January 8, 2013

The SEC Ponders Circumventing Citizens United

J. W. Verret

Senior Affiliated Scholar
Summary

In its January 2010 Citizens United v. FEC decision, the U.S. Supreme Court recognized the First Amendment rights of corporations and unions to spend money in support of causes important to their members. In response, Democrats in Congress introduced a bill requiring publicly traded corporations to disclose these expenditures. The so-called Disclose Act would have expanded the Securities and Exchange Commission's authority to require disclosure of financially relevant information to include small political expenditures.

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In its January 2010 Citizens United v. FEC decision, the U.S. Supreme Court recognized the First Amendment rights of corporations and unions to spend money in support of causes important to their members. In response, Democrats in Congress introduced a bill requiring publicly traded corporations to disclose these expenditures. The so-called Disclose Act would have expanded the Securities and Exchange Commission's authority to require disclosure of financially relevant information to include small political expenditures.

The bill failed to pass the Senate in 2010, and last year a scaled-down version got even less traction. The original sponsors of the Disclose Act were those lawmakers with the strongest union ties, presumably because using the SEC to disclose corporate political speech meant that unions would escape regulation.

Failing to pass the bill, union officials and prominent Democrats organized a letter-writing campaign asking the SEC to develop a rule requiring disclosure anyway. Shortly after President Barack Obama's victory in the November election, SEC officials announced that they are indeed designing a disclosure rule for corporate political expenditures.

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