Bloomberg Law
Jan. 4, 2019, 11:01 AMUpdated: Jan. 4, 2019, 5:51 PM

House Dems Seek SEC Rule on Political Giving Disclosure (2)

Lydia Beyoud
Lydia Beyoud
Fintech & Regtech Reporter
Andrea Vittorio
Andrea Vittorio

The Securities and Exchange Commission could require publicly traded companies to disclose their political spending under one of the first bills the new House Democratic majority introduced Jan. 4.

Language lifting a ban that’s prevented the SEC from writing a political donation disclosure rule is part of a broader Democratic bill (H.R. 1) that would overhaul campaign finance disclosures, elections security, and ethics rules. Rep. John Sarbanes (D-Md.), who heads the House Democrats’ Democracy Reform Task Force, spearheaded the effort.

House Democrats want to vote on the package by the end of January or early February, Sarbanes told reporters after a Jan. 4 press conference. It would face an uphill battle in the Republican-controlled Senate, where Sens. Tom Udall (D-N.M.) and Jeff Merkley (D-Ore.) plan to introduce companion legislation in the coming weeks.

Companies aren’t waiting for congressional action. Reporting on political giving has become the norm amid interest from investors and growing recognition of the risks that can come with not knowing exactly how corporate money in politics is being spent.

“Companies don’t want to end up with eggs on their face,” said Gary Larkin, a research associate at the Conference Board.

Corporate Action

Almost 300 companies in the S&P 500 index disclosed some or all of their election-related spending or prohibited such spending in 2018, according to a study by the nonprofit Center for Political Accountability and the University of Pennsylvania’s Zicklin Center for Business Ethics Research. The annual assessment looks at corporate contributions to elections, which must be reported already, as well as so-called dark money given to trade associations and other politically active groups.

“Those companies that haven’t adopted accountability and disclosure policies are seen as outliers today,” Bruce Freed, who leads the Center for Political Accountability, said. Still, Freed said a reporting rule is needed to make the disclosures “uniform” and “universal.”

The center works with investors and companies to push for more disclosures. U.S.-listed companies faced close to 90 investor requests for lobbying and political spending disclosures in 2018, making it the year’s top topic for shareholder advocacy, according to data from ISS Analytics.

“There is demand for it,” said Lisa Gilbert, vice president of legislative affairs at advocacy group Public Citizen. A bipartisan group of former SEC chairmen and commissioners, as well as activist shareholders and public advocates, have been calling for more political spending disclosures since the 2010 Supreme Court decision in Citizens United v. Federal Elections Commission.

SEC Blockage

At least one sitting member of the SEC has been a proponent of greater disclosure. Commissioner Robert Jackson signed onto a 2011 petition asking the SEC to mandate political expenditures reporting when he was a professor at Columbia Law School and led protests outside the agency’s headquarters in 2014.

But Senate Majority Leader Mitch McConnell (R-Ky.) has repeatedly added provisions to budget and tax bills preventing the commission from working on any sort of political disclosures rulemaking. His stance isn’t likely to change.

“I expect him to continue to express his opposition early and often now that text has been introduced,” a McConnell spokesman told Bloomberg Law regarding H.R. 1.

Sarbanes has hit back, saying “If Mitch McConnell and his team on the other side want to stand between the American people and their democracy, be my guest.”

Even if the legislation doesn’t pass, it could still set the stage for keeping a provision blocking political spending disclosure out of the next funding bill for the SEC, according to Public Citizen’s Gilbert.

(Updated with additional reporting throughout)

To contact the reporter on this story: Lydia Beyoud in Washington at; Andrea Vittorio in Washington at

To contact the editors responsible for this story: Michael Ferullo at; Seth Stern at