MEMORANDUM OF UNDERSTANDING I The United States The Australian Securities Commission I I Concerning Consultation and Cooperation in the Administration and Enforcement of Securities Laws October 20, 1993 ~~ 08 m! ~EIls~I!?Q . BETWEEN THE UNITED 8-8 8ECORIIFIBSBHD EXCEAlla CONHI881019 AND TEE AUSTBALIAU SECURITIES COBMI881019 COHCEBHIHQ ~8~1019 auD COOPE~TIO~ xu TBE ~NI8TIULZIOrJZLHD ESPORCEMSHT OP 88CURI2IES mW8 October 20, 1993 I - The United States Securities and Exchange Commission and the Australian Securities Commission, recognizing the increasing international activity in the securities markets and the corresponding need for mutual cooperation as a means for improving their effectiveness in administering and enforcing the securities laws of their respective countries, have reached the following understanding: Clause 1: Definitions 1. For the purposes of this Memorandum of Understanding: (a) wAuthorityn means: (i) the Securities and Exchange Commulssion of the United States: or (ii) the Australian Securities Commission. The United States Securities and Exchange Commission (SEC)was established pursuant to the Securities Exchange Act of 1934. The SEC is the U.S. national regulator responsible for implementing, administering anB enforcing the Securities Act of 1933; the Securities Exchange Act of 1934: the Public Utility Holding Company Act of 1935; the Trust Indenture Act of 1939; the Investment Company Act of 1940; and the Investment Advisers Act of 1940, which regulate the issuance and trading of securities in the U.S. and the activities of securities professionals and investment companies. The Australian Securities Commission (ASC) is the national corporate and securities regulator established under the Australian Securities Commission Act 1989. The ASC is responsible for administering and enforcing the Corporations Law and the Australian Securities Commission Act 1989 which provide for the regulation of corporations and the securities and futures industries. The ASCs ability to exercise wercive powers on behalf of foreign regulators is governed by the.Mutua1 Assistance in Busin@ss Regulation Act 1992. (b) -requested Authoritym means an Authority to whom a request is made under this Xemorandum of Understanding. (c) nrequesting Authoritym means an --a Authority making -request under this Memorandum of Understanding. (d) *personm includes a natural person, unincorporated association, partnership, or body corporate, government or political subdivision, agency, or instrumentality of a government. (8) missuermmeans a person who issues or proposes to issue any securities. (f) investment businessesm means any business which involves, in whole or in part, effecting transactions in securities for the accounts of others; buying and selling securities for ones own account; advising othars for compensation, either directly or through publications or listings, as to the value of securities or as to the desirability of investing in, purchasing or selling securities: engaging on behalf of an issuer of securities in matters relating to the issuance, registration, exchange and transfer of such securities; the management, promotion, offer or sale of any investment company or collective investment scheme; or equivalent activities conducted by persons or entities; (g) securities processing businesses* means a clearing corporation or securities transfer agent. (h) nsecurities market* means an exchange or other market, including an over-the-counter market, for equity securities, debt securities, bonds, options or any other securities that is recognizd, regulated or sup-ervised by the Authorities: and (i) laws or regulationsm means: (i) the provisions of the la, or regulations promulgated thereunder, of the United States; and (ii) the provisions of the laws, or regulations promulgated thereunder, of Australia, including those laws, and.regulations or other delegated legislation, promulgated thereunder, of any Australian State or Territory, which are from time to time administered by the Australian Securities Commission; concerning: (a) insider trading, misrepresentation or the use of fraudulent, deceptive, or manipulative practices in connedion with the offer, purchase or sale of any security or the conduct of investment businesses; (b) the duties of persons to camply with periodic reportingrequirementsorrequirementsrelating to changes in corporate control; (c) acquisitions of and notifications of interests in securities (including pow- to control the votingrights attachedto securities and powers todispose of securities), and associations and agreements in relation to securities and control over bodies corporate: -, - (a) the making of a false or misleading statement or any material omission in any application or report made to the Authorities; (e) the duties of persons, issuers or investment businesses to make full and fair disclosure of information relevant to investors; (f) the duties of investanent businesses and securities processing businesses pertaining to their financial, operational or other requirements and their duties of fair dealing in the offer and sale of securities, the execution of transactions and the conduct of their businesses; and (g) the financial and other qualifications of those engaged in, or in control of, issuers, investment businesses, securities markets or securities processing businesses. 