SEC, Australian Authorities Sign Mutual Recognition Agreement
ASIC Chairman Tony D'Aloisio, Senator Nick Sherry, and SEC Chairman Christopher Cox exhibit their mutual recognition agreement at a Washington D.C. news conference.
Securities and Exchange Commission Chairman Christopher Cox, the Australian Minister for Superannuation and Corporate Law - Senator Nick Sherry, and Australian Securities and Investments Commission (ASIC) Chairman Tony D'Aloisio today entered into a mutual recognition arrangement between the SEC, the Australian government, and ASIC. The mutual recognition arrangement provides a framework for the SEC, the Australian government, and ASIC to consider regulatory exemptions that would permit U.S. and eligible Australian stock exchanges and broker-dealers to operate in both jurisdictions, without the need for these entities (in certain aspects) to be separately regulated in both countries.
SEC Chairman Cox said, "Today's signing marks a significant milestone in our partnership with Australia to reduce the barriers that U.S. and Australian investors now face in investing in each other's markets. The framework we are establishing is designed to ensure that the significant protections afforded to investors under each nation's regulatory system are maintained and enhanced. An important part of this arrangement is strengthening the ability of the SEC and ASIC to cooperate with each other in our enforcement and supervisory efforts, thereby enhancing the integrity of both our markets."
ASIC Chairman D'Aloisio said, "ASIC welcomes this opportunity to be included in the first mutual recognition arrangement with the SEC and looks forward to strengthening the connections between the USA's and Australia's capital markets. This arrangement reflects the importance of promoting the freer flow of capital in providing wider investment opportunities for Americans and Australians where sound market integrity and investor protection regulatory regimes are in place."
Through this mutual recognition arrangement, the SEC and the Australian authorities agree to consider providing exemptions to exchanges and securities brokers in one another's countries. Once implemented, these exemptions could permit U.S. stock exchanges and broker-dealers regulated by the SEC, subject to conditions imposed by the Australian authorities, to offer their services to Australian wholesale investors and financial firms without being subject to most ASIC regulation. Likewise, eligible Australian stock exchanges and broker-dealers regulated by ASIC, subject to conditions imposed by the SEC, could offer their services to certain types of U.S. investors and firms without being subject to most SEC regulation.
Chairman D'Aloisio also noted, "This will give both Australian and U.S. investors easier and more competitive access to each other's markets, and will offer Australian market participants and U.S. broker-dealers new ways of doing business with clients in each other's markets."
Ethiopis Tafara, Director of the SEC's Office of International Affairs, added, "Over the past several years and continuing to this day, there has been increased interest by U.S. investors in foreign securities. The SEC-Australia mutual recognition arrangement recognizes this investor interest and serves as a pilot exercise in building a cross-border regulatory infrastructure to address the increasing globalization of our securities markets."
An integral component of the mutual recognition arrangement is an Enhanced Enforcement Memorandum of Understanding (MOU) and a new Supervisory MOU that will allow for considerably greater regulatory and enforcement cooperation and coordination between the SEC and ASIC. These MOUs will apply broadly to all U.S. and Australian market activity and not just those related to the mutual recognition arrangement.
Under the arrangement, both the SEC and ASIC will retain jurisdiction to pursue violations of their respective anti-fraud laws and regulations.
Following today's signing of the mutual recognition arrangement, the SEC and Australian authorities will begin considering regulatory exemptions under the arrangement as they are submitted to the two agencies. It is expected that the process of considering the initial applications for exemptions for approval by the authorities could be concluded in early 2009. (Press Rel. 2008-182)
Commission Sustains Disciplinary Action Against Geoffrey Ortiz
The Commission has sustained NASD disciplinary action against Geoffrey Ortiz of Los Angeles, California, a former registered representative of UBS Financial Services, Inc., an NASD member. The Commission also sustained NASD's imposition of a bar from association with any NASD member for Ortiz's misconduct.
The Commission upheld NASD findings that Ortiz forged or caused the forgery of customer initials on account application forms, submitted false information to UBS and provided false information to NASD in response to an information request. In approving NASD's sanctions, the Commission observed that Ortiz's forgery-related violations showed "a disregard of his responsibilities to his customers and his employing [NASD] member." Moreover, his provision of false information to NASD's investigators "subvert[ed] NASD's ability to perform its regulatory function and protect the public interest." The Commission found that NASD's sanctions were neither excessive nor oppressive. (Rel. 34-58416; File No. 3-12889)
In the Matter of William Clark Davis
On August 25, the Commission instituted settled administrative proceedings against William Clark Davis (Davis), who was the president and CEO of Continental Capital Corporation, the parent company of Continental Capital Securities, Inc. and Continental Capital Investment Services, Inc., both broker-dealers that were registered with the Commission during the relevant time period. Davis was a registered representative with Continental Capital Investment Services, Inc. from March 2001 until March 2003.
