Apart from the hundreds of thousands of comments on the Securities and Exchange Commission’s rule making petition on the subject, pressure is continuing to grow surrounding a potential SEC decision that would require corporations to disclose political spending to shareholders.
Both positions, those favoring and opposing disclosure, are represented on the petition, but 70 legislators added their names to the pro-disclosure position Monday. Tweet it: Tweet
Led by Rep. Chris Van Hollen (D-MD), the coalition sent a letter to Elisse Walter, chair of the SEC, urging the commission to require publicly-traded companies to disclose political spending to shareholders. The letter reads:
[I]n the wake from the Citizens United decision, the demand has grown after the consequences of unregulated political contributions have been fully realized by the public and businesses alike. A corporation’s money belongs to the shareholders. While we believe that shareholders ultimately deserve a voice and say if their money is going to be spent on political activity a positive first step would be to disclose this activity so that shareholders can at least be aware of it. Tweet quote: Tweet
Similar sentiment was echoed by Public Citizen’s (a non-partisan public advocacy group) Lisa Gilbert, Director of Congress Watch, applauded the move in a statement:
“[C]orporations have been able to spend money freely on elections, and often do so by giving funds to “dark money” organizations not required to disclose the identities of their donors. But investors have a right to know how their money – a corporation’s profits –– is being spent.” Tweet quote: Tweet
The SEC has been considering the rule change for over a year and a half, mirrored by a similar provision in Van Hollen’s DISCLOSE Act of 2013, which was submitted earlier this year.
Action on the provision was stalled due to the SEC’s two Republican commissioners, calling disclosure reform ‘not a priority.’ Nevertheless, the looming appointment of Mary Jo White to chair the SEC could dramatically reorient the commission’s priorities.
However, those opposing the rule change point to potentially negative economic ramifications as cause for concern.
Associate Professor of Finance at Georgetown University, James Angel, authored the most recent critique. He argues that the disparity of disclosure requirements between public and privately held companies would disproportionately disincentivize publicly-traded investments.
As a result, public capital markets would continue to erode, while investors move to privately held companies. This, Angel argues, would ultimately undo the initial drive for transparency.
Conversely, a 2010 poll by Zogby International, which is cited in Van Hollen’s letter, found 77 percent of business leaders were in favor of disclosure. Companies like Microsoft and Wells Fargo voiced support back in 2011 when the provision was first considered.
A deadline of April 2013 is set for a final verdict on the petition, which may come in time for Mary Jo White to take over. Pressure over the issue of corporate disclosure of political spending has been mounting for over a year and it seems the SEC is the only agency in a position to act decisively.