       5(&200(1'(' )25 )8//7(;7 38%/,&$7,21
            3XUVXDQW WR 6L[WK &LUFXLW 5XOH 

   (/(&7521,& &,7$7,21  )(' $SS 3 WK &LU
               )LOH 1DPH DS




81,7('67$7(6&28572)$33($/6
              )257+(6,;7+&,5&8,7
                BBBBBBBBBBBBBBBBB


'25,6 6,00216+$55,6           ;
0$5/$ )5$1./,1 67(9(1           
%(+55HY68( *$7721          
                                     1RV
0$5< 0853+< 0,&+$(/                 
'(%26( &+(5</ '(%26(            !
                                 
*/(11 $/76&+8/' '(,'5$          
3($5621                         
         3ODLQWLIIV$SSHOOHHV   
                                 
            Y                   
                                 
                                 
686$1 7$9( =(/0$1               
6XSHULQWHQGHQWRI3XEOLF         
,QVWUXFWLRQ6WDWHRI2KLRHW   
DO                             
        'HIHQGDQWV$SSHOODQWV 
                                 
                
                                 
6(1(/ +(50$1 7$</25HW          
DO                             
      ,QWHUYHQRUV'HIHQGDQWV 
         $SSHOODQWV 
                                 
                                 
                                 
                                 
                                 

                            
       6LPPRQV+DUULVHWDO            1RV
        Y=HOPDQHWDO


    +$11$ 3(5.,16 6&+22/             
    HWDO                          
             ,QWHYHQRUV'HIHQGDQWV 
                                      
               $SSHOODQWV 1

          $SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW
         IRUWKH1RUWKHUQ'LVWULFWRI2KLRDW&OHYHODQG
    1RVn6RORPRQ2OLYHUsU'LVWULFW
                             sXGJH
                     $UJXHGsXQH
             'HFLGHGDQG)LOHG'HFHPEHU
      %HIRUH5<$16,/(5DQG&/$<&LUFXLWsXGJHV
                      BBBBBBBBBBBBBBBBB
                           &2816(/
$5*8('  &OLQW %ROLFN ,167,787( )25 s867,&(
:DVKLQJWRQ '&  (GZDUG % )ROH\ 2)),&( 2) 7+(
$77251(<*(1(5$/2)2+,2&ROXPEXV2KLR'DYLG
s<RXQJ648,5(6$1'(56	'(036(<&ROXPEXV
2KLR IRU $SSHOODQWV  5REHUW + &KDQLQ %5('+2)) 	
.$,6(5:DVKLQJWRQ'&0DUYLQ()UDQNHO.5$0(5
/(9,11$)7$/,6	)5$1.(/1HZ<RUN1HZ<RUN
IRU$SSHOOHHV21%5,()&OLQW%ROLFN0DWWKHZ%HUU\
,167,787( )25 s867,&( :DVKLQJWRQ '& 'DYLG &
7U\RQ 3257(5 :5,*+7 0255,6 	 $57+85
&OHYHODQG 2KLR (GZDUG % )ROH\ .DUHQ / /D]RULVKDN
5RJHU ) &DUUROO sDPHV * 7DVVLH 0DU\ /\QQ 5HDGH\
2)),&( 2) 7+( $77251(< *(1(5$/ &ROXPEXV
2KLR 'DYLG s <RXQJ 0LFKDHO 5 5HHG 648,5(
6$1'(56	'(036(<&ROXPEXV2KLRIRU$SSHOODQWV
5REHUW + &KDQLQ $QGUHZ ' 5RWK %5('+2)) 	
.$,6(5:DVKLQJWRQ'&'DYLG*/DWDQLFN&/233(57
32570$16$87(5/$7$1,&.	)2/(<&ROXPEXV
1RV              6LPPRQV+DUULVHWDO     
                                         Y=HOPDQHWDO

2KLR(OOLRW00LQFEHUJsXGLWK(6FKDHIIHU3(23/()25
7+( $0(5,&$1 :$< :DVKLQJWRQ '& 5D\PRQG
9DVYDUL$&/82)2+,2)281'$7,21,1&&OHYHODQG
2KLR 6WHYHQ . *UHHQ $0(5,&$16 81,7(' )25
6(3$5$7,21 2) &+85&+ $1' 67$7( :DVKLQJWRQ
'&0DUYLQ()UDQNHO.5$0(5/(9,11$)7$/,6	
)5$1.(/1HZ<RUN1HZ<RUNIRU$SSHOOHHV:LOOLDP
( 7KUR 2)),&( 2) 7+( $77251(< *(1(5$/
5LFKPRQG 9LUJLQLD 0 5HHG +RSSHU 3$&,),& /(*$/
)281'$7,21 6DFUDPHQWR &DOLIRUQLD 3DXO &OHPHQW
.,1* 	 63$/',1* :DVKLQJWRQ '& 9LFWRULD : 1L
5(%28/ 0$&0855$< +(:,77 0$<1$5' 	
.5,672/ 1HZ <RUN 1HZ <RUN sRVKXD 5 &RKHQ
.$+50$1 s$&.621 	 .5$17= &OHYHODQG 2KLR
1LFKRODV $ 3LWWQHU %5,&.(5 	 (&./(5 &ROXPEXV
2KLRIRU$PLFL&XULDH
  &/$< s GHOLYHUHG WKH RSLQLRQ RI WKH FRXUW LQ ZKLFK
6,/(5sMRLQHG5<$1sGHOLYHUHGDVHSDUDWH
RSLQLRQFRQFXUULQJLQSDUWDQGGLVVHQWLQJLQSDUW
                   BBBBBBBBBBBBBBBBB
                        23,1,21
                    BBBBBBBBBBBBBBBBB
  &/$< &LUFXLW sXGJH  'HIHQGDQWV DQG ,QWHUYHQRUV 'U
6XVDQ7DYH=HOPDQHWDO6HQHO7D\ORUHWDODQG+DQQD
3HUNLQV6FKRROHWDODSSHDOIURPWKHRUGHUHQWHUHGE\WKH
8QLWHG6WDWHV'LVWULFW&RXUWIRUWKH1RUWKHUQ'LVWULFWRI2KLR
HQMRLQLQJ RQ VXPPDU\ MXGJPHQW WKH 2KLR 3LORW 3URMHFW
6FKRODUVKLS 3URJUDP RQ WKH JURXQG WKDW LW YLRODWHV WKH
(VWDEOLVKPHQW &ODXVH RI WKH )LUVW $PHQGPHQW  )RU WKH
IROORZLQJUHDVRQVZH$)),50
                               ,
  ,Q2KLRjV*HQHUDO$VVHPEO\DGRSWHGWKH2KLR3LORW
3URMHFW 6FKRODUVKLS 3URJUDP mYRXFKHU SURJUDPl RU mWKH
SURJUDPl LQ UHVSRQVH WR DQ RUGHU E\ WKH 8QLWHG 6WDWHV
     6LPPRQV+DUULVHWDO           1RV         1RV            6LPPRQV+DUULVHWDO      
      Y=HOPDQHWDO                                                                                      Y=HOPDQHWDO

'LVWULFW&RXUWWKDWSODFHGWKH&OHYHODQG6FKRRO'LVWULFWXQGHU        PLQRULW\FKLOGUHQLQ&OHYHODQGWRUHWXUQWRWKHLQGLVSXWDEO\
WKH GLUHFW PDQDJHPHQW DQG VXSHUYLVLRQ RI WKH 6WDWH             IDLOHG&OHYHODQGSXEOLFVFKRROVIURPZKLFKLQPDQ\FDVHV
6XSHULQWHQGHQWRI3XEOLF,QVWUXFWLRQGXHWRPLVPDQDJHPHQW             WKH\HVFDSHGDVORQJDVWKUHH\HDUVDJRnLVDQH[HUFLVHLQUDZ
E\WKHORFDOVFKRROERDUG7KHYRXFKHUSURJUDPFRYHUVDQ\            MXGLFLDOSRZHUKDYLQJQREDVLVLQWKH)LUVW$PHQGPHQWRULQ
VWDWHVFKRROGLVWULFWWKDWKDVEHHQWKHVXEMHFWRIDIHGHUDOFRXUW    WKH6XSUHPH&RXUWjV(VWDEOLVKPHQW&ODXVHMXULVSUXGHQFH
RUGHUmUHTXLULQJVXSHUYLVLRQDQGRSHUDWLRQDOPDQDJHPHQWRI
WKH GLVWULFW E\ WKH VWDWH VXSHULQWHQGHQWl  2KLR 5HY &RGH     ,QDOOHYHQWVDPDWWHURIWKLVJUDYLW\DQGRIVXFKLPPHQVH
 $  7KH SURJUDP SURYLGHV VFKRODUVKLSV WR           LPSRUWDQFH WR WKH &OHYHODQG FKLOGUHQ ZKR DUH GLUHFWO\
FKLOGUHQ UHVLGLQJ ZLWKLQ WKH DSSOLFDEOH GLVWULFW LQ JUDGHV     DIIHFWHGDQGLQGHHGWRWKHQDWLRQVKRXOGQRWEHGHWHUPLQHG
NLQGHUJDUWHQ WKURXJK HLJKWK JUDGH  6HH 2KLR 5HY &RGH        E\MXVWWZRMXGJHVRIWKLVFRXUW7KHUHIRUH,UHVSHFWIXOO\XUJH
&7KHSURJUDPJLYHVmSUHIHUHQFHWRVWXGHQWV          P\FROOHDJXHVWRWDNHWKLVFDVHIRUHQEDQFUHYLHZLIWKH\DUH
IURP ORZLQFRPH IDPLOLHVl GHILQLQJ WKHP DV WKRVH ZKRVH        DVNHGWRGRVRDQGGHFLGHWKHYLWDOO\LPSRUWDQW(VWDEOLVKPHQW
IDPLOLHVjLQFRPHLVOHVVWKDQRIWKHSRYHUW\OLQH6HH         &ODXVHLVVXHLWSUHVHQWVDIWHUJLYLQJFDUHIXOFRQVLGHUDWLRQWR
2KLR 5HY &RGH  $  m6FKRODUVKLSV PD\ EH           WKH IXOO SDQRSO\ RI 6XSUHPH &RXUW (VWDEOLVKPHQW &ODXVH
DZDUGHGWRVWXGHQWVZKRDUHQRWIURPORZLQFRPHIDPLOLHV              MXULVSUXGHQFHDQGQRWMXVWRQHLQDSSRVLWHFDVH
RQO\LIDOOVWXGHQWVIURPORZLQFRPHIDPLOLHVKDYHEHHQJLYHQ
ILUVWFRQVLGHUDWLRQIRUSODFHPHQWl&OHYHODQG6FKRODUVKLSDQG          $VWRZKDWLVZULWWHQLQSDUW,9RIWKHPDMRULW\RSLQLRQ,
7XWRULQJ3URJUDP$GPLQLVWUDWLRQ3URFHGXUHV0DQXDO              KDYHQRGLVDJUHHPHQW
s$DWHPSKDVLVRULJLQDO2YHUVL[W\SHUFHQWRIWKH
FKLOGUHQ UHFHLYLQJ VFKRODUVKLSV LQ WKH SURJUDP DUH IURP
IDPLOLHVZLWKLQFRPHVDWRUEHORZWKHSRYHUW\OLQH
   7KHYRXFKHUSURJUDPSD\VVFKRODUVKLSVDFFRUGLQJWRIDPLO\
LQFRPH7KHSURJUDPUHTXLUHVSDUWLFLSDWLQJSULYDWHVFKRROV
WRFDSWXLWLRQDWSHUVWXGHQWSHU\HDUDQGSD\VRI
ZKDWHYHUWXLWLRQWKHVFKRRODFWXDOO\FKDUJHVIRUORZLQFRPH
IDPLOLHVIRURWKHUIDPLOLHVWKH6WDWHSD\VRIWKHVFKRROjV
WXLWLRQ XS WR D PD[LPXP RI   6HH 2KLR 5HY &RGH
 $ $  (DFK VFKRODUVKLS IRU
FKLOGUHQDWWHQGLQJDSULYDWHVFKRROLVSD\DEOHWRWKHSDUHQWVRI
WKH VWXGHQW HQWLWOHG WR WKH VFKRODUVKLS  2KLR 5HY &RGH
   6FKRODUVKLS FKHFNV DUH PDLOHG WR WKH VFKRRO
VHOHFWHG E\ WKH SDUHQWV ZKHUH WKH SDUHQWV DUH UHTXLUHG WR
HQGRUVHWKHFKHFNVRYHUWRWKHVFKRROLQRUGHUWRSD\WXLWLRQ
   6FKRROVZLVKLQJWREHGHVLJQDWHGDVSURJUDPSDUWLFLSDQWV
HOLJLEOHWRHQUROOVFKRODUVKLSVWXGHQWVPXVWUHJLVWHUZLWKWKH
YRXFKHU SURJUDP  3ULYDWH VFKRROV ORFDWHG ZLWKLQ WKH
ERXQGDULHVRIWKH&OHYHODQGVFKRROGLVWULFWZKLFKPHHWWKH
    6LPPRQV+DUULVHWDO           1RV          1RV             6LPPRQV+DUULVHWDO         
      Y=HOPDQHWDO                                                                                        Y=HOPDQHWDO

LQGRFWULQDWLRQRI&OHYHODQGVFKRROFKLOGUHQRUIRUHFORVHVLW          6WDWHjVHGXFDWLRQDOVWDQGDUGVPD\SDUWLFLSDWH6HH2KLR5HY
IURPGHILQLQJWKHUHFLSLHQWVRIWKHYRXFKHUVE\UHIHUHQFHWR           &RGH  $ DQG   6FKRROV DUH UHTXLUHG WR
UHOLJLRQ WKDQ WKURXJK WKH UDQJH RI IUHH DQG LQGHSHQGHQW       IROORZWKHSURJUDPjVSULRULW\UXOHVUHJDUGLQJWKHSODFHPHQWRI
FKRLFHVWKHVWDWXWHJLYHVWRWKHSDUHQWVZKRVHFKLOGUHQDWWHQG         VWXGHQWV DQG PD\ QRW GLVFULPLQDWH RQ WKH EDVLV RI UDFH
WKH&OHYHODQGSXEOLFVFKRROV                                        UHOLJLRQRUHWKQLFEDFNJURXQGDGYRFDWHRUIRVWHUXQODZIXO
                                                                       EHKDYLRURUWHDFKKDWUHGRIDQ\SHUVRQRUJURXSRQWKHEDVLV
                                ,9                                    RIUDFHHWKQLFLW\QDWLRQDORULJLQRUUHOLJLRQ6HH2KLR5HY
                                                                       &RGH$3XEOLFVFKRROVLQGLVWULFWVDGMDFHQW
   ,QVWULNLQJGRZQWKLVVWDWXWHWRGD\WKHPDMRULW\SHUSHWXDWHV       WRWKHGLVWULFWLQZKLFKWKHYRXFKHUSURJUDPLVLPSOHPHQWHG
WKHORQJKLVWRU\RIORZHUIHGHUDOFRXUWKRVWLOLW\WRHGXFDWLRQDO       PD\DOVRUHJLVWHUIRUWKHSURJUDPDQGmUHFHLYHVFKRODUVKLS
FKRLFH,WGRHVVRE\UHDFKLQJEDFNWRD6XSUHPH&RXUW           SD\PHQWV RQ EHKDOI RI SDUHQWVl EXW QRQH RI WKH SXEOLF
GHFLVLRQ1\TXLVWWKDWFRQVWUXHVDVWDWXWHWKDWLVOLJKW\HDUV        VFKRROVLQGLVWULFWVDGMDFHQWWR&OHYHODQGKDYHGRQHVR2KLR
DZD\IURPWKHYRXFKHUSURJUDPEHIRUHXVDQGWKDWUHVWVXSRQ            5HY &RGH  &  7KH FKHFNV IRU SURJUDP
ODZ WKDW KDV EHHQ DOWHUHG LQ DQ LPSRUWDQW UHVSHFW E\          SDUWLFLSDQWVDWSXEOLFVFKRROVDUHPDGHRXWWRWKHSDUWLFLSDWLQJ
VXEVHTXHQW6XSUHPH&RXUWGHFLVLRQV0\FROOHDJXHVUHIXVH              VFKRROGLVWULFWUDWKHUWKDQWRWKHSDUHQWV1RSXEOLFVFKRROV
WR DFNQRZOHGJH WKDW WKH SURJUDP LQ 1\TXLVW LV IDFWXDOO\        KDYHUHJLVWHUHGIRUWKHSURJUDPVLQFHLWVHQDFWPHQW
GLVWLQJXLVKDEOH LQ HVVHQWLDO ZD\V IURP WKH 2KLR YRXFKHU
SURJUDPDQGWKDWWKH6XSUHPH&RXUWKDVH[SOLFLWO\GHFODUHG               )RUWKHVFKRRO\HDUVWXGHQWVHQUROOHGLQ
WKDWWKHFULWHULDIRUGHWHUPLQLQJZKHWKHUDVWDWXWHDXWKRUL]LQJ        WKH SURJUDP  RI WKH HQUROOHHV DUH IURP IDPLOLHV DW RU
JRYHUQPHQWDLGWRVFKRROVYLRODWHVWKH(VWDEOLVKPHQW&ODXVH            EHORZWKHSRYHUW\OHYHO2IWKHVHDUHHQUROOHG
KDYH FKDQJHG  $QG WKHQ DOPRVW DV LI UHFRJQL]LQJ WKDW LWV   LQ VHFWDULDQ VFKRROV  $W RQH WLPH LQ WKH FRXUVH RI WKH
1\TXLVWLVGLUHFWO\RQSRLQWDUJXPHQWFDQQRWZLWKVWDQGFORVH           SURJUDP DV PDQ\ DV  RI WKH VWXGHQWV HQUROOHG LQ WKH
VFUXWLQ\ WKH PDMRULW\ UHVRUWV WR WKH ODPHQWDEOH WDFWLF RI     SURJUDP DWWHQGHG QRQUHOLJLRXV VFKRROV  'XULQJ WKH 
DWWHPSWLQJ WR DURXVH VXSSRUW IRU LWV YLHZ E\ PDNLQJ WKH       VFKRRO\HDUILIW\VL[VFKRROVUHJLVWHUHGWRSDUWLFLSDWHLQ
IDPLOLDUEXWXQZRUWK\DUJXPHQWVWKDWWKHYRXFKHUSURJUDP               WKHSURJUDPIRUW\VL[DUHFKXUFKDIILOLDWHG3URJUDP
KDVWRRPDQ\UHOLJLRXVVFKRROVDQGWKDWWKH\DUHWRRUHOLJLRXV        PRQLHVPD\EHXVHGE\WKHSDUWLFLSDWLQJVFKRROVIRUZKDWHYHU
7KLVDUJXPHQWVKRXOGIDLOILUVWEHFDXVHLWLVURRWHGLQQDWLYLVW     SXUSRVHWKH\GHHPDSSURSULDWHWKHYRXFKHUSURJUDPGRHVQRW
KRVWLOLW\WRZDUGUHOLJLRXVVFKRROVDQGVHFRQGEHFDXVHLWKDV         SODFHUHVWULFWLRQVRQWKHXVHRIIXQGVPDGHDYDLODEOHXQGHUWKH
EHHQH[SOLFLWO\UHMHFWHGE\WKH6XSUHPH&RXUWDVDOHJLWLPDWH          SURJUDP
GHWHUPLQDQWRIZKHWKHUDJRYHUQPHQWLVHQJDJLQJLQUHOLJLRXV
LQGRFWULQDWLRQ                                                         7KHVHFWDULDQVFKRROVYDU\LQWKHLUUHOLJLRXVDIILOLDWLRQDQG
                                                                       DSSURDFKHVKRZHYHUWKHKDQGERRNVDQGPLVVLRQVWDWHPHQWV
   'HVSLWHWKHPDMRULW\jVGLVFODLPHUWKDWmFRXUWVGRQRWPDNH          RI WKHVH VFKRROV UHIOHFW WKDW PRVW EHOLHYH LQ LQWHUZHDYLQJ
HGXFDWLRQDOSROLF\ZHGRQRWVLWLQRPQLSRWHQWMXGJPHQWDV            UHOLJLRXVEHOLHIVZLWKVHFXODUVXEMHFWV7KHVHFWDULDQVFKRROV
WRWKHHIILFDF\RIRQHVFKHPHRUSURJUDPYHUVXVDQRWKHUlVOLS         DOVR IROORZ UHOLJLRXV JXLGHOLQHV LQFOXGLQJ LQVWUXFWLRQ LQ
RSDWWKHPDMRULW\RSLQLRQLVQRWKLQJPRUHWKDQDQDWWDFN          UHOLJLRQ DQG PDQGDWHG SDUWLFLSDWLRQ LQ UHOLJLRXV VHUYLFHV
XSRQWKHSKLORVRSKLFDODQGFXOWXUDOGHVLUDELOLW\RISXEOLFO\           LQWHUZHDYLQJRI&KULVWLDQGRFWULQHVZLWKVFLHQFHDQGODQJXDJH
IXQGHG HGXFDWLRQDO FKRLFH IRU WKH SRRU  7KLV FDVH DQG LWV   DUWV FODVVHV UHTXLULQJ WKDW mDOO OHDUQLQJ WDNH SODFH LQ DQ
UHVXOWnVHQWHQFLQJ QHDUO\  SRYHUW\OHYHO PRVWO\               DWPRVSKHUHRIUHOLJLRXVLGHDOVl6W9LQFHQWGH3DXO6FKRRO
     6LPPRQV+DUULVHWDO             1RV            1RV             6LPPRQV+DUULVHWDO       
      Y=HOPDQHWDO                                                                                            Y=HOPDQHWDO

3DUHQW+DQGERRNDQGGHVLJQLQJHGXFDWLRQDO                  LJQRULQJ WKH UHFHQW 6XSUHPH &RXUW FDVHV HPSKDVL]LQJ WKH
VFKRODUVKLS LQ RUGHU mWR PDNH    IDLWK EHFRPH OLYLQJ         LPSRUWDQFHRIJHQXLQHO\LQGHSHQGHQWDQGSULYDWHFKRLFHVDQG
FRQVFLRXV DQG DFWLYH WKURXJK WKH OLJKW RI LQVWUXFWLRQ        WKHGLVWLQFWLRQEHWZHHQWUXHSULYDWHFKRLFHSURJUDPVDQGSHU
UHOLJLRXVWUXWKVDQGYDOXHVSHUPHDWHWKHZKROHDWPRVSKHUHRI               FDSLWDVFKRRODLGSURJUDPVWKHPDMRULW\KDVIDLOHGWRFRQGXFW
WKHVFKRROl6DLQW5RFFR6FKRRO3DUHQW6WXGHQW+DQGERRN                D mPHDQLQJIXOl LQGHSHQGHQW DQDO\VLV RI WKH YRXFKHU
2WKHUVHFWDULDQVFKRROVLQWKHYRXFKHUSURJUDP               SURJUDPjVFRQVWLWXWLRQDOLW\
EHOLHYHWKDWmWKHRQHFDUGLQDOREMHFWLYHRIHGXFDWLRQWRZKLFK
DOORWKHUVSRLQWLVWRGHYHORSGHYRWLRQWR*RGDVRXU&UHDWRU                                            ,,,
5HGHHPHUDQG6DQFWLILHUl6DLQWsRKQ1RWWLQJKDP/XWKHUDQ
6FKRRO 3DUHQW +DQGERRN   DQG WR UHTXLUH                  ,QVXPPDU\DQGWRUHSHDWDFFRUGLQJWRWKH6XSUHPH&RXUW
VWXGHQWVWRmSOHGJHDOOHJLDQFHWRWKH&KULVWLDQIODJDQGWRWKH            D WUXH SULYDWHFKRLFH SURJUDP GRHV QRW UHVXOW LQ
6DYLRUIRUZKRVH.LQJGRPLWVWDQGV2QH6DYLRUFUXFLILHG                  mJRYHUQPHQWDO LQGRFWULQDWLRQl VR ORQJ DV WKH SDWK RI WKH
ULVHQ DQG FRPLQJ DJDLQ ZLWK OLIH DQG OLEHUW\ IRU DOO ZKR         JRYHUQPHQWDLGLVGHWHUPLQHGE\WKHmµJHQXLQHO\LQGHSHQGHQW
EHOLHYHl  &DOYDU\ &HQWHU $FDGHP\ 3DUHQW6WXGHQW                     DQGSULYDWHFKRLFH>@jlRIWKHDLGUHFLSLHQWV6HH0LWFKHOO
+DQGERRN                                                   6&WDWFLWDWLRQRPLWWHGLGDW2j&RQQRUs
                                                                           FRQFXUULQJ$JRVWLQL86DW=REUHVW86DW
  ,Q SULRU OLWLJDWLRQ 'RULV 6LPPRQV+DUULV RQH RI WKH             :LWWHUV86DW0XHOOHU86DW
3ODLQWLIIVKHUHLQEURXJKWDVWDWHFRXUWODZVXLWFKDOOHQJLQJWKH           
FRQVWLWXWLRQDOLW\ RI WKH YRXFKHU SURJUDP XQGHU PXOWLSOH
SURYLVLRQV RI WKH 2KLR &RQVWLWXWLRQ DQG XQGHU WKH                    2KLRjVYRXFKHUSURJUDPHDVLO\PHHWVWKLVWHVW%HIRUHD
(VWDEOLVKPHQW&ODXVHRIWKH8QLWHG6WDWHV&RQVWLWXWLRQ2Q                YRXFKHULVmVSHQWlDWDUHOLJLRXVVFKRRO&OHYHODQGSDUHQWV
0D\WKH2KLR6XSUHPH&RXUWLVVXHGDMXGJPHQWLQ                  PXVWLQGHSHQGHQWO\PDNHWZRLPSRUWDQWFKRLFHV
IDYRURI3ODLQWLIIVKROGLQJWKDWWKHYRXFKHUSURJUDPKDG
EHHQHQDFWHGLQYLRODWLRQRIWKHRQHVXEMHFWUXOHRIWKH2KLR                )LUVW WKH\ PXVW GHFLGH ZKHWKHU WKHLU FKLOG ZLOO WDNH
&RQVWLWXWLRQDQGmPXVWEHVWULFNHQlIURPWKH2KLRVWDWXWH                 DGYDQWDJHRIWKHYRXFKHUDOWHUQDWLYHVDWDOORUVHOHFWDQRWKHU
ERRNV6HH6LPPRQV+DUULVY*RII1(G                    RSWLRQ VXFK DV UHPDLQLQJ LQ WKH &OHYHODQG VFKRROV
2KLR   +RZHYHU D PDMRULW\ RI WKH MXVWLFHV UHMHFWHG        XQGHUWDNLQJKRPHVFKRROLQJRUDWWHQGLQJRQHRI&OHYHODQGjV
3ODLQWLIIVjFODLPVWKDWWKHSURJUDPYLRODWHGWKH(VWDEOLVKPHQW             ZHOO UHJDUGHG FRPPXQLW\ VFKRROV  6HFRQG LI D FKLOGjV
&ODXVH,GDW7KRVHMXVWLFHVUHDVRQHGWKDW              SDUHQWVFKRRVHWKHYRXFKHURSWLRQWKH\PXVWPDNHWKHIXUWKHU
m>W@KH1\TXLVWKROGLQJ>KDGEHHQ@XQGHUPLQHGlE\VXEVHTXHQW                mJHQXLQHO\LQGHSHQGHQWDQGSULYDWHFKRLFH>@lZKHWKHUWRXVH
FDVHV DQG ZDV WKXV QR ORQJHU JRRG ODZ  ,G DW   $        WKHYRXFKHUDWDSULYDWHVFKRROQRQUHOLJLRXVRUUHOLJLRXVRU
FRQFXUULQJRSLQLRQQRWHGWKDWm>Z@LWKUHJDUGWRWKHUHVWRIWKH           IRU VSHFLDO WXWRULQJ LQ WKH &OHYHODQG SXEOLF VFKRROV  7KH
PDMRULW\RSLQLRQ>WKHVHFWLRQQRWGHDOLQJZLWKWKHRQHVXEMHFW             YRXFKHUXVH FKRLFH RI DWWHQGLQJ D SXEOLF VFKRRO LQ D
UXOH@    , ILQG D QXPEHU RI WKH RWKHU DVVHUWLRQV E\ WKH   QHLJKERULQJGLVWULFWLVQRWSUHVHQWO\DYDLODEOHWR&OHYHODQG
PDMRULW\WREHDGYLVRU\LQQDWXUHl,GDW'RXJODVs              SDUHQWV EHFDXVH QR QHLJKERULQJ GLVWULFW KDV RSWHG LQWR WKH
MRLQHG E\ 5HVQLFN DQG 6ZHHQH\ ss FRQFXUULQJ LQ WKH              YRXFKHUSURJUDP
MXGJPHQWRQO\6LQFHWKLVFDVHWKH2KLR/HJLVODWXUHKDVUH
HQDFWHGWKHYRXFKHUSURJUDPLQDPDQQHUUHPHG\LQJWKHRQH                   ,WLVGLIILFXOWWRLPDJLQHKRZ D YRXFKHUVWDWXWHFRXOGEH
VXEMHFWSUREOHPKRZHYHUWKHSURJUDPLVLQDOOUHOHYDQW              FUDIWHG WKDW PRUH FOHDUO\ DQG GHFLVLYHO\ IRUHFORVHV WKH
                                                                           JRYHUQPHQW IURP KDYLQJ DQ\ UROH LQ WKH UHOLJLRXV
    6LPPRQV+DUULVHWDO            1RV          1RV            6LPPRQV+DUULVHWDO        
      Y=HOPDQHWDO                                                                                        Y=HOPDQHWDO

