ABSTRACT

Unregulated markets have an irresistible allure for securities traders. However much regulators try to clamp down on domestic activities there remain international dealings beyond the jurisdiction of a single state.' Canadian stock promoters, for instance, discovered the charms of United States markets in the mid-1940s when they began to feel the regulatory pinch at home. Securities trading in the US was then more tightly controlled than in Canada, but the long-distance telephone was rapidly creating a continent-wide market. American regulators found it difficult to force foreigners to comply with their laws, while Canadian authorities complained of lack of jurisdiction or of problems of proof in dealing with offenders. Eventually United States officials became sufficiently annoyed that the problem threatened to disrupt the broader relations between the two countries.