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Jan. 21, 2016

Six Years After Citizens United, Senators Call for SEC to Shed Light on Dark Money

U.S. Sens. Menendez, Merkley, Schumer, Warren, Others Demand Agency Require Disclosure of Political Spending

WASHINGTON, D.C. – The U.S. Securities and Exchange Commission (SEC) should work on a rule to shed light on dark money and help address the crisis of out-of-control political spending, four U.S. senators said today during a telephone press conference.

U.S. Sens. Bob Menendez (D-N.J.), Jeff Merkley (D-Ore.), Charles Schumer (D-N.Y.) and Elizabeth Warren (D-Mass.) urged the SEC work on a rule requiring publicly held companies to disclose details of their political spending. Despite a rider tucked into the omnibus spending bill, which said only that the SEC can’t finalize a rule, the agency still can draft a rule and seek comments on it.

The senators’ call for a rule came six years after the Jan. 21, 2010, U.S. Supreme Court Citizens United decision. That ruling gave corporations the green light to spend unlimited sums to influence elections. It also led to unprecedented sums of money being funneled anonymously through trade associations and so-called social welfare groups to be spent on elections.

The SEC has received more than 1.2 million public comments in favor of a rule requiring disclosure of political spending, including from leading academics in securities law, investment managers and advisers, a bipartisan group of former SEC commissioners and chairs, 70 major endowed foundations, Vanguard founder Jack Bogle, a number of state treasurers and many others.

“Corporate insiders should not be able to use company treasuries as piggy banks to advance their personal political views, especially without any oversight from shareholders,” said Menendez, lead sponsor of the Shareholder Protection Act. “The case for disclosure is clear and convincing, and I urge the SEC to, without any further delay, take every allowable action to promote transparency and uphold our democracy.”

“Shareholders have a right to see how the companies they invest in are spending their money, but corporations are keeping their political contributions secret. Six years after Citizens United, the need for a strong corporate political disclosure rule is clearer than ever,” said Warren. “Republicans jammed a one-year rider into the must-pass spending bill to try to tie the SEC’s hands, but there is absolutely nothing preventing the agency from making real progress toward an eventual rule. The SEC should stop delaying and get to work on outlining a meaningful disclosure rule.”

“Six years ago today, the Supreme Court ripped a gigantic hole through the fabric of our campaign finance system, but the SEC has the chance to undo some of that damage,” said Schumer. “We strongly urge the SEC to get moving on the rule, and pledge to fight to remove the language blocking this rule from the next appropriations bill. A flood of dark money has created a rigged system that makes it harder for families to get into, and stay in, the middle class. We need to act immediately to undo the corrosive effects of Citizens United on our politics.”

“Today is an unhappy anniversary – the six year mark of a decision that unleashed a flood of unaccountable, dark money into our elections,” said Merkley. “Unchecked corporate political spending has given millionaires and billionaires a megaphone with which to drown out the voices of working Americans in our democracy. It’s time to restore accountability in our elections. The SEC should do everything in their power over the next nine months to prepare a rule that gives shareholders the right to know how the company they own is spending money to influence an election.”

“So far, more than four times the amount of secret money expenditures have been made this cycle than at this point during the 2012 election, and that number is ever-increasing,” said Lisa Gilbert, director of Public Citizen’s Congress Watch division, who moderated the telephone press conference. “The SEC has a responsibility to provide investors with the ability to trace the massive amount of political spending being done by corporations back to companies they own shares of, so that they can better understand the very real material risks their companies are undertaking when they play in politics.”

“The 2016 spending bill did not bar the SEC from using appropriated funds on the planning and proposal of a rule requiring disclosure of political spending. What Congress did instead was to ban use of funds on finalizing such a rule,” explained John Coates, a Harvard Law School professor and securities legal expert who participated in the telephone press conference. “The lead-up to a rule would require a lengthy investigation and proposal phase, for good reason. The SEC has full authority to – and should – commence that phase immediately.”


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