RUQRWsXVWLFH2j&RQQRUFRQFOXGHGWKDWWUXHSULYDWHFKRLFH            DVSHFWVWKHVDPHDVWKHRULJLQDOSLORWVFKRODUVKLSSURJUDP
SURJUDPVZHUHPRUHOLNHO\WRVXUYLYH(VWDEOLVKPHQW&ODXVH               HQDFWHGE\WKH/HJLVODWXUHLQ
FKDOOHQJHVHYHQWKRXJKJRYHUQPHQWDLGZDVGLYHUWHGWRWKH
UHOLJLRXV VFKRROV EHFDXVH mµ>D@Q\ DLG    WKDW XOWLPDWHO\     2QsXO\6LPPRQV+DUULVWKHSDUHQWRIDPLQRU
IORZVWRUHOLJLRXVLQVWLWXWLRQVGRHVVRRQO\DVDUHVXOWRIWKH         FKLOGHQUROOHGLQWKH&OHYHODQG&LW\6FKRRO'LVWULFWIRUWKH
JHQXLQHO\LQGHSHQGHQWDQGSULYDWHFKRLFHVRIDLGUHFLSLHQWVjl           VFKRRO \HDU 0DUOD )UDQNOLQ D WHDFKHU LQ WKH
,GDWTXRWLQJ:LWWHUV86DW2j&RQQRUs           /RUDLQ&LW\6FKRRO'LVWULFWDQG6WHYHQ%HKUSDVWRURI2XU
FRQFXUULQJ                                                          6DYLRU1XHVWUR6DOYDGR&KXUFKLQ/RUDLQ2KLRILOHGVXLWLQ
                                                                        &DVH 1R FY DJDLQVW 'HIHQGDQW 'U 6XVDQ 7DYH
   7UXHSULYDWHFKRLFHSURJUDPVE\WKHLUYHU\QDWXUHFDQQRW           =HOPDQLQKHURIILFLDOFDSDFLW\DV6XSHULQWHQGHQWRI3XEOLF
KDYH WKH IRUELGGHQ mSULPDU\ HIIHFWl RI WKH JRYHUQPHQW            ,QVWUXFWLRQIRUWKH2KLR'HSDUWPHQWRI(GXFDWLRQVHHNLQJWR
mDGYDQFLQJUHOLJLRQlEHFDXVHWKHDLGLVJLYHQGLUHFWO\WRWKH           HQMRLQDSRUWLRQRIWKHSURJUDPRQWKHJURXQGWKDWLWYLRODWHG
EHQHILFLDU\ DQG WKDW VWXGHQW RU SDUHQW UHWDLQV FRQWURO RYHU     WKH(VWDEOLVKPHQW&ODXVHRIWKH)LUVW$PHQGPHQW2QsXO\
ZKHUHWKHDLGZLOOEHDSSOLHGm7KHIDFWWKDWDLGIORZVWRWKH         6XH*DWWRQFKDLURI&LWL]HQV$JDLQVW9RXFKHUV
UHOLJLRXVVFKRRODQGLVXVHGIRUWKHDGYDQFHPHQWRIUHOLJLRQ            0DU\ 0XUSK\ D WHDFKHU LQ WKH &OHYHODQG &LW\ 6FKRRO
LV WKHUHIRUH ZKROO\ GHSHQGHQW RQ WKH VWXGHQWjV SULYDWH           'LVWULFW0LFKDHO'HERVHDSDVWRULQ&X\DKRJD&RXQW\2KLR
GHFLVLRQl,GDW)XUWKHUPRUHZKHQJRYHUQPHQWDLG              &KHU\O 'HERVH DQG *OHQQ $OWVFKXOG 2KLR 7D[SD\HUV DQG
IORZV WR D UHOLJLRXV VFKRRO DV D UHVXOW RI mLQGHSHQGHQW        'HLGUD3HDUVRQWKHSDUHQWRIDFKLOGHQUROOHGLQWKH&OHYHODQG
GHFLVLRQVPDGHE\QXPHURXVLQGLYLGXDOV>Q@RUHDVRQDEOH          &LW\ 6FKRRO 'LVWULFW ILOHG VXLW LQ &DVH 1R FY
REVHUYHULVOLNHO\WRGUDZIURPWKHIDFWVDQLQIHUHQFHWKDW       DJDLQVW'HIHQGDQWV'U6XVDQ7DYH=HOPDQLQKHURIILFLDO
WKH6WDWHLWVHOILVHQGRUVLQJDUHOLJLRXVSUDFWLFHRUEHOLHIl,G     FDSDFLW\ DV 6XSHULQWHQGHQW WKH 6WDWH RI 2KLR WKURXJK LWV
LQWHUQDOTXRWDWLRQPDUNVDQGFLWDWLRQRPLWWHG                      *HQHUDO$VVHPEO\*RYHUQRUDQGRWKHUDJHQWVDQG6DXQGUD
                                                                        %HUU\LQKHURIILFLDOFDSDFLW\DV3URJUDP$GPLQLVWUDWRURIWKH
   7KH PDMRULW\ RSLQLRQ LQ WKLV FDVH FODLPV WKH YRXFKHU         2KLR3LORW6FKRODUVKLS3URJUDPVHHNLQJWKHVDPHLQMXQFWLYH
SURJUDP mLQYROYHV WKH JUDQW RI VWDWH DLG GLUHFWO\ DQG           UHOLHIDVLQ&DVH1RFY
SUHGRPLQDQWO\WRWKHFRIIHUVRIWKHSULYDWHUHOLJLRXVVFKRROVl
6OLS RS DW   )XUWKHUPRUH DFFRUGLQJ WR WKH PDMRULW\         3URSRVHG,QWHUYHQRUV6HQHO7D\ORUsRKQQLHWWD0F*UDG\
m>W@KHUHLVQRQHXWUDODLGZKHQWKDWDLGSULQFLSDOO\IORZVWR           &KULVWLQH6XPD$UNHOD:LQVWRQDQG$P\+XGRFNRQWKHLU
UHOLJLRXVLQVWLWXWLRQVl,GDW7KHPDMRULW\LJQRUHV       RZQ EHKDOI DQG DV QDWXUDO JXDUGLDQV RI WKHLU UHVSHFWLYH
WKDWWKLVYLHZKDVEHHQIODWRXWUHMHFWHGE\WKH6XSUHPH&RXUW          FKLOGUHQILOHGDQDQVZHUWR6LPPRQV+DUULVjFRPSODLQWRQ
LQWKHGHFLVLRQV,KDYHGLVFXVVHGZKLFKPDNHLWYHU\FOHDUWKDW         sXO\3URSRVHG,QWHUYHQRUV+DQQD3HUNLQV6FKRRO
WKHQXPEHURIUHOLJLRXVVFKRROVSDUWLFLSDWLQJLQWKHYRXFKHU            ,Y\ &KDPEHUV &DURO /DPEHUW 2XU /DG\ RI 3HDFH 6FKRRO
SURJUDPWKHWKRURXJKQHVVRIWKHUHOLJLRXVWUDLQLQJWKDWRFFXUV         :HVWSDUN /XWKHUDQ 6FKRRO $VVRFLDWLRQ ,QF /XWKHUDQ
WKHUHDQGWKHXVHWRZKLFKVXFKVFKRROVPLJKWSXWWKHIXQGV            0HPRULDO$VVRFLDWLRQRI&OHYHODQGDQG'HORUHVsRQHVILOHG
DUHDOOWRWDOO\LUUHOHYDQWWRWKHTXHVWLRQRIWKHJRYHUQPHQWjV          DQDQVZHUWR6LPPRQV+DUULVjFRPSODLQWRQ$XJXVW
QHXWUDOLW\ZKHQWKHJRYHUQPHQWDLGUHDFKHVDUHOLJLRXVVFKRRO
RQO\DVDUHVXOWRIWKHUHFLSLHQWjVmµJHQXLQHO\LQGHSHQGHQWDQG           2Q$XJXVWWKHGLVWULFWFRXUWKHOGDSUHOLPLQDU\
SULYDWHFKRLFH>@jl6HH0LWFKHOO6&WDWFLWDWLRQ         LQMXQFWLRQ KHDULQJ LQ ERWK FDVHV DQG RQ $XJXVW  
RPLWWHG=REUHVW86DW:LWWHUV86DW%\         JUDQWHG3ODLQWLIIVWKHLQMXQFWLYHUHOLHIVRXJKW,QWKHVDPH
     6LPPRQV+DUULVHWDO          1RV         1RV            6LPPRQV+DUULVHWDO       
      Y=HOPDQHWDO                                                                                     Y=HOPDQHWDO

RUGHUWKHGLVWULFWFRXUWFRQVROLGDWHGWKHWZRFDVHVDQGIRXQG      WKHJRYHUQPHQWjVUROHLQWKHSURJUDPLVQHXWUDO1HXWUDOLW\
WKDWWKH2KLR6XSUHPH&RXUWjVGHFLVLRQLQ6LPPRQVY*RII           H[LVWV LI WKH mJRYHUQPHQWDO DLG WKDW JRHV WR D UHOLJLRXV
 1(G  2KLR  GLG QRW SUHFOXGH IHGHUDO         LQVWLWXWLRQ GRHV VR µRQO\ DV D UHVXOW RI WKH JHQXLQHO\
FRQVLGHUDWLRQRIWKHFRQVWLWXWLRQDOFKDOOHQJHWRWKHYRXFKHU         LQGHSHQGHQWDQGSULYDWHFKRLFHVRILQGLYLGXDOVjl,GTXRWLQJ
SURJUDPEHFDXVHWKH2KLRFRXUWjVGHFLVLRQUHVWHGRQDVWDWH          $JRVWLQL  86 DW   sXVWLFH 7KRPDV ZURWH WKDW
JURXQGZKLFKLQGHSHQGHQWO\VXSSRUWHGLWVUHVROXWLRQRIWKH           mVLPSO\EHFDXVHDQDLGSURJUDPRIIHUVSULYDWHVFKRROVDQG
FDVH  7KHUHDIWHU RQ $XJXVW   WKH GLVWULFW FRXUW   WKXVUHOLJLRXVVFKRROVDEHQHILWWKDWWKH\GLGQRWSUHYLRXVO\
JUDQWHG LQ SDUW 'HIHQGDQWVj PRWLRQ IRU D VWD\ RI WKH        UHFHLYHGRHVQRWPHDQWKDWWKHSURJUDPE\UHGXFLQJWKHFRVW
SUHOLPLQDU\LQMXQFWLRQ                                              RIVHFXULQJDUHOLJLRXVHGXFDWLRQFUHDWHVDQµLQFHQWLYHj
                                                                     IRUSDUHQWVWRFKRRVHVXFKDQHGXFDWLRQIRUWKHLUFKLOGUHQl
  2Q$XJXVWWKHVDPHGD\WKDWWKHGLVWULFWFRXUW           ,GDW)LQDOO\sXVWLFH7KRPDVFRQFOXGHGWKDWWKH
JUDQWHG3ODLQWLIIVjPRWLRQIRUDSUHOLPLQDU\ LQMXQFWLRQWKH        SRVVLELOLW\ WKDW JRYHUQPHQW DLG PLJKW EH GLYHUWHG E\ D
6WDWH DQG WKH WZR LQWHUYHQLQJ 'HIHQGDQWV DSSHDOHG WKDW        VHFWDULDQVFKRROWRZDUGVVRPHUHOLJLRXVHQGLVLUUHOHYDQWIRU
GHFLVLRQWRWKLV&RXUW$IWHUWKHGLVWULFWFRXUWjV$XJXVW       (VWDEOLVKPHQW &ODXVH SXUSRVHV LI WKH JRYHUQPHQW DLG
 RUGHU JUDQWLQJ D OLPLWHG VWD\ RI LWV SUHOLPLQDU\       SURJUDPSURYLGHVWKHDLGLQDQHXWUDOPDQQHU6HHLGDW
LQMXQFWLRQDOO'HIHQGDQWVILOHGUHYLVHGEULHIVZLWKWKLV&RXUW
DSSHDOLQJWKHSUHOLPLQDU\LQMXQFWLRQZLWKUHJDUGWRVWXGHQWV            ,QKHUFRQFXUULQJRSLQLRQLQ0LWFKHOOsXVWLFH2j&RQQRU
ZKRZHUHQHZWRWKHYRXFKHUSURJUDPLHWKHSRUWLRQRI          MRLQHG E\ sXVWLFH %UH\HU DJUHHG WKDW mQHXWUDOLW\ LV DQ
WKHSUHOLPLQDU\LQMXQFWLRQQRWVWD\HGE\WKHGLVWULFWFRXUWjV        LPSRUWDQW UHDVRQ IRU XSKROGLQJ JRYHUQPHQWDLG SURJUDPVl
$XJXVWRUGHU:KLOHWKRVHDSSHDOVZHUHSHQGLQJ            DJDLQVW(VWDEOLVKPHQW&ODXVHFKDOOHQJHVEXWVKHUHLWHUDWHG
WKH 6WDWH ILOHG D PRWLRQ IRU D VWD\ RI WKH SUHOLPLQDU\     WKDW LW ZDV MXVW RQH IDFWRU WR FRQVLGHU LQ FKDOOHQJHV WR
LQMXQFWLRQZLWKWKH8QLWHG6WDWHV6XSUHPH&RXUWZKLFKWKH           JRYHUQPHQW VFKRRODLG SURJUDPV DQG QRW D mIDFWRU >RI@
6XSUHPH &RXUW JUDQWHG E\ D YRWH RI  RQ 1RYHPEHU       VLQJXODU LPSRUWDQFHl  ,G DW  2j&RQQRU s
 SHQGLQJ WKLV &RXUWjV ILQDO GLVSRVLWLRQ RI WKH HQWLUH   FRQFXUULQJ(YHQsXVWLFH6RXWHUjVGLVVHQWLQJRSLQLRQZKLFK
DSSHDO  6HH 6LPPRQV+DUULV Y =HOPDQ  6 &W        sXVWLFHV 6WHYHQV DQG *LQVEXUJ MRLQHG FRQFHGHG WKDW WKH
7KHUHDIWHUWKLV&RXUWHQWHUHGDQRUGHURQ1RYHPEHU         (VWDEOLVKPHQW&ODXVHSUHVHQWVQRREVWDFOHWRJRYHUQPHQWDLG
  FRQFOXGLQJ WKDW WKH 6XSUHPH &RXUWjV GHFLVLRQ        LILWUHDFKHVVHFWDULDQVFKRROVDVDUHVXOWRIWKHSULYDWHFKRLFHV
JUDQWLQJ WKH 6WDWHjV PRWLRQ IRU D VWD\ UHQGHUHG PRRW         RIDLGUHFLSLHQWV6HHLGDW6RXWHUsGLVVHQWLQJ
'HIHQGDQWVjSHQGLQJPRWLRQVIRUDVWD\LQWKLV&RXUW7KH
FDVHSURFHHGHGLQWKHGLVWULFWFRXUWRQDQH[SHGLWHGEDVLV             sXVWLFH2j&RQQRUHPSKDVL]HGWKHGLVWLQFWLRQEHWZHHQmWUXH
                                                                     SULYDWHFKRLFH SURJUDPVl DQG mSHUFDSLWD VFKRRODLG
  2Q 2FWREHU   DOO SDUWLHV VWLSXODWHG WKDW WKH       SURJUDPVl,GDW2j&RQQRUsFRQFXUULQJ7KH2KLR
KDQGERRNVPLVVLRQVWDWHPHQWVDQGEURFKXUHVRIWKHVFKRROV           YRXFKHUSURJUDPOLNHWKHSURJUDPVLQ=REUHVWDQG:LWWHUVLV
SDUWLFLSDWLQJ LQ WKH &OHYHODQG VFKRODUVKLS SURJUDP DUH         DWUXHSULYDWHFKRLFHSURJUDPEHFDXVHWKHDLGLVJLYHQGLUHFWO\
mDXWKHQWLFVSHDNIRUWKHPVHOYHVKDYHEHHQPDGHDYDLODEOHWR        WRHOLJLEOHLQGLYLGXDOVZKRLQWXUQGHFLGHZKHUHWRVSHQGLW
WKHSDUHQWVRIWKHVFKRODUVKLSVWXGHQWVDQGDUHQRWIDOVHRU         7KH SURJUDPV FRQVLGHUHG LQ 0LWFKHOO DQG $JRVWLQL ZHUH
PLVOHDGLQJ  6RPH RI WKHVH GRFXPHQWV KRZHYHU PD\ QRW         H[DPSOHVRISHUFDSLWDVFKRRODLGSURJUDPVEHFDXVHDLGZDV
DFFXUDWHO\UHIOHFWDGPLVVLRQVWDQGDUGVWKDWKDGWREHUHYLVHGl      GLVWULEXWHGEDVHGRQWKHQXPEHURIVWXGHQWVDWWHQGLQJHDFK
                                                                     VFKRROUHJDUGOHVVRIZKHWKHUWKHVFKRROZDVUHOLJLRXVO\EDVHG
    6LPPRQV+DUULVHWDO          1RV         1RV               6LPPRQV+DUULVHWDO     
      Y=HOPDQHWDO                                                                                        Y=HOPDQHWDO

SDUWLFLSDWLQJSULYDWHVFKRROVDUHZLOOLQJWRDFFHSWWKHYRXFKHU      3ODLQWLIIV DQG 'HIHQGDQWV ERWK ILOHG PRWLRQV IRU VXPPDU\
DVPHHWLQJDSRUWLRQRIWKHDFWXDOHGXFDWLRQDOFRVWVIRUWKHVH       MXGJPHQWRQ1RYHPEHU
FKLOGUHQDQGDUHZLOOLQJWRDEVRUEWKHGLIIHUHQWLDOFRVWDVSDUW
RIWKHLUSURERQRVHUYLFHLQ&OHYHODQGWRKHOSVDYHDVPDQ\RI         2Q1RYHPEHUWKHGLVWULFWFRXUWGHQLHG,QWHUYHQRU
WKHVHFKLOGUHQDVSRVVLEOHIURPWKHGLVDVWURXVFRQVHTXHQFHV          7D\ORUjVPRWLRQWRKDYHWKHIROORZLQJTXHVWLRQFHUWLILHGWRWKH
RIFRQWLQXLQJLQWKHFLW\jVIDLOHGSXEOLFVFKRROV                 2KLR6XSUHPH&RXUWm'RHV2KLRODZJLYHSUHFOXVLYHHIIHFW
                                                                     WR WKH UHVROXWLRQ RI WKH (VWDEOLVKPHQW &ODXVH FODLP LQ
   %XWPRUHLPSRUWDQWWKDQDOORIWKLVVSHFXODWLRQLVWKHUHDOLW\    6LPPRQV+DUULVY*RII1(G2KLR"l
WKDWWKHPDMRULW\jVmQHXWUDORQO\LIDIIRUGDEOHWRDOOlWHVWLV
XWWHUO\PHULWOHVVDVDPDWWHURIODZEHFDXVHWKHQRZVHWWOHG           7KHGLVWULFWFRXUWJUDQWHG3ODLQWLIIVjPRWLRQIRUVXPPDU\
(VWDEOLVKPHQW &ODXVH MXULVSUXGHQFH LV WKDW ZKHWKHU DLG LV     MXGJPHQW RQ 'HFHPEHU   ILQGLQJ WKDW WKH YRXFKHU
DOORFDWHGRQWKHEDVLVRIQHXWUDOVHFXODUFULWHULDLVWKHNH\       SURJUDP YLRODWHG WKH (VWDEOLVKPHQW &ODXVH HQMRLQHG
GHWHUPLQDQWRIZKHWKHUKDYLQJPDGHWKHDLGDYDLODEOHWKH           'HIHQGDQWV IURP DGPLQLVWHULQJ WKH SURJUDP DQG GHQLHG
VWDWHKDVHQJDJHGLQJRYHUQPHQWDOLQGRFWULQDWLRQLQUHOLJLRQ        'HIHQGDQWVjPRWLRQIRUVXPPDU\MXGJPHQW6HH6LPPRQV
6HH$JRVWLQL86DW                                     +DUULVY=HOPDQ)6XSSG1'2KLR
                                                                     7KHFRXUWVWD\HGLWVVXPPDU\MXGJPHQWRUGHUZLWK3ODLQWLIIVj
  ,I WKH VLPSOLFLW\ DQG FODULW\ RI WKH 6XSUHPH &RXUWjV       FRQVHQW SHQGLQJ UHYLHZ E\ WKLV &RXUW  'HIHQGDQWV DQG
ODQJXDJHLQ$JRVWLQLLVQRWVXIILFLHQWWRGHPRQVWUDWHWKDWWKH       ,QWHUYHQRUVDSSHDOHGWRWKLV&RXUWRQsDQXDU\
2KLR VWDWXWH GRHV QRW LQ DQ\ UHVSHFW RSHUDWH WR DGYDQFH
UHOLJLRQFRQILUPDWRU\ODQJXDJHRIFU\VWDOFODULW\DSSHDUVLQ                                       ,,
WKH6XSUHPH&RXUWjVUHFHQWGHFLVLRQLQ0LWFKHOO,QDSDVVDJH
LQKLVRSLQLRQZKLFKHQMR\VWKHVXSSRUWRIDPDMRULW\RIWKH           :HUHFRJQL]HWKHVLJQLILFDQFHWKDWWKLVLVVXHKROGVIRUPDQ\
sXVWLFHV DQG DUJXDEO\ HYHQ WKH VXSSRUW RI WKH GLVVHQWHUV   PHPEHUVRIRXUVRFLHW\7KHLVVXHRIVFKRROYRXFKHUVKDV
sXVWLFH7KRPDVVWDWHV                                               EHHQWKHVXEMHFWRILQWHQVHSROLWLFDODQGSXEOLFFRPPHQWDU\
                                                                     GLVFXVVLRQDQGDWWHQWLRQLQUHFHQW\HDUVDQGZHZRXOGEH
  >7@KH TXHVWLRQ ZKHWKHU JRYHUQPHQWDO DLG WR UHOLJLRXV         UHPLVV LI ZH IDLOHG WR DFNQRZOHGJH WKH VHULRXVQHVV RI WKH
  VFKRROV UHVXOWV LQ JRYHUQPHQWDO LQGRFWULQDWLRQ LV             FRQFHUQVWKLVFDVHKDVUDLVHG:HGRQRWKRZHYHUKDYHWKH
  XOWLPDWHO\ D TXHVWLRQ ZKHWKHU DQ\ UHOLJLRXV                   OX[XU\RIUHVSRQGLQJWRDGYHQWVLQHGXFDWLRQDOSROLF\ZLWK
  LQGRFWULQDWLRQ WKDW RFFXUV LQ WKHVH VFKRROV FRXOG            DFDGHPLFGLVFRXUVHRQSUDFWLFDOVROXWLRQVWRWKHSUREOHPRI
  UHDVRQDEO\EHDWWULEXWHGWRJRYHUQPHQWDODFWLRQ                 IDLOLQJVFKRROVQRUPD\ZHHQWHUWDLQDGLVFXVVLRQRQZKDW
                                                                     PLJKWEHOHJDOO\DFFHSWDEOHLQDK\SRWKHWLFDOVFKRROGLVWULFW
0LWFKHOO6&WDW                                      :HPD\RQO\DSSO\WKHFRQWUROOLQJODZWRWKHFDVHDQGVWDWXWH
                                                                     EHIRUHXV
   7KHOLQHRIFDVHVGHFLGHGLQWKH6XSUHPH&RXUWEHJLQQLQJ
ZLWK0XHOOHULQDQGHQGLQJZLWK0LWFKHOOLQPDNH             7KHFRXUWVGRQRWPDNHHGXFDWLRQDOSROLF\ZHGRQRWVLWLQ
LW XQPLVWDNDEO\ FOHDU WKDW WKH PDMRULW\jV mLPSHUPLVVLEOH       RPQLSRWHQW MXGJPHQW DV WR WKH HIILFDF\ RI RQH VFKHPH RU
LQFHQWLYHlDUJXPHQWKDVQREDVLVLQRXU(VWDEOLVKPHQW&ODXVH         SURJUDPYHUVXVDQRWKHU7KHGHVLJQRUVSHFLILFVRIDSURJUDP
MXULVSUXGHQFH  7KH UXOH LV QRZ VHWWOHG WKDW D JRYHUQPHQW   LQWHQGHG WR UHPHG\ WKH SUREOHP RI IDLOLQJ VFKRROV DQG WR
SURJUDP WKDW SHUPLWV ILQDQFLDO DLG XOWLPDWHO\ WR UHDFK        UHFWLI\HGXFDWLRQDOLQHTXDOLW\PXVWEHUHVHUYHGWRWKHVWDWHV
UHOLJLRXVVFKRROVGRHVQRWRIIHQGWKH(VWDEOLVKPHQW&ODXVHLI        DQG WKH VFKRRO ERDUGV ZLWKLQ WKHP ZLWK RQH FDYHDW  WKH
    6LPPRQV+DUULVHWDO            1RV           1RV             6LPPRQV+DUULVHWDO        
      Y=HOPDQHWDO                                                                                          Y=HOPDQHWDO

