"I spy with my little eye..." are words that you may come to dread on your summer vacation. It's a game often enjoyed by kids (and despised by their parents) on a long, hot car trip, which makes such things as fire trucks, stranded doggies, and siblings' hidden supply of chewing gum the objects of their attention.
But now, the SEC is coming out with its own version of this game for investors. The new version goes something like this: "I spy, with the help of SEC-provided software, information on companies doing business in terrorist states."
New disclosure available
Last Monday, the SEC added such a tool to its website. Citing the agency's progress in using interactive computer technology to make public disclosures more accessible to investors, Chairman Christopher Cox stated, "No investor should ever have to wonder whether his or her investments or retirement savings are indirectly subsidizing a terrorist haven or genocidal state." True enough.
Existing law mandates that companies report on any material activities in a country designated a "State Sponsor of Terrorism" by the Secretary of State. No new regulation has been enacted by the securities regulators. The SEC is simply providing easy access to the required information, without including any additional editorial comment.
Checking out the list
By going to the Investor Information section of the SEC's home page and clicking the tab for "State Sponsors of Terrorism," you'll come to a menu of countries identified as such. Currently, the list includes Cuba, Iran, North Korea, Sudan, and Syria. Clicking again on each of those countries will bring you to a list of companies whose 2006 annual reports disclose business activities in that country. Then, clicking on a specific company will bring up the relevant portions of that company's annual report.
The SEC points out that the mere existence of a company's disclosure should not be construed to mean that the company directly or indirectly supports terrorism, or is otherwise engaged in any improper activity. In other words, use the handy tool to do your homework and make your own judgments about whether any such activities justify kicking the company out of your portfolio.
Most of the companies listed are European, and three have the dubious distinction of having business in all five countries: Credit Suisse
Not just for foreign companies
U.S. companies also claim spots on the lists. For example, Xerox
Another example, MasterCard
That's exactly why the new interactive tool gains even more significance. Instead of relying on a legislative act or a third-party screen to make your investments compatible with your own guidelines, why not find out the facts yourself? What you learn may just as well provide you with sufficient comfort to maintain your investment, as it may provoke you to toss it. Whether or not you agree with this country's foreign policy, or the idea of socially responsible investing, the SEC deserves kudos for making available this technology that empowers the individual investor to make informed decisions.