           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


 ,1'(&. (1(5*< 6(59,&(6           ;
 ,1&DQ,OOLQRLVFRUSRUDWLRQ     
 ,1'(&. 6$*,1$: /,0,7('             
                                       1R
 3$571(56+,3                       
           3ODLQWLIIV$SSHOODQWV !
                                    
                                    
              Y                    
                                    
 &21680(56 (1(5*<                   
 &203$1<D0LFKLJDQ                
                                    
 FRUSRUDWLRQ&06 (1(5*<            
 &25325$7,21D0LFKLJDQ            
 FRUSRUDWLRQ                       
         'HIHQGDQWV$SSHOOHHV 
                                   1
        $SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW
      IRUWKH(DVWHUQ'LVWULFWRI0LFKLJDQDW%D\&LW\
    1Rn5REHUW+&OHODQG'LVWULFWsXGJH
                     $UJXHGsXQH
              'HFLGHGDQG)LOHG2FWREHU



    
     7KLV GHFLVLRQ ZDV RULJLQDOO\ LVVXHG DV DQ mXQSXEOLVKHG GHFLVLRQl
ILOHG RQ 2FWREHU     2Q 0D\   WKH FRXUW GHVLJQDWHG WKH
RSLQLRQ DV RQH UHFRPPHQGHG IRU IXOOWH[W SXEOLFDWLRQ



                                  
      ,QGHFN(QHUJ\6HUYLFHV,QFHWDOY         1R       1R        ,QGHFN(QHUJ\6HUYLFHV,QFHWDOY        
       &RQVXPHUV(QHUJ\&RHWDO                                                                &RQVXPHUV(QHUJ\&RHWDO

    %HIRUH1(/621%2**6DQG'$8*+75(<&LUFXLW                       FRXUWjVRUGHUGLVPLVVLQJ&06(QHUJ\ZDVLPSURSHU$VWR
                        sXGJHV                                          WKH IHGHUDO FODLPV ZH ILQG LW XQQHFHVVDU\ WR WUHDW WKH
                                                                         GLVPLVVDORI&06(QHUJ\DWOHQJWKJLYHQRXUGHWHUPLQDWLRQ
                      BBBBBBBBBBBBBBBBB                                  WKDWWKHSODLQWLIIKDVIDLOHGWRHVWDEOLVKVWDQGLQJLQWKLVFDVH
                           &2816(/                                         7KDWOHDYHVKRZHYHUWKHSODLQWLIIjVFODLPWKDWWKHGLVWULFW
                                                                         FRXUW HUUHG LQ GLVPLVVLQJ LWV VWDWH ODZ FODLP RI WRUWLRXV
$5*8('0DU\0DVVDURQ5RVV3/81.(77	&221(<                          LQWHUIHUHQFHZLWKDSURVSHFWLYHHFRQRPLFDGYDQWDJHDJDLQVW
'HWURLW0LFKLJDQIRU$SSHOODQWV(XJHQH'ULNHU%$55,6               ERWK&RQVXPHUV(QHUJ\DQG&06(QHUJ\:KLOHWKHVWDWH
6277'(11	'5,.(5'HWURLW0LFKLJDQIRU$SSHOOHHV                   ODZFODLPDVVHUWHGDJDLQVW&RQVXPHUV(QHUJ\ZDVGLVPLVVHG
21 %5,()  0DU\ 0DVVDURQ 5RVV 3/81.(77 	                         ZLWKRXWSUHMXGLFHWKHGLVPLVVDORIWKHVWDWHODZFODLPDJDLQVW
&221(<'HWURLW0LFKLJDQIRU$SSHOODQWV(XJHQH'ULNHU               &06 (QHUJ\ GLG QRW FRQWDLQ VXFK D TXDOLILFDWLRQ DQG ZDV
'HQQLV 0 %DUQHV %$55,6 6277 '(11 	 '5,.(5                    WKXV GLVPLVVHG ZLWK SUHMXGLFH  2Q DSSHDO KRZHYHU WKH
'HWURLW 0LFKLJDQ 0LFKDHO * :LOVRQ sDPHV ( %UXQQHU           SODLQWLIIPDNHVQRVSHFLILFDUJXPHQWVFKDOOHQJLQJWKHUXOLQJ