SURSRVHG SURJUDP PD\ QRW UXQ DIRXO RI WKH IUHHGRPV               EHHQ GLVFRXUDJHG IURP SDUWLFLSDWLQJ LQ WKH VFKRRO YRXFKHU
JXDUDQWHHGWRDOOFLWL]HQVLQWKH&RQVWLWXWLRQ,QRWKHUZRUGV         SURJUDPEHFDXVHLWFDQQRWmDIIRUGlWRGRVR7KHLPSRUWRI
WKHGHWHUPLQDWLRQVRIVWDWHVDQGVFKRROERDUGVFDQQRWLQIULQJH           WKLVDUJXPHQWDVEHVW,FDQXQGHUVWDQGLWLVWKDWWKHSDUHQWV
XSRQWKHQHFHVVDU\VHSDUDWLRQEHWZHHQFKXUFKDQGVWDWH:H              RI WKH &OHYHODQG VFKRRO FKLOGUHQ KDYH DQ mLQFHQWLYHl WR
WKHUHIRUHFRQVLGHUWKHSURJUDPSUHVHQWHGEHIRUHXVXQGHUWKH             FKRRVH&OHYHODQGjVUHOLJLRXVVFKRROVEHFDXVHWKHUHDUHQRW
FRQWUROOLQJSUHFHGHQWVRIWKH8QLWHG6WDWHV6XSUHPH&RXUW                HQRXJKQRQUHOLJLRXVVFKRROVSDUWLFLSDWLQJLQWKHSURJUDP2I
DQGWKLV&RXUWWRGHWHUPLQHZKHWKHUVXFKLQIULQJHPHQWKDV                FRXUVHWKHUHLVQRHYLGHQFHRIWKDWHLWKHU$QGWKHUHLVQR
RFFXUUHG                                                                HYLGHQFHWKDWDQ\RIWKHVHYHUDOQRQUHOLJLRXVSULYDWHVFKRROV
                                                                         SDUWLFLSDWLQJ LQ WKH SURJUDP KDYH HYHU UHMHFWHG D VLQJOH
   7KLV&RXUWUHYLHZVWKHGLVWULFWFRXUWjVJUDQWRIVXPPDU\              YRXFKHU DSSOLFDQW IRU DQ\ UHDVRQ LQFOXGLQJ D VXSSRVHG
MXGJPHQWGHQRYR6HH&ROHVY&OHYHODQG%GRI(GXF              LQDELOLW\ WR DIIRUG WKH GLIIHUHQWLDO EHWZHHQ WKH YDOXH RI D
)GWK&LU6XPPDU\MXGJPHQWLVSURSHU               YRXFKHUDQGWKHDFWXDOFRVWRIDQRQUHOLJLRXVSULYDWH
ZKHQWKHSOHDGLQJVGHSRVLWLRQVDQVZHUVWRLQWHUURJDWRULHV            VFKRROHGXFDWLRQ
DQGDGPLVVLRQVRQILOHWRJHWKHUZLWKWKHDIILGDYLWVLIDQ\
VKRZWKDWWKHUHLVQRJHQXLQHLVVXHDVWRDQ\PDWHULDOIDFWDQG            :KLOH,KHVLWDWHWRGLJQLI\WKHPDMRULW\jVVSHFXODWLRQZLWK
WKDWWKHPRYLQJSDUW\LVHQWLWOHGWRMXGJPHQWDVDPDWWHURI             VSHFXODWLRQRIP\RZQZKDWLVDWVWDNHLQWKLVFDVHLVWRR
ODZ )HG 5 &LY 3 F  7KHUH LV QR JHQXLQH LVVXH RI   LPSRUWDQWWROHWDQ\RIP\FROOHDJXHVjPHULWOHVVDUJXPHQWVJR
PDWHULDOIDFWZKHQWKHmUHFRUGWDNHQDVDZKROHFRXOGQRWOHDG           XQDQVZHUHG
D UDWLRQDO WULHU RI IDFW WR ILQG IRU WKH QRQPRYLQJ SDUW\l
0DWVXVKLWD(OHF,QGXV&RY=HQLWK5DGLR&RUS86                 ,WLVLQGLVSXWDEOHWKDWQRQRQUHOLJLRXVSULYDWHVFKRRORUDQ\
                                                         RWKHUVFKRROIRUWKDWPDWWHUKDVHYHUEHHQGLVFRXUDJHGIURP
                                                                         SDUWLFLSDWLQJLQWKH&OHYHODQGYRXFKHUSURJUDPDQGWKHUHLV
   7KH (VWDEOLVKPHQW &ODXVH SURYLGHV WKDW m&RQJUHVV VKDOO          QRHYLGHQFHWKDWDQ\SULYDWHVFKRROUHOLJLRXVRUQRQUHOLJLRXV
PDNHQRODZUHVSHFWLQJDQHVWDEOLVKPHQWRIUHOLJLRQl             KDV HYHU WXUQHG DZD\ D YRXFKHU DSSOLFDQW IRU DQ\ UHDVRQ
86&RQVWDPHQG,,Q/HPRQY.XUW]PDQ86              7KHUHIRUH ZKDW P\ FROOHDJXHV PXVW EH JHWWLQJ DW LV HYHQ
WKH6XSUHPH&RXUWVHWIRUWKWKHIROORZLQJWHVW            PRUHLQVLGLRXVDQGRIIHQVLYH7KHSRLQWDSSDUHQWO\LVWKDW
WR GHWHUPLQH ZKHWKHU D VWDWXWH SDVVHV PXVWHU XQGHU WKH           &OHYHODQGSDUHQWVZRXOGQHYHUFKRRVHWRVHQGWKHLUFKLOGUHQ
(VWDEOLVKPHQW &ODXVH  WKH VWDWXWH PXVW KDYH D VHFXODU         WRDUHOLJLRXVVFKRROLQ&OHYHODQGLIWKH\FRXOGDIIRUGWRVHQG
OHJLVODWLYHSXUSRVHWKHSULQFLSDORUSULPDU\HIIHFWRIWKH           WKHP WR D QRQUHOLJLRXV SULYDWH VFKRRO RU DQRWKHU SXEOLF
VWDWXWHPXVWEHRQHWKDWQHLWKHUDGYDQFHVQRULQKLELWVUHOLJLRQ         VFKRROEXWWKDWWKH\FDQQRWGRVREHFDXVHWKHFRVWGLIIHUHQWLDO
DQGWKHVWDWXWHPXVWQRWIRVWHUH[FHVVLYHHQWDQJOHPHQWZLWK           EHWZHHQWKHYDOXHRIDYRXFKHUDQGWKHDFWXDOWXLWLRQ
UHOLJLRQ,IDVWDWXWHIDLOVDQ\SRUWLRQRIWKLVWHVWLWYLRODWHV      RI&OHYHODQGjVQRQUHOLJLRXVSULYDWHVFKRROVLVSURKLELWLYH
WKH (VWDEOLVKPHQW &ODXVH  ,G  7KH 6XSUHPH &RXUW KDV           $JDLQLWLVRIQRVPDOOLPSRUWDQFHWKDWWKHUHLVDEVROXWHO\QR
DSSOLHGWKH/HPRQWHVWUHJXODUO\LQWKHFRQWH[WRIVFKRROVDQG           HYLGHQFHLQWKHUHFRUGWKDWDQ\&OHYHODQGSXEOLFVFKRROSDUHQW
HGXFDWLRQ6HHHJ.LU\DVsRHO6FK'LVWY*URPHW             KDVHYHUGHFOLQHGWRHQUROOKLVRUKHUFKLOGLQDQRQUHOLJLRXV
86GUDZLQJDVHSDUDWHVFKRROGLVWULFWIRURQH              SULYDWHVFKRROLQ&OHYHODQGEHFDXVHWKHUHZDVDGLIIHUHQWLDO
UHOLJLRQYLRODWHVWKH(VWDEOLVKPHQW&ODXVH6WRQHY*UDKDP            FRVWWKDWZDVSURKLELWLYH,WLVSUREDEO\WUXHWKDWQRSULYDWH
86SRVWLQJ7HQ&RPPDQGPHQWVRQZDOOVRI                  VFKRROUHOLJLRXVRUQRQUHOLJLRXVFDQHGXFDWHDFKLOGIRUWKH
SXEOLF VFKRRO YLRODWHV (VWDEOLVKPHQW &ODXVH %RZHQ Y             YRXFKHU YDOXH RI   %XW LQ DOO SUREDELOLW\ WKH
    6LPPRQV+DUULVHWDO            1RV           1RV             6LPPRQV+DUULVHWDO       
      Y=HOPDQHWDO                                                                                          Y=HOPDQHWDO

   7KHPDMRULW\LQWKLVFDVHVWUDLQLQJPLJKWLO\WRVWULNHGRZQ         .HQGULFN86KROGLQJWKDW(VWDEOLVKPHQW
WKLV ODZ WKHQ FRQMXUHV VWLOO DQRWKHU DQWLYRXFKHU DUJXPHQW       &ODXVH GRHV QRW SUHYHQW UHOLJLRXV RUJDQL]DWLRQV IURP
WKHUHDGHUZLOOUHFDOOWKDWWKHPDMRULW\jVGHFLVLRQDOSUHPLVH           SDUWLFLSDWLQJ LQ IHGHUDOO\ IXQGHG SURJUDP (GZDUGV Y
LVWKDWWKLVFDVHLVFRQWUROOHGE\1\TXLVWDQGLPSOLFLWO\WKDW         $JXLOODUG 86RYHUWXUQLQJVWDWXWHZKLFK
DOOHOVHLVLUUHOHYDQW                                               UHTXLUHG WKH WHDFKLQJ RI &UHDWLRQLVP LQ SXEOLF VFKRROV
                                                                         $JXLODUY)HOWRQ86SD\LQJSXEOLFVFKRRO
  0\ FROOHDJXHVj QH[W QRQ1\TXLVW DUJXPHQW LV WKDW WKH            HPSOR\HHV WR WHDFK LQ SDURFKLDO VFKRRO YLRODWHV WKH
mVFKRROYRXFKHUSURJUDPLVQRWQHXWUDOLQWKDWLWGLVFRXUDJHV            (VWDEOLVKPHQW&ODXVHRYHUUXOHGE\$JRVWLQLY)HOWRQ
WKH SDUWLFLSDWLRQ E\ VFKRROV QRW IXQGHG E\ UHOLJLRXV              86*UDQG5DSLGV6FK'LVWY%DOO86
LQVWLWXWLRQVl6OLSRSDW7KLVVWDWHPHQWLQWKHPDMRULW\          ILQGLQJDVKDUHGWLPHSURJUDPWREHDYLRODWLRQ
RSLQLRQZKLFKOLNHVRPDQ\RWKHUVLQWKHRSLQLRQLVWRWDOO\           RI (VWDEOLVKPHQW &ODXVHRYHUUXOHG E\ $JRVWLQL Y )HOWRQ
ZLWKRXW DQ\ EDVLV LQ WKH HYLGHQFH LV WKHQ IRUWLILHG E\ P\      86   0XHOOHU Y $OOHQ  86 
EURWKHUVjLSVHGL[LWWKDWmUHOLJLRXVVFKRROVRIWHQKDYHORZHU            SHUPLWWLQJWD[SD\HUVWRGHGXFWIURPVWDWHLQFRPHWD[
RYHUKHDGFRVWVVXSSOHPHQWDOLQFRPHIURPSULYDWHGRQDWLRQV              H[SHQVHVLQFXUUHGLQVHQGLQJFKLOGUHQWRSDURFKLDOVFKRROV
DQGFRQVHTXHQWO\ORZHUWXLWLRQQHHGVl,GDW7KHRQO\             GRHVQRWYLRODWH(VWDEOLVKPHQW&ODXVH5RHPHUY%GRI3XE
DXWKRULW\ P\ FROOHDJXHV RIIHU IRU WKLV VSHFXODWLRQ LV D          :RUNV  86  ILQGLQJ QR YLRODWLRQ RI
)RUGKDP8QLYHUVLW\/DZ5HYLHZDUWLFOH,FDQRQO\VXUPLVH               (VWDEOLVKPHQW&ODXVHLQ SURYLGLQJJRYHUQPHQWDLGWRERWK
WKDW WKH SRLQW P\ FROOHDJXHV ZLVK WR PDNH KHUH LV WKDW         SXEOLFDQGSULYDWHXQLYHUVLWLHV
QRQUHOLJLRXVVFKRROVZLOOQRWSDUWLFLSDWHLQ2KLRjVYRXFKHU
SURJUDP EHFDXVH WKH YRXFKHU ZLOO QRW FRYHU WKH FRVW RI             7KH6XSUHPH&RXUWDQGLQGLYLGXDOMXVWLFHVKDYHLQWURGXFHG
HGXFDWLQJ D VWXGHQW LQ D QRQUHOLJLRXV VFKRRO  7KLV P\         YDULDWLRQVRQ WKH/HPRQWHVWLQRWKHUFRQWH[WV6HH/HHY
EURWKHUVUHDVRQFUHDWHVDQmLQFHQWLYHlIRUWKHSDUHQWVWRVHQG          :LVHPDQ86XVLQJFRHUFLRQWHVW
WKHLU FKLOGUHQ WR WKH UHOLJLRXV VFKRROV ZKHUH WKH\ FDQ EH       GHYHORSHGE\sXVWLFH.HQQHG\WRKROGWKDWVFKRROFRXOGQRW
HGXFDWHGPRUHHIILFLHQWO\DQGIRUIHZHUGROODUV                       SURYLGHIRUQRQVHFWDULDQSUD\HUWREHJLYHQDWJUDGXDWLRQE\
                                                                         VFKRROVHOHFWHGFOHUJ\PDQ&RXQW\RI$OOHJKDQ\Y$&/8
  7KHUHLVDEVROXWHO\QRHYLGHQFHLQWKHUHFRUGWRVXSSRUWWKH           86XVLQJWZRSDUWWHVW
PDMRULW\jVDUJXPHQWWKDWWKH2KLRVWDWXWHFUHDWHVDILQDQFLDO            GHYHORSHGE\sXVWLFH2j&RQQRUn(VWDEOLVKPHQW&ODXVHLV
mGLVLQFHQWLYHlIRU&OHYHODQGjVQHLJKERULQJVXEXUEDQSXEOLF              YLRODWHGZKHQJRYHUQPHQWLVH[FHVVLYHO\HQWDQJOHGZLWK
VFKRRO GLVWULFWV WR SDUWLFLSDWH LQ WKH SURJUDP  7KHUH LV QR   UHOLJLRQRUJRYHUQPHQWHQGRUVHVRUGLVDSSURYHVRIUHOLJLRQ
HYLGHQFHWRVXSSRUWZKDWWKHPDMRULW\VHHPVWRLPSO\nWKDW                nDVSDUWRIWKH/HPRQWHVWUHJDUGLQJJRYHUQPHQWGLVSOD\VRI
ZLVKLQJWRXVHDYRXFKHUFKRRVHQRWWRGRVREHFDXVHRWKHU               REMHFWV ZLWK UHOLJLRXV FRQQRWDWLRQV LQWURGXFLQJ sXVWLFH
&OHYHODQG DUHD SXEOLF VFKRROV DUH QRW SDUWLFLSDWLQJ  $QG        .HQQHG\jVWZRSDUWFRHUFLRQWHVWJRYHUQPHQWPD\QRW
WKHUH LV QR HYLGHQFH WKDW LI D SXEOLF VFKRRO FKRRVHV WR        FRHUFHSDUWLFLSDWLRQLQUHOLJLRQDQGJRYHUQPHQWPD\QRW
SDUWLFLSDWH LQ WKH YRXFKHU SURJUDP LW ZLOO ORVH LWV VWDWH      GLUHFWO\ EHQHILW UHOLJLRQ  LQ KLV FRQFXUUHQFH :DOODFH Y
IXQGLQJ                                                               sDIIUHH  86   	 Q  XVLQJ sXVWLFH
                                                                         2j&RQQRUjVWZRSDUWWHVWDVSDUWRIWKH/HPRQDQDO\VLVDQG
  7KHVHDUJXPHQWVDUHEXLOWRQDmIDFWXDOlSUHGLFDWHWKDWKDV            ILQGLQJLWDSSURSULDWHWRGHWHUPLQHZKHWKHUWKHJRYHUQPHQWjV
DEVROXWHO\QREDVLVLQWKHUHFRUG7KHUHLVQRWDVFLQWLOODRI          SXUSRVH LV WR HQGRUVH RU GLVDSSURYH RI UHOLJLRQ /\QFK Y
HYLGHQFHLQWKLVFDVHWKDWDQ\VFKRROSXEOLFRUSULYDWHKDV
    6LPPRQV+DUULVHWDO            1RV           1RV             6LPPRQV+DUULVHWDO        
      Y=HOPDQHWDO                                                                                          Y=HOPDQHWDO

'RQQHOO\86LQWURGXFLQJsXVWLFH               WKHSURJUDPDUHWRRUHOLJLRXV,QVXSSRUWRIWKLVSURSRVLWLRQ
2j&RQQRUjVWZRSDUWWHVW                                               WKH PDMRULW\ GHYRWHV FRQVLGHUDEOH DWWHQWLRQ WR WKH PLVVLRQ
                                                                         VWDWHPHQWV RI VHYHUDO UHOLJLRXV VFKRROV ZKLFK LQGLFDWH WKH
   ,Q $JRVWLQL Y )HOWRQ  86   WKH &RXUW        SHUYDVLYHO\ UHOLJLRXV FKDUDFWHU RI WKHLU SURJUDPV  0\
UHDIILUPHGWKHLPSRUWDQFHRIWKH/HPRQWHVWLQ(VWDEOLVKPHQW             EURWKHUV FRQFOXGH WKHUHIURP WKDW WKHVH VFKRROV mEHOLHYH LQ
&ODXVH FDVHV LQYROYLQJ VFKRRO DLG EXW QRWHG WKDW WKH            LQWHUZHDYLQJ UHOLJLRXV EHOLHIV ZLWK VHFXODU VXEMHFWVl DQG
HQWDQJOHPHQWSURQJFRXOGEHFRQVLGHUHGDVDQDVSHFWRIWKH               mLQFRUSRUDWH>LQWKHLUFXUULFXOXP@UHOLJLRXVFRQFHSWVPRWLYHV
HIIHFWVLQTXLU\$JRVWLQLIRXQGmWKUHHSULPDU\FULWHULDlXVHG           DQGWKHPHVl6OLSRSDW,PDJLQHUHOLJLRXVVFKRROV
E\WKH&RXUWLQHYDOXDWLQJZKHWKHUJRYHUQPHQWDLGKDVWKH                WKDWDUHWUXO\UHOLJLRXV
HIIHFWRIDGYDQFLQJUHOLJLRQZKHWKHUWKHVWDWXWHRUSURJUDPV
LQTXHVWLRQmUHVXOWLQJRYHUQPHQWDOLQGRFWULQDWLRQGHILQHLWV             7KLVSODLQO\KRVWLOHDWWDFNRQWKHUHOLJLRXVVFKRROVLQWKH
UHFLSLHQWV E\ UHIHUHQFH WR UHOLJLRQ RU FUHDWH DQ H[FHVVLYH      2KLRYRXFKHUSURJUDPLVRQH,ZRXOGRIWKRXJKWXQZRUWK\RI
HQWDQJOHPHQWl,GDW                                              PHQWLRQLQDQRSLQLRQIURPWKLVJUHDWFRXUW,VWKHSRLQWEHLQJ
                                                                         PDGHKHUHWKDWUHOLJLRXVVFKRROVPD\SDUWLFLSDWHLQDYRXFKHU
   7KH 6XSUHPH &RXUW KDV QRW RYHUWXUQHG RU UHVFLQGHG WKH         SURJUDPSURYLGLQJWKH\DUHQRWWRRUHOLJLRXV"2ULVLWWKDW
/HPRQ WHVW HYHQ DV LW KDV XVHG LWV IUDPHZRUN WR VKDSH          WKHVHSRYHUW\OHYHOSDUHQWVLQ&OHYHODQGFDQQRWEHWUXVWHGWR
GLIIHULQJDQDO\VHV$OWKRXJKLQ$JRVWLQLWKH&RXUWDUWLFXODWHG         XQGHUVWDQGZKDWWKH\ZLOOEHH[SRVLQJWKHLUFKLOGUHQWRLIWKH\
WKHSULPDU\FULWHULDLWZRXOGXWLOL]HWRGHWHUPLQHZKHWKHUD             FKRRVH RQH RI WKHVH UHOLJLRXV VFKRROV"  2QH ZRXOG KDYH
JRYHUQPHQWDLGSURJUDPLPSHUPLVVLEO\DGYDQFHGRUHQGRUVHG                WKRXJKW WKDW WKH QDLO ZDV ORQJ DJR GULYHQ LQWR WKH FRIILQ
UHOLJLRQ WKH &RXUW KDV QRW QHFHVVDULO\ OLPLWHG LWVHOI WR        EHDULQJWKHGLVFUHGLWHGDUJXPHQWVWKDWLIDYRXFKHUSURJUDP
FRQVLGHULQJVROHO\WKRVHFULWHULD5DWKHULWVHHPVHYLGHQWWKDW        LQYROYHGWRRPDQ\UHOLJLRXVVFKRROVRULIWKRVHLQYROYHGDUH
WKH$JRVWLQL&RXUWLOOXVWUDWHGWKH/HPRQWHVWjVIOH[LELOLW\DQG          KRQHVWO\JHQXLQHO\DQGHVVHQWLDOO\UHOLJLRXVWKHVWDWXWHLV
LWV HYROXWLRQ IURP WKH UHODWLYHO\ ULJLG WKUHHSDUW WHVW WR DQ   WKHUHIRUH LQYDOLG DV mDGYDQFLQJ UHOLJLRQl  7KLV PRVW
DSSURDFK LQ ZKLFK WKH YDU\LQJ FRPSRQHQWV RI D SDUWLFXODU         XQDWWUDFWLYHDUJXPHQWZDVXWWHUO\UHMHFWHGLQ:LWWHUV86
SURJUDPRUVWDWXWHDUHDQDO\]HGZLWKUHJDUGWRWKHLULPSDFWRQ          DWDQG0XHOOHU86DWDQGDOVRZDV
LQ WKH FRQWH[W RI VFKRROV WKH UHOHYDQW VWXGHQWV RU              UHMHFWHG LQ sXVWLFH 3RZHOOjV FRQFXUULQJ RSLQLRQ LQ :LWWHUV
FRPPXQLWLHV  :H WKHUHIRUH ORRN WR WKHVH FRPSRQHQWV DV           6HH :LWWHUV  86 DW  3RZHOO s FRQFXUULQJ
DVSHFWVRIWKHSURSHUDQDO\VLVXQGHU/HPRQEXWDFNQRZOHGJH              0RUHRYHUsXVWLFH7KRPDVZULWLQJIRUDFOHDUPDMRULW\RQWKLV
WKDWSUHFHGHQWGRHVQRWOLPLWLWVHOIWRRQO\WKHVHFRPSRQHQWV            SRLQWLQ0LWFKHOOVWDWHG
VKRXOGRWKHUFRPSRQHQWVSUHYLRXVO\XWLOL]HGE\WKH&RXUWEH
UHOHYDQW VXFK DV FRHUFLRQ RI FLWL]HQV HQGRUVHPHQW RI                ,QVKRUWQRWKLQJLQWKH(VWDEOLVKPHQW&ODXVHUHTXLUHV
UHOLJLRQDQGGLUHFWEHQHILWWRUHOLJLRQ6HH0LWFKHOOY+HOPV          WKH H[FOXVLRQ RI SHUYDVLYHO\ VHFWDULDQ VFKRROV IURP
 6 &W    2j&RQQRU s FRQFXUULQJ             RWKHUZLVHSHUPLVVLEOHDLGSURJUDPVDQGRWKHUGRFWULQHV
ILQGLQJ WKDW $JRVWLQL UHSUHVHQWV D JHQHUDO IUDPHZRUN IRU           RI WKLV &RXUW EDU LW  7KLV GRFWULQH ERUQ RI ELJRWU\
DSSURDFKLQJ TXHVWLRQV FRQFHUQLQJ QHXWUDO VFKRRODLG                    VKRXOGEHEXULHGQRZ
SURJUDPVEXWUHFRJQL]LQJWKDWWKHVHW\SHRIFDVHVGHSHQGRQ
WKHSDUWLFXODUIDFWVRIHDFKFDVH                                      0LWFKHOO6&WDW
    6LPPRQV+DUULVHWDO           1RV          1RV             6LPPRQV+DUULVHWDO       
      Y=HOPDQHWDO                                                                                        Y=HOPDQHWDO

