       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


6(&85,7,(6 $1' (;&+$1*(           ;
&200,66,21                        
           3ODLQWLII$SSHOOHH     
                                     1RV
                                   
/(:,6 * 026%85* s5              !
                                   
       &RQVHUYDWRU$SSHOOHH 
                                   
           Y                      
                                   
%$6,& (1(5*< 	 $)),/,$7(' 
                                   
5(6285&(6 ,1&HWDO           
                  'HIHQGDQWV 
                                   
s$0(6 & %581$&.(<                 
s$0(6 '                
$''$%2HWDO          
                                   
          0RYDQWV$SSHOODQWV 1
      $SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW
     IRUWKH(DVWHUQ'LVWULFWRI0LFKLJDQDW'HWURLW
 1RnsRKQ&RUEHWW2j0HDUD'LVWULFWsXGJH
              6XEPLWWHG$XJXVW
         'HFLGHGDQG)LOHG'HFHPEHU




                           
   6HFXULWLHVDQG([FKDQJH&RPPjQ 1RV
    HWDOY%DVLF(QHUJ\HWDO

%HIRUH0225(DQG&2/(&LUFXLWsXGJHV)25(67(5
               &KLHI'LVWULFWsXGJH
                       BBBBBBBBBBBBBBBBB
                             &2816(/
21 %5,()  :DOWHU / %DXPJDUGQHU sU 086,//, 	
%$80*$5'1(5 6W &ODLU 6KRUHV 0LFKLJDQ IRU
$SSHOODQWV  'RXJODV : 9DQ (VVHQ 67(1*(5 	
67(1*(5*UDQG5DSLGV0LFKLJDQIRU$SSHOOHHVsDPHV
&%UXQDFNH\:LOOLDPVEXUJ0LFKLJDQSURVH
                       BBBBBBBBBBBBBBBBB
                           23,1,21
                       BBBBBBBBBBBBBBBBB
  .$5(11(/6210225(&LUFXLWsXGJH+ROGLQJLWVHOI
RXW WR WKH LQYHVWLQJ SXEOLF DV DQ HQHUJ\ FRPSDQ\ %DVLF
(QHUJ\DQG$IILOLDWHG5HVRXUFHV,QFm%($5lZDVDFWXDOO\
D3RQ]LVFKHPHSD\LQJHDUOLHULQYHVWRUVRXWRIIXQGVUDLVHG
IURPVXEVHTXHQWLQYHVWRUV%HIRUHWKHGLVWULFWFRXUWHQMRLQHG
%($5jV RIILFHUV DQG DJHQWV RQ 1RYHPEHU   IURP
VROLFLWLQJDQ\DGGLWLRQDOLQYHVWPHQWV%($5KDGVXFFHVVIXOO\
ELONHGWKRXVDQGVRILQYHVWRUVRXWRIPLOOLRQVRIGROODUV,Q
'HFHPEHUDWWKHUHTXHVWRIWKH6HFXULWLHVDQG([FKDQJH
&RPPLVVLRQm6(&lWKHGLVWULFWFRXUWDSSRLQWHG/HZLV*
0RVEXUJ sU DV FRQVHUYDWRU m5HFHLYHUl DQG FKDUJHG KLP
ZLWKPDUVKDOLQJ%($5jVDVVHWVDQGGHYLVLQJDSODQIRUWKH
GLVJRUJHPHQWRIWKHSURFHHGVWR%($5jVLQYHVWRUV,Q0D\
WKHGLVWULFWFRXUWDSSURYHGWKHSUHOLPLQDU\GLVWULEXWLRQ
SODQSURSRVHGE\WKH5HFHLYHUDQGLQ6HSWHPEHUWKH
GLVWULFWFRXUWILQDOL]HGWKHGLVWULEXWLRQOLVWDQGGLVJRUJHPHQW
SODQ  7KH SUHVHQW DSSHDOV LQYROYH %($5 LQYHVWRUVj


    
     7KH +RQRUDEOH .DUO 6 )RUHVWHU &KLHI 8QLWHG 6WDWHV 'LVWULFW sXGJH
IRU WKH (DVWHUQ 'LVWULFW RI .HQWXFN\ VLWWLQJ E\ GHVLJQDWLRQ
 6HFXULWLHVDQG([FKDQJH&RPPjQ 1RV                   1RV 6HFXULWLHVDQG([FKDQJH&RPPjQ 
   HWDOY%DVLF(QHUJ\HWDO                                                               HWDOY%DVLF(QHUJ\HWDO

D GLVWULEXWLRQ SODQ WKDW ZDV IDLU DQG HTXLWDEOH  7KXV ZH   FKDOOHQJHV WR WKH GLVWULFW FRXUWjV RUGHUV SXUVXDQW WR WKLV
FDQQRW FRQFOXGH WKDW WKH GLVWULFW FRXUW KDV DEXVHG LWV         GLVWULEXWLRQSODQ
GLVFUHWLRQ
                                                                         ,Q &DVH 1R  sDPHV %UXQDFNH\ DUJXHV WKDW WKH
                     ,,,&21&/86,21                                  GLVWULFW FRXUW HUUHG LQ FODVVLI\LQJ KLP DV DQ mLQVXEVWDQWLDO
                                                                       PDUNHWHUlXQGHUWKHFODVVLILFDWLRQVFKHPHHVWDEOLVKHGLQWKH
  )RU WKH UHDVRQV VWDWHG DERYH ZH $)),50 WKH GLVWULFW         GLVWULEXWLRQSODQ,QVWHDG%UXQDFNH\DUJXHVWKDWKHVKRXOGEH
FRXUWjV FKDOOHQJHG RUGHUV UHJDUGLQJ %UXQDFNH\ DQG WKH            FODVVLILHG DV D mQRQPDUNHWHUl LH DV VRPHRQH ZKR QHYHU
(VFURZ,QYHVWRUV                                                      UHFHLYHG DQ\ FRPPLVVLRQV IRU VHOOLQJ %($5 VHFXULWLHV
                                                                       8QGHU WKH GLVWULEXWLRQ SODQ QRQPDUNHWHUV DUH HQWLWOHG WR
                                                                       UHFHLYHDJUHDWHUSHUFHQWDJHRIWKHLUQHWFRQWULEXWLRQVWKDQDUH
                                                                       PDUNHWHUV  %UXQDFNH\ ZDV FODVVLILHG DV DQ LQVXEVWDQWLDO
                                                                       PDUNHWHU E\ WKH GLVWULFW FRXUW EHFDXVH %($5 UHFRUGV
                                                                       LQGLFDWHGWKDWKHKDGUHFHLYHGDFRPPLVVLRQSD\PHQW
                                                                       IURP %($5  %UXQDFNH\ DUJXHV WKDW WKLV SD\PHQW ZDV
                                                                       DFWXDOO\DUHEDWHDQGWKXVWKDWKHVKRXOGEHUHFODVVLILHGDVD
                                                                       QRQPDUNHWHU  +H ZDV XQDEOH KRZHYHU WR SUHVHQW DQ\
                                                                       HYLGHQFHWKDWWKHSD\PHQWDWLVVXHZDVLQIDFWDUHEDWHWKXV
                                                                       WKHGLVWULFWFRXUWjVILQGLQJRIIDFWFDQQRWEHVDLGWRKDYHEHHQ
                                                                       FOHDUO\HUURQHRXV)RUWKLVUHDVRQZH$)),50
                                                                         ,Q &DVH 1R  WZHQW\WZR %($5 LQYHVWRUV
                                                                       KHUHLQDIWHU WKH m(VFURZ ,QYHVWRUVl FKDOOHQJH WKH GLVWULFW
                                                                       FRXUWjVRUGHUWUHDWLQJD)OHHW%DQNHVFURZDFFRXQWDVD%($5
                                                                       DVVHWWREHGLVWULEXWHGZLWKWKHUHVWRI%($5jVDVVHWVXQGHU
                                                                       WKHGLVWULEXWLRQSODQ7KLVHVFURZDFFRXQWZDVHVWDEOLVKHG
                                                                       ZLWK IXQGV WKDW WKH (VFURZ ,QYHVWRUV DGYDQFHG DIWHU WKH
                                                                       GLVWULFWFRXUWKDGHQMRLQHG%($5DQGLWVRIILFHUVDQGDJHQWV
                                                                       IURPIXUWKHUVROLFLWLQJRIIXQGV:H$)),50WKHGLVWULFW
                                                                       FRXUWjVRUGHUWUHDWLQJWKHHVFURZDFFRXQWDVD%($5DVVHW
                                                                       :HFRQFOXGHWKDWWKH(VFURZ,QYHVWRUVZHUHQRWGHQLHGGXH
                                                                       SURFHVVDQGWKDWWKHGLVWULFWFRXUWjVILQGLQJWKDWWKHHVFURZ
                                                                       DFFRXQWZDVD%($5DVVHWZDVVXSSRUWHGE\WKHHYLGHQFH
                                                                                             ,%$&.*5281'
                                                                       %UXQDFNH\1R
                                                                         %UXQDFNH\D%($5LQYHVWRUDSSHDOVWKHRUGHUFODVVLI\LQJ
                                                                       KLPDVDQmLQVXEVWDQWLDOPDUNHWHUl8QGHUWKHGLVWULEXWLRQ
   6HFXULWLHVDQG([FKDQJH&RPPjQ 1RV                1RV 6HFXULWLHVDQG([FKDQJH&RPPjQ 
    HWDOY%DVLF(QHUJ\HWDO                                                            HWDOY%DVLF(QHUJ\HWDO

