The Banks Are Selling Government Bonds to the Hedgies - The Floor is 250 Million Part 1
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| Author       | Source       | 
| :-------------: |:-------------:|
|  [u/somechicktho](https://www.reddit.com/user/somechicktho/) | [Reddit](https://www.reddit.com/r/Superstonk/comments/mtp8y1/the_banks_are_selling_government_bonds_to_the/) | 

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[DD 👨‍🔬](https://www.reddit.com/r/Superstonk/search?q=flair_name%3A%22DD%20%F0%9F%91%A8%E2%80%8D%F0%9F%94%AC%22&restrict_sr=1)

TL;DR

Investment companies are filing for amendments to combine the liability of holdings not registered with the SEC investment companies and they're buying government bonds through Principal Funds and filing those, while changing the language in their contacts regarding using those funds to up their liability insurance and assumedly collateral, or at best stability.

A number of these bonds have a value in the trillions.

Okay here we go

I've spent the entire weekend pouring through SEC filings, and they tell a slow but compelling story that's been unfolding.

Some of the screenshots are in my post history, and it's just that cause i haven't a clue how to put pictures in text. Or how it all tied together...so far.

Yes I'm really that dumb, so i guess you can't take a grain of financial advice from this.

But I'm going to try my best anyway to spell it what ive seen so someone who isn't dumb can look at what im seeing.

The latest form I've been looking at is the 40APP/A which is is companies appealing to get or renew an Amendment for them and their holdings, or " Amendment Application for an Order under Section 6(c) of the Investment Company Act of 1940, as amended ("Act") for an exemption from Sections 2(a)(32), 5(a)(1), 22(d) and 22(e) of the Act and Rule 22c-1 under the Act, under Section 12(d)(1)(J) of the Act, for an exemption from Sections 12(d)(1)(A) and 12(d)(1)(B) of the Act, and under Sections 6(c) and 17(b) of the Act for an exemption from Sections 17(a)(1) and 17(a)(2) of the Act."

Here's Act 22c-1 for the peeps who don't want to look it up

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> § 270.22c-1 Pricing of redeemable securities for distribution, redemption and repurchase. (a) No registered investment company issuing any redeemable security, no person designated in such issuer's prospectus as authorized to consummate transactions in any such security, and no principal underwriter of, or dealer in, any such security shall sell, redeem, or repurchase any such security except at a price based on the current net asset value of such security which is next computed after receipt of a tender of such security for redemption or of an order to purchase or sell such security: Provided, That:

(Prospectus? That'll come up later)

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12 d 1 A

> (d)Limitations on acquisition by investment companies of securities of other specific businesses (1) (A)It shall be unlawful for any registered investment company (the "acquiring company") and any company or companies controlled by such acquiring company to purchase or otherwise acquire any security issued by any other investment company (the "acquired company"), and for any investment company (the "acquiring company") and any company or companies controlled by such acquiring company to purchase or otherwise acquire any security issued by any registered investment company (the "acquired company"), if the acquiring company and any company or companies controlled by it immediately after such purchase or acquisition own in the aggregate--- (i)more than 3 per centum of the total outstanding voting stock of the acquired company; (ii)securities issued by the acquired company having an aggregate value in excess of 5 per centum of the value of the total assets of the acquiring company; or (iii)securities issued by the acquired company and all other investment companies (other than treasury stock of the acquiring company) having an aggregate value in excess of 10 per centum of the value of the total assets of the acquiring company.

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12 d 1 b

> (b)Distribution by investment company of securities of which it is issuer

It shall be unlawful for any registered open-end company (other than a company complying with the provisions of section 80a--10(d) of this title) to act as a distributor of securities of which it is the issuer, except through an underwriter, in contravention of such rules and regulations as the Commission may prescribe as necessary or appropriate in the public interest or for the protection of investors.

12 d 1 d is pretty important toooooo

> (d)Limitations on acquisition by investment companies of securities of other specific businesses (1) (A)It shall be unlawful for any registered investment company (the "acquiring company") and any company or companies controlled by such acquiring company to purchase or otherwise acquire any security issued by any other investment company (the "acquired company"), and for any investment company (the "acquiring company") and any company or companies controlled by such acquiring company to purchase or otherwise acquire any security issued by any registered investment company (the "acquired company"), if the acquiring company and any company or companies controlled by it immediately after such purchase or acquisition own in the aggregate---

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12 d 1 J

> (J)The Commission, by rule or regulation, upon its own motion or by order upon application, may conditionally or unconditionally exempt any person, security, or transaction, or any class or classes of persons, securities, or transactions from any provision of this paragraph, if and to the extent that such exemption is consistent with the public interest and the protection of investors.

Here's more about 17(a) and 17(b). [The order is so old they just scanned it in lol](https://www.google.com/url?sa=t&source=web&rct=j&url=https://www.sec.gov/rules/final/1968/34-8429.pdf&ved=2ahUKEwiq0Luk34jwAhWTLc0KHXAMBQAQFjAAegQIBhAC&usg=AOvVaw29IR5PAVlyq7kU-wXj80ov)

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17a

> § 270.22c-1 Pricing of redeemable securities for distribution, redemption and repurchase. (a) No registered investment company issuing any redeemable security, no person designated in such issuer's prospectus as authorized to consummate transactions in any such security, and no principal underwriter of, or dealer in, any such security shall sell, redeem, or repurchase any such security except at a price based on the current net asset value of such security which is next computed after receipt of a tender of such security for redemption or of an order to purchase or sell such security: Provided, That:

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17 b

> (b) For the purposes of this section,

(1) The current net asset value of any such security shall be computed no less frequently than once daily, Monday through Friday, at the specific time or times during the day that the board of directors of the investment company sets, in accordance with paragraph (e) of this section, except on:

There's also a whole bunch of amendments to those if you want to read more.