LQFHQWLYH WR XQGHUWDNH UHOLJLRXV LQGRFWULQDWLRQl  $JRVWLQL       2I WKH FDVHV ZKLFK IROORZ /HPRQ ZH ILQG WKH PRVW
86DW7KH&RXUWQRWHGWKDWDILQDQFLDOLQFHQWLYHWR        SHUVXDVLYHLQWKDWLWLVRQSRLQWZLWKWKHPDWWHUDWKDQGWREH
FKRRVHDUHOLJLRXVVFKRRORYHUDQRQUHOLJLRXVVFKRROLVQRW            &RPPLWWHH IRU 3XEOLF (GXFDWLRQ Y 1\TXLVW  86 
SUHVHQWmZKHUHWKHDLGLVDOORFDWHGRQWKHEDVLVRIQHXWUDO             ,Q 1\TXLVW D 1HZ <RUN 6WDWH VWDWXWH HVWDEOLVKHG
VHFXODUFULWHULDWKDWQHLWKHUIDYRUQRUGLVIDYRUUHOLJLRQDQGLV      DPRQJRWKHUDLGDWXLWLRQJUDQWSURJUDPZKLFKSURYLGHGIRU
PDGHDYDLODEOHWRERWKUHOLJLRXVDQGVHFXODUEHQHILFLDULHVRQ          SDUWLDOWXLWLRQUHLPEXUVHPHQWWRORZLQFRPHSDUHQWVZKRVH
DQRQGLVFULPLQDWRU\EDVLVl,G                                     FKLOGUHQDWWHQGHGSULYDWHHOHPHQWDU\RUVHFRQGDU\ VFKRROV
                                                                       6HHLGDW7KHWXLWLRQUHLPEXUVHPHQWSODQDSSOLHGWR
   'HVSLWHWKHSODLQHYLGHQFHWKDWWKHDLGWRWKHSDUHQWVRIWKH       SDUHQWV RI FKLOGUHQ ZKR DWWHQGHG DQ\ SULYDWH VFKRRO QRW
&OHYHODQGVFKRROFKLOGUHQLVLQGHHGmDOORFDWHGRQWKHEDVLVRI         VROHO\VHFWDULDQVFKRROVDQGZDVOLPLWHGWRRIWXLWLRQ
QHXWUDO VHFXODU FULWHULD WKDW QHLWKHU IDYRU QRU GLVIDYRU       SDLG,GDW$WWKHWLPHWKHSODQZDVFKDOOHQJHGQHDUO\
UHOLJLRQDQGLVPDGHDYDLODEOHWRERWKUHOLJLRXVDQGVHFXODU          RI1HZ<RUNjVVFKRRODJHFKLOGUHQDWWHQGHGQRQSXEOLF
EHQHILFLDULHVRQDQRQGLVFULPLQDWRU\EDVLVlLGWKHPDMRULW\         VFKRROV DQG DSSUR[LPDWHO\  RI WKHVH VFKRROV ZHUH
FRQWLQXHV WR LQVLVW WKDW WKH YRXFKHU SURJUDP LV QRW QHXWUDO   VHFWDULDQ,GDW7KH1\TXLVW&RXUWQRWHGWKDWDOWKRXJK
EHFDXVH LW FUHDWHV D IRUELGGHQ mLQFHQWLYHl IRU SDUHQWV LQ      mWKH FKDUDFWHULVWLFV RI LQGLYLGXDO VFKRROV PD\ YDU\ ZLGHO\
&OHYHODQG WR FKRRVH D UHOLJLRXV VFKRRO  $V EHVW , FDQ       IURP>WKH@SURILOHlLQVWLWXWLRQVZKLFKTXDOLILHGIRUDVVLVWDQFH
XQGHUVWDQGLWWKH\UHVWWKLVFRQFOXVLRQnXQVXSSRUWHGWKRXJK            XQGHUWKHVWDWXWHZHUHRQHVWKDWLQFOXGHGUHOLJLRXVLQVWUXFWLRQ
LW LV E\ DQ\ HYLGHQFH LQ WKH UHFRUGnRQ WZR IXUWKHU            DQGUHTXLUHPHQWVDVSDUWRIWKHLUDFDGHPLFFXUULFXOXP6HH
FRQFOXVLRQV7KHILUVWLVWKDWEHFDXVHWKHYDVWPDMRULW\n           LGDW
SHUFHQWnRI WKH SULYDWH VFKRROV SDUWLFLSDWLQJ LQ WKH 2KLR
SURJUDPDUHUHOLJLRXVWKHSHRSOHRI&OHYHODQGDUHGHQLHGD              )ROORZLQJ/HPRQWKH1\TXLVW&RXUWIRXQGWKDWWKH1HZ
mJHQXLQHl FKRLFH  7KLV DUJXPHQW LV PDGH GHVSLWH WKH           <RUN VWDWXWH SDVVHG WKH ILUVW SURQJ RI WKH /HPRQ WHVW o
LQGLVSXWDEOHIDFWWKDWRIDOOWKHSULYDWHQRQUHOLJLRXVSULYDWH         ZKHWKHUWKHVWDWXWHKDGDVHFXODUSXUSRVHoEHFDXVHWKHWXLWLRQ
VFKRROVSDUWLFLSDWLQJLQWKHSURJUDPQRWRQHKDVHYHUWXUQHG          UHLPEXUVHPHQW SURJUDP SURPRWHG SOXUDOLVP DQG GLYHUVLW\
DZD\DYRXFKHUDSSOLFDQWIRUDQ\UHDVRQ7KLVQRWYHU\WKLQO\         DPRQJ1HZ<RUNjVSXEOLFDQGSULYDWHVFKRROVDQGDOOHYLDWHG
YHLOHG DQWLSDWK\ WKH PDMRULW\ KDV VKRZQ WRZDUG UHOLJLRXV        FRQFHUQWKDWWKH6WDWHjVRYHUEXUGHQHGSXEOLFVFKRROVZRXOG
VFKRROVnLWV DUJXPHQW WKDW WKHUH DUH WRR PDQ\ UHOLJLRXV          EHKDUPHGLIDODUJHQXPEHURIFKLOGUHQZKRKDGSUHYLRXVO\
VFKRROVLQWKHSURJUDPnLVPHULWOHVVIRUDQRWKHUUHDVRQWKH           EHHQDWWHQGLQJSULYDWHVFKRROVGHFLGHGWRUHWXUQWRWKHSXEOLF
6XSUHPH&RXUWKDVIODWO\UHMHFWHGWKHDUJXPHQWWKDWDKLJK             VFKRROV6HH86DW7KH&RXUWGLGmQRWTXHVWLRQ
SHUFHQWDJHRIUHOLJLRXVVFKRROVSDUWLFLSDWLQJLQDJRYHUQPHQW         WKH SURSULHW\ DQG IXOO\ VHFXODU FRQWHQW RI 1HZ <RUNjV
DLGSURJUDPLVDQLQGLFDWRUWKDWWKHJRYHUQPHQWLVHQJDJLQJ            LQWHUHVW LQ SUHVHUYLQJ D KHDOWK\ DQG VDIH HGXFDWLRQDO
LQJRYHUQPHQWDOLQGRFWULQDWLRQRIUHOLJLRQ6HH0LWFKHOO         HQYLURQPHQWIRUDOORILWVVFKRROFKLOGUHQl,G
6 &W DW  LG DW  2j&RQQRU s FRQFXUULQJ
$JRVWLQL86DW0XHOOHU86DW                   8QGHUWKHVHFRQGSURQJRIWKH/HPRQWHVWWKDWWKHVWDWXWH
                                                                       QHLWKHUDGYDQFHQRULQKLELWUHOLJLRQoWKH1HZ<RUNVWDWXWH
   7KHPDMRULW\WKHQDWWHPSWVWRVXSSRUWLWVYLHZWKDWWKH2KLR        GLGQRWIDUHDVZHOO7KH&RXUWQH[WIRXQGWKDWWKH1HZ<RUN
VWDWXWHFUHDWHVDIRUELGGHQLQFHQWLYHIRUSDUHQWVWRFKRRVHD          UHLPEXUVHPHQWSURJUDPIDLOHGEHFDXVHm>L@QWKHDEVHQFHRIDQ
UHOLJLRXVVFKRROE\XWLOL]LQJWKHWUDQVSDUHQWDUJXPHQWWKDWWKLV       HIIHFWLYH PHDQV RI JXDUDQWHHLQJ WKDW WKH VWDWH DLG GHULYHG
VWDWXWHVKRXOGEHVWUXFNGRZQEHFDXVHWKHUHOLJLRXVVFKRROVLQ         IURP SXEOLF IXQGV ZLOO EH XVHG H[FOXVLYHO\ IRU VHFXODU
    6LPPRQV+DUULVHWDO            1RV          1RV               6LPPRQV+DUULVHWDO     
      Y=HOPDQHWDO                                                                                           Y=HOPDQHWDO

QHXWUDO DQG QRQLGHRORJLFDO SXUSRVHV LW LV FOHDU IURP RXU      SURJUDPEXWWKHUHLVQRWWKHVOLJKWHVWKLQWLQWKHUHFRUGWKDW
FDVHVWKDWGLUHFWDLGLQZKDWHYHUIRUPLVLQYDOLGl86DW        ZKHQWKH2KLRVWDWXWHZDVHQDFWHGHLWKHUWKHOHJLVODWRUVRUWKH
7KH&RXUWRSLQHGWKDWWKHIDFWWKDWSURJUDPJUDQWVZHUH           JRYHUQRUKDGDQ\LGHDWKDWWKHSXEOLFVFKRROGLVWULFWVDGMDFHQW
GHOLYHUHGWRSDUHQWVUDWKHUWKDQVFKRROVZDVmRQO\RQHDPRQJ            WR&OHYHODQGZRXOGQRWSDUWLFLSDWH:KDWZHPHDVXUHWRGD\
PDQ\IDFWRUVWREHFRQVLGHUHGl,GDW7KH&RXUWUHVWHG          LV QRW ZKHWKHU WKH FKLOGUHQ LQ &OHYHODQG KDYH WKH IXOOHVW
LWVDQDO\VLVRQWKHSUHPLVHWKDWWKHUHKDGEHHQmµQRHQGHDYRU           FRQFHLYDEOHUDQJHRIRSWLRQVDYDLODEOHWRWKHPWKDWDSDQHORI
WR JXDUDQWHH WKH VHSDUDWLRQ EHWZHHQ VHFXODU DQG UHOLJLRXV        IHGHUDOMXGJHVPLJKWWKLQNWREHLGHDOEXWUDWKHUZKHWKHUWKH
HGXFDWLRQDO IXQFWLRQV DQG WR HQVXUH WKH 6WDWH ILQDQFLDO DLG     VWDWXWH DV HQDFWHG KDV WKH SULPDU\ HIIHFW RI DGYDQFLQJ
VXSSRUWVRQO\WKHIRUPHUjl,GDWTXRWLQJ/HPRQ             UHOLJLRQE\LQYROYLQJWKHVWDWHLQJRYHUQPHQWDOLQGRFWULQDWLRQ
86DWm%\UHLPEXUVLQJSDUHQWVIRUDSRUWLRQRIWKHLU           XQGHU$JRVWLQLjVILUVWFULWHULRQ6HH0LWFKHOO6&WDW
WXLWLRQELOOWKH6WDWHVHHNVWRUHOLHYHWKHLUILQDQFLDOEXUGHQV        7RP\NQRZOHGJHQRIHGHUDOFRXUWKDVHYHUKHOG
VXIILFLHQWO\WRDVVXUHWKDWWKH\FRQWLQXHWRKDYHWKHRSWLRQWR         WKDW D VFKRROFKRLFH YRXFKHU SURJUDP LV XQFRQVWLWXWLRQDO
VHQG WKHLU FKLOGUHQ WR UHOLJLRQRULHQWHG VFKRROVl  ,G  7KH   EHFDXVHWKHUDQJHRIFKRLFHVGRHVQRWLQFOXGHDSXEOLFVFKRRO
&RXUWQRWHGWKDWmZKLOHWKHRWKHUSXUSRVHVIRUWKDWDLGoWR            RSWLRQFHUWDLQO\WKHPDMRULW\GRHVQRWFLWHVXFKDFDVH
SHUSHWXDWH D SOXUDOLVWLF HGXFDWLRQDO HQYLURQPHQW DQG WR
SURWHFWWKHILVFDOLQWHJULW\RIRYHUEXUGHQHGSXEOLFVFKRROVo                                           %
DUH FHUWDLQO\ XQH[FHSWLRQDEOH WKH HIIHFW RI WKH DLG LV
XQPLVWDNDEO\ WR SURYLGH GHVLUHG ILQDQFLDO VXSSRUW IRU                1HLWKHU GRHV WKH 2KLR SURJUDP mGHILQH LWV UHFLSLHQWV E\
QRQSXEOLFVHFWDULDQLQVWLWXWLRQVl,G                                UHIHUHQFHWRUHOLJLRQlWKHVHFRQG$JRVWLQLIDFWRUIRUWHVWLQJ
                                                                        IRUmLPSHUPLVVLEOHHIIHFWl$JRVWLQL86DW7KH
   7KH1\TXLVW&RXUWDOVRUHFRJQL]HGDQGGLVFDUGHGWKHVWDWHjV          SURJUDP GHILQHV WKH ILUVWSULRULW\ YRXFKHU UHFLSLHQWV E\
DUJXPHQWV WKDW LW ZDV RI FRQWUROOLQJ VLJQLILFDQFH WKDW 1HZ      UHIHUHQFHWRWKHLUDWWHQGDQFHLQRQHRI&OHYHODQGjVSXEOLF
<RUNjVSURJUDPFDOOHGIRUUHLPEXUVHPHQWRIWXLWLRQDOUHDG\              VFKRROVDQGDIDPLO\LQFRPHWKDWLVQRWPRUHWKDQ
SDLGWKXVHQVXULQJWKDWWKHSDUHQWLVIUHHWRVSHQGWKDWWXLWLRQ       SHUFHQWRIWKHIHGHUDOO\HVWDEOLVKHGSRYHUW\OHYHO6HH2KLR
PRQH\LQDQ\PDQQHUKHRUVKHVHHVILW86DW            5HY&RGH$$QGWKHVWDWXWHH[SOLFLWO\IRUELGV
m>,@IWKHJUDQWVDUHRIIHUHGDVDQLQFHQWLYHWRSDUHQWVWRVHQG         D UHOLJLRXV WHVW IRU DGPLVVLRQ WR D SDUWLFLSDWLQJ VFKRRO
WKHLUFKLOGUHQWRVHFWDULDQVFKRROVE\PDNLQJXQUHVWULFWHGFDVK         LQFOXGLQJUHOLJLRXVVFKRROV6HHLGDW$$
SD\PHQWVWRWKHPWKH(VWDEOLVKPHQW&ODXVHLVYLRODWHG          SDUHQW KDV WKH FKRLFH RI XVLQJ WKH YRXFKHU LQ D SULYDWH
:KHWKHUWKHJUDQWLVODEHOHGDUHLPEXUVHPHQWDUHZDUGRUD            UHOLJLRXVVFKRRODSULYDWHQRQUHOLJLRXVVFKRROIRUWXWRULQJLQ
VXEVLG\LWVVXEVWDQWLYHLPSDFWLVVWLOOWKHVDPHl,GDW        WKH SXEOLF VFKRRO RU LQ D SXEOLF VFKRRO LQ D QHLJKERULQJ
7KH&RXUWDOVRUHMHFWHGWKHVWDWHjVDUJXPHQWWKDWWKHSODQSDLG         GLVWULFWLIDQ\ZLVKWRSDUWLFLSDWH7KHVWDWXWHH[SUHVVHVQR
IRURQO\DSRUWLRQRIWKHWXLWLRQDWDVHFWDULDQVFKRROVD\LQJ         SUHIHUHQFHH[SOLFLWO\RULPSOLFLWO\HLWKHUDVWRWKHUHOLJLRQRI
mLIDFFHSWHGWKLVDUJXPHQWZRXOGSURYLGHWKHIRXQGDWLRQIRU            WKHYRXFKHUUHFLSLHQWVRULIWKHUHFLSLHQWFKRRVHVDSULYDWH
PDVVLYH GLUHFW VXEVLGL]DWLRQ RI VHFWDULDQ HOHPHQWDU\ DQG         VFKRRO ZKHWKHU WKH YRXFKHU LV DSSOLHG WR D UHOLJLRXV RU
VHFRQGDU\VFKRROVl,GDW                                      QRQUHOLJLRXVVFKRRO
  7KHFDVHVRI(YHUVRQY%RDUGRI(GXFDWLRQ86                   7KH $JRVWLQL &RXUW UHFRJQL]HG RI FRXUVH WKDW WKH
DQG%RDUGRI(GXFDWLRQY$OOHQ86            HOLJLELOLW\UHTXLUHPHQWVRIDJRYHUQPHQWDLGSURJUDPFRXOG
ZHUHFDUHIXOO\GLVWLQJXLVKHGE\WKH&RXUW,Q(YHUVRQWKH             mKDYHWKHHIIHFWRIDGYDQFLQJUHOLJLRQE\FUHDWLQJDILQDQFLDO
    6LPPRQV+DUULVHWDO             1RV           1RV             6LPPRQV+DUULVHWDO        
      Y=HOPDQHWDO                                                                                           Y=HOPDQHWDO

,GDWLQWHUQDOTXRWDWLRQPDUNVDQGFLWDWLRQRPLWWHG,I           &RXUWXSKHOGWD[GHGXFWLRQVIRUSDUHQWVZKRH[SHQGHGEXV
WKHUHFLSLHQWVKDYHVXFKDQLQGHSHQGHQWDQGSULYDWHFKRLFH               IDUHIRUFKLOGUHQZKRDWWHQGHGUHOLJLRXVVFKRROVUHDVRQLQJ
WKHQWKHJRYHUQPHQWjVGHFLVLRQWRSURYLGHWKHPRQH\WRIXQG               WKDWWKHEXVIDUHSURJUDPZDVDQDORJRXVWRWKHSURYLVLRQRI
WKDW FKRLFH GRHV QRW KDYH WKH HIIHFW RI DGYDQFLQJ UHOLJLRQ      VHUYLFHVVXFKDVSROLFHDQGILUHSURWHFWLRQVHZDJHGLVSRVDO
7KH JRYHUQPHQW LV RI QHFHVVLW\ QHXWUDO LQ WKH PDWWHU           KLJKZD\VDQGVLGHZDONVIRUSDURFKLDOVFKRROV6HH86
,PSOLFLWLQWKDWFRQVWLWXWLRQDOUXOHRIODZDVLWDSSOLHVLQWKLV        DW7KH&RXUWIRXQGWKDWWKHVHVHUYLFHVFRPPRQWRDOO
FDVHLVWKDWWKHUHPXVWEHDJHQXLQHFKRLFHIURPDPRQJD                 FLWL]HQVDUHmVRVHSDUDWHDQGVRLQGLVSXWDEO\PDUNHGRIIIURP
UDQJHRIDOWHUQDWLYHVWKDWLQGLFDWHFRPSOHWHQHXWUDOLW\RQWKH            WKH UHOLJLRXV IXQFWLRQ WKDW WKH\ PD\ IDLUO\ EH YLHZHG DV
SDUWRIWKHJRYHUQPHQWDVWRZKHUHWKHUHFLSLHQWSDUHQWVPD\              UHIOHFWLRQVRIDQHXWUDOSRVWXUHWRZDUGUHOLJLRXVLQVWLWXWLRQVl
FKRRVH WR VSHQG WKH JRYHUQPHQWDLG IXQGV  7KH YRXFKHU            ,GDW,Q$OOHQWKH&RXUWXSKHOGDVWDWXWHZKLFKDOORZHG
SURJUDPGRHVQRWRIIHQGWKH(VWDEOLVKPHQW&ODXVHEHFDXVH                  VHFXODU WH[WERRNV WR EH SURYLGHG WR FKLOGUHQ DWWHQGLQJ
WKHVWDWXWHDOORZVSDUHQWVWRPDNHDJHQXLQHFKRLFHIRUWKHLU             UHOLJLRXVVFKRROVILQGLQJWKDWmWKH6WDWHFODLPVQRULJKWWR
FKLOGUHQZKRDUHFXUUHQWO\LQ&OHYHODQGSXEOLFVFKRROV                 GLVWULEXWH UHOLJLRXV OLWHUDWXUHl DQG QRWLQJ WKDW mZH FDQQRW
                                                                          DVVXPHWKDWVFKRRODXWKRULWLHVDUHXQDEOHWRGLVWLQJXLVK
  :KDW DUH WKH FKRLFHV 2KLR KDV JLYHQ WKHVH &OHYHODQG             EHWZHHQVHFXODUDQGUHOLJLRXVERRNVl86DW
SDUHQWV"                                                                  7KH 1\TXLVW &RXUW GLVWLQJXLVKHG WKHVH WZR FDVHV QRW RQO\
                                                                          EDVHGRQWKHLUQHXWUDOSRVWXUHWRZDUGUHOLJLRQEXWRQWKHIDFW
   7R SHUPLW WKHLU FKLOGUHQ WR UHPDLQ LQ WKH                    WKDWLQERWKRIWKRVHFDVHVmWKHFODVVRIEHQHILFLDULHVLQFOXGHG
      &OHYHODQGSXEOLFVFKRROVDVEHIRUH                                 DOOVFKRROFKLOGUHQWKRVHLQSXEOLFDVZHOODVWKRVHLQSULYDWH
                                                                          VFKRROVl86DWQFLWLQJ7LOWRQY5LFKDUGVRQ
   7RDFFHSWDWXLWLRQYRXFKHUIRUWKHPWRDWWHQGD                     86   PDNLQJ IHGHUDO DLG DYDLODEOH WR DOO
      &OHYHODQGDUHDQRQUHOLJLRXVSULYDWHVFKRRO                         LQVWLWXWLRQVRIKLJKHUOHDUQLQJ
   7RDFFHSWDWXLWLRQYRXFKHUIRUWKHPWRDWWHQGD                       7KH &RXUW QRWHG WKDW XQOLNH LQ (YHUVRQ DQG $OOHQ WKH
      &OHYHODQGDUHDUHOLJLRXVSULYDWHVFKRRO                            WXLWLRQJUDQWVLQ1\TXLVWZHUHQRWDQHXWUDODWWHPSWWRSURYLGH
                                                                          FRPSDUDEOHEHQHILWVWRDOOSDUHQWVRIVFKRROFKLOGUHQZKHWKHU
   7R DFFHSW D YRXFKHU IRU WKHP WR REWDLQ VSHFLDO              HQUROOHG LQ SXEOLF RU QRQSXEOLF VFKRROV DV WKH mJUDQWV WR
      WXWRULDOKHOSLQWKH&OHYHODQGVFKRROVRU                         SDUHQWVRISULYDWHVFKRROFKLOGUHQDUHJLYHQLQDGGLWLRQWRWKH
   7RDFFHSWDYRXFKHUIRUWKHPWRDWWHQGDSXEOLF                     ULJKWWKDWWKH\KDYHWRVHQGWKHLUFKLOGUHQWRSXEOLFVFKRROV
      VFKRRO LQ D GLVWULFW DGMDFHQW WR &OHYHODQG                   WRWDOO\ DW VWDWH H[SHQVHl   86 DW  Q LQWHUQDO
      DOWKRXJK IRU WKH SUHVHQW WKHVH GLVWULFWV KDYH                 TXRWDWLRQPDUNVRPLWWHG7KH&RXUWDGGLWLRQDOO\GHWHUPLQHG
      GHFOLQHGWRSDUWLFLSDWHLQWKHSURJUDP                             WKDWWKLVDUJXPHQWRIQHXWUDOLW\LIXSKHOGZRXOGEHRYHUO\
                                                                          EURDGSURYLGLQJmDEDVLVIRUDSSURYLQJWKURXJKWXLWLRQJUDQWV
6HH2KLR5HY&RGH                                WKH FRPSOHWH VXEVLGL]DWLRQ RI DOO UHOLJLRXV VFKRROV RQ WKH
                                                                          JURXQGWKDWVXFKDFWLRQLVQHFHVVDU\LIWKH6WDWHLVIXOO\ WR
   ,W LV GLIILFXOW WR LPDJLQH D VWDWXWH WKDW FRXOG DIIRUG LWV   HTXDOL]HWKHSRVLWLRQRISDUHQWVZKRHOHFWVXFKVFKRROVoD
YRXFKHUUHFLSLHQWVDEURDGHUVSHFWUXPRIHGXFDWLRQDOFKRLFH              UHVXOWZKROO\DWYDULDQFHZLWKWKH(VWDEOLVKPHQW&ODXVHl,G
,WLVWUXHRIFRXUVHWKDWWKHSXEOLFVFKRROGLVWULFWVDGMDFHQWWR
&OHYHODQG KDYH GHFOLQHG WR SDUWLFLSDWH LQ WKH YRXFKHU
    6LPPRQV+DUULVHWDO           1RV          1RV                6LPPRQV+DUULVHWDO      
      Y=HOPDQHWDO                                                                                           Y=HOPDQHWDO

