Advocates cheer SEC consideration of corporate disclosure rule
WASHINGTON — A decision by the U.S. Securities and Exchange Commission to consider a new rule this year requiring companies to release information about their political spending has buoyed disclosure advocates, who say such a move could be a game-changer in their quest for more transparency.
If approved by the SEC, the regulation could require all publicly traded corporations to detail how much money they give for political activities, including to tax-exempt advocacy groups and trade associations such as the U.S. Chamber of Commerce. But the move faces stiff opposition from many in the business community, including the Chamber.
The new rule would provide the fullest picture yet of how much corporations have become engaged in campaigns since the 2010 Supreme Court Citizens United ruling made it legal for them to spend unlimited sums on independent political activity.
In the 2012 campaign, federal “super PACs” reported receiving $42.4 million from corporations, most of them privately held, according to a tally by the Sunlight Foundation. But tax-exempt groups, which do not have to report their contributors, spent hundreds of millions of dollars more on election-related activity. It remains a mystery exactly how much money they raised -- and from whom.
The push for more disclosure is being driven not only by liberal campaign finance reform advocates, but by shareholders and institutional investors who argue that good corporate governance requires accountability of how much money is spent on politics and whether it is in the interest of the corporation.
“As an institutional investor, you take a look at the decline in transparency surrounding this, and it gets really hairy for people putting money into publicly traded securities,” Pennsylvania State Treasurer Rob McCord said Tuesday in a conference call with reporters organized by the Corporate Reform Coalition. “You can’t account for how much money is being spent on politics, and why.”
The proposed SEC rule is being pushed by a bipartisan group of law professors who filed a petition in 2011 seeking the regulation. Since then, more than 322,000 comments have been filed in favor of the move – far and away the largest number of comments filed in response to a proposed SEC rule.
In late December, the SEC posted notice that it will consider the rule on its agenda this year, and will issue a public notice about the rule-making process by April.
Robert Jackson, law professor at Columbia University and one of the original petition filers, said the huge response to the proposed regulation reflects the desire by shareholders for the SEC to better protect their interests.
“Investors should be given the information they need to assess whether and how their money is spent on politics,” he said.
But the proposed rule is sharply opposed by the Chamber of Commerce and other business groups, which argue – among other things -- that the SEC does not have the authority to issue such a broad regulation and that information about political spending is not material to a company’s bottom line.
“This rule-making petition is being pushed by groups who do not have the best interests of investors in mind,” said chamber spokeswoman Blair Latoff Holmes. “Instead, they are pushing for a rule because they ultimately want to drive the business community out of the political and public policy arena.”
Even some major corporations that already voluntarily disclose their political spending do not welcome the idea of having to comply with a new regulation and privately warn against a “one-size-fits-all” disclosure rule.
Still, the move by the SEC comes amid what supporters say is building momentum for a “disclosure movement.”
“People are really outraged right now with the dominance, the influence that big money is having on our politics,” said Rep. John Sarbanes (D- Md.). “They are looking to push back in a number of different ways.”
In recent months, officials in states such as California and New York have put new scrutiny on politically active nonprofits.
And last week, New York’s public pension fund filed a suit against the wireless company Qualcomm seeking information about its political spending. The New York public pension fund owns $378 million of Qualcomm stock, making it the company’s biggest public pension investor. The fund has spearheaded an effort to get the companies in which it invests to disclose their political spending, striking deals with 10 corporations so far.
Meanwhile, disclosure advocates on the Hill have renewed their efforts to pass legislation requiring politically active groups disclose their major donors. Rep. Chris Van Hollen (D-Md.), who reintroduced the DISCLOSE Act last week, said he is also exploring ways to limit candidate-specific super PACs that effectively serve as extensions of official campaigns.
“The public is on our side” when it comes to requiring more transparency, Van Hollen said in an interview Monday. “The challenge is elevating this issue to the point where we’re putting political pressure on people to support it.”