Coleman v. Mitchell

Summarize
Check Treatment

Related Cases

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 DS 81,7('67$7(6&28572)$33($/6 )257+(6,;7+&,5&8,7 BBBBBBBBBBBBBBBBB $/721 &2/(0$1 ; 3HWLWLRQHU$SSHOODQW    1R Y  !  %(77< 0,7&+(//:DUGHQ  5HVSRQGHQW$SSHOOHH  1 $SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW IRUWKH6RXWKHUQ'LVWULFWRI2KLRDW&LQFLQQDWL 1RVn6DQGUD6%HFNZLWK 'LVWULFWsXGJH $UJXHG1RYHPEHU 'HFLGHGDQG)LOHG2FWREHU %HIRUH%$7&+(/'(5&2/(DQG&/$<&LUFXLW sXGJHV BBBBBBBBBBBBBBBBB &2816(/ $5*8('  'DYLG & 6WHEELQV &ROXPEXV 2KLR IRU $SSHOODQW&KDUOHV/:LOOH2)),&(2)7+($77251(< *(1(5$/ 2) 2+,2 &ROXPEXV 2KLR IRU $SSHOOHH 21%5,()'DYLG&6WHEELQV&ROXPEXV2KLR'DOH$ %DLFK2)),&(2)7+()('(5$/38%/,&'()(1'(5 )257+(',675,&72)$5,=21$3KRHQL[$UL]RQDIRU   &ROHPDQY0LWFKHOO 1R $SSHOODQW&KDUOHV/:LOOH2)),&(2)7+($77251(< *(1(5$/2)2+,2&ROXPEXV2KLRIRU$SSHOOHH &/$< s GHOLYHUHG WKH RSLQLRQ RI WKH FRXUW LQ ZKLFK &2/(sMRLQHG%$7&+(/'(5s SS GHOLYHUHG DVHSDUDWHRSLQLRQFRQFXUULQJLQSDUWDQGGLVVHQWLQJLQSDUW BBBBBBBBBBBBBBBBB 23,1,21 BBBBBBBBBBBBBBBBB &/$<&LUFXLWsXGJH3HWLWLRQHU$OWRQ&ROHPDQDSSHDOV IURP WKH GLVWULFW FRXUW RUGHU GHQ\LQJ 3HWLWLRQHUjV PRWLRQ SXUVXDQW WR 5XOH  H  RI WKH )HGHUDO 5XOHV RI &LYLO 3URFHGXUHWRDOWHURUDPHQGWKHGLVWULFWFRXUWRUGHUGHQ\LQJ 3HWLWLRQHUjVDSSOLFDWLRQIRUZULWRIKDEHDVFRUSXVSXUVXDQWWR 86&†DQGOLIWLQJWKHVWD\RIH[HFXWLRQSUHYLRXVO\ HQWHUHGE\WKHGLVWULFWFRXUW)RUWKHUHDVRQVVHWIRUWKEHORZ ZH $)),50 ,1 3$57 DQG 5(9(56( ,1 3$57 DQG 5(0$1'IRUIXUWKHUSURFHHGLQJVQRWLQFRQVLVWHQWZLWKWKLV RSLQLRQ %$&.*5281' ,3URFHGXUDO+LVWRU\ 2Q2FWREHUD+DPLOWRQ&RXQW\2KLRJUDQGMXU\ LQGLFWHG 3HWLWLRQHU IRU WKH DJJUDYDWHG PXUGHU RI 7RQQLH 6WRUH\ZLWKGHDWKSHQDOW\VSHFLILFDWLRQVDVZHOODVIRUWKH DJJUDYDWHGUREEHU\RI6WRUH\2QsXQHDMXU\IRXQG 3HWLWLRQHUJXLOW\RIDJJUDYDWHGPXUGHUXQGHU2KLR5HYLVHG &RGH†ZLWKRQHGHDWKSHQDOW\VSHFLILFDWLRQ7KH IROORZLQJGD\WKHMXU\UHFRPPHQGHGWKHGHDWKSHQDOW\IRU 3HWLWLRQHU2QsXQHIROORZLQJLQGHSHQGHQWUHYLHZ  3HWLWLRQHU ZDV IRXQG JXLOW\ RI DJJUDYDWHG PXUGHU WKDW ZDV SDUW RI D FRXUVH RI FRQGXFW LQYROYLQJ WKH SXUSRVHIXO NLOOLQJ RI RU DWWHPSW WR NLOO WZR RU PRUH SHUVRQV E\ WKH RIIHQGHU ZKLFK IDOOV XQGHU WKH 2KLR 5HYLVHG &RGH †  $  GHDWK SHQDOW\ VSHFLILFDWLRQ  &ROHPDQY0LWFKHOO 1R 1R &ROHPDQY0LWFKHOO  H[DPLQDWLRQDQGSUHVHQWLQJWKHUHVXOWVRIVXFKDQH[DPLQDWLRQ RIDJJUDYDWLQJDQGPLWLJDWLQJIDFWRUVWKH&RXUWRI&RPPRQ WRWKHMXU\ZRXOGKDYHSURGXFHGDGLIIHUHQWUHVXOW&ROHPDQ 3OHDVRI+DPLOWRQ&RXQW\2KLRVHQWHQFHG3HWLWLRQHUWRGHDWK ZDVIRXQGFRPSHWHQWWRDVVLVWKLVFRXQVHODWWULDO+HZDV 7KHFRXUWWKHQRUGHUHGWKDW3HWLWLRQHUEHUHWXUQHGWRIHGHUDO WKHUHIRUHFRPSHWHQWWRPDNHWKHGHWHUPLQDWLRQZKHWKHUKH FXVWRG\ ZKHUH 3HWLWLRQHU KDG EHHQ VHUYLQJ D WZHQW\\HDU ZDQWHG WR KDYH D SUHVHQWHQFH H[DPLQDWLRQ RU D PHQWDO IHGHUDO VHQWHQFH IRU D  FRQYLFWLRQ XQGHU  