Equifax Lobbied To Kill Rule Protecting Victims Of Data Breaches

As Equifax acknowledges a massive security breach making the names, addresses, social security numbers and more available for fraud and disruption and it appears executives, including the CFO, sold stock before making this information public, it also comes out that Equifax lobbied to make it more difficult for consumers to get damages for exactly this kind of abuse.

Equifax’s lobbying group argued against the prohibition even as it acknowledged that a 2015 government study found “that credit reporting constituted one of the four largest product areas for class action relief” for consumers. Consumer groups countered the claims of CDIA and other rule opponents by saying the ability to file suit is necessary to protect Americans’ legal rights.

Source: Equifax Lobbied To Kill Rule Protecting Victims Of Data Breaches

For more on this issue:

WSJ Nearly Gets it Right on Accountability to Shareholders for Political Expenditures

We can’t argue with this part:

The fiduciary responsibility of a CEO is to safeguard the company’s assets and acknowledge this overriding principle: “It’s not our money but that of the shareholders.”

And we agree that shareholders (they say small but we say all shareholders) should be allowed to sue corporate managers and boards for political expenditures.

But the reasoning that follows in the Wall Street Journal op-ed by Jon L. Pritchett and Ed Tiryakian is skewed. Their definition of “political” would not be recognized by any dictionary and they are wrong in the examples they pick (and ignore) of corporate decisions unrelated to financial metrics.

The authors mean by “political” a decision that puts principle above immediate financial gain. They use as an example Target’s decision to make their bathrooms free from trans-phobia, attributing a drop in stock price to this particular decision. Is there a single Wall Street analyst report suggesting that this is the case? Is there no way to tie this decision to not just human decency but to Target’s brand choice of inclusion and dignity for all customers?

We would argue that the decision had no impact on the stock price and challenge the authors to prove otherwise. And on the topic of politics we would think a better example from Target would be their making a political contribution to a candidate who opposed gay rights contrary to the company’s longtime gay-friendly brand (they liked his economic policies), which led to extended protests and a lot of bad publicity, and then which led to an apology. That is what we consider politics, not making bathrooms available to customers.

The “Christmas cups” at Starbucks example the authors give in the article qualifies as fake news. Starbucks did have Christmas cups. They were red, which is a color associated with Christmas, and just as Christmas-y, or more so, than their previous cup with snowflakes or the one with a snowman, which somehow never offended anyone. Did the year the cup featured ice skaters constitute a “political decision?” It is the very definition of “ordinary business.”

The same applies to the near-unanimous decision of the CEOs to resign from President Trump’s advisory councils. The CEOs who left are experts at cost/benefit and risk/benefit analysis. They understand that associating themselves with a president who cannot bring himself to explicitly oppose Nazis and the KKK carried significant risk of damage to the reputation of their companies and their brands. As for benefit — the councils met just once and were not doing anything. To the extent that any potential prestige was beneficial to their companies, they rationally concluded that it had was disappearing quickly. An article in the Harvard Business Review the same week as the departure from the President’s advisory councils explicitly points to diversity as a brand and reputation enhancer for companies and Professor Jeffrey Sonnenfeld calls the decision to leave “courageous.” David Gelles, who covers business for the New York Times, wrote about the “forthright engagement” of executives.

Even this past week, it was easy to discern careful calculations made by executives who chose to speak out against Mr. Trump. Many faced calls to resign from the presidential advisory councils, and the prospect of boycotts if they did not.

But they also faced notable and new kinds of pressure from within — from employees who expect or encourage their company to stake out positions on numerous controversial social or economic causes, and from board members concerned with reputational issues. In the past week, business leaders have responded with all-staff memos and town-hall meetings.

In short, while companies are naturally designed to be moneymaking enterprises, they are adapting to meet new social and political expectations in sometimes startling ways.

So, Pritchett and Tiryakian have no basis to assume that the decision to leave the councils was motivated by anything other than their fiduciary responsibility to shareholders. We disagree with the authors’ idea of what constitutes “political.” We do agree entirely, though that investors should be able to sue for misuse of corporate assets in truly political expenditures like campaign contributions and lobbying, as for example to thwart environmental or occupational safety or product safety rules. A good first step is to require companies to disclose those payments. We suggest this as the topic for their next op-ed.

