Rulemaking Petition on Disclosure of Corporate Political Spending Attracts Massive Support from over 250,000 Comments Filed with the SEC

Posted by Lucian Bebchuk, Harvard Law School, and Robert J. Jackson, Jr., Columbia Law School, on Tuesday May 22, 2012 at 9:30 am
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Editor’s Note: Lucian Bebchuk is Professor of Law, Economics, and Finance at Harvard Law School. Robert J. Jackson, Jr. is Associate Professor of Law at Columbia Law School. This post is related to an SEC rulemaking petition available here and discussed on the Forum here. Bebchuk and Jackson are co-authors of Corporate Political Spending: Who Decides?, discussed on the Forum here and here.

Last July, we co-chaired a committee of ten corporate and securities law experts that submitted a rulemaking petition to the Securities and Exchange Commission urging the Commission to develop rules to require public companies to disclose their political spending. As of today, the petition has attracted massive support from a record number of comments filed with the SEC.

Altogether, as is indicated on the SEC’s webpage for comments filed on the petition, the SEC has received more than a quarter of million comments on the petition. An analysis of the comment file indicates that all except eight were supportive of the petition.

Of the filed comments, 259,801 came from individuals who expressed their views through one of six common types of letters received by the Commission. The submission of comments by such a large number of individuals was partly due to the work of the Corporate Reform Coalition, a group that includes institutional investors and public officials. While the 259,801 comments used standard form letters, each of them was separately submitted by one or more individuals who presumably were interested enough in the subject to file a comment with the SEC.

In addition to the 259,801 comments using form letters, the SEC received 487 “unique” comments on the petition. Of these comments, 5 came from institutional investors; 7 were submitted by government officials; 12 were submitted by researchers and nonprofits; 3 were submitted by other organizations such as religious groups; and 460 comments came from individuals who did not indicate an affiliation. Within this group of 487 unique comments, all but eight comments expressed support for the petition.

Notably, the commentary by institutional investors has been unanimously supportive of the petition, with comments coming from prominent investors responsible for significant amounts of shareholder money. These letters included supportive comments from John Bogle, the former chief executive and senior chairman of The Vanguard Group, as well as a letter from a group of mutual fund and institutional asset managers with more than $690 billion under management.

The commentary from government officials was also unanimously in support of the petition. These supportive comments included one from a group of state government officials including the State Treasurers of North Carolina, Pennsylvania, and California and from a group of 43 members of the U.S. House of Representatives.

To the best of our knowledge, the petition has drawn considerably more commentary than any other rulemaking petition in the SEC’s history. To illustrate, over the last three years, the Commission has received some 35 rulemaking petitions, and these petitions received on average 71 comments.

Indeed, the rulemaking petition on corporate political spending has attracted more commentary than even prominent rulemaking initiatives proposed by the SEC itself. For example, the SEC’s proposed proxy access rule, which was the subject of much attention and public debate, received approximately 600 comments.

The overwhelming support reflected in the comment file is consistent with the support expressed for the petition outside the file. Both Bloomberg News and The New York Times have published editorials in support of the petition. Furthermore, 15 members of the U.S. Senate have called on the SEC to develop disclosure rules of the kind proposed in the petition.

In a speech in February of this year, Commissioner Aguilar expressed support for the petition, indicating that the SEC should act soon to provide for disclosure of corporate spending on politics. At the same conference, Chairman Mary Schapiro told reporters that the Commission will address the petition “at some point.”

We hope that the analysis provided in the petition, coupled with the unprecedented support the petition has received over the last nine months, will lead the SEC to initiate a rulemaking process that would produce rules requiring public companies to disclose to shareholders the use of corporate resources on politics.

  1. Please send e-mails in support of the petition to rule-comments@sec.gov. The public is encouraged to submit comments on proposed rules. Here your options.

    + Use the Commission’s Internet comment form;
    + Send an e-mail to rule-comments@sec.gov. Include File Number 4-637 in the subject line;
    +Use the Federal eRulemaking Portal; or
    +Send paper comments in triplicate to Elizabeth M. Murphy, Secretary, Securities and Exchange Commission, 100 F Street, NE, Washington, DC 20549-1090.

    All submissions should refer to File Number 4-637. This file number should be included on the subject line if e-mail is used and that is the method I recommend. To avoid duplication or work at the SEC, use only one method. The Commission will post all comments on petitions on the Commission’s Internet website. Comments are also available in the Commission’s Public Reference Room, 100 F Street, NE, Washington, DC, 20549, on official business days between the hours of 10:00 am and 3:00 pm.

    Your petition can say something as simple as the following:

    Ms. Elizabeth M. Murphy, Secretary
    Securities and Exchange Commission
    100 F Street, Northeast
    Washington, D.C. 20549
    Re: File Number 4-637.

    Dear Ms. Murphy:

    I am an individual investor concerned with how the corporations I invest in are spending corporate funds on political activities. I write in support of a petition by the Committee on Disclosure of Corporate Political Spending, File Number 4-637. In Citizens United v. FEC the US Supreme Court noted that shareowners could “determine whether their corporation’s political speech advances the corporation’s interest in making profits” and could discipline directors and executives who use corporate resources inconsistently with shareowner interests.

    However, unless shareowners can easily access information about a company’s political speech and expenditures we will be unable to know whether such speech “advances the corporation’s interest in making profits” and will be unable to discipline directors and executives. The rulemaking sought by the petitioners would address that issue by giving shareowners the information we need to hold the managers and directors of our companies accountable.

    Comment by James McRitchie — May 22, 2012 @ 1:20 pm

  2. [...] Big numbers. This entry was posted in campaign finance. Bookmark the permalink. ← Richard Epstein on Citizens United/Toobin [...]

    Pingback by “Rulemaking Petition on Disclosure of Corporate Political Spending Attracts Massive Support from over 250,000 Comments Filed with the SEC” | Election Law Blog — May 22, 2012 @ 8:45 pm

  3. [...] two Ivy League law professors touted the groundswell of support for an SEC petition that would require corporations to disclose otherwise-immaterial political spending – including [...]

    Pingback by SEC Rulemaking Should Not be a Popularity Contest — May 23, 2012 @ 2:43 pm

  4. If only SEC rules were adopted using the same methodology as choosing the winner of “American Idol”…

    Comment by Doug Chia — May 24, 2012 @ 8:55 pm

  5. Why would someone give tens or hundreds of millions of dollar to a campaign and not expect preferential treatment in return?

    Comment by Jared Fiorentine — August 31, 2012 @ 2:17 pm

 

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