           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


 81,7(' 67$7(6 2) $0(5,&$       ;
          3ODLQWLII$SSHOOHH     
                                  
                                    1R
           Y                     
                                   !
                                  
0,&+$(/ s2+1 02'(1$              
         'HIHQGDQW$SSHOODQW 
                                 1
       $SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW
  IRUWKH:HVWHUQ'LVWULFWRI0LFKLJDQDW*UDQG5DSLGV
1Rn5REHUW+ROPHV%HOO&KLHI'LVWULFWsXGJH
                      $UJXHGsXQH
             'HFLGHGDQG)LOHG6HSWHPEHU
 %HIRUH&/$<DQG*,/0$1&LUFXLWsXGJHV+$<1(6
                    'LVWULFWsXGJH
                       BBBBBBBBBBBBBBBBB
                             &2816(/
$5*8('  3DXO / 1HOVRQ )('(5$/ 38%/,&
'()(1'(5j6 2)),&( *UDQG 5DSLGV 0LFKLJDQ IRU
$SSHOODQW  'RQDOG $ 'DYLV $66,67$17 81,7('

    
     7KH +RQRUDEOH :LOOLDP s +D\QHV sU 8QLWHG 6WDWHV 'LVWULFW sXGJH
IRU WKH 0LGGOH 'LVWULFW RI 7HQQHVVHH VLWWLQJ E\ GHVLJQDWLRQ



                                   
     8QLWHG6WDWHVY0RGHQD                       1R

67$7(6 $77251(< *UDQG 5DSLGV 0LFKLJDQ IRU
$SSHOOHH21%5,()3DXO/1HOVRQ)('(5$/38%/,&
'()(1'(5j6 2)),&( *UDQG 5DSLGV 0LFKLJDQ IRU
$SSHOODQW  'RQDOG $ 'DYLV $66,67$17 81,7('
67$7(6 $77251(< *UDQG 5DSLGV 0LFKLJDQ IRU
$SSHOOHH
                     BBBBBBBBBBBBBBBBB
                         23,1,21
                     BBBBBBBBBBBBBBBBB
  521$/'/((*,/0$1&LUFXLWsXGJH0LFKDHOsRKQ
0RGHQDZDVFRQYLFWHGRIFRQVSLUDF\WRGHIUDXGWKH8QLWHG
6WDWHVEHFDXVHRIKLVSDUWLFLSDWLRQLQDWD[HYDVLRQVFKHPH
+H QRZ DSSHDOV KLV FRQYLFWLRQ DQG VHQWHQFH DUJXLQJ WKDW
WKHGLVWULFWFRXUWIDLOHGWRSURSHUO\GHWHUPLQHZKHWKHUKH
NQRZLQJO\DQGYROXQWDULO\ZDLYHGKLVULJKWWRFRXQVHOWKH
JRYHUQPHQW LPSURSHUO\ LQWURGXFHG HYLGHQFH UHJDUGLQJ KLV
FRFRQVSLUDWRUVj FRQYLFWLRQV  WKH JRYHUQPHQW SUHVHQWHG
LQDGPLVVLEOHVXPPDULHVRIWKHHYLGHQFHWKHJRYHUQPHQW
HQJDJHGLQSURVHFXWRULDOPLVFRQGXFWDQGWKHGLVWULFWFRXUW
LPSRVHG XQMXVWLILHG VSHFLDO FRQGLWLRQV RQ KLV WHUP RI
VXSHUYLVHG UHOHDVH  )RU WKH UHDVRQV VHW IRUWK EHORZ ZH
$)),500RGHQDjVFRQYLFWLRQ9$&$7(KLVVHQWHQFHDQG
5(0$1'WKHFDVHIRUUHVHQWHQFLQJ
                     ,%$&.*5281'
  7KLVFDVHDULVHVIURPWKHHIIRUWVRIILYHEURWKHUVWRDYRLG
SD\LQJIHGHUDOLQFRPHWD[HV7KHVHPHQ'HQYHU/HH5XVVHOO
2UYDO'HDQ5XVVHOO7LPRWK\3DWULFN5XVVHOO'DQLHO7KRPDV
5XVVHOODQGsDFN$OOHQ5XVVHOOUHIHUUHGWRFROOHFWLYHO\DVWKH
5XVVHOO %URWKHUV SXUFKDVHG VKDP WUXVWV WKDW WKH\ XVHG WR
KLGH WKHLU LQFRPH  0RGHQD KHOSHG VHW XS DQG DGPLQLVWHU
VHYHUDORIWKHVHWUXVWV
  ,Q$SULORIDIHGHUDOJUDQGMXU\UHWXUQHGDFRXQW
LQGLFWPHQWDJDLQVWWKH5XVVHOO%URWKHUVDQG0RGHQD&RXQW
FKDUJHGDOORIWKHGHIHQGDQWVZLWKFRQVSLUDF\WRGHIUDXGWKH
8QLWHG6WDWHVLQYLRODWLRQRI86&7KHUHPDLQLQJ
1R                       8QLWHG6WDWHVY0RGHQD          

FRXQWVFKDUJHGRQO\WKH5XVVHOO%URWKHUVZLWKIDLOXUHWRILOH
LQFRPHWD[UHWXUQVDQGLQFRPHWD[HYDVLRQLQYLRODWLRQRI
86&   DQG  UHVSHFWLYHO\  ,Q 6HSWHPEHU RI
 WKH 5XVVHOO %URWKHUV ZHUH FRQYLFWHG RQ DOO FRXQWV
0RGHQDKRZHYHUHYDGHGDUUHVWXQWLOsXQHRI+LVFDVH
ZDVVHWIRUWULDOLQWKH8QLWHG6WDWHV'LVWULFW&RXUWIRU WKH
:HVWHUQ'LVWULFWRI0LFKLJDQVKRUWO\DIWHUKLVDUUHVW
  $W WKH LQLWLDO SUHWULDO FRQIHUHQFH 0RGHQD LQIRUPHG WKH
PDJLVWUDWH MXGJH WKDW KH ZLVKHG WR SURFHHG SUR VH  7KH
PDJLVWUDWHMXGJHWKHQDVNHG0RGHQDDVHULHVRITXHVWLRQVWR
HQVXUHWKDWKHXQGHUVWRRGWKHFRQVHTXHQFHVRIKLVGHFLVLRQWR
UHSUHVHQWKLPVHOI0RGHQDLQGLFDWHGWKDWKHXQGHUVWRRGWKH
GLIILFXOWLHVLQYROYHGLQVHOIUHSUHVHQWDWLRQEXWZLVKHGWRGR
VRDQ\ZD\%DVHGXSRQ0RGHQDjVDQVZHUVDQGGHPHDQRUWKH
PDJLVWUDWH MXGJH FRQFOXGHG WKDW 0RGHQD mNQRZLQJO\ DQG
YROXQWDULO\ ZDLYHG KLV ULJKW WR FRXQVHOl  7KH PDJLVWUDWH
MXGJHQHYHUWKHOHVVDSSRLQWHGWKH)HGHUDO3XEOLF'HIHQGHUWR
VHUYHDVVWDQGE\FRXQVHOLQWKHHYHQWWKDW0RGHQDFKDQJHG
KLVPLQG
  )LYHGD\VODWHU0RGHQDVHQWDOHWWHUWRWKHGLVWULFWFRXUW
UHTXHVWLQJWKDWFRXQVHOEHDSSRLQWHGRQKLVEHKDOI%XWKH
ZLWKGUHZWKLVUHTXHVWLQDVXEVHTXHQWOHWWHUWKDWKHVHQWWRWKH
GLVWULFW FRXUW WKUHH GD\V WKHUHDIWHU  $W WKH ILQDO SUHWULDO
FRQIHUHQFHEHIRUHWKHGLVWULFWFRXUW0RGHQDDJDLQVWDWHGKLV
GHVLUH WR UHSUHVHQW KLPVHOI  7KH GLVWULFW FRXUW WKHUHIRUH
SHUPLWWHGKLPWRGRVRZLWKRXWIXUWKHULQTXLU\
  0RGHQD ZDV WULHG EHIRUH D MXU\ LQ $XJXVW RI   7R
HVWDEOLVK 0RGHQDjV JXLOW RQ WKH FRQVSLUDF\ FRXQW WKH
JRYHUQPHQWFDOOHGZLWQHVVHVDQGRIIHUHGPRUHWKDQ
H[KLELWV0RGHQDVDWVLOHQWWKURXJKRXWWKHHQWLUHWULDOUDLVLQJ
QRREMHFWLRQVDQGSUHVHQWLQJQRGHIHQVHRQKLVRZQEHKDOI
$IWHUDWKUHHGD\WULDOWKHMXU\IRXQG0RGHQDJXLOW\RQWKH
FRQVSLUDF\FRXQW
  0RGHQDWKHQVHQWDOHWWHUWRWKHGLVWULFWFRXUWUHTXHVWLQJ
WKDWKHUHFHLYHWKHDVVLVWDQFHmRIDPRUHTXDOLILHGDWWRUQH\LQ
WD[UHODWHGPDWWHUVlGXULQJWKHVHQWHQFLQJSURFHHGLQJV:KLOH
ZDLWLQJIRUDUHVSRQVHIURPWKHGLVWULFWFRXUW0RGHQDZDV
     8QLWHG6WDWHVY0RGHQD                           1R        1R                       8QLWHG6WDWHVY0RGHQD         

