Archive for the ‘Campaign Finance’ Category

This week, the Corporate Reform Coalition released a video interview with Vanguard Group’s founder, John C. “Jack” Bogle, about his vision in 1975 to set up a different kind of mutual fund company and how he thinks companies should best serve their shareholders.

Watch Vanguard’s founder Jack Bogle talk about a shareholders right to information like a company’s political spending.

Bogle, who founded Vanguard over 40 years ago based on a novel principle at the time- that a mutual fund company should be owned by the shareholders of its funds and not just by management- remains committed to that vision today. He fosters that commitment by speaking out on broader investor issues, for example, corporate political spending disclosure.

Bogle has submitted public comment to the U.S. Securities and Exchange Commission (SEC) on the securities law professor’s petition calling for the SEC to put forth a rulemaking that would require publicly- held companies to disclose how they spend money in politics. When asked why he commented on the petition Bogle replied, “It’s the shareholder’s right to know what we are all doing,” referring to corporate activities.

bogle-shareholder-right2-twitterBogle’s remarks come at a significant time. Investor advocates are reaching a tipping point in their push for the SEC to issue a rule requiring companies to disclose how they spend money in politics.

As of October 21, outside spending in the 2016 election alone has totaled over $1 billion, much of which is coming from dark money groups that do not have to disclose their donors. This makes it impossible to track secret corporate influence. American know that more dark money in our politics is not good for the health of our democracy, but when faced with adversaries such as giant corporations it’s hard to see an easy way to make change.

One way to combat secret corporate influence is to bring it into the light, which this disclosure rulemaking would do. Unfortunately, the SEC has been dragging its feet on the rulemaking and Congressional Republicans have helped the stagnation by inserting an inappropriate policy rider into the federal budget forbidding the SEC from finalizing (though not from working on) the rule.

For the last decade, investors have been filing shareholder resolutions at individual companies and seeing promising responses from many who are interested in increasing their transparency. Without a uniform rulemaking, though, others are allowed to continue to keep shareholders and the public in the dark about how they spend in politics. Even those who do disclose may not do it the same way as other corporations, making it hard for investors to actually use the information to make corporate comparisons.

How do mutual funds fit into this picture? The major ones, like Vanguard and BlackRock, have incredible power in corporate elections; power accumulated from the millions of retirement savings accounts they manage. With the volume of shares they control, the major mutual funds can and should support shareholder resolutions calling for political spending disclosure. Instead, Vanguard, specifically, either votes against or abstains from voting for these resolutions at the companies where its clients’ savings are invested. The weight of the major mutual fund vote means that many times resolutions fail to get majority support without it.

All shareholders, whether the traditional kind or those who own shares through their mutual fund investments, “are entitled to the information they want, they’re owners,” says Bogle in the interview. Therefore, if shareholders are calling for information about how companies spend money in politics so that they can weigh the reputational risk of this activity, companies should listen and increase their transparency.

The gravity Jack Bogle continues to hold within the investment community is immense, and we should heed his words about shareholder rights. The SEC should make strides on the political spending disclosure rule and Congress should not stand in its way. Until the rule is finalized, though, mutual funds should not hamper the efforts of shareholders calling for disclosure at individual companies.

Bogle seems optimistic that the tide is turning in shareholders’ favor. “When shareholders aren’t served first the world will change,” he says. “And it is changing.”

Originally published on the Corporate Reform Coalition’s website.

It’s clear that Americans want transparency when it comes to how companies spend in politics.

Courtesy Flickr/Almond Butterscotch.

Courtesy Flickr/Almond Butterscotch.

The next administration and the U.S. Securities and Exchange Commission (SEC) must address secret corporate political spending because it poses a great threat to democracy and investor confidence, says a new report by Public Citizen. The report, highlighting the historic campaign for an SEC rule requiring publicly held corporations to disclose their political spending, comes in advance of a Sept. 20 event on the state of corporate disclosure and as Public Citizen and its partners in the Corporate Reform Coalition (CRC) review and plan ahead for a new administration and new SEC priorities.