&21680(56 32:(5 &203$1< sDFNVRQ 0LFKLJDQ                          UHJDUGLQJGLVPLVVDORIWKHVWDWHFODLPDJDLQVW&06(QHUJ\
0LFKDHO s 6KHULGDQ &06 (1(5*< &25325$7,21                        %HFDXVHHYHQmLVVXHVDGYHUWHGWRLQDSHUIXQFWRU\PDQQHU
'HDUERUQ0LFKLJDQIRU$SSHOOHHVs3HWHU/DUN2)),&(                XQDFFRPSDQLHGE\VRPHHIIRUWDWGHYHORSHGDUJXPHQWDWLRQ
2) 7+( $77251(< *(1(5$/ 75$163257$7,21                              DUH GHHPHGZDLYHGlDQ\FKDOOHQJHWRWKHGLVPLVVDORIWKH
',9,6,21/DQVLQJ0LFKLJDQIRU$PLFXV&XULDH                          VWDWH FODLPV LV QRW SURSHUO\ EHIRUH WKLV FRXUW  6HH 8QLWHG
                                                                         6WDWHVY/D\QH)GWK&LUFHUW
                      BBBBBBBBBBBBBBBBB                                  GHQLHG6&WTXRWLQJ0F3KHUVRQY.HOVH\
                                                                         )GWK&LU
                          23,1,21
                      BBBBBBBBBBBBBBBBB                                                           &21&/86,21
  0$57+$&5$,*'$8*+75(<&LUFXLWsXGJH7KLV                             )RU WKH UHDVRQV VHW RXW DERYH ZH ILQG QR HUURU LQ
DSSHDODULVHVIURPDQDQWLWUXVWDFWLRQDJDLQVWWZRSXEOLFXWLOLW\        FRQQHFWLRQZLWKWKHGLVWULFWFRXUWjVGHFLVLRQWRGLVPLVVWKH
FRPSDQLHV &RQVXPHUV (QHUJ\ &RPSDQ\ DQG LWV KROGLQJ                FODLPVDJDLQVW&RQVXPHUV(QHUJ\EHFDXVH,QGHFNIDLOHGWR
FRPSDQ\ &06 (QHUJ\ &RUSRUDWLRQ &RQVXPHUV (QHUJ\                   HVWDEOLVK DQWLWUXVW LQMXU\ DQG VWDQGLQJ  )XUWKHUPRUH WKDW
SURYLGHVHQHUJ\IRUDVXEVWDQWLDOSRUWLRQRIORZHU0LFKLJDQ             VDPH IDLOXUH RI WKH SODLQWLII WR PHHW LWV VWDQGLQJ WKUHVKROG
7KHSODLQWLIIV,QGHFN(QHUJ\6HUYLFHVDQG,QGHFN6DJLQDZ                MXVWLILHV WKH GLVPLVVDO RI WKH IHGHUDO FODLPV DJDLQVW &06
FROOHFWLYHO\ m,QGHFNl RSHUDWH mFRJHQHUDWLRQ V\VWHPVl           (QHUJ\DVZHOO$VDUHVXOWZH$)),50WKHMXGJPHQWRIWKH
ZKLFK SURYLGH HQHUJ\ IRU ODUJH FRPPHUFLDO DQG LQGXVWULDO          GLVWULFW FRXUW GLVPLVVLQJ DOO IHGHUDO FODLPV DJDLQVW WKH
HQHUJ\ FXVWRPHUV  7KH\ DSSHDO IURP WKH GLVWULFW FRXUWjV         GHIHQGDQWVDVZHOODVWKHGLVWULFWFRXUWjVGLVPLVVDORIWKHVWDWH
GLVPLVVDORI&06(QHUJ\IRUIDLOXUHWRVWDWHDFODLPRQZKLFK            ODZ FODLP DJDLQVW &06 (QHUJ\ ZLWK SUHMXGLFH DQG WKH
UHOLHI FRXOG EH JUDQWHG  7KH\ DOVR DSSHDO WKH GLVPLVVDO RI    GLVPLVVDORIWKHVWDWHODZFODLPDJDLQVW&RQVXPHUV(QHUJ\
WKHLU DQWLWUXVW DQG VWDWH ODZ FODLPV DOOHJLQJ WKDW WKH FRXUW   ZLWKRXWSUHMXGLFH,QOLJKWRIWKHVHKROGLQJVZHSUHWHUPLW
HUURQHRXVO\ DSSOLHG WKH mVWDWH DFWLRQ GRFWULQHl H[HPSWLRQ          GLVFXVVLRQ RI DOO RWKHU FODLPV RI HUURU UDLVHG RQ DSSHDO E\
IURPDQWLWUXVWOLDELOLW\DQGPLVWDNHQO\KHOGWKDW,QGHFNIDLOHG          ,QGHFN
WRSURYHDQDQWLWUXVWLQMXU\%HFDXVHZHFRQFOXGHWKDWWKH
    ,QGHFN(QHUJ\6HUYLFHV,QFHWDOY       1R       1R        ,QGHFN(QHUJ\6HUYLFHV,QFHWDOY         
      &RQVXPHUV(QHUJ\&RHWDO                                                              &RQVXPHUV(QHUJ\&RHWDO

