Subject: File No. 4-657
From: Eric A De La Pena
Affiliation: BSIS

March 1, 2013

Jones married two speculative tools to create what he considered a conservative investment scheme. He used leverage to buy more shares, and used short selling to avoid market risk. He bought as many stocks as he sold, so market-wide moves up or down would be a wash on the total value of such a portfolio. The crucial question, then, would not be the direction of the market but whether the manager had picked the right stocks to buy and sell. The fund avoided requirements of the Investment Company Act of 1940 by limiting itself to 99 investors in a limited partnership. Jones chose to take 20 percent of profits as compensation, invoking the Phoenician sea captains who kept a fifth of the profits from successful voyages. He charged no fee unless he made a profit. These elements: a partnership structure where a percentage of profits is paid as compensation to the general partner/fund manager, a small number of limited partners as investors, and a variety of long and short positions, are the core elements of hedge funds today Options backdating is the practice of altering the date a stock option was granted to an earlier or later date, usually a date on which the underlying stock price was lower. This is a way of repricing options to make them valuable or more valuable when the option "strike price" (the fixed price at which the owner of the option can purchase stock) is fixed to the stock price at the date the option was granted. Cases of backdating employee stock options have drawn public and media attention Tax avoidance, on the other hand, is the legal utilization of the tax regime to one's own advantage to reduce the amount of tax that is payable by means that are within the law. Both tax evasion and avoidance can be viewed as forms of tax noncompliance, as they describe a range of activities that are unfavorable to a state's tax system, though such charMany governments tax individuals and/or enterprises on income. Such systems of taxation vary widely, and there are no broad general rules. These variations create the potential for double taxation (where the same income is taxed by different countries) and no taxation (where income is not taxed by any country). Income tax systems may impose tax on local income only or on worldwide income. Generally, where worldwide income is taxed, reductions of tax or foreign credits are provided for taxes paid to other jurisdictions. Limits are almost universally imposed on such credits. Multinational corporations usually employ international tax specialists, a specialty among both lawyers and accountants, to decrease their worldwide tax liabilities.acterization of tax avoidance is suspect, given that avoidance operates lawfully, within self-creating systems Inheritance tax, estate tax, and death tax or duty are the names given to various taxes which arise on the death of an individual. In United States tax law, there is a distinction between an estate tax and an inheritance tax: the former taxes the personal representatives of the deceased, while the latter taxes the beneficiaries of the estate. However, this distinction does not apply in other jurisdictions for example, if using this terminology UK inheritance tax would be an estate tax.Saving is income not spent, or deferred consumption. Methods of saving include putting money aside in a bank or pension plan. Saving also includes reducing expenditures, such as recurring costs. In terms of personal finance, saving specifies low-risk preservation of money, as in a deposit account, versus investment, wherein risk is higher.Following the period of the American regime of the Philippines from 1898 to 1901, the first civil government was created under William H. Taft, General-Governor of the Philippines, in 1902. The BIR would be created under the second civil governor, Luke E. Wright, with the passage of Reorganization Act No. 1189 on July 2, 1904 by the Philippine Commission. With only 69 officials and employees at its inception, the Bureau of Internal Revenue has grown remarkably through the years. John S. Ford was the first Collector of Internal Revenue. He was the bureau's steward for three years (1903-1907). He was succeeded by Ellis Cromwell (1909-1912), William T. Nolting (1912-1914) and James J. Rafferty (1914-1918). Rafferty was the last American collector of the Bureau. Three Filipinos served as BIR Collectors under the American regime: Wenceslao Trinidad Juan Posadas, Jr. and Alfredo L. Yatco.A newly industrialized country, the Philippine economy has been transitioning from one based on agriculture to one based more on services and manufacturing. Of the country's total labor force of around 38.1 million, the agricultural sector employs close to 32% but contributes to only about 13.8% of GDP. The industrial sector employs around 13.7% of the workforce andWith the accession of the Philippines to the Customs Co-Operation Council (CCC), the Tariff Customs Code has to be revised anew in order to align our tariff system with the CCC Nomenclature, and the result is the presently enforced Tariff Customs Code of 1982, revised by virtue of Executive Order No. 688. This new Code also assimilated various amendments to the Customs Code under P.D. 1628 1980 as well as reprints of the tariff concessions under the General Agreement on Tariff Multilateral Agreement Negotiations as provided in Executive Order No. 578, series of 1980, and the tariff concessions granted to ASEAN member countries as embBMV is now a public company following its IPO in June 2008, and its shares are traded on the BMV equities market. It operates by concession of the Secretariat of Finance and Public Credit. Until its IPO BMV was owned by its members, which were a group of banks and brokerage firms. The exchange trades debt instruments including Federal Treasury certificates (CETES), Federal Government Development bonds (BONDES), Investment Unit bonds (UDIBONOS), Bankers acceptances, promissory notes with yield payable at maturity, commercial paper and development bank bonds. In addition, it also trades stocks, debentures, mutual fund shares, and warrants. Trading is conducted electronically through the BMV-SENTRA Equities System. Settlement is T+3, and trading hours are 8:30 a.m. to 3 p.m. for the capital markets and 8 a.m. to 2:30 p.m. for debt instruments (Monday through Friday).odied in various Executive Orders from 1978 to 1981. accounts for 30% of GDP. Meanwhile the 46.5% of workers involved in the services sector are responsible for 56.2% of GDP It is possible for stock markets to get caught up in an economic bubble, like the steep rise in valuation of technology stocks in the late 1990s followed by the dot-com crash in 2000. Hype can affect any asset class, such as gold or real estate. In such events, valuations rise disproportionately to what many people would consider the fundamental value of the assets in question. In the case of stocks, this pushes up market capitalization in what might be called an "artificial" manner. Market capitalization is, therefore, only a rough measure of the true size of a market. However, it does represent the best estimate of all market participants at any point in time—bubbles are easy to spot retrospectively, but if a market participant believes a stock is overvalued, then of course they can profit from this by selling the stock (or shorting it, if they don't hold it). "Cap" is short for capitalization, a measure by which a company's size is classified. Big/Large caps are companies that have a market cap between $10–200 billion dollars. Mid caps range from $2 billion to $10 billion dollars. Small caps are typically new or relatively young companies and have a market cap between $100 million to $1 billion dollars. SmallCap's track record is not as lengthy as that of the Mid to MegaCaps. SmallCaps present the possibility of greater capital appreciation, but at greater risk.When using valuation multiples such as EV/EBITDA and EV/EBIT, the numerator should correspond to the denominator. The EV should therefore correspond to the market value of the assets that were used to generate the profits in question, excluding assets acquired (and including assets disposed) after the end of the financial reporting period. Examples of such changes in assets (capital employed) can include mergers and acquisitions (whether paid in cash or equity), significant capital investments or significant changes in working capital. Ideally, multiples should be calculated using the market value of the weighted average capital employed of the company during the comparable financial period.

