Van Hollen, Menendez, Merkley Lead Senators in Call to Reject Efforts to Block Corporate Political Spending Disclosure

U.S. Senators Chris Van Hollen, Bob Menendez, and Jeff Merkley, along with 33 Democratic and Independent Senators, called on the Chair and Ranking Member of the Senate Financial Services Appropriations Subcommittee to reject any effort to prevent the Security and Exchange Commission (SEC) from requiring public companies to disclose political spending to their shareholders as part of the fiscal year 2018 funding bill.

"For seven long years, companies have had free rein to solidify their influence in politics and maximize their impact on elections," the Senators wrote in a letter to Chair Capito and Ranking Member Coons. "As the magnitude of the problem and the potential for abuse has skyrocketed, investor demand for this information has greatly intensified."

The Senators added: "We believe any appropriations language intended to block this critical disclosure will serve only to impede the SEC's ability to perform its primary mission of investor protection. As such, we urge you to reject any language that would prohibit the SEC from taking any action to require public companies to disclose their political spending to shareholders."

In addition to Senators Van Hollen, Menendez, and Merkley, the letter was signed by Senators Elizabeth Warren (D-Mass.), Sherrod Brown (D-Ohio), Mark Warner (D-Va.), Jack Reed (D-R.I.), Jon Tester (D-Mont.), Michael Bennet (D-Colo.), Ed Markey (D-Mass.), Bob Casey (D-Pa.), Sheldon Whitehouse (D-R.I.), Al Franken (D-Minn.), Amy Klobuchar (D-Minn.), Richard Durbin (D-Ill.), Angus King (I-Vt.), Ron Wyden (D-Ore.), Martin Heinrich (D-N.M.), Chris Murphy (D-Conn.), Tom Udall (D-N.M.), Brian Schatz (D-Hawaii), Tammy Baldwin (D-Wis.), Richard Blumenthal (D-Conn.), Tom Carper (D-Del.), Dianne Feinstein (D-Calif.) Bernie Sanders (I-Vt.), Tim Kaine (D-Va.), Maria Cantwell (D-Wash.), Jeanne Shaheen (D-N.H.), Debbie Stabenow (D-Mich.), Kirsten Gillibrand (D-N.Y.), Cory Booker (D-N.J.), Mazie Hirono (D-Hawaii), Gary Peters (D-Mich.), Bill Nelson (D-Fla.), and Tammy Duckworth (D-Ill.).

The full text of the letter is below:

Dear Chair Capito and Ranking Member Coons:

As you work to prepare the Fiscal Year 2018 Financial Services and General Government Appropriations bill, we respectfully request that you reject any language that would limit the Securities and Exchange Commission's (SEC) ability to develop, propose, issue, finalize, or implement a rule requiring public companies to disclose political spending to shareholders. We write to highlight the importance of excluding any such language because the Consolidated Appropriations Act of 2017 regrettably included language doing just that.

We believe the SEC should require companies to disclose to their shareholders how they use corporate resources for political activities. This disclosure would not only bring much needed accountability to shareholders and transparency to corporate political spending, but it is both clearly consistent with the SEC's requirement for public companies to disclose meaningful financial information to the public and squarely within the SEC's primary mission of investor protection.

The Supreme Court's 2010 decision in Citizens United v. FEC fundamentally changed our nation's campaign finance laws by allowing unlimited and unchecked corporate spending on campaign ads and various other political communications-a decision with which we fervently disagree. However, notwithstanding our disagreement with the Court's holding, the decision clearly recognized shareholder and public interest in the disclosure of political spending. In fact, Justice Kennedy wrote:

"[P]rompt disclosure of expenditures can provide shareholders and citizens with the information needed to hold corporations and elected officials accountable for their positions and supporters.... [D]isclosure permits citizens and shareholders to react to the speech of corporate entities in a proper way. This transparency enables the electorate to make informed decisions and give proper weight to different speakers and messages."^[1]

The lack of proper disclosure undermines the very campaign finance system envisioned by the Court. For seven long years, companies have had free rein to solidify their influence in politics and maximize their impact on elections. As the magnitude of the problem and the potential for abuse has skyrocketed, investor demand for this information has greatly intensified.

To date, more than 1.2 million securities experts, institutional and individual investors, and members of the public have pressed the SEC to promulgate a rule to require public companies to disclose their political spending. Notably, the 1.2 million members of the public are joined in their support of the rulemaking by former SEC Chairs Arthur Levitt (D) and William Donaldson (R) and former Commissioner Bevis Longstreth (D), who emphasized in a May 2015 letter to former SEC Chair Mary Jo White that the Court's expectation of disclosure would only be met by compelling companies to inform shareholders of their political activities.

We believe any appropriations language intended to block this critical disclosure will serve only to impede the SEC's ability to perform its primary mission of investor protection. As such, we urge you to reject any language that would prohibit the SEC from taking any action to require public companies to disclose their political spending to shareholders. We thank you for your leadership to restore transparency, accountability, and critical investor protections, and we thank you for your consideration of this important request.

Sincerely,