Will Disclosure Fight Doom SEC Nominees?

Will Disclosure Fight Doom SEC Nominees?

(Photo: AP/Susan Walsh)


The question of whether the Securities and Exchange Commission should require public corporations to more publicly disclose their political spending has emerged as a growing point of contention in Senate deliberations over who should serve on the SEC.

At a Senate Banking Committee hearing this week to consider two potential commissioners nominated by President Barack Obama—Democrat Lisa Fairfax and Republican Hester Pierce—Democrats on the panel called on both candidates to state whether they think the SEC should step up corporate political disclosure requirements.

Senators Chuck Schumer of New York, Jeff Merkley of Oregon, and Robert Menendez of new Jersey all signaled that the nominees would need to be crystal clear that they support the corporate disclosure rule if they want to move forward in the process.

Republicans attached a rider to a federal spending bill last year that explicitly blocks the SEC from implementing the corporate disclosure rule, arguing that a corporation’s political spending is immaterial to shareholders. Democrats have since doubled down on their support for the rule, which they contend is essential to corporate political transparency.

However, both Fairfax and Pierce danced around the controversial issue and did not offer much assurance to Democrats. “I think there is certainly an argument to be made that it is material,” Fairfax said, without committing any further. Pierce, the Republican, punted, saying she would need to examine the details of such a rule before staking out a position.

That prompted Schumer to warn the nominees that he was “leaning against both your nominations” because their answers were unclear.

Senate Democrats have argued that the GOP rider doesn’t keep the SEC from doing preparatory work on the rule, and they have pressed SEC Chair Mary Jo White to take it up—so far, to no avail. Their strategy now seems to be to force nominees to go on the record about the rule, as a means to increase pressure on the SEC to act.

The Senate must now decide whether it wants to consider the SEC nominations on the floor, a process that is sure to be contentious given the prominence of the issue of financial regulations so far in the 2016 presidential election.

Meanwhile, Schumer has indicated that he may follow up with the nominees and insist that they more clearly explain their positions in writing.

“This issue is something that’s risen to such prominence among investors and politicians that it’s no longer appropriate to be vague on this,” says Lisa Gilbert of Public Citizen, an advocacy group that is lobbying for the SEC rule.