)XUWKHUPRUH ,QGHFN FODLPV WKDW &RQVXPHUV (QHUJ\                 GLVWULFWFRXUWUXOHGFRUUHFWO\RQWKHVWDQGLQJLVVXHZHILQGLW
mH[SORLWHG WKLV VLWXDWLRQ E\ SXUFKDVLQJ SRZHU IRU WKHVH        XQQHFHVVDU\ WR DGGUHVV WKH TXHVWLRQ RI ZKHWKHU WKH FRXUW
FDSWLYHFXVWRPHUVIURP>LWVRZQDIILOLDWHGSRZHUSURGXFHU@l          SURSHUO\ DSSOLHG WKH VWDWH DFWLRQ GRFWULQH LQ WKLV FDVH
                                                                      )XUWKHUPRUH ZH ILQG QR HUURU LQ WKH GLVPLVVDO RI &06
  :KDW,QGHFNIDLOVWRDOOHJHKRZHYHULVWKDW&RQVXPHUV             (QHUJ\DVDSDUW\GHIHQGDQW
(QHUJ\jVGHVLUHWRmEX\ORZlPHDQWWKDWDOORWKHUXQVXFFHVVIXO
ELGGHUVIRU&RQVXPHUV(QHUJ\jVEXVLQHVVZHUHGULYHQRXWRI                )$&78$/$1'352&('85$/%$&.*5281'
WKHPDUNHWDQGWKDWWKHUHDIWHU&RQVXPHUV(QHUJ\SDLGDERYH
PDUNHWSULFHVIRUH[FHVVSRZHU+DGWKHSODLQWLIIDVVHUWHG            $FFRUGLQJ WR LWV FRPSODLQW ,QGHFN KDG  DJUHHG ZLWK
VXFK FODLPV LQ LWV FRPSODLQW ,QGHFN PLJKW KDYH DOOHJHG       *HQHUDO0RWRUVLQWRGHYHORSDFRJHQHUDWLRQIDFLOLW\DW
VXIILFLHQWIDFWVWRGHIHDWWKHGHIHQGDQWjVPRWLRQWRGLVPLVV         *HQHUDO 0RWRUVjV 6DJLQDZ 6WHHULQJ 'LYLVLRQ 3ODQW  $V D
$VLWLVWKHFRPSODLQWLQWKLVPDWWHUJLYHVQRLQGLFDWLRQWKDW       UHVXOW,QGHFNXQGHUWRRNH[WHQVLYHSUHSDUDWLRQVIRUZRUNRQ
&RQVXPHUV(QHUJ\jVWDFWLFVFDXVHGDQ\KDUPWRFRPSHWLWLRQ             WKH SURMHFW  6LPXOWDQHRXVO\ *HQHUDO 0RWRUV DOVR VHOHFWHG
LQJHQHUDO,QGHFNDQGRWKHULQGHSHQGHQWSRZHUSURGXFHUV             ,QGHFNDVLWVmSUHIHUUHGGHYHORSHUlRIDQRWKHUFRJHQHUDWLRQ
KDYH QR VWDWXWRU\ ULJKW WR FRPSHWH LQ WKH HFRQRPLF            IDFLOLW\DWLWVSODQWLQ)OLQW0LFKLJDQOHDGLQJ,QGHFNWREHJLQ
PDUNHWSODFHRQWKHLURZQWHUPVDQGLQVXFKDPDQQHUDVWR             VXEVWDQWLDOGHYHORSPHQWHIIRUWVRQWKDWSURMHFWDVZHOO
DFFXPXODWHH[SHFWHGSURILWV$VGHWHUPLQHGE\WKHGLVWULFW
FRXUWWKHUHIRUHDOOHJDWLRQVWKDWFRPSDQLHVZHUHXQDEOHWR              ,QGHFNDOOHJHVWKDWWKHVXFFHVVRILWV6DJLQDZDQG)OLQWFR
UHFHLYH SULFHV IRU H[FHVV SRZHU WKDW WKH\ IHOW ZHUH           JHQHUDWLRQSURMHFWVZDVXQGHUPLQHGE\&RQVXPHUV(QHUJ\jV
mUHDVRQDEOHlDUHLQVXIILFLHQWWRMXVWLI\DILQGLQJWKDW,QGHFN        UHOXFWDQFH WR VKDUH WKH SXEOLF XWLOLW\jV IDFLOLWLHV DQG
KDV VWDQGLQJ WR SURVHFXWH WKLV FODLP DJDLQVW &RQVXPHUV         WUDQVPLVVLRQ VHUYLFHV  $GGLWLRQDOO\ ,QGHFN FRQWHQGV WKDW
(QHUJ\RUWKDWWKHSODLQWLIIVXIIHUHGDQWLWUXVWLQMXU\,QWKH       &RQVXPHUV (QHUJ\ VDERWDJHG WKH SODLQWLIIjV DWWHPSWV WR
DEVHQFHRIFRQFUHWHDOOHJDWLRQVRIKDUPWRWKHFRPSHWLWLYH            VHUYLFH*HQHUDO0RWRUVZLWKFRJHQHUDWHGSRZHUE\LQVLVWLQJ
QDWXUHRIHQHUJ\SURYLVLRQWKHGLVWULFWFRXUWWKXVZDVFRUUHFW       RQ LQFUHDVHV LQ UDWHV IRU WKH SURYLVLRQ RI VWDQGE\ HOHFWULF
LQ JUDQWLQJ WKH GHIHQGDQWjV PRWLRQ WR GLVPLVV WKH FODLPV      SRZHU WR WKH SODQWV  )LQDOO\ ,QGHFN DOOHJHV &RQVXPHUV
DJDLQVWLWDVDPDWWHURIODZ                                        (QHUJ\ QHJRWLDWHG LWV RZQ VXSSO\ DJUHHPHQW ZLWK *HQHUDO
                                                                      0RWRUVXQGHUZKLFKWKHXWLOLW\FRQWUDFWHGWREHWKHH[FOXVLYH