2. The parties will consult, pursuant to Clause 9, in the event of a dispute over the meaning of any term used in this Memorandum of Understanding. clau se 2. Estab 1 ish8ent of a Pramwork for Conmltatio~ peuardina Matters of Mutual Interest The Authorities intend to engage in consultations about matters of mutual interest designed to further enhance cooperation and to protect investors by ensuring the stability, efficiency, and integrity of the securities markets of the .United Sat&= -and- Australia. Such consultations will also enhance the exercise of market oversight functions and the administration of United States and Australian securities laws. The purpose of such consultations is to assist in the development of mutually acceptable approaches for strengthening the securities markets of the United States and Australia, while avoiding, whenever possible, conflicts that may arise from the application of differing regulatory practices. a e 3- 3 1; This Memorandum of Understanding sets forth a statement of intent of the Authorities to establish a framework for mutual assistance and to facilitate the exchange of information between the Authorities to enforce or secure compliance with any law or regulation, as that term is defined herein, and does not impose any legally binding obligation on the Authorities or supersede domestic law. This Memorandum of Understanding does not, however, create 5 any enforoeable rights, and does not modify or supersede any laws or regulations in force in, or applying to, the United States or Australia. 2. The entry into effect of this Memorandum of Understanding does not affect any right of either Authority arising under the law of its State or any other arrangement to take measures otherwise than as provided herein to obtain infomation necessary to ensure compliance with, or to enforce, the laws or regulations of its State. In particular, this Wemorandum of Understanding dpes --. .not affect any right of either Authority to communicate with, or obtain information or documents from, any person, on a voluntary basis, in the State of the other Authority. 3. Where one Authority wishes to make enquiries of, or seek information from, a person within the territory of another Authority on a voluntary basis, the enquiries will be conducted in accordance with arrangements agreed between the Authorities. 4. This Memorandum of Understanding is intended solely for mutual legal assistance between the ~uthorities. No provision of this MOU shall be construed as conferring the right to ask for, or challenge, the execution qf a request for assistance upon any person other than those designated herein. 5. The Authorities recognize the need for and the desirability of providing mutual assistance and exchanging information to assist each other in securing compliance with the laws or regulations of their respective States. The requested Authority may, however, deny assistance requested under this Memorandum of Understanding on the ground that: (a) provision of the assistance would be contrary to the national or public interest or the law of the State of the requested Authority; or (b) tpe request is not in accordance with the provisions of this Memorandum of Understanding. Cl1 ., -- 1. The Authorities will provide the fullest mutual assistance, within the framework of this Memorandum of Understanding. Such assistance will be provided to facilitate the administration and enforcement of the laws or regulations applicable to securities. Such assistance may h provided notwithstanding that the type of conduct described in the request for assistance would not constitute a violation of the laws or regulations of the State of the requested Authority. 2. Assistance available under this Memorandum of Understanding may include: (a) providing access to information in the files of the requested Authority: (b) taking the testimony and statements of persons; (c) obtaining information and documents from persons; and (d) conducting compliance inspections or examinations of investment businesses, securities processing businesses and securities markets. e 5: eats for LLclrriatanoo 1. Requests for assistance will be made in writing and addressed to the requested Authoritys contact officer listed in Appendix A. 2. A request for assistance will specify the following: (a) a general description of both the subject matter of the request and the purpose for which the information and/or testimony is sought: (b) a general description of the assistance, infognation, , - documents or testimony of persons sought by the requesting Authority: (c) information in the possession of therequesting Authority that might assist the requested Authority in identifying the persons or entities believed by the requesting Authority to possess the information sought, or the places where such information may be obtained; (d) the legal provisions pertaining to the matter that is the subject of the request; (e) the desired the period for the reply; and (f) information inthe possession of the requesting Authority that supports an inference that the subject matter of the request concerns a breach of the law administ&red by the requesting Authority. 