The Wall Street Journal reported last week that the SEC is considering a recommendation that the agency’s commissioners propose a rule mandating disclosure of corporate political spending. Under such a rule, publicly traded companies would need to report all political spending, including any lobbying activity conducted on behalf of the company.
Current rules do not require disclosure and companies do not routinely report donations because they claim it is part of their ordinary business operations.
The potential new rule came about from a rulemaking petition submitted by a number of university professors last year, and in the wake of the Supreme Court’s decision in Citizens United v. Federal Election Commission, which loosened the rules on corporate political spending.
Since the rulemaking petition was lodged, the SEC has received over 300,000 comments, far more than the normal response according to the SEC’s deputy director.
There are a number of reasons argued in favor of a new disclosure rule. They include that a substantial amount of corporate spending on politics occurs without investors’ knowledge and even though investors have a large interest in receiving such disclosure information. Some of the comments to the proposed rulemaking argue that that corporate political spending disclosure is necessary to ensure that it’s used consistent with shareholder interests.
For its part, the SEC is looking into whether or not to recommend the Commission issue a rule, but the SEC has not made a final decision.
The Wall Street Journal articles notes that of the “comment letters received by the SEC, more than 1,000 were individual comments and more than 300,000 were form letters.”
It should also be noted that although the Supreme Court has loosened the grip of corporate political spending rules, it has not done away with disclosure requirements. The Court’s current interpretation of the First Amendment allows federal governments and states to require disclosure of political spending.