      ,,'LVPLVVDO2I&ODLPV$JDLQVW&06(QHUJ\                     VXSSOLHURISRZHUIRUILYHWRWHQ\HDUVWR*HQHUDO0RWRUV
                                                                      IDFLOLWLHVLQFOXGLQJWKH)OLQWSODQWZLWKDQRSWLRQWRDGGWKH
   ,QGHFNjV DQWLWUXVW FRPSODLQW LQ WKLV PDWWHU OLVWHG DV       6DJLQDZIDFLOLW\,QRUGHUWRHQWLFH*HQHUDO0RWRUVWRLQFOXGH
GHIHQGDQWVQRWRQO\&RQVXPHUV(QHUJ\EXWDOVR&RQVXPHUV              WKH6DJLQDZSODQWLQWKHSRZHUDJUHHPHQW&RQVXPHUV(QHUJ\
(QHUJ\jVmSDUHQWDQGKROGLQJFRPSDQ\l&06(QHUJ\3ULRU             RIIHUHG*HQHUDO0RWRUVDmPXOWLPLOOLRQGROODUGLVFRXQWlRQ
WRUXOLQJXSRQ&RQVXPHUV(QHUJ\jVPRWLRQWRGLVPLVVEDVHG             SRZHUFRVWVIRUDOORWKHUFRYHUHGIDFLOLWLHVFRQWLQJHQWXSRQ
XSRQVWDWHDFWLRQLPPXQLW\DQGODFNRIVWDQGLQJKRZHYHUWKH         LQFOXVLRQ RI WKH 6DJLQDZ SODQW LQ WKH FRQWUDFW  1RW
GLVWULFW FRXUW GLVPLVVHG &06 (QHUJ\ DV D GHIHQGDQW RQ         VXUSULVLQJO\*HQHUDO0RWRUVDJUHHGWRWKHGLVFRXQWHGSRZHU
,QGHFNjVFODLPVRIYLRODWLRQVRIDQGRIWKH6KHUPDQ            FRVWVLQH[FKDQJHIRUWKHOLPLWHGH[FOXVLYLW\GHDO
$FW RI   RI WKH &OD\WRQ $FW DQG RI WKH 0LFKLJDQ ODZ
DJDLQVW WRUWLRXV LQWHUIHUHQFH ZLWK SURVSHFWLYH EXVLQHVV            %HFDXVHRIWKHWUHPHQGRXVLQFUHDVHLQWKHSRZHUGHPDQG
DGYDQWDJH2QDSSHDO,QGHFNQRZDVVHUWV WKDWWKHGLVWULFW          GXHWRLWVH[FOXVLYHSRZHUSURYLVLRQDJUHHPHQWVZLWKWKH
     ,QGHFN(QHUJ\6HUYLFHV,QFHWDOY        1R       1R        ,QGHFN(QHUJ\6HUYLFHV,QFHWDOY         
      &RQVXPHUV(QHUJ\&RHWDO                                                               &RQVXPHUV(QHUJ\&RHWDO

*HQHUDO 0RWRUV IDFLOLWLHV DQG ZLWK  RWKHU ODUJH               FRPSHWLWRUV IURP WKH FRJHQHUDWLRQ PDUNHW LQ HDVWHUQ
LQGXVWULDOFRPPHUFLDO FXVWRPHUV &RQVXPHUV (QHUJ\ ZDV              0LFKLJDQ
IRUFHGWRVHHNDGGLWLRQDOSRZHUIURPRWKHUVXSSOLHUV7KH
SODLQWLII FRQWHQGV WKDW UDWKHU WKDQ FRQWUDFW ZLWK ,QGHFN RU      7KHPHUHDOOHJDWLRQRIVXFKDVHOHFWLRQKRZHYHUGRHVQRW
RWKHULQGHSHQGHQWJHQHUDWRUVKRZHYHU&RQVXPHUV(QHUJ\                PLOLWDWHDJDLQVWWKHJUDQWRIDPRWLRQWRGLVPLVVWKHSODLQWLIIjV
SXUFKDVHGWKHQHFHVVDU\SRZHURQO\IURPLWVRZQDIILOLDWHG             FODLPV$EVHQWVRPHLQGLFDWLRQWKDWDOHVVWKDQDUPjVOHQJWK
SURGXFHU 0LGODQG &RJHQHUDWLRQ 9HQWXUH /LPLWHG                    WUDQVDFWLRQ GHVWUR\HG RU GDPDJHG WKH FRPSHWLWLYH
3DUWQHUVKLS  &RQVHTXHQWO\ ,QGHFN DVVHUWV &RQVXPHUV             HQYLURQPHQW LQ SRZHU JHQHUDWLRQ WKH IDFW WKDW &RQVXPHUV
(QHUJ\mVXFFHHGHGLQH[FOXGLQJFRPSHWLWLRQIURPRYHU                (QHUJ\ VHOHFWHG D FRJHQHUDWLRQ SDUWQHU RWKHU WKDQ WKH
SHUFHQW RI WKH 5HOHYDQW $W 5LVN 0DUNHW ZKLOH DW WKH VDPH     SODLQWLIIGRHVQRWDPRXQWWRWKHLQMXU\QHFHVVDU\WRHVWDEOLVK
WLPHNHHSLQJSRWHQWLDOVXSSOHPHQWDODQGDOWHUQDWLYHVRXUFHV            DQWLWUXVW VWDQGLQJ  7KHRUHWLFDOO\ DQ\ VHOHFWLRQ RI D
RIHOHFWULFDOSRZHURXWRIWKHPDUNHWl                               FRPSHWLWRU LQ WKH PDUNHWSODFH ZLOO FDXVH VRPH HFRQRPLF
                                                                       KDUPWRWKHHQWLWLHVQRWFKRVHQIRUWKHSURYLVLRQRIJRRGVRU
