Risk & Compliance

Group Seeks Corporate ‘Soft Money’ Rules

The Securities and Exchange Commission should require companies to disclose their political-contribution policies, government accountability advoca...
Stephen TaubSeptember 9, 2004

A public-interest-advocacy group is urging the Securities and Exchange Commission to require companies to disclose their campaign contributions.

The Center for Political Accountability (CPA) Wednesday fired off a letter to SEC Chairman William Donaldson explaining why the regulator should require public companies to disclose their political contribution policies and practices.

The public-interest-advocacy group says the action is an extension of its campaign to get corporations to disclose “soft money” contributions made with corporate funds. Such contributions aren’t regulated by federal campaign finance law.

In its letter to the SEC, the CPA said that commission action is critical to “protecting shareholder value and creating a level playing field for companies that refrain from using corporate treasuries to achieve a marketplace advantage through political largesse. By adopting an effective rule, the Commission will assure that all companies will have to disclose and justify their political donations to their shareholders.”

The letter also said that requiring company disclosure “will allow shareholders to be not only better informed about how their money is being used but also better able to judge the performance of corporate management. It will serve as a deterrent for management from making the type of questionable contributions that, in the past, have created legal problems that have negatively affected the shareholder value.”

Until now, the CPA’s approach has been to help craft shareholder resolutions to get more than 20 companies to end what it calls “their total secrecy in this area.”

The resolutions urged companies to disclose their contribution policies and political donations, explain the business rationale for those contributions, and identify the corporate officers involved in the decisions.

Previously, 11 major state and city treasurers and pension trustees cited the need for regulation of corporate campaign contributions. In an August 25 letter to Donaldson, the investment officers told Donaldson “that shareholders have a right to know how the companies they own are using their money in the political arena. We ask you and your fellow SEC Commissioners to let the sun shine on corporate contributions so that the tens of millions of shareholders in America’s public companies can know how their money is being used in the nation’s political life.”