5(&200(1'(' )25 )8//7(;7 38%/,&$7,21 8QLWHG6WDWHVY0DFN 1R 3XUVXDQW WR 6L[WK &LUFXLW 5XOH (/(&7521,& &,7$7,21 )(' $SS 3 WK &LU 7KHGHQLDORIDGHIHQGDQWjVPRWLRQWRZLWKGUDZDJXLOW\ )LOH 1DPH DS SOHDLVUHYLHZHGIRUDQDEXVHRIGLVFUHWLRQ8QLWHG6WDWHVY +XQW)GWK&LUFLWLQJ8QLWHG6WDWHV Y 3OXWD )G WK &LU 7KH GLVWULFW 81,7('67$7(6&28572)$33($/6 FRXUWKRZHYHUGLGQRWGHQ\'HIHQGDQWjVPRWLRQ5DWKHUWKH )257+(6,;7+&,5&8,7 GLVWULFW FRXUW JUDQWHG LW 'HIHQGDQW FKDOOHQJHV KLV RZQ BBBBBBBBBBBBBBBBB VXFFHVV,QHVVHQFHKDYLQJORVWDWWULDO'HIHQGDQWQRZVHHNV WR DYRLG WKH KDUVK UHDOLW\ RI KLV RZQ EDG MXGJPHQW LQ ZLWKGUDZLQJ KLV SOHD 6XFK JDPHVPDQVKLS VKRXOG QRW EH FRXQWHQDQFHG RQ DSSHDO )RU WKLV UHDVRQ ZH ILQG WKDW WKH 81,7(' 67$7(6 2) $0(5,&$ ; GLVWULFWFRXUWGLGQRWHUULQJUDQWLQJ'HIHQGDQWjVPRWLRQWR 3ODLQWLII$SSHOOHH ZLWKGUDZWKHJXLOW\SOHD 1R &RQFOXVLRQ Y ! )RU WKH UHDVRQV VWDWHG DERYH ZH $)),50 'HIHQGDQWjV &857,6 1 0$&. FRQYLFWLRQV 'HIHQGDQW$SSHOODQW 1 $SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW IRUWKH6RXWKHUQ'LVWULFWRI2KLRDW&ROXPEXV 1RnsDPHV/*UDKDP'LVWULFWsXGJH $UJXHG0D\ 'HFLGHGDQG)LOHGsXO\ %HIRUH6,/(5DQG*,/0$1&LUFXLWsXGJHV'8**$1 'LVWULFWsXGJH BBBBBBBBBBBBBBBBB &2816(/ $5*8(' 'DYLG s *UDHII :HVWHUYLOOH 2KLR IRU $SSHOODQW 'DQLHO $OOHQ %URZQ $66,67$17 81,7(' 67$7(6 $77251(< &ROXPEXV 2KLR IRU $SSHOOHH 7KH +RQRUDEOH 3DWULFN s 'XJJDQ 8QLWHG 6WDWHV 'LVWULFW sXGJH IRU WKH (DVWHUQ 'LVWULFW RI 0LFKLJDQ VLWWLQJ E\ GHVLJQDWLRQ 8QLWHG6WDWHVY0DFN 1R 1R 8QLWHG6WDWHVY0DFN 21 %5,() 'DYLG s *UDHII :HVWHUYLOOH 2KLR IRU RIMXVWLFH6HH8QLWHG6WDWHVY:LOOLDPV)G $SSHOODQW 'DQLHO $OOHQ %URZQ $66,67$17 81,7(' WK&LU8QLWHG6WDWHVYsHQQLQJV)G 67$7(6$77251(<&ROXPEXV2KLRIRU$SSHOOHH WK&LU BBBBBBBBBBBBBBBBB :H DUH VDWLVILHG WKDW WKH GLVWULFW FRXUW GLG QRW DEXVH LWV GLVFUHWLRQLQGHQ\LQJGHIHQVHFRXQVHOjVPRWLRQWRZLWKGUDZ 23,1,21 'HIHQGDQW KLPVHOI QHYHU PRYHG WR VXEVWLWXWH FRXQVHO BBBBBBBBBBBBBBBBB )XUWKHUPRUH ZKHQ DVNHG GXULQJ WKH KHDULQJ ZKHWKHU KH ZLVKHGIRUGHIHQVHFRXQVHOWRFRQWLQXHRQKLVFDVH'HIHQGDQW 