Firm Addresses Application of Loss Limitation Rule

July 2, 2018

Ms. Elinor Ramey
Attorney-Advisor
Department of the Treasury
1500 Pennsylvania Avenue, N.W.
Washington, D.C. 20220

Re: Comment on New Section 512(a)(6) of the Internal Revenue Code of 1986, as amended by P.L. 115-97 (the "Act")

Dear Ms. Ramey:

Thank you for speaking with us by telephone on May 21 about how the loss limitation rule of section 512(a)(6) should be applied in relation to tax-exempt organizations' holdings of interests in investment partnerships, such as private equity, venture, hedge, energy, and real estate funds (referred to herein as "Investment Partnerships"). As explained below, we urge Treasury to follow the instances of precedent from the Internal Revenue Code, as well as guidance issued from Treasury and other federal agencies, which provide rational support for treating Investment Partnerships specially under section 512(a)(6), which is the purpose of this letter.

As a general overview, should Treasury choose to treat an exempt organization's holding of all Investment Partnership interests as a single "unrelated trade or business" for the purpose of section 512(a)(6), it would be necessary to distinguish Investment Partnerships from other types of partnership into which some exempt organizations customarily enter, such as joint ventures with taxable persons to maximize business opportunities that are closely associated with the organizations' exempt purposes (referred to herein as "Joint Ventures"). This letter identifies some specific sources that might be helpful in crafting such a rule of distinction.

The Tax Section of the New York State Bar Association issued a Report on June 7, 2018, addressing guidance under section 512(a)(6), among other provisions of the Act relevant to exempt organizations.¹ The NYSBA Report recommends first that an exempt organization be permitted to treat "investing" as a single unrelated trade or business for purposes of section 512(a)(6), and second that an interest in a partnership, whose unrelated trade or business is attributed to a tax-exempt partner by reason of section 512(c)(1), should be considered part of the partner's "investing" business "so long as the exempt organization (or a related person) does not "control" the partnership.”²

The Section of Taxation of the American Bar Association issued Comments on the regulatory implementation of section 512(a)(6) on June 21, 2018.³ The ABA Comments recommend that unrelated business taxable income or loss "arising from investments over which the exempt organization does not exercise direct or indirect control . . . [be] excluded from the purview of section 512(a)(6)",⁴ referring to investments in partnerships and LLCs. Interestingly, rather than considering that such non-controlled investments should fall within their own loss-sharing category (or "silo"), or be included in the broader silo of "investing," for purposes of section 512(a)(6), the ABA Comments conclude that all unrelated business taxable losses from such non-controlled investments "should be available to offset UBTI arising from any other source."⁵

This letter addresses solely how unrelated business taxable income allocated to an exempt organization with respect to its ownership of equity in an entity that is a partnership for tax purposes should be treated under section 512(a)(6). Both the NYSBA Report and the ABA Comments recommend that non-controlled partnerships be treated specially under section 512(a)(6). In addition to the reasons for special treatment articulated by the NYSBA Tax Section and the ABA's Section of Taxation, this letter emphasizes that the passive activity loss rules already govern the ownership of all interests in Investment Partnerships by exempt organizations in trust form, and this framework needs to be considered before the loss limitation rules of section 512(a)(6) are super-imposed thereon with respect to such trusts. This letter does not address how various types of unrelated business taxable income earned directly by exempt organizations should be treated under section 512(a)(6), with one exception.⁶ This letter recommends that the ownership of Investment Partnerships be treated as a single trade or business under section 512(a)(6), and provides suggestions for crafting a rule to distinguish Investment Partnerships from Joint Ventures.

This letter first explains briefly the commercial and tax law background of participation by exempt organizations in Investment Partnerships, which is widespread among certain institutions. It then discusses the tax rules that limit the use of losses earned from Investment Partnerships, especially in the hands of exempt organizations formed as trusts, under the laws in effect before the Act, because the cumulative effect of section 512(a)(6) can be appreciated only after grasping the pre-existing loss limitation rules. Finally, rules used to identify "passive" investment in partnerships in one tax context, and factors relevant in categorizing partnerships under the federal securities laws, are then explored for their helpfulness in providing guidance that distinguishes Investment Partnerships from Joint Ventures.

1) Background to Tax-Exempt Investment in Investment Partnerships

a) The Variety of Investment Partnerships and Comparison with Joint Ventures

Many tax-exempt organizations commit liquid assets to funds in partnership form which are sponsored by professional managers and whose equity interests are privately placed (i.e., distributed without the interests being registered with the S.E.C.). These funds involve exempt organizations pooling their liquid assets with other investors and granting discretion to the managers, retaining no power to modify investment decisions. Funds that constitute partnerships for tax purposes and that are typically offered in private placements include private equity, venture, energy, and real estate funds, and the onshore feeders to "master" hedge funds. They are attractive to exempt organizations with reserves because they are perceived to provide diversification from public equity and debt markets, while some of their strategies have yielded good investment returns.

Some of these funds are open-ended (e.g., hedge funds which usually offer opportunities for the investor periodically to redeem its equity), but many have a fixed term and do not guarantee distributions or redemptions until the end of the term, which is often five years or more. The illiquid nature of funds with a long lock-up period has led some exempt organizations to spread their commitments over numerous Investment Partnerships to increase the likelihood that some cash will be available each year from the multitude of fund investments. Several college endowments and private foundations own interests in many hundreds of Investment Partnerships. Diversification within the sector can also be achieved by holding an interest in a "fund-of-funds," which, at the cost of a second level of management fees, allocates commitments across a range of "direct" Investment Partnerships. None of these privately placed funds permit the Investors to remove the manager or general partner, or to accelerate winding up of those with fixed terms, except in extremely limited circumstances.

Many exempt organizations also invest in partnerships whose Interests are registered securities and publicly traded, such as Master Limited Partnerships formed to hold energy assets ("PTPs").⁷ The liquidity offered by trading PTP interests on the market is attractive.

All of the funds described above are formed as partnerships for tax purposes primarily to serve the goals of individual owners. Individual investors are often interested in obtaining immediate access to the funds' deductions and credits, and managers can sometimes obtain an incentive fee in the form of a disproportionate allocation of long term capital gain. Exempt organizations in such partnerships will have the trade or business undertaken by the fund attributed to them and run the risk that their share of the fund's income will constitute unrelated business taxable income ("UBTI").⁸ Also, acquisition indebtedness incurred by a partnership can have the effect of converting the exempt dividend, interest, royalty, rent, and some property gains it earns to taxable "unrelated debt financed income" ("UDFI").⁹ Nevertheless, few Investment Partnerships offer exempt organizations "feeders" formed as corporations for tax purposes, except for leveraged hedge funds.

Some exempt organizations secure the services of an investment manager outside of the collective context, committing assets to a "separately managed account," typically subject to restrictions on the organization's ability to remove the manager. Sometimes these arrangements take the form of limited partnerships in which the exempt organization is the sole limited partner ("funds-of-one"), so as to offer the manager the opportunity to earn incentive in the form of long term capital gain.¹⁰

Similar to funds-of-one are partnerships offered by private equity sponsors to invest in a portfolio company in parallel with a main fund. Interests in such "co-investment" partnerships are offered to investors which make substantially greater commitments than investors in the main fund, and typically have fewer investors and levy lower fees than the main fund. Because not all main fund investors are typically invited to participate in co-investment partnerships, the relative equity ownership by any single exempt organization in such a partnership can constitute the majority interest.

Investment funds in partnership form are used by endowments and operating charities to obtain superior investment returns on their reserves, and they are all subject in some way to the S.E.C.'s rules for regulating investment advisors, investment companies, and/or the sale of investment securities.

In contrast, some operating charities enter into Joint Ventures with taxable persons in order to develop business opportunities that are closely associated with their exempt purposes. These operating charities often contribute assets to such Joint Ventures, obtaining in exchange access to specific skills of their co-venturers and sometimes to financing. The management rights of the operating charities in the Joint Ventures vary, but they may include participation on the board of managers that controls the Joint Venture, approval rights of annual and capital budgets, and veto rights over certain decisions (for example, a change in the purpose of the Joint Venture or a sale of the Joint Venture or its assets). These Joint Ventures are typically formed to capitalize on the expertise or market dominance of the operating charities in their primary activities, and the distribution of interests therein is usually not subject to the S.E.C.'s rules.