SODQ GHYLVHG E\ WKH 5HFHLYHU DQG DSSURYHG E\ WKH GLVWULFW   DFFRXQW%XWLIWKDWLVWKHFDVHWKHQLWLVDJDLQXQFOHDUZKDW
FRXUWHDFK%($5LQYHVWRULVDVVLJQHGDQLQYHVWPHQWQXPEHU          WKH (VFURZ ,QYHVWRUV H[SHFW WR DFKLHYH LQ DQ HYLGHQWLDU\
DQHWLQYHVWRUFODLPm1,&lDQGDQDGMXVWHG1,&m$1,&l          KHDULQJLQWKHGLVWULFWFRXUW
(DFK LQYHVWPHQW LV DVVLJQHG DQ 1,& E\ VXEWUDFWLQJ DQ\
FRPPLVVLRQSD\PHQWVLQWHUHVWSD\PHQWVUHWXUQRISULQFLSDO            ,QVXPWKHSURFHGXUHVXVHGE\WKHGLVWULFWFRXUWZHUHZHOO
SD\PHQWVRUVLPLODUSD\PHQWVPDGHE\%($5WRWKDWDFFRXQW           ZLWKLQWKHOLPLWVRIWKDWFRXUWjVHTXLWDEOHGLVFUHWLRQLQVXFKD
IURPWKHDJJUHJDWHLQYHVWPHQW,QYHVWRUVDUHWKHQFODVVLILHG        FDVH  7KH GLVWULFW FRXUW FRQVLGHUHG WKH HYLGHQFH DQG
LQWRRQHRIIRXUFDWHJRULHVGHIHQGDQWVVXEVWDQWLDOPDUNHWHUV     DUJXPHQWVSUHVHQWHGE\WKH(VFURZ,QYHVWRUVjDWWRUQH\DWD
LQVXEVWDQWLDOPDUNHWHUVDQGQRQPDUNHWHUV7KH$1,&IRUDOO         PRWLRQ KHDULQJ KHOG EHIRUH LVVXDQFH RI WKH  WUDQVIHU
GHIHQGDQWVLQWKHXQGHUO\LQJ6(&DFWLRQLVVHWDW]HUR7KXV       RUGHU  ,W SURYLGHG WKH (VFURZ ,QYHVWRUV ZLWK DPSOH
GHIHQGDQWVDUHQRWHQWLWOHGWRUHFHLYHDQ\SHUFHQWDJHRIWKHLU       RSSRUWXQLWLHVWRUHEXWWKH5HFHLYHUjVFKDUDFWHUL]DWLRQRIWKH
1,&V DV SDUW RI WKH GLVWULEXWLRQ SODQ  7KH $1,& IRU D    IDFWVDQGWRSUHVHQWDOWHUQDWLYHFKDUDFWHUL]DWLRQV0RUHRYHU
VXEVWDQWLDO PDUNHWHU GHILQHG DV DQ LQYHVWRU ZKR UHFHLYHG     WKH (VFURZ ,QYHVWRUV KDYH IDLOHG WR GHPRQVWUDWH WKDW WKH
PRUH WKDQ  LQ FRPPLVVLRQV LV HTXDO WR KLV 1,&        SURFHGXUHVIROORZHGSUHMXGLFHGWKHP
UHGXFHGE\QLQHW\SHUFHQW7KXVVXEVWDQWLDOPDUNHWHUVDUH
HQWLWOHGWRUHFHLYHXSWRWHQSHUFHQWRIWKHLU1,&VDVSDUWRI         7KLVFRQFOXVLRQLVVXSSRUWHGE\WKH)LIWK&LUFXLWjVKROGLQJ
WKHGLVWULEXWLRQSODQ7KH$1,&IRUDQLQVXEVWDQWLDOPDUNHWHU       LQ6(&Y)RUH[$VVHW0DQDJHPHQW//&)GWK
GHILQHGDVDQLQYHVWRUZKRUHFHLYHGFRPPLVVLRQVOHVVWKDQ           &LU   $IWHU HVWDEOLVKLQJ LWV DSSHOODWH MXULVGLFWLRQ
LVHTXDOWRKHU1,&UHGXFHGE\ILIW\SHUFHQW7KXV         GLVFXVVHG VXSUD WKH )RUH[ FRXUW ZHQW RQ WR KROG WKDW WKH
LQVXEVWDQWLDOPDUNHWHUVDUHHQWLWOHGWRUHFHLYHXSWRKDOIRI        GLVWULFWFRXUWKDGQRWDEXVHGLWVGLVFUHWLRQLQGHWHUPLQLQJWKDW
WKHLU1,&VXQGHUWKHGLVWULEXWLRQSODQ)LQDOO\QRQPDUNHWHUVj      WKHLQYHVWRUVjVKRXOGEHWUHDWHGWKHVDPHDVRWKHU
1,&VDUHQRWUHGXFHGDQGWKXVWKH\DUHSRWHQWLDOO\HQWLWOHGWR      )RUH[ DVVHWV GHVSLWH LWV WUDFHDELOLW\  6HH LG DW   7KH
UHFHLYHWKHLUHQWLUH1,&VXQGHUWKHSODQ                            )RUH[FRXUWFRQFOXGHG

   $FFRUGLQJWRWKHSUHOLPLQDU\LQYHVWRUOLVWFRPSLOHGE\WKH          7KH GLVWULFW FRXUW FDUHIXOO\ FRQVLGHUHG WKH >LQYHVWRUVj@
5HFHLYHUGDWHG2FWREHU%UXQDFNH\jVLQYHVWPHQWV             DUJXPHQWVDQGWKHSRVLWLRQRIWKHRWKHUIUDXG YLFWLPV
LQ %($5 WRWDOHG   sRLQW $SSHQGL[ s$ DW       )XUWKHUWKHGLVWULFWFRXUWGHWHUPLQHGWKDWWKHIDFWVGLG
7KLVDSSHDOKRZHYHULQYROYHVRQO\RQHRIWKRVHLQYHVWPHQWV          QRWVXSSRUWDUHPHG\WKDWZRXOGHOHYDWHWKH>LQYHVWRUVj@
GHVLJQDWHG DV 1R  E\ WKH 5HFHLYHU ZRUWK          FODLP DERYH WKH RWKHU YLFWLPV DQG DFFRUGLQJO\
%UXQDFNH\UHFHLYHGDUHWXUQRQWKLVLQYHVWPHQWRI             GHWHUPLQHGWKDWDSURUDWDGLVWULEXWLRQZRXOGSURYLGHD
7KXVXQGHUWKHGLVWULEXWLRQSODQKLV1,&IRUWKLVLQYHVWPHQW         IDLUDQGHTXLWDEOHUHPHG\7KXVWKHGLVWULFWFRXUWXVHG
LV   )RU 1R  %UXQDFNH\ ZDV RULJLQDOO\            LWVGLVFUHWLRQLQDORJLFDOZD\WRGLYLGHWKHPRQH\DQG
FODVVLILHG DV D mVXEVWDQWLDO PDUNHWHUl EHFDXVH WKH %($5        WKHUHIRUHGLGQRWDEXVHLWVGLVFUHWLRQLQDSSURYLQJWKH
UHFRUGVLQGLFDWHGWKDWWZRVHSDUDWHFRPPLVVLRQSD\PHQWVKDG            SODQ
EHHQPDGHWR%UXQDFNH\RQWKLVDFFRXQWRQHIRUDQG
WKHRWKHUIRU7KXVKLV1,&IRU1RZDVUHGXFHGE\        ,GFLWDWLRQDQGLQWHUQDOTXRWDWLRQPDUNVRPLWWHG6LPLODUO\
QLQHW\SHUFHQWDQG%UXQDFNH\ZDVRQO\HQWLWOHGWRUHFHLYHXS        LQWKHSUHVHQWFDVHWKHGLVWULFWFRXUWFDUHIXOO\FRQVLGHUHGWKH
WR WHQ SHUFHQW RI WKLV LQYHVWPHQW DSSUR[LPDWHO\      (VFURZ,QYHVWRUVjDUJXPHQWVWKHSRVLWLRQRIWKHRWKHU%($5
XQGHUWKHGLVWULEXWLRQSODQ                                         LQYHVWRUVDQGWKHIDFWVRIWKHFDVHDQGDFFRUGLQJO\IDVKLRQHG
 6HFXULWLHVDQG([FKDQJH&RPPjQ 1RV                    1RV 6HFXULWLHVDQG([FKDQJH&RPPjQ 
   HWDOY%DVLF(QHUJ\HWDO                                                                HWDOY%DVLF(QHUJ\HWDO

