March 10th, 2011

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Why Citizen's United Is Built On A Fraudulent Myth

Here is an example of why I regard one of the central pillars on which the Citizen's United decision rests is simply not true. In theory, corporations are accountable to shareholders. So if corporations spend in ways their shareholders don't like on policy, shareholders can correct that.

However, when a bunch of shareholders attempted to bring a vote on a network neutrality resolution, the corporate officers refused to permit it. The SEC has held that the officers of AT&T, Verizon, and Comcast may prohibit these shareholders -- the titular owners of the company to whom the officers are accountable -- from demanding a vote on the resolution or raising the issue as part of official communications with their co-owning shareholders because it is not a "significant enough policy issue."

It should be noted that these companies spent tens of millions of dollars of the shareholders' money lobbying on this issue in 2010 alone. The House Republicans have labeled repeal of the FCC's network neutrality rules one of their highest priorities, and have invoked the rarely used Congressional Review Act as a means of repealing these rules.

Yet the shareholders, the supposed owners of the companies primarily impacted by these rules, are prohibited from raising the matter for discussion.

How is this reality compatible with the myth of shareholder accountability? It is not. It is not even the case, as champions of corporate citizenship often urge, that shareholders could overcome the difficulties in organizing a campaign to hold the officers accountable. They have been prohibited from even raising the issue in the first place.