           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


 *5(* &855<HWDO              ;
         3ODLQWLIIV$SSHOODQWV 
                                   
                                     1R
           Y                      
                                    !
                                   
 '$9,' 6&277HWDO              
        'HIHQGDQWV$SSHOOHHV 
                                  1
      $SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW
     IRUWKH6RXWKHUQ'LVWULFWRI2KLRDW&LQFLQQDWL
    1RVn6DQGUD6%HFNZLWK
                      'LVWULFWsXGJH
                      $UJXHG0DUFK
               'HFLGHGDQG)LOHG$SULO
         %HIRUH6,/(5DQG*,/0$1&LUFXLWsXGJHV
                  2j0$//(<'LVWULFWsXGJH
                       BBBBBBBBBBBBBBBBB
                             &2816(/
$5*8('  /LVD 7 0HHNV 1(:0$1 	 0((.6
&LQFLQQDWL2KLRIRU$SSHOODQWV%ULDQ0=HWV2)),&(2)
7+( $77251(< *(1(5$/ &255(&7,216

    
     7KH +RQRUDEOH .DWKOHHQ 2j0DOOH\ 8QLWHG 6WDWHV 'LVWULFW sXGJH IRU
WKH 1RUWKHUQ 'LVWULFW RI 2KLR VLWWLQJ E\ GHVLJQDWLRQ



                                    
     &XUU\HWDOY6FRWWHWDO                1R       1R                                    &XUU\HWDOY6FRWWHWDO          

/,7,*$7,21 6(&7,21 &ROXPEXV 2KLR IRU $SSHOOHHV               ILQGHURIIDFWEXWLWLVXQDYDLOLQJDWWKHVXPPDU\MXGJPHQW
21 %5,()  /LVD 7 0HHNV 1(:0$1 	 0((.6                     VWDJH
&LQFLQQDWL2KLRIRU$SSHOODQWV7RGG50DUWL2)),&(2)
7+( $77251(< *(1(5$/ &255(&7,216                                    7KXV ZH  $)),50 WKH GLVWULFW FRXUWjV GHQLDO RI
/,7,*$7,216(&7,21&ROXPEXV2KLRIRU$SSHOOHHV                    GHIHQGDQWVj PRWLRQ WR GLVPLVV WKH FODLPV RI &XUU\ $OOHQ
                                                                      %URRNV&DQQRQ:HOOVDQG:LOOLDPVRQH[KDXVWLRQJURXQGV
                     BBBBBBBBBBBBBBBBB                                 $)),50 WKH GLVWULFW FRXUWjV GLVPLVVDO RI DOO FODLPV
                                                                      DVVHUWHGE\&KLVROP.LQJDQG6KRUWHUZLWKRXWSUHMXGLFHIRU
                         23,1,21                                      IDLOXUHWRH[KDXVWDGPLQLVWUDWLYHUHPHGLHVDQGDOVR$)),50
                     BBBBBBBBBBBBBBBBB                                WKHGLVWULFWFRXUWjVGHQLDORIWKH5XOHEPRWLRQDVNLQJIRU
                                                                      UHFRQVLGHUDWLRQRIWKDWGLVPLVVDO$)),50WKHGLVWULFW
  .$7+/((10F'21$/'2j0$//(<'LVWULFWsXGJH                         FRXUWjV GLVPLVVDO RI DOO FODLPV E\ DOO SODLQWLIIV DJDLQVW
3ODLQWLIIVDSSHOODQWV *UHJ &XUU\ /HRQDUG $OOHQ .HLWK          +RZDUG5(9(56(WKHGLVWULFWFRXUWjVJUDQWRIVXPPDU\
%URRNV'HUHN&DQQRQsDPHV&KLVROP.HYLQ.LQJsHIIUH\              MXGJPHQWWR&ROOLQV+LHQHPDQ:DONHU$GNLQV1HZVRPH
6KRUWHU 2UVRQ :HOOV DQG $QGUH :LOOLDPV DUH $IULFDQ         DQG5HGZRRGDQG5(0$1'WKLVFDVHIRUWULDO
$PHULFDQ PHQ ZKR DUH LQPDWHV DW WKH 6RXWKHUQ 2KLR
&RUUHFWLRQDO )DFLOLW\ m62&)l LQ /XFDVYLOOH 2KLR
'HIHQGDQWVDSSHOOHHV 'DYLG 6FRWW 7HUU\ &ROOLQV sDPHV
+LHQHPDQ 'LDQQH :DONHU 0DMRU sDPHV $GNLQV &DSWDLQ
sRKQ 1HZVRPH &DSWDLQ 'RQDOG 5HGZRRG DQG 'DUUHQ
+RZDUGDUHHPSOR\HGDW62&)$WWKHWLPHRIWKHHYHQWV
OHDGLQJ WR WKLV FDXVH RI DFWLRQ 6FRWW DQG +RZDUG ZHUH
FRUUHFWLRQVRIILFHUV&ROOLQVZDVWKHZDUGHQ+LHQHPDQDQG
:DONHU ZHUH GHSXW\ ZDUGHQV DQG $GNLQV 1HZVRPH DQG
5HGZRRGZHUH6FRWWjVVXSHUYLVRUV
  3ODLQWLIIVEURXJKWVXLWXQGHU86&DOOHJLQJWKH
GHIHQGDQWVYLRODWHGWKHLU(LJKWK$PHQGPHQWULJKWVXQGHUWKH
8QLWHG6WDWHV&RQVWLWXWLRQ'HIHQGDQWVILOHGERWKDPRWLRQWR
GLVPLVVDQGDPRWLRQIRUVXPPDU\MXGJPHQW7KHGLVWULFW
FRXUW JUDQWHG ERWK PRWLRQV LQ SDUW DQG WKHQ FHUWLILHG WKH
PDWWHUV GHFLGHG IRU LPPHGLDWH DSSHDO  :H QRZ DIILUP LQ             
                                                                              7KLV DUJXPHQW DOVR LJQRUHV WKH IDFW WKDW SODLQWLIIV GLVSXWH WKH FODLP
SDUW UHYHUVH LQ SDUW DQG UHPDQG IRU IXUWKHU SURFHHGLQJV     WKDW 6FRWWjV LQGLYLGXDO JULHYDQFHV ZHUH KDQGOHG LQ DQ DSSURSULDWH IDVKLRQ
FRQVLVWHQWZLWKWKLVRSLQLRQ6SHFLILFDOO\ZH$)),50
WKHGLVWULFWFRXUWjVGHQLDORIWKHGHIHQGDQWVjPRWLRQWRGLVPLVV             
                                                                              7KH     GLVWULFW   FRXUW   GLG   QRW   GLIIHUHQWLDWH   DPRQJ   WKH   VXSHUYLVRU\
WKH FODLPV RI &XUU\ $OOHQ %URRNV &DQQRQ :HOOV DQG        GHIHQGDQWV ZKHQ JUDQWLQJ VXPPDU\ MXGJPHQW LQ WKHLU IDYRU 7KH SDUWLHV

:LOOLDPVRQH[KDXVWLRQJURXQGV$)),50WKHGLVWULFW               VLPLODUO\ WUHDW WKHVH GHIHQGDQWV FROOHFWLYHO\ RQ DSSHDO :KLOH ZH GRXEW

FRXUWjVGLVPLVVDORIDOOFODLPVDVVHUWHGE\&KLVROP.LQJDQG        WKDW    WKH    HYLGHQFH    RI   NQRZOHGJH        UHJDUGLQJ   6FRWWjV   EDFNJURXQG      DQG

6KRUWHU ZLWKRXW SUHMXGLFH IRU IDLOXUH WR H[KDXVW              SURSHQVLWLHV LV XQLIRUP ZLWK UHVSHFW WR WKHVH GHIHQGDQWV WKHUH LV QRWKLQJ


DGPLQLVWUDWLYH UHPHGLHV DQG DOVR $)),50 WKH GLVWULFW
                                                                      RQ     WKH    UHFRUG   EHIRUH   XV   ZKLFK      ZRXOG   HLWKHU   FRQILUP   RU   GHQ\   WKDW
                                                                      VXVSLFLRQ       %HFDXVH WKH WULDO FRXUW DQG WKH SDUWLHV KDYH WUHDWHG WKHVH
FRXUWjV GHQLDO RI WKH 5XOH E PRWLRQ DVNLQJ IRU            GHIHQGDQWV DV D FROOHFWLYH ZKROH VR PXVW ZH IRU SXUSRVHV RI WKLV DQDO\VLV
    &XUU\HWDOY6FRWWHWDO                 1R       1R                     &XUU\HWDOY6FRWWHWDO     