b) Types of Exempt Organization

Exempt organizations constitute either complex trusts or corporations for tax purposes, whether they qualify as public charities or private foundations. Every exempt organization is subject to tax on its net income from a business that is not substantially related to its exempt purpose and that it regularly carries on (UBTI). The tax rate on UBTI is the same rate that the exempt organization would pay on its taxable income if it were a taxable entity (i.e., the trust or corporate rates). If an exempt organization earns investment income from an unrelated business or independently (dividends, interest, royalties, certain rents, and capital gains less recapture amounts), it can exclude such income from UBTI except to the extent that the income is financed with acquisition debt and so constitutes UDFI. UDFI is taxed at the same rate as UBTI. Exempt organizations that constitute private foundations incur an excise tax on their net investment income (generally 2 percent for U.S. foundations and 4 percent for foreign foundations), but if that income is debt-financed it will instead be treated as UDFI (and taxed at the higher UDFI rate).

c) Structure of the Typical Private Equity Fund

Briefly outlining the tax considerations of the structure of a standard private equity fund should illuminate the subsequent discussion of loss limitations.

Private equity funds (treated as partnerships for tax purposes) typically invest in portfolio companies that are treated as corporations for tax purposes, and the funds may earn dividends and gains from the shares, and interest on any loans. Such income is exempt from UBTI in the hands of an exempt investor¹¹ unless the acquisition of the shares or loans is financed by debt incurred by the fund.¹² So as to avoid generating UDFI for the exempt investors, private equity funds typically cause "blocker" subsidiaries in the form of corporations to incur any needed debt (for example to fund a leveraged buyout). Private equity funds typically are not considered to conduct a trade or business for purposes of deducting business expenses under section 162, but instead are engaged in investment.

If a portfolio company is a partnership or disregarded entity owned by the fund, its business activities (usually an unrelated trade or business for the investors in the fund which are exempt organizations) will be attributed to an exempt investor in the fund. All items of the portfolio company's income and expense (other than passive items such as interest, rent, royalties and most property gains) will flow through to the exempt organization investors as UBTI. If the flow-through portfolio company is debt-financed, any passive income items it earns will be considered UDFI. Such a portfolio company will be considered to engage in a trade or business for purposes of section 162.

2) Pre-Existing Loss Limitation Rules Applying to Exempt Organizations

Losses can be generated by an Investment Partnership for its exempt investors for purposes of both UBTI (e.g., losses from an unrelated trade or business) and UDFI (e.g., losses on debt-financed securities). Exempt organizations are limited in their ability to offset these allocated losses in varying degrees based on their status under pre-Act law.

All exempt organizations are limited in their ability to offset capital losses (e.g. from debt-financed securities) against UBTI in the form of ordinary income, earned from Investment Partnerships. Corporate exempt organizations may offset capital losses only against capital gains, while exempt trusts may in addition offset up to $3,000 of capital loss against ordinary income UBTI in any one year. This limitation applies irrespective of whether the capital loss and ordinary income are earned by the same, or different, funds.

Exempt organizations in trust form (e.g., section 501(c)(3) trusts and section 401(a) pensions) are subject also to the limitations on "passive activity losses" ("PALs"). These rules require that UBTI losses from a passive activity may offset only UBTI income from passive activities and may not offset income from a non-passive activity (such as UDFI portfolio income). The relevant definition of a passive activity involves conducting a trade a business under section 162 but without any "material participation" by the taxpayer in the activity. An exempt trust investor will never be considered to participate materially with respect to any of the Investment Partnerships described above or their flow-through portfolio companies.

Because a typical private equity fund will not itself conduct a business under section 162, any loss that it allocates to an exempt trust will constitute a PAL only if it arises from a flow-through portfolio company that itself engages in a trade or business. But if an exempt trust partner is allocated PALs derived from the fund's flow-through portfolio companies, it will not be able to offset them against any UDFI allocated by the fund (or any other fund) in the form of portfolio income (dividends, interest, royalties, and gains from selling most property). Such PALs can offset only UBTI income from the passive activities of that or another Investment Partnership. Any disallowed PALs are suspended at the trust level and carried forward to shelter UBTI passive income of the trust in all future years. If an exempt trust sells its entire interest in an Investment Partnership to an unrelated person, it will be entitled to offset any current and carried forward PALs from that particular partnership against UBTI or UDFI non-passive income from any source.¹³ Under a special limitation, PALs arising from a PTP may offset only future UBTI passive income from that particular entity.¹⁴

Hedge funds are usually considered to operate a trade or business under section 162 and their investors do not materially participate in the activity. Nevertheless those which trade listed shares, bonds, and options are not considered to operate a passive activity under a specific PAL rule.¹⁵

Accordingly, exempt organizations in trust form (and there are many large ones) are already subject to a sophisticated regime of loss limitations under pre-Act law, affording precedent for a level of regulation with respect to this activity which hitherto has appeared acceptable to Congress, particularly when considering the absence to date of any further regulation by Congress of this nature. An exempt trust which invests in numerous Investment Partnerships can generally offset a PAL arising from one partnership against UBTI passive income earned from another, but not against UDFI portfolio income from that fund or any other fund.

