September, 23 2019, 12:00am EDT
For Immediate Release
Contact:
Rachel Curley, rcurley@citizen.org, (202) 454-5195
Don Owens, dowens@citizen.org, (202) 588-7767
Public Citizen experts available for interviews:
Rachel Curley, rcurley@citizen.org, (202) 454-5195
Lisa Gilbert, lgilbert@citizen.org, (202) 454-5188
Bart Naylor, bnaylor@citizen.org, (202) 454-5195
Facebook's Libra, Corporate Political Spending Disclosure and Executive Compensation Among Likely Topics When All Five SEC Commissioners Testify This Week
The Most Popular Rulemaking in Agency’s History Likely to Get Spotlight at Tuesday Hearing
WASHINGTON
On Tuesday, all five commissioners of the U.S. Securities and Exchange Commission (SEC) will appear before the U.S. House Financial Services Committee.
Oversight of the SEC is critical because the agency's mission is to protect American investors. Based on the topics the committee has explored this Congress, lawmakers are likely to ask the commissioners about hot-button topics including environmental, social and governance (ESG) risk disclosure (including the most popular proposed rule in the agency's history on political spending transparency), executive compensation and Facebook's Libra cryptocurrency proposal.
Requiring Companies to Disclose ESG Risk Such As Corporate Political Spending
In July, the U.S. House Subcommittee on Investor Protection, Entrepreneurship and Capital Markets held a hearing on ESG risk disclosure. The SEC does not require corporations to disclose their long-term risk factors such as how they're planning for climate change, whether they are carrying overseas tax liability or whether they are spending shareholder money to influence politics through opaque, dark money channels.
In her opening remarks at the July ESG hearing, U.S. Rep. Carolyn Maloney (D-N.Y.), subcommittee chair, said that corporate political spending disclosure has been a longtime priority of Democrats on the committee. Since the U.S. Supreme Court issued its calamitous 2010 decision in Citizens United v. FEC, corporations have been allowed to spend unlimited amounts to influence American elections and policy outcomes without disclosing the amount and recipients to shareholders or the public. In 2011, a bipartisan committee of leading law professors, including Robert Jackson, who now is an SEC commissioner and who will testify on Tuesday, filed the first petition requesting an SEC rule requiring all public companies to disclose their political expenditures. This rulemaking was placed on the agency's agenda in 2013 by then-SEC Chair Mary Schapiro but was removed by the subsequent chair, Mary Jo White, in 2014.
The rulemaking petition has received more than 1.2 million comments - over 10 times more than any other rulemaking in the agency's history. Following its removal from the SEC agenda, conservatives in Congress built another roadblock to this critical transparency rule by inserting a policy rider into the FY 2016 Financial Services and General Government (FSGG) appropriations bill. The rider prohibited finalization of the disclosure rule, although the agency can still work on it. The rider remained in the past three appropriations bills but finally was struck from the U.S. House version of the FY2020 FSGG bill this past summer. Whether it will stay out of the final FY2020 budget package remains to be seen.
It's critical that investors know all the details about a corporation's attempts to influence politics. We've seen clear examples where companies have drawn bad publicity when their political activity comes to light. For example, AT&T was upended by reports that it paid President Donald Trump's personal attorney and fixer Michael Cohen for insider information on Trump's administration and the company's pending merger with Time Warner. More recently, brands like SoulCycle and Equinox faced celebrity boycotts after it was revealed that the owner of their parent company, Stephen Ross, was holding a fundraiser for Trump.
Moreover, shareholders have demonstrated that they want this information. Election spending and lobbying disclosure consistently are among the most frequently filed shareholder proposals every year. At the beginning of the 2019 proxy season, shareholders filed 93 proposals demanding companies be more upfront with shareholders and the public about whether they exploit loopholes in the political system to gain secret and special access to politicians.
In the Citizens United decision, it was assumed that prompt disclosure would be the new norm. "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 Anthony Kennedy wrote in the decision. Later, he admitted that prompt disclosure is not working out the way he envisioned.
Some companies already are making this type of disclosure. In fact, more than 150 large companies - including more than half of companies in the influential S&P 100 - have struck agreements with their shareholders to disclose their previously opaque political activity. This shows that it is not a burden for companies to share this information that they already have with their shareholders and the public. However, we need a comprehensive rule from the SEC to require all companies to disclose and standardize the disclosures across the stock market.
Executive Compensation
Wall Street crashed the world economy in 2008 due to incentive-laden and hyperinflated executive pay scales, which allowed many CEOs to be reckless with their companies and the U.S. economy. In response, Congress approved pay reforms as part of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act. The SEC, however, has failed to finalize most of these rules, including the essential Sec. 956, which was mandated to be completed by 2011 and which prohibits pay that promotes "inappropriate" risk taking.
