Connecticut Avenue Securities Investor Presentation
Tax, Legal and Regulatory Summary (cont.)
Topic
Sale of B piece
CFTC/Commodity Pool
Operator
Investment Company
Act of 1940
Volcker Rule
ERISA eligibility
CAS direct debt
B piece is generally subject to 30% withholding
tax if sold to non-U.S. investors.
CAS REMIC
B piece is treated as debt-for-tax and therefore NOT
subject to withholding tax if sold to overseas investors
Registration as a Commodity Pool Operator (CPO) Registration as a Commodity Pool Operator (CPO) is
is not required.
not required.
Fannie Mae, as an instrumentality or 'government
entity' of the United States, is exempt from
registration pursuant to Section 2(b) of the Act.
Exempt from the 1940 Act since Fannie Mae is the
issuer. Securities are exempt from Volcker Rule
since they are not issued in reliance upon an
exemption under Section 3(c)(1) or 3(c)(7) of the
1940 Act.
Non-rated and below investment grade rated
notes are ERISA eligible because they represent
either (i) debt for tax or (ii) equity in an operating
company (Fannie Mae).
As an entity wholly owned by Fannie Mae, the SPV is
exempt from registration pursuant to Section 2(b) of
the Act.
The SPV will be exempt from the Act pursuant to
Section 2(b). CAS REMIC notes therefore will not
constitute interests in a "covered fund" for purposes of
the Volcker Rule since the Volcker Rule applies only to
securities issued in reliance on Sections 3(c) (1) or
3(c)(7) of the Act.
The M1 and M2 notes will be ERISA-eligible because
they are both able to meet certain criteria to be
characterized as debt-for-tax independent of the
REMIC election. The B1 is not expected to be ERISA-
eligible.
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