The SEC is Now Actively Considering the Rulemaking Petition on Corporate Political Spending

Lucian Bebchuk is Professor of Law, Economics, and Finance at Harvard Law School. Robert J. Jackson, Jr. is Associate Professor of Law and Milton Handler Fellow at Columbia Law School. Bebchuk and Jackson served as co-chairs of the Committee on Disclosure of Corporate Political Spending, which filed a rulemaking petition concerning political spending, discussed on the Forum here and here. Posts discussing their articles on corporate political spending, Corporate Political Speech: Who Decides?, and Shining Light on Corporate Political Spending, are available here.

According to a report, the Director and Deputy Director of the SEC’s Division of Corporate Finance indicated that the Division is now actively considering a rulemaking petition that was submitted by a committee of ten law professors that we co-chaired. The petition urged the SEC to adopt rules that would require public companies to disclose information about their political spending. At a conference this week, both the Director and Deputy Director indicated that the Division is currently looking into whether to recommend that the SEC issue such a rule.

As the Journal report notes, so far the SEC has received more than 300,000 comments on our petition—to our knowledge, more than any other rulemaking proposal in the Commission’s history. The overwhelming majority of these comments are supportive of the petition, leading the Director of the SEC’s Division of Corporation Finance to observe that the proposal “obviously [involves] an issue that’s extremely important to many.” In addition to the comments in the regulatory file, the petition has received support from a sitting Commissioner of the SEC, a substantial number of members of both the U.S. Senate and House of Representatives, and editorials in the New York Times and Bloomberg News.

While the petition has received unprecedented support, the petition, and the push for SEC disclosure rules in this area, has also attracted opponents, including legal academics, members of Congress, and the Wall Street Journal’s editorial page. In light of these objections and the SEC’s consideration of the petition, we recently issued a study, Shining Light on Corporate Political Spending, which puts forward a comprehensive, empirically-grounded case for SEC rules requiring public companies to disclose their political spending.

Our study provides empirical evidence on the need for such rules, develops fully the arguments made in the rulemaking petition, and responds to the full range of objections that have been raised to disclosure rules in this area. The study, which is forthcoming in the Georgetown Law Journal, is available here.

We hope that the analysis in the petition and in our study will prove useful to the Division of Corporation Finance and the SEC in their examination of this issue. We also hope that the SEC’s consideration of our petition will lead to the adoption of new rules that would shine light on corporate spending on politics.

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