Let’s see what’s under the hood

My first attempted car purchase was harrowing. I made the mistake of going to a used car dealership. As a young woman, I was given the “hard sell.” Jargon was thrown at me, fast talking, special deals were offered “if I bought on the spot.” I broke into a cold sweat, overwhelmed by the enormity of what I didn’t know about the cars and fully aware that it would definitely hurt me. I just didn’t have the money to lose. In one of my smarter moves, I walked away and settled for my bike and the bus for another year.

I’m older now, but I’m getting the same run around — this time as a shareholder. A number of the largest, richest, corporations in America are hiding important information from shareholders — and this is especially true in the wake of the Citizens United Supreme Court decision. Corporate managers can spend corporate money for all kinds of political campaigns — and they can keep that spending totally in the dark. No one gets to know to whom the money goes or how much is spent. Not shareholders. Not even boards of directors.

As a smart shopper, I don’t like this. As an investor, it’s anathema. Show me one investor who says “Losses on mortgage-backed securities kept secret? Awesome! Let me in on that. The less I know about a corporation’s finances and spending, the better!” Or “Secret ‘off balance sheet’ debt? GREAT!” Following the recent financial crisis, stockholders in AIG and a host of other corporations were definitely hurt by what they didn’t know.

“Dark” political spending is no different. When a corporate CEO can sprinkle corporate money — MY money as a shareholder — around to political concerns and causes without ANY sunlight and accountability, it’s only a matter of time before cronyism gets in the way of shrewd decision-making. Investors have been hurt and will continue to be hurt; they need to know. To be good fiduciaries, fund managers need to know too. It’s common sense. That’s why so many big fund managers have pressed the Securities and Exchange Commission to start to REQUIRE corporations to disclose political spending as a matter of course. At last count, funds representing more than $690 billion under management have told the SEC in official comments to get started on pushing out this requirement. Over one half million shareholders have written to the SEC asking for the requirement. The SEC should act. Shareholders need to be able to look under the hood. And without a law requiring corporate managers to disclose political spending, we simply can’t. We deserve better.