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Public Interest Groups Reignite Campaign to Require Corporations to Disclose Political Spending

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Public Citizen is re-starting a campaign to push the SEC to consider a rule requiring companies to disclose their political spending after the agency dropped the issue from its agenda late last year.

 

Starting on Tuesday, January 14th and  leading up to the fourth anniversary of the Citizens United v. FEC decision on Jan. 21st, Public Citizen will run a social media campaign to urge the Securities and Exchange Commission (SEC) to require public corporations to disclose their political spending.    

 

The SEC, which protects shareholders from corporate abuse, received a petition in 2011 from 10 law professors asking for a rule that would require all publicly traded companies to disclose their political spending.  

 

What prompted their request was Justice Kennedy's suggestion, in the majority opinion of the Supreme Court decision in the 2010 Citizens United case, that prompt disclosure of political spending would enable shareholders to oversee how executives spend company money for political purposes, as well help voters observe how lawmakers respond to corporate campaign contributions.    Since no rule exists requiring disclosure, corporations can spend freely to influence elections without oversight, and the checks that Justice Kennedy wrote about don’t exist.

 

The Corporate Reform Coalition, which consists of about 70 different organizations and is spearheaded by Public Citizen, Demos, PIRG, the Sunlight Foundation, and others, has since mobilized more than 650,000 people to file supportive comments on the petition on the SEC’s website.  The comments in favor of a disclosure rule broke the all-time comment record at the agency by a couple hundred thousand.   Several major newspapers (including the New York Times), members of Congress, state treasurers, investors, academics, and other public figures also endorsed the proposed rule.

 

Objecting to a disclosure rule were the American Petroleum Institute, the largest trade association for the oil and natural gas industry in the United States, as well as a coalition of chambers of commerce, mining associations, builders, retailers, and other business groups.  In a joint letter to the FEC, the groups state that the "real purpose" of the proposed law is "to eliminate, or at least substantially reduce corporate political and lobbying activity by using the one-sided disclosures mandated by the rule to attack corporations that engage in the political arena."

 

The Corporate Reform Coalition in its 2012 comments to the SEC rebuts such claims.    The Coalition suggested that– rather than attack politically engaged corporations– proponents want to build confidence in the corporations in which they invest, citing a 2006 survey that found "87% of shareholders said they would have more confidence in investing in a corporation that had adopted rules providing for transparency and oversight in political spending."    The group also cited a 2010 survey of CEOs where the overwhelming majority agreed that "the lack of transparency and oversight in corporate political activity encourages behavior that puts corporations at legal risk and endangers corporate reputations."    

 

In January 2013 the SEC put the rule on its agenda to consider, but then removed it from the agenda in December without explanation. Harvard Law professor John Coats called the SEC’s action  “a policy and political mistake” that permits large corporations to lobby secretly using other people’s money.  The editorial board of the New York Times said that "the one thing certain" about the SEC's indefinite delay is that it is  "a bad sign and sends a terrible message that the agency is reluctant to stand up for what investors need and want."

 

Public Citizen is using the lead-up to the fourth anniversary of the Citizens United decision to highlight the need for the rule, and ask the agency to make the rule a priority and put it back on the agenda.     

 

What You Can Do

 

 

Check out this PBS Newshour segment about the proposed disclosure rule: