Call Commission’s Activity on Enhanced Access to Company Disclosures ‘Inappropriate’
Washington DC – USA*Engage and the National Foreign Trade Council (NFTC) today sent formal comments to the U.S. Securities and Exchange Commission (SEC), recommending that the Commission reconsider its proposal to further develop mechanisms to facilitate greater access to companies’ disclosures concerning their business activities in or with certain countries designated as “state sponsors of terrorism.” In comments sent to the SEC, the associations noted that U.S. companies operating in such countries are conducting legal, legitimate business, and that the proposed mechanism actually punishes those companies who are most transparent.
“The proposed SEC tool is inherently flawed, and while the Commission is seeking comments on how to improve it, the fact is that it should have never been created,” said NFTC President and USA*Engage Co-Chair Bill Reinsch. “To have the SEC selectively posting the names of companies legitimately doing business is inappropriate, in part because it would discourage companies from reporting any activity in excess of what is absolutely required under securities law.”
The letter points out that “a web tool based on company disclosures is further flawed because there is no standard by which to report the nature or extent of business on a country-by-country basis across companies. As a result, companies with more robust reporting mechanisms would be penalized for voluntarily disclosing additional information.”
The letter also emphasizes that it would be “arbitrary for the Commission to provide enhanced access to information in this case but to ignore requests for the same enhanced access for companies doing business in countries on the State Department’s list of ‘Countries of Particular Concern’ contained in its Annual Report on International Religious Freedom, Tier 3 Countries named in the Department’s annual Trafficking in Persons Report, countries subject to enhanced U.S. export controls for reasons of weapons proliferation, or in the case of Sudan or future situations where the U.S. Government has declared that genocide is taking place.”
The associations, collectively representing small and large businesses that help to generate U.S. economic growth and development, also argue “regardless of the intent or method of enhanced access that the Commission would provide, the inevitable result of any disproportionate access would be to suggest a bias against companies that are highlighted.”
The letter points out anecdotally that some of the companies listed on a previous iteration of the SEC tool resulted in “their precipitous exit from legitimate sales, distribution and service relationships out of a desire on the part of management to disassociate themselves with whatever business caused the additional attention, even when that business was legitimate and legal under local and international law and immaterial to the company’s operations. These precipitous exits expose these companies to penalties and lawsuits by business partners for breaches of obligations.”
In closing, USA*Engage and the NFTC highlight that “it is inappropriate for such a company to be identified by a tool of the Commission when it is conducting legitimate business… It would be both unusual and inappropriate for the Commission to pursue this matter further.”
For a copy of the comments, please click here
USA*Engage (www.usaengage.org) is a coalition of small and large businesses, agriculture groups and trade associations working to seek alternatives to the proliferation of unilateral U.S. foreign policy sanctions and to promote the benefits of U.S. engagement abroad. Established in 1997 and organized under the National Foreign Trade Council (www.nftc.org), USA*Engage leads a campaign to inform policy-makers, opinion-leaders, and the public about the counterproductive nature of unilateral sanctions, the importance of exports and overseas investment for American competitiveness and jobs, and the role of American companies in promoting human rights and democracy world wide.
The National Foreign Trade Council (www.nftc.org) is a leading business organization advocating an open, rules-based global trading system. Founded in 1914 by a broad-based group of American companies, the NFTC now serves hundreds of member companies through its offices in Washington and New York.