Dirt Diggers Digest No. 27
January 21, 2003
Editor: Philip Mattera
1. SEC disclosure roundup
2. Shareholder coalition presses utilities on global warming liability disclosure
3. Commercial database access via public libraries
4. Database adds info on Chinese companies
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1. SEC disclosure roundup
The SEC is expected to vote this week on whether to proceed with the
adoption of a new rule requiring mutual funds to disclose how they vote
their proxies on shareholder resolutions at the corporations in which they
have holdings. When the plan was announced in September, its adoption was
considered all but certain, but the investment management industry began
campaigning aggressively against the reform. On January 14, the CEOs of
two of the largest mutual fund companies, Vanguard Group and Fidelity
Investments, jointly published an opinion article in the Wall Street Journal
warning that disclosure would “politicize proxy voting” and “open
mutual-fund voting decisions to thinly veiled intimidation from activist
groups whose agendas may have nothing to do with maximizing our clients’
returns.” They went on to say: “The effect would be to make mutual funds the
prime pressure point for every activist group with a political or social ax
to grind with corporate America.”
Also expected soon is a decision by the Commission on a less controversial
issue: whether to formally adopt a proposed rule that would require mutual
funds to disclose the content of their portfolios quarterly rather than
semi-annually. This action will follow the completion of a 30-day public
comment period on the rule, which would require that funds report the data
in filings that would be available on the SEC’s EDGAR online system. The
reports would also include additional information on the fees collected by
the funds. For more details on the rules, see the SEC’s press release at
http://www.sec.gov/news/press/2002-176.htm.
The SEC also voted last month to issue proposed new rules governing the
reporting of stock trades by corporate insiders. The rules, mandated by the
Sarbanes-Oxley bill passed by Congress last summer, would finally add
Forms 3 and 4 to the list of filings including in the EDGAR electronic
database. A 45-day comment period was opened by the Commission. See
the release at http://www.sec.gov/news/press/2002-178.htm.
Earlier this month, the SEC adopted other rules manadated by Sarbanes-Oxley,
including a requirement that companies that issue financial results using
methods not included in generally accepted accounting principles, or GAAP,
explain in detail how such pro forma numbers differ from GAAP results.
Another provision will require companies to disclose the content of any code
of ethics established for executives. Details can be found in the release at
http://www.sec.gov/news/press/2003-6.htm.
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2. Shareholder coalition presses utilities on global warming liability disclosure
Last week a coalition of institutional investors, including the State of
Connecticut Retirement Plans and members of the Interfaith Center on
Corporate Responsibility, announced an initiative to pressure five large
utilities to disclose to their investors the potential legal liabilities
associated with their high levels of greenhouse gas emissions. The groups
have introduced a resolution at each of the five companies--American Electric
Power, Cinergy Corp., Southern Company, TXU Corp. and Xcel Energy Inc.--that
would require the utilities to disclose both the economic risks associated
with the emissions and the economic benefits of committing to a substantial
reductions of those emissions. The text of the resolution, which will be
voted on at the companies’ forthcoming annual meetings, can be found at
http://www.hastingsgroup.com/FilthyFiveutilities.html.
In a statement supporting the initiative, Connecticut State Treasuer Denise
L. Nappier said: “The lesson we must learn from Enron and the scandals that
followed is that management must provide shareholders with clear and
accurate information about the current and future health of the company--and
this goes beyond accounting…The electric utility industry is a great example
of an industry that has material financial risk not currently sufficiently
disclosed in a big picture way to its investors.” Her full statement, along
with other documents, can be found at at the website cited above.
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3. Commercial database access via public libraries
A recent article by Gary Price on the website Search Engine Watch highlights
a little known research fact: the websites of many public libraries provide
free access to a wealth of commercial databases. These services can be
accessed either in the library or via a remote computer by anyone holding a
valid library card. In the article (available at
http://searchenginewatch.com/searchday/03/sd0115-databases.html) Price notes
that these services often include archives of full-text news articles,
though the service is more likely to be InfoTrac or ProQuest rather than
Nexis or Dow Jones Interactive (which, by the way, will soon disappear in
favor of Factiva, a Dow Jones joint venture with Reuters).
Dirt Diggers will be especially interested in a resource called Business &
Company Resource Center, which is available, for example, at the websites of
the public libaries of New York, Los Angeles and Washington, DC. Produced by
the Gale Group (a subsidiary of The Thomson Corporation), the Resource
Center assembles corporate profile information from a variety of sources,
including other Thomson properties such as the Investext archive of stock
analyst reports.
Price doesn’t mention it in his article, but it should be noted that many
university libraries offer faculty and students access to an even more extensive
array of commercial database services.
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4. Database adds info on Chinese companies
Bureau van Dijk, a European-based producer of business information
databases, has announced that its OSIRIS service now includes financial data
on all companies listed on stock exchanges in China. A spokesman for the
company claimed that OSIRIS <http://osiris.bvdep.com> is the first database
to contain such information on all Chinese publicly traded companies.
-- Philip Mattera <pmattera@goodjobsfirst.org>