bpp wrote:I'm intimately familiar with the banking and investing problems faced by US citizens who live outside the US, and I appreciate ACA's efforts to improve the situation, but on the narrow question of SEC rules I think that letter of theirs has a factual error. They state: "SEC restrictions and regulations prohibit U.S. citizens to invest in certain securities which have not been filed with the SEC. Of course, these restrictions apply to all Americans, not just overseas Americans." I am pretty sure there is no blanket rule against US citizens buying non-SEC registered securities.
Here 'prohibit' seems to be shorthand for 'not actually banned, but so horribly complex, expensive, punitively taxed, and full of potential for damage that nobody in their right mind would consider it'. Massively punitive tax and reporting rules and regulation, both for funds and individuals that might hold them, are a de-facto ban even when not an actual ban. Here is an example of boilerplate found in pretty well every UK fund prospectus:
The Shares have not been and will not be registered under the US Securities Act of 1933, as amended. Subject to certain exceptions, the Shares may not be offered or sold in the US or offered or sold to US Persons.
So SEC fund rules don't ban non-US funds from marketing to US persons, they just make it so self-destructive that no fund would bother. Likewise, FATCA is not actual currency control, but has the same effect nevertheless. Congress commonly finds it easier to accomplish protectionist goals through punitive taxes rather than outright control. Sure you could do it, but would you with all the mines and traps the IRS has set for you? Spend a week or more of your 'free time' each and every year filling out ridiculously complex forms to have between 40% and 100% of your gains taken from you, or have a life? Your choice.
bpp wrote:As for SEC protections in general extending to Americans living overseas, all I can say is that the SEC told me they consider that outside their jurisdiction.
As a non-American living outside America (that is, an NRA) but working for a US company the SEC definitely does consider me inside their jurisdiction when it comes to trading in my company stock.
bpp wrote:So I went with Japanese banks and brokerages -- which was never a problem until the QI and now FATCA rules started closing off that avenue as well... Basically, all of the lower-cost options are closed off to me now, and I'm just praying things don't get any worse than they already are. (Though I confess to pessimism on that score.)
Congress is stuck on stupid with FATCA. You might be interested in reading this recent paper from the architect of FATCA, in which he admits, albeit grudgingly and with bad grace, that it has some 'problems' that are particularly acute for Americans overseas, and then offers a few half-hearted partial 'solutions'. Of course these problems result from his not thinking FATCA through properly. It remains to be seen if any of his 'fixes' occur. (Like you I am pessimistic.)