Sec Admits U.S. Firms Must Disclose Boycott Compliance

The Securities and Exchange Commission has acknowledged that the securities laws require American corporations to disclose whether they are complying with the Arab boycott of Israel. This was stated in a letter from SEC chairman Roderick M. Hills to Rep. Bella S. Abzug (D.L. NY) who had requested “the opinion of the Commission as to the conditions under which participation by a corporation in an economic boycott must be reported to the SEC and to the public.”

Hills said in his letter, released today, that companies participating in such boycott must disclose their participation in any instance where it has a material adverse effect upon corporate “income, assets (including good will) or profits.” The securities laws disclosure requirement also applies to any boycott participation that would be “of importance to investors.”

Abzug, chairperson of the House Government Information and Individual Rights Subcommittee, said that this statement marks the first instance in which the U.S. securities laws have been interpreted to require disclosure of boycott participation. Abzug expressed the hope that “this determination on the SEC’s part marks the beginning of an active effort to enforce strictly this requirement.” She added that “The public has the right to know which corporations are participating in the Arab boycott….Private citizens, as well as the SEC, may go to court to require disclosure and I hope that this valuable tool will receive frequent and successful use in efforts to crush the boycott.” A recent study by another House subcommittee revealed that over 90 percent of the 637 corporations reporting to the Department of Commerce on boycott participation had complied with boycott demands from Arab countries.