The Securities and Exchange Commission wants banks and other financial institutions to provide more detail about their exposure to European sovereign debt so that investors would have a clearer picture of the firms' overall health.
The agency's Division of Corporate Finance said in guidance issued Friday that, to date, disclosures by publicly traded financial institutions have been "inconsistent in both substance and presentation."
It is urging banks with ties to Europe to disclose direct and indirect exposures, country by country and "segregated by sovereign and non-sovereign exposures." It also requests that financial firms give more detail on their hedging strategies and provide estimates on sums they might need to raise if forced to exit their positions.
The SEC's request for fuller disclosure, first reported by Reuters Monday, is likely tied to the collapse of MF Global Holdings Inc., a New York investment firm that made large bets on the debt of several ailing European countries under its Chief Executive, John Corzine. The company did not disclose its positions in Ireland, Portugal, Spain, Belgium and Italy until a week before it filed for bankruptcy Oct. 31.