86& H[DPLQDWLRQ&ROHPDQUHIXVHGWRKDYHDQ\H[DPLQDWLRQDQG † D WKHIHGHUDONLGQDSLQJVWDWXWH+RZHYHUWKHFRXUW WKHQDUJXHGWRWKHMXU\nZLWKRXWIHDURIDQ\FXUUHQWH[SHUW UHVHUYHGWKHULJKWRIWKH6WDWHRI2KLRWRUHTXHVWFXVWRG\RI WHVWLPRQ\RUHYLGHQFHWRWKHFRQWUDU\n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jVFRQFOXVLRQWKDWWKHIDFWWKDW&ROHPDQjVWULDOFRXQVHO VHQWHQFHLQWKH6WRUH\FDVH PDGHDFORVLQJDUJXPHQWWRWKHMXU\XQGHUPLQHVWKH6WDWHjV SRVLWLRQWKDW&ROHPDQLQVWUXFWHGKLVFRXQVHOQRWWRSUHVHQW 2Q 2FWREHU   WKH 2KLR )LUVW $SSHOODWH 'LVWULFW PLWLJDWLRQ HYLGHQFH  &RXQVHOjV FORVLQJ DUJXPHQW GLG QRW DIILUPHG 3HWLWLRQHUjV FRQYLFWLRQ DQG GHDWK VHQWHQFH LQ WKH HYHQ PHQWLRQ PLWLJDWLRQ HYLGHQFH  ,W ZDV D GUDPDWLF DQG 6WRUH\FDVHZKLFKZDVXSKHOGE\WKH2KLR6XSUHPH&RXUW LPSDVVLRQHGSOHDQRWWRVXEMHFW&ROHPDQWRWKHHOHFWULFFKDLU 2QsDQXDU\WKH8QLWHG6WDWHV6XSUHPH&RXUWGHQLHG ,W ZDV ZKROO\ FRQVLVWHQW ZLWK &ROHPDQjV RZQ DWWHPSW WR FHUWLRUDUL2Qs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jV SRVW PDMRULW\jVRSLQLRQKROGLQJWKDWWKHGHDWKVHQWHQFHPXVWEH FRQYLFWLRQ SHWLWLRQ ZKLFK ZDV DIILUPHG E\ WKH 2KLR )LUVW UHYHUVHGEHFDXVHRILQHIIHFWLYHDVVLVWDQFHRIFRXQVHODWWKH SHQDOW\SKDVHRIWKHWULDO  ,Q )HEUXDU\ RI  WKH GLVWULFW FRXUW JUDQWHG 3HWLWLRQHUj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††  DQG RI WKH 2KLR VHQWHQFHV ZKLOH KLV GLUHFW DSSHDOV IURP KLV VWDWH FRXUW  '  :HVW   FRQYLFWLRQV ZHUH SHQGLQJ  &ROHPDQY0LWFKHOO 1R 1R &ROHPDQY0LWFKHOO  $SSHOODWH 'LVWULFW LQ 0DUFK RI   7KH 2KLR 6XSUHPH PHHWWKHVHFRQGSURQJRI6WULFNODQG&ROHPDQZDVUHTXLUHG &RXUW VXEVHTXHQWO\ GHFOLQHG MXULVGLFWLRQ RYHU 3HWLWLRQHUjV WRVKRZWKDWWKHUHZDVDmUHDVRQDEOHSUREDELOLW\WKDWEXWIRU DSSHDO FRXQVHOjVXQSURIHVVLRQDOHUURUVWKHUHVXOWRIWKHSURFHHGLQJ ZRXOG KDYH EHHQ GLIIHUHQW  $ UHDVRQDEOH SUREDELOLW\ LV D 2Q sXQH   3HWLWLRQHU ILOHG DQ DSSOLFDWLRQ IRU SUREDELOLW\ VXIILFLHQW WR XQGHUPLQH FRQILGHQFH LQ WKH GHOD\HGUHFRQVLGHUDWLRQLQWKH2KLR)LUVW$SSHOODWH'LVWULFW RXWFRPHl,GDW&ROHPDQKDVZKROO\IDLOHGWRPDNH ZKLFKWKHFRXUWGHQLHGDQGZDVODWHUDIILUPHGE\WKH2KLR WKLVVKRZLQJ7KHMXU\LQWKH6WRUH\FDVHFRQYLFWHG&ROHPDQ 6XSUHPH &RXUW  2Q 2FWREHU   WKH 2KLR 6XSUHPH RIDJJUDYDWHGPXUGHURIDFKLOGZLWKWKHVSHFLILFDWLRQWKDWWKH &RXUWVHW3HWLWLRQHUjVH[HFXWLRQGDWHIRUsDQXDU\ DJJUDYDWHGPXUGHUZDVSDUWRIDFRXUVHRIFRQGXFWLQYROYLQJ DSXUSRVHIXONLOOLQJRIRUDWWHPSWWRNLOOWZRRUPRUHSHUVRQV )ROORZLQJDWHQGD\VWD\RIH[HFXWLRQE\WKHGLVWULFWFRXUW 7KDWMXU\KDGEHIRUHLWWKHHYLGHQFHRI&ROHPDQjVPXUGHURXV RQsDQXDU\3HWLWLRQHUILOHGSHWLWLRQVIRUWKHZULWRI FRXUVHRIFRQGXFWGHVFULEHGE\WKH2KLR6XSUHPH&RXUWDV KDEHDVFRUSXVSXUVXDQWWR86&†LQFRQQHFWLRQ mD XQLTXH LGHQWLILDEOH SODQ RI FULPLQDO DFWLYLW\l 6WDWH Y ZLWK WKH 6WRUH\ DQG :DOWHUV FDVHV ZKLFK ZHUH ODWHU &ROHPDQ1(G 2KLR 7KHPDMRULW\ FRQVROLGDWHGRQDSSHDO2Q)HEUXDU\WKHGLVWULFW RSLQLRQKHUHFRUUHFWO\QRWHVWKDWWKLVSODQnGXULQJWKHEULHI