   7KH FORVHVW WKH (VFURZ ,QYHVWRUV FRPH WR PDNLQJ D               3URFHHGLQJSURVH%UXQDFNH\REMHFWHGWRKLVFODVVLILFDWLRQ
SUHMXGLFHDUJXPHQWLVLQDUJXLQJWKDWLQUXOLQJRQWKHWUDQVIHU        DV D VXEVWDQWLDO PDUNHWHU DQG WKH PDWWHU ZDV UHIHUUHG WR
RUGHUWKHGLVWULFWFRXUWUHOLHGKHDYLO\RQWKH5HFHLYHUjVUHSO\        0DJLVWUDWHsXGJH9LUJLQLD00RUJDQ$WWKHKHDULQJKHOG
EULHI ZKLFK WKH\ FODLP ZDV QRW ILOHG DW OHDVW WKUHH GD\V   LQ2FWREHU%UXQDFNH\SHUVXDGHGsXGJH0RUJDQWKDWWKH
EHIRUHWKHKHDULQJ,WLVSRVVLEOHWKDWKDGWKLVEULHIEHHQILOHG     SD\PHQWKDGEHHQDUHEDWHRQDQLQYHVWPHQWKHKDG
DWOHDVWWKUHHGD\VEHIRUHWKHKHDULQJWKH(VFURZ,QYHVWRUV            PDGH7KHSD\PHQWIURP%($5WR%UXQDFNH\ZDV
PLJKWKDYHEHHQDEOHWRKDYHPRUHHIIHFWLYHO\UHEXWWHGWKH              FRQWHPSRUDQHRXVZLWKKLVLQYHVWPHQWLQD%($5SURMHFWDQG
5HFHLYHUjV DUJXPHQWV UHJDUGLQJ ZKHWKHU WKH )OHHW %DQN             HTXDOHGIRXUSHUFHQWRIWKDWLQYHVWPHQW*LYHQWKHVHIDFWV
HVFURZDFFRXQWZDVHVWDEOLVKHGE\0F&ORUH\DVDWUXVWIRUWKH           sXGJH0RUJDQGHWHUPLQHGWKDWWKLVSD\PHQWKDGLQIDFWEHHQ
EHQHILW RI WKH (VFURZ ,QYHVWRUV  7KH (VFURZ ,QYHVWRUVj         DUHEDWHRQWKDWLQYHVWPHQW%UXQDFNH\ZDVXQDEOHWRSUHVHQW
DUJXPHQW RQ WKLV SRLQW LV FOHDUO\ WLHG WR WKHLU GXH SURFHVV   VLPLODUHYLGHQFHUHJDUGLQJWKHSD\PHQWKRZHYHU$W
FODLP  mWKH >GLVWULFW FRXUW@ VKRXOG KDYH VFKHGXOHG DQ          WKH KHDULQJ KH XQVXFFHVVIXOO\ DUJXHG WKDW KH KDG QRW
(YLGHQWLDU\+HDULQJWRDOORZWKH0RYDQWVWKHRSSRUWXQLW\WR             PDUNHWHGDQ\%($5SURJUDPVDQGWKDWWKHFRXUWVKRXOGSODFH
DSSULVHWKH&RXUWRI0DVVDFKXVHWWVODZ>UHJDUGLQJWUXVWV@l             JUHDWHUZHLJKWRQKLVRUDOWHVWLPRQ\WKDQRQWKHUHFRUGVRI
$SSHOODQWVj%UDW                                                  %($52QWKLVSRLQWsXGJH0RUJDQjV6HSWHPEHU
                                                                        RUGHUVWDWHV
   7KHUHDUHWZRZD\VWRXQGHUVWDQGWKH(VFURZ,QYHVWRUVj
DUJXPHQWRQWKLVSRLQW)LUVWWKH(VFURZ,QYHVWRUVFRXOGEH               1RHYLGHQFHZDVSUHVHQWHGWKDWWKHSD\PHQW
DUJXLQJ WKDW WKH GLVWULFW FRXUW HUURQHRXVO\ IRXQG WKDW WKH        ZDV FRQWHPSRUDQHRXV ZLWK DQ\ LQYHVWPHQW  7KH
HVFURZDFFRXQWZDVKHOGE\WKH)OHHW%DQNmIRUWKHEHQHILWRI             SD\PHQW LV VKRZQ RQ WKH %($5 FKHFN OHGJHU DV D
%($5lUDWKHUWKDQIRUWKHEHQHILWRIWKH(VFURZ,QYHVWRUV                FRPPLVVLRQZKLFKLVFRQILUPHGE\WKHFRPPLVVLRQVXE
s$DW7UDQVIHU2UGHU)LQGLQJVRI)DFW8QGHUWKLV               OHGJHU7KH,QYHVWRUV>%UXQDFNH\DQGRWKHUPHPEHUVRI
UHDGLQJWKH(VFURZ,QYHVWRUVZRXOGQRWEHFKDOOHQJLQJWKH                KLVIDPLO\@KDYHQRWVXVWDLQHGWKHEXUGHQRISURRIWKDW
GLVWULFWFRXUWjVLQWHUSUHWDWLRQRI0DVVDFKXVHWWVODZEXWUDWKHU          VXFKSD\PHQWVKRXOGQRWEHFRQVLGHUHGDFRPPLVVLRQ
D IDFWXDO ILQGLQJ  7KLV SDUWLFXODU ILQGLQJ LV QRW FOHDUO\       ,QYHVWRU1RVKRXOGEHFODVVLILHGDVDQ,QVXEVWDQWLDO
HUURQHRXV7KHGLVWULFWFRXUWEDVHGWKLVILQGLQJRQWKH(VFURZ           0DUNHWHU
$JUHHPHQWHQWHUHGLQWRE\%($5SUHVLGHQW6FKRXPDQDQG
%($5DWWRUQH\0F&ORUH\DQG6PLWKRIWKH%RVWRQ*URXS                   s$ DW   $IWHU WKH GLVWULFW FRXUW DSSURYHG WKLV RUGHU
6HHs$DW$OWKRXJKLWLVSRVVLEOHWKDWWKHGLVWULFW         %UXQDFNH\ILOHGDQRWLFHRIDSSHDO
FRXUWFRXOGKDYHUHDFKHGDQRWKHUFRQFOXVLRQRQWKLVSDUWLFXODU
SRLQWJLYHQWKHH[LVWHQFHRIRWKHUGRFXPHQWVUHJDUGLQJWKH             7KH(VFURZ,QYHVWRUV1R
HVFURZDFFRXQWWKHGLVWULFWFRXUWDSSHDUVWRKDYHFRQFOXGHG
WKDWWKH(VFURZ,QYHVWRUVZHUHWKHILQDOYLFWLPVRI%($5jV                (YHQ DIWHU WKH %($5 SULQFLSDOV KDG FRQVHQWHG WR WKH
IUDXGXOHQWVFKHPHVnDUHDVRQDEOHFRQFOXVLRQJLYHQWKDWWKH            SUHOLPLQDU\LQMXQFWLRQRQ1RYHPEHUZKLFKHQMRLQHG
(VFURZ ,QYHVWRUVj PRQH\ ZDV QHYHU UHWXUQHG WR WKHP              WKHPIURPUDLVLQJIXUWKHUIXQGVRQEHKDOIRI%($5DQXPEHU
6HFRQG WKH (VFURZ ,QYHVWRUV PLJKW EH DUJXLQJ WKDW WKH          RI LQGLYLGXDOV FRQWULEXWHG DSSUR[LPDWHO\  LQ DQ
GLVWULFW FRXUW HUUHG LQ LQWHUSUHWLQJ 0DVVDFKXVHWWV ODZ DV        HIIRUW WR PDLQWDLQ %($5 DV D YLDEOH HQWLW\  7KLV HIIRUW
UHTXLULQJWKDWWKH(VFURZ,QYHVWRUVEHmLGHQWLILHGE\QDPHDV           DSSDUHQWO\LQYROYHGDQDWWHPSWE\%($5DWWRUQH\%HUQDUG
WUXVW EHQHILFLDULHVl LQ WKH UHFRUGV RI WKH EDQN KROGLQJ WKH    0F&ORUH\DQG%($5SUHVLGHQW0LFKDHO6FKRXPDQWRVHFXUH
   6HFXULWLHVDQG([FKDQJH&RPPjQ 1RV               1RV 6HFXULWLHVDQG([FKDQJH&RPPjQ 
    HWDOY%DVLF(QHUJ\HWDO                                                           HWDOY%DVLF(QHUJ\HWDO

D VHYHQW\ILYH PLOOLRQ GROODU ORDQ WR PDNH WKH GHIUDXGHG         05 086,//,  , XQGHUVWDQG>@ >WKH 5HFHLYHUjV@
%($5 LQYHVWRUV ZKROH  7KH FXUUHQW DSSHDO LQYROYHV WKH        FRXQVHOKDVVDLGDORWRIWKLQJVDQGFRXQVHOVDLGDORWRI
FODLPV RI WZHQW\WZR RI WKHVH LQGLYLGXDOV WKH (VFURZ          WKLQJVLQWKHSOHDGLQJDQG,jPWU\LQJWRDGYLVHWKH&RXUW
,QYHVWRUV                                                            RI ZKDW DFWXDOO\ KDSSHQHG KHUH  :LWKLQ WKDW  GD\
                                                                      SHULRG RI WLPH WKRVH LQGLYLGXDOV PDQ\ RI ZKRP DUH
  7KHIXQGVDWLVVXHZHUHGHSRVLWHGLQDQHVFURZDFFRXQWLQ           VLWWLQJ LQ WKH FRXUW DQG DUH SUHSDUHG WR WHOO WKH &RXUW
WKH)OHHW%DQNLQ0DVVDFKXVHWWV7KLVHVFURZDFFRXQWZDV             ZKHUHWKH\KDGWRJRWRJHWWKDWPRQH\PRVWRIWKHP
VXEMHFW WR WKH WHUPV RI DQ HVFURZ DJUHHPHQW GDWHG            ERUURZHGWKDWPRQH\
sDQXDU\   EHWZHHQ /DUU\ 6PLWK SUHVLGHQW RI WKH          7+( &2857  , XQGHUVWDQG  , KDYH WKH JUHDWHVW
%RVWRQ*URXSWKHILUPKLUHGWRILQGDOHQGHUIRU%($5DQG           V\PSDWK\IRUWKHP<RXGRQjWKDYHWRWHOOPHZKHWKHU
0F&ORUH\DQG6FKRXPDQRQEHKDOIRI%($5$IWHUWKLUW\               WKH\ERUURZHGWKHPRQH\,KDYHWKHJUHDWHVWV\PSDWK\
GD\VLIDQDFFHSWDEOHORDQKDGQRWEHHQVHFXUHGIRU%($5
WKH HVFURZ DJUHHPHQW UHTXLUHG WKDW WKH  LQ WKH      s$DW7KLVH[FKDQJHVXJJHVWVWKDWWKH(VFURZ,QYHVWRUV
HVFURZ DFFRXQW EH UHWXUQHG WR 0F&ORUH\  ,Q DJUHHLQJ WR    ZRXOG KDYH WHVWLILHG WR WKH VRXUFHV RI WKH IXQGV WKDW WKH\
IRUZDUGWKHVHIXQGVWKH(VFURZ,QYHVWRUVKDGEHHQSURPLVHG         LQYHVWHGLQWKHHVFURZDFFRXQW%XWWKHVRXUFHRIWKHIXQGV
WKDW0F&ORUH\ZRXOGUHWXUQWKHLUPRQH\LIDQDFFHSWDEOHORDQ        LVLUUHOHYDQWWRWKHGLVWULFWFRXUWjVGHFLVLRQWRWUHDWWKHHVFURZ
KDG QRW EHHQ VHFXUHG ZLWKLQ WKLUW\ GD\V LQ DGGLWLRQ       DFFRXQWDVD%($5DVVHWEHFDXVHWKDWGHFLVLRQZDVEDVHGRQ
0F&ORUH\DQG6FKRXPDQSURPLVHGWKH(VFURZ,QYHVWRUVD               WKHHVFURZGRFXPHQWV$WWKHVDPHKHDULQJsXGJH*LOPRUH
WHQSHUFHQWUHWXUQRQWKHLUGHSRVLWVZLWK0F&ORUH\                 VXPPDUL]HGWKHIDFWVRIWKHFDVHDVKHXQGHUVWRRGWKHP
   1RWVXUSULVLQJO\QRDFFHSWDEOHORDQZDVIRXQGLQWKHWKLUW\         05086,//,7KLVFRXUWWKHQZLWKRXWDFFRUGLQJ
GD\ SHULRG DQG WKH (VFURZ ,QYHVWRUVj IXQGV ZHUH QHYHU        >WKH(VFURZ,QYHVWRUV@GXHSURFHVVLVLQGLFDWLQJWKDWDQ\
UHWXUQHG7KHUHOHDVHRIWKHIXQGVUHTXLUHGWKHDSSURYDORI          PRQH\WKDWWKH\n
ERWK0F&ORUH\DQG6PLWKDQGIRUVRPHUHDVRQ6PLWKIDLOHG              7+( &2857  , NQRZ ZKDW KDSSHQHG WKH\ JDYH
WRDSSURYHWKHUHOHDVHDIWHUWKHWKLUW\GD\SHULRGKDGH[SLUHG       PRQH\ WR 0U 6FKRXPDQ DQG 0U 0F&ORUH\ ZKR
0F&ORUH\ VXHG 6PLWK LQ 0LFKLJDQ VWDWH FRXUW VHHNLQJ DQ       UHSUHVHQWHGWRWKHPWKDWWKH\ZHUHRIILFHUVDQGDJHQWVRI
RUGHUWR6PLWKWRVKRZFDXVHIRUIDLOLQJWRDSSURYHWKHUHOHDVH       %($5DQGWKLVPRQH\ZDVEHLQJnZDVQHHGHGWRUDLVH
RI WKH IXQGV  0F&ORUH\jV VWDWH FRPSODLQW ZDV ILOHG RQ       VRWKH\FRXOGJRDQGWKH\QHHGHGWRUDLVHWKDW
$SULO                                                       PXFKWRJHWDPLOOLRQORDQWRSXOO%($5RXWRIWKH
                                                                      KROH$QGWKH\VDLGZHjOOJLYH\RXWHQSHUFHQWSHUPRQWK
  1HLWKHUWKH5HFHLYHUQRUWKHGLVWULFWFRXUWZHUHDZDUHRI           RQ\RXUPRQH\DQGWKHUHjVDSHULRGRIGD\V7KHQQR
WKHVH HYHQWV XQWLO 0D\  ZKHQ DQ HPSOR\HH RI WKH         RQHDQGQRQHRIWKHPRQH\ZDVHYHUSDLGEDFNLQWKH
5HFHLYHURSHQHGDOHWWHUIURP)OHHW%DQNWR0F&ORUH\$OO           GD\SHULRG
%($5PDLOZDVDWWKDWWLPHEHLQJIRUZDUGHGWRWKH5HFHLYHU
7KH5HFHLYHUTXLFNO\LQWHUYHQHGLQWKHVWDWHDFWLRQDQGLQ         s$DW7KLVVXPPDU\RIWKHIDFWVZDVQRWFRQWURYHUWHG
$XJXVW  WKH 0LFKLJDQ VWDWH FRXUW KHOG WKDW LW ODFNHG   E\ WKH (VFURZ ,QYHVWRUVj DWWRUQH\  6LPLODUO\ DW WKH
MXULVGLFWLRQRYHUWKHHVFURZDFFRXQWEHFDXVHLWFRQVLVWHGRI        FRQFOXVLRQ RI 0XVLOOLjV DUJXPHQW sXGJH *LOPRUH DVNHG
%($5 IXQGV ZKLFK ZHUH XQGHU WKH IHGHUDO FRXUWjV             0XVLOOLLIKHKDGDQ\WKLQJHOVHWRSUHVHQWWRZKLFK0XVLOOL
MXULVGLFWLRQ                                                       UHSOLHGm7KDWjVHQRXJK<RXU+RQRUls$DW
 6HFXULWLHVDQG([FKDQJH&RPPjQ 1RV                  1RV 6HFXULWLHVDQG([FKDQJH&RPPjQ 
   HWDOY%DVLF(QHUJ\HWDO                                                              HWDOY%DVLF(QHUJ\HWDO

