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December 4, 2013

Keeping Shareholders in the Dark

Protecting investors and ensuring proper corporate governance are the essence of the mission of the Securities and Exchange Commission. But you wouldn’t know that from the recent actions of the agency and its chairwoman, Mary Jo White.

Last week, the S.E.C. unwisely removed from its regulatory agenda a plan to consider a rule to require public companies to disclose their political spending — even though the case for disclosure is undeniable. Basic investor protection requires that shareholders know how corporate executives are spending shareholder money. Good corporate governance requires that companies are transparent about their use of corporate resources. Shareholders know this and have demanded disclosure.

Even before 2010, when the Supreme Court’s ruling in Citizens United opened the floodgates for corporate political spending, shareholder proposals requesting information on such spending were growing. Since the ruling, those requests have increased along with the political spending. Trade associations and politically active tax-exempt groups are not required to disclose their donors, but there is mounting evidence that much of the money they spend is from companies that want to influence elections in secret, without fear of alienating shareholders, customers or legislators they target for defeat.”

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Read full New York Times editorial here

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