Full Disclosure vs. Right to Privacy

Public Companies Not Required to Disclose Political Contributions Silberstein vs U.S. Securities and Exchange Commission, U.S. Dist. Ct., DC, No. 15-00722, Jan. 4, 2016

A federal judge has dismissed a lawsuit against the SEC which argued that the Commission violated the Administrative Procedure Act by not responding to plaintiff Campaign for Accountability’s petition that the SEC  require public companies disclose their political contributions.

While Public companies must report donations by political action committees, they’re not required to report contributions to third parties, including industry groups such as the National Association of Manufacturers that fund ads for and against candidates.

In declaring that it lacked jurisdiction, the court pointed out that the SEC had not actually denied the petition, and noted that only the court of appeals has the authority to review SEC action to determine if its lack of action amounted to “unreasonable delay”.  The Commission had argued that it had the discretion but not the obligation to begin a rule making proceeding.

The case is another illustration of the fallout and tensions created by the U.S. Supreme Court’s 2010 Citizens United decision, which allowed unlimited independent spending by corporations and labor unions in federal elections.  Democrats have been pressuring the SEC to adopt a political contribution disclosure rule, while Republicans succeeded in adding a provision to the government funding bill barring the Commission from working on the rule.

As its stands now, shareholders are in the dark about which candidates public companies are supporting financially.