The Sept. 20 event is organized by Public Citizen, the AFL-CIO, Americans for Financial Reform, Ceres the Financial Accountability & Corporate Transparency (FACT) Coalition, the International Corporate Accountability Roundtable (ICAR), Patriotic Millionaires and SIF: The Forum for Sustainable and Responsible Investment, and hosted by the Center for American Progress. It will explore the SEC’s recent “Disclosure Effectiveness” review, which is evaluating corporate disclosure requirements, and the role of environmental, social and governance disclosures in promoting a sustainable economy.

The report details how a five-year campaign has driven 1.2 million comments to the SEC in support of a disclosure rule – the most in the agency’s history. The campaign also has garnered more than 500 stories in local and national press, and brought together powerful champions on Capitol Hill who are working to ensure that an SEC rulemaking on disclosure is not obstructed by congressional Republicans’ insertion of a harmful policy rider into the appropriations process that would stop the SEC from finalizing the rule. In addition, another 20,000 comments supporting political spending disclosure have come into the agency as comments to its “Disclosure Effectiveness” review process and to the agency’s Regulation S-K concept release, which solicited comments on proposed changes to corporate financial statement requirements.

The campaign began in response to the disastrous 2010 U.S. Supreme Court decision in Citizens United v. FEC, which opened the floodgates for corporations to spend unlimited and undisclosed amounts to influence American politics. In 2011, a bipartisan committee of leading corporate and securities law professors filed the first petition requesting a rulemaking at the SEC requiring all public companies to disclose their political expenditures. In response, the agency began a rulemaking, then halted it.

In this election cycle, secret outside spending is the highest it has ever been, clocking in at a whopping $660 million. Americans know that corporate influences lurk behind most campaign ads. Polls show they remain frustrated by the lack of transparency around corporate political spending.

Disclosure is material to investors as they consider the risk of their investment and important to the American voters who want to know who is bankrolling their elections. The SEC needs to take a stand and move forward with this rulemaking.

Transparency controversies have dominated this year’s presidential campaign, but observers might be missing one of the most important transparency-related topics of all: What insight will the public have into the candidates’ transition planning?

This and other related questions were covered during a National Press Club event sponsored by Public Citizen on Wednesday that featured the deputy general counsel for President-elect Obama’s 2008 transition team, an expert helping the two major party nominees conduct their transition planning right now, a leading academic expert and advocates with varying perspectives.

Norman L. Eisen, the deputy general counsel to Obama’s transition team, said the 2008 work was the last “pre-historic” transition effort because laws passed by Congress since then have formalized processes for the transfer of power from outgoing to incoming administrations.

Eisen, who subsequently became the “ethics czar” of the Obama administration, also promoted Obama’s decision to adopt an ethics policy for transition team members and to implement various sunshine-oriented policies, such as making the White House visitors’ log public.

But Taylor Lincoln, research director of Public Citizen’s Congress Watch division, noted that various measures Congress has passed to make the transitions more efficient have done little to ensure that transitions are conducted in accordance with small-d democratic principles. Despite the fact that transition work is largely publicly funded, the open records and ethics rules that apply to normal government activities do not apply to it.

These shortcomings are significant because the work of transition teams might be among the most important in a presidential administration, Lincoln said, noting that these teams choose the personnel to fill key positions and formulate policy positions.

Sean Moulton, open government project manager at the Project on Government Oversight, advocated applying the Freedom of Information Act to certain transition period records.

Heath Brown, assistant professor of Public Policy at the City University of New York, pointed out that much of the record from past transitions has been lost to history because records were not retained.

Kevin R. Kosar, senior fellow and governance project director at R Street Institute, indicated general agreement with the principle of transparency but noted a tension between transparency and privacy concerns. He noted that transition teams vary for ordinary government work because of hazy lines that separate official participants with informal advisors on the periphery.

Also on the panel was David Eagles, director of the Center for Presidential Transition at the Partnership for Public Service, which is advising the current nominees on their ongoing work. An alum of Mitt Romney’s transition planning team, Eagles noted a significant increase in the comprehensiveness of transition processes in recent years.

