Litigation

SEC Charges Hedge Fund Manager and Bond Salesman with Insider Trading of Credit Default Swaps

On May 5, 2009, the SEC charged a bond salesman and a hedge fund manager with insider trading involving credit default swaps ("CDS"). The case, the first ever involving insider trading of CDS, is a reminder that the antifraud provisions of the Securities Exchange Act of 1934 (the "Exchange Act") reach CDS relating to securities and any fraudulent activity, including insider trading and market manipulation, with respect to such CDS.

The defendants of the civil action filed in the Southern District of New York are Jon-Paul Rorech, a bond and CDS salesman employed by Deutsche Bank Securities Inc., and Renato Negrin, a portfolio manager employed by Millennium Partners, L.P., a hedge fund adviser. According to the SEC, Rorech was privy to material non-public information about a restructuring of a proposed bond offering by VNU N.V., a Dutch media holding company, which was expected to increase the price of the CDS on the VNU bonds. Rorech allegedly tipped Negrin about the contemplated restructuring, and Negrin then purchased CDS on VNU bonds for a Millennium-advised hedge fund. After the restructuring was publicly announced, Negrin closed out the CDS position for an approximately $1.2 million profit.

The complaint charges Rorech and Negrin with violations of the anti-fraud provisions of the Exchange Act and seeks disgorgement of unlawful trading profits and civil monetary penalties.

According to the SEC press release announcing the charges, "[t]he case was handled by the SEC Enforcement Division's Hedge Fund Working Group, which is investigating fraud and market manipulation by hedge fund investment advisers." The release indicated that the SEC is stepping up enforcement efforts with respect to hedge funds, stating that "[t]he SEC already has brought more enforcement actions involving hedge funds in the first four months of this year than all of last year."

SEC Charges Reserve Fund Founder and Son with Fraud

On May 5, 2009, the SEC charged Bruce Bent, the founder of the Reserve Primary Fund (the "Primary Fund") and his son, as well as the Primary Fund's manager and distributor, with fraud in misleading investors about the Primary Fund's vulnerability following the bankruptcy of Lehman Brothers Holdings, Inc.  The Primary Fund "broke the buck", meaning its net asset value fell below $1.00 per share, when the value of the $785 million of Lehman securities the fund held plummeted upon Lehman's bankruptcy filing in the early morning of September 15, 2008.

The complaint alleges that, in the two days following the Lehman bankruptcy, the Bents failed to provide material information to the Primary Fund's investors, board of trustees and rating agencies.  According to the SEC, in an effort to prevent a run on the fund, the defendants misrepresented that the Primary Fund's manager would provide credit support to protect the $1.00 net asset value.  The defendants also allegedly deceived the Primary Fund's board about the volume of redemption requests and market values for the Lehman securities.  The Primary Fund only announced that it had broken the buck in the afternoon of September 16, 2008, triggering liquidation of the fund and dozens of lawsuits by investors against the fund, its manager and the Bents.

The SEC's complaint charges the defendants with violations of the Exchange Act and the Investment Advisers Act of 1940 (the "Advisers Act").  In addition, the complaint seeks an order pursuant to the Investment Company Act of 1940 (the "Investment Company Act") and the Exchange Act compelling a pro rata distribution of remaining fund assets.

SEC Sanctions Adviser for Diligence Failure on Bayou Hedge Fund

On April 22, 2009, the SEC charged New York-based investment adviser Hennessee Group LLC ("Hennessee") and its principal, Charles J. Gradante, with violations of Section 206(2) of the Advisers Act for failing to perform key elements of the due diligence review it had advertised to clients that it would perform before recommending investing in the now-collapsed hedge fund Bayou Group LLC ("Bayou"). The SEC also found that Hennessee and Gradante failed to adequately investigate red flags that came to their attention when they were monitoring Bayou on behalf of their clients.

Hennessee is a hedge fund consultant that recommends hedge funds for client investment and monitors investments on its clients' behalf. According to the SEC's order, Hennessee regularly informed clients that it would not recommend an investment in a hedge fund that did not satisfy each element of its "Five Level Due Diligence Process." That process included (1) a request for data on the hedge fund's historical returns; (2) a face-to-face interview with the fund manager; (3) a detailed review and analysis of the fund's investment portfolio, trading practices and risk management discipline; (4) an on-site visit to interview key personnel, examine the fund's technology operations, discuss the portfolio/trading analysis and address any remaining diligence issues and (5) a reference and background check of the fund's manager.

