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Court Declines Role in Campaign Finance Case

(CN) - An Aetna shareholder who asked the Securities and Exchange Commission to make public companies disclose their political spending, then sued the agency for stonewalling, should take his case to a higher court, a federal judge ruled.

Stephen Silberstein, of California, owned 2,108 shares of Aetna stock, valued at $230,172 in May 2015, according to his lawsuit.

Silberstein claims that although the Supreme Court's 2010 Citizens United v. Federal Election Commission ruling lets public corporations spend unlimited amounts on politics, the high court's ruling also encouraged companies to disclose that spending to shareholders.

In a complaint filed against the SEC in May, Silberstein claimed Aetna officials rejected shareholder proposals in 2012, 2013 and 2014 that would have required more transparency for its political contributions.

He said these requests were made after Aetna inadvertently revealed that despite its public stance in favor of health care reform, it contributed more than $7 million to the U.S. Chamber of Commerce and American Action Network two groups that opposed the Patient Protection and Affordable Care Act, also known as Obamacare.

With Aetna maintaining the spending reports it posts on its website are sufficient, Silberstein turned to the SEC.

He and the Citizens for Responsibility and Ethics in Washington submitted a petition for rulemaking to the agency in May 2014, urging it to adopt a rule requiring public corporations to disclose their political spending to shareholders.

Silberstein had reason to believe the SEC would at least entertain his petition: the agency's division of corporation finance announced in 2013 it would consider such a rule.

No proposal was issued, however, and the SEC's silence led Silberstein to sue the agency in Washington, D.C. federal court.

Silberstein claims the SEC violated the Administrative Procedure Act on two counts: by not responding to his petition and by failing to grant his petition.

U.S. District Judge Rosemary Collyer dismissed the case on Monday, citing the Exchange Act which mandates that challenges to SEC rulemaking be heard by the U.S. Court of Appeals for the District of Columbia, the D.C. Circuit, or the federal appeals courts for the circuit in which the claimant lives.

"Neither potential response to Mr. Silberstein's petition for rulemaking a final order denying or granting the petition would be reviewable by this court," Collyerwrote in a 10-page order.

Collyer did, however, give Silberstein a small victory.

She dismissed his allegation about the SEC's non-response without prejudice, giving him leave to file in a federal appellate court.

His attorney, Anne Weismann of the Campaign for Accountability, did not respond to an email asking whether Silberstein will do so.

The SEC is not required to respond to rulemaking petitions.

The agency can't even consider Silberstein's petition now since the budget President Obama signed last month prohibits it from adopting a political contribution disclosure rule in fiscal year 2016, according to officials speaking on background.

SEC attorney Paul Alvarez declined comment on the ruling.

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