The cover design of Goldbelt Inc.’s 2016 annual report was inspired by the late Clarissa Rizal, a Goldbelt shareholder and weaver. (Photo by Jeremy Hsieh/KTOO)

Goldbelt shareholder Ray Austin was accused of making misleading or false statements on Facebook that were critical of the elected leadership of Juneau’s Native corporation. An administrative law judge recently found him innocent of those charges. 

The state’s Division of Banking & Securities had cited Austin last year and ordered him to pay $1,000 for dozens of Facebook posts that criticized sitting Goldbelt directors.

I speak up for what I think is right,” Austin told CoastAlaska.

But the judge did find him guilty for not filling out the required paperwork before making his comments in a public forum: free speech is not a defense in these types of cases, she ruled.

“Mr. Austin’s constitutional rights were not violated by the requirement he provide the [regulators] concurrent copies of his Facebook postings, including his own re-submitted candidate posts,” Administrative Law Judge Carmen Clark wrote in her 31-page decision.

The Alaska Native Claims Settlement Act — known as ANCSA — created dozens of regional, urban and village Native corporations with shares allocated to Alaska Natives based on their ties to ancestral homelands.

The law was passed by the U.S. Congress, but it gives the state — not the federal government — authority to regulate Native corporate governance and board elections. 

That’s set up a tension between the rights of shareholders to be critical of their corporation’s leaders, and the need to police false or misleading statements that could dupe shareholders voting in an election.

Austin’s critical Facebook posts came under scrutiny after a Goldbelt director complained to state regulators. Agency officials took notice and say Austin’s writings went to the very heart of why they regulate shareholder speech.

Speaking at Austin’s September 15-16 hearing, Leif Haugen, chief of enforcement at the state Division of Banking & Securities, called Austin’s writings “egregious” and says the rules exist for a reason.

And that’s to promote transparency in corporate board elections,” Haugen testified. “These are alluding to incumbent directors, and they’re talking about these directors engaging in illegal activity.”

But the judge disagreed that Austin had ever made false or misleading statements. Even though regulators say they’d disregarded Austin’s complaints because they had accepted the Goldbelt Corporation’s timeline of events, she still disagreed that his post was false or misleading.

Alaska Supreme Court rejected ACLU’s free speech argument for ANCSA shareholders

The judge did, however, let a $500 fine stand because Austin hadn’t filed financial disclosures that are required by the state before making public statements about a Native corporation’s board election. And she took her cues from this year’s Alaska Supreme Court decision that affirmed state regulators’ power to do so.

The American Civil Liberties Union of Alaska had taken the state to court over a shareholder being fined over a letter to the editor in a Nome newspaper. The state’s highest court ruled in favor of the shareholder. But it did not weigh in on the broader constitutional concerns of policing free speech.

Anchorage attorney Susan Orlansky argued that case on behalf of the ACLU. She points out there’s no truth police regulating conventional political races.

“People get to sort out what’s true and not true and who they want to believe,” Orlansky told CoastAlaska in a recent interview. “But Alaska is tightly regulating this when there are shareholders — almost exclusively Alaska Native people — speaking their opinions about an upcoming board of directors election for the corporation. And I find that troubling.”

ANCSA complaints the lion’s share of state financial regulator’s workload

The Division of Banking & Securities is the state’s primary financial regulator. It’s charged with enforcing the rules of payday lenders, mortgage companies, consumer finance and others. But state officials conceded during Austin’s hearing that the majority of its investigations are focused on Native corporations.

“The majority of investigations are related to ANCSA,” Adam Marks the state financial examiner charged with Native corporation cases, testified during Austin’s hearing in mid-September 2020.

Since at least 2016, the agency uses fees levied on them to pay for a dedicated investigator. The division says most of its work is complaint-driven, and it opens about a half-dozen enforcement actions a year.

Austin, who’s from Southeast Alaska but now lives in New Mexico, says Alaska Natives aren’t like conventional shareholders who choose to buy or sell shares to protect a financial investment. 

We had no choice to be put in this corporate world,” he said of the landmark ANCSA legislation passed nearly 50 years ago. “But at the same time, we have no choice we have to work with it or try to make it as best as we can.”

Judge notes there’s “an imbalance of power” at play in ANCSA disputes

The state’s financial regulations are modeled on the federal Securities and Exchange Commission, which regulates non-Native corporations. But the SEC loosened its regulations in the early 1990s to allow reasonable criticism of corporate governance. Alaska hasn’t followed suit.

In her decision in Austin’s case, Clark remarked on the state’s sanctioning of individual shareholders by holding them to the exact same standard as they would corporate directors with sophisticated legal resources.

“There is an imbalance of power between the (Alaska Native corporations) and its shareholders that should not be ignored,” the administrative law judge wrote, “and it is important to prevent statutes and regulations designed to protect shareholders from being weaponized against them.”

Both Goldbelt and the state’s Division of Banking & Securities declined to comment on the outcome of the case.

This article has been updated to correct minor typos and re-edited for clarity.