                                                                             5(&200(1'(' )25 )8//7(;7 38%/,&$7,21
    6WDQIRUGY3DUNHU                            1R                   3XUVXDQW WR 6L[WK &LUFXLW 5XOH 

                                                                          (/(&7521,& &,7$7,21  )(' $SS 3 WK &LU

VXFK DV 6WDQIRUG KDYH D FKRLFH RI OHWKDO LQMHFWLRQ RU                       )LOH 1DPH DS

HOHFWURFXWLRQ)RUDSULVRQHUZKRUHIXVHVWRFKRRVHKLVRUKHU
PHWKRGRIH[HFXWLRQWKHGHIDXOWPHWKRGLVOHWKDOLQMHFWLRQ
6HHLG6WDQIRUGGRHVQRWFKDOOHQJHWKHFRQVWLWXWLRQDOLW\RI         81,7('67$7(6&28572)$33($/6
OHWKDOLQMHFWLRQ                                                                )257+(6,;7+&,5&8,7
   %HFDXVH6WDQIRUGLVJLYHQWKHRSWLRQRIHOHFWURFXWLRQDQG                          BBBBBBBBBBBBBBBBB
OHWKDOLQMHFWLRQZHQHHGQRWHYDOXDWHWKHFRQVWLWXWLRQDOLW\RI
HOHFWURFXWLRQ,Q6WHZDUWY/HJUDQG86DQ
$UL]RQDLQPDWHFKDOOHQJHGOHWKDOJDVDVDFUXHODQGXQXVXDO            .(9,1 67$1)25'               ;
IRUPRIH[HFXWLRQ%XWXQGHU$UL]RQDODZLQPDWHV FRXOG                      3HWLWLRQHU$SSHOODQW 
FKRRVHH[HFXWLRQE\OHWKDOJDVRUOHWKDOLQMHFWLRQ6HHLGDW                                       
  7KH 6XSUHPH &RXUW KHOG WKDW WKH LQPDWH ZDLYHG KLV                                          1R
KDEHDVFODLPWKDWH[HFXWLRQE\OHWKDOJDVZDVXQFRQVWLWXWLRQDO                   Y                   
EHFDXVHKHKDGFKRVHQWRGLHE\OHWKDOJDV6HHLG7KH&RXUW                                        !
                                                                                                      
VWDWHGWKDWm>E@\GHFODULQJKLVPHWKRGRIH[HFXWLRQSLFNLQJ           3+,/ 3$5.(5:DUGHQ           
OHWKDOJDVRYHUWKHVWDWHjVGHIDXOWIRUPRIH[HFXWLRQOHWKDO          .HQWXFN\6WDWH3HQLWHQWLDU\   
LQMHFWLRQo >WKHLQPDWH@KDVZDLYHGDQ\REMHFWLRQKHPLJKW                    5HVSRQGHQW$SSHOOHH 
KDYHWRLWl,G                                                                                   
                                                                                                     1
    $SSO\LQJ WKDW VDPH DQDO\VLV KHUH LI 6WDQIRUG FKRRVHV
HOHFWURFXWLRQ RYHU OHWKDO LQMHFWLRQ WKH FRQVWLWXWLRQDOLW\ RI
ZKLFKKHGRHVQRWFKDOOHQJHKHZLOOZDLYHDQ\REMHFWLRQWR                  $SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW
HOHFWURFXWLRQ  7KXV ZH QHHG QRW FRQVLGHU ZKHWKHU                IRUWKH:HVWHUQ'LVWULFWRI.HQWXFN\DW/RXLVYLOOH
HOHFWURFXWLRQLVFUXHODQGXQXVXDOSXQLVKPHQWEHFDXVHIRU              1Rn&KDUOHV56LPSVRQ,,,&KLHI'LVWULFW
WKDWLVVXHWREHUHOHYDQW6WDQIRUGZRXOGILUVWKDYHWRZDLYH                                  sXGJH
LW
  $)),50('                                                                          $UJXHG)HEUXDU\
                                                                               'HFLGHGDQG)LOHG6HSWHPEHU
                                                                        %HIRUH%2**66,/(5DQG&2/(&LUFXLWsXGJHV
                                                                                        BBBBBBBBBBBBBBBBB
                                                                                             &2816(/
                                                                      $5*8('  s 9LQFHQW $SULOH ,, '(3$570(17 2)
                                                                      38%/,&$'92&$&<)UDQNIRUW.HQWXFN\IRU$SSHOODQW
                                                                      'DYLG$6PLWK2)),&(2)7+($77251(<*(1(5$/

                                                                                                  
     6WDQIRUGY3DUNHU                               1R       1R                             6WDQIRUGY3DUNHU      

&5,0,1$/$33(//$7(',9,6,21)UDQNIRUW.HQWXFN\                        LQKHUHQWDXWKRULW\RIVWDWHFRXUWVWRH[FOXGHGHIHQVHHYLGHQFH
IRU $SSHOOHH  21 %5,()  s 9LQFHQW $SULOH ,,                ZKHQ WKH SUHMXGLFLDO DVSHFWV RI WKDW HYLGHQFH H[FHHG LWV
'(3$570(17 2) 38%/,& $'92&$&< )UDQNIRUW                            SUREDWLYHYDOXH6HH8QLWHG6WDWHVY6FKHIIHU86
.HQWXFN\6WHIDQLH00F$UGOH%RZOLQJ*UHHQ.HQWXFN\                  mµ/RFNHWWDQGLWVSURJHQ\VWDQGRQO\IRUWKH
IRU$SSHOODQW'DYLG$6PLWK,DQ*6RQHJR2)),&(2)                 SURSRVLWLRQWKDWD6WDWHPD\QRWFXWRIILQDQDEVROXWHPDQQHU
7+($77251(<*(1(5$/&5,0,1$/$33(//$7(                                 WKHSUHVHQWDWLRQRIPLWLJDWLQJHYLGHQFHHLWKHUE\VWDWXWHRU
',9,6,21)UDQNIRUW.HQWXFN\IRU$SSHOOHH                             MXGLFLDOLQVWUXFWLRQRUE\OLPLWLQJWKHLQTXLULHVWRZKLFKLWLV
                                                                         UHOHYDQWVRVHYHUHO\WKDWWKHHYLGHQFHFRXOGQHYHUEHSDUWRI
                      BBBBBBBBBBBBBBBBB                                  WKHVHQWHQFLQJGHFLVLRQDWDOOjlsRKQVRQY7H[DV86
                                                                         TXRWLQJ0F.R\Y1RUWK&DUROLQD86
                          23,1,21                                        .HQQHG\sFRQFXUULQJ
                      BBBBBBBBBBBBBBBBB
                                                                            sRQHVjVWHVWLPRQ\ZDVSURSHUO\H[FOXGHGE\DVWDWHFRXUW
  6,/(5&LUFXLWsXGJH3HWLWLRQHU.HYLQ1LJHO6WDQIRUGZDV             DSSO\LQJ LWV RZQ ODZV RI HYLGHQFH  2Q GLUHFW DSSHDO WKH
FRQYLFWHGLQD.HQWXFN\VWDWHFRXUWRIFDSLWDOPXUGHUILUVW             .HQWXFN\ 6XSUHPH &RXUW KHOG WKDW sRQHVjV SURIIHUHG
GHJUHH UREEHU\ ILUVW GHJUHH VRGRP\ DQG UHFHLSW RI VWROHQ       WHVWLPRQ\ZDVLQDGPLVVLEOHGXHWRKLVPLQLPDODQGUHPRWH
SURSHUW\  +H ZDV VHQWHQFHG WR GHDWK  +LV FRQYLFWLRQ DQG      SHUVRQDO NQRZOHGJH RI 6WDQIRUG KLV ODFN RI H[SHUW
VHQWHQFHZHUHXSKHOGRQGLUHFWDSSHDODQGWKURXJKVWDWHSRVW            TXDOLILFDWLRQDQGWKHLPSURSHUVXEVWDQFHRIKLVWHVWLPRQ\
FRQYLFWLRQSURFHHGLQJV6WDQIRUGWKHQILOHGDSHWLWLRQIRUD            6HH 6WDQIRUG  6:G DW   sRQHV ZRXOG KDYH
ZULW RI KDEHDV FRUSXV LQ WKH IHGHUDO GLVWULFW FRXUW ZKLFK      WHVWLILHGDERXWWKHmGHDWKSHQDOW\lDQGQRWDERXW6WDQIRUGjV
GHQLHGKLVSHWLWLRQ:HDIILUPWKHGLVWULFWFRXUWjVGHQLDORI           FKDUDFWHU SULRU UHFRUG RU WKH FLUFXPVWDQFHV RI 6WDQIRUGjV
6WDQIRUGjVKDEHDVSHWLWLRQ                                              FULPHV6HH.RUGHQEURFNY6FURJJ\)G
                                                                         WK&LUHQEDQFILQGLQJWKDWWKHH[FOXVLRQRIVLPLODU
                          ,%DFNJURXQG                                 PLWLJDWLRQWHVWLPRQ\ZDVERWKLUUHOHYDQWDQGKDUPOHVVEH\RQG
                                                                         DUHDVRQDEOHGRXEW
   ,Q%DHUEHO3RRUHZRUNHGDVDQDWWHQGDQWDWD&KHFNHU
JDVROLQHVWDWLRQLQVRXWKZHVWHUQsHIIHUVRQ&RXQW\.HQWXFN\                                     M(OHFWURFXWLRQ
:RUNLQJ DORQH RQH HYHQLQJ VKH UHDG WKH JDV SXPSV LQ
SUHSDUDWLRQ IRU FORVLQJ WKH VWDWLRQ IRU WKH QLJKW  6WDQIRUG      $QGILQDOO\6WDQIRUGDUJXHVWKDWHOHFWURFXWLRQDVDPHWKRG
WKHQVHYHQWHHQ\HDUVROGOLYHGLQWKHYLFLQLW\RIWKH&KHFNHU           RIFDUU\LQJRXWDGHDWKVHQWHQFHLVXQFRQVWLWXWLRQDOSXUVXDQW
VWDWLRQDQGNQHZ3RRUH2QsDQXDU\KHDQG'DYLG                WR WKH (LJKWK $PHQGPHQW EHFDXVH LW YLRODWHV HYROYLQJ
%XFKDQDQ GHFLGHG WR URE WKH VWDWLRQ  7UR\ sRKQVRQ WKHLU       VWDQGDUGVRIGHFHQF\6HH7URSY'XOOHV86
DFFRPSOLFHDJUHHGWRGULYHWKHJHWDZD\FDUEXWUHIXVHGWR              6SHFLILFDOO\KHDUJXHVWKDWHOHFWURFXWLRQYLRODWHV
SDUWLFLSDWHLQWKHUREEHU\                                              WKH(LJKWK$PHQGPHQWEHFDXVHLWLQYROYHVmWKHXQQHFHVVDU\
                                                                         DQGZDQWRQLQIOLFWLRQRISDLQl*UHJJY*HRUJLD86
   $V3RRUHILQLVKHGUHDGLQJWKHSXPSV6WDQIRUGDSSURDFKHG              :HDIILUPWKHGLVWULFWFRXUWjVFRQFOXVLRQ
KHU ZLWK D JXQ DQG WRJHWKHU ZLWK %XFKDQDQ IRUFHG 3RRUH        WKDW6WDQIRUGjVHOHFWURFXWLRQFODLPIDLOV
LQVLGHWKHVWDWLRQjVFRQYHQLHQFHVWRUH2QFHLQVLGH%XFKDQDQ
DWWHPSWHGWRRSHQWKHVWRUHjVIORRUVDIHVZKLOH6WDQIRUGWRRN              6WDQIRUGjVDUJXPHQWLJQRUHVWKHIDFWWKDWKHQHHGQRWEH
3RRUHWRDUHVWURRPDQGUDSHGKHU%XFKDQDQVRRQMRLQHG                 HOHFWURFXWHG.\5HY6WDW$QQESURYLGHVWKDW
                                                                         WKRVH SHUVRQV VHQWHQFHG WR GHDWK SULRU WR 0DUFK  
    6WDQIRUGY3DUNHU                             1R       1R                             6WDQIRUGY3DUNHU       