  $JJULHYHGE\WKHDFWLRQVRIWKHGHIHQGDQWV,QGHFNILOHG             VHUYLFHV,QDVLWXDWLRQVXFKDVWKHRQHSUHVHQWHGLQWKLVFDVH
VXLWLQIHGHUDOGLVWULFWFRXUWDJDLQVW&RQVXPHUV(QHUJ\DQG            KRZHYHU ZKHUH WKH SRZHU SURYLVLRQ DJUHHPHQWV DUH RI
DJDLQVW&06(QHUJ\DOOHJLQJYLRODWLRQVRIDQGRIWKH           OLPLWHG GXUDWLRQ XQIDLU SULFLQJ RU XQIDLU WUHDWPHQW RI D
6KHUPDQ $QWLWUXVW $FW  86&   DQG    RI WKH    FXVWRPHU ZLOO OHDG WKDW FRQVXPHU WR LQYHVWLJDWH DOWHUQDWH
&OD\WRQ$FW86&DQGWKH0LFKLJDQODZRIWRUWLRXV          YHQGRUVLQIXWXUHFRQWUDFWXDOGHDOLQJV2QFHDJDLQ,QGHFN
LQWHUIHUHQFH ZLWK D SURVSHFWLYH HFRQRPLF DGYDQWDJH  7KH        KDV DOOHJHG RQO\ LQMXU\ WR LWVHOI LQ QRW EHLQJ VHOHFWHG E\
GHIHQGDQWVUHVSRQGHGE\ILOLQJPRWLRQVWRGLVPLVVDQGmIRU             &RQVXPHUV (QHUJ\ WR SURYLGH FRJHQHUDWLRQ VHUYLFHV QRW
VXPPDU\GLVSRVLWLRQDQGRUWRGLVPLVVl7KHGLVWULFWFRXUW            LQMXU\WRWKHFXVWRPHUVZKRYROXQWDULO\FKRVHWRFRQWUDFWZLWK
JUDQWHGWKHPRWLRQWRGLVPLVVGHIHQGDQW&06(QHUJ\EHFDXVH             &RQVXPHUV(QHUJ\LQDIUHHH[FKDQJHRISD\PHQWDQGEHQHILW
WKHFRPSODLQWIDLOHGWRVWDWHDFODLPDJDLQVWWKDWGHIHQGDQW           6XFKDQLQMXU\WRDFRPSHWLWRUUDWKHUWKDQWRFRPSHWLWLRQLV
XSRQ ZKLFK UHOLHI FRXOG EH JUDQWHG  /DWHU WKH FRXUW DOVR   QRW WKH W\SH RI LQMXU\ WR ZKLFK WKH DQWLWUXVW ODZV DGGUHVV
JUDQWHGMXGJPHQWWR&RQVXPHUV(QHUJ\RQWKHIHGHUDOFDXVHV             WKHPVHOYHV  $EVHQW VRPH LQGLFDWLRQ WKDW LW FRXOG RIIHU D
RIDFWLRQGHWHUPLQLQJWKDWWKHXWLOLW\ZDVH[HPSWIURPIHGHUDO        VXSHULRU SURGXFW RU D ORZHU FRVW ,QGHFN KDV WKXV IDLOHG WR
DQWLWUXVWOHJLVODWLRQXQGHUWKHVWDWHDFWLRQGRFWULQHDQGWKDW         DOOHJHWKHUHTXLVLWHDQWLWUXVWLQMXU\RQWKLVDOOHJDWLRQDVZHOO
,QGHFNKDGIDLOHGWRVKRZWKHUHTXLVLWHDQWLWUXVWLQMXU\7KH
FRXUW GLVPLVVHG ZLWKRXW SUHMXGLFH ,QGHFNjV 0LFKLJDQ VWDWH           'm5HIXVDOl2I&RQVXPHUV(QHUJ\7R%X\([FHVV
ODZFODLP)URPWKHVHDQGRWKHUUHODWHGUXOLQJV,QGHFNQRZ                            3RZHU)URP3ODLQWLII
DSSHDOV
                                                                         ,QGHFNDOVRDWWHPSWVWRHVWDEOLVKLWVVWDQGLQJDQGDQWLWUXVW
                         ',6&866,21                                    LQMXU\ E\ DOOHJLQJ WKDW &RQVXPHUV (QHUJ\ RIIHUHG WR
                                                                       LQGHSHQGHQWFRJHQHUDWRUVmXQUHDVRQDEO\ORZSD\PHQWVIRU
                           ,6WDQGLQJ                                 H[FHVVSRZHUlWKDWWKRVHFRJHQHUDWRUVSURGXFHGDQGVRXJKW
                                                                       WR VHOO WR &RQVXPHUV (QHUJ\ WR DOOHYLDWH WKH GHIHQGDQWjV
   ,QJUDQWLQJVXPPDU\MXGJPHQWLQIDYRURIWKHGHIHQGDQWV            LQVXIILFLHQWFDSDFLW\7KHSODLQWLIIDVVHUWVWKDWVXFKDFWLRQE\
WKHGLVWULFWFRXUWFRQFOXGHGWKDW,QGHFNjVFRPSODLQWIDLOHGWR         &RQVXPHUV(QHUJ\SODFHG,QGHFNmLQDQH[FOXVLRQDU\µSULFH
DOOHJH WKH UHTXLVLWH DQWLWUXVW LQMXU\ DQG WKDW WKH SODLQWLII   FRVWj VTXHH]Hl WKDW KDPSHUHG FRPSHWLWLRQ IRU FXVWRPHUV
