Chris MacKenzie, U.S. Public Interest Research Group
202-309-7010, [email protected]
Rachel Curley, Public Citizen
202-454-5195, [email protected]
WASHINGTON, DC – On Monday, 37 organizations signed an open letter to Senate Majority Leader Mitch McConnell, urging McConnell to reject any poison pill language in budget legislation that would prohibit the Securities and Exchange Commission from strengthening corporate disclosure laws by requiring transparency of secret political spending. A proposed secret-money rider is a sticking point in Senate budget negotiations, as lawmakers debate a continuing resolution which must pass by the end of September to keep the government open.
Currently, corporations may make unlimited contributions to groups like the Chamber of Commerce that spend on elections without disclosing their donors. The SEC has received enormous pressure from lawmakers, investors, and the public to move the rulemaking that would require publicly traded companies to disclose their political spending.
“Voters are tired of secret money and they’re tired of backroom deals that favor special interests.” said Dan Smith, Democracy Campaign Director for the U.S. Public Interest Research Group. “That’s why the proposed deal in the Senate is facing a roadblock. When constituents call for a clean budget and transparent elections, our senate leadership should listen.”
“Leader McConnell should demonstrate a commitment to investors and transparency by removing the disclosure rider,” said Lisa Gilbert, Director of Public Citizen’s Congress Watch division. “This policy rider was inappropriately attached to the appropriations process as an attempt to keep the SEC from finalizing a requirement for public companies to disclose how they spend money in politics, and Leader McConnell should remove it and allow the SEC to do its job of looking out for investor interests.
“Forcing in a budget rider that would block increased disclosure of political spending is the last thing our senators should be doing,” said Marge Baker, Executive Vice President of People For the American Way. “Americans know that secret money distorts our politics. We need a clean budget without riders—especially one that would be a step backwards for transparency in our democracy.”
“Senate Majority Leader McConnell’s threat to shut down the government to keep big political donors secret is the exact type of political games that voters are sick of, said Karen Hobert Flynn, President of Common Cause. “Americans deserve a clean spending bill and a functioning government that puts the interests of everyday voters ahead of secretive corporate donors.”
“Corporations and their trade groups have a disproportionate influence on the political process, and policies that should be based on science and the public interest are too often derailed in favor of narrow corporate interests,” said Dr. Andrew A. Rosenberg, Director of the Center for Science and Democracy at the Union of Concerned Scientists. “This influence distorts our democracy. An SEC rule requiring companies to disclose how they’re spending their money in elections—and derailing the possibility of such rule as the cost of keeping the government funded is unacceptable.”
“Investors need to know the risks they face if they are to put their own money or that of their clients on the line,” said Morris Pearl, former Managing Director at BlackRock and Patriotic Millionaires Chair. “The S.E.C.’s mandate is to require companies to provide full disclosure to a ‘reasonable investor,’ and if we are going to protect the integrity of the market, we should start by requiring companies to disclose their political spending. The world has changed and our rules must change with it.”
“It’s hard to believe that Senate Majority Leader Mitch McConnell would be willing to shut down the government to prevent shareholders from seeing how their money is spent politically,” said Vin Ryan, Chairman of Schooner Capital Corporation. “What is wrong with full disclosure? How else can you educate shareholders to make any kind of a decent investment judgment if you are withholding information?”
Anne Weismann, Executive Director of Campaign for Accountability, said, “Investors should be fully informed as to where high-level executives are directing corporate funds. The vast majority of Americans want to rein in corporate political spending, but the government is sitting on its hands. It’s time for Congress to get out of the way and let the SEC do its job: keep corporations accountable to their shareholders.”
“This is no way to run the country,” said Timothy Smith, Director of Environmental Social and Governance Shareowner Engagement at Walden Asset Management. “Having a continuing resolution to keep the government running and basic services provided shouldn’t be held hostage by a rider to stop the SEC from even investigating whether companies should disclose their political spending. The SEC has not decided how or if it will proceed with political spending disclosure. But this rider is an attempt to banish any study or thought of requiring such transparency by companies. It is a terrible case of overkill.”
An ideological rider is a policy measure, often attached to budget legislation, with little or no relation to the underlying bill. In December of 2015, Congress attached a rider to its end-of-year budget bill prohibiting the SEC from finalizing this particular disclosure requirement in FY16 (though they could still do work on it in the interim.)
The SEC has received 1.2 million public comments in favor of political spending disclosure, including from leading academics in securities law, investment managers and advisers, 70 major endowed foundations, and a number of state treasurers.
The Corporate Reform Coalition advocates alternative responses to the growing problem of corporate influence in our elections.