The Securities and Exchange Commission yesterday proposed new rules to help prevent publicly owned corporations from concealing illegal or questionable payments from management, directors and stockholders.
The rules are similar to legislative proposals made by the SEC last year. That legislation was passed unanimously by the Senate, but failed to make it out of the House committee before the session ended.
The need for rules changes was suggested by revelations over the past two years that more than 250 U.S. corporations made questionable payments in the U.S. and abroad.
The new rules would require corporations to maintain books and records that "accurately and fairly reflect" transactions. Companies would be required to tighten internal accounting controls.
New anti-payments legislation already has been proposed in the Senate and the House. Both versions contain provisions similar to the SEC's proposed rules changes.
The Senate bill, sponsored by Sens. Harrison J. Williams Jr. (D-N.J.) and William Proxmire (D-Wisc.), would prohibit payments to foreign officials "where the purpose of such payment is to obtain business or to influence the government."
A House bill introuduced by Reps. John M. Murphy (D-N.Y.), also calls for severe criminal penalties against companies that bribe officials of foreign governments.
The Williams-Proxmire bill would require disclosure of the identity of any investor who acquires more than 2 per cent of a publicly owned corporation's stock. Currently, the law calls for revelation of the names of stockholders with 5 per cent or more of a company's stick.
The Senate bill also would amend the disclosure section of the securities law. As a result, "It will be possible to measure the extent to which foreign investors have acquired or seek to acquire controlling or potentially controlling interest in U.S. corporations," Sen. Williams said.