The Securities and Exchange Commission is considering a new rule that would require publicly traded businesses to disclose all their political donations, a prospect facing fierce opposition from Republicans and corporations.
A petition to the SEC asking it to issue the rule has gotten a half-million comments, more than any other petition in the agency's history, reports the New York Times
. In addition, Democrats, shareholders, and pension funds have flooded the SEC with calls for more public disclosure of political contributions.
But House Republicans are fighting back. They introduced a bill last Thursday making it illegal for the commission to issue political disclosure regulations.
In addition, the U.S. Chamber of Commerce, the National Association of Merchants, and the Business Roundtable, three of the most powerful trade associations in Washington, issued a letter to the chief executive officers from Fortune 200 companies to encourage them to stand against proposals demanding more disclosure of political spending.
Representative Scott Garrett, a New Jersey Republican who chairs a House subcommittee that oversees the SEC, is co-sponsoring the new legislation.
“The role of the S.E.C. is investor protection, not to engage in a political foray,” he told the Times.
The pressure on the SEC stems from the fact that hundreds of tax-exempt groups and trade associations spent millions in the 2012 elections without having to reveal the names of their corporate and individual donors. Publicly-traded companies are still banned from giving directly to candidates, but not from donating to tax-exempt groups that use the money to purchase campaign advertising. Much of the support the groups received last year came from publicly-traded companies that may not want their shareholders to know what candidates or causes the company is backing.
Advocates for the new SEC rule argue that shareholders have a right to evaluate how companies spend their money.
“Shareholders have been demanding this information for some time” said Robert J. Jackson Jr. a law professor at Columbia University, who helped write the first petition on the rule to the SEC. “It’s a basic precept of American securities law that shareholders should be given the information they need to evaluate their companies.”
But opponents say the SEC does not have the authority to issue regulations on political spending and a disclosure rule infringes on companies freedom of speech rights and would damage shareholder value.
“The Chamber believes that the funds expended by publicly traded companies for political and trade association engagement are immaterial to the company’s bottom line,” Blair Holmes, a spokeswoman for the business group, told the Times. “(The advocates) apparent goal is to silence the business community by creating an atmosphere of intimidation under the cover of investor protection.”
Liberal and conservative groups alike were active during the 2012 election, spending at least $300 million, said the Center for Responsive Politics. But most of the money went to Republican interests.
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