The SEC found, however, that Hennessee and Gradante failed to conduct the advertised diligence. Rather than conducting the "portfolio/trading analysis" element on the basis of third-party prime-brokerage reports, Hennessee relied entirely on Bayou's "uncorroborated representations and purported rates of return. . . provided during its initial gathering phases." Nor did Hennessee verify that Bayou's relationship with its auditor was independent. The SEC charged that Hennessee and Gradante did not adequately inquire about a rumored conflict of interest reported by a Hennessee client that a Bayou principal was affiliated with Bayou's outside audit firm. Although Gradante emailed the Bayou principals and asked them to "go on the record" to "nip this [rumor] in the bud," he took no steps to verify Bayou's response even though Bayou's response contradicted information in Hennessee's files.

Hennessee collected over $500,000 in advisory fees from approximately 40 clients who invested $56 million in Bayou as a result of Hennessee's recommendation. Hennessee's clients' money was lost or squandered by Bayou's principals, who defrauded their investors by fabricating the fund's performance in client account and year-end financial statements. As reported in the February 15, 2008 Investment Management Regulatory Update, the Bayou principals have pleaded guilty to conspiracy and fraud charges and are currently serving jail terms.

Section 206(2) of the Advisers Act prohibits any transaction, practice, or course of business which operates as a fraud or deceit upon any client or prospective client. Hennessee's disclosure violations provided the grounds on which the SEC brought Section 206(2) sanctions. Notably, the SEC did not find that Hennessee and Gradante had an independent duty to investigate Bayou. Hennessee and Gradante did, however, owe "fiduciary duties to their clients to not misrepresent the services that they were providing and to disclose all material departures from the representations they made to their clients."

Without admitting or denying the SEC's charges, Hennessee and Gradante agreed to a censure to cease and desist from committing or causing further violations, to adopt policies to ensure adequate oral and written disclosure to clients and prospective clients regarding Hennessee's process for evaluating, selecting and monitoring hedge funds, to maintain a written manual setting forth such policies and procedures and to pay approximately $814,644.12 in disgorgement and penalties. They also agreed to provide copies of the SEC's order to all current and prospective clients for the next two years.

A pending private action against Hennessee may indicate that clients may have a more difficult time than the SEC in recovering from investment advisers. In August 2007, South Cherry LLC ("South Cherry"), a Hennessee client that had invested $1.15 million in Bayou on Hennessee's recommendation, sued Hennessee, Gradante and principal Elizabeth Lee Hennessee for violating Section 10(b) of the Exchange Act as well as breaching their investment advisory contract and their fiduciary duties. In dismissing the complaint, the Southern District of New York court found that "[e]ven if using professionals' self-imposed standards against them to prove fraud were acceptable, Hennessee's alleged failure to conduct promised due diligence would still fall short of alleging the requisite scienter because the allegation fails to 'show that the defendants acted with fraudulent intent.'" The court also found that the alleged oral advisory contract was unenforceable under New York's statute of frauds and held that the breach of fiduciary duty claim was preempted by the Martin Act, "which provides the New York Attorney General with the sole discretion to investigate securities violations within or from the state of New York." The court also held that South Cherry could not frame its breach of fiduciary duty claim as a violation of the Advisers Act, noting that "it is well-settled that 'no implied private right of action for damages exists under Section 206.'" This case is now on appeal to the Second Circuit.

It is worth noting that the SEC, unlike a private litigant, need not prove scienter to succeed in a fraud action against an investment adviser. As the SEC explained in its Hennessee order, "negligence suffices for liability" under Section 206(2).

Eighth Circuit Espouses New Excessive Fee Standard for Mutual Funds

On April 8, 2009, the U.S. Court of Appeals for the Eighth Circuit broke with Second Circuit precedent on the issue of how courts should analyze whether fees that an investment adviser charges registered investment companies are "excessive" under Section 36(b) of the Investment Company Act. The decision in Gallus v. Ameriprise Financial, Inc., No. 07-2945, 2009 U.S. App. LEXIS 7382 (8th Cir. Apr. 8, 2009), comes in the wake of the U.S. Supreme Court's grant of certiorari to review another excessive fee case, Jones v. Harris Associates L.P., 527 F.3d 627 (7th Cir. 2008), in which the Seventh Circuit also diverged from Second Circuit precedent on the standard for determining whether fees charged to registered investment companies by an investment adviser are excessive. As reported in the April 7, 2009 Investment Management Regulatory Update, the Supreme Court will hear Jones during its next term, which commences on October 5, 2009.

