November 30, 2012
Growing Pressure on SEC to Regulate Corporate Political Spending
by Robert Kropp
After a petition calling for rules mandating disclosure attracts unprecedented support, officials
at the Securities and Exchange Commission acknowledge they are considering the issue.
After the most expensive election cycle in American history finally ended, Bruce Freed of the Center for Political Accountability
(CPA) wrote, "The new campaign finance paradigm has claimed accountability as a casualty.
Corporate donors to third-party groups often don't know where their political dollars will end up,
what elected official they may end up alienating, or how a political donation might backfire and
mar a corporate reputation."
For the past decade, CPA has led an
investor initiative to improve corporate disclosure of political expenditures and increase board
oversight of such activities. More shareowner resolutions addressing corporate political spending
were filed in 2012 than ever before.
In 2011, a group of academics calling itself the
Committee on Disclosure of Political Spending filed a petition with the Securities and
Exchange Commission (SEC), calling for the establishment of regulations mandating that public
corporations disclose their political spending activities. The Commission has received an
unprecedented 300,000 comment letters on the issue, most of them in support of disclosure.
Support for disclosure "was further evidence that shareholders' demands for corporate political
disclosure were beginning to resonate at the SEC," CPA stated.
It now appears that the
SEC may be ready to take action. At a recent conference hosted by the Practising Law Institute,
Paula Dubberly, a Deputy Director of the Division of Corporation Finance at the SEC, noted the
volume of comment letters and said the Commission is considering a rule requiring that "public
companies provide disclosure to shareholders regarding the uses of corporate resources for
At the same conference, Meredith Cross, the Director of
Corporation Finance, said, "It's obviously an issue that's extremely important to many. In light of
the large number of comments and strong interest, we thought we should at least note this is
something we are thinking about."
Harvard law professor Lucien Bebchuck, who is co-chair
of the Committee on Disclosure of Political Spending, recently w
rote in The New York Times, "For the procedures of corporate democracy to work, investors must
have information about a company's political spending. Without transparency, shareholders cannot
hold directors and executives accountable when they make political expenditures that depart from
"In future elections, individuals holding shares in public
companies should not be left in the dark about whether and how their money is spent on politics,"
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