DIDFWXDOGLVSXWHUHJDUGLQJWKHZDUGHQjVNQRZOHGJHRILQWHU           UHFRQVLGHUDWLRQRIWKDWGLVPLVVDO$)),50WKHGLVWULFW
DOLD H[LVWHQFH RI mZLGHVSUHDG VH[XDO DVVDXOWVl DQG WKH         FRXUWjV GLVPLVVDO RI DOO FODLPV E\ DOO SODLQWLIIV DJDLQVW
OLNHOLKRRG WKDW mVPDOOHU \RXWKIXO SULVRQHUV ZHUH PRUH           GHIHQGDQW+RZDUG5(9(56(WKHGLVWULFWFRXUWjVJUDQW
YXOQHUDEOH WR DWWDFN WKDQ RWKHUVl NQRZOHGJH WKDW WKLV          RIVXPPDU\MXGJPHQWWR&ROOLQV+LHQHPDQ:DONHU$GNLQV
SDUWLFXODUSULVRQHUZRXOGEHDWWDFNHGZDVQRWQHFHVVDU\              1HZVRPH DQG 5HGZRRG DQG 5(0$1' WKLV FDVH IRU
                                                                       WULDO
   $V WKH 6XSUHPH &RXUW VWDWHG mD VXEMHFWLYH DSSURDFK WR
GHOLEHUDWHLQGLIIHUHQFHGRHVQRWUHTXLUHDSULVRQHUVHHNLQJD                                   ,%DFNJURXQG
UHPHG\IRUXQVDIHFRQGLWLRQVWRDZDLWDWUDJLFHYHQWVXFKDV
DQDFWXDODVVDXOWEHIRUHREWDLQLQJUHOLHIl)DUPHU86             7KLVDSSHDODULVHVRXWRIWKHFRQVROLGDWLRQRIWZRDFWLRQV
DW7KXVWRSURYHWKDWWKHVXSHUYLVRUVDFWXDOO\NQHZWKDW        6FRWW LV WKH SULPDU\ GHIHQGDQW LQ ERWK DFWLRQV  7KH ILUVW
6FRWW SUHVHQWHG D VXEVWDQWLDO ULVN RI KDUP WR LQPDWHV WKH    ODZVXLWZDVEURXJKWE\SODLQWLII*UHJ&XUU\&XUU\DOOHJHV
SODLQWLIIV QHHG QRW SURYH DV WKH GLVWULFW FRXUW DSSHDUV WR   WKDW 6FRWW DVVDXOWHG KLP LQ UHWDOLDWLRQ IRU DQ LQFLGHQW WKDW
FRQFOXGHWKDW6FRWWZDVIRXQGWRKDYHXVHGH[FHVVLYHIRUFH            RFFXUUHG RQ (DVWHU 6XQGD\  ZKHQ  6FRWW UHIXVHG WR
RQ DQRWKHU LQPDWH DQG WKDW SULVRQ RIILFLDOV WKHUHDIWHU OHIW   VHUYH&XUU\EUHDNIDVWEHFDXVHRI&XUU\jVDOOHJHGSDUWLFLSDWLRQ
6FRWWIUHHWRDVVDXOWLQPDWHV3ODLQWLIIVRQO\QHHGVKRZWKDW        LQ D ULRW WKDW RFFXUUHG WKUHH \HDUV EHIRUH  2WKHU LQPDWHV
DQLVVXHRIPDWHULDOIDFWH[LVWVDVWRZKHWKHUWKHVXSHUYLVRU\         RYHUKHDUG6FRWWDQGWKUHZIRRGDWKLP6FRWWSURPLVHG&XUU\
GHIHQGDQWVZHUHDZDUHWKDW6FRWWSRVHGDULVNRIVXEVWDQWLDO           UHWDOLDWLRQDWDODWHUWLPH2Q$SULODIHZGD\VODWHU
LQMXU\WRWKHLQPDWHVDQGZHUHGHOLEHUDWHO\LQGLIIHUHQWWRWKDW        &XUU\DOOHJHVWKDW6FRWWZLWKRXWSURYRFDWLRQSXQFKHG&XUU\
ULVN3ODLQWLIIVKDYHGRQHVRE\SURIIHULQJ6FRWWjVWURXEOLQJ         LQWKHIDFHWKUHZ KLP WRWKHJURXQGDQGEDQJHGKLVKHDG
HPSOR\PHQWUHFRUGWKHLQWHUQDOPHPRUDQGXPSXWWLQJ6FRWWjV             DJDLQVWWKHIORRUZKLOH&XUU\jVKDQGVZHUHFXIIHGEHKLQGKLV
VXSHUYLVRUVRQQRWLFHRIWKHLPSOLFDWLRQVRIKLVKLVWRU\DQG          EDFNDQGKLVOHJVZHUHVKDFNOHGWRJHWKHU&XUU\LPPHGLDWHO\
WKH VZRUQ VWDWHPHQWV RI 6FRWWjV FRZRUNHUV DQG RWKHU            ILOHG DQ DGPLQLVWUDWLYH JULHYDQFH FRPSODLQLQJ RI 6FRWWjV
VXSHUYLVRUVUHJDUGLQJKLVFRQGXFWDQGDWWLWXGH                        FRQGXFWDQGRQ$XJXVWLQVWLWXWHGWKLVDFWLRQ
   'HIHQGDQWVDUJXHWKDWQRILQGHURIIDFWFRXOGFRQFOXGHWKH\            7KHVHFRQGODZVXLWLQYROYHGWKHUHVWRIWKHSODLQWLIIV$OOHQ
ZHUHGHOLEHUDWHO\LQGLIIHUHQWEHFDXVHWKH\WRRNVWHSVWRGHDO         %URRNV &DQQRQ &KLVROP .LQJ 6KRUWHU :HOOV DQG
ZLWK 6FRWWjV EHKDYLRU ZLWKLQ WKH FRQILQHV RI WKH FROOHFWLYH    :LOOLDPV  7KHVH SODLQWLIIV DOOHJH WKDW RQ $SULO  
EDUJDLQLQJ DJUHHPHQW o WKH\ GHDOW ZLWK HDFK JULHYDQFH RU       6FRWWDVVDXOWHGHDFKRIWKHPZKLOHWKH\ZHUHFRQQHFWHGWR
FRPSODLQW LQGLYLGXDOO\ LQ DQ DSSURSULDWH PDQQHU  7KLV         HDFKRWKHUE\DmUHFFKDLQlDORQJOHQJWKRIFKDLQXVHGWR
DUJXPHQWRYHUORRNVSODLQWLIIVjDVVHUWLRQWKDWWKHGHIHQGDQWV           WUDQVSRUW SULVRQHUV  7KHVH SODLQWLIIV ZHUH DOVR KDQGFXIIHG
LJQRUHGWKHYDVWQXPEHURIFRPSODLQWVDQGJULHYDQFHVILOHG             EHKLQG WKHLU EDFN DQG ZHUH ZHDULQJ OHJ VKDFNOHV  $IWHU D
DJDLQVW 6FRWW DQG WKH SDWWHUQ RI UDFLDO KDUDVVPHQW WKDW LV   EULHIYHUEDOH[FKDQJHZLWKWKHVHLQPDWHVSODLQWLIIVDOOHJHWKDW
VKRZQLQWKHVHFRPSODLQWV7KHDUJXPHQWWKDWDOORIWKHVH             6FRWW EHFDPH HQUDJHG  7KHVH SODLQWLIIV DOOHJH WKDW 6FRWW
WUHHVGRQRWDGGXSWRDIRUHVWEXWVKRXOGVLPSO\EHYLHZHG           ZRUNHGKLVZD\GRZQWKHFKDLQDVVDXOWLQJHDFKRIWKHPLQ
DVDFROOHFWLRQRIWUHHVPD\ FRQWDLQPHULWDWWULDOEHIRUHD         WXUQ6FRWWSXQFKHG6KRUWHULQWKHIDFHDQGWKUHZKLPWRWKH
                                                                       JURXQG6FRWWKLW&KLVROPDQG.LQJLQWKHIDFHDQGVWUXFN
                                                                       :HOOVLQWKHIDFHDQGKHDG6FRWWSXVKHG&DQQRQDJDLQVWD
                                                                       ZDOODQGSXQFKHGKLPLQWKHEDFNRIKLVKHDGDQGXQGHUKLV
                                                                       ULJKWH\H6FRWWDOVRELW&DQQRQRQWKHXSSHUEDFN6FRWW
         &XUU\HWDOY6FRWWHWDO                                1R           1R                     &XUU\HWDOY6FRWWHWDO    

SXQFKHG:LOOLDPVLQWKHIDFHKLW%URRNVLQWKHKHDGDQGIDFH                                  7KH GLVWULFW FRXUW IRXQG WKDW 6FRWWjV UHFRUG ZDV
DQGVWUXFN$OOHQLQWKHIDFHGLVORFDWLQJ$OOHQjVMDZ$OORI                                mGHSORUDEOHl DQG KLV YHUEDO DEXVH RI $IULFDQ$PHULFDQV
WKHSODLQWLIIVDUH$IULFDQ$PHULFDQ7KHRQO\LQPDWHLQWKH                                  mUHSUHKHQVLEOHl'HVSLWHWKLVWKHGLVWULFWFRXUWFRQFOXGHG
UHFFKDLQZKRP6FRWWGLGQRWDWWDFNZDV&DXFDVLDQ7KHVH                                     WKHUHZDVLQVXIILFLHQWHYLGHQFHIURPZKLFKWRFRQFOXGHWKDW
SODLQWLIIVIXUWKHUDOOHJHWKDWWKRXJKDQRWKHUJXDUGDWWHPSWHG                                WKH SULVRQ RIILFLDOV ZHUH GHOLEHUDWHO\ LQGLIIHUHQW WR 6FRWWjV
WRUHVWUDLQ6FRWWGHIHQGDQW+RZDUGVWRRGE\DQGGLGQRWKLQJ                                  SRWHQWLDOWRFDXVHVXEVWDQWLDOKDUPWRSULVRQLQPDWHV7KH
ZKLOH6FRWWFRPPLWWHGWKHVHDVVDXOWV7KHUHFFKDLQSODLQWLIIV                               GLVWULFWFRXUWVWDWHGWKDWVLQFHm6FRWWjVHPSOR\PHQWUHFRUG
ILOHGWKHLULQLWLDOFRPSODLQWRQ'HFHPEHU                                            VKRZVQRLQFLGHQWVRIXQSURYRNHGDVVDXOWVRQLQPDWHVlWKHUH
                                                                                              ZDVQRHYLGHQFHWKDWWKHVXSHUYLVRUVFRXOGKDYHNQRZQWKDW
   $OO SODLQWLIIV EURXJKW FODLPV XQGHU  DJDLQVW 6FRWW                            6FRWWZRXOGXVHH[FHVVLYHIRUFHRQSULVRQLQPDWHV7KHFRXUW
DOOHJLQJ WKDW KH XVHG H[FHVVLYH IRUFH DJDLQVW WKHP  7KH                             DOVR VWDWHG LW mDSSHDUHGl WKDW WKH LQWHUQDO PHPRUDQGXP
SODLQWLIIV LQYROYHG LQ WKH UHFFKDLQ LQFLGHQW DOVR EURXJKW D                          H[SUHVVLQJ FRQFHUQ WKDW 6FRWWjV EHKDYLRU PD\ HQGDQJHU
FODLPDJDLQVW+RZDUGDOOHJLQJKHIDLOHGWRSURWHFWWKHPIURP                                 LQPDWHV ZDV OHVV FRQFHUQHG ZLWK 6FRWWjV XVH RI H[FHVVLYH
6FRWWjV XVH RI H[FHVVLYH IRUFH GHVSLWH WKH RSSRUWXQLW\ DQG                           IRUFHWKDQWKHSRVVLELOLW\WKDWKLVUDFLVWEHKDYLRUFRXOGmVSDUN
REOLJDWLRQWRGRVR                                                                          DQRWKHU ULRWl  7KH GLVWULFW FRXUW WKHUHIRUH FRQFOXGHG WKDW
                                                                                              mWKLV DSSHDUV WR EH D VLWXDWLRQ LQ ZKLFK WKH VXSHUYLVRU\
  $OOSODLQWLIIVDOVRDOOHJHGWKDWWKHSULVRQZDUGHQGHSXW\                                  'HIHQGDQWVVKRXOGKDYHSHUFHLYHGDULVNEXW>LQIDFW@GLGQRWl
ZDUGHQVDQGYDULRXVVXSHUYLVRUVNQHZRI6FRWWjVSURSHQVLW\
WREHDEXVLYHDQGUDFLDOO\KRVWLOHWRZDUG$IULFDQ$PHULFDQ                                       %HFDXVH6FRWWjVHPSOR\PHQWUHFRUGFRQWDLQVDJUHDWGHDORI
SULVRQHUVEXWGLGQRWKLQJWRVWRS6FRWWRUSURWHFWSULVRQHUV                                HYLGHQFH FRQFHUQLQJ KLV GLVFULPLQDWLRQ DJDLQVW $IULFDQ
IURP6FRWWjVSRWHQWLDODEXVH7KXVSODLQWLIIVFODLPWKDWWKHVH                              $PHULFDQVDQGKLVSURSHQVLW\WRXVHIRUFHDJDLQVWLQPDWHVDQG
VXSHUYLVRUVYLRODWHGWKHLU(LJKWK$PHQGPHQWULJKWVWKURXJK                                    FDXVHLQMXU\WRWKHPZHEHOLHYHWKHUHH[LVWVDJHQXLQHGLVSXWH
GHOLEHUDWHLQGLIIHUHQFHWRWKHKDUP6FRWWSRVHGWRWKHLUZHOO                                RYHUDPDWHULDOIDFWoWKDWLVGHIHQGDQWVjDFWXDONQRZOHGJH
EHLQJ                                                                                        7KH GLVWULFW FRXUW UHVROYHG WKLV GLVSXWH LWVHOI ZKHQ LW
                                                                                              FRQFOXGHGWKHmGHIHQGDQWVVKRXOGKDYHSHUFHLYHGDULVNEXW
   6FRWW EHJDQ ZRUN DV D FRUUHFWLRQV RIILFHU DW 62&) RQ                              GLG QRWl  7KDW UHVROXWLRQ PRUH DSSURSULDWHO\ LV RQH WKDW
'HFHPEHU$VRIQXPHURXVFRPSODLQWVKDG                                      VKRXOGKDYHEHHQOHIWWRWKHWULHURIIDFW*LYHQWKHVXEVWDQFH
EHHQ ILOHG DJDLQVW 6FRWW IRU UDFLVW UHPDUNV DQG EHKDYLRU                              RI 6FRWWjV HPSOR\PHQW UHFRUG DQG WKH DIILGDYLWV WDNHQ RI
WDUJHWHG DW ERWK $IULFDQ$PHULFDQ LQPDWHV DQG $IULFDQ                                  6FRWWjVIHOORZHPSOR\HHVDQGVXSHUYLVRUVDTXHVWLRQRIIDFW
$PHULFDQFRUUHFWLRQVRIILFHUV7KHGLVWULFWFRXUWOLVWHGWKH                                 H[LVWVDVWRZKHWKHU6FRWWjVHPSOR\PHQWUHFRUGGLVFORVHGWKDW
FRPSODLQWVDVIROORZV                                                                        KLVFRQWLQXHGHPSOR\PHQWSRVHGDVXEVWDQWLDOULVNRIVHULRXV
                                                                                              KDUPWRSULVRQLQPDWHV6HHHJ:RRGV)GDW
         )RXUFRPSODLQWVRIYHUEDODEXVHIURPLQPDWHV                                      TXRWLQJ 6WUHHW  )G  WK &LU mVXPPDU\
         2QHFRPSODLQWIURPIHOORZFRUUHFWLRQVRIILFHUVRIXVH                              MXGJPHQWLVLQDSSURSULDWHZKHQµWKHUHDUHLVVXHVRIIDFWDVWR
           RIUDFLDOVOXUVWRZDUGVLQPDWHV                                                   ZKHWKHU>DGHIHQGDQWLQD(LJKWK$PHQGPHQWFDVH@
                                                                                              ZDVµDZDUHRIIDFWVIURPZKLFKWKHLQIHUHQFHFRXOGEHGUDZQ
                                                                                              WKDWDVXEVWDQWLDOULVNRIVHULRXVKDUPH[LVW>HG@jDQGZKHWKHU
     
