Friday, December 13, 2013

SEC Thwarts Indefatigable Progressive Push to Undermine Citizens United

Since the Supreme Court decided Citizens United v. FEC in January 2010, enraged progressives have worked tirelessly to neuter the landmark free-speech case. In fact, before the ink was dry a cadre of Democrat politicians, progressive public-advocacy groups, and leftist academics were scheming to bring now-dangerously uncontrolled corporations back under government purview.

In my latest op-ed, published at the Daily Caller, I describe how one of these strategies—forcing corporations to disclose political spending on SEC-required financial forms—has been (at least for the time being) sacked by SEC Chairwoman Mary Jo White.

The idea to force corporations to disclose political spending gained momentum after Republicans killed the progressive legislative solution to Citizens United, the DISCLOSE Act. In August 2011, a group of corporate law professors from elite universities sought to use the SEC to achieve its aims through a rulemaking petition.

The petition and other academic work, argued disclosure was necessary to protect the interests of minority shareholders and to ensure executives properly spent corporate money. They also pointed to the number of comments supporting the petition as proof its efficacy.

But Chairwoman White correctly deduced this rule would not further the SEC’s mission and in fact would endanger the SEC’s coveted independence. As she stated in a recent speech, “[the SEC’s] independence – and the agency’s unique expertise – should be . . . respected by those who seek to effectuate social policy or political change through the SEC’s powers of mandatory disclosure.”

The academic work too has fallen short of presenting credible evidence this disclosure is needed. As a recent paper explains, the shareholders that clamor for disclosure often have policy objectives opposite those of their fellow shareholders and the corporation. These “special interest” shareholders include union and Democrat-controlled government pension funds, and “social justice” outfits. These groups’ aims often gainsay the corporate objective of increasing shareholder value. For instance, they have clashed with corporations on issues like Obamacare, environmental rules, and trade policy.

And the academics have produced little empirical evidence executives spend from the corporate treasuries in ways anathema to their fiduciary duties. Instead, they rely on hypotheticals and conjecture to establish would-be nefarious motives.

Finally, the volume of supportive comments to the professor petition is misleading. Most of these comments—99.7% at one point—are Astroturf form letters, downloaded straight from progressive websites. No evidence exists, that any of these commenters are even actually shareholders. 

Mary Jo White’s decision is a victory for democracy. It maintains the SEC’s vital independence and allows corporations to advocate their views in the marketplace of ideas without unnecessary government interference. For the time being, progressives will have to find another way around the law.

By Paul Jossey 

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