“The commission appears to have been influenced by inquiries from senior Democratic politicians, including former Rep. Barney Frank [D-Mass.] and the House Democratic Leadership, as well as pressure from left-wing special interest groups,” the memo stated.
The memo found that SEC professional staff aired concerns about embarking on a political disclosure rule when it was first discussed. Among reasons cited were that the issue fell under the jurisdiction of Congress and the Federal Election Commission, that the SEC already had plenty on its plate implementing the Dodd-Frank and JOBS Acts, and that existing laws and rules already protect shareholders.
But Democratic SEC Commissioners pushed for a look into the rulewriting project, and it ultimately was included on the official SEC agenda in the fall of 2012, after Schapiro provided the swing vote to approve it after previously opposing the idea in the spring.
Schapiro left the SEC at the beginning of 2013. Mary Jo White, the new head of the regulator, has said she cannot “prejudge” the issue and the pros and cons of the argument are being studied.
Ever since the Supreme Court’s Citizen’s United decision allowing corporations to spend without limit on politics, the SEC had been swarmed with public comments calling for rules requiring companies to disclose their political spending. Meanwhile business groups like the U.S. Chamber of Commerce have combated the idea as unnecessary to shareholders.
The findings also try to tie the SEC’s work to the recent scandal swirling around the IRS. Issa notes that before Schapiro took over the SEC, she headed the Financial Industry Regulatory Authority. At the same time, Douglas Shulman, the former head of the Internal Revenue Service who led the agency when the improper targeting of conservative groups took place, was a vice president at FINRA. However, the memo noted that it was “unclear” whether SEC officials had any consultations with the IRS in mulling the political disclosure rule.
The memo also claims that Democrats and left-leaning groups’ influence was evident in the “compulsive obsession” with groups organized under Sections 501 and 527 of the tax code in the SEC’s work on the matter — many of the groups, including Tea Party groups that faced improper IRS targeting, were applying for tax-exempt status as 501(c)3 and 501(c )4 groups.
Alongside the memo, top Oversight Republicans are requesting White provided all communications between SEC Commissioners on the matter, as well as any discussion of the Tea Party.
An SEC spokesman declined to comment.