FRXUWGHQLHG3HWLWLRQHUjV†SHWLWLRQVDQGOLIWHGWKHVWD\ VSDQRIWKHVXPPHURInLQFOXGHG RI H[HFXWLRQ SUHYLRXVO\ HQWHUHG E\ WKH GLVWULFW FRXUW  2Q $SULOWKHGLVWULFWFRXUWGHQLHG3HWLWLRQHUj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sXO\   >3HWLWLRQHU@ DQG 'HEUD ' %URZQ EUDFHOHWZDVODWHUIRXQGXQGHUWKHERG\RI6WRUH\FDU DSSURDFKHGWKHKRPHRIWKH5HYHUHQGDQG0UV0LOODUG WKHIWDQGEDWWHU\LQ2KLRDQGDQDGGLWLRQDOPXUGHUDQG *D\RI'D\WRQ2KLR$IWHUFRQYHUVLQJZLWK0U*D\ FDUWKHIWLQ2KLR WKH\VWD\HGDWWKH*D\V KRPHIURPsXO\WKURXJKsXO\ >3HWLWLRQHU@DQG%URZQDFFRPSDQLHGWKH*D\VWR 6XSUD PDMRULW\ DW BB Q  ,Q P\ YLHZ WKHUH LV QR UHOLJLRXVVHUYLFHVLQ/RFNZRRG2KLRRQsXO\ SUREDELOLW\nOHWDORQHDUHDVRQDEOHSUREDELOLW\nWKDWWKHMXU\ 7KH QH[W GD\ WKH *D\V GURYH DSSHOODQW DQG %URZQ WR ZRXOGKDYHGHFLGHGDJDLQVWLPSRVLQJWKHGHDWKSHQDOW\KDGLW GRZQWRZQ&LQFLQQDWLDQGGURSSHGWKHPRII EHHQDZDUHRIWKHHYLGHQFHRI&ROHPDQjVPLVHUDEOHFKLOGKRRG WKDWKHQRZFODLPVKLVFRXQVHOVKRXOGKDYHXQHDUWKHGLQVSLWH 2QsXO\DWDSSUR[LPDWHO\DP7RQQLH RI KLV DGDPDQW REVWUXFWLRQ DQG UHIXVDO WR FRRSHUDWH DQG 6WRUH\DJHILIWHHQOHIWKHUKRPHLQ&LQFLQQDWLZHDULQJ SUHVHQWHGWRWKHMXU\RYHUKLVREMHFWLRQV UXVW\EURZQFXWRIIVKRUWVDEHLJHVOHHYHOHVVEORXVHZLWK \HOORZULQJVEOXH WDVVHOVKRHVDQGD0LFKDHOsDFNVRQ 1RU GR , WKLQN WKHUH LV DQ\ SUREDELOLW\ WKDW UHTXLULQJ EXWWRQ6KHZDVQH[WVHHQDW%ORRPsXQLRU+LJK6FKRRO &ROHPDQ WR VXEPLW WR D SV\FKRORJLFDO RU SV\FKLDWULF DWDSSUR[LPDWHO\DPE\DWHDFKHU  &ROHPDQY0LWFKHOO 1R 1R &ROHPDQY0LWFKHOO  FRQVLVWHQWO\DQGDGDPDQWO\lUHIXVHGWRFRRSHUDWHLQDQ\ZD\ /DWHU WKDW VDPH GD\ EHWZHHQ  DQG  SP D ZLWKDQ\LQYHVWLJDWLRQLQWRPLWLJDWLRQ FODVVPDWHVDZ7RQQLHRQWKHFRUQHURI0D\DQG0RUJDQ 6WUHHWV LQ &LQFLQQDWL LQ WKH FRPSDQ\ RI D PDQ DQG D ,WLVWUXHWKDWWKHUHFRUGIURP&ROHPDQjVWULDOIRUWKH6WRUH\ ZRPDQ7KHFODVVPDWHLGHQWLILHGWKHPDQDV>3HWLWLRQHU@ PXUGHUGRHVQRWUHIOHFWWKDW&ROHPDQZDVDFWXDOO\DGYLVHG :KHQ7RQQLHKDGQRWUHWXUQHGKRPHE\SPWKDW GXULQJ WKDW WULDO RI KLV RSWLRQV ZLWK UHJDUG WR WKH SHQDOW\ GD\ KHU PRWKHU FDOOHG WKH SROLFH DQG UHSRUWHG KHU SKDVHRIWKHWULDO+RZHYHULWLVDOVRFOHDUIURPWKHPDWHULDOV PLVVLQJ &ROHPDQKDVSUHVHQWHGWRWKLVKDEHDVFRXUWDVZHOODVIURP WKLVFRXUWjVRSLQLRQLQWKHFRPSDQLRQKDEHDVFDVHWKDWKHZDV 2Q sXO\   D ERG\ ZDV GLVFRYHUHG LQ DQ ZHOODZDUHRIWKRVHRSWLRQVWKDWKHZDVFRPSHWHQWWRPDNH DEDQGRQHGEXLOGLQJRQ0D\6WUHHWE\DUHDOHVWDWHDJHQW WKHFKRLFHVKHPDGHDQGWKDWKHFHUWDLQO\NQHZE\WKHWLPH $ 0LFKDHO s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jVRWKHUFULPLQDO  )G DW  WKDW FRXQVHOVj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jVWULDOFRXQVHOnZKRGLGQRWUHSUHVHQW &DUROLQD IRU DQ HYDOXDWLRQ RI ZKHWKHU 3HWLWLRQHU ZDV KLP LQ WKH :DOWHUV WULDO EXW ZHUH UHSUHVHQWLQJ KLP LQ WKH FRPSHWHQWWRVWDQGWULDORQIHGHUDONLGQDSLQJFKDUJHV6DOO\ 6WRUH\PDWWHUGXULQJWKHHQWLUHWLPHWKDWWKH:DOWHUVWULDOZDV &XQQLQJKDP sRKQVRQ 0' DQG sLP +LONH\ 3K' WDNLQJ SODFHnZHUH mEDVHG