5(&200(1'(' )25 )8//7(;7 38%/,&$7,21 %RURIIY9DQ:HUW&LW\ 1R 3XUVXDQW WR 6L[WK &LUFXLW 5XOH %GRI(GXFHWDO (/(&7521,& &,7$7,21 )(' $SS 3 WK &LU )LOH 1DPH D S ,Q FRQWUDVW , GR QRW EHOLHYH WKDW VFKRRO RIILFLDOV FDQ UHDVRQDEO\EHWKRXJKWWRHQGRUVHRUFRQGRQHDPHVVDJHZRUQ 81,7('67$7(6&28572)$33($/6 RQDVWXGHQWjV7VKLUWVLPSO\EHFDXVHWKH\GRQRWSURKLELWWKH VWXGHQWIURPZHDULQJWKH7VKLUWWRVFKRRO6HH%GRI(GXF )257+(6,;7+&,5&8,7 RI:HVWVLGH&RPPXQLW\6FKRROVY0HUJHQV 86 BBBBBBBBBBBBBBBBB SOXUDOLW\ m:H WKLQN WKDW VHFRQGDU\ VFKRRO VWXGHQWVDUHPDWXUHHQRXJKDQGDUHOLNHO\WRXQGHUVWDQGWKDW DVFKRROGRHVQRWHQGRUVHRUVXSSRUWVSHHFKWKDWLWPHUHO\ SHUPLWVRQDQRQGLVFULPLQDWRU\EDVLV7KHSURSRVLWLRQWKDW 1,&+2/$6 s %252)) ; VFKRROVGRQRWHQGRUVHHYHU\WKLQJWKH\IDLOWRFHQVRULVQRW 3ODLQWLII$SSHOODQW FRPSOLFDWHGl FLWDWLRQVRPLWWHG 1R Y ,9 ! ,Q VXP WKH 6XSUHPH &RXUWjV )LUVW $PHQGPHQW 9$1 :(57 &,7< %2$5' 2) MXULVSUXGHQFHSURKLELWVVFKRRORIILFLDOVIURPWHOOLQJDVWXGHQW ('8&$7,21 s2+1 %$6,1*(5 WKDWKHFDQQRWZHDUDSDUWLFXODU7VKLUWVLPSO\EHFDXVHWKH\ :,//,$0 &/,)721 DQG SHUFHLYHWKDWWKH7VKLUWLVFRPPXQLFDWLQJDPHVVDJHZLWK '$9,' )52(/,&+ ZKLFKWKH\GLVDJUHH%HFDXVH,EHOLHYHWKDWDUHDVRQDEOHMXU\ FRXOGFRQFOXGHWKDWWKLVLVH[DFWO\ZKDWWKH6FKRROGLGLQWKH 'HIHQGDQWV$SSHOOHHV SUHVHQW FDVH , UHVSHFWIXOO\ GLVVHQW IURP WKH PDMRULW\jV 1 GHFLVLRQWRDIILUPWKHJUDQWRIVXPPDU\MXGJPHQWLQIDYRURI WKH 6FKRRO RQ %RURIIjV )LUVW $PHQGPHQW FODLP , ZRXOG $SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW WKHUHIRUH UHYHUVH WKH MXGJPHQW RI WKH GLVWULFW FRXUW WR WKH IRUWKH1RUWKHUQ'LVWULFWRI2KLRDW7ROHGR H[WHQWWKDWLWHQWHUHGVXPPDU\MXGJPHQWIRUWKH6FKRRORQ 1R n'DYLG$.DW]'LVWULFWsXGJH WKLVFODLPDQGUHPDQGWKHFDVHIRUWULDO 6XEPLWWHG 0DUFK 'HFLGHGDQG)LOHG sXO\ %HIRUH :(//)25'6,/(5DQG*,/0$1&LUFXLW sXGJHV BBBBBBBBBBBBBBBBB &2816(/ 21%5,() &KULV.6WDUNH\67$5.(</$:2)),&(6 )RUW:D\QH,QGLDQDIRU$SSHOODQW3DXO5%RQILJOLR/$: %RURIIY9DQ:HUW&LW\ 1R 1R %RURIIY9DQ:HUW&LW\ %GRI(GXFHWDO %GRI(GXFHWDO 2)),&( 2) 3$8/ 5 %21),*/,2 7ROHGR 2KLR IRU %HFDXVHQRWKLQJLQHLWKHU)UDVHURU.XKOPHLHUSXUSRUWVWR $SSHOOHHV RYHUUXOH 7LQNHU LQGHHG 7LQNHU ZDV UHFHQWO\ FLWHG ZLWK DSSURYDOE\WKH6XSUHPH&RXUWLQ8QLWHG6WDWHVY3OD\ER\ :(//)25' s GHOLYHUHG WKH RSLQLRQ RI WKH FRXUW LQ (QWHUWDLQPHQW*URXS,QF6&W , ZKLFK6,/(5sMRLQHG*,/0$1s SS GHOLYHUHG EHOLHYH WKDW LW VKRXOG EH OHIW WR WKH 6XSUHPH &RXUW WR DVHSDUDWHGLVVHQWLQJRSLQLRQ GHWHUPLQH ZKHWKHU DQG ZKHQ 7LQNHU VKRXOG EH FDVW E\ WKH ZD\VLGH 6HH HJ $JRVWLQL Y )HOWRQ 86 BBBBBBBBBBBBBBBBB FDXWLRQLQJWKHORZHUFRXUWVWRDFFRUGWKH6XSUHPH &RXUW mWKH SUHURJDWLYH RI RYHUUXOLQJ LWV RZQ GHFLVLRQVl 23,1,21 5RGULJXH]GH4XLMDVY6KHDUVRQ$PHULFDQ([SUHVV,QF BBBBBBBBBBBBBBBBB 86 6WHYHQVsGLVVHQWLQJ GHVFULELQJDV mDQ LQGHIHQVLEOH EUDQG RI MXGLFLDO DFWLYLVPl WKH UHIXVDO RI +$55<::(//)25'&LUFXLWsXGJH $IWHU9DQ:HUW ORZHUFRXUWVWRDSSO\FRQWUROOLQJ6XSUHPH&RXUWSUHFHGHQW 2KLR +LJK6FKRRODGPLQLVWUDWRUVWROG1LFKRODV%RURIIWKDW EDVHG XSRQ D SUHGLFWLRQ WKDW WKH 6XSUHPH &RXUW ZRXOG KH ZDV QRW DOORZHG WR ZHDU m0DULO\Q 0DQVRQl 7VKLUWV WR DEDQGRQLWVSULRUKROGLQJ VFKRRO %RURIIjV PRWKHU LQLWLDWHG WKLV DFWLRQ RQ KLV EHKDOI SXUVXDQWWR86& DOOHJLQJWKDWWKHDGPLQLVWUDWRUVj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jVVSHHFKZDVDOVRYXOJDU 7KLVGLVSXWHDULVHVRXWRIDKLJKVFKRROVWXGHQWjVGHVLUHWR .XKOPHLHULQYROYHGDVWXGHQWQHZVSDSHUWKDWZDVIXQGHGDQG ZHDUm0DULO\Q0DQVRQl7VKLUWVWRVFKRRODQGWKHVFKRROjV VSRQVRUHGE\WKHVFKRROLWVHOI6HH.XKOPHLHU86DW RSSRVLQJGHVLUHWRSURKLELWWKRVH7VKLUWV0DULO\Q0DQVRQ m>$@VFKRROPD\LQLWVFDSDFLW\DVSXEOLVKHURIDVFKRRO LVWKHVWDJHQDPHRImJRWKlURFNSHUIRUPHU%ULDQ:DUQHU QHZVSDSHURUSURGXFHURIDVFKRROSOD\µGLVDVVRFLDWHLWVHOIj DQGDOVRWKHQDPHRIWKHEDQGLQZKLFKKHLVWKHOHDGVLQJHU QRWRQO\IURPVSHHFKWKDWZRXOGµVXEVWDQWLDOO\LQWHUIHUHZLWK 6HH (1&$57$ :25/' (1*/,6+ ',&7,21$5< >LWV@ZRUNRULPSLQJHXSRQWKHULJKWVRIRWKHUVWXGHQWVj KWWS GLFWLRQDU\PVQFRPILQGHQWU\DVS"VHDUFK