% * % COMMUNICATION RESULT REPORT ( OCT.16.2003 4:00PM) * * 11 REASON FOR ERROR y ES1) HANG UP OR LINE £-2) B E=3) NO ANSHER Ea) 8 Rhy FAX COVER SHEET To: Mr. Giovanni P, Prezioso General Counsel Fax Number: 202-942-9625 From: Dan Marcus General Counsel Date: 10/16/03 ‘Number of pages (including cover sheet): 4 ‘Comments:VIA FACSIMILE Lee H. Hamilton, October 16, 2003 VICE CHAIR Ce Mr. Giovanni P. Prezioso Mex Cleland General Counsel Securities and Exchange Commission Frederick F Fielding 450 Fifth Street, N.W. Jamie S. Gorelick Washington, D.C. 20549 Slade Gorton. Dear Mr. Prezioso: Joha F Lehman , Tam writing in response to Melinda Hardy’s letter of October 15, 2003, which Timothy J. Roeiner concemed our request for reports of investigations into pre-9/11 trading the SEC received from foreign governments. Ms. Hardy’s letter stated the SEC’s position that the Memorandums of Understanding (MOUs) pursuant to which the SEC received these reports prohibit their disclosure to our Commission ee without consent of the governments of origin. Upon review of the MOUs provided as examples by the SEC, we disagree with this interpretation and request that the SEC reconsider it. James R. Thompson In our view, the MOUs at issue plainly allow the reports to be shared with our ‘Commission. For example, the MOU with Germany allows information received thereunder to be used as follows: (a) for the purpose stated in the request with respect to ensuring compliance with, or enforcement of, the laws or regulations of the requesting Authority... and (b) for purposes within the general framework of the use stated in the request, including conducting a civil or administrative proceeding, assisting in a self-regulatory organization's surveillance or enforcement activities, assisting in a criminal prosecution, or conducting any investigation related thereto for any criminal charge applicable to the violation of the provisions specified in the request. 301 7 Street SW, Room 5125 Washington, DC 20407 7 202.331.4060 ¥ 202.296.5545 worw.9-1 Leommission.govMr. Giovanni P. Prezioso October 16, 2003 Page 2 ‘As you know, our Commission has been tasked by Congress with investigating all facts and circumstances related to the 9/11 attacks, a mandate which includes any effort to profit from those attacks through illicit securities trading activity. Our investigation of “insider trading” in advance of 9/11 falls squarely within the “general framework of the use” for which the information was provided — investigating illegal trading by persons with knowledge of the terrorist attacks. Indeed, we do not agree with the position that a foreign government would allow its information to be used by a self-regulatory ‘organization — a non-government actor ~ to conduct “surveillance activities” related to insider trading, but would deny the same right to a federal Commission tasked by Congress and the President to investigate the same illicit trading. The SEC’s contrary interpretation appears to rest on a wooden and restrictive reading of the MOUs. We cannot agree with the SEC’s position that we are not entitled to the information because our Commission “had not yet been created” at the time of the SEC’s requests for information. This fact is irrelevant under the MOUs, which do not designate specific entities which can receive the information, Instead, they allow sharing of the information “for purposes within the general framework” of the request. We believe that our investigation of insider trading in advance of 9/1 falls directly within this general framework. We are sensitive to the need for the SEC to maintain strong relations with its foreign counterparts. In the course of our investigation, we have often sought extremely sensitive information that departments and agencies of the U.S. government have received from foreign sources. Much of this information concemed vital matters of national security obtained from foreign law enforcement and intelligence agencies. Every other agency from whom we have sought such information has found a way to provide it to us without compromising its relations with its foreign counterparts, We hope and expect the SEC can do the same, and our reading of the MOUs suggests no reason any foreign government would object to our receiving the information. Although we appreciate the SEC’s stated efforts to obtain the relevant consents, we fear the delays inherent in the process may prevent the necessaryMr. Giovanni P. Prezioso October 16, 2003 Page 3 approvals from being received in time for us to fulfill our statutory mandate. For this reason, I urge you to reconsider your position and make the reports available to us immediately. Please feel free to contact me to discuss this matter further. Meriies faniel Marcus General Counsel Sincerely, cc: Richard Humes, Esq. Melinda Hardy, Esq,