US Securities and Exchange Commission (SEC) Chairman William Donaldson called on Monday for greater co-operation with EU market regulators to help prevent damaging corporate scandals like the one at Parmalat.
Closer ties would also help the United States and the European Union avoid clashing on financial markets legislation to the benefit of international investors and issuers.
"Parmalat made us all realise that fraud knows no national boundaries," Donaldson, in Brussels to meet EU officials, told a conference on regulatory issues.
He said the multibillion euro accounting scandal engulfing Italy's largest food firm showed, like past episodes on both sides of the Atlantic, that regulators had to work together.
"The lesson from Parmalat is a lesson for the need of co-operation between United States regulators and regulators around the world. That is exactly what we are calling for now."
Parmalat slid into insolvency last month with an accounting hole that investigators say could now exceed 10 billion euros ($12.6 billion).
Donaldson, due to meet European Internal Market Commissioner Frits Bolkestein later on Monday, said he would propose a formal dialogue between the SEC and the Committee of European Securities Regulators, which helps the European Commission draft EU financial laws and the vital implementation guidelines.
The United States reacted swiftly to US corporate failures at Enron and WorldCom by shaking up its company law with the Sarbanes-Oxley Act of July 2002.
But some of its provisions clashed with other countries' laws, for example, by obliging non-American auditors to be placed under the supervision of a US accounting watchdog at an extra cost.
Addressing EU complaints, the United States has trimmed some administrative requirements and is willing to co-operate with EU regulators over inspections of European audit firms.
"As the SEC began to implement the legislation, it became clear that some of the provisions may conflict with the law of home jurisdictions of foreign participants in US markets such as multinational issuers and audit firms," Donaldson said.
The United States and the EU have been at odds on several other financial regulatory issues.
These include rules preventing EU exchanges having trading screens in the United States, divergent accounting rules and EU demands for tighter oversight of US financial holding firms.
Donaldson said he could not yet EU exchanges trade directly in the United States. The SEC would consider possible exemptions for non-US actors only after it had completed an analysis of the market structure, he said.
"Allowing exchanges and their listed companies to access US markets without registration (with the SEC) would result in disparate regulatory treatment of exchanges and companies already registered with the SEC, as compared with their non-US counterparts," he argued.
Bolkestein's spokesman Jonathan Todd said the Commission was disappointed the United States had not changed its stance on trading screens despite months of intense EU-US talks.
Donaldson said he was confident planned new US rules for the supervision of financial holding companies would meet European Commission requirements for supervising large financial entities, spelled out in the so-called conglomerate directive.
"We have responded by proposing rules that create a regime for holding company oversight by the SEC of large investment banking holding companies," Donaldson said.
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