         6FRWW EHJDQ ZRUN MXVW HLJKW PRQWKV DIWHU WKH UDFLDOO\FKDUJHG (DVWHU
                                                                                              KH DFWXDOO\ µGU>H@Z WKH LQIHUHQFHjl  6HH DOVR 7D\ORU Y
6XQGD\       ULRW   WKDW   RFFXUUHG   LQ   $SULO   RI   WKDW   \HDU   6FRWWjV   XQFOH   D   0LFKLJDQ'HSjWRI&RUUHFWLRQV)GWK&LU
FRUUHFWLRQV RIILFHU ZDV WDNHQ KRVWDJH E\ SULVRQHUV IRU HOHYHQ GD\V GXULQJ                    ILQGLQJVXPPDU\MXGJPHQWLQDSSURSULDWHEHFDXVHWKHUHZDV
WKDW ULRW
         &XUU\HWDOY6FRWWHWDO                                                1R             1R                    &XUU\HWDOY6FRWWHWDO     

   )XUWKHUPRUHmDFWXDONQRZOHGJHlGRHVQRWUHTXLUHWKDWD                                                             7ZRFRPSODLQWVRIVKDNLQJGRZQLQPDWHVKDUVKO\RU
SULVRQ RIILFLDO NQRZ D SULVRQHU ZRXOG ZLWK FHUWDLQW\ EH                                                        RQO\VKDNLQJGRZQ$IULFDQ$PHULFDQLQPDWHV
KDUPHGRUWKDWDSDUWLFXODUSULVRQHUZRXOGEHKDUPHGLQD                                                            2QH FRPSODLQW IURP DQ LQPDWH WKDW 6FRWWIDOVHO\
FHUWDLQZD\m$Q(LJKWK$PHQGPHQWFODLPDQWQHHGQRWVKRZ                                                                DFFXVHGKLPRIDUXOHVLQIUDFWLRQ
WKDWDSULVRQRIILFLDODFWHGRUIDLOHGWRDFWEHOLHYLQJWKDWKDUP                                                     2QHFRPSODLQWIURPDQ$IULFDQ$PHULFDQFRUUHFWLRQV
DFWXDOO\ZRXOGEHIDOODQLQPDWHLWLVHQRXJKWKDWWKHRIILFLDO                                                          RIILFHUWKDW6FRWWIDOVHO\DFFXVHGKLPRIPLVFRQGXFW
DFWHGRUIDLOHGWRDFWGHVSLWHKLVNQRZOHGJHRIDVXEVWDQWLDO                                                         7KUHHLQFLGHQWUHSRUWVILOHGE\6FRWWZKHUH$IULFDQ
ULVNRIVHULRXVKDUPl)DUPHU86DWVHH3ULFH                                                          $PHULFDQLQPDWHVVXIIHUHGXQH[SODLQHGLQMXULHVLQKLV
)G DW  m)DUPHU HVWDEOLVKHG WKDW D ULVN RI GDQJHU                                                          FXVWRG\1RQHRIWKHVHLQPDWHVHYHUILOHGFRPSODLQWV
SDUWLFXODUWRWKHLQGLYLGXDOZDVQRWUHTXLUHGl6WUHHW                                                      7ZR8VHRI)RUFH&RPPLWWHHUHSRUWVILQGLQJWKDW6FRWW
)G DW   7KLV &RXUW KDV HPSKDVL]HG WKDW ZKHQ                                                             XVHG IRUFH RQ $IULFDQ$PHULFDQ LQPDWHV MXVWLILDEO\
HYDOXDWLQJWKLVVWDQGDUGmZHDUHQRWDOORZHGWRµZHLJK                                                           DQGDSSURSULDWHO\
WKHHYLGHQFHjRUµHYDOXDWHWKHFUHGLELOLW\RIZLWQHVVHVjZKHQ                                                         7ZRLQFLGHQWUHSRUWVILOHGE\6FRWWUHJDUGLQJKLVXVHRI
UHYLHZLQJ D PRWLRQ IRU MXGJPHQW DV D PDWWHU RI ODZl 6HH                                                       IRUFH EXW ZLWK QR ILQGLQJ E\ WKH 8VH RI )RUFH
:RRGV)GDW                                                                                                 &RPPLWWHH
                                                                                                                 7KHUHZHUHDOVRQLQHWHHQLQPDWHFRPSODLQWVUHJDUGLQJ6FRWWjV
                                                                                                                 XVHRIUDFLDOVOXUVDQGKDUDVVPHQWWKRXJKWKHUHVHHPVWREH
                                                                                                                 VRPHRYHUODSEHWZHHQWKHVHFRPSODLQWVDQGWKHRQHVOLVWHG
                                                                                                                DERYH  ,Q DGGLWLRQ WKH SODLQWLIIV LQ WKLV FDVH QLQH DOO
       7KH GHIHQGDQWV XUJH WKLV &RXUW WR DGRSW D UXOH WKDW WR HVWDEOLVK
GHOLEHUDWH LQGLIIHUHQFH D SODLQWLII PXVW VKRZ WKDW WKH mRIILFHU ZDV KLJKO\
                                                                                                                 WRJHWKHU HDFK ILOHG D FRPSODLQW VWDWLQJ WKDW 6FRWW XVHG
OLNHO\ WR LQIOLFW WKH SDUWLFXODU               LQMXU\      VXIIHUHG        E\   WKH    SODLQWLIIl    FLWLQJ
                                                                                                                 H[FHVVLYHIRUFHDJDLQVWWKHPUHJDUGLQJWKHLQFLGHQWVDOOHJHG
%U\DQ &RXQW\ &RPPLVVLRQHUV Y %URZQ                           86    ZKLFK                    LQWKHLUWZRODZVXLWV6FRWWZDVQHYHUIRUPDOO\GLVFLSOLQHGIRU
KHOG   WKDW     XQGHU    0RQHOO Y 'HSDUWPHQW RI 6RF 6HUYV                                  86       DQ\RIWKHVHLQFLGHQWV+HZDVKRZHYHURUGHUHGWRXQGHUJR
 D VLQJOH KLULQJ GHFLVLRQ E\ D SROLF\PDNLQJ RIILFLDO ZLOO QRW WULJJHU
                                                                                                                 UHWUDLQLQJ DQG FRUUHFWLYH FRXQVHOLQJ RQ VHYHUDO RFFDVLRQV
PXQLFLSDO        OLDELOLW\   XQOHVV     WKH   SODLQWLII       FDQ     VKRZ      WKDW   WKH   RIILFLDO     ZDV
                                                                                                                 7KHUH ZDV DOVR D PHPRUDQGXP LQ 6FRWWjV GLVFLSOLQDU\ ILOH
                                                                                                                 IURPDQLQVWLWXWLRQDOLQVSHFWRUWRZDUGHQ&ROOLQVH[SUHVVLQJ
mGHOLEHUDWHO\          LQGLIIHUHQWl     o   WKDW   LV   LQ   OLJKW   RI    WKH   HPSOR\HHjV         UHFRUG

H[FHVVLYH IRUFH ZRXOG KDYH EHHQ D SODLQO\ REYLRXV FRQVHTXHQFH RI WKH

KLULQJ GHFLVLRQ         %HVLGHV      %URZQ       GHIHQGDQWV DOVR UHO\ RQ               *HEVHU Y /DJR          KLVEHOLHIWKDWLI6FRWWZHUHQRWGLVFLSOLQHGVRPHRQHZRXOG
9LVWD 6FKRRO 'LVWULFW           86    ZKLFK KHOG WKDW D VFKRRO                               OLNHO\EHKXUWDVDUHVXOWRIKLVFRQGXFW
GLVWULFW    LV   QRW   OLDEOH   LQ    GDPDJHV      XQGHU      7LWOH    ,;    IRU   D   WHDFKHU
V      VH[XDO

KDUDVVPHQW RI D VWXGHQW DEVHQW DFWXDO QRWLFH DQG GHOLEHUDWH LQGLIIHUHQFH
                                                                                                                   $IWHUWKH$SULOLQFLGHQW LQYROYLQJ&XUU\6FRWW
7KHVH      FDVHV      KRZHYHU       DUH   LQDSSRVLWH        WKH\    GR    QRW    GHDO     ZLWK    (LJKWK
                                                                                                                 ZDVDJDLQRUGHUHGWRDWWHQGFRUUHFWLYHFRXQVHOLQJ$8VHRI
                                                                                                                 )RUFH&RPPLWWHHVXEVHTXHQWO\IRXQGWKDW6FRWWKDGQRWXVHG
$PHQGPHQW           FODLPV      IRU   FUXHO   DQG        XQXVXDO      SXQLVKPHQW            DQG   LQVWHDG

DGGUHVV HQWLUHO\ GLIIHUHQW OLQHV RI SUHFHGHQW ZLWK HQWLUHO\ GLIIHUHQW VHWV RI

SUHFRQGLWLRQV          DQG   FRQFHUQV        $OWKRXJK         WKHVH    FDVHV      DOO   XVH   WKH   SKUDVH      LQDSSURSULDWHIRUFHLQWKHLQFLGHQW6FRWWZDVQRWUHPRYHG
mGHOLEHUDWH       LQGLIIHUHQFHl        WKH   VWDQGDUGV        DUH    QRW   WKH    VDPH      DQG    DUH   QRQ   IURPKLVGXWLHVDVDFRUUHFWLRQVRIILFHUGXULQJWKHSHQGHQF\RI
WUDQVIHUDEOH
                                                                                                                 WKHLQYHVWLJDWLRQ
       $V   WKH 6XSUHPH &RXUW VWDWHG LQ )DUPHU Y %UHQQDQ mKDYLQJ VWULSSHG
>SULVRQHUV@ RI YLUWXDOO\ HYHU\ PHDQV RI VHOISURWHFWLRQ DQG IRUHFORVHG WKHLU
DFFHVV WR RXWVLGH DLG WKH JRYHUQPHQW DQG LWV RIILFLDOV DUH QRW IUHH WR OHW
                                                                                                                   $IWHUWKH$SULOLQFLGHQWLQYROYLQJWKHUHFFKDLQ
WKH VWDWH RI QDWXUH WDNH LWV FRXUVHl  86 DW  7KXV WKH VWDQGDUGV
                                                                                                                 SODLQWLIIV DQRWKHU 8VH RI )RUFH LQYHVWLJDWLRQ ZDV RUGHUHG
JRYHUQLQJ (LJKWK $PHQGPHQW FODLPV IRU H[FHVVLYH IRUFH DUH XQLTXH DQG                                             6FRWW DJDLQ ZDV QRW GLVFLSOLQHG RU VXVSHQGHG ZKLOH WKH
PXVW UHPDLQ VR
     &XUU\HWDOY6FRWWHWDO                  1R       1R                      &XUU\HWDOY6FRWWHWDO     