How Trump the populist became Trump the corporate shill – NY Daily News

Corporate America has captured the Trump administration. Public Citizen’s research has found that more than 70% of Trump’s picks for top sub-Cabinet jobs have clear corporate ties.In Trump’s Washington, the populism of the campaign has been overtaken by conventional corporate cronyism on a grand scale. After his famous pledge to “drain the swamp,” Trump issued a weak executive order allowing former lobbyists to immediately join the administration and then granted waivers to top White House staffers that render the ethics rules largely meaningless.

Source: How Trump the populist became Trump the corporate shill – NY Daily News

High-powered CEOs at U.S.-India Business Council vote to split from U.S. Chamber – The Washington Post

The Washington Post reports that the Chamber of Commerce, Washington’s most powerful pro-corporate lobby, is having its own governance problems as some of its members are uncomfortable with the positions the Chamber is taking and one group is trying to break off.

The board of the U.S.-India Business Council — whose membership includes the chief executives of Pepsi and MasterCard — has voted unanimously to break off from the U.S. Chamber of Commerce, saying that “recent actions taken by the Chamber have left us with no alternative but to take this vote to formally separate.”The vote by 29 USIBC board members was the culmination of a running battle with U.S. Chamber of Commerce President Thomas J. Donohue that dates back to 2010 and which came to a boil during the recent visit to Washington by Indian Prime Minister Narendra Modi…

The fight between the USIBC, which has about 350 members, and the Chamber was largely about turf and independence. A member of the USIBC board said that Donohue was unhappy that the USIBC invited Vice President Pence to a meeting because Donohue wanted to invite Pence to a different event.

A person close to the USIBC board said that Donohue also wanted to oust certain members of the USIBC board and install others, moves that would be unprecedented in the history of the council.

Donahue is arguing that the USIBC cannot be split off from the Chamber.

Steven Mufson asks if this is a sign that the Chamber’s influence is slipping. The very size and power of the Chamber has led to schisms over policies on issues like health care and climate change.

Companies like GE, which long relied on the Chamber to be their guide and advocate in Washington, are now as politically sophisticated and connected as the Chamber — if not more so. And in an era that allows virtually unlimited independent political spending, they can form their own more focused, and perhaps more effective, associations. Many lobbyists who represent companies individually think the Chamber has taken on the lumbering character of its aging building, a 92-year-old limestone edifice lined with Corinthian columns overlooking the White House.

Source: High-powered CEOs at U.S.-India Business Council vote to split from U.S. Chamber – The Washington Post

Time to have corporate America be honest about political spending | TheHill

In a political environment teeming with corporate giveaways, politicians’ reliance on huge donors to get and remain in power and a president steeped in potential conflicts of interest, it is more important than ever that the U.S. Securities and Exchange Commission (SEC) issue a rule requiring all public companies to disclose their political spending.

Unfortunately, Republicans in Congress are using the federal budget process to stop this from happening. Funding for the government runs out at the end of September, and — even by the tumultuous standard of recent years — the budget process in Congress is in disarray. The process for fiscal year 2018 is already off to a late start, and, making matters worse, Republicans in on the House side are now trying to sneak policy riders that would not otherwise pass into the must-pass budget bills.

This week, the House Appropriations subcommittee on financial services and general government released its budget draft, which includes a harmful policy rider that stops the SEC from working on or finalizing a rule that would require corporations to tell us how they spend money in politics.

Source: Time to have corporate America be honest about political spending | TheHill

“Free Market” Shareholder Proposal on Lobbying Disclosure at Caterpillar

A shareholder proposal on disclosing of lobbying priorities from the right-wing National Center for Public Policy Research’s Free Enterprise Project:

At this week’s Caterpillar annual shareholder meeting, the National Center for Public Policy Research’s Free Enterprise Project (FEP) is asking company investors to support FEP’s shareholder resolution asking the heavy equipment manufacturer to report on how and why it chooses its lobbying priorities.