JRWK! EXW DOVR IURP VSHHFK WKDW LV IRU H[DPSOH XQJUDPPDWLFDO GHILQLQJmJRWKlDVmDVW\OHRISRSXODUPXVLFWKDWFRPELQHV SRRUO\ZULWWHQLQDGHTXDWHO\UHVHDUFKHGELDVHGRUSUHMXGLFHG HOHPHQWV RI KHDY\ PHWDO ZLWK SXQNl DQG DOVR mD VW\OH RI YXOJDU RU SURIDQH RU XQVXLWDEOH IRU LPPDWXUH DXGLHQFHVl IDVKLRQ FKDUDFWHUL]HG E\ EODFN FORWKHV KHDY\ VLOYHU VHFRQGDOWHUDWLRQLQRULJLQDO TXRWLQJ)UDVHU86DW MHZHOU\EODFNH\HPDNHXSDQGOLSVWLFNDQGRIWHQSDOHIDFH 7LQNHU 86DW 7KLVGLVWLQFWLRQZDVFULWLFDOWR PDNHXSl %DQGPHPEHUVWDNHWKHILUVWSDUWRIWKHLUVWDJH ERWKWKH)UDVHUDQG.XKOPHLHUGHFLVLRQV QDPHV IURP D IDPRXV PRGHO RU FHOHEULW\ VXFK DV 0DULO\Q 0RQURH0DGRQQDRU7ZLJJ\DQGWKHVHFRQGSDUWIURPD %RURIIY9DQ:HUW&LW\ 1R 1R %RURIIY9DQ:HUW&LW\ %GRI(GXFHWDO %GRI(GXFHWDO ,DOVREHOLHYHWKDWWKHPDMRULW\GURSSHGLWVJXDUGPXFKWRR QRWRULRXVVHULDONLOOHUVXFKDV&KDUOHV0DQVRQsRKQ:D\QH TXLFNO\DWWKH6FKRROjVFRQFOXVRU\LQYRFDWLRQRImGLVUXSWLYH *DF\RU5LFKDUG5DPLUH]0DULO\Q0DQVRQ WKHLQGLYLGXDO DQG GHPRUDOL]LQJ YDOXHVl , DP TXLWH FRQILGHQW WKDW WKH LVSRSXODUO\UHJDUGHGDVDZRUVKLSHURI6DWDQZKLFKKHKDV VFKRRO RIILFLDOV LQ 7LQNHU WKRXJKW LW ZRXOG EH KLJKO\ GHQLHG6HH1HLO6WUDXVV6WDJH)ULJKW52//,1* 6721(sXQH GLVUXSWLYH DQG GHPRUDOL]LQJnQRW WR PHQWLRQ GRZQULJKW DW+HLVDOVRZLGHO\UHJDUGHGDVDXVHURILOOHJDO XQSDWULRWLFnIRUVWXGHQWVWRZHDUEODFNDUPEDQGVLQRUGHUWR GUXJVZKLFKKHKDVQRWGHQLHG,QIDFWRQHRIKLVVRQJVLV SURWHVWDZDULQZKLFKWKRXVDQGVRI$PHULFDQVROGLHUVZHUH WLWOHGm,'RQjW/LNHWKH'UXJV %XWWKH'UXJV/LNH0H l6HH ILJKWLQJ DQG G\LQJ 7KH 6XSUHPH &RXUW QHYHUWKHOHVV 'DYLG %URZQ 7KH %HVW DQG :RUVW0XVLF FRQFOXGHGWKDWWKHRIILFLDOVFRXOGQRWSURKLELWWKHVWXGHQWV (17(57$,10(17 :((./<'HF DW VHHDOVR IURPZHDULQJWKHDUPEDQGVLQWKHDEVHQFHRIHYLGHQFHWKDWD *LQD9LYLQHWWR0DULO\Q0DQVRQ1RW.LQGHU1RW*HQWOHU EDQZRXOGEHQHFHVVDU\WRSUHYHQWmPDWHULDODQGVXEWDQWLDO 67 3(7(56%85* 7,0(60DU DW UHSRUWLQJWKDW LQWHUIHUHQFHZLWKVFKRROZRUNRUGLVFLSOLQHl,G 0DQVRQQRORQJHUVWRUHVKLVGUXJVDQGGUXJSDUDSKHUQDOLDLQ OXQFK ER[HV EHFDXVH mHYHU\RQH LV FDUU\LQJ WKHLU ,,, SDUDSKHUQDOLDWKDWZD\7RRWUHQG\l 7KLVEULQJVPHWRWKHODVWEXWFHUWDLQO\QRWOHDVWLPSRUWDQW 2Q $XJXVW %RURII WKHQ D VHQLRU DW 9DQ :HUW PDWWHURQZKLFK,GLVDJUHHZLWKWKHPDMRULW\7KHPDMRULW\ +LJK6FKRROZHQWWRVFKRROZHDULQJDm0DULO\Q0DQVRQl7 DSSDUHQWO\UHDGVWKH6XSUHPH&RXUWjVRSLQLRQVLQ)UDVHUDQG VKLUW7KHIURQWRIWKH7VKLUWGHSLFWHGDWKUHHIDFHGsHVXV .XKOPHLHUDVHVVHQWLDOO\RYHUUXOLQJ7LQNHUFRQFOXGLQJWKDW DFFRPSDQLHGE\WKHZRUGVm6HH1R7UXWK+HDU1R7UXWK DIWHU )UDVHU DQG .XKOPHLHU VFKRRO RIILFLDOV FDQ IRUELG 6SHDN 1R 7UXWKl 2Q WKH EDFN RI WKH VKLUW WKH ZRUG ZKDWHYHU VWXGHQW VSHHFK WKH\ FRQVLGHU mRIIHQVLYHl LQ WKH m%(/,(9(lZDVVSHOOHGRXWLQFDSLWDOOHWWHUVZLWKWKHOHWWHUV VHQVHRISURPRWLQJmGLVUXSWLYHDQGGHPRUDOL]LQJYDOXHVl DV m/,(lKLJKOLJKWHG0DULO\Q0DQVRQjVQDPH DOWKRXJKQRWKLV ORQJ DV WKHLU GHFLVLRQ GRHV QRW DSSHDU mPDQLIHVWO\ SLFWXUH ZDVGLVSOD\HGSURPLQHQWO\RQWKHIURQWRIWKHVKLUW XQUHDVRQDEOHl $WWKHWLPH9DQ:HUW+LJK6FKRROKDGLQHIIHFWDm'UHVVDQG *URRPLQJlSROLF\WKDWSURYLGHGWKDWmFORWKLQJZLWKRIIHQVLYH 7KDWKRZHYHULVQRWZKDWWKH6XSUHPH&RXUWKHOGLQHLWKHU LOOXVWUDWLRQV GUXJ DOFRKRO RU WREDFFR VORJDQV DUH QRW )UDVHURU.XKOPHLHU)UDVHUFRQFOXGHGWKDWVFKRRORIILFLDOV DFFHSWDEOHl &KLHI 3ULQFLSDOjV $LGH 'DYLG )URHOLFK WROG FRXOG WHPSRUDULO\ VXVSHQG D KLJK VFKRRO VWXGHQW ZKR %RURIIWKDWKLVVKLUWZDVRIIHQVLYHDQGJDYHKLPWKHFKRLFHRI SHUVLVWHGLQJLYLQJDVSHHFKSHUPHDWHGZLWKREYLRXVVH[XDO WXUQLQJ WKH VKLUW LQVLGHRXW JRLQJ KRPH DQG FKDQJLQJ RU PHWDSKRUVGXULQJDVFKRRODVVHPEO\GHVSLWHEHLQJZDUQHG OHDYLQJDQGEHLQJFRQVLGHUHGWUXDQW%RURIIOHIWVFKRRO WKDW WKH VSHHFK ZDV mLQDSSURSULDWHl DQG WKDW GHOLYHULQJ LW PLJKWUHVXOWLQmVHYHUHFRQVHTXHQFHVl.XKOPHLHUFRQFOXGHG 2Q 6HSWHPEHU ZKLFK ZDV WKH QH[W VFKRRO GD\ WKDW KLJK VFKRRO DGPLQLVWUDWRUV GR QRW RIIHQG WKH )LUVW %RURII ZRUH DQRWKHU 0DULO\Q 0DQVRQ 7VKLUW WR VFKRRO $PHQGPHQWE\H[HUFLVLQJHGLWRULDOFRQWURORYHUWKHVW\OHDQG %RURIIDQGKLVPRWKHUPHWWKDWGD\ZLWK)URHOLFK3ULQFLSDO FRQWHQW RI VFKRROVSRQVRUHG SXEOLFDWLRQV DV ORQJ DV WKHLU :LOOLDP&OLIWRQDQG6XSHULQWHQGHQWsRKQ%DVLQJHU%DVLQJHU DFWLRQV DUH UHDVRQDEO\ UHODWHG WR OHJLWLPDWH SHGDJRJLFDO FRQFHUQV 7KRXJK WKH RULJLQ RI WKH 7VKLUW LV XQNQRZQ WKH GLVWRUWHG SRUWUD\DO RI sHVXV VHHPV WR KDYH EHHQ FUHDWHG LQ DQ HIIRUW WR LOOXVWUDWH WKH EDQGjV KLW DOEXP m$QWL&KULVW 6XSHUVWDUl %RURIIY9DQ:HUW&LW\ 1R 1R %RURIIY9DQ:HUW&LW\ %GRI(GXFHWDO %GRI(GXFHWDO WROGWKH%RURIIVWKDWVWXGHQWVZRXOGQRWEHSHUPLWWHGWRZHDU DFWLYLWLHV,QGHHGWKDWZDVWKHKROGLQJRI7LQNHU6HH7LQNHU 0DULO\Q 0DQVRQ 7VKLUWV RQ VFKRRO JURXQGV 8QGDXQWHG 86 DW m>6@FKRRO RIILFLDOV FDQQRW VXSSUHVV %RURIIZRUHGLIIHUHQW0DULO\Q0DQVRQ7VKLUWVRQHDFKRIWKH H[SUHVVLRQV RI IHHOLQJV ZLWK ZKLFK WKH\ GR QRW ZLVK WR QH[W WKUHH VFKRRO GD\V 6HSWHPEHU DQG 7KH FRQWHQGl FLWDWLRQ DQG LQWHUQDO TXRWDWLRQ PDUNV RPLWWHG VKLUWVIHDWXUHGSLFWXUHVRI0DULO\Q0DQVRQZKRVHDSSHDUDQFH 'DPEURWY&HQWUDO0LFKLJDQ8QLY )6XSS FDQ IDLUO\ EH GHVFULEHG DV JKRXOLVK DQG FUHHS\ (DFK GD\ (' 0LFK FRQFOXGLQJ WKDW D SXEOLF XQLYHUVLW\jV %RURII ZDV WROG WKDW KH ZRXOG QRW EH SHUPLWWHG WR DWWHQG mGLVFULPLQDWRU\KDUDVVPHQWSROLF\lWKDWSURKLELWHGmV\PEROV VFKRROZKLOHZHDULQJWKH7VKLUWV >HSLWKHWV@RUVORJDQVWKDWLQIHUQHJDWLYHFRQQRWDWLRQVDERXWDQ LQGLYLGXDOjVUDFLDORUHWKQLFDIILOLDWLRQlEXWSHUPLWWHGWKRVH %RURII GLG QRW DWWHQG VFKRRO IRU WKH QH[W IRXU GD\V WKDW LQIHUUHG SRVLWLYH RU QHXWUDO FRQQRWDWLRQV ZDV mDV IROORZLQJ6HSWHPEHU 2QWKHILIWKGD\6HSWHPEHU UHPDUNDEOH DV LW LV LOOHJDOl DIIjG )G WK &LU KLVPRWKHULQLWLDWHGWKHSUHVHQWVXLWLQWKH8QLWHG 6WDWHV 'LVWULFW &RXUW IRU WKH 1RUWKHUQ 'LVWULFW RI 2KLR DOOHJLQJWKDWWKHDGPLQLVWUDWRUVjUHIXVDOWRDOORZKHUVRQWR 7KHPDMRULW\DVVHUWVWKDWmWKH6FKRROSURKLELWHGWKH0DULO\Q ZHDU 0DULO\Q 0DQVRQ 7VKLUWV LQ VFKRRO YLRODWHG KLV )LUVW 0DQVRQ7VKLUWVlLQFOXGLQJWKHWKUHHKHDGHGsHVXV7VKLUW $PHQGPHQW ULJKW WR IUHH H[SUHVVLRQ DQG KLV )RXUWHHQWK WKDWSUHFLSLWDWHGWKLVFDVHmEHFDXVHWKLVSDUWLFXODUURFNJURXS $PHQGPHQW ULJKW WR GXH SURFHVV $IWHU KLV HLJKWHHQWK SURPRWHV GLVUXSWLYH DQG GHPRUDOL]LQJ YDOXHV ZKLFK DUH ELUWKGD\ %RURII ZDV VXEVWLWXWHG IRU KLV PRWKHU DV WKH LQFRQVLVWHQWZLWKDQGFRXQWHUSURGXFWLYHWRHGXFDWLRQl,WLV SODLQWLII 7KHFRPSODLQWQDPHGDVGHIHQGDQWVWKH9DQ:HUW QRW FOHDU KRZHYHU ZKDW mGLVUXSWLYH DQG GHPRUDOL]LQJ &LW\ %RDUG RI (GXFDWLRQ &KLHI 3ULQFLSDOjV $LGH )URHOLFK YDOXHVl WKH PDMRULW\ LV UHIHUULQJ WR ,I WKH PDMRULW\ LV 3ULQFLSDO&OLIWRQDQG6XSHULQWHQGHQW%DVLQJHU FROOHFWLYHO\ VXJJHVWLQJWKDWWKH6FKRROFRXOGKDYHFRQFOXGHGWKDW0DULO\Q WKH6FKRRO %RURIIUHTXHVWHGDWHPSRUDU\UHVWUDLQLQJRUGHU 0DQVRQjV DSSDUHQW HQGRUVHPHQW RI VD\ LOOHJDO GUXJ XVH DQGPRYHGIRUDSUHOLPLQDU\LQMXQFWLRQ7KHGLVWULFWFRXUW PDNHVKLVSLFWXUHDQXQDFFHSWDEOHLPDJHIRUVWXGHQWVWRZHDU IROORZLQJ D KHDULQJ RQ 6HSWHPEHU GHQLHG ERWK LQKLJKVFKRRO,ZRXOGDJUHH$IDLUUHDGLQJRIWKHUHFRUG )ROORZLQJGLVFRYHU\ERWK%RURIIDQGWKH6FKRROPRYHGIRU KRZHYHU VXJJHVWV WKDW WKH mGLVUXSWLYH DQG GHPRUDOL]LQJ VXPPDU\MXGJPHQW,QDPHPRUDQGXPDQGRUGHUGDWHGsXO\ YDOXHVl WKDW WKH 6FKRRO ZDV UHDOO\ FRQFHUQHG DERXW ZDV WKHGLVWULFWFRXUWHQWHUHGVXPPDU\MXGJPHQWLQIDYRU GLVUHVSHFWIRUDVSHFLILFYHQHUDWHGUHOLJLRXVILJXUH RIWKH6FKRRO7KLVDSSHDOIROORZHG 2UVRDUHDVRQDEOHMXU\FRXOGKDYHIRXQG$VQRWHGDERYH ,,$1$/<6,6 KRZHYHUVFKRRORIILFLDOVDUHQRWIUHHWRGHFLGHWKDWRQO\RQH VLGHRIDWRSLFLVRSHQIRUGLVFXVVLRQEHFDXVHWKHRWKHUVLGHLV $6WDQGDUGRI5HYLHZ WRRUHSXJQDQWRUGHPRUDOL]LQJWROLVWHQWR6HH7LQNHU 86DW m$Q\GHSDUWXUHIURPDEVROXWHUHJLPHQWDWLRQPD\ :HUHYLHZGHQRYRDGLVWULFWFRXUWjVGHFLVLRQWRJUDQWRU FDXVHWURXEOH$Q\YDULDWLRQIURPWKHPDMRULW\ VRSLQLRQPD\ GHQ\VXPPDU\MXGJPHQW6HH6PLWKY$PHULWHFK )G LQVSLUHIHDU$Q\ZRUGVSRNHQLQFODVVLQWKHOXQFKURRPRU WK&LU 6XPPDU\MXGJPHQWLVDSSURSULDWH RQWKHFDPSXVWKDWGHYLDWHVIURPWKHYLHZVRIDQRWKHUSHUVRQ ZKHQWKHUHDUHQRJHQXLQHLVVXHVRIPDWHULDOIDFWLQGLVSXWH PD\ VWDUW DQ DUJXPHQW RU FDXVH D GLVWXUEDQFH %XW RXU