5(&200(1'(' )25 3$57,$/7(;7 38%/,&$7,21 3XUVXDQW WR 6L[WK &LUFXLW 5XOH (/(&7521,& &,7$7,21 )(' $SS 3 WK &LU )LOH 1DPH DS 81,7('67$7(6&28572)$33($/6 )257+(6,;7+&,5&8,7 BBBBBBBBBBBBBBBBB 81,7(' 67$7(6 2) $0(5,&$ ; 3ODLQWLII$SSHOOHH 1RV Y ! 0$5/$1'2 +$5'< +(15< *5((1 $17+21< 5286( DQG6+8521 0225( 'HIHQGDQWV$SSHOODQWV 1 $SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW IRUWKH6RXWKHUQ'LVWULFWRI2KLRDW&ROXPEXV 1RnsDPHV/*UDKDP'LVWULFWsXGJH $UJXHGDQG6XEPLWWHG$XJXVW 'HFLGHGDQG)LOHG6HSWHPEHU %HIRUH68+5+(,15,&+DQG'$8*+75(<&LUFXLW sXGJHV&2//,(5 'LVWULFWsXGJH 7KH +RQRUDEOH &XUWLV / &ROOLHU 8QLWHG 6WDWHV 'LVWULFW sXGJH IRU WKH (DVWHUQ 'LVWULFW RI 7HQQHVVHH VLWWLQJ E\ GHVLJQDWLRQ 8QLWHG6WDWHVY 1RV 1RV 8QLWHG6WDWHVY +DUG\HWDO +DUG\HWDO BBBBBBBBBBBBBBBBB HYLGHQFH WKH MXURUV DUH PRUH OLNHO\ WKDQ QRW WR XVH WKH HYLGHQFHIRUWKHYHU\SXUSRVHIRUZKLFKWKHILUVWVHQWHQFHRI &2816(/ WKH UXOH VWDWHV WKDW LW PD\ QRW EH XVHGl ,G m*LYHQ WKH SRWHQWLDO IRU FRQIXVLRQ PLVXVH DQG XQIDLU SUHMXGLFH IURP $5*8(''HQQLV&%HOOL&ROXPEXV2KLRsDPHV(/ RWKHUDFWHYLGHQFHLWLVSUHIHUDEOHWKDWWKHGLVWULFWFRXUWPDNH :DWVRQ&ROXPEXV2KLRIRU$SSHOODQWV7HUU\/HKPDQQ DQH[SOLFLWILQGLQJUHJDUGLQJWKH5XOHEDODQFLQJl8QLWHG $66,67$1781,7('67$7(6$77251(<&LQFLQQDWL 6WDWHVY0\HUV)GWK&LUFHUWGHQLHG 2KLR IRU $SSHOOHH 21 %5,() 'HQQLV & %HOOL 86 6 &W / (G G &ROXPEXV 2KLR sDPHV (/ :DWVRQ &ROXPEXV 2KLR HPSKDVLVDGGHG:HDOVRQRWHWKHGLVWULFWFRXUWIDLOHGWR .HQQHWK56SLHUW&ROXPEXV2KLRIRU$SSHOODQWV*DU\/ PDNHDQH[SOLFLWILQGLQJLQWKLVUHJDUG D IDLOXUHZKLFKLQ 6SDUWLV.HYLQ:.HOOH\$66,67$1781,7('67$7(6 'HIHQGDQW5RXVHjVYLHZUHTXLUHVUHYHUVDO+RZHYHUVLQFH $77251(<6&ROXPEXV2KLRIRU$SSHOOHH ZH KDYH GHFLGHG mEDFNJURXQGl RWKHU WKDQ DV ZH KDYH H[SODLQHGDERYHLVQRWDSURSHUEDVLVIRUDGPLVVLRQXQGHU BBBBBBBBBBBBBBBBB 