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SEC Suspends Web Tool On State Sponsors of Terrorism

SEC Chairman Christopher Cox last week announced that it is temporarily suspending the Web site on companies that have disclosed information about activities with state sponsors of terrorism. The Web site has recorded over 150,000 hits, he said, with disclosure about activities in Iran being the most frequently visited. Cox said the SEC has received both positive and negative comments about the Web site, including criticism from Rep. Barney Frank (D-MA) about the criteria used to include companies on the site with links to their annual reports. Among the options under consideration is the issuance of a concept release to seek comments on the best means of making this disclosure accessible.

The SEC's Web site includes links to the Form 20-F disclosure by companies reporting business interests in Iran, Cuba, Sudan, North Korea and Syria. The link was criticized by a number of registrants whose disclosure was linked via the Web site, but also from others who were concerned that the information was not updated beyond the annual report. Frank noted in his letter to Cox that at least one company on the list had disclosed its divestment from doing business in one of the terrorist finance states.

Cox said that all of the comments were useful in helping the SEC evaluate the performance of its Web tool. The SEC noted in particular the concerns about the lack of more current data than that linked via the annual report. Cox acknowledged that more recent disclosure could include the termination of the activities in the listed countries, which would be material to a complete understanding of the information disclosed in the annual report.

Cox reported that one option under consideration is the use of interactive data tags that companies could apply to disclose this information without the SEC's Web tool. In the meantime, Cox said that investors can continue to locate the information through the EDGAR database using the full-text search capability.

Information about activities in terrorist states is obviously of great interest to the public, according to Cox. The information is required to be reported by both federal law and SEC regulations. The SEC's role, he said, is to make the information available to the investing public, and it will continue to seek a better way to accomplish that objective.

Jacquelyn Lumb