TXLWH SURSHUO\ RQ LQIRUPHG FRQGXFWHGWKHHYDOXDWLRQZKLFKZDVOLPLWHGWR3HWLWLRQHUjV VWUDWHJLFFKRLFHVPDGHE\WKHGHIHQGDQWDQGRQLQIRUPDWLRQ PHQWDO FRPSHWHQF\ WR XQGHUVWDQG WKH IHGHUDO NLGQDSLQJ VXSSOLHGE\WKHGHIHQGDQWl6WULFNODQGY:DVKLQJWRQ FKDUJHV EURXJKW DJDLQVW KLP DQG DELOLW\ WR ZRUN ZLWK DQ 86   DWWRUQH\ LQ GHIHQGLQJ DJDLQVW WKRVH FKDUJHV :LWKLQ WKRVH SDUDPHWHUV'UVsRKQVRQDQG+LONH\IRXQG3HWLWLRQHUWREH (YHQLIFRXQVHOVjSHUIRUPDQFHKHUHZDVGHILFLHQW,ZRXOG ILQGWKDWWKHUHKDVEHHQQRVKRZLQJRISUHMXGLFHVXIILFLHQWWR  6HH 6WDWH Y &ROHPDQ  1(G   Q 2KLR    &ROHPDQY0LWFKHOO 1R 1R &ROHPDQY0LWFKHOO  PHQWDOO\ FRPSHWHQW WR VWDQG WULDO  7KH ILQGLQJV GLG QRW BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB DGGUHVV3HWLWLRQHUjVPHQWDOFRQGLWLRQDWWKHWLPHRIWKH6WRUH\ PXUGHURUDWWKHWLPHRIWKH6WRUH\WULDO &21&855,1*,13$57',66(17,1*,13$57 BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB &RXQVHO VWLSXODWHG WR 3HWLWLRQHUjV PHQWDO FRPSHWHQF\ WR VWDQGWULDOLQWKH6WRUH\FDVH3HWLWLRQHUDUJXHVRQDSSHDOWKDW $/,&(0%$7&+(/'(5&LUFXLWsXGJH&RQFXUUHQFH WKHH[DPLQDWLRQVZKLFKUHVXOWHGLQKLPEHLQJIRXQGPHQWDOO\ 'LVVHQW,FRQFXULQDOORIWKHPDMRULW\RSLQLRQH[FHSWWKDW FRPSHWHQWZHUHOLPLWHGDQGWKDWLQGHSHQGHQWLQYHVWLJDWLRQE\ SRUWLRQWKDWFRQFOXGHVWKDW&ROHPDQjVGHDWKVHQWHQFHPXVWEH 3HWLWLRQHUjVFRXQVHOLQWR3HWLWLRQHUjVVRFLDODQGPHQWDOKLVWRU\ UHYHUVHG EHFDXVH KLV FRXQVHO ZHUH LQHIIHFWLYH GXULQJ WKH ZRXOGKDYHOHGWRWKHSUHVHQWDWLRQRIVXEVWDQWLDOPLWLJDWLQJ SHQDOW\SKDVHRIWKHWULDO HYLGHQFHDWWKHSHQDOW\SKDVHRI3HWLWLRQHUjVWULDO3HWLWLRQHUjV SHUVRQDOEDFNJURXQGDQGFRXQVHOjVUROHLQLQYHVWLJDWLQJWKDW 7KHVHQWHQFHRIGHDWKZHDUHFDOOHGXSRQWRUHYLHZLQWKLV EDFNJURXQG DUH SUHVHQWHG LQ SDUW 9,, RI WKH GLVFXVVLRQ KDEHDV SURFHHGLQJ ZDV LPSRVHG DSSUR[LPDWHO\ VL[ ZHHNV VHFWLRQEHORZ DIWHUDGLIIHUHQWMXU\LPSRVHGDGHDWKVHQWHQFHRQ&ROHPDQ IRUWKHPXUGHURI0DUOHQH:DOWHUV7KLVFRXUWDIILUPHGWKH ',6&866,21 GLVWULFW FRXUWjV GHQLDO RI &ROHPDQjV SHWLWLRQ IRU D ZULW RI KDEHDVFRUSXVLQWKDWFDVH&ROHPDQY0LWFKHOO)G 3HWLWLRQHUj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jVKDEHDVDSSOLFDWLRQZDVILOHGLQ RSWLRQVFRXQVHOSURFHHGHGZLWKWKHUHVLGXDOGRXEWWKHRU\ SULRUWRWKHSDVVDJHRIWKH$QWLWHUURULVPDQG(IIHFWLYH'HDWK RQO\DW&ROHPDQjVGLUHFWLRQ&ROHPDQZDVFRPSHWHQWWR 3HQDOW\$FW m$('3$l WKHSUH$('3$VWDQGDUGRIUHYLHZ VWDQG WULDO DQG FRPSHWHQW WR DVVLVW KLV ODZ\HU ZLWK DSSOLHV  6HH 0DSHV Y &R\OH  )G   WK &LU VWUDWHJLFFKRLFHV    8QGHU WKH SUH$('3$ VWDQGDUG ZH SUHVXPH WKH FRUUHFWQHVV RI VWDWH FRXUW IDFWXDO ILQGLQJV ZKLFK DUH ,GDW ILUVWHPSKDVLVDGGHG  UHEXWWDEOH RQO\ E\ FOHDU DQG FRQYLQFLQJ HYLGHQFH DQG ZH UHYLHZ GHWHUPLQDWLRQV RI ODZ RU GHWHUPLQDWLRQV LQYROYLQJ ,Q WKH YROXPLQRXV UHFRUG SUHVHQWHG WR WKLV FRXUW LQ WKH PL[HGTXHVWLRQVRIODZDQGIDFWGHQRYR,G FLWLQJ5LFNPDQ KDEHDVSURFHHGLQJEHIRUHXVWRGD\&ROHPDQLQFOXGHVDODUJH Y%HOO)G WK&LU FHUWGHQLHG