MEMORANDUM 

OF 

UNDERSTANDING 

THE UNrrED STATES 

SECURFI'IES AND EXCHANGE COMMISSION 

COMMODITY FlffURES TRADING COMMISSION 

THE JERSEY RNANCIAL 

SERVICES COMMISSION 

CONCERNING COOPERATION, CONSULTATION 

AND THE EXCHANGE OF INFORMATION 

MAY22, 2002 
The Commodity Futures Trading Commission of the United States and the Securities and 

Exchange Commission of the United States, on the one hand, and the Financial Services 

Commission of Jersey~ on the other hand, recognizing increased international activity in 

futures and securities transactions and the corresponding need for mutual cooperation 

between relevant authorities, have reached the following understanding. 

DEFINITIONS 

For the purposes of this Memorandum of Understanding: 

1. "Authority" means: 

(a) the United States Commodity Futures Trading Commission; 

(b) the United States Securities and Exchange Commission: or 

(c) the Jersey Financial Services Commission. 

2. "Requested Authority" means an Authority to whom a request is made under 

this Memorandum of Understanding. 

3. "Requesting Authority" means an Authority making a request under this 

Memorandum of Understanding. 

4. "Person" means a natural person, unincorporated association, partnership, 

trust, body corporate, or government or a political subdivision, agency, 

instrumentality, or equivalent authority of a government. 

5. "Futures Market" means an exchange or other market, including an over-thecountermarket. for futures contracts that is recognized, supervised, or subject 

to regulation by an Authority. 

6. "Securities Market" means an exchange or other market, including an over-thecounter market, for securities that is recognized, supervised, or subject to 

regulation by an Authority. 

7. II Laws and Regulations" mean: 

(a) for futures contracts, the provisions of the laws ofthe United States and 

Jersey, the regulations promulgated thereunder, and other regulatory 

requirements that fall within the jurisdiction of an Authority, concerning 

futures contracts; and 

(b) for securities, the provisions of the laws of the United States and Jersey, 

the regulations promulgated thereunder, and other regulatory 
requirements that fall within the jurisdiction of an Authority, concerning 

securities. 

8. "Self-Regulatory Organization" means an organization given delegated authority 

by a government to administer or enforce a law, rule, or regulation as it relates 

to a securities or futures matter. 

9. Except as provided in paragraphs 1 through 8, for the purposes of a request for 

assistance made pursuant to this Memorandum of Understanding, the 

Authorities will define terms in accordance with the relevant laws of the 

Requesting Authority's jurisdiction, unless such definition would require the 

Requested Authority to exceed its legal authority, or otherwise would be 

prohibited by the law of the Requested Authority's jurisdiction. In any case 

where such definition of a term would require the Requested Authority to 

exceed its legal authority or otherwise would be prohibited by the law of the 

Requested Authority's jurisdiction, the Authorities will consult in accordance with 

paragraph 17. 

ESTABLISHMENT OF A FRAMEWORK FOR CONSULTATIONS REGARDING 

MATTERS OF MUTUAL INTEREST 

1 0. The Authorities intend to consult periodically about matters of mutual concern. 

Such consultation will be undertaken in the interest of improving cooperation to 

avoid the conflicts that may arise from the application of differing regulatory 

laws, regulations, and practices, and to enhance: the protection of investors and 

customers; the efficiency and integrity of the Futures and Securities Markets of 

the United States and Jersey; appropriate market oversight; and the effective 

performance by the Authorities oftheirrespectivefunctions regarding the Laws 

and Regulations of the United States and Jersey. Such consultations between 

the Authorities may include, but are not limited to, correspondence and other 

exchanges in which the Authorities share investigative analyses, progress, 

procedures, or strategies, and are subject to the confidentiality provisions of 

paragraph 16. 

MUTUAL ASSISTANCE AND THE EXCHANGE OF INFORMATION 

11. General Principles Regarding Mutual Assistance and the Exchange of 

Information 

(a) This Memorandum of Understanding sets forth the Authorities' intent with 

regard to mutual assistance and the exchange of information for the 

purpose of enforcing and securing compliance with the respective Laws 

and Regulations of the Authorities. The provisions ofthis Memorandum 

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of Understanding are not intended to create legally binding obligations 

or supersede domestic laws. 