Indeed, some private foundations in trust form, which do not conduct directly an unrelated trade or business, are carrying forward sizeable suspended PALs from Investment Partnerships and small or non-existent net operating losses. For example, a private foundation which invests in securities and Investment Partnerships but does not conduct directly an unrelated trade or business, will tend to generate a net operating loss only from UDFI losses on its securities (i.e., portfolio losses). We are aware of one private foundation which is carrying forward tens of millions of dollars in suspended PALs, and zero net operating losses. In this regard we note that the transition rule of Section 13702(b)(2) of the Act preserves from limitation the carryforward of "any net operating loss arising in a taxable year beginning before January 1, 2018". Exempt trusts holding Investment Partnerships expect that this rule applies equally to suspended PALs arising in pre-2018 years and carried forward under section 469(b). If there is any doubt as to whether this expectation is correct, or as to the order in which suspended PALs are considered applied for this purpose, we hope that you will allow us to address this in a second letter.

If section 512(a)(6) is read to consider each Investment Partnership, and perhaps each flow-through portfolio company of a private equity fund, as a separate unrelated trade or business, then an additional level of loss limitation will be layered onto exempt trusts, which appears rather indiscriminate compared to the carefully implemented policy of the PAL rules. We believe that some prominent exempt participants in Investment Partnerships are trusts, and so are already subject to the pre-existing, robust PAL rules. These trusts would find it unnecessarily burdensome to be prevented for example from offsetting a PAL from one Investment Partnership against UBTI passive income from a second partnership, even though the PAL rules would permit this. It would be even more burdensome if an exempt trust were prevented from offsetting a PAL from one flow-through portfolio company against UBTI passive income from a second flow-through portfolio company, when the same Investment Partnership owns both.¹⁶

3) Differentiating Investment in Alternative Funds From Joint Venture Activity

a) Possible Differentiating Factors

Interpreting section 512(a)(6) so as to apply specially to exempt organizations' holdings of Investment Partnerships will require a detailed distinction between the nature of Investment Partnerships relative to that of Joint Ventures, the latter being formed by operating charities to develop specific business opportunities that are closely associated with the organizations' exempt purposes. Factors that might be used to differentiate these two types of partnership used by exempt organizations include: (a) the nature of the assets conveyed (exclusively cash in the case of Investment Partnerships versus cash and/or tangible assets, goodwill, intellectual property in the case of Joint Ventures); (b) the direct ownership of the assets (with Investment Partnerships usually, but not always, holding them indirectly in a subsidiary entity); (c) the relative equity ownership by the exempt organization and its affiliates and the degree of managerial control retained over the operations (with Joint Ventures, the exempt partner usually retains some decision-making power); (d) the number of unrelated investors (usually higher in Investment Partnerships than Joint Ventures); and (e) the applicability of S.E.C. regulation of the managers, the entity, or the sale of interests in the entity (none, in the case of Joint Ventures).

Due to the wide variety in form of Investment Partnerships, it is difficult to conclude that any one of these factors, without more, provides a complete differentiation from Joint Ventures. For example, regarding relative equity ownership and management control, both the NYSBA Report and the ABA Comments distinguish the type of non-control led entity which should be treated specially for purposes of section 512(a)(6) with a disjunctive test of relative equity ownership or management responsibility. The NYSBA Report concludes that control exists "where the organization is the sole general partner or manager of an investment entity."¹⁷ If such "actual control" does not exist, control is deemed to occur in the case of "over 50% ownership."¹⁸ The ABA Comments elaborate on this disjunctive test by adopting the definition of "control" in the Instructions for Schedule R of Form 990 for purposes of listing "related organizations taxable as a partnership."¹⁹ This definition finds control when an exempt organization owns "more than 50% of the profits interests or capital interests in the partnership," or exercises actual control under a more sophisticated definition.²⁰

