Santander Asset Management Sa Sgiic

Event Detail: A COURT IN LYON (FRANCE) HAS NOTIFIED BANCO SANTANDER, S.A. ("THE BANK"), A CONTROL AFFILIATE AND INDIRECT PARENT COMPANY OF SANTANDER SECURITIES LLC, THAT ALLEGATIONS AGAINST THE BANK FOR COMPLICITY OF FRAUD ("COMPLICITÉ D'ESCROQUERIE") AND MONEY LAUNDERING ("BLANCHIMENT") MAY PROCEED TO TRIAL. THESE CRIMINAL PROCEEDINGS (NUM. JICABJRS412000005) CONDUCTED BEFORE THE LYON COURT WERE INITIATED AS A RESULT OF AN ALLEGED INVESTMENT FRAUD PERPETRATED BY A FRENCH INDIVIDUAL WHO HAD BEEN A CLIENT OF A BRANCH OF THE BANK IN IRUN (SPAIN) ALONG WITH THREE OF HIS CONTROLLED COMPANIES THAT MAY HAVE BEEN USED TO FACILITATE THE FRAUD. THIS INDIVIDUAL AND HIS CONTROLLED COMPANIES ALSO OPERATED WITH SEVERAL OTHER BANKS. THE BANK DISPUTES ALL CRIMINAL LIABILITY, HAS MERITORIOUS DEFENSES, AND WILL VIGOROUSLY DEFEND AGAINST THE CRIMINAL NEGLIGENCE ALLEGATIONS. Status: Pending

Allegations: PLAINTIFFS ALLEGE THE FOLLOWING AGAINST THE APPLICANT, ITS CONTROL AFFILIATE AND OTHER DEFENDANTS: 1. A DERIVATIVE CLAIM FOR AIDING AND ABETTING BREACH OF FIDUCIARY DUTY AGAINST ALL DEFENDANTS. 2.A DERIVATIVE CLAIM FOR UNJUST ENRICHMENT/CONSTRUCTIVE TRUST AGAINST ALL DEFENDANTS. 3.A CLASS ACTION CLAIM FOR BREACH OF CONTRACT AGAINST THE SANTANDER ENTITY DEFENDANTS 4.A CLASS ACTION CLAIM FOR BREACH OF THE COVENANT OF GOOD FAITH AND FAIR DEALING AGAINST THE SANTANDER ENTITY DEFENDANTS. PLAINTIFFS ALLEGE THE FOLLOWING ONLY AGAINST OTHER DEFENDANTS: 1.A DERIVATIVE CLAIM FOR VIOLATION OF FIDUCIARY DUTIES OWED TO THE FUNDS AND THEIR SHAREHOLDERS PURSUANT TO THE GENERAL CORPORATIONS ACT OF THE COMMONWEALTH OF PUERTO RICO AGAINST THE DIRECTOR DEFENDANTS. 2.A DERIVATIVE CLAIM FOR VIOLATION OF DUTIES AS AGENT OF THE FUNDS PURSUANT TO THE CIVIL CODE OF THE COMMONWEALTH OF PUERTO RICO AGAINST SANTANDER ASSET MANAGEMENT. Status: Pending Summary: THIS PURPORTED SHAREHOLDER DERIVATIVE AND CLASS ACTION WAS BROUGHT BY CUSTOMERS OF CERTAIN PUERTO RICO CLOSED-END FUNDS ("CEFS") IN PUERTO RICO STATE COURT AGAINST BANCO SANTANDER, S.A., SANTANDER BANCORP, BANCO SANTANDER PUERTO RICO, SANTANDER SECURITIES LLC, SANTANDER ASSET MANAGEMENT LLC, AND SEVERAL DIRECTORS AND SENIOR MANAGEMENT OF THOSE ENTITIES IN SEPTEMBER 2016. BROUGHT ON BEHALF OF THE FUNDS AND OF PUERTO RICO BASED INVESTORS, THE COMPLAINT ALLEGES THAT THE ENTITIES AND INDIVIDUALS CREATED, CONTROLLED, MANAGED, AND ADVISED CERTAIN CEFS TO THE DETRIMENT OF THE FUNDS AND THEIR SHAREHOLDERS FROM MARCH 1, 2012 THROUGH THE PRESENT. A NOTICE OF REMOVAL TO FEDERAL COURT HAS BEEN FILED.