Section 36(b) of the Investment Company Act assigns the adviser of a registered investment company fiduciary duties with regard to its receipt of compensation from the company. In Gallus, the plaintiff shareholders of certain mutual funds managed and distributed by Ameriprise Financial, Inc. ("Ameriprise") alleged that Ameriprise had breached this duty by (i) basing fee negotiations on the fees charged by other mutual fund advisers rather than on Ameriprise's costs and profits, (ii) charging the plaintiffs significantly higher fees than it charged institutional, non-fiduciary clients for comparable advisory services and (iii) misleading the funds' board of directors during fee negotiations about its fee arrangements with non-fiduciary clients.

The Eighth Circuit found that the district court had erred in granting Ameriprise summary judgment based on the Second Circuit excessive fee standard established in Gartenberg v. Merrill Lynch Asset Management, Inc., 694 F.2d 923 (2d Cir. 1982), which provides that the adviser's fiduciary duty is violated if the fee it charges is "so disproportionately large that it bears no reasonable relationship to the service rendered and could not have been the product of arm's-length bargaining." The Eighth Circuit opined that the Gartenberg standard establishes but one way that a fund adviser can breach its Section 36(b) duty, and that the lower court should have considered other possible violations of the duty, including whether Ameriprise's mutual fund advisory fees were exorbitant as compared to its institutional account advisory fees. The Eight Circuit held that "the proper approach to Section 36(b) is one that looks to both the adviser's conduct during negotiation and the end result. . . . Unscrupulous behavior with respect to either can constitute a breach of fiduciary duty."

The Eighth Circuit's approach to determining excessive fees stands in marked contrast to the narrower standard espoused by the Seventh Circuit in Jones, which held that it is not for a court to decide whether a fiduciary's fees are "reasonable," but rather whether they were fully and fairly disclosed.

Judge Rejects Hedge Fund's Fraud Action Against Broker Under the Commodity Exchange Act on Reliance Issue

On March 30, 2009, the U.S. District Court for the Southern District of New York dismissed a hedge fund's fraud action under the Commodities Exchange Act ("CEA") against its prime broker, holding that the hedge fund could not plausibly allege either that it relied on, or was damaged by, the broker's allegedly fraudulent trading report and audit trail record. In her decision, Judge Deborah A. Batts clarified that a plaintiff must "prove reliance" on a misrepresentation to succeed in a private action for fraud under Section 4b of the CEA.

The complaint alleged that on August 17, 2007—seconds after the Federal Reserve Board announced a 50-basis point reduction in the primary credit discount rate—traders at Walrus Master Fund Ltd. ("WMF") entered into a series of trades involving E-Mini S&P index futures contracts. According to WMF, the traders' computer software confirmed that the trades were executed at prices within the limit order. Three days later, on August 20, 2007, WMF received an account statement from Citigroup Global Markets Inc. ("CGM"), its prime broker, which listed an average execution price more than $10,000 higher than the price listed in WMF's records. The audit trail produced by CGM also differed from WMF's trading records. WMF alleged that this pricing discrepancy caused it to suffer damages of almost $380,000. WMF asserted a fraud claim under the CEA as well as state law claims of fraud, negligence and breach of fiduciary duty.

In granting CGM's motion to dismiss the fraud claim under the CEA with prejudice, the court explained that even if CGM's report and audit trail were false, WMF could not possibly have acted in reliance on such misinformation because "the only trading at issue in this case occurred on August 17, 2007, three days prior to the alleged misstatements." Further, the court noted that WMF could not plausibly allege that it was damaged by the misstatements because CGM's report and audit trail "did not cause Plaintiff's loss, but instead merely communicated it to Plaintiff." (emphasis in original).