But these recommended tests risk being under-inclusive or over-inclusive in identifying Investment Partnerships. The relative equity element of such tests is under-inclusive because it would operate to exclude funds-of-one and majority holdings in co-investment partnerships from the category of Investment Partnerships. We understand that exempt organizations when investing their reserves view funds-of-one, majority participations in co-investment funds, and minority participations in main funds identically in terms of the function they serve, differing only in that the latter two are collective arrangements. Thus, promulgating a rule that holding an Investment Partnership shall be considered part of a single unrelated trade or business of holding all Investment Partnerships only if the exempt investor owns 50 percent or less of its equity, would exclude funds-of-one and majority participations in co-investment funds from such trade or business (unless in the case of a fund-of-one the test were applied at the level of its ownership of a "direct" Investment Partnership). Conversely, a 50%-or-less holding in a Joint Venture, when the exempt organization does not act as general partner or managing member but rather retains material management rights, would be included in the category of Investment Partnerships.

We do not believe that taking steps to craft a new rule based solely on one of the aforementioned factors will achieve a result that was intended by Congressional lawmakers, or will be functional when put into practice. Therefore, we wish to refer to two other sources of guidance that might prove helpful, taken singly or together. These are: (i) the Proposed Regulations defining the type of partnership interest which a controlled entity of a foreign sovereign may hold without automatically being considered a "controlled commercial entity" under section 892(a)(2)(B) (REG-146537-06 published in the Federal Register on Nov. 3, 2011); and (ii) the applicability of S.E.C. regulation to the managers, the entity, or the sale of interests in the entity.

b) Proposed Regulations on Controlled Commercial Entities

The Proposed Regulations under section 892 relieve a "controlled entity" of a foreign sovereign from being considered a "controlled commercial entity" "solely because it holds an interest as a limited partner in a limited partnership" that is itself engaged in commercial activities.²¹ Under this "limited partner exception" to controlled commercial entity status by attribution from an interest in a partnership,²² the controlled entity partner avoids being characterized as a controlled commercial entity simply as a result of owning the partnership interest, but remains subject to U.S. tax with respect to any allocation by the partnership of income derived from commercial activities.

The Proposed Regulations provide a functional definition of an "interest as a limited partner in a limited partnership," which depends entirely on lacking management rights rather than relative equity ownership. The sovereign's controlled entity must lack "rights to participate in the management and conduct of the partnership's business at any time during the partnership's taxable year under the law of the jurisdiction in which the partnership is organized or under the governing agreement."²³ Consent rights for extraordinary events such as expelling the general partner or amending the partnership agreement do not constitute forbidden management rights. If managerial rights are avoided, there is no limit on the proportion of equity that the sovereign's controlled entity may own; for example, 100 percent of the limited partner interests in a fund-of-one will be acceptable under this test if managerial rights are avoided.

Controlled entities of sovereigns may currently rely on these Proposed Regulations, and those which do so with respect to their interests in Investment Partnerships are relieved from automatically constituting controlled commercial entities. Specifically, agreements of almost all Investment Partnerships restrict investors from exercising control except in extraordinary circumstances, and the laws of favored jurisdictions for fund formation specifically condition the limited liability of investors on their lack of control.²⁴ Because almost all operating charities retain at least some managerial rights in Joint Ventures,²⁵ interests in these ventures would rarely fall within a category based on the limited partner exception of the section 892 Proposed Regulations.

Given the concentration of these Proposed Regulations' on the lack of material managerial rights, should this factor seem to be most relevant to Treasury, the Proposed Regulations may prove constructive in distinguishing Investment Partnerships from Joint Ventures. When these Proposed Regulations were issued, commentators on their definition of an "interest as a limited partner in a limited partnership" requested that Treasury take into account conditions of investment that commonly supplement the terms of a partnership's organizational document (such as side letter covenants and agreements to sit on an advisory committee). Nevertheless, these Proposed Regulations as written would provide a good starting point for distinguishing Investment Partnerships from Joint Ventures, if Treasury considers that lacking managerial rights is the key distinguishing factor.

d) S.E.C. Regulation of the Managers, the Entity, or the Sale of Interests in the Partnership.

