Amid a barrage of criticism, the Securities and Exchange Commission
is temporarily suspending an online list intended to spotlight
companies doing business in countries tied to terrorism.
The online tool, unveiled in June, allows users to click on certain
countries identified as state-sponsors of terrorism-such as Iran-and
see a list of companies doing business there. It included
information from public companies' annual reports, in which they
disclosed business activities "in or relating to any of the five
State Department-designated State Sponsors of Terrorism," the SEC
Several members of Congress, along with the banking industry and
other international organizations objected, saying the list wasn't
up to date and often included companies that didn't do business in
those countries or had already severed ties. In some cases, critics
said, the list included firms that simply mentioned the name of a
country. That was the case with Immtech Pharmaceuticals, Inc., which
disclosed in its annual report that it was conducting clinical
trials for sleeping sickness medicine in Sudan.
"This list provided misleading information that could have damaged
individual investors and needed to be brought down," said Todd
Malan, president and CEO of the Organization for International
On Capitol Hill, among those who complained were Rep. Barney Frank,
the Massachusetts Democrat who oversees the SEC as chair of the
House Financial Services committee. Also critical was the
committee's senior Republican, Alabama Rep. Spencer Bachus. In a
letter to the SEC, Mr. Bachus said the list appeared to have been
created through a "cursory word search."
In a written statement, SEC Chairman Christopher Cox said the agency
was halting access to the list until it figures out a way to address
the concerns raised about its accuracy. "We will work to improve the
Web tool so that it meets the various concerns that have been
expressed," Mr. Cox said. The SEC also defended the list, saying it
allowed users to click on the company's disclosure and read exactly
what association the corporation had with those countries.
"All of the disclosures were linked directly to the full text of the
company's annual report to insure proper context," Mr. Cox said.
After its launch, the SEC's list raised concerns not only among
companies and lawmakers, but also within other parts of the U.S.
government-such as the State Department and the Treasury-mainly
because it was so simple and unrefined. "It was basically a
word-search list," said one U.S. official. "There was nothing the
least bit sophisticated about it."
U.S. officials say they have been under pressure for months from
Congress and state legislatures to develop an official list of
publicly traded companies active in countries listed as sponsors of
terrorism. Such a list would aid an effort that has caught fire in
states such as Florida, California and Ohio to mandate that public
pension funds divest from companies active in countries such as
Iran, Sudan and Syria.
The administration opposes the groundswell of divestment efforts.
Deputy Treasury Secretary Robert Kimmitt said in a speech in May
that such legislation threatened to complicate international
diplomatic efforts underway to isolate Iran.
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