           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


 (0,/ (:2/6.,                     ;
          3ODLQWLII$SSHOODQW      
                                    
                                      1R
            Y                      
                                     !
                                    
 &,7< 2) %5816:,&.HWDO         
         'HIHQGDQWV$SSHOOHHV 
                                   1
       $SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW
        IRUWKH1RUWKHUQ'LVWULFWRI2KLRDW$NURQ
     1Rn'DQ$3ROVWHU'LVWULFWsXGJH
                  $UJXHG6HSWHPEHU
               'HFLGHGDQG)LOHG$SULO
    %HIRUH*8<DQG0225(&LUFXLWsXGJHV+8//
                    'LVWULFWsXGJH
                       BBBBBBBBBBBBBBBBB
                             &2816(/
$5*8('  7HUU\ + *LOEHUW )5,('0$1 	 *,/%(57
&OHYHODQG2KLRIRU$SSHOODQW1LFN&7RPLQR720,12
	/$7&+1(<0HGLQD2KLRIRU$SSHOOHHV21%5,()

    
     7KH +RQRUDEOH 7KRPDV *UD\ +XOO 8QLWHG 6WDWHV 'LVWULFW sXGJH IRU
WKH (DVWHUQ 'LVWULFW RI 7HQQHVVHH VLWWLQJ E\ GHVLJQDWLRQ



                                    
     (ZROVNLY&LW\RI%UXQVZLFNHWDO          1R

7HUU\+*LOEHUW)5,('0$1	*,/%(57&OHYHODQG2KLR
5R\s6FKHFKWHU7($025	$662&,$7(6&OHYHODQG
2KLR IRU $SSHOODQW  1LFN & 7RPLQR 720,12 	
/$7&+1(<0HGLQD2KLRIRU$SSHOOHHV
  0225(sGHOLYHUHGWKHRSLQLRQRIWKHFRXUWLQZKLFK
*8< s MRLQHG  +8// ' s SS  GHOLYHUHG D
VHSDUDWHGLVVHQWLQJRSLQLRQ
                     BBBBBBBBBBBBBBBBB
                         23,1,21
                     BBBBBBBBBBBBBBBBB
   .$5(1 1(/621 0225( &LUFXLW sXGJH  3ODLQWLII
$SSHOODQW (PLO (ZROVNL DFWLQJ DV $GPLQLVWUDWRU IRU WKH
HVWDWHVRIsRKQ0/HNDQ%HYHUO\/HNDQDQGsRKQ7/HNDQ
DSSHDOV WKH GLVWULFW FRXUWjV GHFLVLRQ JUDQWLQJ VXPPDU\
MXGJPHQWWRDOOGHIHQGDQWVLQWKHLQVWDQWDQGVWDWHODZ
WRUWDFWLRQ$SSHOODQWjVVXLWDOOHJHVYLRODWLRQVRIWKH/HNDQVj
IHGHUDOFRQVWLWXWLRQDOULJKWVDVZHOODVVHYHUDOVWDWHODZWRUW
FODLPV DULVLQJ IURP WKH FRQGXFW RI WKH %UXQVZLFN 3ROLFH
'HSDUWPHQW OHDGLQJ XS WR DQG GXULQJ D WZRGD\ DUPHG
VWDQGRII ZLWK 0U /HNDQ ZKLFK WUDJLFDOO\ HQGHG ZLWK 0U
/HNDQjVGHFLVLRQWRNLOOKLV VRQ DQGKLPVHOI6SHFLILFDOO\
$SSHOODQW FODLPV   WKDW WKH SROLFH YLRODWHG WKH )RXUWK
$PHQGPHQW E\ PDNLQJ D ZDUUDQWOHVV HQWU\ LQWR WKH /HNDQ
KRPHZLWKRXWVXIILFLHQWHYLGHQFHRIH[LJHQWFLUFXPVWDQFHV
WKDWWKHSROLFHXVHGH[FHVVLYHIRUFHDJDLQVW0U/HNDQDQG
KLV IDPLO\ GXULQJ WKH VWDQGRII LQ YLRODWLRQ RI WKH )RXUWK
$PHQGPHQWWKDWWKHSROLFHjVFRQGXFWGXULQJWKHVWDQGRII
GHPRQVWUDWHG GHOLEHUDWH LQGLIIHUHQFH WR WKH VDIHW\ RI WKH
/HNDQ IDPLO\ LQ YLRODWLRQ RI WKH )RXUWHHQWK $PHQGPHQW
 WKDW WKH &LW\ RI %UXQVZLFN ZDV OLDEOH IRU WKH /HNDQVj
FRQVWLWXWLRQDOLQMXULHVEHFDXVHWKHGHFLVLRQVRIWKH%UXQVZLFN
&KLHIRI3ROLFHLQVXSHUYLVLQJWKHVWDQGRIIZHUHWKRVHRID
ILQDOSROLF\PDNHUDQGEHFDXVHWKH&LW\IDLOHGDGHTXDWHO\WR
WUDLQLWVRIILFHUVDQGWKDWWKHSROLFHDUHOLDEOHXQGHUVWDWH
ODZIRUWUHVSDVVDVVDXOWDQGEDWWHU\LQWHQWLRQDOLQIOLFWLRQRI
PHQWDO GLVWUHVV FRQVSLUDF\ DQG ZURQJIXO GHDWK  )RU WKH
1R          (ZROVNLY&LW\RI%UXQVZLFNHWDO       

UHDVRQVVWDWHGEHORZZH$)),50WKHGHFLVLRQRIWKHGLVWULFW
FRXUW
                     ,%$&.*5281'
  2Q0DUFK%HYHUO\/HNDQDQG(PLO(ZROVNLWKH
DGPLQLVWUDWRUIRUWKHHVWDWHVRIsRKQ0/HNDQDQGsRKQ7
/HNDQILOHGWKLVDFWLRQDOOHJLQJWKDWWKHGHIHQGDQWVYLRODWHG
WKH /HNDQVj )RXUWK DQG )RXUWHHQWK $PHQGPHQW ULJKWV DV
VHFXUHG E\ WKH 8QLWHG 6WDWHV &RQVWLWXWLRQ  7KH FRPSODLQW
DOVRDOOHJHGVWDWHFRPPRQODZFODLPVRIWUHVSDVVDVVDXOWDQG
EDWWHU\ LQWHQWLRQDO LQIOLFWLRQ RI PHQWDO GLVWUHVV DQG
FRQVSLUDF\DVZHOODVVWDWXWRU\FODLPVIRUZURQJIXOGHDWK
$IWHUWKHFRPPHQFHPHQWRIWKLVODZVXLW%HYHUO\/HNDQGLHG
RILOOQHVVXQUHODWHGWRWKHLQVWDQWDFWLRQDQGKHUFODLPVZHUH
DVVXPHGE\(PLO(ZROVNLDVDGPLQLVWUDWRURIKHUHVWDWH2Q
'HFHPEHU   WKH WULDO FRXUW JUDQWHG D PRWLRQ IRU
VXPPDU\MXGJPHQWILOHGE\WKHGHIHQGDQWVLQUHJDUGWRDOORI
SODLQWLIIVj IHGHUDO DQG VWDWH FODLPV DQG GLVPLVVHG WKH
SODLQWLIIVjFRPSODLQWLQLWVHQWLUHW\
  $WWKHWLPHRIWKHLQFLGHQW%HYHUO\/HNDQZDVEHGULGGHQ
ZLWKPXOWLSOHVFOHURVLVDQGKDGEHHQUHFHLYLQJKRPHKHDOWK
VHUYLFHVIURP7UL&RXQW\+RPH1XUVHV,QFm7UL&RXQW\l
IRUDSSUR[LPDWHO\RQH\HDUZLWKRXWDQ\VLJQLILFDQWSUREOHPV
:KLOH7UL&RXQW\SURYLGHG0UV/HNDQZLWKDVVLVWDQFHZLWK
KHUFDWKHWHUDQGKHOSHGKHUWREDWKHVKHUHOLHGRQKHUKXVEDQG
sRKQ/HNDQIRUWKHFDUHRIWKHLUQLQH\HDUROGVRQs7DVZHOO
DVWKHFRRNLQJDQGFOHDQLQJIRUWKHKRXVHKROG
   2Q0DUFKZKLOH0UV/HNDQZDVUHFHLYLQJKHUEL
ZHHNO\ KRPH KHDOWK VHUYLFHV 0U /HNDQ FDUU\LQJ D ULIOH
HQWHUHGWKHURRPZKHUHD7UL&RXQW\DLGHZDVFDULQJIRU0UV
/HNDQ$WRQHSRLQW0U/HNDQSODFHGWKHZHDSRQRQO\D
IHZLQFKHVIURPWKHDLGHjVIDFH0U/HNDQDJDLQGLVSOD\HG
D ULIOH GXULQJ WKH YLVLW E\ WKH DLGH RQ 0DUFK  
6XEVHTXHQWO\ RQ 0DUFK   WKH 7UL&RXQW\ DLGH
UHSRUWHG WKH LQFLGHQWV WR KHU VXSHULRU %DUEDUD +LOOHJDVV
%HFDXVH RI KHU FRQFHUQ IRU WKH VDIHW\ RI WKH KHDOWKFDUH
ZRUNHUV JRLQJ WR WKH /HNDQ KRPH +LOOHJDVV FDOOHG 0UV
/HNDQRQ0DUFKDQGDGYLVHGKHUWKDW7UL&RXQW\
     (ZROVNLY&LW\RI%UXQVZLFNHWDO           1R       1R           (ZROVNLY&LW\RI%UXQVZLFNHWDO          

ZDQWHG KHU KXVEDQG WR VLJQ D FRQWUDFW UHJDUGLQJ KLV JXQV     SK\VLFDOKDUPWR0UV/HNDQKRZHYHUKHLJQRUHGWKLVULVNWR
+LOOHJDVV DOVR DVNHG 0UV /HNDQ LI VKH ZDV FRPIRUWDEOH         KHUDQGZDVGHOLEHUDWHO\LQGLIIHUHQWWRWKHGDQJHUWRKHU
GLVFXVVLQJWKLVFRQWUDFWZLWKKHUKXVEDQGDQGVKHLQGLFDWHG
WKDWVKHZRXOGWDONWRKLPDERXWLW+RZHYHULQDERXWKDOIDQ          7KH LVVXH RI TXDOLILHG LPPXQLW\ ZDV DOVR DGGUHVVHG LQ
KRXU 0UV /HNDQ FDOOHG EDFN DQG VWDWHG WKDW VKH ZDV QRW     6WHPOHU  )G DW  ZKLFK KHOG WKDW WKH GHIHQGDQWV
FRPIRUWDEOH GLVFXVVLQJ WKH FRQWUDFW ZLWK KHU KXVEDQG  ,Q      VKRXOGKDYHNQRZQXQGHUFOHDUO\HVWDEOLVKHGODZWKDWWKH\
UHVSRQVH+LOOHJDVVVWDWHGWKDW7UL&RXQW\ZRXOGGLVFXVVWKH           RZHGDGXW\WR%ODFNQRWWRIRUFHKHULQKDUPjVZD\DIWHU
FRQWUDFWZLWK0U/HNDQ                                               RIILFHUVKDGWDNHQDIILUPDWLYHDFWLRQZKLFKGHSULYHG%ODFNRI
                                                                       KHUOLEHUW\6LPLODUO\LQWKLVFDVHEHFDXVHWKH/HNDQVKDG
  2QWKHPRUQLQJRI0DUFK0UV/HNDQFDOOHG7UL             EHHQFRQILQHGLQWKHLUKRPHDQGGHSULYHGRIWKHLUOLEHUW\E\
&RXQW\ DQG LQIRUPHG WKHP WKDW VKH GLG QRW ZDQW D KRPH        WKH VWDQGRII VLWXDWLRQ WKH GHIHQGDQWV VKRXOG KDYH NQRZQ
KHDOWKDLGHWKDWGD\DQGWKDWVKHZDQWHGWRFRQVLGHUDQXUVLQJ         XQGHU FOHDUO\ HVWDEOLVKHG ODZ WKDW WKH\ RZHG WKH /HNDQV D
KRPHSODFHPHQW6KHDOVRDOOHJHGO\LQIRUPHG7UL&RXQW\WKDW           GXW\ QRW WR IRUFH WKHP LQWR D VLWXDWLRQ ZKHUH WKH\ ZRXOG
KHUKXVEDQGZDVDQJU\DQGKHKDGNHSWWKHLUVRQKRPHWKDW              VXIIHUKDUP
GD\  %HFDXVH RI FRQFHUQ IRU 0UV /HNDQ +LOOHJDVV FDOOHG
0UV/HNDQEDFNDQGDVNHGKHULIWKHUHZDVDSUREOHP:KHQ               ,QWKLVFDVHWDNLQJWKHHYLGHQFHLQDOLJKWPRVWIDYRUDEOHWR
0UV/HNDQGLGQRWUHVSRQG+LOOHJDVVDVNHGKHUDJDLQLIWKHUH         WKHSODLQWLIIVWKHHYLGHQFHZRXOGVXSSRUWDILQGLQJE\WKH
ZDV D SUREOHP  $W WKDW SRLQW 0U /HNDQ VSRNH IURP DQ      MXU\WKDWLQFRQGXFWLQJWKHVWDQGRII&KLHI%H\HUGLGQRWDFW
H[WHQVLRQDQGVSHZHGYDULRXVSURIDQLWLHVDW+LOOHJDVV                 ZLWKREMHFWLYHUHDVRQDEOHQHVVDQGRUWKDWKHZDVGHOLEHUDWHO\
                                                                       LQGLIIHUHQWWRDWKUHDWRISK\VLFDOLQMXU\WRWKH/HNDQVDQGDV
   /DWHUDWDERXWDPWKDWVDPHPRUQLQJ0UV/HNDQjV           D PDWWHU RI ODZ KH LV QRW HQWLWOHG WR TXDOLILHG LPPXQLW\
PRWKHU +HOHQ (ZROVNL DGYLVHG +LOOHJDVV WKDW 0U /HNDQ         $FFRUGLQJO\,EHOLHYHVXPPDU\MXGJPHQWVKRXOGQRWKDYH
VXIIHUHG IURP SRVWWUDXPDWLF VWUHVV V\QGURPH DQG WKDW           EHHQ JUDQWHG LQ UHJDUG WR WKH SODLQWLIIVj H[FHVVLYH IRUFH
DOWKRXJKKHKDGEHHQYHUEDOO\DEXVLYHWRKLVZLIHLQWKHSDVW         FODLPV
KH KDG QHYHU EHHQ SK\VLFDOO\ DEXVLYH  $W  DP
+LOOHJDVVFDOOHGWKH&OHYHODQG &OLQLFWRWDONWR'U.LQNOH             ,QUHJDUGWRWKHSODLQWLIIV
VWDWHFDXVHVRIDFWLRQWKH6L[WK
ZKRZDV0UV/HNDQjVSK\VLFLDQ6KHH[SUHVVHGFRQFHUQIRU             &LUFXLW KDV UHFRJQL]HG D JHQHUDO UXOH GLVIDYRULQJ D GLVWULFW
0UV/HNDQDQGIRUWKHVDIHW\RIs7KHUVRQ6KHZDVWROG          FRXUW
VH[HUFLVHRISHQGHQWMXULVGLFWLRQZKHQIHGHUDOLVVXHV
WKDW 'U .LQNOH ZDV QRW DYDLODEOH EXW WKDW KH DOVR KDG D   DUHGLVPLVVHGEHIRUHWULDO*DIIY)',&)G
PHVVDJHWRFDOO0UV/HNDQ                                            WK&LU+RZHYHUWKHGLVWULFWFRXUWLQWKLVFDVHGLG
                                                                       DGGUHVV HDFK RI WKH SODLQWLIIV
 VWDWH FODLPV DIWHU ILQGLQJ QR
   +LOOHJDVVDOVRFRQILUPHGWKDWDURXQGQRRQRQ0DUFK              PHULW WR WKH SODLQWLIIV
 IHGHUDO FODLPV , EHOLHYH WKHVH VWDWH
7UL&RXQW\QRWLILHG$GXOW3URWHFWLYH6HUYLFHVRIWKHLU           FODLPVVKRXOGKDYHEHHQGLVPLVVHGZLWKRXWSUHMXGLFH
FRQFHUQVLQUHJDUGWR0UV/HNDQDQG&KLOGUHQjV6HUYLFHVRI
WKHLU FRQFHUQV LQ UHJDUG WR s7  $W DURXQG  SP       &21&/86,21
+LOOHJDVVUHFHLYHGLQIRUPDWLRQWKDWQHLWKHU$GXOW3URWHFWLYH
6HUYLFHV QRU &KLOGUHQjV 6HUYLFHV FRQVLGHUHG WKLV WR EH DQ        )RUWKHUHDVRQVVWDWHGKHUHLQEDVHGRQGLVSXWHGPDWHULDO
HPHUJHQF\VLWXDWLRQDQGWKDWQHLWKHUDJHQF\ZRXOGEHWDNLQJ           IDFWV LQ WKLV FDVH , EHOLHYH VXPPDU\ MXGJPHQW IRU WKH
IXUWKHULPPHGLDWHDFWLRQWKDWGD\LQUHJDUGWRWKH/HNDQKRPH          GHIHQGDQWVLQUHJDUGWRWKHSODLQWLIIjVIHGHUDODQGVWDWHFODLPV
VLWXDWLRQ  1HYHUWKHOHVV 0HGLQD &RXQW\ +XPDQ 6HUYLFHV           ZDVLQDSSURSULDWHDQGWKHMXGJPHQWRIWKHWULDOFRXUWVKRXOG
                                                                       KDYHEHHQUHYHUVHGDQGUHPDQGHG
    (ZROVNLY&LW\RI%UXQVZLFNHWDO            1R       1R          (ZROVNLY&LW\RI%UXQVZLFNHWDO         

  7DNLQJ WKH HYLGHQFH LQ D OLJKW PRVW IDYRUDEOH WR WKH         FRQWDFWHGWKH%UXQVZLFN3ROLFH'HSDUWPHQWFRQFHUQLQJWKH
SODLQWLIIVJLYHQWKHDGYLFHGHWDLOHGE\&DOOLVWKDW&KLHI%H\HU        LQIRUPDWLRQWKH\KDGUHFHLYHGIURP+LOOHJDVV
KDG IURP PHQWDO KHDOWK SURIHVVLRQDOV DW WKH VFHQH  WKH
HYLGHQFHLQWKLVFDVHZRXOGVXSSRUWDILQGLQJE\WKHMXU\WKDW            $WSP+LOOHJDVVUHFHLYHGDSKRQHFDOOIURP6HUJHDQW
LQ FRQGXFWLQJ WKH VWDQGRII &KLHI %H\HU GLG QRW DFW ZLWK       1LFN6RODUFRQFHUQLQJWKH/HNDQVLWXDWLRQ+LOOHJDVVDVNHG
REMHFWLYHUHDVRQDEOHQHVVl7KHUHIRUHVXPPDU\MXGJPHQW                6HUJHDQW6RODUZKDWDFWLRQVKHDQWLFLSDWHGWKHSROLFHZRXOG
VKRXOG QRW KDYH EHHQ JUDQWHG LQ UHJDUG WR WKH SODLQWLIIVj      WDNH+HWROGKHUWKDWWKLVZDVDSRWHQWLDOVWDQGRIIVLWXDWLRQ
)RXUWK$PHQGPHQWFODLPV                                             WKDWKHZDVJRLQJWRGHYLVHDJDPHSODQDQGWKDWWKHSROLFH
                                                                        ZRXOGSUREDEO\PDNHDFDOO+HLQGLFDWHGWKDWKHKDGEHHQ
   ,Q WKH DOWHUQDWLYH HYHQ LI WKHUH ZDV QR VHL]XUH WKH       PDGHDZDUHRIWKHVLWXDWLRQVRPHWLPHEHIRUHSPE\WKH
GHIHQGDQWV FRXOG KDYH EHHQ IRXQG WR KDYH XVHG H[FHVVLYH         VRFLDOVHUYLFHVDJHQFLHV
IRUFHXQGHUWKHDQDO\VLVRID)RXUWHHQWK$PHQGPHQW&ODLP
7KHGLVWULFWFRXUWFRQFOXGHGWKDW&KLHI%H\HUZDVKHOGWRD                6HUJHDQW6RODUWKHQPHWZLWK6HUJHDQW6WXNEDXHU'HWHFWLYH
GHOLEHUDWHLQGLIIHUHQFHVWDQGDUGLQUHJDUGWRKLVVXSHUYLVLRQRI        6FKQHOO3DWURO2IILFHU0DURNDQG3DWURO2IILFHU6DP3X]HOOD
WKHVWDQGRIIDQGXQGHUWKHIDFWVRIWKLVFDVHWKLVFODLPFRXOG        WRGLVFXVVWKHVLWXDWLRQ'HWHFWLYH6FKQHOOWROG6RODUWKDWKH
QRWVXUYLYHVXPPDU\MXGJPHQWEHFDXVHWKHSODLQWLIIVFRXOG               KDG OHDUQHG LQ 'HFHPEHU RI  WKDW sRKQ /HNDQ ZDV D
QRWVKRZWKDWKHZDVGHOLEHUDWHO\LQGLIIHUHQWWRDQREYLRXV             SDUDQRLG VFKL]RSKUHQLF DQG LI DQ\ SROLFH RIILFHUV WULHG WR
ULVNRIKDUPDFWXDOO\VXIIHUHGE\WKHSODLQWLIIV                      FRPPLW KLP WR D PHQWDO IDFLOLW\ WKHUH ZDV D SRWHQWLDO IRU
                                                                        YLROHQFH6FKQHOODOVRKDGFRQILUPHGMXVWSULRUWRWKHPHHWLQJ
   %DVHGXSRQWKHIDFWXDOFLUFXPVWDQFHVRIWKLVFDVH&KLHI             DIWHU D FRQWDFW ZLWK 6X]DQQH /HNDQ ZKR ZDV D SROLFH
%H\HUKDGDUHDVRQDEOHRSSRUWXQLW\WRGHOLEHUDWHDQGFRQVLGHU           GLVSDWFKHUDQGsRKQ/HNDQjVVLVWHULQODZWKDWsRKQ/HNDQ
YDULRXVDOWHUQDWLYHVSULRUWRHOHFWLQJDFRXUVHRIDFWLRQDQG          ZDVDSDUDQRLGVFKL]RSKUHQLFDQGKHKDGQRWEHHQWDNLQJKLV
KLV DFWLRQV ZRXOG EH GHHPHG FRQVFLHQFHVKRFNLQJ LI WKH\          PHGLFDWLRQ  6X]DQQH IXUWKHU LQIRUPHG 6FKQHOO WKDW sRKQ
ZHUH WDNHQ ZLWK GHOLEHUDWH LQGLIIHUHQFH WRZDUGV WKH             /HNDQKDGORDGHGJXQVDQGWKDWVKHEHOLHYHGKHZRXOGVKRRW
SODLQWLIIV
IHGHUDOO\SURWHFWHGULJKWV'DUUDKY&LW\RI2DN         DWSROLFHRIILFHUVLIWKH\ZHQWWRWKHKRPH
3DUN)GWK&LU9LHZLQJWKHIDFWV
DVVXPPDUL]HGE\WKHGLVWULFWFRXUWLQDOLJKWPRVWIDYRUDEOH             $IWHUDGLVFXVVLRQ6RODUGHFLGHGWRGLVSDWFKWZRRIILFHUVWR
WRWKHSODLQWLIIV,EHOLHYHDUDWLRQDOMXU\FRXOGILQGWKDW&KLHI      WKH/HNDQUHVLGHQFHLQRUGHUWRGHWHUPLQHZKHWKHU%HYHUO\
%H\HUjVFRXUVHRIDFWLRQZDVGHOLEHUDWHO\LQGLIIHUHQWEHFDXVH           /HNDQ RU KHU VRQ ZDV LQ GDQJHU  2IILFHU 'DOH 6FKQHOO
DUDWLRQDOMXU\FRXOGFRQFOXGHWKDWWKHUHZDVDQREYLRXVWKUHDW         YROXQWHHUHG WR JR WR WKH /HNDQ KRPH ZLWK 2IILFHU 6DP
RISK\VLFDOLQMXU\WRWKH/HNDQVDQGWKHSRWHQWLDOWKUHDWRI           3X]HOOD6RODUDQGRWKHURIILFHUVZHQWWRWKH5ROOLQJ+LOOV
SK\VLFDOLQMXU\ZDVWKHYHU\SUHPLVHIRUWKHRIILFHUVjmZHOIDUH         6KRSSLQJ &HQWHU QHDU WKH /HNDQ UHVLGHQFH LQ FDVH IXUWKHU
FKHFNlLQWKHILUVWSODFH&KLHI%HJOH\DOVRNQHZ0U/HNDQ          DVVLVWDQFHZDVQHHGHG%HFDXVHRIWKHLQIRUPDWLRQWKH\KDG
ZDVSDUDQRLGDQGWKDWKLVPHQWDOFRQGLWLRQDQGXQSUHGLFWDEOH            UHFHLYHGUHJDUGLQJsRKQ/HNDQjVSRVVLEOHYLROHQWUHDFWLRQWR
EHKDYLRUZHUHPDMRUIDFWRUVWRFRQWHQGZLWKLQUHJDUGWRWKH            SROLFHRIILFHUV6RODUDGYLVHG3X]HOODWRZHDUFLYLOLDQFORWKHV
HQWLUHLQFLGHQW,QVSLWHRIWKLVNQRZOHGJHKHGLGQRWWDNH           UDWKHUWKDQDSROLFHXQLIRUP6FKQHOOZDVDOUHDG\ZHDULQJ
DGYDQWDJHRIWKHDGYLFHRIPHQWDOKHDOWKSURIHVVLRQDOVZKR              FLYLOLDQFORWKHV
ZHUH SUHVHQW DW WKH VFHQH   ,Q DGGLWLRQ &KLHI %HJOH\ ZDV
VSHFLILFDOO\ WROG WKDW WKH XVH RI WHDU JDV FRXOG UHVXOW LQ      6FKQHOO DQG 3X]HOOD GURYH WR WKH /HNDQ UHVLGHQFH LQ DQ
                                                                        XQPDUNHGFDUSDUNHGDQGZDONHGXSWRDVPDOOSRUFKE\WKH
                                                                        IURQWGRRU6FKQHOONQRFNHGRQWKHRXWHUVWRUPGRRUZKLFK
     (ZROVNLY&LW\RI%UXQVZLFNHWDO            1R       1R           (ZROVNLY&LW\RI%UXQVZLFNHWDO        

ZDVLQIURQWRIWKHLQWHULRUGRRUDQGsRKQ/HNDQRSHQHGWKH                 %H\HU RUGHUHG WKLV YHKLFOH WR WKH VFHQH ZLWKRXW
LQWHULRUGRRU7KHRIILFHUVGLGQRWLGHQWLI\WKHPVHOYHVDQG              LQIRUPLQJKLVFKLHIQHJRWLDWRU6HUJHDQW6RODU7KXVWKH
3X]HOODDVNHGWRVSHDNWR0UV/HNDQ7KHRIILFHUVFRXOGQRW             YHKLFOH DSSHDUHG RQ WKH VFHQH ZKLOH 6RODU ZDV VWLOO
KHDU0U/HNDQjVUHVSRQVH3X]HOODDVNHGKLPWRRSHQWKH                 DWWHPSWLQJ WR QHJRWLDWH D SHDFHIXO UHVROXWLRQ RI WKH
VWRUPGRRUVRWKH\FRXOGKHDUKLP EXW0U/HNDQGLGQRW                 VWDQGRII7KLVFRXOGRQO\FRQILUP0U/HNDQ
VSDUDQRLG
RSHQ WKH GRRU  ,QVWHDG KH ZHQW WR D VPDOO QHDUE\ RSHQ        VXVSLFLRQWKDWWKHSROLFHZHUHRXWWRJHWKLPDQGWKDWKH
ZLQGRZDQGVDLGWKDWWKHRIILFHUVFRXOGKHDUKLPWKURXJKWKH              FRXOGQRWWUXVWWKHP$OWKRXJKWKHYHKLFOH
VORXGVSHDNHU
ZLQGRZ:KHQ3X]HOODDJDLQDVNHGWRVSHDNWR0UV/HNDQ                 RUGHUHG0U/HNDQWRSLFNXSWKHWHOHSKRQHRUFRPHRXW
0U/HNDQGLGQRWUHVSRQGDQGDWRQHSRLQWKHVWDUWHGWRVLQJ            RI WKH KRXVH WKH SKRQH OLQH KDG EHHQ GLVFRQQHFWHG 
WKH6WDU6SDQJOHG%DQQHU                                                 IXUWKHUUHLQIRUFLQJ0U/HNDQ
VSDUDQRLD$QGZKLOHDQ
                                                                          DUPRUHGYHKLFOHFLUFOLQJDKRPHIORRGLQJLWZLWKOLJKW
   3X]HOODWKHQWRRNRXWKLVSROLFHEDGJHDQGLGHQWLILFDWLRQ              DQGFDYLQJWKHZDOOVLQPLJKWFDMROHDVDQHSHUVRQLQWR
FDUG DQG KHOG WKHP XS WR WKH RSHQ ZLQGRZ  +H WROG 0U        VXEPLVVLRQWRSROLFHDXWKRULW\WKLVVWUDWHJ\ZDVULVNLHU
/HNDQWKDWKHZDVDSROLFHRIILFHUDQGWKDWKHQHHGHGWRVSHDN            ZLWKDQXQVWDEOHSHUVRQVXFKDV0U/HNDQ
WR0UV/HNDQ0U/HNDQLPPHGLDWHO\PRYHGDZD\IURPWKH
ZLQGRZ DQG VODPPHG WKH IURQW GRRU  3X]HOOD SXOOHG WKH           ,QDGGLWLRQWKHUHSRUWRI:LOOLDP&DOOLVLQUHJDUGWRKLV
VWRUPGRRURSHQDQGWULHGWRRSHQWKHIURQWGRRUEXWLWZDV            LQWHUYLHZZLWK&KLHI%H\HULQGLFDWHVWKDWWKHHOHFWULFSRZHU
ORFNHG3X]HOODWKHQNLFNHGWKHGRRUXQWLOLWILQDOO\RSHQHG          WRWKH/HNDQKRPHZDVFXWRIImWRPDQLSXODWH0U/HNDQjV
3X]HOOD HQWHUHG WKH KRXVH DQG ZDV VKRW E\ 0U /HNDQ           HQYLURQPHQWlDQGmWKHODFNRISRZHUDOORZHGWKHSROLFHWR
3X]HOODDQG6FKQHOOUHWUHDWHGIURPWKHKRPHDQGFDOOHGIRU              FRQWUROWKHDUHDl0U/HNDQjVDFFHVVWRWKHRXWVLGHZDVDOVR
DVVLVWDQFH3X]HOODZDVWKHQUHPRYHGIURPWKHVFHQH                   UHVWULFWHGE\RSHQWHOHSKRQHOLQHVEHWZHHQWKHQHJRWLDWRUVDQG
                                                                        WKH /HNDQ UHVLGHQFH   $FFRUGLQJ WR &DOOLVj UHSRUW LW ZDV
   7KH RIILFHUV FRQWDFWHG %UXQVZLFN 3ROLFH &KLHI 3DWULFN          &KLHI%H\HUjVEHOLHIWKDWXVHRIWKHDUPRUHGYHKLFOHZRXOG
%H\HU DQG LQIRUPHG KLP RI WKH HYHQWV DW WKH /HNDQ KRPH       VKRZ 0U /HNDQ mHQRXJK SRWHQWLDO IRUFH WR JHW KLP WR
%H\HU FRQWDFWHG WKH RIILFHU LQ FKDUJH RI WKH (PHUJHQF\          VXUUHQGHUl DQG IRUFH ZDV DOVR VKRZQ E\ WKH PDQ\ DUPHG
5HVSRQVH7HDPm(57l6HUJHDQW0F'HUPRWWDQGWKHWZR                  SROLFHRIILFHUVZKRZHUHPHPEHUVRIWKH6:$7WHDPVWKDW
ZHQWWRWKHVFHQH%H\HUHVWDEOLVKHGSHULPHWHUVDURXQGWKH             VXUURXQGHGWKH/HNDQKRPH
/HNDQKRPHHYDFXDWHGQHLJKERULQJUHVLGHQWVDQGPRELOL]HG
WKH(57&KLHI%H\HULQVWUXFWHG6HUJHDQW6RODUZKRZDV                  &RQVWUXLQJ WKH IDFWV LQ D OLJKW PRVW IDYRUDEOH WR WKH
WUDLQHGLQKRVWDJHQHJRWLDWLRQWRUHWXUQWRWKHSROLFHVWDWLRQ         SODLQWLIIV LW LV REYLRXV WKDW DOO WKH PHPEHUV RI WKH /HNDQ
DQGDVVXPHWKHUROHRIFKLHIQHJRWLDWRU                                IDPLO\ZHUHDIIHFWHGE\WKHDFWLRQVRIWKHSROLFHLQFRQWUROOLQJ
                                                                        FRPPXQLFDWLRQV WR WKH KRPH LQ WKH FRQWURO RI WKHLU
   ,QWKHPHDQWLPH0UV/HNDQFDOOHGWKH%UXQVZLFN3ROLFH              HQYLURQPHQWE\FXWWLQJRIIWKHSRZHUWRWKHKRPHZKLFKOHIW
'HSDUWPHQWWRUHSRUWWKDWKHUGRRUKDGEHHQEURNHQGRZQDQG             WKHPZLWKRXWKHDWDQGHOHFWULFLW\E\WKHLQWURGXFWLRQRIWHDU
WKDWVRPHRQHKDGEHHQVKRW7KHSROLFHWUDQVIHUUHGWKHFDOOWR         JDVLQWRWKHLUKRPHE\RIILFHUVZKRXVHGIHUUHWURXQGVILUHG
6HUJHDQW6RODU6RODUDVNHGWRFDOOKHUEDFNRQDQRWKHUOLQH          IURPVKRWJXQVDQGE\WKHVKRZRIIRUFHDVDUPHGRIILFHUV
:KHQ6RODUFDOOHGEDFN0U/HNDQDQVZHUHGWKHSKRQH+H               ZLWK WKH DUPRUHG YHKLFOH VXUURXQGHG  WKHLU KRPH
WROG6RODUWKDWmWKHILUVWRIILFHUZDVOXFN\lDQGWKDWKHKDGKLV       &RQVHTXHQWO\,EHOLHYHWKH/HNDQVZHUHLQWKHFXVWRG\RIWKH
m>ULIOH@ORDGHGDQGUHDG\WRJRlsRLQW$SSHQGL[ms$l         GHIHQGDQW RIILFHUV LQ WKH VHQVH WKDW WKH RIILFHUV KDG
DW  6RODU 'HS DW   6RODU DVNHG /HNDQ LI KH ZRXOG   DIILUPDWLYHO\DFWHGWRGHSULYHDOORIWKHPRIWKHLUOLEHUW\
    (ZROVNLY&LW\RI%UXQVZLFNHWDO           1R       1R          (ZROVNLY&LW\RI%UXQVZLFNHWDO         

  , DOVR EHOLHYH WKDW WKH SODLQWLIIVj H[FHVVLYH IRUFH FODLPV   FRPHRXWRIWKHKRXVHDQGDVVXUHG/HNDQWKDWWKHSROLFHGLG
VKRXOGKDYHJRQHWRWKHMXU\,QWKLVFDVHWKHGLVWULFWFRXUW        QRWZDQWDQ\ERG\WRJHWKXUW0U/HNDQWROG6RODUWKDWKLV
FRQFOXGHGWKDWWKHUHZDVQRVHL]XUHEHFDXVH&KLHI%H\HUGLG            KRPHZDVKLVFDVWOHDQGQRERG\ZDVJRLQJWRWDNHKLPRU
QRWLQWHQGWRDUUHVW0UV/HNDQRUKHUVRQDQGEHFDXVH0U            DQ\WKLQJHOVHRXWRILW&KLHI%H\HUODWHUDVNHG6RODUWRUHWXUQ
/HNDQ EDUULFDGHG KLPVHOI LQ KLV RZQ KRPH  +RZHYHU LQ        WR WKH /HNDQ KRXVH  $IWHU DUULYLQJ DW WKH VFHQH 6RODU
6WHPOHUY&LW\RI)ORUHQFH)GWK&LUFHUW        FRQWLQXHGWU\LQJWRQHJRWLDWHZLWK0U/HNDQE\WHOHSKRQH
GHQLHG86&RQQL%ODFNZDVNLOOHGLQD             0U /HNDQ PDGH QR GHPDQGV DQG EHFDPH LQFUHDVLQJO\
FDUDFFLGHQWDIWHURIILFHUVWKUHDWHQHGWRDUUHVWKHULIVKHGLG        LQFRKHUHQW DV WKH VWDQGRII SURJUHVVHG  $W RQH SRLQW 0U
QRWUHWXUQWRWKHYHKLFOHRIKHUDEXVLYHLQWR[LFDWHGER\IULHQG       /HNDQDVNHGWRVSHDNZLWK6HQDWRU(GZDUG.HQQHG\
7KH IDWDO DFFLGHQW RFFXUUHG ILYH PLQXWHV DIWHU RIILFHUV
UHWXUQHGKHUWRKHUER\IULHQGjVYHKLFOHDQGKHUER\IULHQGOHIW          ,QWKHPHDQWLPHUHODWLYHVRIWKH/HNDQIDPLO\ZHQWWRWKH
WKHVFHQH,Q6WHPOHUWKLVFRXUWFRQFOXGHGWKDW%ODFNZDVLQ          %UXQVZLFNSROLFHVWDWLRQWRRIIHUDVVLVWDQFH%HYHUO\/HNDQjV
WKHFXVWRG\RIWKHGHIHQGDQWRIILFHUVLQWKHVHQVHWKDWWKH\KDG       PRWKHUDQGVLVWHUSOHDGHGZLWKWKHSROLFHWR EHDOORZHGWR
DIILUPDWLYHO\DFWHGWRGHSULYHKHURIKHUOLEHUW\UDWKHUWKDQ         VSHDN ZLWK 0U /HNDQ WR FDOP WKH VLWXDWLRQ  7KH SROLFH
PHUHO\QHJOLJHQWO\UHIXVLQJWRDFWWRSURWHFWKHU                  KRZHYHUUHIXVHGWRDOORZDQ\IDPLO\PHPEHUVWRVSHDNZLWK
                                                                       0U/HNDQ
   ,QUHJDUGWRWKHPDQQHULQZKLFK&KLHI%H\HUFRQGXFWHGWKH
VWDQGRIIWKHGLVWULFWFRXUWVXPPDUL]HVLQIRRWQRWHVDQG            %HWZHHQ  DQG  SP &KLHI %H\HU UHTXHVWHG DQ
RIWKH0HPRUDQGXPRI2SLQLRQDQG2UGHU                                DVVHVVPHQWIURPsDPHV3RO]QHUDPHQWDOKHDOWKSURIHVVLRQDO
                                                                       DW WKH VFHQH  3RO]QHU KDG EHHQ PRQLWRULQJ FRQYHUVDWLRQV
   $UPHGWDFWLFDOVROXWLRQVDUHUDGLFDOVWUDWHJLHVXVHG              EHWZHHQ6HUJHDQW6RODUDQG0U/HNDQ3RO]QHUWROG&KLHI
  RQO\DVDODVWUHVRUWLQKRVWDJHVLWXDWLRQV8VHRILWKHUH         %H\HUWKDWWKHWKUHDWOHYHOZDVKLJK&KLHI%H\HUWKHQDVNHG
  ZDVSUHPDWXUH3ROLFH&KLHI%H\HUFRPPHQFHGWKHSODQ                LIWKHRIILFHUVDWWKHVFHQHKDGDUHDVRQQRWWRSXUVXHDWDFWLFDO
  RQO\ILYHKRXUVDIWHUWKHVWDQGRIIEHJDQ7KHUHZDVVWLOO           VROXWLRQWRWKHVWDQGRII%H\HUDVNHGIRULQSXWIURPDQRWKHU
  KRSHIRUDSHDFHIXOUHVROXWLRQDWWKLVWLPH0U/HNDQ              SV\FKRORJLVW RQ WKH VFHQH ZKR UHVSRQGHG E\ DVNLQJ
  KDGFRPSOHWHO\UHWUHDWHGIURPFRQIURQWDWLRQ7KHUHZDV              UKHWRULFDOO\ZK\%H\HUZDVFRQVLGHULQJDWDFWLFDODVVDXOW
  QR HYLGHQFH WKDW KH KDUPHG KLV IDPLO\ RU LQWHQGHG WR
  KDUPWKHPDQGKHZDVQRWVKRRWLQJDWSROLFHRIILFHUV                 8OWLPDWHO\&KLHI%H\HUGHFLGHGWRRUGHUDQDUPHGHQWU\
  7KHUHZDVLQVXIILFLHQWPDQSRZHUWRFDUU\RXWWKHSODQ                LQWRWKH/HNDQKRXVH3XUVXDQWWRWKHDVVDXOWSODQWKH(57
  VXFFHVVIXOO\DWWKLVWLPHDQGWKHGHIHQGDQWVGLGQRW\HW            WHDPWKUHZLQFHQGLDU\GHYLFHVLQWRWKHKRXVHZKLOHXVLQJD
  KDYH WKH HTXLSPHQW WR GHWHUPLQH WKH ORFDWLRQ RI WKH          EDWWHULQJUDPWREUHDNRSHQWKHIURQWGRRU7HDUJDVZDVDOVR
  UHVLGHQWV,QDGGLWLRQWKHSODQKDGDKLJKSUREDELOLW\RI          XVHG GXULQJ WKH DVVDXOW  7KH SODQ IDLOHG ZKHQ RQH RI WKH
  IDLOXUH,W FDOOHGIRURIILFHUVWRUXQWKURXJKWKHKRXVH           LQFHQGLDU\GHYLFHVLJQLWHGDILUHLQWKHHQWUDQFHKDOODQGWKH
  ZLWKORDGHGZHDSRQVORRNLQJIRU0U/HNDQDIWHUFUHDWLQJ             OHDGRIILFHUVWRSSHGWRSXWRXWWKHILUH7KHSROLFHORVWWKH
  DGLYHUVLRQWKURXJKWKHXVHRILQFHQGLDU\GHYLFHV,WLV            LQLWLDWLYHDVDUHVXOW0U/HNDQH[FKDQJHGJXQILUHZLWKWKH
  XQFOHDUZKDWWKHSROLFHZRXOGKDYHGRQHKDG0U/HNDQ                SROLFH DQG WZR PRUH RIILFHUV ZHUH LQMXUHG  7KH SROLFH
  EHHQ GLVFRYHUHG LQ FORVH SUR[LPLW\ ZLWK KLV IDPLO\           XOWLPDWHO\UHWUHDWHGDQGWKHVWDQGRIIFRQWLQXHG
  $OVRWKHLQFHQGLDU\GHYLFHVVHWDILUHLQWKHKRXVHZKLFK
  WKHRIILFHUVWKHQKDGWRVWRSWRSXWRXW                              $WDSSUR[LPDWHO\ DP6RODUVSRNHDJDLQZLWK0U
                                                                       /HNDQDQGDVNHGWRWDONWR0U/HNDQjVVRQs70U/HNDQ
                                                                       SXWs7RQWKHWHOHSKRQHs7WROG6RODUWKDWKHZDVILQHDQG
     (ZROVNLY&LW\RI%UXQVZLFNHWDO          1R      1R          (ZROVNLY&LW\RI%UXQVZLFNHWDO       

WKDWKHZDVVFDUHG0U/HNDQWKHQWRRNWKHWHOHSKRQHDQG             /HNDQ GLG QRW ZDQW DQ\WKLQJ WKH DXWKRULWLHV FRXOG
DVNHGWRVSHDNWRKLVFRXVLQZKRLVDSULHVW6RODUWROG0U         SURYLGH+HDOUHDG\KDGZKDWKHZDQWHGKLVIDPLO\
/HNDQWKDWKHFRXOGVSHDNWRKLVFRXVLQLIKHOHIWWKHKRXVH          DQG KH ZDV DOUHDG\ LQ KLV RZQ KRPH  HPSKDVLV LQ
0U/HNDQVDLGm>W@KDWjVQRWSDUWRIWKHVFHQDULRlDQGKXQJ            RULJLQDO
XSs$DW6RODU$IIDW6RODUFRQVXOWHGZLWKDQRWKHU
QHJRWLDWRUIURPWKH6RXWKZHVW(QIRUFHPHQW%XUHDXDQGWKH\           &DOOLVjDOVRFRQFOXGHVWKDWWKHUHZHUHDQXPEHURIRSWLRQV
FRQFOXGHGWKDWWKHUHTXHVWWRVSHDNWRDSULHVWZDVDGDQJHU         RSHQ WR WKH GHIHQGDQWV ZKLFK ZRXOG DOVR QHJDWH H[LJHQW
VLJQ LQGLFDWLQJ WKDW 0U /HNDQ PLJKW EH FRQWHPSODWLQJ D      FLUFXPVWDQFHV
PXUGHUVXLFLGHULWXDO
                                                                       +RZHYHU DIWHU UHYLHZLQJ WKLV PDWWHU , FDQjW KHOS EXW
   6KRUWO\WKHUHDIWHUDQDUPRUHGYHKLFOHIURPWKH&OHYHODQG           ZRQGHULIWKHUHZDVQRWDEHWWHUZD\RIFRQGXFWLQJWKH
3ROLFH'HSDUWPHQWDUULYHGRQWKHVFHQH&KLHI%H\HURUGHUHG           mZHOIDUH FKHFNl DW WKH /HNDQ UHVLGHQFH  3HUKDSV WKH
WKH DUPRUHG YHKLFOH WR GULYH RQWR WKH IURQW ODZQ DQG          SROLFH FRXOG KDYH DVNHG D UHODWLYH RI %HYHUO\ /HNDQjV
LOOXPLQDWH WKH /HNDQ KRXVH  2IILFHUV LQVLGH WKH YHKLFOH       WHOHSKRQH KHU DW KRPH DQG RQFH VKH ZDV RQ WKH
DWWHPSWHG WR FRPPXQLFDWH ZLWK 0U /HNDQ RYHU D                  WHOHSKRQHWKHSROLFHFRXOGVSHDNWRKHUWRYHULI\WKDWVKH
ORXGVSHDNHUEXWUHFHLYHGQRUHVSRQVH/DWHUWKDWPRUQLQJ            DQG KHU VRQ ZHUH ZHOO  7KH LGHQWLW\ DQG WHOHSKRQH
WKHDUPRUHGYHKLFOHUDPPHGWKURXJKWKHOLYLQJURRPZDOODQG            QXPEHUVRI0UV/HNDQjVUHODWLYHVZDVDYDLODEOHWRWKH
LQMHFWHGPRUHWHDUJDVLQWRWKHKRXVHLQKRSHVRIHOLFLWLQJD          DXWKRULWLHV  7KH YLVLWLQJ QXUVHV RUJDQL]DWLRQ WKDW ZDV
UHVSRQVHIURP0U/HNDQ%HWZHHQDQGDPWKH              FDULQJ IRU 0UV /HNDQ WHOHSKRQHG KHU PRWKHU +HOHQ
SROLFHKHDUGJXQVKRWVFRPLQJIURPLQVLGHWKHUHVLGHQFH$W            (ZROVNLRQWKHPRUQLQJRI0DUFKWRDGYLVHKHUWKDW
DP&KLHI%H\HURUGHUHGWKHYHKLFOHWRSXVKWKURXJK            %HYHUO\ZDVUHTXHVWLQJWRJRWRDQXUVLQJKRPH3HUKDSV
WKHJDUDJHGRRU7KHUHZDVVWLOOQRUHVSRQVHIURP0U/HNDQ          IXUWKHULQYHVWLJDWLRQE\WKHSROLFHFRXOGKDYHGHWHUPLQHG
)LQDOO\ WKH SROLFH FRQGXFWHG DQRWKHU WDFWLFDO UHVFXH            WKH/HNDQjVKHDOWKVWDWXVDQGDOORZHGWKHFRQIURQWDWLRQ
RSHUDWLRQ  $ URRPWRURRP VHDUFK RI WKH UHVLGHQFH ZDV         EHWZHHQWKHSROLFHDQGsRKQ/HNDQWREHDYRLGHGXQWLO
FRQGXFWHG'XULQJWKHVHDUFKWKHRIILFHUVIRXQGWKHERGLHV           VRPHWKLQJ FRXOG EH GRQH DERXW sRKQjV SRVVHVVLRQ RI
RIsRKQ/HNDQDQGs7/HNDQsRKQ/HNDQKDGVKRWKLVVRQ             ILUHDUPVLQKLVPHQWDOFRQGLWLRQ
DQGWKHQNLOOHGKLPVHOI
                                                                        $OWKRXJK WKH PDMRULW\ ILQGV WKDW WKHUH ZDV TXDOLILHG
  7KH GHWDLOV RI WKLV VWDQGRII DUH ZHOO VXPPDUL]HG LQ WKH   LPPXQLW\ IRU WKH RIILFHUV LQ WKLV FDVH LQ WKH XQSXEOLVKHG
VL[W\VHYHQSDJHUHSRUWRI:LOOLDP3&DOOLVZKRZDVKLUHG          RSLQLRQ RI &DUSHQWHU Y /D[WRQ  )G   :/
E\ WKH %UXQVZLFN &LW\ &RXQFLO WR FRQGXFW DQ LQGHSHQGHQW      WK7HQQLWZDVKHOGWKDWLIWKHIDFWVVXUURXQGLQJ
UHYLHZRIWKHLQFLGHQW0U&DOOLVZKRZDVDIRUPHU )%,           WKHH[LVWHQFHRIH[LJHQWFLUFXPVWDQFHVDUHLQGLVSXWHDQGD
6SHFLDO$JHQW+RVWDJHQHJRWLDWRUQRWHVLQKLVm5HYLHZRI            UDWLRQDOMXU\FRXOGGUDZPRUH WKDQRQHLQIHUHQFHIURPWKH
,QFLGHQW,QYROYLQJsRKQ0/HNDQ%UXQVZLFN2KLR0DUFK             FRQIOLFWLQJIDFWVWKHUHDUHDOVRJHQXLQHLVVXHVRIPDWHULDOIDFW
$SULO   6XPPDU\l WKDW KH KDG WKH EHQHILW RI      UHJDUGLQJZKHWKHURUQRWWKHRIILFHUVDUHHQWLWOHGWRTXDOLILHG
UHYLHZLQJ WKH DOPRVW IRXUKXQGUHGSDJH UHSRUW DERXW WKH        LPPXQLW\7KHUHIRUH,EHOLHYHVXPPDU\MXGJPHQWLQUHJDUG
LQFLGHQW ZKLFK ZDV SUHSDUHG E\ WKH %UXQVZLFN 3ROLFH           WRD)RXUWK$PHQGPHQWYLRODWLRQZDVLQDSSURSULDWHDQGWKH
'HSDUWPHQW+HDOVRKDGWKHOLPLWHGFRRSHUDWLRQRIWKHSROLFH       LVVXHV RI H[LJHQW FLUFXPVWDQFHV DQG TXDOLILHG LPPXQLW\
GHSDUWPHQWDQGKHSHUVRQDOO\LQWHUYLHZHGQXPHURXVRIILFHUV          VKRXOGKDYHEHHQVXEPLWWHGWRDMXU\
DQGLQGLYLGXDOVLQFOXGLQJ0UV/HNDQDERXWWKHLQFLGHQW
    (ZROVNLY&LW\RI%UXQVZLFNHWDO             1R        1R           (ZROVNLY&LW\RI%UXQVZLFNHWDO             

