New Lawsuit Demands SEC Issue Rule Requiring Corporations Disclose Political Donations

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New Lawsuit Demands SEC Issue Rule Requiring Corporations Disclose Political Donations

Lawsuit Marks Launch of New Organization, Campaign for Accountability

Today, the new non-profit Campaign for Accountability (CfA) opened its doors and announced its first action: a lawsuit against the Securities and Exchange Commission for failing to enact a regulation requiring corporations to disclose their political contributions that would inform investors how corporations are spending their money.

The lawsuit against the SEC marks the first action of CfA, which will use research, litigation and communications to expose misconduct and malfeasance in public life. Its executive director is Anne Weismann, formerly chief counsel of Citizens for Responsibility and Ethics in Washington (CREW).

“Millions of Americans’ lives are negatively impacted by decisions made behind the doors of corporate boardrooms, government offices, and shadowy nonprofit groups,” said Ms. Weismann. “CfA will hold those wrongdoers who act at the expense of the public good accountable for their actions.”

Louis Mayberg, previously chairman and founder of CREW and now a founder of CfA, said, “I’m excited to play a role in creating a new organization that won’t pull its punches and will serve as an equal opportunity watchdog.”

CfA filed the new lawsuit against the SEC in the U.S. District Court for the District of Columbia on behalf of plaintiff Steve Silberstein. As part of its 2013 regulatory agenda, the SEC’s Division of Corporation Finance claimed to consider whether the Commission should issue a rule regarding disclosure, but the rule never materialized. Last year, Mr. Silberstein submitted a petition to the SEC requesting the agency require public companies to disclose their political activities, which the SEC ignored. The CfA lawsuit alleges the SEC has violated the Administrative Procedure Act by failing to act on the rulemaking petition.

In 2013, Mr. Silberstein sued Aetna Insurance Company as a shareholder over the company’s failure to accurately reveal its political donations, despite its claim to have a robust disclosure policy in place. A federal court in New York dismissed the case earlier this year for failure to state a claim under the Securities and Exchange Act.

Ms. Weismann continued, “Investors should be fully informed as to where high-level executives are directing corporate funds. An unprecedented number of Americans have added their voices to calls for the Commission to require corporations to reveal their political spending. While a majority of our citizens want to end the flow of dark money, our government is sitting on its hands. It’s time for a court to force the SEC to act.”

In addition to corporate disclosure policies, other issues CfA expects to focus on include Wall Street investors who attempt to influence Washington regulators for personal financial gain and predatory lenders who work to undermine the regulatory efforts of government agencies.

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