Citizens United Aftermath: SEC To Require Disclosures To Shareholders Of Political Contributions

April 24th, 2013

After Citizens United, the President called on Congress to swiftly pass laws to undo the effects of that decision. This request was silly of course–only a constitutional amendment can undo an opinion interpreting the First Amendment (see this video). But what Congress, and administrative agencies could do, was work within Citizens United.

The SEC is may do just that, by requiring disclosures to shareholders of political donations:

A loose coalition of Democratic elected officials, shareholder activists and pension funds has flooded the Securities and Exchange Commission with calls to require publicly traded corporations to disclose to shareholders all of their political donations, a move that could transform the growing world of secret campaign spending.

S.E.C. officials have indicated that they could propose a new disclosure rule by the end of April, setting up a major battle with business groups that oppose the proposal and are preparing for a fierce counterattack if the agency’s staff moves ahead. Two S.E.C. commissioners have taken the unusual step of weighing in already, with Daniel Gallagher, a Republican, saying in a speech that the commission had been “led astray” by “politically charged issues.”

Of course, everyone on the Court–save Justice Thomas–was okay with disclosures.

In seeking greater disclosure to shareholders, many of the advocates are citing an unlikely source: the Supreme Court’s decision in Citizens United, written by Justice Anthony M. Kennedy. In clearing the way for unlimited corporate expenditures in campaigns, Justice Kennedy suggested that “shareholder objections raised through the procedures of corporate democracy” could provide accountability for the new political powers.

“I think the S.E.C. staff is very sympathetic to the petition itself, and a lot of the comments have referenced Justice Kennedy’s opinion in Citizens United,” said Karl J. Sandstrom, counsel to the Center for Political Accountability, which advocates transparency in corporate political spending. “But they have so much on their plate, they have to decide what’s going to come first,” he added.

An Anti-Citizens United amendment was always a pipe dream. But more disclosures would be constitutional.

Update: Thanks to Alison Frankel, a slight update.