Today, two former SEC Chairs and one former Commissioner delivered a letter to SEC Chair Mary Jo White politely berating (well, maybe not so politely) her failure to take action on the 2011 rulemaking petition to require disclosure of the use of corporate resources for political activities.
The former Chairs and Commissioner, William Donaldson, Arthur Levitt and Bevis Longstreth, observed that the petition was submitted in August 2011 by a committee of distinguished law professors, and since then has received 1.2 million letters in support. Characterizing the subject matter of the petition as “an issue of paramount public interest and growing concern to investors,” the three signatories argued that the failure to require disclosure of political spending effectively undercuts “one of the essential building blocks” of the 2010 SCOTUS decision in Citizens United. That decision, they argue, “justified permitting corporate political activities in large part on the expectation that shareholders and citizens would be informed of what those activities entailed.” Yet there are still no rules mandating “that shareholders – those who actually own the wealth of corporations – are informed of decisions on spending their money on politics.” In the letter’s strong final passage, the three writers contend:
“To date, the Court’s expectation of disclosure, which can only be assured by SEC rule, has been denied. It is now five years since Citizens United and almost four years since Petition 4-637 was filed. The Commission’s inaction is inexplicable. Its failure to act offends not only us, who are alumni of this agency struggling to retain our deep pride of association, but investors and the professionals who serve them. And it flies in the face of the primary mission of the Commission, which has since 1934 been the protection of investors. To use a metaphor, mandatory disclosure of corporate political activities should be a ‘slam dunk’ for the Commission.”
There has been a sudden renewal of interest in this topic recently. As noted by thecorporatecounsel.net blog, this month the “Campaign for Accountability” filed a lawsuit against the SEC in the DC District Court, challenging the SEC’s refusal to act on another rulemaking petition filed in 2014 to require political spending disclosure. And, as noted in this Bloomberg article, “[l]ast month, some advocates of the regulation funded a series of cartoon-style ads at Washington subway stations that urge White to seize on the issue. Monsters representing big business are depicted pummeling the Capitol and White House with money. White is portrayed in a cape and tights as the lone superhero who can stop unlimited campaign donations.”
Will the renewed focus on political spending disclosure motivate the SEC to act? Bloomberg reports that, in the past, “White has signaled that she is unlikely to pursue the rule. In a speech in October 2013, she lauded the SEC for resisting past calls to mandate reporting of political contributions, emphasizing that the independent agency should stay away from politics. One month later, she pulled consideration of the rule off of the agency’s regulatory agenda.” And when political spending disclosure proposals have been submitted for shareholder votes, Bloomberg reports that ISS counted 20 proposals just this year that were rejected by shareholders. Whether any of this heightened level of activity surrounding political spending disclosure will move the needle at all remains to be seen.