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Dec. 12, 2012

New York State Leads Way in Ensuring Secretive Political Groups Disclose Sources of Campaign Funds

Move Sets Example for Similar Transparency Regulations by the SEC in Federal Elections

 WASHINGTON, D.C. – A proposed New York rule that would ensure that independent political organizations disclose where their money comes from is a bold move that should be followed by the federal government, Public Citizen said today.

New York Attorney General Eric Schneiderman has announced a new draft state regulation requiring that nonprofit organizations that serve largely as electioneering front groups disclose the sources of the funds spent in New York state and local elections.

 “Since the U.S. Supreme Court’s Citizens United decision, federal, state and local elections have been awash with secret money from corporations attempting to buy influence with lawmakers and sway elections with deceptive advertising,” said Lisa Gilbert, director of Public Citizen’s Congress Watch division. “Despite clear demands from citizens to shed light on the recent tidal wave of dark money, no federal player – not Congress, not the Federal Election Commission, not the IRS – has stepped forward to shed light on all this dark money. Now, New York has set the standard.”

 The activities of nonprofit organizations registered in New York, including 501(c)(4) organizations, are subject to regulation by the New York attorney general’s office. Schneiderman proposed a regulation that would, among other things, require disclosure of contributor and expenditure data by politically active nonprofit groups.

The proposed regulation would make some limited exceptions to protect donor privacy where there is a risk of harm from disclosure. Following hearings and public comment, the regulation is set to take effect in 2013 and apply to any nonprofit that raises and spends substantial funds in New York state and local elections.

 “While the New York attorney general’s proposed transparency regulation is limited to electioneering activity in that state, New York is showing a clear path forward for other jurisdictions,” said Craig Holman, government affairs lobbyist for Public Citizen. “Most importantly, New York is showing the Securities and Exchange Commission (SEC), which has been considering a similar regulation for publicly traded companies, that it can and should be done.” 

 A petition to the SEC for transparency regulation has been pending for more than a year. The petition has received a record-breaking 302,000 public comments urging the SEC to move ahead. To read the SEC petition and the public comments, go to Petition 4-637 here.

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