by Cydney Posner
With election season upon us — after all, the election is only, well, a year and two months away – it’s time to renew the controversy over political spending disclosure. As you may recall, in 2011, a rulemaking petition was filed with the SEC by a committee of law professors requesting that the SEC propose rules to require disclosure of the use of corporate resources for political activities. The petition received well over a million letters in support, and, in May, former SEC Chairs and Commissioner, William Donaldson, Arthur Levitt and Bevis Longstreth, sent a letter to Chair Mary Jo White urging her to take action on the petition. (See this PubCo post.) Also earlier this year, the “Campaign for Accountability” filed a lawsuit against the SEC in the DC District Court, challenging the SEC’s refusal to act on another rulemaking petition filed in 2014 to require political spending disclosure. As reported in this article in Law360, on Monday, the SEC asked a Washington, D.C., federal court to quash that group’s attempt to force the SEC to take action on that petition, arguing that the district court does not have jurisdiction, and that the matter must instead by heard by a federal circuit court of appeals.
On Monday, 44 Democratic Senators sent a letter to SEC Chair Mary Jo White to add their voices “to the many who have expressed frustration and disappointment that the SEC decided to remove this issue from its regulatory agenda entirely.” In their view, because shareholders are the “true owners” of corporations, public companies should be required to disclose to their owners how their money is being spent. Instead, this type of disclosure is strictly voluntary and, they observe, only 2.2% of U.S. public companies make that disclosure. But political spending disclosure “is consistent with the SEC’s requirement for public companies to disclose meaningful financial information to the public.” This needed transparency, they contend, is especially important in light of the Citizens United decision, “which has moved our country in a different and disturbing direction when it comes to corporate influence in politics.” They note that the SEC has received over a million public comments in support of the petition, including support letters from 70 foundations espousing an interest in knowing whether the companies in which they invested were “’making questionable or controversial political expenditures.’”
Of course, the Dems aren’t the only party involved in this fracas. In June, in this year’s financial services spending bill, the House sought to preclude the SEC from adopting any rules requiring disclosure of corporate political spending. (See this PubCo post.) And President Obama has also come under pressure, as 50 public advocacy groups requested that the president issue an executive order requiring political disclosure by corporations that receive federal contracts, according to the NYT.
Meanwhile, Chair White has taken a firm “hands off” position, emphasizing that the SEC should not get involved in politics, according to Bloomberg. Of course, not adopting political spending disclosure rules just might be construed as a political decision also.