In the order, the Commission finds that on February 19, 2008, the Honorable James Carr of the United States District Court for the Northern District of Ohio entered a permanent injunction order against Davis, permanently enjoining him from future violations of Sections 5 and 17(a) of the Securities Act of 1933 and Section l0 (b) of the Securities Exchange Act of 1934 and Rule l0b-5 thereunder, in the civil action entitled United States Securities and Exchange Commission v. William Clark Davis, Civil Action Number 3:03CV7332 (N.D. Ohio). The Commission's complaint alleged that beginning in May 2001, Davis: (1) defrauded investors by purchasing promissory notes on their behalf, without their knowledge or consent; (2) liquidated securities in customer brokerage accounts and used the proceeds to purchase promissory notes; (3) executed the transactions by having customers sign blank letters of authorization (LOAs), by misrepresenting to customers the purpose of the LOAs, and by forging customer signatures on LOAs; (4) had a financial interest in all of the companies issuing promissory notes; and (5) sold unregistered securities.
The Commission's order, which is based on the entry of the permanent injunction against Davis, bars Davis from association with any broker or dealer, pursuant to Section 15(b) of the Securities Exchange Act of 1934. Davis consented to the issuance of the Order without admitting or denying the Commission's findings, except he admits the Commission's jurisdiction over him and the subject matter of the administrative proceedings, and the entry of the permanent injunction in the civil action. (Rel. 34-58418; File No. 3-13143)
Delinquent Filers' Stock Registrations Revoked
The registrations of the stock of Respondents Viragen, Inc., and Viragen International, Inc., have been revoked. Each had repeatedly failed to file required annual and quarterly reports with the Securities and Exchange Commission. Thus, each violated a crucial provision of the federal securities laws that requires public corporations to publicly disclose current, accurate financial information so that investors may make informed decisions. The revocations were ordered in an administrative proceeding before an administrative law judge. (Rel. 34-58419; File No. 3-13101)
In the Matter of Robert L. Carver and Robert L. Carver, II
On August 25, the Commission issued an Order Instituting Administrative Proceedings Pursuant to Section 15(b) of the Securities Exchange Act of 1934 and Section 203(f) of the Investment Advisers Act of 1940, Making Findings, and Imposing Remedial Sanctions (Order) against Robert L. Carver and Robert L. Carver, II. The Order finds that on August 1, 2008, judgments were entered against Robert L. Carver (Carver) and Robert L. Carver, II (Carver II), permanently enjoining them from future violations of Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933, Sections 10(b) and 15(a) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940, in the civil action entitled SEC v. Robert Louis Carver, et al., Civil Action Number, 8:08-CV-627 in the United States District Court for the Central District of California.
The Order further finds that the Commission's complaint alleged that Carver and Carver II made fraudulent misrepresentations and omissions in the unregistered offer and sale of securities in Lincoln Funds International, Inc., Brookstone Capital, Inc., and three biotechnology funds created for making biotechnology-related investments. In addition, the Order finds that the complaint alleged that Carver and Carver II misappropriated investors' funds, while acting as investment advisers, which constituted fraud on the biotechnology funds. Additionally, the Order finds that the complaint alleged that Carver and Carver II acted as unregistered broker-dealers.
Based on the above, the Order bars Carver and Carver II from association with any broker, dealer, or investment adviser. Carver and Carver II consented to the issuance of the Order without admitting or denying any of the findings in the Order except as to the Commission's jurisdiction over them, the subject matter of these proceedings, and the entry of the judgments in the civil injunctive action. (Rels. 34-58423; IA-2771; File No. 3-13146)
Immediate Effectiveness of Proposed Rule Changes
A proposed rule change filed by International Securities Exchange to retire a pilot program to list and trade options on the iShares Emerging Markets Index Fund (SR-ISE-2008-66) has become effective pursuant to Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of August 25. (Rel. 34-58400)
A proposed rule change filed by the Municipal Securities Rulemaking Board relating to revisions to the Series 51 Examination Program (SR-MSRB-2008-06) has become effective under Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of August 25. (Rel. 34-58406)
Proposed Rule Change
The Boston Stock Exchange filed a proposed rule change (SR-BSE-2008-42) under Rule 19b-4 relating to the appointment of market makers on the Boston Options Exchange facility. Publication is expected in the Federal Register during the week of August 25. (Rel. 34-58408)
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