FROOHFWLRQRIQHZVSDSHUDUWLFOHVGHWDLOLQJWKHSURFHHGLQJVLQ 86   WKH :DOWHUV FDVH  $PRQJ WKRVH DUWLFOHV DUH DFFRXQWV RI &ROHPDQjVKDYLQJWROGUHSRUWHUVWKDWKHZDVmUHDOVXUSULVHGl ZKHQWKH:DOWHUVMXU\LPSRVHGWKHGHDWKSHQDOW\DQGWKDWKH mGLGQjWH[SHFWLWDWDOOl$OVRLQWKHYROXPLQRXVUHFRUGLV &ROHPDQjV LQLWLDO VWDWHFRXUW SRVWFRQYLFWLRQ SHWLWLRQ 3DUDJUDSKRIWKDWSHWLWLRQZKLFKLVSDUWRIKLVILIW\VL[WK FODLP IRU UHOLHI LV &ROHPDQjV FODLP WKDW KH mVSHFLILFDOO\  &ROHPDQY0LWFKHOO 1R 1R &ROHPDQY0LWFKHOO  SURFHHGLQJZLWKLQGD\VDIWHUUHPDQG7KLVGHFLVLRQGRHV ,3URFHGXUDOO\'HIDXOWHG&ODLPV QRWDIIHFWDQ\RWKHUVHQWHQFHDJDLQVW3HWLWLRQHU $$GHTXDWHDQG,QGHSHQGHQW6WDWH*URXQG 3HWLWLRQHUDUJXHVWKDWWKHGLVWULFWFRXUWHUUHGZKHQLWUHOLHG RQWKH2KLRVWDWHFRXUWjV DSSOLFDWLRQRIUHVMXGLFDWDXQGHU †RIWKH2KLR3RVW&RQYLFWLRQ$FWWRSURFHGXUDOO\ EDUPDQ\RI3HWLWLRQHUjVIHGHUDOFRQVWLWXWLRQDOFODLPVUDLVHG LQKLVKDEHDVDSSOLFDWLRQ ,Q6WDWHY3HUU\WKH2KLR6XSUHPH&RXUWIRXQGWKDW2KLR FRXUWV VKRXOG DSSO\ WKH GRFWULQH RI UHV MXGLFDWD ZKHQ GHWHUPLQLQJSRVWFRQYLFWLRQUHOLHIXQGHU† 8QGHUWKHGRFWULQHRIUHVMXGLFDWDDILQDOMXGJPHQWRI FRQYLFWLRQEDUVWKHFRQYLFWHGGHIHQGDQWIURPUDLVLQJDQG OLWLJDWLQJLQDQ\SURFHHGLQJH[FHSWDQDSSHDOIURPWKDW MXGJPHQWDQ\GHIHQVHRUDQ\FODLPHGODFNRIGXHSURFHVV WKDW ZDV UDLVHG RU FRXOG KDYH EHHQ UDLVHG E\ WKH GHIHQGDQWDWWKHWULDOZKLFKUHVXOWHGLQWKDWMXGJPHQWRI FRQYLFWLRQRURQDQDSSHDOIURPWKDWMXGJPHQW 1(G 2KLR  3HWLWLRQHUDUJXHVWKDWUHVMXGLFDWDXQGHU†ZDVQRW DQ DGHTXDWH DQG LQGHSHQGHQW VWDWH JURXQG RQ ZKLFK WR SURFHGXUDOO\EDUKLVKDEHDVFODLPVDQGWKXVGLGQRWVDWLVI\ IHGHUDOUHTXLUHPHQWVXQGHU0DXSLQY6PLWK)G WK&LU 8QGHU0DXSLQWKHIROORZLQJLVUHTXLUHGRI DVWDWHSURFHGXUDOUXOHZKLFKEDUVIHGHUDOUHYLHZRIDKDEHDV FODLP)LUVWWKHUXOHPXVWDSSO\WRWKHSHWLWLRQHUjVFODLPDQG WKH SHWLWLRQHU PXVW KDYH IDLOHG WR FRPSO\ ZLWK WKH UXOH 6HFRQG VWDWH FRXUWV PXVW KDYH DFWXDOO\ HQIRUFHG WKH UXOH 7KLUGWKHUXOHPXVWFRQVWLWXWHDQDGHTXDWHDQGLQGHSHQGHQW VWDWH JURXQG MXVWLI\LQJ IRUHFORVXUH RI WKH IHGHUDO FRQVWLWXWLRQDOFODLPm7KLVTXHVWLRQJHQHUDOO\ZLOOLQYROYHDQ H[DPLQDWLRQ RI WKH OHJLWLPDWH VWDWH LQWHUHVWV EHKLQG WKH SURFHGXUDOUXOHLQOLJKWRIWKHIHGHUDOLQWHUHVWLQFRQVLGHULQJ IHGHUDOFODLPVl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l0F&OHVNH\ SURFHGXUDO EDU LQ WKLV FDVH EHFDXVH KH ZDV GHQLHG D 86DW UHDVRQDEOHRSSRUWXQLW\WRSUHVHQWKLVFODLPVLQVWDWHFRXUWLQ YLRODWLRQ RI 0LFKHO Y /RXLVLDQD  86    )XUWKHUWKH2KLR6XSUHPH&RXUWjVUHYLHZRI3HWLWLRQHUjV +RZHYHUWKLV&RXUWLQ5XVWY=HQW)G WK&LU GHDWK VHQWHQFH XQGHU †  $  LQ WKLV SDUWLFXODU FDVH   DQG 5LJJLQV Y 0F0DFNLQ  )G  WK &LU ZKLFK FRQVLVWHG RI FLWDWLRQV WR mVLPLODUl FDVHV LQYROYLQJ   KDV KHOG WKDW DSSOLFDWLRQ RI UHV MXGLFDWD XQGHU mDJJUDYDWHGPXUGHUVZKLFKZHUHDSDUWRIDFRXUVHRIFRQGXFW †  LV DQ DGHTXDWH DQG LQGHSHQGHQW VWDWH JURXQG LQYROYLQJ D SXUSRVHIXO NLOOLQJ RI RU DWWHPSW WR NLOO WZR RU