This year has not been a great one for activists seeking to force corporations to increase disclosure of their political activities.  According to the Manhattan Institute’s Center for Legal Policy, average shareholder support for proposals related to political spending or lobbying declined again this year, from 22 percent to 20 percent for lobbying proposals and 17 percent to 16 percent for political spending proposals.  Further, as we’ve reported, the Securities & Exchange Commission recently passed on a rulemaking that would have required public companies to increase their political disclosures.

Undeterred, shareholder activists at Citizens for Responsibility and Ethics in Washington (“CREW”) launched an aggressive new tactic this week, filing a lawsuit in New York federal court against Aetna.  The complaint does not attack Aetna’s political disclosure policies directly.  Rather, it claims that Aetna misled shareholders when it published a Proxy Statement opposing a shareholder resolution that sought to compel the company to disclose more information about its political activities.

Some of the allegations are a stretch.  The complaint asserts, for example, that Aetna’s Proxy Statement was false and misleading because it stated that the company’s Political Contribution Report, available on the “Health Care Initiatives” section of the Aetna website, was “easily accessible.”  But the complaint also uses the Proxy Statement’s reference to prior company Political Contribution Reports as a hook for asserting that alleged inaccuracies in those reports derivatively resulted in a false and misleading Proxy Statement.

By bringing this case, activists may be attempting to reverse the trend of shareholders voting down political disclosure resolutions.  These groups may hope that companies, fearing litigation, will refrain from opposing similar initiatives in the future.  Ironically, the lawsuit may cause companies to re-think whether they disclose political contributions on their websites at all.  These disclosures are not legally required.  If activists begin picking these online political contribution reports apart for inaccuracies and then sue the company for federal securities law violations, companies might re-think whether it is worth disclosure in the first place.

Photo of Zachary G. Parks Zachary G. Parks

Zachary Parks advises corporations, trade associations, campaigns, and high-net worth individuals on their most important and challenging political law problems.

Chambers USA describes Zachary as “highly regarded by his clients in the political law arena,” noting that clients praised him as their “go-to outside…

Zachary Parks advises corporations, trade associations, campaigns, and high-net worth individuals on their most important and challenging political law problems.

Chambers USA describes Zachary as “highly regarded by his clients in the political law arena,” noting that clients praised him as their “go-to outside attorney for election law, campaign finance, pay-to-play and PAC issues.” Zachary is also a leading lawyer in the emerging corporate political disclosure field, regularly advising corporations on these issues.

Zachary’s expertise includes the Federal Election Campaign Act, the Lobbying Disclosure Act, the Ethics in Government Act, the Foreign Agents Registration Act, and the Securities and Exchange Commission’s pay-to-play rules. He has also helped clients comply with the election and political laws of all 50 states. Zachary also frequently leads political law due diligence for investment firms and corporations during mergers and acquisitions.

He routinely advises corporations and corporate executives on instituting political law compliance programs and conducts compliance training for senior corporate executives and lobbyists. He also has extensive experience conducting corporate internal investigations concerning campaign finance and lobbying law compliance and has defended his political law clients in investigations by the Federal Election Commission, the U.S. Department of Justice, Congressional committees, and in litigation.

Zachary is also the founder and chair of the J. Reuben Clark Law Society’s Political and Election Law Section.

Zachary also has extensive complex litigation experience, having litigated major environmental claims, class actions, and multi-district proceedings for financial institutions, corporations, and public entities.

From 2005 to 2006, Zachary was a law clerk for Judge Thomas B. Griffith on the United States Court of Appeals for the District of Columbia.

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