03
Jun

By: Anne L. Weismann

In a strongly worded letter to SEC Chair Mary Jo White, Senator Elizabeth Warren (D-MA) yesterday detailed the numerous ways in which Chair White has failed to implement the reforms she promised to bring to the SEC during her confirmation hearing.  Sen. Warren’s letter outlines four areas where the SEC Chair has fallen woefully short:  (1) failing to implement Dodd-Frank rules on CEO pay disclosure; (2) failing to require admissions of wrongdoing in SEC enforcement cases; (3) giving companies found in violation of Securities laws waivers to continue to take advantage of SEC special privileges; and (4) failing to address the significant conflicts of interest related to the employment of Chair White’s husband at a law firm that represents companies before the SEC.

Of particular interest to us, Sen. Warren also raised the “overwhelming interest and demand in a corporate campaign spending disclosure rule,” which Chair White has ignored.  On behalf of shareholder Steve Silberstein, CfA sued the SEC for failing to take up Mr. Silberstein’s rulemaking petition to require publicly traded companies to disclose the use of corporate funds for political contributions.  The SEC has yet to respond to the lawsuit, but Chair White’s response to Elizabeth Warren – charging the Senator with mischaracterizing  her statements in some unidentified way – suggests  suggests the agency will vigorously defend the status quo of doing nothing.

Calling the SEC to task for its myriad failures is long overdue.  As three former SEC commissioners – two of them former chairs – recently wrote to Chair White, the SEC’s inaction on the petitions of Mr. Silberstein and a panel of law professors “is inexplicable.”  In even stronger language, they continued, stating:

The Commission’s inaction is inexplicable.  Its failure to act offends not only us, who are alumni of this agency struggling to retain our deep pride of association, but investors and the professionals who serve them.  And it flies in the face of the primary mission of the Commission, which has since 1934 been the protection of investors.  To use a metaphor, mandatory disclosure of corporate political activities should be a “slam dunk” for the Commission.

We couldn’t have said it better ourselves.  Sadly, however, we have little expectation the remonstrations of either Sen. Warren or the former SEC officials will move Chair White to act.  That is why we have turned to the courts as a last resort.