January 22, 2013

Battle Lines Being Drawn: Political Spending Disclosures

Despite the Presidential Election now far behind us, interest in disclosure of political spending continues to be very high by a group of investors. Recently, I blogged about how the number of comments on the rulemaking petition seeking political spending disclosures is now up to 320,000. I also blogged about the likelihood of the SEC proposing rules in this area by sometime in April, as blogged about by Prof. Lucian Bebchuk. The prospect of a rulemaking drew great interest in the media, with over 20 newspapers carrying the story a few weeks back (here is a list of links to those stories). And on "The Mentor Blog," I noted New York State Comptroller has filed a Section 220 books & records lawsuit in Delaware against Qualcomm a few weeks ago. So investors are pressing for more disclosure on numerous fronts.

Now, the Chamber of Commerce has fired back by submitting this 30-page comment letter on the rulemaking petition. As noted by Ning Chiu in this blog, the Chamber's response sounds the alarm by noting that: "A number of recent Commission regulations have been set aside by the courts for failing to satisfy this standard--the Commission should not waste precious public resources on a rulemaking exercise that is similarly doomed to failure." Perhaps some of the Chamber's concerns would be addressed if the DISCLOSE Act ("Disclosure of Information on Spending on Campaigns Leads to Open and Secure Elections Act of 2013") were enacted. Rep. Chris Van Hollen (D-MD) reintroduced the bill - HR 148 - just after the New Year. This battle likely has just begun (although the war has spanned decades)...

Here's an example illustrating the methods being used to attract so many comment letters on this petition. Credo uses this page to facilitate the submission of a form comment letter. Online campaigning continues to grow as I have predicted for years...although I thought it would happen in the annual shareholder meeting context...

Political Spending: What Can You Do Now? Our Checklists & Samples

In our "Political Contributions" Practice Area, I have posted a number of items that can help you navigate this hot topic, including three checklists and a sample monitoring memo. Check them out!

Corp Fin Updates Financial Reporting Manual (Again)

On Friday, Corp Fin indicated that it has updated its Financial Reporting Manual for for issues related to significance testing for related businesses, auditor responsibility for cumulative period from inception amounts, PCAOB requirements for auditors of non-issuer financial statements, and other changes.

- Broc Romanek