DVNHG WR SDUWLFLSDWH LQ DQ LQWHUYLHZ ZLWK D SUHVHQWHQFH            WKDWUHVWULFWDSUREDWLRQHUjVIUHHGRPPXVWEHHVSHFLDOO\ILQH
LQYHVWLJDWRU0RGHQDGHFOLQHGH[SODLQLQJWKDWKHZRXOGQRW               WXQHGl
SDUWLFLSDWHLQWKHLQWHUYLHZZLWKRXWWKHDVVLVWDQFHRIFRXQVHO
,QUHVSRQVHWKHLQYHVWLJDWRUFODLPHGWKDW0RGHQDKDGDOUHDG\                 7KLVFRXUWKDVDOVRKHOGWKDWDGLVWULFWFRXUWPXVWmDWWKH
GHFOLQHGWRKDYHDSSRLQWHGFRXQVHOSUHVHQWDQGWKHUHIRUHQR               WLPHRIVHQWHQFLQJVWDWHLQRSHQFRXUWWKHUHDVRQVIRULWV
ORQJHU KDG WKH ULJKW WR FRXQVHO  0RGHQD VWLOO UHIXVHG WR        LPSRVLWLRQRIWKHSDUWLFXODUVHQWHQFHLQFOXGLQJLWVUDWLRQDOH
SDUWLFLSDWHLQWKHLQWHUYLHZ7KHSUHVHQWHQFHLQYHVWLJDWLRQ               IRU PDQGDWLQJ VSHFLDO FRQGLWLRQV RI VXSHUYLVHG UHOHDVHl
UHSRUW365ZDVWKXVSUHSDUHGZLWKRXWKLVLQSXW0RGHQD                  8QLWHG6WDWHVY.LQJVOH\)GWK&LU
ODWHUUHFHLYHGDOHWWHUIURPWKHGLVWULFWFRXUWLQIRUPLQJKLP              LQWHUQDOTXRWDWLRQPDUNVRPLWWHG7KHGLVWULFWFRXUWIDLOHG
WKDWWKH)HGHUDO3XEOLF'HIHQGHUKDGDOUHDG\EHHQDSSRLQWHG                WRGRVRLQWKHSUHVHQWFDVH,QVWHDGWKHRQO\PHQWLRQRIWKH
WRSURYLGHDQ\DVVLVWDQFHWKDWKHPLJKWQHHG                              VSHFLDO FRQGLWLRQV LV LQ WKH VHQWHQFLQJ RUGHU WKDW WKH FRXUW
                                                                           LVVXHGDIWHUWKHFRQFOXVLRQRIWKHKHDULQJ
   $W WKH VHQWHQFLQJ KHDULQJ WKH GLVWULFW FRXUW VHQWHQFHG
0RGHQD WR  PRQWKV LQ SULVRQ IROORZHG E\  \HDUV RI               %DVHG RQ DOO RI WKH DERYH ZH FRQFOXGH WKDW WKH GLVWULFW
VXSHUYLVHG UHOHDVH  7KH GLVWULFW FRXUW ODWHU LVVXHG LWV           FRXUWDEXVHGLWVGLVFUHWLRQLQUHTXLULQJ0RGHQDWRXQGHUJR
VHQWHQFLQJRUGHUZKLFKDGGHGVSHFLDOFRQGLWLRQVWR0RGHQDjV               WHVWLQJ DQG WUHDWPHQW IRU GUXJ DQG DOFRKRO DEXVH DQG WR
WHUPRIVXSHUYLVHGUHOHDVH6SHFLILFDOO\WKHRUGHUSURYLGHG              DEVWDLQIURPWKHXVHRIDOFRKROLFEHYHUDJHVGXULQJKLVWKUHH
WKDW0RGHQDPXVWUHFHLYHWHVWLQJDQGWUHDWPHQWIRUDOFRKRO                 \HDU WHUP RI VXSHUYLVHG UHOHDVH  :H WKHUHIRUH YDFDWH
DQG GUXJ DEXVH DQG DEVWDLQ IURP WKH XVH RI DOFRKROLF              0RGHQDjVVHQWHQFHDQGUHPDQGWKHFDVHZLWKLQVWUXFWLRQVWR
EHYHUDJHV0RGHQDQRZDSSHDOVKLVFRQYLFWLRQDQGVHQWHQFH                UHVHQWHQFH0RGHQDZLWKRXWWKHVSHFLDOFRQGLWLRQVDWLVVXH
                                                                           %DVV)GDWYDFDWLQJWKHGHIHQGDQWjVVHQWHQFHDQG
                          ,,$1$/<6,6                                    UHPDQGLQJWKHFDVHWRWKHGLVWULFWFRXUWZLWKLQVWUXFWLRQVWKDW
                                                                           LWHOLPLQDWHWKHVSHFLDOFRQGLWLRQVUHJDUGLQJWKHSRVVHVVLRQ
$ :DLYHURIFRXQVHO                                                     DQGXVHRIDOFRKROWKDWZHUHLPSRVHGZLWKRXWDQ\EDVLVLQWKH
                                                                           UHFRUG3UHQGHUJDVW)GDWVDPH
   0RGHQDFRQWHQGVWKDWWKHGLVWULFWFRXUWHUUHGLQFRQFOXGLQJ
WKDWKHNQRZLQJO\DQGYROXQWDULO\ZDLYHGKLVULJKWWRFRXQVHO                                  ,,,&21&/86,21
D ULJKW JXDUDQWHHG E\ WKH 6L[WK $PHQGPHQW WR WKH 8QLWHG
6WDWHV&RQVWLWXWLRQ+HSUHVHQWVWKLVDUJXPHQWIRUWKHILUVW                )RU DOO RI WKH UHDVRQV VHW IRUWK DERYH ZH $)),50
WLPHRQDSSHDOKRZHYHUDQGPXVWWKHUHIRUHHVWDEOLVKWKDWWKH             0RGHQDjV FRQYLFWLRQ 9$&$7( KLV VHQWHQFH DQG
GLVWULFW FRXUW FRPPLWWHG SODLQ HUURU LQ PDNLQJ WKDW                 5(0$1' WKLV FDVH IRU UHVHQWHQFLQJ ZLWKRXW WKH VSHFLDO
GHWHUPLQDWLRQ8QLWHG6WDWHVY.RHEHUOHLQ)G                 FRQGLWLRQVRQ0RGHQDjVVXSHUYLVHGUHOHDVHWKDWUHTXLUHKLP
WK&LUm:KHUHDVKHUHDFULPLQDOGHIHQGDQW                 WRXQGHUJRWHVWLQJDQGWUHDWPHQWIRUGUXJDQGDOFRKRODEXVH
KDVIDLOHGWRREMHFWEHORZKHRUVKHPXVWGHPRQVWUDWHWKDWWKH            DQGWRDEVWDLQIURPWKHXVHRIDOFRKROLFEHYHUDJHV
HUURUZDVSODLQDVGHILQHGE\)HG5&ULP3EEHIRUHZH
PD\H[HUFLVHRXUGLVFUHWLRQWRFRUUHFWWKHHUURUlIRRWQRWH
RPLWWHGm7RHVWDEOLVKSODLQHUURUDGHIHQGDQWPXVWVKRZ
WKDWDQHUURURFFXUUHGLQWKHGLVWULFWFRXUWWKDWWKHHUURU
ZDV SODLQ LH REYLRXV RU FOHDU  WKDW WKH HUURU DIIHFWHG
>WKH@GHIHQGDQWjVVXEVWDQWLDOULJKWVDQGWKDWWKLVDGYHUVH
LPSDFW VHULRXVO\ DIIHFWHG WKH IDLUQHVV LQWHJULW\ RU SXEOLF
     8QLWHG6WDWHVY0RGHQD                         1R       1R                        8QLWHG6WDWHVY0RGHQD            