3. In urgent circmstances, a request for assistance and a reply to such a request may be effected by summary proceduree or by means of communication other than the exchange of letters, provided that they are confinned in the manner prescribed in this Clause. plause 6: Exeaution of Remueat@ 1. Access to information held in the files of the requested Authority will be provided upon the request of the requesting ., - Authority. 2. The requested Authority will, in response to a request, take the testimony of persons involved, directly or indirectly, in the activities underlying the request, or holding information that may assist in carrying out the request. The requesting Authority may, in its discretion, request the taking of the testimony or statements of specific persons. The requested Alithority also may require the production of other evidence from any other person or persons designated by the requesting Authority. 3. The testimony of persons will be taken in accordance with the laws and practices of the State of the requested Authority. Any person providing information or evidence as a result of a request made under this Memorandum of Understanding will be entitled to all of the rights and protections of the laws of the State of the requested Authority. Where assertions are made regarding other rights and privileges arising exclusively pursuant to the law of the State of the requesting Authority, the Authorities will consult to determine the appropriate way to proceed. 4. When requested by the requesting Authority, testimony or statements will be taken under oath or affirmation and a transcript will be made. In addition, a representative of the requesting Authority qy be present at the taking of testimony or statements and may prescribe specific questions to be asked of any witness. 5. When requested by the requesting Authority, an inspection or examination will be conducted of the books and record?-of-an-. investment business or its custodian or agent, a securities market or a securities processing business. In addition, a representative of the requesting Authority may be present at the inspection or examination and, subject to approval by the requested Authority, may participate in conducting that inspection or examination. 6. In addition to assisting in the taking of testimony or statements pursuant to paragraph 4, or an inspectionor examination pursuant to paragraph 5 of this Section, the requesting Authority my submit to the requested Authority a request, with reasons, that a person or persons designated by the requesting Authority be permitted to conduct the testimony or take a statement of any person, or conduct an inspection or examination. (a) The request may be granted, modified or denied by the requested Authority in its discretion. The requested Authority may impose such conditions on the participation of the requesting Authority as it deems appropriate. (b) Where a request specifies that the laws of the State of the requesting Authority require the 0pportUnity for counsel for the witness or any party to the proceeding, to pose questions to the witness, the requested Authority will use its best efforts to ensure that such an opportunity will be given. (c) Clause 9 applies to the denial of a request referred to in this Clause. -, - C 0 : 1. The requesting Authority may use the information furnished pursuant to this Memorandum of Understanding solely: (a) for the purposes stated in the request, including ensuring compliance with or enforcement of the laws or regulations of the requesting Authority specified in the request, and related provisions; and (b) for related purposes, including conducting a civil or administrative enforcement proceeding, assisting in a self-regulatory enforcement proceeding, conducting or assisting in a criminal prosecution, or conducting any investigation related thereto for any general charge applicable to the violation of the provision specified in the request. 2. To use the information furnished for any purpose other than those stated in paragraph 1 of this Clause, the requesting Authority will first inform the requested Authority of its intention and provide the requested Authority the opportunity to oppose such use. The requested Authority will raise its objections to such use, if any, within 14 days of receipt of the requesting Authoritys notice. If the requested Authority opposes such use of the information the Authorities agree to consult pursuant to Clause 9 concerning the reasons for the objections. ~la~se Confidagtialitv of ~eaucrs- 8: 1. To the extent permitted by law, except for disclosures -. --- in accordance with Clause 7, or those necessary for the furtherance of the request: (a) each Authority will keep confidential requests made under thisNemrandum of Understanding, thecontents of such requests, and any other matters arising during the operation of this Memorandum of Understanding, including consultations between the Authorities and unsolicited assistance; and (b) the requesting Authority will keep confidential any information received pursuant to this Memorandum of Understanding. 