Roger Saxton, special counsel for Cowley Hearne Lawyers – a member of the world’s largest association of independent law firms, Meritas International – said access to capital and financial markets was a key issue in the free-trade negotiations. He warned that the free-trade agreement could be used by the US Securities and Exchange Commission to gain “backdoor entry” into Australian firms listed on the US stock exchange.
The SEC cannot access or regulate the Australian arm of publicly listed firms, and the Sarbanes-Oxley Act – with new laws on corporate and legal responsibilities – does not apply in Australia. “Australian companies listed in the US are subject to Sarbanes-Oxley in the US,” Mr Saxton said.
“But the US could say, ‘we’ve got to be able to regulate companies that have access to our market and the only way is to enforce our own jurisdiction’. “In other words, ‘if you don’t play by our rules we won’t let you play in our park’. “The SEC is currently negotiating on a country-by-country basis to gain access to companies and to bring prosecutions under Sarbanes-Oxley. Under a free-trade agreement with Australia, it could happen.
“If that happens, Sarbanes-Oxley enforcements could apply in Australia and that could be frightening.” Mr Saxton also claimed that Australian lawyers had “not paid enough attention” to how the Sarbanes-Oxley Act would affect their US clients. “There is a huge, comprehensive reporting requirement on a global scale under Sarbanes-Oxley that must be reported to SEC,” he said.