"Retooling this Web site -- which previously provided access to incomplete and extraneous information -- will enhance its usefulness to citizens seeking to determine whether their investments are being used to finance terrorism or genocide," Rep. Spencer Bachus of Alabama said, in a statement.
SEC Chairman Christopher Cox said the agency plans to work to improve the Web tool, which permits investors to view company disclosure documents on business interests in countries that the secretary of State has designated to be "state sponsors of terrorism." These countries include Cuba, Iran, North Korea, Sudan, and Syria. This tool, which Cox said has experienced "exceptional traffic" since it was unveiled on June 25, has generated criticism from some lawmakers and businesses.
According to Cox, the commission received many positive comments about the usefulness of the Web tool but also negative comments, "primarily from the registrants whose disclosures were findable using the Web tool," as well as from those concerned by the lack of updated information beyond what a company has included in its most recent annual report.
Both Bachus and House Financial Services Committee Chairman Barney Frank, D-Mass., recently sent letters to Cox regarding the list. Bachus said the "ill-conceived" initiative links companies with no apparent link to terrorist-financing states and leaves off the list other publicly traded companies that have significant operations in such nations. He said the list was seemingly created by performing a cursory word-search using the SEC's EDGAR database.
Frank said "the concept of a list generated in this fashion strikes me as unfair and perhaps counterproductive." Frank also said "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."
SEC Republican Commissioner Paul Atkins reportedly said last week that the SEC should fix the Web tool if possible or remove the page.
SEC "staff is considering whether the use of interactive data tags applied by companies themselves could permit investors, analysts and others to easily discover this disclosure without need of an SEC-provided Web tool at all," Cox said in his statement. While the Web tool is offline, the companies' disclosures regarding their business contacts in the specified countries will be available through the SEC's EDGAR database, he said.
Cox disputed claims that the Web site's content was generated from a "mere keyword" search of the SEC's EDGAR database. He also said the SEC's only commentary with the search results stated that a company's disclosure does not mean the entity directly or indirectly has supported any improper activities.