Some aspect of all Investment Partnerships are subject to S.E.C. regulation, while the Joint Ventures described above escape it entirely. Managers of Investment Partnerships are almost invariably registered with the S.E.C. as investment advisors under the Investment Advisers Act of 1940. The proportion of securities held as assets by these partnerships almost always causes them to be considered investment companies subject to regulation under the Investment Company Act of 1940 (although they are usually exempt from registering with the S.E.C.).²⁶ And their equity interests constitute investment securities whose sale must either be registered under the Securities Act of 1933 or comply with conditions for exemption therefrom.

In contrast, the Investment Advisers Act typically does not apply to Joint Ventures involving operating charities, which is rational in light of the fact that these scenarios do not involve any individual being paid to advise on the purchase or sale of investment securities (in contrast to Investment Partnerships). Similarly, the proportion of a Joint Venture's assets held as securities very rarely meets the general 40 percent threshold for investment company status. Finally, the persons venturing with the exempt organization typically are active participants in the venture's business, and so are not considered to acquire investment securities in an offering.

Treasury understandably may be reluctant to allow tax results to be determined solely by the rules of a sister agency, which might change in future without the effect on tax policy being considered. But the position of Investment Partnerships under the S.E.C.'s current rules is a valid differentiating factor, and perhaps may serve alongside others in classifying partnerships for purposes of section 512(a)(6).

If the results of S.E.C. classifications are to be depended upon, good tax administration will be served if certifications made by the staff of the S.E.C. are relied upon, rather than determinations by private practitioners of the availability of an exemption.²⁷ For example, it might be better to include as a factor whether or not the partnership is advised by a registered investment advisor, rather than whether its equity interests are sold pursuant to a lawyer's opinion that the sale qualifies for an exemption to the registration requirements of the Securities Act.²⁸ The relative ease of obtaining the status of a registered investment advisor should be evaluated in determining whether using this factor would open the door to participants obtaining tactical S.E.C. registrations in order to change tax results under section 512(a)(6).

4) Conclusion

If Treasury chooses to treat an exempt organization's holding of all Investment Partnership interests as a single "unrelated trade or business" for purposes of section 512(a)(6), it will be helpful in ensuring the functional intent to distinguish Investment Partnerships from Joint Ventures (where operating charities enter into the latter with taxable persons to maximize business opportunities that are closely associated with their exempt purposes). Both the NYSBA Report and ABA Comments recommend that a partnership interest be treated specially for purposes of section 512(a)(6) if the exempt partner and its related persons do not "control" the partnership under a disjunctive test of actual control or deemed control based on relative equity ownership.

We believe that these tests risk being under-inclusive by excluding funds-of-one (unless the test is applied at the level of their investments) and majority participations in co-investment funds, and over-inclusive by embracing 50% or less participations in Joint Ventures, when the exempt organization does not act as general partner or managing member but rather retains material management rights.

If, from Treasury's perspective, the significant, dominant feature of Joint Ventures is the presence of material managerial rights retained by the operating charity, the Proposed Regulations on the "limited partner exception" to controlled commercial entity status of foreign sovereigns could be helpful in crafting a rule. These Proposed Regulations depend entirely on identifying whether the investor has rights to participate in the management of the partnership's business at any time during the year under its organizational document or governing law, and otherwise ignore relative equity ownership. Provided that managerial rights are the key issue for Treasury, this test would avoid the risk of both over- and under-inclusiveness inherent in the disjunctive tests suggested in the NYSBA Report and the ABA Comments.

Another valid, differentiating factor that should be considered is the quality of all Investment Partnerships being subject to some aspect of regulation by the S.E.C., which the Joint Ventures do not share. Reluctance to make tax results either dependent or contingent upon the changing laws of a sister agency further suggests that this factor should not stand alone in making the desired tax classification. Also, if the S.E.C. status of a partnership is considered relevant for section 512(a)(6) purposes, tax administration is served better if reference is made to a status involving a decision or registration by the S.E.C.'s staff, rather than a determination by a private practitioner that an exemption applies.

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We thank you for your kind attention to this letter and stand by to answer any questions or comments that you might have. We very much appreciate having the opportunity to share our thoughts with you on this important question.

Sincerely yours,

Evan Migdail

Melissa Gierach

DLA Piper LLP
Washington, DC

cc:
Lee Sheller Thomas Dick (DLA Piper UK LLP)