Jan 8 Backers of a rule to require companies to disclose political spending said on Tuesday they were heartened by a recent notice that the U.S. Securities and Exchange Commission may take up the controversial idea soon.
A federal notice from late December states an SEC division "is considering whether to recommend that the Commission issue a proposed rule to require that public companies provide disclosure to shareholders regarding the use of corporate resources for political activities."
The text suggested some action by April. Proponents of disclosure held a call with reporters on Tuesday to applaud the item since even its appearance would have required a sign-off by commissioners.
"The fact they put this on the agenda is a very good sign they intend to move forward with it," Adam Kanzer, general counsel of Domini Social Investments LLC, said on the call.
It is not clear just how hot the topic is at the SEC, whose four commissioners either declined to comment or did not immediately return messages on Tuesday. SEC spokesman John Nester said its staff "is considering whether to make a recommendation" but said no date for a decision has been set.
Spending on elections by publicly traded companies has drawn much criticism after a 2010 Supreme Court ruling eased restrictions.
In 2011, a group of law professors backing more corporate spending disclosure petitioned the SEC. They asked the agency to design rules that would require the disclosure of contributions at relatively low levels, perhaps with annual proxy disclosures, and to sort out just what sort of contributions would have to be disclosed such as money given to trade associations.
Democratic-leaning groups and some public pension fund managers have argued companies owe their shareholders more details about their outlays for candidates and lobbying.
On Jan. 3, New York State's $150 billion public pension fund sued chipmaker Qualcomm Inc for details of its spending.
The debate is intertwined with a political contest over funding sources. Along with two of the law professors, elected officials who spoke on the teleconference call on Tuesday included two Democrats, Pennsylvania Treasurer Rob McCord and congressman John Sarbanes of Maryland.
Businesses worry new rules could interfere with how companies interact with public officials, according to a Jan. 4 letter sent to the SEC by trade associations including the U.S. Chamber of Commerce.
Opponents also worry the disclosures could violate Free Speech rights and say the idea is far outside the agency's authority. "Wading into these waters is not the SEC's appropriate mandate," said James Copland, director of a legal policy center at the market-oriented Manhattan Institute in New York, via email.
Still, Copland said he was not surprised the SEC is reviewing the topic and cited pressure from the academics and investors aligned with labor groups.
SEC Commissioner Luis Aguilar, a Democrat, backed the idea of requiring more corporate disclosure in a speech last February. At the same event, then-SEC Chairman Mary Schapiro said the SEC would take up the matter but said that shareholders already could require more disclosure through proxy resolutions.
A representative for Aguilar said he declined to comment on Tuesday. The three other commissioners did not respond to questions. SEC spokesman Nester said the review's timing could be influenced by other rulemakings.