Oversight Probe: House Dems Pressured SEC to Scrutinize 501(c) Donations

The House Oversight and Government Reform Committee today said that House Democratic leadership was pressuring the Securities and Exchange Commission to cast a wary eye on donations made to tax-exempt groups.

In a letter accompanying a memo to SEC Chairwoman Mary Jo White, Oversight Chairman Darrell Issa (R-Calif.), subcommittee chairman Jim Jordan (R-Ohio), and member Patrick McHenry (R-N.C.) cited documents obtained through the committee's investigation that show special-interest groups and House Dems convincing the SEC to go against staff recommendations and probe donations by the same types of groups that fell under extra IRS scrutiny.

“Documents produced to the Committee indicate that the SEC has been under immense pressure from elected officials and special interest groups as part of a government-wide effort to stifle political speech," the trio wrote. "This effort to politicize the agency appears to have been successful in overcoming the objections of the SEC’s professional staff, and moving the Commission closer to using its authority to regulate public securities markets as a backdoor way to limit the political speech of the same types of groups targeted by the IRS.”

Among the evidence cited in the memo is a Jan. 15 draft document "prepared via a senior staff member’s personal, non-official email account [that] detailed new attention and emphasis on groups organized under Section 501 and 527 of the Internal Revenue Code."

A rulemaking petition was submitted to the SEC in August 2011 to require that public companies disclose corporate activities for political purposes to shareholders. Staff protested that such regulation was under the purview of the FEC and Congress, not the SEC.

"Notwithstanding this advice from the SEC professional staff, three SEC Commissioners acted to place a political disclosure rulemaking on the agency's official agenda," the memo states. "The decision to do so implicates a process wherein the professional, objective advice of the SEC staff was overridden by the three votes of political appointees."

"Documents provided to the Committee demonstrate that this action followed intense lobbying by elected officials and special interest groups."

The Oversight Committee gave the SEC one week to turn over all documents and communications involving certain officials and mentions of "tea party" or 501(c) groups. Issa's panel also wants any such documents involving communication between the SEC and President Obama's office, and the SEC and IRS.