3$75,&.s'8**$1'LVWULFWsXGJH2Q0D\ VSHFLILFDOO\VWDWHGm,ZDQWKLPWRFRQWLQXHZLWKP\FDVHl DMXU\IRXQG&XUWLV10DFNJXLOW\RIWKUHHFRXQWVRIDUPHG 'HIHQGDQW IXUWKHU VWDWHG WKDW DOWKRXJK KH ZLVKHG WR VHH EDQN UREEHU\ 86& D G WKUHH FRXQWV RI GHIHQVH FRXQVHO PRUH KH mQHYHU GRXEWHG KLV DELOLWLHV WR XVLQJRUFDUU\LQJDILUHDUPGXULQJDQGLQUHODWLRQWRDFULPHRI UHSUHVHQWPHl$OWKRXJKGHIHQVHFRXQVHOmLQIHUUHGlWKDWD YLROHQFH86&FDQGVL[FRXQWVRIXQDUPHGEDQN EUHDNGRZQLQWKHDWWRUQH\FOLHQWUHODWLRQVKLSKDGRFFXUUHG UREEHU\ 86& 'HIHQGDQW KDV ILOHG D WLPHO\ 'HIHQGDQWKLPVHOIGLVSHOOHGDQ\VXFKLQIHUHQFHVGXULQJWKH DSSHDO)RUWKHUHDVRQVVWDWHGEHORZZH$)),50 KHDULQJ %DFNJURXQG $VZHKDYHSUHYLRXVO\VWDWHGm>W@KHQHHGIRUDQLQTXLU\ ZLOO QRW EH UHFRJQL]HG ZKHUH WKH GHIHQGDQW KDV QRW 'HIHQGDQW RULJLQDOO\ DFFHSWHG D SOHD DJUHHPHQW XQGHU HYLGHQFHGKLVGLVVDWLVIDFWLRQRUZLVKWRUHPRYHKLVDSSRLQWHG ZKLFKKHSOHGJXLOW\WRWZRFRXQWVRIDUPHGEDQNUREEHU\DQG FRXQVHOl,OHV)GDW$WQRSRLQWGLG'HIHQGDQW RQHFRXQWRIXVLQJDILUHDUPLQFRQQHFWLRQZLWKDFULPHRI KLPVHOIWU\WRmILUHl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jV RQ $SULO WKH GLVWULFW FRXUW JUDQWHG 'HIHQGDQWjV PRWLRQWRZLWKGUDZ PRWLRQDQGWKHPDWWHUZDVVHWIRUWULDORQ0D\ 'HIHQGDQWj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jVJXLOW\SOHDZDVZLWKGUDZQ QHHGWRPD\EHVHHKLPPRUH,KDYHQHYHUGRXEWHGKLV DELOLWLHVWRUHSUHVHQWPH,WjVMXVWWKDW,KDGVRPHDVSHFWV 8QLWHG6WDWHVY0DFN 1R 1R 8QLWHG6WDWHVY0DFN WHVWLPRQ\ RI VHYHUDO EDQN WHOOHUV D EDQN FXVWRPHU RIP\FDVHWKDW,IHOW,QHHGHGWRWDONWRKLPDERXWDQGLW 'HIHQGDQWjVDFFRPSOLFH6WHSKHQ5LFHDQH[JLUOIULHQG0LNL MXVWVHHPHGOLNHLWZDVJHWWLQJFORVHUDQGFORVHUWRP\ *RWRK DQG D IHOORZ LQPDWH WR ZKRP 'HIHQGDQW KDG WULDODQGP\TXHVWLRQVZHUHJRLQJXQDQVZHUHG,WjVQRW UHSRUWHGO\DGPLWWHGWRFRPPLWWLQJQLQHEDQNUREEHULHV$W WKDW,jYHORVWFRQILGHQFHLQP\DWWRUQH\ OHDVW WZR RI WKHVH ZLWQHVVHV LGHQWLILHG 'HIHQGDQW IURP D SKRWRVSUHDG DQG DW WULDO 7KH *RYHUQPHQW DOVR SUHVHQWHG s$%DVHGXSRQ'HIHQGDQWjVDQVZHUWKHGLVWULFWFRXUW VXUYHLOODQFHSKRWRJUDSKVIURPDQXPEHURIWKHUREEHULHV