WMF's claim, the court added, "if it has one at all, is for breach of contract in failing to place Plaintiff's order at the price requested." The court dismissed the remaining state law claims without prejudice with leave to replead in state court. WMF has filed notice of its appeal to the Second Circuit.

industry update

European Commission Proposes Comprehensive Regulation of Alternative Investment Fund Managers

On April 30, 2009, the European Commission (the "Commission") published a proposal to create a "comprehensive framework for the direct regulation and supervision" of alternative investment fund managers ("AIF Managers"). According to the Commission, the proposed Directive on Alternative Investment Fund Managers (the "Directive") was designed to (1) establish a framework for monitoring risks posed by AIF Managers to investors, counterparties, other financial market participants and financial stability and (2) permit AIF Managers to provide services and market funds across the European Community (the "EC"), subject to compliance requirements. The Directive would apply to AIF Managers, irrespective of where they are established, who market alternative investment funds ("AIF") in the EC, and AIF marketed in the EC, irrespective of where they are domiciled.

Notably, the Directive does not seek to directly regulate AIF, although it does impose on AIF Managers many reporting and other requirements relating to the AIF they manage. Neither does the Directive substantively restrict investments, other than with respect to investments in securitizations and leverage limits, which are to be determined. The Directive leaves regulation of short sales to other regulatory efforts underway, and it does not regulate fees charged by, or remuneration paid to, AIF Managers, which may in some cases be subject to existing EC legislation.

The Directive will next be sent to the European Parliament and European Council, where it is expected to be the subject of vigorous debate. As Charlie McCreevy, European Commissioner for Internal Markets and Services and drafter of the Directive, summarized, "[f]or some, the proposal goes too far. For others, it does not go far enough." If the Directive is approved by the end of 2009, it could come into force in 2011, although the Commission has indicated that provisions regarding the treatment of AIF Managers and AIF established outside the EC (discussed below) would only be applicable in 2014, after a three-year transition period. A brief description of some of the main aspects of the proposed Directive follows.

Coverage. The Directive would apply to all AIF Managers "established in the European Community" except:

  • (1) AIF Managers whose assets under management (including any assets acquired through the use of leverage) are less than €100 million ($133 million);
  • (2) AIF Managers whose assets under management (including any assets acquired through the use of leverage) are less than €500 million ($666 million) if the portfolio of AIF managed by the AIF Managers (a) are not leveraged and (b) have lock-up periods of five years following the inception of the AIF; and
  • (3) funds and managers of funds regulated under the UCITS Directive (existing legislation regulating investment funds and managers in the EC).

AIF Managers in categories (1) and (2) would remain subject to regulation at the national level.

Authorization. In order to market or manage AIF in the EC, an AIF Manager not exempted from the Directive as described above would be required to seek authorization with the competent authorities of the member state in which it has its registered office. In connection with the authorization process, the AIF Manager would have to provide information regarding the AIF Manager's ownership, compliance program, the AIF managed by the AIF Manager, including the jurisdictions in which they are domiciled and their constituitive documents, details as to the delegation of any management services to third parties, and custody arrangements.

Once authorized, an AIF Manager would be allowed to market AIF in its home member state, and upon "passporting" of its authorization to the competent authorities of the other member states of the EC, throughout the EC. Under the Directive, authorized AIF Managers may market AIF to "professional investors", although the Directive provides that member states have the option of allowing AIF Managers to market AIF to retail investors in their own territory.

AIF Managers and AIF Established Outside the EC. An authorized AIF Manager may only market an AIF domiciled outside of the EC if the AIF's home country has an agreement with the AIF Manager's home member state that complies with Article 26 of the OECD Model Tax Convention and ensures an effective exchange of tax information.

Member States are permitted to authorize AIF Managers established outside of the EC to market AIF in the EC in accordance with the Directive if:

  • the Commission has determined that the AIF Manager's home country has adopted prudential regulation and on-going supervision of AIF Managers equivalent to the Directive;
  • the Commission has determined that the AIF Manager's home country grants AIF Managers in the EC market access equivalent to that granted by the EC to AIF Managers in that country;
  • a cooperation agreement is in place between the competent authorities of the member state and the AIF Manager's home country supervisor ensuring an efficient exchange of information for monitoring systemically relevant financial institutions and the orderly functioning of markets in which the AIF Manager is active;
  • the member state has an agreement with the AIF Manager's home country that complies with Article 26 of the OECD Model Tax Convention and ensures an effective exchange of tax information; and
  • the AIF Manager has provided the EC member state with the same information an EC AIF Manager would provide to be an authorized AIF Manager.

