Washington - U.S. Senator Robert Menendez (D-NJ) today spearheaded a letter from 14 Senators to the Securities Exchange Commission (SEC) calling on it to use its existing authority to mandate the disclosure of corporate political spending. This most recent call for transparency comes on the eve of the anniversary of the Supreme Court's unprecedented Citizens United v. Federal Election Commission decision that allows corporations to use general treasury funds on independent expenditures and electioneering communications as well as for payments to third-party organizations -- "Super PACs" -- to run political ads. Further, this decision does not require the disclosure of corporate political spending to the public or the approval of the corporation's shareholders.

"I whole-heartedly disagree with the Supreme Court's Citizen's United decision that essentially gives corporations the power to influence elections without the consent or knowledge of their shareholders. And I have been fighting to right this wrong," said Menendez. "We may not be able to overturn this decision, but the SEC can take immediate action and require the public disclosure of political spending by corporations. I urge them to do so as soon as possible because it's not just shareholders who have the right to know who's behind these Super PACs and which campaigns corporations are influencing -- all Americans have the right to know."

"Super PACs are well on their way to spending more than direct campaigns in 2012. These Super PACs have seemingly benign names like 'Americans For This' and 'Americans For That'. Make no mistake about it: these are not grassroots movements. They are corporations trying to influence the outcome of elections to whichever candidate will improve their bottom line, even if that's at the public's expense. When a corporation hides behind the curtain of the Supreme Court's decision, the integrity of our electoral process is compromised," added Menendez.

Action by the SEC is just one part of closing the loophole left open in the Citizen's United decision. Senator Menendez has authored the Shareholder Protection Act, which would not only require full disclosure of any political spending by any publicly-owned corporation, but would require shareholder authorization of this spending. Investors would need to approve a corporate budget for political expenditures on an annual basis via a majority vote and any expenditure over $50,000 would need to be individually approved. Additionally, the disclosure of each expenditure and individual board member votes would need to be disclosed online within 48 hours.

Senator Menendez has always believed in a level playing field and that our democracy should be based not on who spends the most money, but on the vote of every individual who casts their ballot. He has done the following to achieve this end:

  • Protecting Shareholders: Introduced S.1360, the Shareholder Protection Act, which would require a shareholder vote before corporate treasury funds are spent on political campaigns. The bill would require investors to authorize political expenditures on an annual basis via a majority vote, require investor approval of any expenditure over $50,000 and require online disclosure of each expenditure and individual board member votes within 48 hours.
  • DISCLOSE Act: Original cosponsor of the DISCLOSE Act and voted twice to proceed to voting on it. The DISCLOSE Act would: require all organizations and corporations to make their donors public and appear on camera to stand by their ads and ban foreign-controlled corporations and government contractors from making political expenditures.
  • Reducing Foreign Spending in Elections: Introduced S.2954, the Prohibiting Influence in American Elections Act, which would ensure that a corporation where either one or more foreign principals serves on the Board of Directors, or one or more foreign principals directly or indirectly has an ownership interest or one or more foreign principals directly or indirectly holds debt or other obligations in the company may not spend in American elections. Certain provisions of this bill were included in the DISCLOSE Act.
  • Fair Elections: Cosponsored S.750, the Fair Elections Now Act (introduced by Senator Durbin), which would create a voluntary, non-taxpayer-funded public financing system for congressional elections.

Click here to download a PDF of the letter to the U.S. Securities and Exchange Commission. Full text is below:

January 19, 2012

Dear Chairwoman Schapiro:

We write today to urge the Securities and Exchange Commission to consider using its existing authority to issue rules requiring full public disclosure of corporate political spending.

As you may know, the Shareholder Protection Act (S. 1360), would require shareholder authorization and full disclosure of any political spending by any publicly-owned corporation. While the SEC may not have the authority to implement every part of this bill, we believe the SEC should immediately consider implementing the disclosure requirements that your leadership has advised us are within your existing powers.

As such, we urge the SEC to consider using its rulemaking authority to issue rules that would require corporations to disclose their political spending to shareholders. The disclosures should include spending on independent expenditures, electioneering communications and donations to outside groups for political purposes, i.e., Super PACs. Such disclosures can be online in an easily searchable format and can also use existing communication lines between corporations and shareholders, such as proxy statements, quarterly and annual reports, and registration statements.

We believe that the Supreme Court's Citizens United decision has had profoundly negative effects for all parties in our election system, including shareholders. While some companies, such as Microsoft, Wells Fargo, Merck and Aetna, have taken the steps to publicly disclose their political spending - illustrating not only the ease with which it can be accomplished but also the acceptance of this practice by many prominent and large corporations - many shareholders remain in the dark, unaware that their money could be funding political activities, or even political attack ads. The rights of shareholders must be protected and at present, we believe that they are being compromised.

Furthermore, this information is not only material to shareholders, but also something that shareholders continue to request. As indicated by the Committee on Disclosure of Corporate Political Spending in its August 2011 petition to the SEC for rulemaking, a 2006 poll - well before the Citizens United decision - showed that 85% of shareholders believed there was a lack of transparency surrounding corporate political activity. Additionally, an October 2010 Zogby International poll commissioned by the Center for Economic Development found that 77% of business leaders said that corporations should disclose all of their direct and indirect political expenditures. And two-thirds of those business leaders agreed with the following statement: "The lack of transparency and oversight in corporate political activity encourages behavior that puts corporations at legal risk and endangers corporate reputations."

The call for disclosure of political spending by publicly-owned corporations is not a new one. However, in the wake from the Citizens United decision, the demand for disclosure has grown as the consequences of unregulated political contributions have been fully realized by the public and businesses alike.

A corporation's money belongs to the shareholders, not the executives, and while we believe that shareholders deserve a voice and say if their money is going to be spent on political activity, a positive first step would be to disclose this activity so that shareholders can at least be aware of it, which they may not presently be.

We thank you for your attention to this matter and look forward to your response.

Sincerely,

Robert Menendez

Jeff Bingaman

Sherrod Brown

Tom Udall

Patrick Leahy

Sheldon Whitehouse

Dick Durbin

Jeanne Shaheen

Tom Harkin

Mark Begich

Richard Blumenthal

Jeffrey Merkley

Frank R. Lautenberg

Bernie Sanders

Al Franken

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