Shariah’s Black Box

[201] Letter from Janice Silberstein, Assoc. Gen. Counsel, City of N.Y., Office of the Comptroller, to Sec. and Exch. Comm’n, Div. of Corporate Fin., Office of the Chief Counsel (Feb. 7, 2003), in Halliburton No-Action File, supra note 196.

[202] See GE No-Action File, supra note 196.

[203] Letter from Richard S. Simon, Deputy Gen. Counsel, The City of N.Y., Office of the Comptroller, to Sec. and Exch. Comm’n, Div. of Corporate Fin., Office of the Chief Counsel (Dec. 10, 2004), in GE No-Action File, supra note 196.

[204] Id.

[205] U.S. Securities and Exchange Commission, Office of Global Security Risk, https://www.sec.gov/divisions/corpfin/globalsecrisk.htm (last visited Jan. 30, 2008). In this context, the SEC proposed the following:

II. Disclosure of Business Activities in or With Countries Designated as State Sponsors of Terrorism

The federal securities laws do not impose a specific disclosure requirement that addresses business activities in or with a country based upon its designation as a State Sponsor of Terrorism. However, the federal securities laws do require disclosure of business activities in or with a State Sponsor of Terrorism if this constitutes material information that is necessary to make a company’s statements, in the light of the circumstances under which they are made, not misleading. [Note 6 citation appears here in the text. See below.] The term “material” is not defined in the federal securities laws. Rather, the Supreme Court has determined information to be material if there is a substantial likelihood that a reasonable investor would consider the information important in making an investment decision or if the information would significantly alter the total mix of available information. [Note 7 citation appears here in the text. See below.]

The materiality standard applicable to a company’s activities in or with State Sponsors of Terrorism is the same materiality standard applicable to all other corporate activities. Any such material information not covered by a specific rule or regulation must be disclosed if necessary to make the required statements, in the light of the circumstances under which they are made, not misleading. The materiality standard’s extensive regulatory and judicial history helps companies and their counsel to interpret and apply it consistently, and we remain committed to employing this standard to company disclosure regarding business activities in or with State Sponsors of Terrorism.

Although the Commission is well positioned to review disclosure relating to business activities regardless of the country in which they are conducted, we do not have the expertise or information necessary to identify the particular countries whose governments have funded, sponsored, provided a safe haven for, or otherwise supported terrorism. Nor is it the Commission’s role to determine the degree to which a public company’s business activities may support terrorism or may be inconsistent withU.S.foreign policy orU.S.national interests.

Note 6: Rule 408 of Regulation C, [17 CFR 230.408] and Rule 12b-20 under the Securities Exchange Act of 1934 [17 CFR 240.12b-20].

Note 7: TSC Industries v. Northway, Inc., 426 U.S. 438 (1976). It has also held that materiality of contingent or speculative events or information depends on balancing the probability that the event will occur and the expected magnitude of the event. Basic v. Levinson, 485U.S. 224, 238 (1988).

Concept Release on Mechanisms to Access Disclosures Relating to Business Activities in or With Countries Designated as State Sponsors of Terrorism, 72 Fed.Reg.65862,65863(proposed Nov. 23, 2007) (to be codified at 17 C.F.R. pts. 228, 229, 230, 239, 240 & 249) (footnotes omitted).

[206] See generally Coughlin, supra note 24.

[207] This is a term of art used by many commentators, both of the punditry variety and of the scholarly. It should be distinguished from ‘Islamicist’, which tends to describe an academic whose discipline is the study of things Islamic.

[208] Supra note 191.

[209] See generally Loss & Seligman, supra note 10, at 910-11, 1018-31.

[210] Supra note 191.