May 21, 2019

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CalPERS To Consider Support For Corporate Political Spending Disclosure Mandate

Next week, the California Public Employees Retirement System will consider a staff recommendation “to update the legislative and policy guidelines to include support for Securities and Exchange Commission (SEC) rulemaking on disclosure of the use of corporate resources for charitable and political activities.” 

Under the California Constitution (Art. XVI, § 17(b)), the members of CalPERS’ Board of Administration have a fiduciary duty to “discharge their duties with respect to the system solely in the interest of, and for the exclusive purposes of providing benefits to, participants and their beneficiaries, minimizing employer contributions thereto, and defraying reasonable expenses of administering the system.”  This duty to CalPERS’ participants and their beneficiaries must “take precedence over any other duty”.   The staff’s recommendation is notable for the complete absence of any analysis, much less data, that would support the conclusion that an SEC rule would improve the CalPERS’ investment returns.  If CalPERS has no evidence or analysis, how can it adopt the recommendation consistent with its fiduciary obligations?

The staff’s recommendation also includes this eye-popping statement:

Since Citizens United [v. Federal Election Comm’n, 130 S.Ct. 876 (2010)] there have been more than 500 shareowner proposals focused on corporate political donations, 4 have passed.  CalPERS has voted on these proposals regarding political donations in line with the Global Governance Principles, voting in support in the overwhelming majority of cases.

Thus, CalPERS is now trying to get the government to impose a requirement that stockholders have in almost every case rejected.

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About this Author

Keith Paul Bishop, Corporate Transactions Lawyer, finance securities attorney, Allen Matkins Law Firm
Partner

Keith Paul Bishop is a partner in Allen Matkins' Corporate and Securities practice group, and works out of the Orange County office. He represents clients in a wide range of corporate transactions, including public and private securities offerings of debt and equity, mergers and acquisitions, proxy contests and tender offers, corporate governance matters and federal and state securities laws (including the Sarbanes-Oxley Act of 2002 and the Dodd-Frank Act), investment adviser, financial services regulation, and California administrative law. He regularly advises clients...

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