The U.S. Chamber of Commerce and almost 30 other business groups contend that the effort is little more than a disingenuous attempt by labor unions and others to stifle the private sector’s voice under the guise of investor protection.
“This rule-making petition is being pushed by groups who do not have the best interests of investors in mind,” Chamber spokeswoman Blair Latoff said. “Instead, they are pushing for a rule because they ultimately want to drive the business community out of the political and public policy arena."
In forcefully worded comments sent Friday to the SEC, the business groups charged that a rule on political contributions would go beyond the commission’s statutory authority. Campaign finance, they said, is the domain of the Federal Election Commission.
The cost of moving forward with a rulemaking process “doomed to failure” would outweigh any benefits, the business groups said, especially at a time when the commission is set to move forward with a series of rules mandated by the Dodd-Frank Act.
They also contend that forcing only publicly traded firms to disclose campaign spending would violate the First Amendment, because it would single them out for free speech-related requirements not imposed on private companies.
The SEC’s action came in response to an August 2011 petition filed by 10 law professors who contended that shareholders have a right to know how corporate money is spent. They cited the U.S. Supreme Court’s landmark 2009 Citizens United ruling, which allowed independent political spending by corporations.
“Absent disclosure, shareholders are unable to hold directors and executives accountable when they spend corporate funds on politics in a way that departs from shareholder interests,” the professors argued.
The petition has received more than 322,000 comments — an SEC record — and support from members of Congress, unions, watchdog groups and investors.
Advocates of the disclosure requirement acknowledged Tuesday that opposition would be fierce, and called upon the SEC to move swiftly to begin the formal rule-making process.
“Time is of the essence,” Sarbanes said. “The closer we get to the next election cycle, the harder it will be to get these things in place.”