A new link has appeared on the home page of the Securities and Exchange Commission’s website. Under “Investor Information” there is a link called “State Sponsors of Terrorism” Hmmm, you wonder, the SEC now thinks that investors need to know which countries are state sponsors of terrorism? Perhaps, because when you click the link, there’s a list itemizing Cuba, Iran, North Korea, Sudan and Syria.

But wait, there’s more. Each country on the list is linked to a list of companies that mentioned that particular country in its 2006 annual report. This list is clearly an outgrowth of the SEC’s Office of Global Security Risk, on which we’ve reported here before and which is tasked with reviewing securities filings of publicly-traded companies to determine whether, among other things, companies should disclose dealings with sanctioned countries.

Being on that list is probably not a good thing. So you might think that the SEC might exercise some discretion about who belongs on the list and who does not. But you would be wrong. Take for example, candy and soft drink giant Cadbury Schweppes, which is on the Syria list. But if you click the link on that page you will discover that Cadbury sold its operations in Syria. Yes, it’s on the list because the annual report mentioned Syria, but only in the context that it divested its operations in Syria. If the purpose of the list is to disclose to investors companies that are running a risk by having operations in sanctioned countries, that is hardly served by listing companies that have divested their operations in those countries.

Needless to say, the list is starting to draw fire from business interests. The Institute of International Banks, for example, charged that the blacklist could discourage banks from listing on U.S. securities exchanges, even though that might arguably be the goal of such a list.

(FULL DISCLOSURE: If it’s hot over the July 4th holiday, a certain Cadbury Schweppes product will, at my house, be liberally mixed with gin and a squeeze of fresh lime, so we may not be completely impartial in our reporting on Cadbury Schweppes.)

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