SEC Enhances Oversight of Non-U.S. Advisers Through Cooperation Arrangements

January 1, 0001


On July 19, 2013, the Securities and Exchange Commission (SEC) announced the establishment of supervisory arrangements with financial regulators of the member states of the European Union (EU) and the European Economic Area (EEA) as part of long-term strategy to improve the oversight of certain entities in the asset management industry that operate across national borders. The memoranda of understanding (MOUs) provide a framework for supervisory cooperation and exchange of information between the SEC and the EU/EEA member state regulators. The 25 EU member-state regulator signatories to the MOUs include Belgium, Germany, Ireland, Italy, Luxembourg, Spain, and the United Kingdom. The EEA signatories to the MOUs are regulators from Iceland, Liechtenstein and Norway.

These supervisory cooperation arrangements will enhance the SEC staff’s ability to share information about certain entities in the asset management industry, such as investment advisers and fund managers. Such information may include routine supervisory information, as well as the information that regulators need to monitor risk concentrations, identify emerging systemic risks, and better understand a globally-active regulated entity’s compliance culture. The MOUs also facilitate the ability of the SEC and its counterparts to conduct on-site examinations of registered entities located outside of the United States.

The SEC first established international regulatory cooperation arrangements with its overseas counterparts more than two decades ago to facilitate information sharing regarding enforcement matters. Such arrangements exist between the SEC and 80 jurisdictions. The recent supervisory MOUs expand and further cement the SEC’s relationships with international regulators and the capabilities of joint examination and enforcement efforts. As result, foreign investment advisers and fund managers are more likely to face examination and enforcement from both their local regulators and the SEC.

* * *

O’Melveny & Myers is available to advise domestic and foreign investment advisers and fund managers about U.S. securities compliance. For questions, please contact Heather Traeger at (202) 383-5232, Kris Easter at (202) 383-5364, or Matthew Cohen at (202) 383-5179.

This memorandum is a summary for general information and discussion only and may be considered an advertisement for certain purposes. It is not a full analysis of the matters presented, may not be relied upon as legal advice, and does not purport to represent the views of our clients or the Firm. Heather Traeger, an O'Melveny partner licensed to practice law in the District of Columbia and Texas, Kris Easter, an O'Melveny counsel licensed to practice law in the District of Columbia and Texas, and Matthew Cohen, an O'Melveny associate licensed to practice law in the District of Columbia and California, contributed to the content of this newsletter. The views expressed in this newsletter are the views of the authors except as otherwise noted.

Portions of this communication may contain attorney advertising. Prior results do not guarantee a similar outcome. Please direct all inquiries regarding New York's Rules of Professional Conduct to O’Melveny & Myers LLP, Times Square Tower, 7 Times Square, New York, NY, 10036, Phone:+1-212-326-2000. © 2013 O'Melveny & Myers LLP. All Rights Reserved.