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Overview
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 SEC
has made disclosures about companies with business ties to
state sponsors of terrorism into hot button issue
- State sponsors are countries
designated as such by the
US Department of State
- Cuba
- Iran
- North Korea
- Sudan
- Syria
- Iraq, Yemen and Libya have been removed from the
list
SEC Office of
Global Security Risk SEC
Software Tool
- SEC website posted a tool to enable
investors to identify disclosures in public company filings about companies'
activities in countries that are state sponsors of terrorism
- Tool has been temporarily suspended in response
to concerns about accuracy information
- See
SEC Software Tool for Investors
below
Enhanced
Access to Company Info Request for comment
- SEC has 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
- SEC press release
11.16.07
- SEC concept release 33-8860 11.16.07
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SEC Office of
Global Security Risk
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SEC webpage
- Charged by the SEC with reviewing and commenting
on public company filings
Typical
SEC comment
- We note the several references to your
operations in ___. Please identify for us the __countries in which you have
operations. If any of these operations are in a country identified by the U.S.
State Department as state sponsor of terrorism, or if you have other contacts
with any such country, identify each such country for us. Advise us also whether
your __subsidiary is in __, a country identified by the U.S. State Department as
a state sponsor of terrorism.
If any of your operations or other contacts is with a country identified as a
state sponsor of terrorism, please advise us of the materiality of those
contacts to the Company, and give us your views as to whether those contacts
constitute a material investment risk for your security holders.
If you have contacts with more than one such country, provide the requested
information with respect to your contacts with the countries individually and in
the aggregate. In preparing your response, please consider that evaluations of
materiality should not be based solely on quantitative factors, but should
include consideration of all factors, including the potential impact of
corporate activities upon a company's reputation and share value, that a
reasonable investor would deem important in making an investment decision.
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Precedent Disclosures
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Export-Import
Bank of Korea (Iran)
Starwood Hotels & Resorts (Syria)
Xerox (Syria)
Double Hull Tankers (Syria)
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Precedent SEC Comment Letters
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Comment
letters from Office of Global Security Risk
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SEC Software Tool for Investors
SEC_CODE_REF_0090001192884
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SEC Chairman Cox suspended availability of tool on 7.20.07
in response to concerns about accuracy of information 
Enables
investors to identify disclosures in public company filings about companies'
activities in countries that are state sponsors of terrorism
- Chairman Cox: "No investor should ever have
to wonder whether his or her investments or retirement savings are indirectly
subsidizing a terrorist haven or genocidal state."
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SEC release goes on to say:
The existence of a
disclosure by a company concerning activities in one of the listed countries
does not, in itself, mean that the company directly or indirectly supports
terrorism or is otherwise engaged in any improper activity.
Software
tool
- Identifies 100 or so companies with some
commercial ties, however indirect, to one or more of the five current
state sponsors of terrorism
- Credit Suisse and HSBC Holdings have ties to all
five current state sponsors of terrorism
- MasterCard is an example of a US domestic company
on the list
- While MasterCard has no business
operations, subsidiaries or affiliated entities in Syria, Iran, Sudan, North
Korea or Cuba, a limited number of financial institutions are licensed by
MasterCard to issue cards or acquire merchant transactions in certain of these
countries, which have each been identified by the U.S. State Department as
terrorist-sponsoring states and are subject to [U.S.
Treasurys Office of Foreign Assets Control (OFAC] restrictions. Our
reputation may suffer due to our association with these countries, which in turn
could have a material adverse effect on the value of our stock.
Critics
of software tool
- Critics say tool could mislead investors, as it
simply lists companies that use name of any state sponsors of terrorism
in annual report, without any filter to exclude
companies based on public disclosures (e.g., withdrawal from doing business in
such states)
- Wall Street Journal
article
7.05.07
- Rep. Barney Frank letter
7.12.07
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