5XOHEZHQHHGQRWFRQVLGHU5RXVHjVDUJXPHQW 23,1,21 :KLOHZHGRILQGWKHGLVWULFWFRXUWHUUHGLQDGPLWWLQJWKLV BBBBBBBBBBBBBBBBB HYLGHQFH LQ OLJKW RI WKH RYHUZKHOPLQJ HYLGHQFH DJDLQVW 5RXVH ZH QHYHUWKHOHVV ILQG WKLV HUURU WR EH KDUPOHVV ,Q &857,6/&2//,(5'LVWULFWsXGJH,QWKLVFRQVROLGDWHG GHWHUPLQLQJZKHWKHUDQHUURULVKDUPOHVVWKHUHYLHZLQJFRXUW DSSHDO'HIHQGDQWV0DUODQGR+DUG\+HQU\*UHHQ$QWKRQ\ mPXVWWDNHDFFRXQWRIZKDWWKHHUURUPHDQWWR>WKHMXU\@QRW 5RXVH DQG 6KXURQ 0RRUH FKDOOHQJH WKHLU UHVSHFWLYH VLQJOHGRXWDQGVWDQGLQJDORQHEXWLQUHODWLRQWRDOOHOVHWKDW MXGJPHQWV RI FRQYLFWLRQ DQGRU VHQWHQFHV LQ WKLV GUXJ KDSSHQHGl.RWWHDNRVY8QLWHG6WDWHV86 FRQVSLUDF\FDVH%HFDXVHWKHRQO\LVVXHRISUHFHGHQWLDOYDOXH 6 &W / (G 7KH JRYHUQPHQW LV'HIHQGDQW5RXVHjVDUJXPHQWFRQFHUQLQJDGPLVVLRQRIRWKHU SUHVHQWHG PRUH WKDQ VXIILFLHQW RWKHU HYLGHQFH WR VXSSRUW DFWVHYLGHQFHSXUVXDQWWR)HG5(YLGEZHDGGUHVVLW 5RXVHjVFRQYLFWLRQLQFOXGLQJWHVWLPRQ\E\ZLWQHVVHVRWKHU EHORZ $OO IDFWV QRW UHOHYDQW WR 'HIHQGDQW 5RXVH DQG DOO WKDQ/HH*LOORI5RXVHjVFRRNLQJDQGVHOOLQJRIFUDFNFRFDLQH UHPDLQLQJLVVXHVZLWKUHVSHFWWRHDFKGHIHQGDQWDUHDGGUHVVHG ,QOLJKWRIRWKHUFRPSHOOLQJHYLGHQFHDJDLQVW5RXVHZHFDQ LQDQXQSXEOLVKHGDSSHQGL[WRWKLVRSLQLRQ VD\ ZLWK mIDLU DVVXUDQFHl WKDW WKH MXU\jV YHUGLFW mZDV QRW ,5(/(9$17)$&76 VXEVWDQWLDOO\VZD\HGlE\DQ\LPSURSHUO\UHFHLYHGHYLGHQFHRI RWKHUFULPHVFRPPLWWHGE\WKHGHIHQGDQW 2Q 2FWREHU WKH *UDQG sXU\ IRU WKH 6RXWKHUQ 'LVWULFWRI2KLRUHWXUQHGDFRXQWVXSHUVHGLQJLQGLFWPHQW ,,,&21&/86,21 DJDLQVW LQGLYLGXDOV DOOHJLQJ YDULRXV GUXJ RIIHQVHV ,Q VXP ZH FRQFOXGH WKH HYLGHQFH RI 5RXVHjV GUXJ 'HIHQGDQW $QWKRQ\ 5RXVH ZDV FKDUJHG LQ FRXQW RQH ZLWK WUDQVDFWLRQVLQZDVLPSURSHUO\DGPLWWHG+RZHYHUZH FRQVSLUDF\WRSRVVHVVZLWKLQWHQWWRGLVWULEXWHDQGFRQVSLUDF\ XOWLPDWHO\ ILQG WKLV HUURU ZDV KDUPOHVV DQG WKHUHIRUH WRGLVWULEXWHPRUHWKDQJUDPVRIFRFDLQHEDVHLQYLRODWLRQ $)),50WKHGLVWULFWFRXUW RI86&7KHLQGLFWPHQWFKDUJHGWKHFRQVSLUDF\ WRRN SODFH m>I@URP RQ RU DERXW 0D\ WKURXJK DQG LQFOXGLQJWKHGDWHRIWKH6XSHUVHGLQJ,QGLFWPHQW>2FWREHU 8QLWHG6WDWHVY 1RV 1RV 8QLWHG6WDWHVY +DUG\HWDO +DUG\HWDO >:@H ILUVW UHYLHZ IRU FOHDU HUURU WKH GLVWULFW FRXUWjV @ WKH H[DFW GDWHV EHLQJ XQNQRZQ WR WKH JUDQG MXU\l IDFWXDOGHWHUPLQDWLRQWKDWWKHmRWKHUDFWVlRFFXUUHG 5RXVHZHQWWRWULDO DORQJZLWKFRGHIHQGDQWV+HQU\*UHHQ 6HFRQG ZH H[DPLQH GH QRYR WKH GLVWULFW FRXUWjV OHJDO 0DXULFH0RUULVDQG'HQQLV(YDQV GHWHUPLQDWLRQ WKDW WKH HYLGHQFH ZDV DGPLVVLEOH IRU D OHJLWLPDWH SXUSRVH )LQDOO\ ZH UHYLHZ IRU DEXVH RI 7KHJRYHUQPHQWSUHVHQWHGHYLGHQFHDWWULDOWKDWDJURXSRI GLVFUHWLRQ WKH GLVWULFW FRXUWjV GHWHUPLQDWLRQ WKDW WKH LQGLYLGXDOVIURP*DU\,QGLDQDDQGIURP &ROXPEXV2KLR SUREDWLYH YDOXH RI WKH RWKHU DFWV HYLGHQFH LV QRW ZHUHDOOLQYROYHGLQDVWUHHWJDQJNQRZQDVWKHm*,%R\Vl VXEVWDQWLDOO\RXWZHLJKHGE\LWVXQIDLUO\SUHMXGLFLDOHIIHFW 7KHJRYHUQPHQWFRQWHQGHGWKLVJURXSGLVWULEXWHGGUXJVIURP YDULRXV ORFDWLRQV LQ WKH QHDU HDVW VLGH DQG ZHVW VLGH RI 8QLWHG 6WDWHV Y 0HUULZHDWKHU )G DW FLWDWLRQV &ROXPEXV6HYHUDOFRRSHUDWLQJZLWQHVVHVWHVWLILHGDWWULDO RPLWWHG 7KHJRYHUQPHQWjVNH\ZLWQHVVZDV/HH*LOO ,Q WKLV FDVH WKH UHFRUG GRHV QRW UHIOHFW WKH GLVWULFW FRXUW $WWULDO*LOOWHVWLILHGKHZHQWWRSULVRQLQ:KHQKH PDGHWKHUHTXLUHGIDFWXDOILQGLQJWKHRWKHUEDGDFWVRFFXUUHG ZDV UHOHDVHG LQ KH FRQWDFWHG $QWKRQ\ 5RXVH ZKR +RZHYHUVLQFH5RXVHGLGQRWGLVSXWHWKLVIDFWDWWULDOQRU KHOSHGKLPJHWEDFNLQWRWKHGUXJEXVLQHVV*LOOVROGFUDFN GRHVKHGRVRRQDSSHDOZHGRQRWILQGWKHGLVWULFWFRXUWjV VXSSOLHGE\5RXVHRXWRIVHYHUDOORFDWLRQVLQ&ROXPEXV,Q IDLOXUHUHTXLUHVUHYHUVDO WKH VSULQJ RI D FRQILGHQWLDO LQIRUPDQW FRQWDFWHG D %XUHDX RI $OFRKRO 7REDFFR DQG )LUHDUPV m$7)l DJHQW ,QVWHDGRILGHQWLI\LQJRQHRIWKHHQXPHUDWHGSXUSRVHVXQGHU