Some common sense from the Journal's readers (including former SEC Commissioner Gallagher):
For the past several years, a small group of politically motivated investors has submitted corporate proxy proposals related to lobbying and public-policy advocacy expenditures, ranging from requiring companies to disclose their trade association contributions to banning political spending and lobbying altogether. With very few exceptions, supermajorities of shareholders reject these proposals year after year at company after company. The reason is clear: Investors interested in economic returns, rather than political goals, realize that public-policy advocacy is essential for building shareholder value in corporations (“Political Giving Captures Spotlight,” Business & Tech., April 5).
Frustrated by this dearth of shareholder support, special-interest groups have sought to pressure the SEC to adopt rules that they believe would curtail disagreeable corporate speech. Fewer than a dozen union, special-interest shareholders and partisan political groups flooded the SEC with 1.2 million mostly identical form letters demanding a rule-making.
Ultimately, the SEC isn’t the appropriate body to address this issue, primarily because the SEC has the authority to require disclosure only of information on material expenditures. Rational investors don’t consider this information material to their investment decision-making. Disclosure, untethered to materiality, becomes a political game inviting limitless potential for mischief. The SEC is ill-suited to regulate campaign finance and should instead focus on its mission of regulating capital markets and protecting investors.
Daniel M. Gallagher
Washington
Mr. Gallagher served as a commissioner of the U.S. Securities and Exchange Commission from 2011-15.
Why the passion for disclosure of political spending details related to an expense item that is de minimis? The only purpose of disclosure is so liberals can use the information to pressure companies that support conservative causes and politicians. Whether one believes that full transparency is a Holy Grail, one has to be impressed by the persistence of the left’s proxies—public-employee and union retirement systems with trillions of dollars in aggregate assets—in using proxy season to keep the spotlight on corporate political spending. Transparency advocates will plug away at shareholder resolutions until companies one-by-one give way or until the SEC acts. It is impossible for conservatives to be nearly as passionate about keeping nonmaterial expense items out of the spotlight although the implications of not doing so are material for union-friendly politicians.
Edward Smith
Columbia, S.C.
