Australian Bankers' Association
17 October 2003
VIA E-MAIL: firstname.lastname@example.org
Mr. Jonathan G. Katz
Dear Mr. Katz,
Re: Proposed Rule Relating to Foreign Bank Exemption from the Insider Lending Prohibition of Exchange Act Section 13(k) (File No. S7-15-03)
The Australian Bankers' Association (ABA) represents 23 banks authorised to carry on banking business in Australia. ABA's membership includes Australia and New Zealand Banking Group Limited, HSBC Bank Australia Limited, National Australia Bank Limited and Westpac Banking Corporation, each of which has securities listed or has a related entity whose securities are listed on the New York Stock Exchange. The ABA's membership also includes other banks that are issuers in the United States, for example the Commonwealth Bank of Australia, that have their securities registered under the US Securities Exchange Act of 1934 (the Exchange Act). These members are subject to many of the requirements of the Sarbanes-Oxley Act of 2002, including Section 402.
The ABA appreciates the opportunity to respond to Release No. 34-48481, International Series Release No. 1272 (the Proposing Release), in which the US Securities Exchange Commission (the Commission) solicited comments on a proposed Rule 13k-1 (the Proposed Exemption) that would exempt qualified foreign banks from the insider lending prohibition under Section 13(k) of the Exchange Act, as added by Section 402 of the Sarbanes-Oxley Act.
We support the Commission's efforts to craft an appropriately balanced exemption for foreign banks from Section 402 of the Sarbanes-Oxley Act. Since Section 402 became effective, we have had the opportunity in consultations with our members to learn about the principal implications that Section 402 has had for banks organised in Australia. Banks have been required to review, at their own cost and inconvenience, and in certain cases amend, many practices and credit policies permissible under the related party provisions in the Australian Corporations Act 2001 that have existed for many years. These related party provisions are discussed in the Sullivan & Cromwell Letter (defined below). Compliance with the restrictions of Section 402 of the Sarbanes-Oxley Act has added difficulty and complexity for ABA members, in circumstances where the related party provisions in the Australian Corporations Act 2001 already provided an extensive level of protection by regulating these transactions in an accountable, auditable regulatory framework.
We support the recommendations with respect to the Proposed Exemption contained in the comment letter dated October 17, 2003 submitted by Sullivan & Cromwell LLP (the Sullivan & Cromwell Letter). We also confirm that the description of Australian law and banking practice contained in the Sullivan & Cromwell Letter is accurate in all material respects; in our opinion, it is unlikely that the laws and regulations of Australia will be amended to satisfy the requirements of subparagraph (b)(2) of the Proposed Exemption. Accordingly, we urge the Commission to consider broadening the Proposed Exemption so that it would, as a practical matter, be more readily available to banks organised in Australia that do, or that wish to, access the capital markets in your country.
* * *
The Australian Bankers' Association would be happy to discuss any questions the Commission may have with respect to this letter. Any questions the Commission may have with respect to this letter may be directed to David Bell, Chief Executive Officer, phone (612) 8298-0401 or e-mail email@example.com, or Ian Gilbert, Director, Retail Regulatory Policy, phone (612) 8298-0406 or e-mail: firstname.lastname@example.org. The fax number for Messrs. Bell and Gilbert is (612) 8298-0432.
cc: Giovanni P. Prezioso
Alan L. Beller
Paul M. Dudek