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Friday, 05 September 2014 08:17

SEC Inundated by One Million Requests for Corporate Campaign Contribution Transparency

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citizensucorrupts(Photo: Light Brigading)

On September 4, Public Citizen held a news conference to urge the Securities and Exchange Commission (SEC) to consider a rule that would prohibit corporate campaign contributions from being cloaked in secrecy.

The organization announced that one million people in the United States had either sent formal comments to the SEC or signed a petition to bring transparency to corporations contributing shareholder-owned funds to elections without full disclosure. Public Citizen is urging the SEC

to require all publicly traded companies to disclose political spending information to their shareholders.

The rule was placed on the agency’s agenda by departing SEC Chair Mary Shapiro in 2013 but was removed by Chair Mary Jo White earlier this year. The rulemaking petition has garnered historic support from investors and the general public. Its removal sparked outrage among its advocates, who contend that White is not taking into account the changing needs of investors since the U.S. Supreme Court’s decision in Citizens United v. Federal Election Commission. That ruling gave corporations and the wealthy the green light to spend unlimited sums to influence elections and led to a flood of “dark money” groups that don’t disclose their donors. In addition, White is ignoring the material nature of political spending information (with its inherent risks) to shareholders.

In short, SEC Chair Mary Jo White - who many thought would bring sunlight to bear upon corporate involvement in politics - is actually enabling them to keep their contributions in the dark.

This is a technical issue involving how corporations are held accountable to shareholders. Currently, corporate boards or executives can decide to give large sums of money to a shady organization such as Karl Rove's Crossroads, but the higher-ups in the company are not required to disclose the expenditure to shareholders. In short, shareholders are being denied the right to know how their investments in a publicly traded company are politically gambled - and how those expenses might impact the value of their stock.

Furthermore, in an age when television plays an extraordinarily powerful role in deciding national, senatorial, congressional and even many local elections, the covert money businesses give to influence election outcomes has a significant impact on voter perceptions. Political ads on television are extremely costly, and the new shadowy organizations allowed by the Citizens United decision can have a major impact on electoral outcomes via expensive TV ads. Therefore, accountability as to which companies are helping to pay for the ads is extremely important to a democracy that functions openly.

What is ironically fascinating about this glaring loophole in corporate accountability is that it is an issue not of structural change in the economy but rather of capitalist credibility with investors. As Public Citizen explains:

The area of corporate political spending requires particular investor protections because it exposes investors to significant new risks. Certain corporate political spending choices may diverge from a company’s stated values or policies, or may endanger the company’s brand or shareholder value by embroiling it in hot-button issues. Investors have a right to know what candidates or issues their investments are going to support or oppose....

Amanda Ballantyne, national director of the Main Street Alliance, said, “Given the studies showing that political spending by corporate executives does little to benefit the overall company, equity shareholders like small business owners deserve to know how the money they invest is being used. It is the duty of the SEC to protect these consumers and to require the disclosure of political expenditures to stockholders.”

"Investors have filed hundreds of shareholder resolutions urging companies to disclose their political spending and lobbying expenditures, convinced that companies should be transparent about how investor dollars are spent directly or indirectly to impact elections and influence policy. Despite the progress of close to 150 companies choosing to disclose information about their political spending, we desperately need a level playing field where all companies disclose comparable information. The SEC can play an important role for investors by creating a standard regulation providing for such disclosure,” said Tim Smith, director of ESG Share owner Engagement, Walden Asset Management.

This is not a battle over the future economic system of the United States; it is, however, indicative of how even investors in the stock market - shareholders in the capitalist system - are stiff-armed by the top dogs in corporations. White's current refusal to consider corporate disclosure of political spending also hampers voters who want to know how corporations are involved in influencing the electoral process. In essence, White is helping to create a blind pseudo-democracy by allowing unrevealed corporate influence.

That leads - along with recent Supreme Court decisions, the lack of Department of Justice criminal prosecution of Wall Street executives, and pro-corporate congressional and administrative branch policies - to a blending of corporations and government that is known, by definition, as fascism.  

What we end up with is a spectacle of faux-democracy in which voters are marionettes. Their strings are pulled by ads, corporate media and propaganda financed by corporations and 1%-ers.

Meanwhile, voters do not get a crumb of information on which corporations are manipulating them.

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