This file contains archived live captions of the Corporate Political Spending and Foreign Influence forum held on June 23, 2016.  This file is not a transcript of the meeting, and it has not been reviewed for accuracy or approved by the Federal Election Commission.
	
	

	>> Good morning, welcome back everybody.  I'm so excited we have a packed out at the FEC and hopefully more people listening online.  This event has been a long time in the making and it's very exciting for me to be here with all these great guests and with all of you.  We are going to have some of the nation's top legal minds here for a few hours.  We'll have a thoughtprovoking discussion on a hot topic.  
	We're going to hear from leading public policy professionals, academics and attorneys on what the situation is now.  I've been really thrilled with the guests that we've been able to get to come speak to you today because really, these guys are, every single one of them are rock stars.  They're superstars in their fields.  It's going to be really great.  And it is all about these great guests and the information they are providing, which is why we have turned the tables on the normal FEC setup.  Normally there's commissioners sitting up there and the witnesses are facing us and everybody in the back is just looking at the back of heads, but not today, the attention's on our great panelists.  We have turned the table around so they can face you.  Everybody has index cards on their seats when they came in.  We can get you more index cards if you have lots and lots of questions, because there'll be an opportunity for that later.  
	I want to thank all of my colleagues who are all going to be with us in person or virtually.  And...everyone is really interested in hearing from the panelists.  I want to particularly thank the chairman, Matt Peterson, who invited me to organize this form and...probably didn't know just how cared away I was going to get with that invitation.  But has been a very good sport about it. 
	The topic of foreign money and U.S. elections has been a concern for me for several years and I have attempted to address it through the more traditional, through some more traditional venues like putting notices of proposed rule makings up for vote, as well as working with my colleague Ann Ravel to put a petition before the commission.  The Genesis of this event goes before an OpEd I wrote in the New York Times with a provocative thesis that the longtime statutory ban may actually bar most corporations from making political expenditures and contributions. 
	The key is in the phrase used throughout Citizens United that corporations with Citizens United.  The Supreme Court made that clear in citizens united and the Hobby Lobby case, which people don't usually think of in campaign finance.  In the Hobby Lobby case, the majority explained that corporations are a legal fiction.  It's important to keep in mind that the purpose of this fiction is to provide protection for human beings.  A corporation is simply a form of organization used by human beings to achieve desired ends.  An established body of law specifies the right and obligations of the people, including shareholders, offices and employees who are associated with the corporation in one way or another.  When rights, whether constitutional or statutory are extended to corporations, the purpose is to protect the rights of these people.  
	And that makes sense.  That makes a lot more sense than the common vernacular that kind of exercises people when people talk about this and say corporations are people, because we all know that corporations aren't really people. 
	But it is all about protecting the rights of people.  Now, the question that occurred to me earlier this year is what happens when those people don't actually have the rights to engage in the political activity that the corporations are engaging in?  Not all people do.  Foreign nationals, notably, do not.  Government contractors also, and the court has upheld those restrictions on political activity by foreign nationals and by government contractors. 
	Now, it doesn't make sense to say that individually, a foreign national cannot engage in direct advocacy in U.S. politics and spend money to do so, but...if they get together with a bunch of other people, suddenly they can.  You don't get more rights by forming a corporation.  You don't lose rights by forming a corporation, but you don't gain rights either. 
	And, based on that analysis, I can and have argued that perhaps we oughta have a zero tolerance for foreign shareholders of corporate spenders because that, they own the resources of the corporation.  
	Now, that's a, admittedly, an edgy position to take and knocked locked into it, but...if not that, then what?  Another theory that I put forward is maybe there'd be some threshold, like 20%, drawing on analogies to corporate law in Delaware or communications law.  And if not that, again, then what?  Maybe we should have a negative check off where corporations who want to engage in this direct political spending need to assure someone, the government, the people, that they are not owned by foreign nationals or controlled by foreign nationals.  That kind of a foreign check off idea has recently surfaced in bipartisan legislative proposal on The Hill, dealing with the IRS.  Slightly different context, but similar concept.  So...you know, maybe I set up this entire event just to prove to my colleagues that it's not just me that's talking about this stuff.  My former law professor, Gary Tribe.  There are lots of ways of looking at it.  
	One idea I had was to bring in experts, not only from the usual suspects from people we know and love in the election law community, but also corporate experts and tax expert on communications law experts and see what we can learn from them.  Because...I think, no one, really, wants to have foreign money influencing our elections.  This should be something we can all agree on.  If we can all agree on that basic premise, there oughta be a path forward for us to make sure that is, in fact, what happens and we can assure the American people that is what is happening. 
	So...we've got a great, great day lined up for you today.  We have awesome speakers.  A lunch between the second and third panel.  We're video and audiostreaming this event.  Staff will be collecting questions from, that you write down on the index cards so I can ask the panelists.  People can tweet them.  You can email your questions to forum@FEC.gov or send them via Twitter using the hashtagÊ#FECforum.  We'll post it on YouTube.  If you don't have all day to sit and listen to the program, we'll show you where the best parts are.  We're going to hope to produce a transcript as well, so those that are visual, like to see the words in front of you, can also participate.  
	So, I hope that both the people in this packed room learn a lot, send us questions and participate in this and I'm going to leave it to the first panel, I just want to make very brief introductions.  This isn't about me, this is about them, so...let me get off the stage.  Our first panel starts with Sheila Krumholz who has served a decade as Executive Director of the nonpartisan independent and totally indispensable product.  It's a goto resource for me and I know really everybody who cares about this subject, America's journalists and voters are markedly betterinformed because of Sheila efforts and those of her staff. 
	We have Norm Ornstein, may be the most famous political scientist in the country.  Quoted constantly in the newspapers.  Along, of course, with his friend and coauthor, Tom Mann.  I should give credit to Tom as well.  Norm is a resident scholar and coauthor of It's Even Worse Than It Looks, a book that speaks to me.  Out with a revised edition saying It's Even Worse Than It Was.  One of the brightest and mostinformed scholars of our students. 
	John Pudner launched a campaign of David Brat against Eric Canter in a race that no one thought Eric Canter could lose.  The many avenues for foreign or elicit campaign contributions led him to start Take Back Our Republic.  A group of conservatives looking for campaign finance solutions. 
	And last, but not least, we have Melissa Yeager.  A senior writer at the Sunlight Foundation.  A nonprofit organization like CRP and other really indispensable organizations in this field.  Anyone that cares about money and politics, they advocate for open government with a primary influence on money and politics.  Lately she's reported on vulture funds.  I know I'm looking forward to what everybody has to say and looking forward to your questions.  Take it away, we'll go in alphabetical order, so Sheila, you've got the floor.

	>> Thank you.

	>> I'm flying without PowerPoint.  There won't be death by PowerPoint, but there might be death by data.  We'll try to keep it lively and I'm sure the speakers who follow me will be, give us a reason for hope and a rousing sendoff.  
	I'm going to provide context with overview of the money in 2016 along with comparative figures from the previous election cycle and update on who the top players are now. 
	First at the macro level.  The Center for Responsive Politics tallied $6.32 billion spent on the 2012 election cycle at the federal level, based on reported spending.  So...again, $6.3 billion.  That doesn't include at least $100 million or so spent on federal electioneering that didn't fall within the reporting windows.  So we might want to round that to $6.4 billion.  The current raised is only $3.35 billion, including some data only through March and other data for outside spending that is based on spending as of yesterday.  It's not uniform.  Of the $3.35 billion, $1.8 billion has been spent on the presidential races and about 1.34 has been raised for congressional.  
	Outside money makes up 1/5 of the money raised for presidential races and a majority of presidential money goes to republican and conservative organizations.  56% on the congressional side, that's similar, about 53% conservative or republican. 
	So, what will the 2016 elections cost?  Some are already calling this a $10 billion election, which would be quite a leap from 6.3, 6.4 billion in 2012.  Even if we went with the higher amount, reporting what was raised in 2012, that'd only be $6.7 billion.  
	Another way to compare it is to take all the money raised so far this year, $3.35 billion and compare it to a relatively comparable period in 2012.  So the money raised through September 2012 totals only $4.7 billion compared to 3.35.  This isn't, there isn't enough data yet to extrapolate, so it's really pure conjecture at this point, but if I had to guess, I'd say we're more likely to see a grand total of 7 or $8 billion rather than 10. 
	All it takes is one or two billionaires to upset the apple cart and these comparisons go out the window.  Since the Citizens United decision, outside money has grown increasingly important in elections.  It exceeds $400 million in this cycle and is close to three times as high in the current cycle as it was at this point in 2012.  16% of the grand total raised higher than all previous cycles.  Not surprisingly, SuperPacs are driving $341 million in expenditures so far, accounted for 34% of all outside spending.  Roughly the same share at this point as in the last presidential cycle. 
	Dark money refers to money from undisclosed donors than by either political, nonprofit, that doesn't disclose its donors or SuperPac taking contributions from a political nonprofit.  There's been about $37 million in reported dark money spending over 15 million in dark money spending in the 2016 presidential race so far.  13.8 million versus $37 million in this current cycle. 
	Given that dark money spending exceeded $300 million in 2012, 500 or $600 million is definitely within the realm of possibility this cycle.  Speculating, we could see a lot of GOP donors dump money to help Trump make up for his shortfall if he can't raise money conventionally.  On the other hand, relatively few people speed the money, leading to more randomness and less ability to predict with any preposition. 
	There are dark money groups that aren't captured in the data like One Nation, which has spent at least $15 million in Senate races without reporting anything to the FEC.  They're active in Senate races and other races at the state level. 
	Single candidate nonprofits have been growing in popularity in the last few cycles.  They don't generally start spending until mid to late summer.  Their money is more effective in house and Senate races where they'll probably spend most of the cycle. 
	Turning to corporate and LLC donors.  If you go to opensecrets.org homepage and select Top Corporate Analysis This Cycle, you'll see corporations and private donors have delivered just shy of $22 million going back to 2011.  Today they're giving it a faster clip.  Most outside money comes from individuals, the $22 million given so far by this point in 2012 is less than 1/3 of what's already been given so far this cycle.  Contact Alex Baumgart for more data.  
	The number one corporate donor so far this cycle is a subsidiary of Star Companies, backed by Hank Greenberg, giving more than $12.5 million to presidential SuperPacs.  The top LLC donor, so far this cycle is Bessie Lou Stables with $3.5 million gift to Conservative Solutions PAC.  Senior researcher Douglas Webber has quite a bit of research on Corporate PACs that he can share if you contact him.  
	I'll give you a couple highlights.  Corporate PACs have increased their donations substantially.  We can easily identify the American divisions of foreign companies that form PACs and collect contributions from their American employees.  The foreignsponsored Corporate PACs have contributed 2/3.  Of much greater is money given through organizations by organizations directly and allowed to keep their donors hidden.  Corporate donors giving secretly through nondisclosing groups, straw donors giving through LLCs and foreign donors giving secretly and illegally, all are issues of enormous importance for the integrity of the democratic process generally and public confidence, specifically. 
	In terms of foreign money, based on scandals of the past, the wherewithal and willingness of foreign donors to contribute in shaping U.S. elections.  Is it logical to believe that interest is any less now that they can do so in complete anonymity. 
	Thank you.

	>> Let me just interject before Norm starts, if you guys think of questions, feel free to write them down, flag down a staff person, they'll take them and funnel them to the panelists after all four of them have a chance to speak.  There's WiFi in the room that give you the password.

	>> I want to start with a shout out to Ellen.  Many years ago there, was a New Yorker cartoon about the doorway to the Ways and Means Committee.  We have some commissioners who have tried to make it feckful and that's Ellen.
[laughter]

	>> If we start with Commissioner Weintraub's analysis, which is accepting, in some respects, the way that first of all, justice Kennedy defined corporations and then in the Hobby Lobby decision, the way that Justice Alito expanded that decision.  You could add to it, the rather exuberant way in which Justice Scalia, in a partial descent in the Citizens United case, talked about how the framers loved corporations.  Then, logic would suggest, exactly what she said.  Which is that any corporation that has foreign ownership shouldn't be allowed to participate in politics in the same way.  
	Now, I don't start with that premise though, the textbook definition of a corporation is an association of individuals created by law or under an authority of law, having a continuous existence independent of the existences of its members and powers and liabilities distinct from those of its members.  
	So...that logic says to me that corporations, which are set up under charters directly with the goal of maximizing shareholder return, maximizing profits are very different from individuals.  They are not people, they have different motives and people have many motives.  
	But, I would also say that corporations are different now than they used to be.  In 1953, Charles Wilson, then the CEO of General Motors made a statement in testimony to Congress that became very famous.  What's good for General Motors is good for America and visa versa.  That was then.  This is now.  Now...we have corporate inversions.  Where companies, that used to say we're proud to be part of America are sending their ownership and charter abroad to save on taxes.  
	We have a vast expansion of foreign countries and entities buying American companies and creating American subsidiaries.  And...we have a global economy.  So...at General Motors, which hasn't done an inversion, which is proudly still based in Detroit, is a global company where the vast majority of its manufacturing elements and its business are done abroad.  
	Now, what that means is that they have a variety of interests in their goal of making money.  And those interests do not necessarily coincide with American national interest.  
	We start with citizens and those who are legal residents, participating in our politics.  With an assumption, at least, the reason that we separate out foreign money is an assumption that American systems may have many motives, but they are loyal to the United States.  And they primarily want to advance American interests.  What happens when you have a company, maybe one that, for example, has substantial gambling interests in Macau?  That decides that American foreign policy should be altered in a way that wouldn't fit America's national interests, but would enhance their own business interest in Macau.  It's impossible to tell where it's coming from.  You put that together with an agency that has avoided enforcement of these things.  And that leads us to, I think, to me, at least, to conclusion that fits America's national interest. 
	One way to deal with it is accept what the court has done and take the logic where it should go, which is exactly what Ellen is saying.  It could be if you took some of the suggestions on the table for the FEC that requires entities contributing to politics, to basically certify that there is no foreign money or foreign influence involved, and if you combine that with real disclosure, then at least you would have a better enforcement mechanism.  That's not going to do away with the problem. 
	I believe it's a problem that, combined with many other elements in our politics, is going to create a real crisis for legitimacy in the system.  If there is no longer a sense that people involved in our politics are interests in the nation as a whole, but have a set of other interests, and you put that together with a group of individuals at the 1/10th of 1% level, increasingly removed from the society who say things like, as Steven Schwartzman of black stone did when president Obama suggested that maybe it was time to look at the carried interest tax rate, this is like Hitler invading Poland.  When you have, I kid you not, when you have that, you're setting up a formula for something that's really troubling for the system.  
	We could, presumably deal with disclosure at some point by passing the Disclose Act or something more.  It'd be helpful if an agency ÊI remember at a time when I criticized a previous chairman of the agency for not following the law and he wrote "I don't just follow the law, I also have to follow what the courts say."  Well the court ruled 8:1 in a robust fashion that we should have disclosure and I haven't seen that play out so far in what the agency has done.  If we could get some measure of disclosure along with some of the elements that Commissioner Weintraub and others are proposing, maybe we could at least put broad boundaries around this area. 
	But in the absence of that, brace yourselves for something that could be farworse than what we're seeing right now.

