Pershing Square Capital Management, L.P.

Allegations: ON JANUARY 17, 2017, THE SEC INSTITUTED ADMINISTRATIVE PROCEEDINGS AGAINST THE REGISTRANT, PURSUANT TO SECTION 203(E) AND 203(K) OF THE ADVISERS ACT, FINDING THAT THE REGISTRANT HAD VIOLATED ADVISERS ACT RULE 206(4)-5 WHEN A FORMER EMPLOYEE MADE A $500 PERSONAL POLITICAL CONTRIBUTION TO A CANDIDATE FOR THE DEMOCRATIC PARTY NOMINATION FOR GOVERNOR OF MASSACHUSETTS (THE "CONTRIBUTION") WHILE THE REGISTRANT ADVISED A FUND WHERE A MASSACHUSETTS GOVERNMENT ENTITY (THE "INVESTOR") WAS AN INVESTOR. THE SEC FOUND THAT, AFTER THE CONTRIBUTION WAS MADE, ITS RETURN WAS SOUGHT AND RECEIVED, AND NOTED THAT ADVISERS ACT RULE 206(4)-5 DOES NOT REQUIRE A SHOWING OF QUID PRO QUO OR ACTUAL INTENT TO INFLUENCE AN ELECTED OFFICIAL OR CANDIDATE. Status: Final Sanction Detail: WITHOUT ADMITTING TO ANY ALLEGATIONS, THE REGISTRANT CONSENTED TO THE ISSUANCE OF AN ORDER AND PAID A CIVIL MONEY PENALTY OF $75,000 ON JANUARY 18, 2017. Summary: ON JANUARY 17, 2017, THE REGISTRANT AND THE U.S. SECURITIES AND EXCHANGE COMMISSION (THE "COMMISSION") ENTERED INTO A SETTLEMENT REGARDING A PREVIOUSLY REPORTED CAMPAIGN CONTRIBUTION BY A FORMER EMPLOYEE MADE IN VIOLATION OF THE COMMISSION'S RULES GOVERNING POLITICAL CONTRIBUTIONS BY INVESTMENT ADVISER EMPLOYEES AND THE REGISTRANT'S OWN COMPLIANCE POLICIES. WITHOUT ADMITTING OR DENYING LIABILITY, THE REGISTRANT AGREED TO PAY $75,000 TO RESOLVE THIS MATTER. THE $500 CONTRIBUTION IN QUESTION WAS TO THE SISTER OF A PERSONAL FRIEND OF THE FORMER EMPLOYEE. THE FRIEND'S SISTER WAS TRYING, UNSUCCESSFULLY, TO ENTER ONE OF THE GUBERNATORIAL PRIMARIES IN MASSACHUSETTS. THE CONTRIBUTION WAS MADE OVER TWO YEARS AFTER A MASSACHUSETTS PENSION FUND FIRST INVESTED WITH THE REGISTRANT'S FUNDS. THE FORMER EMPLOYEE REQUESTED THAT THE CONTRIBUTION BE RETURNED, AND IT WAS REFUNDED. THE REGISTRANT WAS UNAWARE OF THE CONTRIBUTION AT THE TIME IT WAS MADE. UPON LEARNING OF THE CONTRIBUTION, THE REGISTRANT FILED AN EXEMPTION APPLICATION WITH THE COMMISSION'S DIVISION OF INVESTMENT MANAGEMENT STATING THAT IT SHOULD NOT BEAR ANY LIABILITY FOR ITS FORMER EMPLOYEE'S ERROR. AS MADE CLEAR IN THE EXEMPTION APPLICATION, THE $500 CONTRIBUTION, WHICH WAS $350 GREATER THAN PERMITTED BY COMMISSION RULES, WAS MADE BY A FORMER EMPLOYEE WHO WAS NOT A MEMBER OF THE REGISTRANT'S INVESTOR RELATIONS GROUP AND WAS NOT RESPONSIBLE FOR SECURING OR RETAINING INVESTMENTS IN THE REGISTRANT'S FUNDS. THE CONTRIBUTION WAS MADE IN DIRECT VIOLATION OF THE REGISTRANT'S WRITTEN COMPLIANCE POLICIES AND WAS CONTRARY TO A SUBSEQUENT CERTIFICATION BY THE EMPLOYEE THAT HE HAD COMPLIED WITH THE REGISTRANT'S POLICIES GOVERNING POLITICAL CAMPAIGN CONTRIBUTIONS. MOREOVER, AT PRECISELY THE SAME TIME AS THE UNREPORTED CONTRIBUTION, THE REGISTRANT'S CHIEF EXECUTIVE OFFICER WILLIAM A. ACKMAN REQUESTED PERMISSION FROM THE REGISTRANT'S COMPLIANCE GROUP TO MAKE AN IDENTICAL CONTRIBUTION TO THE SAME PERSON IN MASSACHUSETTS. WHEN INFORMED OF THE $150 LIMIT, MR. ACKMAN MADE A $150 CONTRIBUTION, AS PERMITTED BY LAW. THE ORDER SETTLING THIS MATTER BRIEFLY DESCRIBES THE CIRCUMSTANCES THAT SERVE AS THE BASIS FOR THE VIOLATION, WHICH ARE SET FORTH IN GREATER DETAIL IN THE REGISTRANT'S EXEMPTION APPLICATION AND WHICH, AS OF THE DATE HEREOF, IS AVAILABLE ON THE COMMISSION'S WEBSITE. THE ORDER ALSO FINDS THAT THE RULE IN QUESTION DOES NOT REQUIRE A SHOWING OF ACTUAL INTENT TO INFLUENCE A CANDIDATE FOR ELECTED OFFICE, AND THAT THE COMMISSION WAS NOT REQUIRED TO SHOW THAT THE REGISTRANT WAS EVEN AWARE THAT IT WAS VIOLATING THE RULE. THE REGISTRANT FOLLOWS RIGOROUS COMPLIANCE PROCEDURES, TAKES ALL REASONABLE STEPS TO ENFORCE ITS POLICIES, AND CAREFULLY TRAINS AND PERIODICALLY REMINDS ALL EMPLOYEES AND RELATED PARTIES OF THOSE POLICIES.