WKDW JLYHQ WKH HYLGHQFH RQ WKH PDWWHU WKHUH LV URRP IRU D     ,QKLVVXPPDU\&DOOLVDGGUHVVHGWKHmWDFWLFDORSHUDWLRQVl
GLIIHUHQFHRIRSLQLRQl,GDW,QWKHFDVHEHIRUHXVWKH          ZKLFKWRRNSODFHGXULQJWKHVWDQGRIIDQGFRQFOXGHG
GLVWULFW FRXUW H[SUHVVO\ UHFRJQL]HG DQ H[LVWLQJ PDWHULDO
GLVSXWHRIIDFWLQUHJDUGWRH[LJHQWFLUFXPVWDQFHVDVIROORZV              ,QVXPPDU\DV,KDYHVHWIRUWKDERYH,GRQjWEHOLHYHWKLV
                                                                            PDWWHUFRXOGKDYHEHHQUHVROYHGWKURXJKWKHWUDGLWLRQDO
  'HIHQGDQWVFRQWHQGWKDWH[LJHQWFLUFXPVWDQFHVMXVWLILHG                   IRUPRIKRVWDJHQHJRWLDWLRQV,EHOLHYHWKDWsRKQ/HNDQ
  WKH ZDUUDQWOHVV HQWU\ EHFDXVH 0U /HNDQ SUHVHQWHG DQ               VHWRXWRQDSDWKRIVHOIGHVWUXFWLRQZKHQKHVKRW2IILFHU
  LPPHGLDWHWKUHDWWRKLVIDPLO\3ODLQWLIIVGLVDJUHHRQWKH               3X]HOOD RQ WKDW )ULGD\ DIWHUQRRQ  , EHOLHYH WKDW sRKQ
  EDVLVWKDWSULRUWRYLVLWLQJWKHKRPHGHIHQGDQWVDGPLWWHG               /HNDQZDVZLOOLQJWRGLHmSURWHFWLQJlKLVKRPHDQGKLV
  WKHUHZDVQRSUREDEOHFDXVHWRDUUHVW0U/HNDQDQGQR                    VRQ DQG EHFDXVH RI KLV PHQWDO GLVRUGHU , WKLQN KH
  H[LJHQW FLUFXPVWDQFHV H[LVWHG  )XUWKHU WKH RIILFHUV               EHOLHYHGKHZDVGRLQJMXVWWKDWSURWHFWLQJKLPVHOIKLV
  QHYHUVDZDFULPHEHLQJFRPPLWWHGQRUGLGWKH\KHDU                      KRPHDQGKLVIDPLO\
  0U/HNDQWKUHDWHQDQ\RQH
                                                                          s$DW&DOOLV5HSRUWDW&DOOLVQRWHGWKDWKHKDG
%DVHGXSRQWKLVPDWHULDOGLVSXWHRIIDFWWKHUHLVURRPIRUD             WKUHHFULWLFLVPVLQUHJDUGWRWKHWDFWLFDORSHUDWLRQV
GLIIHUHQFHRIRSLQLRQRQWKHLVVXHRIH[LJHQWFLUFXPVWDQFHV
DQGWKLVLVVXHZDVIRUDMXU\                                               ,EHOLHYHWKHWDFWLFDOHQWU\LQWRWKH/HNDQUHVLGHQFH
                                                                                 ZDVFRQGXFWHGWRRVRRQLQWRWKHVWDQGRII
   7KLV GLVSXWH RI IDFW LV IXUWKHU EROVWHUHG E\ WKH UHSRUW RI        ,EHOLHYHLWZDVDPLVWDNHWRWU\WRXVHWKHDUPRUHG
:LOOLDP&DOOLVZKLFKLVVLJQLILFDQWEHFDXVHKHZDVKLUHGE\                      YHKLFOHWRRYHUZKHOPsRKQ/HNDQLQWRVXUUHQGHULQJ
WKHGHIHQGDQW&LW\RI%UXQVZLFNWRFRQGXFWDQLQGHSHQGHQW                      , EHOLHYH LW ZDV D PLVWDNH WR LQWHUUXSW WKH WDFWLFDO
UHYLHZRIWKHLQFLGHQW,QDGGUHVVLQJH[LJHQWFLUFXPVWDQFHV                    HQWU\WRWU\WRGHDOZLWKWKHILUHLQWKHIURQWGRRU
DOWKRXJKWKHPDMRULW\ILQGVWKDWWKLVZDVDKRVWDJHVLWXDWLRQ
LQKLVUHSRUWSUHSDUHGIRUWKHGHIHQGDQWV&DOOLVjH[SODLQVZK\           s$DW
WKLVLQFLGHQWGLGQRWLQYROYHDKRVWDJHVLWXDWLRQ
                                                                             7KHUHFRUGDOVRLQFOXGHVWKHWKLUWHHQSDJHUHSRUWRIsDPHV
  8SRQUHYLHZLQJWKLVVLWXDWLRQ,DPRIWKHRSLQLRQWKDW                 s)\IH3K'ZKRZDVUHWDLQHGDVSODLQWLIIVjH[SHUW,QKLV
  WKH/HNDQPDWWHUZDVQRWDKRVWDJHVLWXDWLRQ$KRVWDJH                UHSRUW'U)\IHQRWHVWKDWKHUHYLHZHGSROLFHLQYHVWLJDWLYH
  LV GHILQHG DV D SHUVRQ KHOG DQG WKUHDWHQHG E\ D                UHSRUWVWKHUHSRUWRI:LOOLDP&DOOLVDQGWKHGHSRVLWLRQVRI
  VXEMHFWWRIRUFHWKHIXOILOOPHQWRIFHUWDLQVXEVWDQWLYH                 VL[RIILFHUVZKRZHUHLQYROYHGLQWKHLQFLGHQW  +H DJUHHV
  GHPDQGVRQDWKLUGSDUW\,QWKLVVLWXDWLRQWKHUHZDV                 ZLWKPDQ\RIWKHVWDWHPHQWVDQGFRQFOXVLRQVFRQWDLQHGLQWKH
  QRWDWKUHDWE\0U/HNDQWRKDUP0UV/HNDQRUWKHLU                   &DOOLVVXPPDU\DQGQRWHVQXPHURXVYLRODWLRQVRIJHQHUDOO\
  VRQQRUZDVWKHUHDVXEVWDQWLYHGHPDQGE\0U/HNDQ                   DFFHSWHGSROLFHFXVWRPDQGSUDFWLFHLQUHJDUGWRWKHLQLWLDO
  7KHUHIRUH LW DSSHDUV WKDW %HYHUO\ /HNDQ DQG KHU VRQ           HQWU\ RI WKH /HNDQ KRPH DQG WKH UHVXOWLQJ VWDQGRII  ,Q
  sRKQ 7 /HNDQ ZHUH QRW DFWXDOO\ KRVWDJHV EXW ZHUH             DGGLWLRQKLVUHSRUWGHWDLOVWKHLQDGHTXDF\RIWKH%UXQVZLFN
  YLFWLPV RI 0U /HNDQ
V DFWLRQV  7KH\ ZHUH LQ WKH              3ROLFH 'HSDUWPHQWjV SROLFLHV DQG WUDLQLQJ UHJDUGLQJ
  UHVLGHQFHZKHQ0U/HNDQFRPPLWWHGKLVFULPLQDODFW                     HQFRXQWHUVZLWKHPRWLRQDOO\GLVWXUEHGSHUVRQV
  DQGKHDIIRUGHGWKHPQRRSSRUWXQLW\WROHDYH
  0DQ\KRVWDJHVLWXDWLRQVLQYROYHDQHJRWLDWLRQSURFHVV
  RUEDUJDLQLQJDSSURDFKoWRPHHWFHUWDLQGHPDQGV,Q
  WKLVVLWXDWLRQWKHUHZHUHQRVXEVWDQWLYHGHPDQGVDV0U
    (ZROVNLY&LW\RI%UXQVZLFNHWDO            1R       1R          (ZROVNLY&LW\RI%UXQVZLFNHWDO       

                        ,,$1$/<6,6                                                         BBBBBBBBBBBBBB
$6WDQGDUGRI5HYLHZ                                                                           ',66(17
                                                                                               BBBBBBBBBBBBBB
   :HUHYLHZWKHGLVWULFWFRXUWjVJUDQWRIVXPPDU\MXGJPHQW
WRWKHGHIHQGDQWRIILFHUVGHQRYR$LNHQY&LW\RI0HPSKLV              7+20$6 *5$< +8// 'LVWULFW sXGJH GLVVHQWLQJ
 )G   WK &LU  FHUW GHQLHG  86     5HVSHFWIXOO\ , GLVVHQW  , EHOLHYH WKH LVVXH RI H[LJHQW
6XPPDU\MXGJPHQWLVSURSHURQO\ZKHQWKHUH                FLUFXPVWDQFHV DQG TXDOLILHG LPPXQLW\ ZHUH LVVXHV IRU WKH
LVQRGLVSXWHDVWRDPDWHULDOTXHVWLRQRIIDFWDQGRQHSDUW\LV        MXU\&LWLQJ2j%ULHQWKHGLVWULFWFRXUWDGGUHVVHGWKHLVVXHRI
HQWLWOHGWRDMXGJPHQWDVDPDWWHURIODZ)(' 5 &,9 3             H[LJHQWFLUFXPVWDQFHVDVIROORZV
F9LHZLQJDOOIDFWVDQGLQIHUHQFHVGUDZQWKHUHIURPLQ
WKH OLJKW PRVW IDYRUDEOH WR WKH QRQPRYDQW WKLV FRXUW WKHQ       ([LJHQWFLUFXPVWDQFHVH[LVWRQO\ZKHUHUHDOLPPHGLDWH
GHWHUPLQHV ZKHWKHU WKH HYLGHQFH SUHVHQWHG LV VXFK WKDW D          DQGVHULRXVFRQVHTXHQFHVZRXOGFHUWDLQO\RFFXUZHUH
UHDVRQDEOHMXU\FRXOGILQGIRUWKDWSDUW\$LNHQ)GDW            D SROLFH RIILFHU WR SRVWSRQH DFWLRQ WR JHW D ZDUUDQW
FLWLQJ0DWVXVKLWD(OHF,QGXV&RY=HQLWK5DGLR&RUS            2
%ULHQ  )G   WK &LU  FLWDWLRQV
86                                                RPLWWHG :HOVK  86 DW  7KH LVVXH WKHQ LV
                                                                          ZKHWKHU0U/HNDQSRVHGDWKUHDWWRKLVIDPLO\WKDWZDV
% 4XDOLILHG ,PPXQLW\ &ODLPV $JDLQVW ,QGLYLGXDO                       ERWKUHDODQGLPPHGLDWH
   2IILFHU'HIHQGDQWV
                                                                          7KLVLVVXHLVSDUWLFXODUO\GLVWXUELQJEHFDXVHRIWKHZD\
   $SSHOODQWjV FODLPV DJDLQVW WKH LQGLYLGXDO RIILFHUV RI WKH       WKH%UXQZLFN>VLF@SROLFHGHSDUWPHQWFKRVHWRKDQGOHWKH
%UXQVZLFN3ROLFH'HSDUWPHQWPXVWEHHYDOXDWHGXQGHUWKH                   
VLWXDWLRQ
 7KH\ VHQW WZR SROLFH RIILFHUV WR WKH KRXVH
IUDPHZRUNRITXDOLILHGLPPXQLW\$FFRUGLQJWRWKHGRFWULQH               SRVLQJDVFLYLOLDQVRQHLQMHDQVDQGDVZHDWVKLUWRQWKH
RI TXDOLILHG LPPXQLW\ mJRYHUQPHQW RIILFLDOV SHUIRUPLQJ              RIIFKDQFHWKDW0U/HNDQDNQRZQSDUDQRLGPLJKWOHW
GLVFUHWLRQDU\IXQFWLRQVJHQHUDOO\DUHVKLHOGHGIURPOLDELOLW\             WKHVHVWUDQJHUVLQWRWDONWRKLVZLIH$VWDEOHSHUVRQ
IRU FLYLO GDPDJHV LQVRIDU DV WKHLU FRQGXFW GRHV QRW YLRODWH      ZRXOGQRWKDYHOHWWKHPLQ7RWKLQNWKHLUFKDQFHVRI
FOHDUO\HVWDEOLVKHGVWDWXWRU\RUFRQVWLWXWLRQDOULJKWVRIZKLFK           HQWU\PLJKWLQFUHDVHDIWHUXQVXFFHVVIXOO\DWWHPSWLQJWR
D UHDVRQDEOH SHUVRQ ZRXOG KDYH NQRZQl  +DUORZ Y                 GHFHLYHKLPDQGWKHQFODLPLQJWREHSROLFHRIILFHUVZDV
)LW]JHUDOG864XDOLILHGLPPXQLW\                 VLPSO\ IRROKDUG\  7KH SROLFH FRXOG KDYH FKRVHQ DQ\
LQYROYHVDWZRVWHSLQTXLU\)LUVWWKHFRXUWPXVWGHWHUPLQH             QXPEHURIRWKHUOHVVFRQIURQWDWLRQDOZD\VWRFKHFNRQ
ZKHWKHUEDVHGXSRQWKHDSSOLFDEOHODZWKHIDFWVYLHZHGLQ               0UV /HNDQ DQG KHU VRQ  $OWKRXJK WKLV SDUWLFXODU
WKH OLJKW PRVW IDYRUDEOH WR WKH SODLQWLIIV VKRZ WKDW D           LQFLGHQWDSSHDUVWRKDYHWULJJHUHGWKHXQIRUWXQDWHVHULHV
FRQVWLWXWLRQDO YLRODWLRQ KDV RFFXUUHG  ,I WKH FRXUW ILQGV D     RI HYHQWV WKDW IROORZHG WKH &RXUW PXVW GHWHUPLQH
FRQVWLWXWLRQDO YLRODWLRQ LW PXVW WKHQ FRQVLGHU ZKHWKHU WKH        ZKHWKHU H[LJHQW FLUFXPVWDQFHV H[LVWHG DW WKH SUHFLVH
YLRODWLRQLQYROYHGmµFOHDUO\HVWDEOLVKHGFRQVWLWXWLRQDOULJKWV            PRPHQWWKHRIILFHUVHQWHUHGWKHKRXVH
RI ZKLFK D UHDVRQDEOH SHUVRQ ZRXOG KDYH NQRZQjl
'LFNHUVRQY0F&OHOODQ)GWK&LU                $OWKRXJKWKHGLVWULFWFRXUWFLWHV2j%ULHQIRUWKHGHILQLWLRQ
TXRWLQJ&KULVWRSKHOY.XNXOLQVN\)GWK&LU          RIH[LJHQWFLUFXPVWDQFHVDQGFRQFOXGHVWKDWWKLVLVDGHFLVLRQ
VHHDOVR6DXFLHUY.DW]866&W              IRU WKH FRXUW 2j%ULHQ DOVR WHDFKHV WKDW ZKHWKHU H[LJHQW
    )RU D ULJKW WR EH FOHDUO\ HVWDEOLVKHG    FLUFXPVWDQFHV H[LVWHG mLV D TXHVWLRQ IRU WKH MXU\ SURYLGHG
m>W@KHFRQWRXUVRIWKHULJKWPXVWEHVXIILFLHQWO\FOHDUWKDWD
    (ZROVNLY&LW\RI%UXQVZLFNHWDO          1R       1R           (ZROVNLY&LW\RI%UXQVZLFNHWDO        

EHOLHYH WKDW WKH $SSHOODQWjV YHUVLRQ RI WKH IDFWV GRHV QRW   UHDVRQDEOHRIILFLDOZRXOGXQGHUVWDQGWKDWZKDWKHLVGRLQJ
HVWDEOLVKFXOSDELOLW\ULVLQJDERYHQHJOLJHQFH7KHUHIRUHZH         YLRODWHV WKDW ULJKWl 5XVVR Y &LW\ RI &LQFLQQDWL  )G
DIILUP WKH GLVWULFW FRXUWjV GHFLVLRQ WR DZDUG VXPPDU\          WK&LUTXRWLQJ$QGHUVRQY&UHLJKWRQ
MXGJPHQWDVWRWKH$SSHOODQWjVZURQJIXOGHDWKFODLPV                 86m$OWKRXJKLWQHHGQRWEHWKHFDVH
                                                                      WKDW µWKH YHU\ DFWLRQ LQ TXHVWLRQ KDV EHHQ SUHYLRXVO\ KHOG
                     ,,,&21&/86,21                                 XQODZIXOLQOLJKWRISUHH[LVWLQJODZWKHXQODZIXOQHVV
                                                                      PXVWEHDSSDUHQWjl,GTXRWLQJ$QGHUVRQ86DW
  ,QVXPZH$)),50WKHGLVWULFWFRXUWjVJUDQWRIVXPPDU\             :KHWKHU TXDOLILHG LPPXQLW\ LV DSSOLFDEOH WR DQ RIILFLDOjV
MXGJPHQWWRWKH'HIHQGDQWV$SSHOOHHVRQDOOFODLPVDVVHUWHG           DFWLRQVLVDTXHVWLRQRIODZWKDWLVUHYLHZHGGHQRYR6HH
E\WKH3ODLQWLII$SSHOODQW                                           'LFNHUVRQ)GDW
                                                                        :DUUDQWOHVV(QWU\
                                                                         7XUQLQJ ILUVW WR WKH $SSHOODQWjV ZDUUDQWOHVV HQWU\ FODLP
                                                                      DJDLQVW 2IILFHUV 3X]HOOD DQG 6FKQHOO ZH FRQFOXGH WKDW WKH
                                                                      GLVWULFW FRXUW FRUUHFWO\ IRXQG WKDW H[LJHQW FLUFXPVWDQFHV
                                                                      H[LVWHGWRMXVWLI\DZDUUDQWOHVVHQWU\$SROLFHRIILFHUjVHQWU\
                                                                      LQWR D KRPH ZLWKRXW D ZDUUDQW LV SUHVXPSWLYHO\
                                                                      XQFRQVWLWXWLRQDOXQGHUWKH)RXUWK$PHQGPHQW2j%ULHQY
                                                                      &LW\ RI *UDQG 5DSLGV  )G   WK &LU 
                                                                      :DUUDQWOHVVHQWULHVDUHSHUPLWWHGKRZHYHUZKHUHmH[LJHQW
                                                                      FLUFXPVWDQFHVlH[LVW+DQFRFNY'RGVRQ)G
                                                                       WK &LU   ([LJHQW FLUFXPVWDQFHV H[LVW ZKHUH
                                                                      WKHUH DUH mµUHDO LPPHGLDWH DQG VHULRXV FRQVHTXHQFHVj WKDW
                                                                      ZRXOG FHUWDLQO\ RFFXU ZHUH D SROLFH RIILFHU WR µSRVWSRQH>@
                                                                      DFWLRQWRJHWDZDUUDQWjl2j%ULHQ)GDWTXRWLQJ
                                                                      :HOVKY:LVFRQVLQ867KHUHOHYDQW
                                                                      LQTXLU\ LV ZKHWKHU WKH IDFWV DUH VXFK WKDW DQ REMHFWLYHO\
                                                                      UHDVRQDEOHRIILFHUFRQIURQWHGZLWKWKH VDPHFLUFXPVWDQFHV
                                                                      FRXOGUHDVRQDEO\EHOLHYHWKDWH[LJHQWFLUFXPVWDQFHVH[LVWHG
                                                                      'LFNHUVRQ)GDW7KUHHW\SHVRIFLUFXPVWDQFHV
                                                                      KDYH WUDGLWLRQDOO\ EHHQ IRXQG WR FRQVWLWXWH H[LJHQW
                                                                      FLUFXPVWDQFHVmZKHQWKHRIILFHUVZHUHLQKRWSXUVXLWRI
                                                                      D IOHHLQJ VXVSHFW  ZKHQ WKH VXVSHFW UHSUHVHQWHG DQ
                                                                      LPPHGLDWHWKUHDWWRWKHDUUHVWLQJRIILFHUVDQGSXEOLFZKHQ
                                                                      LPPHGLDWH SROLFH DFWLRQ ZDV QHFHVVDU\ WR SUHYHQW WKH
                                                                      GHVWUXFWLRQRIYLWDOHYLGHQFHRUWKZDUWWKHHVFDSHRINQRZQ
                                                                      FULPLQDOVl+DQFRFN)GDW
    (ZROVNLY&LW\RI%UXQVZLFNHWDO         1R      1R            (ZROVNLY&LW\RI%UXQVZLFNHWDO          