MXVWLI\LQJIRUHFORVXUHRIFRQVWLWXWLRQDOFODLPVLQKDEHDV PRUH SHUVRQVl PLUURUHG WKH VWDWH FRXUW UHYLHZ XSKHOG LQ 0F&OHVNH\,Q0F&OHVNH\WKH6XSUHPH&RXUWXSKHOGWKH 3HWLWLRQHUDUJXHVWKDW.HHQHUY5LGHQRXU )G UHYLHZLQJ VWDWH FRXUWjV VXSSRUW IRU LWV FRQFOXVLRQ RI WK&LU VXSSRUWVKLVSRVLWLRQWKDWDSSOLFDWLRQRIUHV SURSRUWLRQDOLW\ ZKLFK FRQVLVWHG RI FLWDWLRQV WR FDVHV MXGLFDWD XQGHU †  ZDV QRW DQ DGHTXDWH DQG mLQYROYLQJJHQHUDOO\VLPLODUPXUGHUVl0F&OHVNH\86 LQGHSHQGHQWVWDWHJURXQGIRUEDUULQJKLVKDEHDVFODLPV,Q DW .HHQHUWKLV&RXUWIRXQG $FFRUGLQJO\ZHILQGWKDWXQGHU3URIILWWDQG0F&OHVNH\ 7KH 2KLR 6XSUHPH &RXUW KDV FRQVWUXHG WKH 3RVW SURSRUWLRQDOLW\UHYLHZXQGHU† $ GRHVQRWYLRODWH &RQYLFWLRQ$FWWRSUHFOXGHMXGLFLDOUHYLHZRIQHZLVVXHV GXHSURFHVVRUWKH(LJKWK$PHQGPHQW:HDOVRILQGWKDWWKH LQDOOEXWDOLPLWHGQXPEHURIFLUFXPVWDQFHV$VDUHVXOW 2KLR6XSUHPH&RXUWjVUHOLDQFHRQVLPLODUFDVHVLQYROYLQJWKH 2KLRSRVWFRQYLFWLRQFROODWHUDOUHOLHILVQRWFRH[WHQVLYH †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jV JXLOW\ YHUGLFW EXW 5(9(56( WKH MXGJPHQW RI WKH GHDWKVHQWHQFHEHFDXVHRIWKHLQHIIHFWLYHDVVLVWDQFHRIFRXQVHO ,Q5LJJLQVWKLV&RXUWGLGQRWDGGUHVVWKHFRH[WHQVLYHQHVV DWWKHSHQDOW\SKDVHRIWKHWULDO:H5(0$1'WKHFDVHWRWKH RISURFHGXUDOGHIDXOWXQGHUWKH2KLR3RVW&RQYLFWLRQ$FWDQG GLVWULFWFRXUWZLWKLQVWUXFWLRQVWRLVVXHDZULWRIKDEHDVFRUSXV IHGHUDOKDEHDV5DWKHUWKLV&RXUWVLPSO\FRQFOXGHGXQGHU YDFDWLQJ3HWLWLRQHUj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jV@GXHSURFHVVFODLPWKLV GHDWKSHQDOW\l&DUWHU)G DW 7KHUHIRUHXQGHU FRXUW ZLOO QRW FRQVLGHU WKDW FODLP XQOHVV >SHWLWLRQHU@ 6WULFNODQGFRXQVHOjVREMHFWLYHO\XQUHDVRQDEOHSHUIRUPDQFH HVWDEOLVKHV>FDXVHDQGSUHMXGLFH@ DW WKH SHQDOW\ SKDVH RI WKH WULDO ZKLFK OLNHO\ DIIHFWHG WKH RXWFRPHVXFKWKDWFRQILGHQFHLQWKHUHVXOWLQJGHDWKVHQWHQFH 5LJJLQV)GDW FLWLQJ3HUU\1(GDW  LVXQGHUPLQHGFRQVWLWXWHGLQHIIHFWLYHDVVLVWDQFHLQYLRODWLRQ RIWKH6L[WK$PHQGPHQW ,Q5XVWFLWLQJ5LJJLQVWKLV&RXUWDOVRIRXQGSHWLWLRQHUjV KDEHDV FODLPV EDUUHG ZLWKRXW UHIHUHQFH WR FRH[WHQVLYHQHVV 9,,,3URSRUWLRQDOLW\5HYLHZ XQGHU.HHQHU6SHFLILFDOO\WKLV&RXUWIRXQGWKDWSHWLWLRQHU ZDV 2KLR5HYLVHG&RGH† $ UHTXLUHV2KLRDSSHOODWH FRXUWVWRUHYLHZGHDWKVHQWHQFHVIRUSURSRUWLRQDOLW\m>L@Q EDUUHGIURPSUHVHQWLQJKLVFRQVWLWXWLRQDOFODLPVWRWKH GHWHUPLQLQJZKHWKHUWKHVHQWHQFHRIGHDWKLVDSSURSULDWH>WKH VWDWHFRXUWVEHFDXVHKHKDGWKHRSSRUWXQLW\WRUDLVHWKH UHYLHZLQJ FRXUW@ VKDOO FRQVLGHU ZKHWKHU WKH VHQWHQFH LV LVVXHVGXULQJWKHFRXUVHRIKLVGLUHFWDSSHDOEXWIDLOHGWR H[FHVVLYH RU GLVSURSRUWLRQDWH WR WKH SHQDOW\ LPSRVHG LQ GR VR    %HFDXVH >SHWLWLRQHU@ IDLOHG WR UDLVH KLV VLPLODUFDVHVl FRQVWLWXWLRQDO LVVXHV LQ KLV GLUHFW DSSHDO DQG EHFDXVH >SHWLWLRQHUjV@ SURFHGXUDO GHIDXOW >XQGHU WKH 2KLR UHV 7KH (LJKWK $PHQGPHQW EDUV SXQLVKPHQWV ZKLFK DUH MXGLFDWD GRFWULQH@ FRQVWLWXWHG DQ µDGHTXDWH DQG JURVVO\GLVSURSRUWLRQDWHWRWKHLUFRUUHVSRQGLQJFULPH6HH LQGHSHQGHQWj VWDWH