LQYHVWLJDWLRQ ZDV EHLQJ FRQGXFWHG  7KH 8VH RI )RUFH               7KHFRQFHSWRImGHOLEHUDWHLQGLIIHUHQFHlHQFRPSDVVHVERWK
&RPPLWWHHVXEVHTXHQWO\GHWHUPLQHGWKDW6FRWWjVXVHRIIRUFH             D VXEMHFWLYH DQG DQ REMHFWLYH FRPSRQHQW  7KH REMHFWLYH
LQWKLVLQFLGHQWZDVXQQHFHVVDU\                                       FRPSRQHQW UHTXLUHV WKDW WKH GHSULYDWLRQ DOOHJHG EH
                                                                        VXIILFLHQWO\VHULRXV)DUPHU86DW7KXVIRUD
  2Q 0D\   6FRWW WROG D UDFLVW MRNH RYHU D SULVRQ    FODLPEDVHGRQDIDLOXUHWRSUHYHQWKDUPWKHLQPDWHPXVW
LQWHUFRPV\VWHP%HFDXVHRIWKLVLQIUDFWLRQ6FRWWZDVSODFHG          VKRZ WKDW KH LV LQFDUFHUDWHG XQGHU FRQGLWLRQV SRVLQJ D
RQ DGPLQLVWUDWLYH OHDYH ZLWKRXW SD\  +H ZDV WHUPLQDWHG        VXEVWDQWLDO ULVN RI VHULRXV KDUP  ,G  :H DJUHH ZLWK WKH
sXQHIRUWHOOLQJWKHUDFLVWMRNH                             GLVWULFW FRXUW WKDW WKH KDUP DOOHJHG E\ DOO SODLQWLIIV EHLQJ
                                                                        EHDWHQZLWKRXWFDXVHE\DSULVRQJXDUGLVVXIILFLHQWO\VHULRXV
                    ,,3URFHGXUDO+LVWRU\                             WRIXOILOOWKHREMHFWLYHFRPSRQHQWRIWKLVGHILQLWLRQ
   7KLVFDVHFRPHVWRWKH6L[WK&LUFXLW&RXUWRI$SSHDOVDIWHU            7RVDWLVI\WKHVXEMHFWLYHFRPSRQHQWSODLQWLIIVPXVWVKRZ
WKHGLVWULFWFRXUWMXGJHUXOHGRQGHIHQGDQWVjPRWLRQWRGLVPLVV         WKDWWKHSULVRQRIILFLDOVKDGDVXIILFLHQWO\FXOSDEOHVWDWHRI
DQG PRWLRQ IRU VXPPDU\ MXGJPHQW DQG WKHQ FHUWLILHG WKH         PLQG,GFLWDWLRQRPLWWHG$mVXIILFLHQWO\FXOSDEOHVWDWH
LVVXHVGHFLGHGLQWKRVHUXOLQJVIRUDSSHDOSXUVXDQWWR5XOH            RIPLQGlLVRQHLQZKLFKmWKHRIILFLDONQRZVRIDQGGLVUHJDUGV
ERIWKH)HGHUDO5XOHVRI&LYLO3URFHGXUHDQG86&             DQH[FHVVLYHULVNWRLQPDWHKHDOWKRUVDIHW\WKHRIILFLDOPXVW
E                                                               ERWK EH DZDUH RI IDFWV IURP ZKLFK WKH LQIHUHQFH FRXOG EH
                                                                        GUDZQWKDWDVXEVWDQWLDOULVNRIVHULRXVKDUPH[LVWVDQGKH
  7KH GHIHQGDQWVj PRWLRQ WR GLVPLVV DVVHUWHG WKDW DOO WKH       PXVWDOVRGUDZWKHLQIHUHQFHl,GDW$SULVRQRIILFLDO
SODLQWLIIVKDGIDLOHGWRH[KDXVWWKHLUDGPLQLVWUDWLYHUHPHGLHV          FDQ EH OLDEOH LI KH GLVUHJDUGV WKDW ULVN E\ IDLOLQJ WR WDNH
XQGHUWKH3ULVRQ/LWLJDWLRQ5HIRUP$FW>m3/5$l@86&              UHDVRQDEOHPHDVXUHVWRDEDWHLW,GDW
HDEHIRUHILOLQJVXLW7KHGLVWULFWFRXUWDQDO\]HGHDFK
SODLQWLIIjVUHFRUGRIDGPLQLVWUDWLYHJULHYDQFHV7KHGLVWULFW            3ODLQWLIIV PD\ SURYH WKDW WKH GHIHQGDQWV KDG DFWXDO
FRXUWIRXQGWKDW&XUU\KDGVXFFHVVIXOO\H[KDXVWHGKLVFODLPV            NQRZOHGJHRIDVXEVWDQWLDOULVNmLQWKHXVXDOZD\VlDFFRUGLQJ
DJDLQVW6FRWWDQGWKHVXSHUYLVRU\GHIHQGDQWVEHFDXVHKHKDG            WRWKH6XSUHPH&RXUW6HHLGDW7KDWLVDIDFWILQGHU
H[KDXVWHG KLV DGPLQLVWUDWLYH UHPHGLHV E\ DSSHDOLQJ KLV            PD\LQIHUDFWXDONQRZOHGJHWKURXJKFLUFXPVWDQWLDOHYLGHQFH
JULHYDQFH WR WKH FKLHI LQVSHFWRU EHIRUH ILOLQJ KLV DPHQGHG      RUmPD\FRQFOXGHDSULVRQRIILFLDONQHZRIDVXEVWDQWLDOULVN
FRPSODLQW                                                              IURPWKHYHU\IDFWWKDWWKHULVNZDVREYLRXVl,G
  7KH GLVWULFW FRXUW QH[W IRXQG WKDW RI WKH UHFFKDLQ            )RUH[DPSOHLIDQ(LJKWK$PHQGPHQWSODLQWLIISUHVHQWV
SODLQWLIIV$OOHQ%URRNV&DQQRQ:HOOVDQG:LOOLDPVKDG                HYLGHQFHVKRZLQJWKDWDVXEVWDQWLDOULVNRILQPDWHDWWDFNV
H[KDXVWHG WKHLU FODLPV DJDLQVW &XUU\ DQG WKH VXSHUYLVRU\           ZDV ORQJVWDQGLQJ SHUYDVLYH ZHOO GRFXPHQWHG RU
GHIHQGDQWVEHFDXVHWKH\WRRKDGVXFFHVVIXOO\DSSHDOHGWKHLU              H[SUHVVO\QRWHGE\SULVRQRIILFLDOVLQWKHSDVWDQGWKH
JULHYDQFHVWRWKHFKLHILQVSHFWRUEHIRUHILOLQJWKHLUDPHQGHG             FLUFXPVWDQFHVVXJJHVWWKDWWKHGHIHQGDQWRIILFLDOEHLQJ
FRPSODLQW7KHGLVWULFWFRXUWIRXQGWKDW&KLVROP.LQJDQG               VXHG KDG EHHQ H[SRVHG WR LQIRUPDWLRQ FRQFHUQLQJ WKH
6KRUWHU KRZHYHU KDG QRW H[KDXVWHG WKHLU DGPLQLVWUDWLYH            ULVN DQG WKXV 
PXVW KDYH NQRZQ
 DERXW LW WKHQ VXFK
UHPHGLHV DV RI WKH GDWH RI WKH FRXUWjV RUGHU UXOLQJ RQ WKH     HYLGHQFHFRXOGEHVXIILFLHQWWRSHUPLWDWULHURIIDFWWR
PRWLRQ WR GLVPLVV  7KH GLVWULFW FRXUW WKHUHIRUH GLVPLVVHG        ILQGWKDWWKHGHIHQGDQWRIILFLDOKDGDFWXDONQRZOHGJHRI
&KLVROP.LQJDQG6KRUWHUIURPWKHDFWLRQ                              WKHULVN
                                                                        )DUPHUY%UHQQDQ86DW
       &XUU\HWDOY6FRWWHWDO                       1R          1R                    &XUU\HWDOY6FRWWHWDO     

