By Mark J. Astarita, Esq.
We all know that the Internet has made the world smaller, and opened numerous
opportunities for various businesses to conduct business with persons and entities
residing in foreign countries. With those opportunities comes unique challenges
for the financial community, as doing business in a foreign country means complying
with yet another set of securities laws, rules and regulations.
We all know that the Internet has made the world smaller, and opened numerous opportunities for various businesses to conduct business with persons and entities residing in foreign countries. With those opportunities comes unique challenges for the financial community, as doing business in a foreign country means complying with yet another set of securities laws, rules and regulations.
Despite the fact that you do not reside in the foreign country, you need to comply with their regulations regarding the offer and sale of securities. It might be tempting to believe that a US broker-dealer is beyond the reach of a foreign securities regulators, but that is simply not the case, as doing business in a foreign country subjects you to the jurisdiction of that country. This issue is really just theoretical, since the NASD and SEC may consider violation of another country's securities laws a violation of US securities laws.
The NASD has previously released two Notices to Members regarding these issues. The first, NASD Notice to Members 98-91, was titled "NASD Alerts Members To Their Obligations Concerning Cold Calling And Advertising To Persons In The United Kingdom" and was apparently released by the NASD at the request of the securities regulators in the United Kingdom. Two years later a second Notice to Members was released, again reminding members of their obligations in foreign countries. NASD Notice to Members 00-02 - NASD Alerts Members To Their Obligations Concerning Soliciting Business In Foreign Jurisdictions.
On December 10, 2001, the NASD released NASD Notice to Members 01-81 titled "NASD Provides Interpretive Guidance On The Conduct Of Business Abroad." The release is an attempt to provide an overview and interpretation of the NASD's rules regarding overseas operations, and is in a question and answer format, dealing with some of the more common issues in foreign business operations.
Current NASD rules on the topic include:
A careful reading of the Notice, and other comments from the NASD reflect a growing concern with operations in foreign countries. Readers are advised to move carefully into these markets, as violation of the applicable regulations can subject one to civil and criminal prosecution in the foreign country, as well as disciplinary action in the United States.
Copyright 2001, Mark J.
Astarita. All Rights Reserved .Mark J. Astarita, Esq. is a partner
in the law firm of Beam & Astarita, LLC,
and represents financial professionals in a wide variety of matters. He is also
the sponsor of The Securities Law Home Page
and can be reached at (212) 509-6544 or by e-mail at email@example.com.
Nothing herein is intended as legal or financial advice. The law is different in different jurisdictions, and the facts of a particular matter can change the application of the law. Please consult an attorney or your financial advisor before acting upon the information contained in this article.
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