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Washington, DC - Rep. Barney Frank (D-MA), Chairman of the House Committee on Financial Services sent a letter Thursday to Securities and Exchange Commission (SEC) Chairman Christopher Cox regarding the list of public companies listed to have investments in terrorist-financed states on the SEC’s website. Chairman Frank expressed concern in how the list was compiled -- citing companies that have previously disclosed divestment from terrorist-financed states, and other discrepancies -- and called for the SEC to consider a new methodology for creating a more accurate list.
The full text of the letter as follows:
July 12, 2007
Dear Chairman Cox:
I am writing to express concern about your agency’s recently posted webpage that provides investors with a list of public companies the SEC says have investments in terrorist-financing states. I understand from several reports that at least one company listed has in fact disclosed their divestment from terrorist-financing states. Others apparently have investments that are so negligible they could not reasonably be considered material either to investors or the economy of the terrorist-financing state.
While I acknowledge the SEC’s good intentions and the disclaimer you have added to your webpage that the companies named may not be involved in the direct financing of terrorism, the concept of a list generated in this fashion strikes me as unfair and perhaps counterproductive. As you know, the Financial Services Committee is considering legislation—the Iran Sanctions Enabling Act—intended to discourage investment in Iran by directing the Treasury Department to publicly identify companies active in that country’s energy sector. We have set a $20 million threshold for inclusion on the list and—partly out of consideration for the competitive standing of the U.S. capital markets—consciously did not make this disclosure a condition of listing shares in the U.S. markets. It is a significant concern to me that by developing its list without any clear criteria, the SEC’s efforts will dilute the effectiveness of publicizing the names of companies that do have material investments in the economies of rogue states.
I hope you will give serious consideration to devising either a more rigorous, materiality-based methodology for developing the list you are presenting to investors or else eliminating the webpage entirely. Disclosure is important, but in this instance it is my belief the disclosure needs to be absolutely accurate or not occur at all.
Sincerely,
BARNEY FRANK
Chairman
House Financial Services Committee
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