)HG5&LY3F:HPXVWYLHZWKHHYLGHQFHLQDOLJKW                         7KHGLVWULFWFRXUWFRQFOXGHGKRZHYHUWKDWWKHUHFFKDLQ
PRVWIDYRUDEOHWRWKHQRQPRYLQJSDUW\WRGHWHUPLQHZKHWKHU                        SODLQWLIIV GLG QRW H[KDXVW WKHLU FODLPV DJDLQVW +RZDUG IRU
DJHQXLQHLVVXHRIPDWHULDOIDFWH[LVWV$GLFNHVY6+.UHVV                    IDLOLQJ WR SURWHFW WKHP IURP 6FRWW EHFDXVH QRQH RI WKH
	&R86:KLWHY7XUIZD\3DUN5DFLQJ                           SODLQWLIIVVSHFLILFDOO\ILOHGDJULHYDQFHDJDLQVW+RZDUG7KH
$VVjQ,QF)GWK&LU6XPPDU\                        GLVWULFWFRXUWWKHUHIRUHGLVPLVVHG+RZDUGIURPWKHDFWLRQ
MXGJPHQWLVDSSURSULDWHRQO\ZKHQWKHQRQPRYLQJSDUW\IDLOV
WRPDNHDVKRZLQJVXIILFLHQWWRHVWDEOLVKWKHH[LVWHQFHRIDQ                        'HIHQGDQWV DOVR ILOHG D PRWLRQ IRU VXPPDU\ MXGJPHQW
HOHPHQWHVVHQWLDOWRWKDWSDUW\jVFDVHDQGRQZKLFKWKDWSDUW\                     FRQWHQGLQJ WKH XQGLVSXWHG IDFWV VKRZHG WKDW VXSHUYLVRU\
ZLOOEHDUWKHEXUGHQRISURRIDWWULDO&HORWH[&RUSY&DWUHWW                  HPSOR\HHV&ROOLQV+LHQHPDQ:DONHU$GNLQV1HZVRPH
86                                                        DQG5HGZRRGZHUHQRWGHOLEHUDWHO\LQGLIIHUHQWWRWKHGDQJHU
                                                                                   6FRWWSRVHGWRWKHLQPDWHV7KHGLVWULFWFRXUWJUDQWHGWKHVH
  :HILQGWKDWLQWKLVFDVHLVVXHVRIPDWHULDOIDFWSUHFOXGH                     PRWLRQVIRUVXPPDU\MXGJPHQWKROGLQJWKDWWKRXJK6FRWWjV
VXPPDU\ MXGJPHQW LQ GHIHQGDQWVj IDYRU  6SHFLILFDOO\ ZH                    HPSOR\PHQWUHFRUGZDVmGHSORUDEOHlDQGmUHSUHKHQVLEOHlQR
FRQFOXGHWKDWDWULHURIIDFWFRXOGILQGEDVHGRQWKHHYLGHQFH                    UHDVRQDEOHMXU\FRXOGILQGWKHVHVXSHUYLVRU\HPSOR\HHVZHUH
VXEPLWWHG WKDW WKH VXSHUYLVRU\ GHIHQGDQWV DFWXDOO\ NQHZ                     GHOLEHUDWHO\LQGLIIHUHQWWR6FRWWjVSRWHQWLDOXVHRIH[FHVVLYH
&XUU\ SRVHG D VXEVWDQWLDO ULVN RI VHULRXV KDUP WR SULVRQ                  IRUFHDJDLQVW$IULFDQ$PHULFDQSULVRQHUV
LQPDWHV
                                                                                      6FRWWDOVRPRYHGIRUVXPPDU\MXGJPHQWDJDLQVWSODLQWLII
   ,QLWVSURKLELWLRQRIFUXHODQGXQXVXDOSXQLVKPHQWVWKH                      &XUU\RQO\VWDWLQJWKDWKLVXVHRIIRUFHZDVUHDVRQDEOHXQGHU
(LJKWK $PHQGPHQW SODFHV UHVWUDLQWV RQ SULVRQ RIILFLDOV                      WKHFLUFXPVWDQFHVEHFDXVH&XUU\ZDVQRWVHYHUHO\LQMXUHGDQG
GLUHFWLQJ WKDW WKH\ PD\ QRW XVH H[FHVVLYH SK\VLFDO IRUFH                   EHFDXVH&XUU\DOOHJHGO\DWWHPSWHGWRKHDGEXWWDQGVSLWRQ
DJDLQVWSULVRQHUVDQGPXVWDOVRWDNHUHDVRQDEOHPHDVXUHVWR                       KLP7KHGLVWULFWFRXUWGHQLHG6FRWWjVPRWLRQILQGLQJWKDW
JXDUDQWHHWKHVDIHW\RIWKHLQPDWHV)DUPHUY%UHQQDQ                       LVVXHVRIPDWHULDOIDFWQDPHO\&XUU\jVGHVFULSWLRQRIHYHQWV
86TXRWLQJ+XGVRQY3DOPHU86                           SUHFOXGHGVXPPDU\MXGJPHQW
7RHVWDEOLVKOLDELOLW\XQGHUWKH(LJKWK
$PHQGPHQWIRUDFODLPEDVHGRQDIDLOXUHWRSUHYHQWKDUPWR                          $IWHUWKHGLVWULFWFRXUWUXOHGSODLQWLIIV&KLVROP.LQJDQG
DSULVRQHUSODLQWLIIVPXVWVKRZWKDWWKHSULVRQRIILFLDOVDFWHG                   6KRUWHU ILOHG D PRWLRQ IRU UHFRQVLGHUDWLRQ SURYLGLQJ
ZLWKGHOLEHUDWHLQGLIIHUHQFHWRDVXEVWDQWLDOULVNWKDW6FRWW                    GRFXPHQWDWLRQ WKDW WKH\ KDG LQGHHG H[KDXVWHG WKHLU
ZRXOGFDXVHSULVRQHUVVHULRXVKDUP)DUPHUY%UHQQDQ                        DGPLQLVWUDWLYH UHPHGLHV VRPH PRQWKV SULRU WR WKH FRXUWjV
86DW+HOOLQJY0F.LQQH\86                         UXOLQJ7KHGLVWULFWFRXUWILQGLQJWKHUHZDVQRJRRGH[FXVH
:RRGV Y /HFXUHX[  )G   WK &LU                    IRUWKHIDLOXUHE\&KLVROP.LQJDQG6KRUWHUWRSURYLGHWKH
6WUHHWY&RUUHFWLRQV&RUSRI$P)GWK                         FRXUW ZLWK GRFXPHQWDWLRQ RI WKHLU DSSHDOV WR WKH FKLHI
&LU7D\ORUY0LFKLJDQ'HSjWRI&RUUHFWLRQV)G                        LQVSHFWRUHDUOLHUUHIXVHGWRUHFRQVLGHULWVUXOLQJ
WK&LU
                                                                                     7KXV IROORZLQJ WKH HQWU\ RI LWV UXOLQJ WKH RQO\ FODLPV
                                                                                   UHPDLQLQJ LQ WKH GLVWULFW FRXUW ZHUH WKRVH RI &XUU\ $OOHQ
                                                                                  %URRNV &DQQRQ :HOOV DQG :LOOLDPV DJDLQVW 6FRWW IRU
     3ULVRQ RIILFLDOV DUH KHOG OLDEOH IRU H[SRVLQJ SULVRQHUV WR H[FHVVLYH
                                                                                   H[FHVVLYHXVHRIIRUFH7KHGLVWULFWFRXUWWKHQFHUWLILHGWKH
IRUFH DW WKH KDQGV RI SULVRQ       HPSOR\HHV XQGHU WKH VDPH mGHOLEHUDWH
                                                                                   PDWWHUVGHFLGHGLQLWV)HEUXDU\RUGHUIRULPPHGLDWH
                                                                                   DSSHDO XQGHU 5XOH E RI WKH )HGHUDO 5XOHV RI &LYLO
LQGLIIHUHQFHl   VWDQGDUG   WKDW   )DUPHU   Y   %UHQQDQ   HPSOR\V   IRU   SULVRQ
RIILFLDOV ZKR IDLO WR SURWHFW LQPDWHV IURP YLROHQFH E\ RWKHUV 6HH %O\GHQ
Y 0DQFXVL    )G   G &LU 
     &XUU\HWDOY6FRWWHWDO                  1R       1R                     &XUU\HWDOY6FRWWHWDO     

3URFHGXUHDQG86&E:HJUDQWHGSHUPLVVLRQ                 7KHUHTXLUHPHQWWKDWDSULVRQHUILOHDJULHYDQFHDJDLQVWWKH
WRWKHSDUWLHVWRSXUVXHWKHLQWHUORFXWRU\DSSHDO                      SHUVRQ KH XOWLPDWHO\ VHHNV WR VXH GRHV QRW LPSRVH D
                                                                        KHLJKWHQHG SOHDGLQJ UHTXLUHPHQW XSRQ ZRXOGEH 
                     ,,,,VVXHVRQ$SSHDO                             SODLQWLIIV,WRQO\DVVXUHVDVHQYLVLRQHGXQGHUWKH3/5$WKDW
                                                                        WKHSULVRQDGPLQLVWUDWLYHV\VWHPKDVDFKDQFHWRGHDOZLWK
  7KH SODLQWLIIV DSSHDO WKUHH LVVXHV  WKH GLVPLVVDO RI      FODLPVDJDLQVWSULVRQSHUVRQQHOEHIRUHWKRVHFRPSODLQWVUHDFK
&KLVROP .LQJ DQG 6KRUWHU IRU IDLOXUH WR H[KDXVW  WKH     IHGHUDOFRXUW7KXVZHDIILUPWKHGLVWULFWFRXUWjVGHFLVLRQWR
GLVPLVVDO RI DOO FODLPV DJDLQVW +RZDUG RQ H[KDXVWLRQ             GLVPLVVWKHSODLQWLIIVjFODLPVDJDLQVW+RZDUG
JURXQGVDQGWKHGLVPLVVDORIWKHVXSHUYLVRU\GHIHQGDQWV
RQVXPPDU\MXGJPHQW7KHGHIHQGDQWVGLGQRWILOHDFURVV                                               '
DSSHDO
                                                                          )LQDOO\ SODLQWLIIV FRQWHQG LW ZDV HUURU WR GLVPLVV WKH
  7KHSODLQWLIIVZKRZHUHGLVPLVVHGIRUIDLOXUHWRH[KDXVW              VXSHUYLVRU\HPSOR\HHVRQVXPPDU\MXGJPHQWEHFDXVHLVVXHV
&KLVROP .LQJ DQG 6KRUWHU FRQWHQG WKDW  LW LV            RIPDWHULDOIDFWSUHFOXGHWKHLUGLVPLVVDO3ODLQWLIIVFRQWHQG
XQQHFHVVDU\ WR H[KDXVW mH[FHVVLYH IRUFH FODLPVl EHFDXVH          WKDW 6FRWWjV HPSOR\PHQW UHFRUG FRQWDLQHG VXIILFLHQW
mH[FHVVLYH IRUFHl GRHV QRW TXDOLI\ DV D mSULVRQ FRQGLWLRQl      UHIHUHQFHVWRKLVSURSHQVLW\WRGLVFULPLQDWHDJDLQVWDQGDEXVH
XQGHU H  LW LV XQQHFHVVDU\ WR H[KDXVW FODLPV IRU      $IULFDQ$PHULFDQ SULVRQHUV WR FUHDWH DQ LVVXH RI IDFW
PRQHWDU\GDPDJHVEHFDXVHWKHSULVRQFRPSODLQWV\VWHPGRHV              UHJDUGLQJZKHWKHUWKHVXSHUYLVRUVDZDUHRI6FRWWjVORQJDQG
QRW SURYLGH IRU PRQHWDU\ UHOLHI DQG  WKH\ LQ IDFW KDG   mGHSORUDEOHlUHFRUGZHUHGHOLEHUDWHO\LQGLIIHUHQWWRWKHULVN
H[KDXVWHGWKHLUFODLPVDWWKHWLPHWKHGLVWULFWFRXUWFRQVLGHUHG        6FRWW SRVHG RI XVLQJ H[FHVVLYH IRUFH DJDLQVW $IULFDQ
WKH PRWLRQV WR GLVPLVV DQG WKH GLVWULFW FRXUW DEXVHG LWV      $PHULFDQLQPDWHV
GLVFUHWLRQE\QRWFRQVLGHULQJHYLGHQFHRIWKDWH[KDXVWLRQ
                                                                          $V GHVFULEHG DERYH SODLQWLIIV SURIIHU D ORQJ UHFRUG RI
  $OO SODLQWLIIV LQYROYHG LQ WKH UHFFKDLQ LQFLGHQW $OOHQ      FRPSODLQWVDQGLQFLGHQWUHSRUWVILOHGDJDLQVW6FRWW$VWKH
%URRNV&DQQRQ:HOOVDQG:LOOLDPVDVZHOODV&KLVROP                GLVWULFWFRXUWQRWHGWKHPDQ\FRPSODLQWV LQFLGHQWUHSRUWV
.LQJ DQG 6KRUWHU FRQWHQG WKDW LW ZDV HUURU WR GLVPLVV        DQG 8VH RI )RUFH LQYHVWLJDWLRQV SDLQW D SLFWXUH RI D
+RZDUGRQWKHJURXQGWKDWQRSODLQWLIIKDGEURXJKWDVSHFLILF           mUHSUHKHQVLEOHlSULVRQJXDUGZKRVHLQIUDFWLRQVDQGDOOHJHG
JULHYDQFHDJDLQVWKLP                                                  LQIUDFWLRQVDSSHDUHGDLPHGDWDSDUWLFXODUFODVVRIWDUJHWVRU
                                                                        YLFWLPV o DOO $IULFDQ$PHULFDQV  ,Q DGGLWLRQ WR 6FRWWjV
  $OOSODLQWLIIVLQFOXGLQJ&XUU\FRQWHQGLWZDVHUURUIRUWKH         GLVFLSOLQDU\ UHFRUG WKH GLVWULFW FRXUW DOVR KDG EHIRUH LW DQ
GLVWULFWFRXUWWRGLVPLVVWKHVXSHUYLVRU\HPSOR\HHV&ROOLQV           LQWHUQDO PHPRUDQGXP IURP DQ LQVWLWXWLRQDO LQVSHFWRU WR
+LHQHPDQ :DONHU $GNLQV 1HZVRPH DQG 5HGZRRG RQ                 GHIHQGDQW&ROOLQVVXJJHVWLQJWKDW6FRWWEHGLVFLSOLQHGEHIRUH
VXPPDU\ MXGJPHQW EHFDXVH WKH GLVWULFW FRXUW HUURQHRXVO\           WKDWVRPHRQHJRWKXUWE\KLVFRQGXFW
GHFLGHG DQ LVVXH RI IDFW o QDPHO\ ZKHWKHU D MXU\ FRXOG
GHWHUPLQHIURPWKHHYLGHQFHEHIRUHLWWKDWWKHVXSHUYLVRUVKDG            :H UHYLHZ GH QRYR WKH GLVWULFW FRXUWjV RUGHU JUDQWLQJ
DFWXDONQRZOHGJHRIWKHULVN6FRWWSRVHGRIFDXVLQJVHULRXV             VXPPDU\MXGJPHQW$YHU\Y.LQJ)GWK&LU
KDUP                                                                    6XPPDU\ MXGJPHQW LV DSSURSULDWH ZKHUH WKH
                                                                        SOHDGLQJV GHSRVLWLRQV DQVZHUV WR LQWHUURJDWRULHV DQG
  'HIHQGDQWVZLWKRXWDSSHDOLQJWKHGLVWULFWFRXUWjVGHFLVLRQ           DGPLVVLRQVRQILOHWRJHWKHUZLWKWKHDIILGDYLWVLIDQ\VKRZ
WKHPVHOYHVFRQWHQGWKDWWKHGLVWULFWFRXUWHUUHGLQILQGLQJWKDW       WKDWWKHUHLVQRJHQXLQHLVVXHDVWRDQ\PDWHULDOIDFWDQGWKDW
SODLQWLIIV&XUU\$OOHQ%URRNV&DQQRQ:HOOVDQG:LOOLDPV            WKHPRYLQJSDUW\LVHQWLWOHGWRDMXGJPHQWDVDPDWWHURIODZ
    &XUU\HWDOY6FRWWHWDO                 1R       1R                     &XUU\HWDOY6FRWWHWDO      

