WSJ letter to the editor: Disclosure Is Just a Means to a Political End

Public-policy advocacy is essential for building shareholder value in corporations.

April 14, 2016 3:06 p.m. ET

For the past several years, a small group of politically motivated investors has submitted corporate proxy proposals related to lobbying and public-policy advocacy expenditures, ranging from requiring companies to disclose their trade association contributions to banning political spending and lobbying altogether. With very few exceptions, supermajorities of shareholders reject these proposals year after year at company after company. The reason is clear: Investors interested in economic returns, rather than political goals, realize that public-policy advocacy is essential for building shareholder value in corporations (“Political Giving Captures Spotlight,” Business & Tech., April 5).

Frustrated by this dearth of shareholder support, special-interest groups have sought to pressure the SEC to adopt rules that they believe would curtail disagreeable corporate speech. Fewer than a dozen union, special-interest shareholders and partisan political groups flooded the SEC with 1.2 million mostly identical form letters demanding a rule-making.

Ultimately, the SEC isn’t the appropriate body to address this issue, primarily because the SEC has the authority to require disclosure only of information on material expenditures. Rational investors don’t consider this information material to their investment decision-making. Disclosure, untethered to materiality, becomes a political game inviting limitless potential for mischief. The SEC is ill-suited to regulate campaign finance and should instead focus on its mission of regulating capital markets and protecting investors.

Daniel M. Gallagher


Mr. Gallagher served as a commissioner of the U.S. Securities and Exchange Commission from 2011-15.