WASHINGTON, D.C. – In a record-breaking demonstration of support, more than one million comments have been submitted to the U.S. Securities and Exchange Commission (SEC) calling on the agency to take immediate steps to require publicly traded corporations to disclose their use of corporate resources for political purposes to their shareholders.
In a press conference outside the agency today, members of the Corporate Reform Coalition urged the agency to move swiftly on the rule in response to the overwhelming demand. A petition requesting this rulemaking was filed in 2011 by a bipartisan committee of leading law professors. The rulemaking was placed on the agency’s agenda by former SEC Chair Mary Schapiro in 2013 but was removed by Chair Mary Jo White earlier this year, sparking outrage among investors and the public.
John C. Bogle, founder of Vanguard, said, “It’s high time that the abuse of corporate political spending comes to an end. Disclosure of corporate political contributions to the corporation’s shareholders—its owners—is the first step toward dealing with the potentially corrupt relationship between corporate managers and legislators. Shareholders must not be left in the dark while their money is spent without their knowledge.”
“The overwhelming support from public comments the petition has attracted, and the strength of the arguments for transparency put forward in the petition, provide a strong case for SEC initiation of a rulemaking process,” said Lucian Bebchuk, professor and director of the program on Corporate Governance at Harvard Law School and co-chair of the committee that filed the petition. “Furthermore, opponents of the petition have failed in their comments to provide any good basis for avoiding such a process.”
The one million supportive comments have come from diverse sources such as John C. Bogle, founder and former CEO of Vanguard; U.S. Reps. Chris Van Hollen (D-Md.), Mike Capuano (D-Mass.) and 70 other members of the U.S. House; 15 U.S. senators including Sens. Elizabeth Warren (D-Mass.), Robert Menendez (D-N.J.), and Jeff Merkley (D-Ore.); five state treasurers; the Maryland State Retirement Agency; US SIF: The Forum for Sustainable and Responsible Investment; CREDO Mobile; the Sustainable Investments Institute; and a large group of firms managing more than $690 billion in assets and many more.
“SEC Chair Mary Jo White should seize this moment to safeguard investors by providing them with information necessary to make their investing decisions,” said Lisa Gilbert, director of Public Citizen’s Congress Watch division. “Concerns have been raised that the agency has delayed action on this commonsense rule because of the opposition of powerful business lobbies, themselves beneficiaries of dark corporate money.”
“The SEC has the authority and the responsibility to regulate for the protection of investors and the public interest, and has a duty to respond to the changed circumstances brought by the Citizens United decision,” said Liz Kennedy, counsel at Demos. “Americans are demanding long-overdue action on the corporate political disclosure rule from the SEC.”
The area of corporate political spending requires particular investor protections because it exposes investors to significant new risks. Certain corporate political spending choices may diverge from a company’s stated values or policies, or may endanger the company’s brand or shareholder value by embroiling it in hot-button issues. Investors have a right to know what candidates or issues their investments are going to support or oppose. As evidence of strong investor concern about political spending, in the past five years, there have been 166 votes on shareholder resolutions calling for the disclosure of political contributions, with an average support level of 30 percent. Moreover, 76 additional resolutions were withdrawn after negotiations led to companies expanding their disclosure policies.