    7KH GHIHQGDQW VKDOO SDUWLFLSDWH LQ D SURJUDP RI          UHSXWDWLRQ RI WKH MXGLFLDO SURFHHGLQJVl  8QLWHG 6WDWHV Y
  WHVWLQJDQGWUHDWPHQWIRUDOFRKRODEXVHDVGLUHFWHGE\WKH            6FKXOWH)GWK&LU
  SUREDWLRQ RIILFHU XQWLO VXFK WLPH DV WKH GHIHQGDQW LV
  UHOHDVHGIURPWKHSURJUDPE\WKHSUREDWLRQRIILFHU                       :H PXVW ILUVW GHFLGH ZKHWKHU WKH GLVWULFW FRXUW SURSHUO\
                                                                         GHWHUPLQHG WKDW 0RGHQD KDG ZDLYHG KLV ULJKW WR FRXQVHO
                                                                   7KLVFRXUWKDVKHOGWKDWEHIRUHDOORZLQJDFULPLQDOGHIHQGDQW
                                                                         WRUHSUHVHQWKLPVHOIDGLVWULFWFRXUWPXVWFRQGXFWDFROORTX\
    7KH GHIHQGDQW VKDOO DEVWDLQ IURP DOO XVH RI             VXEVWDQWLDOO\VLPLODUWRWKHRQHVHWIRUWKLQWKH%HQFK%RRNIRU
  DOFRKROLFEHYHUDJHV                                                   8QLWHG6WDWHV'LVWULFWsXGJHV8QLWHG6WDWHVY0F'RZHOO
                                                                         )GWK&LU7KHUHTXLUHGFROORTX\
1HLWKHUDOFRKROQRUGUXJXVHSOD\HGDUROHLQ0RGHQDjVFULPH            FRQVLVWVRIVHYHUDOTXHVWLRQVDQGVWDWHPHQWVWKDWDUHGHVLJQHG
1RUGRHVWKHUHFRUGLQGLFDWHWKDW0RGHQDKDVDQ\VXEVWDQFH               WR JDXJH WKH GHIHQGDQWjV XQGHUVWDQGLQJ RI WKH OHJDO
DEXVHSUREOHP,QGHHGWKH365VSHFLILFDOO\VWDWHVWKDWWKH             SURFHHGLQJV WR DVVHVV KLV ZLOOLQJQHVV WR EHDU WKH
SUREDWLRQRIILFHUmKDVQRLQIRUPDWLRQSHUWDLQLQJWRVXEVWDQFH            FRQVHTXHQFHVRISURFHHGLQJSURVHDQGWRXUJHKLPWRDFFHSW
DEXVHXVHSHUWDLQLQJWR0U0RGHQDl7KHVSHFLDOFRQGLWLRQV             WKHDVVLVWDQFHRIDSSRLQWHGFRXQVHO,GDW7KLVFRXUW
DWLVVXHWKHUHIRUHGRQRWEHDUDUHDVRQDEOHUHODWLRQVKLSWR            DOVRUHTXLUHVWKHGLVWULFWFRXUWWRPDNHDQH[SUHVVILQGLQJWKDW
HLWKHUUHKDELOLWDWLQJ0RGHQDRUSURWHFWLQJWKHSXEOLF8QLWHG           WKHGHIHQGDQWKDVNQRZLQJO\DQGYROXQWDULO\ZDLYHGKLVULJKW
6WDWHVY3UHQGHUJDVW)GWK&LU            WRFRXQVHOXQGHUWKH6L[WK$PHQGPHQW,GDW,QWKH
VWULNLQJVSHFLDOFRQGLWLRQVWKDWSURKLELWHGWKHGHIHQGDQWIURP          SUHVHQW FDVH 0RGHQD FRQFHGHV WKDW WKH PDJLVWUDWH MXGJH
SXUFKDVLQJSRVVHVVLQJRUXVLQJDOFRKROZKHUHWKHUHFRUGGLG           FRQGXFWHGWKHUHTXLUHGFROORTX\DQGFRQFOXGHGWKDW0RGHQD
QRWVKRZWKDWmDOFRKROZDVDFRQWULEXWLQJFDXVHRIKLVFULPH             NQRZLQJO\DQGYROXQWDULO\ZDLYHGKLVULJKWWRFRXQVHO+H
RUWKDWWKHGHIHQGDQWRWKHUZLVHLVLQQHHGRIDQ\VXEVWDQFH              PDLQWDLQVKRZHYHUWKDWWKHGLVWULFWFRXUWKDGDQREOLJDWLRQ
DEXVHUHKDELOLWDWLRQl                                                 WRFRQGXFWWKHZDLYHURIFRXQVHOSURFHHGLQJDVHFRQGWLPH
                                                                         DIWHU 0RGHQD KDG H[SUHVVHG GRXEWV DERXW UHSUHVHQWLQJ
   %XWWKHJRYHUQPHQWFRQWHQGVWKDW0RGHQDLVWREODPHIRU               KLPVHOISULRUWRWULDO
WKHDEVHQFHRILQIRUPDWLRQDVWRZKHWKHUKHKDVDVXEVWDQFH
DEXVH SUREOHP  ,W SRLQWV RXW WKDW 0RGHQD UHIXVHG WR              :HGLVDJUHH$PDJLVWUDWHMXGJHLVDXWKRUL]HGE\VWDWXWHWR
SDUWLFLSDWHLQDQLQWHUYLHZZLWKWKHSUHVHQWHQFHLQYHVWLJDWRU           GHWHUPLQH ZKHWKHU D FULPLQDO GHIHQGDQW KDV HIIHFWLYHO\
GXULQJ ZKLFK WLPH KH ZRXOG KDYH KDG WKH RSSRUWXQLW\ WR          ZDLYHGWKHULJKWWRFRXQVHO86&EDm>$@
SURYLGHDQDFFRXQWRIKLVSDVWGUXJDQGDOFRKROXVHRUKLV              MXGJHPD\GHVLJQDWHDPDJLVWUDWHMXGJHWRKHDUDQGGHWHUPLQH
ODFNWKHUHRI0RGHQDFRXQWHUVWKDWKHGLGQRWSDUWLFLSDWHLQ            DQ\ SUHWULDO PDWWHU SHQGLQJ EHIRUH WKH FRXUW    l  7KH
WKHLQWHUYLHZDVDUHVXOWRIWKHFRQIXVLRQUHJDUGLQJKLVOHJDO           PDJLVWUDWHMXGJHLQWKHSUHVHQWFDVHH[HUFLVHGWKDWDXWKRULW\
UHSUHVHQWDWLRQ  :H QHHG QRW GHFLGH ZKLFK SDUW\ LV               DQGIROORZHGWKHSURFHGXUHVUHTXLUHGE\WKLVFRXUWLQGRLQJ
UHVSRQVLEOHIRUWKHUHFRUGEHLQJVLOHQWDVWRZKHWKHU0RGHQD             VR  $OWKRXJK 0RGHQD KDG DQ LQWHULP FKDQJH RI KHDUW
KDV D VXEVWDQFH DEXVH SUREOHP  $ GHIHQGDQWjV IDLOXUH WR        UHJDUGLQJKLVGHFLVLRQWRSURFHHGSURVHKHXOWLPDWHO\JDYH
SURYLGH LQIRUPDWLRQ WR D SUHVHQWHQFH LQYHVWLJDWRU GRHV QRW        WKHGLVWULFWFRXUWQRUHDVRQWRVXVSHFWWKDWKHZDVXQFHUWDLQ
JLYHWKHGLVWULFWFRXUWOLFHQVHWRLPSRVHDQ\VSHFLDOFRQGLWLRQ          DERXWUHSUHVHQWLQJKLPVHOI6SHFLILFDOO\KHVHQWWKHGLVWULFW
LWFKRRVHV6HH8QLWHG6WDWHVY%DVV)G              FRXUWDOHWWHUH[SOLFLWO\ZLWKGUDZLQJKLVHDUOLHUUHTXHVWWREH
WK &LU  QRWLQJ WKDW D GLVWULFW FRXUWjV GLVFUHWLRQ LQ   UHSUHVHQWHG E\ DSSRLQWHG FRXQVHO DQG DW WKH ILQDO SUHWULDO
LPSRVLQJ VSHFLDO FRQGLWLRQV mLV QRW XQIHWWHUHGl 8QLWHG           FRQIHUHQFHUHLWHUDWHGKLVGHVLUHWRSURFHHGSURVH
6WDWHVY7ROOD)GG&LUm>&@RQGLWLRQV
      8QLWHG6WDWHVY0RGHQD                      1R       1R                      8QLWHG6WDWHVY0RGHQD        

