(updated with correction)
Russell Investments placed restrictions on two of the four Russian companies that are in Russell indexes and that are sanctioned by the Treasury Department's Office of Foreign Assets Control and the European Union.
“Russell indexes will cap the number of shares of any Russian company named as having 'new equity' blocked by OFAC and/or the EU so as not to exceed the number of shares held in the index as of the date the sanction is announced,” a statement from the company said.
So far, “four Russian companies that are active members of the Russell Global index … have been named as part of the OFAC and/or EU sanctions: Novatek OAO, Rosneft OAO, VTB Bank OJSC and Sberbank of the Russian Federation.”
Russell capped the number of shares in VTB and Sberbank.
Russell has taken the step as a “precaution” because of the lack of clarity of sanctions banning U.S. and EU investors from dealing in new equity issues of named Russian companies.
“Although neither OFAC nor the EU have provided a comprehensive definition of 'new equity,' we believe participation in corporate-action events like secondary offerings, rights offerings, warrants and stock dividends have a high probability of being considered prohibited transactions,” the statement said. “Furthermore, it is not clear that when 'new equity' shares are pooled with 'old' equity shares on the open market, they can be differentiated, in which case any purchase of equity shares from a named company could potentially result in a violation.”
“(W)ith a reported 20,000 Russian troops again massed at the Ukrainian border, there may certainly be more to come,” Mathew Lystra, Russell senior research analyst, said in an e-mail in response to questions.
