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The US Security & Exchange Commission’s is going on the offensive regarding enforcement of regulations and clamp-down of illegal trading practices in the credit crisis. Last Friday, Christopher Cox, the SEC’s Chairman, addressed an audience of regulators from 65 countries at the SEC’s annual International Enforcement Institute conference in Washington.
Cox told the audience “As the credit crisis has unfolded throughout the world during 2008, the SEC has been working closely with our international regulatory counterparts, including many of you in this room, to coordinate our actions and align our strategies. Nowhere was this more important than in the area of enforcement. Investigations into the causes of this year's unprecedented market volatility, and the extent to which market manipulation might have contributed to it, have taken on exceptional importance as we work to restore investor confidence.”
The SEC has made, on average, more than one request a day for help from foreign regulators and received a similar number of requests from abroad. The SEC is currently working on a dozen possible international sub-prime linked frauds, some major and many involving criminal charges. International regulatory cooperation allows the funds of those under investigation to be frozen so preventing their flight to other jurisdictions. Cox highlighted support from the UK, Spain, Andorra and other jurisdictions.
The SEC has been developing Memoranda of Understanding (MOUs) that go beyond the standard MOU for regulators developed by IOSCO. This extends to the sharing of accounting information, including audit work papers, telephone and internet records, credit card records, travel records, employment information, and corporate records. Regulators would also assist one another in obtaining records of electronic and telephonic communication, as well as testimony, responses to questions, and statements from witnesses. Cox praised the Australian regulators for having agreed such an MOU with the SEC.
Cox said “… robust public enforcement is regularly associated with deeper securities markets around the world, and in fact that it plays just as important a role in maintaining healthy markets as does the entire system of public disclosure”.
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