The Securities and Exchange Commission should be an advocate for shareholders on the corporate political spending issue sparked by the controversial Citizens United ruling, says SEC Commissioner Luis Aguilar.
“When it is clear that investors are in the dark and not receiving adequate disclosures, the Commission should act, and act swiftly, to ensure that investors have the information they require,” Aguilar said.
Withholding information from shareholders, he went on, “is a fundamental deprivation” which hinders them from making informed decisions about their shareholdings and how to exercise voting rights.
The remarks come as companies’ expenditure on lobbying looks set to become a key focus of the forthcoming proxy voting season in the US. Just last week New York State Comptroller Thomas DiNapoli announced that the $134bn (€104bn) New York State Common Retirement Fund had reached agreements with three California companies, Pacific Gas and Electric (PG&E), Safeway and Sempra Energy, mandating the disclosure of their political spending. DiNapoli hailed the move as a victory for shareholders and “another step forward for transparency and accountability” in the wake of the Citizens United decision.
In January a group of US investment institutions said they had filed shareholder resolutions at 40 companies calling on them to report on their spending on direct lobbying and lobbying via trade associations.Backers of the initiative included the New York fund, Walden Asset Management, the AFSCME Employees Pension Plan, PAX World Fund and the Tides Foundation. There is legislation currently tabled in California under which corporations with shareholders in the state will have to disclose details of their political contributions and expenditure.
Citizens United refers to a 2010 judgement by the US Supreme Court which ruled that political spending is a form of protected speech.
Aguilar, speaking in a personal capacity, made his remarks in a speech entitled Shining A Light On Expenditures Of Shareholder Money.
“Despite the abundance of reasons investors have for requiring this information and the transparency it would provide, the fact remains that no comprehensive disclosure framework exists,” he noted – adding that investors’ voices were often drowned out by the “louder, better-funded, and often better-connected” companies, financial institutions and corporate lawyers.
“The voices of investors are often drowned out”
He said: “Shareholders require uniform disclosures regarding corporate political expenditures for many reasons, including that it is impossible to have any corporate accountability or oversight without it.”