  0RGHQDJLYHVQRFRPSHOOLQJUHDVRQZK\ZHVKRXOGEUHDN               FRQYLFWLRQ WKDW WKH WULDO FRXUW FRPPLWWHG D FOHDU HUURU RI
QHZ JURXQG E\ UHTXLULQJ WKDW D GLVWULFW FRXUW UHHYDOXDWH D   MXGJPHQWl%RZOLQJY3IL]HU,QF)GWK
PDJLVWUDWHMXGJHjVDFFHSWDQFHRIWKHGHIHQGDQWjVZDLYHURI            &LU
FRXQVHOVROHO\EHFDXVHWKHGHIHQGDQWDWRQHSRLQWKDGVHFRQG
WKRXJKWV DERXW UHSUHVHQWLQJ KLPVHOI  7R UHTXLUH VXFK D          )HGHUDOODZUHTXLUHVWKDWDGLVWULFWFRXUWLPSRVHVSHFLILHG
UHFRQVLGHUDWLRQZRXOGGHIHDWRQHRIWKHNH\SXUSRVHVRIWKH           FRQGLWLRQV RQ D WHUP RI VXSHUYLVHG UHOHDVH XQGHU FHUWDLQ
0DJLVWUDWHV $FW QDPHO\ WKH FRQVHUYDWLRQ RI MXGLFLDO           FLUFXPVWDQFHVQRQHRIZKLFKLVDWLVVXHLQWKHSUHVHQWFDVH
UHVRXUFHV6HH+RZDUGY6HFj\RI+HDOWK	+XPDQ6HUYV              86&  G  $ GLVWULFW FRXUW PD\ DOVR LPSRVH
)GWK&LUUHFRJQL]LQJWKDWm>W@KLV           mVSHFLDOl FRQGLWLRQV RI VXSHUYLVHG UHOHDVH WKDW LW GHHPV
GXSOLFDWLRQ RI WLPH DQG HIIRUW >E\ D GLVWULFW FRXUW DQG D   DSSURSULDWH,G7RLPSRVHDVSHFLDOFRQGLWLRQKRZHYHUWKH
PDJLVWUDWHMXGJH@ZDVWHVMXGLFLDOUHVRXUFHVUDWKHUWKDQVDYLQJ        GLVWULFW FRXUW PXVW GHWHUPLQH DPRQJ RWKHU WKLQJV WKDW WKH
WKHPDQGUXQVFRQWUDU\WRWKHSXUSRVHVRIWKH0DJLVWUDWHV            FRQGLWLRQ
$FWl7KHGLVWULFWFRXUWWKHUHIRUHGLGQRWFRPPLWDQ\HUURU
SODLQRURWKHUZLVHLQDFFHSWLQJ0RGHQDjVZDLYHURIKLVULJKW           LV UHDVRQDEO\ UHODWHG WR VSHFLILHG VHQWHQFLQJ IDFWRUV
WRFRXQVHO                                                            QDPHO\WKHQDWXUHDQGFLUFXPVWDQFHVRIWKHRIIHQVHDQG
                                                                        WKHKLVWRU\DQGFKDUDFWHULVWLFVRIWKHGHIHQGDQWDQGWKH
% &RFRQVSLUDWRUVjFRQYLFWLRQV                                          QHHGWRDIIRUGDGHTXDWHGHWHUUHQFHWRSURWHFWWKHSXEOLF
                                                                        IURPIXUWKHUFULPHVRIWKHGHIHQGDQWDQGWRSURYLGHWKH
  0RGHQD QH[W PDLQWDLQV WKDW WKH DGPLVVLRQ RI WHVWLPRQ\          GHIHQGDQWZLWKQHHGHGHGXFDWLRQDORUYRFDWLRQDOWUDLQLQJ
UHJDUGLQJWKHFRQYLFWLRQVRIKLVFRFRQVSLUDWRUVWKH5XVVHOO            PHGLFDOFDUHRURWKHUFRUUHFWLRQDOWUHDWPHQWLQWKHPRVW
%URWKHUV GHSULYHG KLP RI D IDLU WULDO  'XULQJ GLUHFW         HIIHFWLYHPDQQHU
H[DPLQDWLRQWKHSURVHFXWRUTXHVWLRQHG'DQLHO5XVVHOODVWR
ZKHWKHUKHDQGKLVEURWKHUVKDGEHHQFRQYLFWHGRIFRQVSLUDF\         5LWWHU)GDW 8QLWHG6WDWHVY%RUWHOV)G
7KHTXHVWLRQLQJZHQWDVIROORZV                                      WK&LUUHFRJQL]LQJWKDWWKHLPSRVLWLRQRI
                                                                      D VSHFLDO FRQGLWLRQ LV QRW DQ DEXVH RI GLVFUHWLRQ LI WKDW
    4 <RX ZHUH RQ WULDO LQ WKLV FRXUWURRP ODVW \HDU LQ      FRQGLWLRQLVmUHDVRQDEO\UHODWHGWRWKHGXDOJRDOVRISUREDWLRQ
       $XJXVWZHUH\RXQRW"                                          WKHUHKDELOLWDWLRQRIWKHGHIHQGDQWDQGWKHSURWHFWLRQRIWKH
    $ <HV,ZDV                                                    SXEOLFl
    4 $QG \RX ZHUH FRQYLFWHG RI WKH ILYH LQGLYLGXDO
       FRXQWVDJDLQVW\RXDVZHOODVWKHFRQVSLUDF\FRXQW              0RGHQDFODLPVWKDWWKHGLVWULFWFRXUWDEXVHGLWVGLVFUHWLRQ
       ZHUH\RXQRW"                                                  E\ LPSRVLQJ WKH IROORZLQJ VSHFLDO FRQGLWLRQV RQ KLV
    $ <HDK                                                          VXSHUYLVHGUHOHDVH
    4 $QG\RXUEURWKHUVZHUHOLNHZLVH FRQYLFWHGRIWKH
       VDPHFRXQWV"                                                     
    $ <HVVLU
                                                                          7KH GHIHQGDQW VKDOO SDUWLFLSDWH LQ D SURJUDP RI
0RGHQD GLG QRW REMHFW WR WKH JRYHUQPHQWjV OLQH RI               WHVWLQJDQGWUHDWPHQWIRUGUXJDEXVHDVGLUHFWHGE\WKH
TXHVWLRQLQJVRZHDUHOLPLWHGWRWKHGHWHUPLQDWLRQRIZKHWKHU          SUREDWLRQ RIILFHU XQWLO VXFK WLPH DV WKH GHIHQGDQW LV
WKHDGPLVVLRQRIWKHWHVWLPRQ\DWLVVXHFRQVWLWXWHGSODLQHUURU        UHOHDVHGIURPWKHSURJUDPE\WKHSUREDWLRQRIILFHU
.RHEHUOHLQ)GDW
    8QLWHG6WDWHVY0RGHQD                       1R       1R                        8QLWHG6WDWHVY0RGHQD            