(b) This Memorandum of Understanding does not limit an Authority to taking 

solely those measures described herein to obtain information necessary 

to ensure enforcement of or compliance with the Laws and Regulations 

applicable in its jurisdiction. In particular, this Memorandum of 

Understanding does not affect any right of any Authority to communicate 

with, or obtain information or documents from, any Person on a voluntary 

basis in the jurisdiction of the other Authority. 

(c) This Memorandum of Understanding does not confer upon any Person 

the right or ability directly or indirectly to obtain, suppress, or exclude any 

information or to challenge the execution of a request for assistance 

under this Memorandum of Understanding. 

(d) The Authorities recognize the importance and desirability of providing 

assistance and information for the purpose of enforcing and securing 

compliance with the Laws and Regulations applicable in their respective 

jurisdictions. However, a request for assistance may be denied by the 

Requested Authority: 

(i) where the request would require the Requested Authority to act 

in a manner that would violate its domestic law; 

(ii) where the request is not made in accordance with the provisions 

of this Memorandum of Understanding; or 

(iii) on grounds of public interest. 

Where a request for assistance is denied, or where assistance is not 

available under its domestic law, the Requested Authority will provide 

the reasons for not granting the assistance and consult pursuant to 

paragraph 17. 

12. Scope of Assistance 

(a) The Authorities will, within the framework of this Memorandum of 

Understanding, provide each other with the fullest assistance 

permissible under the Jaws of the United States and Jersey. Such 

assistance will be provided in order to facilitate: the enforcement of the 

Laws and Regulations applicable to Futures and Securities Markets and 

their participants; market oversight including market and financial 

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surveillance; the granting of licenses, registrations, authorizations, 

waivers, or exemptions for the conduct, supervision, and inspection of 

Persons that are regulated by an Authority; the investigation, litigation, 

or prosecution by an Authority of activity that potentially violates the Laws 

and Regulations applicable m its respective jurisdiction; and any other 

matters that the Authorities deem appropriate. 

(b) The assistance available upon request under this Memorandum of 

Understanding includes, but is not limited to, providing information held 

in the files ofthe Requested Authority; and, if assistance is requested in 

connection with an investigation or proceeding to enforce the laws and 

regulations administered by the Requesting Authority: 

(i) taking statements and the testimony of Persons; and 

(ii) obtaining information and documents from Persons. 

(c) It is the common understanding of the Authorities that any request for 

assistance made by the Commodity Futures Trading Commission or the 

Securities and Exchange Commission pursuant to the Memorandum of 

Understanding that describes any matter that they believe involves acts 

or courses of conduct that created a false or misleading impression as 

to the market in or the price or value of any investment, and which they 

believe were undertaken by any Person for the purpose of creating that 

impression and, thereby, inducing any other Person to acquire, dispose 

of, subscribe for, or underwrite that investment or to refrain from doing 

so or to exercise, or refrain from exercising, any rights conferred by 

those investments, shall provide a sufficient basis for the Jersey 

Financial Services Commission to exercise the powers in Article 29(2) 

or Article 30, as appropriate, of the Financial Services (Jersey) Law of 

1998, subject only to the Jersey Financial Services Commission's 

determination that the preconditions for assistance set forth in Article 33 

of the Financial Services (Jersey) Law of 1998 have been met. 

(d) Where a request for assistance is made pursuant to this Memorandum 

of Understanding, and an Authority does not have the power to provide 

the requested assistance, the Authority will use all reasonable efforts to 

obtain the aid of other governmental agencies in order to provide the 

requested assistance. 

13. Requests for Assistance 

(a) Requests for assistance will be made in writing and will be addressed 

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to the Requested Authority's contact officer listed in Appendix A. 

(b) Requests for assistance will include the following: 

(i) a general description of both the subject matter of the request 

and the purpose for which the assistance or information is 

sought; 

(ii) a general description ofthe assistance, documents, information, 

testimony, or statements sought by the Requesting Authority; 

(iii) any information known to or in the possession of the Requesting 

Authority that might assist the Requested Authority in identifying 

either the Persons believed to possess the information or 

documents sought or the places where such information may be 

obtained; 

(iv) the Laws and Regulations pertaining to the subject matterofthe 

request; and 

(v) the desired time period for the reply. 