Allegations: NOT COMPLYING WITH THE REGULATIONS PERTAINING TO COMMISSIONS, COSTS AND REVENUES OF THE FUNDS AFECTED IN RELATION TO CERTAIN REBATES. Status: On Appeal Summary: ON AUGUST 2, 2011 BY ORDER ENTERED BY THE MINISTRY OF ECONOMY AND TAXES, A FINE WAS IMPOSED ON SANTANDER ASSET MANGEMENT, SGIC SA IN THE AMOUNT OF $18,471,6000 DUE TO AN ALLEGED INFRINGMENT OF ARTICLE 80.N OF ACT NO. 35/2003, DATED NOVEMBER 4, 2003, RELATING TO THE IMCOME, FEES AND COSTS REGIME OF TWO INVESTMENT FUNDS DURING THE YEARS 2003 TO 2007. THE FINE RELATES TO AN ISSUE BROUGHT BY THE "COMITE CONSULTIVO DE LA COMISION NACIONAL DEL MERCADO DE VALORES" (SPAIN'S STOCKS AND INVESTMENT PRODUCT REULATOR CONSULTATION COMMITTEE) ALLEGING THAT THE NON-COMPLIANCE OF THE OBLIGATION HAS A "GENERIC CHARACTER" AND ITS INTERPRETATION "COULD HAVE GOT ENOUGH CLARITY ONLY RECENTLY." ON OCTOBER 18, 2011, SAM FILED AN APPEAL AGAINST THE ORDER IN THE COURTS OF AUDIENCIA GENERAL. THE FINE WAS TEMPORARILY HELD ON DECEMBER 1, 2011 UNTIL THE PROCESS HAD ENDED. ON DECEMBER 14, 2012, AUDIENCIA GENERAL REJECTED THE APPEAL. ON JANUARY 18, 2013, SAM FILED ITS INTENTION TO APPEAL TO THE SPANISH SUPREME COURT. ON MARCH, 2013 SAM FILED AN APPEAL TO THE SPANISH SUPREME COURT. THE COURT ISSUED ITS FINAL JUDGEMENT ON SEPTEMBER 28, 2015. THE COURT RATIFIED THE FINE OF 14,000,000EUROS IMPOSED BY THE LOWER COURT. PAYMENT OF THE FINE WAS MADE IN FEBRUARY, 2016.

Allegations: UNSUITABLE SALES OF INVESTMENT PRODUCTS Status: On Appeal Sanction Detail: $23455200 Summary: IN MAY 2013 THE SPANISH MINISTRY OF ECONOMY ISSUED A DECISION IN WHICH IT FOUND THAT AN INDIRECT 50% OWNER OF THE REGISTRANT HAD COMMITTED A SERIOUS INFRINGEMENT AND A VERY SERIOUS INFRINGEMENT OF THE SECURITIES MARKETS WITH REGARD TO THE COMMERCIALIZATION OF AN INVESTMENT PRODUCT. TWO SANCTIONS WERE IMPOSED ON SUCH ENTITY FOR A TOTAL AMOUNT OF EURO 16.9 MILLION. THE DECISION OF THE MINISTRY OF ECONOMY WASN APPEALED TO THE AUDIENCIA NACIONAL (ADMINISTRATIVE COURT). THROUGH ORDER ISSUED ON JULY 1, 2015, THE ADMINISTRATIVE COURT ANULLED ONE OF THE SACTIONS IN AN AMOUNT OF 10.000.000 EUROS, AND HAS CONFIRMED ANOTHER SACTION IN AN AMOUNT OF 6.900.000 EUROS. THIS RESOLUTION HAS BEEN APPEALED TO THE SUPREME COURT AND IS PENDING FINAL DECISION.

Allegations: UNSUITABLE SALES OF INVESTMENT PRODUCTS. Status: On Appeal Sanction Detail: THE TOTAL AMOUNT OF THE FINE WAS $1,000,000 EUROS. Summary: IN JANUARY 2013, THE SPANISH MINISTRY OF ECONOMY ISSUED A DECISION IMPOSING A FINE OF $1 MILLION EUROS TO AN INDIRECT 50% OWNER OF THE REGISTRANT FOR AN INFRINGEMENT OF THE SECURITIES MARKETS ACT WITH REGARD TO THE COMMERCIALIZATION OF AN INVESTMENT PRODUCT. THE DECISION OF THE MINISTRY OF ECONOMY HAS BEEN APPEALED IN THE CONTENTIONS-ADMINISTRATIVE COURT AND THE DECISION IS PENDING.