  7KH WKLUG IDFWRU UHTXLUHV XV WR FRQVLGHU ZKHWKHU WKH           (YLGHQFH WKDW D FRFRQVSLUDWRU KDV EHHQ FRQYLFWHG RI
SURVHFXWRU GHOLEHUDWHO\ RU DFFLGHQWDOO\ PDGH WKH LPSURSHU       FRQVSLULQJ ZLWK D FULPLQDO GHIHQGDQW LV JHQHUDOO\
DUJXPHQWVLQTXHVWLRQ%RWKRIWKHLPSURSHUUHPDUNVDWLVVXH         LQDGPLVVLEOH EHFDXVH LW PLJKW OHDG WKH MXU\ WR mUHJDUG WKH
DSSHDUWREHGHOLEHUDWHDWWHPSWVWREROVWHUWKHJRYHUQPHQWjV          LVVXH RI WKH UHPDLQLQJ GHIHQGDQWjV JXLOW DV VHWWOHG DQG
FDVHDJDLQVW0RGHQD7KHJRYHUQPHQWPRUHRYHUGRHVQRW              >FRQFOXGHWKDW@WKHWULDOLVDPHUHIRUPDOLW\l8QLWHG6WDWHVY
FRQWHQGWKDWWKHDUJXPHQWVZHUHXQLQWHQWLRQDO$FFRUGLQJO\          *ULIILQ)GWK&LU)HG5(YLG
WKLVIDFWRUIDYRUV0RGHQD                                           SURYLGLQJ WKDW UHOHYDQW HYLGHQFH mPD\ EH H[FOXGHG LI LWV
                                                                      SUREDWLYHYDOXHLVVXEVWDQWLDOO\RXWZHLJKHGE\WKHGDQJHURI
   7KHODVWIDFWRUFHQWHUVRQZKHWKHUWKHJRYHUQPHQWKDGD            XQIDLU SUHMXGLFHl  ,I WKH FRFRQVSLUDWRU WHVWLILHV DW WULDO
VWURQJ FDVH DJDLQVW WKH GHIHQGDQW VXFK WKDW WKH LPSURSHU     KRZHYHUHYLGHQFHRIKLVSULRUFRQYLFWLRQVPD\EHLQWURGXFHG
DUJXPHQWVOLNHO\KDGQRLPSDFWRQWKHRXWFRPHRIWKHWULDO           VRWKDWWKHMXU\FDQDFFXUDWHO\DVVHVVKLVFUHGLELOLW\8QLWHG
$VGLVFXVVHGDERYHLQ3DUW,,%WKHJRYHUQPHQWRIIHUHGD            6WDWHVY6DQGHUV)GWK&LU)HG5
VXEVWDQWLDODPRXQWRIHYLGHQFHWRHVWDEOLVK0RGHQDjVJXLOW           (YLGDDOORZLQJHYLGHQFHRISULRUFRQYLFWLRQVIRUWKH
HYLGHQFHWKDW0RGHQDIDLOHGWRUHEXW7KLVIDFWRUWKXVIDYRUV        SXUSRVHRIHYDOXDWLQJDZLWQHVVjVFUHGLELOLW\,QDOORZLQJWKH
WKHJRYHUQPHQW                                                       DGPLVVLRQRIVXFKHYLGHQFHKRZHYHUWKHGLVWULFWFRXUWPXVW
                                                                      LQVWUXFWWKHMXU\WKDWLWPD\QRWFRQVLGHUWKHFRFRQVSLUDWRUjV
   ,QVXPWKHUHOHYDQWIDFWRUVGRQRWGLVSURSRUWLRQDWHO\IDYRU       SULRU FRQVSLUDF\ FRQYLFWLRQ DV HYLGHQFH RI WKH GHIHQGDQWjV
HLWKHU WKH JRYHUQPHQW RU 0RGHQD  %XW 0RGHQD EHDUV WKH       JXLOW  6DQGHUV  )G DW  m:KHQ D JXLOW\ SOHD RU
EXUGHQRIVKRZLQJWKDWWKHSURVHFXWRULDOPLVFRQGXFWLQWKH            FRQYLFWLRQLVLQWURGXFHGLQWRHYLGHQFHWKH GLVWULFWFRXUWLV
SUHVHQWFDVHZDVVRmH[FHSWLRQDOO\IODJUDQWWKDWLWFRQVWLWXWHV       UHTXLUHGWRJLYHDFDXWLRQDU\LQVWUXFWLRQWRWKHHIIHFWWKDWWKH
SODLQ HUURUl  &DUWHU  )G DW  LQWHUQDO TXRWDWLRQ   MXU\PD\XVHWKHFRQYLFWLRQRUJXLOW\SOHDRQO\WRGHWHUPLQH
PDUNVRPLWWHG0RGHQDKDVQRWPHWWKLVEXUGHQEHFDXVHLQ           WKHWHVWLI\LQJZLWQHVVjVFUHGLELOLW\l
OLJKW RI WKH HYLGHQFH RIIHUHG DJDLQVW 0RGHQD DW WULDO KH
FDQQRWVKRZWKDWWKHSURVHFXWRUjVLVRODWHGUHPDUNVKDGDQ\               'DQLHO 5XVVHOO WHVWLILHG DW WULDO DV D ZLWQHVV IRU WKH
HIIHFWRQWKHMXU\jVJXLOW\YHUGLFW$OWKRXJKUHJUHWWDEOHWKH       JRYHUQPHQW  7KH SURVHFXWRU WKHUHIRUH ZDV HQWLWOHG WR
SURVHFXWRUjV LPSURSHU DUJXPHQWV WKXV GR QRW ZDUUDQW WKH        TXHVWLRQ 5XVVHOO DERXW KLV SULRU FRQVSLUDF\ FRQYLFWLRQ LQ
UHYHUVDORI0RGHQDjVFRQYLFWLRQ                                    RUGHU WR mUHPRYH WKH VWLQJl RI DQ\ DWWHPSW WR LPSHDFK KLV
                                                                      FUHGLELOLW\ZLWKKLVFRQYLFWLRQRQFURVVH[DPLQDWLRQ)HG5
( &RQGLWLRQVRIVXSHUYLVHGUHOHDVH                                  (YLGDGYLVRU\FRPPLWWHHjVQRWH%XWWKHGLVWULFWFRXUW
                                                                      ZDVUHTXLUHGWRLVVXHDFDXWLRQDU\LQVWUXFWLRQDIWHU5XVVHOO
    0RGHQDjV ILQDO FKDOOHQJH UHODWHV WR KLV VHQWHQFH  +H   DFNQRZOHGJHGKLVFRQVSLUDF\FRQYLFWLRQ6DQGHUV)GDW
FRQWHQGVWKDWWKHGLVWULFWFRXUWHUURQHRXVO\LPSRVHGVSHFLDO            7KH GLVWULFW FRXUW IDLOHG WR GR VR  $V D UHVXOW WKH
FRQGLWLRQVRQKLVVXSHUYLVHGUHOHDVH,QSDUWLFXODU0RGHQD          DGPLVVLRQRI'DQLHO5XVVHOOjVWHVWLPRQ\FRQFHUQLQJKLVSULRU
FODLPVWKDWWKHGLVWULFWFRXUWODFNHGDQ\EDVLVIRUUHTXLULQJ         FRQVSLUDF\FRQYLFWLRQZDVHUURQHRXV)XUWKHUPRUH'DQLHO
KLP WR UHFHLYH WHVWLQJ DQG WUHDWPHQW IRU GUXJ DQG DOFRKRO    5XVVHOOZDVWKHRQO\RQHRIWKH5XVVHOO%URWKHUVWRWHVWLI\DW
DEXVH DQG WR DEVWDLQ IURP WKH XVH RI DOFRKROLF EHYHUDJHV     WULDODQGWKXVKLVWHVWLPRQ\UHJDUGLQJWKHFRQYLFWLRQVRIKLV
GXULQJKLVWKUHH\HDUWHUPRIVXSHUYLVHGUHOHDVH:HZLOOVHW        EURWKHUVZDVQRWDGPLVVLEOHIRUWKHSXUSRVHRIDVVHVVLQJWKHLU
DVLGHDVXSHUYLVHGUHOHDVHFRQGLWLRQRQO\LIZHGHWHUPLQHWKDW        FUHGLELOLW\
WKH GLVWULFW FRXUW DEXVHG LWV GLVFUHWLRQ LQ LPSRVLQJ WKH
FRQGLWLRQ8QLWHG6WDWHVY5LWWHU)GWK&LU
m$EXVHRIGLVFUHWLRQLVGHILQHGDVDGHILQLWHDQGILUP
     8QLWHG6WDWHVY0RGHQD                        1R       1R                     8QLWHG6WDWHVY0RGHQD        

