Page 5 - May-June 2012

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May/June 2012
Public Citizen News
SEC Should Require Companies to Disclose Political Spending
Public Citizen Photo/Kelly Ngo
David Arkush, director of Public Citizen’s Congress Watch division (at megaphone) speaks at a March rally held outside the Securities and
Exchange Commission to demand that publicly traded companies disclose their political spending.
By Dorry Samuels
After the maelstrom of nega-
tive publicity aimed at Target
Corp. in the summer of 2010 be-
cause it gave $150,000 to MN
Forward — a political group that
backed an extreme right-wing
Republican candidate in Minne-
sota’s gubernatorial race — many
corporations have opted to keep
their political spending secret.
Corporate executives are keep-
ing this spending hidden from
their shareholders, who actually
are the owners of the companies.
Shareholders include anyone
with a 401(k) invested in stocks
or mutual funds — nearly one of
every two households today.
Corporations have a green light
to spend unlimited amounts
from their treasuries to influence
elections because of the U.S. Su-
preme Court’s 2010 decision in
Citizens United v. Federal Election
. However, in the de-
cision, a majority of the justices
erroneously assumed that share-
holders would be informed of
corporate political spending and
therefore could police it.
The Securities and Exchange
Commission (SEC) should require
publicly traded companies to dis-
close their donors, according to
the Corporate Reform Coalition,
which is led by Public Citizen and
made up of good government
groups, hedge fundmanagers, in-
vestors and academics. In March,
the coalition organized a rally
outside the SEC in Washington,
D.C., to demand that publicly
traded companies disclose their
political spending.
Rally speakers included David
Arkush, director of Public Citi-
zen’s Congress Watch division;
Bill de Blasio, the New York City
public advocate; Bob Edgar, pres-
ident of Common Cause; Gary
Kalman, federal legislative office
director of the U.S. Public Interest
Research Group; and Kate Coyne-
McCoy, executive director of the
Coalition for Accountability in
Political Spending. All are part of
the Corporate Reform Coalition.
Immediately after the rally, the
speakers met with high-level SEC
staff to discuss the need for trans-
parency in corporate spending
and to call on all the commission-
ers to provide a timeline detailing
when they will respond to com-
ments submitted to the agency
regarding disclosure.
Already, one of the five SEC
commissioners, Luis Aguilar, has
voiced his support for the disclo-
sure measure.
also has asked supporters to sub-
mit comments to the SEC. As of
press time, the SEC had received
more than 260,000 comments — a
record number — about the need
for disclosure, almost 44,000 of
which came from Public Citizen
members and supporters.
“The sheer diversity of the
comments that have flooded the
SEC is simply astounding,” said
Lisa Gilbert, deputy director of
Public Citizen’s Congress Watch
division and a leader in the coali-
tion. “A wide array of stakehold-
ers — from former major mutual
fund managers to current inves-
tors to academics to good govern-
ment groups — have all weighed
in supporting this measure. The
SEC should act now and cre-
ate this essential rule to protect
Public Citizen: JOBS Act Opens Door for Fraud Risk
By Dorry Samuels
Public Citizen strongly opposed the Jump-
start Our Business Startups (JOBS) Act,
signed into law in April by President Barack
The legislation opens the door to great
risk of fraud by stripping accountability
and sunshine requirements that make U.S.
markets work better for shareholders and
The law rolls back rules designed to pre-
vent bank analysts from talking up a stock
just to win business, a practice that was per-
vasive in the tech-boom years. Even worse,
the JOBS Act loosens a range of other report-
ing requirements and expands stock invest-
ment beyond “accredited investors,” giving
official sanction to the Internet-based fund-
raising activity known as “crowdfunding,”
which occurs when people pool their money
and other resources together, usually via
the Internet, to support efforts initiated by
other people or organizations, and is seen by
many as an invitation for fraud.
Finally, the bill exempts firms from real
independent tests of internal controls for
five years.
Despite the outpouring of expert, investor
and public concerns about the bill, several
important measures that would have fixed
some of the flaws in the bill and incorporat-
ed changes proposed by Securities and Ex-
change Commission (SEC) Chair Mary Scha-
piro and institutional investors failed.
The measures couldn’t muster enough
support from either party.
“It is a huge and embarrassing failure of
the Congress that a measure such as this
could pass with such ease,” said Lisa Gilbert,
deputy director of Public Citizen’s Congress
Watch division. “Following the 2008 Wall
Street collapse, it should be obvious that we
need stronger protections against fraud and
stronger guarantees of transparency.”
Public Citizen hopes to mitigate the dam-
age by making recommendations to the SEC
as it writes rules to implement the law.