Sale among Group Petitioning SEC to Adopt Disclosure Rule on Corporate Political Spending

Hillary Sale, the Walter D. Coles Professor of Law and professor of management, is among 10 academics who are petitioning the Securities and Exchange Commission (SEC) to adopt a rule requiring that information on political spending be disclosed to shareholders of public companies.

The group, known as the Committee on Disclosure of Corporate Political Spending, submitted their petition for rulemaking under Section 14 of the Securities Exchange Act of 1934. The 11-page petition argues that:

  • the request for the new rule is in line with SEC rules that have evolved over time to address investor interests, changes in disclosure practices, and related external events;
  • public investors have expressed an interest in information on political spending;
  • many public companies are already voluntarily disclosing such information; and
  • disclosure is important for accountability mechanisms, including those used by courts considering corporate political speech matters.

The committee is urging the SEC to draw on both the voluntary mechanisms and the SEC’s prior experience in rulemaking to promptly create the new rule. The committee cites several examples of SEC rules that have been adopted related to investor interest, including those governing disclosure of executive pay and of director oversight of risk-taking. The petition notes that recent market events also have made the need for disclosure of director oversight of risk-taking more critical.

“Our research from investor polls, shareholder proposals, and policy statements indicates that public investors are highly interested in information regarding corporate political spending,” Sale says. “The SEC should address the need for transparency in political spending to better inform shareholders and allow them to protect themselves from hidden political agendas in corporate campaign spending.”

The committee recommends that in creating the rule, the SEC should:

  • allow for a “de minimis exception on corporate spending on political activity,” but set a low threshold;
  • use the existing proxy-disclosure regime as the method for how often investors should be provided with this information; and
  • specify the political spending that should fall under the rule.

An expert in securities and corporate governance, Sale has written extensively on securities and corporate governance matters, including redesigning the SEC, independent directors as securities monitors, derivative litigation, and corporate law and governance. She is the co-author, with John C. Coffee, Jr., of a casebook on federal securities regulation, now in its 11th edition, and of a book on federal securities laws, rules, and forms.

In addition to Sale, other committee members, who all are all experts in corporate governance and securities law, are:

  • Lucian A. Bebchuk, the William J. and Alicia Townsend Friedman Professor of Law, Economics and Finance, Harvard Law School;
  • Bernard S. Black, the Chabraja Professor, Northwestern University Law School and Kellogg School of Management;
  • John C. Coffee, Jr., the Adolf A. Berle Professor of Law, Columbia Law School;
  • James D. Cox, the Brainerd Currie Professor of Law, Duke Law School;
  • Ronald J. Gilson, the Charles J. Meyers Professor of Law and Business, Stanford Law School, and the Marc & Eva Stern Professor Law and Business, Columbia Law School;
  • Jeffrey N. Gordon, Alfred W. Bressler Professor of Law, Columbia Law School;
  • Henry Hansmann, the Oscar E. Ruebhausen Professor of Law, Yale Law School;
  • Robert J. Jackson, Jr., associate professor of law, Columbia Law School; and
  • Donald C. Langevoort, the Thomas Aquinas Reynolds Professor of Law, Georgetown Law School.

[view ] petition

[view ] New York Times op-ed