GHQLHGFRXQVHOj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mRSHUDELOLW\lZLWKLQWKHGHILQLWLRQ ZDV KDUPOHVV JLYHQ WKH RWKHU HYLGHQFH SUHVHQWHG DJDLQVW RI ILUHDUP XQGHU 86& D F WKH 'HIHQGDQW GLVWULFW FRXUW HUUHG E\ DOORZLQJ HYLGHQFH RI D VXEVHTXHQW XQLQGLFWHG EDQN UREEHU\ DV mVLPLODU DFWVl HYLGHQFH XQGHU 'HIHQVH&RXQVHOjV0RWLRQWR:LWKGUDZ 5XOHERIWKH)HGHUDO5XOHVRI(YLGHQFHWKHGLVWULFW FRXUWHUUHGLQGHQ\LQJGHIHQVHFRXQVHOjVPRWLRQWRZLWKGUDZ 1H[W 'HIHQGDQW DVVHUWV WKDW WKH GLVWULFW FRXUW HUUHG LQ DQG WKH GLVWULFW FRXUW HUUHG LQ DOORZLQJ 'HIHQGDQW WR GHQ\LQJGHIHQVHFRXQVHOjVPRWLRQWRZLWKGUDZ:HUHYLHZ ZLWKGUDZKLVJXLOW\SOHD)RUWKHIROORZLQJUHDVRQVZHILQG WKHGLVWULFWFRXUWjVGHQLDOIRUDEXVHRIGLVFUHWLRQ6HH8QLWHG 'HIHQGDQWjVDUJXPHQWVWREHZLWKRXWPHULW 6WDWHVY,OHV)GQWK&LU:KHQ UHYLHZLQJDGLVWULFWFRXUWjVGHQLDORIDPRWLRQWRZLWKGUDZRU m2SHUDELOLW\lXQGHUF VXEVWLWXWH FRXQVHO ZH JHQHUDOO\ PXVW FRQVLGHU WKH WLPHOLQHVV RI WKH PRWLRQ WKH DGHTXDF\ RI WKH FRXUWjV 'HIHQGDQWILUVWDVVHUWVWKDWWKHWULDOFRXUWHUUHGLQGHQ\LQJ LQTXLU\LQWRWKHPDWWHUWKHH[WHQWRIWKHFRQIOLFWEHWZHHQ KLV5XOHPRWLRQIRUDFTXLWWDORQWKHWKUHHFFKDUJHV WKH DWWRUQH\ DQG FOLHQW DQG ZKHWKHU LW ZDV VR JUHDW WKDW LW :HUHYLHZVXIILFLHQF\RIWKHHYLGHQFHFODLPVE\GHWHUPLQLQJ UHVXOWHG LQ D WRWDO ODFN RI FRPPXQLFDWLRQ SUHYHQWLQJ DQ mZKHWKHU DIWHU YLHZLQJ WKH HYLGHQFH LQ WKH OLJKW PRVW DGHTXDWHGHIHQVHDQGWKHEDODQFLQJRIWKHVHIDFWRUVZLWK IDYRUDEOHWRWKHSURVHFXWLRQDQ\UDWLRQDOWULHURIIDFWFRXOG WKHSXEOLFjVLQWHUHVWLQWKHSURPSWDQGHIILFLHQWDGPLQLVWUDWLRQ ILQGWKHHOHPHQWVRIWKHFULPHEH\RQGDUHDVRQDEOHGRXEWl 8QLWHG6WDWHVY0DFN 1R 1R 8QLWHG6WDWHVY0DFN 8QLWHG 6WDWHV Y +HUQDQGH] )G WK &LU RQO\RIWKH0D\UREEHU\EXWDOVRRIDUHVXOWLQJKLJKVSHHG FLWLQJ8QLWHG6WDWHVY$EGXOODK)G SROLFHFKDVHLQYROYLQJVHYHQRUHLJKWSROLFHFUXLVHUV WK&LU 7KHGLVWULFWFRXUWUHFRJQL]HGWKDWHYLGHQFHRIWKH0D\ ,Q JHQHUDO F SURYLGHV IRU DQ DGGLWLRQDO SHQDOW\ UREEHU\ZDVLQGHHGSUHMXGLFLDOEHFDXVHRILWVSHUVXDVLYHYDOXH ZKHQHYHUDGHIHQGDQWXVHVFDUULHVRUSRVVHVVHVDmILUHDUPl