  $OWKRXJK WKH GHWHUPLQDWLRQ RI H[LJHQW FLUFXPVWDQFHV LV      IRU UHYLHZj DQG >D@Q DUJXPHQWj RQ HDFK LVVXH SUHVHQWHGl
QRUPDOO\ D TXHVWLRQ IRU WKH MXU\ mLQ D FDVH ZKHUH WKH    %LFNHOY.RUHDQ$LU/LQHV&R)GWK&LU
XQGHUO\LQJIDFWVDUHHVVHQWLDOO\XQGLVSXWHGDQGZKHUHDILQGHU     FHUWGHQLHG86$SSHOODQWjVEULHI
RIIDFWFRXOGUHDFKEXWRQHFRQFOXVLRQDVWRWKHH[LVWHQFHRI       RQDSSHDOGRHVQRWVSHFLILFDOO\PHQWLRQDQ\RIWKHVHFODLPV
H[LJHQWFLUFXPVWDQFHVWKHLVVXHPD\EHGHFLGHGE\WKHWULDO        QRUGRHVLWFRQWDLQDQ\DUJXPHQWDVWRZK\WKHGLVWULFWFRXUWjV
FRXUWDVDPDWWHU RI ODZl,G,Q+DQFRFNZHIRXQGWKDW        GHWHUPLQDWLRQ WKDW VXPPDU\ MXGJPHQW ZDV DSSURSULDWH RQ
H[LJHQWFLUFXPVWDQFHVH[LVWHGDVDPDWWHURIODZZKHUHWKH          WKHVHFODLPVZDVLQHUURU7KH$SSHOODQWjVDUJXPHQWVHFWLRQ
SROLFH UHFHLYHG D FDOO FRQFHUQLQJ D VXLFLGDO DQG SRVVLEO\   $SSHOODQWjV %U DW  VXJJHVWV WKDW WKH GLVWULFW FRXUWjV
KRPLFLGDOJXQPDQVKRWVKDGEHHQUHSRUWHGILUHGDQGDWOHDVW       GHFLVLRQWRGLVPLVVWKHVWDWHODZFODLPVVKRXOGEHUHYHUVHG
RQH UDGLR FRPPXQLFDWLRQ LQGLFDWHG WKDW WKH JXQPDQ KDG        EDVHGXSRQWKHVDPHDUJXPHQWVDVVHUWHGDVWRWKH$SSHOODQWjV
WKUHDWHQHG WR NLOO DQ\ SROLFH RIILFHUV ZKR DUULYHG  ,G   FRQVWLWXWLRQDOFODLPV7KHGLVWULFWFRXUWjVRSLQLRQKRZHYHU
6LPLODUO\LQ'LFNHUVRQ)GDWZHFRQFOXGHGWKDW        TXLWHFOHDUO\EDVHGLWVFRQFOXVLRQVDVWRWKHVWDWHODZFODLPV
VXPPDU\ MXGJPHQW EDVHG XSRQ H[LJHQW FLUFXPVWDQFHV ZDV         XSRQGLIIHUHQWJURXQGVWKDQLWVFRQVWLWXWLRQDOUXOLQJV7KHVH
DSSURSULDWHZKHUHWKHSROLFHPDGHDQXQDQQRXQFHGIRUFLEOH           JURXQGVDUHQRWDGGUHVVHGDQ\ZKHUHLQWKH$SSHOODQWjVEULHI
HQWU\ZKLOHUHVSRQGLQJWRDFDOOUHSRUWLQJWKDWDGUXQNHQPDQ       7KHUHIRUHZHGHFOLQHWRFRQVLGHUWKHP
ZDVVFUHDPLQJDQGKDGILUHGVKRWVLQKLVKRXVH$OWKRXJKLW
ZDVODWHUGHWHUPLQHGWKDWWKHVXVSHFWZDVDORQHLQKLVKRXVH           5HDG OLEHUDOO\ WKH $SSHOODQWjV EULHI GRHV DGGUHVV WKH
DQGZDVVFUHDPLQJLQWRWKHWHOHSKRQHZHGHWHUPLQHGWKDWLW         GLVWULFWFRXUWjVJUDQWRIVXPPDU\MXGJPHQWDVWRWKHZURQJIXO
ZDVUHDVRQDEOHIRUWKHSROLFHWREHOLHYHWKDWVRPHRQHZDVLQ        GHDWK FODLPV LQVRIDU DV LW FKDOOHQJHV WKH GLVWULFW FRXUWjV
WKHKRXVHDQGZDVLQLPPHGLDWHSHULORIERGLO\KDUPJLYHQ           FRQFOXVLRQWKDWWKHGHDWKVRI0U/HNDQDQGKLVVRQZHUHQRW
WKH SUHVHQFH RI D ILUHDUP DQG WKH VXVSHFWjV DSSDUHQW        SUR[LPDWHO\ FDXVHG E\ WKH GHIHQGDQWV  1HYHUWKHOHVV DV
ZLOOLQJQHVVWRXVHKLVZHDSRQ,G                                 HPSOR\HHV RI D SROLWLFDO VXEGLYLVLRQ WKH LQGLYLGXDO
                                                                    GHIHQGDQWV DUH HQWLWOHG WR VWDWXWRU\ LPPXQLW\ XQOHVV WKHLU
  6LPLODUIDFWVZHUHSUHVHQWKHUH7KHGLVWULFWFRXUWUHOLHG       mDFWVRURPLVVLRQVZHUHZLWKPDOLFLRXVSXUSRVHLQEDGIDLWK
XSRQIDFWVZKLFKVKRZHGWKDWDWWKHWLPHRIWKHLQLWLDOHQWU\      RULQDZDQWRQRUUHFNOHVVPDQQHUl2+,2 5(9 &2'( $
                                                                     $E %DQNV%DOGZLQ :HVW   7KH
  WKHRIILFHUVKDGFUHGLEOHHYLGHQFHWKDWsRKQ/HNDQ            VWDQGDUGIRUUHFNOHVVQHVVHPSOR\HGE\2KLRFRXUWVKROGVWKDW
  ZDV D PHQWDOO\ GLVWXUEHG PDQ ZKR ZDV YRODWLOH             m>W@KHDFWRUjVFRQGXFWLVLQUHFNOHVVGLVUHJDUGRIWKHVDIHW\RI
  GDQJHURXV DQG QRW WDNLQJ KLV SUHVFULEHG PHGLFDWLRQ         RWKHUVLIVXFKULVNLVVXEVWDQWLDOO\JUHDWHUWKDQWKDWZKLFK
  KHUHFHQWO\EHJDQEUDQGLVKLQJDVKRWJXQLQIURQWRI           LV QHFHVVDU\ WR PDNH KLV FRQGXFW QHJOLJHQWl  )DEUH\ Y
  KRPH KHDOWK FDUH SHUVRQQHO LQ D WKUHDWHQLQJ PDQQHU        0F'RQDOG 9LOODJH 3ROLFH 'HSjW  1(G   2KLR
  KHWROGKLVEURWKHUWKHQLJKWEHIRUHWKDWKLVJXQVZHUH       TXRWDWLRQRPLWWHG$VZHKDYHDOUHDG\H[SODLQHGZH
  mORDGHG DQG UHDG\l  KH LQH[SOLFDEO\ NHSW KLV VRQ
  KRPHIURPVFKRROWKDWGD\DQGKLVZLIHXQH[SHFWHGO\
  DVNHGWREHSXWLQWRDQXUVLQJKRPHWKDWPRUQLQJ                     
                                                                         7KH RQH H[FHSWLRQ WR WKLV REVHUYDWLRQ LV WKH GLVWULFW FRXUWjV
s$DW'LVW&W2SDW,QDGGLWLRQWKHXQGLVSXWHG      GLVFXVVLRQ RI WKH WUHVSDVV FODLP s$ DW  'LVW &W 2S DW 

HYLGHQFHVKRZHGWKDW2IILFHUV3X]HOODDQG6FKQHOOREVHUYHG          7KH VROH JURXQGV DVVHUWHG E\ WKH GLVWULFW FRXUW IRU JUDQWLQJ VXPPDU\
                                                                    MXGJPHQW RQ WKH WUHVSDVV FODLP ZDV LWV FRQFOXVLRQ WKDW H[LJHQW
0U /HNDQ EHKDYLQJ HUUDWLFDOO\ LPPHGLDWHO\ SULRU WR WKHLU    FLUFXPVWDQFHV MXVWLILHG WKH RIILFHUVj ZDUUDQWOHVV HQWU\ %HFDXVH ZH DOVR
                                                                    FRQFOXGH WKDW H[LJHQW FLUFXPVWDQFHV H[LVWHG DV D PDWWHU RI ODZ ZH DIILUP
                                                                    WKH GLVWULFW FRXUW RQ WKLV FODLP
    (ZROVNLY&LW\RI%UXQVZLFNHWDO            1R       1R             (ZROVNLY&LW\RI%UXQVZLFNHWDO           

SDUDQRLG VFKL]RSKUHQLF HYHQ LI WKH YHKLFOH SUHYLRXVO\ KDG       GHFLVLRQWRHQWHU+HDVVHUWHGWKH)LIWK$PHQGPHQWZKHQ
EHHQXVHGVXFFHVVIXOO\LQGHDOLQJZLWKLQGLYLGXDOVZKRZHUH             DVNHG DERXW KLV ZLIH DQG VDQJ WKH 6WDU 6SDQJOHG %DQQHU
QRWPHQWDOO\LOO7URXEOHGDVZHDUHE\WKHFRQGXFWRIWKH             :KHQ2IILFHUV3X]HOODDQG6FKQHOOLGHQWLILHGWKHPVHOYHVDV
SROLFH LQ WKLV VWDQGRII KRZHYHU LPSUXGHQFH DQG SRRU            SROLFH RIILFHUV KH VODPPHG WKH GRRU  :H DJUHH ZLWK WKH
H[HFXWLRQGRQRWULVHWRWKHOHYHORIFRQVWLWXWLRQDOO\DUELWUDU\        GLVWULFWFRXUWWKDWm>R@QHFRXOGUHDVRQDEO\FRQVWUXHWKLVDVD
DEXVHVRISRZHU:HWKHUHIRUHFRQFOXGHWKDWWKHGLVWULFWFRXUW         VLJQWKDW0U/HNDQZDVKLGLQJVRPHWKLQJKROGLQJKLVIDPLO\
FRUUHFWO\JUDQWHGVXPPDU\MXGJPHQWWRWKHGHIHQGDQWVDVWR              KRVWDJHRUSUHYHQWLQJWKHSROLFHIURP>VWRSSLQJ@ZKDWHYHU
WKH$SSHOODQWjV)RXUWHHQWK$PHQGPHQWFODLP                             DFWLRQKHKDGSODQQHGls$DW'LVW&W2SDW7KLV
                                                                        GUDPDWLFUHDFWLRQFRPELQHGZLWKWKHRIILFHUVjNQRZOHGJHWKDW
&0XQLFLSDO/LDELOLW\                                                 KHZDVDUPHGDQGYRODWLOHDQGWKDWKLVZLIHDQGFKLOGZHUHLQ
                                                                        WKHKRXVHZLWKKLPUHYHDOVDQXQGLVSXWHGERG\RIHYLGHQFH
  +DYLQJ FRQFOXGHG WKDW WKH $SSHOODQW KDV QRW VKRZQ D           IURP ZKLFK D UHDVRQDEOH RIILFHU FRXOG KDYH UHDVRQDEO\
JHQXLQH LVVXH RI PDWHULDO IDFW DV WR DQ\ RI WKH DVVHUWHG      FRQFOXGHGWKDWWKHUHZDVDQLPPHGLDWHWKUHDWWR0U/HNDQjV
FRQVWLWXWLRQDOFODLPVZHWKHUHIRUHFRQFOXGHWKDWWKHGLVWULFW          ZLIHDQGVRQ
FRXUWFRUUHFWO\GLVPLVVHGWKH$SSHOODQWjVPXQLFLSDOOLDELOLW\
FODLPV:KHUHDVKHUHDPXQLFLSDOLW\jVOLDELOLW\LVDOOHJHGRQ          7KH GDQJHU WR 0U /HNDQjV IDPLO\ PDNHV WKLV DQ HYHQ
WKHEDVLVRIWKHXQFRQVWLWXWLRQDODFWLRQVRILWVHPSOR\HHVLWLV       VWURQJHUFDVHIRUH[LJHQWFLUFXPVWDQFHVWKDQ+DQFRFN
QHFHVVDU\WRVKRZWKDWWKHHPSOR\HHVLQIOLFWHGDFRQVWLWXWLRQDO         )G  ZKHUH WKHUH ZDV QR HYLGHQFH RI DQ\ SRWHQWLDO
KDUP  &LW\ RI /RV $QJHOHV Y +HOOHU  86        KRVWDJHV7KHSUHVHQFHRIKRVWDJHVDOVRGLVWLQJXLVKHVWKH
 m>1@HLWKHU 0RQHOO    QRU DQ\ RWKHU RI RXU FDVHV
DXWKRUL]HV WKH DZDUG RI GDPDJHV DJDLQVW D PXQLFLSDO
FRUSRUDWLRQEDVHGRQWKHDFWLRQVRIRQHRILWVRIILFHUVZKHQLQ             
IDFW WKH MXU\ KDV FRQFOXGHG WKDW WKH RIILFHU LQIOLFWHG QR            :H UHVSHFWIXOO\ GLVDJUHH ZLWK sXGJH +XOOjV FKDUDFWHUL]DWLRQ RI WKH
FRQVWLWXWLRQDO KDUPl  %HFDXVH QR VXFK FRQVWLWXWLRQDO           GLVWULFW FRXUW RSLQLRQ DV KDYLQJ mH[SUHVVO\ UHFRJQL]HG DQ H[LVWLQJ PDWHULDO

YLRODWLRQ KDV EHHQ VKRZQ ZH DIILUP WKH GLVWULFW FRXUWjV        GLVSXWH RI IDFW LQ UHJDUG WR H[LJHQW FLUFXPVWDQFHVl 'LVVHQW DW  7KH
                                                                        SRUWLRQ RI WKH GLVWULFW FRXUW RSLQLRQ H[FHUSWHG LQ sXGJH +XOOjV GLVVHQW
GHFLVLRQ JUDQWLQJ VXPPDU\ MXGJPHQW WR WKH &LW\ RQ WKH           PHUHO\ UHVWDWHV WKH SODLQWLIIjV FODLPV WKDW WKH SROLFH ZHUH QRW DZDUH RI
$SSHOODQWjVPXQLFLSDOOLDELOLW\FODLP                                  H[LJHQW FLUFXPVWDQFHV EHIRUH DUULYLQJ DW WKH /HNDQ KRXVH DQG WKDW WKH
                                                                        SROLFH GLG QRW GLUHFWO\ ZLWQHVV D FULPH EHLQJ FRPPLWWHG RU 0U /HNDQ
'6WDWH/DZ&ODLPV                                                    WKUHDWHQLQJ DQ\ERG\ $V LV H[SODLQHG LQ WKLV RSLQLRQ LQIUD DQG LQ WKH
                                                                        GLVWULFW FRXUW RSLQLRQ WKHVH IDFWV GR QRW UDLVH D JHQXLQH LVVXH DV WR

   :HDOVRKROGWKDWWKH$SSHOODQWjVVWDWHODZFODLPVZHUH              ZKHWKHU H[LJHQW FLUFXPVWDQFHV H[LVWHG DW    WKH WLPH WKH SROLFH PDGH WKH
SURSHUO\ GLVPLVVHG  ,QLWLDOO\ ZH FRQFOXGH WKDW WKH             GHFLVLRQ WR HQWHU WKH /HNDQ KRXVH   7KH GLVWULFW FRXUW WKHUHIRUH GLG QRW
                                                                        mH[SUHVVO\ UHFRJQL]Hl D JHQXLQH LVVXH RI PDWHULDO IDFW DV LW XOWLPDWHO\
$SSHOODQWjV FODLPV IRU DVVDXOW DQG EDWWHU\ LQWHQWLRQDO           JUDQWHG VXPPDU\ MXGJPHQW WR WKH GHIHQGDQWV RQ WKH SODLQWLIIVj )RXUWK
LQIOLFWLRQ RI HPRWLRQDO GLVWUHVV DQG FLYLO FRQVSLUDF\ ZHUH      $PHQGPHQW FODLPV

ZDLYHGE\WKH$SSHOODQWjVIDLOXUHWRDGGUHVVWKHPLQKLVEULHI
                                                                            
WRWKLVFRXUW6HH$KOHUVY6FKHELO)GWK                2XU XVH RI WKH WHUP mKRVWDJHl LV LQWHQGHG PHUHO\ WR VLJQLI\ WKDW 0UV

&LUILQGLQJSODLQWLIIVDSSHDOLQJVXPPDU\MXGJPHQWLQ            /HNDQ DQG KHU VRQ ZHUH XQGHU WKH FRQWURO RI 0U /HNDQ ZKR ZDV DUPHG

  DFWLRQ KDG ZDLYHG D QXPEHU RI WKHLU VWDWH ODZ WRUW    DQG SRWHQWLDOO\ KRPLFLGDO DQG ZHUH LQ VHULRXV GDQJHU RI EHLQJ KDUPHG

FODLPVE\IDLOLQJWRDGGUHVVWKHPLQWKHLUDSSHOODWHEULHIV           :H UHFRJQL]H WKDW WKLV PD\ GLIIHU IURP WKH GHILQLWLRQ RI mKRVWDJHl


m)HGHUDO5XOHRI$SSHOODWH3URFHGXUHDUHTXLUHVWKDWDQ
                                                                        HPSOR\HG LQ WKH &DOOLV UHSRUW ZKLFK UHTXLUHV WKDW WKH mKRVWDJHl EH XVHG
                                                                        WR VHFXUH VXEVWDQWLYH GHPDQGV LQ D EDUJDLQLQJ SURFHVV 1HYHUWKHOHVV ZH
DSSHOODQWjVEULHILQFOXGHµDVWDWHPHQWRIWKHLVVXHVSUHVHQWHG          GLVDJUHH ZLWK sXGJH +XOO WKDW WKH IDFW WKDW 0U /HNDQ ZDV QRW PDNLQJ
     (ZROVNLY&LW\RI%UXQVZLFNHWDO                    1R       1R          (ZROVNLY&LW\RI%UXQVZLFNHWDO      

LQVWDQWFDVHIURPWKRVHFLWHGE\WKH$SSHOODQWLQZKLFKWKLV                     FDVHVVXFKDVWKLVRQHLQZKLFKRIILFHUVPXVWFKRRVHDPRQJ
FRXUWGHFOLQHGWRILQGH[LJHQWFLUFXPVWDQFHV6HH2j%ULHQ                   ULVNVDSODLQWLIIPXVWVKRZWKDWWKHSROLFHmNQRZLQJO\DQG
)G DW  ILQGLQJ DEVHQFH RI H[LJHQW FLUFXPVWDQFHV                  XQUHDVRQDEO\lRSWHGIRUDFRXUVHRIFRQGXFWWKDWHQWDLOHGD
ZKHUHQRKRVWDJHVZHUHSUHVHQW8QLWHG6WDWHVYsRKQVRQ                    VXEVWDQWLDOO\JUHDWHUWRWDOULVNWKDQWKHDYDLODEOHDOWHUQDWLYHV
)G   WK &LU  KROGLQJ WKDW QR H[LJHQW                  )DUPHU86DW$OWKRXJKLQKLQGVLJKWZHPD\
FLUFXPVWDQFHVZHUHSUHVHQWRQFHKRVWDJHVKDGEHHQVHFXUHG                        DJUHHWKDWWKHGHFLVLRQVPDGHZHUHLOODGYLVHGDQGPD\DOVR
DQGUHPRYHGIURPGDQJHU7KHLPSRUWDQFHRIWKHSRWHQWLDO                       DJUHH WKDW &KLHI %H\HU ZDV QHJOLJHQW LQ IDLOLQJ WR EHWWHU
GDQJHUWRLQQRFHQWSHRSOHLQWKHKRXVHLVDSSDUHQWIURPRXU                      LQIRUPKLPVHOIEHIRUHPDNLQJWKHGHFLVLRQWKLVZRXOGQRW
RSLQLRQLQ'LFNHUVRQ)GDWZKLFKHPSKDVL]HG                         OHDGWRWKHFRQFOXVLRQWKDWKHFDOORXVO\GLVUHJDUGHGWKHULVNRI
WKHUHDVRQDEOHEHOLHIWKDWDKRVWDJHFRXOGEHSUHVHQWLQWKH                     LQMXU\WRWKH/HNDQIDPLO\
KRXVHnHYHQWKRXJKWKLVWXUQHGRXWWRQRWEHWKHFDVHnLQ
ILQGLQJWKDWH[LJHQWFLUFXPVWDQFHVH[LVWHGDVDPDWWHURIODZ                     $SSHOODQWjV DOOHJDWLRQ WKDW EHWWHU HTXLSPHQW VXFK DV
,QWKHLQVWDQWFDVHWKHSROLFHKDGDFWXDONQRZOHGJHWKDW0U                    WKHUPDOLPDJLQJWHFKQRORJ\ZKLFKFRXOGKDYHLPSURYHGWKH
/HNDQjVZLIHDQGVRQZHUHLQVLGHDQGWKHDSSDUHQWWKUHDWWR                     FKDQFHVIRUDVXFFHVVIXODVVDXOWZRXOGKDYHEHHQDYDLODEOHWR
WKHPZDVHQKDQFHGE\WKHIDFWWKDW0UV/HNDQKDGHDUOLHU                        &KLHI%H\HULIKHKDGZDLWHGORQJHUWRRUGHUWKHDVVDXOWLV
VRXJKWWREHWDNHQRXWRIWKHKRXVHDQGWKDW0U/HNDQKDG                       VLPLODUO\XQDYDLOLQJ$VWDWHRIILFLDOjVGHFLVLRQWRLQLWLDWHD
NHSWKLVVRQKRPHIURPVFKRRO                                                   UHVFXHZLWKVXERSWLPDOHTXLSPHQWVRXQGVLQQHJOLJHQFHQRW
                                                                                 GHOLEHUDWH UHFNOHVVQHVV  6HH 6DODV  )G DW 
  7KH $SSHOODQW HPSKDVL]HV WKDW WKH SROLFH DGPLWWHG WKDW                  ,QGHHGLQWKHLQVWDQWFDVHWKH$SSHOODQWKDVQRWFRQWUDGLFWHG
H[LJHQWFLUFXPVWDQFHVZHUHQRWSUHVHQWEHIRUHWKH\DUULYHGDW                    &KLHI %H\HUjV GHSRVLWLRQ WHVWLPRQ\ WKDW KH KDG QR ZD\ RI
WKH/HNDQKRPHDQGWKDWWKHSROLFHQHYHUVDZDFULPHEHLQJ                      NQRZLQJWKDWWKHUPDOLPDJLQJHTXLSPHQWZRXOGODWHUEHFRPH
FRPPLWWHGDQGGLGQRWKHDU0U/HNDQWKUHDWHQDQ\RQH$V                        DYDLODEOH7KHUHIRUHKLVGHFLVLRQWRDFWZLWKRXWWKHEHQHILW
WKHGLVWULFWFRXUWFRUUHFWO\REVHUYHGKRZHYHUWKHIDFWWKDW                    RIVXFKHTXLSPHQWFDQQRWEHVDLGWREHGHOLEHUDWH
H[LJHQWFLUFXPVWDQFHVGLGQRWH[LVWDWVRPHHDUOLHUSRLQWLQ
WLPH LV LUUHOHYDQW VLQFH RXU LQTXLU\ LV OLPLWHG WR ZKHWKHU                7KHUHFDQEHOLWWOHGRXEWWKDWWKHIDFWVRIWKHLQVWDQWFDVH
H[LJHQW FLUFXPVWDQFHV H[LVWHG DW WKH PRPHQW WKH SROLFH                    VKRZWKDWWKHDFWLRQVRIWKHSROLFHZHUHLQPDQ\LQVWDQFHV
HQWHUHG WKH UHVLGHQFH  8QLWHG 6WDWHV Y 0RUJDQ  )G               LOODGYLVHGDQGSRRUO\H[HFXWHG/LNHWKHGLVWULFWFRXUWZH
  WK &LU  FHUW GHQLHG  86                  DUH QRW FRQYLQFHG WKDW LW ZDV QHFHVVDU\ RU SUXGHQW WR
                                                                                 XQGHUWDNHDWDFWLFDODVVDXOWRQO\ILYHKRXUVLQWRWKHVWDQGRII
                                                                                 ZLWK 0U /HNDQ SDUWLFXODUO\ VLQFH KH KDG E\ DOO DFFRXQWV
                                                                                 UHWUHDWHG IURP WKH FRQIURQWDWLRQ DQG GLG QRW DSSHDU WR EH
VXEVWDQWLYH GHPDQGV DQG WKHUHIRUH ZDV QRW WHFKQLFDOO\ KROGLQJ KLV IDPLO\
                                                                                 SRVLQJDQLPPHGLDWHWKUHDWWRKLVIDPLO\RUWKHSROLFH7KH
mKRVWDJHl LQ WKH VHQVH WKDW WHUP LV XVHG E\ &DOOLV FUHDWHV D PDWHULDO IDFW
TXHVWLRQ DV WR WKH H[LVWHQFH RI H[LJHQW FLUFXPVWDQFHV        7KH NH\ LVVXH LQ
                                                                                 H[SHUWVLQWKLVFDVHVHHPWRDJUHHZLWKWKHGLVWULFWFRXUWWKDW
GHWHUPLQLQJ ZKHWKHU H[LJHQW FLUFXPVWDQFHV H[LVWHG LV ZKHWKHU WKH RIILFHUV        m>D@UPHGWDFWLFDOVROXWLRQVDUHUDGLFDOVWUDWHJLHVXVHGRQO\DV
UHDVRQDEO\ EHOLHYHG WKDW mWKH VXVSHFW UHSUHVHQWHG DQ LPPHGLDWH WKUHDW WR         DODVWUHVRUWLQKRVWDJHVLWXDWLRQVlDQGWKDWm>X@VHRILWKHUH
WKH    SXEOLFl   +DQFRFN     )G DW  QRW ZKHWKHU WKH VXVSHFW ZDV   ZDV SUHPDWXUHl  s$ DW  'LVW &W 2S DW  Q
PDNLQJ VXEVWDQWLYH GHPDQGV LQ FRQQHFWLRQ ZLWK VXFK D WKUHDW $V WR WKLV
                                                                                 0RUHRYHU WKH DVVDXOW LWVHOI ZDV SRRUO\ SODQQHG DQG LW
TXHVWLRQ WKH SRUWLRQ RI WKH &DOOLV UHSRUW TXRWHG LQ sXGJH +XOOjV GLVVHQW
FRQFHGHV WKDW DOWKRXJK 0UV /HNDQ DQG KHU VRQ mZHUH QRW DFWXDOO\
                                                                                 DSSHDUVWKDWWKHSROLFHODFNHGWKHSHUVRQQHODQGHTXLSPHQWWR
KRVWDJHVl WKH\ mZHUH     YLFWLPV   RI 0U /HNDQjV DFWLRQV   7KH\ ZHUH LQ WKH
                                                                                 FDUU\LWRXWVXFFHVVIXOO\7KHGHFLVLRQWRGHSOR\DQDUPRUHG
UHVLGHQFH ZKHQ 0U /HNDQ FRPPLWWHG KLV FULPLQDO DFW DQG KH DIIRUGHG              YHKLFOH VHHPV SDUWLFXODUO\ LPSUXGHQW ZKHQ FRQIURQWLQJ D
WKHP QR RSSRUWXQLW\ WR OHDYHl        s$ DW 
    (ZROVNLY&LW\RI%UXQVZLFNHWDO              1R        1R            (ZROVNLY&LW\RI%UXQVZLFNHWDO         

