By Lydia Wheeler - 04/22/15 06:00 AM EDT
A coalition of investors and state officials is launching a new push for regulations requiring publicly traded companies to disclose their campaign spending to shareholders.
It’s the latest effort in a long-running dispute pitting business groups who decry the proposal as an attack on the First Amendment against financial reform advocates who argue the political expenditures should be disclosed.
The group is calling on the Securities and Exchange Commission (SEC) to move forward with a rule that mandates reporting.
Without the political spending information, the group says, shareholders are left in the dark, unable to make informed investment decisions or determine whether their money is going to groups that advocate for issues they oppose.
Wheeler, who also submitted a separate letter to the SEC from state treasurers in Washington, Vermont, North Carolina and Rhode Island, said some companies have voluntarily agreed to disclose their political spending.
“When will the SEC realize the shift and turn the lights on for all companies?” he said.
The agency only requires companies to disclose their unaudited financial statements in quarterly reports and report major company events like bankruptcies or changes in leadership.
The group noted that roughly $7 billion was spent in the last presidential election cycle, including more than $300 million from undisclosed donors.
Financial reformers have sought the regulations since August 2011 and appeared to have made headway in December 2013, when the SEC added consideration of the proposal to its formal rule-making agenda.
The agency received over a million comments on the rule-making petition. But it ultimately decided to drop the idea following pressure from congressional Republicans and business groups, who warned the forced disclosure could have a chilling effect on free speech. They argued the SEC lacked the expertise necessary to make campaign finance reforms.
That type of rule-making, critics said, should be left to the Federal Election Commission.
“The SEC has made it clear that a campaign finance proposal is not on their agenda, and this is a desperate attempt to pressure the Commission to change its mind,” U.S. Chamber of Commerce spokeswoman Blair Latoff Holmes said in a statement to The Hill. “We hope the SEC will continue to see that this issue is not, has never been, and should never be a function of the SEC.”
Corporate shareholder Daniel Simon, however, said it’s the SEC’s job to protect shareholders.
“Without this information, shareholders are at risk, and on that basis alone, the SEC should act,” he said.
Other opponents of the rule have argued the SEC is already too inundated with finalizing rules created by the 2010 Dodd-Frank Wall Street reform law to take on campaign spending.
The debate stems from the Supreme Court’s decision, which allowed corporations to spend freely on politics from their general treasuries. The case spurred the creation of super-PACs and increased the amount of spending flowing through tax-exempt organizations that aren’t required to disclose donors.
“Corporate political spending is a risky business, and the opaqueness of corporate political spending only heightens these risks,” said Cynthia DiBartolo, chairwoman of the Greater New York Chamber of Commerce and founder and CEO of Tigress Financial Partners, who co-signed the letter. “Unfortunately, the American public has an incomplete picture of how these companies impact the government.”
The SEC declined to comment on the letters or answer questions about why it abandoned its plan to consider a corporate-disclosure rule.