Operating Conditions. The Directive sets forth certain operating restrictions with respect to conflicts of interest, risk management, liquidity management and investment in securitization vehicles. With respect to investment in securitization vehicles, AIF Managers will be permitted to invest AIF funds only in securitization vehicles in which the originator maintains a net economic interest of not less than five percent. The Directive also requires AIF Managers who manage portfolios of greater than €250 million ($332 million) to maintain capital of at least 0.02% of the amount by which the portfolio value exceeds €250 million.

Disclosure to Investors. AIF Managers must disclose the following information to investors in the AIFs they manage: investment strategy, investment restrictions, the identity of the AIF's depositary, auditor, valuator and other service providers, liquidity risk management policies and fees and expenses. AIF Managers will also be required to disclose any preferential arrangements with other investors, the percentage of each AIF's assets that is subject to special arrangements due to their illiquid nature (e.g., side pockets) and the AIF's risk profile and risk management systems.

Reporting Obligations. AIF Managers will be required to "regularly" report to the competent authorities of their home member states and will be required to provide aggregated information regarding the main instruments in which they trade, the markets on which they actively trade and on the principal exposures and concentrations of each AIF they manage.

Leverage. AIF Managers that manage one or more AIF employing leverage that exceeds the value of the equity capital of the AIF in two out of the last four quarters must make additional disclosures to investors and provide additional information to the competent authorities of their home member states. The Directive provides that individual member states will share information and otherwise cooperate to identify the extent to which leverage may contribute to systemic risk in the financial system or the risk of disorderly markets. The Directive also provides that the Commission will adopt implementing measures to set leverage limits on AIF Managers and creates an emergency power to impose additional limits.

Controlling Investments. The Directive also imposes notice requirements on AIF Managers managing AIF that acquire 30% or more of an issuer or a non-listed company domiciled in the EC, other than certain small and medium enterprises.

Donohue Expresses Concerns About Investment Companies' Use of Derivatives

In an April 17, 2009 speech to the American Bar Association, Andrew J. Donohue, Director of the SEC's Division of Investment Management, expressed concern about registered investment companies' use of derivatives. Specifically, he asked whether mutual funds' disclosure about their use of derivatives, while technically compliant with the Investment Company Act, adequately allows investors to understand the risks associated with derivatives and the funds that invest in them.

Director Donohue recounted the SEC's history of policy-making with respect to mutual funds' use of derivatives, summarizing the SEC's 1979 release on securities trading practices of registered investment companies (the so-called "ten-triple-six release") that has become the basis for the SEC's positions on registered investment companies' use of derivatives. He also discussed the results of a study conducted by the SEC in 1994 that concluded that mutual funds should improve disclosure regarding their use of derivatives.

According to Donohue, today's mutual funds generally provide "extensive disclosure" consistent with Investment Company Act requirements. The disclosure, however, does not necessarily help investors evaluate risks posed by investing in derivatives or in funds that invest in derivatives. He cited the use of derivatives as a contributing factor to certain fixed income funds' losses in excess of 30% in 2008, and expressed doubts as to whether the funds' investors, particularly at the retail level, appreciated the potential gains or losses resulting from the use of derivatives.

Director Donohue acknowledged that his concerns raise additional questions, including:

  • Should the SEC reexamine the Investment Company Act leverage restrictions?
  • Is regulatory or legislative action needed to address the leverage created by investment companies' use of derivatives?
  • Do existing rules sufficiently address the proper procedure for investment company pricing and liquidity determinations of derivatives holdings?
  • Do investment company boards exercise meaningful oversight over funds' use of derivatives?

Finally, Donohue reminded mutual fund directors of the SEC's advice—first given 30 years ago—that directors should ensure that disclosure documents completely inform investors about the risks of trading derivatives. Disclosure should inform investors about "the potential risk of loss; the identification of the securities trading practices as separate and distinct from the underlying securities; the differing investment goals inherent in participating in the trading practices versus investing in the underlying securities; whether the fund's name accurately reflects its portfolio investment policies and securities trading practices; and any other material information relating to such trading practices."

European Parliament Approves Legislation for Oversight of Credit Rating Agencies

On April 23, 2009, the European Parliament approved new legislation for the direct supervision of credit rating agencies ("CRAs") in the EC. The new legislation is designed to address conflicts of interest and to promote transparent and accurate credit ratings. It is anticipated that finance ministers will formally adopt the bill at a meeting in Brussels next month.