  %HFDXVH 6WDQIRUG IDLOHG WR IXOO\ DQG IDLUO\ SUHVHQW KLV      6WDQIRUGLQWKHUHVWURRPZKHUHWKH\FRQWLQXHGWRUDSHDQG
MXGLFLDOUHFXVDODUJXPHQWVWRWKHVWDWHFRXUWVZHDIILUPWKH          VRGRPL]H3RRUH
GLVWULFW FRXUWjV KROGLQJ WKDW 6WDQIRUGjV UHFXVDO FODLPV DUH
SURFHGXUDOO\ EDUUHG  )XUWKHUPRUH 6WDQIRUG KDV IDLOHG WR          :KHQ 6WDQIRUG OHIW WKH VWDWLRQ KH WRRN 3RRUH ZLWK KLP
GHPRQVWUDWHDQ\FDXVHDQGSUHMXGLFHRUPDQLIHVWLQMXVWLFHWR           'ULYLQJ 3RRUHjV FDU KH GURYH KHU D VKRUW GLVWDQFH WR DQ
RYHUFRPHSURFHGXUDOGHIDXOW                                          LVRODWHGDUHD%XFKDQDQDQGsRKQVRQIROORZHGLQsRKQVRQjV
                                                                       FDU:KHQWKHFDUVVWRSSHG%XFKDQDQH[LWHGsRKQVRQjVFDU
     K3HQDOW\3KDVH,QHIIHFWLYH$VVLVWDQFHRI&RXQVHO             DQG DSSURDFKHG 3RRUHjV  +H VDZ 6WDQIRUG VWDQGLQJ MXVW
                                                                       RXWVLGHWKHRSHQGULYHUjVGRRUDQG3RRUHVPRNLQJDFLJDUHWWH
  6WDQIRUGDOVRFRQWHQGVWKDWKLVFRXQVHOjVSHUIRUPDQFHDWWKH         LQWKHEDFNVHDW6XGGHQO\6WDQIRUGVKRW3RRUHLQWKHIDFHDW
SHQDOW\SKDVHRIKLVWULDOFRQVWLWXWHGLQHIIHFWLYHDVVLVWDQFHRI       SRLQWEODQNUDQJH+HWKHQVKRWKHUDVHFRQGWLPHLQWKHKHDG
FRXQVHO+HFODLPVWKDWKLVFRXQVHOGLGQRWLQYHVWLJDWHKLV,4
SRVVLEOHEUDLQG\VIXQFWLRQVH[XDODEXVHYLFWLPL]DWLRQRUWKH            $IWHU KH PXUGHUHG 3RRUH 6WDQIRUG UHWXUQHG WR WKH JDV
H[WHQWRIKLVGUXJDQGDOFRKRODGGLFWLRQV7KHGLVWULFWFRXUW         VWDWLRQWRVWHDOFLJDUHWWHV7RWDOSURFHHGVIURPWKHUREEHU\RI
SURSHUO\FRQFOXGHGKRZHYHUWKDWWKLVFODLPLVQRWFRJQL]DEOH         WKH&KHFNHUVWDWLRQLQFOXGHGDSSUR[LPDWHO\FDUWRQVRI
RQ KDEHDV UHYLHZ  6WDQIRUGjV SHQDOW\ SKDVH LQHIIHFWLYH         FLJDUHWWHV WZR JDOORQV RI JDVROLQH DQG D VPDOO DPRXQW RI
DVVLVWDQFH RI FRXQVHO FODLP LV DOVR  SURFHGXUDOO\ GHIDXOWHG    FDVK
EHFDXVH6WDQIRUGIDLOHGWRUDLVHWKHFODLPEHIRUHWKH.HQWXFN\
6XSUHPH&RXUW                                                          ,Q $XJXVW  RYHU WKHLU REMHFWLRQV 6WDQIRUG DQG
                                                                       %XFKDQDQZHUHMRLQWO\WULHGEHIRUHDMXU\LQWKHFRXUWURRPRI
                  L5REHUWsRQHV7HVWLPRQ\                          sHIIHUVRQ&LUFXLWsXGJH&KDUOHV0/HLEVRQ7KHMXU\IRXQG
                                                                       6WDQIRUGJXLOW\RIWKHFDSLWDOPXUGHURI3RRUHILUVWGHJUHH
   6WDQIRUG QH[W FRQWHQGV WKDW WKH WULDO FRXUW LPSURSHUO\       UREEHU\ILUVWGHJUHHVRGRP\DQGUHFHLSWRIVWROHQSURSHUW\
H[FOXGHGWKHWHVWLPRQ\RI5REHUWsRQHVDIRUPHUGHDWKURZ             YDOXHGLQH[FHVVRIsXGJH/HLEVRQVHQWHQFHG6WDQIRUG
LQPDWHGXULQJWKHSHQDOW\SKDVHRIKLVWULDO7KHH[FOXVLRQRI       WRGHDWKIRUKLVFDSLWDOPXUGHUFRQYLFWLRQDQGIRUW\ILYH\HDUV
sRQHVjV WHVWLPRQ\ KH DUJXHV LPSURSHUO\ OLPLWHG KLV             LPSULVRQPHQW IRU UREEHU\ VRGRP\ DQG UHFHLSW RI VWROHQ
FRQVWLWXWLRQDOULJKWWRSUHVHQWPLWLJDWLQJHYLGHQFHsRQHVZDV        SURSHUW\&RGHIHQGDQW%XFKDQDQFRXOGQRWUHFHLYHWKHGHDWK
RQH RI QLQH PLWLJDWLRQ ZLWQHVVHV FDOOHG E\ 6WDQIRUGjV           SHQDOW\EHFDXVHKHZDVSURVHFXWHGDVGHDWKLQHOLJLEOH+H
DWWRUQH\VGXULQJWKHSHQDOW\SKDVHEXWKHZDVWKHRQO\RQH            ZDV VHQWHQFHG WR OLIH LPSULVRQPHQW IRU PXUGHU DQG VL[W\
QRWSHUPLWWHGWRWHVWLI\EHIRUHWKHMXU\0LWLJDWLRQWHVWLPRQ\        \HDUVLPSULVRQPHQWIRUUDSHVRGRP\DQGUREEHU\sRKQVRQ
IURPILYHZLWQHVVHVZDVDFWXDOO\SUHVHQWHG                            ZDVFRQYLFWHGLQMXYHQLOHFRXUWIRUKLVUROHDVWKHJHWDZD\
                                                                       GULYHU
   7KH GLVWULFW FRXUW GLG QRW HUU LQ KROGLQJ WKDW sRQHVjV
WHVWLPRQ\ZDVSURSHUO\H[FOXGHG(GGLQJVY2NODKRPD               6WDQIRUGjVFRQYLFWLRQZDVXSKHOGRQGLUHFWDSSHDODQGLQ
86DQG/RFNHWWY2KLR86             SRVWFRQYLFWLRQSURFHHGLQJV,QWKH.HQWXFN\6XSUHPH
UHTXLUH WKDW MXULHV EH DOORZHG WR FRQVLGHU DOO UHOHYDQW        &RXUW DIILUPHG KLV FDSLWDO FRQYLFWLRQ  6HH 6WDQIRUG Y
PLWLJDWLQJ HYLGHQFH ZLWK WKH OLPLWDWLRQ WKDW m>Q@RWKLQJ     &RPPRQZHDOWK6:G.\$QGLQ
OLPLWV WKH WUDGLWLRQDO DXWKRULW\ RI D FRXUW WR H[FOXGH DV    KLVFRQYLFWLRQEHFDPHILQDOZKHQWKH866XSUHPH &RXUW
LUUHOHYDQWHYLGHQFHQRWEHDULQJRQWKHGHIHQGDQW
VFKDUDFWHU         DIILUPHG KLV FRQYLFWLRQ DQG VHQWHQFH  6HH 6WDQIRUG Y
SULRUUHFRUGRUWKHFLUFXPVWDQFHVRIKLVRIIHQVHl/RFNHWW          .HQWXFN\86$IWHUKLVGLUHFWDSSHDOIDLOHG
86DWQ7KH6XSUHPH&RXUWKDVUHFRJQL]HGWKH            6WDQIRUGILOHGDSRVWFRQYLFWLRQPRWLRQWRYDFDWHSXUVXDQWWR
      6WDQIRUGY3DUNHU                              1R      1R                             6WDQIRUGY3DUNHU      

.\5&ULP3)LUVWWKHsHIIHUVRQ&LUFXLW&RXUWDQG         DYDLODEOHXQGHUWKH)HGHUDO5XOHVRI&LYLO3URFHGXUHLIDQG
WKHQ WKH .HQWXFN\ 6XSUHPH &RXUW UHMHFWHG KLV SRVW              WRWKHH[WHQWWKDWWKHMXGJHLQWKHH[HUFLVHRIKLVGLVFUHWLRQ
FRQYLFWLRQ PRWLRQ DQG DIILUPHG KLV FDSLWDO VHQWHQFH  6HH       DQG IRU JRRG FDXVH VKRZQ JUDQWV OHDYH WR GR VR EXW QRW
6WDQIRUGY&RPPRQZHDOWK6:G.\,Q                RWKHUZLVHl7KHEXUGHQRIGHPRQVWUDWLQJWKHPDWHULDOLW\RI
WKH866XSUHPH&RXUWGHQLHGFHUWLRUDULRQ6WDQIRUGjV            LQIRUPDWLRQUHTXHVWHGLVRQWKHPRYLQJSDUW\6HH0XUSK\Y
SRVWFRQYLFWLRQFODLPV6HH6WDQIRUGY.HQWXFN\86             sRKQVRQ)GWK&LU

