SEC Reconsidering Terrorist Tracking Tools

November 16, 2007 ( - The Securities and Exchange Commission is trying to decide if it can - or should - help investors be more aware of business ties with terrorists.

The SEC has now asked for public comment about   “…whether   to   develop mechanisms to facilitate greater access to companies’ disclosures concerning their business activities in or with countries   designated   as   State   Sponsors   of   Terrorism   by the U.S. Secretary of State.”   The five nations currently designated by the U.S. Secretary of State   as   state   sponsors   of   terrorism are Cuba, Iran, North Korea, Sudan and Syria.


The   Commission’s request for comment comes in the form of a  concept release that asks   whether improvements in public access to company disclosures can be made.

Earlier this year, the SEC temporarily provided access to a Web tool that linked   to   portions   of   companies’   most   recent annual reports that described   their   business   activities   in   any of the five countries (see  SEC Makes Terrorism-Link Info Available to Investors ).   However, the SEC said that since the linked reports were not always the company’s most recent disclosure,   and   because   of other concerns with the Web tool, it was “…discontinued   pending   consideration   of   the   issues set forth in the concept release.”  

At the time Congressman Barney Frank (D-Massachusetts), the head of the U.S. House Financial Services Committee said that the SEC should consider a more accurate method for compiling the list, noting that some of the companies on the list have dumped their ties with the terrorist states since the list was created (see  Legislator Condemns SEC’s Method for Pinpointing Terrorist State-linked Companies ).

“Investors   have   told   us   they   want   to   avoid supporting terrorism directly   or   indirectly through their investments,” said SEC Chairman Christopher   Cox.   “Some of the information they need for this purpose is already   on   file   with   the SEC. We’re interested in ways to help investors find what they’re looking for.”