# Australian Shares and a US Person



## csd440 (Feb 27, 2015)

Today I received an email from my brokerage company about a new share purchase plan, and in big red letters up the top was "Not to be sent to the US, not available to US persons". 

Now I was born in Australia, have owned shares in Australia since I was 17. I became a dual US citizen when I was 32. 

I went an googled australian share purchase and US person and up came company after company that restricts US persons from participating in Share purchase plans. 

What the hell!!!! So I'm wondering just how far FATCA has impacted financial accounts of Aussies out there. I know about this happening to peoples bank accounts in European countries. Now I'm getting real scared. I have known and despised FATCA for a while but today was a real slap in the face. I can't even invest in my own country because I stupidly became a US person.


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## BBCWatcher (Dec 28, 2012)

Both Australia (yes, even Australia) and the United States have securities regulations. Among other things, the regulations can limit where and how shares are marketed and sold. For example, there are many countries that limit foreign ownership, especially in certain industries. Australians -- well, not too many of them, anyway -- and other foreigners cannot buy shares in U.S. airlines, as an example.

Here in Singapore I recently received a document from a financial institution listing all the restrictions on who can do what concerning a particular stock issue. I'm afraid that Australians had certain limitations in Singapore participating in that issue. This isn't only an American thing, and it certainly isn't FATCA either -- this stuff is decades old. (I can't remember what the limitations were off hand, but there were several rather dense paragraphs of text to read.)

So now that you understand that lots of developed countries have securities regulations that affect their citizens in lots of different places, what are you trying to do in investment terms? What would you like to accomplish, specifically?


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## BBCWatcher (Dec 28, 2012)

To elaborate slightly, one fairly common reason an Australian company would not be able to sell shares to U.S. persons is because their shares are also traded on a U.S. exchange, typically NASDAQ or the NYSE, typically as ADRs. For regulatory or exchange reasons, or both, Americans are directed to the U.S. exchange. The company is able to raise more capital through both exchanges, and Americans can still invest in the company at least as easily. Sometimes an Australian company has to keep investors, shares, and exchanges separate in order to limit foreign ownership due to Australian law, but they still want to raise as much capital as legally permitted in the U.S.

It's not clear from your description that you are barred from that issue, by the way. Those possessing multiple citizenships frequently have to dig a little deeper to figure out whether such language bars them or not -- basically whether they mean "OK if you have citizenship #1 (even if you have #2)" or "not OK if you have citizenship #2 (whether or not you have #1)." It's just one of the "occupational hazards" of multiple citizenships, and that's not anything new. In fact, sometimes it isn't even about citizenships, e.g. U.S. citizens possessing no other citizenship who were imprisoned in World War II internment camps solely because they had Japanese ancestry.


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## csd440 (Feb 27, 2015)

Thanks that does ease my mind. I felt like the walls were closing in all of a sudden. I didn't have any plans per se, I just want to be able to keep what I do have already open. I own shares and of course have various bank accounts but was imagining the worst if they found out I was a US citizen suddenly everything would be closed on me. It was bad enough when I left the US and had planned to keep some of my accounts there open but when they found put I had moved they forced me to close my bank and brokerage accounts.


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## BBCWatcher (Dec 28, 2012)

Financial institutions aren't often _required_ to do business with you. Generally they aren't allowed to _discriminate_ in certain ways (e.g. race, religion, gender), and generally it's against their business interests to turn away many customers for other reasons, but beyond that, there aren't too many "must serve" rules in the world. These aren't, generally, regulated monopolies or government-provided services. They're private enterprises. OK, too often with socialized losses, but that's a different issue. 

HSBC Jersey, for example, is right now busy closing the accounts of non-residents of Jersey, not because any government is requiring them to do so but because they've reassessed their business interests/risks and decided it's not in their business interests to maintain those accounts. (Most of these account holders happen to be residents and citizens of the U.K.) That's HSBC's right to make that business decision for HSBC. Obviously it inconveniences HSBC Jersey account holders -- they have to find a new financial institution -- but life occasionally comes with inconveniences, I'm afraid. Some of them are now facing the risk they'll have to pay the taxes they've illegally evaded, but "that's a different issue." 

Another example: stock initial public offerings (IPOs) in the United States. The "traditional" way that individuals have been permitted to participate is if they have a preferred relationship with the underwriting broker. For example, if Goldman Sachs is handling the IPO, traditionally they put their top clients ahead of everyone else in being able to purchase IPO shares first. Is that discrimination? You bet it is. Not _illegal_ discrimination, but it's a notable example of how a financial institution can refuse to do business with you, much like an exclusive (or "exclusive") nightclub with a rope line.

Don't take it personally. Fortunately the world is big enough, and the financial industry competitive enough, that there will always be someone prepared to hold your money. If it isn't "New Aussie Company Incorporated" -- probably a rubbish company anyway  -- there will be other options.


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