(c) In urgent circumstances, requests for assistancet and the response to 

such requests, may be effected by telephone or e-mail, provided such 

communication is confirmed in writing. 

14. Execution of Requests for Assistance 

In accordance with paragraph 12(b), in responding to a request for assistance, 

(a) The Requested Authority will provide requested information held in its 

files. 

(b) The Requested Authority will provide to the Requesting Authority the 

requested information or documents that the Requested ·Authority 

obtains from (i) any Person designated by the Requesting Authority or 

(ii) any other Person who may possess, have custody of, or control over, 

the requested information or documents. 

(c) The Requested Authority will take the testimony or statements of any 

Person involved, directly or indirectly, in the activities that are the subject 

matter of the request for assistance or in possession of information 

relating, directly or indirectly, to the activities that are the subject matter 

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of the request for assistance. The Requesting Authority may, in its 

discretion, request the taking of statements or testimony of designated 

Persons. When requested by the Requesting Authority, testimony and 

statements will be taken under circumstances where a knowingly false 

statement could subject the declarant to criminal penalties. 

(d) Notwithstanding paragraph 14(f), any Person providing a statement 

pursuant to a request for assistance under this Memorandum of 

Understanding will have the right to have counsel present. In addition, 

a representative or representatives of the Requesting Authority may be 

present at the taking of testimony or statements and may prescribe, to 

a designated representative of the Requested Authority, specific 

questions to be asked of any witness. The Requested Authority will 

make a transcript of any testimony or statement it takes on behalf of the 

Requesting Authority. 

Where the Requested Authority grants a request which specifies 

that the law of the State of the Requesting Authority requires the 

opportunity for counsel for the witness or for a party to an 

adjudicative proceeding to pose questions to the witness, the 

Requested Authority will use its best efforts to ensure that such 

an opportunity will be given. 

(e) In addition to participating in the taking of testimony or statements 

pursuant to paragraph 14(c) of this Section, the Requesting Authority 

may submit to the Requested Authority a request, with reasons, that a 

Person or Persons designated by the Requesting Authority be permitted 

to take the testimony of any Person or take a statement of any Person. 

(f) Unless otherwise decided by the Authorities, information and documents 

requested under this Memorandum of Understanding will be gathered 

in accordance with the procedures applicable in the jurisdiction of the 

Requested Authorjty and by Persons designated by the Requested 

Authority. 

(g) Notwithstanding any other provision of this Memorandum of 

Understanding, any Person providing testimony, statements, 

information, or documents as a result of a request for assistance under 

this Memorandum of Understanding will be entitled to all rights and 

privileges applicable in the jurisdiction of the Requested Authority. 

Assertions regarding rights and privileges arising exclusively under the 

laws applicable in the jurisdiction of the Requesting Authority will be 

preserved for consideration by the courts in that jurisdiction. 

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(h) If it appears that responding to a request for assistance under this 

Memorandum of Understanding will involve substantial cost. the 

Requested Authority may, as a condition to executing the request, ask 

the Requesting Authority to make a contribution to such cost in an 

amount agreed upon by the Authorities. 

15. Permissible Uses of Information 

(a) The Requesting Authority may use non-public information furnished in 

response to a request for assistance under this Memorandum of 

Understanding solely: 

(i) for the purpose stated in the requestforassistancewith respect 

to ensuring compliance with or enforcement of the Laws and 

Regulations applicable in the jurisdiction of the Requesting 

Authority, including the legal provisions specified in the request 

and related provisions; and 

(ii) for a purpose within the general framework of the use stated in 

the request for assistance, including conducting a civil or 

administrative enforcement proceeding, assisting in a SelfRegulatory Organization's surveillance or enforcement activities. 

assisting in a criminal prosecution, or conducting any 

investigation for any general charge applicable to the violation of 

the provisions specified in the request where such general 

charge pertains to a violation of the Laws and Regulations 

administered by the Requesting Authority. 

(b) Before using non-public information furnished under this Memorandum 

of Understanding for a purpose other than those stated in paragraph 

15(a), the Requesting Authority must first inform the Requested Authority 

of the intended use. The Requested Authority will advise its views within 

14 days and, if necessary, the Authorities will consult pursuant to the 

provisions of paragraph 17 to discuss the reasons for any denial by the 

Requested Authority over such intended use and the circumstances 

under which the intended use might otherwise be allowed. 