	>> I realize some of you think it's an oxymoron to say there's a conservative campaign finance advocate in front of you.  But that's the position I'm coming from.  I started to take back our republic and was told I'd have one friend.  Walter Jones from North Carolina.  That was it.  My first meeting with Walter was "please find money me some friends."  I knew David Brat was likeminded.  I want to thank Commissioner Weintraub for focusing on the two issues in this hearing that unify conservatives. 
	That is foreign money and to a lesser degree, corporate.  I'll touch on that a little bit.  But...we went to Walter Jones and Dave Brad and started talking to people.  I'm happy to announce that today, we have 46 republican cosponsors on a bill that came out of white paper we posted last year.  On closing the credit card loophole.  That left lane is HR4177 to stop foreign donations affecting our elections act.  That bill is being backed by everyone on the committee that has to go through The House.  This is a piece of legislation that could make The House, potentially this year, could definitely make it through The House right now.  
	This was partly by getting on some of the unifying themes.  The common agreement that no one wants foreign money taking over any part of the government decisionmaking process.  And so, let me ÊI'm going to focus more on foreign money today, then touch on corporate at the end.  Unfortunately, we heard a little bit from Sheila on how much we don't know on foreign money.  They do a great job of chronicling anything you can find.  Unfortunately, because foreign money is illegal, the ways that it gets into the system are very hard to quantify.  
	But...let me say that, if we can all agree that foreign money is unconstitutional, if anyone needs to go back through the wording on that, happy to do it with you offline and that, and undesirable, let's talk about former political consultants background, we do know.  We do know that people right now, all over, foreign and domestic, know that political investment is a very good investment.  That, you know, the chance to put millions of dollars into political contributions with the possible result of billions of dollars in taxpayer money, coming back to you through policy changes or actual special interest money, is a tremendous investment.  So let's start, that's point one, we know.  Point two we know is that there are, believe it or not, unscrupulous political consultants, who, if you find them a way to get money into a system will do it to make money.  The math is very simple here.  If you can find a way to get a million dollars from somewhere and can do a media buy with it, you get $150,000.  If you start talking tens of millions, you're pretty welloff pretty quickly. 
	Certainly, I love most of my former colleagues in the political consulting realm, but I promise people jump on that.  That's before you get things like scam PACs.  You keep the money for yourselves.  There's the temptation to bring money in and some will readily jump on it. 
	Third thing we know, there are foreign interests willing to hack into government servers, into political party servers, even worse things, they'll carry on deadly acts.  This kind of concept, would you really think anyone would channel money in from abroad to affect U.S. policy is almost incomprehensible when I hear that from people.  There are very unscrupulous players who benefit greatly from changes in U.S. policy.  
	Now, this isn't always, you know, someone trying to cause harm to the U.S., it could just be trying to have competitive advantage over U.S. companies, et cetera.  But the third item is that's there. 
	Fourth item, I'd say, there are clearly avenues to connect the first three.  There are ways to have an unscrupulous political consultant realize there's someone overseas who wants to get money through the system that will benefit them.  
	So...while we don't know, we can't put dollar figures on what's in, I would say look at the country and our government as a house and look at where the doors and windows are unlocked and opened for this kind of activity and start trying to show it. 
	First of all, the thing we're addressing with our current bill, you can move enormous amounts of money, completely undetected through unverified credit card contributions.  Asked how much is coming in?  I have no idea.  I know hundreds of millions of dollars are coming through on unverified credit card contributions.  I think it's naive to say "I'm sure no one would take advantage of that system."  I want you to grasp this for a minute.  When you go online to purchase something, if you don't know the zip code of the credit card you're using, you can't purchase it.  That's a simple bank check we're thrilled is in place.  If you make a mistake, you can quickly correct it.  Typed a digit wrong in the zip code, fix that, it's a 2 in other news a zero.  So, what campaigns started doing in 08 is turning the system off.  You can optout with your banks.  As long as a giftcard number works, the count beautician goes through. 
	Try to think of this, someone has millions of dollars overseas and wants to get it through.  If I was an unscrupulous political consultant and didn't carry about foreign law, I'd set up a room full of people, retype over and over the credit card number $200 a pop.  It's never affordable, it's never detectable and flooded in and often won't be noticed.  You don't do this in a $50,000 legislative race where someone wonders why money is flooding in, but that avenue is there and so easy. 
	Secondly, you can buy a channel in, as the Saudis just did with uber.  Buy a big chunk of a U.S. company and flood money in.  There are all kinds of reasons the Saudis might have interest in the U.S., but I'll refer to longer articles in that process, but if you're going to put a few billion dollars into a U.S. company to get a seed from when you funnel money into U.S. campaigns, that's another door opened that has to be addressed.  The credit open secrets put in a report on C4s breaking the 50% limit on giving.  
	Obviously, if you have a C4 that doesn't have to disclose to owners, that's one of many dark money avenues that can be used.  If you're overseas and want to get money in and knew a C4 could do it without you being reported, they're spending well over half of their money on political activity.  That's an inviting avenue as well. 
	We want to look at how we can close some of these doors and make it difficult.  Some tell me, look, there's no way to stop the flow of foreign money, there's so much of it, it'll get through one way or the other.  Well... I tell them the same thing I told all of my children.  I can't stop you from doing bad things, I can only make it as inconvenient as possible and hope in the end you don't do it. 
	So, we can close some of these doors.  4177 simply requires that candidates and groups have to use the normal bank procedure for verifying credit cards.  Some conservatives like this bill because it played into their narrative that President Obama's campaign was flooding money through foreign organizations.  I developed the system for President Obama, sat down to say, if you have mistakes on handwritten sheets.  There's no accusation of this being set up for this reason.  The problem is, once a system is in place like this and people have seven years to figure it out, it invites corruption.  I want to be clear, this isn't an attack on why the system was set up.  She was actually very comfortable in understanding doing a joint event with me mostlikely next month to say this is why this creates a problem.  Here's why we set it up.  I don't want to sound partisan on that.  But it's a real problem. 
	That's certainly one door we can close very easily and I hope we will.  And as I said, each member of The House Administration Committee has signed on as sponsors, cosponsors, bipartisan. 
	That's one we can fix.  And...and that eliminates one avenue.  Certainly, I wholeheartedly support the HR5515 just put out by Killemar and Hannah [phonetic] to verify that no foreign money is being used on election year activity.  If you're signing off on something, someone who never realized how much money you have to spend on legal fees to run a C3 and C4 until this year, lawyers will be scared to let them sign if there's chance of foreign money going through the system.  That's another door to close. 
	Let's keep closing off these doors, that's a great bill.  We just had a case in San Diego where a political consultant figured out a way to have a Mexican businessman get $500,000 into a San Diego local race.  Clearly they're going to look for these avenues and let's not make C4 an easy one or any other dark money sources. 
	Think about these two proposals.  They both talk about either using a procedure that's already in place or selfpolicing.  These are the kind of first steps I hope we can agree on before we get into some tougher disclosure issues admittedly.  
	We touched a little more briefly on corporate giving in general.  Certainly corporategiving, you know, tends republican, it doesn't necessarily tend conservative though.  I would like to say, so many of the conservatives who work with me on primaries and all are very concerned about the chamber's involvement in primaries.  This isn't a strict partisan effort.  
	When I talked with Brat, the candidate was right, the consultant was wrong.  Everybody got crony capitalism.  It plays off this idea that republican primaries, conservatives, it seemed, the chamber and other groups come in and overwhelm their candidates and defeat them.  This is actually, the idea of small business being a, a better alternative and truer conservative, if you're a conservative than the chamber who, as we heard, tends republicans, but are the winners, that's the motivator for a lot of conservatives too. 
	The other thing to think about with corporate giving is the selection of candidates, the idea that deals are being cut in this town and we're being left out here.  I think some of the absurdity on the corporate giving, the chamber, has given six figures in the U.S. Senate candidate to both sides.  It's okay, so whoever wins, they've got.  That's the angst you see from a lot of conservatives.  They're all the same.  They already paid everyone, they'll do whatever the corporate interest is.  I know it's tempting to conservative, versus environmental conservatives, but there's real grounds for agreement there and certainly on some of the government contractors. 
	So, in closing, you know, I'd like to ask, ask a couple things of the commissioners and you hate to do that to your host, to make requests as a guest, but on a couple items, I'd say for the, for the republican members, please try to look at cases like the one Chair Ravel put out last year on the $300,000 given by the foreign company formed by a German who was under indictment for tax evasion.  I don't think they should be giving $300,000 to affect U.S. elections.  I don't know which box conservative would check to say that's a good influence on our election. 
	I thought that was a brilliant case by Ann Ravel to lay out something for 4177.  To investigate these and send a message that you know, we're not going to have 33 ties on everything.  We really want, we want the FEC to be effective enforcement tool. 
	Now...I'll make the request from maybe some from the other political end though.  There are legitimate concerns that we have to overcome as conservatives on disclosure.  I think things in a Wisconsin investigation, I think some people are targeted unfairly in that.  Every time there are cases like that, it makes it harder and harder for us to push the case of disclosure.  So you know, or, yeah, there's a case out in California from years back on, you know, individual no longer being CEO who you know, because of $1,000 contribution on the marriage amendment.  
	I would implore the other side to realize, these are the issues that conservatives who want campaign finance reform to fight through.  There's going to be targeting or retribution against people for speaking, the quicker we can get to broader and more complete disclosure.

	>> Thank you, Melissa? 

	>> Good morning, and thank you to members of the Federal Election Commission and particularly to Commissioner Weintraub for inviting me to speak today on behalf of the Sunlight Foundation.  My name is Melissa Yeager.  I'm going to talk about an area that concerns the American people as a whole. 
	I'd like to talk about the organization that I represent, the Sunlight Foundation.  Sunlight is a nonpartisan, nonprofit organization.  We focus on transparency and accountability in government and one area of which is the influence of money and politics.  As journalists we've covered campaign finance, lobbying and various forms of influence.  The technologists we work with have experimented with tools to help the public access data and information so they can betterunderstand their government.  We're certainly strong believers in the first amendment, but we also believe that disclosure and transparency lead to a stronger democracy.  
	And this election cycle, Americans will be exposed to billions of dollars worth of advertising and messages, meant to influence their votes and we believe Americans should have access to information that will allow them to consider the source of that messaging. 
	It's clear this election cycle on both the democratic and republican sides of this issue that the American public is clearly exhausted by the influence of money in our political process.  They are frustrated that a disproportionate number of people have a louder voice in democracy because they have more money.  And additionally, they're weary about outside groups playing an increasingly large role in elections, particularly those, as we've spoken about, that are funded by anonymous donors. 
	Voters want to know who is influencing their elected officials so they can hold them accountable for their decisions and more disclosure could help mitigate this frustration in our opinion.  
	We believe it empowers voters to make informed decisions, and she'd light on potential areas of corruption.  This ensures the integrity of our system.  
	According to a poll by the University of Chicago 70% of democrats and republicans alike favor requirement that the names of political donors be made public.  The 2016 election cycle is on track to exceed $7 billion in spending, including $500 million in dark money from groups that aren't required to disclose their donors. 
	That means that people don't have information about these organizations to evaluate the oftencomplex and controversial messages that they receive.  We're seeing more and more dark money coming from 501C4 nonprofit social welfare groups and limited liability companies that we kindly refer to as shell LCs set up for the focus of influencing campaigns and elections. 
	If we learned anything recently, LLCs are internationally used as a vehicle for people to move money in secret.  There are many examples of LLCs already in this cycle.  We know of at least one example where the owner admitted he was using it to distance himself from a campaign.  An analysis by the Sunlight Foundation said Marco Rubio had several untraceable LLC donors.  The biggest was IGXÊLLC with an address in Delaware.  The only information on the LLC filing is that of the corporate that registered them.  Corporation Service Company and that's where the paper trail ends. 
	Andrew Duncan told the IP he used IGX to max the donation because he was worried about reprisals which is refreshingly honest, but also troublesome.  There are someone agencies that should be concerned about the lack of information about LLCs, the FEC has a duty to ensure the integrity of our election and know the source of their funding.  The Supreme Court has repeatedly ruled the first amendment, under some circumstances, people do have the right to anonymous speech, but there's no explicit right to make anonymous contributions.  Nor do the people who are not U.S. citizens or permanent residents have any right to participate in American elections. 
	With that in mind, these anonymous groups represent a significant area of concern when it comes to ensuring the integrity of our elections.  It's easy to set up an LLC, particularly in Delaware and U.S. that LLC as a vehicle to give to a campaign.  So, as it stands, a foreign donor could set up an LLC to give to a political campaign.  Even a foreign government could take this route, considering there are places like China where corporations are partially owned and controlled by their government. 
	The law is pretty clear when it comes to the influence of foreign money on our political process, what Congress intended.  Congress clearly stated without ambiguity, it can't happen.  Congress entrusted the FEC to devise methods to make sure the intent of this law was enforced.  The FEC, to our knowledge, hasn't devised any mechanism in response to Citizens United to up hold one of the basic parts of campaign finance law, ensuring foreign money doesn't find its way into elections. 
	The Citizens United decision established corporations have rights comparable to individuals when it comes to outside spending in election, allowing companies to exercise free speech through uncapped independent expenditures. 
	We live in very polarizing times in politics, as the Pew Research Center pointed out, Americans on both sides of the issue agree that they are concerned with the influence of money on the political system.  We're glad the FEC is looking at this forum to look at the flow of money into the system and examine ways to make sure it adheres to current U.S. law. 
	As our name suggests, we believe sunlight to be the best of disinfectants and would restore integrity to our politics and faith in our government.  Thank you.

	>> Thank you, that was fabulous.  And we have some great questions.  I'm going to start with one that comes from the audience.  I don't know who came up with this, but it's a great question.  
	There is a prospective in the money and politics scholarship that under certain conditions, corporate money can have a moderating effect on the parties and politicians because large companies want to invest in infrastructure, education, et cetera.  To what extent will limiting donations from large multinational corporations potentially increase or exacerbate polarization and more ideological politics?  To the extent that our politics could become more ideological or polarized.  I throw that open to anyone on the panel who wants to take a stab at it.

	>> I would just say I'm, to put it mildly, skeptical of that perspective.  First...I think we don't have a whole lot of evidence, given the way money has flowed into politics and what's happened in our politics that large multinational corporations are interested, primarily, in having government function well.  And...I would start by referring you to the Chamber of Commerce but we could go in a lot of other places.  Putting in large amounts of money to move to elect people who have no particular interest in seeing policies enacted and that includes things that are very much in their direct selfinterest, like trade bills, like infrastructure, and beyond.  
	And what we've also seen, what I've seen, talking to large numbers of members of Congress is that right now, for large multinational corporations, the CEOs are moreinterested in keeping their marginal tax rates low than they are in anything that has to do with a larger fiduciary responsibility of their companies.  I don't have a lot of faith that having corporate money flow in, especially if it flows in as dark money and we don't know where it's going or what it's being used for would have a moderating effect.

	>> It's a great question, I hate to maybe lose one friend in the room of whoever asked it, but I almost have the opposite view on this.  I'd rather have parties be stronger than corporations, as opposed to choosing elected officials.  I understand the question and perspective, but to pick up and go from what Norm said, the concept that the corporations in and of themselves want good U.S. policy for everyone, I, I think is a faroverstatement, certainly in some cases.  The beauty of having parties be a little stronger is that you can hold parties accountable, I think first and foremost, the best giving is small dollar donations to candidates that you can hold accountable and vote out of office if they don't agree. 
	But more of state and local parties, the national parties do a pretty good job of taking care of themselves in negotiations, but part of the problem here is parties not having any power and...you know, it was interesting to hear you know, people jumping on republicans for not controlling their nominating process.  I don't advocate that, but at least if the party's putting forth ideas they can be held accountable.  For people that loved Obamacare, the democrats could benefit from that.  The places where they didn't, republicans benefitted.  You could hold a party accountable for putting together a party vision and voting up or down members of the party.  
	So...I really think, if you look at how the founders want an influenced balance, right now, it's out of whack the other way, the corporate is too big.  In addition to wanting more disclosure to counter that, we want to bring back the tax credit for $200 donors, we would like a lot of people in power to offset the corporate influence.  For us, it's corporate union, special interest, for conservatives, you put all three together.  They all do have some common characteristics in that they theoretically represent employees and members, but I'd argue there's often a detachment and distortion between what the actual lobbyists are for those groups.  I know it's tempting when things aren't going well to say the party's the problem, but I think the party's are mitigating and accountable force behind the candidates.  I'd rather see the balance go back that way.

	>> I would just add or, agree, that I think the positive is that business want stability and certainty and to the degree they are giving money and that given not just to grease the schism of legislative agenda, but to grease the schism on any movement to further that agenda.  That could be good, but I can't see how unlimited secret contributions, which are also, I believe, too often or largely, transactional in nature could ever be good in the sense that we wouldn't have the mitigating effects of public ability to view those contributions and hold the members and party leaders accountable.  I think there's, maybe a kernel of truth, but it's not significant.

	>> Okay...I've got a couple questions from commissioners.  The first one's from me.  This is for you, John.  I hear what you say about disclosure, that you know, it's, we shouldn't be pie in the sky about you know, the un, unalloyed good that comes from disclosure.  I wonder in your concerns would be allayed by reconsideration of thresholds.  This isn't something we can do at the FEC, but let's think big.  Is there some level at which you would agree, well, yeah, the public really has a right to know if somebody is giving $10,000, $100,000, a million dollars.  Is there some level at which we say whatever the countervailing concerns are on the other side, the public really needs to know that? 

	>> Absolutely.  I want to be clear.  I'm basically for full disclosure across the board.  I'm just talking about, it's harder to make the case when there's an example of targeting.  You know, certainly the communities I'm used to dealing with.  That was my request.  Anything be done to temper that.  For example, when we first rolled out, we said we'd like to up the limit for first disclosure.  The idea that someone's buying a member of Congress for $500 is ludicrous.  But no, my threshold's very low.  $1,000.  I think the important thing, you have to put 527, C4s are going to play in this game, the same rules at the candidate. 
	The big problem here is the candidates can't raise any money, relatively, so...you know, they're up and Norm's side of the case.  If someone comes in with $10 million and says we need this thing changed in the budget and we spent $10,000, can we vote to change it?  Your candidate's thinking, I have to raise $2700 at a time.  I inflict this wound on myself.  
	Part of the reason I want disclosure across the board.  I don't want there to be an advantage to give elsewhere.  A package that says you can give more than $2700.  If a candidate could ask for $10,000 at a time in exchange for disclosure, I want to be clear, I'm for complete disclosure.  I can't think of cases where I don't want it. 
	I brought this group.  A lot of people that disagrees with me on disclosure things, the less chapters there are in a book like this intimidation one coming out of people being targeted, the easier the disclosure case will be.  Anything to make it easier would help our case, I'm for complete disclosure.

	>> Any other comments from any of the panelists?  Here's a question from another commissioner.  This is for Norm.  You heard about asymmetric polarization, how does undisclosed spending, some from corporations, affect those trends? 

	>> Let me give a shout out to Commissioner Ravel as well.  All of these issues have gotten caught up in the tribal battle between the parties and what's happening now is, I think that we're seeing at least one salutary effect of the population out there.  I've urged many of my friends in the reform community for a long time to reach out to tea party members who are not all that happy about having billionaires dominate this process and aren't all that happy with their own party's establishment.  And...that's happening slowly.  And even John is finding some substantial resistance among a lot of his members.  
	But...I think what's also happened, if you look at the way this is played out, where the vast bulk of the push to get 501C4 designation is coming from.  Now, I have a ÊI wrote a piece this week in The Atlantic about the attempt to impeach, starting with ascencure of someone who came out of retirement to take a thankless job.  They have had success at doing this.  The IRS, under siege has basically said that Karl Rove's crossroads GPS, which no one in his or her right mind could possibly see as a social welfare association can qualify under its standards.  It's kept the IRS from doing what the wonderful bright lines project has tried to do, which is to really set some standard for what qualifies as political activity and reduce that.  Polling is now down through a prism of tribal polarization.  That's too bad.  What John represents is an understanding that whether you're at the right end or the left end of the spectrum, a campaign funding system that builds into it, corruption, and you know, we have a lot of the diversionary tactics by those opposed to reform who say "look at what happened in the presidential campaign, don't tell me big money affects politics."  Jeb Bush had this SuperPac and nothing happened.  It's more deep seated corruption of a political system.  It's happening at the state level, you're seeing outside groups buy state legislatures for relatively small sums of money.  It's also happening, I'll add on to one thing John said about strengthening the parties, including the state and local parties.  When you have outside corporate interests creating parallel party organizations, the mostsophisticated voter identification operation, more people on the ground than the party committee, and going into primaries to influence things, I, I just don't see how anybody could see that as a healthy kind of thing.  This is not something that is one sided, it's just that the focus on change has become one sided and thank you, John for trying to alter that.

	>> I'd like to say again, thank you, John, your presence on this issue is so welcomed and so longneeded.  I agree wholeheartedly.  I used to get calls from folks on the tea party and folks in the Occupy Movement saying "we're outraged!  This is insane, we're so glad you're with us."  I'd say "we're not really tea party, not really occupiers, but so good you're with this issue."  This died off after the IRS debacle.  I think the residence is still there and witnessed in the campaigns of Sanders and Trump.  There's something profound to build on.  I'm glad John Pudner's on the case.