<https://www.law.cornell.edu/cfr/text/17/270.22c-1>

And ofc there are more rules in the Amendment above that aren't going to be linked here. They are publically available.

SO

What are a whole shitload of banks doing filing 40/APP in the past two weeks? They're multi-filing under multiple holdings to allow all of them to not only be able to make previously prohibited decisions but also to let them all be [liable for each other.](https://www.sec.gov/edgar/search/#/dateRange=30d&category=custom&forms=40-APP)

And, if you'll notice in the language, also so they can quickly sell securities to other (themselves I assume) investment companies and right back for profit.

Now let's move on to this big ass sale that Banks are having, JP Morgan 13 billion, Bank of America 15 billion. Wells Fargo legit selling their asset investment holdings after combining it with Corporate and changing their numbers to reflect it.

Principal Funds just took a shitload of Government Money Market Funds And they have filed a ton of Repurchase agreements and more to, well. Lol municipalities, federal, state, city that are insured.

Principal Funds has in their paperwork as reads

> "Objective:    The Fund seeks as high a level of current income as is considered consistent with preservation of principal and maintenance of liquidity."

And a part of the buying contract is

> "Repurchase Agreement Risk. If the other party to a repurchase agreement defaults on its obligation under the agreement, the Fund may suffer delays and incur costs or lose money in exercising its rights under the agreement. If the seller fails to repurchase the security and the market value of the security declines, the Fund may lose money."

Repurchase agreements that a whole bunch of big banks are doing with Principal Funds for everything, including US Treasury.

<https://www.sec.gov/Archives/edgar/data/898745/000089874521000318/xslN-MFP2_X01/primary_doc.xml>

[Oh and for the more reading that I'm wtfing, they've made changes to the 2a-7 in 2014, here's all the amendments in blue.](https://www.google.com/url?sa=t&source=web&rct=j&url=https://www.sec.gov/rules/final/2014/33-9616-rule-2a-7-amendments.pdf&ved=2ahUKEwiWrdmq7ojwAhWVVs0KHcVNCWsQFjAAegQIBRAC&usg=AOvVaw0gN2jW3RuvVSyD4MeSX1T4)

More interesting readings

<https://www.law.cornell.edu/cfr/text/17/240.15c3-3a>

i need to sort from all my crazy screenshots and random links.

About those changes to Money Market Funds in 2014.

There was another time that Rule 2a-7 was amended... Right after the 2008 market crash. It even got referenced in the filings.

[Here's amendments in blue for 2a-7 2010.](https://www.google.com/url?sa=t&source=web&rct=j&url=https://www.sec.gov/rules/final/2010/rule2a-7amendments.pdf&ved=2ahUKEwiMqN2i_4jwAhVPLs0KHay4Cd4QFjACegQICxAC&usg=AOvVaw0IeAzQU534KO5LOKQFgIqO&cshid=1618790764738)

Check out 32, which is a whole NEW addition regarding Weekly Liquid Assets that, lol, include government securities, and ones specifically offered as a discount.

They also changed the language of Repurchase agreements.

An N-MFP2 is

FORM N-MFP MONTHLY SCHEDULE OF PORTFOLIO HOLDINGS OF MONEY MARKET FUNDS

[Look at all of them running to file and those dates. Those fucking dates. All those Liquidity Funds.](https://www.sec.gov/edgar/search/#/dateRange=30d&category=custom&forms=N-MFP%252CN-MFP1%252CN-MFP2)

That must be why they're all burning the midnight oil.

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Bonus Round:

[Stuff they passed for 2a-7 on July 21, 2008](https://www.google.com/url?sa=t&source=web&rct=j&url=https://www.sec.gov/rules/final/2008/ic-28266.pdf&ved=2ahUKEwiiqu6EgonwAhXMZc0KHeuZAGUQFjADegQICRAC&usg=AOvVaw12ff-HlKP-v-ulU_2J4UqW)

Didn't something happen in SEPTEMBER 2008?

I guess I'll think about it while I make a Part 2, reluctantly, cause this is really hard and i have no organizational skills.

I'll include more details that banks are buying up these through Principal Funds. Next round.

Also, why are a bunch of retirement funds 8ks showing 1 gamestop share? Fellow apes or insurance?

And I'll go over why prospectus is important, cause all your banks are frantically filing them to change their contract language.

[Part 1.5](https://www.reddit.com/r/Superstonk/comments/mtt8wg/master_feeder_funds_privately_negotiated_loans/?utm_medium=android_app&utm_source=share)

Edit: changed billions to TRILLIONS

Edit 2: guys i learned how to bold

Edit 3: it didn't bold nm

Edit 4: look! i got it guys thanks for all the help and patience lmao

Edit 5: look look i made my first hyperlink on reddit guys

Edit 6: it looks better!