                                                                          7KHGLVWULFWFRXUWDSSOLHGWKHFRUUHFWOHJDOVWDQGDUGLQOLJKW
  6WDQIRUGjVIHGHUDOKDEHDVOLWLJDWLRQEHJDQZKHQKHILOHGKLV          RI WKH HYLGHQFH DQG WKH VWDWH FRXUW SURFHHGLQJV  7KH
SHWLWLRQLQWKH:HVWHUQ'LVWULFWRI.HQWXFN\LQsDQXDU\           GLVFRYHU\VRXJKWE\6WDQIRUGZRXOGQRWUHVROYHDQ\IDFWXDO
7KDW SHWLWLRQ UDLVHG IRUW\WZR VHSDUDWH FODLPV RI HUURU  ,Q   GLVSXWHVWKDWFRXOGHQWLWOHKLPWRUHOLHIHYHQLIWKHIDFWVZHUH
$XJXVWWKHGLVWULFWFRXUWGHQLHGKLVKDEHDVSHWLWLRQDQG          IRXQG LQ KLV IDYRU  7R WKH FRQWUDU\ 6WDQIRUGjV UHTXHVWHG
JUDQWHGDEODQNHWFHUWLILFDWHRISUREDEOHFDXVHm&3&l,Q            GLVFRYHU\ZKHQUHYLHZHGLQOLJKWRIWKHUHFHQWO\H[DPLQHG
sDQXDU\6WDQIRUGWLPHO\DSSHDOHGWKHGLVWULFWFRXUWjV             UHFRUGIDOOVPRUHLQWKHFDWHJRU\RIDILVKLQJH[SHGLWLRQ:H
GHQLDODQGGLVPLVVDORIKLVKDEHDVSHWLWLRQWRWKLVFRXUW             ZLOOQRWILQGWKDWDGLVWULFWFRXUWHUUHGE\GHQ\LQJDILVKLQJ
                                                                        H[SHGLWLRQPDVTXHUDGLQJDVGLVFRYHU\
                  ,,&HUWLILFDWHRI$SSHDODELOLW\
                                                                                     J3RVW&RQYLFWLRQ5HFXVDO&ODLPV
   $IWHUWKHGLVWULFWFRXUWjVHQWU\RIMXGJPHQWDQGLVVXDQFHRI
D &3& WKH 6XSUHPH &RXUW FRQVLGHUHG KRZ SURYLVLRQV                  6WDQIRUG DOVR FRQWHQGV WKDW WKH GLVWULFW FRXUW HUUHG LQ
FRQWDLQHGLQWKH$QWLWHUURULVPDQG(IIHFWLYH'HDWK3HQDOW\              FRQFOXGLQJWKDWKLVUHFXVDOFODLPVZHUHSURFHGXUDOO\GHIDXOWHG
$FWRIm$('3$l86&VKRXOGEH                LQVWDWHFRXUW,QKLVKDEHDVSHWLWLRQ6WDQIRUGDOOHJHGWKDWKLV
DSSOLHG LQ KDEHDV DFWLRQV LQLWLDWHG SULRU WR $('3$jV             WULDOMXGJHsXGJH/HLEVRQZDVFRQVWLWXWLRQDOO\UHTXLUHGWR
HQDFWPHQWEXWIRUZKLFKDSSHDOVZHUHILOHGDIWHU$('3$jV                UHFXVHKLPVHOIIURPFRQGXFWLQJ6WDQIRUGjVWULDOEHFDXVHDW
HQDFWPHQW6HH6ODFNY0F'DQLHO867KH            WKH WLPH RI WKH WULDO sXGJH /HLEVRQ ZDV FDPSDLJQLQJ IRU
&RXUWKHOG                                                             HOHFWLRQ WR WKH .HQWXFN\ 6XSUHPH &RXUW  $GGLWLRQDOO\
                                                                        6WDQIRUG DOOHJHG LQHIIHFWLYH DVVLVWDQFH RI FRXQVHO FODLPV
    :KHQ D KDEHDV FRUSXV SHWLWLRQHU VHHNV WR LQLWLDWH DQ        DULVLQJIURPWKHIDLOXUHRIsXGJH/HLEVRQWRUHFXVHKLPVHOI
    DSSHDORIWKHGLVPLVVDORIDKDEHDVFRUSXVSHWLWLRQDIWHU
    $SULOWKHHIIHFWLYHGDWHRI$('3$WKHULJKW               :H DIILUP WKH GLVWULFW FRXUWjV FRQFOXVLRQ WKDW 6WDQIRUG
    WRDSSHDOLVJRYHUQHGE\WKHFHUWLILFDWHRIDSSHDODELOLW\           SURFHGXUDOO\GHIDXOWHGKLVUHFXVDOFODLPV6WDQIRUGGLGQRW
    &2$UHTXLUHPHQWVQRZIRXQGDW86&F                UDLVHDQ\UHFXVDOFODLPVLQKLVSRVWFRQYLFWLRQPRWLRQWRWKH
    7KLVLVWUXHZKHWKHUWKHKDEHDVFRUSXVSHWLWLRQZDVILOHG           .HQWXFN\ 6XSUHPH &RXUW  ,Q KLV SRVWFRQYLFWLRQ EULHI
    LQ WKH GLVWULFW FRXUW EHIRUH RU DIWHU $('3$
V HIIHFWLYH     VXEPLWWHG WR WKH .HQWXFN\ 6XSUHPH &RXUW 6WDQIRUG
    GDWH                                                               DGGUHVVHGWKHPHULWVRIRQO\mHLJKWSRLQWVXUJHGIRUUHYHUVDOl
                                                                        6HH6WDQIRUG6:GDW7KHUHIRUHWKH.HQWXFN\
,GDW$SSO\LQJ6ODFNWKLVFRXUWKDVVWDWHGWKDWmZLWK           6XSUHPH &RXUWjV RSLQLRQ RQO\ DGGUHVVHG WKH PHULWV RI WKH
UHVSHFWWRDSSHDOVLQLWLDWHGDIWHUWKHHIIHFWLYHGDWHRI$('3$          mHLJKWSRLQWVXUJHGIRUUHYHUVDOl6HHLGDW7KXVWKH
LQ KDEHDV SURFHHGLQJV FRPPHQFHG SULRU WR WKDW GDWH SUH        GLVWULFWFRXUWFRUUHFWO\FRQFOXGHGWKDWSRVWFRQYLFWLRQFODLPV
$('3$ODZJRYHUQVWKHDSSHOODWHFRXUWjVUHYLHZRIWKHWULDO             QRW LQFOXGHG LQ WKH mHLJKW SRLQWV XUJHG IRU UHYHUVDOl ZHUH
FRXUWjVUXOLQJZKLOH$('3$jVUHTXLUHPHQWRIDFHUWLILFDWHRI            SURFHGXUDOO\EDUUHG
    6WDQIRUGY3DUNHU                             1R       1R                              6WDQIRUGY3DUNHU         

                H)HGHUDO(YLGHQWLDU\+HDULQJ                        DSSHDODELOLW\JRYHUQVWKHULJKWWRDSSHDOl0DFNH\Y'XWWRQ
                                                                       )GWK&LU
  1H[W 6WDQIRUG FODLPV WKDW WKH GLVWULFW FRXUW HUUHG E\
GHQ\LQJKLPDIHGHUDOHYLGHQWLDU\KHDULQJLQFRQMXQFWLRQZLWK             8QGHUSRVW$('3$FD&2$PD\LVVXHRQO\XSRQ
KLV KDEHDV SHWLWLRQ  +H ZDV QHYHU JUDQWHG DQ\ SRVW          mDVXEVWDQWLDOVKRZLQJRIWKHGHQLDORIDFRQVWLWXWLRQDOULJKWl
FRQYLFWLRQKHDULQJE\WKH.HQWXFN\VWDWHFRXUWV                      $OVRD&2$PXVWmLQGLFDWHZKLFKVSHFLILFLVVXHRULVVXHV
                                                                       VDWLVI\ WKH VKRZLQJ UHTXLUHGl  6HH  86&  F
  *HQHUDOO\DKDEHDVSHWLWLRQHULVHQWLWOHGWRDQHYLGHQWLDU\         :KHUHDSSHDOVDUHLQLWLDWHGDIWHU$('3$jVHIIHFWLYHGDWHEXW
KHDULQJ LQ IHGHUDO FRXUW LI WKH SHWLWLRQ mDOOHJHV VXIILFLHQW   D GLVWULFW FRXUW JUDQWHG D &3& UDWKHU WKDQ D &2$ WKH
JURXQGVIRUUHOHDVHUHOHYDQWIDFWVDUHLQGLVSXWHDQGWKHVWDWH      UHYLHZLQJFRXUWPD\ FRQVLGHUDQLVVXHUDLVHGRQDSSHDOVR
FRXUWV GLG QRW KROG D IXOO DQG IDLU HYLGHQWLDU\ KHDULQJl     ORQJDVWKDWLVVXHVDWLVILHVWKHVWDWXWRU\&2$VWDQGDUGVVHW
:LOVRQY.HPQD)GWK&LUFLWDWLRQ            IRUWKLQF6HH0DFNH\)GDW
DQGLQWHUQDOTXRWDWLRQRPLWWHG+RZHYHUDSHWLWLRQPD\EH
VXPPDULO\GLVPLVVHGLIWKHUHFRUGFOHDUO\LQGLFDWHVWKDWWKH             (YHQWKRXJKWKHGLVWULFWFRXUWRULJLQDOO\LVVXHGD&3&ZH
SHWLWLRQHUjVFODLPVDUHHLWKHUEDUUHGIURPUHYLHZRUZLWKRXW           QHHG QRW XQGHUWDNH &2$ DQDO\VLV RI WKH LVVXHV UDLVHG E\
PHULW6HHLG(YHQLQDGHDWKSHQDOW\FDVHmEDOGDVVHUWLRQV        6WDQIRUG RQ DSSHDO  ,Q sDQXDU\  WKH GLVWULFW FRXUW
DQGFRQFOXVRU\DOOHJDWLRQVGRQRWSURYLGHVXIILFLHQWJURXQG            UHFRQFLOHG6ODFNDQGLWVSURJHQ\ZLWKWKHSURFHGXUDOKLVWRU\
WRZDUUDQWUHTXLULQJWKHVWDWHWRUHVSRQGWRGLVFRYHU\RUWR           RI 6WDQIRUGjV KDEHDV SHWLWLRQ  %HFDXVH 6WDQIRUG ILOHG KLV
UHTXLUH DQ HYLGHQWLDU\ KHDULQJl  =HWWOHPR\HU Y )XOFRPHU      KDEHDVSHWLWLRQEHIRUH$('3$jVHIIHFWLYHGDWHEXWILOHGKLV
)GG&LU                                      QRWLFH RI DSSHDO DIWHU $('3$jV HIIHFWLYH GDWH WKH GLVWULFW
                                                                       FRXUWGHWHUPLQHGWKDWD&2$ZDVUHTXLUHG7KHUHIRUHLWVXD
  7KHGLVWULFWFRXUWGLGQRWHUUE\GHQ\LQJ6WDQIRUGjVUHTXHVW         VSRQWHLVVXHGD&2$mIRUDOOLVVXHVUDLVHGE\>6WDQIRUG@LQWKH
IRUDQHYLGHQWLDU\KHDULQJ6WDQIRUGQHYHUVSHFLILHGZKLFKRI         SHWLWLRQIRUZULWRIKDEHDVFRUSXVILOHGLQWKHGLVWULFWFRXUWDQG
KLVIRUW\WZRKDEHDVFODLPVRIHUURUZDUUDQWHGDQHYLGHQWLDU\          SUHVHQWHGWRWKH8QLWHG6WDWHV&RXUWRI$SSHDOVIRUWKH6L[WK
KHDULQJDQGQHYHUVSHFLILHGZKDWFRXOGEHGLVFRYHUHGWKURXJK           &LUFXLW LQ WKH DSSHDO FXUUHQWO\ SHQGLQJ EHIRUH WKDW &RXUWl
DQHYLGHQWLDU\KHDULQJ)XUWKHUPRUHKLVFODLPVZHUHHLWKHU           6WDQIRUGDSSHDOVIRXUWHHQRIKLVKDEHDVFODLPVDQGVLQFHD
EDUUHGIURPUHYLHZRUZLWKRXWPHULW                                   &2$LVVXHGIRUHDFKFODLPZHUHYLHZDOOIRXUWHHQ
                 I5XOH'LVFRYHU\0RWLRQ                                               ,,,6WDQGDUGRI5HYLHZ
  6WDQIRUG IXUWKHU DUJXHV WKDW WKH GLVWULFW FRXUW DEXVHG LWV      %HFDXVH 6WDQIRUGjV KDEHDV SHWLWLRQ ZDV ILOHG LQ sDQXDU\
GLVFUHWLRQ E\ GHQ\LQJ GLVFRYHU\ SXUVXDQW WR 5XOH  RI WKH     SULRUWRWKHHIIHFWLYHGDWHRI$('3$ZHDSSO\WKHSUH
5XOHV*RYHUQLQJ86&FDVHV7KHGLVWULFWFRXUW            $('3$ YHUVLRQ RI  86&   ZKHQ UHYLHZLQJ WKH
GLGQRWDEXVHLWVGLVFUHWLRQE\GHQ\LQJGLVFRYHU\                     GLVWULFW FRXUWjV GHQLDO RI KLV KDEHDV SHWLWLRQ 6HH /LQGK Y
                                                                       0XUSK\  86     8QGHU SUH$('3$
  +DEHDVSHWLWLRQHUVKDYHQRULJKWWRDXWRPDWLFGLVFRYHU\$          DQDO\VLV m>Z@H UHYLHZ D GLVWULFW FRXUWjV GHQLDO RI KDEHDV
GLVWULFWFRXUWKDVGLVFUHWLRQWRJUDQWGLVFRYHU\LQDKDEHDVFDVH      FRUSXV UHOLHI GH QRYR EXW ZH UHYLHZ DQ\ ILQGLQJV RI IDFW
XSRQDIDFWVSHFLILFVKRZLQJRIJRRGFDXVHXQGHU5XOH6HH          PDGHE\WKHGLVWULFWFRXUWIRUFOHDUHUURUl&RPEVY&R\OH
%UDF\Y*UDPOH\86%\UGY&ROOLQV             )G   WK &LU   $ VWDWH FRXUW
V IDFWXDO
)GWK&LU5XOHDSURYLGHVm$             ILQGLQJVmDUHHQWLWOHGWRFRPSOHWHGHIHUHQFHLIVXSSRUWHGE\
SDUW\VKDOOEHHQWLWOHGWRLQYRNHWKHSURFHVVHVRIGLVFRYHU\           WKHHYLGHQFHl,G8QGHUWKLVSUHVXPSWLRQRIFRUUHFWQHVVD
     6WDQIRUGY3DUNHU                             1R       1R                             6WDQIRUGY3DUNHU       