While the rule languishes, U.S. Rep. Tulsi Gabbard (D-Hawaii) has introduced a bill (H.R. 3885) that requires a significant portion of annual pay for senior bankers to be sequestered for 10 years. If the bank is found guilty of misconduct, this pool of money is used to pay the penalty. This makes executives collectively responsible for bank conduct and can create incentives for better corporate conduct.
Following the colossal fraud connected to the 2008 financial crash, banks have paid more than $133 billion in fines, but shareholders - not executives - footed that bill. Before major financial firms went private, their partners paid the fines out of money that might have been part of their annual bonuses, so this legislation simply returns to previous practice.
We also fully expect the members on the Financial Services Committee to ask about out-of- control CEO pay.
Facebook's cryptocurrency, Libra
In July, the Financial Services Committee held a hearing on Facebook's proposed cryptocurrency, Libra.
The Libra proposal raises a series of concerns with few precedents. Among them:
- The Libra proposal is overwhelmingly likely to extend and deepen Facebook's dominance in social media, improperly extend its social media dominance into the global payments market and potentially into the market for real goods as well, exclude and punish competitors, rip off consumers and deny them the benefit of newly innovative products.
- At scale, Libra will become systemically important, but without the controls on financial institutions - such as deposit insurance - designed to protect against systemic risk.
- As a private, borderless currency, Libra will make it very difficult to ensure consumers are afforded appropriate disclosures, civil remedies, protection against usury, fair access to credit, defense against unfair and deceptive practices, and more. There is good reason to worry that the Libra world will be a welcoming home for hucksters and scam artists.
- No matter what Facebook now promises, Libra threatens to make Facebook a corporate surveillance leviathan with no precedent outside the realm of science fiction, giving the company dramatically enhanced power over information flows and our economy, while also potentially worsening the already serious problem of algorithmic racial discrimination.
- The Libra proposal poses a fundamental threat to nations' ability to maintain their own monetary policy and to take measures to address currency crises.
- Tax cheats, organized criminal enterprises, money launderers and others will rush to take advantage of Libra, and it is not at all apparent how these abuses can be prevented.
Libra also raises a series of questions about whether and how the SEC would and should exercise jurisdiction. These include:
- Are the Libra Investment Tokens securities?
- Are the Libra coins - the Libra that consumers will hold - securities?
- Should Libra be regulated as an exchange traded fund (ETF) and Libra coins treated like shares within an ETF?
Conclusion
American investors and consumers are at risk from corporate managers focusing on short-term gains and playing in politics as well as from soaring executive compensation and unregulated cryptocurrency in our rapidly changing economy. The agency tasked with protecting investors and ensuring fair markets has a great responsibility to tackle these challenges in a way that serves its mission and not corporate profits.
Public Citizen is a nonprofit consumer advocacy organization that champions the public interest in the halls of power. We defend democracy, resist corporate power and work to ensure that government works for the people - not for big corporations. Founded in 1971, we now have 500,000 members and supporters throughout the country.
(202) 588-1000LATEST NEWS
Sanders Launches Probe of 'Outrageously Overpriced' Ozempic and Wegovy
The Senate Health, Education, Labor, and Pensions Committee chair said that the popular medications "will not do any good for the millions of patients who cannot afford them."
Apr 24, 2024
U.S. Sen. Bernie Sanders on Wednesday opened an investigation into an "outrageously overpriced" medication manufactured by a Denmark-based company whose value by market capitalization is larger than the Scandinavian country's gross domestic product.
Sanders (I-Vt.), who chairs the Senate Health, Education, Labor, and Pensions (HELP) Committee, sent a letter to Lars Fruergaard Jørgensen, CEO of Novo Nordisk. The company makes semaglutide, a glucagon-like peptide-1 (GLP-1) agonist used to treat Type 2 diabetes under the brand name Ozempic and, when sold as Wegovy, to treat obesity in adults with at least one weight-related comorbidity.
"The scientists at Novo Nordisk deserve great credit for developing these drugs that have the potential to be a game-changer for millions of Americans struggling with Type 2 diabetes and obesity," Sanders acknowledged. "As important as these drugs are, they will not do any good for the millions of patients who cannot afford them."
"Further, if the prices for these products are not substantially reduced they also have the potential to bankrupt Medicare, Medicaid, and our entire healthcare system," he added.
Sanders continued:
Today, Novo Nordisk is charging patients in the United States up to 15 times more for Ozempic and Wegovy than it charges patients in Canada, Europe, or Japan. For example, your company charges $969 in the United States for one month of Ozempic but just $155 in Canada and just $59 in Germany. Further, Novo Nordisk charges Americans $1,349 for one month Wegovy but just $140 in Germany and just $92 in the United Kingdom.