LQHVWDEOLVKLQJWKH'HIHQGDQWjVLGHQWLW\EXWZDVVDWLVILHGWKDW GXULQJDQGLQUHODWLRQWRDQ\FULPHRIYLROHQFH6HH86& DQ\XQGXHSUHMXGLFHFRXOGEHDYRLGHGE\WKHSURSHUOLPLWLQJ F$)RUSXUSRVHVRIFWKHWHUPmILUHDUPl LQVWUXFWLRQV7KHGLVWULFWFRXUWWKHQSURFHHGHGWRLQVWUXFWWKH LVGHILQHGDVm$DQ\ZHDSRQLQFOXGLQJDVWDUWHUJXQZKLFK MXU\WKDWLWFRXOGFRQVLGHUHYLGHQFHRIWKH0D\UREEHU\RQO\ ZLOORULVGHVLJQHGWRRUPD\UHDGLO\EHFRQYHUWHGWRH[SHOD WRGHWHUPLQHWKHLGHQWLW\RIWKHSHUSHWUDWRUDQGIRUQRRWKHU SURMHFWLOH E\ WKH DFWLRQ RI DQ H[SORVLYH % WKH IUDPH RU UHDVRQ:HUHYLHZWKHGLVWULFWFRXUWjVGHWHUPLQDWLRQDVWRWKH UHFHLYHU RI DQ\ VXFK ZHDSRQ & DQ\ ILUHDUP PXIIOHU RU SRWHQWLDOIRUXQIDLUSUHMXGLFHIRUDEXVHRIGLVFUHWLRQ8QLWHG ILUHDUP VLOHQFHU RU ' DQ\ GHVWUXFWLYH GHYLFHl ,G 6WDWHVY:ULJKW)GWK&LU D m$ GLVWULFW FRXUW LV JUDQWHG µYHU\ EURDGj GLVFUHWLRQ LQ 'HIHQGDQWFRQWHQGVWKDWKLVFFRQYLFWLRQVPXVWEH GHWHUPLQLQJZKHWKHUWKHGDQJHURIXQGXHSUHMXGLFHRXWZHLJKV UHYHUVHG EHFDXVH QRQH RI WKH HYLGHQFH SUHVHQWHG DW WULDO WKHSUREDWLYHYDOXHRIWKHHYLGHQFHl8QLWHG6WDWHVY9DQFH HVWDEOLVKHVWKDWWKHILUHDUPVZHUHmRSHUDEOHl$VWKLV&RXUW )GWK&LU'HVSLWHWKHYHU\EURDG KDV SUHYLRXVO\ VWDWHG mD ILUHDUP QHHG QRW EH RSHUDEOH WR GLVFUHWLRQ JUDQWHG WKH GLVWULFW FRXUW LQ PDNLQJ 5XOH VDWLVI\ WKH GHILQLWLRQ RI ILUHDUP IRU SXUSRVHV RI 86& GHWHUPLQDWLRQVZHILQGWKDWLWZDVHUURUWRDOORZWHVWLPRQ\ Fl8QLWHG6WDWHVY%DQG\)GWK UHJDUGLQJWKHKLJKVSHHGSROLFHFKDVH,QRXURSLQLRQWKH &LU FROOHFWLQJ FDVHV VHH DOVR 8QLWHG 6WDWHV Y GHWDLOVRIWKHKLJKVSHHGFKDVHZHUHRIOLWWOHDVVLVWDQFHWRWKH 7@KHODZLV MXU\LQGHWHUPLQLQJLGHQWLW\LQWKLVFDVHDVLWZDVXQGLVSXWHG FOHDU WKDW D ZHDSRQ GRHV QRW QHHG WR EH RSHUDEOH WR EH D WKDW'HIHQGDQWFRPPLWWHGWKH0D\UREEHU\)XUWKHUPRUH ILUHDUPl QRQHRIWKHUREEHULHVFKDUJHGLQWKHLQGLFWPHQWLQYROYHGD KLJKVSHHGFKDVH 'HIHQGDQWjVUHOLDQFHRQWKH6XSUHPH&RXUWjVGHFLVLRQLQ %DLOH\Y8QLWHG6WDWHV866&W/ :HILQGKRZHYHUWKDWWKHGLVWULFWFRXUWjVHUURULQDOORZLQJ (G G DV ZHOO DV WKLV &RXUWjV SRVW%DLOH\ HYLGHQFHRIWKHKLJKVSHHGSROLFHFKDVHZDVKDUPOHVVLQOLJKW GHFLVLRQ LQ 8QLWHG 6WDWHV Y 0RRUH )G WK &LU RI