State Treasurers, Investors Petition SEC To Mandate Political Spending Disclosures

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By Yin Wilczek

April 21 — State treasurers and investors holding more than $1 billion in assets April 21 separately petitioned the Securities and Exchange Commission to require public companies to disclose their political spending.

In their petition, the state treasurers told the commission that the current “patchwork” of voluntary disclosures by some companies “leaves shareholders like us with a complex system of partial and disjointed information to consider.”

The signatories were Oregon's Ted Wheeler, North Carolina's Janet Cowell, Rhode Island's Seth Magaziner, Washington's James McIntire and Vermont's Beth Pearce.

The investors' petition—signed by 144 individuals, including former SEC Chairman William Donaldson, Jabe Blumenthal, designer of Microsoft Excel and Ben Cohen, co-founder of Ben and Jerry's—said the lack of sunlight on political expenditures leaves them unable to adequately assess corporate legal, reputational, operational and other risks.

“Disclosure of corporate political spending is necessary so that all shareholders can evaluate whether a corporation's assets are being utilized in the best interests of the corporation,” they said.

An SEC spokesman did not immediately respond to a request for comment.

Landmark Decision

In 2010, in Citizens United v. Federal Elections Commission, 558 U.S. 310, 2010 BL 15350, the U.S. Supreme Court lifted long-standing limits on corporate political expenditures.

In the wake of the ruling, investors have pressed—through shareholder resolutions and other methods—for more transparency in how companies spend their lobbying dollars. Shareholder activists recently announced that they filed more than 100 proposals this proxy season calling on companies to disclose their political expenditures.

In a same-day press conference to announce the rulemaking petitions, Cynthia DiBartolo, founder and chief executive officer of Tigress Financial Partners and chairperson of the Greater New York Chamber of Commerce, argued that mandatory political spending disclosures are simply a “good risk-management tool” that's “critical for investors.”

Oregon Treasurer Wheeler also told reporters that he has informally met and discussed the issue with “managerial-level individuals” at the SEC. So far, their response has been, “We'll think about it and get back to you,” he said.

“That’s why it’s important for those who are institutional investors to make it clear that this is an issue” on which the SEC must act, Wheeler continued. “The pressure is going to continue to build until they do take appropriate action.”

Pending Petitions

There are pending petitions submitted to the SEC that call for similar rulemaking, including one submitted in 2011 by a group of securities and corporate law professors. That petition has garnered more than 1.2 million comments, the overwhelming majority of which support the rulemaking.

In the meantime, many companies—including Intel Corp. and PG&E Corp.—already disclose their political expenditures. According to statistics cited by the state treasurers, 61 percent of the top 300 companies in the S&P 500 disclose their direct political spending and 43 percent disclose the payments they make to trade associations that engage in political spending.

The SEC, burdened by rulemakings mandated under the Dodd-Frank Wall Street Reform and Consumer Protection Act and the Jumpstart Our Business Startups Act, is unlikely to add the item to its agenda anytime soon.

SEC Chairman Mary Jo White came under fire from shareholder advocates and some lawmakers when the commission omitted possible action on the matter from its spring 2013 agenda.

To contact the reporter on this story: Yin Wilczek in Washington at

To contact the editor responsible for this story: Che Odom at

The state treasurers' petition is available at

The investors' petition is available at