     ,QGHFN(QHUJ\6HUYLFHV,QFHWDOY          1R       1R        ,QGHFN(QHUJ\6HUYLFHV,QFHWDOY        
      &RQVXPHUV(QHUJ\&RHWDO                                                                 &RQVXPHUV(QHUJ\&RHWDO

       %&RQVXPHUV(QHUJ\jV&RQWUDFWV:LWK2WKHU                        WKHUHIRUHODFNHGVWDQGLQJWRSURVHFXWHWKLVFDXVHRIDFWLRQ
                   /DUJH&XVWRPHUV                                       7KHFRXUWGHWHUPLQHGWKDWQRDQWLWUXVWLQMXU\ZDVRFFDVLRQHG
                                                                         ZKHQ &RQVXPHUV (QHUJ\ FRQWUDFWHG ZLWK FXVWRPHUV RWKHU
  ,QGHFNDOVRLQVLVWVWKDWFRQWUDFWVHQWHUHGLQWRE\&RQVXPHUV           WKDQ *HQHUDO 0RWRUV ZKHQ &RQVXPHUV (QHUJ\ DOOHJHGO\
(QHUJ\ ZLWK  RWKHU ODUJH SRZHU FRQVXPHUV LQ HDVWHUQ            VKRZHG IDYRULWLVP WR 0LGODQG &RJHQHUDWLRQ 9HQWXUH RU
0LFKLJDQ RWKHU WKDQ *HQHUDO 0RWRUV6DJLQDZ YLRODWHG                 ZKHQ &RQVXPHUV (QHUJ\ UHIXVHG WR HQWHU LQWR DJUHHPHQWV
DQWLWUXVW ODZV E\ HIIHFWLYHO\ SUHHPSWLQJ  RI WKH FR          ZLWK WKH SODLQWLII WR SXUFKDVH H[FHVV HQHUJ\ JHQHUDWHG E\
JHQHUDWLRQPDUNHW7KHSODLQWLIIDUJXHVWKDWVXFKFRQWUDFWV             ,QGHFN
QRWRQO\H[FOXGHG,QGHFNIURPWKHPDUNHWEXWDOVRFDXVHGWKH
FXVWRPHUV WR ORVH ORZFRVW DOWHUQDWLYHV WR &RQVXPHUV                  8QGHU 6L[WK &LUFXLW FDVH ODZ mLW LV QRW HQRXJK IRU WKH
(QHUJ\jVSURGXFW                                                       SODLQWLII WR FODLP HFRQRPLF LQMXU\  µ3ODLQWLIIV PXVW SURYH
                                                                         DQWLWUXVWLQMXU\ZKLFKLVWRVD\LQMXU\RIWKHW\SHWKHDQWLWUXVW
   ,QGHFN GRHV QRW FRQWHQG WKDW LW DFWXDOO\ KDG DJUHHPHQWV       ODZVZHUHLQWHQGHGWRSUHYHQWDQGWKDWIORZVIURPWKDWZKLFK
ZLWKDQ\RIWKHSRZHUXVHUVUHIHUHQFHGLQLWVFODLPRUWKDW           PDNHVWKHGHIHQGDQWVjDFWVXQODZIXOjl9DOOH\3URGV&R
LW FRXOG KDYH VHUYHG DV D WUXH ORZHUFRVW DOWHUQDWLYH WR        ,QFY/DQGPDUN$'LYRI+RVSLWDOLW\)UDQFKLVH6\V,QF
&RQVXPHUV(QHUJ\$VDUHVXOWDQ\FODLPRILQMXU\WRWKH               )GWK&LUTXRWLQJ%UXQVZLFN&RUS
SODLQWLIIIURPWKHGHIHQGDQWVjDFWLRQVLVVSHFXODWLYHDWEHVW           Y3XHEOR%RZO20DW,QF866XFK
0RUHRYHU HYHQ LI ,QGHFN ZHUH DEOH WR HVWDEOLVK WKH              D KHLJKWHQHG VWDQGDUG LV UHTXLUHG EHFDXVH WKH UHOHYDQW
SUHHPSWLRQ IURP WKH UHOHYDQW PDUNHW WKDW LW DVVHUWV LW KDV     DQWLWUXVWODZVmZHUHHQDFWHGIRUµWKHSURWHFWLRQRIFRPSHWLWLRQ
IDLOHG WR DOOHJH KRZ VXFK DFWV KDYH LQMXUHG FRPSHWLWLRQ         QRWFRPSHWLWRUVjl%UXQVZLFN&RUS86DWTXRWLQJ
HVSHFLDOO\ LQ OLJKW RI WKH GLVFRXQWHG UDWHV RIIHUHG WR WKH      %URZQ6KRH&RY8QLWHG6WDWHV86
FXVWRPHUV LQ OLJKW RI WKH IDFW WKDW WKH H[FOXVLYH FRQWUDFWV
ZHUH RI OLPLWHG GXUDWLRQ DQG LQ OLJKW RI WKH IDFW WKDW WKH      %\HPSKDVL]LQJWKHLPSRUWDQFHRIHVWDEOLVKLQJmDQWLWUXVW
FXVWRPHUV ZHUH IUHH WR VHHN RWKHU SRZHU JHQHUDWRUV DW WKH       LQMXU\lFRXUWVHQVXUHmWKDWDQWLWUXVWOLWLJDQWVXVHWKHODZVWR
FRQFOXVLRQRIWKHFRQWUDFWV2QFHDJDLQDEDODQFLQJRIWKH             SUHYHQWDQWLFRPSHWLWLYHDFWLRQDQGPDNH>@FHUWDLQWKDWWKH\
