Hsbc Global Asset Management (Usa) Inc.

Allegations: IN SEPTEMBER 2017, FOLLOWING THE CONCLUSION OF THE US FEDERAL RESERVE BOARD'S REVIEW OF THE EFFECTIVENESS OF HSBC'S FX PRACTICES DURING THE PERIOD OF OCTOBER 2008 THROUGH OCTOBER 2013, HSBC HOLDINGS PLC AND HSBC NORTH AMERICA HOLDINGS INC. ENTERED INTO A CONSENT ORDER REGARDING CERTAIN DEFICIENCIES IN HSBC'S CONTROL AND OVERSIGHT OVER ITS FX BUSINESS. HSBC THROUGH VARIOUS SUBSIDIARIES OF HOLDINGS, INCLUDING HBEU AND HBUS, LACKED ADEQUATE GOVERNANCE, RISK MANAGEMENT, COMPLIANCE AND AUDIT POLICIES AND PROCEDURES TO ENSURE THAT HSBC'S COVERED FX ACTIVITIES COMPLIED WITH SAFE AND SOUND BANKING PRACTICES AND APPLICABLE INTERNAL POLICIES. ON AUGUST 18, 2023, THE FEDERAL RESERVE BOARD CONCLUDED THAT HSBC WAS IN FULL COMPLIANCE AND TERMINATED THE CONSENT ORDER. Status: Final Sanction Detail: PURSUANT TO THE FEDERAL DEPOSIT INSURANCE ACT, THE FEDERAL RESERVE ISSUED A CONSENT ORDER TO CEASE AND DESIST AND ASSESSMENT OF A CIVIL MONEY PENALTY (THE "ORDER"). ACCORDINGLY, HSBC SHALL CEASE AND DESIST WITH RESPECT TO THE DEFICIENCIES DOCUMENTED IN THE ORDER AND TAKE AFFIRMATIVE ACTION RELATING TO INTERNAL CONTROLS AND COMPLIANCE OVERSIGHT OVER CERTAIN MARKETS ACTIVITY. ON SEPTEMBER 29, 2017, HSBC PAID A CIVIL MONEY PENALTY IN THE AMOUNT OF $175,296,000. Summary: IN SEPTEMBER 2017, FOLLOWING THE CONCLUSION OF THE US FEDERAL RESERVE BOARD'S REVIEW OF THE EFFECTIVENESS OF HSBC'S FX PRACTICES DURING THE PERIOD OF OCTOBER 2008 THROUGH OCTOBER 2013, HSBC HOLDINGS PLC AND HSBC NORTH AMERICA HOLDINGS INC. ENTERED INTO A CONSENT ORDER REGARDING CERTAIN DEFICIENCIES IN HSBC'S CONTROL AND OVERSIGHT OVER ITS FX BUSINESS. HSBC THROUGH VARIOUS SUBSIDIARIES OF HOLDINGS, INCLUDING HBEU AND HBUS, LACKED ADEQUATE GOVERNANCE, RISK MANAGEMENT, COMPLIANCE AND AUDIT POLICIES AND PROCEDURES TO ENSURE THAT HSBC'S COVERED FX ACTIVITIES COMPLIED WITH SAFE AND SOUND BANKING PRACTICES AND APPLICABLE INTERNAL POLICIES. ON AUGUST 18, 2023, THE FEDERAL RESERVE BOARD CONCLUDED THAT HSBC WAS INFULL COMPLIANCE AND TERMINATED THE CONSENT ORDER.

Allegations: THE EUROPEAN COMMISSION IN DECEMBER 2021 COMPLETED A CARTEL INVESTIGATION INTO THE FOREIGN EXCHANGE ('FOREX') SPOT TRADING MARKET BY IMPOSING FINES ON FIVE FINANCIAL INSTITUTIONS, INCLUDING HSBC HOLDINGS PLC. THE COMMISSION'S INVESTIGATION FOCUSED ON THE TRADING OF THE G10 CURRENCIES. THE COMMISSION'S INVESTIGATION REVEALED THAT SOME TRADERS IN CHARGE OF THE FOREX SPOT TRADING OF G10 CURRENCIES, ACTING ON BEHALF OF THE FINED BANKS, EXCHANGED SENSITIVE INFORMATION AND TRADING PLANS, AND OCCASIONALLY COORDINATED THEIR TRADING STRATEGIES THROUGH AN ONLINE PROFESSIONAL CHATROOM. THE COMMISSION FOUND THAT THESE INFORMATION EXCHANGES ENABLED THE TRADERS TO MAKE INFORMED MARKET DECISIONS ON WHETHER AND WHEN TO SELL OR BUY THE CURRENCIES THEY HAD IN THEIR PORTFOLIOS, AS OPPOSED TO A SITUATION WHERE TRADERS ACTING INDEPENDENTLY FROM EACH OTHER TAKE AN INHERENT RISK IN TAKING THESE DECISIONS. OCCASIONALLY, THESE INFORMATION EXCHANGES ALSO ALLOWED THE TRADERS TO IDENTIFY OPPORTUNITIES FOR COORDINATION, FOR EXAMPLE THROUGH A PRACTICE CALLED "STANDING DOWN", WHEREBY SOME OF THEM WOULD TEMPORARILY REFRAIN FROM TRADING TO AVOID INTERFERING WITH ANOTHER TRADER. HSBC COOPERATED WITH THE INVESTIGATION AND HAS PAID THE FINE NOTED BELOW. Status: Final Sanction Detail: FINE ANNOUNCED BY THE COMMISSION ON 12/2/21. Summary: HSBC HOLDINGS CAUSED THE FINE TO BE PAID WITHIN IN THE TIMEFRAME DIRECTED BY THE COMMISSION.

