Capital Markets Transparency and
Security: The Nexus Between U.S.-China Security Relations and
America's Capital Markets
MEMORANDUM TO COMMISSIONERS
September 24, 2001
Subject: Commissioned Report "Capital Markets Transparency and Security:
The Nexus Between U.S.-China Security Relations and America's Capital Markets"
From: C. Richard D'Amato, Chairman
We have proceeded to web-publish the report prepared at the Commission's request
by Adam Pener, Senior Analyst with the William J. Casey Institute of the Center
for Security Policy. A disclaimer on the front of the study clearly indicates
the paper does not reflect the views of the Commission or any individual Commissioners.
As I mentioned when I distributed the report to each of you on July 3 for comment,
this assessment is a major step forward in the Commission's research effort
concerning this very important topic. Some of you responded to my request for
comments or recommendations for changes that should be considered and I am
pleased to inform you that all of those recommendations received were incorporated
in the published version that is now available for public comment.
Also, consistent with my memorandum of July 3, the recommendations in the report
were not released to the public pending the Commission's internal consideration
of those recommendations. As the report was completed at the end of June in
anticipation of our capital markets hearing of July 6 (that was later postponed),
Mr. Pener prepared a "Foreword" that covers key developments that
have taken place during the intervening period in this rapidly emerging new
area of risk management. He also provides a description of his professional
activities that helped shape the study.
This background paper, to our knowledge, is the most comprehensive of its kind.
The Commission welcomes public reaction and comments and the national debate
that the report will hopefully stimulate. Such a debate can only enrich the
Commission's understanding of the merits and limitations of capital markets
transparency and leverage, and should help lay the groundwork for our Commission
hearing on China's fundraising activities in the U.S. capital markets presently
scheduled for December 6, 2001. Finally, at this time of national trauma when
policy-makers are reviewing carefully the full array of financial policy tools
and options to combat the scourge of international terrorism and those that
aid and abet it, this comprehensive report should help stimulate a needed national
debate.