Accounting Observer > Public Blog - The SEC Pulls Its "Terrorism Tool"

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The SEC Pulls Its "Terrorism Tool"

Location: Blogs AAO Weblog (Public)
Posted by: Jack Ciesielski	7/23/2007 3:06 AM
I mentioned it as an aside about a month ago: the SEC built a web-based tool to let investors find the companies that do business with countries that the State Department has designated as sponsors of terrorism. It didn't strike me as the kind of thing all investors would want: there as many varieties of investors as there are companies. It seemed like an admirable tweak of the EDGAR system however, a subtle one that would increase value to many investors without a lot of effort. There are some investors that do not want their portfolios to provide any possible financing to sponsors of terrorism (the State of Florida's pension system, for one example). This was a good "first cut" kind of tool for many of them. And there are many "little guys" who would like to do the same. So, it didn't seem like it was something destined to raise much dust when it first arrived. Then last week, Barney Frank, chairman of the House Committee on Financial Services, criticized the tool as being inaccurate. On Friday, the SEC took the tool away from investors. According to a statement by Chairman Christopher Cox, it will return with more up-to-date information. That carries the implication that the tool will corral information from 10-Qs as well as 10-Ks. (The original tool extracted data from only 10-Ks.) Cox also hinted that the tool might evolve into an XBRL project - and that "the Commission staff will also consider whether to recommend a Concept Release on the question of how best to make public company disclosure of activities in terrorist states more accessible. The release would solicit public comment in a formal way, so that the Commission could ensure that all legitimate concerns can be met while providing better access to company disclosures on these topics." If that happens, it will be quite a while before tool reappears - and it'll be interesting to follow the dialogue on the concept release. Those firms who try to stonewall it will be visible in the process, and their motives for slowing down the development of the tool would be justifiably questionable.

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