Public Citizen will be revisiting this issue next week with the release of a report on the policy advisors closest to Hillary Clinton and Donald Trump.

Here are some photos from the event:
Presidential Transition Event

village-1357192_640At a time when public approval of Congress remains near all-time lows, revisiting campaign finance laws is critical. Party officials have recommended members spend roughly twice as much time fundraising as they do on the floor or in committee. U.S. House members raise on average $2,400 every single day of their term. U.S. Senators will raise roughly twice that.

These campaign spending increases are reflected at the state and local level as well. For example, a single local school board race in California resulted in over $3.5 million in inside and outside spending. The tides may be shifting, however.

California is now poised to enact a law which would lift the state’s ban on publicly financed campaigns. SB 1107 passed with bipartisan backing last week. It gives local and state government to option stick with the current system or switch to public financing. The bill requires public financing laws have a dedicated funding source and that funds be “available to all qualified, voluntarily participating candidates for the same office without regard to incumbency or political party preference.”

Public Citizen’s members in California sent over 1,200 letters to their assembly members in the days leading up to the vote. All that’s left is for Gov. Jerry Brown to sign the bill.  You can contact his office at (916) 445-2841 and ask him to sign SB 1107.

Voters in California will have further opportunity to express their frustration with the current system when Proposition 59 appears on their ballots this November. It is a resolution that calls on California legislators to do everything they can to overturn Citizens United v. Federal Election Commission. Yesterday, the Sacramento Bee endorsed the measure, which is backed by groups such as California Common Cause, calPIRG, Courage Campaign and others.

By Anisha Sehgal

Both consumers and healthcare payers are struggling with the rising price of drugs. Unless meaningful reforms are enacted, this problem will only get larger and patients will continue to face crippling out-of-pocket costs in order to care for themselves and their loved ones. The Medicare Part B demonstration is an example of such a reform and would begin to repair the dysfunctional way that we pay for prescription drugs. Unfortunately for patients, the pharmaceutical industry has mounted considerable opposition to this reform and it is not alone. Politicians and organizations such as patients’ groups have also voiced their objection. However, the majority of these individuals and groups have received industry funding.

A recent Public Citizen report revealed that of the 147 patients’ groups who have signed letters objecting to the Medicare Part B demonstration at least 110 (75%) received funding from pharmaceutical or medical device corporations. Since patients’ groups are not required to disclose their funding sources there may be even more than the 110 groups identified by the report that received money from pharma.

The letter organized by the Community Oncology Alliance was sent to congressional leadership while the letter organized by the Partnership to Improve Patient Care was sent to the Center for Medicare and Medicaid Services (CMS). Along with the 147 patients’ groups, 241 doctors’ groups and pharmaceutical industry groups — both of which benefit from the maintaining the status quo of the current reimbursement method — signed either of the two letters opposing the reform. The letters’ combination of patients’ groups as well as industry groups, such as local Biotechnology Innovation Organization (BIO) affiliates, demonstrates the close ties patients’ groups have with the pharmaceutical industry.

In 2015, Part B spending reached $22 billion, double the amount it was in 2007. A reform such as this is necessary in order to remedy Medicare Part B’s unsustainable spending trend. The Medicare Part B demonstration, which is supported by numerous consumer interest groups including Public Citizen, aims to remove incentives for doctors to unnecessarily prescribe higher priced medicines when effective and affordable alternatives are available. Currently a physician who administers a drug under Medicare Part B will be reimbursed for the average sales price plus six percent. The demonstration proposes changing the reimbursement to the average sales price plus 2.5 percent and a flat dollar amount.

The pharmaceutical industry is strongly opposed to this reform because a decrease in the prescription of higher-priced drugs means a decrease in the industry’s profits. In fact, the industry has already spent more than $9 million in campaign funding for members of Congress, which is strongly correlated with lawmakers’ stances on the issue, as revealed by another recent Public Citizen report.

The pharmaceutical industry’s troubling pattern of influence raises questions about the independence of this reform’s opponents. Patients’ groups should reconsider their stance on this issue and realize that in this debate pharma is only looking out for itself, not for the deserving patients of this country.

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