DERXWWKH*,%R\VjFUDFNRSHUDWLRQ$7)DQGWKH&ROXPEXV 5XOHEWKHJRYHUQPHQWJDYHDVLWVUHDVRQmEDFNJURXQGl 3ROLFH 'HSDUWPHQW FRQGXFWHG DQ LQYHVWLJDWLRQ 2IILFHUV DQG FRPPRQ SODQ RU VFKHPH 7KH GLVWULFW FRXUW JDYH LQVWDOOHGDYLGHRFDPHUDDWWKHLQIRUPDQWjVUHVLGHQFHVLQFH EDFNJURXQG DV LWV UDWLRQDOH IRU DGPLWWLQJ WKH HYLGHQFH PDQ\RIWKH*,%R\VjDOOHJHGO\IUHTXHQWHGWKHSODFH:KHQ $OWKRXJKWKHOLVWRISHUPLVVLEOHSXUSRVHVHQXPHUDWHGXQGHU WKHLQIRUPDQWPRYHGDQRWKHUYLGHRFDPHUDZDVLQVWDOOHGDW 5XOH E LV QRW H[KDXVWLYH ZH FDQQRW VHH KRZ WKH QHZ UHVLGHQFH 7KHVH FDPHUDV FDSWXUHG DQG UHFRUGHG mEDFNJURXQGlDVGHILQHGE\WKHJRYHUQPHQWZRXOGVHUYHWKH YDULRXVXQODZIXODFWLYLWLHVLQFOXGLQJGLVWULEXWLRQDQGXVHRI HQGV RI WKH UXOH 7R DOORZ D JHQHUDO H[FHSWLRQ IRU FUDFNDQGSRZGHUFRFDLQHE\VHYHUDORIWKH*,%R\V*LOODQG mEDFNJURXQGFLUFXPVWDQFHVlDQH[FHSWLRQQRWDVFDUHIXOO\ RWKHUFRRSHUDWLQJZLWQHVVHVWHVWLILHGH[WHQVLYHO\DVWR5RXVHj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sRKQVRQ)GDWm$OHJLWLPDWHFRPSRQHQWRIWKDW FRXQVHOREMHFWHGDQGWKHWULDOMXGJHKHOGDEHQFKFRQIHUHQFH ZHLJKLQJ SURFHVV LV WKH WULDO FRXUWjV LQIRUPHG MXGJPHQW RXWRIWKHMXU\jVSUHVHQFH7KHJRYHUQPHQWH[SODLQHGLWZDV ZKHWKHUGHVSLWHWKHµWHFKQLFDOjDGPLVVLELOLW\RIWKHRWKHUDFWV DWWHPSWLQJ WR VKRZ EDFNJURXQG WKDW LV KRZ /HH *LOO PHW 8QLWHG6WDWHVY 1RV 1RV 8QLWHG6WDWHVY +DUG\HWDO +DUG\HWDO $QWKRQ\ 5RXVH DQG WKH GHYHORSPHQW RI WKHLU UHODWLRQVKLS /RZH ZHUH QRW QDPHG LQ WKH FKDUJHG FRQVSLUDF\ 7KLV 7KHJRYHUQPHQWDOVRFRQWHQGHGWKLVLQIRUPDWLRQVKRZHGD WHVWLPRQ\ZDVQRWQHFHVVDU\WRH[SODLQWKHFKDUJHGRIIHQVH FRPPRQ VFKHPH RU SODQ EHWZHHQ *LOO 5RXVH DQG RWKHUV FRPSOHWH WKH VWRU\ RI *LOOjV WHVWLPRQ\ QRU GLG LW WHQG WR ZKLFK FRQWLQXHG LQ WKH DOOHJHG VWDUWLQJ \HDU RI WKH HVWDEOLVKWKHFKDUJHGFRQVSLUDF\LWVHOI7KXVWKHWULDOFRXUW FRQVSLUDF\ 'HIHQVH FRXQVHO DUJXHG WKLV