Public companies working on national defense or national security issues can now get an exemption from the reporting requirements governed by the Securities and Exchange Commission from the director of national intelligence.
In a May 5 memo published in last week's Federal Register, President Bush granted his intelligence czar -- currently John Negroponte -- with the authority to excuse public companies from basic filing requirements. Carrying a less-than-transparent heading, "Assignment of Function Relating to Granting of Authority for Issuance of Certain Directives," the president's memo referred to the Constitution in assigning Negroponte's office the power to suspend provisions of the 1934 Securities and Exchange Act .
The exchange act laid out the basics of regulation of the country's financial markets and investors. President Bush wrote in his memo that should such an exemption be given for the law, the heads of departments and agencies should be consulted "as appropriate."
The amended version of the exchange act says that "with respect to matters concerning the national security of the United States," the president or the head of an executive branch agency may exempt companies from certain critical legal obligations -- including preparing financial statements in compliance with generally accepted accounting principles.
Around the same time that the president's directive was made public, it was reported that telecommunications giants AT&T, BellSouth and Verizon were cooperating with the National Security Agency, providing records of the public's telephone calls.
Published reports have quoted White House officials as saying that this is the first time a president has delegated the exemption authority to someone else, and that there have been no confirmation of any companies receiving a waiver.
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