On August 3, 2011, a group of leading academics, including Harvard Law School Professor Lucian A. Bebchuk, submitted this petition for rulemaking to the Securities and Exchange Commission. The petitioners asked the SEC to adopt rules requiring public companies to disclose to shareholders the use of corporate resources for political activities. Three days later, I submitted this letter opposing the idea. In Shining Light on Corporate Political Spending, Professor Bebchuk and Columbia Law Professor Robert J. Jackson, Jr. cite my letter and offer up some counter arguments. Their paper is forthcoming in The Georgetown Law Journal, Volume 101, April 2013 but if you can’t wait, it can be downloaded here.
My letter was followed by hundreds of thousands of letters in support of the petition (most of which were form letters). For more about rulemaking petitions, see Petitioning the Securities and Exchange Commission.
Yesterday, Professor Bebchuk published this post on the Harvard Law School Forum on Corporate Governance and Financial Regulation announcing that the ”Securities and Exchange Commission recently updated its entry in the Office of Management and Budget’s Unified Agenda to indicate that, by April, it plans to issue a Notice of Proposed Rulemaking on requiring public companies to disclose their spending on politics.” But what exactly is the Unified Agenda and does this mean that the SEC will, in fact, be adopting a rule?
The Unified Agenda of Federal Regulatory and Deregulatory Actions is a semiannual compilation of information about regulations under development by federal agencies, published in the spring and fall. In the fall of 1993, President Clinton issued Executive Order No. 12866 in order to enhance the planning and coordination of both new and existing regulations. Section 4 of the Executive Order requires each agency to prepare an agenda of all regulations under development or review. The description of each regulatory action must contain, at a minimum, a regulation identifier number (RIN), a brief summary of the action, the legal authority for the action, any legal deadline for the action, and the name and telephone number of a knowledgeable agency official.
Here is the SEC’s agenda entry with respect to the political spending disclosure rule. The full SEC agenda lists numerous other rulemaking matters at various stages ranging from “prerule” to “final”.
The SEC’s entry laconically states “The Division [of Corporation Finance] is considering whether to recommend that the Commission issue a proposed rule to require that public companies provide disclosure to shareholders regarding the use of corporate resources for political activities.” Does this mean that the SEC will be adopting a rule? Professor Bebchuk in his post takes the optimistic view that “this update makes clear that the SEC’s consideration of this issue will result in a Notice of Proposed Rulemaking.” I’m not so sure. After all, multa cadunt inter calicem supremaque labra (loosely, “there’s many a slip twixt the cup and the lip”). Erasmus, Adagia, I, v, 1. If the SEC does proceed, it should be prepared for another inundation of comment letters.