To read the news today is to understand how significantly shifting political winds can affect public companies. But you wouldn’t know it from what their public filings have to say about today’s all-important mid-term elections. Or, in most cases, what they don’t say.
If you’ve picked up a paper recently, you’ve likely seen any number of stories reflecting just how deeply politics impacts business. To wit:
- On Sunday, an expose in The New York Times revealed that “across the corporate landscape, the Trump administration has presided over a sharp decline in financial penalties against banks and big companies accused of malfeasance.” Among the findings: in the first 20 months of the Trump administration, the SEC imposed penalties and asked for the return of illicit profits totaling $1.9 billion, down 62 percent from $5 billion at the same point in President Obama’s first term.
- Pepsi, Coca-Cola, and other makers of sugary drinks are pushing ballot initiatives that would ban localities from taxing food sales (which, not coincidentally, also prevents them from joining the movement to tax sugary drinks).
- A high-profile New York State lawsuit against Exxon could inspire Congress to move on proposed legislation that would require all securities fraud cases to be based on federal law and filed in federal court. The Times said that “there is a chance Congress will adopt it after the midterm elections, especially if the Republicans lose control of the House.”
And yet, for all the obvious and not-so obvious repercussions of today’s vote, we haven’t heard much about the midterms in public company filings. That’s not an anecdotal report. We searched the Intelligize platform for any mention of the midterm elections in public filings from the last year, and came up with a surprisingly small universe of results.
In fact, we can summarize them quickly. First, a handful of biotech and healthcare companies have identified the regulatory uncertainty associated with the midterms as potential risk factors. In language also used by Nxstage Medical, Inc., for instance, SI-BONE states that “the forthcoming 2018 mid-term elections could result in significant legislative and regulatory reforms impacting the FDA’s regulation of our products.
A second group of three companies—a Mexican building materials company (Cemex), a venture debt firm (Hercules Capital) and a textile manufacturer (Unifi, Inc.)—note that the mid-terms could impact macroeconomic conditions, including U.S. trade policy, and in turn their businesses.
Only one bank (Mercantile Bank Holding Corp.) mentions, in an S1 from last month, an obvious risk factor for the industry: the fact that the current unified government has pursued “regulatory relief for the banking industry,” and that “possible changes in regulations or regulatory approach resulting from the midterm elections cannot be predicted.”
And that’s it. Well, except for the largest group of all. That would be the four media companies, including Sinclair Broadcasting, which noted that they will benefit from the midterm’s glut of political advertising.