Senators to SEC on the Anniversary of Citizens United: Require Companies to Disclose Political Spending

Press Release

On the sixth anniversary of the U.S. Supreme Court's Citizens United decision, U.S. Senators Bob Menendez (D-NJ), Jeff Merkley (D-Ore), Chuck Schumer (D-NY) and Elizabeth Warren (D-Mass) called on the U.S. Securities and Exchange Commission (SEC) to move forward to require publicly held companies to disclose their political spending to shareholders. They were joined by Harvard Law Professor and Securities Legal Expert John Coates and Public Citizen's Congress Watch Division President Lisa Gilbert.

While House Republicans successfully added a non-transparency rider to the omnibus spending bill passed in December, the Senators reiterated that the provision does not bar the SEC from moving forward with preparing for a rulemaking. Led by Menendez, the Senators, along with 92 of their Congressional colleagues, sent a letter to SEC Chair White directly following the December roadblock encouraging more transparency, not less.

"Corporate insiders should not be able to use company treasuries as piggy banks to advance their personal political views, especially without any oversight from shareholders," said Sen. Menendez, lead sponsor of the Shareholder Protection Act. "The case for disclosure is clear and convincing, and I urge the SEC to, without any further delay, take every allowable action to promote transparency and uphold our democracy."

"Today is an unhappy anniversary -- the six year mark of a decision that unleashed a flood of unaccountable, dark money into our elections," said Sen. Merkley. "Unchecked corporate political spending has given millionaires and billionaires a megaphone with which to drown out the voices of working Americans in our democracy. It's time to restore accountability in our elections. The SEC should do everything in their power over the next nine months to prepare a rule that gives shareholders the right to know how the company they own is spending money to influence an election."

"Six years ago today, the Supreme Court ripped a gigantic whole through the fabric of our campaign finance system, but the SEC has the chance to undo some of that damage," said Sen. Schumer. "We strongly urge the SEC to get moving on the rule, and pledge to fight to remove the language blocking this rule from the next appropriations bill. A flood of dark money has created a rigged system that makes it harder for families to get into, and stay in, the middle class. We need to act immediately to undo the corrosive effects of Citizens United on our politics."

"Shareholders have a right to see how the companies they invest in are spending their money, but corporations are keeping their political contributions secret. Six years after Citizens United, the need for a strong corporate political disclosure rule is clearer than ever," said Sen. Warren. "Republicans jammed a one-year rider into the must-pass spending bill to try to tie the SEC's hands, but there is absolutely nothing preventing the agency from making real progress toward an eventual rule. The SEC should stop delaying and get to work on outlining a meaningful disclosure rule."

"So far more than five times the amount of secret money expenditures have been made this cycle than at this point during the 2012 election, and that number is ever-increasing," said Lisa Gilbert, director of Public Citizen's Congress Watch division. "The SEC has a responsibility to provide investors with the ability to trace the massive amount of political spending being done by corporations back to companies they own shares of, so that they can better understand the very real material risks their companies are undertaking when they play in politics."

"The 2016 spending bill did not bar the SEC from using appropriated funds on the planning and proposal of a rule requiring disclosure of political spending. What Congress did instead was to ban use of funds on finalizing such a rule," explained John Coates, a Harvard Law School professor and securities legal expert. "The lead-up to a rule would require a lengthy investigation and proposal phase, for good reason. The SEC has full authority to -- and should -- commence that phase immediately."

The SEC has received more than 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, Vanguard founder Jack Bogle and a number of state treasurers. Additionally, a group of former SEC commissioners, including former SEC Chairs Arthur Levitt (Democrat) and William Donaldson (Republican), and former SEC Commissioner Bevis Longstreth (Democrat) have commented in support.

The four Senators have long-been champions for corporate political spending disclosure. Menendez is the lead sponsor, and Warren and Merkley are co-sponsors, of the Shareholder Protection Act that would require public companies to disclose their political campaign spending to their shareholders and seek approval from a majority of shareholders before spending money from the company's general treasury on political activities. This August, Menendez, Warren, Schumer and Merkley were part of a group of 44 U.S. Senators pressing the SEC to complete their rulemaking and, in October, they urged the newly-named nominees for the SEC to support corporate political spending disclosure.

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