Page 4 - Public Citizen News November-December 2013

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4
November/December 2013
Public Citizen News
Briefing
, from page 1
Public Citizen repeatedly has
made before the SEC, Menendez
said, “It’s simple. It’s sharehold-
ers’ money, and they should
know whether the corporate
managers who work for them are
spending for political purposes.
And if so, what are those political
purposes.”
Menendez’s efforts to achieve
disclosure for shareholders ex-
tend beyond calling for the SEC
rule. He also is the lead sponsor
of the Shareholder Protection Act
(S. 824), which would mandate
the same disclosure through leg-
islation as well as require share-
holder approval of a company’s
overall political budget. Public
Citizen supports both the SEC
disclosure rulemaking and the
Shareholder Protection Act.
Menendez and Sen. Elizabeth
Warren (D-Mass.) were the key-
note speakers at the briefing.
They were joined by profes-
sors Robert Jackson and John
Coates of Columbia and Har-
vard Law Schools, respectively;
Pat Doherty of the New York
State Comptroller’s Office; Heidi
Welsh, executive director of the
Sustainable Investments Insti-
tute; and Laura Berry, executive
director of the Interfaith Center
on Corporate Responsibility.
The panel pressed the SEC to
respond to the overwhelming
support for the rulemaking by
shareholders and not to give cre-
dence to arguments that the rule
would constitute an unwarranted
political move by the agency.
Warren urged everyone in the
audience to do what they could
to push the agency to issue a rule
mandating transparency of cor-
porate political spending.
“The idea that a company can
say, ‘I’m going to take your mon-
ey, but then I’m going to spend
big parts of it in ways that you
don’t understand, in ways that
I’m not going to disclose,’ I think
is fundamentally wrong,” War-
ren said. “It undercuts the basic
notions of corporate democracy
and ultimately all of democracy.”
Warren’s arguments about dis-
closure are supported by U.S.
Supreme Court Justice Anthony
Kennedy’s majority opinion in
the
Citizens United v. Federal
Election Commission
case. In it,
he specifically justified unleash-
ing the flood of corporate money
in elections in part because of
shareholders’ ability to hold cor-
porate executives accountable;
however, shareholders currently
have no way of knowing how
much their company is spending
on politics.
“Without transparency, share-
holders can’t possibly hold di-
rectors and executives account-
able when they spend corporate
money — shareholder money — in
politics,” said professor Robert
Jackson, one of the original filers
of the SEC petition.
Jackson also noted that re-
gardless of an individual’s opin-
ion on the benefits or costs of
corporate political spending,
disclosure would put a stop to
spending intended to benefit ex-
ecutives personally, rather than
the company as a whole.
Professor Coates, whose re-
search has shown that political
spending by firms may actually
harm shareholder value, said,
“All you need to know for this
rule to make sense as a policy
matter is that politics is risky. It
creates risks for investors, and in-
vestors need to know what those
risks are in order to make reason-
able investment decisions.”
Lisa Gilbert, director of Public
Citizen’s Congress Watch divi-
sion, concluded the briefing by
addressing some of SEC Chair
Mary Jo White’s concerns about
the agency’s independence from
Congress due to a slew of recent
mandates handed down by law-
makers.
“SEC Chair Mary Jo White late-
ly has spoken about the need
for the SEC to be independent,
stressing that they are the ones
who should use their expertise to
mandate transparency require-
ments when information about
companies is needed by inves-
tors. We believe this rule fits that
rubric perfectly.”
The SEC has placed the rule on
its agenda for consideration but
has yet to announce whether it
will move forward with the rule-
making process.
Photos Courtesy of Columbia Law School. Photographer: Jay Mallin
(Above) At the congressional briefing held Oct. 30 on
Capitol Hill in Washington, D.C., Sen. Elizabeth Warren
(D-Mass.) applauds the Shareholder Protection Act, which
would require companies to disclose political spending to
shareholders.
(Left) Lisa Gilbert, director of Public Citizen’s Congress
Watch division, speaks at the briefing, emphasizing the
record 640,000-plus comments that the Securities and
Exchange Commission has received in support of a rule that
would require publicly traded companies to disclose their
political spending.
Briefing Emphasizes Need to Inform About Corporate Political Spending