JURXQG RQ ZKLFK WKH VWDWH UHOLHG WR &RNHUY*HRUJLD86  m>:@KHQD6WDWH IRUHFORVHMXGLFLDOUHYLHZRIKLVFRQVWLWXWLRQDOFODLPVZH RSWV WR DFW LQ D ILHOG ZKHUH LWV DFWLRQ KDV VLJQLILFDQW PD\ QRW FRQVLGHU >SHWLWLRQHUjV@ FRQVWLWXWLRQDO FODLPV GLVFUHWLRQDU\HOHPHQWVLWPXVWQRQHWKHOHVVDFWLQDFFRUGZLWK XQOHVVKHFDQVKRZ>FDXVHDQGSUHMXGLFH@ WKHGLFWDWHVRIWKH&RQVWLWXWLRQDQGLQSDUWLFXODULQDFFRUG ZLWKWKH'XH3URFHVV&ODXVHl(YLWWVY/XFH\86 5XVW)GDW FLWDWLRQVRPLWWHG     7KLV&RXUWLQ.HHQHUFLWHGVHYHUDOFDVHVLQVXSSRUWRILWV 3HWLWLRQHUDUJXHVWKDWWKH6WDWHRI2KLRKDYLQJRSWHGIRU SRVLWLRQWKDWmEHFDXVHRIWKHQDUURZLQWHUSUHWDWLRQSODFHGRQ SURSRUWLRQDOLW\ UHYLHZ KDV QRW DSSOLHG VXFK UHYLHZ >6HFWLRQ@  E\ WKH 2KLR 6XSUHPH &RXUW FROODWHUDO FRQVWLWXWLRQDOO\  6SHFLILFDOO\ 3HWLWLRQHU FODLPV WKDW WKH UHOLHILVRIWHQXQDYDLODEOHRULQHIIHFWLYHDVD6WDWHUHPHG\l † $ VWDQGDUGRIGHWHUPLQLQJZKHWKHUmWKHVHQWHQFH .HHQHU)GDW+RZHYHUWKHVHFDVHVFRQFHUQHG LV H[FHVVLYH RU GLVSURSRUWLRQDWH WR WKH SHQDOW\ LPSRVHG LQ IRUJLYHQHVVRIWKHH[KDXVWLRQUHTXLUHPHQWIRUKDEHDVUHYLHZ VLPLODUFDVHVlLVLQDGHTXDWHEHFDXVHUHYLHZLQJFRXUWVQHHGWR QRWWKHDGHTXDF\RIUHVMXGLFDWDXQGHU†DVDVWDWH EDVH WKHLU UHYLHZ RQ PRUH WKDQ PHUH FRPSDULVRQ RI GHDWK JURXQGMXVWLI\LQJIRUHFORVXUHRIDIHGHUDOFRQVWLWXWLRQDOFODLP VHQWHQFHVDFURVVFDVHV 2QHFDVH0DFNH\Y.RORVNL)G WK&LU  VWDWHG +RZHYHU WKH 6XSUHPH &RXUW KDV XSKHOG SURSRUWLRQDOLW\ UHYLHZXQGHU)ORULGDODZZKHUHFRXUWmGHFLVLRQVDUHUHYLHZHG >D@VZHVDLGLQ7HUUHOOY3HULQL)G> WK WR HQVXUH WKDW WKH\ DUH FRQVLVWHQW ZLWK RWKHU VHQWHQFHV &LU @DQG&ROH\Y$OYLV)G> WK&LU LPSRVHGLQVLPLODUFLUFXPVWDQFHVl3URIILWWY)ORULGD  @WKH6XSUHPH&RXUWRI2KLRKDVLQWHUSUHWHG2KLR 86      0RUHRYHU WKH 6XSUHPH &RXUW KDV 5HYLVHG&RGH6HFWLRQVRQDUURZO\WKDWLW IRXQG mDEVHQW D VKRZLQJ WKDW WKH    FDSLWDO SXQLVKPHQW ZRXOGDIIRUGWKHDSSHOODQWQRHIIHFWLYHUHPHG\:H  &ROHPDQY0LWFKHOO 1R 1R &ROHPDQY0LWFKHOO  KROGWKDWWKHDSSHOODQWVKRXOGQRWEHUHTXLUHGWRDSSO\IRU FRXUWjV TXHVWLRQV UHJDUGLQJ WKH RSWLRQ IRU D SUHVHQWHQFH DGHOD\HGDSSHDORIWKHGHQLDORIKLVPRWLRQWRYDFDWHKLV LQYHVWLJDWLRQDQGPHQWDOHYDOXDWLRQGRQRWHVWDEOLVK)DUHWWD VHQWHQFHLQRUGHUWRH[KDXVWVWDWHUHPHGLHV DV FRQWUROOLQJ LQ WKH IDFH RI VXEVWDQWLDO SUHFHGHQW E\ WKH 6XSUHPH &RXUW DQG WKLV &RXUW RQ FRXQVHOjV LQGHSHQGHQW 7KLV&RXUWjVFRQFOXVLRQLQ.HHQHUDIWHUGLVFXVVLRQRI7HUUHOO REOLJDWLRQ WR LQYHVWLJDWH WKH SHUVRQDO EDFNJURXQG RI D &ROH\ DQG 0DFNH\ GLG QRW FRQFHUQ ZKHWKHU UHV MXGLFDWD GHIHQGDQW LQ SUHSDUDWLRQ IRU WKH SHQDOW\ SKDVH RI D FDSLWDO XQGHU †  ZDV DQ DGHTXDWH DQG LQGHSHQGHQW VWDWH WULDO JURXQGMXVWLI\LQJIRUHFORVXUHRIIHGHUDOFRQVWLWXWLRQDOFODLPV UDWKHU.HHQHUIRXQGWKDWEHFDXVHSHWLWLRQHUjVFODLPZDVQRW +RZHYHUIRUVXFKREMHFWLYHO\XQUHDVRQDEOHSHUIRUPDQFHWR FRJQL]DEOHXQGHU†mKHKDVH[KDXVWHGDYDLODEOH6WDWH FRQVWLWXWH LQHIIHFWLYH DVVLVWDQFH RI FRXQVHO 6WULFNODQG UHPHGLHVl.HHQHU)GDW&RQYHUVHO\5XVWDQG