WKH RYHUZKHOPLQJ HYLGHQFH RI 'HIHQGDQWjV JXLOW 6HH IDLOVWRSHUVXDGHXVRWKHUZLVH1RWKLQJLQHLWKHU%DLO\ 8QLWHG6WDWHVY0XUSK\)GWK&LU RU0RRUHXQGHUPLQHVRXUSULRUKROGLQJWKDWDZHDSRQQHHG DSSO\LQJ KDUPOHVV HUURU DQDO\VLV ZKHUH JRYHUQPHQW QRWEHRSHUDEOHWRFRQVWLWXWHDILUHDUPXQGHUD SUHVHQWHGRWKHUFRQYLQFLQJHYLGHQFHDVLGHIURPmRWKHUDFWVl HYLGHQFHm$QHUURULVKDUPOHVVXQOHVVRQHFDQVD\ZLWKIDLU :HDUHDOVRVDWLVILHGWKDWWKHUHZDVDPSOHHYLGHQFHIURP DVVXUDQFHWKDWWKHHUURUPDWHULDOO\DIIHFWHGWKHGHIHQGDQWjV ZKLFKWKHWULHURIIDFWFRXOGILQGEH\RQGDUHDVRQDEOHGRXEW VXEVWDQWLDOULJKWVWKDWWKHMXGJPHQWZDVVXEVWDQWLDOO\VZD\HG WKDW 'HIHQGDQW FDUULHG XVHG RU SRVVHVVHG D ILUHDUP DV E\WKHHUURUl,GFLWLQJ.RWWHDNRVY8QLWHG6WDWHV86 GHILQHG LQ 86& D LQ UHODWLRQ WR D FULPH RI 6&W/(G YLROHQFHLHLQFRQQHFWLRQZLWKWKHFKDUJHGEDQNUREEHULHV 6WHSKHQ5LFH'HIHQGDQWjVDFFRPSOLFHLQWKHILUVWUREEHU\ 7KH *RYHUQPHQW SUHVHQWHG VXEVWDQWLDO H\HZLWQHVV WHVWLILHG WKDW 'HIHQGDQW SURYLGHG KLP ZLWK D FDOLEHU WHVWLPRQ\ UHJDUGLQJ WKH EDQN UREEHULHV LQFOXGLQJ WKH 8QLWHG6WDWHVY0DFN 1R 1R 8QLWHG6WDWHVY0DFN FRPELQDWLRQ SUHVHQW DQ XQXVXDO DQG GLVWLQFWLYH SDWWHUQ KDQGJXQ9DULRXVEDQNWHOOHUVWHVWLILHGWKDWWKH\REVHUYHGWKH FRQVWLWXWLQJDmVLJQDWXUHl)RUH[DPSOHLQ8QLWHG6WDWHVY ILUHDUP GXULQJ WKH UREEHU\ ZKLFK ZDV UHDGLO\ GLVFHUQDEOH :RRGV)GWK&LUZHIRXQGWKDWWKH IURPWKHVXUYHLOODQFHSKRWRJUDSKV5LFHDOVRWHVWLILHGWKDWKH GHIHQGDQWVjFRQGXFWUHYHDOHGDmVLJQDWXUHlIRU5XOHE JDYH'HIHQGDQWDFKURPH/RUFLQPLOOLPHWHUSLVWROIRUWKH SXUSRVHVmLQVRIDUDVHDFKZDVDQDUPHGUREEHU\E\UREEHUV VHFRQG UREEHU\ ZKLFK EDQN WHOOHUV WHVWLILHG WKH\ VDZ ZHDULQJVNLPDVNVJRJJOHVDQGMXPSVXLWVDQGXVLQJDVWROHQ 'HIHQGDQWFDUU\LQJGXULQJWKHUREEHU\7KH/RUFLQSLVWROZDV YHKLFOH IRU D JHWDZD\ FDUl /LNHZLVH ZH ILQG WKDW WKH DOVRDGPLWWHGLQWRHYLGHQFH6LPLODUO\H\HZLWQHVVHVWHVWLILHG VLPLODULWLHV FLWHG E\ WKH GLVWULFW FRXUW LQ FRPELQDWLRQ DUH DQGVXUYHLOODQFHSKRWRJUDSKVFOHDUO\VKRZHGWKDW'HIHQGDQW VXIILFLHQWWRHVWDEOLVKDmVLJQDWXUHl FDUULHG D KDQGJXQ GXULQJ WKH WKLUG EDQN UREEHU\ $ FULPLQDOLVWIURPWKH&ROXPEXV3ROLFH'HSDUWPHQWWHVWLILHG 