Citing the harm faced by investors when the U.S. government imposes financial sanctions on foreign regimes, the Securities Industry and Financial Markets Association (SIFMA) is calling on policymakers to establish a standardized approach to sanctions that gives investors room to manoeuvre.
In a new white paper, the securities industry lobby group argued that the imposition of sanctions in pursuit of foreign policy, or national security goals, often has unintended negative consequences on U.S. investors — including investors that are exposed to affected securities through pension plans, mutual funds and ETFs.
“In some cases, investors have suffered substantial losses and been unable to divest holdings, receive dividends or interest payments, or preserve the value of investments made long before sanctions were imposed,” the group said.
Against that backdrop, SIFMA called on government policymakers to adopt a more systematic approach to levying sanctions, that considers the impact on investors and facilitates compliance by securities firms.
Among other things, it recommended that the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) establish a standardized framework for capital markets sanctions that allows pre-existing securities to be traded on secondary markets, or gives investors ample time to dispose of sanctioned securities, and provides transition periods to give investors and securities firms time to comply with planned restrictions.
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