   7KH6XSUHPH&RXUWKDVUHYLVLWHGPDQ\RIWKHLVVXHVUDLVHG              7KHILUVWRIWKH/HPRQFULWHULDWKDWPXVWEHPHWLIDVWDWXWH
LQ1\TXLVW,Q$JRVWLQLY)HOWRQ86          LVWRVXUYLYHDQ(VWDEOLVKPHQW&ODXVHFKDOOHQJHLVWKDWLWKDYH
WKH&RXUWVWDWHGWKDWm>Z@HGRQRWDFNQRZOHGJHDQGZHGR              DmVHFXODUSXUSRVHl7KH2KLRYRXFKHUSURJUDPPHHWVWKLV
QRWKROGWKDWRWKHUFRXUWVVKRXOGFRQFOXGHRXUPRUHUHFHQW            FULWHULRQ DQG WKH SODLQWLIIV DJUHH WKDW LW GRHV  7KH VROH
FDVHVKDYHE\LPSOLFDWLRQRYHUUXOHGDQHDUOLHUSUHFHGHQWl           SXUSRVHRIWKHYRXFKHUSURJUDPLVWRVDYH&OHYHODQGjVPRVWO\
7KH&RXUWFRQWLQXHGWRUHDIILUPmWKDWLIDSUHFHGHQWRIWKLV           SRRU PRVWO\ PLQRULW\ SXEOLF VFKRRO FKLOGUHQ IURP WKH
&RXUWKDVGLUHFWDSSOLFDWLRQLQDFDVH\HWDSSHDUVWRUHVWRQ         GHYDVWDWLQJFRQVHTXHQFHVRIUHTXLULQJWKHPWRUHPDLQLQWKH
UHDVRQVUHMHFWHGLQVRPHRWKHUOLQHRIGHFLVLRQVWKH&RXUWRI         IDLOHG&OHYHODQGVFKRROVLIWKH\ZLVKWRHVFDSH7KHUHLVDOVR
$SSHDOV VKRXOG IROORZ WKH FDVH ZKLFK GLUHFWO\ FRQWUROV         QR VHULRXV FODLP WKDW WKH VWDWXWH LV FRQVWLWXWLRQDOO\ LQYDOLG
OHDYLQJ WR WKLV &RXUW WKH SUHURJDWLYH RI RYHUUXOLQJ LWV RZQ   VROHO\EHFDXVHLWIRVWHUVDQmH[FHVVLYHHQWDQJOHPHQWlEHWZHHQ
GHFLVLRQVl,GHPSKDVLVDGGHG7KH6XSUHPH&RXUWKDV              JRYHUQPHQWDQGUHOLJLRQ5DWKHUWKHRQO\LVVXHLQWKHFDVHLV
UHIUDLQHG IURP RYHUUXOLQJ 1\TXLVW DQG KDV LQVWHDG               ZKHWKHU WKH YRXFKHU SURJUDP KDV WKH IRUELGGHQ mSULPDU\
GLVWLQJXLVKHGYDULRXVFDVHVRQWKHEDVLVRIWKHLUIDFWV WKLV         HIIHFWl RI DGYDQFLQJ UHOLJLRQ  7KLV FRXUWjV ILUVW GXW\
&RXUW KDV DFFRUGLQJO\ IROORZHG WKDW DSSURDFK  m$ VLQJOH       WKHUHIRUH DIWHU UHFRJQL]LQJ WKDW 1\TXLVWjV IDFWXDOO\ DQG
IDFWXDOGLIIHUHQFHFRQVHTXHQWO\FDQVHUYHWRHQWDQJOHRUIUHH          OHJDOO\ RXWGDWHG GHFLVLRQ LV RI QR KHOS LV WR SURFHHG WR
D SDUWLFXODU JRYHUQPHQWDO SUDFWLFH IURP WKH UHDFK RI WKH       H[DPLQHWKHILUVWWZRFULWHULDIURP$JRVWLQLjVmLPSHUPLVVLEOH
>(VWDEOLVKPHQW@&ODXVHjVFRQVWLWXWLRQDOSURKLELWLRQl&ROHV          HIIHFWlWHVWWRGHWHUPLQHZKHWKHUWKHHIIHFWRI2KLRjVYRXFKHU
)GDW:HWKHUHIRUHORRNWRUHOHYDQWFDVHODZWR            SURJUDPLVWRDGYDQFHUHOLJLRQHLWKHUEHFDXVHWKHDLGLW
DVVLVW XV E\ DQDORJ\ LQ DQDO\]LQJ WKH IDFWXDO GLVFUHSDQFLHV    SURYLGHV UHVXOWV LQ JRYHUQPHQWDO LQGRFWULQDWLRQ RU  WKH
EHWZHHQWKLVFDVHDQG1\TXLVW                                         SURJUDPGHILQHVLWVUHFLSLHQWVE\UHIHUHQFHWRUHOLJLRQ6HH
                                                                       $JRVWLQL  86 DW   7KHVH DUH WKH RQO\ WZR LVVXHV
   ,Q0XHOOHUY$OOHQ86WKH&RXUWIRXQG           SURSHUO\EHIRUHXV
FRQVWLWXWLRQDO D 0LQQHVRWD VWDWXWH ZKLFK DOORZHG VWDWH
WD[SD\HUVWRGHGXFWRQWKHLUVWDWHLQFRPHWD[FHUWDLQWXLWLRQ                                          $
WUDQVSRUWDWLRQ DQG HGXFDWLRQDO H[SHQVHV RI WKHLU FKLOGUHQ
DWWHQGLQJ HOHPHQWDU\ RU VHFRQGDU\ VFKRROV  )ROORZLQJ WKH          ,QDGGUHVVLQJ$JRVWLQLjVILUVWFULWHULRQIRUWHVWLQJDVWDWXWHjV
/HPRQWHVWWKH&RXUWDJUHHGWKDWWKHVWDWXWHKDGWKHVHFXODU          FODLPHG LPSHUPLVVLEOH HIIHFW ZH PXVW DVN ZKHWKHU WKH
SXUSRVH RI GHIUD\LQJ WKH FRVW RI HGXFDWLRQ IRU DOO SDUHQWV   JRYHUQPHQWDLGLQWKHIRUPRIWKHWXLWLRQYRXFKHUUHVXOWVLQ
UHJDUGOHVVRIWKHW\SHRIVFKRROWKHLUFKLOGUHQDWWHQG,GDW        mJRYHUQPHQWDOLQGRFWULQDWLRQl,WLVREYLRXVWKDWWKH2KLR
$QDO\]LQJWKHHIIHFWRIWKHVWDWXWHWKH&RXUWKHOGWKDW         VWDWXWH GRHV QRW KDYH WKH UHPRWHVW HIIHFW RI SURYLGLQJ
WKH SURJUDP GLG QRW KDYH D SULPDU\ HIIHFW RI DGYDQFLQJ        JRYHUQPHQWDOLQGRFWULQDWLRQLQDQ\UHOLJLRQWRVD\QRWKLQJRI
UHOLJLRQEHFDXVHWKHWD[GHGXFWLRQZDVDWUDGLWLRQDODUHDIRU          KDYLQJVXFKDSULPDU\HIIHFW
VWDWH OHJLVODWXUHV WR FRGLI\ SROLFLHV ZKLFK mDFKLHYH DQ
HTXLWDEOH GLVWULEXWLRQ RI WKH WD[ EXUGHQl DQG EHFDXVH WKH       7KH 6XSUHPH &RXUW GHFLVLRQV VLQFH /HPRQ DQG 1\TXLVW
GHGXFWLRQZDVDYDLODEOHIRUHGXFDWLRQDOH[SHQVHVLQFXUUHGE\           KDYH HPSKDVL]HG WKDW WKH FULWLFDO TXHVWLRQ LQ GHWHUPLQLQJ
DOOSDUHQWVZKHWKHUWKHLUFKLOGUHQDWWHQGHG SXEOLFVFKRROV          ZKHWKHU JRYHUQPHQW DLG XOWLPDWHO\ IORZLQJ WR UHOLJLRXV
QRQVHFWDULDQSULYDWHVFKRROVRUFKXUFKDIILOLDWHGVFKRROV,G       VFKRROV UHVXOWV LQ JRYHUQPHQWDO LQGRFWULQDWLRQ LV LI WKH
DW                                                           UHFLSLHQW EHQHILFLDULHV PDNH D mJHQXLQHO\ LQGHSHQGHQW DQG
                                                                       SULYDWHFKRLFH>@lWRmVSHQGlWKHIXQGVLQDUHOLJLRXVVFKRRO
    6LPPRQV+DUULVHWDO            1RV          1RV              6LPPRQV+DUULVHWDO        
      Y=HOPDQHWDO                                                                                          Y=HOPDQHWDO

DQGSULYDWHVFKRROVERWKUHOLJLRXVDQGQRQUHOLJLRXVsXVWLFH             7KH &RXUW IRXQG LW FRPSHOOLQJ WKDW WKH GHGXFWLRQ ZDV
7KRPDV HPSKDVL]HG WKDW WKH VWDWXWH GLG QRW KDYH DQ              DYDLODEOHIRUDOOSDUHQWVZLWKVFKRRODJHFKLOGUHQVWDWLQJWKDW
mLPSHUPLVVLEOHHIIHFWlEHFDXVHWKHmSULQFLSOHVRIQHXWUDOLW\            WKLV DVSHFW ZDV mYLWDOO\ GLIIHUHQW IURP WKH VFKHPH VWUXFN
DQGSULYDWHFKRLFHDQGWKHLUUHODWLRQVKLSWRHDFKRWKHU>WKDW@         GRZQ LQ 1\TXLVW  7KHUH SXEOLF DVVLVWDQFH DPRXQWLQJ WR
ZHUH>DOVR@SURPLQHQWlLQWKH&RXUWjVGHFLVLRQVLQ$JRVWLQL            WXLWLRQ JUDQWV ZDV SURYLGHG RQO\ WR SDUHQWV RI FKLOGUHQ LQ
=REUHVW:LWWHUVDQG0XHOOHUZHUHSUHVHQW,GDW             QRQSXEOLFVFKRROVl,GDW7KH&RXUWDQDORJL]HGWKHWD[
                                                                        GHGXFWLRQVFKHPHDVVLPLODUWRWKH*,%LOORURWKHUIRUPVRI
                                ,,                                     mSXEOLFDVVLVWDQFHPDGHDYDLODEOHJHQHUDOO\ZLWKRXWUHJDUGWR
                                                                        WKHVHFWDULDQQRQVHFWDULDQRUSXEOLFQRQSXEOLFQDWXUHRIWKH
  ,W LV DJDLQVW WKLV EDFNJURXQG RI FKDQJHG 6XSUHPH &RXUW        LQVWLWXWLRQEHQHILWWHGl,G7KH&RXUWIRXQGLWVLJQLILFDQWWKDW
(VWDEOLVKPHQW &ODXVH MXULVSUXGHQFH WKDW ZH PXVW WHVW WKH         XQGHU WKH 0LQQHVRWD SODQ JRYHUQPHQWDO DLG ZDV RQO\
FRQVWLWXWLRQDOLW\RIWKH2KLRYRXFKHUSURJUDP                        FKDQQHOHGWKURXJKWKHSDUHQWVUDWKHUWKDQGLUHFWO\SDLGWRWKH
                                                                        SDURFKLDOLQVWLWXWLRQVDQGQRWHG WKDWLWZRXOGQRWEDVHWKH
   7KH2KLRVWDWXWHLVWKHSURGXFWRIDRUGHULVVXHGE\            FRQVWLWXWLRQDOLW\RIDVWDWXWHRQ WKH FRQVLGHUDWLRQRI\HDUO\
WKH8QLWHG6WDWHV'LVWULFW&RXUWLQ&OHYHODQGGLUHFWLQJWKH            VWDWLVWLFDOHYLGHQFHFRQFHUQLQJZKLFKQRQVHFWDULDQVFKRROVo
2KLR6XSHULQWHQGHQWRI(GXFDWLRQWRDGGUHVVWKHHGXFDWLRQDO             UHOLJLRXVRURWKHUZLVHoEHQHILWWHGIURPWKHWD[GHGXFWLRQ,G
FULVLVLQ&OHYHODQGjVSXEOLFVFKRROV6HH5HHGY5KRGHV          DW7KH&RXUWVWDWHGWKDWWKH(VWDEOLVKPHQW&ODXVHLVQRW
)6XSS1'2KLR7KH2KLROHJLVODWXUHDQGWKH            DEDUWRmWKHVRUWRIDWWHQXDWHGILQDQFLDOEHQHILWXOWLPDWHO\
VWDWHjVJRYHUQRUUHVSRQGHGZLWKWKHYRXFKHUSURJUDPWKDWLV             FRQWUROOHGE\WKHSULYDWHFKRLFHVRILQGLYLGXDOSDUHQWVWKDW
EHIRUHXVWRGD\6HH2KLR5HY&RGH              HYHQWXDOO\ IORZV WR SDURFKLDO VFKRROV IURP WKH QHXWUDOO\
:HPD\VDIHO\DVVXPHWKDWLQIDVKLRQLQJWKHQHZODZWKH               DYDLODEOHWD[EHQHILWDWLVVXHLQWKLVFDVHl,GDW
2KLR OHJLVODWRUV DQG WKH JRYHUQRU NQHZ WKDW WKH FKDOOHQJH
WKH\IDFHGZDVWRGHVLJQDODZWKDWZRXOGVXUYLYHDIHGHUDO               ,Q:LWWHUVY:DVKLQJWRQ'HSDUWPHQWRI6HUYLFHVIRUWKH
FRQVWLWXWLRQDO FKDOOHQJH RQ (VWDEOLVKPHQW &ODXVH JURXQGV          %OLQG  86   WKH 6XSUHPH &RXUW IRXQG
7KDWLVQRWWRVD\WKDWWKHVWDWXWHWKHOHJLVODWRUVZURWHDQGWKH       FRQVWLWXWLRQDOD:DVKLQJWRQ6WDWHSURJUDPZKLFKSURYLGHG
JRYHUQRU VLJQHG LQWR ODZ LV LQVXODWHG IURP IHGHUDO MXGLFLDO     YRFDWLRQDO UHKDELOLWDWLRQ DVVLVWDQFH JUDQWV WR D EOLQG
FRQVWLWXWLRQDOVFUXWLQ\5DWKHULWLVWRVD\ZKDWWKHPDMRULW\        LQGLYLGXDOZKR DWWHQGHGD&KULVWLDQFROOHJHLQWKHKRSHRI
GRHVQRWHYHQDFNQRZOHGJHWKLVVWDWXWHLVSUHVXPHGWREH              EHFRPLQJDSDVWRU7KH&RXUWIRXQGWKHVWDWXWHjVSXUSRVH
FRQVWLWXWLRQDO6HH0F'RQDOGY%RDUGRI(OHFWLRQ&RPPjUV             mXQPLVWDNDEO\ VHFXODUl LG DW  DQG IRXQG WKDW XQOLNH
 86    +DUWIRUG )LUH ,QV &R Y            1\TXLVWmDQ\DLGSURYLGHGXQGHU:DVKLQJWRQjVSURJUDPWKDW
/DZUHQFH'\NHV*RRGHQEHUJHU%RZHU	&ODQF\)G                 XOWLPDWHO\ IORZV WR UHOLJLRXV LQVWLWXWLRQV GRHV VR RQO\ DV D
WK&LU7KLVSUHVXPSWLRQLVQRWDPHUH             UHVXOWRIWKHJHQXLQHO\LQGHSHQGHQWDQGSULYDWHFKRLFHVRIDLG
OLWHUDU\ ILJXUH IRU URWH UHFLWDWLRQ LQ DOO DSSHOODWH RSLQLRQV   UHFLSLHQWVl,GDW7KHIDFWWKDWWKHYRFDWLRQDODVVLVWDQFH
DGGUHVVLQJWKHFRQVWLWXWLRQDOLW\RIOHJLVODWLYHHQDFWPHQWVLWLV       ZDV SDLG GLUHFWO\ WR WKH VWXGHQW ZKR FRXOG H[SHQG WKH
DEHGURFNUXOHRIVWDWXWRU\FRQVWUXFWLRQRQHZHDUHERXQG              HGXFDWLRQDOIXQGVRQmZKROO\VHFXODUHGXFDWLRQlSHUVXDGHG
DVVLGXRXVO\ WR KRQRU DV ZH EHJLQ RXU DVVHVVPHQW RI WKH         WKH&RXUWWRILQGWKDWWKHSURJUDPGLGQRWFUHDWHDQLQFHQWLYH
YDOLGLW\RIWKH2KLRVWDWXWH                                         WRDSSO\WKHDLGWRUHOLJLRXVHGXFDWLRQ,Gm$LGUHFLSLHQWVj
                                                                        FKRLFHVDUHPDGHDPRQJDKXJHYDULHW\RISRVVLEOHFDUHHUVRI
                                                                        ZKLFKRQO\DVPDOOKDQGIXODUHVHFWDULDQ1RWKLQJLQWKH
    6LPPRQV+DUULVHWDO              1RV            1RV             6LPPRQV+DUULVHWDO        
      Y=HOPDQHWDO                                                                                             Y=HOPDQHWDO

UHFRUG LQGLFDWHV WKDW    DQ\ VLJQLILFDQW SRUWLRQ RI WKH DLG   XQGHUVWDQGLQJRIWKHFULWHULDIRUGHWHUPLQLQJZKHWKHULQDQ\
H[SHQGHGXQGHUWKH:DVKLQJWRQSURJUDPDVDZKROHZLOOHQG                   VSHFLILFSURJUDPJRYHUQPHQWDLGKDVWKHSULPDU\HIIHFWRI
XSIORZLQJWRUHOLJLRXVHGXFDWLRQl,G7KH&RXUWDOVRIRXQG              DGYDQFLQJUHOLJLRQKDGmFKDQJHGl,QGHHGLQ$JRVWLQLWKH
WKDWmWKHPHUHFLUFXPVWDQFHWKDWSHWLWLRQHUKDVFKRVHQWRXVH               6XSUHPH&RXUWZHQWVRIDUDVWRPRGLI\WKH/HPRQWHVWLWKDG
QHXWUDOO\ DYDLODEOH VWDWH DLG WR KHOS SD\ IRU KLV UHOLJLRXV        UHOLHG XSRQ LQ 1\TXLVW  7KH $JRVWLQL &RXUW EHJDQ E\
HGXFDWLRQ>GRHVQRW@FRQIHUDQ\PHVVDJHRIVWDWHHQGRUVHPHQW                UHFDVWLQJ/HPRQjVmHQWDQJOHPHQWlLQTXLU\DVDIDFWRUXQGHU
RIUHOLJLRQl,GDW                                                WKHmLPSHUPLVVLEOHHIIHFWlSURQJUDWKHUWKDQDVDVHSDUDWHDQG
                                                                            LQGHSHQGHQWFULWHULRQ6HH$JRVWLQL86DW,W
   ,Q$JRVWLQLY)HOWRQWKH&RXUWKHOGWKDWWKH(VWDEOLVKPHQW             WKHQ LGHQWLILHG WKUHH QHZ VXEFULWHULD WR FRQVLGHU ZKHQ
&ODXVHGLGQRWEDUD1HZ<RUNSURJUDPZKLFKVHQWSXEOLF                     HYDOXDWLQJ ZKHWKHU D JRYHUQPHQWDLG SURJUDP YLRODWHV
VFKRRO WHDFKHUV LQWR SDURFKLDO VFKRROV WR SURYLGH UHPHGLDO           /HPRQjVmLPSHUPLVVLEOHHIIHFWlSURQJ7KHVHDUH
HGXFDWLRQWRGLVDGYDQWDJHGFKLOGUHQ5HFRJQL]LQJWKDWWKHUH
KDG EHHQ VLJQLILFDQW FKDQJHV LQ (VWDEOLVKPHQW &ODXVH                     ZKHWKHU WKH DLG UHVXOWV LQ JRYHUQPHQWDO
MXULVSUXGHQFH WKH &RXUW IRXQG WKDW LW FRXOG QR ORQJHU                LQGRFWULQDWLRQ
SUHVXPHmWKDWWKHSODFHPHQWRISXEOLFHPSOR\HHVRQSDURFKLDO
VFKRROJURXQGVLQHYLWDEO\UHVXOWVLQWKHLPSHUPLVVLEOHHIIHFW                  ZKHWKHU WKH DLG SURJUDP GHILQHV LWV UHFLSLHQWV E\
RI VWDWHVSRQVRUHG LQGRFWULQDWLRQ RU FRQVWLWXWHV D V\PEROLF             UHIHUHQFHWRUHOLJLRQDQG
XQLRQEHWZHHQJRYHUQPHQWDQGUHOLJLRQl86DW
7KH&RXUWQRWHGWKDWWKRVHGLUHFWDLGSURJUDPVZKHUHJUDQWV                    ZKHWKHU WKH DLG FUHDWHV DQ H[FHVVLYH HQWDQJOHPHQW
DUHmPDGHDYDLODEOHJHQHUDOO\ZLWKRXWUHJDUGWRWKHVHFWDULDQ                EHWZHHQJRYHUQPHQWDQGUHOLJLRQ
QRQVHFWDULDQ RU SXEOLFQRQSXEOLF QDWXUH RI WKH LQVWLWXWLRQ
EHQHILWWHG>DUHYDOLGGHSDUWXUHVIURPWKHJHQHUDOUXOH@WKDWDOO            6HHLGDW
JRYHUQPHQWDLGWKDWGLUHFWO\DLGVWKHHGXFDWLRQDOIXQFWLRQRI
UHOLJLRXVVFKRROVLVLQYDOLGl,GDW5HO\LQJRQDQHDUOLHU             8VLQJWKLVPRGLILHG/HPRQWHVWWKH$JRVWLQL&RXUWIRXQG
FDVHZKLFKKDGIRXQGLWSHUPLVVLEOHWRSODFHDSXEOLFVFKRRO                FRQVWLWXWLRQDODIHGHUDOO\PDQGDWHG1HZ<RUNSURJUDPWKDW
VLJQODQJXDJHLQWHUSUHWHULQWRDSULYDWHSDURFKLDOVFKRROXQGHU             VHQWSXEOLFVFKRROWHDFKHUVLQWRSULYDWHSDURFKLDOVFKRROVWR
WKH ,QGLYLGXDOV ZLWK 'LVDELOLWLHV (GXFDWLRQ $FW  86&           SURYLGHUHPHGLDOHGXFDWLRQWRHOLJLEOHFKLOGUHQ8QGHUWKH
  WKH &RXUW GHWHUPLQHG WKDW WKHVH LQVWDQFHV LQYROYH           SURJUDP FKLOGUHQ PHHWLQJ WKH HOLJLELOLW\ UHTXLUHPHQWV
VLWXDWLRQVZKHUHPRQH\XOWLPDWHO\JRHVWRUHOLJLRXVVFKRROV                 UHFHLYHG WKH VHUYLFHV ZKHWKHU WKH\ DWWHQGHG D SULYDWH RU
mRQO\ DV D UHVXOW RI WKH JHQXLQHO\ LQGHSHQGHQW DQG SULYDWH         SXEOLFVFKRRO6HHLGDW7KH$JRVWLQL&RXUWFRQFOXGHG
FKRLFHV RI LQGLYLGXDOVl  ,G DW  FLWLQJ =REUHVW Y         WKDWSURJUDPVLQZKLFKPRQH\XOWLPDWHO\IORZVWRDSULYDWH
&DWDOLQD)RRWKLOOV6FK'LVW867KH&RXUW               UHOLJLRXVVFKRRO EDVHGRQWKHmµJHQXLQHO\LQGHSHQGHQWDQG
QRWHG DV D FHQWUDO SDUW RI LWV DQDO\VLV WKDW WKH VHUYLFHV         SULYDWH FKRLFHV RIj LQGLYLGXDOVl GR QRW YLRODWH WKH
SURYLGHGE\SXEOLFVFKRROHPSOR\HHVZHUHUHPHGLDOVWDWLQJ                  (VWDEOLVKPHQW&ODXVH,GDWTXRWLQJ:LWWHUV86
WKDWWKHmVHUYLFHVGRQRWWKHUHIRUHUHOLHY>H@VHFWDULDQVFKRROV           DW
RIFRVWVWKH\RWKHUZLVHZRXOGKDYHERUQHLQHGXFDWLQJWKHLU                   )LQDOO\ LQ 0LWFKHOO Y +HOPV  6 &W   D
VWXGHQWVl  ,G DW   7KH &RXUW FRQFOXGHG WKDW WKH 1HZ        SOXUDOLW\RSLQLRQZULWWHQE\sXVWLFH7KRPDVWKH&RXUWXSKHOG
<RUNSURJUDPVHUYLFHVmDUHDYDLODEOHWRDOOFKLOGUHQZKRPHHW               WKH FRQVWLWXWLRQDOLW\ RI D IHGHUDOO\ PDQGDWHG /RXLVLDQD
                                                                            SURJUDPZKHUHHGXFDWLRQDOPDWHULDOVZHUHORDQHGWRSXEOLF
    6LPPRQV+DUULVHWDO            1RV           1RV            6LPPRQV+DUULVHWDO       
      Y=HOPDQHWDO                                                                                         Y=HOPDQHWDO