UHOHYDQW IDFWRUV WR HVWDEOLVK DQWLWUXVW LQMXU\ OHDGV WR WKH      ZLOOQRWEHDEOHWRUHFRYHUXQGHUWKHDQWLWUXVWODZVZKHQWKH
FRQFOXVLRQ WKDW WKH GLVWULFW FRXUW SURSHUO\ DQG VXPPDULO\         DFWLRQFKDOOHQJHGZRXOGWHQGWRSURPRWHFRPSHWLWLRQLQWKH
JUDQWHG MXGJPHQW DV D PDWWHU RI ODZ RQ WKLV SRUWLRQ RI         HFRQRPLF VHQVHl  +\SRLQW 7HFKQRORJ\ ,QF Y +HZOHWW
,QGHFNjVFODLPV                                                         3DFNDUG&R)GWK&LU2WKHUZLVH
                                                                         mURXWLQH GLVSXWHV EHWZHHQ EXVLQHVV FRPSHWLWRUV ZRXOG EH
    &)DYRULWLVP%\&RQVXPHUV(QHUJ\)RU0LGODQG                        HOHYDWHG WR WKH VWDWXV RI DQ DQWLWUXVW DFWLRQ WKHUHE\
                 &RJHQHUDWLRQ9HQWXUH                                   WULYLDOL]LQJ WKH $FW EHFDXVH RI LWV WRR UHDG\ DYDLODELOLW\l
                                                                         &DSLWDO ,PDJLQJ $VVRFV 3& Y 0RKDZN 9DOOH\ 0HG
  ,QGHFNIXUWKHUFRQWHQGVWKDWWKHDQWLFRPSHWLWLYHQDWXUHRI            $VVRFV,QF)GG&LU
&RQVXPHUV (QHUJ\jV DFWLRQV LV VKRZQ E\ WKH GHIHQGDQWVj
VHOHFWLRQRIWKHDIILOLDWHG0LGODQG&RJHQHUDWLRQ9HQWXUHDV               7R DVVLVW FRXUWV LQ IXOILOOLQJ WKHLU UHVSRQVLELOLWLHV RI
WKHVROHFRJHQHUDWRUIRULWVSRZHUSURYLVLRQDJUHHPHQWVZLWK            HQVXULQJWKDWDQWLWUXVWODZVDUHQRWmWULYLDOL]HGlWKH6XSUHPH
KLJKXVHFXVWRPHUV7KHSODLQWLIIDUJXHVWKDWWKHVHOHFWLRQRI          &RXUW KDV DUWLFXODWHG FHUWDLQ IDFWRUV WR EH DQDO\]HG LQ
0LGODQG HIIHFWLYHO\ HOLPLQDWHG ,QGHFN DQG DOO RWKHU                GHWHUPLQLQJ ZKHWKHU D SODLQWLII KDV HVWDEOLVKHG DQWLWUXVW
        ,QGHFN(QHUJ\6HUYLFHV,QFHWDOY        1R      1R         ,QGHFN(QHUJ\6HUYLFHV,QFHWDOY         
         &RQVXPHUV(QHUJ\&RHWDO                                                               &RQVXPHUV(QHUJ\&RHWDO

VWDQGLQJ6HH$VVRFLDWHG*HQ&RQWUDFWRUVRI&DO,QFY              HFRQRPLF IRUXP PXVW DW OHDVW DOOHJH WKDW H[FOXVLRQ RI WKH
&DOLIRUQLD6WDWH&RXQFLORI&DUSHQWHUV86             FRPSHWLWRUIURPWKHPDUNHWSODFHUHVXOWVLQWKHHOLPLQDWLRQRI
7KRVHIDFWRUVLQFOXGH                                          DVXSHULRUSURGXFWRUDORZHUFRVWDOWHUQDWLYH7KHUHFRUGLQ
                                                                         WKLVDSSHDOSUHVHQWVQRLQGLFDWLRQWKDWFRPSHWLWLRQLWVHOIZDV
    WKHFDXVDOFRQQHFWLRQEHWZHHQWKHDQWLWUXVWYLRODWLRQ            KDUPHG E\ DQ\ DFW RI WKH GHIHQGDQWV  &RQVHTXHQWO\ WKH
    DQG KDUP WR WKH SODLQWLII DQG ZKHWKHU WKDW KDUP ZDV         DQWLWUXVW GDPDJHV DOOHJHG E\ ,QGHFN DUH WRR LQGLUHFW DQG
    LQWHQGHG WR EH FDXVHG  WKH QDWXUH RI WKH SODLQWLIIjV    VSHFXODWLYHWRMXVWLI\DVVHUWLRQRIIHGHUDODQWLWUXVWMXULVGLFWLRQ
    DOOHJHG LQMXU\ LQFOXGLQJ WKH VWDWXV RI WKH SODLQWLII DV      RYHUWKLVPDWWHU
    FRQVXPHURUFRPSHWLWRULQWKHUHOHYDQWPDUNHWWKH
    GLUHFWQHVVRULQGLUHFWQHVVRIWKHLQMXU\DQGWKHUHODWHG                 $&RQVXPHUV(QHUJ\jV&RQWUDFW:LWK*HQHUDO
    LQTXLU\RIZKHWKHUWKHGDPDJHVDUHVSHFXODWLYHWKH                               0RWRUV6DJLQDZ3ODQW
