A Medical Device Daily
A new study by Environmental Investor Health Network (Falls Church, Virginia) recommends that the U.S. SEC should close eight loopholes in the current system of securities and accounting regulation of nanotechnologies. The existence of these gaps, EIHN says, serves to prevent "honest accounting" for a firm's potential liabilities and provides practical solutions. The eight regulatory gaps identified are as follows:
1) Shortsightedness: taking the short view and thereby effectively avoiding disclosure or estimation of potential longer term liabilities.
2) Concealed science: concealing emerging science that forewarns of potential liabilities in the future.
3) The known minimum: disclosing only the "known minimum" of potential liabilities, even though a more realistic assessment might be so much larger that it would indicate the potential for a total wipe out of shareholder value.
4) Privileging secrecy: "privileging" concealment, by using attorney-client privileges as a shield against generating a public estimate of liability for investors.
5) Inconsistent estimates: providing inconsistent liability estimates to insurers and investors, with larger estimates of liabilities typically provided to insurers than to investors.
6) Hidden assumptions: using hidden assumptions to minimize estimates of liability.
7) Missing benchmarks: refusing to benchmark liabilities against other companies whose published litigation results may demonstrate realistic estimates of liability.
8) Risk-free proxies: refusing to allow shareholders to place on the annual proxy ballot questions requesting disclosure of specific risks of concern to investors.