FHUWDLQHGXFDWLRQDOH[SHQVHVIRUSDUHQWVRIVWXGHQWVDWWHQGLQJ           WKH $FWjV HOLJLELOLW\ UHTXLUHPHQWV QR PDWWHU ZKDW WKHLU
HLWKHUSXEOLFRUSULYDWHVFKRROVUHOLJLRXVRUQRQUHOLJLRXVGLG         UHOLJLRXVEHOLHIVRUZKHUHWKH\JRWRVFKRROl,GDW
QRW YLRODWH WKH mLPSHUPLVVLEOH HIIHFWl SURQJ RI WKH /HPRQ
WHVW7KH&RXUWIRFXVHGRQWKHIDFWWKDWWKHGHGXFWLRQZDV                 7KH6XSUHPH&RXUWUHYLVLWHGWKLVLVVXHWKLVSDVWWHUP%\
JLYHQ GLUHFWO\ WR WKH SDUHQWV ZLWKRXW UHJDUG WR WKH W\SH RI   DSOXUDOLW\WKH&RXUWXSKHOGDSURJUDPWRORDQHGXFDWLRQDO
VFKRROUHOLJLRXVRUQRQUHOLJLRXVWRZKLFKWKHSDUHQWVPLJKW            PDWHULDOVDQGHTXLSPHQWWRSULYDWHUHOLJLRXVVFKRROVZKLFK
FKRRVH WR VHQG WKHLU FKLOGUHQ DV D VWURQJ LQGLFDWRU RI WKH    FKDQQHOHGIHGHUDOIXQGVWKURXJKVWDWHDJHQFLHV6HH0LWFKHOO
VWDWXWHjV mQHXWUDOLW\l  6HH LG DW   $Q\ PRQH\         Y+HOPV6&W:ULWLQJIRUIRXUMXVWLFHV
UHFHLYHGDWDUHOLJLRXVVFKRROWKH&RXUWVDLGZDVmXOWLPDWHO\          sXVWLFH7KRPDVFRQFOXGHGWKDWWKHFULWLFDOTXHVWLRQLQFDVHV
FRQWUROOHGE\WKHSULYDWHFKRLFHVRILQGLYLGXDOSDUHQWVl,G           RI JRYHUQPHQW DLG WR UHOLJLRXV VFKRROV LV ZKHWKHU WKH
DW                                                                JRYHUQPHQW DLG LV QHXWUDO ZKHWKHU LW UHVXOWV IURP WKH
                                                                         JHQXLQHO\ LQGHSHQGHQW DQG SULYDWH FKRLFHV RI LQGLYLGXDO
   7KLVSULQFLSOHnWKDWZKHWKHUSXEOLFIXQGVILQGWKHLUZD\WR            SDUHQWV6HHLGDWsXVWLFH7KRPDVQRWHGWKDWWKH
DUHOLJLRXVVFKRROLVRIQRFRQVWLWXWLRQDOFRQVHTXHQFHLIWKH\           QH[XV EHWZHHQ QHXWUDOLW\ DQG SULYDWH FKRLFH ZDV WKH
JHW WKHUH DV D UHVXOW RI JHQXLQHO\ SULYDWH FKRLFHnZDV            SURPLQHQWHYHQWKHFKLHIIDFWRULQXSKROGLQJJRYHUQPHQWDLG
UHDVVHUWHGLQ:LWWHUVY:DVKLQJWRQ'HSDUWPHQWRI6HUYLFHV               LQ $JRVWLQL =REUHVW :LWWHUV DQG 0XHOOHU DQG IRXQG WKDW
IRUWKH%OLQG867KHUHD:DVKLQJWRQVWDWH           WKHUHLVDFORVHUHODWLRQVKLSEHWZHHQSULYDWHFKRLFHDQGWKH
SURJUDP VXUYLYHG DQ (VWDEOLVKPHQW &ODXVH FKDOOHQJH HYHQ            TXHVWLRQRIZKHWKHUDSURJUDPFUHDWHVDILQDQFLDOLQFHQWLYHWR
WKRXJKLWSURYLGHGYRFDWLRQDOUHKDELOLWDWLRQDVVLVWDQFHIRUD            XQGHUWDNHUHOLJLRXVVFKRROLQJ6HHLGDW
EOLQGLQGLYLGXDOWRDWWHQGD&KULVWLDQFROOHJHLQRUGHUWRVWXG\
WR EH D &KULVWLDQ SDVWRU  )XQGV XQGHU WKH SURJUDP ZHUH           7KHRSLQLRQJRHVRQWRVWDWHWKDWm>L@IDLGWRVFKRROVHYHQ
GLVSHUVHG GLUHFWO\ WR WKH HOLJLEOH DSSOLFDQWV ZKR PDGH WKH       GLUHFW DLG LV QHXWUDOO\ DYDLODEOH DQG EHIRUH UHDFKLQJ RU
FKRLFHRIZKHUHWRH[SHQGWKHHGXFDWLRQDOIXQGVWKHUHIRUH              EHQHILWWLQJDQ\UHOLJLRXVVFKRROILUVWSDVVHVWKURXJKWKHKDQGV
m>D@Q\DLGWKDWXOWLPDWHO\IORZ>HG@WRUHOLJLRXVLQVWLWXWLRQV      OLWHUDOO\RUILJXUDWLYHO\RIQXPHURXVSULYDWHFLWL]HQVZKRDUH
>GLG@ VR RQO\ DV D UHVXOW RI WKH JHQXLQHO\ LQGHSHQGHQW DQG     IUHH WR GLUHFW WKH DLG HOVHZKHUH WKH JRYHUQPHQW KDV QRW
SULYDWHFKRLFHVRIDLGUHFLSLHQWVl,GDW                       SURYLGHG DQ\ VXSSRUW RI UHOLJLRQl   6 &W DW 
                                                                         LQWHUQDOFLWDWLRQVRPLWWHG7KHRSLQLRQUHFRJQL]HVWKDWWKHUH
   ,Q=REUHVWY&DWDOLQD)RRWKLOOV6FKRRO'LVWULFW86            H[LVWmVSHFLDO(VWDEOLVKPHQW&ODXVHGDQJHUVZKHQPRQH\LV
WKH&RXUWXSKHOGWKHFRQVWLWXWLRQDOLW\RIDSURJUDP            JLYHQWRUHOLJLRXVVFKRROVRUHQWLWLHVGLUHFWO\UDWKHUWKDQDVLQ
SURYLGLQJDVLJQODQJXDJHLQWHUSUHWHUIRUDGHDIVWXGHQWLQD            :LWWHUV DQG 0XHOOHU LQGLUHFWO\l  ,G DW  LQWHUQDO
&DWKROLFKLJKVFKRRO5HO\LQJXSRQ:LWWHUVDQG0XHOOHUWKH             FLWDWLRQV RPLWWHG  ,Q D IRRWQRWH sXVWLFH 7KRPDV
=REUHVW &RXUW FRQFOXGHG WKDW WKH VWDWXWH JDYH SDUHQWV WKH        K\SRWKHVL]HG mWKDW WKH SULQFLSOHV RI QHXWUDOLW\ DQG SULYDWH
FKRLFHRIZKHUHWRVHQGWKHLUHOLJLEOHFKLOGUHQWRVFKRRODQG            FKRLFHZRXOGEHDGHTXDWHWRDGGUHVVWKRVHVSHFLDOULVNVl,G
mGLVWULEXWHV EHQHILWV QHXWUDOO\    ZLWKRXW UHJDUG WR WKH     DWQ+HFRQWLQXHGWRILQGWKDWDWOHDVWLQUHJDUGVWR
µVHFWDULDQQRQVHFWDULDQ RU SXEOLFQRQSXEOLF QDWXUHj RI WKH         1\TXLVWWKHSURKLELWLRQDJDLQVWGLUHFWSD\PHQWVZDVOLQNHGWR
VFKRROl,GDWTXRWLQJ:LWWHUV86DW                mVHULRXV FRQFHUQV DERXW ZKHWKHU WKH SD\PHQWV ZHUH WUXO\
                                                                         QHXWUDOl,G
  7KLVOLQHRIFDVHVFXOPLQDWHGLQWKH$JRVWLQLGHFLVLRQLQ
 LQ ZKLFK WKH 6XSUHPH &RXUW GHFODUHG WKDW LWV
    6LPPRQV+DUULVHWDO           1RV          1RV                 6LPPRQV+DUULVHWDO       
      Y=HOPDQHWDO                                                                                            Y=HOPDQHWDO

  $OWKRXJKsXVWLFH2j&RQQRUFRQFXUUHGLQWKHMXGJPHQWVKH               VWDWXWH PXVW QRW IRVWHU DQ H[FHVVLYH JRYHUQPHQW
ZURWHVHSDUDWHO\LQ0LWFKHOOEDVHGXSRQKHUEHOLHIWKDWmWKH             HQWDQJOHPHQWZLWKUHOLJLRQ
SOXUDOLW\DQQRXQFHVDUXOHRIXQSUHFHGHQWHGEUHDGWKIRUWKH
HYDOXDWLRQRI(VWDEOLVKPHQW&ODXVHFKDOOHQJHVWRJRYHUQPHQW            ,GDWHPSKDVLVDGGHGLQWHUQDOTXRWDWLRQPDUNVDQG
VFKRRODLG SURJUDPVl   6 &W DW   sXVWLFH           FLWDWLRQRPLWWHG
2j&RQQRUjVFRQFXUULQJRSLQLRQVKRZVGLVDJUHHPHQWQRWRQO\
ZLWKWKHmH[SDQVLYHVFRSHRIWKHSOXUDOLW\jVUXOH>@lEXWZLWK             7KH1\TXLVW&RXUWUXOHGWKDWWKH1HZ<RUNVWDWXWHYLRODWHG
WZRVSHFLILFDVSHFWVRILWVDQDO\VLV,G)LUVWVKHIRXQGWKH       WKH/HPRQ WHVWEHFDXVHLWKDGWKHmLPSHUPLVVLEOHHIIHFWRI
SOXUDOLW\jVmWUHDWPHQWRIQHXWUDOLW\FRPHVFORVHWRDVVLJQLQJ          DGYDQFLQJUHOLJLRQl1\TXLVW86DW,WGLGVRWKH
WKDWIDFWRUVLQJXODULPSRUWDQFHLQWKHIXWXUHDGMXGLFDWLRQRI          &RXUW VDLG E\ SURYLGLQJ GLUHFW ILQDQFLDO DVVLVWDQFH WR
(VWDEOLVKPHQW&ODXVHFKDOOHQJHVWRJRYHUQPHQWVFKRRODLG               UHOLJLRXVVFKRROVZLWKRXWDQ\UHVWULFWLRQVDVWRWKHVFKRROVj
SURJUDPVl,G6HFRQGVKHIRXQGmWKHSOXUDOLW\jVDSSURYDO           XVHRIWKHIXQGVWKHUHIRUHmDGYDQF>LQJ@WKHUHOLJLRXVPLVVLRQ
RI DFWXDO GLYHUVLRQ RI JRYHUQPHQW DLG WR UHOLJLRXV              RIVHFWDULDQVFKRROVl,GDW%XWWKUHH\HDUVDJRLQ
LQGRFWULQDWLRQ LV LQ WHQVLRQ ZLWK RXU SUHFHGHQWV DQG      $JRVWLQLY)HOWRQ86WKH6XSUHPH&RXUW
XQQHFHVVDU\WRGHFLGHWKHLQVWDQWFDVHl,G                          GHFODUHGXQPLVWDNDEO\WKDWmZHKDYHGHSDUWHGIURPWKHUXOH
                                                                       WKDWDOOJRYHUQPHQWDLGWKDWGLUHFWO\DVVLVWVWKHHGXFDWLRQDO
  :KLOHDJUHHLQJZLWKsXVWLFH7KRPDVWKDWmQHXWUDOLW\LVDQ            IXQFWLRQ RI UHOLJLRXV VFKRROV LV LQYDOLGl  ,G DW   7KH
LPSRUWDQW UHDVRQ IRU XSKROGLQJ JRYHUQPHQWDLG SURJUDPV            $JRVWLQL &RXUW WKHQ SURFHHGHG WR UHGHILQH DQG QDUURZ WKH
DJDLQVW(VWDEOLVKPHQW&ODXVHFKDOOHQJHVlsXVWLFH2j&RQQRU             FULWHULDIRUGHWHUPLQLQJZKHQJRYHUQPHQWDLGWKDWILQGVLWV
RSLQHGWKDWmQHXWUDOLW\LVQRWDORQHVXIILFLHQWWRTXDOLI\WKHDLG     ZD\WRDUHOLJLRXVVFKRROKDVWKHSULPDU\HIIHFWRIDGYDQFLQJ
DV FRQVWLWXWLRQDOl   6 &W DW   6KH FULWLFL]HG   UHOLJLRQ
sXVWLFH7KRPDVjVRSLQLRQIRUUHO\LQJRQORJLFZKLFKZRXOG
VXSSRUWGLUHFWJRYHUQPHQWDLGWRUHOLJLRXVRUJDQL]DWLRQVEDVHG           $JDLQ,GRQRWTXHVWLRQIRUDPRPHQWWKHFRUUHFWQHVVRI
RQ WKH QXPEHU RI SHUVRQV EHORQJLQJ WR HDFK RUJDQL]DWLRQ       WKH 6XSUHPH &RXUWjV GHFLVLRQ LQ 1\TXLVW  , DFFHSW LW ERWK
m>7@KHSOXUDOLW\RSLQLRQIRUHVKDGRZVWKHDSSURYDORIGLUHFW            DQDO\WLFDOO\DQGSUHFHGHQWLDOO\DVDIDLWKIXODSSOLFDWLRQ
PRQHWDU\VXEVLGLHVWRUHOLJLRXVRUJDQL]DWLRQVHYHQZKHQWKH\          RIWKHmSULPDU\HIIHFWlWHVWRI/HPRQ+RZHYHU1\TXLVWZDV
XVHWKHPRQH\WRDGYDQFHWKHLUUHOLJLRXVREMHFWLYHVl,GDW          QRW DQDO\]HG DQG GHFLGHG XQGHU ZKDW WKH $JRVWLQL &RXUW
  sXVWLFH 2j&RQQRU UHMHFWHG DQ RXWULJKW EDQ RQ DQ\       FDOOHGLWVmFKDQJHGXQGHUVWDQGLQJRIWKHFULWHULDXVHGWR
GLYHUVLRQRIJRYHUQPHQWIXQGVWRVHFWDULDQXVHVEXWZRXOG             DVVHVVZKHWKHUDLGWRUHOLJLRQKDVDQLPSHUPLVVLEOHHIIHFWl
HQDFWDUXOHZKLFKUHTXLUHVSODLQWLIIVWRSURYHWKDWWKHDLGLQ        ,GDW6LQFHWKLVDSSHDOLVDOVRDQmLPSHUPLVVLEOHHIIHFWl
TXHVWLRQ LV RU KDV EHHQ XVHG IRU UHOLJLRXV SXUSRVHV DQG    FDVHRXUGHFLVLRQFDQQRWEHFRQWUROOHGE\1\TXLVW
IRXQG WKDW mSUHVXPSWLRQV RI UHOLJLRXV LQGRFWULQDWLRQ DUH
QRUPDOO\ LQDSSURSULDWH ZKHQ HYDOXDWLQJ QHXWUDO VFKRRODLG                                           %
SURJUDPVXQGHUWKH(VWDEOLVKPHQW&ODXVHl,GDW
                                                                         :KDW WKHQ LV WKH 6XSUHPH &RXUWjV mFKDQJHG   
  sXVWLFH 2j&RQQRU FRQFOXGHG WKDW EHFDXVH WKH VFKRRODLG         XQGHUVWDQGLQJlRIWKHSURSHUWHVWIRUGHWHUPLQLQJZKHWKHUD
SURJUDPLQ$JRVWLQLZDVVLPLODUWRWKDWDWLVVXHLQ0LWFKHOO          ODZKDVWKHSULPDU\HIIHFWRIDGYDQFLQJUHOLJLRQ"
WKH$JRVWLQLFULWHULDVKRXOGFRQWUROWKHRXWFRPHRIWKHFDVH
KRZHYHU VKH QRWHG WKDW WKH mVFKRRODLG FDVHV RIWHQ SRVH         ,Q0XHOOHUY$OOHQ86WKH&RXUWKHOG
                                                                       WKDW D 0LQQHVRWD VWDWXWH DXWKRUL]LQJ D WD[ GHGXFWLRQ IRU
    6LPPRQV+DUULVHWDO           1RV         1RV             6LPPRQV+DUULVHWDO        
      Y=HOPDQHWDO                                                                                       Y=HOPDQHWDO

  7KLUGWKH1HZ<RUNVWDWXWHSHUPLWWHGJRYHUQPHQWDLGWR             GLIILFXOWTXHVWLRQVDWWKHLQWHUVHFWLRQRIWKHQHXWUDOLW\DQGQR
VFKRROV WKDW GLVFULPLQDWHG DJDLQVW FKLOGUHQ RQ WKH EDVLV RI   DLGSULQFLSOHVDQGWKHUHIRUHGHI\VLPSOHFDWHJRUL]DWLRQXQGHU
UHOLJLRQ DQG LQ IDFW VHYHUDO TXDOLI\LQJ VFKRROV LPSRVHG      HLWKHUUXOHl6&WDW
UHOLJLRXVUHVWULFWLRQVRQDGPLVVLRQV6HHLGDW
                                                                        ,QUHJDUGWR0LWFKHOODQGLWVVKDUSO\GLYLGHGSOXUDOLW\ZH
  7KH2KLRYRXFKHUSURJUDPRQWKHRWKHUKDQGFRQWDLQVD             QRWHWKDWm>Z@KHQDIUDJPHQWHG&RXUWGHFLGHVDFDVHDQGQR
SURYLVLRQ H[SOLFLWO\ IRUELGGLQJ SDUWLFLSDWLQJ VFKRROV IURP       VLQJOHUDWLRQDOHH[SODLQLQJWKHUHVXOWHQMR\VWKHDVVHQWRIILYH
GLVFULPLQDWLQJ DJDLQVW SURVSHFWLYH VWXGHQWV RQ WKH EDVLV RI    sXVWLFHV 
WKH KROGLQJ RI WKH &RXUW PD\ EH YLHZHG DV WKDW
UHOLJLRQ6HH2KLR5HY&RGH$                     SRVLWLRQ WDNHQ E\ WKRVH 0HPEHUV ZKR FRQFXUUHG LQ WKH
                                                                      MXGJPHQWV RQ WKH QDUURZHVW JURXQGVjl  0DUNV Y 8QLWHG
   ,WLVFOHDUWKDWWKH1HZ<RUNVWDWXWHVWUXFNGRZQLQ1\TXLVW       6WDWHV86TXRWLQJ*UHJJY*HRUJLD
DQGWKH2KLRVWDWXWHEHIRUHXVDUHGLVVLPLODUODZVERWKLQWKHLU      86Q$FFRUGLQJO\ZHILQGWKDWWKH
SXUSRVHV DQG WKH PHWKRGRORJLHV IRU FDUU\LQJ RXW WKHLU          RSLQLRQRIsXVWLFH2j&RQQRULVWKHQDUURZHURIWKHSOXUDOLW\
SXUSRVHV$VWKHPDMRULW\DFNQRZOHGJHVm>D@VLQJOHIDFWXDO          DV LW XWLOL]HV WKH VWDQGDUG RI $JRVWLQL EDVHG RQ D IDFWXDO
GLIIHUHQFH FRQVHTXHQWO\ FDQ VHUYH WR HQWDQJOH RU IUHH D       VLPLODULW\ UDWKHU WKDQ FUHDWLQJ D QHZ VWDQGDUG FHQWHUHG RQ
SDUWLFXODU JRYHUQPHQWDO SUDFWLFH IURP WKH UHDFK RI WKH         QHXWUDOLW\WKHUHE\PDNLQJLWVPDQGDWHVFRQWUROOLQJ
>(VWDEOLVKPHQW@&ODXVHjVFRQVWLWXWLRQDOSURKLELWLRQl6OLSRS
DWBBLQWHUQDOTXRWDWLRQPDUNVDQGFLWDWLRQRPLWWHG$FDVH                                       ,,,
FRQVWUXLQJ D VWDWXWH VR PDQLIHVWO\ GLIIHUHQW WKDQ WKH RQH
EHIRUH XV FRXOG KDUGO\ DV D IDFWXDO PDWWHU EH D ELQGLQJ     :HQRZDSSO\WKHIUDPHZRUNHVWDEOLVKHGE\SUHFHGHQWWR
SUHFHGHQWRQWKLVFRXUW                                            WKHFDVHEHIRUHXVUHFRJQL]LQJWKHSUHGRPLQDWLQJWKHPHLQ
                                                                      WKLVDUHDRIODZWREHWKHQHHGIRUFDUHIXOMXGLFLDODWWHQWLRQWR
                                                                    WKHIDFWXDOGHWDLOLQWKHFKDOOHQJHGVWDWXWRU\VFKHPH
  7KHVXEVWDQWLDOGLIIHUHQFHVLQWKHSXUSRVHDQGDSSOLFDWLRQ             $W WKH RXWVHW ZH QRWH WKDW 'HIHQGDQWVj DUJXPHQW
RI WKHWZRVWDWXWHVLVQRWWKHRQO\UHDVRQ1\TXLVWGRHVQRW          FRQFHUQLQJRWKHURSWLRQVDYDLODEOHWR&OHYHODQGSDUHQWVVXFK
JRYHUQRXUUHVXOW7KHDGGLWLRQDOUHDVRQLVWKDWWKHUXOHRIODZ     DVWKH&RPPXQLW\6FKRROVLVDWEHVWLUUHOHYDQW$QDO\]LQJWKH
XSRQ ZKLFK 1\TXLVW ZDV GHFLGHG KDV FKDQJHG  )LUVW WKH      VFKRODUVKLS SURJUDP FKRLFHV DV FRPSDUHG WR FKRLFHV RU
1\TXLVWHUDFDWHJRULFDOSURKLELWLRQDJDLQVWGLUHFWJUDQWVWRDLG      VFKRROVRXWVLGHWKHSURJUDPLVDVNLQJWKLV&RXUWWRH[DPLQH
UHOLJLRXVVFKRROVLVQRORQJHUWKHODZDQGVHFRQGWKHFULWHULD      WKHHQWLUHFRQWH[WRI2KLRHGXFDWLRQ6XFKDTXHVWLRQLVQRW
IRU GHWHUPLQLQJ ZKHQ D VWDWXWH KDV WKH IRUELGGHQ mSULPDU\     EHIRUHWKLV&RXUW7KH'HIHQGDQWVjDUJXPHQWZRXOGUHZULWH
HIIHFWlRIDGYDQFLQJUHOLJLRQKDYHEHHQPRGLILHG                   WKH ODZ WR UHTXLUH WKDW WKH FRXUWV ORRN WR DOO SRVVLEOH
                                                                      DOWHUQDWLYHVWRDFKDOOHQJHGSURJUDPWKXVYLVLWLQJLVVXHVRI
   ,Q/HPRQY.XUW]PDQ86WKH6XSUHPH             OHJLVODWLYHFKRLFHDQGHGXFDWLRQDOSROLF\ZKLFKQRSODLQWLII
&RXUW IDVKLRQHG WKH IROORZLQJ WHVW IRU DVVHVVLQJ ZKHWKHU D    KDVUDLVHG
VWDWXWHYLRODWHVWKH(VWDEOLVKPHQW&ODXVH
                                                                        $WRUDODUJXPHQW'HIHQGDQWVDVVHUWHGUHSHDWHGO\WKDWWKH
  )LUVWWKHVWDWXWHPXVWKDYHDVHFXODUOHJLVODWLYHSXUSRVH         &RPPXQLW\ 6FKRROV SURJUDP VKRXOG EH FRQVLGHUHG
  VHFRQGLWVSULQFLSDORUSULPDU\HIIHFWPXVWEHRQHWKDW            FRWHUPLQRXV ZLWK WKH YRXFKHU SURJUDP DUJXLQJ WKDW WKH
  QHLWKHUDGYDQFHVQRULQKLELWVUHOLJLRQILQDOO\WKH         SURJUDPV DUH PHUHO\ VHSDUDWH VHFWLRQV LQ WKH VWDWXWH
    6LPPRQV+DUULVHWDO            1RV           1RV              6LPPRQV+DUULVHWDO         
      Y=HOPDQHWDO                                                                                           Y=HOPDQHWDO

