SEC Sued For Allegedly Failing To Adopt Campaign Funding Rule
By: Christopher Robbins
A new public advocacy interest group has filed suit against the SEC, accusing the agency of failing to enact regulations requiring corporations to disclose their political contributions to investors.
The lawsuit was the first official action of the Campaign for Accountability (CfA), which started operations on Wednesday with plans to use research, litigation and communications to expose “malfeasance in public life.” The group says its other issues include focusing on Wall Street investors who attempt to influence Washington regulators for personal gain and predatory lenders who work to undermine the regulatory efforts of government agencies.
“Investors should be fully informed as to where high-level executives are directing corporate funds,” said Anne Weismann, CfA executive director. “An unprecedented number of Americans have added their voices to calls for the [SEC] 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.”
Weismann has also served as chief counsel of Citizens for Responsibility and Ethics in Washington, D.C.
“Millions of Americans’ lives are negatively impacted by decisions made behind the doors of corporate boardrooms, government offices and shadowy nonprofit groups,” Weismann said. “We will hold those wrongdoers who act at the expense of the public good accountable for their actions.”
The group filed its lawsuit in U.S. District Court for the District of Columbia on behalf of Steve Silberstein, who in 2013 sued the Aetna Insurance Company as a shareholder over the company’s failure to accurately reveal its political donations. Silberman’s suit was dismissed by a New York federal court earlier this year for failure to state a claim under the Securities and Exchange Act.
Last year, Silberstein submitted a petition to the SEC requesting the agency require corporations to disclose their political activities, which the lawsuit claims the SEC did not respond to. The CfA lawsuit alleges the SEC has violated the Administrative Procedure Act by failing to act on the rulemaking petition.
An SEC spokesperson declined to comment on the lawsuit..
The action marks the latest effort by activists to require corporations to disclose their political contributions, sometimes labeled as “dark money,” that began in earnest after the U.S. Supreme Court’s 2010 Citizens United ruling, which paved the way for unbridled corporate campaign funding. Currently, such contributions do not have to be disclosed.
In 2013, the SEC’s Division of Corporate Finance claimed to consider whether the SEC should issue a rule regarding disclosure, but the rule never materialized.
That same year, a coalition of Democratic lawmakers called on the SEC to rule on the disclosure of corporate political contributions. In 2014, the SEC received over a million petitions and public comments requesting a ruling. Earlier this year, state treasurers from Minnesota, North Carolina, Washington, Oregon and Rhode Island also urged the SEC’s commissioners to take action on the issue.