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

The Harmonization of Securities Laws

IOSCO

"[O]ther countries didn't have the financial resources; they didn't have the institutional knowledge; they didn't have the principles. It was sort of a love/hate relationship. The U.S. has all the answers, but why do they have to be in charge of everything?"

- February 4, 2008 Interview with Sara Hanks

The predecessor entity to the International Organization of Securities Commissions (IOSCO) was founded in 1974 and consisted of securities regulators from North and South America. Its purpose was to discuss joint cooperation on securities regulations and to create international standards. In 1984, regulators from Indonesia, France, Korea, and the United Kingdom joined IOSCO. IOSCO was part of the effort to harmonize securities laws of various countries and to help developing countries with market regulation. It also was another way to spread U.S.-style securities regulation.

Membership in IOSCO was at first primarily U.S., Canadian, and Latin American. Irving Pollack, a former SEC Commissioner, remembers that it began with one-on-one contacts with Latin American officials who were trying to create securities commissions and then "everybody else wanted to get in." Pollack understood the interest of other countries in IOSCO "[as] demonstrat[ing] to the world that the SEC's regulatory system was one that was probably the best in the world."(91)

IOSCO was not particularly active until the 1980s. In 1986, SEC Chairman John Shad gave a speech in Versailles in which he urged IOSCO to play a larger role. SEC Chairman David Ruder also attended an IOSCO conference in Rio de Janeiro with the specific intent of sending the message that the SEC was interested in IOSCO and international securities regulation.(92) Linda Quinn, SEC Director of Corporation Finance, was also active in creating various IOSCO working groups where regulators would meet at least quarterly to make recommendations regarding how to better integrate markets and create uniform standards.

As IOSCO's activity increased, its membership grew to include Europe and Japan, but it continued to be dominated by the SEC. Even with that, the SEC was working towards a more uniform and international set of laws which would facilitate the ability of foreign issuers to tap the U.S. capital markets and U.S. issuers to raise capital abroad.

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