SHWLWLRQHUKDVWKHEXUGHQRImµHVWDEOLVK>LQJ@E\FRQYLQFLQJ            DYHU\KHDY\EXUGHQ6HH8QLWHG6WDWHVY+RUWRQ)G
HYLGHQFHWKDWWKHIDFWXDOGHWHUPLQDWLRQE\WKHVWDWHFRXUWLV          WK&LU$VDJHQHUDOUXOHMRLQWWULDOVDUH
HUURQHRXVjl&RHY%HOO)GWK&LU           IDYRUHG6HH8QLWHG6WDWHVY'HPSVH\)G
TXRWLQJ 0F4XHHQ Y 6FURJJ\  )G   WK           WK &LU   sXURUV DUH SUHVXPHG WR IROORZ WKH
&LU7KLVmSUHVXPSWLRQRQO\DSSOLHVWREDVLFSULPDU\          LQVWUXFWLRQVRIWKHFRXUWDQGWRJLYHHDFKGHIHQGDQWjVFDVH
IDFWVDQGQRWWRPL[HGTXHVWLRQVRIODZDQGIDFWlDQGmDOVR           VHSDUDWH FRQVLGHUDWLRQ  6HH )UDQFLV Y )UDQNOLQ  86
DSSOLHVWRLPSOLFLWILQGLQJVRIIDFWORJLFDOO\GHGXFHGEHFDXVH          Q   7KH PHUH SRWHQWLDO IRU FRQIXVLRQ
RIWKHWULDOFRXUW
VDELOLW\WRDGMXGJHWKHZLWQHVVHV
GHPHDQRU        VWDQGLQJ DORQH ZLOO QRW RXWZHLJK VRFLHW\jV LQWHUHVW LQ WKH
DQGFUHGLELOLW\l0F4XHHQ)GDW                           VSHHG\DQGHIILFLHQWUHVROXWLRQRIFULPLQDOWULDOV6HH8QLWHG
                                                                       6WDWHVY0RRUH)GWK&LU
  +DEHDVUHYLHZLVQRWDEURDGH[HUFLVHRIVXSHUYLVRU\SRZHU
EXW LV OLPLWHG WR FRQVWLWXWLRQDO HUURU  6HH (EHUKDUGW Y        ,Q%XFKDQDQ86DWWKH6XSUHPH&RXUWDQDO\]HG
%RUGHQNLUFKHU)GWK&LU7REHHOLJLEOH           WKH MRLQW WULDO RI 6WDQIRUG DQG %XFKDQDQ  $SSUDLVLQJ WKH
IRUKDEHDVUHOLHIRQDQ\JLYHQFODLPDVWDWHSULVRQHUILUVWPXVW      FRQVWLWXWLRQDOLW\RIGHDWKTXDOLI\LQJDPXWXDOMXU\LQDFDVH
IXOO\DQGIDLUO\SUHVHQWKLVFODLPDVDPDWWHURIIHGHUDOODZ        ZKHUH RQH FRGHIHQGDQW LV GHDWKHOLJLEOH DQG WKH RWKHU LV
WR VWDWH FRXUWV  6HH 3LFDUG Y &RQQRU  86     GHDWKLQHOLJLEOHZKHUHWKHGHDWKLQHOLJLEOHFRGHIHQGDQWIHDUV
0HUHO\UDLVLQJDQLVVXHDVDPDWWHURIVWDWHODZZLOO         WKDW D GHDWKTXDOLILHG MXU\ LV OLNHO\ WR UHQGHU PRUH VHYHUH
QRW VDWLVI\ WKH H[KDXVWLRQ UHTXLUHPHQW  6HH 5LJJLQV Y        SXQLVKPHQW LW KHOG WKDW D MRLQW WULDO ZDV FRQVWLWXWLRQDO
0F0DFNLQ)GWK&LU6RORQJDV            %XFKDQDQ  86 DW   $OWKRXJK LW GLG QRW
WKHSHWLWLRQHUKDVIXOO\DQGIDLUO\SUHVHQWHGKLVIHGHUDOFODLP        VSHFLILFDOO\DGGUHVVWKHFRQVWLWXWLRQDOLW\RIDMRLQWWULDOIURP
WR WKH VWDWHjV KLJKHVW FRXUW WKDW FODLP ZLOO EH WRWDOO\      WKH GHDWKHOLJLEOH FRGHIHQGDQWjV SHUVSHFWLYH WKH &RXUWjV
H[KDXVWHGHYHQLIWKHVWDWHFRXUWVGRQRWFRQVLGHUWKHFODLPRQ        KROGLQJQRQHWKHOHVVGHPRQVWUDWHVWKDWMRLQWWULDOVIRUGHDWK
WKHPHULWV6HH+DUULVY5HHV)GWK           HOLJLEOHDQGGHDWKLQHOLJLEOHFRGHIHQGDQWVDUHSHUPLVVLEOH
&LU                                                            ,I DQ\WKLQJ EHFDXVH RI WKH H[FOXVLRQ RI SUHVXPDEO\ PRUH
                                                                       V\PSDWKHWLFMXURUVZKRFRXOGQRWEHGHDWKTXDOLILHGLWZRXOG
  :KHUH D SHWLWLRQHU KDV QRW IXOO\ DQG IDLUO\ SUHVHQWHG D     EHIDUPRUHSODXVLEOHWKDWWKHGHDWKLQHOLJLEOHFRGHIHQGDQW
IHGHUDOFODLPWRWKHVWDWHjVKLJKHVWFRXUWRUZKHQVWDWHFRXUWV        ZRXOGEHSUHMXGLFHG
KDYHKHOGWKDWFRQVLGHUDWLRQRISHWLWLRQHUjVFODLPLVEDUUHG
GXHWRWKHSURFHGXUDOGHIDXOWLQVWDWHFRXUWDIHGHUDOFRXUW            6WDQIRUG ZDV QRW HQWLWOHG WR D VHSDUDWH WULDO IURP FR
RUGLQDULO\ZLOOQRWFRQVLGHUWKHPHULWVRIWKDWFODLPXQOHVVWKH       GHIHQGDQW%XFKDQDQ+HPDNHVQRFRQFUHWHDOOHJDWLRQWKDW
SHWLWLRQHUFDQVKRZFDXVHWRH[FXVHKLVIDLOXUHWRSUHVHQWWKH         KLVGXHSURFHVVULJKWVZHUHYLRODWHGE\DMRLQWWULDOEH\RQGWKH
FODLPVDSSURSULDWHO\LQVWDWHFRXUWDQGDFWXDOSUHMXGLFHDVD         FRQFHSWXDODUJXPHQWWKDWDMXU\PD\KDYHYLHZHGKLPDVWKH
UHVXOW6HH&ROHPDQY7KRPSVRQ86            PRUH FXOSDEOH FRGHIHQGDQW EHFDXVH KH ZDV GHDWKHOLJLEOH
7HDJXH Y /DQH  86     7KH RQH        DQG%XFKDQDQZDVGHDWKLQHOLJLEOH7KHMXU\ZDVUHSHDWHGO\
H[FHSWLRQWRWKLVUXOHLVZKHUHDSHWLWLRQHUVXEPLWVQHZDQG           DGPRQLVKHG WR VHSDUDWHO\ FRQVLGHU WKH HYLGHQFH DV WR HDFK
UHOLDEOHHYLGHQFHWKDWDFRQVWLWXWLRQDOYLRODWLRQKDVSUREDEO\         GHIHQGDQW DQG WKH UHFRUG UHYHDOV QR LQGLFDWLRQ WKDW WKH
UHVXOWHGLQWKHFRQYLFWLRQRIDQLQQRFHQWLQGLYLGXDO,QFDVHV        FRXUWjV LQVWUXFWLRQV ZHUH LJQRUHG  %\ PHUHO\ DOOHJLQJ
LQYROYLQJSUREDEOHLQQRFHQFHFRXUWVDGGUHVVWKHPHULWVRIWKH         SRWHQWLDO MXURU FRQIXVLRQ 6WDQIRUG KDV QRW VDWLVILHG KLV
GHIDXOWHGFODLPWRDYRLGDIXQGDPHQWDOPLVFDUULDJHRIMXVWLFH         EXUGHQRIVKRZLQJWKDWVHSDUDWHWULDOVZHUHQHFHVVDU\
6HH6FKOXSY'HOR86
    6WDQIRUGY3DUNHU                               1R       1R                               6WDQIRUGY3DUNHU         