ERDW@ IURP HQGDQJHULQJ KHU OLIH LQ WKH FRXUVH RI D SROLFH        0RUHRYHUWKLVFRXUWKDVQHYHUKHOGWKDWWKHSROLFH
UHVFXHHIIRUWl,GDW                                              PXVWZLWQHVVDFULPHIRUH[LJHQWFLUFXPVWDQFHVWREHSUHVHQW
                                                                           ,Q +DQFRFN  )G DW  IRU H[DPSOH WKH GHIHQGDQW
  )LQDOO\LQ.HSQHUY+RXVWRXQ)6XSSG('                RIILFHUVj LQIRUPDWLRQ UHJDUGLQJ H[LJHQW FLUFXPVWDQFHV ZDV
3D  WKH FRXUW DGGUHVVHG D IDFWXDO VLWXDWLRQ FORVHO\         OLPLWHGWRUHSRUWVWKH\UHFHLYHGIURPDUDGLRGLVSDWFK:KHUH
DQDORJRXVWRWKHLQVWDQWFDVH,Q.HSQHUDQDUPHGLQGLYLGXDO             DVKHUHDQDUPHGDQGYRODWLOHLQGLYLGXDOSRVHVDQREYLRXV
ZKR ZDV DOVR D GLDJQRVHG VFKL]RSKUHQLF WRRN KLV IRUPHU             WKUHDWWRDQRWKHUZHGRQRWEHOLHYHWKH)RXUWK$PHQGPHQW
HPSOR\HUDQGDQRWKHUSHUVRQKRVWDJHDQGEDUULFDGHGKLPVHOI                 UHTXLUHVWKHSROLFHWRVWDQGLGO\E\XQWLOWKH\DFWXDOO\REVHUYH
LQWKHHPSOR\HUjVRIILFH$WZRGD\VWDQGRIIHQVXHG7KH                 DFULPLQDODFW6LPLODUO\DOWKRXJKWKHSROLFHPD\QRWKDYH
SROLFHXOWLPDWHO\GHFLGHGWRXQGHUWDNHDWDFWLFDODVVDXOWDIWHU           SHUVRQDOO\KHDUGDQ\WKUHDWVWKH\ZHUHDZDUHRI0U/HNDQjV
WKHKRVWDJHWDNHUjVGHPDQGVEHFDPHLQFUHDVLQJO\HUUDWLF$V               WKUHDWHQLQJ EHKDYLRU  0RUHRYHU WKH XQGLVSXWHG HYLGHQFH
WKHSROLFHVWRUPHGWKHRIILFHWKHKRVWDJHWDNHUVKRWDQGNLOOHG           LQGLFDWHV WKDW 2IILFHU 6FKQHOO ZDV DZDUH RI 0U /HNDQjV
RQH RI WKH KRVWDJHV  ,G DW   7KH FRXUW IRXQG WKDW WKH   VWDWHPHQWWKDWKLVJXQVZHUHmORDGHGDQGUHDG\l
FRQGXFWRIWKHSROLFHLQXQGHUWDNLQJDWDFWLFDODVVDXOWGLGQRW
VKRFNWKHFRQVFLHQFHXQGHUHLWKHUWKHLQWHQWWRKDUPRUWKH                   :HDUHDOVRXQSHUVXDGHGE\WKH$SSHOODQWjVFODLPWKDWWKH
GHOLEHUDWH LQGLIIHUHQFH VWDQGDUG  ,G DW   $V WKH FRXUW     GHIHQGDQW RIILFHUV LPSHUPLVVLEO\ FUHDWHG WKH H[LJHQW
H[SODLQHG                                                                 FLUFXPVWDQFHV E\ LQLWLDOO\ DWWHPSWLQJ WR VHH 0UV /HNDQ
                                                                           ZLWKRXW LGHQWLI\LQJ WKHPVHOYHV DV SROLFH RIILFHUV  7KH
  :KLOH WKHLU DFWLRQ VXUHO\ KDG JUDYH ULVNV WDNLQJ QR             $SSHOODQWUHOLHVXSRQ8QLWHG6WDWHVY0RUJDQ)GDW
  DFWLRQDOVRKDGJUDYHULVNV,WLVLPSRUWDQWWRUHPHPEHU                LQZKLFKZHREVHUYHGWKDWm>S@ROLFHRIILFLDOVDUHQRW
  WKDW &]DMNRZVNL ZLWK VHULRXV PHQWDO SUREOHPV KDG                 IUHH WR FUHDWH H[LJHQW FLUFXPVWDQFHV WR MXVWLI\ WKHLU
  SUHYLRXVO\ VKRW sRUGDQ DQG ZDV PDNLQJ GHPDQGV WKDW                ZDUUDQWOHVVLQWUXVLRQVl7KH0RUJDQFDVHKRZHYHULVHDVLO\
  ZHUHEHFRPLQJLQFUHDVLQJO\EL]DUUH,QKLQGVLJKWPD\EH                 GLVWLQJXLVKHG,Q0RUJDQWKHSROLFHVXUURXQGHGWKHKRPHRI
  WKHVWDWHSROLFHZHUHQHJOLJHQWDQGVKRXOGKDYHWDNHQD                  DSHUVRQVXVSHFWHGRISRVVHVVLQJLOOHJDOILUHDUPVDQGIORRGHG
  GLIIHUHQW SDWK EXW QHJOLJHQFH LV QRW WKH DSSOLFDEOH              WKHKRXVHZLWKOLJKWVZKLOHVXPPRQLQJWKHVXVSHFWZLWKWKH
  FRQVWLWXWLRQDOVWDQGDUG                                                 mEODULQJFDOORIDEXOOKRUQl,GDW7KHVXVSHFWH[LWHG
                                                                           WKHKRXVHFDUU\LQJDSLVWROZKLFKKHWKHQVHWGRZQLQVLGHWKH
,G                                                                        GRRUZD\ RI WKH KRXVH  7KH SROLFH DUUHVWHG KLP DQG WKHQ
                                                                           VHDUFKHGWKHKRXVHVHL]LQJDQXPEHURIILUHDUPVLQFOXGLQJ
   9LHZLQJWKHLQVWDQWIDFWVLQOLJKWRIWKHIRUHJRLQJFDVHVZH           WKH SLVWRO  ,G  :H KHOG WKDW WKH ZDUUDQWOHVV VHDUFK RI WKH
FRQFOXGHWKDWWKH$SSHOODQWKDVQRWVKRZQVXIILFLHQWIDFWVWR              KRPH ZDV QRW MXVWLILHG E\ H[LJHQW FLUFXPVWDQFHV  :H
VXSSRUWDFODLPRIGHOLEHUDWHLQGLIIHUHQFH+HUHWKHSROLFH              H[SODLQHG WKDW m>W@KHUH ZDV QR VXEVWDQWLDWHG HYLGHQFH WKDW
DWWHPSWHGWRUHVFXH0UV/HNDQDQGKHUVRQIURPDWKUHDWRI                0RUJDQZDVGDQJHURXVRUWKDWDJUDYHRIIHQVHRUFULPHRI
SULYDWHYLROHQFH,WLVXQGLVSXWHGWKDWWKHUHZDVQRFOHDUZD\            YLROHQFHKDGRFFXUUHGRUZDVHYHQWKUHDWHQHGl,GDW
RXWRIGDQJHUDQGDQ\FRXUVHSXUVXHGE\WKHSROLFHHQWDLOHG               :H HPSKDVL]HG WKH ODFN RI DQ\ GHPRQVWUDWHG QHHG IRU
VLJQLILFDQWULVNV7KH$SSHOODQWDWEHVWKDVVKRZQWKDW&KLHI           LPPHGLDWHDFWLRQQRWLQJWKDWWKHSROLFHKDGVXIILFLHQWWLPHWR
%H\HU VKRXOG KDYH REWDLQHG PRUH LQIRUPDWLRQ IURP WKH                PHHWDWDORFDOFRIIHHVKRSDQGmDVVHVV>@WKHVLWXDWLRQlEHIRUH
PHQWDOKHDOWKSURIHVVLRQDOVRQWKHVFHQHDQGPD\KDYHPDGH                 GHFLGLQJ WR VXUURXQG WKH KRXVH  ,G DW   8QGHU WKHVH
DQLQFRUUHFWDVVHVVPHQWRIWKHULVNVDVDUHVXOW'HOLEHUDWH              FLUFXPVWDQFHV ZH IRXQG WKDW WKH PHUH SRVVLELOLW\ WKDW WKH
LQGLIIHUHQFH KRZHYHU UHTXLUHV WKDW WKH SROLFH DFW LQ              VXVSHFWZRXOGUHDFWZLWKKRVWLOLW\WRWKHGUDPDWLFDFWLRQVRI
FRQVFLRXV GLVUHJDUG RI D NQRZQ ULVN RI VHULRXV LQMXU\  ,Q
    (ZROVNLY&LW\RI%UXQVZLFNHWDO           1R       1R         (ZROVNLY&LW\RI%UXQVZLFNHWDO      

WKH SROLFH FRXOG QRW E\ LWVHOI FUHDWH VXIILFLHQW H[LJHQW     ZLWKDKRVWDJHQHJRWLDWLQJWHDPDQGD6:$7WHDPZHUHWKH
FLUFXPVWDQFHVWRMXVWLI\DZDUUDQWOHVVVHDUFK,GDW,Q       ILUVWWRUHVSRQGDIWHUWKHKXVEDQGVWRUPHGKLVZLIHjVRIILFH
WKHLQVWDQWFDVHE\FRQWUDVW2IILFHUV3X]HOODDQG6FKQHOOGLG        DQGWRRNKHUKRVWDJH%HIRUHWKHFLW\SROLFHFRXOGGHSOR\
KDYHUHDVRQWREHOLHYHWKDWWKHUHZDVDGDQJHURIYLROHQFH            KRZHYHUWKHFRXQW\VKHULIIRUGHUHGWKHPWROHDYHDVVHUWLQJ
$OWKRXJKWKLVWKUHDWPD\KDYHULVHQWRWKHOHYHORIH[LJHQW            KLVH[FOXVLYHMXULVGLFWLRQRYHUFRXUWKRXVHVHFXULW\,GDW
FLUFXPVWDQFHVRQO\DIWHUWKHRIILFHUVLGHQWLILHGWKHPVHOYHVWR         7KHVKHULIIjVGHSDUWPHQWGLGQRWSRVVHVVWKHVDPHH[SHULHQFH
0U/HNDQWKHULVNWR0UV/HNDQDQGKHUVRQZDVQRWFUHDWHG          FDSDELOLWLHVRUHTXLSPHQWIRUGHDOLQJZLWKKRVWDJHVLWXDWLRQV
VROHO\E\WKHRIILFHUVjFRQGXFWDVLQ0RUJDQ0RUHRYHUWKLV         WKDWZHUHSRVVHVVHGE\WKHFLW\SROLFH$IWHUXQVXFFHVVIXO
ULVNWR0UV/HNDQDQGKHUVRQUHDVRQDEO\MXVWLILHGWKHEHOLHI         HIIRUWVWRQHJRWLDWHDUHVROXWLRQWKHJXQPDQNLOOHGKLVZLIH
WKDWWKHUHZDV D QHHGWRLQYHVWLJDWHWKHVLWXDWLRQUHODWLYHO\        DQGWKHQKLPVHOI7KH)LIWK&LUFXLWFRQFOXGHGWKDWWKHDFWLRQV
TXLFNO\7KLVIDFWGLVWLQJXLVKHVWKHLQVWDQWFDVHIURPPDQ\           RIWKHVKHULIIGLGQRWULVHWRWKHOHYHORIFRQVFLHQFHVKRFNLQJ
FUHDWHGH[LJHQF\FDVHVZKLFKKDYHUHDVRQHGWKDWWKHSROLFH            EHKDYLRU,GDW7KH&RXUWUHDVRQHGWKDWWKHRIILFHUVGLG
FDQQRWFODLPWKHUHZDVLQVXIILFLHQWWLPHWRVHHNDZDUUDQWLI          QRWmFXWRIIDOODYHQXHVRIUHVFXHZLWKRXWSURYLGLQJDQ
WKHHYLGHQFHVKRZVWKDWWKHSROLFHFRQWUROOHGWKHWLPLQJRIWKH        DOWHUQDWLYHl,GDW5DWKHUWKHRIILFHUVmFRQWUROOHGWKH
HQFRXQWHU JLYLQJ ULVH WR WKH VHDUFK  6HH 8QLWHG 6WDWHV Y   FRQGXFWRIDSROLFHUHVFXHFRQVLGHULQJIDFWRUVVXFKDVWKH
&DPSEHOO)GWK&LUQRWLQJWKDW            VDIHW\RIWKRVHLQYROYHGl,G7KHPHUHIDFWWKDWWKHVKHULIIjV
LQFDVHVIURPWKH(LJKWK&LUFXLWKROGLQJFRQWUROOHGGHOLYHULHV         GHSDUWPHQWGLGQRWSRVVHVVWKHEHVWDYDLODEOHHTXLSPHQWGLG
WREHH[LJHQWFLUFXPVWDQFHVFUHDWHGE\WKHSROLFHmWKHSROLFH         QRW UHQGHU WKH GHFLVLRQ WR KDQGOH WKH VWDQGRII FRQVFLHQFH
KDG WKH RSSRUWXQLW\ WR REWDLQ D VHDUFK ZDUUDQW SULRU WR       VKRFNLQJ,GDW
H[HFXWLQJWKHFRQWUROOHGGHOLYHU\DWWKDWGZHOOLQJEXWFKRVH
QRWWRGRVRl86Y&UHVWD)GVW&LU              ,Q$QGUHZV)GDWWKH'&&LUFXLWDGGUHVVHG
m7KXVWKHDJHQWVFRXOGQRWKDYHFRQWUROOHGWKHWLPH            D )RXUWHHQWK $PHQGPHQW FODLP DVVHUWHG RQ EHKDOI RI D
DWZKLFKWKHIDNHGHOLYHU\WRRNSODFHZKLFKLVDQHFHVVDU\            VXVSHFWZKRGURZQHGZKLOHDWWHPSWLQJWRHYDGHWKHSROLFH
HOHPHQWWRDILQGLQJWKDWWKHJRYHUQPHQWGHOLEHUDWHO\FUHDWHG          7KHVXVSHFWGRYHLQWRDFKDQQHODIWHUEHLQJFRQIURQWHGE\D
WKH H[LJHQW FLUFXPVWDQFHVl FHUW GHQLHG  86        SROLFHRIILFHU:KHQWKHVXVSHFWEHJDQWRGURZQWKHRIILFHU
                                                                KDLOHGDSULYDWHERDWWRDVVLVWWKHPDQ6HHLQJWKDWWKHVXVSHFW
                                                                       ZDVXQFRQVFLRXVDZRPDQRQWKHERDWWROGWKHRIILFHUVKH
   0RUHRYHU WKH FUHDWHGH[LJHQF\ FDVHV KDYH W\SLFDOO\            QHHGHGWRGLYHLQWRVDYHKLPDQGLQIRUPHGWKHRIILFHUWKDW
UHTXLUHGVRPHVKRZLQJRIGHOLEHUDWHFRQGXFWRQWKHSDUWRI             VKHKDGEHHQWUDLQHGWRH[HFXWHVXFKDUHVFXH,G7KHRIILFHU
WKHSROLFHHYLQFLQJDQHIIRUWLQWHQWLRQDOO\WRHYDGHWKHZDUUDQW       GLUHFWHGKHUQRWWRJRLQWRWKHZDWHUEHFDXVHWKHGURZQLQJ
UHTXLUHPHQW6HH&DPSEHOO)GDWm7KLV&RXUWKDV           PDQZDVDQHVFDSHGSULVRQHUDQGFRXOGEHGDQJHURXV,G
VWUXFN GRZQ ZDUUDQWOHVV HQWULHV E\ WKH SROLFH LQ VLWXDWLRQV    7KHFRXUWFRQFOXGHGWKDWWKHRIILFHUjVDFWLRQRILQWHUIHULQJ
ZKHUHGHOLEHUDWHFRQGXFWRQWKHSDUWRISROLFHRIILFHUVKDV            ZLWKWKHSULYDWHFLWL]HQjVUHVFXHHIIRUWGLGQRWGHPRQVWUDWHD
FUHDWHGWKHFODLPHGH[LJHQWFLUFXPVWDQFHVl8QLWHG6WDWHVY         UHFNOHVVGLVUHJDUGIRUWKHVXVSHFWjVVDIHW\,GDW7KH
9RQ:LOOLH)GWK&LUm7KLVLVQRWD            FRXUWH[SODLQHGWKDWLWLVQRWDFRQVWLWXWLRQDOYLRODWLRQmIRUD
FDVHZKHUHWKHJRYHUQPHQWSXUSRVHO\WULHGWRFLUFXPYHQWWKH            VWDWHRIILFHUWRDWWHPSWDQLQHIIHFWXDOUHVFXHlDQGWKHUHIRUH
UHTXLUHPHQWV RI >WKH NQRFN DQG DQQRXQFH VWDWXWH@l  7KH      PHUHQHJOLJHQFHRQWKHSDUWRIWKHRIILFHUVLQWKHFRQGXFWRI
$SSHOODQWKDVSUHVHQWHGQRHYLGHQFHWRLQGLFDWHWKDW2IILFHUV          WKHUHVFXHGLGQRWVWDWHD)RXUWHHQWK$PHQGPHQWYLRODWLRQ
6FKQHOO DQG 3X]HOOD PDGH D GHOLEHUDWH HIIRUW WR LQFLWH 0U    ,GDW0RUHRYHUWKHFRXUWH[SODLQHGmWKHSROLFHZHUH
/HNDQVRDVWRFUHDWHDWKUHDWWR0UV/HNDQDQGKHUVRQWKDW         HQWLWOHGLIQRWREOLJHGWRSUHYHQW>WKHSULYDWHFLWL]HQRQWKH
    (ZROVNLY&LW\RI%UXQVZLFNHWDO          1R      1R                  (ZROVNLY&LW\RI%UXQVZLFNHWDO                    

