Tags: corporation | political | contribution | SEC

NYT: SEC Failing to Protect Investors

By    |   Thursday, 05 December 2013 07:47 AM

The Securities and Exchange Commission (SEC) is failing to protect investors by dropping a proposal to require companies to disclose political spending, The New York Times editorial board.

"Basic investor protection requires that shareholders know how corporate executives are spending shareholder money," the board charges. "Good corporate governance requires that companies are transparent about their use of corporate resources. Shareholders know this and have demanded disclosure."

Corporate political spending has mushroomed since the Supreme Court's Citizens United ruling in 2010. And more and more evidence, the Times says, is indicating that much of the money flooding into trade groups and tax-exempt political groups is coming from companies that want to keep donations secret to avoid upsetting their shareholders or customers.

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The petition urging the SEC to require corporations to disclose political donations has garnered more than 600,000 comments, more than any in the SEC's history. Most commenters, including institutional investors managing almost $700 billion, support the proposal.

The Supreme Court ruling supports shareholders, the Times argues, saying the court stated that disclosures would help shareholders keep corporations accountable and make sure they're focusing on making profits.

Opponents of the proposal say the SEC should not get involved in campaign finance or free speech.

"But that is not the point," the Times counters. "Without disclosure, shareholders have no way to assess whether corporate political spending benefits them, and every reason to believe it is fraught with risks to the corporate brand, business reputation, the bottom line and, by extension, shareholder returns."

Saying the proposal is not a priority, SEC Chairman Mary Jo White said her agency put it on the back burner to focus on completing rules needed for the Dodd-Frank Act.

"Indefinite delay is a bad sign and sends a terrible message that the agency is reluctant to stand up for what investors need and want," the board says.

The SEC seemed ready to implement the rule that enjoyed large and growing support, says the Center for Responsive Politics, nonpartisan nonprofit tracking money in politics.

Yet it reversed course when White came under pressure while before the House Financial Services Committee, the group states. "The SEC is supposed to be insulated from politics, but it now appears that the commission has succumbed to political gamesmanship by not moving forward with this popular, common sense ruling."

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The Securities and Exchange Commission (SEC) is failing to protect investors by dropping a proposal to require companies to disclose political spending, The New York Times editorial board.
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2013-47-05
Thursday, 05 December 2013 07:47 AM
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