   0RGHQDPXVWGRPRUHKRZHYHUWKDQVLPSO\VKRZWKDWWKH             WROHUDWHWKHVHW\SHVRIFULPHVlZDVQRWLPSURSHULQWHUQDO
GLVWULFW FRXUW HUUHG LQ DGPLWWLQJ WHVWLPRQ\ UHJDUGLQJ WKH       TXRWDWLRQ PDUNV RPLWWHG  ,QGHHG 0RGHQD DFNQRZOHGJHV
5XVVHOO%URWKHUVjFRQVSLUDF\FRQYLFWLRQV8QGHUWKHSODLQ            WKDWWKLVDUJXPHQWVWDQGLQJDORQHLVQRWLPSURSHU%XWKH
HUURU VWDQGDUG RI UHYLHZ KH PXVW DOVR HVWDEOLVK WKDW WKH     PDLQWDLQV WKDW WKH VWDWHPHQW FRQVWLWXWHV SURVHFXWRULDO
DGPLVVLRQ RI WKLV WHVWLPRQ\ DIIHFWHG KLV VXEVWDQWLDO ULJKWV    PLVFRQGXFW ZKHQ YLHZHG LQ FRQQHFWLRQ ZLWK WKH RWKHU
8QLWHG6WDWHVY6FKXOWH)GWK&LU           LPSURSHU DUJXPHQWV VHW IRUWK DERYH  +H IDLOV WR H[SODLQ
$QHUURUDIIHFWVWKHVXEVWDQWLDOULJKWVRIDFULPLQDOGHIHQGDQW        KRZHYHU KRZ DQ DFFHSWDEOH UHPDUN PDGH E\ D SURVHFXWRU
ZKHQLWLVSUHMXGLFLDOWKDWLVZKHQLWmDIIHFW>V@WKHRXWFRPH        EHFRPHVLPSURSHUVROHO\EHFDXVHWKHSURVHFXWRUHQJDJHGLQ
RIWKHGLVWULFWFRXUWSURFHHGLQJVl8QLWHG6WDWHVY2ODQR       PLVFRQGXFWDWVRPHRWKHUSRLQWGXULQJWKHFORVLQJDUJXPHQW
86     ,Q GHWHUPLQLQJ ZKHWKHU DQ HUURU LV
SUHMXGLFLDOZHPXVWH[DPLQHLWLQWKHFRQWH[WRIWKHUHFRUGDV           %DVHG RQ WKH DERYH DQDO\VLV ZH FRQFOXGH WKDW WKH
D ZKROH  8QLWHG 6WDWHV Y <RXQJ  86        SURVHFXWRU LPSURSHUO\ YRXFKHG IRU 'DQLHO 5XVVHOOjV
KROGLQJWKDWDQDSSHOODWHFRXUWPXVWYLHZmDFODLP>RISODLQ          FUHGLELOLW\DQGSUHVVXUHGWKHMXU\WRUHWXUQDJXLOW\YHUGLFW
HUURU@DJDLQVWWKHHQWLUHUHFRUGl                                 7KH TXHVWLRQ WKHQ LV ZKHWKHU WKH SURVHFXWRUjV VWDWHPHQWV
                                                                       ZHUHVRIODJUDQWDVWRZDUUDQWUHYHUVLQJ0RGHQDjVFRQYLFWLRQ
   $WWULDO'DQLHO5XVVHOOWHVWLILHGWKDWKLVEURWKHUVSXUFKDVHG      &DUUROO)GDWQ7KLVFRXUWKDVLGHQWLILHGIRXU
WUXVWVIURP0RGHQDLQRUGHUWRKLGHWKHLULQFRPH+HDOVR             IDFWRUVWRJXLGHWKLVLQTXLU\mZKHWKHUWKHFRQGXFWDQG
H[SODLQHGWKDW0RGHQDPDUNHWHGWKHVHWUXVWVDVDPHDQVWR              UHPDUNV RI WKH SURVHFXWRU WHQGHG WR PLVOHDG WKH MXU\ RU
DYRLG IHGHUDO LQFRPH WD[HV  ,Q DGGLWLRQ WKUHH RWKHU          SUHMXGLFHWKHGHIHQGDQWZKHWKHUWKHFRQGXFWRUUHPDUNV
LQGLYLGXDOVWHVWLILHGWKDWWKH\VHUYHGDVWUXVWHHVIRUWUXVWVVHW      ZHUH LVRODWHG RU H[WHQVLYH  ZKHWKHU WKH UHPDUNV ZHUH
XSE\0RGHQDRQEHKDOIRIWKH5XVVHOO%URWKHUVEXWWKDWWKH\          GHOLEHUDWHO\ RU DFFLGHQWDOO\ PDGH DQG  ZKHWKHU WKH
QHYHUSHUIRUPHGDQ\VXEVWDQWLYHIXQFWLRQVDVWUXVWHHV7KH\           HYLGHQFHDJDLQVWWKHGHIHQGDQWZDVVWURQJl&DUWHU)G
LQVWHDG DOORZHG 0RGHQD WR XVH WKHLU QDPHV DQG VLJQHG           DW
ZKDWHYHUGRFXPHQWVKHSUHVHQWHGWRWKHP)XUWKHUPRUHDQ
DJHQWZLWKWKH,QWHUQDO5HYHQXH6HUYLFHWHVWLILHGWKDWEDVHG            7KH ILUVW IDFWRU IRFXVHV RQ WKH HIIHFW RI WKH LPSURSHU
XSRQKLVNQRZOHGJHDQGH[SHULHQFHWKHWUXVWVHVWDEOLVKHGE\           DUJXPHQWVDWLVVXHQDPHO\ZKHWKHUWKH\ZHUHPLVOHDGLQJRU
0RGHQDODFNHGDQ\HFRQRPLFVXEVWDQFHDQGZHUHGHVLJQHG                 RWKHUZLVHSUHMXGLFLDOWRWKHGHIHQGDQW,QWKHSUHVHQWFDVHWKH
VROHO\WRKLGHLQFRPH0RGHQDRIIHUHGQRUHEXWWDOWRDQ\RI           SURVHFXWRUjV DUJXPHQWV GLG QRW PLVOHDG WKH MXU\ DV WR WKH
WKLVWHVWLPRQ\                                                        HYLGHQFH DJDLQVW 0RGHQD  7KH\ GLG KRZHYHU SUHMXGLFH
                                                                       0RGHQD ERWK E\ LPSOLFLWO\ YRXFKLQJ IRU WKH WHVWLPRQ\ RI
   $VVKRZQDERYHWKHJRYHUQPHQWRIIHUHGDPSOHHYLGHQFH               'DQLHO5XVVHOODQGE\LPSURSHUO\SUHVVXULQJWKHMXU\WRILQG
WRHVWDEOLVK0RGHQDjVJXLOWEH\RQGDUHDVRQDEOHGRXEW7KH            0RGHQDJXLOW\7KLVIDFWRUWKHUHIRUHIDYRUV0RGHQD
VWUHQJWKRIWKHJRYHUQPHQWjVFDVHDJDLQVW0RGHQDPDNHVLW
KLJKO\ XQOLNHO\ WKDW WKH DGPLVVLRQ RI WKH WHVWLPRQ\                ,QHYDOXDWLQJWKHVHFRQGIDFWRUZHFRQVLGHUZKHWKHUWKH
FRQFHUQLQJWKH5XVVHOO%URWKHUVjFRQVSLUDF\FRQYLFWLRQVKDG           LPSURSHUDUJXPHQWVPDGHE\WKHSURVHFXWRUZHUHLVRODWHG
DQ\HIIHFWRQWKHMXU\jVYHUGLFW)XUWKHUPRUH'DQLHO5XVVHOO         7KH SURVHFXWRU LQ WKH SUHVHQW FDVH PDGH WZR LPSURSHU
DFNQRZOHGJHGWKHFRQYLFWLRQVZLWKRXWDQ\HODERUDWLRQDQG              VWDWHPHQWV ERWK RI ZKLFK ZHUH PDGH GXULQJ FORVLQJ
WKH JRYHUQPHQW GLG QRW HPSKDVL]H WKLV DVSHFW RI 5XVVHOOjV      DUJXPHQW  %XW EHFDXVH WKH SURVHFXWRU GLG QRW PDNH DQ
WHVWLPRQ\  )RU DOO RI WKHVH UHDVRQV ZH FRQFOXGH WKDW WKH   H[WHQVLYHVHULHVRILPSURSHUVWDWHPHQWVWKLVIDFWRUIDYRUVWKH
DGPLVVLRQRIWKLVWHVWLPRQ\GLGQRWFRQVWLWXWHSODLQHUURU          JRYHUQPHQW
    8QLWHG6WDWHVY0RGHQD                        1R       1R                      8QLWHG6WDWHVY0RGHQD            

