Broc Romanek reports that:
On Friday, I blogged a member's negative reaction to the obscure provision in Dodd-Frank that requires the SEC to adopt rules eliciting disclosure regarding "conflict minerals" in the Congo. Many corporate lawyers and others in the corporate community (which includes many shareholders) share that member's reaction. Now, Rep. Carolyn Maloney (D-NY) has introduced a House bill entitled the "Business Transparency on Trafficking and Slavery Act" (H.R. 2759) that would require companies to disclose efforts to identify and address the risks of human trafficking, forced labor, slavery and child labor in their supply chains.
Although these bills are well-meaning, attempting to solve the world's problems through SEC filings simply is the wrong - and very expensive - way to go. How in the world did Congress start thinking they should influence foreign policy, as well as domestic social and environmental issues, through SEC filings to the determent of shareholders? Well, before Dodd-Frank, Rep. Frank Wolf (R-Va.) used an omnibus appropriations bill in early '04 to require companies to disclose business activities in countries designated by the State Department as sponsoring international terrorism (Wolf particularly was targeting Iran). Corp Fin's "Office of Global Security Risk" was born.
Social disclosure is inconsistent with the purposes of the securities laws, costly to shareholders, contributes to information overload on shareholders, and doesn't add information that most investors find useful. It should be cast into the outer darkness.
