| 12 June 2007
As I write this, many of the great and good of the US investment fraternity
are putting on their white shirts and Brooks Brothers suits (no chinos for them)
to sit around a table and discuss mutual recognition.
No, that doesn't mean using masonic handshakes to spot each other at cocktail
parties, it means that they're trying to stop alien snake-oil salespeople offloading
attractive but dangerous financial products onto defenceless American investors.
SEC Chairman Christopher Cox explained that: "Innovations in technology have
eliminated many barriers to cross-border access between US and foreign markets.
Consequently, it is imperative that the Commission consider the implications
of increased US investor demand for foreign investment opportunities."
Or in other words, US brokerages are worried that better international communications
allow US citizens to buy shares or bonds from foreign dealers, bypassing SEC
restrictions and domestic firms.
So the SEC, which at least in this context can best be thought of as a kind
of trade union of investment professionals, is getting together with its fellows
in other countries to create a regulatory cartel which will allow a few whiter-than-white
dealers into a magic circle while casting everyone else into outer darkness.
'Selective mutual recognition would involve the SEC permitting certain types
of foreign financial intermediaries to provide services to US investors under
an abbreviated registration system, provided those entities are supervised in
a foreign jurisdiction under a securities regulatory regime substantially comparable
(but not necessarily identical) to that in the United States,' says Mr Cox.
The problem nowadays with defining what is acceptable is that everything else
quite rapidly becomes criminal. That limits investor choice. OK, it also limits
damage to foolish, greedy and ignorant investors, but there is a better way
of doing that, called the market, which doesn't limit choice.
Luckily, there is something called the Internet, which works in the direction
of greater choice. But the owners of Internet brokerages will be well advised
to stay away from the US, or Mr Cox will have them thrown into gaol!
You have been reading an entry on the following blog:
Penelope Wise
Penny Wise but not Pound Foolish! But remember: I am not offering investment advice. My comments are just for your general information; I do not recommend investments, and you should take professional advice before entering any investment contract.
Penelope blogs on investment and financial services around the world: mainstream and alternative. Contact: penny@lowtax.net
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