The Shareholder Protection Act of 2013: Another Invisible Initiative
This post is in continuation of a series of posts that address rulemaking and shareholder disclosure after Citizens United.
On April 25, 2013, Congressman Michael E. Capauano re-introduced the Shareholder Protection Act of 2013, H.R. 1734, (“Act”) to the United States House of Representatives, which would amend the Exchange Act to require: (1) a majority vote of shareholder authorization prior to corporate political expenditures; (2) a Board of Directors vote authorizing any expenditure over $50,000; and, (3) a quarterly disclosure of the corporate expenditures to the shareholders, the Securities and Exchange Commission (“SEC”), and the public, with significant expenditures being disclosed on-line within 48 hours.
Congressman Capuano first filed the Act in 2010 in response to the then recent Supreme Court opinion in Citizens United v. Federal Elections Commission, 558 U.S. 310 (2010). The Court noted that “Government may regulate corporate political speech through disclaimer and disclosure requirements” and that today’s advanced technology would allow prompt disclosure to shareholders and the public. Prompt disclosure, in turn, would facilitate the exercise of control over the expenditures by shareholders.
With the advent of the Internet, prompt disclosure of expenditures can provide shareholders and citizens with the information needed to hold corporations and elected officials accountable for their positions. Shareholders can determine whether their corporation’s political speech advances the corporation’s interest in making profits, and citizens can see whether elected officials are “ ‘in the pocket’ of so-called moneyed interests.” Disclosure would, therefore, provide transparency and facilitate accountability to shareholders.
According to a press release, Congressman Capuano supported the Act because he believed the decision in Citizens United gave corporations an “outsized voice in the political process.” Senator Robert Menendez also supported the Act, stating “[e]nough is enough. Individual citizens should determine the outcome of our elections, not multi-billion-dollar corporate interests, or worse, a foreign government, so it’s time we pass this legislation to give shareholders a voice over how their corporate dollars are spent on elections.” Thirty-six House Representatives, comprised entirely of Democrats, co-sponsored the Act.
In addition to congressional support, a coalition letter was submitted, expressing concern not only for shareholders and the public, but also for the electoral system. The letter noted that unregulated corporate political spending would foster more negative attack ads, compounding the present public cynicism associated with elections.
Although the Act was referred to the House Committee on Financial Services (“Committee”) the same day it was introduced, the Committee has not proceeded with the Act. At this juncture, it seems highly unlikely that Congress will enact the Act. In fact, govtrack.us gives it a 0% chance of being enacted.