IXUWKHU H[SODLQHG WKDW KH SHUFHLYHG WKDW KLV RIILFHUV ZHUH   FRXOGMXVWLI\ DZDUUDQWOHVVVHDUFK,QVWHDGWKHXQGLVSXWHG
WLULQJ DQG SRWHQWLDOO\ ORVLQJ WKHLU HGJH ZKLFK FRXOG KDYH   HYLGHQFHLQGLFDWHVWKDWWKHRIILFHUVKDGUHDVRQDEOHJURXQGVWR
PDGH LW PRUH GLIILFXOW WR FRQGXFW VXFFHVVIXOO\ D WDFWLFDO    EHFRQFHUQHGIRUWKHVDIHW\RI0UV/HNDQDQGKHUVRQEXWGLG
RSHUDWLRQODWHU,QDGGLWLRQ&KLHI%H\HUKDGVRPHUHDVRQIRU       QRW SRVVHVV SUREDEOH FDXVH VXIILFLHQW WR REWDLQ D ZDUUDQW
FRQILGHQFHWKDWDWDFWLFDODVVDXOWFRXOGVXFFHHGEDVHGXSRQ         8QGHU WKHVH FLUFXPVWDQFHV LW ZDV UHDVRQDEOH WR JR WR WKH
KLVNQRZOHGJHRIWKHSDVWVXFFHVVRIWKH&LW\jVHPHUJHQF\            /HNDQKRPHDQGDWWHPSWWROHDUQPRUHWKURXJKFRQVHQVXDO
WHDP  0RUHRYHU LW VHHPV IURP WKH UHFRUG WKDW HYHU\RQH     TXHVWLRQLQJRI0U/HNDQ8QLWHG6WDWHVYsRQHV)G
DJUHHGDWWKHWLPHWKDWWKHUHZDVOLWWOHLIDQ\SURVSHFWIRU         WK &LU m)HGHUDO FRXUWV KDYH UHFRJQL]HG WKH
VXFFHVVIXOUHVROXWLRQWRWKHFULVLVWKURXJKQHJRWLDWLRQ0U        µNQRFNDQGWDONjVWUDWHJ\DVDUHDVRQDEOHLQYHVWLJDWLYHWRRO
/HNDQ PDGH QR GHPDQGV DQG ZDV QRW FRPPXQLFDWLQJ               ZKHQRIILFHUVVHHNWRJDLQDQRFFXSDQWjVFRQVHQWWRVHDUFKRU
FRKHUHQWO\ZLWKWKHQHJRWLDWRU*LYHQWKHJULPSURVSHFWIRU         ZKHQ RIILFHUV UHDVRQDEO\ VXVSHFW FULPLQDO DFWLYLW\l FHUW
QHJRWLDWLRQVLWZDVUHDVRQDEOHIRU&KLHI%H\HUWRFRQFOXGH          GHQLHG 86  6 &W    :KHQ DQ RIILFHU
WKDWDWDFWLFDOVROXWLRQZRXOGEHUHTXLUHGHYHQWXDOO\               REVHUYHV IDFWV JLYLQJ ULVH WR H[LJHQW FLUFXPVWDQFHV LQ WKH
                                                                     FRXUVHRIVXFKDFRQVHQVXDOHQFRXQWHULWXVXDOO\FDQQRWEH
   9LHZHGDJDLQVWWKLVEDFNGURSZHGRQRWWKLQNLWZRXOGEH         VDLG WKDW WKH RIILFHU LPSHUPLVVLEO\ mFUHDWHGl WKH H[LJHQW
DSSURSULDWH WR VD\ WKDW &KLHI %H\HU DFWHG ZLWK FDOORXV       FLUFXPVWDQFHV,G$OWKRXJK2IILFHUV6FKQHOODQG3X]HOODjV
LQGLIIHUHQFHWRWKHULVNRILQMXU\WR0UV/HNDQRUKHUVRQ         VWUDWHJLFGHFLVLRQQRWWRLGHQWLI\WKHPVHOYHVLPPHGLDWHO\PD\
,QVWHDG LW DSSHDUV WKDW &KLHI %H\HU PDGH D GHFLVLRQ WKDW   KDYHEHHQLOODGYLVHGDQGPD\HYHQKDYHFRQWULEXWHGWR0U
UHTXLUHG D EDODQFLQJ RI WKH ULVNV SUHVHQWHG E\ DJJUHVVLYH    /HNDQjVDJLWDWLRQWKLVFRQGXFWGLGQRWJLYHULVHWRDFODLP
DFWLRQDJDLQVWWKHULVNVSUHVHQWHGE\IXUWKHUGHOD\7KLVLVQRW    WKDWWKHSROLFHLPSHUPLVVLEO\FUHDWHGWKHH[LJHQF\
D VLWXDWLRQ ZKHUH WKH SROLFH GHOLEHUDWHO\ UHIXVHG WR WDNH
REYLRXVVWHSVWKDWZRXOGGHFUHDVHWKHULVNRUDEDQGRQHGWKH            (YHQ LI JHQXLQH LVVXHV RI PDWHULDO IDFW GLG H[LVW DV WR
/HNDQV LQ D GDQJHURXV HQYLURQPHQW  6HH /HIIDOO Y 'DOODV   ZKHWKHU D UHDVRQDEOH RIILFHU ZRXOG KDYH SHUFHLYHG DQ
,QGHS6FK'LVW)GWK&LU,QVWHDG       LPPHGLDWHWKUHDWWRWKH/HNDQVZHZRXOGVWLOOILQGVXPPDU\
WKH $SSHOODQW FKDOOHQJHV &KLHI %H\HUjV FKRLFH DPRQJ
QHFHVVDULO\ULVN\DOWHUQDWLYHWDFWLFVLQXQGHUWDNLQJDQHIIRUWWR
UHVFXH 0UV /HNDQ DQG KHU VRQ IURP GDQJHU  0HUHO\                
                                                                           :H WKHUHIRUH UHVSHFWIXOO\ GLVDJUHH ZLWK sXGJH +XOOjV VXJJHVWLRQ WKDW
GHPRQVWUDWLQJ WKDW &KLHI %H\HU LQFRUUHFWO\ DVVHVVHG WKH        WKH &DOOLV UHSRUWjV FULWLFLVPV RI WKH %UXQVZLFN 3ROLFH 'HSDUWPHQWjV
FRPSHWLQJ ULVNV PD\ GHPRQVWUDWH QHJOLJHQFH RQ &KLHI            mZHOIDUH FKHFNl SURFHGXUH FUHDWHV D JHQXLQH LVVXH RI PDWHULDO IDFW DV WR

%H\HUjVSDUWEXWLWLVQRWHQRXJKWRVKRZDFDOORXVGLVUHJDUG       WKH TXHVWLRQ RI H[LJHQW FLUFXPVWDQFHV           7KH SRUWLRQ RI WKH &DOOLV UHSRUW

IRUWKHVDIHW\RI0UV/HNDQDQGKHUVRQ,G                       TXRWHG LQ WKH GLVVHQW PHUHO\ VWDWHV WKDW WKH SROLFH VKRXOG KDYH XVHG
                                                                     GLIIHUHQW PHWKRGV WR GLVFHUQ ZKDW ULVN LI DQ\ 0U /HNDQ SRVHG WR KLV ZLIH


  &DVHVIURPRWKHUFLUFXLWVGHDOLQJZLWKXQVXFFHVVIXOSROLFH         DQG   VRQ   DQG    WKDW   GLIIHUHQW   SROLFH   WDFWLFV   PLJKW   KDYH
                                                                     FRQIURQWDWLRQ EHWZHHQ 0U /HNDQ DQG WKH SROLFH 7KH IDFW WKDW 0U /HNDQ
                                                                                                                                              DYRLGHG     WKH


UHVFXHHIIRUWVDUHLQVWUXFWLYH6HHHJ6DODVY&DUSHQWHU      PLJKW QRW KDYH EHHQ SURYRNHG WR VXFK YRODWLOH EHKDYLRU LI WKH SROLFH KDG
)GWK&LU$QGUHZVY:LONLQV           QRW JRQH WR KLV KRPH LQ SODLQ FORWKHV KRZHYHU GRHV QRW GLVSXWH WKDW

)GVW&LU,Q6DODV)GDW         H[LJHQW FLUFXPVWDQFHV         ZHUH SUHVHQW ZKHQ 0U /HNDQ XOWLPDWHO\                GLG
 WKH )LIWK &LUFXLW DGGUHVVHG D VXEVWDQWLYH GXH SURFHVV    H[KLELW WKLV YRODWLOH EHKDYLRU ,Q WKH DEVHQFH RI IDFWV VXJJHVWLQJ WKDW WKH

FODLPDVVHUWHGRQEHKDOIRIDZRPDQZKRZDVNLOOHGE\KHU            SROLFH LPSHUPLVVLEO\ mFUHDWHG WKH H[LJHQF\l DV WKDW FRQFHSW LV XQGHUVWRRG
                                                                     LQ )RXUWK $PHQGPHQW MXULVSUXGHQFH ZKHWKHU RU QRW SROLFH WDFWLFV ZHUH
KXVEDQG DIWHU D GD\ORQJ VWDQGRII ZLWK WKH SROLFH DW WKH    SDUW RI WKH FDXVDO FKDLQ UHVXOWLQJ LQ WKH H[LJHQF\ LV QRW PDWHULDO WR WKH
FRXUWKRXVHZKHUHWKHYLFWLPZRUNHG&LW\SROLFHHTXLSSHG           TXHVWLRQ     RI   ZKHWKHU   WKH   ZDUUDQWOHVV    HQWU\    ZDV   MXVWLILHG   E\   H[LJHQW
                                                                     FLUFXPVWDQFHV
    (ZROVNLY&LW\RI%UXQVZLFNHWDO             1R       1R          (ZROVNLY&LW\RI%UXQVZLFNHWDO        

MXGJPHQW WR EH DSSURSULDWH RQ WKH EDVLV RI WKH mFOHDUO\         86VHHDOVR6WHPOHUY&LW\RI)ORUHQFH
HVWDEOLVKHGl SURQJ RI WKH TXDOLILHG LPPXQLW\ WHVW  $V WKH      )GWK&LUDSSO\LQJ)DUPHUjV
DERYH GLVFXVVLRQ LQGLFDWHV ZH FDQ ILQG QR FRQWUROOLQJ            GHOLEHUDWH LQGLIIHUHQFH VWDQGDUG WR )RXUWHHQWK $PHQGPHQW
DXWKRULW\ ZKHUH D FRXUW KDV KHOG VLPLODU FRQGXFW WR EH          FODLPLQQRQLQVWLWXWLRQDOVHWWLQJFHUWGHQLHG86
XQFRQVWLWXWLRQDOmXQGHUIDFWVQRWGLVWLQJXLVKDEOHLQDIDLUZD\          7KXVmWKHRIILFLDOPXVWERWKEHDZDUHRIIDFWVIURP
IURPWKHIDFWVSUHVHQWHGLQWKHFDVHDWKDQGl6DXFLHU6          ZKLFKWKHLQIHUHQFHFRXOGEHGUDZQWKDWDVXEVWDQWLDOULVNRI
&WDW,Q5XVVR)GDWZHKHOGWKDWWKH            VHULRXVKDUPH[LVWVDQGKHPXVWDOVRGUDZWKHLQIHUHQFHl
GHIHQGDQWSROLFHRIILFHUVZHUHHQWLWOHGWRTXDOLILHGLPPXQLW\            )DUPHU86DW+DYLQJGUDZQWKHLQIHUHQFHWKH
RQ WKH SODLQWLIIjV ZDUUDQWOHVV HQWU\ FODLPV ZKHUH WKH            RIILFLDO PXVW DFW RU IDLO WR DFW LQ D PDQQHU GHPRQVWUDWLQJ
XQGLVSXWHG IDFWV VKRZHG WKDW WKH VXVSHFW ZDV PHQWDOO\             mUHFNOHVV RU FDOORXV LQGLIIHUHQFHl WRZDUG WKH LQGLYLGXDOjV
GLVWXUEHGWKHVXVSHFWSRVVHVVHGWZRNQLYHVDUDGLRFDOOKDG            ULJKWV/DQGRO5LYHUDY&UX]&RVPH)GVW
GHVFULEHGWKHVXVSHFWDVVXLFLGDODQGWKHVXVSHFWKDGWXUQHG            &LU
RXWWKHOLJKWVDQGJRQHVLOHQWLPPHGLDWHO\EHIRUHWKHRIILFHUVj
GHFLVLRQ WR HQWHU  :H H[SODLQHG WKDW HYHQ LI WKH RIILFHUVj      )URPWKHUHFRUGWKHUHLVOLWWOHGRXEWWKDW&KLHI%H\HUGUHZ
DFWLRQVZHUHXQUHDVRQDEOHZHZHUHQRWDZDUHRImDVLQJOH                WKHLQIHUHQFHWKDWDJJUHVVLYHWDFWLFVPLJKWSURYRNH0U/HNDQ
FDVHLQGLFDWLQJWKDWDQRIILFHUjVDWWHPSWWRUHVFXHZKDWWKDW            WRUHVSRQGLQDGDQJHURXVPDQQHUWRZDUGKLVZLIHDQGFKLOG
RIILFHU EHOLHYHV WR EH D VXLFLGDO SHUVRQ GRHV QRW FRQVWLWXWH    ,Q KLV GHSRVLWLRQ &KLHI %H\HU TXLWH IUDQNO\ H[SODLQHG WKDW
H[LJHQWFLUFXPVWDQFHVl,GDW:HDUHQRWDZDUHRIDQ\           m>W@KDWSRVVLELOLW\>RIDYLROHQWUHDFWLRQ@H[LVWHGWKURXJKRXW
VXFK FDVH WKDW KDV LVVXHG VLQFH 5XVVR  &HUWDLQO\ WKHQ D     WKHHQWLUHFULVLVVLWXDWLRQVRZHZHUHFRQFHUQHGWKDWWKDWZDV
UHDVRQDEOH RIILFHU FRXOG QRW DQWLFLSDWH WKDW D FRXUW PLJKW       LQIDFWZKDWZRXOGKDSSHQls$DW%H\HU'HSDW
GHFLGHH[LJHQWFLUFXPVWDQFHVZHUHDEVHQWZKHUHWKHGDQJHU                &KLHI%H\HUDOVRLQGLFDWHGWKDWKHFRQVLGHUHGWKHSRVVLELOLW\
RI VXLFLGH ZDV FRPSRXQGHG E\ DQ DSSDUHQW WKUHDW WR WKH          RIDPXUGHUVXLFLGHUHDFWLRQZKHQHYDOXDWLQJWKHDGYLVDELOLW\
VXVSHFWjV IDPLO\  7KHUHIRUH VXPPDU\ MXGJPHQW IRU WKH            RILQLWLDWLQJDQDVVDXOWZLWKWKHDUPRUHGYHKLFOHEXWKHKRSHG
RIILFHUVRQWKHJURXQGVRITXDOLILHGLPPXQLW\LVDSSURSULDWH             WKDW0U/HNDQmZRXOGWDNHKLVDJJUHVVLYHDFWLRQRXWRQWKH
UHJDUGLQJWKHZDUUDQWOHVVHQWU\FODLP                                   SROLFHls$DW%H\HU'HSDW
  ([FHVVLYH)RUFH                                                      ,WVHHPVFOHDUIURPWKHUHFRUGKRZHYHUWKDW&KLHI%H\HU
                                                                         DOVR NQHZ WKDW IXUWKHU GHOD\ DQG LQDFWLRQ DOVR SRVHG
  7KH GLVWULFW FRXUW UHMHFWHG WKH $SSHOODQWjV )RXUWK               VXEVWDQWLDOULVNV7KH&DOOLVUHSRUWIRUH[DPSOHFRQFOXGHG
$PHQGPHQWH[FHVVLYHIRUFHFODLPRQWKHJURXQGVWKDWWKHUH                WKDW DOWKRXJK RQ EDODQFH D VWUDWHJ\ RI VWDOOLQJ IRU WLPH
ZDVQRWDmVHL]XUHlRIHLWKHU0U/HNDQRUKLVIDPLO\s$DW          JHQHUDOO\LVWKHEHVWWRUHGXFHULVNVWRKRVWDJHVVWDOOLQJKDVLWV
'LVW&W2SDW$VWKHFRXUWQRWHGWKH)RXUWK          RZQGUDZEDFNVDQGULVNV7KHXQGLVSXWHGIDFWVVXJJHVWWKDW
$PHQGPHQWSURWHFWVDJDLQVWRQO\XQUHDVRQDEOHVHL]XUHVLWLV             WKHVH ULVNV DQG GUDZEDFNV IDFWRUHG LQWR &KLHI %H\HUjV
QRWDJXDUDQWHHDJDLQVWXQUHDVRQDEOHRURXWUDJHRXVRIILFLDO              GHFLVLRQVWRLQLWLDWHDWDFWLFDODVVDXOWDQGGHSOR\WKHDUPRUHG
FRQGXFWJHQHUDOO\6HH*DODVY0F.HH)G                YHKLFOH  3ULRU WR RUGHULQJ WKH ILUVW DVVDXOW &KLHI %H\HU
WK &LU   7KHUHIRUH WR DVVHUW D VXFFHVVIXO )RXUWK      FRQVXOWHG D PHQWDO KHDOWK SURIHVVLRQDO RQ WKH VFHQH ZKR
$PHQGPHQWFODLPWKHSODLQWLIIVPXVWILUVWVKRZWKDWWKHUH               LQIRUPHG KLP WKDW WKH WKUHDW OHYHO ZDV KLJK  &KLHI %H\HU
ZDVDVHL]XUH6HHLG7KHGLVWULFWFRXUWFRQFOXGHGWKDWQRQH
RIWKH/HNDQVZHUHVHL]HGE\WKHSROLFH:HGHWHUPLQHWKDW
WKHGLVWULFWFRXUWHUUHGLQVRIDUDVLWIRXQGWKDW0U/HNDQZDV
                                                                         ,G DW 
       (ZROVNLY&LW\RI%UXQVZLFNHWDO                    1R        1R          (ZROVNLY&LW\RI%UXQVZLFNHWDO      

   7RKROGRWKHUZLVHZRXOGHIIHFWLYHO\JLYHWKHSROLFHIUHH                         QRWVHL]HGGXULQJWKHVWDQGRIIDOWKRXJKZHDJUHHZLWKWKH
OLFHQFHWRWDNHDQ\ULVNZLWKWKHOLYHVRIKRVWDJHVLQDQDUPHG                     GLVWULFWFRXUWjVFRQFOXVLRQWKDW0UV/HNDQDQGKHUVRQZHUH
VWDQGRIIVLWXDWLRQDVORQJDVWKH\GLGQRWDFWPDOLFLRXVO\DQG                     QRWVHL]HG1HYHUWKHOHVVZHFRQFOXGHWKDWWKH$SSHOODQWKDV
VDGLVWLFDOO\ZLWKWKHLQWHQWWRFDXVHKDUP7KHGLVWULFWFRXUW                     QRW GHPRQVWUDWHG D JHQXLQH LVVXH RI PDWHULDO IDFW DV WR
QRWHGWKLVVDPHFRQFHUQH[SODLQLQJWKDWLWGLGmQRWEHOLHYH                        ZKHWKHUH[FHVVLYHIRUFHZDVXVHGDJDLQVW0U/HNDQ
WKDW EHFDXVH 0U /HNDQ ZDV DUPHG DQG GDQJHURXV WKH
GHIHQGDQWV FRXOG DWWHPSW WR UHVWRUH RUGHU E\ DQ\ PHDQV                         $)RXUWK$PHQGPHQWVHL]XUHRFFXUVZKHQDSROLFHRIILFHU
ZKDWVRHYHUVRORQJDVWKH\GLGQRWLQWHQGWRKXUWWKH/HNDQVl                      UHVWUDLQV WKH OLEHUW\ RI D FLWL]HQ LQ VXFK D ZD\ WKDW D
s$DW'LVW&W2SDW                                                   UHDVRQDEOH FLWL]HQ ZRXOG UHDVRQDEO\ EHOLHYH XQGHU WKH
                                                                                    FLUFXPVWDQFHVWKDWKHRUVKHZDVQRWIUHHWROHDYH0LFKLJDQ
   1HYHUWKHOHVV HYHQ XQGHU WKH PRUH H[DFWLQJ GHOLEHUDWH                      Y&KHVWHUQXW86$YLRODWLRQRIWKH
LQGLIIHUHQFHVWDQGDUGZHFRQFOXGHWKDWWKH$SSHOODQWKDVQRW                       )RXUWK$PHQGPHQWUHTXLUHVWKHmLQWHQWLRQDODFTXLVLWLRQRI
VKRZQ D JHQXLQH LVVXH RI PDWHULDO IDFW DV WR ZKHWKHU WKH                  SK\VLFDOFRQWUROlRIDSHUVRQE\DVWDWHRIILFLDO%URZHUY
FRQGXFW RI WKH SROLFH URVH WR WKH OHYHO RI WKH FRQVFLHQFH                 &RXQW\RI,Q\R86$VHL]XUHGRHVQRW
VKRFNLQJ XQGHU WKH SDUWLFXODU FLUFXPVWDQFHV SUHVHQWHG                         RFFXUPRUHRYHUXQWLOWKHVXEMHFWLVVXFFHVVIXOO\GHWDLQHGE\
'HOLEHUDWH LQGLIIHUHQFH KDV EHHQ HTXDWHG ZLWK VXEMHFWLYH                      SK\VLFDOIRUFHRUDVKRZRIDXWKRULW\&DOLIRUQLDY+RGDUL
UHFNOHVVQHVVDQGUHTXLUHVWKHSODLQWLIIWRVKRZWKDWWKH                    '  86   KROGLQJ WKDW ER\ ZDV QRW VHL]HG
VWDWHmRIILFLDONQRZVRIDQGGLVUHJDUGVDQH[FHVVLYHULVNWR                        ZKLOHIOHHLQJIURPSXUVXLQJSROLFHRIILFHUXQWLORIILFHUWDFNOHG
>WKH YLFWLPjV@ KHDOWK RU VDIHW\l  )DUPHU Y %UHQQDQ                  KLPEULQJLQJER\XQGHUSK\VLFDOFRQWURO*DODV)GDW
                                                                                    m&OHDUO\GXULQJWKHLQLWLDOVWDJHVRIWKHSXUVXLWZKHQWKH
                                                                                    PLQRU SODLQWLII GHFLGHG WR IOHH UDWKHU WKDQ WR REH\ WKH
                                                                                    GHIHQGDQWRIILFHUjVGLUHFWLYHWRVWRSWKHPLQRUSODLQWLIIZDV
0U /HNDQ DORQH DQG LW LV XQGLVSXWHG WKDW 0U /HNDQ ZDV FRQWDLQHG                  QRWUHVWUDLQHGl
ZLWKLQ KLV KRXVH DQG VXUURXQGHG E\ D YDVWO\ VXSHULRU SROLFH SUHVHQFH
0RUHRYHU WKH &RXUWjV RSLQLRQ LQ :KLWOH\ VXJJHVWV WKDW LWV UHDVRQLQJ PD\
                                                                                      7KHGLVWULFWFRXUWFRQFOXGHGWKDW0U/HNDQZDVQRWVHL]HG
                                                                                    EHFDXVH E\ EDUULFDGLQJ KLPVHOI LQ KLV KRPH KH QHYHU
QRW DSSO\ RXWVLGH WKH LQVWLWXWLRQDO VHWWLQJ RI WKH SULVRQ 7KH :KLWOH\ &RXUW
EDVHG LWV FRQFOXVLRQV LQ ODUJH SDUW RQ WKH GHIHUHQFH WUDGLWLRQDOO\ DIIRUGHG
WR SULVRQ DGPLQLVWUDWRUV LQ PDLQWDLQLQJ GLVFLSOLQH DQG VHFXULW\ LG DW         VXEPLWWHGWRRIILFLDODXWKRULW\7KLVFRQFOXVLRQZDVLQHUURU
 DQG ZDV FDUHIXO WR OLPLW LWV KROGLQJ n LQVRIDU DV LW GHILQHG WKH VFRSH          7KHUHFDQEHOLWWOHTXHVWLRQXQGHUWKHFLUFXPVWDQFHVWKDW0U
RI )RXUWHHQWK $PHQGPHQW SURWHFWLRQV n WR SULVRQ LQPDWHV                7KH &RXUW   /HNDQZDVQRWIUHHWROHDYH7KHGLVWULFWFRXUWFRQVLGHUHG0U
H[SODLQHG WKDW m>E@HFDXVH WKLV FDVH LQYROYHV SULVRQ LQPDWHV UDWKHU WKDQ
                                                                                    /HNDQjVFDVHWREHPRUHFORVHO\DQDORJRXVWRWKDWRIDIOHHLQJ
SUHWULDO GHWDLQHHV RU SHUVRQV HQMR\LQJ XQUHVWULFWHG OLEHUW\ ZH LPSO\
QRWKLQJ DV WR WKH SURSHU DQVZHU    RXWVLGH WKH SULVRQ VHFXULW\ FRQWH[W E\
                                                                                    VXVSHFWZKRLVQRWXQGHUWKHFRQWURORIRIILFLDODXWKRULWLHV
KROGLQJ DV ZH GR WKDW LQ WKHVH FLUFXPVWDQFHV WKH 'XH 3URFHVV &ODXVH               :H EHOLHYH KRZHYHU WKDW 0U /HNDQjV FDVH PRUH FORVHO\
DIIRUGV UHVSRQGHQW QR JUHDWHU SURWHFWLRQ WKDQ GRHV WKH &UXHO DQG 8QXVXDO            UHVHPEOHVWKHIDFWVLQ%URZHU86DW,QWKDWFDVH
3XQLVKPHQWV &ODXVHl     ,G DW                                                 WKHGHFHGHQWQHYHUYROXQWDULO\VXEPLWWHGWRRIILFLDODXWKRULW\
                                                                                   EXWZDVUHVWUDLQHGQRQHWKHOHVVZKHQKHFROOLGHGZLWKDSROLFH
     2I FRXUVH DQ RIILFLDOjV VXEMHFWLYH DZDUHQHVV RI D ULVN PD\ EH                 URDGEORFNVHWXSIRUWKHSXUSRVHRIVWRSSLQJKLP7KH&RXUW
SURYHG    FLUFXPVWDQWLDOO\   E\   HYLGHQFH   VXJJHVWLQJ   WKDW   mWKH   GHIHQGDQW
                                                                                    IRXQGWKDWWKLVDFWRIUHVWUDLQWFRQVWLWXWHGDVHL]XUHIRUWKH
RIILFLDO EHLQJ VXHG KDG EHHQ H[SRVHG WR LQIRUPDWLRQ FRQFHUQLQJ WKH ULVN
DQG WKXV µPXVW KDYH NQRZQj DERXW LWl            )DUPHU        86 DW 
                                                                                    SXUSRVHVRIWKH)RXUWK$PHQGPHQW,G6LPLODUO\LQWKLV
0RUHRYHU mWKH FRQFHSW RI FRQVWUXFWLYH NQRZOHGJH LV IDPLOLDU HQRXJK WKDW
                                                                                    FDVHDOWKRXJK0U/HNDQZDVQHYHULQSROLFH FXVWRG\WKH
WKH WHUP µGHOLEHUDWH LQGLIIHUHQFHj ZRXOG QRW RI LWV RZQ IRUFH SUHFOXGH D          SROLFHVXUURXQGHGWKHKRXVHDQGSDUDGHGDQDUPRUHGYHKLFOH
VFKHPH WKDW FRQFOXVLYHO\ SUHVXPHG DZDUHQHVV IURP D ULVNjV REYLRXVQHVVl
    (ZROVNLY&LW\RI%UXQVZLFNHWDO             1R       1R             (ZROVNLY&LW\RI%UXQVZLFNHWDO             

