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SEC 1998 Annual Report:
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International Affairs
The SEC operates in a global marketplace. Our international affairs staff
promotes international cooperation among regulators and encourages the adoption
of high regulatory standards by negotiating information-sharing arrangements
for enforcement and regulatory matters, conducting technical assistance
programs, and furthering the SEC's interests in international organizations.
Key 1998 Results
The SEC develops global regulatory initiatives to better protect U.S.
investors. This year, the Asian financial crisis highlighted the importance of
high regulatory standards and the need for disclosure and transparency. We
devoted substantial resources to respond to the Asia crisis, in addition to
implementing international enforcement and technical assistance programs.
Regulatory Initiatives
In 1998, the importance of cross-border and cross-sector regulatory
cooperation in promoting financial stability was noted by the Group of Seven
(G-7) countries (Canada, France, Germany, Italy, Japan, the U.K., and the U.S.)
The SEC worked closely with the U.S. Treasury Department on initiatives of the
G-7 and the Group of Twenty-Two Finance Ministers and Central Bank Governors
(G-22).
Work on Financial Stability
G-7 Summit
Our staff helped shape the G-7 Finance Ministers Summit Report, which called
for improved international cooperation among regulators and law enforcement
authorities, and compliance with Ten Key Principles of Information Sharing.
G-22
In response to the Asian financial crisis, the G-22 issued reports on
transparency and accountability, and strengthening the international financial
architecture. We played an active role in the development of these reports.
Core Principles of Securities Regulation
In 1998, the International Organization of Securities Commissions (IOSCO)
adopted the "Objectives and Principles of Securities Regulation" (the
Core Principles), which represent consensus on sound practices for regulating
securities markets. Our staff worked within IOSCO to develop the Core
Principles. The principles will guide securities regulators and assist
international organizations in assessing securities regulation in emerging
markets.
International Disclosure Standards
In 1998, IOSCO adopted non-financial statement disclosure standards that
will allow issuers to prepare a single disclosure document for capital raising
and listing in multiple jurisdictions.
International Accounting Standards
The SEC chairs IOSCO's working party on multinational disclosure and accounting.
In early 1999, the International Accounting Standards Committee expects to
finalize a core set of standards. The SEC and other IOSCO members will then
consider whether to allow foreign issuers to use these standards for
cross-border securities offerings.
Responses to Changes in Technology
Our staff contributed to IOSCO's development of a complementary
international regulatory approach to the Internet, including the issuance of a
1998 report entitled "Securities Activity on the Internet."
Year 2000 Prepardness
Through its work with IOSCO and other international organizations, the SEC
is promoting Y2K preparedness internationally, including testing and
contingency planning.
International Organizations
The SEC promotes its views on the U.S. securities markets and develops
international consensus on regulatory and market oversight issues in various
international forums.
International Organization of Securities Commissions
IOSCO is the predominant international forum for collaboration in the
securities regulatory community. Its membership includes 90 countries, covering
most of the world's securities regulators.
Council of Securities Regulators of the Americas (COSRA)
COSRA is a regional organization whose membership includes the SEC as well
as securities regulators from 25 nations in North, Central and South America,
and the Caribbean. In 1998, COSRA's key initiatives included (1) launching an
innovative, hemisphere-wide "Facts on Saving and Investing Campaign,"
including town meetings, radio and television shows, and seminars, and (2)
producing a report on collective investment schemes that provides information
about the mechanisms used to oversee a variety of investment vehicles.
Organization for Economic Cooperation and Development (OECD)
Our staff's expertise on disclosure resulted in the inclusion of strict
accounting and auditing guidelines for companies in the OECD's treaty
criminalizing foreign bribery. The treaty will go into effect in early 1999.
Enforcement Cooperation
The SEC needs assistance from foreign authorities to protect U.S. investors
from cross-border fraud. We have entered into over 30 formal
information-sharing arrangements with foreign counterparts.
1998 Enforcement Cooperation Results
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Requests to Foreign Authorities for |
275 |
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Requests for Enforcement Assistance from |
412 |
The following cases illustrate the effectiveness and importance of the SEC's
international enforcement program.
- SEC v. Euro Security
Fund, et al . In this insider trading matter, the SEC identified
substantial purchases in the United States, through European banks, of
Elsag Bailey's options and equities immediately prior to an announcement
of a tender offer for Elsag Bailey by a Swiss-Swedish company. The SEC
simultaneously obtained a U.S. court order freezing $6.6 million in
potential profits and requested information about the identity of traders
from European securities authorities. With this assistance, the SEC
identified one of the foreign traders as a company insider and obtained
information to support a preliminary injunction.
- SEC v. Cavanaugh, et al
. In this microcap fraud case, several Spanish entities controlled
accounts involved in a manipulative trading scheme. The SEC's counterpart
in Spain was instrumental in helping the SEC locate $5 million in proceeds
at a bank in Spain. The money was then frozen to permit its return to
defrauded U.S. investors.
Technical Assistance
The SEC's technical assistance program helps emerging securities markets
develop regulatory structures that promote investor confidence. The program is
multifaceted and includes training, reviewing foreign securities laws, and
responding to detailed requests.
1998 Technical Assistance Results
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Requests for Technical Assistance |
216 |
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U.S. Training Provided |
374 Officials from 94 Countries |
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Overseas Training Provided |
Over 200 Officials |
The cornerstone of the SEC's technical assistance program is the
International Institute for Securities Market Development, a two-week,
management-level training program covering the development and oversight of
securities markets. In addition, the SEC conducts a week-long International
Institute for Securities Enforcement and Market Oversight.
Our staff participated in a range of training initiatives in conjunction with the China Securities Regulatory Commission, including a program on accessing the U.S. capital markets, and commented on Chinese draft securities legislation.