DQGWKHPRYLQJSDUW\LVHQWLWOHGWRDMXGJPHQWDVDPDWWHURI &RQVWLWXWLRQVD\VZHPXVWWDNHWKLVULVNl ODZ 6HH )(' 5 &,9 3 F ,Q GHFLGLQJ D PRWLRQ IRU %RURIIY9DQ:HUW&LW\ 1R 1R %RURIIY9DQ:HUW&LW\ %GRI(GXFHWDO %GRI(GXFHWDO ,, VXPPDU\ MXGJPHQW WKH FRXUW PXVW YLHZ WKH HYLGHQFH DQG GUDZ DOO UHDVRQDEOH LQIHUHQFHV LQ IDYRU RI WKH QRQPRYLQJ ,DOVREHOLHYHWKDWWKHPDMRULW\PLVDSSUHKHQGVWKHPHDQLQJ SDUW\6HH0DWVXVKLWD(OHF,QGXV&RY=HQLWK5DGLR&RUS RIWKHWHUPVmYXOJDUlDQGmRIIHQVLYHl,Q)LUVW$PHQGPHQW 86 7KHMXGJHLVQRWmWRZHLJKWKH FDVHV WKRVH WHUPV UHIHU WR ZRUGV DQG SKUDVHV WKDW DUH HYLGHQFH DQG GHWHUPLQH WKH WUXWK RI WKH PDWWHU EXW WR WKHPVHOYHV FRDUVH DQG FUXGH UHJDUGOHVV RI ZKHWKHU RQH GHWHUPLQH ZKHWKHU WKHUH LV D JHQXLQH LVVXH IRU WULDOl GLVDJUHHVZLWKWKHRYHUDOOPHVVDJHWKDWWKHVSHDNHULVWU\LQJ $QGHUVRQY/LEHUW\/REE\,QF86 WRFRQYH\5RXJKO\VSHDNLQJWKH\DUHWKHZRUGVDQGSKUDVHV $ JHQXLQH LVVXH IRU WULDO H[LVWV ZKHQ WKHUH LV VXIILFLHQW WKDWPLJKWKDYHDSSHDUHGRQFRPHGLDQ*HRUJH&DUOLQjVOLVWRI mHYLGHQFH RQ ZKLFK WKH MXU\ FRXOG UHDVRQDEO\ ILQG IRU WKH ZRUGVWKDWRQHFDQQRWVD\RQWKHUDGLR6HHJHQHUDOO\)&&Y QRQPRYLQJSDUW\l,GDW 3DFLILFD)RXQGDWLRQ86 UHSULQWLQJ &DUOLQjVm)LOWK\:RUGVlPRQRORJXH 7KDWLVZK\WKHKLJK %)LUVW$PHQGPHQW&ODLP VFKRRO DGPLQLVWUDWRUV LQ 3\OH Y 6RXWK +DGOH\ 6FKRRO &RPPLWWHH ) 6XSS ' 0DVV ZHUH m,W LV D KLJKO\ DSSURSULDWH IXQFWLRQ RI SXEOLF VFKRRO DOORZHG WR SURKLELW D VWXGHQW IURP ZHDULQJ D 7VKLUW HGXFDWLRQWRSURKLELWWKHXVHRIYXOJDUDQGRIIHQVLYHWHUPVLQ SURFODLPLQJ m6HH 'LFN 'ULQN 6HH 'LFN GLH 'RQjW %H D SXEOLFGLVFRXUVHl%HWKHO6FKRRO'LVWULFW1RY)UDVHU 'LFNl6HHLGDW QQ GLVWLQJXLVKLQJ7LQNHUY 86 :KLOHVWXGHQWVGRQRWmVKHGWKHLU 'HV0RLQHV,QGHSHQGHQW&RPPXQLW\6FKRRO%RDUG 86 FRQVWLWXWLRQDOULJKWVWRIUHHGRPRIVSHHFKRUH[SUHVVLRQDWWKH EHFDXVHm>X@QOLNH7LQNHUWKLVLVQRWDFDVHDERXW VFKRROKRXVH JDWHl 7LQNHU Y 'HV 0RLQHV ,QGHSHQGHQW ZKHWKHU D SDUWLFXODU YLHZSRLQW PD\ EH H[SUHVVHGl 7KH &RPPXQLW\6FKRRO'LVWULFW 86 WKH VFKRRODGPLQLVWUDWRUVLQ3\OHZHUHREYLRXVO\QRWREMHFWLQJWR )LUVW$PHQGPHQWULJKWVRIVWXGHQWVLQWKHSXEOLFVFKRROVPXVW WKH PHVVDJH WKDW GUXQN GULYLQJ LV EDG DQG VKRXOG EH EHmDSSOLHGLQOLJKWRIWKHVSHFLDOFKDUDFWHULVWLFVRIWKHVFKRRO GLVFRXUDJHG HQYLURQPHQWl+D]HOZRRG6FKRRO'LVWULFWY.XKOPHLHU 86 TXRWLQJ7LQNHU 86DW :LWK ,I%RURIIKDGZRUQD7VKLUWIHDWXULQJ0DULO\Q0DQVRQjV WKRVH SUHFHSWV LQ PLQG ZH DSSO\ WKH 7LQNHU)UDVHU QDPHDQGWKHVRQJO\ULFVFRQWDLQHGLQWKHPDMRULW\jVRSLQLRQ .XKOPHLHUWULORJ\WRWKHIDFWVRIWKLVFDVH WKLVZRXOGEHDYHU\HDV\FDVH$QXPEHURIWKRVHZRUGVDUH YXOJDUUHJDUGOHVVRIZKHWKHURQHOLNHVRUGLVOLNHV0DULO\Q ,Q7LQNHUDIHZVWXGHQWVZRUHEODFNDUPEDQGVWRVFKRROmWR 0DQVRQjV PXVLF RU DJUHHV RU GLVDJUHHV ZLWK ZKDWHYHU H[KLELWWKHLUGLVDSSURYDORIWKH9LHWQDPKRVWLOLWLHVDQGWKHLU PHVVDJH %RURII ZRXOG EH WU\LQJ WR FRQYH\ E\ ZHDULQJ WKH DGYRFDF\RIDWUXFHWRPDNHWKHLUYLHZVNQRZQDQGE\WKHLU VKLUW %XW WKDW VRUW RI YXOJDULW\ LV DEVHQW IURP WKH WKUHH H[DPSOHWRLQIOXHQFHRWKHUVWRDGRSWWKHPl7LQNHU 86 KHDGHGsHVXV7VKLUWWKDW%RURIIZRUH7KLVSDUWLFXODU7VKLUW DW7KHVFKRROSURKLELWHGWKHDUPEDQGVDQGVXVSHQGHG ZDVIRXQGmRIIHQVLYHlEHFDXVHLWH[SUHVVHVDYLHZSRLQWWKDW DQ\ VWXGHQW ZKR ZDV IRXQG ZHDULQJ WKHP 7KH 6XSUHPH PDQ\ SHRSOH SHUVRQDOO\ ILQG UHSHOOHQW QRW EHFDXVH LW LV &RXUW KHOG WKDW WKH VFKRROjV DFWLRQV YLRODWHG WKH VWXGHQWVj YXOJDU IUHHGRP RI VSHHFK 7KH &RXUW QRWHG WKDW m>W@KH SUREOHP SRVHGE\WKHSUHVHQWFDVHGRHVQRWUHODWHWRUHJXODWLRQRIWKH &HQVRUVKLS RQ WKDW EDVLV LV VLPSO\ QRW SHUPLWWHG LQ WKH OHQJWK RI VNLUWV RU WKH W\SH RI FORWKLQJ WR KDLU VW\OH RU DEVHQFH RI D UHDVRQDEOH SUHGLFWLRQ E\ VFKRRO RIILFLDOV RI GHSRUWPHQW2XUSUREOHPLQYROYHVGLUHFWSULPDU\)LUVW VXEVWDQWLDOGLVUXSWLRQRIRUPDWHULDOLQWHUIHUHQFHZLWKVFKRRO $PHQGPHQWULJKWVDNLQWRµSXUHVSHHFKjl,GDW7KH %RURIIY9DQ:HUW&LW\ 1R 1R %RURIIY9DQ:HUW&LW\ %GRI(GXFHWDO %GRI(GXFHWDO &RXUWFRQFOXGHGWKDWWRMXVWLI\WKHSURKLELWLRQRIDSDUWLFXODU VKLUW ZDV SHUFHLYHG WR H[SUHVV D SROLWLFDO RU UHOLJLRXV