ILQGLQJ WKDW D MRLQW WULDO IRU GHDWKHOLJLEOH DQG GHDWK                                  ,9'LVFXVVLRQ
LQHOLJLEOHFRGHIHQGDQWVLVSHUPLVVLEOHZHZLOOQRWPDQGDWH
XQLIRUPSURVHFXWLRQRIDOOFRGHIHQGDQWVLQFDSLWDOFDVHV                                     D0RUJDQFODLPV
  :H DIILUP WKH GLVWULFW FRXUWjV GHQLDO RI 6WDQIRUGjV IRXU         6WDQIRUGFRQWHQGVWKDWSXUVXDQWWRWKH6XSUHPH&RXUWjV
(QPXQGFODLPV                                                          KROGLQJLQ0RUJDQY,OOLQRLV86KHZDV
                                                                         XQFRQVWLWXWLRQDOO\ GHQLHG D ULJKW WR mOLIHTXDOLI\l KLV MXU\
                       G7ULDO6HYHUDQFH                               6SHFLILFDOO\KHDOOHJHVWKUHHFRQVWLWXWLRQDOYLRODWLRQV)LUVW
                                                                         KHDUJXHVWKDWWKHVWDWHWULDOFRXUWjVUHIXVDOWRDVNRUDOORZ
   $OWHUQDWLYHO\ 6WDQIRUG DUJXHV WKDW KLV WULDO VKRXOG KDYH      GHIHQVH FRXQVHO WR DVN OLIHTXDOLI\LQJ YRLU GLUH TXHVWLRQV
EHHQVHYHUHGIURPFRGHIHQGDQW%XFKDQDQjVWRHQVXUHDIDLU               FRQVWLWXWHGFRQVWLWXWLRQDOHUURU6HFRQGKHDUJXHVWKDWWKH
WULDOXQGHUWKH6L[WK(LJKWKDQG)RXUWHHQWK$PHQGPHQWV                GLVWULFWFRXUWHUUHGLQFRQFOXGLQJWKDWKHZDVQRWHQWLWOHGWR
$FFRUGLQJWR6WDQIRUGEHFDXVHKHZDVHOLJLEOHIRUWKHGHDWK             WKH EHQHILW RI 0RUJDQ  $QG WKLUG KH DUJXHV WKDW KLV
SHQDOW\DQG%XFKDQDQZDVQRWDMXU\ZRXOGFRQVLGHUKLPWKH              FRXQVHOjVIDLOXUHWROLIHTXDOLI\KLVMXU\FRQVWLWXWHGLQHIIHFWLYH
PRUH FXOSDEOH RI WKH WZR FRGHIHQGDQWV DQG VHQWHQFH KLP          DVVLVWDQFHRIFRXQVHO+HLVQRWHQWLWOHGWRKDEHDVUHOLHIRQ
PRUH VHYHUHO\  ([HUFLVLQJ KLV GLVFUHWLRQ WKH WULDO MXGJH       DQ\RIWKHVH0RUJDQFODLPV
GHQLHG6WDQIRUGjVVHYHUDQFHPRWLRQV7KHGLVWULFWFRXUWGLG
QRW ILQG FRQVWLWXWLRQDO HUURU LQ sXGJH /HLEVRQjV GHQLDO RI          ,Q :LWKHUVSRRQ Y ,OOLQRLV  86   WKH
VHYHUDQFHDQGQHLWKHUGRZH                                            6XSUHPH &RXUW GHWHUPLQHG WKDW LW ZDV SURSHU WR DVN
                                                                         SURVSHFWLYH MXURUV DERXW WKHLU YLHZV FRQFHUQLQJ WKH GHDWK
   $GHIHQGDQWLVQRWHQWLWOHGWRVHYHUDQFHPHUHO\EHFDXVHKH            SHQDOW\ GXULQJ YRLU GLUH LQ FDSLWDO FDVHV  6XFK mGHDWK
PLJKWKDYHKDGDEHWWHUFKDQFHRIDFTXLWWDOLQDVHSDUDWHWULDO         TXDOLI\LQJlTXHVWLRQVZRXOGHQVXUHWKHLPSDUWLDOLW\RIMXURUV
6HH=DILURY8QLWHG6WDWHV861RU              E\DOORZLQJWKHVWDWHWRSURSHUO\H[HUFLVHFKDOOHQJHVIRUFDXVH
GRHV KH KDYH D ULJKW WR D VHSDUDWH WULDO PHUHO\ EHFDXVH        DJDLQVWSRWHQWLDOMXURUVXQZLOOLQJWRUHWXUQDFDSLWDOVHQWHQFH
GHIHQGDQWVSUHVHQWDQWDJRQLVWLFGHIHQVHV6HH8QLWHG6WDWHV             6HHLGDW,Q0RUJDQGHIHQVHFRXQVHOZDVJLYHQWKH
Y 'D\  )G   WK &LU  KROGLQJ WKDW      SDUDOOHO DELOLW\ WR LGHQWLI\ WKRVH MXURUV ZKR ZRXOG DOZD\V
DEVHQW VRPH LQGLFDWLRQ WKDW WKH DOOHJHG DQWDJRQLVWLF               LPSRVHWKHGHDWKSHQDOW\0RUJDQKHOGWKDWmRQYRLUGLUHWKH
GHIHQGDQWVPLVOHGRUFRQIXVHGWKHMXU\WKHPHUHIDFWWKDWFR           FRXUW PXVW RQ GHIHQGDQWjV UHTXHVW LQTXLUH LQWR WKH
GHIHQGDQWV EODPH HDFK RWKHU GRHV QRW FRPSHO VHYHUDQFH           SURVSHFWLYHMXURUVjYLHZVRQFDSLWDOSXQLVKPHQWlEHFDXVHD
&RXUWVVKRXOGJUDQWDVHYHUDQFHmRQO\LIWKHUHLVDVHULRXVULVN         SURVSHFWLYHMXURUZKRZRXOGDOZD\VLPSRVHWKHGHDWKSHQDOW\
WKDWDMRLQWWULDOZRXOGFRPSURPLVHDVSHFLILFWULDOULJKWRIRQH        PXVWQRWEHHPSDQHOHG0RUJDQ86DWm,IHYHQ
RIWKHGHIHQGDQWVRUSUHYHQWWKHMXU\IURPPDNLQJDUHOLDEOH            RQH VXFK MXURU LV HPSDQHOHG DQG WKH GHDWK VHQWHQFH LV
MXGJPHQWDERXWJXLOWRULQQRFHQFHl=DILUR86DW            LPSRVHGWKH6WDWHLVGLVHQWLWOHGWRH[HFXWHWKHVHQWHQFHl,G
*UDQWLQJ RU GHQ\LQJ VHYHUDQFH LV ZLWKLQ WKH WULDO MXGJHjV        DW
GLVFUHWLRQ6HH*OLQVH\Y3DUNHU)GWK&LU
$QGDVWDWHWULDOFRXUWjVDOOHJHGDEXVHRIGLVFUHWLRQ                                      L9RLU'LUH
ZLWKRXWPRUHLVQRWDFRQVWLWXWLRQDOYLRODWLRQ6HH6LQLVWDMY
%XUW)GWK&LU                             7ZRW\SHVRIYRLUGLUHZHUHFRQGXFWHGGXULQJ6WDQIRUGjV
                                                                         WULDO  )LUVW WKH FRXUW FRQGXFWHG LQGLYLGXDO YRLU GLUH DIWHU
  $ SHWLWLRQHU VHHNLQJ KDEHDV UHOLHI RQ WKH EDVLV RI D WULDO   ZKLFKFRXQVHODVNHGOLPLWHGVFRSHIROORZXSTXHVWLRQV$QG
FRXUWjVIDLOXUHWRVHYHUKLVWULDOIURPKLVFRGHIHQGDQWjVEHDUV         VHFRQGFRXQVHOFRQGXFWHGJHQHUDOYRLUGLUHLQRSHQFRXUW
     6WDQIRUGY3DUNHU                           1R      1R                               6WDQIRUGY3DUNHU        

  $WWKHFRPPHQFHPHQWRILQGLYLGXDOYRLUGLUH6WDQIRUGjV           GHDWKHOLJLELOLW\WRWULJJHUPHQVHH7LVRQY$UL]RQD86
FRXQVHO ILOHG m'HIHQGDQWjV 3URSRVHG 9RLU 'LUH 4XHVWLRQV          KROGLQJ mWKDW PDMRU SDUWLFLSDWLRQ LQ WKH
&RQFHUQLQJ &DSLWDO 3XQLVKPHQWl D VHULHV RI WZHQW\QLQH       IHORQ\ FRPPLWWHG FRPELQHG ZLWK UHFNOHVV LQGLIIHUHQFH WR
TXHVWLRQVVL[RIZKLFKZHUHOLIHTXDOLI\LQJ7KHWULDOFRXUW      KXPDQOLIHLVVXIILFLHQWWRVDWLVI\lGHDWKHOLJLELOLW\SXUVXDQW
VDLGWKDWLWZRXOGEHDVNLQJmDOORIWKHLQGLYLGXDOYRLUGLUH       WR(QPXQGWKHSUHPLVHXQGHUO\LQJKLV(QPXQGFODLPVWKDW
TXHVWLRQVRIWKHsXU\lDQGWKDWLWZRXOGLQTXLUHLQWRWZRDUHDV    WKHWULDOFRXUWGHFLGHGWKDW%XFKDQDQZDVGHDWKLQHOLJLEOH
GHDWKTXDOLILFDWLRQDQGSUHH[LVWLQJSHUVRQDOFRPPLWPHQWV          LVLQFRUUHFW
,PPHGLDWHO\ WKHUHDIWHU 6WDQIRUGjV FRXQVHO LQTXLUHG DV
IROORZVm:HKDYHWHQGHUHGSURSRVHGTXHVWLRQVWRWKHFDSLWDO          7KH WULDO FRXUW PDGH LW FOHDU WKDW %XFKDQDQjV GHDWK
SKDVH ZKLFK , WDNH LW DUH RYHUUXOHG"l  7KH WULDO MXGJH    LQHOLJLEOHSURVHFXWLRQZDVQRWWKHUHVXOWRIDILQGLQJRIIDFWRQ
UHVSRQGHGm<HDKl'XULQJLQGLYLGXDOYRLUGLUHWKHWULDOFRXUW     LWVSDUWEXWUDWKHUDFRQFHVVLRQDQGGHFLVLRQE\WKHSURVHFXWRU
DVNHG RQO\ RQH FDSLWDO TXHVWLRQ  m'R \RX KDYH DQ\         7KHSURVHFXWRUDFWHGZHOOZLWKLQKLVDXWKRULW\E\GHFLGLQJWR
FRQVFLHQWLRXV VFUXSOHV DJDLQVW LPSRVLQJ WKH GHDWK SHQDOW\    SURVHFXWHRQHFRGHIHQGDQWDVGHDWKHOLJLEOHDQGWKHRWKHUDV
VXFKWKDW\RXFRXOGQRWFRQVLGHULWXQGHUWKHFLUFXPVWDQFHVLQ      GHDWKLQHOLJLEOH,Q%RUGHQNLUFKHUY+D\HV86
WKLVRUDQ\RWKHUFDVHDQGUHJDUGOHVVRIZKDWWKHHYLGHQFHPD\      WKH6XSUHPH&RXUWVWDWHGWKDWm>L@QRXUV\VWHP
EH"l                                                             VRORQJDVWKHSURVHFXWRUKDGSUREDEOHFDXVHWREHOLHYHWKDW
                                                                    WKH DFFXVHG FRPPLWWHG D RIIHQVH GHILQHG E\ VWDWXWH WKH
  ,W LV QRW NQRZQ ZKHWKHU WKH FRXUW ZRXOG KDYH SHUPLWWHG   GHFLVLRQZKHWKHURUQRWWRSURVHFXWHDQGZKDWFKDUJHWRILOH
6WDQIRUGjVFRXQVHOWRDVNmOLIHTXDOLI\LQJlTXHVWLRQVGXULQJ        RU EULQJ EHIRUH D JUDQG MXU\ JHQHUDOO\ UHVWV HQWLUHO\ LQ KLV
JHQHUDOYRLUGLUH+LVFRXQVHOQHYHUVRXJKWSHUPLVVLRQWRDVN      GLVFUHWLRQl
VXFKTXHVWLRQVDQGLQWKHHQGGLGQRWDVNDQ\OLIHTXDOLI\LQJ
TXHVWLRQVGXULQJJHQHUDOYRLUGLUH                                   0RUHWRWKHSRLQWHYHQLIWKHWULDOFRXUWKDGHUURQHRXVO\
                                                                    GHFLGHG WKDW %XFKDQDQ FRXOG RQO\ EH SURVHFXWHG DV GHDWK
                  LL0RUJDQ$SSOLFDELOLW\                         LQHOLJLEOH6WDQIRUGZRXOGVWLOOODFNVWDQGLQJWRREMHFWWRWKH
                                                                    FRXUWjVPLVDSSOLFDWLRQRI(QPXQGWR%XFKDQDQ:KLOHLWLV
  7KH SDUWLHV GLVSXWH 0RUJDQjV DSSOLFDELOLW\  )LUVW WKH\   WUXHWKDW%XFKDQDQUHFHLYHGDZLQGIDOOEHFDXVHKHZDVGHDWK
GLVSXWHZKHWKHU6WDQIRUGjV0RUJDQFODLPLVFRJQL]DEOHRQ            LQHOLJLEOHWKHIDFWWKDWKHUHFHLYHGDZLQGIDOOGLGQRWXQIDLUO\
KDEHDVUHYLHZ$QGVHFRQGWKH\GLVSXWHZKHWKHU0RUJDQ           SUHMXGLFH6WDQIRUG6HH+DUULVY5LYHUD86
GHFLGHG LQ  DSSOLHV UHWURDFWLYHO\ WR 6WDQIRUG ZKRVH      KROGLQJ WKDW HYHQ LI WKH DFTXLWWDO RI D FR
FRQYLFWLRQEHFDPHILQDOLQ:KHWKHU0RUJDQDSSOLHV            GHIHQGDQWUHVWHGRQDQLPSURSHUJURXQGWKDWHUURUZRXOGQRW
UHWURDFWLYHO\LVDTXHVWLRQRIILUVWLQVWDQFH                      FUHDWHDFRQVWLWXWLRQDOGHIHFWLQDGHIHQGDQWjVJXLOW\YHUGLFW
                                                                    ZKLFK ZDV VXSSRUWHG E\ VXIILFLHQW HYLGHQFH DQG ZDV WKH
  $VDQLQLWLDOPDWWHUZHDJUHHZLWKWKHGLVWULFWFRXUWjVZHOO   SURGXFWRIDIDLUWULDO,WLVXQGLVSXWHGWKDW6WDQIRUGFRXOGEH
IRXQGHGFRQFOXVLRQWKDWWKH0RUJDQLVVXHLVFRJQL]DEOHRQ           SURVHFXWHGDVGHDWKHOLJLEOHDQGWKDWWKH6WDWHKDGFRPSOHWH
KDEHDVUHYLHZEHFDXVHWKH.HQWXFN\6XSUHPH&RXUWUHDFKHG            DXWKRULW\WRSURVHFXWHKLPDVVXFK
WKHPHULWVRIWKHWKDWLVVXH6HH6WDQIRUGY&RPPRQZHDOWK
6:G.\)XUWKHUPRUHVLQFHWKH            ,IZHZHUHWRDFFHSW6WDQIRUGjV(QPXQGFODLPVDVYDOLG
0RUJDQ LVVXH ZDV SURSHUO\ UDLVHG LQ 6WDQIRUGjV KDEHDV        WKHUHFRXOGRQO\EHMRLQWWULDOVZKHUHDOOFRGHIHQGDQWVDUH
SHWLWLRQDQGFHUWLILFDWHRIDSSHDODELOLW\LWLVQRZEHIRUHWKLV    SURVHFXWHGXQLIRUPO\*LYHQWKH6XSUHPH&RXUWjVGHFLVLRQ
FRXUW7KDWVDLGZHOHDYHWKHTXHVWLRQRIZKHWKHU0RUJDQ          LQ %XFKDQDQ Y .HQWXFN\  86   
VKRXOGEHDSSOLHGUHWURDFWLYHO\IRUDQRWKHUGD\:HQHLWKHU
    6WDQIRUGY3DUNHU                               1R       1R                             6WDQIRUGY3DUNHU        

