The US Department of Treasury published a Federal Register notice on June 8 announcing a mandatory survey regarding foreign ownership of US securities. The survey is being conducted under the authority of the International Investment and Trade in Services Survey Act, a similar authority used to justify the Commerce Department’s Bureau of Economic Analysis Surveys of foreign direct investment (both outbound and inbound) and applies to US persons and foreign persons subject to US jurisdiction.
Although mandatory, as of now it applies only in certain circumstances and to certain parties:
1. Who is a “US person”? Includes individuals, partnerships, branches, associations, trusts, corporations, or other organizations (whether or not organized under the laws of a particular state), as well as any government (including a foreign government, the US Government, a state, local government and any agency, corporation, financial institution or other entity, including a government-sponsored agency that resides in the United States or is subject to US jurisdiction
2. Who has to report?
a. Parties included in the June 2019 Benchmark Survey of Foreign Resident Holdings of US Securities
b. Parties included in the Aggregate Holdings of Long-Term Securities by US and Foreign Residents Report as of December 2019
c. Any party contacted individually by the Federal Reserve Bank of New York – if you are not contacted by the Federal Reserve Bank of New York (and are not included in the two reports in 2.a or 2.b above, you do not need to report)
3. What to report? Foreign resident holdings of US securities, including:
a. Equities;
b. Short-term debt securities;
c. Select money market instruments; and
d. Long term debt securities.
4. How to report? There are survey forms and specific instructions, which can be accessed on the Department of Treasury website.
5. Due date: All reports are due by August 31, 2020 and must be sent to the Federal Reserve Bank of New York (acting as the fiscal agent for the Department of Treasury). The address is:
Federal Bank of New York
Data and Statistics Function
6th Floor
33 Liberty Street
New York, New York 10045-0001
Morgan Lewis’s CFIUS working group is seeing a renewed interest by the US Government in continuing to collect data on foreign interests in the United States. Although the penalties for not responding are not severe – in the thousands of dollars for a failure to respond – the Government can potentially affect other aspects of regulated conduct in the United States that could be impacted by a refusal or failure to file a survey response. Those who are handling investments, securities investments, and cross-border transactions in the United States that involve securities should review the notice to see if their business is applicable.
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