Despite Popular Demand, SEC Will Not Make Corporate Transparency A Priority For 2014


Unlike last year’s, the Securities and Exchange Commission’s list of regulatory priorities for 2014 does not include consideration of how to ensure public companies provide investors with transparency about their corporate political spending. This comes despite hundreds of thousands of Americans encouraging the agency to do so.

A petition to the Securities and Exchange Commission to require more sunlight around corporate political spending garnered 643,599 public comments on the proposal to require that public companies disclose use of corporate resources for political activities to shareholders, more than 99.7 percent of which were in support of such a rule.

Since the Supreme Court’s 5 to 4 Citizens United ruling in 2010, corporations have been free to spend as much money as they want on independent expenditures in support of or opposition to political candidates. While some of these expenditures are subject to existing disclosure rules, many keep their spending hidden by funneling the money through tax-exempt groups like the U.S. Chamber of Commerce, Karl Rove’s Crossroads GPS, the Koch Brothers’ Americans for Prosperity, and Pat Boone’s 60 Plus Association. Legislation to require meaningful disclosure of who is really behind these ads has been blocked by Congressional Republicans since 2010.

Supporters of transparency have urged the SEC to use its rule-making authority to solve part of the problem. In 2011, ten professors of law petitioned the Commission, urging it to require public companies to disclose all significant political spending so shareholders can hold their companies accountable.

But, according to the Washington Post, while the SEC’s 2013 to-do list “signaled that it might consider formally proposing a rule to require the spending disclosures,” the item did not appear on the 2014 agenda released last week. According to the report, the SEC did not offer any explanation for the omission. The omission of this priority from its agenda does not preclude the SEC from proposing a rule in 2014.

While more than 641,800 of the comments were in support of the rule, several tax-exempt political groups that do not disclose their contributors wrote in opposition, calling the proposed rule “wholly unsupportable as a matter of policy,” “far outside the Commission’s legal authority,” and “plainly” in violation the First Amendment. These opponents included the U.S. Chamber of Commerce, the 60 Plus Association, the National Association of Manufacturers.