                                &                                     VXFFHVVIXOO\H[KDXVWHGWKHLUDGPLQLVWUDWLYHUHPHGLHVXQGHU
                                                                       WKH3/5$'HIHQGDQWVFRQWHQGWKDWSODLQWLIIVZHUHUHTXLUHG
  7KHUHPDLQLQJUHFFKDLQSODLQWLIIV$OOHQ%URRNV&DQQRQ           WR H[KDXVW EHIRUH ILOLQJ WKHLU ILUVW FRPSODLQW DQG WKDW
:HOOV DQG :LOOLDPV FRQWHQG LW ZDV HUURU IRU WKH GLVWULFW    H[KDXVWLQJEHIRUHILOLQJWKHLUDPHQGHGFRPSODLQWRUDWDQ\
MXGJHWRGLVPLVVWKHLUFODLPVDJDLQVW+RZDUGWKHFRUUHFWLRQV          WLPHGXULQJWKHSHQGHQF\RIWKHIHGHUDOSURFHHGLQJVGRHVQRW
RIILFHUZKRZLWQHVVHG6FRWWjVDVVDXOWRQWKHPDQGDOOHJHGO\            VXIILFH$OWKRXJKGHIHQGDQWVGLGQRWILOHDFURVVDSSHDOWKH\
IDLOHGWRLQWHUYHQH7KHGLVWULFWMXGJHGLVPLVVHGWKDWFODLP          DVVHUW WKDW LQ WKH 6L[WK &LUFXLW D SDQHO PD\ FRQVLGHU WKLV
EHFDXVHQRQH RIWKHSULVRQHUVFRPSODLQHGDERXW+RZDUGjV               LVVXHHYHQWKRXJKLWZDVQRWIRUPDOO\UDLVHGE\DQ\SDUW\:H
EHKDYLRU QRU HYHQ PHQWLRQHG +RZDUG LQ WKHLU SULVRQ             DGGUHVVWKLVODVWLVVXHILUVW
JULHYDQFHV  7KH GLVWULFW FRXUW WKHUHIRUH KHOG WKDW WKH
SULVRQHUVjFODLPVZHUHQRWH[KDXVWHGDVWR+RZDUG                                                      $
   3ODLQWLIIVDUJXHWKDWUHTXLULQJSULVRQHUVWRSXWIRUWKDOOOHJDO       ,QWKHGLVWULFWFRXUWGHIHQGDQWVMRLQHGLQSODLQWLIIVjUHTXHVW
WKHRULHV LQ WKHLU JULHYDQFHV LPSRVHV DQ XQGXO\ KHLJKWHQHG       WKDWPDWWHUVLQWKHFRXUWjV)HEUXDU\RUGHUEHFHUWLILHG
SOHDGLQJVWDQGDUGRQSODLQWLIIV3ODLQWLIIVDVVHUWWKDW         IRULPPHGLDWHDSSHDO,QGRLQJVRGHIHQGDQWVWROGWKHGLVWULFW
SULVRQSHUVRQQHONQHZZKRZDVLQYROYHGLQWKHLQFLGHQWVWKDW           FRXUWWKDWWKH\LQWHQGHGWRILOHDQDSSHDOUHJDUGLQJWKHFRXUWjV
ZHUHWKHVXEMHFWRIWKHLUJULHYDQFHVDQGNQHZWKHLUUHVSHFWLYH         FRQFOXVLRQ WKDW SODLQWLIIV &XUU\ $OOHQ %URRNV &DQQRQ
UROHV  %HFDXVH SULVRQ RIILFLDOV ZHUH DZDUH RI WKHVH IDFWV   :HOOV DQG :LOOLDPV KDG DGHTXDWHO\ H[KDXVWHG WKHLU VWDWH
SODLQWLIIV DVVHUW WKH\ ZHUH QRW UHTXLUHG WR LGHQWLI\ HYHU\     DGPLQLVWUDWLYHUHPHGLHV'HVSLWHWKLVDVVHUWLRQGHIHQGDQWV
SHUVRQ DJDLQVW ZKRP WKH\ KDG D JULHYDQFH LQ WKHLU ZULWWHQ     GLG QRW ILOH DQ\ DSSHDO \HW WKH\ QRZ DVVHUW ZH PD\ VWLOO
FRPSODLQWV WR SULVRQ DXWKRULWLHV  3ODLQWLIIV DUJXH WKDW DQ    FRQVLGHUWKDWSRUWLRQRIWKHGLVWULFWFRXUWjVRUGHU,QVXSSRUW
LQYHVWLJDWLRQLQWR+RZDUGjVUROHLQWKHLQFLGHQWZRXOGKDYH            RIWKLVSURSRVLWLRQGHIHQGDQWVUHO\RQ%URZQY7RRPEV
IORZHGQDWXUDOO\IURPRUEHHQHQFRPSDVVHGZLWKLQHYHQWKH            )G   WK &LU  ZKLFK KHOG WKDW FRXUWV
PRVWJHQHUDOJULHYDQFHDQGDFFRUGLQJO\QRWKLQJEH\RQGWKH            LQFOXGLQJ FRXUWV FRQVLGHULQJ WKH LVVXH IRU WKH ILUVW WLPH RQ
JULHYDQFHVWKH\ILOHGZDVUHTXLUHGWRLQVWLWXWHDGPLQLVWUDWLYH         DSSHDO VKRXOG HQIRUFH WKH H[KDXVWLRQ UHTXLUHPHQW RI WKH
SURFHHGLQJVDJDLQVW+RZDUG                                            3/5$ VXD VSRQWH HYHQ LI QRW UDLVHG E\ D GHIHQGDQW
                                                                       'HIHQGDQWVEHOLHYHWKDW7RRPEVIRUJLYHVWKHLUIDLOXUHWRILOH
  7KHFODLPDJDLQVW+RZDUGKRZHYHULVDVHSDUDWHFODLP              DWLPHO\FURVVDSSHDODIWHUKDYLQJUHTXHVWHGDQGEHHQJLYHQ
DJDLQVW D VHSDUDWH LQGLYLGXDO SUHPLVHG RQ D VHSDUDWH DQG      WKHULJKWWRGRVRRQWKLVLVVXH
LQGHSHQGHQW OHJDO WKHRU\  %HFDXVH +RZDUG ZDV QRW
PHQWLRQHGLQWKHSULVRQHUVjJULHYDQFHV62&)GLGQRWNQRZ                7KHSODLQWLIIVFRQWHQGWRWKHFRQWUDU\WKDW7RRPEVGRHV
WKDWWKHSULVRQHUVVSHFLILFDOO\KDGDJULHYDQFHDJDLQVWKLPVR        QRW LQ WKH DEVHQFH RI D FURVVDSSHDO RSHQ WKH GRRU WR
62&) KDG QR UHDVRQ WR SXUVXH DQ\ FODLP RU GLVFLSOLQDU\        UHFRQVLGHUDWLRQ RI WKRVH H[KDXVWLRQ LVVXHV GHFLGHG LQ WKHLU
DFWLRQ DJDLQVW +RZDUG EDVHG RQ WKH SULVRQHUVj RIILFLDO          IDYRUE\WKHGLVWULFWFRXUW3ODLQWLIIVDUJXHWKDWEHFDXVHWKLV
FRPSODLQWV$VWKLV&RXUWVWDWHGLQ)UHHPDQY)UDQFLV            &RXUW GHFLGHG 7RRPEV EHIRUH ZH GHWHUPLQHG WKDW WKH
)GDWmWKHLPSRUWDQFHRIXVLQJWKHSULVRQJULHYDQFH             H[KDXVWLRQ UHTXLUHPHQW RI H RI WKH 3/5$ LV QRW
SURFHVV >LV@ WR DOHUW SULVRQ RIILFLDOV WR SUREOHPVl  7KH     MXULVGLFWLRQDO:\DWWY/HRQDUG)GWK&LU
SODLQWLIIVj JULHYDQFHV PD\ KDYH DOHUWHG 62&) WR SUREOHPV        ZHPXVWKDYHDVVXPHGLQ7RRPEVWKDWWKHH[KDXVWLRQ
ZLWK 6FRWW EXW WKH\ GLG QRW UHDVRQDEO\ DOHUW 62&) WR         UHTXLUHPHQW RI H ZDV D SUHUHTXLVLWH WR IHGHUDO
SUREOHPVZLWK+RZDUG                                                 MXULVGLFWLRQ  %HFDXVH ZH QRZ NQRZ WKDW QRW WR EH WUXH
       &XUU\HWDOY6FRWWHWDO                        1R          1R                    &XUU\HWDOY6FRWWHWDO   

