Murky Materiality & Scattered Standards: In Favor of a More Uniform System of SST Disclosure Requirements

December 1, 2021

The Securities and Exchange Commission (SEC) requires corporations to disclose their business in or with state sponsors of terrorism (SSTs). The SEC solicits these disclosures with varying standards arising under several different mechanisms. These mechanisms include the requirements of the materiality standard, the provisions of Regulation S-K, targeted inquiry in individually issued comment letters, and affirmative requirements mandated under specific legislation. Each of these mechanisms requires disclosure of slightly different information regarding SSTs with varying degrees of exactitude.

This Note examines the SEC’s current SST disclosure framework, considering the benefits, as well as the criticisms, of these disclosure mandates. This Note concludes that, although SST disclosure mandates are important, the mechanisms in place result in inconsistent disclosure that renders the entire framework ineffective. This Note argues that a more consistent SST disclosure standard is needed and proposes the addition of a new line item to Regulation S-K mandating that companies disclose all of their business in or with SSTs.

December 2021

No. 3