16. Confidentiality 

(a) The Requesting Authority will not disclose non-public information 

received under this Memorandum of Understanding, except as 

contemplated by paragraph 15 or pursuant to a legally enforceable 

demand, or in connection with an adjudicatory action or proceeding 

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brought under the laws applicable in the jurisdiction of the Requesting 

Authority to which the Requesting Authority or its government, or a 

political subdivision thereof, is a party. 

(b) Each Authority will keep confidential, to the extent permitted by law, 

requests made pursuant to this Memorandum of Understanding, 

consultations between the Authorities (including consultations under 

paragraph 1 0), and unsolicited assistance under paragraph 18, unless: 

(i) such disclosure is absolutely necessary to carry out a request; or 

(ii) the other Authority expressly waives such confidentiality. 

(c) Totheextentpossible, the Requesting Authority will notify the Requested 

Authority of any legally enforceable demand for non-public information 

furnished under this Memorandum of Understanding prior to compliance, 

and the Requested Authority will assert such appropriate Jegal 

exemptions or privileges with respect to such information as may be 

available. 

(d) In response to a request by the Requested Authority, and to the extent 

permitted by Jaw, after the Requesting Authority has terminated the 

matter for which assistance has been requested under this 

Memorandum of Understanding, it will, to the extent practicable, return 

to the Requested Authority all documents and copies thereof not already 

disclosed in proceedings referred to in paragraph 15(a) and other 

material disclosing the contents of such documents, other than material 

that is generated as part of the investigative, deliberative, or internal 

analytical process of the Requesting Authority. 

17. Consultation Regarding Mutual Assistance and the Exchange of Information 

(a) In any case of dispute over the interpretation of this Memorandum of 

Understanding, the Authorities will consult each other with a view to 

reaching a mutually acceptable interpretation. 

(b) The Authorities will consult with each other regarding this Memorandum 

of Understanding with a view to improving its operation and resolving 

any matters that may arise. In particular, the Authorities will consult in the 

event of: 

(i) an Authority's denial of a request made by another Authority 

pursuant to this Memorandum of Understanding; 

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(ii) a material change in market or business conditions or in the 

legislation governing the matters set forth in paragraph 7; and 

(iii) any circumstance that makes it necessary or appropriate to 

amend or extend this Memorandum of Understanding in order to 

achieve its purposes. 

(c) The Authorities may agree on such practical measures as may be 

necessary to facilitate the implementation of this Memorandum of 

Understanding. 

(d) Any of the conditions of this Memorandum of Understanding may be 

amended or waived by mutual written consent. 

18. Unsolicited Assistance 

To the extent permitted by the Laws and Regulations of its respective 

jurisdiction, each Authority will use reasonable efforts to provide the other 

Authorities with any information it discovers that gives rise to a suspicion of a 

breach or an anticipated breach of the Laws and Regulations applicable in the 

jurisdiction of the other Authorities. 

FINAL PROVISIONS 

19. Effective Date 

Cooperation in accordance with this Memorandum of Understanding will begin 

on the date of its signing by the Authorities. 

20. Termination 

Cooperation and assistance in accordance with this Memorandum of 

Understanding will continue until the expiration of thirty days after any Authority 

gives written notice to the other Authorities of its intention to discontinue 

cooperation and assistance hereunder. If either the Commodity Futures 

Trading Commission or the Securities and Exchange Commission gives such 

notice, cooperation under this Memorandum will continue with respect to the 

other two Authorities. If any Authority gives a termination notice. the terms and 

conditions of this Memorandum of Understanding will continue with respect to 

all requests for assistance that were made before the effective date of 

notification until the Requesting Authority terminates the matter for which 

assistance was requested. 

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FOR THE COMMODITY FUTURES 

TRADING COMMISSION OF THE 

UNITED STATES: 

mali, 

Date: ,- /1, ,.I)P 

FOR THE SECURITIES AND EXCHANGE 

COMMISSION OF THE UNITED STATES: 

10 

FOR THE FINANCIAL SERVICES 

COMMISSION OF JERSEY: 

Richard P?aii 

Director General 

Date: )l. ~ ~\..