Serving Shareholders and Democracy

[Commentary] American elections have since been flooded with corporate money. And the court’s reasoning is proving to be wrong: Shareholders of most American companies can't determine whether corporate campaign spending is in their best interest because they haven't been told how the companies are spending in political races.

A way to expose some of these contributions to public scrutiny: the Securities and Exchange Commission could pass a rule demanding more disclosure of political expenditures to shareholders. Last week, a group of legal scholars sent a petition to the SEC urging it to craft rules requiring companies to disclose to shareholders how they use corporate resources for political activities. Shareholders clearly want to know. The SEC should move swiftly to craft such a rule. It has the authority to demand increased corporate disclosure — as it did in the 1990s in tightening rules on the disclosure of executive pay. A uniform rule of disclosure of political contributions in corporate proxy statements once a year or through some other means would help shareholders assess the profitability of a company’s political activities and protect democracy from the flood of money unleashed by the Citizens United decision.