Rulemaking Petition on Disclosure of Corporate Political Spending Attracts Massive Support from over 250,000 Comments Filed with the SEC

Editor’s Note: Lucian Bebchuk is Professor of Law, Economics, and Finance at Harvard Law School. Robert J. Jackson, Jr. is Associate Professor of Law at Columbia Law School. This post is related to an SEC rulemaking petition available here and discussed on the Forum here. Bebchuk and Jackson are co-authors of Corporate Political Spending: Who Decides?, discussed on the Forum here and here.

Last July, we co-chaired a committee of ten corporate and securities law experts that submitted a rulemaking petition to the Securities and Exchange Commission urging the Commission to develop rules to require public companies to disclose their political spending. As of today, the petition has attracted massive support from a record number of comments filed with the SEC.

Altogether, as is indicated on the SEC’s webpage for comments filed on the petition, the SEC has received more than a quarter of million comments on the petition. An analysis of the comment file indicates that all except eight were supportive of the petition.

Of the filed comments, 259,801 came from individuals who expressed their views through one of six common types of letters received by the Commission. The submission of comments by such a large number of individuals was partly due to the work of the Corporate Reform Coalition, a group that includes institutional investors and public officials. While the 259,801 comments used standard form letters, each of them was separately submitted by one or more individuals who presumably were interested enough in the subject to file a comment with the SEC.

In addition to the 259,801 comments using form letters, the SEC received 487 “unique” comments on the petition. Of these comments, 5 came from institutional investors; 7 were submitted by government officials; 12 were submitted by researchers and nonprofits; 3 were submitted by other organizations such as religious groups; and 460 comments came from individuals who did not indicate an affiliation. Within this group of 487 unique comments, all but eight comments expressed support for the petition.

Notably, the commentary by institutional investors has been unanimously supportive of the petition, with comments coming from prominent investors responsible for significant amounts of shareholder money. These letters included supportive comments from John Bogle, the former chief executive and senior chairman of The Vanguard Group, as well as a letter from a group of mutual fund and institutional asset managers with more than $690 billion under management.

The commentary from government officials was also unanimously in support of the petition. These supportive comments included one from a group of state government officials including the State Treasurers of North Carolina, Pennsylvania, and California and from a group of 43 members of the U.S. House of Representatives.

To the best of our knowledge, the petition has drawn considerably more commentary than any other rulemaking petition in the SEC’s history. To illustrate, over the last three years, the Commission has received some 35 rulemaking petitions, and these petitions received on average 71 comments.

Indeed, the rulemaking petition on corporate political spending has attracted more commentary than even prominent rulemaking initiatives proposed by the SEC itself. For example, the SEC’s proposed proxy access rule, which was the subject of much attention and public debate, received approximately 600 comments.

The overwhelming support reflected in the comment file is consistent with the support expressed for the petition outside the file. Both Bloomberg News and The New York Times have published editorials in support of the petition. Furthermore, 15 members of the U.S. Senate have called on the SEC to develop disclosure rules of the kind proposed in the petition.

In a speech in February of this year, Commissioner Aguilar expressed support for the petition, indicating that the SEC should act soon to provide for disclosure of corporate spending on politics. At the same conference, Chairman Mary Schapiro told reporters that the Commission will address the petition “at some point.”

We hope that the analysis provided in the petition, coupled with the unprecedented support the petition has received over the last nine months, will lead the SEC to initiate a rulemaking process that would produce rules requiring public companies to disclose to shareholders the use of corporate resources on politics.

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