U.S. securities regulators, under pressure from human rights activists, are expanding scrutiny of foreign firms seeking to raise money in U.S. capital markets.

The Securities and Exchange Commission recently said that it is looking more closely at foreign firms doing business in rogue nations such as Sudan, Iraq and Libya to ensure the firms fully disclose the financial risks when attempting to sell securities to U.S. investors. This could result in foreign firms revealing more information, though it would amount to enforcement of existing rules rather than an expansion of disclosure requirements.

The SEC moved in response to criticism that foreign firms were not making clear their risks of doing business in rogue nations.

Activists, who have turned to securities regulation as a tool for pressuring companies to withdraw from controversial investments, said this marks the first time the SEC has publicly singled out concerns over human rights, national security or religious freedom as a trigger for closer examination of a foreign firm's application to list its stock in U.S. markets.

Adam Pener, a senior analyst at the William J. Casey Institute, a conservative think tank in Washington, said the SEC is sending a powerful warning to companies and fund managers that these political risks are "materially relevant to investors."

There was no immediate outcry on Wall Street because the SEC decision, although a symbolic victory for the human rights community, didn't appear to create onerous new standards for foreign firms trying to raise money in the U.S. Investors said it should, however, make it easier to evaluate foreign firms that often don't have the same level of openness as U.S. firms.

"This is a good step," said Chris Orndorff, a managing principal at Payden & Rygel, a Los Angeles money management firm. "The only people it's going to deter are those people that may have something to hide."

The SEC, which explained its actions in a letter sent last week to Sudan critic Rep. Frank R. Wolf (R-Va.), has shied away from restricting access to U.S. capital markets, arguing that it would have a chilling effect on global investments or spark retaliation by foreign governments.

An SEC spokesman, who asked not to be named, downplayed the significance of its move. The regulatory agency said it is not creating new rules.

To ensure compliance, the SEC said it would examine more closely any listing application from foreign firms that are doing business in countries sanctioned by the United States, such as Sudan, Iraq and Iran. In the past, U.S. regulators have conducted "selected reviews" of foreign listing applications because of limited resources.

The SEC also plans to amend its rules to require all foreign firms to file listing documents electronically. That will make it easier for investors to scrutinize those documents.

The SEC said its move reflected the evolving concerns of the investor community and the increasingly global nature of the stock markets. In the 1970s, for example, regulators looked more closely at a company's exposure to tobacco-related liabilities. More recently, it was the Y2K computer bug scare.

The SEC's actions would affect just a tiny slice of the U.S. capital market. The 1,310 foreign firms listed in the U.S. or in the filing pipeline represent less than 1% of all publicly traded firms, though the overseas share has risen sharply in recent years as the global flow of capital has increased. And those operating in sanctioned countries are a small fraction of those foreign filers.

The SEC is under pressure from Sudan critic Wolf to take action against Chinese oil giant PetroChina and Canada's Talisman Energy Inc. Both firms, listed on the New York Stock Exchange, are accused of supporting human rights abuses through their investments in oil-rich Sudan.

U.S. sanctions prohibit U.S. firms from doing business in that impoverished African country, whose government is accused of using its oil profits to support a campaign of international terrorism and genocide against its political opponents. But the U.S. doesn't prevent foreign firms operating in Sudan or other sanctioned countries from seeking access to U.S. capital markets, arguing it would trigger a backlash among its trading partners and could violate its international obligations.

The SEC said it had forwarded Wolf's request to its enforcement division and would not discuss whether an investigation of those firms was underway.

Dave Mann, a spokesman for Calgary-based Talisman, said the firm is confident it has not violated any SEC disclosure rules. A spokesperson at Goldman Sachs, the lead underwriter for the PetroChina offering, said the firm had no comment.

The SEC acknowledged that the Sudan controversy had forced regulators to confront the increasingly complex and often contradictory pressures created by U.S. concerns over national security, the promotion of democracy and the commitment to maintaining open markets. The SEC has spoken to officials in the Treasury Department, which oversees U.S. economic sanctions, about creating an interagency group to look into the Sudan issue.

The California Public Employees' Retirement System (CalPERS), the nation's largest pension fund and a leader in promoting corporate governance, said Friday it welcomed any move by the SEC that would help U.S. investors make educated decisions about their foreign exposure.

At the urging of state Treasurer Phil Angelides, CalPERS, which controls a $160-billion portfolio, is expanding its criteria for assessing future investments in developing countries. By the end of this year, the CalPERS board hopes to have a formula for weighing such factors as the transparency of government regulatory activities, political stability and labor practices.