H[SUHVVLRQRIRSLQLRQWKHVFKRROPXVWmVKRZWKDWLWVDFWLRQ YLHZSRLQW 3ULQFLSDO &OLIWRQ VDLG VR KLPVHOI ,W DSSHDUV ZDVFDXVHGE\VRPHWKLQJPRUHWKDQDPHUHGHVLUHWRDYRLG XQPLVWDNDEOHWKDWWKHUHDVRQZK\WKHWKUHHKHDGHGsHVXV7 WKHGLVFRPIRUWDQGXQSOHDVDQWQHVVWKDWDOZD\VDFFRPSDQ\DQ VKLUWZDVGHHPHGmRIIHQVLYHlZDVEHFDXVHLWVDLGVRPHWKLQJ XQSRSXODU YLHZSRLQWl ,G DW 7KH SURKLELWLRQ RI WKH DERXWDYHQHUDWHGUHOLJLRXVILJXUHDQGEHFDXVHPDQ\SHRSOH DUPEDQGV WKH &RXUW KHOG FRXOG QRW EH VXVWDLQHG ZLWKRXW LQ9DQ:HUW SUHVXPDEO\LQFOXGLQJ3ULQFLSDO&OLIWRQ KDSSHQ VKRZLQJ WKDW HQJDJLQJ LQ WKH SURKLELWHG FRQGXFW ZRXOG WRGLVDJUHHYHKHPHQWO\ZLWKZKDWWKH\SHUFHLYHGWKH7VKLUW mPDWHULDOO\DQGVXEVWDQWLDOO\LQWHUIHUHZLWKWKHUHTXLUHPHQWV DV VD\LQJ ,QGHHG IURP 3ULQFLSDO &OLIWRQjV H[SODQDWLRQ LW RIDSSURSULDWHGLVFLSOLQHLQWKHRSHUDWLRQRIWKHVFKRROl,G ZRXOGQRWEHXQUHDVRQDEOHWRSUHVXPHWKDWLIWKH7VKLUWKDG TXRWLQJ %XUQVLGH Y %\DUV )G WK &LU GHSLFWHG sHVXV LQ D SRVLWLYH OLJKW LW ZRXOG QRW KDYH EHHQ FRQVLGHUHGmRIIHQVLYHl 6HYHUDO \HDUV ODWHU LQ %HWKHO 6FKRRO 'LVW 1R Y &RQVLVWHQW ZLWK WKH 6XSUHPH &RXUWjV )LUVW $PHQGPHQW )UDVHU86 WKH&RXUWmFDVWVRPHGRXEWRQ MXULVSUXGHQFH WDNLQJ VLGHV LQ WKDW PDQQHU ZRXOG EH WKHH[WHQWWRZKLFKVWXGHQWVUHWDLQIUHHVSHHFKULJKWVLQWKH FRQVLGHUHGYLHZSRLQWGLVFULPLQDWLRQZKLFKLVDFFRPSDQLHG VFKRROVHWWLQJl%D[WHUY9LJR&RXQW\6FKRRO&RUS)G E\DQDOOEXWLUUHEXWWDEOHSUHVXPSWLRQRIXQFRQVWLWXWLRQDOLW\ WK&LU ,Q)UDVHUWKH&RXUWKHOGWKDWD 6HH HJ 5RVHQEHUJHU Y 5HFWRU 9LVLWRUV RI 8QLY RI VFKRRO GLVWULFW DFWHG ZLWKLQ LWV SHUPLVVLEOH DXWKRULW\ LQ 9LUJLQLD86 GHVFULELQJYLHZSRLQW GLVFLSOLQLQJ D VWXGHQW ZKR JDYH DQ RIIHQVLYHO\ OHZG DQG GLVFULPLQDWLRQ DV mDQ HJUHJLRXV IRUP RI FRQWHQW LQGHFHQW VSHHFK DW D VFKRRO DVVHPEO\ ,Q UHDFKLQJ LWV GLVFULPLQDWLRQlDQGREVHUYLQJWKDWm>Z@KHQWKHJRYHUQPHQW FRQFOXVLRQWKH&RXUWQRWHGm>W@KHPDUNHGGLVWLQFWLRQEHWZHHQ WDUJHWV QRW VXEMHFW PDWWHU EXW SDUWLFXODU YLHZV WDNHQ E\ WKH SROLWLFDO µPHVVDJHj RI WKH DUPEDQGV LQ 7LQNHU DQG WKH VSHDNHUVRQDVXEMHFWWKHYLRODWLRQRIWKH)LUVW$PHQGPHQW VH[XDOFRQWHQWRIUHVSRQGHQWjVVSHHFKLQWKLVFDVHl)UDVHU LVDOOWKHPRUHEODWDQWl :HVW9LUJLQLD6WDWH%GRI(GXFY 86 DW 7KH &RXUW UHFRJQL]HG mWKDW WKH %DUQHWWH 86 m,IWKHUHLVDQ\IL[HGVWDU FRQVWLWXWLRQDO ULJKWV RI VWXGHQWV LQ SXEOLF VFKRROV DUH QRW LQRXUFRQVWLWXWLRQDOFRQVWHOODWLRQLWLVWKDWQRRIILFLDOKLJK DXWRPDWLFDOO\FRH[WHQVLYHZLWKWKHULJKWVRIDGXOWVLQRWKHU RU SHWW\ FDQ SUHVFULEH ZKDW VKDOO EH RUWKRGR[ LQ SROLWLFV VHWWLQJVl ,G DW ,W GLVWLQJXLVKHG 7LQNHU EHFDXVH WKH QDWLRQDOLVP UHOLJLRQ RU RWKHU PDWWHUV RI RSLQLRQ l YXOJDUDQGRIIHQVLYHVSHHFKDWLVVXHZDVmXQUHODWHGWRDQ\ 3HUU\(GXF$VVjQY3HUU\/RFDO(GXFDWRUVj$VVjQ86 SROLWLFDOYLHZSRLQWl,GDW7KH&RXUWXOWLPDWHO\KHOG %UHQQDQ s GLVVHQWLQJ m2QFH WKH JRYHUQPHQW WKDWWKHVFKRROGLVWULFWKDGWKHDXWKRULW\WRGHWHUPLQHWKDWWKH SHUPLWV GLVFXVVLRQ RI FHUWDLQ VXEMHFW PDWWHU LW PD\ QRW YXOJDUDQGOHZGVSHHFKDWLVVXHZRXOGXQGHUPLQHWKHVFKRROjV LPSRVH UHVWULFWLRQV WKDW GLVFULPLQDWH DPRQJ YLHZSRLQWV RQ EDVLFHGXFDWLRQDOPLVVLRQ,G WKRVH VXEMHFWV ZKHWKHU D QRQSXEOLF IRUXP LV LQYROYHG RU QRWl %XOOIURJ)LOPV,QFY:LFN)6XSS ,Q+D]HOZRRG6FKRRO'LVWULFWY.XKOPHLHU86 &' &DO REVHUYLQJ WKDW mUHJXODWLRQV WKDW WKH &RXUW HFKRHG LWV SRVLWLRQ LQ )UDVHU WKDW m>D@ GLVFULPLQDWH RQ WKH EDVLV RI WKH FRQWHQW RI VSHHFKl DUH VFKRROQHHGQRWWROHUDWHVWXGHQWVSHHFKWKDWLVLQFRQVLVWHQW JHQHUDOO\QRWWROHUDWHGXQGHUWKH)LUVW$PHQGPHQWEXWWKDW ZLWK LWV µEDVLF HGXFDWLRQDO PLVVLRQ HYHQ WKRXJK WKH HYHQ ZKHQ FRQWHQWEDVHG UHJXODWLRQ LV SHUPLWWHG JRYHUQPHQW FRXOG QRW FHQVRU VLPLODU VSHHFK RXWVLGH WKH mGLVFULPLQDWLRQ RQ WKH EDVLV RI SROLWLFDO RU RWKHU YLHZV LV VFKRROjl.XKOPHLHU86DW TXRWLQJ)UDVHU QHYHUWROHUDWHGl DIIjG)G WK&LU %RURIIY9DQ:HUW&LW\ 1R 1R %RURIIY9DQ:HUW&LW\ %GRI(GXFHWDO %GRI(GXFHWDO LGHQWLILHGZLWKLOOHJDOGUXJXVHRURWKHUXQODZIXODFWLYLWLHV 86DW ,Q.XKOPHLHUWKH&RXUWKHOGWKDWWKHVFKRRO WKDW7VKLUWVEHDULQJWKHLULPDJHVDUHXQDFFHSWDEOHIRUKLJK