SEC's Gallagher slams effort to adopt political disclosure rules
WASHINGTON (Reuters) - The U.S. Securities and Exchange Commission should not waste time drafting rules to force companies to disclose information like campaign contributions or government payments for energy projects, a top SEC official said Friday.
"Requiring disclosure of all corporate political contributions adds a pile of inherently non-material information to the mountain of disclosure already mandated at considerable cost," said SEC Commissioner Daniel Gallagher, a Republican, in prepared remarks at a conference in New York.
"Establishing our rulemaking priorities entails deciding how not to expend our time and expert resources," he added.
Gallagher laid out the rulemakings he feels should be a priority, such as those targeting credit-ratings and proxy advisory firms, as well as others he believes should be placed on the back burner.
He said he expects the SEC to start "the final push" toward adopting rules that would strip credit-rating references from agency regulations and thereby reduce investors reliance on such ratings.
But he also laid out his least favorite initiatives that the commission is considering is the so-called "resource extraction" rule required by the 2010 Dodd-Frank law that forces oil, gas and mining companies to disclose payments to foreign governments.
The resource extraction rule was tossed out by a federal court in July following an industry challenge. The SEC did not appeal the decision, saying instead it would rewrite the rule.
Gallagher said re-writing the rule should be "low on our to-do list," adding the SEC has "no expertise where foreign policy and energy policy are concerned."
Gallagher's remarks come days before advocates of a political spending disclosure rule and two U.S. senators plan to convene a press conference on Capitol Hill where they will call on the SEC to take action on a petition a group of professors has submitted asking the commission to require companies disclose their political contributions.
The petition, seeking disclosures on contributions, was prompted by the Supreme Court's 2010 Citizens United decision, which held that independent expenditures by corporations are constitutional and paved the way for spending by groups known as Super PACs. As of July 23, Super Pacs reported spending more than $600 million in the 2012 election cycle, according to OpenSecrets.org.
The disclosure proposal has garnered more than 600,000 public comments, but has gained little support so far at the SEC with only one of the SEC's five commissioners publicly endorsing the idea.
Gallagher has long opposed both the political spending rule and the resource extraction rule.
But his renewed efforts on Friday to put the rules on ice come on the heels of two recent major policy speeches by the SEC's new Chair, Mary Jo White, in which she seemed to suggest she may share Gallagher's sentiments.
White did not specifically comment on the political disclosure or resource extraction rules in her prior remarks.
But she chastised Congress for mandating certain disclosures, and referenced a third rule requiring manufacturers to disclose whether their products contain certain "conflict minerals" from the Democratic Republic of Congo.
Such rules "seem more directed at exerting societal pressure on companies" rather than helping investors make informed decisions, she said.
"As the chair of the SEC, I must question, as a policy matter, using the federal securities laws and the SEC's powers of mandatory disclosure to accomplish these goals," White said at the time.
Although Gallagher does not set the agenda for the SEC, his views have the potential to shape how the SEC proceeds in rulemaking because he is one of five voting members of the commission.
White has not publicly discussed her plans. In a congressional hearing in May, she told lawmakers the SEC was not actively drafting a political spending rule.
(Reporting by Sarah N. Lynch; Editing by Leslie Gevirtz)
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