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The Imperial SEC? - Foreign Policy and the Internationalization of the Securities Markets, 1934-1990

Internationalization of the Securities Markets

The SEC Grapples with Internationalization

Throughout the 1970s, what came to be known as the "internationalization of the securities markets" was clearly on the SEC's agenda, driven by removal of the IET and larger economic trends. In 1973, the SEC created an Office of International Corporate Finance, "in recognition of the increased internationalization of capital markets and the securities business."(72) The office was responsible for offerings by U.S. companies abroad, offerings by foreign issuers in the United States, the drafting of special disclosure forms for foreign issuers, and the creation of rules and regulations regarding foreign issuers and other market professionals.

During the SEC's 1977 Major Issues Conference, one session focused on the question: "What Can and Should the Commission Do to Maintain Investor Protection and Still Encourage the Internationalization of the Securities Markets."(73) Some of the major international issues presented included the scope of disclosures required of foreign issuers, whether the SEC should support or discourage foreign issuers from accessing U.S. capital markets, and whether foreign brokers should be regulated by the SEC.

As the conference discussion paper stated, the SEC had always taken the position that there should not be "a double standard of disclosure" for foreign issuers.(74) Yet it also recognized that U.S. accounting standards represented the greatest obstacle to foreign issuers accessing U.S. capital markets. In contrast to statements that some Commissioners and staff were making, the paper noted that, except for certain accommodations that had already been made, the SEC did not intend to make further concessions.

Different Commissioners and staff members seemed to be conflicted about what the SEC's position regarding internationalization should be. Some believed that the SEC needed to be more flexible in order to encourage internationalization. Others took the position that foreign and domestic issuers should be treated exactly the same.

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