Warren shows leadership by asking Obama to remove SEC chair

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In a daring move, Sen. Elizabeth Warren (D-Mass.) recently sent a letter to President Obama calling on him to replace the chair of the U.S. Securities and Exchange Commission (SEC), Mary Jo White.

It’s a bold step by the senator, reflecting the deep frustration of those who have pushed White to move forward with an investor-focused agenda and increase disclosure.

{mosads}The president has the authority to immediately designate another commissioner to replace White at any point. In her letter, Warren cited White’s repeated actions that seem to undermine the agency’s mission of protecting investors.

As I noted in a Public Citizen press release, “In keeping with her overall anti-disclosure posture, Chair White has failed to advance a proposed and desperately needed rule that would require publicly traded corporations to disclose their political spending to shareholders.”

Investors should not be left in the dark as to whether executives are spending funds on political causes that may run counter to shareholder interests.

The proposed rule has record-breaking public and investor support and is backed by leading members of Congress, five state treasurers, numerous public interest groups, former SEC commissioners and chairs from both political parties, major institutional investors, pension funds, and more.

Despite the inclusion of a policy rider in the 2016 omnibus spending package blocking finalization of the proposed rule, legal experts have concluded that there is no language in the rider that would prohibit the agency from working on the rule pre-finalization. That said, the rider must be removed from fiscal 2017 appropriations legislation — to be negotiated after the election ends and Congress returns — to allow the agency to complete the rule this year.

During the last government funding battle, Josh Earnest, White House press secretary, said that the president is “concerned about the fact that the proposal includes a rider that would essentially protect the ability of special interests to funnel money into political campaigns without having to disclose it.”

We hope that the president becomes an active opponent of any bill that includes this rider.

Warren echoed this sentiment in her letter, writing:

Congressional Democrats will fight to remove the recently passed rider from December’s government funding legislation, and I urge you [President Obama] to threaten to veto any effort to extend this corrupt policy.

The political spending regulation is just one of the many environmental, social and governmental arenas in which investors have been asking for more disclosure.

Investors also have been asking the SEC to increase mandatory reporting of environmental, social and governmental (ESG) information including climate change, human rights, tax and workforce matters. Investors and the public are increasingly demanding transparency on a wider range of issues as they seek to understand what underpins corporate decisions.

Despite this demand for more information and the increased capabilities of investors to use it, the SEC has declined to meaningfully update its ESG disclosure requirements for years. Companies and their service providers would appreciate a standardized process with a more level playing field. Stakeholders on all sides have pressed the SEC to step into the void.

Warren’s letter noted that, rather than filling this void, White has instead chosen to focus the agency’s limited resources on pursuing a voluntary “disclosure effectiveness initiative” with the aim of reducing companies’ existing disclosure obligations.

The next battle in the disclosure wars will come to a head on Nov. 14, when Congress will return to Washington for the lame-duck session to negotiate the last budget of Obama’s tenure. The administration has spoken out repeatedly against inserting poison pill riders into the appropriations process and has singled out the SEC’s political disclosure rider.

Stopping this rider should be a bright line.

Beyond the budget, we look forward to the new administration and to new leadership at the SEC. No doubt during the confirmations process, many senators will continue to voice their support for the political spending rule-making and more disclosure writ large. We hope that the newly reconstituted SEC will make disclosure a top priority.

Warren’s bold leadership has been a shot across the bow. We hope that President Obama champions disclosure during the upcoming budget debate, and that the next generation of SEC leaders will lead the way.

Gilbert is the director of Public Citizen’s Congress Watch division.

The views expressed by contributors are their own and not the views of The Hill.

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