	>> This is a question by email that talks about the definition of foreign money.  Can we define it?  How to separate it out from the donations of essentially a global company with a U.S. address?  Anybody? 

	>> I think that's the challenge here and why we would be hopeful that there'd be a discussion about that.  It's a, much like disclosure, there's an opportunity here to have a discussion on what that means and we'd be hopeful that the FEC would start that discussion.

	>> There are two elements to this.  One is a global company with a U.S. address, like the General Motors example I used.  The other is a foreign company with a U.S. subsidiary.  Anybody who believes that a giant foreign company, where the U.S. subsidiary is contributing money as a corporate entity isn't listening to what its overseers are saying and what they want is far too naive for me.  You've got both challenges and certainly, in both instances, if you don't start with disclosure, so you know where the company is putting its money and we can then judge whether what they're doing is, fits within America's national interest or...is actually done because they can make more money if it suits another country's foreign policy, say...at least you've got some way to get that into the dialogue.  
	And...if you have some of the legislation that John has talked about, and that includes putting legal liability on people to certify that there's no foreign money going in, you're not stopping the problem.  And the only way to stop the problem, to me, is to go back to where we were before Citizens United and say "oops, we were wrong, corporations are not people, they are distinct entities with different motives and their corporate money shouldn't be involved."  That's fine.  Those are individuals, acting in their own interest, which may suit the interest of a company, but a very different phenomenon.

	>> Just a point of clarification, when you talk about disclosure in this context, Norm, you talk on the contributing side or spending side? 

	>> Both.

	>> The FEC has also visited the issue of foreign ownership and maybe, perhaps, that's it.

	>> Next, stay tuned, we have an expert on that exact subject.  And...I'll also add, because we've been talking a lot about big corporations, multinational corporations, but going back to what several of you pointed out about LLCs, another scenario that I personally worry about is you know, three guys from Canada or Mexico or wherever, China, who decide they're going to set up an LLC.  They call up a lawyer in Delaware and say "let's set up an LLC."  And they, you know, because it's an LLC formed in Delaware?  Is that foreign money?  Purged of foreign status? 

	>> In the Hobby Lobby decision, Justice Alito started out talking about all corporations, then moved to talk about the privately held ones.  And waxed on about these mom and pop operations.  One might point out that among the mom and pop operations, Cargill which has 133,000 employees and Coke Industries which has well over 60,000 and they're all over the world.  There's a danger here, you need to strike, perhaps, a different balance.  We have to start with the publicallyheld ones.  The private ones, and individuals who may wellhave a very important interest in that fashion are also part of this issue and this problem.

	>> I see my colleague, Commissioner Hunter, waving her hand in the background.

	>> [Speaker off mic].

	>> It was founded by a German under tax evasion indictment there.  The company wasn't still owned by him, but he set up the foreign company that put in the Los Angeles referenda.

	>> [Speaker off mic]. .

	>> I did a followup story on that too, but yes, it was more recently, right.  That's correct.  Yes.

	>> [Speaker off mic].

	>> So, the reason I brought it up, in the broader question of the crisis of legitimacy that I think we could wellface.  It is not about corporations in this case, but it is, if we have a world where corporations are heavilyinvolved in our politics, but are no longer necessarily promoting American interests and we have a growing equality in the country and elite of which Schwartzman is representative.  You'll get a larger mass of people growing more distrustful of the capacity of government to act in its interest.  And that, I think, is a part of why we've had this dramatic explosion of populism on both sides that has been a challenge, actually, to both parties and is a challenge to the fundamentals here.  That's why I brought it up.  It's not that there's a direct connection between corporations and Schwartzman, per se.  
	I could give you a string of other comments made by other people in the hedge fund or investment world that are equally as offensive, but...it's part of, I think, a broader challenge that we face.  And then, I think all of our institutions now face.  If we don't build a stronger level of legitimacy and you know, maybe John McCain is right that we'll get some huge scandal and that will bring about some change, I'm not sure that's a great way to operate.  I'm not sure anymore, that a scandal is going to do it.  We're getting a growing detachment between the broader mass of citizens in a sense that government is working in their interests.  That's why I brought it up.

	>> [Speaker off mic].

	>> Thank you, Commissioner Hunter.  You raise a good point that I was going to ask the panel about.  Foreigners opposing a ballot initiative.  And then, in the OpEd that Professor Tribe and Mr. Graytech [phonetic] brought up.  Uber has been active in initiatives so far.  We don't know what they'll be doing going forward.  Do any of the panelists want to comment on the distinction between ballot initiatives and candidate elections?  There should be such a distinction or is this out of our control?  Just...anybody wants to comment? 

	>> I'd say, I would rather not be a distinction and just to address the other comment.  I'm not trying to pick apart the legal argument on either side of that, I'm not going through linebyline, the point of focusing on that case, a little right of center, this had all the components of bad political giving.  I'm not trying to pick it apart and say you had the wrong legal argument.  Just saying, I thought it was a great effort to bring up something that had unifying aspects to it.  In that same vein, can we find cases that don't have to result in a 33.  At a previous event, I made the comment, it was so appreciated, Chair Ravel, doing that, she was the first Obama appointee that ever complimented on anything.  You know, can we find some of those?  My concern over Wisconsin is, I have lots of republican friends in Wisconsin.  I think there are lots of problems with some of the people we're going after in that case.  As a conservative, I was concerned.  There I'm concerned the result was legislation of basically creating what I think will be a gridlock group in Wisconsin, it never enforces anything.  Can we get to something where obviously we don't want witch hunts, we don't want people using political attacks to target people because their paperwork was wrong on a filing, but the pendulum is really at the other end right now.  Where there's so fear of anyone having repercussions for deliberately going out and working bad money into the system and can we find ways to address that.

	>> I'll just give you one more opportunity.  We're about to close our time for this panel.  If anybody wants to have any closing thoughts on this?  Okay...then.  Really, I, I hope you will all join me in thanking this terrific panel.
[applause]

	>> We'll be starting up again at 11:30.  There is definitely water across the hallway and hopefully there's still some coffee left.  But...in any event, stand up, stretch, get the blood flowing, talk amongst yourselves.  
	
	[Break].  
	
	

	>> Okay, if everyone could get seated, we'll get started with our second panel.  If anybody wants to make themselves Êfeel free to leave the doors open.  If people want to lounge on the couches out there and listen from that side, I think we have a screen over there.  We had a shortage of chairs in the first panel.  We want everybody to be comfy.  
	Well...I'm extremely excited to welcome you all back and to listen to this blockbuster panel.  I'm so excited to bring these people here.  I believe that, I don't think any of these people have actually testified before the commission, or if so, it's been a really long time.

	>> I have.

	>> You have?  Okay, it's been a really long time.  This is not the usual suspects for us.  Which, I think is so important for us to hear different perspectives and what this panel is going to do is to try and bring in some perspectives from different areas of the law.  
	We have, on this panel, John Coates who teaches corporate governance and finance at Harvard Law School and Harvard Business School.  Any lawyers in the room, we've all heard of Rocktell.  He's seen it from both sides.  The academic and practical side. 
	Robert Jackson is Professor of Law and codirector  Êwhere his research emphasizes empirical study of compensation and corporate governance matters.  Before joining the faculty in 2010, professor Jackson served as advisor of senior officials. 
	Mace Rosenstein's chair is focused on arcane limitations under the Communications Act and implemented FCC rules and policy.  
	My dear old friend Donald Tobin is a former faculty member and Associate Dean at the renowned, Ohio State School of Law, so wellknown for professors and teaching and scholarship.  Left side a former Justice Department attorney.  The purpose of this panel was to try and bring in these experts to help guide us and bring some perspectives from other areas of the law that are not just focused on the FECA.  The Federal Election Campaign Act.

	>> Thank you very much for the invitation to be in a place I don't normally go.  I'm happy to ignore everything that everybody else in this room spent their career focusing on, until, Citizens United and actually in fairness, Citizens United did wake me up to something the corporate law has too.  Long before Citizens United, but not that far to the 70s, started using the constitution quite aggressively and opportunistically to deregulate when they lose the lobbying battles that they are very good at fighting.  They get two rounds of regulatory reform, one in the actual regulatory process and another in court where they're using the first amendment to take on greater and greater pieces of the regulatory world.  
	Today, I'm going to focus principally on a couple narrow topics.  Drawing on my, my teaching and research in the corporate area and to make some basic points about, about disclosure, or its absence of ownership.  Including foreign ownership and the fact that in many, many domains, nevertheless, there are longstanding statutes, regulations, legal traditions for creating foreign companies and foreign influence to control companies quite differently than we treat domestic and there's nothing particularly surprising about that.  It's not an embrace of nativism, it's not an embrace of Trump's approach to trade, it's a standard part of the way that every country thinks about regulating business activity in their country. 
	So, as you all probably know, there's no disclosure obligation on companies as such in the U.S. to disclose political activities.  There have been efforts ongoing to get the SEC to do something for public companies.  Chevron has spent a million dollars.  That's standard baseline, but there's probably a bigger gap in the disclosure laws that you may not be fully aware of.  There's no general obligation for a company operating in the U.S. to tell anybody who its owners are.  They're more than 5 million active business corporations active enough to file returns with the IRS and of those, less than 1% are public companies and even of the public companies, the public companies, essentially, have obligations to disclose the ownership interests of the people, currently executive officers or directors of the company or if they own more than 5%.  Just want to stress, most companies, including very large companies are not public and not even subject to that disclosure regime.  
	So in sum, if the public wants to know who owns a given company that shows up in any forum as a donor, for example, in the FEC regulatory process, there's no way to find out, actually, who owns the company under normal disclosure obligations.  There are some reporting requirements to specific pieces of the government, I'll come back to that in a second, such as the IRS, but they're generally not available to the public and very carefully circumscribed in how that data can be used. 
	Is this an issue, is there any reason to think that foreign control of companies is common?  Yes.  IRS data I was alluding to discloses in the mostrecent update I could find, about $12 trillion of assets owned by U.S. companies that were controlled by foreign owners.  51% or more. 
	Something like 100,000 such companies with a nontrivial amount of revenue and assets.  Operating in the U.S.  One you all know, actually.  You know that Budweiser can you've seen turn into something called America?  It's actually owned by a Belgium company.  The lonely city of Belgium has Donald Trump has referred to it recently.  
	Okay...less than full control, IRS collects data on controlled companies, there's a separate data regime that the Federal Reserve Bank of New York and the U.S. Treasury run.  They try to figure out how much noncontrolling investment there is in corporate stock.  An astonishing increase over the past 30 years.  About 5% of all U.S. corporate stock was controlled by foreigners.  It's now up to 25.  Let that sink in for a second.  
	One in four dollars, in value terms, in U.S. corporations is controlled, directly or indirectly by a foreign owner.  And what kind of foreign owner?  We don't know.  It's part of the disclosure gap.  It could be individuals, it could be companies, they could be governments and of course, in many countries like China, where governments and businesses are essentially identical, it's a little hard to tease out, even if you know the country from which the investment was coming. 
	The largest single country source in that data, which they report, is the Cayman Islands.  Which means, basically, anybody, anywhere in the world, since the Cayman Islands are not exactly a location for major independent activity, it's really a location for corporate, fictional, entities to shelter their ownership. 
	Okay...what about elections?  Is there any indication that corporations, in fact, are moving into the elections?  This is something you probably already heard about to some extent on the first panel.  
	Earlier in this presidential cycle, $2.5 million was given to Rubio's single candidate SuperPac by a Panamanian company.  We don't know the owners of that company.  I know one of them.  Hank Greenberg because I was involved in litigation.  The actual total, current composition of the ownership is unknown.  It's a private obligation.  A company called Children of Israel LLC organized in the U.S. by a Silicon Valley realtor, Lisa Gowel [phonetic].  Her job, which she markets herself as is a realtor in the Silicon Valley area, helping Chinese nationals find houses in Silicon Valley.  That LLC has given a lot of money to single candidate SuperPacs. 
	One in eight dollars flowing from corporations and that doesn't count dark money where they're predominantly business corporation members.  Larry Tribe in yesterday's Boston Globe can pointed out that uber played an unheralded role in getting their drivers to have background checks. 
	Companies spring up, within a week, make a $250,000 donation to a single candidate SuperPac and no one has any idea who these companies are, who they're owned by, anything else, they're likely owned by U.S. citizens, my guess, on average, but...we don't know.  And we certainly don't know what's going to be coming down the pipe.  That path has been laid.  
	Now, just to make my final point, is it, what's the Êare there Êprecedents for thinking about differentiallyregulating foreign companies.  Free trade, parody of treatment when it comes to business, is a standard part of the ideology within both parties and within most of the population, if they think about it over time, long and hard enough about it, sometimes we flirt with protectionism, but not in a serious way.  
	However...coinciding with that long tradition of free trade, we have veryspecific foreign restrictions throughout a number of different industries, just as every country in the world has to take the most example, obvious definite, unless you go through a specific regulatory approval process and they won't grant it to countries because of national security concerns. 
	Infrastructure is another big category.  Shipping aircrafts, Telecom, all these industries have strict industries.  Maybe not so obvious, financial services.  Now, the crisis, hopefully, has taught the financial markets are a type of crucial public infrastructure and we regulate foreign ownership in this area.  There's a recent deal that fell apart involving an insurance company based in Iowa called Fidelity Life and ban, a Chinese company was going to buy them.  They announced a deal.  The New York Life insurance commissioner asked who bought you and they refused to disclose their ownership.  The deal died over that.  It's a multimillion dollar deal.  If you've been sleeping in a hotel owned by a company that refused to disclose its ownership is part of a routine acquisition. 
	One reason for the sensitivity is the current chairman is married to a granddaughter of the former chairman of the party in China and the New York Times has done a little sleuthing around what little disclosure there is in China and found that two of the shareholders are staying on part of the government of China.  Companies owned by other companies, owned by other companies.  In other words, you can't trace the ownership in this serious way, probably because it ultimately traces back to let's say, economically and politicallyadvantaged descendants of the founders in China which could be politically embarrassing within China. 
	So...that's an example of where we already have, for good reason, an existing skepticism about foreign ownership.  There are many, what more fundamental feature of our government is the protection of the public.  Foreign interest and domestic interest are going to predictably merge.  If you're appointing a committee chairman, et cetera, through a preliminary system that has oversight of the industry.  It's a little odd to allow foreign influence to occur at the top of the chain and not further down that chain.  That is to say if the Defense Department can ban somebody from participating in a contract, why would you let people with influence over the contract higher up the chain be influenced in the electoral system influenced by the same companies.  I'll stop there.

	>> Thank you very much, I'm delighted to be here.  I'm Robert Jackson.  Thank you to the Commissioner and to the staff for making this possible.  I'm also a corporate lawyer.  The sense of security downstairs might know that.  They looked at me skeptically, you guys aren't allowed here, what are you doing here?  I'm going to be brief, I only have a few points to make and also, because the other people on the panel are smarter than me.  Professor Coates was my corporate law professor, so I don't really have anything.  I'm going to focus on a slightly different topic than Professor Coates did.  What is the state of other areas of the law and what can it tell you about election law and what it should look like?  I'm going to focus on that and particularly going to focus on the law that governs political spending by large public companies in the United States.  
	So...I'm going to focus on that subject.  I'm going to tell you what the state of the law is.  How it's changing and then, last, I'm going to make a plea to you, I'm going to lobby you for some help.  So...first, let me say, the question is, what is the state of the law governing large public companies, the CocaColas, the IBMs and whether and how they can take shareholders money and spend it on politics.  That's one of the questions, the state of the law.  I'm here to tell you, we don't have any. 
	Corporate securities law is typically not concerned with these subjects.  Until the Citizens United decision and things that preceded it, corporate securities law focused on different matters, questions of the shareholders interest, do the managers have those in mind?  But we didn't imagine that corporations would have this very powerful constitutional right to spend the shareholders money on politics until the Supreme Court told us.  
	In a series of decisions that culminated with Citizens United in 2010.  When they did, a few of us started thinking about, now that corporations have this power, what should be the rules of the game for how they use it?  Who decides?  Management?  Directors?  The shareholders whose money it is?  We didn't know.  We hadn't given it much thought.  A few of us have set out to try and establish, get a sense for what the rules of the game oughta be.  If a large public company wants to take shareholder money and use it for political purposes. 
	The first thing I want to say about this is that in the area of corporate law, when I say we don't have any law about this, I'm not joking.  We actually don't have rules that govern this.  What we have is the standard default rule of American corporate law, which is known, for those who remember from law school is the business judgment rule. 
	The rule that says the people who run the corporation are experts.  We should let them make decisions as experts and leave them alone when they do.  It's a good rule, I'm a fan of this rule, it applies in almost all situations where corporations make decisions, except this one.  
	Where the manager's interest, those who control the corporation are different from those of those who own it.  Shareholders.  A good example is executive compensation, in that area, often the managers want to pay themselves more and the shareholders would rather they take less, so they have a conflict of interest and we have law that deals with that. 
	We allow the shareholders to get information about it.  We have mandatory disclosure of this stuff and also, recently, because of the DoddFrank act, we give shareholders a vote on what they think of the executive's pay.  We don't have any of that in, in corporate law when it comes to political spending.  We treat corporate spending on politics as a business judgment.  We treat it just like the decision to buy a factory or hire fire people, we treat it as a judgment where the managers are using shareholder money and presumably of the shareholder's interest.  If I convince you of anything it should be, that's the wrong rule for this kind of thing.  In this area, the manager's interests are different from that of the shareholders.  They should be.  Shareholders don't choose what corporations they own based on the corporations politics.  They choose it on the basis of the business or interest in diversification. 
	Because the directors, the manager's interest might conflict with those of shareholders, we need special rules in this area.  To be honest with you, my message isn't so much about what we can tell you about corporate law, but instead, the ways that election law can help us build a better corporate law for these questions. 
	As I said, we don't have any law in that area.  For that reason, several law professors petitioned the Securities and Exchange Commission to develop a rule requiring corporations to disclose to their investors when corporate money is used for politics.  
	You see, the idea here would be, if the managers use the money in a way that shareholders don't like, well, shareholders will get information about that.  And if they do, then shareholders can take action.  They can sell the company stock, they can vote out the directors who are doing stuff they don't like.  But without that information, these markets can't work.  It's like executive pay.  We said the SEC should require disclosure of this.  Ten corporate law professors, nine famous ones and me asked the Securities and Exchange Commission to require disclosure of this and I'm happy to say, this petition has gained some support.  1.2 million people have written to the SEC and asks them to do this.  That makes it the most commented in the history of the Securities and Exchange Commission. 
	For a brief moment in time, it appears the SEC might take action under the commission, but we got a new chairman who was called to a hearing at the House of Representatives and asked by every majority member of the panel not to do it.  Shortly thereafter, the petition came off the SEC's agenda and that's where it stayed during this chairman's term. 
	My hope is that the next election will give us a new president and new chairman of the SEC and it'll be important for this chairman to take seriously the need for a rule in this area. 
	In the meantime, I want to tell you what we have in corporate law for disclosure of political spending.  It's not quite right to say we don't have anything at all, we just have no law.  
	Instead, we have voluntary agreements between company shareholders and their managers where more than 100 of the largest public companies agreed, voluntarily to disclose that information ad shareholder's request, these are among the most common topics, subjects of shareholder proposals in the United States.  
	They have overwhelmingly led to voluntary agreements by the largest public companies to disclose this stuff.  You might say, Jackson, that means we don't need an SEC rule in this area because companies are doing it voluntarily, so let's wait until they all do.  That's wrong.  
	Let me say why.  First, in general, when we need information about something a corporation is doing, we don't make them ask on a company by company basis.  Because there are like 11,000 public companies and that takes a lot of time.  Also shareholders diversify, they have few incentives to take that kind of action.  It's unlikely that they'll do it.  But putting that to one side, the bigger problem is, the companies that agree to disclose voluntarily, are the ones leastlikely to be spending money in a way that shareholders don't like.  The voluntary efforts exist, if you go to public company websites, you'll see information on politics, but you'll see it in a selected way, just the tip of the iceberg for the actual amount of corporate political spending that happening in this country. 
	That brings me to my last point.  My pitch to election law experts here and otherwise.  One of the reasons that the SEC has refused to develop the rule I just described is they claim they lack the expertise.  They say, elections are complicated, it's not our thing, we have lots of security lawyers, but this election stuff, we don't really know anything about it, so we can't do it. 
	So...I pointed out to them that this building exists and that there are some extraordinary election lawyers who know about things like should there be a dominimous limit and exemptions for certain kinds of disclosures.  They claim to be clueless about this, but my sense is, you have ideas and I want to urge you to share them with the Securities and Exchange Commission.  The reason I say this, as long as these two groups of lawyers don't talk to each other, they'll be able to claim that the reason they haven't done this is because they don't know how.  Based on what I heard this morning and what I'll hear the rest of the day, that's not a good enough answer.  We have the capacity to write a rule that would give investors transparency into what's happening in corporate political spending.  I hope you help them do that.  Thank you very much.

