Who knew corporate governance could get so many people excited? More than one million comments have now been filed concerning a petition asking the Securities and Exchange Commission to require publicly traded companies to disclose the money they spend to influence elections. That’s more than five times higher than the previous record for an SEC petition.
These comments come from major investors, elected officials, good-government groups, and concerned citizens. The Brennan Center weighed in early, and then again to inform the agency of factual developments such as the ever-expanding support for transparency among investors. Virtually all of the million comments are in favor of increased disclosure.
As the Brennan Center explained in a 2012 report, transparency is important to both corporate health and the functioning of our democracy. Disclosure allows investors to know whether a company is engaging in risky behavior, since political spending can damage a brand and tends to correlate to lower shareholder value. In Citizens United, a decision that opened the door to unlimited corporate cash in elections, the Supreme Court lauded disclosure requirements because they “provide shareholders and citizens with the information needed to hold corporations and elected officials accountable for their positions and supporters.”
In the federal system, corporations can’t give directly to candidates or parties. But Citizens United held that they can engage in independent spending. Since that case was decided in 2010, outside spending has exploded. Corporations have taken advantage of the weakened regulations, but a relatively small portion of the reported spending comes directly from firms. In fact, we have no idea how much corporations really spend, because much outside money in elections is “dark money,” the sources of which are hidden from the public. Brennan Center analyses of spending in competitive U.S. House and Senate races have revealed that the majority of the outside money is being spent by groups that keep some or all of their donors hidden.
Dark money is a problem for two basic reasons. First, voters need to understand the source of election messages to evaluate whether to trust them. Was the ad attacking a senator who voted for regulation of some industry paid for by companies from that industry, worried more about their bottom line than the public good? Second, the public needs information about the sources of political money to know to whom elected officials may feel they owe a favor.
The Brennan Center has advocated for various solutions to the lack of transparency in election spending, from the DISCLOSE Act to improved IRS regulations. The SEC petition was submitted back in 2011. Now that the agency has collected more than a million comments over the course of three years, it should be more than ready to begin rulemaking to bring to corporate political spending the transparency that shareholders and voters need.