Peters Calls For More Transparency in Political Spending by Public Companies
WASHINGTON, DC – U.S. Senator Gary Peters (MI) today announced that he has joined his colleagues in sending a letter to Securities and Exchange Commission (SEC) Chair Mary Jo White urging her to bring more transparency to political campaign spending by requiring public companies to disclose their political expenditures to their stakeholders.
“The Supreme Court’s 2010 decision in Citizens United v. FEC allowed unlimited and unchecked corporate spending on campaign ads and various other political communications. This reversed long-standing precedent and has taken our country in a fundamentally different direction when it comes to corporate influence in politics,” wrote Peters and his colleagues. “Because shareholders are the true owners of a corporation, a public company should be required to disclose to its owners how their money is being spent. When it comes to spending on political activity, only roughly 2.2% of all public companies in the United States make such disclosures, and they do so completely voluntarily.”
In the letter, the Senators urge the SEC to implement Rulemaking petition 4-637, which would improve transparency for corporate political spending by requiring public companies to disclose to their shareholders how they use corporate resources for political activities. The SEC has received more than one million public comments in favor of requiring political spending disclosure by public companies. Additionally, the rule is supported by former SEC Chairman Arthur Levitt, former SEC Chairman William Donaldson and former SEC Commission Bevis Longstreth.
The U.S. Supreme Court’s 2010 decision in Citizens United v. FEC opened the door to unlimited corporate political spending on advertising and other political communications. Contributions by public companies are essentially secret because outside groups like SuperPACs are not required to disclose their donors. Currently, only 2.2 percent of publicly held companies in the United States disclose their political spending to their shareholders.
“When public corporations are allowed contribute to SuperPACs and other outside groups that are not required to disclose their donors, it amounts to secret, unlimited corporate political spending,” said Senator Peters. “Michigan voters and investors in public companies deserve to know who is trying to influence our elections and what their agenda is. Requiring companies to disclose political spending to their shareholders will help bring much needed transparency to our electoral system.”
According to data from Open Secrets, more than $800 million was spent by outside groups in federal races in 2014. Michigan’s recent 2014 Senate race was the most expensive in the state’s history, with more than $29 million spent by outside groups. In the 2014 Michigan Governor’s race, outside groups spent more than $39 million according to the Michigan Campaign Finance Network.
Peters strongly supports efforts to reform the campaign finance system to improve disclosures and transparency. Earlier this year, Peters cosponsored a constitutional amendment to give Congress the authority to set reasonable limits on money raised and spent in federal elections and allow states to regulate campaign spending at the state level. He also cosponsored the Democracy Is Strengthened by Casting Light on Spending in Elections (DISCLOSE) Act to promote increased transparency in government and improve disclosure requirements for money spent on elections.
The full text of the letter is available below, or click here:
The Honorable Mary Jo White, Chair
U.S. Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549
Dear Chair White:
We write to express our support for Rulemaking petition 4-637, which the Securities and Exchange Commission (SEC) is currently considering. If implemented, petition 4-637 would require public companies to disclose to their shareholders how they use corporate resources for political activities, bringing much needed transparency to corporate political spending.
The Supreme Court’s 2010 decision in Citizens United v. FEC allowed unlimited and unchecked corporate spending on campaign ads and various other political communications. This reversed long-standing precedent and has taken our country in a fundamentally different direction when it comes to corporate influence in politics.
Because shareholders are the true owners of a corporation, a public company should be required to disclose to its owners how their money is being spent. When it comes to spending on political activity, only roughly 2.2% of all public companies in the United States make such disclosures, and they do so completely voluntarily. There is nothing constraining these companies from joining the nearly 98% of their brethren who choose to keep their campaign donations a secret, even from their own owners.
The system now in place poses a fundamental threat to “government of the people, by the people, for the people,” that President Lincoln so eloquently described. Our democracy cannot function well when the voices of everyday citizens are drowned out by unaccountable corporations and special interests.
As you know, the SEC has received more than 1 million public comments in favor of political spending disclosure, including from leading academics in the field of corporate governance, investment managers and advisors, and the investing public. A number of State Treasurers have weighed in supporting the petition for rulemaking, as they have “an obligation to make sure public funds are invested responsibly and accountably.” In addition, 70 foundations wrote to the SEC in support of political spending disclosures to “know whether companies in which (they) invest are making questionable or controversial political expenditures.”
Notably, we are also joined in our support for the petition for rulemaking by former SEC Chairman Arthur Levitt, former SEC Chairman William Donaldson, and former Commissioner Bevis Longstreth. In the letter they sent to you at the end of May, they highlight the SEC’s failure to act as “inexplicable” and offends not just them, but “investors and the professionals who serve them.” We add our voices to the many who have expressed frustration and disappointment that the SEC decided to remove this issue from its regulatory agenda entirely.
We appreciate your willingness to strongly consider the importance of this rulemaking and reconsider the decision to remove it from the SEC’s regulatory agenda.
We ask that you to make this a top priority for the SEC in the near term, and inform us of the basis for your decision should you not plan to include it on the Commission’s agenda for the upcoming year.
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