	>> Thank you.  Mace? 

	>> I'm a piker on this panel, I'm a lowly communications attorney, this isn't my space and I'm also not as smart as any of these guys, but I'll fake it, okay?  So just humor me.

	>> Don't believe any of them when they say that.

	>> I practice in one of the areas that Professor Coates mentioned, does have an existing regime to regulate foreign ownership and that's in the Telecom space.  I guess that's a good thing, you guys can sort of write on a blank slate here, I have a centuryold statutory regime that I have to struggle with and trying to adapt to modern exigencies.  I'll walk you through some of the highlights of it.  This is where it becomes the dry, lecture portion of the program, but I think it'll be interesting.  
	As I mentioned, the fundamental challenge that I think the FEC faces and practitioners in this area face and the regulated parties face is that our law governing foreign investment, was enacted in 1934 and it hasn't changed since.  What's even more interesting, its underpinnings, it's progeny, it's Providence can be traced back to radioactive 1912, over 100 years ago, when the whole world looked different, much less our communications infrastructure and communications policy infrastructure.  Congress first became concerned about foreign ownership of radio communications in 1912, you ready for this?  There was no commercial communications infrastructure industry.  They were concerned that Germany or its proxies might gain control of privatelyheld ship to shore radio stations along the East Coast in the runup to the first World War and they might use those facilities in order to send merchant ships off course.  That's where our program began, if you will. 
	Because, ever since that time, the Congress and the commission have struggled with how, to what extent, to regulate foreign investment in this sector.  
	So...let me walk through, with you, a little bit about that statutory underpinning.  I think what you'll see, this may not be what this room wants to hear.  The progression, the evolution of the FEC in this area has been from strict permission to the extent that now, forward, we'll get there, for all intents and purposes, it's possible to have 100% foreign ownership of a U.S. communications facility with certain exceptions that we can talk about.  
	So...since 1934, when the Communications Act was promulgated, wireless communications licenses, think broadcasters, and for our purposes today, think cell phone operators.  Anything that allows you to communicate by, over spectrum without putting a signal through a wire has been subject to section 310 of the act.  310 prohibit any foreign government or its representative or any alien or any representative of an alien.  An alien has the common sense definition here or any foreign organized corporation from holding an FCC license.  Period.  If you're a foreigner or a foreign corporation, much less a foreign government, you may not apply to the FCC to hold a radio license.  That's the first thing.  Second thing 310 does is prohibits foreign individuals and foreign governments and foreign organized corporations from owning or voting more than 20% of the equity or voting interests in an agency.  You can hold up to a 20% interest in a licensee, whether it's C Corp., partnership or LLC.  
	Interestingly and we'll touch on this in a little bit.  The FCC Ênot withstanding that's an out right and categorical limit, the FCC has determined that it has discretion to forebear from enforcing that limit when it believes the public interest warrants doing so.  So, in effect, the FCC has determined it has discretion and that hasn't been challenged to allow relaxation of that 20% statutory cap.  
	Then we get to section 310B4 which has the provision that has most bedevilled the industry, that has to do with the limitation of indirect investment in FCC licenses.  An investment in a U.S.organized entity that itself directly or indirectly controls that licensing entity we were talking about a second ago.  I can't project it here.  If you're interested, you should go back and look at it.  It's one of the least artfully drafted statutes I've come across.  
	Section 310B4 limits indirect foreign ownership to 25%.  It's a bump up from the direct ownership cap.  If the commission finds the public interest would be served by prohibiting it, right?  So, common sense reading says, it's okay to own as much as you want unless the FCC tells you you can't.  Historically, the FCC interpreted it as a categorical cap that could only be waived upon application to the FCC.  The FCC just read it wrong and said no, you can't own more than 25% unless you come to us.  That's been one of the challenges we dealt with with the interpretation on the application of this statute through the years.  
	I should note, it also may be relevant to some of the things you're going to be thinking about.  The 25% limitation is calculated separately for voting and equity interests.  Neither the voting prong or economic prong exceeds 25% to find you're in compliance with the limitation. 
	And that equity ownership, generally is calculated on an outstanding, rather than a fullydiluted basis and standards contingent future interests such as warmth or others until they're exercised.  Over time, this will not surprise you, vehicles such as debt, including convertible debt and options and warranties have become preferred mechanisms.  Preferred mechanisms from the foreign ownership calculation.  I can issue warrants to my foreign investors and until they're exercised, they're not relevant to my disclosure to the FCC or to the FCC's calculation of the foreign ownership quotient.  But because there's an exception to every rule, the FCC also determined, goated by Rupert Murdoch in 1995, it has discretion to pierce a nominal capital structure or it has reason to believe that structure doesn't align, at least reasonably, it's not on the curve with the actual locus of economic ownership. 
	I digress there briefly.  My disclaimer and disclosure is this was my case.  Murdoch became a U.S. citizen because he wanted to buy a bunch of TV stations here.  Under 310, he couldn't.  He wasn't a U.S. citizen.  He arranged an expedited path to citizenship.  That wasn't my part of the case.  My part came ten years later when a whistle blower went to the FCC  Êthat resulted in a protracted and very difficult FCC proceeding and that case resulted in the FCC's determination that in fact, it has the power to pierce the capital structure.  What it said was hang on, Murdoch only put down $76,000 and says he controls 76% of this come.  99% of the economic value and risk is flowing out to the shareholders of the U.S. corporation, limiting an Australian company. 
	Here's another behind the scenes look at the FCC.  A resultsdriven agency.  They had a problem when the company was out of compliance with the statute. It could have led to the revocation of those licenses and would have been the end of the line for FOX, which was only a few years old at the time and provided a huge policy objective and initiative for the FCC for generations. 
	We first argued from the statute and lost.  I won't go into that argument.  We tried to recapitalize the company and the FCC diverted to plan C.  Purple cow and a waiver, right?  They couldn't take the risk that Murdoch would shut it down and go home.  This is a unique situation.  It's never going to occur the public interest value of that network is really important.  We will bless this structure and essentially forebear from enforcing the 25% gap under the statute, even though everybody acknowledges it's not in compliance.  A light went on, not an unusual approach for the FCC to take when they have two conflicting policy objectives. 
	As a footnote, you probably know that news Corp. Has been redomiciled in Delaware.  The public float has done what a public float will do over time.  And over time, the attributable foreign ownership of the public float has settled down around 25% unless there've been a couple bumps up.  The FCC has mechanisms to deal with that. 
	Let's go back to history, briefly.  As I mentioned, the radioactive 1912 completely for bear ownership.  The radio act would begin to permit some foreign ownership.  They set limits on the direct foreign ownership.  That's all they did.  The legislative history emphasized national security concerns.  There was, over the air, entertainment radio.  The concern had evolved, not just from the ship to shore communications that had a very practical implication and consequence, but the concern had broadened to a more generalized concern that a hostile foreign power could propagandize.  This loophole could allow them to evade foreign restrictions altogether simply by holding a U.S. company.  60 or so years passed, the commission would permit, in the telephone context, never in the broadcast context, I want to spend a few minutes on that too, because I think it's relevant to what we're talking about here.  
	Then came the WTO in the mid90s.  The basic telecommunications agreement, pursuant to which, I think about 65 or 70 countries around the world undertook to open their telecommunications markets.  We, of course, joined the WTO and ratified it.  We said we will only open our wireless radio markets, that is cell phones, but we're not going to open the broadcast sector.  And, in short order, after the adoption of the WTO, you saw the flood gates opening a little bit.  You saw more access to foreign capital.  In 2001, you saw Deutsche Telecom's acquisition of Voice Stream Wireless, now owned by the government of Germany.  The FCC concluded that under the WTO, it really had no choice and could not identify any public interest harms to allowing a friendly foreign state to own a critical United States telecommunications infrastructure. 
	In the years since then, that was the signal event in this transition.  Since that time, the FCC has approved 150 to 200 instances of foreign ownership of a wireless common carrier licensee in excess of 25%.  They have only allowed such ownership, twice, in the broadcast context, once was Murdoch and more recently, the Pandora case, you know, the music service was seeking to acquire a terrestrial radio station, had difficulty calculating its foreign ownership.  
	A couple of minutes, and I'm finishing soon, I promise.  A couple minutes on this common carrier broadcast dichotomy, it might inform some of the stuff we're talking about today.  As I mentioned, historically, the concern in general about foreign ownership was that foreign powers could acquire and disrupt our private communications or ship to shore communications.  Later, as I mentioned with the emergence of commercial broadcasting there, was a concern that foreign powers could manipulate U.S. public opinion over the radio or over television.  In contrast to what the FCC has characterized as its traditionally heightened concern for foreign influence over control of licensees of which exercise editorial discretion over the content of their transmissions, the broadcasters, on the ground they're just merely passive conduits for information provided by others.  
	Let's pause for a second, I'd ask you to think about whether that rationale can continue to be squared with the realties of telecommunications marketplaces.  Policymakers are becoming increasingly concerned about foreign influence, not over broadcast content.  We know nobody watches broadcast television anymore anyway.  I'd dare say that's probably trending in the right direction.  Communications infrastructure, think about the information that you know, they may be passing conduits, they may be sort of locked into being passive conduits, but our communications networks control the delivering and processing of vast amounts of highly sensitive information.  Not just for the government but for national institutions and other markets.  The commission might want to be shifting its focus away from broadcasting, you know, how much influence can you exercise by owning a radio station in Fargo?  To our wired and unwired communications networks, given the vast quantities of data they distribute and given their vulnerabilities from a national security perspective.  Partial recognition of that reality around 2000, 2001, the commission started to refer transactions involving foreign investment, Team Telecom.  Do you know what I mean?  Isn't that like a great name?  Like team USA, Team Telecom.  Team Telecom is an Interagency Task Force comprising DOJ, FBI, homeland security and defense.  Which reviews every FCC transaction involving a foreign investment and review it from a national security perspective.  The process has evolved to the point now where the FCC will either unilaterally refer a transaction out to Team Telecom or more often, we'll hear from Team Telecom as soon as the transaction is filed.  Team Telecom will instruct the agency to put down its path.  Sometimes it's uneventful.  Sometimes it results in a national security agreement in which the transaction parties obligate a contract with the government, regulating certain aspects of their network operations.  
	And now it appears from the Pandora case and a couple other proceedings that that same lens will be brought to bear on broadcast transactions as well.  As the commission works to rationalize its approach to foreign ownership now across the sectors and is taking baby steps to harmonize its treatment of broadcasters and treatment of common carriers.  And finally, on methodology.  
	I know that is another issue.  I will shut up now.  Once you get me started on this, it's hard to get me to stop, but historically, the commission I should say, is a very open agency, it's very transparent.  There are fairly extensive disclosure obligations on applicants for new radio stations, on applicants to sell or acquire area radio stations.  There are periodic ownership reporting requirements of all FCC licenses in the order course, they have to make certain disclosures about certain of their owners.  They also have to certify compliance with the foreign ownership provisions of the communications act.  That's certain junctures licensing process or license renewal process. 
	Historically the FCC has left licensees to determine how they're going to figure out what their phone ownership is.  Obviously in closelyheld corporations, they know.  The commission has allowed you to rely on known shareholders, registered shareholders, management holdings, they allow you to conduct surveys and they will accept any survey that produces a statisticallysignificant result but more recently they started to legislate the types of methodology that are acceptable.  In particular, in recognition of the challenge that big, global, public companies face in knowing who owns them.  
	The commission has conceded, it's difficult for corporations to know who owns them.  And I think, if you were to go carefully and review FCC filings, do a little regression analysis, you might find that companies that nominally are in compliance with the 25% cap or believe they are, or can represent that they are, aren't.  It may be impossible for them to do that.  Among the steps the commission is considering in a pending proceeding that was launched last October would be to accept shareholder street addresses as proxy for citizenship.  Talking about the sigma 500 process, I can't understand it, but it is, I guess an algorithm or software that's deployed by the depository trust company that allows corporations to tag shares and to segregate them based on certain cases, whether the corporation has reason to believe or they're foreign.  Whether the holder itself acknowledges that it's foreign or not.  
	In an interesting liberalization, they're reconsidering the historic representation that an unknown response to a survey or unknown shareholder must be deemed to be foreign.  Among the proposals they're considering, would be a proportional task.  Unreported shares or unknown shares would be treated in proportion to known shares with respect to foreign versus domestic.  The commission is working very hard to rationalize its process and the industry is, I think, very engaged in, in trying to get to something that works both for the industry and for the agency.  I'll be quiet.

	>> Thank you very much, I'll let you know that a professor gave an incredibly wonky presentation.  That was very illuminating.

