Certificated fraud in an uncertificated world

Abstract

... It is a typical bond issue by an emerging markets sovereign. The dollar-denominated $500 million issue is underwritten by two leading investment banks. The issue is represented by a single certificated global bond registered in the name of Cede & Co. as nominee for The Depository Trust Company (DTC). Upon the closing of the transaction, the physical global bond is placed in the vault of the fiscal agent, acting as custodian for the clearing system. Uncertificated interests in the global bond are allocated electronically to the accounts in DTC of the purchasers, or custodians acting on their behalf. After settlement, the bond issue trades entirely in uncertificated form in DTC and through Euroclear’s1 and Clearstream’s2 omnibus accounts at DTC to participants in the latter two clearing systems. The real bonds are offered and sold to the public under a shelf registration statement with the US Securities and Exchange Commission and can be viewed at www.sec.gov. The bonds are listed on EuroMTF market of the Luxembourg Stock Exchange and a listing application for the bonds is on file with and becomes readily available on the web site of the Exchange: www.bourse.lu. Prospectuses are also readily available from third party service providers such as Perfect Information Ltd. The disclosure in this documentation makes it abundantly clear that the bonds will trade in uncertificated form.