LQIRUPDWLRQ ZDV HUUHGLQDGPLWWLQJ*LOOjVWHVWLPRQ\DVEDFNJURXQGHYLGHQFH SUHMXGLFLDO DQG FRQVWLWXWHG LPSURSHU FKDUDFWHU HYLGHQFH ZKLFKVKRXOGEHH[FOXGHGXQGHU)HG5(YLG %5XOHE $IWHU KHDULQJ DUJXPHQWV RI FRXQVHO WKH WULDO MXGJH +DYLQJ GHWHUPLQHG WKH HYLGHQFH FRXOG QRW KDYH EHHQ RYHUUXOHG5RXVHjVREMHFWLRQDQGDOORZHGWKHJRYHUQPHQWWR SURSHUO\ DGPLWWHG DV EDFNJURXQG HYLGHQFH ZH ZLOO QRZ GHYHORS WKH HYLGHQFH 7KH MXGJH JDYH WKH MXU\ D OLPLWLQJ H[DPLQHZKHWKHULVZDVSURSHUO\DGPLWWHGXQGHU5XOHE LQVWUXFWLRQKRZHYHUH[SODLQLQJWRWKHMXU\WKH\FRXOGRQO\ 5XOHERIWKH)('(5$/ 58/(6 2) (9,'(1&(JHQHUDOO\ FRQVLGHUWKHWHVWLPRQ\UHJDUGLQJDFWVSULRUWR0D\DV SURKLELWVWKHLQWURGXFWLRQRIHYLGHQFHRIH[WULQVLFDFWVWKDW HYLGHQFHRIEDFNJURXQGLQIRUPDWLRQDQGDVDQH[SODQDWLRQRI PLJKWDGYHUVHO\UHIOHFWRQRQHjVFKDUDFWHU6HH)HG5(YLG KRZFHUWDLQLQGLYLGXDOVEHFDPHDFTXDLQWHGZLWKHDFKRWKHU Em6LPLODUDFWlRUmRWKHUEDGDFWlHYLGHQFHKRZHYHU PD\ EH DGPLVVLEOH LI VXFK HYLGHQFH EHDUV XSRQ D UHOHYDQW 7KHMXU\IRXQG5RXVHJXLOW\RIWKHFRQVSLUDF\FKDUJH7KH LVVXH LQ WKH FDVH 7KH UXOH HQXPHUDWHV D QRQH[KDXVWLYH GLVWULFWFRXUWVHQWHQFHG5RXVHWRPRQWKVLPSULVRQPHQW QXPEHURISURSHUSXUSRVHVIRUVXFKHYLGHQFH6HH)HG5 DQGILYH\HDUVVXSHUYLVHGUHOHDVH5RXVHDSSHDOVLQWHUDOLD (YLGE WKH GLVWULFW FRXUWjV GHFLVLRQ WR DOORZ WHVWLPRQ\ UHJDUGLQJ DOOHJHG GUXJ DFWLYLW\ E\ 5RXVH SULRU WR WKH GDWH RI WKH :HKDYHFRQVLVWHQWO\KHOGWKHGLVWULFWFRXUWPXVWDSSO\D FRQVSLUDF\ DOOHJHG LQ WKH VXSHUVHGLQJ LQGLFWPHQW WKUHHVWHSDQDO\VLVWRHYDOXDWHWKHDGPLVVLELOLW\RIHYLGHQFH 6SHFLILFDOO\5RXVHFODLPVWKHGLVWULFWFRXUWIDLOHGWRFRQGXFW XQGHU5XOHE6HH8QLWHG6WDWHVYs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mRWKHUDFWVlHYLGHQFH DGKHULQJWRWKHSURFHGXUDODQDO\VLVVHWRXWLQ0HUULZHDWKHU PXVWVKRZWKHHYLGHQFHLVSUREDWLYHRIDPDWHULDOLVVXHRWKHU UHJDUGLQJDGPLVVLRQRI5XOHEHYLGHQFHRUZKHUH5XOH