"Meanwhile," the senator noted, "researchers at Yale University estimate that both of these drugs can be profitably manufactured for less than $5 a month."
"The result of these astronomically high prices is that Ozempic and Wegovy are out of reach for millions of Americans who need them," Sanders said. "Unfortunately, Novo Nordisk's pricing has turned drugs that could improve people's lives into luxury goods, all while Novo Nordisk made over $12 billion in profits last year—up 76% from 2021. That is unacceptable."
As of March 2024, Novo Nordisk was Europe's most highly valued company by market capitalization. Its $554 billion market cap is significantly higher than Denmark's annual gross domestic product of approximately $410 billion, according to International Monetary Fund figures.
Sanders also pointed out that Novo Nordisk is charging different prices for Ozempic and Wegovy, even though they're "the exact same drug."
"Novo Nordisk charges Americans with obesity nearly $400 more every month than those with Type 2 diabetes for the same product provided in similar doses," he wrote.
"The unjustifiably high prices of Ozempic and Wegovy are already straining the budgets of Medicare and Medicaid and severely limiting access for patients who need these drugs," the letter says. "Last year, researchers at Vanderbilt University's Department of Health Policy and the University of Chicago's Department of Medicine estimated in the New England Journal of Medicine that it would cost Medicare over $150 billion a year to cover Wegovy and other similar weight loss drugs."
"To put this in perspective, the cost of all retail prescription drugs covered by Medicare in 2022 was less than $130 billion," Sanders added.
"As chairman of the committee, I am asking Novo Nordisk to substantially reduce the price of Ozempic and Wegovy so that these important drugs can be available to Americans with Type 2 diabetes and obesity," he wrote.
Existing law empowers the government to step in to lower drug prices in service of the public interest. Under the Bayh-Dole Act of 1980—legislation meant to promote the commercialization and public availability of government-funded inventions—federal agencies reserve the right to "march in" and authorize price-lowering generic alternatives to patented medications developed with public funding.
However, U.S. administrations—including President Joe Biden's—have been loath to exercise "march-in" rights.
Under pressure from the public and lawmakers led by Sanders, Novo Nordisk last year announced that it would cut prices by up to 75% for some of its insulin products.
Responding to Wednesday's letter, Pharmaceutical Research and Manufacturers of America—Big Pharma's leading lobbyist—accused Sanders of "attacking an innovative company to advance a political agenda instead of addressing the real cause of affordability challenges."
Noting Novo Nordisk's bigger-than-Denmark market cap, Warren Gunnels, the HELP Committee's majority staff director, wrote on social media that the company "made over $12 billion in profits last year by, among other things, charging Americans $969 for Ozempic while it can be purchased for $59 in Germany and costs $5 to make."
"Our political agenda is to end this greed," he added. "Guilty. As. Charged."
Keep ReadingShow Less
Texas State Troopers in Riot Gear Crack Down on UT Students' Gaza Protest
"Why do we even have these institutions of higher learning if we won't let students speak their conscience and protest?" said one University of Texas professor.
Apr 24, 2024
This is a developing story... Please check back for possible updates...
Civil rights advocates on Wednesday expressed alarm at a rapid escalation by Texas state troopers who descended on a student-led protest at University of Texas at Austin, which was organized in solidarity with Gaza and other U.S. college students taking part in a growing anti-war movement.
UT students gathered on campus at midday and were promptly given two minutes to disperse by state troopers, who had already been called to the scene.
The troopers were equipped with riot gear, with some carrying assault rifles and several stationed on horses.
Erick Lara, a 20-year-old sophomore, told The Dallas Morning News that the nonviolent protest transformed "within minutes" after the police began arresting demonstrators.
"I didn't think it would escalate this far," he told the outlet. "And I didn't think there would be this much police intervention from what's supposed to be a peaceful protest. Not very peaceful when there's a bunch of aggressors around, especially on horses."
The organizers called the gathering "The Popular University" and said it was aimed at pressuring UT to "divest from death."
The protesters walked out of their classes to demand UT divest from weapons manufacturers in order to end its complicity in Israel's U.S.-backed assault on Gaza, which has killed at least 34,262 Palestinians.
Student-run newspaper The Daily Texanreported roughly 50 state troopers were deployed to stop the initial protest of about 150-200 people.
Ryan Chandler, a reporter for NBC affiliate KXAN-TV and UT alum, reported that there were at least 10 students detained.
"Went here for four years, never saw anything like this," said Chandler, posting a video of a group of police pushing one student to the ground and arresting them.
Joseph Pierce, a Stony Brook University professor who attended graduate school at UT, also said the escalation was an unusually "drastic response to students advocating for an end to the genocide of the Palestinian people."