'HIHQGDQWDOVRDVVHUWVWKDWWKHGLVWULFWFRXUWmYLWLDWHGlWKH WKDWWKHILUHDUPXVHGGXULQJWKHWKLUGUREEHU\DSSHDUHGIURP HIIHFWLYHQHVVRI5XOHEE\GLVFRXQWLQJWKHGLVVLPLODULWLHV WKHVXUYHLOODQFHSKRWRJUDSKVWRSRVVHVVWKHXVXDOIHDWXUHVRI EHWZHHQWKH0D\UREEHU\DQGWKHUREEHULHVFKDUJHGLQWKH DKDQGJXQ LQGLFWPHQWDQGVSHFLILFDOO\WKHIDFWWKDW'HIHQGDQWXVHGD ZHDSRQDQGDQDFFRPSOLFHGXULQJKLVHDUOLHUUREEHULHVEXW $FFRUGLQJO\ZHILQGWKDWWKHGLVWULFWFRXUWGLGQRWHUULQ QRW LQ WKH 0D\ UREEHU\ $OWKRXJK VRPH GLVVLPLODULWLHV GHQ\LQJ'HIHQGDQWjV5XOHPRWLRQZLWKUHVSHFWWRWKHWKUHH H[LVWHGEHWZHHQWKH0D\UREEHU\DQGWKHHDUOLHUUREEHULHV FFKDUJHV FKDUJHGLQWKHLQGLFWPHQWWKHGLVWULFWFRXUWIRXQGWKDWVXFK GLVVLPLODULWLHV UHSUHVHQWHG D UHILQHPHQW RI 'HIHQGDQWjV m6LPLODU$FWVl(YLGHQFH WHFKQLTXH RU UHVXOWHG IURP WKH ZLWQHVVHVj GLIIHULQJ REVHUYDWLRQVRUSHUVSHFWLYHVQRWIURPDPDWHULDOGLIIHUHQFH 'HIHQGDQW DOVR FRQWHQGV WKDW WKH GLVWULFW FRXUW HUUHG LQ LQWKHDFWVWKHPVHOYHV DOORZLQJWKH*RYHUQPHQWWRSUHVHQWHYLGHQFHRIDVXEVHTXHQW EDQNUREEHU\DVmVLPLODUDFWVlHYLGHQFHXQGHU5XOHERI 7KH UREEHULHV FKDUJHG LQ WKH LQGLFWPHQW VSDQQHG D WLPH WKH)HGHUDO5XOHVRI(YLGHQFH SHULRG IURP 1RYHPEHU WKURXJK $SULO 7KH GLVVLPLODULWLHV FLWHG E\ 'HIHQGDQW DULVH RQO\ LQ FRQQHFWLRQ 8QGHU 5XOH E D FRXUW PD\ DGPLW HYLGHQFH RI D ZLWKWKHILUVWWKUHHUREEHULHVIRUZKLFK'HIHQGDQWZDVDOVR GHIHQGDQWjVmRWKHUlRUmVLPLODUlEDGDFWVRUFULPHVRQO\LIWKH FKDUJHG ZLWK XVLQJ D ZHDSRQ DQG DV WR WKH ILUVW UREEHU\ HYLGHQFHLVSUREDWLYHRIDUHOHYDQWIDFWDQGQRWWRVKRZWKH FKDUJHGLQWKHLQGLFWPHQWLQZKLFKDQDFFRPSOLFHZDVXVHG GHIHQGDQWjVmFKDUDFWHUlRUmSURSHQVLW\lWRFRPPLWEDGDFWV 'HIHQGDQW ZDV FKDUJHG ZLWK VL[ VXEVHTXHQW UREEHULHV LQ 8QLWHG6WDWHVY&OHPLV)GWK&LU ZKLFKQRZHDSRQRUDFFRPSOLFHZDVXVHG$WDPLQLPXP 2WKHU EDG DFWV PD\ EH DGPLVVLEOH XQGHU 5XOH E LI WKH 0D\ UREEHU\ ZDV VLPLODU WR WKH ODVW VL[ UREEHULHV UHOHYDQWWRSURYLQJmPRWLYHRSSRUWXQLW\LQWHQWSUHSDUDWLRQ FKDUJHG LQ WKH LQGLFWPHQW DQG WKHUHIRUH ZDV SURSHUO\ SODQNQRZOHGJHLGHQWLW\RUDEVHQFHRIPLVWDNHRUDFFLGHQWl DGPLVVLEOH