	>> It was 12 years ago I testified before the commission to talk about political organizations.  Amazingly, things haven't changed much since that time.  I've lost a lot of hair, but beyond that, not much has changed. 
	The Supreme Court's decision in Citizens United versus Federal Election Commission dramatically changed our finance landscape by creating an entirely new type of donor.  Although much has been written about the decision and about the consequences of corporate spending on independent election advocacy, very little has looked at the ramifications of how to fit corporate election activity within our current regulatory framework.  
	Or about what new regulations are necessary in order to ensure compliance by corporations with existing election laws.  The Supreme Court has found that corporations have a right to engage in independent election advocacy, but hasn't clearly enunciated what the principles are that underly that right.  As regulators think through how to ensure corporate compliance with existing election laws, they must consider how strongly corporations differ from individual citizens and how those different characteristics raise tremendous regulatory questions. 
	So...today, what I'd like to discuss is as we look at some of these unanswered questions, how do we look at tax law and maybe a little bit of corporate law to see what rules and what lessons we can learn?  
	So...let's start with the assumption that Citizens United will remain good law.  I, then, see two areas where the uniqueness of the corporate forum creates significant regulatory challenges and those involve both donations by foreign nationals and by govern contractors, and disclosure.  
	In the tax context, policymakers have struggled for years with the corporate form and how some corporations can be used by people to manipulate and obfuscate tax laws.  Tax shelters, tax evasion, tax cheats often use corporate arrangements including the use of holding companies or other subcorporations as a means of hiding income.  
	Recent public outcry, surrounding the Panama papers, highlights the length that individuals will go to avoid U.S. tax law.  What tax law teaches us, is that the use of the corporate form to manipulate compliance with the law is not a theoretical problem.  But it's a real one.  
	For example, considering the existing rule that foreign nationals are prohibited from engaging in electioneering communication.  In simple terms, a foreign individual could create a Wyoming corporation.  The Wyoming corporation could be the sole owner of a Delaware corporation that could own a Nevada corporation.  The Nevada corporation could then engage in independent expenditures on behalf of a candidate.  
	For those who don't practice corporate law, I hope I picked the four mostdifficult corporate states as far as disclosure for, to be able to break the corporate structure. 
	So, under existing law, it'd be incredibly difficult for any government entity, including the FCC, to have any idea that the funds in question came from a foreign individual.  
	Similar problems exist with regard to the disclosure provisions.  In Citizens United, the court upheld disclosure as justified based on a government interest in providing the electorate with information and acknowledged there was evidence in the record in McConnell that independent groups were running electionrelated advertisements while hiding behind dubious and misleading names. 
	Complex entity relationships, high donors from the public and from regulators.  If we had individuals donating in the name of another person, that'd be criminal.  But our existing regulatory regime seems perfectly comfortable allowing this to be done through the corporate form. 
	So, in thinking through the regulatory responses to these problems, I suggest we have to think of three different types of corporate entities.  We have our publicallyheld corporate entities, privatelyheld corporate entities and taxexempt organizations that have been put under this corporate rubric that doesn't even include LLCs who have generally been regulated as partnerships. 
	Why do I suggest that difference?  These entities have very different operations, different ways of acting that have significant different ramifications in the election law context. 
	Publically traded corporations are traded on Stock Exchange, they usually have diverse groups of shareholders, they're regulated on securities law.  In this case, an owner of a publicallyheld corporation is not generally contributing to the capital of the corporation.  They're generally buying their shares from someone else. 
	When we think about corporate money in that context, being spent on elections, we're actually thinking of shareholder profits that are being used in that way. 
	So, then, when we look at that, we have to think, what are the underlying rationales for allowing corporations to participate in political campaigns?  Are we concerned about who owns the corporation?  Are we concerned about who controls the corporation?  Are we concerned about who's funding the election activities?  We have to understand in a sense the evil we're trying to address to think about the ways to solve that problem. 
	So...I think there are several ways to look at this in the publicallyheld context.  The first is really when we're looking at sort of beneficial ownership.  What is the way in which somebody has enough ownership of the corporation that they're really involved?  And...in a different context, the SEC has used a 5% threshold for determining that amount.  I don't know, the 5% isn't magic, it's in a totally different context, but it does tell us it wouldn't be overly burdensome to ask a publicallytraded corporation to know who its owner were in the 5 to 10% range, right?  It's clearly difficult for them to know in theÊ.01% range.  It's hard for them to know who owns any share.  If we're talking about somebody who owns a significant Shaeffer a publicallytraded corporation, it's not that hard, not that burdensome to require the shareholder to disclose that information. 
	So, that's one way we've looked at that before.  The second way corporate law and tax law looks at this is effective control.  Not just if you have a 15% shares in the corporation, but do you have enough ownership interest that you really control the activity of the corporation, so we could look at effective control and making our determinations. 
	And out of the box kind of way we looked at this, the committee on foreign investment in the United States which looks at foreign ownership of defenserelated activities.  Where there's a national security interest and there, it looks at a functional definition of control.  There's not a bright line task.  In lots of other areas of tax law, we worry about bright line tax versus not bright line tax.  What ability do the shareholders have to control the activities of the corporation?  And looks at a whole set of different activities there. 
	So, we do have models to look at to say, when is enough enough?  When is it, when is the participation in a publicallyheld corporation, which has diffuse ownership, enough that we want to think about regulating. 
	The second is privatelyheld.  That gets to me, a lot scarier.  We heard about that in the earlier panel.  Unlike publicallyheld corporations, in the privatelyheld context, capital contributions to the privatelyheld corporation may, in fact, be providing funds to the corporation that the corporation could use for election advocacy.  I've written about the concern that taxable entities will become the new major loophole for campaign advocacy.  What you'll do is give to a corporation as a contribution to capital that's not taxed and that capital contribution will be spent by the privatelyheld corporation on election advocacy. 
	If a foreign owner contributed capital to a privatelyheld corporation, and that privatelyheld corporation spent that money on election advocacy, we'd have no idea that was happening.  Our existing regulatory regime has no way for identifying that. 
	So, here, we need to have some method that requires privatelyheld corporations who engage, right?  Not every privatelyheld corporation, most do not actually engage in election advocacy.  Who engage in election advocacy to disclose how the corporation received its funds, where its funds come from and give us some type of disclosure about at least the owners that have effective control of the corporation.  I'd say we could look at the threshold for privatelyheld corporations. 
	The last area I want to talk about and to me, the most scary is tax exempt organizations.  They don't really Êthe Supreme Court has kind of treated them like corporations, but they're totally different than corporations.  They don't really fit within a lot of the concerns we have in corporations, but what they do is shield incredibly well, donors.  And, at the moment, at least.  You could give a foreign could not beautician to the favorite social welfare organization and as long as that foreign contribution wasn't designated for the purpose of electioneering contribution or an ad, there's no disclosure requirement on that contribution.  That money can be mixed with the money of lots of other people in a very fundable way. 
	We had a crisis on disclosure in the tax exempt context for some time, but I think what we're highlighting now is this, how much that, the crisis is expanded by the fact that they can be used in a way, a sense of cleansing a donor's identity.  
	Wanted to leave some time for people to ask questions, but I want to raise a whole set of other types of questions and concerns.  In both the tax and the corporate context, we always worry about attribution rules.  How you become an owner.  We have to know, do we use family attribution rules?  Do we use other types of ways of combining ownership interest to know if there's effective control or not or some type of improper influence.  How we do lookthroughs.  This is a real problem in all of our industries.  If you can set up 12 corporations withholding companies, how do you actually get through to find out who the real owner is?  We're seeing it in campaign finance disclosure regime.  The disclosure is of the corporation, not of its actual members and of course, a corporation gives to another corporation, we make it even further. 
	What does it mean to be foreign?  Do we care about who its members are?  What about, we have corporate inversion now?  What about when a standard U.S. corporation leaves and goes to a foreign country.  It's in a foreign country, not paying U.S. tax, but maybe is made up of a majority of U.S. shareholders.  Is that a foreign corporation?  Do we want corporations that don't each pay any U.S. tax to be able to participate in our election process?  
	So...what I'd say is the tax law really tells us about corporate involvement and campaign advocacy is that the situation is a mess.  I mean, I wish I could give you a more academic wonderful world for this, the fact is, tax law is a mess, because of the ability to manipulate corporate forums here and abroad to hide income and bringing that kind of disaster into the election law context is only going to be a further disaster.  
	So...what I really urge is as much as possible, we need to get our hands on the corporate form.  The Supreme Court came in and said corporations have this right, but we all know that corporations aren't people.  It's going to take me a long time to have children, raise them up and teach them to vote for the people I'd vote for and they might not even listen to me.  With people like this, we can do it in a matter of minutes.  We have to get a hold on how these corporate entities work and how we want to have a corporate disclosure regime and regulatory regime that protects the liberties so important to us.  I thank you for the opportunity to be here today, it's always nice to do something else as a Dean and I appreciate the opportunity.

	>> Well, thank you very much.  That was incredible.  Really, all of you, we have a lot of great questions, but I'm going to assert the moderator's privilege and ask the first one myself.  This one goes mostdirectly to Professor Jackson, but I'll invite Professor Coates to weigh in.  As with our other panelists, we're looking for ways of moving forward and possible insights that can be gained from other fields.  You said there's no law, but they may not be law in the corporate context on what corporations can politically disclose, but there are rules and laws in the corporate context about what constitutes ownership and control.  Of an entity. 
	I'll invite you to speak for a few minutes about, and, I realize that there may be different standards in different states, but you know, how, how is that issue looked at in the corporate context and you know, maybe there's something there that we could use as a starting point to say well, maybe this is what constitutes foreign Êthere's a definition of ownership and control.  You know, Dean Tobin raised the fundamental question, what does it mean to be foreign?  Maybe we could look at that as a potential avenue to move forward.

	>> So...I'm delighted with the chance to say more about that.  I agree with Dean Tobin that some of the existing standards we have in corporate securities law might be insightful.  As he mentioned, we have a 5% beneficial ownership rule that requires disclosure under the Williams Act and not openly that, but...one thing I'll say about that, that might be useful for your consideration, yours and the staff's, is that we, we go even further.  We require this 5% threshold.  If you owned 5% or more of the beneficial securities of a publicallytraded company, not only do you have to disclose that you exist, but you have to disclose who you are, where you got the money to buy this stuff, and here's the important part.  What your intentions are.  Do I intend to try to take control, do I intend to be a passive investor?  We have different forms for this.  That's one set of thoughts. 
	Here's one more.  There is some data on this but as Professor Coates explained, it's rather incomplete and not directed at this question, but if you want to study the issue carefully, large institutional investors in this country who own public companies have to file a form, it's called form 13F.  In securities law we have the most boring names 

	>> We don't know about that at all 

	>> I feel like maybe that's just an agency thing...so we have this form that the institutional investors have to file, it's very rich with data on who owns what.  The good news; you can, the data that have been used in research, you can get it easily, the bad news is, it's not directed at the problem with foreign owners.  These are usually investors that have investment activity in the United States.  But not always.  You could start with examining these data to get a sense of who are the owners.  It'd be very incomplete and only a first cut.  You get a picture of what's going on.  You can take guidance and cues from, as Dean Tobin has pointed out, the 5% beneficial owner standards that give information about who these owners are, but what are their intentions having acquired this stake? 

	>> So, let me flesh out the 5% a little more and say something else about control.  Which, is a slightly different question.  So...beneficial ownership, generally speaking, means, as with the Telecom structure, either, voting power or right to profit.  Or equity ownership.  So, that's the way it's defined.  It captures both ideas.  
	The SEC's slightly more worried about warrants and the like.  So...warrants don't count, options don't count.  Except if they're used to influence control.  There's a residual, non bright line standard that could be used to deem it ownership.  
	The reason for it, by the way, is precisely that.  If you looked simply to the corporate law, the nominal owner of the shares of most, certainly public companies, even many private companies is not really the owner.  It's a conduit set up not to evade or do anything in this context, but simply to administer the needs.  A repository trust company referred to earlier, a collective, a nonprofit membership organization that banks and brokers run.  If you look at corporate law question, they only own it on behalf of the banks and brokers.  The SEC, realizing this, many years ago, said we can't think about corporate law.  What we're interested in is disclosure of the risk of controlshifting.  Control isn't limited to formal ownership, it's through these intermediate ways.  They came up with a definition of beneficial ownership that goes out to whoever can influence votes or has the right to get profit from the organization.  In addition, they realize many years ago in the context of some scandals that people can get around that by splitting their ownership up 4.9, 4.9, 4.9, get much higher than 5 to control the company. 
	They have a concept called GROUP.  It's purposely never been defined.  It basically means group.
[laughter]

	It means anything beyond mere communication.  So it would certainly pick up, for example, in your area, the head of a campaign who shares offices with the head of a SuperPac and they talk to each other Êalmost certainly they'd be a group under the SEC, less clear, it'd be truly independent owners who collectively look at the candidate's website and take cues from it and act in a concerted way that happens to be exactly the same kind of independent extent picture results, or sending out mailers that look similar to each other.  
	That's ownership.  On control, both within securities law and within the foreign ownership restrictions, going beyond Telecom and other industries that talk about it and under state corporate law for takeover regulation purposes.  You can find thresholds for control at 5, 10, 15, 20, 25 and 50 and probably there's one at 40.  I don't remember off to top of my head.  Any threshold in there.  If there's a policy rationale for all the different choices, if it's a disclosure regime, you start low, because why not?  I never heard a credible articulation of a real reason not to disclose 5% ownership with the one exception that sometimes people at Warren Buffet will argue that stocks in mind give away his strategy and he don't want to give away strategy to his competitor investors.  The SEC has a way of dealing with that.  You can delay just to the SEC and then to the public on a delayed basis.  
	So...that's, so, in the opposite extreme, what you're after is a ban, you simply cannot engage in this kind of activity, that'd push you towards a higher threshold of the kind the Telecom acted on, to implement.  Those are some further thoughts on those two choices.

	>> So, here's a question that came in by email.  That kind of touches on some of what you just mentioned.  This is for any of the panelists on panel two, I was wondering if they could comment on the impact of HR5053 on foreign money in the elections and nondisclosed money in the elections in general.  This just passed in the House of Representatives and would, in addition to, remove the requirement of nonprofit organizations to report their donors to the IRS in the form 990 schedule B.

	>> So...I'm, I'm commenting on something I know a lot about and know a little about.  I haven't read this bill.  I know about the reason for disclosure on 990s.  I will say it is incredibly important from a tax compliance standpoint that you have a sense of what's on the 990s.  What's very important for people to know, the 990s donor disclosure is used for IRS tax compliance purposes and not released to the public at large.  The provision of the law already doesn't require that to be released.  It's this, to me, fictional fear of the IRS getting that information that's driving it, but...the IRS has to make sure that nonprofit tax exempt organizations are actually what they say they are.  They have tremendous benefits under existing law.  They are exempt from property tax in a lot of cities and states.  They have, depending on the type of tax exempt organization, donations to those organizations are tax exempt.  If that profit is tax exempt, there are significant public policy reasons why we want to know the donors to those activities and under existing law, they are not disclosed to the public.  
	Now...we'll make your question, maybe one of the things I proposed is it should be, right?  That outside of this 501C3 context, when people are engaged in political advocacy, we should be disclosing the donors who give 5,000 or more.  It's not administratively burdensome because we're already collecting it.  The idea that the IRS wouldn't have that information is really a very difficult Êit would make it Êit would make their compliance requirements very difficult.

	>> Scalia's comment about having the moral courage to stand by your convictions and be publically identified with your free speech seems to be relevant to me here.  Anybody's idea of free speech being hiding in the shadows.  We're not talking about membership in the NAACP.  Where disclosure might lead you to be lynched.  It's ridiculous.  Flat out ridiculous, you want to live in Russia, move to Russia.

	>> Well...Justice Scalia said democracy would be doomed if people didn't have that courage.  This comes from a different perspective.  Assuming state interest in selfgovernment is stronger than the interest in foreign and domestic communications, do you think the FCC's 20% threshold is far too high for election law purposes?  I think that's probably directed at Mace, but anybody who wants to weigh in is welcome to.

	>> I'm not sure that I would be comfortable saying whether it's appropriate or not for election law purposes.  But I think I can get to an answer or at least help, help amplify what I think is going on in the question by looking at, talking about the FCC's ownership attribution standards, because...as in other industries and other regimes, the FCC deems certain interests that are far below what we would, I think, intuitively think of as controlling interests or perhaps even influential interests.  As being ownership interests that must be disclosed to them and couldn't have regulatory consequences. 
	In, in the corporate context, it's a 5% test, which seems to be pretty common, based on what I'm hearing.  But...think about a limited partnership or an LLC, where the commission has taken the position that any interest, irrespective of its economic value, that is to say, say a 1100th percent partnership interest will be deemed to be ownership of the entire partnership unless the holder of that interest subscribes to certain insulating criteria that effectively screen her from any participation and/or influence over the daytoday operations or affairs of the partnership.  Those are prescribed limitations, the failure to comply with which, can cause your interest to be deemed to be an interest in the whole, think about the consequences that could have, the structural ownership restrictions, foreign ownership restrictions and the like. 
	The FCC has spent decades grappling with the question of how much influence is too much influence?  How do we quantify it?  How do we restrict it?  And...the 5% figure has tended to be a proxy, you know, they know it when, like Justice Stewart, they know it when they see it.  5% allows you to have a voice in corporate affairs and I dare say it could be lower, actually.  How many of these actually get filed, disclosing interest in excess of 5%, I'd dare say not many, right?  I don't know.

	>> I think 30 to 40% of U.S. companies have a filing, the very largest ones, so much smaller percentages because it's hard to get that much capital.  I, the only thing I'd add to that, the partnership distinction and the LLCs are, in many ways, more like partnerships than they are like corporations in this respect, not only tax, but also here.  They're subject to very extensive agreements which govern government, which crease the governance structure for them.  Whereas a standard business corporation, there's certain strong presumptions about how we govern, but the partnership isn't true.  That's why having a low ownership interest often is coupled with rights that effectively give you significant influence to the partnership agreement.  I can't imagine any agency wanting to read these agreements and sort them on the basis of actual granted powers, which is why I think the presumption you're talking about makes sense.  To sort of force the person using the structure to show you that they're not having control in that way.  The on the way to go is to have an undefined notion of control, and they can go to jail for it if they have it at many other Êthat's effectively what the SEC does.

	>> We don't send people to jail here.

	>> You know....

	>> That's, that's another building across the way.  Here's another question from email.  Can the panel explain an individual's ownership interest in corporate assets?  In particular, do shareholders have an indivisible interest in the entirety of a corporations assets such that 1% shareholder has a 1% ownership interest in every dollar of the corporation?  If that's the case, can one say as a matter of law that any dollar of a corporation with any foreign shareholder ownership could be said to be wholly domestic? 

	>> A standard corporation, if you own 1% of the share, you have 1% right in the corporation's value, if and when it's liquidated and 1% of the voting rights.  You might think that doesn't sound like much, but you may be the largest individual voting holder of a large public company with 1% of the shares.  And in the current corporate governance environment, the boards of companies that are confronted by 1% shareholders listen to them.  Not you know, they don't do what they say, necessarily, all the time, but they do engage with them.

	>> That's right.  So...so, when we teach corporate law to law students, we're thinking about these issues for the first time, we explain that what a share in a corporation gives you, as Professor Coates explained, you prefer its ongoing profits.  It doesn't entitle you to call them up and say "give me 1% of the money" and this is a very important legal distinction from the way I think about corporate law.  It frees the corporations to make a lot of money.  It's not the law.  But I think, I'm not sure how much that tells us about whether the money in the corporation is foreign money, so to speak.  Here's why...for me, what we're more interested in is the subject you asked me about and we've been discussing, which is control of the corporate resources and for the reasons Professor Coates gave, 1% ownership in a corporation could yield a significant amount of control and...the way to think about this, I think, is that the corporation is this box with enormous resources and...the interesting question is not who's money is it?  And sort of, can we trace it back?  The question is, who decides what happens with those resources?  And the answer, in the case of a 1% shareholder of a very large public company, they'll be given a fair amount of attention. 
	I want to highlight one ironic thing that's worth noting here, in the last decade or so, shareholders of U.S. public corporations for various reasons have been given a lot more influence than they once had.  And the thing to understand about this Êso, there's many reasons why that might be good.  Many reasons why it might not be good.  One thing to keep in mind, because that's true, there's no borders on that change.  Right?  That's equally true.  The shareholder who is a U.S. shareholder and a foreign shareholder.  Now...I think that's just worth understanding from your perspective, because...increasingly, the U.S. corporations are becoming more responsive to shareholder interest.  That's something to keep in mind, given that we know corporations are active in elections. 

	>> Here's another question from the room.  Are charitable contributions by a company subject to the business judgment rule? 