GLVWULFWLQWKDWFDVHGLGQRWYLRODWHWKH)LUVW$PHQGPHQWE\ VFKRRO VWXGHQWV WR ZHDU LQ VFKRRO 6HH HJ :LOOLDPV Y H[HUFLVLQJHGLWRULDOFRQWURORYHUWKHFRQWHQWRIVWXGHQWVSHHFK 6SHQFHU)G WK&LU FRQFOXGLQJ LQDVFKRROVSRQVRUHGSXEOLFDWLRQmVRORQJDV>WKHVFKRROjV@ WKDW VFKRRO RIILFLDOV FRXOG KDOW WKH GLVWULEXWLRQ RI DQ DFWLRQV DUH UHDVRQDEO\ UHODWHG WR OHJLWLPDWH SHGDJRJLFDO LQGHSHQGHQWXQGHUJURXQGVFKRROQHZVSDSHUWKDWFRQWDLQHGDQ FRQFHUQVl,GDW7KH&RXUWGLVWLQJXLVKHGEHWZHHQWKH DGYHUWLVHPHQWIRUDVWRUHWKDWVROGGUXJSDUDSKHUQDOLD ,Q )LUVW$PHQGPHQWDQDO\VLVDSSOLHGLQ7LQNHUDQGWKHDQDO\VLV IDFW DIWHU WKH 6XSUHPH &RXUWj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m>D@VFKRROPD\SURKLELW MXU\ FRXOG HDVLO\ FRQFOXGH WKDW WKLV ZDV H[DFWO\ ZKDW WKH D VWXGHQW IURP ZHDULQJ D 7VKLUW WKDW LV RIIHQVLYH EXW QRW 6FKRROGLG REVFHQHRQVFKRROJURXQGVHYHQLIWKH7VKLUWKDVQRWEHHQ VKRZQ WR FDXVH D VXEVWDQWLDO GLVUXSWLRQ RI WKH DFDGHPLF ,EHOLHYHWKDWWKH6FKRROLQWKLVFDVHFDPHSHULORXVO\FORVH SURJUDPl7KHFRXUWWKHQKHOGWKDWWKH6FKRROGLGQRWDFWLQ WRDGPLWWLQJWKDWLWVGHFLVLRQWRSURKLELW%RURIIIURPZHDULQJ D PDQLIHVWO\ XQUHDVRQDEOH PDQQHU LQ ILQGLQJ WKH 7VKLUWV WKHWKUHHKHDGHGsHVXV7VKLUWZDVPDGHSUHFLVHO\EHFDXVHWKH RIIHQVLYHDQGLQHQIRUFLQJLWVGUHVVFRGH 6FKRROIRXQGWKH7VKLUWjVYLHZSRLQWUHSXJQDQW3ULQFLSDO &OLIWRQH[SODLQHGLQDQDIILGDYLWWKDW ,QWKLVDSSHDO%RURIIDUJXHVWKDWWKHGLVWULFWFRXUWHUUHGLQ JUDQWLQJVXPPDU\MXGJPHQWWRWKH6FKRRO,QKLVDSSHOODWH ,KDYHIRXQGWKHWVKLUWZKLFKFRQWDLQVWKHWKUHHIDFHG EULHIKHPDLQWDLQV sHVXVWREHRIIHQVLYH7KLVWVKLUWLVRIIHQVLYHEHFDXVH LWPRFNVDPDMRUUHOLJLRXVILJXUH0RFNLQJDQ\UHOLJLRXV 7KHZD\WRDQDO\]HWKLVLVWRILUVWGHWHUPLQHZKHWKHUWKH ILJXUHLVFRQWUDU\WRRXUHGXFDWLRQDOPLVVLRQVZKLFKLVWR VSHHFK LV µYXOJDU RU RIIHQVLYHj ,I LW LV WKHQ )UDVHU EH UHVSHFWIXO RI RWKHUV DQG RWKHUVj EHOLHIV 6HFRQG DOORZV EDQQLQJ LW DQG WKH DQDO\VLV LV FRPSOHWH PRFNLQJ WKLV SDUWLFXODU UHOLJLRXV ILJXUH LV SDUWLFXODUO\ 2WKHUZLVHDSSO\7LQNHUDQGH[DPLQHLIWKHUHLVDWKUHDW RIIHQVLYH WR D VLJQLILFDQW SRUWLRQ RI RXU VFKRRO RIVXEVWDQWLDOGLVUXSWLRQVXFKWKDWZRXOGDOORZWKHVFKRRO FRPPXQLW\LQFOXGLQJVWXGHQWVWHDFKHUVVWDIIPHPEHUV WREDQWKHVSHHFK DQGSDUHQWV $SSHOODQWjV%ULHIDW%RURIIFODLPVWKDWWKHDGPLQLVWUDWRUVj ,QYLHZRIWKLVH[SODQDWLRQ,DPDWDORVVWRXQGHUVWDQG GHFLVLRQ WKDW WKH 7VKLUWV DUH RIIHQVLYH ZDV PDQLIHVWO\ KRZWKHPDMRULW\FDQVD\WKDWm>W@KHUHFRUGLVGHYRLGRIDQ\ XQUHDVRQDEOHDQGXQVXSSRUWHGE\WKHHYLGHQFH%RURIIUHOLHV HYLGHQFH WKDW WKH 7VKLUWV WKH µWKUHHKHDGHG sHVXVj 7VKLUW WRDJUHDWH[WHQWRQHYLGHQFHWKDWVLPLODU7VKLUWVSURPRWLQJ SDUWLFXODUO\ZHUHSHUFHLYHGWRH[SUHVVDQ\SDUWLFXODUSROLWLFDO RWKHU EDQGV VXFK DV 6OD\HU DQG 0HJDGHWK ZHUH QRW RUUHOLJLRXVYLHZSRLQWl2IFRXUVHWKHWKUHHKHDGHGsHVXV7 SURKLELWHGDQGDOVRRQHYLGHQFHWKDWRQHRWKHUVWXGHQWZDV %RURIIY9DQ:HUW&LW\ 1R 1R %RURIIY9DQ:HUW&LW\ %GRI(GXFHWDO %GRI(GXFHWDO QRWSURKLELWHG IURPFDUU\LQJDEDFNSDFNWKDWGRQQHGWKUHH BBBBBBBBBBBBBBBBB m0DULO\Q0DQVRQlSDWFKHV%HFDXVHWKH7VKLUWVZHUHQRW mRIIHQVLYHl%RURIIUHDVRQVDQGEHFDXVHWKHUHLVQRHYLGHQFH ',66(17 WKDWDVXEVWDQWLDOGLVUXSWLRQZRXOGDULVHIURPKLVZHDULQJWKH BBBBBBBBBBBBBBBBB 7VKLUWVWKHQWKH6FKRROYLRODWHGKLV)LUVW$PHQGPHQWULJKWV :HGLVDJUHH 521$/' /(( *,/0$1 &LUFXLW sXGJH GLVVHQWLQJ 6XPPDU\MXGJPHQWLVXQTXHVWLRQDEO\DYDOXDEOHPHDQVIRU 7KH VWDQGDUG IRU UHYLHZLQJ WKH VXSSUHVVLRQ RI YXOJDU RU DYRLGLQJXQQHFHVVDU\WULDOV$SH[2LO&RY'L0DXUR SODLQO\RIIHQVLYHVSHHFKLVJRYHUQHGE\)UDVHUVXSUD6HH )G G&LU EXWLWLVXVXDOO\LQDSSURSULDWHLQ &KDQGOHUY0F0LQQYLOOH6FKRRO'LVWULFW )G FLYLO ULJKWV FDVHV ZKHQ WKHUH DUH GLVSXWHG DQG PDWHULDO WK &LU ILQGLQJ WKDW VFKRRO EXWWRQV FRQWDLQLQJ TXHVWLRQVDERXWWKHUHDVRQDEOHQHVVRIDQRIILFLDOjVDFWLRQVRU LQRIIHQVLYHWHUPVPD\QRWEHSURKLELWHGDEVHQWDVKRZLQJRI DERXWDQRIILFLDOj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mWKUHH 'RXJODV)G WK&LU REVHUYLQJWKDW KHDGHGsHVXVl7VKLUWWREHRIIHQVLYHEHFDXVHRIWKHm6HH1R VXPPDU\MXGJPHQWLVmDQLQDGHTXDWHSURFHGXUHIRUVRUWLQJ 7UXWK+HDU1R7UXWK6SHDN1R7UXWKlPDQWUDRQWKHIURQW RXWQHEXORXVTXHVWLRQVRIPRWLYDWLRQlLQD)LUVW$PHQGPHQW DQG EHFDXVH RI WKH REYLRXV LPSOLFDWLRQ RI WKH ZRUG UHWDOLDWLRQFDVH %&+$5/(6 $/$1 :5,*+7 $57+85 5 m%(/,(9(l ZLWK m/,(l KLJKOLJKWHG RQ WKH EDFN 7KH 0,//(5 0$5< .