SODLQWLIIV DVN XV WR LQWHUSRODWH 7RRPEV DQG WUHDW H                    ZLOO QRW VXEVWLWXWH IRU H[KDXVWLRQ WKURXJK WKH SULVRQjV
H[KDXVWLRQLVVXHVDVZHZRXOGDQ\RWKHUDIILUPDWLYHGHIHQVH                        DGPLQLVWUDWLYHJULHYDQFHSURFHGXUH6HHLGKROGLQJWKDWDQ
EDUULQJ WKHLU FRQVLGHUDWLRQ XQOHVV WLPHO\ DVVHUWHG E\ D                      LQYHVWLJDWLRQE\DSULVRQ8VHRI)RUFH&RPPLWWHHGRHVQRW
GHIHQGDQWDQGSURSHUO\SUHVHUYHGIRUDSSHDO3ODLQWLIIVSRLQW                      VDWLVI\WKHUHTXLUHPHQWRIWKH3/5$
RXWWKDWPRVWFRXUWVWRFRQVLGHUWKHLVVXHKDYHFKDUDFWHUL]HG
WKH3/5$jVH[KDXVWLRQUHTXLUHPHQWVDVDIILUPDWLYHGHIHQVHV                            :HILQGDFFRUGLQJO\WKDWQRQHRIWKHOHJDOWKHRULHVXSRQ
6HHHJ3HUH]Y:LVFRQVLQ'HSDUWPHQWRI&RUUHFWLRQV                        ZKLFK WKHVH SODLQWLIIV UHO\ HLWKHU H[FXVH WKH H[KDXVWLRQ
)GWK&LUKROGLQJWKDWH[KDXVWLRQXQGHU                        UHTXLUHPHQWV RI H RU PDQGDWH UHYHUVDO RI WKH GLVWULFW
HLVDQDIILUPDWLYHGHIHQVHDQGGHIHQGDQWVPD\ZDLYH                          FRXUWjVRUGHUHQIRUFLQJWKRVHUHTXLUHPHQWVRQWKHUHFRUGWKHQ
RUIRUIHLWUHOLDQFHRQLW0DVVH\Y+HOPDQ)G                         EHIRUHLW:HDOVRILQGPRUHRYHUWKDWWKHGLVWULFWFRXUWGLG
WK&LUH[KDXVWLRQUHTXLUHPHQWVDUHDIILUPDWLYH                        QRWDEXVHLWVGLVFUHWLRQZKHQLWUHIXVHGWRFRQVLGHUHYLGHQFH
GHIHQVHV ZKLFK DUH ZDLYDEOH LI QRW DVVHUWHG sHQNLQV Y                    RIH[KDXVWLRQQRWSURIIHUHGXQWLODIWHUWKHFRXUWUHQGHUHGLWV
+DXEHUW  )G   G &LU  H                             GHFLVLRQRQERWKGLVSRVLWLYHPRWLRQV$5XOHEPRWLRQ
UHTXLUHPHQWVDUHDIILUPDWLYHGHIHQVHVXQGHU)HG5&LY3                         SUHPLVHGRQQHZO\DFTXLUHGHYLGHQFHPXVWEHDFFRPSDQLHG
HsDFNVRQY'LVWULFWRI&ROXPELD)6XSSG                        E\DVKRZLQJWKDWWKHSDUW\SURIIHULQJWKHQHZHYLGHQFHFRXOG
''&VDPH                                                              QRW LQ WKH H[HUFLVH RI GXH GLOLJHQFH KDYH DFTXLUHG WKH
                                                                                    HYLGHQFH VRRQHU  *RRG  )G DW   &KLVKROP DQG
  :HQHHGQRWDQVZHUWKLVDUJXPHQWKHUHHYHQLIZHZHUHWR                         6KRUWHUUHFHLYHGILQDOQRWLFHRIWKHGLVSRVLWLRQRIWKHLUDSSHDOV
DJUHH ZLWK WKH GHIHQGDQWV WKDW LW LV DSSURSULDWH IRU XV WR                WRWKH&KLHI,QVSHFWRULQ0D\RIDIXOOHLJKWPRQWKV
DGGUHVV WKH H[KDXVWLRQ LVVXH GHVSLWH WKHLU IDLOXUH WR FURVV                EHIRUH WKH GLVWULFW FRXUW HQWHUHG MXGJPHQW GLVPLVVLQJ WKHLU
DSSHDOZHILQGWKDWWKHGLVWULFWFRXUWjVUHIXVDOWRGLVPLVVWKH                    FODLPV7KHUHLVQRUHDVRQZK\WKLVLQIRUPDWLRQFRXOGQRW
FODLPVRI&XUU\$OOHQ%URRNV&DQQRQ:HOOVDQG:LOOLDPV                         KDYHEHHQVXEPLWWHGWRWKHGLVWULFWFRXUWVRRQHU8QGHUWKH
RQ H[KDXVWLRQ JURXQGV ZDV QRW HUURQHRXV  $V QRWHG WKH                   FLUFXPVWDQFHV WKH GHFLVLRQ RI ZKHWKHU WR DFFHSW WKDW QHZ
GLVWULFWFRXUWFRQFOXGHGWKDWWKHVHVL[SODLQWLIIVFRXOGFRQWLQXH                   HYLGHQFH OD\ VTXDUHO\ ZLWKLQ WKH GLVFUHWLRQ RI WKH GLVWULFW
                                                                                    FRXUWDQH[HUFLVHRIGLVFUHWLRQZHFKRRVHQRWWRGLVWXUE
     
      :H QRWH KRZHYHU WKDW ZKLOH LW LV WUXH ZH KDYH FRQFOXGHG H
                                                                                       3XWVLPSO\ZKLOHZHEHOLHYHLWLVIDLULQWKHFLUFXPVWDQFHV
GRHV QRW LPSRVH D MXULVGLFWLRQDO EDU WR IHGHUDO MXULVGLFWLRQ ZH KDYH DOVR
                                                                                    RIWKLVFDVHWRH[FXVHWKHIDLOXUHWRDGKHUHWRWKHSUHIHUUHG
FRQFOXGHG WKDW WKH REOLJDWLRQ WR H[KDXVW DGPLQLVWUDWLYH UHPHGLHV EHIRUH             SURFHGXUHRIFRPSOHWLQJWKHJULHYDQFHSURFHVVSULRUWRWKH
UHVRUW WR IHGHUDO FRXUW LV D PDQGDWRU\ RQH 6HH :\DWW Y /HRQDUG                ILOLQJRIDQDFWLRQDQGDWWDFKLQJGRFXPHQWDWLRQWRWKHRULJLQDO
)G DW  KROGLQJ WKDW WKRXJK QRW MXULVGLFWLRQDO WKH UHTXLUHPHQW WKDW          FRPSODLQWZHDOVREHOLHYHLWLVRQO\IDLUWRUHTXLUHSODLQWLIIV
DGPLQLVWUDWLYH UHPHGLHV EH H[KDXVWHG UHPDLQV PDQGDWRU\ &ODUN Y
                                                                                    WR H[HUFLVH GXH GLOLJHQFH WR SURYLGH GRFXPHQWDWLRQ RI
%HHEH  :/  WK &LU 2FW   m>W@KH QHZ H[KDXVWLRQ
UHTXLUHPHQW ZKLOH QRW MXULVGLFWLRQDO LV PDQGDWRU\ DQG PXVW EH DGGUHVVHG
                                                                                    H[KDXVWLRQ WR WKH GLVWULFW FRXUW RQFH DYDLODEOH  7KHVH
LQ WKH ILUVW LQVWDQFH E\ WKH GLVWULFW FRXUW LQ DOO SULVRQHU FLYLO ULJKWV FDVHV    SDUWLFXODUSODLQWLIIVGLGQRWH[HUFLVHWKDWGLOLJHQFHKHUH7KXV
EHIRUH WKH PHULWV RI WKH FDVH DUH DGGUHVVHGl $QG WKLV &RXUW KDV QRW              ZH DIILUP WKH GLVWULFW FRXUWjV GHFLVLRQ WR GLVPLVV WKHVH
KHVLWDWHG WR HQIRUFH H HYHQ ZKHUH VXFK HQIRUFHPHQW UHVXOWV LQ WKH             SODLQWLIIVIRUIDLOXUHWRH[KDXVWXQGHUHDQGILQGWKDW
GLVPLVVDO RI RWKHUZLVH SURSHUO\ VWDWHG FODLPV 6HH )UHHPDQ Y )UDQFLV              WKH GLVWULFW FRXUW GLG QRW DEXVH LWV GLVFUHWLRQ ZLWKLQ WKH
 )G   WK &LU  GLVPLVVLQJ FDVH IRU IDLOXUH WR
H[KDXVW 7KXV DOWKRXJK 7RRPEV SUHGDWHV D QXPEHU RI GHYHORSPHQWV LQ
                                                                                    PHDQLQJ RI 5XOH E ZKHQ LW UHIXVHG WR UHFRQVLGHU WKDW
WKH ODZ UHODWLQJ WR H LWV GLUHFWLYH WKDW D FRXUW VKRXOG FRQVLGHU              RUGHU
FRPSOLDQFH ZLWK WKH PDQGDWHV RI H HYHQ DEVHQW D SURSHU LQYRFDWLRQ
RI WKRVH PDQGDWHV E\ D SDUW\GHIHQGDQW DSSHDUV WR UHPDLQ YLDEOH
       &XUU\HWDOY6FRWWHWDO                  1R        1R                    &XUU\HWDOY6FRWWHWDO   

LQRUGHUWRVXFFHHGRQDEPRWLRQDSODLQWLIIPXVWKDYH                WRSXUVXHWKHLUFODLPVLQIHGHUDOFRXUWEHFDXVHWKH\KDGIXOO\
H[HUFLVHGGXHGLOLJHQFHWRSURFXUHHYLGHQFHEHIRUHGLVPLVVDO               H[KDXVWHGWKRVHFODLPVSULRUWRWKHILOLQJRIWKHLUDPHQGHG
DQGVKRZWKDWWKHHYLGHQFHLVPDWHULDODQGFRQWUROOLQJDQG                  FRPSODLQW DQG KDG SURIIHUHG GRFXPHQWDWLRQ WR WKH FRXUW
FOHDUO\ZRXOGKDYHSURGXFHGDGLIIHUHQWUHVXOWLISUHVHQWHG                 FOHDUO\FRQILUPLQJWKDWIDFW,QWKHFLUFXPVWDQFHVRIWKLVFDVH
EHIRUHWKHRULJLQDOMXGJPHQW&KLVROP.LQJDQG6KRUWHU                  WKRVHIDFWVDUHVXIILFLHQWWRVDWLVI\WKHPDQGDWHVRIH
DSSHDO WKH GLVWULFW FRXUWjV UHIXVDO WR UHFRQVLGHU LWV SULRU
RSLQLRQ  :H UHYLHZ WKH GHQLDO RI SODLQWLIIVj PRWLRQ IRU             :KLOHWKHSUHIHUUHGSUDFWLFHLVIRULQPDWHVWRFRPSOHWHWKH
UHFRQVLGHUDWLRQIRUDQDEXVHRIGLVFUHWLRQ                                 JULHYDQFHSURFHVVSULRUWRWKHILOLQJRIDQDFWLRQDQGWRDWWDFK
                                                                            WRWKHLUFRPSODLQWGRFXPHQWDWLRQRIWKDWIDFWmEHFDXVHWKH
  3ODLQWLIIV&KLVROP.LQJDQG6KRUWHUGRQRWSURYLGHDQ\                  H[KDXVWLRQ UHTXLUHPHQW LV QRW MXULVGLFWLRQDO GLVWULFW FRXUWV
QHZ H[SODQDWLRQ IRU WKHLU ODFN RI GLOLJHQFH LQ SURYLGLQJ            KDYH VRPH GLVFUHWLRQ LQ GHWHUPLQLQJ FRPSOLDQFH ZLWK WKH
HYLGHQFH RI H[KDXVWLRQ WR WKH GLVWULFW FRXUW  ,QVWHDG WKH\       VWDWXWHl  :\DWW Y /HRQDUG  )G   WK &LU
FRQWHQGWKH\GRQRWQHHGWRH[KDXVWFODLPVWKDWDVNIRU                  7KXV WKLV &RXUW KDV DFNQRZOHGJHG WKDW WKH
PRQHWDU\GDPDJHDVWKHSULVRQJULHYDQFHSURFHGXUHVGRQRW                  FLUFXPVWDQFHV SUHVHQWHG WR D GLVWULFW FRXUW PD\ mUDLVH
SURYLGH PRQHWDU\ UHOLHI IRU D SULVRQHUjV FODLPV  DOOHJH         TXHVWLRQVDERXWZKHWKHULWLVIDLUWRUHTXLUHWKHSULVRQHUWR
H[FHVVLYHIRUFHDVH[FHVVLYHIRUFHLVQRWDmSULVRQFRQGLWLRQl            NQRZWKDWDGPLQLVWUDWLYHUHPHGLHVPXVWEHH[KDXVWHGEHIRUH
RU  KDYH EHHQ UHYLHZHG E\ D 8VH RI )RUFH &RPPLWWHH            ILOLQJDFRPSODLQWl)UHHPDQY)UDQFLV)G
VLQFH WKH 8VH RI )RUFH &RPPLWWHH LV DNLQ WR WKH SULVRQjV          WK &LU   :H KDYH H[SUHVVO\ IRXQG WKDW VXEVWDQWLDO
DGPLQLVWUDWLYH JULHYDQFH SURFHGXUH DQG RSHUDWHV WR DOHUW              FRPSOLDQFHZLWKWKHH[KDXVWLRQUHTXLUHPHQWVLQWKHIRUPRI
SULVRQRIILFLDOVWRDSULVRQHUjVFODLPV                                 JRRGIDLWKHIIRUWVWRFRQWDFWSULVRQSHUVRQQHOFDQEHGHHPHG
                                                                            VXIILFLHQW mH[KDXVWLRQl XQGHU WKH 3/5$ ZKHUH WKH HYHQWV
   7KLV&RXUWKDVKHOGGHILQLWLYHO\WKDWQRQHRIWKHUHDVRQV                JLYLQJULVHWRWKHFODLPRFFXUUHGSULRUWRSDVVDJHRIWKH$FW
SODLQWLIIVSURSRVHWRFLUFXPYHQWWKHSULVRQjVDGPLQLVWUDWLYH                ,GVHHDOVR+HUULQJY0LWFKHOO&9VOLSRS1'
JULHYDQFHSURFHGXUHVZLOOTXDOLI\DVRUH[FXVHH[KDXVWLRQ                 2KLRsXO\UHIXVLQJWRGLVPLVVDFWLRQXQGHUH
XQGHUHD$VWDWHSULVRQHUVHHNLQJPRQHWDU\GDPDJHV                IRU IDLOXUH WR DWWDFK WR WKH FRPSODLQW WKH DGPLQLVWUDWLYH
VWLOO PXVW H[KDXVW KLV DGPLQLVWUDWLYH UHPHGLHV XQGHU WKH             GHFLVLRQUHIOHFWLQJH[KDXVWLRQEHFDXVHH[KDXVWLRQSUHGDWHG
3/5$ HYHQ LI WKH JULHYDQFH V\VWHP GRHV QRW SURYLGH IRU            WKH FRPSODLQW DQG WKH FRPSODLQW ZDV ILOHG SULRU WR WKH
PRQHWDU\GDPDJHV6HH:\DWWY/HRQDUG)GDW                    GHFLVLRQLQ7RRPEV,QGHHGWKLV&RXUWKDVJRQHVRIDUDVWR
VWDWH SULVRQHU VHHNLQJ PRQHWDU\ GDPDJHV PXVW H[KDXVW               UHIXVHWRGLVPLVVDQDFWLRQRQH[KDXVWLRQJURXQGVZKHUHWKH
/DYLVWD Y %HHOHU  )G   WK &LU             DGPLQLVWUDWLYHJULHYDQFHSURFHVVZDVRQO\FRPSOHWHGGXULQJ
IHGHUDOLQPDWHVHHNLQJPRQHWDU\LQMXQFWLYHDQGGHFODUDWRU\               WKH SHQGHQF\ RI WKH DSSHDO ILQGLQJ WKDW LW ZRXOG XQGXO\
UHOLHIPXVWH[KDXVW$SULVRQHUDVVHUWLQJFODLPVRIH[FHVVLYH             H[SHQGMXGLFLDOUHVRXUFHVWRGRVR7KDGGHXV;Y:R]QLDN
IRUFH DOVR PXVW H[KDXVW KLV DGPLQLVWUDWLYH UHPHGLHV  6HH           )GWK&LUFKRRVLQJWRUHYLHZWKHPHULWV
)UHHPDQY)UDQFLV)GDWKROGLQJWKDWmSULVRQ                   RI WKH DSSHDO HYHQ WKRXJK WKH FODLPV ZHUH QRW H[KDXVWHG
FRQGLWLRQVlXQGHUHLQFOXGHVFODLPVRIH[FHVVLYHIRUFH               SUHYLRXVO\EHFDXVHWKHDFWLRQFRXOGVLPSO\EHUHILOHGXSRQ
$QGDQLQYHVWLJDWLRQE\DSULVRQ8VHRI)RUFH&RPPLWWHH                    UHPDQG
                                                                              $VWKHGLVWULFWFRXUWSRLQWHGRXWPRUHRYHULQ/DUNLQVY
                                                                            :LONLQVRQ:/DWWK&LU'HF
     