	>> Um...yes.  So, a question I'm often asked about this idea that they should have to disclose their corporate spending on politics is should the same be true about their charitable contributions?  And this is where it's great to be a professor and not something else.  I'm just required to tell the truth.  That's the one obligation of my job.  The truthful answer is there is no intellectually consistent way to disclose their spending on politics and not their spending on charity.  They're enormously similar. 
	My whole argument is about the manager's interest and what they do with shareholders money.  Managers might have interest in giving me to charity for particular reasons, they might conflict with the shareholder's interests, it might also be political contributions. 
	That said, my view is that if there are lots of reasons why shareholders might feel much more strongly about information having to do with politics than information having to do with charity.  Because, for example, if you're a shareholder of a public company, it might trouble you that the money you've given to the corporation is going to be used for politics that youÊabhor. .

	>> As a Dean that likes to raise money, most of the time my donors want to be disclosed.  I think you have two different ways corporations give, but I think most of the time, corporations are giving, they will disclosing in the charitable context.  And maybe when they're not, it raises more concerns, why are they not?  But in general, corporations have different ways of giving.  They often are giving through foundations and other charitable organizations they've set up and oftentimes, when they're giving from the corporate treasury, they actually see more of a business reason to be giving and they want more of a business action to the donation, so...you know, I wouldn't be troubled one way or the other, as long as you, with all of these things, make the thresholds high enough.  I don't think corporations should have to disclose $500 activities.  You want it to be real.

	>> Or if they give money to the University of Maryland law school.

	>> I'm happy to disclose that.

	>> You're making an important point.  One of the things that's interesting, this proposal's been out there some time and many comments have come from many sources, investors, politicians, you name it, they've commented on this, the number of comments from corporations from corporate boards who say they don't want to disclose, like look, we'd rather not do this is zero.  Zero.  It doesn't strike me that corporations have a hard time saying stuff when they want to.  I feel like there are a lot of people on K Street whose fulltime job is to do that.  When I talk to Board of Directors, they don't say to me, they say I'd love to have disclosure, then I'll know what my competitors are doing, I'll be able to scale it appropriately and I'll have Êthere'll be accountability for where my money goes.  Which is all to the good for the wellrun business.  It's important to note there, are lots of reasons to oppose this kind of thing, but...the idea that they're significant corporate opposition to them has been disclosed in the public comment file is one.

	>> Okay, so here's a question that came in by way of Twitter earlier on the first panel, but I saved it because I thought you guys might know more about this.  Could the Bank Secrecy Act be an effective tool to prevent foreign donors from influencing elections? 

	>> The Bank Secrecy Act, in a related apparatus of regulations designed to help prevent money laundering, is implemented through the banking system.  It doesn't quite capture what I think we are focused on, because...most equity ownership isn't caught, most people don't, in any meaningful sense, sell directly to a bank shares or buy from them in the U.S., largely banks are forbidden from directly owning.  For the most part, the Bank Secrecy Act and the apparatus attached to it is aimed at cash.  It could, some of the surveillance pieces of it, I think, could be adapted.  And one thing I'll note, the Federal Reserve Bank of New York survey I described earlier, it's done under the auspices of a statute giving the treasury the right to do it, but then sort of delegates it to The Fed.  It's similar.  They reach out to banks, brokers and large companies.  They give a survey out.  The banks have to respond to it.  There's some check on it.  The provision of information to that.  None of that's public currently.  It's only aggregated.  The data is only aggregated.

	>> Here's another question from the room.  This is for Mace.  What do you think of the "true sponsorship provision" especially as a means to forced disclosure of a group's funders within TV ads themselves.  Specifically referring to political/issue ads? 

	>> There is, there are provisions in the Communications Act governing the disclosure of the identity of sponsored material on the air.  And of course, that's particularly sensitivity in the political advertising context.  The FCC has been struggling with how to implement provisions that require what I would call a lookthrough to you know, the true sponsorship of organizational or actfunded ads.  I guess the question is, if I'm in favor of it, I guess I am, and, and you know, there's an interesting jurisdictional overlap between your commission and, and the FCC in this respect and an interesting tension too, in that the FCC, under its own implemented statute cannot sensor candidate speech.  Which, in itself, has had ratifications in our age with, in particular, shall we call them abortionfocused spots and spots containing graphic imagery which broadcasters endeavor not to air, but ultimately are obligated as a statutory matter, to air.  The disclosure provisions arise in that context also and it's a work in progress at the FCC.

	>> Can I followup?  I'm curious about that regime.

	>> You're supposed to be answering the questions.

	>> I know, but he should know, I hope he knows.  If I set up a company and dump a million dollars into it and they dump ait into a SuperPac, who shows up as the sponsor for the ad under the current law? 

	>> The SuperPac.

	>> So if I name my company something mysterious and the SuperPac too, there's basically no real transparency there.

	>> Yeah.

	>> Citizens for a better tomorrow tomorrow.  This has been incredibly illuminating for me personally and I hope to everybody else in the room and who is listening on the audio and video feed.  Please join me in thanking this great panel.
[applause]

	>> And now, the moment that many of you have been waiting for.  It's lunch time.  So there is food directly across the hall, restrooms are to the right and the left and let me say, if anybody is curious or concerned about where their taxpayer dollars are being spent, lunch is on me.  The taxpayers Êthe only taxpayer paying for your lunch is this one sitting here.  There are veggie wraps and chicken wraps and we'll be back here at 2:00 p.m. to start up with our last panel of the day.
[applause]

	
	[Lunch break].  
	
	

	>> Okay, welcome back to the people in the room and everybody out there listening in.  I can see my plot worked by giving you food in the building.  Most of you came back after such a long and hardworking, mentallyworking morning.  We're glad to have so many of you here in the room.  We have here, Richard Briffault, he's the Joseph P.ÊChamberlain professor at Columbia law school.  He's one of the top scholars on the intersections of corporations and politics.  Chair and conflicts of interest, board of the city of New York.  And was also a member of New York State's Moreland ad to investigate public construction.  Perhaps someone who understands like me what it's like to know what the right thing to do is and have people fail to do it for you in a government context. 
	Jared DeMarinis is with the Maryland state board of elections.  He's really taken a prominent role amongst state election officials.  One of the first in the nation to draft and pass regulations regarding the use of social media, internet advertisements by campaign accounts and political contributions by text message.  Very forwardthinking.  Somebody who has really looked at how campaigns are changing and most of the point today, he helped draft the Maryland law that helped close the controversial Maryland LLC loophole and political activity, 501C and 527 organizations. 
	And last but not least, Ciara Torres Spelliscy.  Her book talks about corporations expanding their constitutional rights.  And how courts have often obliged.  Ciara was named as a top wonk by the website topwonks.org. 
	We have all of these wonky people here, excited to hear what you have to say.  Richard, lead us off.

	>> Thank you, Commissioner, for inviting me here and everybody.  I've learned so much from the prior two panels.  They've been great so far.  I want to talk about three things.  First, I want to do a little back to basics, which is why does campaign finance law restrict corporate and form political activity. 
	Second, talk about Citizens United and its impact on the justifications and on the rules that it doesn't directly affect, but how it, nonetheless, some of the big stuff on themes we heard in the prior, how it affects things it does not directly regulate. 
	And finally, you put me down as Administrative Law, what kind of actions the FCC it can take in terms of rule making to address issues of corporate political spending and foreign influence that have been triggered after Citizens United. 
	What are the justifications for restricting corporate participation in elections?  Traditionally there, were two.  First, really dates back to the 19th century.  Speeches that Andrew Jackson gave, denouncing the role of the second bank of the United States in the 1932 election.  Speeches of Lincoln and Hayes and Cleveland.  Corporations are aggregations of wealth.  Corporations, because of their wealth and power, were seen as a special threat to democracy and similarly, when, when unions became more powerful during the New Deal, they were added into the mix of entities singled out for special treatment.  Federal, state laws began to treat corporations as special in the 1890s.  Federal law, our oldest law, the Tillman act.  On the Taft legislation in the 1940s, extending that to expenditures and to unions. 
	So, number one has always been this concept of corporations as because of the corporate form, amassing distinctive wealth.  Rob Jackson alluded to this this morning, shareholder protection, other people's money.  You have corporations and various investigations that go back to 1905.  The Armstrong commission of New York State, managers using funds that were adverse to the interest of certain corporate shareholders. 
	The two dominant junctions going down to year 2010 were the aggregations of wealth and protection of already shareholders.  
	Eliminating the first, the gist of the court statement, I won't say corporations are people too, but they're not distinctively bad actors.  The fact they have wealth and power doesn't make them different from private citizens who have wealth and power as well.  You can't single out corporations because of their status as devices for accumulating wealth. 
	And the court was pretty dismissive, there might be a tiny bit of wiggle room, but not much on the argument that they're restricting corporations was snuffed in the interest of protecting minority shareholders.  I do think you see that concern animating a lot of the effort to get the SEC to take action for greater disclosure and greater corporate management accountability to corporate shareholders. 
	But there is one other justification which didn't get a lot of play until the current century, but emerges, particularly in the SEC versus Beaumont litigation.  The ease of creating corporations and their ability to use them to circumvent otherwise legitimate restrictions and requirements that would be imposed on individuals.  
	So...the corporate form, it's not just a source of power, it's easy to generate and under American law has long been a distinct and separate actor.  This justification, the anticircumvention restriction wasn't an issue for Citizens United.  It has been invoked by many courts of appeals in the last six years which have considered and recollected challenges to the bans on the corporate contributions, the Beaumont case predates Citizens United also used it. 
	It's particularly relevant to the remaining areas, the areas in which we deal with individuals, which is contribution restrictions and especially disclosure.  Because of the, both the potential and the actual use of notforprofit corporations and other entities, such as LLCs to avoid disclosure and perhaps, to participate in campaigns where they shouldn't be allowed to. 
	A final factor, which I think is not given a lot of weight, but is relevant to some recent actions or nonactions of the FEC and is picked up in the 1971 federal, the FECA, Federal Election Campaign Act which authorized corporate and union solution on PACs.  Corporations have firms in general, unions as well, corporations are not only collections of shareholders, but they're also obviously collections of employees.  
	And I think one of the strands were the powerful strands in the statute, authorizing corporations to participate through PACs was the protection of employees from coercion and threats of reprisal. 
	If we look at justifications for regulating corporations today, it's primarily about the prevention of circumvention of otherwise legitimate rules dealing with individuals and I think also protecting some corporate and union affiliates, their employees from undo pressure to participate in the corporate project.  
	Turning to restrictions on foreign money, interestingly, you might think of this as very basic, it's far morerecent.  If federal restrictions on corporations date back to 1907, the actual addressing of foreign money in elections only goes back to 1966, although, where it first shows up tells us more about where it came from.  Which was, it first began as an amendment to the Foreign Agents Registration Act of 1938.  This gives us a sense of why this is there.  The 1938 Act was in part, a concern Ê1938 tells you a possibility of the time that was potentially communist.  A version of a legislative process with lobbying.  There was an effort to get greater disclosure of the identities of people recruited to act on behalf of foreigners, initially foreign governments, but also expanded to include foreign individuals.  And it reminds me, I was struck by Mace's presentation in the first panel, how much this connected issues of national security.  The radio act of 1912, the Telecom regulations and defense.  I think in the first panel there, was some reference to this, this kind of reflects it.  Only Americans citizens should be participating in the political process.  That's maybe part of it and that is certainly the language that the DC circuit used in the Blumen case upholding foreign nationals contributing money in the elections.  But there's another quasinational security interest, often through not only private entities.  It was also alluded to in the last panel.  In many, in other countries, it is far more common for business enterprises to be controlled by foreign, by the governments themselves.  Whether it's in China or Russia or the use of sovereign wealth funds through many of the oil countries. 
	I think you see both.  The concerns about foreign governments, especially the arms of foreign agencies and the sense of foreigners are not members of our policy.  
	What does Citizens United do?  We all know, it struck down restrictions on corporate expenditures in our elections and eliminating the two principle justifications of, I'd say the problems posed by corporate wealth, and the protection of minority shareholders.  
	It left in place everything else.  In particular, the ban on corporate contributions in American elections and left in place the anticircumvention option.  
	I don't want to talk today, it's not our focus, but the ban on corporate contributions requires some sharp distinction between contributions of expenditures.  We all know that has been pushed very hard through the emergence of coordinated expenditures which are not nominally coordinated and it seems to me that although the existing coordination rules are right for reconsideration, in light of the experience that we gave from SuperPacs over the last six years, that coordination has to be redefined in a more realistic way.  This goes beyond the specific issue of campaign participation, but is one important way of addressing the possibility of corporations participating through donations.  SuperPacs and other entities, when those entities act in close corporation with elected official campaigns, that's de facto contribution.  So, I think it's not our major focus today, but I think an agency would be welladvised to think about new rules, redefining what coordination is. 
	The bigger issue for me is disclosure.  Although popular concern, with Citizens United focused on the potential for misuse of Êthe potential power of large businesses and corporations entering our elections, I think the real issues have been the explosion of campaign activity by nonprofit, 501C4s and C6s.  Their major purpose isn't electoral, they don't have to register as political committees and by closely held corporations, LLCs and shell corporations, entities which are really there to disguise the presence of one or a small number of people. 
	It's interesting if you look at the history of litigation over the corporate participation in our elections.  Almost all the cases have actually involved ideological corporations, nonprofits.  If you look at the major federal cases, national right to work committee, Wisconsin right to life committee, Citizens United itself, western tradition partnership, all of them path breakers in either, failing to or succeeding in extending corporate participation have been ideological entities.  That's really where the action is. 
	As we know, C4s and C6s have to disclose their election year and communication expenditures, but through regulations adopted before Citizens United, these entities within the corporate form only have to disclose those donors that earmark funds for specific expenditures, which, in practice, means no one.  So, I think one appropriate response, and because you put me in Administrative Law, I'm thinking administrative actions. 
	An appropriate response here would begin to think through what does it mean to be a corporate, a donor to election year communications?  Here's, I think, until now, the issues have come up in a lot of, let's say the inactions that divided nonactions of the FCC, have come up in enforcement actions.  There are plausible arguments in some of those cases that you're making law through enforcement in gray areas.  This is not unique to this agency.  Most federal Êmany federal administrative agencies prefer to act through enforcement actions rather than through rule making.  An appropriate response would be to do some rulemaking and try to figure out Êthis picks up on the distinction, but really it's two and one.  On one hand, nonprofits and closely held corporations and nonpublically held corporations.  I don't think it should treat everyone the same, but for nonprofits, which exist solely to collect contributions to engage in political activity or for narrowly defined privatelyheld corporations.  Those contributions are supporting political activity. 
	It may be that for the C4s and C6s, you do have entities that are not totally electoral.  They may not even be primarily electoral.  The functional way to address this is not to say it's gotta be earmarked, but to do it in reverse.  Basically say something along the lines of, we're going to treat contributions of that threshold.  To treat them as donations, supporting the electionary communication unless they're earmarked for a nonelectoral fund.  If you want to give your money to a nonelectoral version, the nonelectoral portion of crossroads, if that such exists, you give it to that, if you don't, you're treated as electoral activity. 
	I don't know that you're going to get this, but I think the current phrase of for the purpose of electionary communication has been used to hide donors supporting electionary communications, including corporations. 
	The D.C. circuit recently upheld the current rule as consistent with the discretionary authority, the language clearly indicates that would support the opposite role or at least a strong showing in that language.  Given the, the arguments for this.  And the nature of the FEC's rulemaking authority that they would support the opposite result. 
	I think this would be something to do.  Included in that, as I'd have a peel back the onion rule.  As we already discussed, I think in Tom's comments earlier and in public news accounts the last couple election cycles of the Daisy chain.  Corporation A giving to corporation B giving to corporation C giving to...so on.  I don't have legislative language in front of me, I'd support a rule that says any entity that engages in this, maybe call it the human participation rule, or publically held corporation.  I'm not so concerned about them on record, we know something about them or a union.  They exist on record.  The Americans for better tomorrow, the people for good government, the meaningless titles which you can peel back and peel back.  I think it'd be within the authority of this commission to say disclosure has to be disclosure and disclosure has to be the real interests.  Is there a term for the inside of an onion?  Once you peel back Êthe inside of the onion rule. 
	The commission was recently unable to take action with respect to treating certain donations as if they were straw donors.  I'd reframe that to say simply not that the LLC's donation is a straw donation, but when an LLC makes a donation, we should know who is behind them and that could be addressed through rulemaking.  I may be optimistic as to what kind of rulemaking would actually occur, but it's a good strategy to at least, for one thing, our rule making is launched, we'll get comments from people in this room and all around the country which can come up with, I think, an informed approach to this, to see whether there is something, except where we are supporting disclosure that would be more effective. 
	That says less about the ban on Pharma.  I think that was addressed very effectively in the prior panel.  I think though, one way to begin is to figure out what's there?  And I think, enhanced disclosure, particularly on, by the, on the spending of the money behind the nonprofit, the money behind the C4s and C6s and behind entities that are getting to the SuperPacs.  When a C4 is giving to a SuperPac.  At least they give us a better sense of the scope of the problem.  And...the modes of participation of foreign entities.  So, that's one thought.  The second thought is to think about to what extent it makes sense to pick up a model of PAC regulation, because...although corporate spending in elections is a new thing, as of 2010, PAC, corporate PAC spending in elections is not been legitimated since 1972 and probably predates that a little bit.  
	And there, of course, law takes a fairly hard line.  Treating foreign nationals in the operation of the PAC, participating in the selection of persons who operate the PAC, making decisions regarding the PAC's contributions as meaning it far.  I'm not sure you want to take it as far as that, but you could begin with the PACs. 
	And in connection with this, part of what I'm doing is picking up on FEC decisions or nondecisions I don't agree with and seeing if they can be redone and develop a rule that addresses a relationship between corporations and their subsidiaries more effectively.  Here, of course, I'm thinking of the Chevron decision and the idea that Chevron and Chevron USA are two unrelated entities and one of them is a government contractor and the other one is not.  When the one that is not a government contractor is wholly owned by the one that is.  This was the result of an enforcement action.  The rule of participation didn't matter so much when corporations were completely band.  Now that corporations are in the game, we have to think about who they are, who's behind them and what are their relationships to each other?  I'm not sure if this is my third rule making or my fourth, this will get you through your next couple decades of not being replaced, I think another area for appropriate rulemaking is figuring out what's the, and there are obviously models of this from many other Êcorporations come up in almost every regulated sphere, labor, everywhere else.  Is to figure out what's nature of the relationship between the subsidiary and a parent between affiliates.  And it's relative for the government contractor ban, it's relevant for the foreign corporation ban and the corporate contributions.

