Should The SEC Require Disclosure Of Companies’ Political Activities?

Should The SEC Require Disclosure Of Companies’ Political Activities?

 Public companies are required to disclose a great deal of information to their shareholders. Now, a group of 10 leading academics is suggesting that the SEC should develop rules to require public companies to disclose to shareholders the use of corporate resources for political activities.  

The professors reason that:
 
(1)   that the SEC’s disclosure rules have evolved over time in response to changes in investor interests and needs;
(2)   public investors have become increasingly interested in receiving information about corporate political spending;
(3)   in response to increased investor interest, a large number of public companies have voluntarily adopted policies requiring disclosure of the company’s spending on politics, and the disclosure practices of these companies can provide a useful starting point for the Commission’s design of disclosure rules in this area; and
(4)   disclosure of information on corporate political spending is important for the operation of corporate accountability mechanisms, including those that the courts have relied upon in their analysis of corporate political speech.
 
Will the SEC “promptly initiate” a rulemaking project to require disclosure of corporate political spending to public company shareholders, as these professors request? Although the idea certainly has merit, and probably a lot of merit, we don’t think that SEC action is very likely now, given all the other open issues and troubles facing the Commission.
 
The 10 corporate and securities law professors requesting the action are:
 
? Lucian A. Bebchuk, William J. and Alicia Townsend Friedman Professor of Law, Economics and Finance at Harvard Law School;
? Bernard S. Black, Chabraja Professor, Northwestern University Law School and Kellogg
School of Management;
? John C. Coffee, Jr., Adolf A. Berle Professor of Law at Columbia Law School;
? James D. Cox, Brainerd Currie Professor of Law at Duke Law School;
? Ronald J. Gilson, Charles J. Meyers Professor of Law and Business, Stanford Law
School, and the Marc & Eva Stern Professor Law and Business, Columbia Law School;
? Jeffrey N. Gordon, Alfred W. Bressler Professor of Law at Columbia Law School;
? Henry Hansmann, Oscar E. Ruebhausen Professor of Law at Yale Law School;
? Robert J. Jackson, Jr., Associate Professor of Law at Columbia Law School;
? Donald C. Langevoort, Thomas Aquinas Reynolds Professor of Law at Georgetown Law
School; and
? Hillary Sale, Walter D. Coles Professor of Law and Professor of Management, Washington University in St. Louis School of Law.