   7KH GLVWULFW FRXUW GLG QRW HUU E\ ILQGLQJ DQ\ %UXWRQ         DFFHSW QRU UHMHFW WKH GLVWULFW FRXUWjV KROGLQJ WKDW 0RUJDQ
YLRODWLRQ KDUPOHVV  2YHUZKHOPLQJ HYLGHQFH RI 6WDQIRUGjV           FUHDWHGDQHZUXOHRIODZWKDWXQGHU7HDJXHY /DQH 
JXLOW ZDV SUHVHQWHG DW WULDO  )LUVW WKH MXU\ OHDUQHG WKDW    86   FRXOG QRW EH UHWURDFWLYHO\ DSSOLHG WR
6WDQIRUG KDG WZLFH DGPLWWHG NLOOLQJ 3RRUH  'D\V DIWHU KLV      6WDQIRUGjVFDVH
DUUHVW6WDQIRUGVQHDNHGXSEHKLQGDVHFXULW\JXDUGSXWWKH
HQG RI D SHQFLO DJDLQVW WKH JXDUGjV HDU DQG VDLG  m&OLFN     )RUWKHVDNHRIDUJXPHQWZHDVVXPHWKDW0RUJDQDSSOLHV
FOLFNFOLFNMXVWOLNHWKHJLUO,jPJRLQJWREORZ\RXUIXFNLQJ         UHWURDFWLYHO\WR6WDQIRUGjVFDVHPHDQLQJWKDWKHZDVHQWLWOHG
EUDLQVRXWl$QGGD\VODWHUDFRUUHFWLRQVRIILFHURYHUKHDUG            WR DVN OLIHTXDOLI\LQJ TXHVWLRQV RI KLV MXU\ YHQLUH SDQHO
6WDQIRUGEUDJJLQJWKDWKHVRGRPL]HGVKRWDQGNLOOHG3RRUH              0RUJDQ UHTXLUHV D WULDO FRXUW WR SHUPLW OLIHTXDOLI\LQJ
EHFDXVH VKH FRXOG UHFRJQL]H DQG LGHQWLI\ KLP  6HFRQG           TXHVWLRQVGXULQJYRLUGLUHRQO\ZKHUHDGHIHQGDQWjVFRXQVHO
sRKQVRQWKHJHWDZD\GULYHUSURYLGHGH\HZLWQHVVWHVWLPRQ\               UHTXHVWV WKDW VXFK TXHVWLRQV EH DVNHG  0RUJDQ GRHV QRW
WKDW6WDQIRUGVKRW3RRUH$QGWKLUGDPRXQWDLQRISK\VLFDO             KRZHYHU VSHFLILFDOO\ UHTXLUH WKDW GHIHQGDQWjV FRXQVHO EH
DQGFLUFXPVWDQWLDOHYLGHQFHo6WDQIRUGjVILQJHUSULQWVZHUH              SHUPLWWHGWRDVNOLIHTXDOLI\LQJTXHVWLRQVGXULQJLQGLYLGXDO
OLIWHGIURP3RRUHjVFDUKDLUVPDWFKLQJ6WDQIRUGjVKHDGDQG              YRLUGLUH8QGHU0RUJDQDGHIHQGDQWjVULJKWWROLIHTXDOLI\
SXELFKDLUZHUHIRXQGRQ3RRUHjVERG\6WDQIRUGZDVVHHQ                 KLVMXU\FRXOGDOVREHVDWLVILHGGXULQJJHQHUDOYRLUGLUH:H
FDUU\LQJDZD\VWROHQFDVHVRIFLJDUHWWHVIURPWKH&KHFNHUJDV            DGRSWWKHVRXQGDQDO\VLVRIWKH.HQWXFN\6XSUHPH&RXUW
VWDWLRQ DQG VWROHQ &KHFNHU NH\V ZHUH IRXQG DW 6WDQIRUGjV
PRWKHUjVKRPHoSURYLGHGDEXQGDQWHYLGHQFHRI6WDQIRUGjV                  6LPSO\ SXW WKH UXOLQJV DQG GLVFXVVLRQV RI UHFRUG
JXLOW7KXVDQ\%UXWRQYLRODWLRQFRQVWLWXWHGKDUPOHVVHUURU             FRQFHUQLQJ WKH OLVW RI TXHVWLRQV SURSRVHG E\ WKH
                                                                           GHIHQGDQWVQHYHUDGGUHVVHGWKHSURSULHW\RIDVNLQJWKH
                       F(QPXQG&ODLPV                                   TXHVWLRQVGXULQJWKHJHQHUDOYRLUGLUH:HFDQILQGQR
                                                                           UXOLQJVRQWKHPHULWVRIWKHTXHVWLRQVQRUDQ\KLQWRIKRZ
   6WDQIRUGDOVRDOOHJHVIRXUVHSDUDWHFRQVWLWXWLRQDOYLRODWLRQV           WKH FRXUW ZRXOG KDYH UXOHG KDG DSSHOODQWjV FRXQVHO
DULVLQJXQGHU(QPXQGY)ORULGD86+LV                 DWWHPSWHGWRDVNWKHTXHVWLRQVRIWKHMXURUVGXULQJWKH
XQGHUO\LQJ(QPXQGFODLPZKLFKJLYHVULVHWRKLVRWKHUWKUHH              FROOHFWLYHYRLUGLUH$VWKHWULDOFRXUWGLGQRWPDNHDQ\
LVWKDWWKHGLVWULFWFRXUWHUUHGE\PLVLQWHUSUHWLQJ(QPXQGDVLW           UXOLQJV DGYHUVH WR WKH DSSHOODQW GXULQJ KLV FRXQVHOjV
DSSOLHGWRFRGHIHQGDQW%XFKDQDQDQGDVDUHVXOWWKHGHDWK               TXHVWLRQLQJRIWKHMXU\ZHFDQILQGQRHUURUSUHMXGLFLDO
SHQDOW\ZDVVRXJKWDJDLQVWKLPEXWQRWDJDLQVW%XFKDQDQ+H               WR DSSHOODQW  :K\ KRZHYHU FRXQVHO FKRVH QRW WR
DUJXHVWKDWKHZDVSUHMXGLFHGE\%XFKDQDQjVEHLQJWULHGDV                 H[SORUH WKH YHQLUHPHQjV SUHGLOHFWLRQ IRU LPSRVLQJ WKH
GHDWKLQHOLJLEOHEHFDXVHVLQFHKHZDVGHDWKHOLJLEOHWKHMXU\            GHDWKSHQDOW\LVDTXHVWLRQZKLFKFDQQRWEHDWWULEXWHGWR
ZRXOGYLHZKLPDVWKHPRUHFXOSDEOHGHIHQGDQWDQGVHQWHQFH                 DQ\DFWLRQRUIDLOLQJRIWKHWULDOFRXUW
KLPPRUHVHYHUHO\6WDQIRUGjVRWKHUWKUHH(QPXQGFODLPVDUH
YDULRXVLQHIIHFWLYHDVVLVWDQFHRIFRXQVHOFODLPV:HDIILUP             6WDQIRUGY&RPPRQZHDOWK6:GDWLQWHUQDO
WKHGLVWULFWFRXUWjVGHQLDORI6WDQIRUGjV(QPXQGFODLPV                 FLWDWLRQVDQGTXRWDWLRQVRPLWWHG
  $OORI6WDQIRUGjVFODLPVDULVHIURPKLVEHOLHIWKDWWKHWULDO            (YHQDSSO\LQJ0RUJDQUHWURDFWLYHO\DV6WDQIRUGUHTXHVWV
FRXUWHUUHGE\LQWHUSUHWLQJ(QPXQGWRPHDQWKDWFRGHIHQGDQW             WKH WULDO FRXUWjV UHIXVDO WR SHUPLW OLIHTXDOLI\LQJ TXHVWLRQV
%XFKDQDQKDGWREHWULHGDVGHDWKLQHOLJLEOHEHFDXVHKHZDV              GXULQJ LQGLYLGXDO YRLU GLUH ZRXOG QRW FRQVWLWXWH IHGHUDO
QRW WKH WULJJHUPDQ  :KLOH 6WDQIRUG LV FRUUHFW WKDW WKH         FRQVWLWXWLRQDOHUURU%HFDXVHKLVFRXQVHOZDVQRWSUHFOXGHG
6XSUHPH &RXUW ODWHU FODULILHG WKDW (QPXQG GLG QRW OLPLW          IURPDVNLQJOLIHTXDOLI\LQJTXHVWLRQVGXULQJJHQHUDOYRLUGLUH
    6WDQIRUGY3DUNHU                             1R       1R                              6WDQIRUGY3DUNHU       