	>> Thank you.  Jared? .

	>> I wanted to say thank you, Commissioner for inviting me to this panel.  This has been rather informative throughout the entire day here.  I'm going to address the impact of corporate contributions on the state and local level and I'm going to first address that Maryland is always allowed corporate contributions, we just don't allow corporations to run for political office because they are not a person for that purpose.  
	And when Citizens United came out, I remember the press calls coming in, because now, there was such a heightened awareness among the press core and it had really no impact on the state of Maryland's giving process.  We've always allowed corporations to give and make independent expenditures.  But...since then, it, it definitely changed.  And...I'm going to give you a little case study about how difficult it is, and kind of a, what the other panel and everyone here being such professors in law schools, it reminds me of my, one professor's quote about the, if you don't let the nose of the camel inside the tent, type of deal.  Once it's in there, it's very difficult to get out. 
	Corporations and corporate contributions is definitely that type of being here.  So...like I said, Maryland is always allowed corporate contributions.  We had an attribution rule in place that said that whollyowned subsidiaries of a corporation and if the corporation had identical shareholders, they would be considered as one contributor.  Now...this makes sense and everything.  This is, since the dawn of the time.  In the 90s, LLCs came into existence and into corporate law in Maryland, the powers that be and everyone asked, are LLCs part of this attribution rule?  And...the office of the Attorney General at the time said no.  LLCs have to be considered separate entities and they're not part of the attribution rule because when the law was written, it was written saying corporations and LLCs are not corporations. 
	This became the LLC loophole in the state of Maryland here.  And...basically, everyone who was the mostpopular form of corporate structure, especially for small business owners developed many LLCs.  And they were able to give to politicians over their contribution limits.  And...this is, it existed for years.  Out there.  And...it had such a significant impact on local and state elections, which was making it virtually impossible for it to ever get changed.  There was years of it, constantly in front of the General Assembly to close this loophole.  And I was going through some of the comments online too.  That I, with the FEC, #FECforum.  Large developers in the state of Maryland used to typically set up many LLCs for legitimate reasons to control their various interests. 
	And they, then, contributed that they controlled to their candidates.  They formed basically, clusters of giving power to increase their political clout.  And this ranged into the hundreds of thousands of dollars to specific entities and to specific candidates.  I mean, the corporations, corporate contributions, you know, targeted the correct elections to maximize their effect at the state and local level.  
	So, I think that it would be, while you may, while it may be insignificant as a figure compared to say, overall giving to a candidate by individuals, it's impact is probably greater than that.  Because...one person given $25 versus a person giving $100,000, they controlled all those interests there.  And...I think corporate money was kind of like the original dark money in a sense here.  Because you don't necessarily know how they were, how this decision was made, who really speaks for the corporation, and the public just kind of looks at it and goes, it's just a name and most of these LLCs or corporations have names that no one even knows about and then they go in and they get a registered agent there.  
	So...it, it was really the first forum.  Even though it was disclosed and you could try to find it, it takes a long time there.  
	So...flash forward now from the 90s all the way to 2013.  Which we basically, when the LLC loophole was finally closed.  The law was only effective after the 2014 general election.  They wanted to make sure they got one last election with the LLC loophole. 
	This law, that we passed, in Maryland, was passed with bipartisan support.  So, this is not something, now, that was republic or democratic issue, I think that the states now have taken the mantle of this for disclosure and reform, in a bipartisan effort here.  
	And...the close, now, is that we then, changed it to all business entities, so that we don't care what structure they are, LLC, LLP, corporations, anything.  If they're owned or controlled by 80% of the same individuals, they're considered one contributor now.  
	Along the lines here, the idea, then, there was a ban on casino interests as well.  I received many I guess, concerns about well, if the, if one corporation in this person's control is a casino, will it affect, say, their dry cleaning business if they want to give it to me on an unrelated matter?  The answer is yes.  Once the you know, once the ban was attached to all the contributors, then it affects all of them.  
	It wasn't the mostpopular response, they still wanted a lot of the money there.  So...but, once you have big money entering into the political process, it is nearly impossible to get it out.  Or it's corrupting influences on you.  Because...campaigns constantly get more expensive.  
	The last cycle is the floor.  It's not the ceiling anymore.  Because then they look around and go, well, if I took $100,000 to win, my opponent's going to raise $150,000 so therefore, I have to now look at and raise $200,000.  So, it's always kind of like, an increasing arm's race there.  So, once they know that they have an access to money, from one contributor that can give tens of thousands of dollars, then of course they can easily raise that in their mind.  If you cut off those sources for that, it has an impact on their ability to raise money and now I have to go out and get you know, the legal limit from 20 people or go out a little harder.  
	The other thing too, is that, I wanted to say about how the states are taking this responsibility, I think about corporations and shareholders in a new light.  I think that they are, they used to look at the federal side and say, that used to be the shining model of disclosure and activity for you know, compliance and the states were always the, let almost anything go. 
	Now I think the roles have kind of flipped here.  For example, wind expenditures, in the state of Maryland, if you're an entity that makes an independent expenditure in our state for a state or local election and you have shareholders, you have to submit your activity to the shareholders on their regular shareholder report.  
	So the shareholders will have some knowledge about that.  I think I wanted to talk about, a little bit, one of the questions here, what can the FEC do?  How can they build a record about this?  And...I can say that how this change came about, I can talk about the fact that we had two commissions, to study campaign finance law, one by the Attorney General, another by the General Assembly or that outside groups did reports about how much money was passed through the loophole, which in one fouryear cycle was $5 million in the very small state of Maryland, which, as you can see, had a very significant impact there or the press was very knowledgeable about this loophole.  But in the end, it was really the Citizens United case. 
	The Citizens United case, even in the state, where it had no effect, prior, I mean, after its ruling, made legislators rethink and take a look about corporate influence.  And I think that in their mind, because we, everyone looked at the federal model, you had a lot of people go...of course corporations can never give because the federal law prohibits corporations from giving.  Once Citizens United opened up, they were giving more.  
	Campaign finance has gone through a, depending on how you feel about it, major changes in the last seven, you know, in the last decade or so.  I think that one of the things about it is that on the state and local levels, the, it is more of a bipartisan issue than on the federal level.  The reason for it is because of the, the impacts that they have been doing to themselves as legislators with redistricting.  Redistricting has made every district now a safe district.  Before, you used to have to worry about what the democrat or republican is doing in your own district.  Now...you are more worried about your challenges from your own party.  Whether it from left or right.  And that, the general election is almost predetermined at that point there.  For the outcome.  
	So...legislators are now looking at it and saying "I want to know what I typically, what my opponent is doing."  And their opponent is more in their party than ever before.  Which is why I think we were able to pass a comprehensive campaign finance reform with greater disclosure on dark money with C4 activities, with 527 activities, with rapid disclosure on SuperPac activities within 48 hours.  All these reforms and greater disclosure and enforcement laws was because they were looking at it in their own light and saying, well...I want to know what's going on in my election that matters to me the most.  
	And before I leave, I want to talk a little about foreign influence here.  Now, foreign influence is a, is a, we can all agree that, I think we never want a foreign government to influence our elections.  Or have the ability to change our political discourse.  Maryland is unique in one scenario here.  We have a town that actually allows noncitizens to vote and participate in elections.  They can go out and vote for mayor, but it's against federal law right now, for a person in that town, that's living there, to give a $5 donation to the candidate they choose.  
	Also...nationally, we've been passing a lot of dream acts.  There's the dreamers out there.  Now, maybe they have a right, maybe they don't have a right to participate in the electoral process, but they're here, they want to participate in this process here, this is not a national government trying to push their own agenda in our political process here.  These are people that, in the Dream Act, pay taxes.  These are questions now, I think that as we go forward, I think we need to to address and that foreign nationals is a, is a different subject from when it was first, I guess, thought of in the 1930s or in the 40s when, when there was a war and we wanted to make sure about that. 
	So...with that, I just wanted to show that how it took forever, but it did take, we did get it done, to limit or corporate fluorescences on the electoral process here, which is why I'm an optimist in these situations here.  I think that as the people from the states move up through the ranks, the rules they play with on the state level, they want to bring to the next election.  Then they're going to say, well...this worked and this is not something that I couldn't win or it wouldn't have a negative impact on it, and they're going to take that, I hope, bipartisanship and disclosure and reform attitude to the federal side and that is all.

	>> Before you start, I want to remind anybody that joined us late and is listening in, online, that you can email questions for the panel to forum@FEC.gov or send them via Twitter using theÊ#FECforum hashtag. 
	Good afternoon.  My name is Ciara Torres Spelliscy.  I'm a fellow at the Brennan Center for Justice and I'm the author of Corporate Citizen and one of the things I deal with in my book is dark money.  Another topic I deal with in my book is foreign influence on American elections.  I've been working on the issue of corporate political spending since 2007 and what got me into this was a Supreme Court case called Wisconsin Right to Life 2.  And I think a lot of people in this room realize that case ba laid the groundwork for Citizens United three years later.  
	I think the crux of the matter at hand is that over $600 million of dark money has been spent in the federal elections since Citizens United was decided and I think that raises at least two big questions for Americans to consider.  Number one, who is considered part of we the people and two, who is footing the bills for American political ads?  
	So...firstly, who is considered part of we the people?  Do we want that we to include foreign spenders?  And this has been an issue since 2010.  And it was raised by the president of the United States.  President Obama, in his first State of the Union Address, chastising justices a few feet from him.  The Supreme Court reverses a century of law that I believe will open the flood gates for special interests, including foreign corporations to spend without limits in our elections.  I don't think elections should be bank rolled by America's most powerful interests or worse, by foreign entities.  Sitting in the audience, Justice Alito was caught on camera mouthing the words, "not true."  Ever since then, there's been a question about whether foreign corporate money will get into elections, postCitizens United or not. 
	I'm not sure the average American voter would feel comfortable with foreign sources spending in our elections, especially foreign sovereigns.  I doubt the average American voter would want Citgo, for example, which is an oil company, that is owned by the government of Venezuela having any say over American energy policy or who is elected to any American office.  
	Now, as far as we know, Citgo hasn't spent money in American elections, but the $600 million of dark money means that that type of spending could be hiding in plain sight.  We simply do not know the sources.  
	Now we do know through certain leaks that have happened view the past six years that some of that dark money is corporate money and some of that dark money is publically traded corporate money.  While Citgo may be the clearest example of the type of foreign spending that would be objectionable, I think we should also worry about foreign private interests that own any number of Americansounding brands. 
	And I think the problem with the foreign ownership of those companies is that when they spend in American elections, they may not have U.S. interests at heart.  And there is a very long list that I won't go into, but will give you a sampling of foreignowned, "American" brands. 
	Think of Burger King which merged with Tim Horton's and is now Canadian.  Nestle USA is opened by Nestle SA which is headquartered in Switzerland.  711 is owned by a Japanese company.  Firestone is owned by Bridgestone which is also Japanese.  The Pier Hotel in New York City is owned by an Indian conglomerate called the Tata Group.  The Sunglass Hut in most American malls is owned by an Italian eyewear company. 
	Americans might be shocked that Church's Chicken is owned by the first Islamic investment bank which recently changed its name to RCapita.  You might think about what that is, the name change. 
	It's not just consumer brands.  Foreign banks have been on a buying spree of American banks.  To wit, Compass Bank is owned by a Spanish bank.  Sovereign Bank is owned by a Spanish bank.  Union Bank is owned by Japanese financial group.  Bank of the West is owned by a French bank. 
	Here's where it's really troubling.  Parts of American infrastructure have been bought or leased by foreign interests.  The Indiana Toll Road has been leased by an Australian and Spanish consortium so has the Spanish skyway.  I think all of this foreign ownership raises questions about whether it is appropriate for these foreignowned entities to spend in American elections.  The law isn't clear and the rules aren't clear.  The FEC should clarify them. 
	That was all issue one.  Number two, who is footing the bill for American political ads?  The answer to the question of where does dark money come from is an especially poignant one if the answer includes publicallytraded companies.  If the answer includes publicallytraded companies, then ordinary people with their 401Ks may not like to learn that the answer to who is paying for that awful political ad that's airing on a you know, continual loop on my TV, the answer could well be you.  And your retirement investments.  
	So...while very few corporations have spent on the record, some have.  Including CV Star, mentioned in an earlier panel.  They spend at least $10 million in this presidential race.  In the last presidential election, Chevron spent $2.5 million.  But we have this $600 million dark money knowledge gap which grows every day.  And...we do know a little bit about where some of that money is coming from in, since 2010, the U.S. Chamber of Commerce has been a source of dark money.  And...according to open secrets, they have raised over $100 million in dark money.  Now...I think because the chamber is a business association, it is reasonable to assume that most of that hundred million dollars is from a corporate source, but no one outside of the chamber knows for sure and that's the problem. 
	Meanwhile...the Supreme Court has held in Buckley, in McConnell, in Citizens United itself, there's a voter informational interest which justifies campaign finance disclosure as a matter of constitutional law.  The basic idea that the Supreme Court has endorsed is about heuristics for voters.  If I know as a voter that an ad is paid for by the American Lung Association, I'll treat it differently than if it's paid for by a tobacco company. 
	But another aspect of accountability is served by American politics.  Justice Kennedy writing for the majority of Citizens United said the following "shareholder objections raised through the procedures of corporate democracy can be more effective today because modern technology makes disclosures rapid and informative.  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."  
	If investors are to hold their companies accountable, then we need more transparency than we have today.  Including, which corporation is funding which political ad.  
	So...in conclusion, dark money is a problem for voters who may not want to vote for a candidate that is backed by industry.  Dark money is a problem for investors who may not want to foot the bill for corporate political spending.  Dark money is a problem for customers who may not want to support a firm that supports their political opponents.  But without greater transparency, voters, investors and customers can be duped.  Thank you.

	>> Thank you.  That was, for the third time, really terrific and illuminating.  We have a couple questions from the audience.  First one is for Jared.  Some Maryland jurisdictions are considering implementing public finances of elections.  Do you think those programs will work in an era of large independent expenditures? 

	>> Yes.  Well... yes.  I think one of Êwell, we, in 2014, we actually elected a republic governor using a publicallyfinanced program.  The first time ever in the history of the entire program, which was over 40 years old.  
	So...with a lot of outside spending, against that government 

	>> You said the first time ever Êwhat was the first time ever? 

	>> The first time ever that a candidate won using public financing in the state and only the second time ever it was actually used by a general election candidate in its 40year history, because of the limits in place on it.  There was such a low expenditure limit, but...with the right messaging or the right campaign, anything can happen.  Money that is, people are the greater equalizers against money in that situation here.

	>> John Pudner would agree with you.  He was on one of our earlier panels.

	>> Exactly.  The public findings and programs out there are in response to all the money interests that are coming into the process.  And...they, I think, that, helped restore the trust that people will have in the system because they would feel as though, that they're not answering questions to big business or something, that they would be responsive to their individual concerns and that a $5 contribution can get magnified into something that is much greater than what their voice would normally be.  
	And, I think that it's Êthese local jurisdictions, Montgomery County has passed it, another one is going to think about it.  You have successful programs in cities like New York City and other places that have used this successfully.  And I think that yes, I think that is very important and just also, to go back to one of my points about corporate influence and how significant it is.  I just wanted to say, this is why you also have all the pay to play laws in the states as well. 
	Because, if it wasn't so significant, and it didn't have such a, I guess, a corrosive effect on individual participation in it, you wouldn't necessarily see the, the disclosure, public you know, pay to play laws that are constantly out there. 
	So...as you can see, it does have its affect.

	>> Anybody else want to comment on that? 

	>> On the funding, yeah, something we had since 1989, what do we mean by successful?  Mayors have been elected on it.  We had a mayor that was in finance, but his opponents were able to get their message out and win.  They had enough money that it was contested elections.  
	I'm pretty sure I mentioned I was on the Moreland commission, a New York State commission.  We had a hearing, a public and city council member talks about the benefits of having public financing in his city council race and the negative consequences of not having it.  We have the city and state legislature, of course, occupies the same ground as the city council and we have public funding in the council races but not for the assembly and Senate races.  The levels of competitiveness are totally different.  He was very complementary about public financing allowed him to mount the successful race as republican for the city council, how he was scoffed at in the state Senate, it wasn't available.

	>> This is a related question, directed at Jared, but really, from your standpoint of you know what's going on more broadly, I think any of the panelists could answer it.  From your experience, does regulation of corporate campaign finance work?  If rules are passed, are they followed? 

	>> Yes, I think that, well, I think one, it works because it gets greater disclosure for the people to know who's getting to their candidates and that they can make decisions at that point there.  I can think of you know, when a corporation, I'm thinking of the Target situation, they gave to an issue there.  The outcry, once people knew about it, started boycotting the business and they then reversed their corporate giving policy on that front there.  
	I think that corporations too, I, I think that they will, they want to follow rules.  I think people want to follow rules.  You're always going to have outliers that will try to break the rules or go as close to the edge as possible there, but I think that a majority of the corporations and the giving out there, want to follow the rules and if, if you create the bright line standards for them, and allow them what the regulations are, they will follow them in that sense.

	>> Either of you want to comment on that? 

	>> That's my experience as well.  Most people do want to follow the rules and where you run into problems, when there's a vacuum in the rules and people say, if there aren't any rules....

	>> They'll fill the vacuum right there and it's difficult to take it out.

	>> Indeed.  So, here's a question for Richard.  What is the agency's role in creating a record for Congress and other agencies such as the SEC? 

