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September 06, 2014
Regulate Corporate Political Spending, One Million Say to SEC
    by Robert Kropp

At a press conference organized by members of the Corporate Reform Coalition, sustainable investors and other corporate governance advocates call on the Securities and Exchange Commission to mandate political spending disclosure by corporations.

The consequences of the US Supreme Court's controversial Citizens United decision were predictable. A series of charts published in the Washington Post early this year details the astronomical increases in spending by corporations and other outside groups in the four years since the decision was announced.

In addition to the regrettable impacts of such spending on the electoral workings of a democracy, many have questioned whether political spending might have a negative influence on corporate governance. Many more have questioned the impact on shareowners of corporate funds being spent on elections at the sole discretion of corporate management. In an effort to improve the governance of the companies they own, investors allied with the Center for Political Accountability (CPA) have introduced increasing numbers of shareowner resolutions requesting disclosure of political spending activities; these resolutions have in turn attracted increasing percentages of shareowner support.

Another indicator of the success of CPA's efforts is the fact that over 100 major corporations have voluntarily agreed to disclose their spending activities. Increasing numbers have chosen to disclose their lobbying expenditures and payments to outside groups as well.

But considering the fact that there are thousands of publicly traded corporations in the US, changes in public policy will be necessary for systemic change to occur at a meaningful level. And since it's a fool's errand to wait for Congress to act effectively—the Senate is scheduled to vote on a constitutional amendment next week, but Republican opposition means that it will never pass into law—corporate governance advocates are left with appealing to the Securities and Exchange Commission (SEC) for regulatory relief.

Vermont Independent Senator Bernard Sanders captured the essence of the importance of the bill that has no chance of passing. “Billionaires buying elections is not what our Constitution stands for,” he said. “The major issue of our time is whether the United States of America retains its democratic foundation or whether we devolve into an oligarchic form of society where a handful of billionaires are able to control our political process by spending hundreds of millions of dollars to elect candidates who represent their interests.”

Unless end stage capitalism as we know it dies on the floor of the Senate on Monday, sustainable investors and other corporate governance advocates are left with petitioning the SEC to issue rules on political spending disclosure. But after Mary Shapiro was followed as Chairperson by Mary Jo White, the Commission announced that adopting political spending disclosure would not be on its agenda this year.

A record-setting one million comments to the SEC are urging it to rethink its priorities. In 2011, a group of academics petitioned the Commission "to develop rules to require public companies to disclose to shareholders the use of corporate resources for political activities." The Committee on Disclosure of Corporate Political Spending consisted of a group of ten corporate and securities law experts, co-chaired by Lucian Bebchuk of Harvard Law School and Robert Jackson of Columbia Law School.

Since then, more then one million people have signed on in support of the petition. And at a press conference on Thursday organized by the Corporate Reform Coalition, sustainable investors and other corporate governance advocates spoke out strongly in favor of an SEC mandate.

“The overwhelming support from public comments the petition has attracted, and the strength of the arguments for transparency put forward in the petition, provide a strong case for SEC initiation of a rulemaking process,” said Bebchuk, the co-chair of the committee that filed the petition. “Furthermore, opponents of the petition have failed in their comments to provide any good basis for avoiding such a process.”

“It is no surprise that over one million comments have been received demanding greater transparency on corporate political spending,” Laura Berry, Executive Director of the Interfaith Center on Corporate Responsibility (ICCR), said. “As investors, this information is crucial to understand corporate strategies that impact the future value of our investments. As citizens, we must fully understand how our government is influenced by corporate interests. Understanding where and how corporate dollars flow is the most straightforward approach.”

And Timothy Smith of Walden Asset Management, whose email first alerted me to the press conference, said, “Investors have filed hundreds of shareholder resolutions urging companies to disclose their political spending and lobbying expenditures, convinced that companies should be transparent about how investor dollars are spent directly or indirectly to impact elections and influence policy. Despite the progress of close to 150 companies choosing to disclose information about their political spending, we desperately need a level playing field where all companies disclose comparable information. The SEC can play an important role for investors by creating a standard regulation providing for such disclosure.”

“Investors want to know how their money is being spent,” he continued.

According to The Nation, 15 Senators and 70 House members are among the more than one million who have submitted comments in favor of greater transparency.


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