Possible Obama SEC Pick Specializes in Helping Corporations Hide Political Expenditures

By George Joseph, The Intercept

15 June 15

s a battle rages over whether the Securities and Exchange Commission should require publicly traded companies to disclose their political expenditures, the White House is said to be considering nominating a high-powered Washington attorney to the SEC who specializes in advising corporate clients on how to avoid such disclosures.

Bloomberg and other news organizations have reported that Keir Gumbs, a partner at Covington & Burling, is one of the White House’s top two picks to replace outgoing Democratic commissioner Luis Aguilar. Though Gumb’s nomination, which requires Senate approval, would maintain the Democrats’ 3-2 advantage on the commission, many progressive groups like CREDO have already publicly criticized the White House’s presumed nominees for having “no track record of being Wall Street reformers.”

In recent years, campaign finance reform advocates have pressured the SEC to adopt rules requiring public companies to release information about political expenditures. Such a move would force the disclosure of massive corporate contributions to the secretive non-profit organizations that have become major players in electoral politics. According to the Center for Responsive Politics, these “dark money” organizations, 501(c)(4)s and 501(c)(6)s, spent just over $5 million in 2006, but in the 2012 presidential election that amount had grown to $300 million.

Capitalizing on this pressure for disclosures, Gumbs and his legal partner, Robert Kellner, have been offering corporate leaders “one-hour primers” on how to counteract shareholder political demands since at least 2013. In fact, they just published a comprehensive guide for companies in the March/April issue of the Corporate Governance Advisor, including “strategies and tips” on “grappling with disclosure issues.” The report advises companies on how to appear open to dialogue and transparent without “disclosing invasive details about corporate political activities.”

Reached by telephone, Gumbs declined to comment on how his work at Covington & Burling may affect his potential tenure at the SEC or whether he would support the issue of political expenditure disclosures if nominated and confirmed.

The White House’s opportunity to fill a spot on the SEC has prompted demands from Sen. Tammy Baldwin, D-Wisc., and Sen. Elizabeth Warren, D-Mass., for a nominee willing to rein in Wall Street firms. In a blistering 13-page letter released on June 2, Warren attacked the tenure of SEC Chairwoman Mary Jo White, questioning why White has allowed the issue of campaign finance disclosure to slip off the SEC agenda.

The next day, none other than Gumbs’s partner at Covington & Burling, Robert Kellner, was featured on CNBC attacking Warren for her comments. Kellner called her actions “rather extraordinary” and declared that Warren’s criticism of the SEC’s inaction on corporate political disclosure “seems misplaced because corporate political disclosure has utterly nothing to do with the SEC.”

In 2013, Covington & Burling successfully defended Qualcomm, a mobile technology company, from a lawsuit by the New York State Common Retirement Fund to make internal records about political expenditures available to shareholders. The law firm became the first and only to lead a corporation’s defense against political expenditure transparency from shareholders (Gumbs was not an attorney on the case).

The guide Gumbs helped produce on “grappling with disclosure issues” concludes that the SEC is not going to act on corporate political expenditures in the short term, but cautions that “it is difficult to predict how the rulemaking might develop after the next election.” If the White House does make Gumbs an SEC commissioner, that prediction might become a little bit easier.