	>> I could send that one back to you, but I think it could be whatever it wants to be.  I think the agency has the power to undertake rulemaking.  A lot of this, for itself, but I think its investigations could ensure congressional action.  Another one of many recent contested actions within the agency, I think, I don't know if we alluded to here or a prior conversation about the Morey Energy Case.  Allegations that a corporation was putting major pressure on its employees to participate in support of an election candidate, Governor Romney in the 2012 election.  The commission declined to bring in enforcement action on whatever activities the corporation did, it fell within the statutory Êit didn't violate the statutory language.  Well, this could be a nice example of factfinding in the ways in which corporations try and persuade pressure, pick your verb, their employees to participate in the elections.  It could be that you need a set of regs that reflects a richer understanding of how the internal dynamics of a workplace.  You can lead an investigation that would lead to congressional action, to amend the statute, to make it more protective or to pick up things that are not just involving, not just campaign finance participation, but other forms of coerce participation, such as showing up at rallies, not clearly picked up by the statute as it's written. 
	I think, it's fair to say, the agencies had trouble making decisions in the last period.  Maybe the agency should rejigger itself and focus more on factfinding and building a record on including participation from all sides.  And actually getting it out there. 
	I mean, the McConnell case was a great example of a court's relying heavily on a record, but the record was largely compiled in litigation.  But people, this is a domain of a huge amount of anecdote and not a lot of record facts.  I don't know how the commission as a whole feels about this, but maybe some of the work of the commission could be focused on fact finding.  I don't know if it's ever done a collaborative work as Rob Jackson suggested with the SEC.  Corporate participation in elections is the domain of both agencies, could be, but right now we're in a stage where it's falling between two stools.  Whether it's joint fact finding or developing some facts and shipping them over.  I think it'd be a very, it's a potentially productive use of the agency's time, like the hearing like this suggests too.

	>> That was one of the goals of this hearing, to bring more information to us and potentially that we could share with other entities.

	>> Can I add on that point? 

	>> Yes, please.

	>> So, a couple months ago, the entity in Mexico that regulates their elections invited me and other academics down to talk about how U.S. elections are administered.  And...I felt really proud as an exNew Yorker and really mortified as an American to give my presentation.  And the reason is, I did a compare and contrast between New York City Campaign Finance Board which has a stellar reputation for enforcing the laws and rules that they you know, require all the candidates who are getting this public money to abide by, and then I contrasted that with the FEC and I think the FEC actually has, is bordering on a rule of law problem here.  One of the tenants of the rule of law that would I would teach to my constitutional law students is that no one is above the law.  You are regulating sitting members of Congress and often sitting presidents.  So, I think it is very important that the FEC take its role as a regulator of such powerful people seriously.  And...if there are rules on the books, for the love of Pete, enforce them.

	>> I agree with that.

	>> I'm lecturing the wrong commissioner.

	>> I was going to say, when you first started to describe that conference like "oh, wow, I wish they'd have invited me" and then when you told me what you said, I thought, maybe it's just as well I wasn't there.  Let me say as a lot of people know in the Murray energy case as in many others, we didn't carry that face forward or do an investigation because of the 33 split.

	>> Maybe this is totally naive and almost surely it is and I'm not that much of an optimist, having sort of looked at a lot of these 33 divides, they'd come up in the enforcement.  I should be asking you the questions.  Do you think there's any prospect for more collaborative action if these things are taken up, not as enforcement actions but as rule makings?  In other words, not targeting a specific company or LLC participant and saying, in effect, I'm thinking like the truth of reconciliation, forgive everything Êwe don't go into anything that's happened so far...going forward, we need rules on LLCs.  Going forward, we need rules on Êmore informed rules in light of corporation participation.  Does that have a prospect or just ridiculous? 

	>> I hope you're not being ridiculous.  I didn't I know vital all of you smart people in here because I thought you'd be just sort of entertaining us all for the day and it'd all go into the circular file.  I'm hoping that we are working on a process of perhaps moving forward and doing something productive.  A lot of people agree that rulemaking is a better venue than enforcement when you said earlier, many agencies prefer to act through enforcement.  I don't know that I'd say prefer to act through enforcement, but we can't avoid acting through enforcement.  The complaints are presented to us, we can avoid starting a rule making.  I wish we wouldn't avoid starting a rule making and as I said at the very outset, I think that it really shouldn't be controversial to say we don't want to have foreign money in our elections.  I, I don't know Êone of my colleagues asked me, when I was walking around with the agenda saying "did you invite any proforeign money speakers?"  Are there any?  Maybe there could be some common ground, I would hope this would be that.  And...that was part of the motivation in bringing in all sorts of smart people who are not the usual folks who come and talk to us, but try to bring in new ideas, some ideas from scholars, from people who are not partisans, but are just deepthinkers on this subject.  I'd like to think there's a prospect for, for action.  You know...we'll see.  
	I have another question here, which, actually this is a good segue to Ciara.  How are corporate and foreign contributions related to the Watergate scandal (?).

	>> All right, the short version; part of the money that went into the reelection of President Nixon in 1972 went to his committee which had the awesome acronym CREEP and CREEP gathered in lots of money from corporate donors and the problem with nah is that's perfectly illegal, both then and now, under the Tillman Act.  Part of that corporate money went to fund the Watergate burglary.  So when the Watergate burglary happened, which is a burglary at the DNC, some enterprising reporters from the Washington Post start following the money and some of the money that they find is being rooted through Mexico and bohemian banks and Swiss bank accounts.  One of the things that comes out in the Watergate hearings, there was these cash payments from Gulf Oil to the Nixon reelection campaign.  This sparked the interest of the Securities and Exchange Commission at the time.  They sort of asked the question, wait a minute, Gulf Oil is a publicallytraded company, how is it giving these $50,000 cash payments to the Nixon campaign?  
	They start their own parallel investigation, along with Congress was investigating Watergate and so were federal prosecutors.  What the Securities and Exchange Commission finds is that I think it's 500 different publicallytraded companies had what they called, what the SEC called political slush funds.  And...the money wasn't just going to the Nixon campaign, it was also going to fund democratic candidates, and it was going abroad to fund political campaigns in other countries.  
	And...other Heads of State were impacted by this and some of them resigned after the SEC's investigation was made public.  
	That led to the creation of a law called the Foreign Corrupt Practices Act.  Which means that a, an American business cannot use contributions abroad to get or keep business and one of the things you could think about, domestically, is why is it okay for an American company to make contributions when they are trying to keep or get business in the United States domestically?  I'll end it there.

	>> So, the, the followup that was just transmitted to me is, does this history indicate to us that it's important to keep an eye on corporate and foreign money.

	>> Yes.
[laughter]

	>> Very succinct answer.  Couple more questions.  This came in from the public via email.  Has Maryland considered a Blumeninspired law, the case on foreign nationals, that would exclude any funds from outside the state from being spent in connection with the Maryland election?  And I will just broaden that again, for the academics on the panel, you know, are you aware of that being considered in other places and do any of you think that would be a good idea? 

	>> I mean, to restrict it from anybody outside the state, I guess, when you start running a campaign, especially these local campaigns in the state, county and city, those levels, I mean, you always, you go to the people that you know to first raise your money to get your seat money in these campaigns.  Families, friends, colleagues.  So...I would probably not restrict it to anybody you know, a person from Alabama or from Maine or from Michigan wants to give to a Maryland candidate, I don't think they would have any sort of impact, especially if it's within the limits and I think the, where it would have impact would be on like say, public financing.  You'd want to say the moneys that they're raising should be from constituents that would be paying into the public financing program or have a direct impact into the public financing program, so you would, I would say yes, you could restrict it for a candidate that those matching funds or, or anything with that, if you want to participate in those programs, yes, you can make more restrictions because the public is going to get money there.  But as for a candidate, at that level, I think it'd be difficult to start those campaigns if you wanted to start your grassroots, because the first people you hit up are your family and friends and they may not live in the state.  I'd say, you know, no to that.

	>> I have an article on this.  2015 University of Chicago Legal Forum, I was going to get the title.  Of constituents and contributors.  And it takes off on some language that Chief Justice Roberts referred to, McCatchins, influencing officials through their contributions.  McCatchin was only constituent in one state, but was giving in ten different states.  This has come up and literally a handful of states.  I think four have had rules on this.  Two Court of Appeals struck them down.  The ninth circuit in Washington State.  Oddly, the Alaska Supreme Court held up a similar rule that was never contested in the federal courts.  It's on the books in Hawaii.  It gives you a sense of who's doing this.  
	The language in Blumen suggests you can connect eligibility to vote.  Incarcerated people can contribute in campaigns.  The two don't go together perfectly.  States and cities have public funding, to the extent they are of a matching form.  If you need to raise a certain amount of money to qualify and/or what you get matches another raise.  All or virtually all of them either require that the threshold moneys and the matchable moneys be within the jurisdiction or they require that a significant, very high fraction of the money be raised within the jurisdiction.  In Connecticut, if you're running for the state Senate, you have to raise X percentage of qualified funds from that percentage.  There's no Supreme Court case that puts it to bed, but I think you could restrict onsite donations, but you can certainly treat them differentially.

	>> This question apparently comes from someone who is a little more pessimistic about whether the FEC is going to do something.  Do you think state and local government should try and regulate foreign influence corporations that spend on their elections and how could this do this? 

	>> So, earlier there was the reference to the foreign pornographer who gave to the 2012 election in Los Angeles.  (?) I would think you'd give to the FEC to make that jurisdiction.  There was also a parallel state law in California which had almost a mirror of prohibitions.  The regulator in California went after the pornographer for spending in the election.  I think that states can play a role in being a front line defense against corporate money being spent in these elections and foreign corporate money in particular.

	>> Right now with that decision, it opens up the ballot issues.  You cannot give to a candidate.  Federal law prohibits it at federal, state and local elections.  So...it's now opened, kind of this, this loophole for ballot issue committees.  Whether foreign corporations can give, I think that, you're looking at something that would decide in the political process there.  And has probably the least scrutiny from the citizens participation on that.  As it goes down the ballot, president, everyone has an opinion about.  As you get lower and lower down, questions people don't necessarily follow those issues.  They're coupled with the fact that you can make unlimited contributions.  States need to, with this decision here, have to revisit those rules about foreign corporations and foreign nationals participating in ballot committees. 

	>> Another question that was handed to me.  What do you make of Norm Ornstein's example of is what's good for GM still good for America? 

	>> I guess I'll start this one here.  I did like, the quote that was still relevant.  No, I mean, corporations act in their own corporate interests and they are made by, I don't think they're saying what's good for GM is good for America.  It might have an impact on America and be able to benefit America, just like any time when they open up a, you know, a, when they always talk about building new baseball stadiums or football stadiums.  They go, you're going to put a stadium here, it's going to be good for the surrounding area.  There'll be more people, everything's going to grow the economy around there.  
	GM is looking at it to grow their business.  They want to find people that will help GM's corporate interest.  I don't think those are necessarily in line with the idea of the citizenry at times.  I don't think that you know, they might be bigger than U.S. Steel to quote a different movie there.

	>> I'm not sure it was true in 1954 when Charlie Wilson said it.  There are reigning theory, corporations are to supposed to do what's in the best interest of the shareholders.  That's the incentives they're given.  We don't have community members sitting on corporate boards.  We don't have politicians sitting on corporate boards.  We don't have labor unions sitting on corporate boards as we do in European countries.  We have shareholder welfare.  If the shareholders are all American, the odds are, it will help Americans, although, not necessarily all Americans.  They're making a significant fraction of their income outside the United States.  There's no reason Êit may be that the individuals are good citizens, but there's no reason to assume the entity thinks it's a citizen.

	>> And I think that even though it's paradigmatic that a corporation is acting in its shareholder's best interest, I think it's important to remember what Professor Coates and Professor Jackson talked about earlier.  There's a lot of attention between what a board wants and what a CEO wants from a political expenditure and what a shareholder might want from a political expenditure.  The CEO may just want a ticket to the inaugural, the shareholder wants a return on investment.  Those are two different things.

	>> So here's an interesting question from the audience.  So...obviously everyone in this room is interested in these issues and not everyone in this room is a commissioner.  The question for the audience is, what can we do when we walk out of here today if we care about these issues? 

	>> Vote in November.

	>> I mean, that's the, that's, your voice out there.  And as an election official, I always want people to vote.  I don't care you know Ê100%, let's go out there.  I think that you can't, what is the quote?  Our system, and I've done a couple international elections as well, it has its flaws.  It has, I mean, it's, it's not perfect by any stretch of the means here.  But...the one thing that we are the, the shining light for the rest of the world as an example here.  I think that, don't, don't get like a, with all the headlines, check out of the system and go "ah" throw your hands up and say pop on both their houses, but to get engaged.  At the state and local level, you can see change, you can see the impact that you want to make and electing the right people, whatever your political persuasions are, to those offices does have an impact.  You know...you, you get the potholes fixed.  You can see, you know, changes made, especially at the state and local levels.  So...don't check out, vote, participate, and you know, help try to bring about the change that you want.

	>> I think also, needing to get involved and organized with groups that focus on these issues.  I do think that, people in this room are obviously unique in the sense that you're in this room.

	>> This is not a typical cross section? 

	>> You look at the issues that Americans Êit tends to come up 24th out of 24.  There's a reason for that.  There's a reason you're concerned about climate change, terrorism and the economy.  There's all sorts of important things that hit people on a daily basis.  We see some of the issues that may be more frontburner issues.  Climate change, the economy, Social Security, you know, inequity, are connected to these structural issues about how we run democracy.  Whether it's voting rules, voter ID, redistricting, campaign finance, and I do think altogether it's worthwhile, it's important to find groups that engage with this.  Some folks were focused on the informational side.  Getting information is actually pretty powerful and disseminating information is a pretty powerful tool in this area. 
	To remind elected and appointed officials that these issues matter, and that they're not out of the spotlight.  Elected officials are pretty attentive when they're in the spotlight, as the debate about gun regulation that's going to be going on.  We may not be happy or we may be happy with how it's going, but at least it's become a frontburner issue.  These issues are very rarely frontburner issues.  At least at the level of concrete action.  It may be that it's important to get involved in organizations or groups that treat these issues as important issues to make sure that elected and appointed officials know they're being watched on this.

	>> I'm not sure I agree with you, this is such a lowprofile issue.  I've seen an awful lot, there are candidates out there on both sides of the aisle talking about this issue.  I see a lot written about it.  I give a lot of credit to some really great reporting on this issue.  MateaÊGold of the Washington Post and Nick at the New York Times.  I think people care about this.  I would echo the comments of all the panelists that really what you can do is, obviously, vote and get all your frepdz to vote and...because it's always better for democracy if more people are voting, but to get involved at the state and local and federal level, to hold everyone who is out there, making decisions that affect your life, including me, accountable, write us letters, tell us, write letters to the editor, tell us what we're doing right, tell us what we're doing wrong.  When we put things out for comment and government agencies are always putting things out for comment.  Comment!  Pay attention.  Stay engaged.  There's a lot that citizens can do to stay more involved in their government and you know, if you want to have a government that responds to the issues that you care about, you have to A, vote for the people who are going to represent your interest, and B, you know, hold their feet to the fire and make sure they continue to pay attention to the issues that you care about.  
	So...whatever they are, and whatever side of the issue you're on.

	>> I have two concrete things.  Bug President Obama about issuing an executive order for federal contractors and that part of dark money.  And...write to Mary Jo White, the chair of the Securities and Exchange Commission and ask remember to promulgate a rule on corporate dark money.

	>> Writing and, letters to the editor, we tweet and we post now, c'mon.

	>> That's true.

	>> You tweet, you do a hashtag, this is 

	>> Tweet at me, I'll retweet it.  Absolutely.

	>> We want to see campaign finance before tweeting on Twitter.

	>> This is probably a followup about Ciara's comment, someone in the audience wants to know, are there other countries we can learn from?  Who's doing this particularly well? 

	>> I'm a big fan of elections Canada.  One of the reasons I like 

	>> Who doesn't 

	>> One of the things I think is really so Canadian about elections Canada is the only Canadian citizen who is not allowed to vote is whoever is the head of election as Canada.  Because they don't want the tarnish of partisanship to impact how people think about that professional agency. 
	Going to Mexico, the way they run their elections is unconstitutional under the way they run their election.  The way we run our selections would be unconstitutional in the Mexican elections.  They are much more restrictive than we would be under the first amendment.  The two systems, you couldn't run them at the same time.  There's a total different approach to how elections are run in the countries.

	>> I'm always struck by the fact that if you compared Citizens United with an analogous decision from the Canadian Supreme Court, Harper vÊCanada.  The U.S. Supreme Court has taken the decision that any kind of restriction on spending is going to limit the amount of debate and limit the way the issues get aired and interfere with the robust discussion of issues we want to promote. 
	In order to promote the most robust discussion of the issues and get the information out there, they don't want one side drowning out the other side just because they have more money.  I've always found it fascinating.  Countries that come from fairly similar histories.  Former British colonies and lived through a lot of the same experiences and have similar kinds of laws and they come to exactly opposite conclusions about what is the best way to promote a goal that we all want, which is to make sure that everybody's voice gets heard and that we have the best, bestinformed base going on on all the public issues of the day.  I think that's always been interesting to me.  
	We are just about at 3:30 when we said we were going to end this, so I want to first of all, thank this panel, please join me in thanking them.
[applause]

	>> I want to also thank all of my colleagues who all participated in person or online and virtually and have been listening to all the great panelists.  I really, for me, this has been an incredible day.  And has been so, so informative, you know, hearing from people that we don't normally hear from.  We're going to take all this, post videos on YouTube, we're going to make a transcript.  We're going to think hard about this.  I hope we will get to a rulemaking some day where all these ideas might be reflected.  Our policy folks will be paying a lot of attention. 
	I also want to send another big thank you to every single person who works in this building.  I want to tell you that everything that everyone in this country knows and writes about, campaign finance at the federal level, certainly and who is funding who and where the money comes from and where the money goes, everything we know is due to the hard work and good efforts of all the people who work in this building and make sure that information gets here and gets online and gets reviewed and that complaints are analyzed and information is shared.  I want you to join me in giving a big round of applause to the great people who work at the FEC.
[applause]

	>> They don't get a lot of applause in their lives.  I want to thank all of you who showed up in person and who listened in online and who will perhaps, some day continue to see what we post online on this issue and just encourage you to keep paying attention.  This has been a fabulous day and I thank every single one of you for your attention.  Thanks again.
[applause]

	
	[Presentation concluded at 3:30 p.m. ET]. 
	
	"This text is being provided in a rough draft format.  Communication Access Realtime Translation (CART) is provided in order to facilitate communication accessibility and may not be a totally verbatim record of the proceedings."