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The fabulous Section {{{{{1}}}|3(d)}} representation, giving one’s counterparty the right to [[close out]] should any so-designated [[representations]] turn out not to be true. This is sure to occupy an inordinate amount of your [[negotiation]] time — in that it occupies any time at all — because you are as likely to be hit in the face by a live starfish in the Gobi Desert as you are to close out an {{isdama}} because your counterparty is late in preparing its annual accounts. [[Disclaimer|But that’s a personal view and you may not rely on it.]] | |||
Now you might ask what good an item of {{ | The {{{{{1}}}|3(d)}} representation, in the {{isdaprov|documents for delivery}} table in the {{isdaprov|Schedule}}, therefore covers only the ''accuracy and completeness'' of {{{{{1}}}|Specified Information}} and not (for example) whether {{{{{1}}}|Specified Information}} is delivered ''at all''. For that, see Section {{{{{1}}}|4(a)}} - {{{{{1}}}|Furnish Specified Information}}. | ||
=====“Covered by the Section {{{{{1}}}|3(d)}} Representation”===== | |||
If one is required to “[[Furnish Specified Information - ISDA Provision|furnish]]” {{{{{1}}}|Specified Information}} under Section {{{{{1}}}|4}}, two things can go wrong: | |||
'''No show''': One can ''fail'' to provide it, ''at all'', in which case there is a {{{{{1}}}|Breach of Agreement}}, but be warned: the [[Grace period|period]] before one can enforce such a failure, judged by the yardstick of modern financial contracts, is long enough for a whole kingdom of dinosaurs to [[evolve]] and be wiped out; or | |||
'''It’s cobblers''': One ''can'' provide the {{{{{1}}}|Specified Information}}, on time, but it can be a total pile of ''horse ordure''. Now, here is a [[trick for young players]]: if your {{{{{1}}}|Specified Information}} is, or turns out to be, false, you have no remedy ''unless'' you have designated that it is “subject to the Section {{{{{1}}}|3(d)}} [[representation]]”. That is the one that promises it is accurate and not misleading. | |||
=====Might Section 3(d) ''not'' cover a representation?===== | |||
Now you might ask what good an item of {{{{{1}}}|Specified Information}} can possibly be, if Section {{{{{1}}}|3(d)}} ''didn’t'' apply and it could be just made up on the spot without fear of retribution — as a youngster, the [[JC]] certainly asked that question, and has repeated it over many years, and is yet to hear a good answer — but all we can presume is that in its tireless quest to cater for the unguessable predilections of the [[Negotiator|negotiating community]], {{icds}} left this preposterous option open ''just in case''. It wouldn’t be the first time. | |||
=====Legal opinions, and Credit Support Documents===== | |||
A trawl through the [[SEC]]’s “Edgar” archive<ref>[https://www.google.com/search?q=%22ISDA+Master+Agreement%22+site%3Ahttps%3A%2F%2Fwww.sec.gov You are welcome.]</ref> reveals that the sorts of things to which “[[Covered by Section 3(d) Representation]]” results in a “No” outcome are ''rare'' — but not non-existent. It is things like “[[Legal opinion]] from counsel concerning due authorization, enforceability and related matters, addressed to the other party and reasonably acceptable to such other party”, or “{{{{{1}}}|Credit Support Document}}s”. {{seedetail}} | |||
=====Annual reports===== | |||
The other little fiddle — and it ''is'' a little fidgety fiddle — is to remark of annual reports that, yes, they ''are'' covered by that Section 3(d) representation, ''but'' with a [[proviso]]: | |||
{{quote|“Yes; ''provided that'' the phrase “is, as of the date of the information, true, accurate and complete in every material respect” in Section {{{{{1}}}|3(d)}} shall be deleted and the phrase “fairly presents, in all material respects, the financial condition and results of operations as of their respective dates and for the respective periods covered thereby” shall be inserted in lieu thereof.”}} | |||