How the SEC is keeping us safe from booking hotel rooms…

January 13, 2009

While we here at footnoted haven’t criticized the SEC for being asleep at the wheel on Bernie Madoff or the financial crisis, plenty of others have (see here and here among others). So you can imagine our surprise when we came across this comment letter that the SEC sent to online travel company Orbitz Worldwide (OWW).

In the letter, which was dated Oct. 10, but appears to only be recently released via Edgar, the SEC asks Orbitz to explain why ordinary folks can seemingly book hotel rooms in Cuba, Iran and Syria (the picture is of the Sheraton Damascus) — all countries on the State Department list for being state sponsors of terrorism. In her response, Orbitz CFO Marsha Williams explains that rooms can’t be booked for Cuba and that bookings in Iran and Syria make up a tiny amount of Orbitz’ business — .001% of gross bookings. The SEC closed its investigation on Oct. 16 and Orbitz appears to have corrected the issue since I just tried to book a room in both Damascus and Tehran for February and wasn’t able to do so on Orbitz’ site.

But here’s the real issue: Oct. 10 was smack dab in the midst of the market meltdown, with the Dow dropping 1,500 points over three days and the S&P 500 declining nearly 15%. One would think (or at least hope) that the SEC would have more important things to do than focus on hotel room bookings in Cuba, Iran and Syria. When asked about the letter this morning, John Heine, an SEC spokesman said while the SEC clearly had lots of other things on its plate, “we don’t feel we can neglect this particular area.”

Still, given everything else that was going on, and given how we always hear about the SEC’s limited resources, the ability to go on Orbitz and book hotel rooms in Damascus doesn’t exactly seem like a high priority. Not to mention the time it took for Orbitz’ CFO to respond to the SEC’s letter.

Image Source: Starwood Hotels

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