SEC's Cooperative Arrangements with Foreign Regulators
May 12, 2017
The SEC uses multilateral and bilateral information sharing arrangements — generally known as memoranda of understanding or MOUs — to facilitate consultation and cooperation with its foreign counterparts. MOUs establish clear mechanisms for the exchange of information, including setting forth the terms and conditions for sharing and protecting the confidentiality of non-public information.
These memoranda of understanding are located on our website
What are Arrangements for Enforcement Cooperation?
MOUs for enforcement cooperation facilitate the ability of securities regulators to assist one another in investigations and prosecutions of cross-border securities fraud.
IOSCO Multilateral Memorandum of Understanding
In 2002, the International Organization of Securities Commissions (IOSCO) created a Multilateral Memorandum of Understanding (MMOU), the first global multilateral information-sharing arrangement among securities regulators. Given the MMOU's demonstrated value, IOSCO resolved that by 2013 all IOSCO members should become Appendix A signatories to the MMOU.
Pursuant to the MMOU, signatories agree, among other things, to provide certain critical information, to permit use of that information in civil or administrative proceedings, to onward share information with self-regulatory organizations and criminal authorities, and to keep such information confidential. In particular, the MMOU provides for the following:
- sharing information and documents held in the regulators' files;
- obtaining information and documents regarding transactions in bank and brokerage accounts, and the beneficial owners of such accounts; and
- taking or compelling a person's statement or, where permissible, a person's testimony.
The MMOU has significantly enhanced the SEC's enforcement program by increasing and expediting the SEC's ability to obtain information from a growing number of jurisdictions worldwide. Moreover, the MMOU has created incentives for jurisdictions that lack the legal ability to engage in effective information sharing to enact legislation that will enable them to do so.
IOSCO Enhanced Multilateral Memorandum of Understanding
In 2016, IOSCO created an Enhanced Multilateral Memorandum of Understanding (EMMOU) to further raise standards for information sharing among securities and derivatives regulators. The SEC became a signatory under EMMOU Article 3(3) in May 2019. The EMMOU (Articles 3(2) and 3(3)) broadens the types of assistance IOSCO signatories commit to provide each other. New types of assistance for signatories under Articles 3(2) and 3(3) include:
- compelling a person’s attendance and, where permissible, taking or compelling that person’s statement or testimony under oath, in accordance with the rights and privileges afforded by the laws and regulations applicable in the jurisdiction of the requested authority;
- obtaining auditing information, including audit work papers, communications, and other information relating to the audit or review of financial statements; and
- freezing or sequestering funds/assets, if permissible, and where not available, providing assistance in the form of guidance with legal procedures to freeze or sequester funds/assets.
Additionally, between those counterparts who are signatories under EMMOU Article 3(3), the assistance available also includes:
- obtaining subscriber identification records from telephone companies and ISPs; and
- obtaining recordings of telephone conversations or other electronic communications maintained by regulated financial institutions.
Bilateral Memoranda of Understanding
Before the establishment of the IOSCO MMOU, the SEC signed bilateral information sharing MOUs with the securities authorities of twenty different countries. Bilateral MOUs have proven crucial to investigations undertaken by the Commission's enforcement staff, and, as such, the SEC considers these bilateral arrangements to be an excellent supplement to the information sharing mechanism of the IOSCO MMOU. In light of the IOSCO MMOU, SEC staff now strongly recommends the negotiation of bilateral MOUs only if a foreign securities authority is empowered to provide assistance beyond that required by the IOSCO MMOU, such as the ability to compel testimony or the gathering of Internet service provider, phone and other records other than bank, broker, and beneficial owner information on behalf of the requesting authority.
What are Arrangements for Regulatory Cooperation?
MOUs for regulatory cooperation establish clear mechanisms for consultation, cooperation and the exchange of supervisory information. Such mechanisms eliminate the need to address supervisory information-sharing issues on an ad hoc basis and address new information-sharing needs created by global financial conglomerates and cross-border affiliated markets.
The SEC's MOUs for regulatory cooperation can vary in scope and purpose and, to date, the SEC has entered into MOUs that cover information sharing and cooperation related to:
- affiliates within a financial group subject to consolidated supervision by the SEC and/or a foreign authority;
- firms registered with both the SEC and a foreign authority;
- the oversight of markets in the US and a foreign jurisdiction affiliated through a common ownership structure; and/or
- the sharing of non-public issuer-specific information relating to the application of International Financial Reporting Standards (IFRS) by dually-listed companies.
What are Arrangements for Technical Assistance?
These MOUs express a general intent of the SEC and its counterparts to consult and cooperate in all aspects of securities regulation, in particular through the provision of technical assistance by the SEC to the foreign jurisdiction. Today, the SEC has a comprehensive program for affording technical assistance and conducting training programs around the world, a description of which can be found at: http://www.sec.gov/about/offices/oia/oia_emergtech.htm.
What are Terms of Reference for Bilateral Dialogues?
Bilateral dialogues between the SEC and its counterparts are aimed at:
- identifying and discussing regulatory issues of common concern;
- improving cooperation and the exchange of information in cross-border securities enforcement matters; and/or
- continuing and expanding upon the existing program of training and technical assistance provided by the SEC to the foreign regulator.
The dialogues include both regular meetings and ad hoc information exchange at the staff level and between high-level representatives of the SEC and the foreign regulator.