WKDQFKDUDFWHU6HH+XGGOHVWRQY8QLWHG6WDWHV86 ELVQRWLPSOLFDWHGFOHDUO\LGHQWLI\LQJWKHHYLGHQWLDU\ 6&W/(GG EDVLVIRUDGPLVVLRQRIWKHHYLGHQFHDQGSURSHUO\DQDO\]LQJ WKDWEDVLV :HUHYLHZDGLVWULFWFRXUWjVGHFLVLRQWRDGPLWHYLGHQFHRI mRWKHU FULPHV ZURQJV RU DFWVl XQGHU 5XOH E XVLQJ D ,Q UHVSRQGLQJ WR 5RXVHj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m,QYLHZRILWV DGPLVVLEOHXQGHU5XOHE HYLGHQWSUREDWLYHYDOXHLQH[SODLQLQJWKH µDOOKHFRXOGGRj VWDWHPHQWWKHGLVWULFWFRXUWGRHVQRWDSSHDUWRKDYHDEXVHGLWV $%DFNJURXQG(YLGHQFH GLVFUHWLRQLQDGPLWWLQJWKLVHYLGHQFHWRVKRZWKHEDFNJURXQG DQG GHYHORSPHQW RI WKH FRQVSLUDF\ DQG >GHIHQGDQWjV@ 7KLV FRXUW KDV SUHYLRXVO\ UHFRJQL]HG WKH SURSULHW\ RI NQRZOHGJHDEOHSDUWLFLSDWLRQLQWKHFRQVSLUDF\l,GDW LQWURGXFLQJ mEDFNJURXQGl HYLGHQFH 6HH 8QLWHG 6WDWHV Y +HUH DJDLQ WKH HYLGHQFH ZDV SUR[LPDWH WR WKH GDWH RI WKH %XFKDQDQ)GWK&LU8QLWHG6WDWHV FKDUJHGRIIHQVHWKHHYLGHQFHZDVQHFHVVDU\WRH[SODLQWKH Y3DXOLQR)GWK&LUFHUWGHQLHG ZLWQHVVjV WHVWLPRQ\ DQG LW UHODWHG WR WKH LQFHSWLRQ RI WKH 866&W/(GG6XFK FKDUJHGFRQVSLUDF\ HYLGHQFHRIWHQUHIHUUHGWRDVmUHVJHVWDHlGRHVQRWLPSOLFDWH 5XOHEs$&. % :(,167(,1 0$5*$5(7 $ %(5*(5 7KHDERYHDQDO\VLVRIRXUSULRUFDVHVRQWKLVVXEMHFWUHYHDOV s26(3+ 0 0&/$8*+/,1 :(,167(,1j6 )('(5$/ WKDWUDWKHUWKDQSURYLGLQJXQIHWWHUHGUHLQWKHGHILQLWLRQRI (9,'(1&(>@>F@+RZHYHUDUHYLHZRI%XFKDQDQ EDFNJURXQG RUUHV JHVWDH HYLGHQFH HYROYHG E\ WKRVH FDVHV DQG3DXOLQRDQGVLPLODUFDVHVGHPRQVWUDWHVWKHmEDFNJURXQG LPSRVHVVHYHUHOLPLWDWLRQVLQWHUPVRIWKHWHPSRUDOSUR[LPLW\ FLUFXPVWDQFHVH[FHSWLRQlWRWKHJHQHUDOH[FOXVLRQRIRWKHUDFW FDXVDO UHODWLRQVKLS RU VSDWLDO FRQQHFWLRQV WKDW PXVW H[LVW HYLGHQFHLVQRWDQRSHQHQGHGEDVLVWRDGPLWDQ\DQGDOORWKHU EHWZHHQ WKH RWKHU DFWV DQG WKH FKDUJHG RIIHQVH %HIRUH D DFWHYLGHQFHWKHSURSRQHQWZLVKHVWRLQWURGXFH5DWKHUWKH FRXUW GHFLGHV ZKHWKHU RWKHU