    SRWHQWLDO IRU GXSOLFDWLYH UHFRYHU\ RU FRPSOH[
    DSSRUWLRQPHQWRIGDPDJHVDQGWKHH[LVWHQFHRIPRUH                 ,QGHFN DVVHUWV WKDW &RQVXPHUV (QHUJ\ YLRODWHG DQWLWUXVW
    GLUHFWYLFWLPVRIWKHDOOHJHGDQWLWUXVWYLRODWLRQ                   ODZV E\ QHJRWLDWLQJ D SRZHU DJUHHPHQW ZLWK WKH *HQHUDO
                                                                         0RWRUV6DJLQDZ SODQW DIWHU RIILFLDOV IURP WKDW IDFWRU\ KDG
6RXWKDYHQ/DQG&R,QFY0DORQH	+\GH,QF)G                GLVFXVVHGZLWK,QGHFNWKHSRVVLELOLW\RIKDYLQJWKHSODLQWLII
  WK &LU   $OO ILYH IDFWRUV PXVW EH          SURYLGH FRJHQHUDWHG SRZHU IRU WKH IDFLOLW\  &RQVXPHUV
EDODQFHGKRZHYHUZLWKQRRQHIDFWRUEHLQJGHWHUPLQDWLYH               (QHUJ\KRZHYHUGLGQRWFDXVHDQWLWUXVWLQMXU\WR,QGHFNE\
6HH3HFNY*HQHUDO0RWRUV&RUS)GWK                 OXULQJ*HQHUDO0RWRUV6DJLQDZLQWRLWVIROG,QVWHDG*HQHUDO
&LU   )XUWKHUPRUH DV QRWHG E\ WKLV FRXUW LQ 9DOOH\     0RWRUVLWVHOIGHFLGHGQRWWRSXUVXH IXUWKHULWVQHJRWLDWLRQV
3URGXFWV m>W@KH 6L[WK &LUFXLW LW LV IDLU WR VD\ KDV EHHQ    ZLWK WKH SODLQWLII EXW UDWKHU WR WDNH DGYDQWDJH RI WKH
UHDVRQDEO\DJJUHVVLYHLQXVLQJWKHDQWLWUXVWLQMXU\GRFWULQHWR          GLVFRXQWHGUDWHVRIIHUHGE\&RQVXPHUV(QHUJ\1RDOOHJDWLRQ
EDUUHFRYHU\ZKHUHWKHDVVHUWHGLQMXU\DOWKRXJKOLQNHGWRDQ            LQ WKH FRPSODLQW LQGLFDWHV LQ DQ\ PDQQHU ZKDWVRHYHU KRZ
DOOHJHG YLRODWLRQ RI DQWLWUXVW ODZV IORZV GLUHFWO\ IURP          *HQHUDO0RWRUVLWVHOIZDVKDUPHGRUKRZRWKHUFXVWRPHUVLQ
FRQGXFWWKDWLVQRWLWVHOIDQDQWLWUXVWYLRODWLRQl,GDW         WKH HQHUJ\ PDUNHW VXIIHUHG E\ DJUHHLQJ WR D OLPLWHG SRZHU
                                                                         SURYLVLRQ DJUHHPHQW ZLWK D ORZHU ELGGHU IRU VXFK HQHUJ\
  ,QWKLVFDVHDQH[DPLQDWLRQRIWKHDQWLWUXVWVWDQGLQJIDFWRUV         JHQHUDWLRQ  0RUHRYHU DV WKH GLUHFW YLFWLP RI WKH DOOHJHG
OHDGV WR WKH LQHVFDSDEOH FRQFOXVLRQ WKDW WKH GLVWULFW FRXUW      DQWLWUXVW YLRODWLRQ LQ WKLV UHJDUG *HQHUDO 0RWRUV6DJLQDZ
DSSURSULDWHO\GLVPLVVHG,QGHFNjVFDXVHRIDFWLRQDJDLQVWWKH             FRXOGSURVHFXWHLWVRZQFDXVHRIDFWLRQVKRXOGLWGHHPWKH
GHIHQGDQWV6LJQLILFDQWO\WKHRQO\KDUPDOOHJHGO\VXIIHUHG            DFWLRQVRI&RQVXPHUV(QHUJ\LQDSSURSULDWH&RQVHTXHQWO\
E\,QGHFNZDVLQWKHFRPSDQ\jVFDSDFLW\DVDFRPSHWLWRULQ               D EDODQFLQJ RI WKH IDFWRUV WR EH FRQVLGHUHG LQ DQ DQWLWUXVW
WKH PDUNHWSODFH QRW DV D GHIHQGHU RI PDUNHWSODFH                 VWDQGLQJ FDVH WLOWV LQ IDYRU RI D GHFLVLRQ WKDW QR DQWLWUXVW
FRPSHWLWLRQ$OWKRXJKDQWLWUXVWDFWLRQVPD\RIFRXUVHEH              LQMXU\ FDQ EH SURYHG DV D PDWWHU RI ODZ FRQFHUQLQJ WKH
LQLWLDWHG E\ PDUNHWSODFH FRPSHWLWRUV WKRVH DFWRUV LQ WKH         &RQVXPHUV(QHUJ\DJUHHPHQWZLWK*HQHUDO0RWRUV6DJLQDZ

     
     $Q LGHQWLFDO FRQFOXVLRQ ZRXOG EH UHDFKHG ZKHWKHU WKLV LVVXH LV
DQDO\]HG XQGHU 5XOH  RU XQGHU 5XOH E +HQFH ZH QHHG QRW
DGGUHVV ,QGHFNjV FRQWHQWLRQ WKDW WKH GLVWULFW FRXUW LPSURSHUO\ DSSOLHG
VXPPDU\ MXGJPHQW DQDO\VLV WR D 5XOH  SURFHHGLQJ