     ,W LV XQFOHDU ZK\ WKHVH SODLQWLIIV RU DW OHDVW &KLVROP DQG 6KRUWHU   WKLV &RXUW LPSOLHG ZLWKRXW GHFLGLQJ WKDW H[KDXVWLRQ RI
GLG QRW VLPSO\ ILOH D QHZ DFWLRQ DW WKDW SRLQW LQ WLPH
    &XUU\HWDOY6FRWWHWDO                  1R       1R                       &XUU\HWDOY6FRWWHWDO      

UHPHGLHV SULRU WR WKH ILOLQJ RI DQ DPHQGHG FRPSODLQW DV       H[KDXVWLRQJURXQGVDQGWKDWLWLVQRWQHFHVVDU\XQGHUH
RFFXUUHGKHUHFRXOGFRQVWLWXWHH[KDXVWLRQmSULRUWRILOLQJD           IRUXVWRRUGHUWKHGLVWULFWFRXUWWRGRVRDWWKLVVWDJH
VXLWLQIHGHUDOFRXUWlZLWKLQWKHPHDQLQJRIH,QGHHG
WKHGLVWULFWFRXUWLQWKLVFDVHUHOLHGDWOHDVWSDUWLDOO\XSRQWKLV                                      %
VWDWHPHQWLQ/DUNLQVWRGHQ\GHIHQGDQWVjPRWLRQWRGLVPLVVDV
WR &XUU\ $OOHQ %URRNV &DQQRQ :HOOV DQG :LOOLDPV               3ODLQWLIIV&KLVROP.LQJDQG6KRUWHUDSSHDOWKHLUGLVPLVVDO
EHFDXVHWKH\DOODFWHGGLOLJHQWO\WRFRPSOHWHWKHJULHYDQFH             IRU IDLOXUH WR H[KDXVW WKHLU DGPLQLVWUDWLYH UHPHGLHV XQGHU
SURFHVVSULRUWRWKHILOLQJRIWKHDPHQGHGFRPSODLQW                   H7KHGLVWULFWFRXUWUXOHGRQ)HEUXDU\WKDW
                                                                        WKHVHWKUHHSODLQWLIIVKDGQRWH[KDXVWHGDOODYDLODEOHUHPHGLHV
  3ODLQWLIIV &XUU\ $OOHQ %URRNV &DQQRQ :HOOV DQG             EHFDXVH WKH\ KDG IDLOHG WR VXEPLW GRFXPHQWDWLRQ VKRZLQJ
:LOOLDPVDOOILOHGWKHLUFODLPVVKRUWO\DIWHUWKHHIIHFWLYHGDWH        WKH\ KDG DSSHDOHG WKHLU JULHYDQFHV WR DQG UHFHLYHG D
RIWKH3/5$DQGZHOOEHIRUHWKHGHYHORSPHQWRIDQ\FDVH                GLVSRVLWLRQ IURP WKH FKLHI LQVSHFWRU  7KH GLVWULFW FRXUW
ODZUHJDUGLQJWKHSURFHGXUHVIRUFRPSOLDQFHZLWKWKHQHZ                FRQFOXGHG DFFRUGLQJO\ WKDW WKHUH ZHUH QR FLUFXPVWDQFHV
$FWjVH[KDXVWLRQUHTXLUHPHQWV1RQHRIWKHVHLQPDWHVKDG               ZKLFKFRXOGMXVWLI\DQ\WKLQJRWKHUWKDQDVWULFWDSSOLFDWLRQRI
WKH EHQHILW RI WKH GHVFULSWLRQ LQ 7RRPEV RI WKH SUHIHUUHG      HWRWKHVHWKUHHSODLQWLIIV:HUHYLHZWKLVGHFLVLRQGH
SURFHGXUHXQGHUHZKHQWKH\LQVWLWXWHGWKHLUDFWLRQV              QRYR
7KH SODLQWLIIV EURXJKW VXLW PRUHRYHU WR FKDOOHQJH WKH
FRQVWLWXWLRQDOLW\ RI FRQGXFW ZKLFK HLWKHU SUHGDWHG WKH              6HYHUDO ZHHNV DIWHU WKH GLVWULFW FRXUW HQWHUHG LWV RUGHU
HIIHFWLYH GDWH RI WKH QHZ $FW RU RFFXUUHG DOPRVW                GLVPLVVLQJWKHVHFODLPVSODLQWLIIVILOHGDPRWLRQXQGHU5XOH
VLPXOWDQHRXVO\WKHUHZLWK6WLOOWKHSODLQWLIIVDOOSXUVXHGWKH        E RI WKH )HGHUDO 5XOHV RI &LYLO 3URFHGXUH DVNLQJ WKH
JULHYDQFHSURFHVVWRLWVFRPSOHWLRQWRQRDYDLODQGGLGVR            &RXUWWRUHFRQVLGHULWVRUGHU,QVXSSRUWRIWKHLU5XOHE
YHU\HDUO\RQLQWKHSURFHHGLQJVoWKDWLVSULRUWRWKHILOLQJRI      PRWLRQ SODLQWLIIV VXEPLWWHG PDWHULDOV LQGLFDWLQJ WKDW WKH
DQDPHQGHGFRPSODLQW(DFKRIWKHVHSODLQWLIIVDOVRSURYLGHG           JULHYDQFHVRI&KLVROPDQG6KRUWHUKDGLQIDFWEHHQDSSHDOHG
GRFXPHQWDWLRQRIWKHLUHIIRUWVWRWKHGLVWULFWFRXUWZHOOEHIRUH        WRWKHFKLHILQVSHFWRUZKRUHVSRQGHGWRWKRVHJULHYDQFHVLQ
WKH FRXUWjV FRQVLGHUDWLRQ RI WKH GHIHQGDQWVj GLVSRVLWLYH          0D\ RI   3ODLQWLIIV GLG QRW SURYLGH GRFXPHQWDWLRQ
PRWLRQVZKLFKGLGQRWRFFXUXQWLO\HDUVDIWHUWKHDFWLRQVZHUH         LQGLFDWLQJ WKDW .LQJ KDG SXUVXHG DQ DSSHDO WR WKH FKLHI
LQLWLDWHG  )LQDOO\ EHFDXVH LW ZDV VR FOHDU H[KDXVWLRQ KDG    LQVSHFWRUDQGRIIHUHGQRH[SODQDWLRQIRUIDLOLQJWRVXEPLWWKH
DFWXDOO\RFFXUUHGGLVPLVVDOIRUIDLOXUHWRGRVRHDUOLHUZRXOG         GRFXPHQWDWLRQUHJDUGLQJ&KLVROPDQG6KRUWHUWRWKHGLVWULFW
KDYHUHTXLUHGmUHVWDUWLQJlDQDFWLRQZKLFKKDGDORQJKLVWRU\          FRXUW VRRQHU  7KH GLVWULFW FRXUW  UHIXVHG WR UHFRQVLGHU LWV
7KHGLVWULFWFRXUWZDVWKXVSUHVHQWHGZLWKFLUFXPVWDQFHVLQ           RULJLQDOUXOLQJILQGLQJWKHSULVRQHUVKDGQRWH[HUFLVHGGXH
ZKLFK DV WR WKHVH SODLQWLIIV WKH DSSOLFDWLRQ RI H        GLOLJHQFHLQDWWHPSWLQJWRSURYLGHWKLVHYLGHQFHWRWKHFRXUW
FRQWHPSODWHGLQ7RRPEVZRXOGKDYHEHHQXQIDLUWRSODLQWLIIV             EHIRUHLWUXOHGRQWKHPRWLRQWRGLVPLVV6HH*RRGY2KLR
DQG UHVXOWHG LQ D ZDVWH RI WKH SDUWLHVj DQG WKH FRXUWjV       (GLVRQ&R)GWK&LUKROGLQJWKDW
UHVRXUFHV:HFRQFOXGHWKDWLQWKHVHFLUFXPVWDQFHVLWZDV
QRWHUURUWRUHIXVHWRGLVPLVVWKHFODLPVRIWKHVHSODLQWLIIVRQ
                                                                            
                                                                               :H UHFRJQL]H WKDW WKHVH FLUFXPVWDQFHV DUH QRW OLNHO\ WR EH UHSHDWHG
                                                                        LQ WKLV &RXUW ,W LV RQO\ EHFDXVH WKH HYHQWV DW LVVXH RFFXUUHG VR ORQJ DJR
                                                                        LH QHDU SDVVDJH RI WKH $FW DQG EHIRUH WKLV &RXUWjV DGRSWLRQ RI
                                                                        SURFHVVHV IRU FRPSOLDQFH ZLWK WKH $FW WKDW WKH VLWXDWLRQ SUHVHQWV LWVHOI
                                                                        QRZ ,W LV XQOLNHO\ VXEVHTXHQW SODLQWLIIV ZRXOG ILQG WKHPVHOYHV LQ WKHVH
                                                                        XQLTXH FLUFXPVWDQFHV