Allegations: ALLEGED MARKET MANIPULATION PRACTICES Status: Final Sanction Detail: 50000 EUR Summary: THIS CLAIM WAS ACQUIRED BY BANCO SANTANDER FROM ITS ACQUISIONT AND ABSORPTION OF BANCO BANIF, S.A. IN JANUARY 2014, THE SPANISH REGULATOR COMISIÓN NACIONAL DE MERCCADO DE VALORES (CNMV) ISSUED A DECISION IMPOSING A FINE OF EURO 50.000 TO BANCO BANIF, S.A. (NOWADAYS BANCO SANTANDER, S.A.) ALLEGED MARKET MANIPULATION PRACTICES. BANCO SANTANDER DECIDED NOT TO APPEAL. IT IS A FIRM SANCTION.

Allegations: BREACH OF THE DILIGENCE AND INFORMATION DUTIES ALLEGED IN CONNECTION WITH THE PURCHASE OF SOME RISKY ASSETS BY THE CLAIMING PARTY (BEING A CONSERVATIVE CLIENT). Status: On Appeal Sanction Detail: 2,000,000 EUR Summary: THIS IS A CLAIM ACQUIRED BY BANCO SANTANDER FROM ITS ACQUISITION AND ABSORPTION OF BANCO BANIF, S.A. IN MAY 2013, THE SPANISH REGULATOR COMISIÓN NACIONAL DE MERCCADO DE VALORES (CNMV) ISSUED A DECISION IMPOSING A FINE OF EURO 2 MILLION TO BANCO BANIF, S.A. (NOWADAYS BANCO SANTANDER, S.A.) FOR A SERIOUS INFRINGEMENT FOR THE BREACH OF THE DILIGENCE AND INFORMATION DUTIES ALLEGED IN CONNECTION WITH THE PURCHASE OF SOME RISKY ASSETS BY THE CLAIMING PARTY (BEING A CONSERVATIVE CLIENT). THE DECISION OF CNMV HAS BEEN APPEALED IN FRONT OF THE MINISTRY OF ECONOMY.THROUGH RESOLUTION ISSUED ON OCTOBER 19, 2015, THE MINISTER OF ECONOMY HAS DISMISSED THE APPEAL. THE RESOLUTION HAS BEEN APPEALED TO THE AUDIENCIA NACIONAL. AUDIENCIA NACIONAL DISMISSED BANCO SANTANDER'S APPEAL AND BANCO SANTANDER HAS APPEALED TO THE SUPREME COURT AND IS PENDING FINAL DECISION.

Allegations: FAILURE TO MAINTAIN CERTAIN ANTI-MONEY LAUNDERING CONTROLS (RELATING TO, AMONG OTHER THINGS, CUSTOMER DUE DILIGENCE AND THE FILING OF SUSPICIOUS ACTIVITY REPORTS DURING THE PERIOD OF TIME BETWEEN 2012 AND 2015) MEETING THE STANDARDS REQUIRED UNDER SPANISH LAW. Status: On Appeal Sanction Detail: SEE RESPONSE TO B ABOVE. Summary: ON MARCH 1, 2018, THE SPANISH MINISTRY OF ECONOMY AND COMPETITION ISSUED AN UNPUBLISHED DECISION ON ADMINISTRATIVE PROCEEDINGS AS TO BANCO SANTANDER, S.A. ("BSSA"), CONCLUDING THAT CERTAIN ASPECTS OF BSSA'S ANTI-MONEY LAUNDERING CONTROLS (RELATING TO, AMONG OTHER THINGS, CUSTOMER DUE DILIGENCE AND THE FILING OF SUSPICIOUS ACTIVITY REPORTS DURING THE PERIOD OF TIME BETWEEN 2012 AND 2015) DID NOT MEET ALL REQUIRED STANDARDS UNDER SPANISH LAW. AS A RESULT, THE MINISTRY IMPOSED A FINE OF 10,547,704 EUROS. BSSA STRONGLY BELIEVES THE DECISION IS UNFOUNDED AND WITHOUT MERIT AND ON MAY 5, 2018 APPEALED THE ADMINISTRATIVE DECISION TO THE SPANISH HIGH NATIONAL COURT. THE MINISTRY'S DECISION RELATES SOLELY TO BSSA AND IS NOT RELATED IN ANY WAY TO ANY ACTIVITY OR CONCERNED AT OR INVOLVING SANTANDER ASSET MANAGEMENT SA SGIIC.

