Mr. Chairman, thank you for calling this hearing.

Mr. Chairman, as you know, one of my chief concerns when I came to the Senate in 1993 was whether we had too many unnecessary rules and regulations. I am concerned that this may the case with the SEC's new rule.

I will say that I have sympathy for what the SEC is trying to do. After all, who doesn't want more information about a company they are investing in?

But, the world of options, futures and derivatives is a very complicated world. To suggest that the government can force disclosure that would give investors comfort and accuracy, I think is very dangerous.

If I didn't understand the financial statements of a company I was investing in -- I would get out. And if I didn't, who is to blame?

No one is ever going to be able to tell you with certainty whether a financial instrument is going to go up or go down. In fact I think the very nature of derivatives is hedging one's bets on the future -- now how can we get an accurate read on that?

And god knows, if a company misleads anyone, there are enough lawyers out there waiting to sue. Make no mistake about that.

So here are some of the problems I see with this new rule.

First, it appears to be a burdensome new disclosure, affecting some at least 500 companies, and when it is fully implemented it will affect 5000 companies.

Second, it provides three options of disclosure, which is going to make comparison shopping very difficult.

Third, I think it is going to be difficult to enforce.

Finally, the this may have the effect of discouraging companies from using hedging tactics. I really have to question if that is good for the companies or the investors.

Thank you Mr. Chairman. I look forward to the testimony.

Home | Menu | Links | Info | Chairman's Page