FSA, FINRA Sign Cooperation Agreement

by Glen Shapiro, LawAndTax-News.com, New York

23 September 2010

The United Kingdom Financial Services Authority (FSA) and the United States Financial Industry Regulatory Authority (FINRA) have entered into a memorandum of understanding (MOU) to support more cooperation between the two regulators.

The FINRA is the largest non-governmental regulator for all securities firms doing business in the US, while the FSA regulates the UK financial services industry under the Financial Services and Markets Act. The MOU was said to be aimed at establishing a strong framework for enhancing the ability of the FSA and FINRA to oversee the world's largest securities firms and markets.

The agreement will facilitate the exchange of information on firms and individuals under common supervision, support collaboration on investigations and enforcement matters, and allow further sharing of regulatory techniques, including approaches to risk-based supervision of firms.

There are specific procedures for enforcement matters, which are contained in an appendix to the MOU and contain such matters as the details to be contained in requests for assistance, the grounds for denial of a request, a provision for joint investigations, and the preservation of the rights of a person under investigation within the jurisdiction of the requested authority. The MOU also contains a clause stipulating complete confidentiality for material transmitted from either party.

The FSA and FINRA have, in fact, not only agreed to exchange information with each other on request, but each will also provide information without a prior request from the other, if the first believes it could be of assistance to the other. Both authorities, however, acknowledge in the MOU that they can only provide information if permitted, or not prevented, under applicable laws and regulations in their respective countries.

The agreement was signed on September 15 by Jon Pain, the FSA's Managing Director of Supervision, and the FINRA's Chairman and Chief Executive Officer, Richard Ketchum. It had immediate effect.

"Given the linkages between our markets, it is vital that both regulators cooperate closely with each other," Pain said. "This MOU will enhance the supervision of firms and financial markets in both the UK and the US."

Ketchum added that "to ensure consumer protection and market integrity in today's global market, regulators must work together with key regulatory partners. Under this agreement, the FSA and FINRA will be able to share information more freely and expeditiously in support of the oversight of common firms and investigations into wrongdoing."

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