U.S. Senator Robert C. Byrd, D-W.Va., has introduced an amendment to the pending Wall Street accountability and financial reform bill which would hold companies accountable for their failure to disclose certain health and safety information in their filings with the Securities and Exchange Commission (SEC), and with the companies' own shareholders. Senator Byrd filed the amendment in his first legislative response to the April 5th mining disaster in Montcoal, which took the lives of 29 West Virginians -- and in recognition of a broader need for consistency and clarity about how corporations disclose worker safety conditions at coal mines, oil rigs, and other risky workplaces. Byrd's West Virginia colleague, Senator Jay Rockefeller joined Byrd as an original co-sponsor of the amendment.
"Investors ought to know if a company is jeopardizing its workforce in order to maximize its profits," said Byrd. "In addition, failure to disclose these adverse safety or health conditions could have a significant financial impact on investors, especially if there is a halt in operations because a company failed in its obligation to protect its workers."
"As we seek to make Wall Street more transparent and accountable to investors and Main Street America, I believe it is imperative that workers, investors and the general public receive a more complete and consistent analysis of whether the companies in which they have invested their funds are operating in a safe and healthy manner. Many companies maintain commendable health and safety records, and also disclose those records. Unfortunately, not all companies maintain such good records. Inconsistent disclosure in the past has made it hard to separate the wheat from the chaff."
"No one wants corporations to cut corners on safety and health -- including the many well-intentioned corporate leaders. This amendment will ensure that we can all make a reasonably informed assessment of whether companies are getting too close to crossing the line on worker safety and health," Byrd added. "I am pleased to join with Senator Rockefeller in addressing these serious issues."
Specifically, Byrd's amendment requires publicly traded corporations to disclose information about occupational health and safety conditions at risky workplaces -- such as coal mines or oil rigs. The Securities and Exchange Commission and shareholders would be authorized to seek equitable relief (such as the immediate disclosure of health and safety conditions), as well as civil penalties in cases of knowing failure to disclose information. The scope of the relief and the penalties would be set by a court, in proportion to other penalties that may be imposed under health and safety laws, and in light of the facts and the circumstances of each case.
The amendment requires corporations to disclose four categories of health and safety information: pending litigation regarding health and safety; significant health or safety conditions at risky workplaces, which may cause the corporation to incur damages arising from wrongful deaths; significant health or safety conditions that may impact financial conditions or operating results within the corporation; and trends in health and safety violations that may affect the relationship between costs and revenues of a corporation.
Senator Rockefeller is the lead cosponsor of Senator Byrd's amendment and Senator Byrd is the lead cosponsor of an amendment filed by Senator Rockefeller to require publicly-traded mining companies to disclose specific safety information in their SEC filings or face penalties.
The Securities Exchange Act of 1934 requires companies to disclose, discuss, and analyze many types of risk, for the benefit of investors and the public. Corporate failures to disclose unsafe or unhealthy working conditions can lead to a grave and painful impact on workers, families, and communities -- and these failures can also have meaningful consequences for investors, industries, and markets. The reputations of companies and entire industries can suffer irreparable damage. Capital and equipment can become stranded due to physical damage or the closure of operations. Inadequate disclosure of safety and health information may also mask declining productivity.