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Saturday, March 11 2017

The NASAA and the SEC Enter into a MOU Regarding Non-Public Information

On February 17, 2017, the North American Securities Administrators Association (“NASAA”) and the Securities and Exchange Commission (“SEC”) entered into a Memorandum of Understanding (“Memorandum”) regarding the treatment of non-public information. The purpose of the Memorandum is to assist the NASAA and the SEC in evaluating and monitoring amended exemptions at the federal and state level.

Two of the key inquiries addressed by the Memorandum are, “What constitutes non-public information?” and “Who will determine the status of information as public or non-public?” The Memorandum defines “non-public information” as “. . . data, information, or reports submitted, received, or shared among the Parties pursuant to [the Memorandum of Understanding].” In the event that a question arises as to the nature of information being shared, the party receiving the information will contact the party providing the information in an effort to determine whether the information is public or non-public. The party receiving the information will then treat it as non-public if that is determined to be the case by the party providing the information.

One significant provision of the Memorandum details that when one of the parties provides non-public information to the other party, the receiving party will presume that the information provided is confidential and will continue to maintain the confidentiality of the information. The confidentiality of the information is not required to be maintained only if the providing party designates so in writing.

The Memorandum outlines who may receive non-public information. Only officials and employees of the party receiving the information may possess it if they need to know the information in the performance of their official job duties. The Memorandum also details that the SEC may use non-public information provided to it “. . . from NASAA to inform any investigation, examination, proceeding, or civil action.” However, in executing the Memorandum, the SEC agreed that it will not initiate an action or proceeding based on the non-public information unless it has given prior notice to, and received written consent from the NASAA.

For additional information regarding how the Memorandum addresses requests for non-public information from third parties, including Congressional Committees, click here.