+RZHYHUWKHVWDWXWRU\UHFRUGGRHVQRWVXSSRUWWKLVDUJXPHQW            QHXWUDO DQG QRQLGHRORJLFDO SXUSRVHV LW LV FOHDU IURP RXU
H[FHSWIRUSHUKDSVWKHOLWHUDOPHDQLQJWKDWWKHWZRSURJUDPV             FDVHVWKDWGLUHFWDLGLQZKDWHYHUIRUPLVLQYDOLGl,GDW
GRLQGHHGRFFXS\VHSDUDWHVHFWLRQVLQWKH2KLR&RGH7KH
VFKRROYRXFKHUSURJUDPLVHQDFWHGDVDFRPSOHWHSURJUDPLQ                 7KH2KLRYRXFKHUSURJUDPZKLFKLVDGHTXDWHO\GHVFULEHG
WKH2KLR5HYLVHG&RGH6HH2KLR5HY&RGH                  LQWKHPDMRULW\RSLQLRQFRXOGQRWEHPRUHXQOLNHWKH1HZ
7KHSURJUDPLVHQDFWHGDVDSDUWRIWKHFKDSWHURQ            <RUN VWDWXWH ERWK LQ LWV SXUSRVH DQG LQ WKH PDQQHU RI LWV
%RDUGVRI(GXFDWLRQ6HH2KLR5HY&RGHHWVHT               DSSOLFDWLRQ7KHHVVHQWLDOGLIIHUHQFHVEHWZHHQWKH1HZ<RUN
)XUWKHUPRUHWKHVFKRROYRXFKHUSURJUDPDQGRQO\WKHVFKRRO             DQG2KLRVWDWXWHVPD\EHVXPPDUL]HGDVIROORZV
YRXFKHUSURJUDPZDVFKDOOHQJHGE\3ODLQWLIIVLQWKLVODZVXLW
,QFRQWUDVWWKH&RPPXQLW\6FKRROVSURJUDPLVFRGLILHGLQLWV               )LUVWWKHSXUSRVHRIWKH1HZ<RUNVWDWXWHZDVWRSURYLGH
RZQFKDSWHU6HH2KLR5HY&RGHHWVHT,WLV               ILQDQFLDO KHOS WR 1HZ <RUNjV ILQDQFLDOO\ WURXEOHG SULYDWH
VLPLODUO\DFRPSOHWHSURJUDPZLWKLQWKH&RGHWKHVWDWXWRU\              VFKRROVEHFDXVHWKHLUFORVLQJZRXOGIRUFH1HZ<RUNjVSXEOLF
SURYLVLRQV JRYHUQ DOO DVSHFWV RI WKH SURJUDP ZLWKRXW              VFKRROV WR DEVRUE WKH SULYDWH VFKRRO VWXGHQWV UHVXOWLQJ LQ
UHIHUHQFHWRWKHYRXFKHUSURJUDP:HPD\QRWYLHZWKHVH                 PDVVLYHLQFUHDVHGFRVWVDQGWKHUHODWHGEXUGHQVRIDEVRUELQJ
WZRSURJUDPVDVLQH[WULFDEO\LQWHUGHSHQGHQWZKHQWKHSODLQ               DVPDQ\DVWKUHHTXDUWHUVRIDPLOOLRQQHZVWXGHQWV
ODQJXDJHRIWKHVWDWXWRU\VFKHPHGHPRQVWUDWHVWKHRSSRVLWH
,W LV VLPSO\ QRW WKH SURSHU UROH RI WKH FRXUWV WR FKDQJH        7KHSXUSRVHRIWKH2KLRVWDWXWHRQWKHRWKHUKDQGLVWR
VWDWXWRU\FRQVWUXFWLRQE\MXGLFLDOILDW6HH%URJDQY8QLWHG           SURYLGHILQDQFLDOKHOSWRSRYHUW\OHYHOVWXGHQWVDWWHQGLQJWKH
6WDWHV861DW
O/LIHDQG$FFLGHQW,QV           SXEOLFVFKRROVLQ&OHYHODQGLQRUGHUWRHQDEOHWKHPLIWKH\
&RY8QLWHG6WDWHV)GWK&LUm7KH             ZLVKWRDWWHQGQRQUHOLJLRXVSULYDWHVFKRROVUHOLJLRXVSULYDWH
&RXUWV    GR QRW KDYH WKH SRZHU WR UHSHDO RU DPHQG WKH   VFKRROVSXEOLFVFKRROVLQQHLJKERULQJGLVWULFWVWKDWZLVKWR
HQDFWPHQWVRIWKHOHJLVODWXUHHYHQWKRXJKWKH\PD\GLVDJUHH              SDUWLFLSDWH LQ WKH YRXFKHU SURJUDP RU WR REWDLQ VSHFLDO
ZLWKWKHUHVXOWUDWKHULWLVWKHLUIXQFWLRQWRJLYHWKHQDWXUDO         WXWRULQJZKLOHUHPDLQLQJLQWKH&OHYHODQGSXEOLFVFKRROV
DQG SODLQ PHDQLQJ HIIHFW WR VWDWXWHV    l  6KRXOG ZH
FRQVLGHUWKH&RPPXQLW\6FKRROVSURJUDPLQRXUDQDO\VLVRI                  6HFRQGWKH1HZ<RUNSURJUDPLQYROYHGGLUHFWILQDQFLDO
WKHFRQVWLWXWLRQDOLW\RIWKHVFKRROYRXFKHUSURJUDPZHZRXOG            JUDQWV WR 1HZ <RUNjV SULYDWH VFKRROV UHOLJLRXV DQG
RSHQWKHGRRUWRDZLGHUHDFKLQJDQDO\VLVZKLFKZRXOGSHUPLW             QRQUHOLJLRXVSULPDULO\IRUPDLQWHQDQFHDQGUHSDLU$OWKRXJK
XVWRFRQVLGHUDQ\DQGDOOVFKRODUVKLSSURJUDPVDYDLODEOHWR             WKHWXLWLRQUHLPEXUVHPHQWDQGWD[UHOLHIVHFWLRQVRIWKHVWDWXWH
FKLOGUHQ ZKR TXDOLI\ IRU WKH VFKRRO YRXFKHU SURJUDP  ZH        DSSHDUHGWREHQHILWWKHSDUHQWVRISULYDWHVFKRROFKLOGUHQWKH
ZRXOGEHFRQVLGHULQJDQGFRPSDULQJHYHU\DYDLODEOHRSWLRQ                1\TXLVW&RXUWVWDWHGWKDWWKHmWXLWLRQUHLPEXUVHPHQWSURJUDP
IRU&OHYHODQGFKLOGUHQ6XFKDQDQDO\VLVZRXOGH[SDQGRXU               DOVR IDLOV WKH µHIIHFWj WHVW IRU PXFK WKH VDPH UHDVRQV WKDW
MXULVGLFWLRQIDUEH\RQGWKHFDVHDWKDQGZHDUHSUHVHQWHGRQO\          JRYHUQLWVPDLQWHQDQFHDQGUHSDLUJUDQWVl,G
ZLWK WKH TXHVWLRQ RI ZKHWKHU WKH VFKRRO YRXFKHU SURJUDP             8QGHUWKH2KLRYRXFKHUSURJUDPRQWKHRWKHUKDQGWKHUH
YLRODWHV WKH (VWDEOLVKPHQW &ODXVH DQG ZH PXVW OLPLW              LVQRSURYLVLRQIRUDQ\ILQDQFLDOJUDQWVLQDQ\IRUPWRDQ\
RXUVHOYHV WR WKDW LVVXH UHJDUGOHVV RI WKH WHPSWDWLRQV            SULYDWHVFKRROV$YRXFKHUUHFLSLHQWUHFHLYHVDVFKRODUVKLS
'HIHQGDQWVjDUJXPHQWVSUHVHQW                                           FKHFN DQG WKH IXQGV WKHUHIURP UHDFK D SULYDWH UHOLJLRXV
  :H ILQG WKDW 1\TXLVW JRYHUQV RXU UHVXOW  )DFWXDOO\ WKH      VFKRRORQO\DIWHUDFKLOGjVSDUHQWVKDYHFRQVLGHUHGDYDULHW\
SURJUDPDWKDQGLVDWXLWLRQJUDQWSURJUDPIRUORZLQFRPH                RIRSWLRQVDYDLODEOHWRWKHPDQGKDYHFKRVHQWKHUHOLJLRXV
                                                                         SULYDWHVFKRRODVWKHEHVWRSWLRQIRUWKHLUFKLOG
    6LPPRQV+DUULVHWDO            1RV           1RV              6LPPRQV+DUULVHWDO        
      Y=HOPDQHWDO                                                                                           Y=HOPDQHWDO

FOHDUO\ LQGLFDWH WKDW WKH 2KLR YRXFKHU SURJUDP LV QRW            SDUHQWVZKRVHFKLOGUHQDWWHQGSULYDWHVFKRROSDUDOOHOWRWKH
XQFRQVWLWXWLRQDO                                                      WXLWLRQ UHLPEXUVHPHQW SURJUDP IRXQG LPSHUPLVVLEOH LQ
                                                                         1\TXLVW8QGHUERWKWKH1HZ<RUNVWDWXWHLQ1\TXLVWDVZHOO
                                                                       DV WKH 2KLR 6WDWXWH DW LVVXH SDUHQWV UHFHLYH JRYHUQPHQW
                                                                         IXQGVHLWKHULQGLUHFWSD\PHQWIRUSULYDWHVFKRROWXLWLRQRUDV
  ,Q 1\TXLVW WKH 6XSUHPH &RXUW ZDV UHTXLUHG WR GHFLGH           DUHLPEXUVHPHQWIRUWKHVDPHDQGLQERWKFDVHVWKHJUHDW
ZKHWKHUD1HZ<RUNVWDWXWHFRQWDLQLQJSURYLVLRQVIRUERWK                PDMRULW\ RI VFKRROV EHQHILWWHG E\ WKHVH WXLWLRQ GROODUV DUH
GLUHFWDQGLQGLUHFWILQDQFLDODVVLVWDQFHWR1HZ<RUNjVSULYDWH           VHFWDULDQ  7KH 1\TXLVW &RXUW LWVHOI IRXQG WKHUH WR EH QR
VFKRROV YLRODWHG WKH (VWDEOLVKPHQW &ODXVH  7KH VWDWXWH           GLVWLQFWLRQEHWZHHQmDUHLPEXUVHPHQWDUHZDUGRUDVXEVLG\
SURYLGHGIRUWKUHHIRUPVRIDVVLVWDQFHGLUHFWJUDQWVIRU           >DVLQDOOWKUHH@WKHVXEVWDQWLYHLPSDFWLVVWLOOWKHVDPHl
EXLOGLQJPDLQWHQDQFHDQGUHSDLUVIRUSULYDWHVFKRROEXLOGLQJV           86DW$VLQ1\TXLVWWKH2KLRSURJUDPFRQWDLQVQR
WXLWLRQUHLPEXUVHPHQWJUDQWVIRUVRPHORZLQFRPHSDUHQWV             mHIIHFWLYH PHDQV RI JXDUDQWHHLQJ WKDW WKH VWDWH DLG GHULYHG
RIFKLOGUHQDOUHDG\DWWHQGLQJWKHSULYDWHVFKRROVDQGD             IURP SXEOLF IXQGV ZLOO EH XVHG H[FOXVLYHO\ IRU VHFXODU
IRUPRIWD[UHOLHIIRUSDUHQWVZKRIDLOHGWRTXDOLI\IRUWXLWLRQ         QHXWUDODQGQRQLGHRORJLFDOSXUSRVHVl,GDW+HUHWKHUH
UHLPEXUVHPHQWXQGHUWKHVWDWXWH6HH1\TXLVW86DW               LVFOHDUO\mQRHQGHDYRUWRJXDUDQWHHWKHVHSDUDWLRQEHWZHHQ
                                                                VHFXODU DQG UHOLJLRXV IXQFWLRQV DQG WR HQVXUH WKDW 6WDWH
                                                                         ILQDQFLDODLGVXSSRUWVRQO\WKHIRUPHUl,GDW,QERWK
   7KH1HZ<RUNOHJLVODWXUHHQDFWHGWKHVWDWXWHIRUWKHVROH             1\TXLVWDQGWKLVFDVHWKHUHDUHQRUHVWULFWLRQVRQWKHUHOLJLRXV
SXUSRVH RI GLUHFWO\ EHQHILWWLQJ 1HZ <RUN VWDWHjV             VFKRROVDVWRWKHLUXVHRIWKHWXLWLRQIXQGVoWKHIXQGVPD\EH
ILQDQFLDOO\SUHVVHGSULYDWHVFKRROVZKHUHLQVRPH               XVHG IRU UHOLJLRXV LQVWUXFWLRQ RU PDWHULDOV DV HDVLO\ DV IRU
 VWXGHQWVnDOPRVW  RI WKH VWDWHjV HQWLUH                  HUDVHUVDQGSOD\JURXQGHTXLSPHQW
HOHPHQWDU\ DQG VHFRQGDU\ VFKRRO SRSXODWLRQnZHUH EHLQJ
HGXFDWHG6HHLGDW7KHOHJLVODWLYHmILQGLQJVlLQWKH              'HVSLWHWKHODQJXDJHRIWKHVWDWXWHWKHUHLVQRHYLGHQFHWKDW
1HZ<RUNVWDWXWHGHFODUHGLWZDVLQWKHVWDWHjVLQWHUHVWWR        WKHWXLWLRQYRXFKHUVVHUYHDVDQHXWUDOIRUPRIVWDWHDVVLVWDQFH
SURYLGHIXQGLQJIRUmPDLQWHQDQFHDQGUHSDLUlRIWKHVWDWHjV              ZKLFK ZRXOG H[FXVH WKH GLUHFW IXQGLQJ RI UHOLJLRXV
SULYDWH VFKRROV LQ RUGHU WR SURWHFW WKH KHDOWK DQG VDIHW\ RI   LQVWLWXWLRQV E\ WKH VWDWH GHVSLWH WKH VWDWXWHjV ODQJXDJH
WKRVHDWWHQGLQJWKHVFKRROVWKHVWDWHKDGDQLQWHUHVWLQ            $GPLWWHGO\WKHYRXFKHUSURJUDPGRHVQRWUHVWULFWHQWU\LQWR
SURPRWLQJ mDOWHUQDWLYH HGXFDWLRQDO V\VWHPVl DQG  D             WKH SURJUDP WR UHOLJLRXV RU VHFWDULDQ VFKRROV EXW IDFLDO
mSUHFLSLWRXV GHFOLQHl LQ WKH QXPEHU RI FKLOGUHQ DWWHQGLQJ         QHXWUDOLW\DORQHGRHVQRWEULQJVWDWHDFWLRQLQWRFRPSOLDQFH
SULYDWHVFKRROVZRXOGSHUSHWXDWHDQDOUHDG\H[LVWLQJILVFDO              ZLWKWKH)LUVW$PHQGPHQW6HH&KXUFKRIWKH/XNXPL%DEOX
FULVLVLQSXEOLFVFKRROV,GDW                              $\H,QFY&LW\RI+LDOHDK867KH
                                                                         VFKRROYRXFKHUSURJUDPLVQRWQHXWUDOLQWKDWLWGLVFRXUDJHV
  7KH1\TXLVW&RXUWKHOGWKDWWKH1HZ<RUNODZRIIHQGHGWKH              WKH SDUWLFLSDWLRQ E\ VFKRROV QRW IXQGHG E\ UHOLJLRXV
(VWDEOLVKPHQW &ODXVH EHFDXVH mWKH HIIHFW RI WKH DLG >ZDV@        LQVWLWXWLRQVDQGWKH&OHYHODQGSURJUDPOLPLWVWKHVFKRROVWR
XQPLVWDNDEO\ WR SURYLGH GHVLUHG ILQDQFLDO VXSSRUW IRU              ZKLFKDSDUHQWFDQDSSO\WKHYRXFKHUIXQGVWRWKRVHZLWKLQ
QRQSXEOLFVHFWDULDQLQVWLWXWLRQVl,GDW)XUWKHUPRUH           WKH SURJUDP  3UDFWLFDOO\ VSHDNLQJ WKH WXLWLRQ UHVWULFWLRQV
WKH 1\TXLVW &RXUW FRQFOXGHG WKDW m>L@Q WKH DEVHQFH RI DQ        PDQGDWHG E\ WKH VWDWXWH OLPLW WKH DELOLW\ RI QRQVHFWDULDQ
HIIHFWLYH PHDQV RI JXDUDQWHHLQJ WKDW WKH VWDWH DLG GHULYHG       VFKRROV WR SDUWLFLSDWH LQ WKH SURJUDP DV UHOLJLRXV VFKRROV
IURP SXEOLF IXQGV ZLOO EH XVHG H[FOXVLYHO\ IRU VHFXODU          RIWHQKDYHORZHURYHUKHDGFRVWVVXSSOHPHQWDOLQFRPHIURP
    6LPPRQV+DUULVHWDO           1RV          1RV                  6LPPRQV+DUULVHWDO      
      Y=HOPDQHWDO                                                                                             Y=HOPDQHWDO

SULYDWHGRQDWLRQVDQGFRQVHTXHQWO\ORZHUWXLWLRQQHHGV6HH          FDVH LV GLUHFWO\ RQ SRLQW DQG WKH IDFWXDOO\ XQVXSSRUWHG
0DUWKD0LQRZ5HIRUPLQJ6FKRRO5HIRUP)RUGKDP/                   DQWLUHOLJLRXVVFKRROV DUJXPHQWV LQ WKH RSLQLRQ VWURQJO\
5HY   ILQGLQJ WKDW YRXFKHU IXQGLQJ OHYHOV        VXJJHVWWKDWWKHPDMRULW\KDVVLPSO\VLJQHGRQWRWKHIDPLOLDU
W\SLFDOO\ mDSSUR[LPDWH>@ WKH WXLWLRQ OHYHO VHW E\ SDURFKLDO     DQWLYRXFKHUPDQWUDWKDWYRXFKHUSURJUDPVDUHQRPRUHWKDQ
VFKRROV>ZKLFK@UHIOHFWVVXEVLGLHVIURPRWKHUVRXUFHVl,Q           DVFKHPHWRIXQQHOSXEOLFIXQGVLQWRUHOLJLRXVVFKRROV
IDFW 'HIHQGDQWV DGPLW WKDW WKHUH LV LQFHQWLYH IRU SULYDWH
QRQVHFWDULDQVFKRROVWRSDUWLFLSDWHLQWKHFRPPXQLW\VFKRROV                                              ,
SURJUDPUDWKHUWKDQLQWKHVFKRROYRXFKHUSURJUDP6HH%ULHI
RI6WDWHDW7KHHYLGHQFHLOOXVWUDWHVWKLVSRLQWLQWKDW          ,W LV LPSOLFLW LQ WKH PDMRULW\jV UHDVRQLQJ WKDW WKHUH LV QR
RISDUWLFLSDWLQJVFKRROVDUHVHFWDULDQMXVWDVLQ1\TXLVWZKHUH       QHHGIRUDQ\LQGHSHQGHQWDQDO\VLVZKHWKHU2KLRjVYRXFKHU
RIWKHSDUWLFLSDWLQJVFKRROVZHUHVHFWDULDQ%H\RQGWKDW         SURJUDPYLRODWHVWKH(VWDEOLVKPHQW&ODXVHEHFDXVH1\TXLVW
ZHQRWHWKDWWKHQXPEHURIDYDLODEOHSODFHVIRUVWXGHQWVLQ            LVmRQSRLQWZLWKWKHPDWWHUDWKDQGl6OLSRSDW,QP\
VHFWDULDQVFKRROVLVKLJKHUWKDQDVPDQ\RIWKHVHFWDULDQ         MXGJPHQWWKHPDMRULW\LVPLVWDNHQDVDPDWWHURIIDFWWKHWZR
VFKRROVDUHODUJHUDQGSURYLGHDJUHDWHUQXPEHURISODFHVIRU          VWDWXWHV DUH WRWDOO\ GLIIHUHQW DQG DV D PDWWHU RI ODZ WKH
FKLOGUHQLQWKHYRXFKHUSURJUDP0RUHRYHUFORVHWRRI            UHOHYDQW (VWDEOLVKPHQW &ODXVH MXULVSUXGHQFH KDV FKDQJHG
WKHVWXGHQWVHQUROOHGLQWKHSURJUDPIRUWKHVFKRRO          VLQFH 1\TXLVW  $V WR WKH ODWWHU D UHDGLQJ RI WKH 6XSUHPH
\HDUDWWHQGHGVHFWDULDQLQVWLWXWLRQV                                 &RXUWjV (VWDEOLVKPHQW &ODXVH FDVHV GHFLGHG VLQFH 
                                                                       PDNHVLWXQPLVWDNDEO\FOHDUWKDWWKHYRXFKHUSURJUDPSDVVHV
  7KHDOOHJHGFKRLFHDIIRUGHGERWKSXEOLFDQGSULYDWHVFKRRO           FRQVWLWXWLRQDOPXVWHU,GRQRWFODLPWKDWWKH1\TXLVWGHFLVLRQ
SDUWLFLSDQWVLQWKLVSURJUDPLVLOOXVRU\LQWKDWWKHSURJUDPjV         KDV EHHQ RYHUUXOHG DOWKRXJK VRPH RI WKH UHDVRQLQJ LQ WKH
GHVLJQ GRHV QRW UHVXOW LQ WKH SDUWLFLSDWLRQ RI WKH DGMDFHQW   1\TXLVWRSLQLRQKDVEHHQmXQGHUPLQHGlDVWKH2KLR6XSUHPH
SXEOLFVFKRROVIURPRXWVLGHWKH&OHYHODQGVFKRROGLVWULFW3HU        &RXUWSXWLWLQ6LPPRQV+DUULVY*RII1(G
SXSLOH[SHQGLWXUHVLQWKHSXEOLFVFKRROVDUHEDFNHGE\          2KLR1\TXLVWLVVLPSO\LQDSSRVLWHWRWKHDSSHDOEHIRUH
LQSXEOLFIXQGLQJ6HH%ULHIRI6HQHO7D\ORU,QWHUYHQRUVDW           XV
$WDPD[LPXPRIWKHUHLVDILQDQFLDOGLVLQFHQWLYH
IRUSXEOLFVFKRROVRXWVLGHWKHGLVWULFWWRWDNHRQVWXGHQWVYLD          7KH1HZ<RUNVWDWXWRU\SURYLVLRQVVWUXFNGRZQLQ1\TXLVW
WKHVFKRROYRXFKHUSURJUDP6LQFHLWVLQFHSWLRQQRSXEOLF            DQGWKH2KLRYRXFKHUSURJUDPDUHHVVHQWLDOO\GLIIHUHQWODZV
VFKRROVIURPRXWVLGH&OHYHODQGKDYHUHJLVWHUHGLQWKHVFKRRO           WKH\ DUH SODLQO\ GLVWLQJXLVKDEOH ERWK LQ WKHLU GHFODUHG
YRXFKHU SURJUDP DQG WKHUH DUH QR VSDFHV DYDLODEOH IRU         SXUSRVHV DQG LQ WKH PDQQHU RI WKHLU DSSOLFDWLRQ  )RU WKDW
FKLOGUHQZKRZLVKWRDWWHQGDVXEXUEDQSXEOLFVFKRROLQSODFH          UHDVRQDORQHWKHUHDVRQLQJDQGWKHKROGLQJRIWKH1\TXLVW
RI D SULYDWH VFKRRO XQGHU WKH SURJUDP  7KHUHIRUH WKH        GHFLVLRQFDQQRWJRYHUQRXUUHVXOW
SURJUDP FOHDUO\ KDV WKH LPSHUPLVVLEOH HIIHFW RI SURPRWLQJ
VHFWDULDQVFKRROV                                                                                       $

  7KLV LV QRW WKH W\SH RI FDVH ZKLFK ZRXOG IDOO LQWR WKH      , EHJLQ ZLWK D FRPSDULVRQ RI WKH 1HZ <RUN VWDWXWRU\
H[FHSWLRQWRWKH1\TXLVWUXOHV+HUHVWDWHDVVLVWDQFHLVRQO\        SURYLVLRQVFRQVWUXHGLQ1\TXLVWDQGWKH2KLRVWDWXWHEHIRUH
DYDLODEOHWRWKRVHVWXGHQWVZKRDWWHQGSULYDWHVFKRROVoWKH           XVDFRPSDULVRQWKDWVKRZVYHU\FOHDUO\WKDWWKHWZRODZVDUH
DLGLVFOHDUO\GHSHQGHQWRQZKHWKHUSDUHQWVFKRRVHSXEOLFRU           HVVHQWLDOO\ GLIIHUHQW  , WKHQ H[DPLQH WKH 6XSUHPH &RXUW
SULYDWHVFKRROV7KDWWKHPDMRULW\RISODFHVDYDLODEOHLQWKH         (VWDEOLVKPHQW &ODXVH FDVHV GHFLGHG VLQFH 1\TXLVW ZKLFK
    6LPPRQV+DUULVHWDO           1RV          1RV              6LPPRQV+DUULVHWDO        
      Y=HOPDQHWDO                                                                                         Y=HOPDQHWDO

 BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB                        SURJUDPDUHIRUVWXGHQWV DWWHQGLQJVHFWDULDQVFKRROVLVQRW
                                                                       XQSHUVXDVLYH7KLVSURJUDPSURYLGHVLQFHQWLYHVIRUSDUHQWV
  &21&855,1*,13$57',66(17,1*,13$57                               WRFKRRVHVFKRROVRWKHUWKDQPDLQVWUHDPSXEOLFRQHVEXWWKDW
 BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB                        FKRLFH GRHV QRW H[WHQG WR VFKRROV RXWVLGH RI WKH SURJUDP
                                                                       6WXGHQWV PD\ QRW FKRRVH WR DWWHQG FRPPXQLW\ RU PDJQHW
  5<$1&LUFXLWsXGJHFRQFXUULQJLQSDUWDQGGLVVHQWLQJLQ            VFKRROV XVLQJ D YRXFKHU WKH\ PD\ QRW DSSO\ D YRXFKHU WR
SDUW0\FROOHDJXHVjUHVROXWLRQRIWKHTXHVWLRQSUHVHQWHGE\          WXLWLRQ DW D SULYDWH VFKRRO RXWVLGH WKH &OHYHODQG 6FKRRO
WKHSODLQWLIIVjFROODWHUDOHVWRSSHOFODLPLVHPLQHQWO\FRUUHFW         'LVWULFW DQG WKH\ PD\ QRW UHFHLYH D YRXFKHU IRU D SULYDWH
DQG VR , MRLQ SDUW ,9 RI WKH FRXUWjV RSLQLRQ  +RZHYHU     VFKRROZLWKLQWKH&OHYHODQG6FKRRO'LVWULFWZKLFKKDVQRW
EHFDXVH,EHOLHYH2KLRjVYRXFKHUSURJUDPWREHFRQVWLWXWLRQDO          UHJLVWHUHG DV SDUW RI WKH SURJUDP  5DWKHU WKH SURJUDP
XQGHU WKH )LUVW $PHQGPHQW DQG WKH 6XSUHPH &RXUWjV               SURYLGHVILQDQFLDODVVLVWDQFHIRUWKRVHSDUHQWVZKRZLVKWR
(VWDEOLVKPHQW &ODXVH FDVHV LQWHUSUHWLQJ WKH DPHQGPHQW ,         SODFHWKHLUFKLOGUHQLQWKHSDUWLFXODUSULYDWHVFKRROVPRVWO\
PXVWUHVSHFWIXOO\GLVVHQWIURPWKHPDMRULW\jVWUHDWPHQWRIWKH         UHOLJLRXVZKLFKWDNHSDUWLQWKHSURJUDP:HILQGVXFKD
YRXFKHUSURJUDPjVFRQVWLWXWLRQDOLW\                                 VFKHPHGLUHFWO\DNLQWR1\TXLVWjVRIIHQVLYHDLGWRRQO\SULYDWH
                                                                       VFKRRO VWXGHQWV DQG QRW DQ LQVWDQFH ZKHUH mWKH FODVV RI
   0\EURWKHUVKDYHVWUXFNGRZQDVXQFRQVWLWXWLRQDO2KLRjV             EHQHILFLDULHVLQFOXGHGDOOVFKRROFKLOGUHQWKRVHLQSXEOLFDV
HIIRUWWRHVWDEOLVKDVFKRROFKRLFHYRXFKHUSURJUDPZKRVH              ZHOODVWKRVHLQSULYDWHVFKRROVl86DWQ7KH
SULPDU\SXUSRVHLVWRHQDEOHPRVWO\PLQRULW\SRYHUW\OHYHO             HIIHFWRIWKLVSURJUDPOLNH1\TXLVWDQGXQOLNH0XHOOHUDQG
VFKRROFKLOGUHQLQ&OHYHODQG2KLRWRHVFDSHWKHGHYDVWDWLQJ         VXEVHTXHQWFDVHVLVRQHZKHUHmSXEOLFDVVLVWDQFHDPRXQWLQJ
FRQVHTXHQFHVRIDWWHQGLQJ&OHYHODQGjVGHPRQVWUDEO\IDLOHG              WRWXLWLRQJUDQWVZDVSURYLGHGRQO\WRSDUHQWVRIFKLOGUHQLQ
SXEOLFVFKRROV0\FROOHDJXHVKDYHGRQHVRQRWRQWKHEDVLV           QRQSXEOLFVFKRROVl0XHOOHU86DW
RIDQ\LQGHSHQGHQWFRQVWLWXWLRQDODQDO\VLVRIWKH2KLR3LORW
3URMHFW 6FKRODUVKLS 3URJUDP DV WKH YRXFKHU SURJUDP LV             &RQWUDU\ WR WKH WD[ GHGXFWLRQ JHQHUDOO\ DYDLODEOH LQ
IRUPDOO\NQRZQEXWEHFDXVHWKH\FODLPWKHLQYDOLGLW\RIWKH           0XHOOHUWKH2KLRYRXFKHUSURJUDPLVDYDLODEOHWRFXUWDLORQO\
VWDWXWH LV D FRQFOXVLRQ IRUHRUGDLQHG E\ WKH 8QLWHG 6WDWHV      WKRVH H[SHQVHV ZKLFK VWXGHQWV DWWHQGLQJ FHUWDLQ SULYDWH
6XSUHPH&RXUWjVGHFLVLRQLQ&RPPLWWHHIRU3XEOLF(GXFDWLRQ             VFKRROV DFFUXH  6HH  86 DW  GLVWLQJXLVKLQJ WKH
DQG 5HOLJLRXV /LEHUW\ Y 1\TXLVW  86    ,    0XHOOHU SURJUDP IURP WKDW LQ 1\TXLVW EHFDXVH LQ 1\TXLVW
GLVDJUHH7KH1HZ<RUNVWDWXWHLQWHUSUHWHGLQ1\TXLVWDQG             mWXLWLRQJUDQWV>ZHUH@SURYLGHGRQO\WRSDUHQWVRIFKLOGUHQLQ
WKH2KLRVWDWXWHEHIRUHXVDUHWRWDOO\GLIIHUHQWLQDOORIWKHLU       QRQSXEOLF VFKRROVl  7KH LGHD RI SDUHQWDO FKRLFH DV D
HVVHQWLDOUHVSHFWVERWKLQWKHLUSXUSRVHVDQGWKHLUSURYLVLRQV        GHWHUPLQLQJIDFWRUZKLFKEUHDNVDJRYHUQPHQWFKXUFKQH[XV
IRUFDUU\LQJRXWWKHLUUHVSHFWLYHSXUSRVHV,WLVLPSRVVLEOHWR       LVLQDSSURSULDWHLQWKHFRQWH[WRIJRYHUQPHQWOLPLWDWLRQRIWKH
WDNHVHULRXVO\WKHPDMRULW\jVFODLPWKDW1\TXLVWJRYHUQVRXU           DYDLODEOHFKRLFHVWRRYHUZKHOPLQJO\VHFWDULDQSULYDWHVFKRROV
UHVXOW DQG IRU WKDW UHDVRQ UHTXLUHV WKDW WKH 2KLR YRXFKHU   ZKLFKFDQDIIRUGWKHWXLWLRQUHVWULFWLRQVSODFHGXSRQWKHPDQG
SURJUDPPXVWEHVWUXFNGRZQ                                         ZKLFKKDYHUHJLVWHUHGZLWKWKHSURJUDP7KHDEVHQFHRIDQ\
                                                                       PHDQLQJIXO SXEOLF VFKRRO FKRLFH IURP WKH GHFLVLRQ PDWUL[
  0RUHRYHUWKHPDMRULW\jVUHIXVDOWRFRQGXFWDQ\PHDQLQJIXO           \LHOGV D OLPLWHG DQG UHVWULFWHG SDOHWWH IRU SDUHQWV ZKLFK LV
DQDO\VLVRIWKH6XSUHPH&RXUWjVVHYHUDO(VWDEOLVKPHQW&ODXVH           VROHO\FDXVHGE\VWDWHOHJLVODWLYHVWUXFWXULQJ
GHFLVLRQV KDQGHG GRZQ LQ WKH  \HDUV VLQFH 1\TXLVW ZDV
GHFLGHGLWVLQVLVWHQFHWKDWWKHSODLQO\GLVWLQJXLVKDEOH1\TXLVW
    6LPPRQV+DUULVHWDO             1RV           1RV            6LPPRQV+DUULVHWDO      
      Y=HOPDQHWDO                                                                                          Y=HOPDQHWDO

