Corporate political spending must be disclosed, says securities law expert

Aug 18, 2011

Investors are highly interested in information regarding corporate political spending, says Hillary Sale, JD, securities and corporate governance expert and the Walter D. Coles Professor of Law at Washington University in St. Louis.

“The SEC should address the need for transparency in political spending to better inform shareholders and allow them to protect themselves from hidden political agendas in corporate campaign spending,” she says.

Sale has written extensively on securities and matters, including redesigning the Securities and Exchange Commission (SEC), independent directors as securities monitors, derivative litigation, and corporate law and governance.

She is among 10 academics who are petitioning the SEC to adopt a rule requiring that information on political spending be disclosed to shareholders of public companies.

The group, known as the Committee on Disclosure of Corporate Political Spending, submitted its petition for rulemaking under Section 14 of the Securities Exchange Act of 1934. The 11-page petition argues that:

• the request for the new rule is in line with SEC rules that have evolved over time to address investor interests, changes in disclosure practices and related external events;
• public investors have expressed an interest in information on political spending;
• many public companies are already voluntarily disclosing such information; and
• disclosure is important for accountability mechanisms, including those used by courts considering corporate political speech matters.

The committee is urging the SEC to draw on both the voluntary mechanisms and the SEC’s prior experience in rulemaking to promptly create the new rule.

The committee cites several examples of SEC rules that have been adopted related to investor interest, including those governing disclosure of executive pay and of director oversight of risk-taking.

The committee recommends that in creating the rule, the SEC should:

• allow for a “de minimis exception on corporate spending on political activity,” but set a low threshold;
• use the existing proxy-disclosure regime as the method for how often should be provided with this information; and
• specify the political spending that should fall under the rule.

Explore further: 3 Qs: Economist makes the case for new quasi-experiments as a way of studying environmental issues

More information: To view the petition and a complete list of committee members, who all are experts in corporate governance and securities law, visit law.wustl.edu/news/pages.aspx?id=8916 .

add to favorites email to friend print save as pdf

Related Stories

What could Facebook have to hide?

Jan 14, 2011

In a controversial move deemed either shrewd or unfair -- depending on whom you ask -- investment firm Goldman Sachs recently invested $450 million in the high-profile, world-changer Facebook. The deal provides Facebook with ...

Business 101: Must Apple discuss CEO Jobs' health?

Jun 22, 2009

(AP) -- This week, Apple Inc. wasn't shy about touting the sales of its latest mobile device. But the company didn't say anything confirming reports from over the weekend that co-founder and CEO Steve Jobs had a liver transplant ...

AXA firms to pay $242 mn over program glitch

Feb 03, 2011

The US computer-based investment branch of the French AXA group will pay $242 million in compensation and fines after hiding a program glitch that cost investors millions, the SEC said Thursday.

Recommended for you

Which foods may cost you more due to Calif. drought

Apr 17, 2014

With California experiencing one of its worst droughts on record, grocery shoppers across the country can expect to see a short supply of certain fruits and vegetables in stores, and to pay higher prices ...

Performance measures for CEOs vary greatly, study finds

Apr 16, 2014

As companies file their annual proxy statements with the U.S. Securities and Exchange Commission (SEC) this spring, a new study by Rice University and Cornell University shows just how S&P 500 companies have ...

Investment helps keep transport up to speed

Apr 16, 2014

Greater investment in education and training for employees will be required to meet the future needs of the transport and logistics industry, according to recent reports by Monash University researchers.

User comments : 0

More news stories

Study finds law dramatically curbing need for speed

Almost seven years have passed since Ontario's street-racing legislation hit the books and, according to one Western researcher, it has succeeded in putting the brakes on the number of convictions and, more importantly, injuries ...

Impact glass stores biodata for millions of years

(Phys.org) —Bits of plant life encapsulated in molten glass by asteroid and comet impacts millions of years ago give geologists information about climate and life forms on the ancient Earth. Scientists ...