WKHIDFWVDUHLQGLVSXWHDQGWRPDNHDUJXPHQWVUHJDUGLQJWKRVH           ,QsDQXDU\WKH5HFHLYHUPRYHGWKHGLVWULFWFRXUWIRU
IDFWVl,GDW,QDGGLWLRQ(OOLRWWUHTXLUHVFODLPDQWVWR     DQ RUGHU WR WUDQVIHU WKH HVFURZ DFFRXQW WR WKH 5HFHLYHUjV
VKRZmKRZWKH\ZRXOGKDYHEHHQEHWWHUDEOHWRGHIHQGWKHLU            DFFRXQWIRUGLVWULEXWLRQWRWKH%($5LQYHVWRUV7KLVLVVXH
LQWHUHVWVLQDSOHQDU\SURFHHGLQJl,G8VLQJWKLVVWDQGDUG        ZDVEULHIHGE\WKHSDUWLHVLQFOXGLQJWKH(VFURZ,QYHVWRUV
WKH(OOLRWWFRXUWKHOGWKDWFHUWDLQFODLPDQWVLQWKDWFDVHKDG        DQG D KHDULQJ RQ WKH WUDQVIHU RI WKH HVFURZ DFFRXQW WR WKH
EHHQGHQLHGGXHSURFHVVE\WKHSURFHGXUHVWKHGLVWULFWFRXUW          5HFHLYHU ZDV KHOG EHIRUH 86 'LVWULFW sXGJH *LOPRUH RQ
KDGDGRSWHG)RUH[DPSOHWKHFRXUWKHOGWKDWWZRFODLPDQWV          0DUFK    $W WKLV KHDULQJ WKH (VFURZ ,QYHVWRUVj
ZKRKDGEHHQGHQLHGWKHRSSRUWXQLW\WRSUHVHQWHYLGHQFHRQ            DWWRUQH\5DOSK0XVLOOLDUJXHGWKDWWKHHVFURZDFFRXQWZDV
WKH QDWXUH RI WKHLU WUDQVDFWLRQV ZLWK WKH GHIHQGDQW DQG WR   QRWD%($5DVVHW0XVLOOLDUJXHGWKDWWKH(VFURZ,QYHVWRUV
SUHVHQW DIILUPDWLYH GHIHQVHV VKRXOG KDYH EHHQ JLYHQ DQ         ZHUHQRWLQIDFWLQYHVWRUVEXWPHUHO\GHSRVLWRUVZKRKDGSXW
RSSRUWXQLW\WRUHEXWWKHUHFHLYHUjVFKDUDFWHUL]DWLRQRIWKHLU         IRUZDUGHDUQHVWPRQH\LQDQHIIRUWWRVHFXUHDORDQIRU%($5
WUDQVDFWLRQV DQG WR SUHVHQW DIILUPDWLYH GHIHQVHV  7KHVH       7KHGLVWULFWFRXUWUHMHFWHGWKLVDFFRXQWRIWKHIDFWV2QWKH
FODLPDQWV ILOHG WKHLU REMHFWLRQV ZLWK WKH FRXUW EXW ZHUH      LVVXHRIZKHWKHUWKH(VFURZ,QYHVWRUVZHUHLQIDFWLQYHVWRUV
DSSDUHQWO\QHYHUJLYHQDKHDULQJRUDQRSSRUWXQLW\WRDGGUHVV         WKHGLVWULFWMXGJHHPSKDVL]HGWKDWXQGHUWKHWHUPVRIWKHLU
WKHFRXUWGLUHFWO\,QVWHDGWKHSURFHGXUHVIRUWKHILOLQJRI        DJUHHPHQWZLWK0F&ORUH\WKHGHSRVLWRUVZHUHWRUHFHLYHWHQ
REMHFWLRQVDGRSWHGE\WKHGLVWULFWFRXUWRQO\LQYROYHGmEODQN         SHUFHQW LQWHUHVW RQ WKHLU GHSRVLWV HYHU\ WKLUW\ GD\V  7KLV
IRUPVVHWWLQJRXWWKHJURXQGVIRUREMHFWLRQVl,GDW    ZHLJKHGLQIDYRURIDILQGLQJWKDWWKH(VFURZ,QYHVWRUVZHUH
                                                                      LQ IDFW LQYHVWLQJ LQ %($5 UDWKHU WKDQ SXWWLQJ XS HDUQHVW
  ,QFRQWUDVWWKHGLVWULFWFRXUWLQWKHSUHVHQWFDVHKDVKHOGDW     PRQH\RQ%($5jVEHKDOI7KHGLVWULFWMXGJHDOVRTXHVWLRQHG
OHDVWWZRKHDULQJVWRGHWHUPLQHZKHWKHUWKHWUDQVIHURIWKH           0XVLOOLDERXWWKHPRWLYHVRIWKH(VFURZ,QYHVWRUVPRVWRI
HVFURZDFFRXQWWRWKH5HFHLYHUZDVDSSURSULDWH$OWKRXJK             ZKRPKDGPDUNHWHG%($5SURJUDPVLQWKHSDVW,QDGGLWLRQ
WKH (VFURZ ,QYHVWRUV KDYH QRW EHHQ SURYLGHG ZLWK D IXOO      WKHGLVWULFWMXGJHDSSDUHQWO\LQWHUSUHWHG0F&ORUH\jVIDLOXUHWR
HYLGHQWLDU\KHDULQJWKH\KDYHEHHQUHSUHVHQWHGE\FRXQVHODW         UHWXUQWKHPRQH\WRWKHLQYHVWRUVDIWHUWKLUW\GD\VDVHYLGHQFH
PRWLRQ KHDULQJV DGGUHVVLQJ WKHLU REMHFWLRQV  7KH (VFURZ       RI\HWDQRWKHU%($5VZLQGOH
,QYHVWRUVjFRXQVHOKDVKDGDPSOHRSSRUWXQLWLHVWRUHEXWWKH
5HFHLYHUjV FKDUDFWHUL]DWLRQ RI WKH IDFWV ZKLFK KDYH               2Q$SULOWKHGLVWULFWFRXUWLVVXHGWKHWUDQVIHURUGHU
VXEVHTXHQWO\EHHQDGRSWHGE\WKHGLVWULFWFRXUW                      7KH GLVWULFW FRXUW KHOG WKDW DV WKH WHUP RI WKH HVFURZ
                                                                      DJUHHPHQW KDG ODSVHG m%($5 KD>G@ DEVROXWH WLWOH IUHH RI
  0RUHRYHUWKH(VFURZ,QYHVWRUVFDQQRWGHPRQVWUDWHWKDW              >DOO@FODLPVlWRWKHs$DW7UDQVIHU2UGHU
WKH\KDYHEHHQSUHMXGLFHGE\WKHODFNRIDIXOOHYLGHQWLDU\           8QGHUWKHWHUPVRIWKHWUDQVIHURUGHUWKH(VFURZ,QYHVWRUV
KHDULQJ  ,W LV QRW FOHDU MXVW ZKDW HYLGHQFH WKH (VFURZ     ZHUH WR EH WUHDWHG WKH VDPH DV DQ\ RWKHU %($5 LQYHVWRUV
,QYHVWRUV ZRXOG SUHVHQW LI WKH\ ZHUH WR EH JUDQWHG WKH       WKXV WKH\ ZRXOG XOWLPDWHO\ UHFHLYH D GLVWULEXWLRQ IURP
UHTXHVWHGHYLGHQWLDU\KHDULQJ$WWKHKHDULQJRQWKHWUDQVIHU        %($5jVWRWDODVVHWSRROLIWKH\ZHUHRWKHUZLVHHQWLWOHGWRD
RIWKHHVFURZDFFRXQWLQWRWKH5HFHLYHUjVDFFRXQWKHOG0DUFK         GLVWULEXWLRQ XQGHU WKH GLVWULEXWLRQ SODQ  7KH GLVWULFW FRXUW
WKH(VFURZ,QYHVWRUVjDWWRUQH\0XVLOOLSURSRVHG           FUHDWHG D VHSDUDWH SURFHGXUH KRZHYHU IRU WKRVH (VFURZ
WKDWWKHFRXUWUHFHLYHWKHWHVWLPRQ\RIVRPHRIWKH(VFURZ            ,QYHVWRUV ZKR FRXOG VKRZ mWKDW WKH\ ZHUH FRPSOHWHO\ DQG
,QYHVWRUV  7KH SURIIHUHG WHVWLPRQ\ KRZHYHU DSSHDUHG WR      WRWDOO\ LQQRFHQW DQG KDG QR NQRZOHGJH RI WKH >6(&jV@
DGGUHVV WKH VRXUFH RI WKH IXQGV WKDW WKH (VFURZ ,QYHVWRUV    OLWLJDWLRQDJDLQVW>%($5@DQGWKDWWKH\ZHUHQRWPDUNHWHUV
LQYHVWHGUDWKHUWKDQWKHQDWXUHRIWKHHVFURZDFFRXQWLWVHOI         IRU DQ\ >%($5@ SURJUDPVl  s$ DW   7ZR LQYHVWRUV
   6HFXULWLHVDQG([FKDQJH&RPPjQ 1RV                 1RV 6HFXULWLHVDQG([FKDQJH&RPPjQ 
    HWDOY%DVLF(QHUJ\HWDO                                                             HWDOY%DVLF(QHUJ\HWDO

