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A coalition of corporate investors, shareholders, activists and academics Tuesday urged the Securities and Exchange Commission to act quickly on plans to require corporations to more fully disclose their political spending.
“Investors have been clamoring for this information from the SEC for some time,” Robert Jackson, an associate law professor at Columbia Law School, said during a conference call organized by the Corporate Reform Coalition, which includes a wide range of progressive groups as well as shareholders and investors.
Jackson co-chairs a committee of law professors who initially petitioned the SEC to change its corporate disclosure rules in 2011. Having received a record 322,000 public comments on the petition, the SEC last month signaled that it would include a corporate disclosure rule-making on its “regulatory flexibility” agenda for 2013. The SEC will issue a notice of proposed rule-making by April.
“This is an incredibly important development — the fact that the SEC is prepared to focus on this and engage in a serious rule-making,” said Rep. John Sarbanes, D-Md. “It really can’t be overstated what this means for the disclosure movement.”
Sarbanes is a member of a newly formed House task force on election reform, chaired by Rep. John B. Larson, D-Conn., the former chairman of the House Democratic Caucus. The task force will examine legislative fixes ranging from the recently reintroduced DISCLOSE Act to bills that would amend the constitution to reverse the Supreme Court’s 2010 Citizens United ruling, matching public funds for congressional candidates and election reforms to lift obstacles to voting.
But even as Congress considers legislation, said Sarbanes, “there’s a lot that we can do at the regulatory level with the tools that we already have.” He urged incoming SEC chairwoman Elisse Walter to “pick up where the outgoing [chairwoman],” Mary Schapiro, left off.
Spearheaded by Public Citizen, the Corporate Reform Coalition is urging the SEC to require publicly traded corporations to fully disclose to shareholders and the public not only their direct campaign contributions and expenditures, which already must be reported to the Federal Election Commission, but also their indirect payments to politically active trade associations.
Unrestricted outside groups such as super PACs and tax-exempt groups, including trade associations, spent record sums in the 2012 elections but much of it went unreported. Sarbanes said that he refers to such groups as “money drones,” adding, “The people operating those drones are hidden, and they’re hidden because we don’t have proper disclosure.”
Conservatives have fought pro-disclosure legislative and regulatory proposals, arguing that they are an attempt to stifle speech and tamp down political giving. Organizers on the conference call acknowledged those concerns but argued that the Supreme Court has consistently upheld disclosure regulations.
“There’s a lot of very strong institutional support for this rule,” said Adam Kanzer, managing director and general counsel of Domini Social Investments. Shareholders have no means to monitor the activity of CEOs who now “enjoy unchecked authority to use other people’s funds” on political activities, he added, noting that full disclosure is necessary to protect investors from risk.
“Companies repeatedly say that their political spending is in our best interests,” Kanzer said. “We’d like to be able to assess that for ourselves.”