Crackdown on frauds helped by sharing between markets

The Securities Commission believes its efforts to crack down on insider trading and securities fraud are being aided "every day" by growing information sharing among capital market watchdogs around the world.

The International Organisation of Securities Commissions (IOSCO), which is meeting in Wellington this week, aims to have most of its 182 members signed up to its Memorandum of Understanding information sharing agreement by 2010.

IOSCO adopted the MOU in early 2002 in the aftermath of the September 11 attacks, partly in response to growing concerns about the use of securities markets for criminal purposes.

The MOU has 30 signatories, including New Zealand, while a further nine jurisdictions are committed to the agreement but are prevented from signing by domestic legislation.

Jane Diplock, chair of IOSCO's executive committee as well as the New Zealand Securities Commission, said the commission used the MOU "all the time, every day".

"We here in New Zealand have used it significantly in a number of court actions we've taken".

That included obtaining information from US regulators to be used in the Tranz Rail insider trading case.

In that instance, the MOU had been "extremely successful" but it had also been used in many other enforcement matters to gain access to information from other jurisdictions that would have been far more difficult to obtain through regular court process.

Diplock said boiler room scams remained "a major concern" for IOSCO members around the world.

"Certainly we have work being done on those on an ongoing basis.

"They're very difficult to eradicate and they seem to plague many different jurisdictions."

The Securities Commission's website carries a number of warnings about boiler rooms that have targeted New Zealand investors.

Diplock said IOSCO was also concerned by a lack of cooperation from some jurisdictions in relation to requests for information.

"Some of these jurisdictions have been involved in transactions that were a part of collapses that have concerned the world, such as Parmalat and Enron.

"We are definitely taking steps to move forward with those jurisdictions."

Meanwhile, although more than half of IOSCO members had applied for membership of the MOU and a number of others were preparing applications, all the current signatories were developed economies.

Emerging economic giant China had yet to sign up to the MOU but had indicated it was keen.

"There is a huge energy to modernise all sorts of frameworks including that for securities," said Diplock.

IOSCO planned to conduct a training programme in Shanghai at the end of April focusing on the agreement.