DWWHPSWHG WR PHHW WKLV EXUGHQ EXW WKH GLVWULFW FRXUW         RIWKHIXQGVIRUWKHHVFURZDFFRXQWZDVRQHILQDOVZLQGOHE\
VXEVHTXHQWO\ IRXQG WKDW ERWK KDG EHHQ DZDUH RI WKH 6(&       %($5jVRIILFHUVLQFOXGLQJLWVSUHVLGHQW6FKRXPDQ,QOLJKW
OLWLJDWLRQDWWKHWLPHRIWKHLULQYHVWPHQWV$PDMRULW\RIWKH       RI WKLV FRQFOXVLRQ WKH GLVWULFW FRXUWjV GHFLVLRQ WR WUHDW WKH
(VFURZ,QYHVWRUVLQIDFWZHUHFODVVLILHGDV%($5PDUNHWHUV          (VFURZ,QYHVWRUVLQWKHVDPHPDQQHUDVDOORWKHUVZLQGOHG
XQGHUWKHGLVWULEXWLRQSODQHYHQWXDOO\DGRSWHG                       %($5LQYHVWRUVPDNHVDJUHDWGHDORIVHQVH$VWKH6XSUHPH
                                                                      &RXUW QRWHG LQ WKH RULJLQDO 3RQ]L FDVH VXFK FDVHV mFDOO
  7KH (VFURZ ,QYHVWRUV DSSHDOHG WKH WUDQVIHU RUGHU WR WKH     VWURQJO\ IRU WKH SULQFLSOH WKDW HTXDOLW\ LV HTXLW\l
6L[WK &LUFXLW EXW WKH DSSHDO ZDV GLVPLVVHG IRU ODFN RI      &XQQLQJKDPY%URZQ86
MXULVGLFWLRQRQ1RYHPEHU$WWKDWWLPHWKLVFRXUW
KHOG WKDW WKH WUDQVIHU RUGHU ZDV QRW DQ DSSHDODEOH ILQDO       7KHFKDOOHQJHGRUGHUFOHDUO\IDOOVZLWKLQWKHmEURDGSRZHUV
MXGJPHQWDQDSSHDODEOHLQWHUORFXWRU\RUGHURUDQDSSHDODEOH         DQG ZLGH GLVFUHWLRQl WKDW D GLVWULFW FRXUW PD\ XWLOL]H LQ
FROODWHUDORUGHU                                                     IDVKLRQLQJUHOLHILQDQHTXLW\UHFHLYHUVKLSSURFHHGLQJ(OOLRWW
                                                                      )GDW7KLVGLVFUHWLRQZKLFKmGHULYHVIURPWKH
   2Q 0D\   WKH GLVWULFW FRXUW LVVXHG DQRWKHU RUGHU   LQKHUHQWSRZHUVRIDQHTXLW\FRXUWWRIDVKLRQUHOLHIlPDNHV
LQYROYLQJWKHHVFURZDFFRXQWIXQGV7KHGLVWULFWFRXUWGRFNHW        WKHXVHRIDEEUHYLDWHGVXPPDU\SURFHVVHVSRVVLEOH,G6HH
GHVFULEHG WKLV RUGHU DV mUHJDUGLQJ HVWDEOLVKPHQW RI             DOVR6(&Y%ODYLQ)GWK&LUm2QFH
3UHOLPLQDU\3URFHGXUHIRU'HWHUPLQDWLRQRI%($5,QYHVWRU              WKH&RPPLVVLRQKDVHVWDEOLVKHGWKDWDGHIHQGDQWKDVYLRODWHG
&ODLPDQGIRU3ODQRI,QLWLDO'LVWULEXWLRQRI'LVJRUJHPHQW            WKHVHFXULWLHVODZVWKHGLVWULFWFRXUWSRVVHVVHVWKHHTXLWDEOH
3URFHHGVls$DW7KLVGLVWULEXWLRQRUGHUDGRSWHGWKH          SRZHU WR JUDQW GLVJRUJHPHQW    l  6XFK DEEUHYLDWHG
GLVWULEXWLRQSODQSURSRVHGE\WKH5HFHLYHU7KHGLVWULEXWLRQ         SURFHGXUHV LQFOXGLQJ WKH XVH RI D VLQJOH UHFHLYHUVKLS
RUGHU DOVR UHLWHUDWHG WKDW WKH (VFURZ ,QYHVWRUV ZRXOG EH      SURFHHGLQJWRUHVROYHDOOFODLPVDGYDQFHWKHJRYHUQPHQWjV
WUHDWHG LQ WKH VDPH PDQQHU DV DOO RWKHU %($5 LQYHVWRUV      LQWHUHVWLQMXGLFLDOHIILFLHQF\E\UHGXFLQJWKHWLPHQHHGHGWR
XQOHVVWKH(VFURZ,QYHVWRUVFRXOGGHPRQVWUDWHWKDWWKH\KDG           UHVROYH GLVSXWHV GHFUHDVLQJ WKH FRVWV RI OLWLJDWLRQ DQG
EHHQ XQDZDUH RI WKH 6(& OLWLJDWLRQ DW WKH WLPH RI WKHLU     SUHYHQWLQJWKHGLVVLSDWLRQRIWKHUHFHLYHUjVDVVHWV(OOLRWW
LQYHVWPHQW,QDGGLWLRQWKLVGLVWULEXWLRQ RUGHUHVWDEOLVKHG        )GDWFLWLQJ6(&Y:HQFNH)GWK
SURFHGXUHVIRUWKHUHIHUUDORIREMHFWLRQVWR0DJLVWUDWHsXGJH         &LU FHUW GHQLHG  86   8QLWHG 6WDWHV Y
0RUJDQ  7KH GLVWULEXWLRQ RUGHU LQGLFDWHG WKDW DQ LQLWLDO     $UL]RQD)XHOV&RUS)GWK&LU
GLVWULEXWLRQRIZRXOGEHPDGHDIWHUWKH5HFHLYHU
KDGILQDOL]HGWKHLQYHVWRUOLVWVDQGmDIWHUHQWU\RIDILQDORUGHU      ,QH[HUFLVLQJLWVHTXLWDEOHGLVFUHWLRQKRZHYHUWKHGLVWULFW
E\WKH&RXUWls$DW                                          FRXUWPXVWVWLOOSURYLGHWKHFODLPDQWVZLWKGXHSURFHVV7KH
                                                                      (VFURZ,QYHVWRUVDOVRDUJXHWKDWWKHGLVWULFWFRXUWjVLVVXDQFH
  'HVSLWHLWVWHQWDWLYHQDWXUHWKH5HFHLYHUDUJXHVWKDWWKLV         RIWKHWUDQVIHURUGHUYLRODWHGWKHLUGXHSURFHVVULJKWV
RUGHUXQOLNHWKHWUDQVIHURUGHUZDVDILQDODSSHDODEOH         :H FRQFOXGH KRZHYHU WKDW WKH (VFURZ ,QYHVWRUV LQ WKH
RUGHU  7KH (VFURZ ,QYHVWRUV GLG QRW DSSHDO WKH          SUHVHQWFDVHUHFHLYHGGXHSURFHVV
GLVWULEXWLRQRUGHUKRZHYHU,QVWHDGWKH(VFURZ,QYHVWRUV
UHWXUQHGWRWKHGLVWULFWFRXUWLQ2FWREHUILOLQJDPRWLRQ         7KH (OOLRWW FRXUW DIWHU VXUYH\LQJ WKH FDVH ODZ RQ GXH
IRUDKHDULQJWRDUJXHIRUDUHYLVLRQRIWKHWUDQVIHURUGHU      SURFHVVLQWKH6(&UHFHLYHUVKLSFRQWH[WFRQFOXGHGWKDWmD
DQGIRUFHUWLILFDWLRQXQGHU)HGHUDO5XOHRI&LYLO3URFHGXUH           GLVWULFW FRXUW GRHV QRW JHQHUDOO\ DEXVH LWV GLVFUHWLRQ LI LWV
E7KH(VFURZ,QYHVWRUVSHUVLVWHGLQWKHLUDUJXPHQWWKDW         VXPPDU\SURFHGXUHVSHUPLWSDUWLHVWRSUHVHQWHYLGHQFHZKHQ
 6HFXULWLHVDQG([FKDQJH&RPPjQ 1RV                 1RV 6HFXULWLHVDQG([FKDQJH&RPPjQ 
   HWDOY%DVLF(QHUJ\HWDO                                                             HWDOY%DVLF(QHUJ\HWDO