Allegations: FAILURE TO MAINTAIN CERTAIN ANTI-MONEY LAUNDERING CONTROLS RELATED TO CUSTOMER DUE DILIGENCE BETWEEN SEPTEMBER 2015 AND JUNE 2017, IN A MANNER THAT MET THE STANDARDS REQUIRED UNDER CHINESE LAW. Status: Final Sanction Detail: BANCO SANTANDER, S.A. SHANGHAI BRANCH PAID A FINE OF RMB 1,000,000 - USD AMOUNT ABOVE IS AN ESTIMATE AS OF JANUARY 7, 2019. Summary: FOLLOWING A ROUTINE REVIEW BY THE PEOPLE'S BANK OF CHINA ('PBOC ') CARRIED OUT IN 2017, THE PBOC ISSUED AN ADMINISTRATIVE DECISION IDENTIFYING A FAILURE TO MAINTAIN CERTAIN ANTI-MONEY LAUNDERING CONTROLS RELATED TO CUSTOMER DUE DILIGENCE, BETWEEN SEPTEMBER 2015 AND JUNE 2017, IN A MANNER THAT MET THE STANDARDS REQUIRED UNDER CHINESE LAW. THE PBOC'S DECISION RELATED SOLELY TO BSSA'S SHANGHAI BRANCH AND IS NOT RELATED IN ANY WAY TO ANY ACTIVITY OR CONCERN AT OR INVOLVING SANTANDER INVESTMENT SECURITIES INC.

Allegations: FAILURE TO ACT IN CUSTOMERS' BEST INTERESTS AS REQUIRED UNDER SPANISH LAW, IN CONNECTION WITH THE PLACEMENT OF SHARES OF COLLECTIVE INVESTMENT UNDERTAKINGS IN CUSTOMERS' MANAGED AND ADVISED PORTFOLIOS. Status: Final Sanction Detail: BANCO SANTANDER, S.A. (BSSA) WAS FINED EUR 4,500,000 - USD AMOUNT ABOVE IS AN ESTIMATE AS OF JANUARY 7, 2019. BSSA PAID A REDUCED AMOUNT OF EUR 3,600,000, AVAILING ITSELF OF THE REDUCTION FOR PROMPT PAYMENT ALLOWANCE. Summary: ON SEPTEMBER 27, 2018, THE COMISION NACIONAL DEL MERCADO DE VALORES ('CNMV') PUBLISHED A DECISION AS TO BSSA, CONCLUDING THAT BSSA FAILED TO ACT IN CUSTOMERS' BEST INTERESTS AS REQUIRED UNDER SPANISH LAW IN CONNECTION WITH THE PLACEMENT OF SHARES OF COLLECTIVE INVESTMENT UNDERTAKINGS IN CUSTOMERS' MANAGED AND ADVISED PORTFOLIOS. BSSA PAID A FINE OF EUR 3,600,000. THE CNMV'S DECISION RELATED SOLELY TO BSSA AND IS NOT RELATED IN ANY WAY TO ANY ACTIVITY OR CONCERN AT OR INVOLVING SANTANDER INVESTMENT SECURITIES INC.

Allegations: NOT COMPLYING WITH THE REGULATIONS PERTAINING TO COMMISSIONS, COSTS AND REVENUES OF THE FUNDS AFECTED IN RELATION TO CERTAIN REBATES. Status: Final Sanction Detail: $18,471,600 Summary: ON AUGUST 2, 2011 BY ORDER ENTERED BY THE MINISTRY OF ECONOMY AND TAXES, A FINE WAS IMPOSED ON SANTANDER ASSET MANGEMENT, SGIC SA IN THE AMOUNT OF $18,471,6000 DUE TO AN ALLEGED INFRINGMENT OF ARTICLE 80.N OF ACT NO. 35/2003, DATED NOVEMBER 4, 2003, RELATING TO THE IMCOME, FEES AND COSTS REGIME OF TWO INVESTMENT FUNDS DURING THE YEARS 2003 TO 2007. THE FINE RELATES TO AN ISSUE BROUGHT BY THE "COMITE CONSULTIVO DE LA COMISION NACIONAL DEL MERCADO DE VALORES" (SPAIN'S STOCKS AND INVESTMENT PRODUCT REULATOR CONSULTATION COMMITTEE) ALLEGING THAT THE NON-COMPLIANCE OF THE OBLIGATION HAS A "GENERIC CHARACTER" AND ITS INTERPRETATION "COULD HAVE GOT ENOUGH CLARITY ONLY RECENTLY." ON OCTOBER 18, 2011, SAM FILED AN APPEAL AGAINST THE ORDER IN THE COURTS OF AUDIENCIA GENERAL. THE FINE WAS TEMPORARILY HELD ON DECEMBER 1, 2011 UNTIL THE PROCESS HAD ENDED. ON DECEMBER 14, 2012, AUDIENCIA GENERAL REJECTED THE APPEAL. ON JANUARY 18, 2013, SAM FILED ITS INTENTION TO APPEAL TO THE SPANISH SUPREME COURT. ON MARCH, 2013, SAM FILED AN APPEAL TO THE SPANISH SUPREME COURT. FINAL DECISION WAS ISSUED BY HE SUPREME COURT ON SEPTEMBER 2015. PAYMENT OF THE FINE WAS MADE IN FEBRUARY 2016.

