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Almost two years later, the SEC took the same hands-off policy when GE came knocking at the door also seeking a no-action letter to support its contention that it need not include a proxy proposal by the Comptroller at its annual shareholders’ meeting which mirrored the earlier proposal submitted to Halliburton.[202] In its correspondence in opposition to GE’s request, the Comptroller quoted at length from the Congressional Conference Report on the 2004 Budget, which requested that the SEC establish an Office of Global Security Risk, to evaluate the risks caused by the conduct of business operations in terrorist states:

The Committee is concerned that American investors may be unwittingly investing in companies with ties to countries that sponsor terrorism and countries linked to human rights violations. For example, the Committee is aware of certain companies listed on U.S.exchanges that are linked to human rights abuses in Sudan. The Committee believes that a company’s association with sponsors of terrorism and human rights abuses, no matter how large or small, can have a material adverse effect on a public company’s operations, financial condition, earnings, and stock prices, all of which can negatively affect the value of an investment. In order to protect American investors’ savings and to disclose these business relationships to investors, the Committee directs the Commission to establish an Office of Global Security Risk within the Division of Corporation Finance. The duties of this office shall include, but not be limited to: (1) establishing a process by which the SEC identifies all companies on U.S. exchanges operating in State Department-designated terrorist-sponsoring states; (2) ensuring that all companies sold on U.S. exchanges operating in State Department-designated terrorist-sponsoring states are disclosing such activities to investors; (3) implementing enhanced disclosure requirements based on the asymmetric nature of the risk to corporate share value and reputation stemming from business interests in these higher risk countries; (4) coordinating with other government agencies to ensure the sharing of relevant information across the Federal government; and (5) initiating a global dialogue to ensure that foreign corporations whose shares are traded in the United States are properly disclosing their activities in State Department-designated terrorist-sponsoring states to American investors. The Commission is directed to provide the Committee with quarterly reports on the activities of the Office of Global Security Risk.[203]

The Comptroller returned to the theme of a special office within the SEC designed by Congress to supervise U.S. companies association with terror and their disclosure of the “global security risk” attendant to such conduct in their public filings:

On March 31, 2004, Chairman Donaldson testified before Congress on the Commission’s progress in establishing the Office of Global Security Risk:

Additionally, as part of ongoing enhancements to our review program, we have established two new offices within the Division of Corporation Finance: The Office of Disclosure Standards, which will evaluate the review policies and review results of the Division’s review program as carried out by its eleven review offices; and The Office of Global Security Risk, created in response to the 2004 appropriations report language. The Office of Global Security Risk, which will function within the traditional disclosure mission of the Commission, will have the following primary objectives: to identify companies whose activities raise concern about global security risks that are material to investors; to obtain appropriate disclosure where merited; and to share information as necessary and appropriate with, the other, key government agencies responsible for tracking terrorist financing.

The Office of Global Security Risk will focus on asymmetric risk by assisting review staff in giving consideration to whetherU.S.or foreign companies that are registered with the SEC have operations or other exposure with or in areas of the world that may subject it and its investors to material risks, trends or uncertainties. This consideration would include whether a company has operations in a country or area of activity where political, economic or other risks exist that are material, or whether a company faces public or government opposition, boycotts, litigation, or similar circumstances that are reasonably likely to have a material adverse impact on a company’s financial condition or results of operations.

“Testimony Concerning Fiscal 2005 Appropriations Request for the U.S. Securities and Exchange Commission”, Statement of William H. Donaldson, before the Subcommittee on Commerce, Justice, State, and the Judiciary, Committee on Appropriations, United States House of Representatives, March 31, 2004.[204]

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