(PXHJEXQDP)GWK&LUm,PSURSHU              & 6XPPDULHV
YRXFKLQJRFFXUVZKHQDMXU\FRXOGUHDVRQDEO\EHOLHYHWKDWD
SURVHFXWRU ZDV LQGLFDWLQJ D SHUVRQDO EHOLHI LQ D ZLWQHVVj        0RGHQD DOVR FKDOOHQJHV WKH DGPLVVLRQ RI VHYHUDO
FUHGLELOLW\l,GLQWHUQDOTXRWDWLRQPDUNVRPLWWHG,QWKH         HYLGHQWLDU\ VXPPDULHV WKDW ZHUH LQWURGXFHG E\ WKH
SUHVHQW FDVH WKH SURVHFXWRU PDGH YDJXH VWDWHPHQWV WR WKH      JRYHUQPHQW+HDUJXHVWKDWWKHJRYHUQPHQWGLGQRWFRPSO\
HIIHFW WKDW VHYHUDO ZLWQHVVHV ZHUH QR ORQJHU SURWHVWLQJ WKH    ZLWKWKHUHTXLUHPHQWVIRUDGPLWWLQJWKHVHVXPPDULHVDVVHW
IHGHUDOLQFRPHWD[7KHVHVWDWHPHQWVE\WKHPVHOYHVDUHQRW            IRUWKLQ5XOHRIWKH)HGHUDO5XOHVRI(YLGHQFH%HFDXVH
LQGLFDWLYH RI WKH SURVHFXWRUjV SHUVRQDO YLHZ DV WR WKH         0RGHQDGLGQRWREMHFWWRWKHDGPLVVLRQRIWKHVXPPDULHVZH
ZLWQHVVHVjFUHGLELOLW\%XWWKHSURVHFXWRUDOVRVKDUHGZLWKWKH       FRQVLGHU KLV FKDOOHQJH XQGHU WKH SODLQHUURU VWDQGDUG RI
MXU\KLVHYDOXDWLRQWKDW'DQLHO5XVVHOOLVQRZDmODZDELGLQJ          UHYLHZ.RHEHUOHLQ)GDW
PDQl  $ ODZDELGLQJ PDQ GRHV QRW RI FRXUVH FRPPLW
SHUMXU\7KHSURVHFXWRUjVGHVFULSWLRQRI5XVVHOOWKHUHIRUHDW           5XOH  JRYHUQV WKH DGPLVVLELOLW\ RI HYLGHQWLDU\
OHDVWLPSOLFLWO\FRQYH\HGWRWKHMXU\WKHSURVHFXWRUjVSHUVRQDO        VXPPDULHV,WSURYLGHVLQSHUWLQHQWSDUWDVIROORZV
EHOLHIWKDW5XVVHOOLVDFUHGLEOHZLWQHVV6XFKYRXFKLQJLV
LPSHUPLVVLEOH                                                           7KH FRQWHQWV RI YROXPLQRXV ZULWLQJV UHFRUGLQJV RU
                                                                         SKRWRJUDSKVZKLFKFDQQRWFRQYHQLHQWO\EHH[DPLQHGLQ
  0RGHQD DOVR FODLPV WKDW WKH SURVHFXWRU LPSURSHUO\                FRXUWPD\EHSUHVHQWHGLQWKHIRUPRIDFKDUWVXPPDU\
SUHVVXUHGWKHMXU\WRUHWXUQDJXLOW\YHUGLFWE\VWDWLQJWKDWm,         RU FDOFXODWLRQ  7KH RULJLQDOV RU GXSOLFDWHV VKDOO EH
WKLQN ZH FDQ DOO WDNH VRPH PHDVXUH RI VDWLVIDFWLRQ LQ WKH      PDGHDYDLODEOHIRUH[DPLQDWLRQRUFRS\LQJRUERWKE\
LQYHVWLJDWLRQ DQG SURVHFXWLRQ RI WKH 5XVVHOOV RI sRKQ            RWKHUSDUWLHVDW>D@UHDVRQDEOHWLPHDQGSODFH
0RGHQD%XWZHjUHQRWILQLVKHG:HjUHQRWILQLVKHGXQWLO
WKLVYHUGLFWLVUHWXUQHGl6WDWHPHQWVWKDWH[KRUWWKHMXU\WR         )HG5(YLG7KLVFRXUWKDVLQWHUSUHWHG5XOHDV
mGRLWVMRElDUHLPSURSHU8QLWHG6WDWHVY<RXQJ86        LPSRVLQJ ILYH UHTXLUHPHQWV IRU WKH DGPLVVLRQ RI DQ
7KHDERYHTXRWHGDUJXPHQWDOWKRXJKDPELJXRXV             HYLGHQWLDU\VXPPDU\WKHXQGHUO\LQJGRFXPHQWVPXVWEH
FDQ EH FRQVWUXHG DV SUHVVXULQJ WKH MXU\ WR KHOS WKH           VRYROXPLQRXVWKDWWKH\FDQQRWEHFRQYHQLHQWO\H[DPLQHGLQ
JRYHUQPHQWILQLVKLWVVHOIGHVFULEHGODXGDEOHJRDORIEULQJLQJ         FRXUWWKHSURSRQHQWRIWKHVXPPDU\PXVWKDYHPDGHWKH
0RGHQDWRMXVWLFH7KLVNLQGRISUHVVXUHmKDVQRSODFHLQWKH         GRFXPHQWV DYDLODEOH IRU H[DPLQDWLRQ RU FRS\LQJ DW D
DGPLQLVWUDWLRQRIFULPLQDOMXVWLFHl,G                              UHDVRQDEOHWLPHDQGSODFHWKHXQGHUO\LQJGRFXPHQWVPXVW
                                                                       EHDGPLVVLEOHLQHYLGHQFHWKHVXPPDU\PXVWEHDFFXUDWH
   $FFRUGLQJWR0RGHQDWKHSURVHFXWRUHQJDJHGLQIXUWKHU              DQGQRQSUHMXGLFLDO DQG WKHVXPPDU\PXVWEHSURSHUO\
PLVFRQGXFWZKHQKHLPSORUHGWKHMXU\WRmWHOOWKURXJK\RXU            LQWURGXFHGWKURXJKWKHWHVWLPRQ\RIDZLWQHVVZKRVXSHUYLVHG
YHUGLFWWHOO0LFKDHOsRKQ0RGHQDWKDWZKDWKHGLGZLWKWKH            LWVSUHSDUDWLRQ8QLWHG6WDWHVY%UD\)G
5XVVHOO>%@URWKHUVZDVFULPLQDODQGWKDWWKHWD[ODZVRIWKLV          WK&LU
FRXQWU\DSSO\WR0LFKDHOsRKQ0RGHQDl7KLVFRXUWKDVKHOG
WKDWDUJXPHQWVWKDWLQYLWHWKHMXU\WRmVHQGDPHVVDJHlWRWKH            0RGHQDPDLQWDLQVWKDWWKHJRYHUQPHQWIDLOHGWRVDWLVI\WKH
GHIHQGDQW WKURXJK LWV YHUGLFW DOWKRXJK GLVIDYRUHG GR QRW      ILUVW WKUHH UHTXLUHPHQWV VHW IRUWK DERYH LQ LQWURGXFLQJ
mFURVVWKHOLQHLQWRSURVHFXWRULDOPLVFRQGXFWl8QLWHG6WDWHV         QXPHURXV VXPPDULHV RI WKH 5XVVHOO %URWKHUVj ILQDQFLDO
Y5HOLIRUG)GWK&LUFRQFOXGLQJWKDW         WUDQVDFWLRQV  +H PDLQWDLQV WKDW WKH mPRVW VLJQLILFDQW
WKHSURVHFXWRUjVDUJXPHQWWRWKHMXU\WKDWLWVKRXOGmUHWXUQD         YLRODWLRQRI5XOHlZDVWKHJRYHUQPHQWjVDOOHJHGIDLOXUH
YHUGLFWWKDWWHOOVWKHGHIHQGDQWWKDWWKHFLWL]HQVZRQjW   WRPDNHWKHGRFXPHQWVXQGHUO\LQJWKHVHVXPPDULHVODEHOHG
                                                                       DV([KLELWVDQGDYDLODEOHIRU
    8QLWHG6WDWHVY0RGHQD                        1R       1R                      8QLWHG6WDWHVY0RGHQD        

