By Benjamin Goad - 12/03/13 11:47 AM EST
Watchdog groups and unions are assailing the Securities and Exchange Commission for backing away from regulations that would force companies to disclose their political spending.
More than 50 groups making up the Corporate Reform Coalition issued a scathing statement Tuesday after the SEC chose not to include the contentious measure on its rule-making agenda for 2014.
“The decision to drop this rule and others from the Commission’s agenda is a step back from the SEC’s proactive agenda to protect investors,” wrote the coalition, whose members include Public Citizen, the Center for Political Accountability and the Center for Responsive Politics.
The AFL-CIO, the nation's largest labor federation, also criticized the decision on Tuesday.
"Just as labor unions are legally required to publicly disclose their political spending, public companies should be held to the same standard," AFL-CIO President Richard Trumka said in a statement.
Late last year, the SEC revealed in its 2013 regulatory agenda that it was considering the requirement in response to a petition backed by hundreds of thousands of signatories.
To date, the proposal has attracted almost 700,000 public comments, the overwhelming majority in favor of the disclosure rules.
But business groups objected to the proposal, saying the requirements would have a chilling effect on political speech. Further, they argued the SEC is ill equipped to wade into campaign finance issues traditionally overseen by the Federal Election Commission.
The SEC was largely silent on the issue this year, and made clear last week that it is no longer a priority. The agency’s 38-item rule-making agenda contains no mention of the proposal.
Opponents of the disclosure mandate cheered the SEC's decision.
“It was obvious that the proponents of this proposal were seeking to infringe upon significant First Amendment interests by trying to convince the SEC to pursue the narrow, partisan political goal of singling out for special requirements the entities that they perceive as opponents in political and policy debates,” Chamber of Commerce spokeswoman Blair Latoff Holmes said in a statement to The Hill.
But the coalition of campaign finance reform advocates is demanding that the agency explain why it is choosing to drop “the most widely supported rulemaking in the Securities and Exchange Commission’s history.”
The SEC has said only that the regulatory agenda merely reflects items on the agency’s front burner and has not ruled out future action.
"The list represents our best estimate as to what would be ready for Commission consideration by fall of 2014,” SEC spokesman John Nester said in an email.
The petition in support of disclosure regulations was launched two years ago by a group of law professors who argued that investors have a right to know how their money is being spent on political campaigns.
The effort is rooted in the Supreme Court’s Citizen’s United decision, which allowed corporations to spend freely on politics from their general treasuries.
Companies regulated by the SEC are required to file quarterly reports apprising investors of “material information” related to finances. According to SEC guidance, expenditures are generally not considered material unless they amount to at least 3 percent of a company’s value.
There is no requirement that companies inform shareholders about political activity. The coalition notes that at least 100 companies have begun voluntarily disclosing their political spending.
“Unfortunately, however, other companies keep their shareholders in the dark, unaware if their money is funding political campaigns and even political attack ads,” the coalition wrote. “We look forward to an explanation from SEC Chairman Mary Jo White as to why the investor demand for this updated regulation is being rebuffed.”