Allegations: AS A RESULT OF AN INSPECTION OF A 2014 MORTGAGE PORTFOLIO, THE BANK OF SPAIN CITED BANCO SANTANDER, S.A. WITH EXCESSIVE CHARGING OF COMMISSIONS AND FAILURE TO PROVIDE SUFFICIENT INFORMATION TO CONSUMERS TO ALLOW THEM TO MAKE AN INFORMED DECISION ON THE PURCHASE OF SAID PORTFOLIOS. Status: Final Sanction Detail: BANCO SANTANDER, S.A. WAS FINED EURO 8,000,000 - USD AMOUNT ABOVE IS AN ESTIMATE AS OF 08/27/2019. BANCO SANTANDER, S.A. PAID A REDUCED AMOUNT OF EUR 6,400,000 AVAILING ITSELF OF THE 20% REDUCTION FOR PROMPT PAYMENT ALLOWANCE. Summary: AS A RESULT OF AN INSPECTION OF A 2014 MORTGAGE PORTFOLIO, THE BANK OF SPAIN CITED BANCO SANTANDER, S.A. WITH EXCESSIVE CHARGING OF COMMISSIONS AND FAILURE TO PROVIDE SUFFICIENT INFORMATION TO CONSUMERS TO ALLOW THEM TO MAKE AN INFORMED DECISION ON THE PURCHASE OF SAID PORTFOLIOS. WITHOUT ADMITTING OR DENYING THE FINDINGS, BANCO SANTANDER, S.A. PAID A FINE OF EURO 6,400,000 AVAILING ITSELF OF THE 20% REDUCTION FOR PROMPT PAYMENT ALLOWANCE.

Allegations: AS A RESULT OF AN INSPECTION OF A 2014 MORTGAGE PORTFOLIO, THE BANK OF SPAIN CITED BANCO SANTANDER, S.A. WITH EXCESSIVE CHARGING OF COMMISSIONS AND FAILURE TO PROVIDE SUFFICIENT INFORMATION TO CONSUMERS TO ALLOW THEM TO MAKE AN INFORMED DECISION ON THE PURCHASE OF SAID PORTFOLIOS. BANCO SANTANDER, S.A. IS ACCOUNTABLE FOR THE FINE AS BANCO POPULAR WAS ACQUIRED BY BANCO SANTANDER, S.A. IN 2017. Status: On Appeal Sanction Detail: BANCO SANTANDER, S.A. HAS PAID A FINE FOR CITATIONS RELATED TO BANCO POPULAR PRIOR TO BEING ACQUIRED BY BANCO SANTANDER, S.A. IN THE AMOUNT OF EURO 4,500,000 - USD AMOUNT ABOVE IS AN ESTIMATE AS OF 08/27/2019. Summary: AS A RESULT OF AN INSPECTION OF A 2014 MORTGAGE PORTFOLIO, THE BANK OF SPAIN CITED BANCO SANTANDER, S.A. WITH EXCESSIVE CHARGING OF COMMISSIONS AND FAILURE TO PROVIDE SUFFICIENT INFORMATION TO CONSUMERS TO ALLOW THEM TO MAKE AN INFORMED DECISION ON THE PURCHASE OF SAID PORTFOLIOS. BANCO SANTANDER, S.A. IS ACCOUNTABLE FOR THE FINE AS BANCO POPULAR WAS ACQUIRED BY BANCO SANTANDER, S.A. IN 2017.