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Sudan Divestment: U.S. Investors Sold Assets but Could Benefit from Increased Disclosure Regarding Companies' Ties to Sudan

GAO-10-742 Published: Jun 22, 2010. Publicly Released: Sep 20, 2010.
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Recognizing the humanitarian crisis in Darfur, Sudan, Congress enacted the Sudan Accountability and Divestment Act (SADA) in 2007. This law supports U.S. states' and investment companies' decisions to divest from companies with certain business ties to Sudan. It also seeks to prohibit federal contracting with these companies. GAO was asked to (1) identify actions that U.S. state fund managers and investment companies took regarding Sudan-related assets; (2) describe the factors that these entities considered in determining whether and how to divest; and (3) determine whether the U.S. government has contracted with companies identified as having certain Sudan-related business operations and assess compliance with SADA's federal contract prohibition provision. GAO surveyed states, analyzed data on investment companies and companies with Sudan-related business operations, assessed federal contracts, and reviewed documents and interviewed officials from the Securities and Exchange Commission (SEC), among other federal agencies.


Recommendations for Executive Action

Agency Affected Recommendation Status
United States Securities and Exchange Commission In order to enhance the investing public's access to information it needs to make well-informed decisions when determining whether and how to divest Sudan-related assets, the SEC should consider issuing a rule requiring companies that trade on U.S. exchanges to disclose their business operations related to Sudan, as well as possibly other U.S.-designated state sponsors of terrorism.
Closed – Implemented
A senior official at Division of Corporation Finance reported that in 2011, in response to our recommendation, the SEC did consider issuing a rule requiring companies that trade on U.S. exchanges to disclose their business operations related to Sudan and Iran. Specifically, in the fall and spring of 2011, the SEC included an agenda item (item 3235-AL01) in the publicly available biannual Regulatory Flexibility Agenda ( stating that the Division was considering recommending that the Commission propose disclosure requirements relating to business and investment activities in Iran and Sudan. However, an SEC official said the consideration of a rule related to Sudan was overtaken by other events. The Regulatory Flexibility Agenda item 3235-AL01 was removed from the agenda in 2012, when the Iran Threat Reduction and Syria Human Rights Act of 2012 was enacted. While the new legislation resulted in a requirement that reporting companies disclose certain activities involving contacts with or support for Iran or other identified persons involved in terrorism or the creation of weapons of mass destruction, an SEC official said the legislation does not include reporting related to Sudan or other State Sponsors of Terrorism.

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