Shareholder efforts to get US firms to disclose their political spending have not been made any easier following a decision by a US judge to dismiss a lawsuit that would had the Securities and Exchange Commission (SEC) require such disclosure.
Since the US Supreme Court, in its landmark Citizen United ruling of 2010, lifted all limits on corporate political spending, some shareholders have sought transparency on the issue from the companies they own.
Boston-based SRI investor NorthStar Asset Management has been particularly vigilant, filing shareholder proposals at Google and Procter & Gamble seeking details of their political spending. Regarding such proposals, the SEC’s policy has been to decide their merit on a case-by-case basis.
But early last year, a lone investor named Stephen Silberstein petitioned the US securities regulator to require disclosure of corporate political spending. Silberstein argued that the SEC’s failure to do so was a violation of a statute known as the Administrative Procedure Act (APA). Though supported by 700,000 signatures, the SEC ignored the petition.
That led Silberstein to take the SEC to court to force the regulator to require the disclosure. His lawsuit was supported by the Campaign for Accountability (CfA), a watchdog NGO based in Washington D.C.“Investors should be fully informed as to where high-level executives are directing corporate funds. While a majority of our citizens want to end the flow of dark money, our government is sitting on its hands. It’s time for a court to force the SEC to act,” said CfA Executive Director Anne Weismann when the suit was filed in May.
Seven months later, the suit has been thrown out by District Court Judge Rosemary Collyer. In her decision, Collyer stated that her court had no jurisdiction over the matter but instead should be referred to an appellate court. Collyer also upheld the SEC’s view that it was not in violation of the APA. She write: “The SEC has been vested by Congress with broad discretionary powers to promulgate (or not to promulgate) rules requiring disclosure of information beyond that specifically required by statute.”
Daniel Stevens, a spokesman for the CfA, said the NGO would now consider filing the lawsuit with the appellate court referred to by the judge. “We are disappointed with the decision, as we believe that the SEC should always require publicly-traded firms to disclose their political spending,” he said.
The CfA estimates that as much as $5bn (€4.6bn) could be spent on candidates in this year’s US presidential campaign, or nearly double the $2.6bn spent in 2012.