smith & Wesson insists Saltz’s previous failures to admit he serves on VirTra’s board of directors boils down to nothing more than an “inadvertent omission” — a harmless action considering the company poses little, if any, direct competition to the gun maker.

Majority Action disputes this claim, suggesting the company violated its own policies by turning a blind eye to VirTra’s conflict with the Smith & Wesson training academy.

“Even if Saltz felt that the overlaps between VirTra’s and AOBC’s business activities did not constitute a genuine conflict, the Code of Conduct and Ethics the Board adopted in the run-up to this year’s annual meeting created an unquestionable duty to report, based on the possible appearance of conflict,” the group concluded.

Shareholders will vote on these issues at the gun maker’s annual meeting Tuesday. It’s unclear if major investors — such and BlackRock and Vanguard — will support another shareholder-backed proposal for a gun safety risk report, as both did during Sturm, Ruger and Company’s annual meeting in May.

Majority Action hopes both firms will again side with them and “vote for greater corporate transparency.”

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