DFWV IDOO LQWR WKH mEDFNJURXQG YHU\ GHILQLWLRQ RI ZKDW FRQVWLWXWHV EDFNJURXQG HYLGHQFH FLUFXPVWDQFHVl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j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jV 8QLWHG6WDWHVY 1RV 1RV 8QLWHG6WDWHVY +DUG\HWDO +DUG\HWDO WHVWLPRQ\ RU FRPSOHWHV WKH VWRU\ RI WKH FKDUJHG RIIHQVH HYLGHQFH)RUH[DPSOHLQ8QLWHG6WDWHVY%XFKDQDQ sHQQLIHU < 6FKXVWHU 8QFKDUJHG 0LVFRQGXFW 8QGHU 5XOH )GWK&LUWKHGUXJRUJDQL]DWLRQLQYROYHGLQ E 7KH $GPLVVLELOLW\ RI ,QH[WULFDEO\ ,QWHUWZLQHG WKDWFDVHDOOHJHGO\EHJDQRSHUDWLQJLQDQGDURXQG.DODPD]RR (YLGHQFH8 0,$0, /$: 5(9,(:0DUFK0D\ 0LFKLJDQ LQ 7KH LQGLFWPHQW DOOHJHG WKH FRQVSLUDF\ WHUPLQDWHGLQsXQH7KH%XFKDQDQWULDOFRXUWDGPLWWHG 7KHJRYHUQPHQWUHOLHVXSRQ8QLWHG6WDWHVY3DVVDUHOOD HYLGHQFH FRQFHUQLQJ D VHL]XUH RI GUXJV LQ DQG D ) G WK &LU DUJXLQJ m>H@VWDEOLVKLQJ WKH SXUFKDVHRIGUXJVLQ,QDIILUPLQJWKHFRXUWEHORZZH GHYHORSPHQWDQGEDFNJURXQGRIDGUXJFRQVSLUDF\PHHWVWKH VDLG ILUVWUHTXLUHPHQWRIDGPLVVLELOLW\XQGHU>5XOH@EDVLWLV D OHJLWLPDWH SXUSRVH IRU DGPLVVLRQ RI HYLGHQFH RI GUXJ +HUHKRZHYHU5XOHELVQRWDSSOLFDEOHEHFDXVHWKH GHDOLQJEHWZHHQFRFRQVSLUDWRUVSULRUWRWKDWFKDUJHGLQWKH HYLGHQFH FRQVWLWXWHV mD FRQWLQXLQJ SDWWHUQ RI LOOHJDO LQGLFWPHQWl 7KH JRYHUQPHQW RYHUVWDWHV WKH KROGLQJ LQ DFWLYLW\l>FLWLDWLRQRPLWWHG@(YHQLI5XOHEDSSOLHG 3DVVDUHOOD ,Q 3DVVDUHOOD WKH WHVWLPRQ\ XQGHU VFUXWLQ\ LQ WKLV VLWXDWLRQ WKH GLVWULFW FRXUW GLG QRW DEXVH LWV FRQFHUQHGGUXJGHDOVWKDWWRRNSODFHVRPHWLPHLQ7KH GLVFUHWLRQ LQ DGPLWWLQJ WKH WHVWLPRQ\ EHFDXVH WKH FRXQWHUIHLWLQJRIIHQVHVFKDUJHGLQWKHLQGLFWPHQWLQWKDWFDVH HYLGHQFHVHUYHGWKHmOHJLWLPDWHSXUSRVHRIVKRZLQJWKH ZHUHDOOHJHGWRKDYHEHJXQRQRUEHIRUH)HEUXDU\,G EDFNJURXQGDQGGHYHORSPHQWRIDFRQVSLUDF\l^FLWDWLRQ DW Q ,Q KROGLQJ DGPLVVLRQ RI WKLV WHVWLPRQ\ ZDV RPLWWHG` SURSHUZHVDLG ,GDW7KLVHYLGHQFHFRQFHUQHGHYHQWVWKDWWRRNSODFH ,QRXUYLHZWHVWLPRQ\FRQFHUQLQJSULRUGUXJWUDQVDFWLRQV ZLWKLQWKHDOOHJHGWLPHIUDPHRIWKHFRQVSLUDF\DQGLVW\SLFDO EHWZHHQ 3DVVDUHOOD DQG 3DUVRQV DQG 3DVVDUHOOD DQG RI WKH HYLGHQFH QHHGHG WR SURYH WKH YHU\ H[LVWHQFH RI WKH +XGVRQ ZDV DGPLVVLEOH XQGHU 5XOH E IRU WKH FKDUJHGFRQVSLUDF\ OHJLWLPDWHSXUSRVHRISURYLQJWKHmH[LVWHQFHRIDODUJHU FRQWLQXLQJ SODQ VFKHPH RU FRQVSLUDF\ RI ZKLFK WKH ,Q8QLWHG6WDWHVY3DXOLQR)GWK&LU SUHVHQWFULPHRQWULDOLVDSDUWl>FLWDWLRQVRPLWWHG@7KLV WKH HYLGHQFH ZDV QRW H[WULQVLF EXW UDWKHU HVWDEOLVKHG WKH HYLGHQFH VKRZHG WKDW WKHUH ZDV DQ RQJRLQJ SODQ RU H[LVWHQFHRIDVLQJOHRQJRLQJFRQVSLUDF\WKDWVLPSO\PRYHG VFKHPH LQYROYLQJ 3DVVDUHOOD DQG RWKHUV WR HQJDJH LQ IURP)ORULGDWR.HQWXFN\7KHUHZHVDLGWKHHYLGHQFHZDV FULPHVZKLFKZHUHWKHVXEMHFWRIWKHLQGLFWPHQW7KLV SURSHUO\ DGPLWWHG mVLQFH LW ZDV FOHDUO\ DGPLVVLEOH IRU WKH HYLGHQFHZDVWKHUHIRUHUHOHYDQWWRERWKWKHH[LVWHQFHDQG µOHJLWLPDWH SXUSRVH RI VKRZLQJ WKH EDFNJURXQG DQG WKHFRQWLQXLQJQDWXUHRIWKHFRQVSLUDF\ GHYHORSPHQWRIDFRQVSLUDF\jl,GDWFLWDWLRQVRPLWWHG ,GDW7KXVLQ3DVVDUHOODWKHHYLGHQFHZDVQHFHVVDU\ )LQDOO\LQ8QLWHG6WDWHVY+LWRZ)GWK&LU WR HVWDEOLVK WKH H[LVWHQFH RI WKH FKDUJHG FRQVSLUDF\ WKH RWKHU DFW HYLGHQFH FRQFHUQHG WHVWLPRQ\ E\ D 0RUHRYHU XQOLNH LQ WKLV FDVH WKH GLVSXWHG HYLGHQFH LQ FRFRQVSLUDWRUFRQFHUQLQJD)HEUXDU\GUXJWUDQVDFWLRQDW 3DVVDUHOODFRQFHUQHGHYHQWVFORVHO\FRQQHFWHGLQWLPHWRWKH WKHGHIHQGDQWjVWULDOIRUDGUXJFRQVSLUDF\DOOHJHGO\LQYROYLQJ FKDUJHGRIIHQVH PRUH WKDQ SRXQGV RI PDULMXDQD FRQVXPPDWHG LQ $XJXVW 'XULQJ WKH )HEUXDU\ WUDQVDFWLRQ WKH $UHYLHZRIRWKHUFDVHVUHYHDOVDVLPLODUO\FORVHFRQQHFWLRQ FRFRQVSLUDWRUKDGWROGWKHGHIHQGDQWKHWKHGHIHQGDQWFRXOG EHWZHHQWKHFKDUJHGRIIHQVHDQGWKHSURIIHUHGEDFNJURXQG KDYH mDV PXFK >RI WKH PDULMXDQD@ DV KH FRXOG GRl ,G DW