H[DPLQDWLRQRUFRS\LQJ,QUHVSRQVHWRWKLVDOOHJDWLRQWKH           WKXVIDLOHGWRPHHWKLVEXUGHQRIVKRZLQJWKDWWKHDGPLVVLRQ
JRYHUQPHQWFRQWHQGVWKDWLWILOHGD6WDWHPHQWRI'LVFRYHU\             RIWKHVXPPDULHVFRQVWLWXWHGSODLQHUURU
WKDWLQIRUPHG0RGHQDWKDWXSRQUHTXHVWLWZRXOGPDNHDQ\
UHFRUGVLQWHQGHGIRUXVHDWWULDODYDLODEOHIRULQVSHFWLRQ,W        ' 3URVHFXWRULDOPLVFRQGXFW
SRLQWVRXWWKDW0RGHQDQHYHUPDGHVXFKDUHTXHVW
                                                                         0RGHQD QH[W FRQWHQGV WKDW WKH SURVHFXWRU HQJDJHG LQ
   %XW 5XOH  mRSHUDWHV LQGHSHQGHQWO\ RI WKH GLVFRYHU\       PLVFRQGXFW GXULQJ WKH FORVLQJ DUJXPHQWV  +H VSHFLILFDOO\
UXOHVl$LU6DIHW\,QFY5RPDQ&DWKROLF$UFKELVKRSRI       DUJXHV WKDW WKH SURVHFXWRU YRXFKHG IRU VHYHUDO RI WKH
%RVWRQ  )G   VW &LU   7KH JRYHUQPHQW       JRYHUQPHQWjVZLWQHVVHVSUHVVXUHGWKHMXU\WRUHWXUQDJXLOW\
WKHUHIRUH KDG D GXW\ WR mVWDWH ZKHQ DQG ZKHUHl WKH           YHUGLFWDQGH[KRUWHGWKHMXU\WRmVHQGDPHVVDJHlZLWKLWV
GRFXPHQWV XQGHUO\LQJ LWV VXPPDULHV FRXOG EH YLHZHG              YHUGLFW0RGHQDKRZHYHUQHYHUREMHFWHGWRDQ\RI WKHVH
ZLWKRXWUHJDUGWRZKHWKHU0RGHQDPDGHDUHTXHVWIRUWKHVH              DUJXPHQWV  +H PXVW WKHUHIRUH VKRZ WKDW WKHLU XWWHUDQFH
UHFRUGV ,G m7KXV WR VDWLVI\ WKH µPDGH DYDLODEOHj            FRQVWLWXWHGSODLQHUURU.RHEHUOHLQ)GDW
UHTXLUHPHQWDSDUW\VHHNLQJWRXVHDVXPPDU\XQGHU5XOH
 PXVW LGHQWLI\ LWV H[KLELWV DV VXFK SURYLGH D OLVW RU      ,QUHYLHZLQJDFODLPRISURVHFXWRULDOPLVFRQGXFWXQGHUWKH
GHVFULSWLRQRIWKHGRFXPHQWVVXSSRUWLQJWKHH[KLELWDQGVWDWH         SODLQHUURU VWDQGDUG RI UHYLHZ ZH PXVW ILUVW GHWHUPLQH
ZKHQ DQG ZKHUH WKH\ PD\ EH UHYLHZHGl  0RUHRYHU WKH        ZKHWKHUWKHVWDWHPHQWVDWLVVXHZHUHLPSURSHU8QLWHG6WDWHV
6WDWHPHQWRI'LVFRYHU\ILOHGE\WKHJRYHUQPHQWSURYLGHGWKDW           Y&DUWHU)GWK&LU,IVRZHWKHQ
0RGHQDFRXOGLQVSHFWWKHGRFXPHQWVRQO\LIKHDOORZHGWKH              KDYH WR GHFLGH ZKHWKHU WKH\ ZHUH VXIILFLHQWO\ IODJUDQW WR
JRYHUQPHQWWRH[DPLQHWKHPDWHULDOVWKDW0RGHQDSODQQHGWR             ZDUUDQW UHYHUVDO RI WKH GHIHQGDQWjV FRQYLFWLRQ GHVSLWH KLV
LQWURGXFHDWWULDO1RWKLQJLQ 5XOHLQGLFDWHVWKDWWKH          IDLOXUH WR REMHFW WR WKHP DW WULDO ,G m>3@URVHFXWRULDO
ULJKWWRH[DPLQHRUFRS\UHFRUGVXQGHUO\LQJDVXPPDU\PD\              PLVFRQGXFWPD\EHVRH[FHSWLRQDOO\IODJUDQWWKDWLWFRQVWLWXWHV
EH FRQGLWLRQHG LQ VXFK D PDQQHU  ,G  UHFRJQL]LQJ WKH      SODLQHUURUDQGLVJURXQGVIRUUHYHUVDOHYHQLIWKHGHIHQGDQW
mDEVROXWH ULJKWl WR H[DPLQH WKH UHFRUGV XQGHUO\LQJ D            GLGQRWREMHFWWRLWlTXRWLQJ8QLWHG6WDWHVY&DUUROO
VXPPDU\                                                              )GQWK&LU

  7KH GLVWULFW FRXUW WKHUHIRUH HUUHG LQ DGPLWWLQJ WKH             0RGHQD ILUVW PDLQWDLQV WKDW WKH SURVHFXWRU LPSURSHUO\
FKDOOHQJHGVXPPDULHVLQWRHYLGHQFH%XWZHFRQFOXGHWKDW              YRXFKHGIRUVHYHUDORIWKHJRYHUQPHQWjVZLWQHVVHVZKHQWKH
WKHGLVWULFWFRXUWGLGQRWFRPPLWSODLQHUURULQGRLQJVR)LUVW     SURVHFXWRUWROGWKHMXU\WKDWWKHVHZLWQHVVHVmJRWWKHLUOLYHV
DV VHW RXW DERYH LQ 3DUW ,,% WKH JRYHUQPHQW RIIHUHG        WRJHWKHUlDIWHUUHMHFWLQJWKHLUIRUPHUUHVLVWDQFHWRWKHIHGHUDO
FRPSHOOLQJXQUHEXWWHGHYLGHQFHRI0RGHQDjVJXLOWZLWKRXW              WD[ ODZV  +H SDUWLFXODUO\ ILQGV IDXOW ZLWK WKH IROORZLQJ
UHJDUG WR WKH VXPPDULHV LQ TXHVWLRQ  6HFRQG EHFDXVH          FRPPHQWVPDGHE\WKHSURVHFXWRUUHJDUGLQJ'DQLHO5XVVHOO
0RGHQD GRHV QRW FRQWHQG WKDW WKH VXPPDULHV LQDFFXUDWHO\
UHSRUWHGWKH5XVVHOO%URWKHUVjILQDQFLDOGHDOLQJVZHZRXOGEH           ,jYH JRW WR VD\ LWjV UHDO VDWLVI\LQJ WR VHH WKDW WKLV
KDUGSUHVVHG WR GHWHUPLQH WKDW WKH DGPLVVLRQ RI WKH               FRPPXQLW\ORVWDQDQJU\ODZEUHDNHUDQGPD\VRRQJHW
VXPPDULHVmVHULRXVO\DIIHFWHGWKHIDLUQHVVLQWHJULW\RUSXEOLF         EDFNDSURGXFWLYHODZDELGLQJPDQZKRZLOOUHMRLQKLV
UHSXWDWLRQRIWKHMXGLFLDOSURFHHGLQJVl6HH%UD\)GDW          IDPLO\ DV D KDUGZRUNLQJ WD[SD\HU DQG D SRVLWLYH UROH
 FRQFOXGLQJ WKDW WKH LPSURSHU DGPLVVLRQ RI                 PRGHOIRUERWKWKHFRPPXQLW\DQGIRUKLVIDPLO\
VXPPDULHV ZDV QRW SODLQ HUURU ZKHUH WKH DSSHOODQW QHYHU
FODLPHGWKDWWKHVXPPDULHVZHUHLQDFFXUDWH0RGHQDKDV                 7KLVFRXUWKDVKHOGWKDWDmSURVHFXWRUFDQQRWLPSURSHUO\
                                                                       YRXFKIRUWKHFUHGLELOLW\RIKLVZLWQHVVHVl8QLWHG6WDWHVY