“After eight years of President Obama’s regulatory overreach, high corporate taxation and executive actions that hampered growth and led to America’s worst economic recovery since the 1930s, we finally have a president willing to work with business leaders on a pro-growth agenda. President Trump is showing an eagerness to increase American manufacturing and bring jobs back to America,” said National Center General Counsel and FEP Director Justin Danhof, Esq. “Our shareholder proposal urges Caterpillar to capitalize on the current political climate to advance the company’s goals and improving shareholder value.”

The labor group CtW also submitted a shareholder proposal at the Caterpillar annual meeting. Theirs was to implement a stronger clawback policy. It received 121,854,679 votes in favor and 292,939,985 votes against. There were votes more than 25 million cast against three of the directors as well.

IRRC Webinar on Corporate Political Spending at the State Level

On March 22, 2017 IRRC is hosting a webinar on its new report with shocking new information on the undisclosed corporate political expenditures at the state level:

Join us to review the latest research from the IRRC Institute, “How Leading U.S. Corporations Govern and Spend on State Lobbying”, conducted by the Sustainable Investments Institute.

Download the research.

This research reveals virtually no disclosure of corporate expenditures related to political lobbying activities at the state level. Even at the federal level, only 25 percent of companies have board-level policies on lobbying and only 12 percent disclose actual spending.

A summary of the findings:

Corporate Policies

 Just one-quarter of the S&P 500 have board-level policies regarding lobbying. However, this is an increase from only 16 percent in 2013. (Chart, p. 9, shows corporate governance trends.)

 By contrast, company oversight and disclosure of election spending is commonplace among the largest American companies, with 90 percent of the S&P 500 having a policy that addresses election contributions and half of the index companies specifically requiring board oversight. Further, 75 percent of the S&P 500 explains which corporate officials oversee election spending.

 The contrast between the level of disclosure about election spending and lobbying is stark. Only 12 percent of S&P 500 companies report how much they spend on lobbying; most only report on spending at the federal level. Voluntary disclosure about state lobbying on company websites is nearly non-existent: Just two companies report appear to report on all their state
expenditures, while 5 percent identify the states where lobbying occurs but not the amounts spent, and 2 percent report on aggregate state spending.

 Companies are revealing more about how much they spend in elections and lobbying but remain reticent about disclosing how much they give to intermediary groups that use corporate money to pursue political objectives—trade associations, non-profit “social welfare” organizations or charities that have clear partisan goals. These intermediaries pursue their goals
at all levels of government through election spending and lobbying. Half of the S&P 500 have some sort of policy on these groups, up from only 14 percent in 2010; and 31 percent of companies make public at least some of their payments to these groups, a three-fold increase from just 9 percent in 2010. Yet most policies are about money in elections, not lobbying.

Source: Register here

The Problem With Roger Lowenstein

Fund manager Roger Lowenstein demonstrates a breathtaking ignorance of government checks and balances in an op-ed for the New York Times, suggesting that Senator Elizabeth Warren does not have the right to ask President Obama to remove Mary Jo White as Chair of the SEC.

He sneers:

Last time I checked, the S.E.C. was a regulatory agency of the executive branch, in which Ms. Warren is not, in fact, employed.

Senator Warren is, on the other hand, a member of the United States Senate, which approves (or not, as Judge Merrick Garland can attest) Presidential appointees like Chair White. The terms “advise” and “consent” make clear the duty of the Senate to oversee Presidential appointees. The Senate is also responsible for the enabling legislation and budget for the Commission, and therefore it is entirely within its jurisdiction and indeed its obligation to review and comment on its activities. And a note: she did not call for Chair White to be “fired,” as Lowenstein claims. Commissioners cannot be fired. But the Chair designation is within the authority of the President to reassign and it is entirely within the authority of a Senator (or anyone else, for that matter) to suggest that he do so. (Does anyone remember Lowenstein objecting to the House considering impeachment of the Commissioner of the IRS? For some reason, that did not offend his sense of propriety.)

In fact, it is a provision imposed by Congress in the Commission’s budget that prevents it from issuing rules that would require companies to disclose their direct and indirect campaign contributions and lobbying expenditures.