2. Except as contemplated by Clause 7, the requesting Authority will not offer the information to, and will use its best efforts to ensure that it is not obtained by, any other person. Unless otherwise agreed, in the event that any other person obtains such information the requesting Authority will use its best efforts to ensure that such information is not used by that person ih any way that involves disclosure to any other person. 3. The requesting Authority will notify the requested Authority of any legally enforceable demand for information prior to complying with the demand and will assert such appropriate legal exemptions or privileges with respect to such information as may be available. -, - 4. In response to a request by the requested Authority and to the extent permitted by law, as soon as the requesting Authority has terminated the matter for which assistance has been requested under this Memorandum of Understanding, it will return to the requested Authority all documents and copies thereof not already disclosed in proceedings referred to in Clause 7 and other material disclosing the contents of such documents, other than material generated as part of the deliberative or internal analytical processes of the requesting Authority, which may be retained. ga aae 9- t t g 1. The Authorities will keep the operation of this Memorandum of Understanding under continuous review and will consult with a view to improving its operation and resolving any matters which may arise. In particular, the Authorities will consult upon request in the event of: (a) a denial by one Authority of, or opposition by one Authority to, a request or proposal made by the other Authority pursuant to this Memorandum of Understanding; or (b) a change in market or business conditions, or in the laws gnd regulations of the State of either Authority, or any other development which makes it necessary to amend or extend this Memorandum of Understanding in order to achieve its purposes. -. - 2. In cases where the requested Authority is the SEC, denial of a request under Clause 3(5) (a) will be made by its Commission after consultation with relevant officials wimin the United States Government, and in cases where the requested Authority is the ?SC, such a denial will be made by its Commission, or by the Australian Attorney-General, or his or her delegate (nAttoraey-General*), in consultation with the ASC. If the Attorney-General denies assistance, the ASC will forward to the SEC the reasons given by the Attorney-General (if any) for such denial. 3. The Authorities may determine such practical measuxes as may be necessary to facilitate the implementation of this Memorandum of Understanding. 4. Any of the terms of this Memorandum of Understanding may be amended, relaxed or waived by mutual consent. glause 10: Vnsoliaited Assistgggg To the extent permitted by law, each Authority will use reasonable efforts to provide the other Authority with any information it discovers that gives rise to a suspicion of a breach, or anticipated breach, of the laws or regulations of the other Authority. Ca u If it appears to the requested Authority that it will incur -, - substantial costs in responding to a request for assistance under this Memorandum of Understanding, the requested Authority and the requesting Authority will establish a cost sharing arrangement before continuing to respond to such request for assistance. Clause 12: Effective Date This Memorandum of Understanding will be effective from the date of its signature by the Authorities. This Memorandum of Understanding will continue in effect until the expiration of 30 days after either Authority gives written notice to the other Authority of its intention to terminate the Memorandum of Understanding. If either Authority gives such notice, this Memorandum of Understanding will continue to have effect with respect to all requests for assistance that were made before the effective date of notification until the requesting Authority terminates the matter for which assistance was requested. DATED this 20th day of October 1993 in Washington, D.C. UNITED STATES SECURITIES AUSTRALIAN SECURITIES AND EXCHANGE COMMISSION COMMISSION United States Securities and Exchange Commission 450 Fifth Street, N.W. Washington, D. C. 20549 U.S.A. Attention: Director, Office of International Affairs Tel: (202) 272-2306 PAX: (202) 504-2282 Australian Securities COrtmis~i~n Norwich House 6-10 OIConnell Street Sydney NSW 2001 AUSTRALIA Attention: Director, Policy & International Tel: (612) 911-2075 Fax: (612) 911-2634
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