LQIURQWRIWKH/HNDQVjKRXVH7KHVHDFWLRQVTXDOLI\DVDQ              RIILFHUVZHUHQRWH[FKDQJLQJJXQILUHZLWK/HNDQDWWKHWLPH
LQWHQWLRQDODSSOLFDWLRQRISK\VLFDOIRUFHDQGVKRZRIDXWKRULW\          WKDWWKHIDWHIXOGHFLVLRQVRIWKDWGD\ZHUHPDGH
PDGHZLWKWKHLQWHQWRIDFTXLULQJSK\VLFDOFRQWURO0RUHRYHU
WKLVDVVHUWLRQRIIRUFHDQGDXWKRULW\VXFFHHGHGLQUHVWUDLQLQJ              2WKHUFRXUWVKDYHIRXQGWKDWDQLQWHQWWRKDUPLVUHTXLUHG
0U /HNDQjV OLEHUW\ WR OHDYH KLV KRPH  8QOLNH WKH IOHHLQJ     ZKHUH WKH SROLFH ILUH XSRQ DQ HVFDSLQJ VXVSHFW DQG
VXVSHFWVLQ+RGDUL'DQG*DODV0U/HNDQZDVQRWmRQWKH               LQDGYHUWHQWO\LQMXUHKRVWDJHVLQWKHSURFHVV&KLOGUHVVY&LW\
ORRVHl%\ZD\RILOOXVWUDWLRQ0U/HNDQFOHDUO\ZRXOGKDYH            RI$UDSDKR)GWK&LUKROGLQJ
EHHQVHL]HGIRUWKHSXUSRVHVRIWKH)RXUWK$PHQGPHQWKDG                 LQWHQWWRKDUPUHTXLUHGZKHUHSROLFHILUHGXSRQKLMDFNHGYDQ
WKHSROLFHQDLOHGVKXWWKHGRRUVDQGZLQGRZVRIKLVKRXVH                FRQWDLQLQJKRVWDJHVLQDWWHPSWWRVWRSYDQDVLWGURYHWKURXJK
ZLWKKLPLQVLGH7KHDFWLRQVRIWKHSROLFHLQWKHLQVWDQWFDVH          VHULHVRISROLFHURDGEORFNV/HHY:LOOLDPV)6XSSG
ZHUHQROHVVHIIHFWLYHLQUHVWUDLQLQJ0U/HNDQjVPRYHPHQWV                (' 9D  LQWHQW WR KDUP DSSOLHG ZKHUH
DQGWKHUHIRUHVKRXOGEHFRQVLGHUHGDVHL]XUH&I)LVKHUY           DUPHGVXVSHFWVWRRNDKRVWDJHDQGZHUHDWWHPSWLQJWRHVFDSH
&LW\RI0HPSKLV)GWK&LUKROGLQJ              LQWKHKRVWDJHjVYDQ,QWKHLQVWDQWFDVHKRZHYHU0U/HNDQ
WKDW LQWHQWLRQDO DSSOLFDWLRQ RI IRUFH ZKLFK LPPRELOL]HG            ZDV FRQWDLQHG LQ KLV KRXVH DQG VXUURXQGHG E\ D YDVWO\
DXWRPRELOH HIIHFWLYHO\ VHL]HG DOO SDVVHQJHUV  7KLV               VXSHULRU SROLFHSUHVHQFH7KHSROLFHZHUHQHYHUIRUFHGWR
FRQFOXVLRQ LV FRQVLVWHQW ZLWK GHFLVLRQV LQ RWKHU FLUFXLWV        PDNH D KDVW\ GHFLVLRQ WR XVH IRUFH LQ RUGHU WR SUHYHQW KLV
ZKLFK KDYH IRXQG WKDW SROLFH HIIRUWV WR IRUFH D EDUULFDGHG      HVFDSHLQWRWKHFRPPXQLW\$OWKRXJK0U/HNDQGLGSRVHD
LQGLYLGXDO RXW RI D KRPH DUH SURSHUO\ WUHDWHG DV VHL]XUHV      GDQJHU WR KLV IDPLO\ WKH $SSHOODQWjV YHUVLRQ RI WKH IDFWV
VXEMHFW WR WKH )RXUWK $PHQGPHQWjV UHDVRQDEOHQHVV                    VXJJHVWVWKDWWKHGDQJHUZDVQRWLPPHGLDWHDVORQJDV0U
UHTXLUHPHQW,QUH&LW\RI3KLODGHOSKLD/LWLJ)G            /HNDQZDVQRWSURYRNHG
UG&LU6FLULFDsFRQFXUULQJDQGGLVVHQWLQJKROGLQJ
WKDWXVHRILQFHQGLDU\GHYLFHVDJDLQVWKRXVHZDVVHL]XUHDVLW
                                                                             
ZDVXVHRImIRUFHZLWKWKHDLPRIJDLQLQJHQWU\LQWRWKHKRXVH                 :H QRWH WKDW :KLWOH\ Y $OEHUV  86   ZKLFK ZDV
RU IRUFLQJ WKH RFFXSDQWV RXWl FHUW GHQLHG  86       GLVFXVVHG IDYRUDEO\ LQ /HZLV FRXOG EH LQWHUSUHWHG WR VXJJHVW WKDW WKH PRUH
*LQWHUY6WDOOFXS)GWK&LU            SHUPLVVLYH mLQWHQW WR KDUPl WHVW DSSOLHV HYHQ ZKHQ WKHUH LV D JHQXLQH

KROGLQJ WKDW VHWWLQJ EXLOGLQJ RQ ILUH WR mVPRNH RXWl            LVVXH RI PDWHULDO IDFW DV WR WKH LPPHGLDF\ RI WKH GDQJHU SRVHG E\ D
                                                                         EDUULFDGHG DQG DUPHG LQGLYLGXDO 7KH :KLWOH\ &RXUW KHOG WKDW mLQWHQW WR
EDUULFDGHG VXVSHFW ZDV VXEMHFW WR )RXUWK $PHQGPHQW                 KDUPl ZDV WKH DSSURSULDWH VWDQGDUG IRU DVVHVVLQJ (LJKWK DQG )RXUWHHQWK
UHDVRQDEOHQHVV WHVW WR GHWHUPLQH ZKHWKHU GHVWUXFWLRQ RI            $PHQGPHQW YLRODWLRQV LQ WKH FRQWH[W RI D SULVRQ ULRW ,G DW  7KH
SURSHUW\ ZDV ZDUUDQWHG  %HFDXVH ZH FRQFOXGH WKDW 0U           SODLQWLII LQ :KLWOH\ DQ LQPDWH ZDV LQMXUHG ZKHQ JXDUGV ILUHG VKRWJXQV
/HNDQZDVVHL]HGIRUWKHSXUSRVHVRIWKH)RXUWK$PHQGPHQW               LQWR DQ LQPDWHFRQWUROOHG FHOO EORFN LQ DQ RSHUDWLRQ WR UHVFXH D JXDUG

ZHWKHUHIRUHDQDO\]HWKHSROLFHjVDFWLRQVWRZDUGKLPVROHO\              EHLQJ KHOG KRVWDJH 7KH &RXUW FRQFOXGHG WKDW WKH LQWHQW WR KDUP VWDQGDUG
                                                                         ZDV DSSURSULDWH HYHQ WKRXJK mWKH HYLGHQFH FRXOG EH WDNHQ WR VKRZ WKDW
XQGHU WKH REMHFWLYH UHDVRQDEOHQHVV WHVW RI WKH )RXUWK             WKH JHQHUDO GLVWXUEDQFH KDG TXLHWHG GRZQl ,G DW 
$PHQGPHQW6HH*UDKDPY&RQQRU86                        1RQHWKHOHVV ZH WKLQN LW ZRXOG EH LQDSSURSULDWH WR H[WHQG WKH :KLWOH\
KROGLQJWKDWZKHUHDQH[FHVVLYHIRUFHFODLPDULVHVLQ            KROGLQJ WR WKH LQVWDQW FDVH ,QLWLDOO\ :KLWOH\ LV IDFWXDOO\ GLVWLQJXLVKDEOH
WKH FRQWH[W RI DQ DUUHVW RU LQYHVWLJDWRU\ VWRS LW VKRXOG EH   7KH :KLWOH\ &RXUW HPSKDVL]HG WKDW WKH XQGLVSXWHG IDFWV VKRZHG WKDW WKH

DQDO\]HGVROHO\XQGHU)RXUWK$PHQGPHQWDQGQRW)RXUWHHQWK               VLWXDWLRQ DOWKRXJK LW KDG FDOPHG VRPHZKDW mUHPDLQHG GDQJHURXV DQG
                                                                         YRODWLOHl ,G DW  7KLV ZDV EDVHG XSRQ IDFWV LQGLFDWLQJ WKDW LQ
$PHQGPHQW'XH3URFHVV&ODXVH                                           DGGLWLRQ WR WKH GDQJHU WR WKH KRVWDJH JXDUG mVHYHUDO    LQPDWHV ZHUH
                                                                         DUPHG     QXPHURXV LQPDWHV UHPDLQHG RXWVLGH WKHLU FHOOV DQG WKH
   :HFRQFOXGHWKDWWKHGLVWULFWFRXUWZDVFRUUHFWKRZHYHULQ          FHOOEORFN UHPDLQHG LQ WKH FRQWURO RI WKH LQPDWHVl ,G 7KXV DFFRUGLQJ WR
ILQGLQJWKDWWKHSROLFHGLGQRWVHL]H0UV/HNDQRUs7/HNDQ          WKH &RXUW WKH SROLFH ZHUH FRQIURQWHG ZLWK DQ XQFRQWDLQHG DQG RXWRI
                                                                         FRQWURO SULVRQ ULRW ,Q WKH LQVWDQW FDVH E\ FRQWUDVW WKH WKUHDW FDPH IURP
    (ZROVNLY&LW\RI%UXQVZLFNHWDO            1R       1R             (ZROVNLY&LW\RI%UXQVZLFNHWDO            

WKLVZDVDVLWXDWLRQZKHUHDFWXDOGHOLEHUDWLRQZDVSUDFWLFDO           7KHUH ZDV QR UHDVRQ IRU HLWKHU RI WKHP WR EHOLHYH WKDW WKH
7KH SROLFH ZDLWHG ILYH KRXUV WR LQLWLDWH WKH ILUVW mWDFWLFDO   SROLFHZHUHSUHYHQWLQJWKHPIURPOHDYLQJWKHKRXVH,QIDFW
VROXWLRQlZKLFKVWURQJO\VXJJHVWVWKDWVSOLWVHFRQGGHFLVLRQ           LWZDVWKHFOHDUREMHFWLYHRIWKHSROLFHWRUHPRYHWKHPIURP
PDNLQJZDVQRWUHTXLUHG0DQ\PRUHKRXUVSDVVHGEHIRUHWKH             WKHKRXVHDQGUHPRYHWKHPIURPWKHFRQWURORI0U/HNDQ
GHFLVLRQZDVPDGHWRGHSOR\WKHDUPRUHGYHKLFOH,QGHHGLQ            7KHLU PRYHPHQW ZDV UHVWUDLQHG E\ 0U /HNDQ RU LQ 0UV
KLV GHSRVLWLRQ &KLHI %H\HU LQGLFDWHG WKDW WKH GHFLVLRQ WR      /HNDQjVFDVHKHURZQSK\VLFDOFRQGLWLRQQRWE\WKHSROLFH
LQLWLDWH D WDFWLFDO DVVDXOW ZDV PDGH DIWHU FRQVXOWLQJ WZR       7KH IDFW WKDW WKH SROLFH H[HUFLVHG FRQWURO RYHU WKH
PHQWDO KHDOWK SURIHVVLRQDOV DQG UHTXHVWLQJ LQSXW IURP WKH        HQYLURQPHQWLQWKH/HNDQVjKRXVHGRHVQRWGHPRQVWUDWHWKDW
RIILFHUVRQWKHVFHQH%H\HUDOVRLQGLFDWHGWKDWKHGLVFXVVHG          0UV /HNDQ DQG KHU VRQ ZHUH VHL]HG  7KH GLVWLQJXLVKLQJ
WKHSURVDQGFRQVRIXVLQJWHDUJDV&OHDUO\WKLVWHVWLPRQ\           IHDWXUHRIDVHL]XUHLVWKHUHVWUDLQWRIWKHVXEMHFWjVOLEHUW\n
GHPRQVWUDWHVQRWRQO\WKDWGHOLEHUDWLRQZDVSUDFWLFDOEXWWKDW         VSHFLILFDOO\KLVRUKHUIUHHGRPWRZDONDZD\&RQWURORYHU
VRPHHIIRUWDWGHOLEHUDWLRQZDVLQIDFWPDGH7KLVFRQFOXVLRQ          RQHjV HQYLURQPHQW GRHV QRW HVWDEOLVK D VHL]XUH XQOHVV WKDW
LVVXSSRUWHGE\&DOOLVjVUHSRUWZKLFKQRWHGWKDWWKHUHZDVQR          FRQWURO VRPHKRZ UHVWULFWV WKH VXEMHFWjV SK\VLFDO OLEHUW\
QHHGIRULPPHGLDWHDFWLRQDQGFRQFOXGHGWKDWm>R@QHRIWKH              7KHUH DUH QR IDFWV DOOHJHG WKDW ZRXOG VXJJHVW WKLV ZDV WKH
VWURQJHVW SRLQWV RQ WKH VLGH RI WKH DXWKRULWLHV ZDV µWLPHjl   FDVHIRU0UV/HNDQRUKHUVRQ
s$DW&DOOLV5HSDW
                                                                           (YHQ WKRXJK ZH FRQFOXGH WKDW WKH GLVWULFW FRXUW HUUHG LQ
   7KH WLPH IRU GHOLEHUDWLRQ DYDLODEOH WR &KLHI %H\HU LQ        ILQGLQJ WKDW 0U /HNDQ ZDV QRW VHL]HG WKH $SSHOODQW KDV
GHFLGLQJKRZWRUHVSRQGWR0U/HNDQjVDFWLRQVGLVWLQJXLVKHV            QRQHWKHOHVVIDLOHGWRVKRZWKDWWKHRIILFHUVjXVHRIIRUFHZDV
WKLV FDVH IURP WKRVH FDVHV LQ ZKLFK DFWXDO PDOLFH DQG DQ      XQUHDVRQDEOH7KHGHWHUPLQDWLRQRIZKHWKHUIRUFHXVHGWR
LQWHQWWRKDUPZDVUHTXLUHG,Q/HZLVIRUH[DPSOHWKHHQWLUH         HIIHFWDVHL]XUHZDVXQUHDVRQDEOHmUHTXLUHVFDUHIXODWWHQWLRQ
FRXUVHRIHYHQWVODVWHGDPHUHVHYHQW\ILYHVHFRQGV86
DW:KHQWKHRIILFHUVREVHUYHGWKHYLFWLPjVPRWRUF\FOH
DSSURDFKLQJ DW KLJK VSHHG WKH\ ZHUH IRUFHG WR PDNH DQ             
LQVWDQWDQHRXVGHFLVLRQWRJLYHFKDVH,GDW/LNHZLVHLQ               ,Q KLV GLVVHQW sXGJH +XOO UHOLHV XSRQ 6WHPOHU Y &LW\ RI )ORUHQFH

&OD\EURRN Y %LUFKZHOO  )G  WK &LU  ZH        )G   WK &LU  FHUW GHQLHG  86   LQ
                                                                        UHDFKLQJ WKH FRQFOXVLRQ WKDW 0UV /HNDQ DQG KHU VRQ ZHUH VHL]HG E\ WKH
KHOGWKDWDE\VWDQGHULQMXUHGGXULQJDSROLFHVKRRWRXWPXVW             SROLFH :H WKLQN WKLV FDVH LV LQDSSRVLWH 6WHPOHU ZDV D VXEVWDQWLYH GXH
VKRZWKDWWKHSROLFHDFWHGmµPDOLFLRXVO\DQGVDGLVWLFDOO\IRU           SURFHVV FDVH QRW D )RXUWK $PHQGPHQW H[FHVVLYH IRUFH FDVH ,Q 6WHPOHU
WKHYHU\SXUSRVHRIFDXVLQJKDUPjlLQRUGHUWRPDLQWDLQDGXH           ZH KHOG WKDW WKH SROLFH E\ SK\VLFDOO\ UHPRYLQJ WKH GHFHGHQW &RQQL
SURFHVVFODLP,GDWTXRWLQJ/HZLV86DW            %ODFN IURP RQH YHKLFOH DQG SODFLQJ KHU LQ WKH YHKLFOH RSHUDWHG E\ KHU
:HH[SODLQHGWKDWWKLVVWDQGDUGZDVDSSURSULDWHEHFDXVHWKH             LQWR[LFDWHG DQG DEXVLYH ER\IULHQG WRRN DIILUPDWLYH DFWLRQ WR UHVWUDLQ WKH
                                                                        GHFHGHQWjV OLEHUW\ DQG WKHUHIRUH RZHG KHU D GXW\ QRW WR DFW LQ D PDQQHU
SROLFHmKDGQRRSSRUWXQLW\WRSRQGHURUGHEDWHWKHLUUHDFWLRQ           WKDW ZDV GHOLEHUDWHO\ LQGLIIHUHQW WR KHU VDIHW\ SXUVXDQW WR WKH )RXUWHHQWK
WR WKH GDQJHURXV DFWLRQV RI WKH DUPHG PDQl ZKHQ KH             $PHQGPHQWjV VXEVWDQWLYH GXH SURFHVV SURWHFWLRQV ,G 7KH GHFHGHQWjV
DSSURDFKHGWKHPPHQDFLQJO\ZLWKDZHDSRQDQGWKHQRSHQHG                FODLPV ZHUH QRW DQDO\]HG XQGHU WKH )RXUWK $PHQGPHQWjV REMHFWLYH
ILUH,GDWVHHDOVR0RUHODQG)GDWKROGLQJ          UHDVRQDEOHQHVV VWDQGDUG 0RUHRYHU HYHQ LI 6WHPOHU FDQ EH UHDG WR KROG
WKDWLQWHQWWRKDUPVWDQGDUGDSSOLHGZKHQSROLFHHQFRXQWHUHG            WKDW WKH GHFHGHQW ZDV VHL]HG ZLWKLQ WKH PHDQLQJ RI WKH )RXUWK

D JXQILJKW LQ SURJUHVV LQ D SDUNLQJ ORW ZKHUH  WR       $PHQGPHQW WKH IDFWXDO VLWXDWLRQ SUHVHQWHG WKHUHLQ LV UHDGLO\
                                                                        GLVWLQJXLVKDEOH IURP WKH LQVWDQW FDVH ,Q 6WHPOHU ZH KHOG WKDW WKH SROLFH
LQQRFHQW SHRSOH ZHUH FDXJKW LQ WKH FURVVILUH  8QOLNH WKH     HVWDEOLVKHG FXVWRG\ RI WKH GHFHGHQW ZKHQ WKH\ SK\VLFDOO\ JUDEEHG KHU DQG
GHIHQGDQWV LQ &OD\EURRN KRZHYHU &KLHI %H\HU DQG KLV            OLIWHG KHU LQWR KHU ER\IULHQGjV YHKLFOH DJDLQVW KHU ZLOO ,G 1R VXFK DFW RI
                                                                        GLUHFW SK\VLFDO UHVWUDLQW ZDV HYHU WDNHQ LQ UHODWLRQ WR 0UV /HNDQ RU KHU
                                                                        VRQ
    (ZROVNLY&LW\RI%UXQVZLFNHWDO          1R       1R             (ZROVNLY&LW\RI%UXQVZLFNHWDO           

WR WKH IDFWV DQG FLUFXPVWDQFHV RI HDFK SDUWLFXODU FDVH       PDNH XQKXUULHG MXGJPHQWV XSRQ WKH FKDQFH IRU UHSHDWHG
LQFOXGLQJ WKH VHYHULW\ RI WKH FULPH DW LVVXH ZKHWKHU WKH    UHIOHFWLRQODUJHO\XQFRPSOLFDWHGE\WKHSXOOVRIFRPSHWLQJ
VXVSHFWSRVHVDQLPPHGLDWHWKUHDWWRWKHVDIHW\RIWKHRIILFHUV       REOLJDWLRQVl  ,G DW   7KH &RXUW IXUWKHU H[SODLQHG
RU RWKHUV DQG ZKHWKHU KH LV DFWLYHO\ UHVLVWLQJ DUUHVW RU    KRZHYHU WKDW mZKHQ XQIRUVHHQ FLUFXPVWDQFHV GHPDQG DQ
DWWHPSWLQJWRHYDGHDUUHVWE\IOLJKWl*UDKDP86DW           RIILFHUjVLQVWDQWMXGJPHQWHYHQSUHFLSLWDWHUHFNOHVVQHVVIDLOV
7KHWHVWLVREMHFWLYHLWDVNVZKHWKHUDUHDVRQDEOHRIILFHU     WRLQFKFORVHHQRXJKWRKDUPIXOSXUSRVHWRVSDUNWKHVKRFN
ZRXOGFRQFOXGHWKDWWKHOHYHORIIRUFHXVHGZDVDSSURSULDWH          WKDWLPSOLFDWHVµWKHODUJHFRQFHUQVRIWKHJRYHUQRUVDQGWKH
6HHLGDW                                                    JRYHUQHGjl,GTXRWLQJ'DQLHOV86DW,QVXFK
                                                                      VLWXDWLRQV ZKLFK LQFOXGH KLJK VSHHG YHKLFOH FKDVHV D
   8QGHUWKLVVWDQGDUGZHKROGWKDWVXPPDU\MXGJPHQWIRU             )RXUWHHQWK$PHQGPHQWYLRODWLRQRFFXUVRQO\ZKHQWKHSROLFH
WKHGHIHQGDQWVZDVDSSURSULDWH7KHSROLFHXVHGGHDGO\IRUFH         DFWZLWKPDOLFHDQGDQmLQWHQWWRKDUPl,GDW
RQO\GXULQJWKHWDFWLFDODVVDXOWRQWKH/HNDQVjKRPH$WWKLV
SRLQWKRZHYHULWLVXQGLVSXWHGWKDW0U/HNDQZDVILULQJRQ           $SSO\LQJWKLVIUDPHZRUNZHDJUHHZLWKWKHGLVWULFWFRXUW
WKHRIILFHUVDQGKHWKHUHIRUHSRVHGDQLPPHGLDWHWKUHDWWRWKH       WKDW WKLV FDVH mIDOOV ZLWKLQ WKH µPLGGOHUDQJHj EHWZHHQ
RIILFHUV  $OWKRXJK WKH IDFWV YLHZHG PRVW IDYRUDEO\ WR WKH   FXVWRGLDO VHWWLQJV DQG KLJKVSHHG FKDVHVl DQG OLNHZLVH
SODLQWLIIVUHYHDOWKDW0U/HNDQZDVQRWDQLPPHGLDWHWKUHDW          FRQFOXGHWKDWRQEDODQFHmWKHPRUHDSSURSULDWHVWDQGDUGRI
ZKHQWKHRIILFHUVZHUHQRWDWWHPSWLQJDIRUFLEOHHQWU\QHLWKHU       UHYLHZLVµGHOLEHUDWHLQGLIIHUHQFHjls$DW'LVW&W
ZDVWKHUHDQ\XVHRIGHDGO\IRUFHDWWKHVHWLPHV0RUHRYHU          2S DW   $OWKRXJK WKH %UXQVZLFN SROLFH RIILFHUV
LWLVXQGLVSXWHGWKDW0U/HNDQZDVDFWLYHO\UHVLVWLQJDUUHVW        FRQGXFWLQJ WKH VWDQGRII XQGRXEWHGO\ IDFHG FRPSHWLQJ
LQGHHGKHGHPRQVWUDWHGWKDWKHZRXOGILUHRQDQ\RIILFHUV            REOLJDWLRQVDQGLQWHQVHSUHVVXUHVLQPDNLQJWKHLUGHFLVLRQV
ZKRHQWHUHGWKHKRXVH8QGHUWKHVHFLUFXPVWDQFHVZHFDQ             WKHIDFWVYLHZHGPRVWIDYRUDEO\WRWKHSODLQWLIIVUHYHDOWKDW
RQO\ FRQFOXGH WKDW WKH XVH RI WKH EDWWHULQJ UDP DQG WKH
LQFHQGLDU\GHYLFHVZKLFKZHUHGLUHFWHGDJDLQVW0U/HNDQjV
KRPH EXW QRW KLV SHUVRQ ZHUH REMHFWLYHO\ UHDVRQDEOH DV           
DSSOLHGWR0U/HNDQ$WOHDVWRQHFRXUWKDVIRXQGIDUJUHDWHU             :H QRWH WKDW DOWKRXJK WKH LVVXH KDV QHYHU EHHQ GHFLGHG FDVHV IURP