   ,Q FRQWUDGLVWLQFWLRQ WR:LWWHUV D VWXGHQW XQGHU WKH 2KLR       VWDWXWRU\ VFKHPH ZKHUH LW FRQVWLWXWHV DQ LPSHUPLVVLEOH
VWDWXWHFDQQRWDSSO\VWDWHDLGWRDQ\VFKRROKHRUVKHFKRRVHV           LQIULQJHPHQW XQGHU WKH (VWDEOLVKPHQW &ODXVH RI WKH )LUVW
LQFOXGLQJSXEOLFVFKRROVVLQFHXQGHUWKH2KLRSURJUDPQR                $PHQGPHQW  :H WKHUHIRUH $)),50 WKH GLVWULFW FRXUWjV
SXEOLF VFKRROV KDYH HQUROOHG QRU DUH OLNHO\ WR HQUROO           RUGHUILQGLQJWKHVFKRROYRXFKHUSURJUDPXQFRQVWLWXWLRQDODV
6LPLODUO\$JRVWLQLLVLQDSSRVLWHEHFDXVHWKHVHUYLFHVPDGH               ZHOO DV WKH FRXUWjV GHWHUPLQDWLRQ WKDW 3ODLQWLIIV DUH QRW
DYDLODEOH WR VWXGHQWV DW SDURFKLDO VFKRROV WKURXJK WKH             FROODWHUDOO\HVWRSSHG
SODFHPHQWRISXEOLFVFKRROWHDFKHUVWRWHDFKVHFXODUVXEMHFWV
ZHUHDYDLODEOHWRDOOTXDOLI\LQJVWXGHQWVZLWKRXWUHJDUGWRWKH
QDWXUH RI WKH LQVWLWXWLRQ WKH\ DWWHQGHG   86 DW 
ILQGLQJ WKDW XQGHU WKH 1HZ <RUN SURJUDP DW LVVXH LQ
$JRVWLQL DQG XQOLNH WKH 1\TXLVW SURJUDP VHUYLFHV mDUH
DYDLODEOH WR DOO FKLOGUHQ ZKR PHHW WKH $FWjV HOLJLELOLW\
UHTXLUHPHQWVQRPDWWHUZKHUHWKH\JRWRVFKRRO:KLOH
WKH SURJUDP XSKHOG LQ 0LWFKHOO SURYLGHG IRU WKH ORDQ RI
LQVWUXFWLRQDOHTXLSPHQWE\VWDWHDJHQFLHVWRERWKSXEOLFDQG
SULYDWHVFKRROVLQWKLVFDVHDLGSUHGRPLQDQWO\IORZVGLUHFWO\
WRWKHFRIIHUVRIUHOLJLRXVLQVWLWXWLRQV8QOLNH0LWFKHOOXQGHU
WKH2KLRVWDWXWHWKHUHDUHQRWmQXPHURXVSULYDWHFLWL]HQVZKR
DUH IUHH WR GLUHFW WKH DLG HOVHZKHUHl DV WKH PDMRULW\ RI WKH
FKRLFHV DYDLODEOH WR SDUHQWV DQG VWXGHQWV DUH UHOLJLRXV
LQVWLWXWLRQV6&WDW7KRPDVsSOXUDOLW\7KH
YRXFKHU SURJUDP DW LVVXH FRQVWLWXWHV WKH W\SH RI mGLUHFW
PRQHWDU\ VXEVLGLHV WR UHOLJLRXV LQVWLWXWLRQVl WKDW sXVWLFH
2j&RQQRUIRXQGLPSHUPLVVLEOHLQ0LWFKHOO,GDW
2j&RQQRUsFRQFXUULQJ7KLVSURJUDPLVGLVVLPLODUWRWKDW
XSKHOGLQERWK$JRVWLQLDQG0LWFKHOODVKHUHDLGJRHVRQO\WR
VWXGHQWVHQUROOHGLQSULYDWHVFKRROVWKHUHE\IRVWHULQJWKHW\SH
RI JRYHUQPHQW HQWDQJOHPHQW SURKLELWHG XQGHU WKH
(VWDEOLVKPHQW&ODXVH
  7R DSSURYH WKLV SURJUDP ZRXOG DSSURYH WKH DFWXDO
GLYHUVLRQ RI JRYHUQPHQW DLG WR UHOLJLRXV LQVWLWXWLRQV LQ
HQGRUVHPHQWRIUHOLJLRXVHGXFDWLRQVRPHWKLQJmLQWHQVLRQl
ZLWKWKHSUHFHGHQWVRIWKH6XSUHPH&RXUW0LWFKHOO6
&WDW:HILQGWKDWZKHQDVKHUHWKHJRYHUQPHQWKDV
HVWDEOLVKHGDSURJUDPZKLFKGRHVQRWSHUPLWSULYDWHFLWL]HQV
WRGLUHFWJRYHUQPHQWDLGIUHHO\DVLVWKHLUSULYDWHFKRLFHEXW
ZKLFK UHVWULFWV WKHLU FKRLFH WR D SDQRSO\ RI UHOLJLRXV
LQVWLWXWLRQV DQG VSDFHV ZLWK RQO\ D IHZ DOWHUQDWLYH
       6LPPRQV+DUULVHWDO            1RV              1RV              6LPPRQV+DUULVHWDO        
         Y=HOPDQHWDO                                                                                              Y=HOPDQHWDO

GRZQ  +RZHYHU LQ 3DUW ,, RI WKLV RSLQLRQ WKH PDMRULW\             SRVVLELOLWLHVWKHQWKH(VWDEOLVKPHQW&ODXVHLVYLRODWHG7KLV
SDLQVWDNLQJO\ VHWV IRUWK )LUVW $PHQGPHQW (VWDEOLVKPHQW                    VFKHPH LQYROYHV WKH JUDQW RI VWDWH DLG GLUHFWO\ DQG
&ODXVHMXULVSUXGHQFHDQGLWVHYROXWLRQVLQFH1\TXLVWZKLOH                    SUHGRPLQDQWO\WRWKHFRIIHUVRIWKHSULYDWHUHOLJLRXVVFKRROV
FDUHIXOO\ DSSO\LQJ WKDW ODZ WR WKH VWDWXWH DW KDQG LQ WKH            DQG LW LV XQTXHVWLRQHG WKDW WKHVH LQVWLWXWLRQV LQFRUSRUDWH
IROORZLQJVHFWLRQ$JDLQLWLVREYLRXVWKDWWKHGLVVHQWjVEDOG              UHOLJLRXVFRQFHSWVPRWLYHVDQGWKHPHVLQWRDOOIDFHWVRIWKHLU
IDFHG DVVHUWLRQ WKDW WKLV DQDO\VLV LV QRW mPHDQLQJIXOl LV              HGXFDWLRQDOSODQQLQJ7KHUHLVQRQHXWUDODLGZKHQWKDWDLG
DSSDUHQWO\ ERUQ RXW RI QRWKLQJ PRUH WKDQ LWV GLVDJUHHPHQW              SULQFLSDOO\IORZVWRUHOLJLRXVLQVWLWXWLRQVQRULVWKHUHWUXO\
ZLWKWKHRXWFRPHRIWKLVFDVHUDWKHUWKDQZLWKDQREMHFWLYH                   mSULYDWHFKRLFHlZKHQWKHDYDLODEOHFKRLFHVUHVXOWLQJIURPWKH
REVHUYDWLRQ,WLVWKHPDMRULW\ZKLFKHPSOR\VWKHHYROYLQJ                    SURJUDPGHVLJQDUHSUHGRPLQDQWO\UHOLJLRXV
MXULVSUXGHQWLDOVWDQGDUGVLQUHDFKLQJLWVRXWFRPHZKLOHWKH
GLVVHQWHPSOR\VDULJLGDQWLTXDWHGVWDQGDUGWRUHDFKLWVUHVXOW                  :H FRQFOXGH WKDW XQOLNH 0LWFKHOO $JRVWLQL :LWWHUV DQG
GULYHQ RXWFRPH LQ FRQWUDYHQWLRQ    RI WKH 6XSUHPH &RXUWjV               0XHOOHU WKH 2KLR VFKRODUVKLS SURJUDP LV GHVLJQHG LQ D
ODWHVWSURQRXQFHPHQWV6HHHJ$JRVWLQL86DW                PDQQHUFDOFXODWHGWRDWWUDFWUHOLJLRXVLQVWLWXWLRQVDQGFKRRVHV
                                                                            WKHEHQHILFLDULHVRIDLGE\QRQQHXWUDOFULWHULD7KHHIIHFWRI
                                                                               WKH YRXFKHU SURJUDP LV LQ GLUHFW FRQWUDYHQWLRQ WR WKHVH
                                   9,                                         6XSUHPH &RXUW FDVHV ZKLFK PDQGDWH WKDW WKH VWDWH DLG EH
                                                                               QHXWUDOO\DYDLODEOHWRDOOVWXGHQWVZKRTXDOLI\WKDWWKHSDUHQWV
  :H UHFRJQL]H WKH LPSRUWDQFH RI WKLV FDVH DQG WKH                     UHFHLYLQJWKHVWDWHDLGKDYHWKHRSWLRQRIDSSO\LQJWKHIXQGV
SUHFHGHQWLDOYDOXHLWHVSRXVHV(TXDOO\DVLPSRUWDQWZHDUH                  WR VHFXODU RUJDQL]DWLRQV RU FDXVHV DV ZHOO DV WR UHOLJLRXV
DZDUHRIWKHFULWLFDOQDWXUHRITXHVWLRQVRIHGXFDWLRQDOSROLF\               LQVWLWXWLRQV DQG WKDW WKH VWDWH DLG GRHV QRW SURYLGH DQ
DQG WKH QHHG WR HVWDEOLVK VXFFHVVIXO VFKRROV DQG DFDGHPLF              LQFHQWLYH WR FKRRVH D UHOLJLRXV LQVWLWXWLRQ RYHU D VHFXODU
SURJUDPV IRU FKLOGUHQ  :H ILQG KRZHYHU WKDW HYHQ PRUH              LQVWLWXWLRQ$FFRUGLQJO\ZHKROGWKDWQRJHQXLQHLVVXHRI
LPSRUWDQWLVWKHQHHGWRXSKROGWKH&RQVWLWXWLRQRIWKH8QLWHG                 PDWHULDOIDFWUHPDLQVIRUWULDOWKDWWKHYRXFKHUSURJUDPKDV
6WDWHV DQG LQ WKLV FDVH WR RYHUULGH WKH 6WDWH RI 2KLRjV            WKHSULPDU\HIIHFWRIDGYDQFLQJUHOLJLRQDQGWKDWLWFRQVWLWXWHV
                                                                               DQ HQGRUVHPHQW RI UHOLJLRQ DQG VHFWDULDQ HGXFDWLRQ LQ
                                                                               YLRODWLRQRIWKH(VWDEOLVKPHQW&ODXVH:HWKHUHIRUHDIILUP
     
      sXGJH 5\DQ LQDSSURSULDWHO\ FDOOV IRU DQ   03 s,3. UHYLHZ RI WKH PDWWHU   WKH GLVWULFW FRXUWjV RUGHU JUDQWLQJ VXPPDU\ MXGJPHQW WR
LQ KLV GLVVHQW   7KHUH DUH UXOHV DQG SURFHGXUHV JRYHUQLQJ D FDOO IRU    03    3ODLQWLIIV
s,3. UHYLHZ RQFH D FDVH KDV EHHQ GHFLGHG ZKHWKHU WKH FDOO LV PDGH E\ D
SDUW\ RU 8:, 854390 E\ DQ DFWLYH MXGJH RI WKLV &RXUW RU PHPEHU RI WKH
                                                                                                               ,9
RULJLQDO SDQHO DQG LW LV WKH SURFHVV FRQWHPSODWHG E\ WKHVH UXOHV DQG
                                                  03 s,3.
                                                                                  ,QWHUYHQRU 7D\ORU DVVHUWV WKDW WKH GLVWULFW FRXUW HUUHG E\
SURFHGXUHV ZKLFK VKRXOG EH XVHG WR LQYRNH                   UHYLHZ DIWHU WKH
&RXUWjV RSLQLRQ KDV EHHQ LVVXHG    6HH &UDIW Y &,5 1RV  
  :/  DW Q WK &LU 1RY   FULWLFL]LQJ WKH       KROGLQJWKDWWKH2KLR6XSUHPH&RXUWjVRSLQLRQLQ6LPPRQV
FRQFXUULQJ RSLQLRQjV H[KRUWDWLRQ IRU HQ EDQF UHYLHZ RI WKH PDWWHU ZKLOH       +DUULVY*RII1(G2KLRGLGQRWHVWRS
QRWLQJ WKDW )HG 5 $SS 3 E DQG  &LU ,23 F VHW IRUWK WKH        3ODLQWLIIVjFODLPDQGE\UHIXVLQJWRFHUWLI\WKHTXHVWLRQRI
DSSURSULDWH SURFHGXUHV WR IROORZ ZKHQ FDOOLQJ IRU VXFK UHYLHZ 7KH
                                                                               HVWRSSHOWRWKH2KLR6XSUHPH&RXUW7KLV&RXUWUHYLHZVWKH
XQIRUWXQDWH SUDFWLFH RI DUJXLQJ IRU HQ EDQF UHYLHZ RI D FDVH LQ D SDQHO
PHPEHUjV VHSDUDWH RSLQLRQ o LQVWHDG RI VLPSO\ SHUPLWWLQJ WKH &RXUWjV
                                                                               LVVXHRIFROODWHUDOHVWRSSHODVSDUWRIWKHVXPPDU\MXGJPHQW
UHJXODU RSHUDWLQJ SURFHGXUHV IRU VHHNLQJ VXFK UHYLHZ WR EH IROORZHG            GHWHUPLQDWLRQGHQRYR7KLV&RXUWUHYLHZVWKHGLVWULFWFRXUWjV
VXEVHTXHQW WR WKH LVVXDQFH RI WKH PDMRULW\ RSLQLRQ o LV RQH ZKLFK VKRXOG       GHQLDO RI FHUWLILFDWLRQ IRU DQ DEXVH RI GLVFUHWLRQ  6HH
QRW EH SHUSHWXDWHG
    6LPPRQV+DUULVHWDO            1RV          1RV               6LPPRQV+DUULVHWDO     
      Y=HOPDQHWDO                                                                                           Y=HOPDQHWDO

7UDQVDPHULFD,QV&RY'XUR%DJ0IJ&R)G                   6LPLODUO\WKHGLVWULFWFRXUWGLGQRWHUULQUHIXVLQJWRFHUWLI\
WK&LU                                                    WKHTXHVWLRQWRWKH2KLR6XSUHPH&RXUW7KHJRYHUQLQJODZ
                                                                        DVWRZKHWKHUDSDUW\LVHVWRSSHGIURPUHOLWLJDWLQJDQLVVXHQRW
   8QGHUERWKIHGHUDODQGVWDWHODZDQmLVVXHPXVWKDYHEHHQ           HVVHQWLDO WR WKH FRXUWjV GHWHUPLQDWLRQ LV FOHDU DQG
QHFHVVDU\WRVXSSRUWWKHMXGJPHQWLQWKHSULRUSURFHHGLQJl        XQFRQWURYHUWHGZHWKHUHIRUHILQGQRDEXVHRIGLVFUHWLRQLQ
LQRUGHUWRILQGFROODWHUDOHVWRSSHO.QR[&RXQW\(GXF$VVjQ          WKHGLVWULFWFRXUWjVGHWHUPLQDWLRQ
Y.QR[&RXQW\%GRI(GXF)GWK&LU
DFFRUG0HWUR+HDOWK0HG&WUY+RIIPDQQ/D5RFKH                                                9
,QF  1(G   2KLR m,VVXH SUHFOXVLRQ
SUHFOXGHVWKHUHOLWLJDWLRQRIDQLVVXHWKDWKDVEHHQDFWXDOO\              %HIRUHFRQFOXGLQJZHPXVWSDXVHWREULHIO\DGGUHVVWKH
DQGQHFHVVDULO\OLWLJDWHGDQGGHWHUPLQHGLQDSULRUDFWLRQl          GLVVHQWQRWIRUWKHSXUSRVHRIGLJQLI\LQJLWVK\SHUEROHEXWWR
FI $PHLJK Y %D\FOLIIV &RUS  1(G   2KLR       TXDVKDQ\SXWDWLYHO\VXEVWDQWLYHDUJXPHQWZKLFKPD\KDYH
m:KHUHWKHMXGJPHQWRIDFRXUWLVQRWGLVSRVLWLYHRQ              IRXQGLWVZD\WKURXJKWKHJUDWXLWRXVLQVXOWV7KHGLVVHQWILUVW
LVVXHVZKLFKDSDUW\ODWHUVHHNVWROLWLJDWHUHVMXGLFDWDLVQRW       PDNHVWKHEDOGIDFHGDVVHUWLRQWKDWWKHPDMRULW\KDVVWUXFN
DSSOLFDEOHHYHQLIWKHSULRUFRXUWGHFLVLRQKDVGLVFXVVHG         GRZQWKHYRXFKHUSURJUDPDVXQFRQVWLWXWLRQDOZLWKRXWDQ\
WKHLVVXHVWKDWDUHWKHVXEMHFWRIWKHFXUUHQWOLWLJDWLRQl$        mPHDQLQJIXOl LQGHSHQGHQW DQDO\VLV DQG WKDW WKH PDMRULW\
GHWHUPLQDWLRQLVQRWHVVHQWLDOWRWKHMXGJPHQWLIWKHMXGJPHQW          VLPSO\ FRQFOXGHV WKDW WKH SURJUDP LV mIRUHRUGDLQHGl WR EH
FRXOG EH VXSSRUWHG E\ DQ DGHTXDWH DQG LQGHSHQGHQW VWDWH         IRXQG XQFRQVWLWXWLRQDO XQGHU 1\TXLVW  $FFRUGLQJ WR WKH
JURXQG  6HH /DPEUL[ Y 6LQJOHWDU\  86          GLVVHQWWKH1HZ<RUNVWDWXWHLQ1\TXLVWLVmWRWDOO\GLIIHUHQWl
,Q*RIIWKH2KLR6XSUHPH&RXUWKHOGWKDWWKH             IURP WKH 2KLR VWDWXWH EHIRUH XV WRGD\ WKXV PDNLQJ LW
VFKRROYRXFKHUSURJUDPZDVHQDFWHGLQYLRODWLRQRIWKHRQH             LPSRVVLEOHWRmWDNHVHULRXVO\lWKHPDMRULW\jVFRQFOXVLRQWKDW
VXEMHFW UXOH RI WKH 2KLR &RQVWLWXWLRQ DQG RQ WKDW EDVLV      1\TXLVWLVFRQWUROOLQJ+RZHYHUHYHQDFXUVRU\UHDGLQJRI
RUGHUHGWKHSURJUDPLQLWVHQWLUHW\mVWULFNHQlIURPWKH2KLR            WKHPDMRULW\RSLQLRQFOHDUO\LQGLFDWHVWKDWLWLVWKHGLVVHQWDQG
VWDWXWH ERRNV  1(G DW   7KDW UXOLQJ HQWLWOHG WKH   LWVUKHWRULFZKLFKVKRXOGQRWEHWDNHQVHULRXVO\$VFDUHIXOO\
SODLQWLIIV WR WKH UHOLHI WKH\ UHTXHVWHG DQG WKHUHIRUH DQ\     VHWIRUWKLQ3DUW,,,RIWKLVRSLQLRQWKH2KLRVWDWXWHDWLVVXH
GLVFXVVLRQ RI RWKHU JURXQGV IRU VWULNLQJ RU XSKROGLQJ WKH       KDV WKH VDPH HIIHFW DV WKDW RI WKH 1HZ <RUN VWDWXWH KHOG
VWDWXWHFRXOGEHQHLWKHUQHFHVVDU\QRUHVVHQWLDOWRWKHKROGLQJ        XQFRQVWLWXWLRQDOXQGHUWKH(VWDEOLVKPHQW&ODXVHLQ1\TXLVW
7KH2KLR&RXUWGHWHUPLQHGWKDWWKHHQWLUHSURJUDPFRXOGQRW             %RWKVWDWXWHVKDYHWKHLPSHUPLVVLEOHHIIHFWRIEHQHILWWLQJRQO\
VWDQG WKHUHIRUH DQ\ DQDO\VLV DV WR WKH FRQVWLWXWLRQDOLW\ RI   VWXGHQWVLQSDUWLFXODUSULYDWHDQGPRVWO\UHOLJLRXVVFKRROV
SDUWLFXODUSRUWLRQVRIWKHSURJUDPZDVE\GHILQLWLRQDGYLVRU\           LUUHVSHFWLYHRIWKHLOOXVRU\FKRLFHSURYLGHGRQWKHIDFHRIWKH
RUGLFWDDQGFDQQRWEHUHOLHGXSRQWREDUIXUWKHUOLWLJDWLRQ          2KLRVWDWXWH7KHIDFWWKDWWKHGLVVHQWPD\QRWDJUHHZLWKWKH
%HFDXVH3ODLQWLIIVZRXOGQRWEHDEOHWRREWDLQ6XSUHPH&RXUW            DQDO\VLVVHWIRUWKLQWKHRSLQLRQWRLOOXVWUDWHWKLVSRLQWGRHV
UHYLHZRIWKH2KLR6XSUHPH&RXUWjVGHWHUPLQDWLRQDVWRWKH              QRWLVSRIDFWRUHQGHUWKHDQDO\VLVmPHDQLQJOHVVl
(VWDEOLVKPHQW&ODXVHVXFKGHWHUPLQDWLRQVFDQQRWFRQVWLWXWH
FROODWHUDOHVWRSSHO6HH&DOY5RRQH\86               6HFRQG LQ D VLPLODU YHLQ WKH GLVVHQW FODLPV WKDW WKH
 GHFOLQLQJ WR UHYLHZ D )RXUWK $PHQGPHQW UXOLQJ            PDMRULW\UHDFKHVLWVFRQFOXVLRQWKDWWKHYRXFKHUSURJUDPLV
DGYHUVH WR WKH VWDWH RI &DOLIRUQLD ZKHUH WKDW UXOLQJ ZDV       XQFRQVWLWXWLRQDO XQGHU WKH (VWDEOLVKPHQW &ODXVH ZLWKRXW
XQQHFHVVDU\WRDMXGJPHQWLQIDYRURIWKHVWDWH                       FRQGXFWLQJ DQ\ mPHDQLQJIXOl DQDO\VLV LQWR WKH 6XSUHPH
                                                                        &RXUWjVVHYHUDOFDVHVRQWKLVLVVXHVLQFH1\TXLVWZDVKDQGHG
