The New York Times’ lead story today reports on a potentially huge breakthrough in the quest for corporations to be accountable to their own shareholders for their political spending, and for that spending to be made public.
Key excerpts are below.
S.E.C. Gets Plea: Force Companies to Disclose Donations
By NICHOLAS CONFESSORE
Published: April 23, 2013
A loose coalition of Democratic elected officials, shareholder activists and pension funds has flooded the Securities and Exchange Commission with calls to require publicly traded corporations to disclose to shareholders all of their political donations, a move that could transform the growing world of secret campaign spending.
S.E.C. officials have indicated that they could propose a new disclosure rule by the end of April, setting up a major battle with business groups that oppose the proposal and are preparing for a fierce counterattack if the agency’s staff moves ahead…
A petition to the S.E.C. asking it to issue the rule has already garnered close to half a million comments, far more than any petition or rule in the agency’s history, with the vast majority in favor of it. While relatively few petitions result in action by the S.E.C., the commission staff filed a notice late last year indicating that it was considering recommending a rule….
Tax-exempt groups and trade associations spent hundreds of millions of dollars on political advertising during 2012 elections, but they are not required to disclose their donors. Evidence has mounted that a significant portion of the money came from companies seeking to intervene in campaigns without fear of offending their customers, their shareholders — or the lawmakers they target for defeat…
While campaign finance regulations are usually the province of the Federal Election Commission, advocates for the new proposal have pressured the S.E.C. to issue its own disclosure rule. They argue that shareholders should be able to evaluate business executives’ oversight of company resources and that S.E.C. regulations already require disclosure of similar information, like executive compensation.
“Shareholders have been demanding this information for some time” said Robert J. Jackson Jr. a law professor at Columbia University who helped write the original petition to the S.E.C. “It’s a basic precept of American securities law that shareholders should be given the information they need to evaluate their companies.”…
Virtually no public corporations have spent their own money directly in political campaigns, a practice now permitted under the Supreme Court’s Citizens United decision. And corporations remain banned from giving money directly to federal candidates.
Instead, some large companies donate money to trade associations and other tax-exempt groups, like the U.S. Chamber of Commerce or Crossroads Grassroots Policy Strategies, founded by Karl Rove, which in turn mount huge advertising campaigns on businesses’ behalf. Because those groups assert their spending to be educational in nature, they are exempt from most of the donor disclosure requirements that apply to super PACs, political parties and candidates.
The trade associations lining up in opposition to the rule amount to a roll call of the most politically influential — and highly regulated — industries in the country. They include the American Gaming Association, the National Retail Federation and the National Mining Association….
In seeking greater disclosure to shareholders, many of the advocates are citing an unlikely source: the Supreme Court’s decision in Citizens United, written by Justice Anthony M. Kennedy. In clearing the way for unlimited corporate expenditures in campaigns, Justice Kennedy suggested that “shareholder objections raised through the procedures of corporate democracy” could provide accountability for the new political powers.