Has SEC Breached First Amendment by Greenlighting Mastercard Censorship Proposal?

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The Securities and Exchanges Commission (SEC) has apparently given the green-light for Mastercard shareholders to vote on a proposal for the formation of a “human rights committee” that would monitor financial transactions with designated hate groups.

The proposal is put forth by political activists SumOfUs and is directed towards what is alternatively called the far-right, alt-right, white supremacists, white nationalists, and so on.

“Spreading hate involves spending money,” Eoin Dubsky, from SumOfUs, said. “Whether it’s paying for online advertising or organising violent rallies, white supremacist groups need financial services from companies like Mastercard.”

The supporting statement for the proposal says: “Internet infrastructure companies like web host GoDaddy, social media platform Facebook and payments firm PayPal have come under pressure for doing business with or providing a forum for neo-Nazis and other hate groups.

Mastercard has received negative publicity for processing of payments to white supremacist groups…

Mastercard continues to process payments for organizations such as American Border Patrol, League of the South, Proud Boys and Stormfront.”

The Mastercard board and executives are against the proposal. They says:

“The Board unanimously recommends that stockholders vote AGAINST this proposal.

Mastercard is committed to treating all people fairly and with dignity, and our interest in human rights extends to all areas in which our business is involved and where we have particular expertise.

The Board does not believe that establishing a separate human rights committee is necessary to properly exercise its oversight of this important area…

The Proposal focuses on the use of our products by certain organizations. We operate our network on the principle that consumers should be able to make all lawful purchases, and our franchise rules ensure compliance with the laws pertaining to the acceptable use of our payment processing services by merchants, acquirers and issuers.”

This is no longer a matter for the executives or the board, however, because SumOfUs has managed to get it to a shareholders vote. What’s more, Buzzfeed says:

“Documents seen by BuzzFeed News reveal that the US Securities and Exchange Commission has given the green light for shareholders to get the chance to vote on the formation of the committee, despite staunch opposition from the Mastercard board and executives.”

Mastercard, Facebook, Twitter, PayPal and much of the rest are publicly traded companies. Unlike private companies, SEC has to approve or disapprove certain actions.

SEC is a government entity. The First Amendment of the US Constitution says:

“Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.”

Abridging means to curtail or shorten. Now this can get a bit complex, but Congress has passed the Securities Act 1933. That act prohibits anyone from raising funds from the public unless they comply with numerous regulations and SEC oversight.

As SEC is approving or disapproving actions based on a law passed by congress, then their green-lighting of this proposal can be argued to be a government enforced or facilitated curtailment of speech.

Unlike a private company where there is no duty to the public in the general sense, a public company does have such duty as they’re raising money from the public and as they have to comply with a number of regulations and SEC policies, with SEC getting its authority from Congressional law.

A court battle on this matter, therefore, could well hold them accountable for breaching the first amendment by abridging freedom of speech through allowing Mastercard to potentially discriminate or censor based on political views.

It looks like new laws are potentially on their way regarding access to social media and perhaps banking or money processing services.

Such laws would presumably take the form of redress if a service is denied in the absence of an illegal act.

There can be instances where words too are illegal in themselves. Causing panic and the likely ensuing physical injury by shouting fire in a theatre, for example, is an illegal act. Inciting violence is too. In some European countries, inciting hate is also an illegal act.

The entities mentioned above might well be engaging in illegal activities if they are dehumanizing to such extent that it amounts to inciting violence.

Extending restrictions to lesser standards, however, and doing so with the approval or facilitation of a government entity, must necessarily require significant debate and justification, including explanations of why current restrictions on freedom of speech are not sufficient.

Polemicism can amount to inciting violence. Short of that, one has to debate and persuade, not win through the backdoor by utilizing corporate censorship.

The problem with the latter is that it might fuel radicalization due to groupthink bubbles that re-enforce each other without challenge.

The alternative view is that you can’t debate with such individuals because their ideas are too dangerous or simply wrong. Just which ideas are dangerous or wrong, however, is a subjective matter that can only reach some level of objectivity through debate.

Placing Mastercard as an arbiter of what debate can be had might be acceptable to some where it concerns certain individuals, but it is also the institution of an apparatus that can gradually limit freedom considerably.

In the haste of things and under some perhaps acceptable excuses, America has to be very careful of not compromising its principles.

That goes for both the left and the right, both of which are falling very short of civilized debate with both more of a throwback to the last century rather than coming up with actual solutions, like a Citizens Assembly where ordinary people can have a public forum for debate.

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