When calculating multiples over different time periods (e.g. historic multiples vs forward multiples) EV should be adjusted to reflect the weighted average invested capital oExamples of Investing activities are
Purchase or Sale of an asset (assets can be land, building, equipment, marketable securities, etc.)
Loans made to suppliers or received from customers
Payments related to mergers and acquisitions.
f the company in each period
In the case of finding Cash Flows when there is a change in a fixed asset account, say the Buildings and Equipment account decreases, the change is added back to Net Income. The reasoning behind this is that because Net Income is calculated by, Net Income = Rev - Cogs - Depreciation Exp - Other Exp then the Net Income figure will be decreased by the building's depreciation that year. This depreciation is not associated with an exchange of cash, therefore the depreciation is added back into net income to remove the non-cash activity.Inventories have a significant effect on profits. A business that makes or buys goods to sell must keep track of inventories of goods under all accounting and income tax rules. An example illustrates why. Fred buys auto parts and resells them. In 2008, Fred buys $100 worth of parts. He sells parts for $80 that he bought for $30, and has $70 worth of parts left. In 2009, he sells the remainder of the parts for $180. If he keeps track of inventory, his profit in 2008 is $50, and his profit in 2009 is $110, or $160 in total. If he deducted all the costs in 2008, he would have a loss of $20 in 2008 and a profit of $180 in 2009. The total is the same, but the timing is much different. Most countries' accounting and income tax rules (if the country has an income tax) require the use of inventories for all businesses that regularly sell goods they have made or bought.Along with many other financial products and services, derivatives reform is an element of the Dodd–Frank Wall Street Reform and Consumer Protection Act of 2010. The Act delegated many rule-making details of regulatory oversight to the Commodity Futures Trading Commission and those details are not finalized nor fully implemented as of late 2012.