WR SURYH 'HIHQGDQWj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jVREMHFWLRQWKHGLVWULFWFRXUWGHWHUPLQHGWKDW &RYs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mRWKHUDFWlLVDGPLVVLEOHIRUDSURSHUSXUSRVH SXUSRVHVWKHGLVWULFWFRXUWIRXQGWKDWWKUHHHOHPHQWVZKHQ XQGHU5XOHE7KLUGWKHGLVWULFWFRXUWPXVWGHWHUPLQH YLHZHGLQFRPELQDWLRQFRQVWLWXWHGDmVLJQDWXUHlGXHWRWKHLU ZKHWKHU WKH mRWKHU DFWVl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jVFRQVLVWHQWXVHRIWKH VWHSVRIWKHGLVWULFWFRXUWjVLQTXLU\LHZKHWKHUWKH0D\ WKUHHLQFRPELQDWLRQFRQVWLWXWHGDmVLJQDWXUHl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jVGHWHUPLQDWLRQWKDWWKH0D\UREEHU\ZDV VRPHZKHUHDURXQGVL[IHHWWDOOZHDULQJEXON\FORWKLQJWKH DGPLVVLEOHXQGHU5XOHEWRVKRZ'HIHQGDQWjVLGHQWLW\ SHUSHWUDWRU XVHG VLPLODU FRPPDQGV LQ HDFK FDVH WKH IRUDEXVHRIGLVFUHWLRQ7UHSHOY5RDGZD\([SUHVV,QF SHUSHWUDWRUDOZD\VFROOHFWHGWKHPRQH\KLPVHOILQWKHODVWVL[ )G WK&LUH[SODLQLQJWKDWSHUWKH UREEHULHVWKHSHUSHWUDWRUDOZD\VOHIWWKURXJKWKHEDFNRIWKH 8QLWHG6WDWHV6XSUHPH&RXUWjVGHFLVLRQLQ*HQHUDO(OHFWULF EDQN DQG DSSHDUHG QRW WR XVH D JHWDZD\ FDU PRVW RI WKH UREEHULHVRFFXUUHGRQD:HGQHVGD\RU)ULGD\PRUQLQJDQG DOORIWKHUREEHULHVRFFXUUHGZLWKLQDUHODWLYHO\VKRUWSHULRG RIWLPH ,Q WKHLU EULHIV ERWK SDUWLHV UHO\LQJ RQ SULRU 6L[WK &LUFXLW GHFLVLRQV DVVHUW WKDW ZH VKRXOG UHYLHZ GH QRYR WKH GLVWULFW FRXUWjV GHFLVLRQ WKDW WKH 'HIHQGDQWFRQWHQGVWKDWWKHVLPLODULWLHVWKHGLVWULFWFRXUW HYLGHQFH ZDV DGPLVVLEOH IRU D SURSHU SXUSRVH XQGHU 5XOH E 6HH UHOLHGXSRQZHUHVLPSO\FRQGXFWDVVRFLDWHGZLWKWKHVWDQGDUG HJ 8QLWHG 6WDWHV Y sREVRQ )G WK &LU 8QLWHG 6WDWHV Y 0HUULZHDWKHU )G WK &LU +RZHYHU LQ EDQNUREEHU\DQGWKHUHIRUHGLGQRWFRQVWLWXWHDmVLJQDWXUHl OLJKW RI WKH 6XSUHPH &RXUWjV GHFLVLRQ LQ sRLQHU DQG RXU UHFHQW GHFLVLRQ $V WKH GLVWULFW FRXUW SURSHUO\ VWDWHG KRZHYHU VWDQGDUG LQ 7UHSHO ZH FRQFOXGH WKDW WKH DSSURSULDWH VWDQGDUG RI UHYLHZ IRU WKH FRQGXFWDOWKRXJKQRWSDUWLFXODUO\XQXVXDOE\LWVHOIPD\LQ DGPLVVLELOLW\ RI HYLGHQFH XQGHU 5XOH E LV mDEXVH RI GLVFUHWLRQl