DSSURYHGWKLVILQGLQJLQDVXEVHTXHQWRUGHU$VDUHVXOWRI         WKHHVFURZDFFRXQWZDVQRWD%($5DVVHWDQGWKXVWKDWWKH
WKLV ILQGLQJ %UXQDFNH\ ZDV FODVVLILHG DV DQ LQVXEVWDQWLDO    GLVWULFWFRXUWKDGHUUHGLQDSSURYLQJWKHWUDQVIHURUGHU$WWKH
PDUNHWHU DFFRUGLQJ WR WKH  GLVWULEXWLRQ RUGHU  7KLV    PRWLRQKHDULQJRQ0DUFK0DJLVWUDWHsXGJH0RUJDQ
ILQGLQJ ZDV QRW FOHDUO\ HUURQHRXV  7KH PDJLVWUDWH MXGJH     DJUHHGZLWKWKH5HFHLYHUWKDWWKHGLVWULEXWLRQRUGHUKDG
EDVHG WKLV ILQGLQJ RQ WKH %($5 FKHFN OHGJHU ZKLFK           EHHQDILQDODSSHDODEOHRUGHUsXGJH0RUJDQLVVXHGDQRUGHU
GHVFULEHG WKH  SD\PHQW DV D FRPPLVVLRQ DQG WKH          RQ0DUFKGHQ\LQJWKH(VFURZ,QYHVWRUVjPRWLRQ
FRPPLVVLRQVXEOHGJHU%UXQDFNH\ZDVXQDEOHWRRIIHUDQ\            7KH(VFURZ,QYHVWRUVILOHGDQRWLFHRIDSSHDORIWKDWRUGHURQ
HYLGHQFHRWKHUWKDQKLVRZQWHVWLPRQ\WKDWWKHSD\PHQWZDV         $SULO
DUHEDWH
                                                                        6XEVHTXHQWO\ WKH GLVWULFW FRXUW LVVXHG DQ RUGHU RQ
  5HSUHVHQWLQJ KLPVHOI %UXQDFNH\ DUJXHV WKDW WKH FRXUW        6HSWHPEHUDSSURYLQJWKHSURSRVHGILQDOLQYHVWRU
EHORZVKRXOGQRWKDYHSODFHGDQ\ZHLJKWRQWKHUHFRUGVRI            OLVWDQGGLVWULEXWLRQRIGLVJRUJHPHQWSURFHHGLQJV1HLWKHUWKH
%($5JLYHQ%($5jVKLVWRU\RIIUDXG7KHORZHUFRXUWjV              (VFURZ,QYHVWRUVQRU%UXQDFNH\ILOHGDQRWLFHRIDSSHDORI
UHOLDQFH RQ %($5jV UHFRUGV ZDV UHDVRQDEOH KRZHYHU            WKDWRUGHU
HVSHFLDOO\ FRQVLGHULQJ WKH SUDFWLFDO GLIILFXOWLHV WKDW ZRXOG
IROORZ IURP DQ\ HIIRUW WR UHFRQVWUXFW %($5jV WUDQVDFWLRQV                                    ,,$1$/<6,6
IURPWKHWHVWLPRQ\RIWKRVHGHIUDXGHGE\%($5%HFDXVHZH
DUHXQDEOHWRFRQFOXGHWKDWWKHGLVWULFWFRXUWjVFRQFOXVLRQZDV      $ *LYHQ WKH 'LVWULFW &RXUWjV 6XEVHTXHQW )LQDO
LQ HUURU ZH DIILUP WKH GLVWULFW FRXUWjV RUGHU FODVVLI\LQJ      'LVWULEXWLRQ2UGHUWKH$SSHDOVLQWKH3UHVHQW&DVH
%UXQDFNH\DVDQLQVXEVWDQWLDOPDUNHWHUIRULQYHVWPHQW1R               $UH7LPHO\

                                                                       7KH5HFHLYHUDUJXHVWKDWZHODFNMXULVGLFWLRQWRFRQVLGHU
     7KH 'LVWULFW &RXUW 'LG 1RW 'HQ\ WKH (VFURZ             WKLVFDVHEHFDXVHWKH(VFURZ,QYHVWRUVIDLOHGWRILOHDWLPHO\
       ,QYHVWRUV 'XH 3URFHVV DQG 'LG 1RW $EXVH ,WV            DSSHDO RI WKH ILQDO RUGHU LQ WKLV FDVH ZKLFK WKH 5HFHLYHU
       'LVFUHWLRQ LQ 'HFLGLQJ WR 7UHDW WKH (VFURZ              LGHQWLILHVDVWKH0D\GLVWULEXWLRQRUGHU:HFRQFOXGH
       ,QYHVWRUVLQWKH6DPH0DQQHUDVWKH2WKHU%($5                KRZHYHUWKDWWKH0D\GLVWULEXWLRQSODQZDVQRWDILQDO
       ,QYHVWRUV                                                    DSSHDODEOHRUGHU

  7KH(VFURZ,QYHVWRUVjDUJXPHQWRQWKHPHULWVLVHVVHQWLDOO\           m$ µILQDO GHFLVLRQj JHQHUDOO\ LV RQH ZKLFK HQGV WKH
WKDWWKHGLVWULFWFRXUWHUUHGLQKROGLQJWKDWWKHLQWKH    OLWLJDWLRQRQWKHPHULWVDQGOHDYHVQRWKLQJIRUWKHFRXUWWRGR
)OHHW %DQN HVFURZ DFFRXQW ZDV D %($5 DVVHW DQG WKXV LQ     EXWH[HFXWHWKHMXGJPHQWl&DWOLQY8QLWHG6WDWHV86
RUGHULQJWKHWUDQVIHURIWKHVHIXQGVWRWKH5HFHLYHUjVDFFRXQW
IRUGLVWULEXWLRQWRWKH%($5LQYHVWRUV2QRQHOHYHOWKHQ             
WKHLVVXHLVZKHWKHUWKHGLVWULFWFRXUWHUUHGLQILQGLQJDVD                7KH ILQDOLW\ LVVXH DSSOLHV WR %UXQDFNH\jV DSSHDO DV ZHOO %UXQDFNH\

IDFWXDO PDWWHU WKDW WKH )OHHW %DQN HVFURZ DFFRXQW ZDV D    DSSHDOV WKH GLVWULFW FRXUWjV RYHUUXOLQJ RI KLV REMHFWLRQ WR KLV FODVVLILFDWLRQ

%($5DVVHW*LYHQWKHODQJXDJHRIWKH(VFURZ$JUHHPHQW              DV DQ LQVXEVWDQWLDO PDUNHWHU      %XW WKLV RUGHU LV QRW RQ LWV IDFH D ILQDO


EHWZHHQ6PLWKDQGWKH%($5RIILFHUVKRZHYHULWFDQQRWEH           DSSHDODEOH     RUGHU   ,W   UHVHPEOHV   WKH
                                                                     SUHYLRXVO\ KHOG ZDV QRW DQ DSSHDODEOH RUGHU
                                                                                                                       WUDQVIHU   RUGHU   ZKLFK
                                                                                                                              $V LV WKH FDVH IRU WKH
                                                                                                                                                       ZH


VDLG WKDW WKLV IDFWXDO GHWHUPLQDWLRQ ZDV FOHDUO\ HUURQHRXV   (VFURZ ,QYHVWRUV KRZHYHU ZH KDYH MXULVGLFWLRQ WR KHDU %UXQDFNH\jV
7KHGLVWULFWFRXUWDSSHDUVWRKDYHFRQFOXGHGWKDWWKHUDLVLQJ        DSSHDO DIWHU WKH GLVWULFW FRXUWjV ILQDO GLVWULEXWLRQ RUGHU DV ZH H[SODLQ
                                                                     LQIUD
 6HFXULWLHVDQG([FKDQJH&RPPjQ 1RV                       1RV 6HFXULWLHVDQG([FKDQJH&RPPjQ 
   HWDOY%DVLF(QHUJ\HWDO                                                                   HWDOY%DVLF(QHUJ\HWDO

