SEC chair chastises Congress over new disclosure rules

WASHINGTON Fri Oct 4, 2013 4:37am IST

SEC Chair Mary Jo White testifies at a Senate Banking, Housing and Urban Affairs Committee hearing on Capitol Hill July 30, 2013. REUTERS/Jose Luis Magana

SEC Chair Mary Jo White testifies at a Senate Banking, Housing and Urban Affairs Committee hearing on Capitol Hill July 30, 2013.

Credit: Reuters/Jose Luis Magana

WASHINGTON (Reuters) - The head of the Securities and Exchange Commission criticized Congress for loading the agency with certain new disclosure requirements that she said fell outside the agency's core mandate.

In a surprising Thursday speech, SEC Chair Mary Jo White obliquely referred to several new rules, including a requirement that manufacturers to disclose whether their products contain "conflict minerals" produced in war-torn Democratic Republic of the Congo. She said such rules seemed geared more toward influencing social policy than informing investors.

"Recent disclosure directives from Congress have been quite prescriptive, essentially leaving no room for the SEC to exercise its independent expertise and judgment in deciding whether or not to make the specified mandated disclosures," White said.

White said that while the agency must respect Congress and write the rules it is required to, she questioned whether federal securities law was the proper vehicle to pursue social changes or end human rights abuses.

The Dodd-Frank financial regulatory overhaul of 2010 required the SEC to draft several obscure rules including the new conflict minerals disclosure and one to force oil, gas and mining companies disclose their payments to foreign countries.

Critics have said these provisions fall outside the agency's purview and distract from its mission.

But the SEC pressed ahead and issued final rules on both provisions last year, only to see them both challenged in court.

This summer, one federal judge upheld the conflict minerals rule, but another tossed the extractive resources rule.

(Reporting by Aruna Viswanatha; Editing by David Gregorio)

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