6WDQIRUG LV QRW HQWLWOHG WR KDEHDV UHOLHI RQ KLV ILUVW WZR   WKHFULPHV6HH&UX]Y1HZ<RUN86
0RUJDQFODLPV                                                       *LOOLDPY0LWFKHOO)GWK&LU
            LLL,QHIIHFWLYH$VVLVWDQFHRI&RXQVHO                      7KH FRQIHVVLRQ RI 6WDQIRUGjV FRGHIHQGDQW 'DYLG
                                                                       %XFKDQDQZDVUHDGLQWRHYLGHQFHE\'HWHFWLYH+DOOGXULQJ
  $VDQDOWHUQDWLYHWRKLVFODLPWKDWWKHWULDOFRXUWYLRODWHGKLV     WKH GHIHQGDQWVj MRLQW WULDO  %XFKDQDQ QHYHU WHVWLILHG  7KH
0RUJDQULJKWWROLIHTXDOLI\KLVMXU\6WDQIRUGDUJXHVWKDWKLV        FRQIHVVLRQZDVUHGDFWHGVRWKDW6WDQIRUGjVQDPHZDVUHSODFHG
FRXQVHOjVIDLOXUHWROLIHTXDOLI\WKHMXU\GXULQJJHQHUDOYRLU         E\ mWKH RWKHU SHUVRQl ZKHUHYHU LW DSSHDUHG  'HVSLWH WKLV
GLUHFRQVWLWXWHGLQHIIHFWLYHDVVLVWDQFHRIFRXQVHO:HKROG           UHGDFWLRQWKHGLVWULFWFRXUWIRXQGWKDW%XFKDQDQjVFRQIHVVLRQ
WKDWWKLVFODLPIDLOVWRR                                             GLUHFWO\LQFULPLQDWHG6WDQIRUGLQYLRODWLRQRI%UXWRQ)URP
                                                                       WKH FRQIHVVLRQ WKH MXU\ OHDUQHG WKDW mWKH RWKHU SHUVRQl 
  ,Q 6WULFNODQG Y :DVKLQJWRQ  86   WKH        UHTXHVWHG WKDW %XFKDQDQ EULQJ WKH JXQ WR WKH UREEHU\ 
6XSUHPH&RXUWDUWLFXODWHGDWHVWIRULQHIIHFWLYHDVVLVWDQFHRI         FDUULHGWKHJXQGXULQJWKHFRPPLVVLRQRIWKHRIIHQVHVDWWKH
FRXQVHO7KHUHDUHWZRFRPSRQHQWVWRWKH6WULFNODQGWHVW           &KHFNHUJDVVWDWLRQVRGRPL]HGWKHYLFWLPDQGVKRWWKH
                                                                       YLFWLPWZLFH
  )LUVW WKH GHIHQGDQW PXVW VKRZ WKDW FRXQVHOjV
  SHUIRUPDQFHZDVGHILFLHQW7KLVUHTXLUHVVKRZLQJWKDW                  7KHGLVWULFWFRXUWIRXQGWKDWWKHMXU\ZRXOGUHDVRQDEO\KDYH
  FRXQVHO PDGH HUURUV VR VHULRXV WKDW FRXQVHO ZDV QRW          FRQFOXGHG WKDW WKH mRWKHU SHUVRQl ZDV 6WDQIRUG ZKLOH WKH
  IXQFWLRQLQJDVWKHmFRXQVHOlJXDUDQWHHGWKHGHIHQGDQWE\             6WDWH DUJXHV WKDW WKH MXU\ FRXOG DOVR KDYH UHDVRQDEO\
  WKH6L[WK$PHQGPHQW6HFRQGWKHGHIHQGDQWPXVWVKRZ                FRQFOXGHGWKDWWKHmRWKHUSHUVRQlZDV&DOYLQ%XFKDQDQ$W
  WKDW WKH GHILFLHQW SHUIRUPDQFH SUHMXGLFHG WKH GHIHQVH         WULDOWKHGHIHQVHjVWKHRU\ZDVWKDW&DOYLQ%XFKDQDQ'DYLGjV
  7KLV UHTXLUHV VKRZLQJ WKDW FRXQVHOjV HUURUV ZHUH VR           XQFOHNLOOHG3RRUH&DOYLQ%XFKDQDQjVQDPHZDVPHQWLRQHG
  VHULRXVDVWRGHSULYHWKHGHIHQGDQWRIDIDLUWULDODWULDO         VHYHUDOWLPHVGXULQJWKHWULDOEXWLWLVQRWOLNHO\WKDWDMXU\
  ZKRVHUHVXOWLVUHOLDEOH                                            ZRXOGKDYHEHOLHYHGKLPWREHWKHmRWKHUSHUVRQl,WZDV
                                                                       6WDQIRUG DQG QRW &DOYLQ %XFKDQDQ ZKR VDW DV D GHIHQGDQW
6WULFNODQG86DW6WULFNODQGVSHFLILFDOO\KROGVWKDW       EHIRUHWKHMXU\DQG'DYLG%XFKDQDQjVVWDWHPHQWVDERXWWKH
WKHWZRSURQJVRILWVWHVWQHHGQRWEHDSSOLHGLQRUGHURULQ          mRWKHUSHUVRQlZHUHSODFHGLQWRHYLGHQFHE\WKHSURVHFXWLRQ
WRWDOLW\6HHLGDW)RULQVWDQFHLIDGHIHQGDQWFRXOGQRW     ZKLFK WKH MXU\ NQHZ ZDV SXVKLQJ IRU WKH FRQYLFWLRQ RI
PDNHWKHUHTXLVLWHVKRZLQJ RQ WKHSHUIRUPDQFHSURQJWKH             6WDQIRUGDVWKHVKRRWHU
FRXUWQHHGQRWXQGHUWDNHDQDO\VLVXQGHUWKHSUHMXGLFHSURQJ
6WDQIRUGjV 0RUJDQ LQHIIHFWLYH DVVLVWDQFH RI FRXQVHO FODLP           %DVHG RQ RXU  GHFLVLRQ LQ +RGJHV ZKLFK ZDV
GRHVQRWVDWLVI\HLWKHUSURQJRIWKH6WULFNODQGWHVW                VXSSRUWHGODWHUE\WKH6XSUHPH&RXUWLQ*UD\LWDSSHDUVWKDW
                                                                       WKH GLVWULFW FRXUW ZDV FRUUHFW WKDW WKH UHSODFHPHQW RI
   7R GHPRQVWUDWH LQHIIHFWLYH DVVLVWDQFH XQGHU WKH                m6WDQIRUGlZLWKmWKHRWKHUSHUVRQlLQ%XFKDQDQjVFRQIHVVLRQ
SHUIRUPDQFH SURQJ D mGHIHQGDQW PXVW RYHUFRPH WKH                GLGQRWSUHYHQWD%UXWRQYLRODWLRQ0HUHO\VXEVWLWXWLQJWKH
SUHVXPSWLRQ WKDW XQGHU WKH FLUFXPVWDQFHV >DW WKH WLPH RI      WHUPmRWKHUSHUVRQlIRUm6WDQIRUGlZRXOGQRWKDYHSUHYHQWHG
FRXQVHOjVFRQGXFW@WKHFKDOOHQJHGDFWLRQPLJKWEHFRQVLGHUHG          WKHMXU\IURPGUDZLQJWKHQDWXUDOFRQFOXVLRQWKDWWKHmRWKHU
VRXQG WULDO VWUDWHJ\l  ,G DW  LQWHUQDO TXRWDWLRQ DQG    SHUVRQl DQG 6WDQIRUG ZHUH LQGHHG RQH DQG WKH VDPH
FLWDWLRQ RPLWWHG  6WDQIRUG KDV QRW RYHUFRPH WKDW              1HYHUWKHOHVVDQ\%UXWRQYLRODWLRQZDVKDUPOHVV
SUHVXPSWLRQ0RUJDQGRHVQRWPDQGDWHWKDWOLIHTXDOLI\LQJ
TXHVWLRQVEHDVNHGRISRWHQWLDOMXURUVLQHYHU\FDVH,QVWHDG
    6WDQIRUGY3DUNHU                            1R       1R                               6WDQIRUGY3DUNHU        

H[FOXVLRQRIWKHFRQIHVVLRQVHYHUDQFHRIWKHWULDORU         0RUJDQKROGVWKDWDGHIHQGDQWKDVWKHULJKWWROLIHTXDOLI\KLV
UHGDFWLRQ RI WKH FRQIHVVLRQ WR DYRLG PHQWLRQ RU REYLRXV       MXU\XSRQUHTXHVW%\SUHPLVLQJDGHIHQGDQWjVULJKWWROLIH
LPSOLFDWLRQRIWKHQRQFRQIHVVLQJGHIHQGDQW6HH5LFKDUGVRQ          TXDOLI\ XSRQ GHIHQVH FRXQVHOjV PDNLQJ D UHTXHVW WR OLIH
Y0DUVK86                                   TXDOLI\ 0RUJDQ VXJJHVWV WKDW WKHUH DUH LQVWDQFHV ZKHUH
                                                                      GHIHQVH FRXQVHO PLJKW FKRRVH QRW WR DVN OLIHTXDOLI\LQJ
   %UXWRQYLRODWLRQVFDQRFFXUHYHQZKHUHDGHIHQGDQWjVQDPH          TXHVWLRQVDVDPDWWHURIVWUDWHJ\3XUVXDQWWR0RUJDQIDLOXUH
LVUHGDFWHGRUUHSODFHGIURPDQRQWHVWLI\LQJFRGHIHQGDQWjV          WR OLIHTXDOLI\ D MXU\ LV QRW SHU VH LQHIIHFWLYH DVVLVWDQFH RI
FRQIHVVLRQ,Q+RGJHVY5RVH)GWK&LU         FRXQVHO
WKH 6L[WK &LUFXLW KHOG WKDW DGPLVVLRQ RI D UHGDFWHG QRQ
WHVWLI\LQJ FRGHIHQGDQWjV VWDWHPHQW FRQWDLQLQJ WKH ZRUG             6WDQIRUG SUHVHQWV QR HYLGHQFH WR FRXQWHUDFW RXU
mEODQNlLQSODFHRIWKHGHIHQGDQWjVQDPHYLRODWHGWKH%UXWRQ          SUHVXPSWLRQWKDWKLVFRXQVHOjVIDLOXUHWRDVNOLIHTXDOLI\LQJ
UXOHm$OWKRXJKWKHRWKHUSDUW\LVUHIHUUHGWRDVµEODQNjLQWKH     TXHVWLRQVGXULQJJHQHUDOYRLUGLUHFRQVWLWXWHGWULDOVWUDWHJ\
UHGDFWHGVWDWHPHQWWKHFLUFXPVWDQFHVRIWKHFDVHDQGRWKHU           7KHUHFRUGLVVLOHQWDVWRWKHUDWLRQDOHEHKLQGKLVFRXQVHOjV
HYLGHQFHDGPLWWHGYLUWXDOO\FRPSHOWKHLQIHUHQFHWKDWµEODQNj         SHUIRUPDQFH7KXVZHFDQGRQRPRUHWKDQVSHFXODWHDVWR
LV>WKHGHIHQGDQW@l,GDW$QGLQ*UD\Y0DU\ODQG          VRPHRIWKHUHDVRQVZK\6WDQIRUGjVFRXQVHOPLJKWQRWKDYH
86WKH6XSUHPH&RXUWGLVFXVVHGWKH             DVNHGOLIHTXDOLI\LQJTXHVWLRQVGXULQJJHQHUDOYRLUGLUH)LUVW
GDQJHU RI UHGDFWLQJ D FRQIHVVLRQ E\ VLPSO\ UHPRYLQJ D         KH PD\  KDYH PLVWDNHQO\ EXW KRQHVWO\ EHOLHYHG WKDW ZKHQ
GHIHQGDQWjVQDPHm>7@KHREYLRXVGHOHWLRQ>RIDGHIHQGDQWjV          sXGJH/HLEVRQH[FOXGHGKLVOLIHTXDOLI\LQJTXHVWLRQVGXULQJ
QDPH@ PD\ ZHOO FDOO WKH MXURUVj DWWHQWLRQ VSHFLDOO\ WR WKH   LQGLYLGXDO YRLU GLUH sXGJH /HLEVRQ ZDV H[FOXGLQJ WKRVH
UHPRYHGQDPH%\HQFRXUDJLQJWKHMXU\WRVSHFXODWHDERXW             TXHVWLRQV IRUDOOVWDJHVRIYRLUGLUHLQFOXGLQJJHQHUDOYRLU
WKH UHIHUHQFH WKH UHGDFWLRQ PD\ RYHUHPSKDVL]H WKH              GLUH  6HFRQG FRXQVHO PD\ QRW KDYH ZDQWHG WR DVN OLIH
LPSRUWDQFHRIWKHFRQIHVVLRQjVDFFXVDWLRQl                         TXDOLI\LQJTXHVWLRQVGXULQJJHQHUDOYRLUGLUHEHFDXVHKHGLG
                                                                      QRWZDQWLQGLYLGXDOMXURUVWRKHDURQHDQRWKHUjVDQVZHUVWR
   :KHUH D %UXWRQ YLRODWLRQ RFFXUV D FRXUW PXVW WKHQ         OLIHTXDOLI\LQJ TXHVWLRQV  3HUKDSV KH ZDV DIUDLG WKDW D
GHWHUPLQHZKHWKHUWKDWYLRODWLRQLVKDUPOHVV7KHFRXUWPXVW         SURVSHFWLYH MXURU HVSRXVLQJ GHDWK DV D SXQLVKPHQW ZRXOG
GHFLGHmµZKHWKHUWKHµPLQGVRIDQDYHUDJHMXU\jlZRXOGKDYH           LQIOXHQFHRWKHUMXURUV7KLUGE\WKHWLPHJHQHUDOYRLUGLUH
IRXQGWKH6WDWHjVFDVHDJDLQVWDGHIHQGDQWmµVLJQLILFDQWO\OHVV       RFFXUUHGGHIHQVHFRXQVHOPD\KDYHEHHQVDWLVILHGZLWKWKH
SHUVXDVLYHjl KDG WKH LQFULPLQDWLQJ SRUWLRQ RI WKH FR          FRPSRVLWLRQRIWKHMXU\DQGFRQILGHQWLQLWVDELOLW\WRKRQHVWO\
GHIHQGDQWjVVWDWHPHQWEHHQH[FOXGHG+RGJHV)GDW             DQGDEO\SHUIRUPLWVGXWLHV$QGIRXUWKLIWKHMXU\SRROZDV
 TXRWLQJ 6FKQHEOH Y )ORULGD  86   Q      VDWLVIDFWRU\GHIHQVHFRXQVHOPD\KDYHFDOFXODWHGWKDWDVNLQJ
5HOLHIPD\EHJUDQWHGRQFROODWHUDOUHYLHZRQO\LI          DGGLWLRQDOOLIHTXDOLI\LQJTXHVWLRQVPLJKWDLGWKHSURVHFXWLRQ
WKH WULDO HUURU mKDG VXEVWDQWLDO DQG LQMXULRXV HIIHFW RU      LQGHFLGLQJKRZWRXVHLWVSHUHPSWRU\FKDOOHQJHV6HH%URZQ
LQIOXHQFH LQ GHWHUPLQLQJ WKH MXU\
V YHUGLFW  8QGHU WKLV      YsRQHV)GWK&LUm>&RXQVHOjV@
VWDQGDUGKDEHDVSHWLWLRQHUVDUHQRWHQWLWOHGWRKDEHDVUHOLHI    GHFLVLRQ QRW WR DVN SRWHQWLDO MXURUV ZKHWKHU WKH\ ZRXOG
EDVHGRQWULDOHUURUXQOHVVWKH\FDQHVWDEOLVKWKDWLWUHVXOWHGLQ    DXWRPDWLFDOO\YRWHWRLPSRVHWKHGHDWKSHQDOW\DSSHDUVWR
µDFWXDOSUHMXGLFHjl%UHFKWY$EUDKDPVRQ86         >EH@DWDFWLFDOGHFLVLRQEHFDXVHLWVHHPVUHDVRQDEOHIRUWULDO
 LQWHUQDO TXRWDWLRQ DQG FLWDWLRQ RPLWWHG  $Q          FRXQVHO WR ZDQW WR IRFXV WKH MXU\ RQ WKH LGHD RI WKH GHDWK
HUURQHRXV DGPLVVLRQ RI D QRQWHVWLI\LQJ FRGHIHQGDQWjV           SHQDOW\DVOLWWOHDVSRVVLEOH
FRQIHVVLRQFDQFRQVWLWXWHKDUPOHVVHUURUZKHUHWKHGHIHQGDQW
FODLPLQJD%UXWRQYLRODWLRQFRQIHVVHGWRIXOOSDUWLFLSDWLRQLQ
    6WDQIRUGY3DUNHU                              1R       1R                              6WDQIRUGY3DUNHU       