7KH0D\GLVWULEXWLRQRUGHUKRZHYHU                0RRUH 0RRUHjV )HGHUDO 3UDFWLFH   DW  G HG
OHIWDQXPEHURIPDWWHUVWREHUHVROYHGEHIRUHWKHmMXGJPHQWl             VHHDOVR*LOOLVY'HSjWRI+HDOWKDQG+XPDQ6HUYV
LHWKHGLVWULEXWLRQFRXOGEHH[HFXWHG0RVWLPSRUWDQWO\               )G   WK &LU  KROGLQJ WKDW DQ
WKH RUGHU GLG QRW LQFOXGH D ILQDO LQYHVWRU OLVW EXW LQVWHDG     LQWHUORFXWRU\DSSHDOODFNLQJ5XOHEFHUWLILFDWLRQLQYRNHV
HVWDEOLVKHG SURFHGXUHV IRU WKH UHIHUUDO RI REMHFWLRQV E\            DSSHOODWHMXULVGLFWLRQZKHQMXGJPHQWEHFRPHVILQDOSULRUWR
LQYHVWRUV  ,Q WKLV UHJDUG WKH RUGHU FOHDUO\ FRQWHPSODWHG D      GLVSRVLWLRQ RI WKH DSSHDO HYHQ ZKHUH D VHFRQG QRWLFH RI
VXEVHTXHQWILQDOGHFLVLRQm2QFHDOOUHIHUUDOVDUHFRPSOHWHG             DSSHDOKDVQRWEHHQILOHG
WKH&RXUWVKDOOUHFHLYHDILQDOL]HGLQYHVWRUOLVWZKLFKVKDOO
FRQVWLWXWHDILQDODQGELQGLQJGHWHUPLQDWLRQRIWKHLQYHVWRUV                :HKROGWKDWZHKDYHMXULVGLFWLRQWRKHDUWKHSUHVHQWFDVH
DQG WKH DPRXQW RI WKHLU FODLPV IRU SXUSRVHV RI WKLV               $Q DSSHDODEOH RUGHU KDV EHHQ LVVXHG E\ WKH GLVWULFW FRXUW
SURFHHGLQJls$DWHPSKDVLVDGGHG6LPLODUO\WKH                %UXQDFNH\DQGWKH(VFURZ,QYHVWRUVKDYHFOHDUO\PDQLIHVWHG
0D\RUGHUFRQFOXGHVZLWKWKHIROORZLQJWZRVHQWHQFHV                 DQLQWHQWLRQWRDSSHDOWKHRUGHUVLQTXHVWLRQDVWKRVHRUGHUV
ZKLFKFOHDUO\LQGLFDWHWKDWWKHGLVWULFWMXGJHGLGQRWWUHDWWKH           DUH HPERGLHG LQ WKH GLVWULFW FRXUWjV ILQDO LQYHVWRU OLVW
RUGHU DV D ILQDO GHFLVLRQ  m7KLV 2UGHU VKDOO EH VHQW WR DOO   0RUHRYHUWKH5HFHLYHUFDQVKRZQRSUHMXGLFHIURPKDYLQJ
LQYHVWRUVRUWKHLUDWWRUQH\VZKRILOHGREMHFWLRQVSULRUWRWKH             WRDGGUHVVWKHVHDSSHDOV7KXVWKHSUHPDWXUHILOLQJRIWKH
'HFHPEHUKHDULQJ7KHILQDORUGHUVKDOOEHVHQWWR               DSSHOODQWVjQRWLFHVRIDSSHDOGRHVQRWGHSULYHWKLVFRXUWRI
DOO %($5 LQYHVWRUVl  s$ DW   0RUHRYHU WKH GLVWULFW       MXULVGLFWLRQLQWKHSUHVHQWFDVH
FRXUW GRFNHW GHVFULEHG WKH 0D\  RUGHU DV mUHJDUGLQJ
HVWDEOLVKPHQWRI3UHOLPLQDU\3URFHGXUHIRU'HWHUPLQDWLRQRI                   7KLV FRQFOXVLRQ LV FRQVLVWHQW ZLWK WKLV FRXUWjV SUHYLRXV
%($5,QYHVWRU&ODLPDQGIRU3ODQRI,QLWLDO'LVWULEXWLRQRI                RUGHU UHMHFWLQJ WKH (VFURZ ,QYHVWRUVj DSSHDO RI WKH 
'LVJRUJHPHQW3URFHHGVls$DW                                       WUDQVIHURUGHU8QGHUWKHUHDVRQLQJRIIHUHGVXSUDWKHWUDQVIHU
                                                                           RUGHUZDVQHLWKHUDILQDORUGHUQRUDQDSSHDODEOHFROODWHUDO
   7KH 5HFHLYHU DUJXHV KRZHYHU WKDW WKH 0D\                   RUGHU  *LYHQ WKH HTXLWDEOH SRZHUV RI WKH GLVWULFW FRXUW LQ
GLVWULEXWLRQ RUGHU ZDV ILQDO ZLWK UHVSHFW WR WKH LVVXH RQ         UHFHLYHUVKLSSURFHHGLQJVWKHGLVWULFWFRXUWFRXOGKDYHDWDQ\
DSSHDOLHWKHWUDQVIHURIWKHHVFURZDFFRXQWLQWR             WLPH EHWZHHQ LVVXLQJ WKH WUDQVIHU RUGHU DQG LWV ILQDO SODQ
WKH5HFHLYHUjVJHQHUDODFFRXQWDQGWKHGHFLVLRQWRWUHDWWKH               GHWHUPLQHG WR WUHDW WKH (VFURZ ,QYHVWRUV GLIIHUHQWO\  7KH
(VFURZ ,QYHVWRUV DV %($5 LQYHVWRUV XQGHU WKH SODQ  7KH           ILQDOGLVWULEXWLRQSODQKRZHYHUZDVDQDSSHDODEOHFROODWHUDO
5HFHLYHUFLWHV8QLWHG6WDWHVY&KULVWXQDV)GWK              RUGHU EHFDXVH LW FRQFOXVLYHO\ GHWHUPLQHG WKH ULJKWV RI WKH
&LUIRUWKHSURSRVLWLRQWKDWHYHQDSUHOLPLQDU\RUGHU              (VFURZ,QYHVWRUVDQG%UXQDFNH\ZLWKUHVSHFWWRWKHGLVSXWHG
FDQEHDILQDODSSHDODEOHRUGHUZKHQWKDWSUHOLPLQDU\RUGHU               IXQGVZDVVHSDUDWHIURPWKHPHULWVRIWKH6(&jVFRPSODLQW
WHUPLQDWHV DOO LVVXHV SUHVHQWHG ZLWK UHVSHFW WR D SDUWLFXODU       DJDLQVW%($5DQGZRXOGEHXQUHYLHZDEOHRQDSSHDORIWKH
SDUW\DQGOHDYHVQRWKLQJWREHGRQHH[FHSWIRUWKHH[HFXWLRQ               XQGHUO\LQJ6(&DFWLRQ
RI WKH MXGJPHQW ZLWK UHVSHFW WR WKDW LQGLYLGXDO  ,Q
&KULVWXQDVDQLQGLYLGXDOFRQYLFWHGRIGUXJFKDUJHVILOHGDQ               %7KH3DUWLHVj&ODLPVRQWKH0HULWV
DSSHDOLQFKDOOHQJLQJDILQDORUGHURIFULPLQDOIRUIHLWXUH
7KLVDSSHDOZDVILOHGDOPRVWWZR\HDUVDIWHUWKHSUHOLPLQDU\                    7KH&ODVVLILFDWLRQRI%UXQDFNH\DVDQ,QVXEVWDQWLDO
IRUIHLWXUH RUGHU KDG EHHQ LVVXHG  :H GHWHUPLQHG WKDW WKH                0DUNHWHU:DV1RW&OHDUO\(UURQHRXV
SUHOLPLQDU\ IRUIHLWXUH RUGHU KDG EHHQ ILQDO ZLWK UHVSHFW WR
&KULVWXQDVLQDOWKRXJKLWKDGQRWEHHQILQDOZLWKUHVSHFW              7KHPDJLVWUDWHMXGJHIRXQGWKDW%UXQDFNH\UHFHLYHGD
                                                                           FRPPLVVLRQ SD\PHQW IURP %($5 DQG WKH GLVWULFW FRXUW
 6HFXULWLHVDQG([FKDQJH&RPPjQ 1RV                   1RV 6HFXULWLHVDQG([FKDQJH&RPPjQ 
   HWDOY%DVLF(QHUJ\HWDO                                                               HWDOY%DVLF(QHUJ\HWDO

SURFHHGLQJ FRQGXFWHG E\ D GLVWULFW FRXUW VLWWLQJ LQ HTXLW\   WRWKLUGSDUW\FODLPVWRWKHVHL]HGSURSHUWLHVXQWLO,G
ZLWKWKHDVVLVWDQFHRIDQ6(&UHFRPPHQGHGUHFHLYHU(OOLRWW           DW   $V D UHVXOW ZH FRQFOXGHG WKDW WKH DSSHDO ZDV
GRHVQRWDGGUHVVWKHEDVLVRIWKHFRXUWjVMXULVGLFWLRQEXWLWLV      XQWLPHO\DQGWKXVWKHFRXUWODFNHGMXULVGLFWLRQWRUHYLHZWKH
QRWHZRUWK\WKDWWKH(OOLRWWFODLPDQWVDSSHDOHGRQO\DIWHUWKH          IRUIHLWXUHRUGHU,GDW
GLVWULFWFRXUWKDGLVVXHGDQm2UGHU(VWDEOLVKLQJ)LQDO3ODQIRU
'LVWULEXWLRQRI$VVHWVl,GDW7KH(OOLRWW)LQDO3ODQ            7KH SUHVHQW FDVH KRZHYHU SUHVHQWV IDFWV YHU\ GLIIHUHQW
GLIIHUHGIURPWKH0D\GLVWULEXWLRQSODQDWLVVXHLQWKLV          IURP WKRVH LQ &KULVWXQDV  &KULVWXQDV LQYROYHG D FULPLQDO
FDVHLQPRUHWKDQQDPHKRZHYHU7KH(OOLRWWGLVWULEXWLRQ             IRUIHLWXUHDGLIIHUHQWDQGLQPDQ\UHVSHFWVPXFKVLPSOHU
SODQZDVLVVXHGRQO\DIWHUWKHFODLPDQWVjREMHFWLRQVKDGEHHQ          SURFHVVWKDQWKHFRPSOH[GLVJRUJHPHQWSURFHHGLQJDWLVVXHLQ
KHDUGE\WKHFRXUWUDWKHUWKDQEHIRUHDVLQWKHSUHVHQWFDVH        WKHSUHVHQWFDVH0RUHRYHULQ&KULVWXQDVZHUHOLHGKHDYLO\
DQG LQFOXGHG ILQGLQJV DGGUHVVLQJ REMHFWLRQV  $ORQJ WKHVH       RQ D  DPHQGPHQW WR WKH )HGHUDO 5XOHV RI &ULPLQDO
OLQHVWKH(OOLRWWFRXUWQRWHGMXVWKRZIHZDSSHDOVLWKDGWR          3URFHGXUH ZKLFK mPDNHV    FOHDU WKDW D IRUIHLWXUH RUGHU
GHFLGH                                                                ZKHWKHUSUHOLPLQDU\RUILQDODVWRWKLUGSDUW\FODLPVLVDILQDO
                                                                       RUGHUDVWRWKHGHIHQGDQWl,GDWQ7KHUHLVQRVXFK
    2QHWKRXVDQGHLJKWKXQGUHGDQGQLQHW\FODLPV                FODULI\LQJUXOHLQWKHFRQWH[WRIGLVJRUJHPHQWSURFHHGLQJV
  ZHUHILOHGE\RQHWKRXVDQGVL[W\WZRFODLPDQWV              0RVW LPSRUWDQW WKH 0D\  GLVWULEXWLRQ SODQ ZDV QRW
  7KLVZDVQRWDQHDV\UHFHLYHUVKLSWRDGPLQLVWHU              mILQDOl HYHQ ZLWK UHVSHFW WR WKH (VFURZ ,QYHVWRUV DV LW
    ,Q WKLV FRQWH[W WKH 5HFHLYHU DQG VXEVHTXHQWO\ WKH          HVWDEOLVKHGDSURFHGXUHE\ZKLFKLQGLYLGXDO(VFURZ,QYHVWRUV
  GLVWULFWFRXUWZHUHFDOOHGXSRQWRGLVWULEXWHWKHUHPDLQV            FRXOG UHPRYH WKHPVHOYHV IURP WKH JHQHUDO SRRO E\
  RI (OOLRWWjV DVVHWV  ,Q WKH HQG RI WKH PDQ\ FODLPDQWV   GHPRQVWUDWLQJWKDWWKH\ZHUHXQDZDUHRIWKHRQJRLQJ6(&
  RQO\WZHQW\VHYHQFODLPDQWVDSSHDOHGRQWHQLVVXHVRI               OLWLJDWLRQ DW WKH WLPH RI WKHLU LQYHVWPHQW LQ WKH HVFURZ
  ZKLFKZHUHYHUVHIRXU                                               DFFRXQW%\FRQWUDVWWKHSUHOLPLQDU\RUGHULQ&KULVWXQDVKDG
                                                                       D PRUH mILQDOl HIIHFW  mWKH DFWXDO HIIHFW RI D SUHOLPLQDU\
,GDW                                                        IRUIHLWXUH RUGHU LV FOHDUO\ WKDW RI D ILQDO RUGHU DV WR WKH
                                                                       GHIHQGDQWl,GDW
   1HLWKHU WKH (VFURZ ,QYHVWRUV QRU %UXQDFNH\ KDV ILOHG D
QRWLFHRIDSSHDOIURPWKHGLVWULFWFRXUWjV6HSWHPEHU             7KXVHYHQWKRXJKWKH5HFHLYHULVLQFRUUHFWLQDVVHUWLQJWKDW
RUGHU  )RUH[ VXJJHVWV WKDW ZH KDYH MXULVGLFWLRQ WR KHDU      2UGHUZDVDILQDORUGHUZHZRXOGVWLOOODFNMXULVGLFWLRQ
DSSHDOVRIWKDWRUGHUE\WKH(VFURZ,QYHVWRUVDQG%UXQDFNH\          LIWKHUHKDVQRW\HWEHHQDQDSSHDODEOHRUGHULQWKLVFDVH:H
XQGHUWKHFROODWHUDORUGHUGRFWULQH+RZHYHU%UXQDFNH\DQG           FRQFOXGHKRZHYHUWKDWWKHGLVWULFWFRXUWLVVXHGDQDSSHDODEOH
WKH(VFURZ,QYHVWRUVILOHGWKHLUQRWLFHVRIDSSHDOSULRUWRWKH        RUGHULQWKLVFDVHRQ6HSWHPEHUDIWHUWKHSUHVHQW
LVVXDQFHRIWKDWRUGHUDQGQHLWKHUKDVILOHGDVHFRQGQRWLFHRI       DSSHDOV ZHUH ILOHG  7KH GRFNHW GHVFULEHV WKLV RUGHU DV
DSSHDO  7KLV FRXUW KDV KHOG QRQHWKHOHVV WKDW mµDQ DSSHDO   mDSSURYLQJDPHQGHGSURSRVHGILQDOOLVWDQGGLVWULEXWLRQRI
VKRXOGQRWEHGLVPLVVHGEHFDXVHLWZDVWHFKQLFDOO\SUHPDWXUH           GLVJRUJHPHQWSURFHHGLQJVl
LI LQ IDFW DQ DSSHDODEOH MXGJPHQW RU RUGHU ZDV UHQGHUHG
EHORZWKHDSSHOODQWFOHDUO\PDQLIHVWHGKLVLQWHQWWRDSSHDO             7KHUHLVSHUVXDVLYHDXWKRULW\IRUWKHSURSRVLWLRQWKDWWKLV
IURPLWDQGWKHSUHYDLOLQJSDUW\EHORZFDQVKRZQRSUHMXGLFH           6HSWHPEHURUGHULVDQDSSHDODEOHFROODWHUDORUGHU
UHVXOWLQJ IURP WKH SUHPDWXULW\ RI WKH QRWLFHjl  sDFNVRQ Y   7KH)LIWK&LUFXLWDGGUHVVHGDIDFWXDOO\VLPLODUFDVHLQ6(&Y
79$  )G   WK &LU TXRWLQJ  s         )RUH[$VVHW0DQDJHPHQW//&)GWK&LU
 6HFXULWLHVDQG([FKDQJH&RPPjQ 1RV                    1RV 6HFXULWLHVDQG([FKDQJH&RPPjQ 
   HWDOY%DVLF(QHUJ\HWDO                                                                HWDOY%DVLF(QHUJ\HWDO