The approved legislation requires all CRAs planning to operate in the EC to register with the Committee of European Securities Regulators and submit to oversight by national supervisors. The legislation also requires public disclosure of ratings methodologies and sets forth a rotation system for analysts and senior officials who approve credit ratings, in an effort to improve credit agency transparency and independence. Ratings issued outside of the EC will require endorsement by an EC CRA established in the EC and registered in accordance with the legislation, which will be responsible for ensuring that such non-EC CRAs' activities comply with the legislation. Non-EC CRAs with no presence in the EC may, however, utilize an alternative certification regime that will determine, on a case-by-case basis, whether a rating issued by such agencies may be used within the EC. The new legislation is set to enter into force and apply in the EC 20 days after the legislation's publication in the Official Journal of the EC. As an exception, the legislation will not apply with respect to ratings issued outside of the EC until 18 months after the legislation's publication in the Official Journal of the EC.

Regulators in the United States are also examining the issue of CRA oversight. On April 15, 2009, the SEC held a roundtable in which SEC commissioners and staff members, CRA executives and academics discussed the role of credit ratings in the financial crisis. The panelists also talked about the SEC's recently adopted and recently proposed rules that address issues of competition, conflicts of interest and accountability with respect to CRAs. As reported in the April 23, 2009 Corporate Regulatory Report, panelists discussed the advantages and disadvantages of the current "issuer pays" CRA model, expressed varying views regarding the future of credit ratings as a useful tool for investors and suggested alternative models that could eliminate or mitigate conflicts of interest in the credit rating industry.

Federal "Red Flags Rules" Compliance Date Is Pushed Back to August 1, 2009

As reported in the April 7, 2008 Investment Management Regulatory Update, the Federal Trade Commission (the "FTC") has adopted a new set of rules requiring certain "financial institutions" to adopt identity theft protection programs (the "Red Flag Rules"). The Red Flags Rules were previously set to go into effect starting November 1, 2008, although in October 2008, the FTC announced a six-month delay of enforcement of the rules. On April 30, 2009, the FTC announced a further three-month delay of enforcement of the rules until August 1, 2009.

Obama Administration Provides More Details on Proposals Regarding the Taxation of U.S.-Based Multinational Corporations' Foreign Income

On May 4, 2009, the Obama Administration (the "Administration") provided additional detail on its previously-announced plan to reform the U.S. tax laws relating to the taxation of income earned by foreign subsidiaries of U.S. corporations. One of the Administration's proposals would require U.S. taxpayers, beginning in 2011, to treat certain foreign entities as corporations, rather than as disregarded or pass-through entities, for (at least some) U.S. tax purposes. The description of the proposal does not provide any details on the circumstances under which a foreign entity would be treated as a per se corporation, although it seems likely that the proposal will focus on foreign entities that receive significant amounts of intercompany interest, royalties or similar types of "passive" income that give rise to a current deduction for the related payor.

Also on May 4, 2009, the Administration announced a summary of proposals that would increase tax compliance rules with respect to U.S. individuals with offshore financial accounts and other offshore investments.

SEC Rules and Regulations

SEC Proposes Short Sale Restrictions

The SEC recently issued proposals that would revive restrictions on short sales in equity securities. The proposed restrictions on short sales are contained in five proposed rules that adopt two alternative approaches: (1) a "short sale price test restriction" approach that would apply on a permanent, market-wide basis and (2) a "circuit breaker" approach that would apply to a specific security during extreme market declines in such security. Comments on the proposed short sale restriction alternatives are due June 19, 2009. The SEC also held a roundtable discussion on the proposed restrictions on May 5, 2009. Participants in the roundtable discussion included heads of self-regulatory organizations, trading venues, financial services industry and investment firms, and academics.

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If you have any questions regarding the matters covered in this Regulatory Update, please contact any of our Investment Management Group lawyers listed below or your regular Davis Polk contact:

John Crowley, Partner
212-450-4550 | john.crowley@dpw.com

Nora Jordan, Partner
212-450-4684 | nora.jordan@dpw.com

Yukako Kawata, Partner
212-450-4896 | yukako.kawata@dpw.com

Leor Landa, Partner
212-450-6160 | leor.landa@dpw.com

Danforth Townley, Partner
212-450-4240 | danforth.townley@dpw.com

Sophia Hudson, Associate
212-450-4762 | sophia.hudson@dpw.com

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To ensure compliance with requirements imposed by the IRS, we inform you that, unless explicitly provided otherwise, any U.S. federal tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.