Disclosure Requirements - U.S.A

26.04.2013

Disclosure Category: 2

Disclosure requirements - funds and equities

For U.S. investment funds, U.S. regulations allow the issuer(s) and/or fund manager(s) to get information about the investors, the investors identity and their holding. For equities, the same possibility exists for the issuer but disclosure could be objected by the investor.

Consent

Customers holding U.S. funds and/or U.S. securities consent and are hereby deemed to consent to disclosure and to the appointment of the requestor as their attorney-in fact, under power of attorney to collect from CBL such information as is required to be disclosed. Customers who do not want to grant such authority to CBL should refrain from holding such securities in their account with CBL.

Background and legal basis

In both cases below, such disclosure requests are possible subject to the company having issued the securities which have opted for such disclosure request in its by laws.

  1. Request from fund manager(s), based on rule 22C-2 from the SEC. The funds are entitled to obtain beneficial owner information at all times. CBL's depository, based on the input received from CBL, will submits the required information on behalf of CBL to the funds.
    In cases of non-disclosure, there is a risk of fees to CBL that will then be passed on to its customers.
    The funds can instruct the financial intermediary (that is, CBL's custodian) to restrict or prohibit further transactions on the fund shares for a specific shareholder who has been identified by the funds as having engaged in transactions of fund shares (directly or indirectly through the intermediary's account) that violate policies established by the funds for the purpose of eliminating or reducing any dilution of the value of the outstanding securities issued by the funds.
  2. Request from issuer(s), based on rule 14C-2 from the Securities Exchange Commission (“SEC”). The disclosure request on equities is initiated by the issuer and, subsequently, CBL's depository will submit the relevant information to the issuer based on the input received from CBL. The shareholder can elect to object to such a disclosure request and accordingly CBL will reply to such request on a case by case basis subject to specific prior customer consent.
    No specific information is available on the risk incurred in cases of non-compliance by shareholder/investor.

Obligation to report threshold crossings - equities

All investors, resident or non-resident, who acquire a 5% or greater share of one class of an equity issue must disclose the specifics of the transaction directly to the SEC within 10 calendars days of acquisition (Rule 13D of the Securities Exchange Act 1934). No intermediation from CBL is required.

Every investment manager that exercises investment discretion with respect to account holding Section 13(F) securities, as defined in Rule 13, having an aggregate fair market value on the last trading day of any month of any calendar day of at least USD 100 million shall file a report on form 13F with the SEC within 45 calendar days after the last day of such calendar year and within 45 calendar days after the last day of each of the first three calendar quarters of the subsequent calendar year (Rule 13F-1 of the Securities Exchange Act 1934). No intermediation from CBL required.

Sanctions

No specific information is available on the risk incurred in cases of non-compliance with the obligation to report threshold crossings. Please refer to the Securities Exchange Act 1934.

Disclosure Category: 3

U.S. Treasury's large position record-keeping and reporting rules

Background and legal basis

Under the Government Securities Act Amendments of 1993, the U.S. Treasury may call for Large Position Reports from those entities whose reportable position in a given Treasury security exceeds a certain threshold.

Treasury will provide notice requesting large position reports by issuing a press release and subsequently publishing a notice in the Federal Register.

Large position reports must be received by the Federal Reserve Bank of New York before 12:00 noon Eastern time on the fourth business day after the issuance of the Treasury press release calling for large position information. The actual date on which reports are due will be provided in the press release.

Large position reports must be filed with the Government Securities Dealer Statistics Unit of the Federal Reserve Bank of New York. Further details on completing the reporting requirement can be found at the TreasuryDirect website.

Who is subject to the large position rules?

With the exception of foreign official organisations and the Federal Reserve Banks, the Treasury's large position record-keeping and reporting rules apply to all entities, foreign and domestic, that may control a reportable position in a recently issued Treasury security. This includes but is not limited to: government securities brokers and dealers; registered investment companies; registered investment advisers; custodians, including depository institutions, that exercise investment discretion; hedge funds; pension funds; insurance companies; foreign banks; and foreign affiliates of U.S. entities.

Custodians are not required to report on such positions if they do not have the authority to exercise control (that is, investment discretion) over the purchase, sale, retention or financing of specific Treasury securities.

Under the Treasury's large position rules, neither a custodian nor an executing broker-dealer is obligated to inform its customers of these record-keeping and reporting requirements.

The Government Securities Act Amendments of 1993 specifically provide that the Treasury will not be compelled to disclose publicly any information required to be kept or reported. In particular, such information is exempt from disclosure under the Freedom of Information Act.

Sanctions

No specific information is available on sanctions incurred in cases of non-compliance with the U.S. Treasury's large position record-keeping and reporting rules. Please refer to the Government Securities Act Amendments of 1993.