"It is a response that did not occur when in 2005 we protested the anti-gay marriage bill; in the late 2000s when we protested anti-immigration bills; in the 2010s when we protested the open-carry bill," Pierce said. "It is a clear attempt at silencing Palestinian and anti-Zionist Jewish voices."
The students faced the state troopers in a standoff on the university's main street.
"This violence against peaceful student protesters at UT Austin is absolutely horrifying—and should be condemned in the strongest terms by every politician and mainstream journalist," said former New Yorker editor Erin Overbey.
UT media and Middle East studies professor Nahid Siamdoust said the university "brought out everything but the kitchen sink to make sure" students couldn't erect an anti-war encampment like students at Columbia University, New York University, and other schools across the U.S. have in recent days.
The university had informed organizers with the on-campus Palestine Solidarity Committee on Tuesday that exercising their First Amendment rights in support of Palestinians in Gaza would "violate our policies and rules."
"The freedom to protest is integral to our democracy," said the ACLU of Texas Wednesday amid reports of the crackdown. "UT Austin students have a First Amendment right to freely express their political opinions—without threats of arrest and violence."
Keep ReadingShow Less
Endorsing Biden, Building Trades Union Slams Trump as Lackey for 'His Billionaire Buddies'
"He does not care about anybody in this world except Donald Trump," said the president of North America's Building Trades Unions. "His dark side is very, very dark."
Apr 24, 2024
The leadership of a union that represents more than 3 million building trades workers in the U.S. and Canada endorsed President Joe Biden's reelection bid on Wednesday, slamming presumptive GOP nominee Donald Trump for catering to the needs of billionaires like himself during his first four years in the White House.
"When Trump was elected, we took him at his word that he would have a worker-centered agenda and deliver on long-stalled issues such as infrastructure investment," said Sean McGarvey, president of North America's Building Trades Unions (NABTU), whose governing board voted to endorse Biden on Tuesday.
"Instead of delivering," McGarvey added, Trump "aligned himself with his billionaire buddies to enact tax cuts that raised costs for our members. Simply put, he failed to deliver. Given our experience and knowing his track record, the choice is clear."
Building trades unions and their rank-and-file members are generally seen as more conservative and pro-Trump than other elements of the U.S. labor movement. In 2017, McGarvey celebrated Trump's effort to advance construction work on the Keystone XL pipeline, a massive fossil fuel project that Biden effectively killed in 2021 after years of organizing by environmentalists and Indigenous tribes.
But NABTU's leadership endorsed Clinton over Trump in the 2016 presidential election and Biden over Trump in 2020.
In a five-minute ad released Wednesday, the union highlights Trump's pledge to be a dictator on "day one" and condemns the former president as a dangerous egomaniac.
NABTU called for Trump's resignation after the January 6, 2021 insurrection at the U.S. Capitol.
"Donald Trump, he's not a good man. He's not a good person. He does not care about anybody in this world except Donald Trump," McGarvey says in the new ad. "His dark side is very, very dark."
Wow. You may have seen a short version of the North America Building Trade Union ( @NABTU) video endorsement of Biden. The full video is incredible and absolutely devastating for Trump. They did not hold back. A must watch till the end. pic.twitter.com/stL7b7JazP
— MeidasTouch (@MeidasTouch) April 24, 2024
In his statement Wednesday announcing NABTU's endorsement, McGarvey cites the Bipartisan Infrastructure Law, the Chips and Science Act, and the Inflation Reduction Act as key legislative achievements that "brought life-changing, opportunity-creating, generational change focused on the working men and women of this great country who have for far too long been clamoring for a leader to finally keep their word."
"In the coming months," he added, "we will continue to engage our membership and their families directly, member to member, door to door, and jobsite to jobsite, with an unprecedented field program in key battleground states, to tell them how important President Biden and his policies have been to them, their economic security, and their freedoms."
But McGarvey said in an appearance on MSNBC's "Morning Joe" on Wednesday that the union does not intend to "waste a lot of time talking to every American that supports Donald Trump" or "some of our members that support Donald Trump, because we're not gonna change their minds."
Speaking at NABTU's annual legislative conference on Wednesday, Biden welcomed the union's endorsement and said that "Donald Trump's vision of America is one of revenge and retribution, a defeated former president who sees the world from Mar-a-Lago, who bows down to billionaires and looks down on union workers."
NABTU is the latest major union to back Biden as he prepares for his high-stakes rematch with Trump in November. In January, Biden secured the support of the emboldened United Auto Workers, whose president called Trump a "scab" who "stands against everything we stand for as a union."
"Donald Trump is a billionaire," said UAW president Shawn Fain, "and that's who he represents."
Keep ReadingShow Less
Most Popular