$< .$1( )('(5$/ 35$&7,&( $1' SULQFLSDOVSHFLILFDOO\VWDWHGWKDWWKHGLVWRUWHGsHVXVILJXUHZDV 352&('85( SS Q Q RIIHQVLYHEHFDXVHm>P@RFNLQJDQ\UHOLJLRXVILJXUHLVFRQWUDU\ G HG QRWLQJ WKDW TXHVWLRQV UHJDUGLQJ WKH WRRXUHGXFDWLRQDOPLVVLRQZKLFKLVWREHUHVSHFWIXORIRWKHUV UHDVRQDEOHQHVVRIRIILFLDOVjDFWLRQVLQ)LUVW$PHQGPHQWFDVHV DQG RWKHUVj EHOLHIVl 7KH RWKHU 7VKLUWV ZHUH WUHDWHG ZLWK PD\SUHFOXGHWKHHQWU\RIVXPPDU\MXGJPHQW 8QOLNHWKH HTXDOGLVDSSURYDO&OLIWRQZHQWRQWRH[SODLQWKHUHDVRQLQJ PDMRULW\,EHOLHYHWKDWDMXU\FRXOGUHDVRQDEO\ILQGWKDWWKH EHKLQGWKH6FKRROjVSURKLELWLRQRIWKH7VKLUWVJHQHUDOO\ UHDVRQ ZK\ 6FKRRO RIILFLDOV GHFODUHG %RURIIjV 0DULO\Q 0DQVRQ7VKLUWVmRIIHQVLYHlZDVEHFDXVHWKHILUVW0DULO\Q $OWKRXJK , GR QRW NQRZ LI >%RURII@ LQWHQGV WR 0DQVRQ7VKLUWKHZRUHFRQWDLQHGDPHVVDJHDERXWUHOLJLRQ FRPPXQLFDWH DQ\WKLQJ ZKHQ ZHDULQJ WKH 0DULO\Q WKDWWKH\FRQVLGHUHGREQR[LRXV$FFRUGLQJO\,EHOLHYHWKDW 0DQVRQ WVKLUWV , EHOLHYH WKDW WKH 0DULO\Q 0DQVRQ W VXPPDU\MXGJPHQWLQIDYRURIWKH%RDUGRQ%RURIIj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m\RXFDQNLOO GXHSURFHVVFODLPXQGHUWKHODZRIWKLVFLUFXLWHYHQLILWKDG \RXUVHOIQRZEHFDXVH\RXjUHGHDGLQP\PLQGlmOHWjVMXPS EHHQSURSHUO\SUHVHUYHG6HH*IHOOY5LFNHOPDQ)G XSRQWKHVKDUSVZRUGVDQGFXWDZD\RXUVPLOHVZLWKRXWWKH WK &LU UHMHFWLQJ WKH DUJXPHQW WKDW mWKH WKUHDWRIGHDWKWKHUHjVQRUHDVRQWROLYHDWDOOlDQGm/HWjVMXVW IUHHGRPRIFKRRVLQJRQHjVKDLUVW\OHLVDIXQGDPHQWDOULJKWl NLOO HYHU\RQH DQG OHW \RXU JRG VRUW WKHP RXW)XFN sDFNVRQY'RUULHU)G WK&LU SHU LW(YHU\ERG\jVVRPHRQHHOVHjVQLJJHU,NQRZ\RXDUHVRDP FXULDP UHMHFWLQJWKHDUJXPHQWWKDWKLJKVFKRROVWXGHQWVKDYH ,,ZDVQjWERUQZLWKHQRXJKPLGGOHILQJHUVl7KHSULQFLSDO DFRQVWLWXWLRQDOO\SURWHFWHGSULYDF\LQWHUHVWLQEHLQJDEOHWR DWWHVWHGWKDWWKRVHW\SHVRIO\ULFVZHUHFRQWUDU\WRWKHVFKRRO ZHDUORQJKDLUWRVFKRRO %XWVHH0DVVLHY+HQU\)G PLVVLRQDQGJRDORIHVWDEOLVKLQJmDFRPPRQFRUHRIYDOXHV WK&LU FRQFOXGLQJWKDWKLJKVFKRROVWXGHQWV WKDWLQFOXGHKXPDQGLJQLW\DQGZRUWKVHOIUHVSHFWDQG KDYHDOLEHUW\RUSULYDF\LQWHUHVWLQJRYHUQLQJWKHLUSK\VLFDO UHVSRQVLELOLW\l DQG DOVR WKH JRDO RI LQVWLOOLQJ mLQWR WKH DSSHDUDQFHLQVFKRRO %LVKRSY&RODZ)G VWXGHQWVDQXQGHUVWDQGLQJDQGDSSUHFLDWLRQRIWKHLGHDOVRI WK&LU VDPH %UHHQY.DKO )G GHPRFUDF\DQGKHOSWKHPWREHGLOLJHQWDQGFRPSHWHQWLQWKH WK&LU VDPH ,QDQ\HYHQWWKH6XSUHPH&RXUWKDV SHUIRUPDQFHRIWKHLUREOLJDWLRQVDVFLWL]HQVl UHSHDWHGO\HPSKDVL]HGWKDWVXEVWDQWLYHGXHSURFHVVLVQRWWR EHXVHGDVDIDOOEDFNFRQVWLWXWLRQDOSURYLVLRQZKHQDQRWKHU &OLIWRQDOVRVXEPLWWHGWRWKHGLVWULFWFRXUWPDJD]LQHDUWLFOHV SURYLVLRQRUDPHQGPHQW LQWKLVFDVHWKH)LUVW$PHQGPHQW WKDWSRUWUD\0DULO\Q0DQVRQDVKDYLQJDmSURGUXJSHUVRQDl GLUHFWO\DGGUHVVHVWKHVXEMHFW6HH&RQQY*DEEHUW86 DQGDUWLFOHVZKHUHLQ0DULO\Q0DQVRQKLPVHOIDGPLWVWKDWKH m:HKDYHKHOGWKDWZKHUHDQRWKHUSURYLVLRQ LVDGUXJXVHUDQGSURPRWHVGUXJXVH&OLIWRQFRQFOXGHVIURP RI WKH &RQVWLWXWLRQ µSURYLGHV DQ H[SOLFLW WH[WXDO VRXUFH RI KLVIRXUWHHQ\HDUVRIH[SHULHQFHWKDWFKLOGUHQDUHJHQXLQHO\ FRQVWLWXWLRQDO SURWHFWLRQj D FRXUW PXVW DVVHVV D SODLQWLIIjV LQIOXHQFHGE\WKHURFNJURXSDQGVXFKSURSDJDQGD FODLPV XQGHU WKDW H[SOLFLW SURYLVLRQ DQG QRW WKH PRUH JHQHUDOL]HGQRWLRQRIµVXEVWDQWLYHGXHSURFHVVjl TXRWLQJ $IILGDYLWV RI RWKHU 6FKRRO RIILFLDOV VXSSRUW WKH *UDKDPY&RQQRU 86 DGPLQLVWUDWLRQjVSRVLWLRQWKDWWKH0DULO\Q0DQVRQ7VKLUWV JHQHUDOO\ VSHDNLQJ ZHUH SURKLELWHG EHFDXVH WKH\ ZHUH ,,,&21&/86,21 mFRXQWHUSURGXFWLYHDQGJRDJDLQVWWKHHGXFDWLRQDOPLVVLRQRI WKH9DQ:HUW&LW\6FKRRO'LVWULFWFRPPXQLW\l$IILGDYLWRI )RUWKHIRUHJRLQJUHDVRQVDQGIRUWKHUHDVRQVVWDWHGLQLWV sRKQ%DVLQJHU6HHDOVR$IILGDYLWRI'DYLG)URHOLFK RSLQLRQZH$)),50WKHGHFLVLRQRIWKHGLVWULFWFRXUW VWDWLQJ YLHZ WKDW WKH 7VKLUWV DUH D