On June 3, 2021, President Biden issued Executive Order 14032, entitled "Addressing the Threat from Securities Investments that Finance Certain Companies of the People’s Republic of China" (the "E.O."). The E.O. prohibits U.S. persons from transacting in publicly traded securities of any "Non-SDN Chinese Military-Industrial Complex Companies" ("NS-CMICs") (such securities, "Sanctioned NS-CMIC Securities") identified on a list maintained by the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) from and after August 2, 2021 (or, in the case of entities that are subsequently listed as NS-CMICs, 60 days from such listing), provided that U.S. persons may continue to hold Sanctioned NS-CMIC Securities and may divest by selling them to non-U.S. persons at any time until one year from listing.
We are closely monitoring developments relating to the E.O., and in particular, we are taking the following steps, among others, to meet the requirements of the E.O.:
- We have complied, and will continue to comply, with the E.O.;
- We have not purchased and will not purchase any Sanctioned NS-CMIC Securities on or after the applicable effective date of the restrictions;
- We will take all steps to ensure that funds which are currently held or eligible for purchase by US persons remain eligible under the E.O.;
- If additional NS-CMICs become subject to the restrictions under the E.O., to the extent required by the E.O., we will not purchase for value any of these additional Sanctioned NS-CMIC Securities on or after the effective date of the restrictions applicable to such Sanctioned NS-CMIC Securities and will divest Sanctioned NS-CMIC Securities within the deadlines imposed under the E.O.;
- We are working closely with leading industry groups, including SIFMA and ICI, to monitor and respond to developments in real time, and are working with external counsel where appropriate;
- We are reviewing relevant government communications, including guidance and other communications from the Office of Foreign Assets Control of the U.S. Department of Treasury, and adapting our compliance efforts accordingly; and
- We maintain a robust Sanctions Compliance Program ("SCP") consistent with OFAC guidance, which includes, among other things, the application of customary blocking, screening and monitoring practices, which we are deploying in response to the E.O.
We recognize the unique challenges resulting from the issuance and implementation of the E.O., and will continue to work closely with stakeholders and external counsel where appropriate to identify and take necessary actions to meet the requirements of the E.O.