Lowenstein writes:

Actually, dredging up the details of political spending has nothing to do with protecting investors, though it might fall into the category of “things corporations do that some people do not like.”

Actually, it falls into the category of “things the Supreme Court explicitly predicated the Citizens United decision on.”

In the majority decision, Justice Kennedy Anthony M. Kennedy said that corporate political spending depends on the ability of shareholders to ensure that the speech reflects their views rather than diverting corporate assets for the benefit of executives. He suggested that any abuse could be corrected by shareholders “through the procedures of corporate democracy.” He said this would happen because all political spending will be thoroughly disclosed online: “With the advent of the Internet, prompt disclosure of expenditures can provide shareholders and citizens with the information needed to hold corporations and elected officials accountable for their positions and supporters.”

Justice Kennedy correctly notes that the expenditure of corporate assets for political purposes can only be legitimated by transparency and a robust market response.

Senator Warren’s comments on Chair White were accurate, appropriate, and civil. Lowenstein’s criticism of Senator Warren was not.

Source: The Problem With Elizabeth Warren – The New York Times

John Bogle Wants Companies to Stop Hiding Their Political Contributions | Huffington Post

VEA Vice Chair Nell Minow writes in the Huffington Post:

Citizens United invalidated limits on corporate political spending. It is one of the most controversial Supreme Court decisions of this generation and its impact on our political system has been enormous, if incalculable. And yet, one of the key findings in Justice Kennedy’s majority decision, one of the key bases for the ruling, is factually wrong.

Justice Kennedy wrote that if shareholders oppose political expenditures made by management, they will be able to correct the situation “through the procedures of corporate democracy.” He said this would happen because all political spending will be thoroughly disclosed online: “With the advent of the Internet, prompt disclosure of expenditures can provide shareholders and citizens with the information needed to hold corporations and elected officials accountable for their positions and supporters.”

The problem is that the Supreme Court did not make corporate political contributions contingent on disclosure. That leaves us with the worst of both worlds. Executives can use unlimited corporate money to elect and influence politicians and shareholders have no ability to discover how and how much. Even if they did, the conflicts of interest and lack of disclosure within the financial services industry impose so many layers between investors and their money and so many restrictions on investor oversight that shareholder oversight is all but vestigial.

No one has thought more deeply and meaningfully about this problem than the man who created the modern mutual fund system, Vanguard founder John Bogle. He supports “proxy access,” giving investors the right to propose alternate candidates for the board of directors. He supports transparency, disclosure of the process, amount, and recipients of corporate political contributions.

And Bogle supports a proposal for an SEC rule that would require companies to disclose their spending in politics. That proposal has received a staggering and unprecedented number of comments in support from more than 1.2 million Americans. But it is stalled now because Congress cut off funding to move it forward — apparently due to exactly the kind of undisclosed corporate political contributions the rule would make public.

Bogle wrote in the New York Times:

For all its faults, the Citizens United ruling upheld the disclosure requirements of the campaign financing law, and I had hoped full disclosure might limit corporate contributions. But in fact, corporations are able to exploit provisions in the law governing nonprofit groups to make lavish political contributions without disclosure, making it easier than ever for cash to subvert our political system. Action to limit contributions at the corporate level is therefore urgent.

Indeed, the Supreme Court itself put the onus on shareholders to control corporate political giving. In his opinion for the majority in Citizens United, Justice Anthony M. Kennedy predicated the First Amendment right of free speech on the ability of shareholders to ensure that the speech reflects their views rather than diverting corporate assets for the benefit of executives. He suggested that any abuse could be corrected by shareholders “through the procedures of corporate democracy.”

Bogle calls on institutional shareholders to insist on better disclosure. “America’s institutional investors must stand up to the Supreme Court’s misguided decision and bring democracy to corporate governance, recognize conflicts that arise from the interlocking interests of our corporate and financial systems, and take that first step along the road to reducing the dominant role that big money plays in our political system.”Bogle spoke with members of the Corporate Reform Coalition this month, reiterating his belief that shareholders, as owners, are entitled to the information about how corporate money is used to influence elections and politicians.

Source: John Bogle Wants Companies to Stop Hiding Their Political Contributions | Huffington Post