Jan. 19, 2012
On the Anniversary of the Citizens United Decision, Investors, Lawmakers Press SEC to Mandate Disclosure of Corporate Political Spending
Investors Managing $800 Billion in Assets Want Transparency in Corporate Political Spending; Academics, Good Government Groups, Others Agree
WASHINGTON, D.C. – After the 2010 election cycle brought an onslaught of corporate campaign contributions, the Corporate Reform Coalition – made up of institutional investors managing a combined total of $800 billion in assets, as well as public officials, legal scholars, good government groups and CEOs – is calling on the Securities and Exchange Commission (SEC) to issue rules on corporate political spending.
Ten prominent corporate and securities law professors filed a petition with the SEC in August, urging it to require publicly traded companies to disclose their political spending. The petition has since garnered supportive comments filed with the SEC from investors, including mutual fund managers, good corporate actors, good government groups and other stakeholders.
The importance of the issue of corporate political spending has increased in the wake of the U.S. Supreme Court’s January 2010 decision in Citizens United v. Federal Election Commission, which expanded the scope of political spending permissible to companies. The decision allowed corporations to spend unlimited amounts from their treasuries to influence elections. Thepetition calls on the SEC to ensure that shareholders know how corporations are spending their money.
“Undisclosed corporate political activity poses significant risks to our investments and to our democracy,” said Adam Kanzer, managing director and general counsel of Domini Social Investments LLC. “Every year, corporate executives use millions of dollars of other people’s money to influence the outcome of elections and the development of a wide range of public policy issues, including environmental protection, public health and safety and financial regulatory reform, just to name a few. We are making a very simple request to the SEC: Require companies to disclose these political payments so that investors can evaluate and mitigate the risks. We are asking the SEC to reaffirm that sunlight is indeed the best disinfectant.”
The Supreme Court endorsed full disclosure by 8-1 in the Citizens United ruling. The SEC could and should close the disclosure gap for the publicly traded companies they oversee, the groups said.
U.S. Senator Robert Menendez (D-N.J.) has been a leader in the effort to curb corporate influence on our elections, today calling on the SEC to use its existing authority to mandate disclosure of corporate political spending. Menendez also authored the Shareholder Protection Act, which would bring about disclosure to shareholders and lead to real accountability for companies around political spending.
“I wholeheartedly disagree with the Supreme Court’s Citizens United decision that essentially gives corporations the power to influence elections without the consent or knowledge of their shareholders – and I have been fighting to right this wrong,” Menendez said. “We may not be able to overturn this decision, but the SEC can take swift action and require the public disclosure of political spending by corporations. I urge them to do so as soon as possible because it’s not just shareholders who have the right to know who’s behind these Super PACs and which campaigns corporations are influencing. All Americans have the right to know.”
“Our petition presents data indicating that public investors have become increasingly interested in receiving information about corporate political spending,” said Lucian Bebchuk, director of Harvard Law School’s Program on Corporate Governance and co-chair of the professors’ group submitting the petition. “The professors who jointly filed the August petition differ in their views on the extent to which corporate political spending is beneficial for, or detrimental to, shareholder interests. However, we all share the view that information about corporate political spending is important to shareholders – and that the case for requiring disclosure of such information is strong.”
Added Robert Jackson, a professor at Columbia Law School and the professors’ group second co-chair, “Investors have made clear that they want more information on how public companies spend shareholder money on politics. As it has in the past, the [SEC] should respond by developing rules that give shareholders the information they need to evaluate how their money is being spent. That is why a broad group of top corporate and securities-law experts unanimously agreed last summer to petition the SEC to develop this rule. And that is why the SEC should move to develop those rules as soon as possible.”
In a release issued by his office, Oregon State Treasurer Ted Wheeler said, “Shareholders have a right to know about the activities of the companies they own, particularly when those actions – or even inaction – can impact the bottom line.”
Added North Carolina Treasurer Janet Cowell, “Corporations should disclose to shareholders and the public every dime expended from treasury resources for campaign purposes. There should be no anonymous donations through third parties.”