GHVWUXFWLRQ RI SURSHUW\ WR EH UHDVRQDEOH DW WKH VXPPDU\       WKLV FLUFXLW GHFLGHG EHIRUH /HZLV KDYH mH[SUHVVHG GRXEWl DV WR ZKHWKHU
                                                                      WKH GHOLEHUDWH LQGLIIHUHQFH VWDQGDUG VKRXOG DSSO\ LQ QRQFXVWRGLDO VHWWLQJV
MXGJPHQW VWDJH LQ WKH FRQWH[W RI DQ DUPHG DQG EDUULFDGHG     6WHPOHU Y &LW\ RI )ORUHQFH  )G    WK &LU  FHUW
LQGLYLGXDO*LQWHU)GDWKROGLQJWKDWSODLQWLIIV         GHQLHG  8 6          6XFK GRXEW ZH EHOLHYH KDV EHHQ
IDLOHGWRFUHDWHDMXU\TXHVWLRQDVWRZKHWKHUEXUQLQJGRZQ           UHVROYHG E\ WKH &RXUWjV RSLQLRQ LQ /HZLV ZKLFK PDGH FOHDU WKDW WKH NH\
KRXVH ZKHUH KHDYLO\ DUPHG IXJLWLYH ZDV EDUULFDGHG ZDV          YDULDEOH LV ZKHWKHU DFWXDO GHOLEHUDWLRQ LV SUDFWLFDO QRW ZKHWKHU WKH
XQUHDVRQDEOH XVH RI IRUFH  ,Q OLJKW RI 0U /HNDQjV         FODLPDQW ZDV LQ VWDWH FXVWRG\       $V WKH &RXUW H[SODLQHG GHOLEHUDWH
                                                                      LQGLIIHUHQFH DSSOLHV LQ FXVWRGLDO VHWWLQJV EHFDXVH WKHVH VHWWLQJV SURYLGH
ZLOOLQJQHVVWRXVHGHDGO\IRUFHDJDLQVWWKHSROLFHLQUHVLVWLQJ       WKH RSSRUWXQLW\ IRU UHIOHFWLRQ DQG XQKXUULHG MXGJPHQWV /HZLV  86
DUUHVW WKH XVH RI QRQGHDGO\ IRUFH VXFK DV WHDU JDV DQG    DW  &XVWRGLDO VHWWLQJV KRZHYHU DUH QRW WKH RQO\ VLWXDWLRQV LQ ZKLFK
SV\FKRORJLFDOWDFWLFVZKLOHSHUKDSVLOOFRQVLGHUHGZDVQRW          RIILFLDOV PD\ KDYH D UHDVRQDEOH RSSRUWXQLW\ WR GHOLEHUDWH m/LNH SULVRQ
H[FHVVLYHXQGHUDQ\YHUVLRQRIWKHIDFWVEHIRUHXV,QGHHG          RIILFLDOV ZKR DUH FKDUJHG ZLWK RYHUVHHLQJ DQ LQPDWHjV ZHOIDUH 6WDWH
WKH$SSHOODQWKDVSUHVHQWHGQRHYLGHQFHWRLQGLFDWHWKDW0U          RIILFLDOV ZKR FUHDWH RU HQKDQFH GDQJHU WR FLWL]HQV PD\ DOVR EH LQ D

/HNDQZDVSK\VLFDOO\KDUPHGLQDQ\ZD\E\WKHIRUFHH[HUWHG           SRVLWLRQ ZKHUH µDFWXDO GHOLEHUDWLRQ LV SUDFWLFDOjl %XWHUD  )G DW 
                                                                      TXRWLQJ /HZLV  86 DW  DSSO\LQJ GHOLEHUDWH LQGLIIHUHQFH
E\WKHSROLFH                                                        VWDQGDUG LQ FDVH LQ ZKLFK SULYDWH FLWL]HQ ZDV LQMXUHG ZKLOH DFWLQJ DV
                                                                      XQGHUFRYHU RSHUDWLYH LQ SROLFH LQYHVWLJDWLRQ ZKHUH IDFWV VKRZHG WKDW
                                                                      mRIILFHUV KDG WKH RSSRUWXQLW\ WR SODQ WKH XQGHUFRYHU RSHUDWLRQ ZLWK
                                                                      FDUHl
    (ZROVNLY&LW\RI%UXQVZLFNHWDO          1R      1R           (ZROVNLY&LW\RI%UXQVZLFNHWDO        

WKDW)RXUWHHQWK$PHQGPHQWOLDELOLW\ZLOODWWDFKWRmFRQGXFW            (YHQLIDFRQVWLWXWLRQDOLQMXU\KDGRFFXUUHGWKHODZLVQRW
LQWHQGHG WR LQMXUH LQ VRPH ZD\ XQMXVWLILDEOH E\ DQ\          VXIILFLHQWO\FOHDUO\HVWDEOLVKHGRQWKLVTXHVWLRQWRRYHUFRPH
JRYHUQPHQWDOLQWHUHVWl/HZLV86DWHPSKDVLV            TXDOLILHGLPPXQLW\6HH5XVVR)GDW,QUH
DGGHG  m:KHWKHU WKH SRLQW RI WKH FRQVFLHQFH VKRFNLQJ LV   &LW\RI3KLODGHOSKLD/LWLJ)GDWJUDQWLQJTXDOLILHG
UHDFKHGZKHQLQMXULHVDUHSURGXFHGZLWKFXOSDELOLW\IDOOLQJ          LPPXQLW\WRSROLFHZKHUHILUHXVHGWRVPRNHRXWEDUULFDGHG
ZLWKLQWKHPLGGOHUDQJHIROORZLQJIURPVRPHWKLQJPRUHWKDQ          JURXSDIWHUJXQEDWWOHEHFDXVHLWFRXOGQRWFRQFOXGHWKDWmLQ
QHJOLJHQFH EXW OHVV WKDQ LQWHQWLRQDO FRQGXFW VXFK DV         WKH OLJKW RI SUHH[LVWLQJ ODZ WKH XQODZIXOQHVV RI HLWKHU
UHFNOHVVQHVVRUµJURVVQHJOLJHQFHjLVDPDWWHUIRUFORVHUFDOOVl    GURSSLQJWKHH[SORVLYHRUOHWWLQJWKHILUHEXUQVKRXOGKDYH
,GTXRWDWLRQDQGFLWDWLRQRPLWWHG                                EHHQDSSDUHQWlTXRWDWLRQRPLWWHG,Q5XVVR)GDW
                                                                      ZH KHOG WKDW WKH GHIHQGDQW SROLFH RIILFHUV ZHUH
   :KHWKHUFRQGXFWIDOOLQJZLWKLQWKLVmPLGGOHUDQJHlUHDFKHV        HQWLWOHGWRTXDOLILHGLPPXQLW\DVWRWKHFODLPWKDWWKH\XVHG
WKHOHYHORIFRQVFLHQFHVKRFNLQJGHSHQGVXSRQWKHIDFWVDQG          XQUHDVRQDEOHIRUFHLQILULQJPXOWLSOHWLPHVZLWKDQRQOHWKDO
FLUFXPVWDQFHVRIWKHLQGLYLGXDOFDVH$VWKH6XSUHPH&RXUW          7DVHUJXQXSRQDPHQWDOO\ GLVWXUEHGVXVSHFWZLHOGLQJWZR
UHFHQWO\H[SODLQHGFRQGXFWmWKDWVKRFNVLQRQHHQYLURQPHQW          NQLYHV:HQRWHGWKDWmDOWKRXJKWKHSODLQWLIIVjDOOHJDWLRQV
PD\QRWEHVRSDWHQWO\HJUHJLRXVLQDQRWKHUDQGRXUFRQFHUQ         PD\UDLVHDJHQXLQHLVVXHRIPDWHULDOIDFWDVWRZKHWKHUWKH
ZLWKSUHVHUYLQJWKHFRQVWLWXWLRQDOSURSRUWLRQVRIVXEVWDQWLYH        XVHRIWKH7DVHUZDVUHDVRQDEOHlZHFRXOGQRWFRQFOXGHWKDW
GXH SURFHVV GHPDQGV DQ H[DFW DQDO\VLV RI FLUFXPVWDQFHV        WKH GHIHQGDQWjV mXVH RI QRQOHWKDO IRUFH WR VXEGXH D
EHIRUH DQ\ DEXVH RI SRZHU LV FRQGHPQHG DV FRQVFLHQFH         SRWHQWLDOO\ KRPLFLGDO LQGLYLGXDO WUDQVJUHVVHG FOHDUO\
VKRFNLQJl,GDW)RUH[DPSOHLQWKHFRQWH[WRISUHWULDO     HVWDEOLVKHG ODZl  ,G  ,Q UHDFKLQJ WKLV FRQFOXVLRQ ZH
GHWHQWLRQWKHIDXOWUHTXLUHPHQWIRUDGXHSURFHVVYLRODWLRQ         HPSKDVL]HG WKDW WKH GHIHQGDQW mGHSOR\HG WKH 7DVHU LQ DQ
PD\ EH VDWLVILHG E\ VKRZLQJ WKDW VWDWH RIILFLDOV ZHUH        HIIRUW WR REYLDWH WKH QHHG IRU OHWKDO IRUFHl  ,G DW 
GHOLEHUDWHO\ LQGLIIHUHQW WR WKH EDVLF PHGLFDO QHHGV RI        6LPLODUO\ KHUHWKHGHIHQGDQWVGLGQRWHPSOR\OHWKDOIRUFH
GHWDLQHHV,GVHHDOVR+HIOLQY6WHZDUW&RXQW\)G         H[FHSWGXULQJWKRVHRFFDVLRQVZKHQ0U/HNDQILUHGGLUHFWO\
WK&LUFHUWGHQLHG86%\          XSRQWKHP:HDUHDZDUHRIQRFRQWUROOLQJSUHFHGHQWVLQFH
FRQWUDVWLQ/HZLV86DWWKH6XSUHPH&RXUWKHOG          5XVVR KROGLQJ WKDW WKH XVH RI QRQOHWKDO IRUFH DJDLQVW DQ
WKDW HYHQ mGHOLEHUDWH LQGLIIHUHQFHl LV LQVXIILFLHQW WR         DUPHGDQGYRODWLOHVXVSHFWFRQVWLWXWHVH[FHVVLYHIRUFH:H
GHPRQVWUDWHD)RXUWHHQWK$PHQGPHQWYLRODWLRQRQWKHEDVLV            WKHUHIRUHFRQFOXGHWKDWWKHGHIHQGDQWVDUHHQWLWOHGWRTXDOLILHG
RISROLFHFRQGXFWGXULQJDKLJKVSHHGYHKLFOHFKDVH                 LPPXQLW\RQWKH$SSHOODQWjVH[FHVVLYHIRUFHFODLP
   m>7@KH FULWLFDO TXHVWLRQ LQ GHWHUPLQLQJ WKH DSSURSULDWH       6XEVWDQWLYH'XH3URFHVV&ODLP
VWDQGDUGRIFXOSDELOLW\LVZKHWKHUWKHFLUFXPVWDQFHVDOORZHG
WKH VWDWH DFWRUV WLPH WR IXOO\ FRQVLGHU WKH SRWHQWLDO           :H DOVR FRQFOXGH WKDW WKH GLVWULFW FRXUW FRUUHFWO\
FRQVHTXHQFHV RI WKHLU FRQGXFWl  0RUHODQG Y /DV 9HJDV       GHWHUPLQHGWKDWWKHFRQGXFWRIWKHSROLFHGXULQJWKHWZRGD\
0HWUR 3ROLFH 'HSjW  )G   WK &LU       VWDQGRIIGLGQRWYLRODWHWKHVXEVWDQWLYHGXHSURFHVVULJKWVRI
UHYLHZLQJ FLUFXLWVj WUHDWPHQW RI /HZLV GHFLVLRQ  $V WKH   %HYHUO\ /HNDQ RU KHU VRQ  $V WKH 6XSUHPH &RXUW KDV
/HZLV&RXUWH[SODLQHGWKHGHOLEHUDWHLQGLIIHUHQFHVWDQGDUG          H[SODLQHGmµ>W@KHWRXFKVWRQHRIGXHSURFHVVLVSURWHFWLRQRI
mLV VHQVLEO\ HPSOR\HG RQO\ ZKHQ DFWXDO GHOLEHUDWLRQ LV        WKH LQGLYLGXDO DJDLQVW DUELWUDU\ DFWLRQ RI JRYHUQPHQWj
SUDFWLFDOl,GDW7KH&RXUWQRWHGIRUH[DPSOHWKDW         ZKHWKHUWKHIDXOWOLHVLQDGHQLDORIIXQGDPHQWDOSURFHGXUDO
mOLDELOLW\IRUGHOLEHUDWHLQGLIIHUHQFHWRLQPDWHZHOIDUHUHVWV       IDLUQHVVRULQWKHH[HUFLVHRISRZHUZLWKRXWDQ\UHDVRQDEOH
XSRQWKHOX[XU\HQMR\HGE\SULVRQRIILFLDOVRIKDYLQJWLPHWR        MXVWLILFDWLRQl&RXQW\RI6DFUDPHQWRY/HZLV86
    (ZROVNLY&LW\RI%UXQVZLFNHWDO              1R       1R           (ZROVNLY&LW\RI%UXQVZLFNHWDO         

TXRWLQJ:ROIIY0F'RQQHOO86                  RI&ROXPELD)G'&&LUm$OO
FLWDWLRQVRPLWWHG7KH$SSHOODQWjVFODLP              FLUFXLW FRXUWV RI DSSHDOV    KDYH E\ QRZ UHOLHG RQ WKLV
LVRQHRIVXEVWDQWLYHQRWSURFHGXUDOGXHSURFHVV7KDWLVWKH         SDVVDJH LQ 'H6KDQH\ WR DFNQRZOHGJH WKDW WKHUH PD\ EH
$SSHOODQWDUJXHVWKDW0UV/HNDQDQGKHUVRQZHUHGHSULYHG                SRVVLEOHFRQVWLWXWLRQDOOLDELOLW\ZKHUHWKHVWDWHFUHDWHVD
RI OLIH DQG OLEHUW\ DV D UHVXOW RI WKH DUELWUDU\ H[HUFLVH RI   GDQJHURXV VLWXDWLRQ RU UHQGHUV FLWL]HQV PRUH YXOQHUDEOH WR
JRYHUQPHQW SRZHU n QDPHO\ WKH DFWLRQV RI WKH SROLFH LQ          GDQJHUlTXRWDWLRQRPLWWHG%RZHUVY 'H9LWR)G
XQQHFHVVDULO\HVFDODWLQJWKHFRQIURQWDWLRQZLWK0U/HNDQ                WK&LUm,IWKHVWDWHSXWVDPDQLQDSRVLWLRQ
                                                                          RIGDQJHUIURPSULYDWHSHUVRQVDQGWKHQIDLOVWRSURWHFWKLP
   7KH'XH3URFHVV&ODXVHRIWKH)RXUWHHQWK$PHQGPHQWLV                  LWZLOOQRWEHKHDUGWRVD\WKDWLWVUROHZDVPHUHO\SDVVLYHLW
mSKUDVHGDVDOLPLWDWLRQRQWKH6WDWHjVSRZHUWRDFWQRWDVD            LVDVPXFKDQDFWLYHWRUWIHDVRUDVLILWKDGWKURZQKLPLQWRD
JXDUDQWHHRIFHUWDLQPLQLPDOOHYHOVRIVDIHW\DQGVHFXULW\l              VQDNH SLWl  7KH $SSHOODQWjV FODLP LV EDVHG XSRQ VXFK D
'H6KDQH\Y:LQQHEDJR&RXQW\'HSjWRI6RFLDO6HUYV                  mVWDWHFUHDWHGGDQJHUlWKHRU\7KDWLVWKH$SSHOODQWFRQWHQGV
867KHSXUSRVHRIWKH'XH3URFHVV&ODXVH              WKDW WKH FRQGXFW RI WKH %UXQVZLFN SROLFH LQ HVFDODWLQJ WKH
mZDVWRSURWHFWWKHSHRSOHIURPWKH6WDWHQRWWRHQVXUHWKDW             FRQIURQWDWLRQ ZLWK 0U /HNDQ VXEVWDQWLDOO\ LQFUHDVHG WKH
WKH 6WDWH SURWHFWHG WKHP IURP HDFK RWKHUl  ,G DW   ,Q   GDQJHUWKDWKHZRXOGDFWYLROHQWO\WRZDUGKLVZLIHDQGVRQ
JHQHUDOWKHUHIRUHWKH'XH3URFHVV&ODXVHGRHVQRWLPSRVH
OLDELOLW\RQWKH6WDWHIRULQMXULHVLQIOLFWHGE\SULYDWHDFWVRI             ,QRUGHUWRHVWDEOLVKDFRQVWLWXWLRQDOYLRODWLRQKRZHYHULW
YLROHQFH7KHUHDUHKRZHYHUH[FHSWLRQVWRWKLVJHQHUDOUXOH           LV QRW HQRXJK WR VKRZ D FDXVDO FRQQHFWLRQ EHWZHHQ VWDWH
)LUVWVWDWHRIILFLDOVPD\EHVXEMHFWWRFRQVWLWXWLRQDOOLDELOLW\         DFWLRQ DQG DQ DFW RI SULYDWH YLROHQFH  m>7@KH GXH SURFHVV
LI WKH\ IDLO WR SURYLGH SURWHFWLRQ IRU LQGLYLGXDOV LQ VWDWH      JXDUDQWHH GRHV QRW HQWDLO D ERG\ RI FRQVWLWXWLRQDO ODZ
FXVWRG\m7KHUDWLRQDOHIRUWKLVSULQFLSOHLVVLPSOHHQRXJK             LPSRVLQJ OLDELOLW\ ZKHQHYHU VRPHRQH FORDNHG ZLWK VWDWH
ZKHQ WKH 6WDWH E\ WKH DIILUPDWLYH H[HUFLVH RI LWV SRZHU VR      DXWKRULW\ FDXVHV KDUPl  /HZLV  86 DW   7KH
UHVWUDLQVDQLQGLYLGXDOjVOLEHUW\WKDWLWUHQGHUVKLPXQDEOHWR           $SSHOODQW PXVW GHPRQVWUDWH WKDW WKH VWDWH DFWHG ZLWK WKH
FDUHIRUKLPVHOIDQGDWWKHVDPHWLPHIDLOVWRSURYLGHIRUKLV           UHTXLVLWH FXOSDELOLW\ WR HVWDEOLVK D VXEVWDQWLYH GXH SURFHVV
EDVLFKXPDQQHHGVnHJIRRGFORWKLQJVKHOWHUPHGLFDO                YLRODWLRQXQGHUWKH)RXUWHHQWK$PHQGPHQW$VWKH6XSUHPH
FDUHDQGUHDVRQDEOHVDIHW\nLWWUDQVJUHVVHVWKHVXEVWDQWLYH             &RXUW KDV H[SODLQHG WKLV UHTXLUHV WKDW WKH   SODLQWLII
OLPLWVRQVWDWHDFWLRQVHWE\WKH(LJKWK$PHQGPHQWDQGWKH                VKRZWKDWWKHFKDOOHQJHGDFWLRQZDVVRmHJUHJLRXVlWKDWLWFDQ
'XH3URFHVV&ODXVHl,GDW                                         EHVDLGWREHmDUELWUDU\LQWKHFRQVWLWXWLRQDOVHQVHl,GDW
                                                                          TXRWDWLRQRPLWWHG7KH6XSUHPH&RXUWLQHODERUDWLQJXSRQ
  (YHQLQQRQFXVWRGLDOVHWWLQJVKRZHYHUVWDWHRIILFLDOVPD\             WKLV VWDQGDUG KDV UHSHDWHGO\ LQVWUXFWHG WKDW WKH )RXUWHHQWK
YLRODWHWKH'XH3URFHVV&ODXVHZKHQWKHLUDIILUPDWLYHDFWLRQV             $PHQGPHQWSURWHFWVRQO\DJDLQVWDEXVHRIH[HFXWLYHSRZHU
GLUHFWO\ LQFUHDVH WKH YXOQHUDELOLW\ RI FLWL]HQV WR GDQJHU RU      ZKLFKmVKRFNVWKHFRQVFLHQFHl,G
RWKHUZLVHSODFHFLWL]HQVLQKDUPjVZD\6HH'H6KDQH\
86DWm:KLOHWKH6WDWHPD\KDYHEHHQDZDUHRIWKH                     7R EH VXUH WKH mVKRFNV WKH FRQVFLHQFHl VWDQGDUG LV mQR
GDQJHUVWKDWsRVKXDIDFHGLQWKHIUHHZRUOGLWSOD\HGQRSDUW            FDOLEUDWHG \DUG VWLFNl  ,G DW   $W D PLQLPXP WKH
LQ WKHLU FUHDWLRQ QRU GLG LW GR DQ\WKLQJ WR UHQGHU KLP DQ\    VWDQGDUG UHTXLUHV D VKRZLQJ EH\RQG PHUH QHJOLJHQFH
PRUH YXOQHUDEOHWRWKHPl*D]HWWHY&LW\RI3RQWLDF               'DQLHOVY:LOOLDPV86m)DUIURPDQ
)GWK&LUm>$@GXW\WRSURWHFWFDQDULVH            DEXVHRISRZHUODFNRIGXHFDUHVXJJHVWVQRPRUHWKDQD
LQDQRQFXVWRGLDOVHWWLQJLIWKHVWDWHGRHVDQ\WKLQJWRUHQGHU            IDLOXUHWRPHDVXUHXSWRWKHFRQGXFWRIDUHDVRQDEOHSHUVRQl
DQLQGLYLGXDOPRUHYXOQHUDEOHWRGDQJHUl%XWHUDY'LVWULFW            ,G$WWKHRWKHUHQGRIWKHVSHFWUXPLWLVJHQHUDOO\DJUHHG