  6LQFH RXU mVFUXWLQ\ RI FRXQVHOjV SHUIRUPDQFH PXVW EH           7KLUG FRQVLGHULQJ WKH WRWDOLW\ RI WKH HYLGHQFH WKHUH LV QR
KLJKO\GHIHUHQWLDOl6WULFNODQG86DWDQG6WDQIRUG          UHDVRQDEOHSUREDELOLW\WKDWHYHQLIGHIHQVHFRXQVHOHUUHGWKH
KDV SUHVHQWHG QR HYLGHQFH WR UHEXW WKH SUHVXPSWLRQ WKDW         VHQWHQFHU ZRXOG KDYH FRQFOXGHG WKDW WKH EDODQFH RI
FRXQVHOjV IDLOXUH WR DVN OLIHTXDOLI\LQJ TXHVWLRQV GXULQJ         DJJUDYDWLQJ DQG PLWLJDWLQJ FLUFXPVWDQFHV GLG QRW ZDUUDQW
JHQHUDOYRLUGLUHFRQVWLWXWHGVRXQGWULDOVWUDWHJ\ZHUHMHFWKLV       GHDWK  6HH 6WULFNODQG  86 DW   $V LV UHTXLUHG
LQHIIHFWLYHDVVLVWDQFHFODLPXQGHU6WULFNODQGjVSHUIRUPDQFH             SXUVXDQW WR .\ 5HY 6WDW $QQ   WKH .HQWXFN\
SURQJ                                                                  6XSUHPH&RXUWUHYLHZHG6WDQIRUGjVGHDWKVHQWHQFHRQGLUHFW
                                                                        DSSHDODQGGHWHUPLQHGWKDWWKHGHDWKVHQWHQFHZDVVXSSRUWHG
   $OWHUQDWLYHO\6WDQIRUGGRHVQRWVDWLVI\WKHSUHMXGLFHSURQJ         E\ WKH HYLGHQFH LH WKH EDODQFH RI DJJUDYDWLQJ DQG
RIWKH6WULFNODQGWHVW7RGHPRQVWUDWHLQHIIHFWLYHDVVLVWDQFH          PLWLJDWLQJFLUFXPVWDQFHVZDUUDQWHGGHDWK6HH6WDQIRUG
XQGHUWKHSUHMXGLFHSURQJm>W@KHGHIHQGDQWPXVWVKRZWKDW              6:GDW6WDQIRUGjVWULDOZDVIXQGDPHQWDOO\IDLUDQG
WKHUH LV D UHDVRQDEOH SUREDELOLW\ WKDW EXW IRU FRXQVHOjV       FRXQVHOjVIDLOXUHWROLIHTXDOLI\WKHMXU\GLGQRWXQGHUPLQHWKH
XQSURIHVVLRQDOHUURUVWKHUHVXOWRIWKHSURFHHGLQJZRXOGKDYH          UHOLDELOLW\RIDQGFRQILGHQFHLQWKHUHVXOW6HH%URZQ
EHHQ GLIIHUHQW  $ UHDVRQDEOH SUREDELOLW\ LV D SUREDELOLW\      )G DW  KROGLQJ RQ VLPLODU JURXQGV WKDW FRXQVHOjV
VXIILFLHQWWRXQGHUPLQHFRQILGHQFHLQWKHRXWFRPHl,GDW             IDLOXUH WR OLIHTXDOLI\ D MXU\ GLG QRW FRQVWLWXWH LQHIIHFWLYH
 m,Q PDNLQJ WKH GHWHUPLQDWLRQ ZKHWKHU WKH VSHFLILHG          DVVLVWDQFHRIFRXQVHOXQGHU6WULFNODQGjVSUHMXGLFHSURQJ
HUURUV UHVXOWHG LQ WKH UHTXLUHG SUHMXGLFH D FRXUW VKRXOG
SUHVXPH DEVHQW FKDOOHQJH WR WKH MXGJPHQW RQ JURXQGV RI           :H UHMHFW 6WDQIRUGjV FODLP WKDW WKH IDLOXUH RI KLV WULDO
HYLGHQWLDU\ LQVXIILFLHQF\ WKDW WKH MXGJH RU MXU\ DFWHG          FRXQVHOWRDVNOLIHTXDOLI\LQJTXHVWLRQVFRQVWLWXWHGLQHIIHFWLYH
DFFRUGLQJ WR WKH ODZl  ,G  m7KH DVVHVVPHQW RI SUHMXGLFH     DVVLVWDQFHRIFRXQVHO
VKRXOGSURFHHGRQWKHDVVXPSWLRQWKDWWKHGHFLVLRQPDNHULV
UHDVRQDEO\ FRQVFLHQWLRXVO\ DQG LPSDUWLDOO\ DSSO\LQJ WKH                                   E%UXWRQFODLP
VWDQGDUGV WKDW JRYHUQ WKH GHFLVLRQl  ,G DW   m>7@KH
TXHVWLRQLVZKHWKHUWKHUHLVDUHDVRQDEOHSUREDELOLW\WKDWWKH          1H[W6WDQIRUGDUJXHVWKDWWKHGLVWULFWFRXUWHUUHGE\ILQGLQJ
VHQWHQFHUo LQFOXGLQJ DQ DSSHOODWH FRXUW WR WKH H[WHQW LW       WKDW WKH DGPLVVLRQ RI QRQWHVWLI\LQJ FRGHIHQGDQW 'DYLG
LQGHSHQGHQWO\UHZHLJKVWKHHYLGHQFHoZRXOGKDYHFRQFOXGHG               %XFKDQDQjVFRQIHVVLRQDVUHFRXQWHGE\'HWHFWLYHsHUU\+DOO
WKDWWKHEDODQFHRIDJJUDYDWLQJDQGPLWLJDWLQJFLUFXPVWDQFHV            WRWKHMXU\FRQVWLWXWHGDKDUPOHVVYLRODWLRQRIWKH%UXWRQUXOH
GLGQRWZDUUDQWGHDWKl,G:HDOVRPXVWDVNZKHWKHUWKH              :HDJUHHZLWKWKHGLVWULFWFRXUW
WULDO ZDV IXQGDPHQWDOO\ IDLU DQG ZKHWKHU FRXQVHOjV HUURUV
OLNHO\ XQGHUPLQHG WKH UHOLDELOLW\ RI DQG FRQILGHQFH LQ WKH        ,Q %UXWRQ Y 8QLWHG 6WDWHV  86   WKH
UHVXOW  6HH /RFNKDUW Y )UHWZHOO  86          6XSUHPH &RXUW KHOG WKDW DGPLVVLRQ RI D FRGHIHQGDQW
V
                                                                 FRQIHVVLRQLPSOLFDWLQJWKHQRQFRQIHVVLQJGHIHQGDQWYLRODWHG
                                                                        WKHQRQFRQIHVVLQJGHIHQGDQW
V 6L[WK$PHQGPHQWULJKWVWR
  8QGHU6WULFNODQGjVSUHMXGLFHSURQJ6WDQIRUGjVFRXQVHOjV              FRQIURQWDWLRQDQGFURVVH[DPLQDWLRQZKHUHWKHFRGHIHQGDQW
IDLOXUHWRDVNOLIHTXDOLI\LQJTXHVWLRQVGXULQJJHQHUDOYRLUGLUH       GLGQRWWHVWLI\DWWULDO6HHLGDW,IWKHFRQIHVVLRQ
GLG QRW FRQVWLWXWH LQHIIHFWLYH DVVLVWDQFH RI FRXQVHO  )LUVW   FOHDUO\LPSOLFDWHGWKHQRQFRQIHVVLQJGHIHQGDQWIRUWKHFULPHV
WKHUHLVQRHYLGHQFHWKDWDQ\SRWHQWLDOMXURUVZHUHLQFOLQHGWR         FKDUJHGHYHQDOLPLWLQJLQVWUXFWLRQFRXOGQRWUHPRYHWKHWDLQW
DOZD\VVHQWHQFHDFDSLWDOGHIHQGDQWWRGHDWK6HFRQGQRWKLQJ          FDXVHGE\WKHODFNRIRSSRUWXQLW\WRFRQIURQWWKHZLWQHVV6HH
LQ WKH UHFRUG LQGLFDWHV WKDW FRXQVHOjV IDLOXUH WR DVN OLIH    6PLWKY(VWHOOH)GWK&LU+HQFH
TXDOLI\LQJTXHVWLRQVOHGWRWKHLPSDQHOPHQWRIDSDUWLDOMXU\          ZKHUH D %UXWRQ VLWXDWLRQ H[LVWV WKH FRXUW PD\ SURWHFW WKH
                                                                        QRQFRQIHVVLQJ GHIHQGDQW
V 6L[WK $PHQGPHQW ULJKWV E\ 