,QWKDWFDVHWKH6(&EURXJKWDQHQIRUFHPHQWDFWLRQDJDLQVW             VWDQGLQJWRDSSHDOXQGHUWKLVVWDQGDUGDVWKH\KDYHDFOHDU
)RUH[ ZKLFK OLNH %($5 KDG HQJDJHG LQ D VFKHPH WR            ILQDQFLDOVWDNHLQWKHFKDOOHQJHGRUGHUV
GHIUDXGLQYHVWRUV)RUH[jVDVVHWVZHUHIUR]HQDQGDUHFHLYHU
ZDVDSSRLQWHG6HHLGDW7KH)RUH[UHFHLYHUOLNHWKH           6HFRQGWKH)RUH[FRXUWGHWHUPLQHGWKDWLWKDGMXULVGLFWLRQ
5HFHLYHU LQ WKH SUHVHQW FDVH PDUVKDOHG WKH DVVHWV RI WKH      WRKHDUWKHFDVHEHFDXVHWKHGLVWULFWFRXUWjVDSSURYDORIWKH
IUDXGXOHQWHQWLW\DQGSUHSDUHGDGLVWULEXWLRQSODQ6HHLGDW         GLVWULEXWLRQ SODQ ZDV DQ DSSHDODEOH FROODWHUDO RUGHU  7KH
  7ZR )RUH[ LQYHVWRUV REMHFWHG WR WKH SODQ EHFDXVH LW     FROODWHUDORUGHUGRFWULQHZKLFKZDVHVWDEOLVKHGLQ&RKHQY
SURSRVHGWRWUHDWWKHPLQWKHVDPHPDQQHUDVDOORWKHU)RUH[            %HQHILFLDO ,QGXVWULDO /RDQ &RUS  86  
LQYHVWRUVIRUGLVWULEXWLRQSXUSRVHVHYHQWKRXJKRI            DXWKRUL]HVDSSHOODWHUHYLHZRIDQRUGHUZKHQLWmIDOO>V@LQWKDW
ZKDW WKH\ KDG LQYHVWHG LQ )RUH[ KDG EHHQ GHSRVLWHG LQ D       VPDOOFODVV>RIRUGHUVDQGGHFLVLRQV@ZKLFKILQDOO\GHWHUPLQH
VHSDUDWH DFFRXQW DQG ZDV WKXV VWLOO WUDFHDEOH DW WKH WLPH      FODLPV RI ULJKW VHSDUDEOH IURP DQG FROODWHUDO WR ULJKWV
)RUH[jV DVVHWV ZHUH IUR]HQ  7KH )RUH[ GLVWULFW FRXUW           DVVHUWHGLQWKHDFWLRQWRRLPSRUWDQWWREHGHQLHGUHYLHZDQG
FRQVLGHUHGWKHLQYHVWRUVjREMHFWLRQVEXWGHQLHGUHOLHIWKXV           WRRLQGHSHQGHQWRIWKHFDXVHLWVHOIWRUHTXLUHWKDWDSSHOODWH
WKHDWLVVXHZDVDGGHGWRWKHJHQHUDOSRROWREH              FRQVLGHUDWLRQEHGHIHUUHGXQWLOWKHZKROHFDVHLVDGMXGLFDWHGl
GLVWULEXWHGWR)RUH[LQYHVWRUVJHQHUDOO\6HHLG7KHGLVWULFW        ,G DW   7KH )RUH[ FRXUW ZHQW RQ WR GLVFXVV WKH WKUHH
FRXUW VXEVHTXHQWO\ DSSURYHG WKH UHFHLYHUjV SODQ DQG WKH         UHTXLUHPHQWV WKDW DQ RUGHU PXVW VDWLVI\ WR IDOO ZLWKLQ WKH
LQYHVWRUVDSSHDOHG                                                     FROODWHUDORUGHUUXOHDVHVWDEOLVKHGLQ&RRSHUV	/\EUDQGY
                                                                        /LYHVD\  86     m>7@KH RUGHU PXVW
   7KH )RUH[ FRXUW FRQVLGHUHG WZR WKUHVKROG LVVXHV EHIRUH        FRQFOXVLYHO\ GHWHUPLQH WKH GLVSXWHG TXHVWLRQ UHVROYH DQ
FRQVLGHULQJ WKH PHULWV RI WKH LQYHVWRUVj DSSHDO  )LUVW WKH   LPSRUWDQWLVVXHFRPSOHWHO\ VHSDUDWHIURPWKHPHULWVRIWKH
)RUH[ FRXUW GHWHUPLQHG WKDW WKH LQYHVWRUV KDG VWDQGLQJ WR       DFWLRQDQGEHHIIHFWLYHO\XQUHYLHZDEOHRQDSSHDOIURPDILQDO
DSSHDOHYHQWKRXJKWKH\ZHUHQRWSDUWLHVWRWKHXQGHUO\LQJ             MXGJPHQWl7KHGLVWULFWFRXUWjVGLVWULEXWLRQSODQWKH)RUH[
6(& HQIRUFHPHQW DFWLRQ DQG KDG QRW VRXJKW WR LQWHUYHQH          FRXUW UHDVRQHG mFRQFOXVLYHO\ GHWHUPLQH>G@ WKH PDQQHU LQ
EHORZ6HHLGDW7KHOLWLJDQWVLQWKHSUHVHQWFDVHKDYH         ZKLFKWKHUHFHLYHUVKLSDVVHWVVKRXOGEHGLVWULEXWHGl)RUH[
QRWUDLVHGWKHLVVXHRIWKHPRYDQWVjVWDQGLQJWRDSSHDOWKH             )GDW1H[WWKH)RUH[FRXUWFRQFOXGHGWKDWWKH
RUGHUVRIWKHGLVWULFWFRXUWEXWZHUDLVHWKLVLVVXHVXDVSRQWH      mGLVWULEXWLRQRIWKHDVVHWVlZDVmVHSDUDWHIURPWKHPHULWVRI
EHFDXVHZHDUHXQGHUDQLQGHSHQGHQWREOLJDWLRQWRSROLFHRXU            WKH 6(&jV FRPSODLQW DJDLQVW )RUH[l  ,G  )LQDOO\ WKH
RZQMXULVGLFWLRQ6HH%DLUGY1RUWRQ)GWK          GLVWULEXWLRQ SODQ ZRXOG EH XQUHYLHZDEOH RQ ILQDO DSSHDO
&LU:HKDYHKHOGSUHYLRXVO\WKDWDQRQSDUW\OLWLJDQW          mEHFDXVHWKHDVVHWVIURPWKHUHFHLYHUVKLSZLOOEHGLVWULEXWHG
KDV VWDQGLQJ WR DSSHDO IURP DQ RUGHU HQWHUHG LQ D IHGHUDO     DQGOLNHO\XQUHFRYHUDEOHORQJEHIRUHWKHDFWLRQEURXJKWE\
UHFHLYHUVKLSDFWLRQ LIWKDWOLWLJDQWVDWLVILHVWKHVWDQGDUGIRU        WKH6(&LVVXEMHFWWRDSSHOODWHUHYLHZl,G
VWDQGLQJWRDSSHDODQRUGHURIDEDQNUXSWF\FRXUW)LGHOLW\
%DQN1DWjO$VVjQY00*URXS,QF)GWK              7KH(OHYHQWK&LUFXLWjVRSLQLRQLQ6(&Y(OOLRWW)G
&LUm7RDSSHDOIURPDQRUGHURIWKHEDQNUXSWF\FRXUW          WK&LUUHYjGLQSDUW)GWK&LU
DSSHOODQWV PXVW KDYH EHHQ GLUHFWO\ DQG DGYHUVHO\ DIIHFWHG         VXJJHVWV D VLPLODU DSSURDFK  $V ZLWK )RUH[ WKH
SHFXQLDULO\E\WKHRUGHU7KLVSULQFLSOHDOVRNQRZQDVWKH            XQGHUO\LQJIDFWVRI(OOLRWWDUHVLPLODUWRWKRVHLQWKHSUHVHQW
µSHUVRQDJJULHYHGjGRFWULQHOLPLWVVWDQGLQJWRSHUVRQVZLWK            FDVH  7KH (OOLRWW GHIHQGDQWV KDG FRQGXFWHG DQ HQRUPRXV
D ILQDQFLDO VWDNH LQ WKH EDQNUXSWF\ FRXUWjV RUGHUl  ,G       3RQ]L VFKHPH DQG GHIUDXGHG KXQGUHGV RI LQYHVWRUV ,G DW
FLWDWLRQV RPLWWHG  7KH OLWLJDQWV LQ WKH SUHVHQW FDVH KDYH   $VLQWKHSUHVHQWFDVH(OOLRWWLQYROYHGDGLVJRUJHPHQW