GLVWUDFWLRQ DQG DUH mFRQWUDU\ WR RXU HGXFDWLRQDO PLVVLRQl $IILGDYLW RI 5LWD +XUOHVV VWDWLQJ WKH 6FKRROjV FRQFOXVLRQ WKDW 0DULO\Q 0DQVRQ7VKLUWVmKDYHQREXVLQHVVLQDVFKRROVHWWLQJlDQG %RURIIY9DQ:HUW&LW\ 1R 1R %RURIIY9DQ:HUW&LW\ %GRI(GXFHWDO %GRI(GXFHWDO DUH mDVVRFLDWHG ZLWK YDOXHV WKDW DUH FRXQWHUSURGXFWLYH DQG ,Q RXU YLHZ KRZHYHU WKH HYLGHQFH GRHV QRW VXSSRUW DQ FRQWUDU\ WR WKH HGXFDWLRQDO PLVVLRQ RI WKH 9DQ :HUW &LW\ LQIHUHQFHWKDWWKH6FKRROLQWHQGHGWRVXSSUHVVWKHH[SUHVVLRQ 6FKRRO'LVWULFWl 7KHUHFRUGLVGHYRLGRIDQ\HYLGHQFHWKDW RI%RURIIjVYLHZSRLQWEHFDXVHRILWVUHOLJLRXVLPSOLFDWLRQV WKH 7VKLUWV WKH mWKUHHKHDGHG sHVXVl 7VKLUW SDUWLFXODUO\ 5DWKHUWKHUHFRUGGHPRQVWUDWHVWKDWWKH6FKRROSURKLELWHG ZHUHSHUFHLYHGWRH[SUHVVDQ\SDUWLFXODUSROLWLFDORUUHOLJLRXV %RURIIjV 0DULO\Q 0DQVRQ 7VKLUWV JHQHUDOO\ EHFDXVH WKLV YLHZSRLQW SDUWLFXODUURFNJURXSSURPRWHVGLVUXSWLYHDQGGHPRUDOL]LQJ YDOXHVZKLFKDUHLQFRQVLVWHQWZLWKDQGFRXQWHUSURGXFWLYHWR 8QGHUWKHVHFLUFXPVWDQFHVZHILQGWKDWWKHGLVWULFWFRXUW HGXFDWLRQ7KHGLVVHQWLQJMXGJHDJUHHVWKDWm>L@IWKHRQO\7 ZDV FRUUHFW LQ ILQGLQJ WKDW WKH 6FKRRO GLG QRW DFW LQ D VKLUWVDWLVVXHLQWKLVFDVHZHUHWKHRQHVWKDWVLPSO\GLVSOD\HG PDQLIHVWO\XQUHDVRQDEOHPDQQHULQSURKLELWLQJWKH0DULO\Q LOOXVWUDWLRQVRI0DULO\Q0DQVRQODUJHO\XQDGRUQHGE\WH[WWKH 0DQVRQ 7VKLUWV SXUVXDQW WR LWV GUHVV FRGH 7KH 6XSUHPH MXGJPHQW RI WKH GLVWULFW FRXUW PLJKW EH VXVWDLQDEOHl +H &RXUW KDV KHOG WKDW WKH VFKRRO ERDUG KDV WKH DXWKRULW\ WR UHDVRQVKRZHYHUWKDWWKHRQH7VKLUWIHDWXULQJWKHGLVWRUWHG GHWHUPLQH mZKDW PDQQHU RI VSHHFK LQ WKH FODVVURRP RU LQ sHVXV ILJXUH PD\ KDYH EHHQ SURKLELWHG EHFDXVH RI WKH VFKRROLVLQDSSURSULDWHl)UDVHU86DW7KH&RXUW 6FKRROjV GLVDJUHHPHQW ZLWK LWV UHOLJLRXV PHVVDJH ,Q RXU KDV GHWHUPLQHG WKDW m>D@ VFKRRO QHHG QRW WROHUDWH VWXGHQW YLHZWKH6FKRROjVWUHDWPHQWRIWKHmWKUHHKHDGHGsHVXVl7 VSHHFKWKDWLVLQFRQVLVWHQWZLWKLWVµEDVLFHGXFDWLRQDOPLVVLRQ VKLUW DQG WKH RWKHUV LV QRW GLVWLQJXLVKDEOH 7KH UHFRUG HYHQ WKRXJK WKH JRYHUQPHQW FRXOG QRW FHQVRU VLPLODU HVWDEOLVKHVWKDWDOORIWKH7VKLUWVZHUHEDQQHGLQWKHVDPH VSHHFK RXWVLGH WKH VFKRROjl .XKOPHLHU 86 DW PDQQHU IRU WKH VDPH UHDVRQVWKH\ ZHUH GHWHUPLQHG WR EH TXRWLQJ )UDVHU 86 DW ,Q WKLV FDVH ZKHUH YXOJDURIIHQVLYHDQGFRQWUDU\WRWKHHGXFDWLRQDOPLVVLRQRI %RURIIjV 7VKLUWV FRQWDLQ V\PEROV DQG ZRUGV WKDW SURPRWH WKHVFKRRO6HH3\OHY6RXWK+DGOH\6FKRRO&RPPLWWHH YDOXHVWKDWDUHVRSDWHQWO\FRQWUDU\WRWKHVFKRROjVHGXFDWLRQDO )6XSS '0DVV XSKROGLQJDSURKLELWLRQ PLVVLRQWKH6FKRROKDVWKHDXWKRULW\XQGHUWKHFLUFXPVWDQFHV RQ7VKLUWSURFODLPLQJm6HH'LFNGULQN6HH'LFNGULYH6HH RIWKLVFDVHWRSURKLELWWKRVH7VKLUWV 'LFNGLH'RQjWEHD'LFNlDQGm&RHG1DNHG%DQG 'R,W 7R7KH5K\WKPl 7KHGLVVHQWZRXOGILQGWKDWWKHHYLGHQFHZDVVXIILFLHQWIRU D UHDVRQDEOH MXU\ WR LQIHU WKDW WKH 6FKRRO KDV HQJDJHG LQ ,QVXPZHDUHRIWKHYLHZWKDWWKH6FKRROKDVWKHDXWKRULW\ mYLHZSRLQWGLVFULPLQDWLRQlE\SURKLELWLQJWKH7VKLUWVVLPLODU WR SURKLELW 0DULO\Q 0DQVRQ 7VKLUWV XQGHU WKHVH WRWKHDUPEDQGSURKLELWLRQLQ7LQNHU7KHGLVVHQWSULPDULO\ FLUFXPVWDQFHV UHOLHV RQ RQH VHQWHQFH LQ 3ULQFLSDO &OLIWRQjV DIILGDYLW LQ ZKLFK&OLIWRQVWDWHGWKDWKHIRXQGWKHmWKUHHKHDGHGsHVXVl7 &)RXUWHHQWK$PHQGPHQW&ODLP VKLUW WR EH RIIHQVLYH EHFDXVH mLW PRFNV D PDMRU UHOLJLRXV ILJXUHl8QGHUWKDWUHDVRQLQJLIDMXU\ILQGVWKDWWKH6FKRRO $VIRU%RURIIjV)RXUWHHQWK$PHQGPHQWFODLPZHGRQRW KDV SURKLELWHG WKH 7VKLUWV EHFDXVH RI DQ\ YLHZSRLQW EHOLHYHWKDWLWZDVSUHVHUYHGIRURXUUHYLHZ%RURIIVXJJHVWV H[SUHVVHG RQ WKH VKLUWV WKHQ WKH 6FKRRO PXVW VKRZ WKDW LW WKDWWKH6FKRROjVDFWLRQVYLRODWHGKLVULJKWWRmGXHSURFHVVl UHDVRQDEO\SUHGLFWHGWKDWDOORZLQJWKH7VKLUWVZRXOGKDYH EXWKHGRHVQRWGLVFXVVWKLVFODLPDWDOOLQKLVEULHIRQDSSHDO FDXVHG D VXEVWDQWLDO GLVUXSWLRQ RI RU PDWHULDO LQWHUIHUHQFH &I%XVKY'LFWDSKRQH&RUS)G WK&LU ZLWKVFKRRODFWLYLWLHV6HH7LQNHU 86DW QRWLQJWKDWFODLPVQRWSXUVXHGRQDSSHDOZLOOW\SLFDOO\ EHFRQVLGHUHGDEDQGRQHG 8QLWHG6WDWHVY(OGHU )G WK&LU KROGLQJWKDWLVVXHVUDLVHGE\DQ