Allegations: IN DECEMBER 2016, THE EUROPEAN COMMISSION (THE 'COMMISSION') ISSUED A DECISION THAT IN EARLY 2007 HSBC, AMONG OTHER BANKS, COLLUDED ON EURO INTEREST RATE DERIVATIVE PRICING ELEMENTS, AND EXCHANGED RELATED SENSITIVE INFORMATION, IN BREACH OF EU ANTITRUST RULES. THE COMMISSION DETERMINED THAT THE DURATION OF HSBC'S INFRINGEMENT WAS 1 MONTH AND FINED HSBC 33,606,000 EUROS. HSBC APPEALED THE DECISION TO THE GENERAL COURT OF THE EUROPEAN UNION, WHICH IN 2019 ANNULLED THE FINE FOR FAILURE TO PROVIDE REASONS, BUT UPHELD HSBC'S LIABILITY. IN 2021 THE EUROPEAN COMMISSION IMPOSED A REVISED FINE OF 31,700,000 EUROS (USD $37,802,250 WHICH UTILIZES THE CLOSING FX RATE AS OF THE DATE OF ISSUANCE FOR THE AMENDED FINE AND AS REFLECTED IN SECTION 12.A ). HSBC APPEALED TO THE LIABILITY FINDINGS TO THE COURT OF JUSTICE OF THE EUROPEAN UNION, WHICH UPHELD HSBC'S LIABILITY IN JANUARY 2023. HSBC CONTINUES TO MAINTAIN AN APPEAL BEFORE THE GENERAL COURT AGAINST THE 2021 COMMISSION DECISION IMPOSING A REVISED FINE. Status: On Appeal Sanction Detail: HSBC CONTINENTAL EUROPE IN ACCORDANCE WITH THE 2021 DECISION PAID A FINE IN THE AMOUNT OF 31,700,000 EUROS. SEE INFORMATION WITH RESPECT TO THE APPEAL ABOVE. THE FINE IS CONVERTED TO USD $37,802,250 (CLOSING FX RATE AS OF THE DATE OF ISSUANCE FOR THE AMENDED FINE) AS REPORTED ABOVE IN SECTION 12.A. Summary: HSBC PAID THE REVISED FINE OF 31,700,000 EUROS (USD $37,802,250 WHICH UTILIZES THE CLOSING FX RATE AS OF THE DATE OF ISSUANCE FOR THE AMENDED FINE AND AS REFLECTED IN SECTION 12.A ) IN 2021 . WHILE HSBC'S CHALLENGE TO LIABILITY HAS BEEN EXHAUSTED, FOLLOWING A JANUARY 2023 RULING OF THE COURT OF JUSTICE OF THE EU, HSBC CONTINUES TO CHALLENGE THE FINE BEFORE THE GENERAL COURT AND IS AWAITING A HEARING DATE.

Allegations: IN JANUARY 2018, FOLLOWING THE CONCLUSION OF THE US DEPARTMENT OF JUSTICE'S (DOJ) INVESTIGATION INTO HSBC'S HISTORICAL FOREIGN EXCHANGE ACTIVITIES, HSBC HOLDINGS ENTERED INTO A THREE-YEAR DEFERRED PROSECUTION AGREEMENT WITH THE CRIMINAL DIVISION OF THE DOJ (THE FX DPA), REGARDING FRAUDULENT CONDUCT IN CONNECTION WITH TWO PARTICULAR TRANSACTIONS IN 2010 AND 2011. IN JANUARY 2021, THE FX DPA EXPIRED AND, IN AUGUST 2021, THE CHARGES DEFERRED BY THE FX DPA WERE DISMISSED. Status: Final Sanction Detail: IN JANUARY 2018, FOLLOWING THE CONCLUSION OF THE US DEPARTMENT OF JUSTICE'S (DOJ) INVESTIGATION INTO HSBC'S HISTORICAL FOREIGN EXCHANGE ACTIVITIES, HSBC HOLDINGS ENTERED INTO A THREE-YEAR DEFERRED PROSECUTION AGREEMENT WITH THE CRIMINAL DIVISION OF THE DOJ (THE FX DPA), REGARDING FRAUDULENT CONDUCT IN CONNECTION WITH TWO PARTICULAR TRANSACTIONS IN 2010 AND 2011. IN JANUARY 2021, THE FX DPA EXPIRED AND, IN AUGUST 2021, THE CHARGES DEFERRED BY THE FX DPA WERE DISMISSED. Summary: IN JANUARY 2018, FOLLOWING THE CONCLUSION OF THE US DEPARTMENT OF JUSTICE'S (DOJ) INVESTIGATION INTO HSBC'S HISTORICAL FOREIGN EXCHANGE ACTIVITIES, HSBC HOLDINGS ENTERED INTO A THREE-YEAR DEFERRED PROSECUTION AGREEMENT WITH THE CRIMINAL DIVISION OF THE DOJ (THE FX DPA), REGARDING FRAUDULENT CONDUCT IN CONNECTION WITH TWO PARTICULAR TRANSACTIONS IN 2010 AND 2011. IN JANUARY 2021, THE FX DPA EXPIRED AND, IN AUGUST 2021, THE CHARGES DEFERRED BY THE FX DPA WERE DISMISSED.