SEC filings may not be as good in disclosure

BusinessWeek’s Dawn Kopecki has a great story posted on the magazine’s Web site and in other places on the Internet today about how President Bush has given his intelligence czar, John Negroponte, the power to excuse publicly traded companies from their usual accounting and securities-disclosure obligations.

In other words, companies can omit information from their SEC filings if they believe that the information involves national security or other similar matters, according to Kopecki.

She writes, “In addition to refusing to explain why Bush decided to delegate this authority to Negroponte, the White House declined to say whether Bush or any other President has ever exercised the authority and allowed a company to avoid standard securities disclosure and accounting requirements. The White House wouldn’t comment on whether Negroponte has granted such a waiver, and BusinessWeek so far hasn’t identified any companies affected by the provision. Negroponte’s office did not respond to requests for comment.

“Securities-law experts said they were unfamiliar with the May 5 memo and the underlying Presidential authority at issue. John C. Coffee, a securities-law professor at Columbia University, speculated that defense contractors might want to use such an exemption to mask secret assignments for the Pentagon or CIA.”

Read more here.

This is an issue that affects all business journalists who write about public companies, as well as private companies that file SEC documents. In the past, business journalists have lobbied for, or against, new regulations that affect their ability to report about companies, such as the passage of Regulation Fair Disclosure in 2000.