Corporate > AG Deal Diary > SEC Issues Comment Letter in Connection With New Iran Sanctions Disclosure Requirement
02 Oct '13

The staff of the SEC recently issued a comment letter requiring a registrant to evaluate whether a transaction involving the National Iranian Oil Company (NIOC) should have been disclosed in the registrant’s annual report on Form 20-F. A vessel owned by the registrant and chartered to a third party had loaded crude oil in Iran to be shipped by NIOC to a buyer in China. The staff issued a comment letter requiring the registrant to evaluate whether disclosure of the transaction was required under Section 13(r) of the Securities Exchange Act of 1934 (as amended by the Iran Threat Reduction and Syria Human Rights Act of 2012, § 219, 112 P. L. 158), and if so, to amend its annual report.

Section 13(r) requires reporting issuers to disclose in an annual or quarterly report specified information if the issuer or its affiliate, among other things, knowingly conducts a transaction with a person that meets the definition of the “Government of Iran” as specified in the Iran Transactions Regulations (specifically, § 31 C.F.R. § 560.304), without the specific authorization of a department or agency of the U.S. government. The staff stated that NIOC is an entity identified in the cited provision.

The staff stated in one of its comment letters that it noted the transaction from a news article.

The staff’s comment letter suggests that the SEC is taking an active approach to the reporting requirements of Section 13(r).  This is consistent with the aggressive approach to enforcement of U.S. sanctions against Iran taken by the U.S. agencies (including the Treasury Department’s Office of Foreign Asset Control and the Department of State) that are tasked with the review and investigation of such information.