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Waiting for Godot, Superman and Mary Jo White…

Why is the SEC taking so long to set a rule on corporate political donations?

In the docu­ment­ary “Wait­ing for Super­man” which is about reform­ing public schools,  Geof­frey Canada, the famous Harlem advoc­ate for better educa­tion, explains how disap­poin­ted he was as a child to discover that Super­man wasn’t real and could­n’t rescue him from poverty, racism or a broken educa­tion system. This meant, of course, that real people like him would have to do the hard work of fixing these knotty prob­lems.

A year or so back I compared wait­ing for Mary Jo White to “Wait­ing for Godot.” I did not actu­ally mean it liter­ally as Godot never shows up in the play. I hope wait­ing for Mary Jo White is more success­ful than that. 

For the past few years, corpor­ate reformers have been wait­ing for Mary Jo White to fight the dark money prob­lem that has meta­stas­ized in federal elec­tions.  Between the day in 2010 when Citizens United was decided and today, over $600 million in dark untrace­able money has been spent. That worries share­hold­ers because they could be foot­ing the bill if the dark money is from corpor­ate coffers. 

For those not in the know, Mary Jo White is the Chair of the Secur­it­ies and Exchange Commis­sion, which is in charge of regu­lat­ing publicly traded corpor­a­tions. They have had this job since the Great Depres­sion. The SEC was created in response to the 1929 stock crash. One of the contrib­ut­ing factors to that crash was the sale of worth­less stocks with weak or nonex­ist­ent disclos­ures. 

Before he was a Justice on the Supreme Court, Louis Bran­deis argued for better disclos­ure on stocks to give the buyer fair notice of what they were buying. As Bran­deis wrote: “To be effect­ive, know­ledge of the facts must be actu­ally brought home . . . and this can best be done by requir­ing the facts to be stated in good, large type in every notice, circu­lar, letter and advert­ise­ment.” He argued that labeling on stocks should be like labeling on food, a theme Justin Levitt has advoc­ated with labeling of polit­ical ads today.

Now at first blush, it might seem that the Chair of the SEC has no juris­dic­tion over corpor­ate polit­ical spend­ing but this is a common miscon­cep­tion. The SEC already regu­lates money in polit­ics through vari­ous preex­ist­ing rules and laws. For example, the SEC and the Depart­ment of Justice have joint juris­dic­tion over the Foreign Corrupt Prac­tices Act (FCPA). This law prevents U.S. firms from using bribes to get or keep busi­ness abroad. This law covers campaign contri­bu­tions to foreign elec­ted offi­cials when they are given with the intent to procure busi­ness. The SEC will and does levy heavy fines for viol­at­ing this aspect of the FCPA. 

The SEC also regu­lates pay to play in both the muni­cipal bond and public pension fund markets. In other words, the SEC has ample exper­i­ence regu­lat­ing in the area of money in polit­ics.  Some might argue that they actu­ally have more impact than the Federal Elec­tion Commis­sion since the SEC has the advant­age of not being dead­locked in 3–3 ties. 

Louis Bran­deis was worried about lax rules for those able to use other people’s money whether through the bank­ing industry or corpor­a­tions. His basic asser­tion was that one is more care­ful with one’s own money and is more care­less and risk prone when using the dime belong­ing to the other fellow. This prob­lem has not gone away. Corpor­ate managers are able to use other people’s money on polit­ics without telling investors where they are spend­ing the money or why. This is why an across-the-board disclos­ure rule is needed from the SEC.

Unlike Super­man or Godot, Mary Jo White has real power to fix the dark money prob­lem on behalf of the share­hold­ers of publicly traded compan­ies. She was grilled at a Congres­sional hear­ing asking her why she hasn’t acted despite over one million public comments request­ing a new trans­par­ency rule. She demurred. But the ques­tion can fairly be put, “Where is Mary Jo White?” We need her to act on Peti­tion 4–637 before the Obama admin­is­tra­tion packs up and leaves without tack­ling this solv­able prob­lem.  

The views expressed are the author’s own and not neces­sar­ily those of the Bren­nan Center for Justice.

(Photo: Think­stock)