Analyst Disclosures
I usually have CNBC playing in the background throughout the day. I’m a bit of a junky. It’s fun watching Joe Kernen and Andrew Ross Sorkin flirt with fisticuffs.
Often the network will bring on analysts that cover specific stocks. Analyst appearances are accompanied by a familiar table titled Analyst Disclosure. The Analyst Disclosure, mandated by financial regulators like the SEC and FINRA, identifies some of the analyst’s potential conflicts of interest, including ownership positions in the underlying security held by the analyst, their family, or their firm.. The disclosure also identifies whether the company being discussed by the analyst is an investment banking client of the firm, or if there are other existing conflicts.
Usually, the Analyst Disclosure is quite mundane, with a red ‘NO’ for each potential conflict. But the disclosure serves a purpose. One can imagine a world before the mandatory disclosure where analysts would come onto CNBC to talk their book or steer retail investors into a trade for their own benefit (other financial professionals undoubtedly still do this regularly).
Candidates for elected office, much like financial analysts, are subject to various regulations and reporting. In Massachusetts, all donations to campaign funds must identify the contributor’s name and address. In addition, when an individual contributes $200 or more in a calendar year, the recipient must report the contributor’s occupation and employer.
Yet, I have never seen a ‘Politician’s Disclosure’ table that summarizes their potential conflicts of interest. This used to be the domain of local news. We have the tools to identify potential conflicts. I’d love for Stump to popularize a novel ‘Politician’s Disclosure,’ but we will need your help in formulating its parameters.
Using the Analyst Disclosure from the financial industry seems like a great place to start. The Politician’s Disclosure should always identify the dollar amount and percentage of their campaign contributions sourced from themselves and their relatives, as well as their current or former employers and clients.
A summary of all contributions from non-individuals (legal entities like corporations, PACs, unions, or associations) could be informative. Contribution data is often messy text fields, but AI tools make cleaning the data easier. Voters should be given visibility into trends that illuminate a candidate’s base of support. Would you like to know if 70% of a candidate’s campaign contributions came from real estate developers?
I believe the Politician’s Disclosure should also identify contributions from out of state. From January 2024 through May 2024, the ~100 state candidates on Stump raised just under $2 million, excluding loans, unaggregated receipts, or bank interest and transfers. Approximately 92% of the contribution dollars were from Massachusetts addresses. The chart below shows the total contributions and percent of contributions associated with Massachusetts addresses for each candidate.
Although some candidates deviate substantially from the average, it seems reasonable that over 90% of donation dollars are coming from Massachusetts contributors. But what about contributions from outside the actual district(s) that the candidates are running to represent? This can be challenging to track, since a given municipality can be split into more than one district (sidenote: I’m in the process of learning some GIS tricks to analyze this, but if GIS is an area where you have expertise, let’s connect). A report by OpenSecrets indicates that the percentage of contributions to U.S. House candidates from within their district has decreased over time, falling to 26.4% in 2022.
What else should the Politician’s Disclosure include?
