In a letter to the SEC, Rep. Michael Capuano
(D-MA) asked the Commission to adopt regulations requiring disclosure of
corporate spending in elections. Similarly, he urged the SEC to require a vote
from company shareholders before that corporation may use its general treasury
funds for political spending. The House Member noted that the Supreme Court’s
2010 decision in Citizens United v. Federal Election Commission changed the
face of campaign finance for elections by authorizing, for the first time,
unlimited political spending by
corporations, which the Supreme Court understands to fall under the definition
of person. Rep. Capuano is the Ranking Member on the House Oversight and
Investigations Subcommittee.
While the FEC undoubtedly has jurisdiction over
election matters, he noted, the SEC has the authority to promulgate rules regarding the procedures through which companies spend their treasury funds, which, after all, is
shareholders' money, for political purposes,
as well as disclosure of that spending as material information to shareholders. Since the Citizens United decision, said Rep.
Capuano, shareholders have shown a marked interest in participating in political spending decisions and have submitted
numerous proposals to include robust political spending disclosures in proxy
statements.
Rep. Capuano has introduced legislation requiring
the SEC to implement through regulation a shareholder vote authorizing
corporate political spending. Under the process set up in H.R. 2517, the
Shareholder Protection Act, shareholders would vote annually to authorize a political spending budget,
at an amount set by the corporation, by majority vote.
The corporation would then disclose to shareholders and the SEC, via
existing reports and on the Internet, the amounts spent and for what
purposes. While the Shareholder Protection
Act could serve as a model for the SEC, Representative Capuano is open to other
approaches that would accomplish the same goals.
He emphasized that shareholders have the right to
decide if their money is spent for political purposes and to be notified of its
specific use. Since the SEC clearly has the authority to enforce such accountability
and disclosure, he urged the Commission to act to protect shareholders by
requiring a shareholder "say" on political spending and ensuring
proper disclosure.
In a letter to the Commission last October, a
consortium of over 40 House Members, including Rep. Carolyn Maloney (D-NY),
urged the SEC to use its authority to issue rules requiring full public release
of corporate political spending. Describing the present system as undemocratic
and untenable, the Members said that the Citizens United ruling has left shareholders
completely in the dark, unaware that their money could be funding political
attack ads. In order to protect the rights of shareholders, said the Members, the
SEC should adopt regulations requiring corporations to disclose their political
spending to shareholders. Shareholders cannot hold corporate management
accountable for decisions the shareholders never knew were made, reasoned the
Members. Rep. Maloney is the Ranking Member on the House Financial Institutions
Subcommittee.
Requiring disclosures of corporate political
spending does not have to be overly burdensome on business, explained the Members,
since the SEC can use existing mediums of shareholder communication to
facilitate disclosure, including proxy statements, quarterly and annual
reports, and registration statements.
Further, in order to ensure that shareholders are informed of all
political spending, the disclosures should include spending on independent expenditures,
electioneering communications, and donations to outside groups for political purposes,
such as super-PACs.