UPDATE 1-US SEC's Cox condemns surveillance of shareholders

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WASHINGTON, April 13 (Reuters) - U.S. Securities and Exchange Commission Chairman Christopher Cox said on Friday any company that investigated or intimidated shareholders after they submitted proxy petitions should be "condemned."

Cox made the comment in a letter to New York City Comptroller William Thompson, who has asked both the SEC and the Justice Department to investigate Wal-Mart Stores Inc.'s (WMT.N: Quote, Profile, Research, Stock Buzz) reported surveillance of shareholders.

Cox said he forwarded Thompson's request to the SEC's New York regional office. That office will take whatever action "it deems appropriate," Cox said.

"I am sure you appreciate that ... the division cannot comment on the existence or status of its investigations," Cox added in the letter, which was released by the agency.

Earlier this week, Thompson asked both the SEC and the U.S. Attorney General to look into the matter after the Wall Street Journal reported that an internal Wal-Mart security group was asked to investigate the potential threat of those submitting proposals to its June shareholder meeting.

"The right of shareholders to propose appropriate matters for consideration at annual meetings is an indispensable element of the federal securities laws we administer at the SEC," Cox said in the letter to Thompson.

"Attempts by company fiduciaries to intimidate shareholders exercising these rights are antithetical to the core principles of corporate governance and the full and appropriate expression of shareholder rights and should be roundly condemned," Cox said in the letter.

The SEC, as a matter of policy, does not confirm or deny investigations into investor protection matters.