UHTXLUHVWKDW3HWLWLRQHUVKRZSUHMXGLFHVDWLVILHGE\VKRZLQJ 5LJJLQV VSRNH GLUHFWO\ WR WKH LVVXH RI UHV MXGLFDWD XQGHU D UHDVRQDEOH SUREDELOLW\ WKDW EXW IRU VXFK SHUIRUPDQFH WKH †DVDQDGHTXDWHDQGLQGHSHQGHQWVWDWHJURXQG5XVW WULDORXWFRPHZRXOGKDYHEHHQGLIIHUHQW6WULFNODQG86 DQG 5LJJLQV QRW .HHQHU DUH FRQWUROOLQJ DV WR 3HWLWLRQHUjV DWm5HDVRQDEOHSUREDELOLW\lLVmDSUREDELOLW\VXIILFLHQW FODLP DSSOLFDWLRQ RI UHV MXGLFDWD XQGHU †  LV DQ WR XQGHUPLQH FRQILGHQFH LQ WKH RXWFRPHl EXW GRHV QRW DGHTXDWH DQG LQGHSHQGHQW VWDWH JURXQG IRU EDUULQJ KDEHDV UHTXLUH VKRZLQJ WKDW FRXQVHOjV XQUHDVRQDEOH SHUIRUPDQFH UHYLHZRIFRQVWLWXWLRQDOFODLPV PRUHOLNHO\WKDQQRWDOWHUHGWKHRXWFRPHLQWKHFDVH,GDW   m0LWLJDWLQJ HYLGHQFH XQUHODWHG WR GDQJHURXVQHVV +RZHYHU3HWLWLRQHUDUJXHVWKDWWKHIDFWVJLYLQJULVHWRWKH PD\DOWHUWKHMXU\jVVHOHFWLRQRISHQDOW\HYHQLILWGRHVQRW 2KLRFRXUWjVDSSOLFDWLRQRIUHVMXGLFDWDWRKLVFDVHUHQGHUWKH XQGHUPLQHRUUHEXWWKHSURVHFXWLRQjVGHDWKHOLJLELOLW\FDVHl JURXQGLQDGHTXDWHLQWKLVSDUWLFXODULQVWDQFH3HWLWLRQHUFLWHV :LOOLDPV6&WDWm>7@KHJUDSKLFGHVFULSWLRQRI sDPHVY.HQWXFN\86  WRVXSSRUWKLV >GHIHQGDQWjV@FKLOGKRRGILOOHGZLWKDEXVHDQGSULYDWLRQRU FODLPWKDWUHVMXGLFDWDXQGHU†ZDVmQRWWKHVRUWRI WKHUHDOLW\WKDWKHZDVµERUGHUOLQHPHQWDOO\UHWDUGHGjPLJKW ILUPO\HVWDEOLVKHGDQGUHJXODUO\IROORZHGVWDWHSUDFWLFHWKDW ZHOO KDYH LQIOXHQFHG WKH MXU\jV DSSUDLVDO RI KLV PRUDO FDQSUHYHQWLPSOHPHQWDWLRQRIIHGHUDOFRQVWLWXWLRQDOULJKWVl FXOSDELOLW\l,GDW FLWDWLRQRPLWWHG 7KHVHQWHQFLQJ DQG WKXV QRW DQ DGHTXDWH VWDWH JURXQG RQ ZKLFK WR UHO\ LQ SKDVH LV OLNHO\ WR EH mWKH VWDJH RI WKH SURFHHGLQJV ZKHUH EDUULQJFRQVWLWXWLRQDOFODLPV7KH6XSUHPH&RXUWLQsDPHV FRXQVHOFDQGRKLVRUKHUFOLHQWWKHPRVWJRRGl*OHQQ QRWHG WKDW D .HQWXFN\ UXOHjV GLVWLQFWLRQ EHWZHHQ )GDW TXRWLQJ.XEDWY7KLHUHW)G mLQVWUXFWLRQVlDQGmDGPRQLWLRQVlZDVmQRWVWULFWO\DGKHUHG WK&LU FHUWGHQLHG86  ,WLVUHDVRQDEO\ WRl DQG WKDW WKH .HQWXFN\ &RXUW RI $SSHDOV KDG UHDFKHG SUREDEOHWKDWLQIRUPLQJDMXU\RIDFDSLWDOGHIHQGDQWjVORZ GHFLVLRQVFRQWUDU\WRWKHUXOHmLQVHYHUDOFDVHVlsDPHV ,4GHSULYHGEDFNJURXQGDQGSV\FKLDWULFSUREOHPVZRXOG 86DW DIIHFW WKH EDODQFH RI DJJUDYDWLQJ DQG PLWLJDWLQJ FLUFXPVWDQFHV WKDW KDG SUHYLRXVO\ UHVXOWHG LQ WKH GHDWK 3HWLWLRQHUjVGHPRQVWUDWLRQRIWKH2KLRFRXUWVjLQFRQVLVWHQW VHQWHQFH%UHZHU)GDW DSSOLFDWLRQRIUHVMXGLFDWDXQGHU†FRQVLVWVRIRQH FDVH 6WDWH Y +RZDUG  1( G  2KLR    ,Q :H ILQG JLYHQ 3HWLWLRQHUjV SHUVRQDO EDFNJURXQG +RZDUG D FRQYLFWLRQ ZDV UHYHUVHG LQ SRVWFRQYLFWLRQ SV\FKRORJLFDOKLVWRU\DQGSRWHQWLDORUJDQLFEUDLQG\VIXQFWLRQ SURFHHGLQJV EHFDXVH RI DQ LPSURSHU MXU\ LQVWUXFWLRQ  7KH WKDWLWLVUHDVRQDEO\SUREDEOHWKDWWKHSUHVHQWDWLRQRIHYHQD FRXUWFRXOGKDYHDSSOLHGUHVMXGLFDWDLQWKDWWKHLQVWUXFWLRQ VXEVWDQWLDOVXEVHWRIWKHPLWLJDWLQJHYLGHQFHGHWDLOHGDERYH LVVXHFRXOGKDYHEHHQOLWLJDWHGRQDSSHDOEXWFKRVHWRUHYHUVH mZRXOGKDYHKXPDQL]HG>3HWLWLRQHU@EHIRUHWKHMXU\VXFKWKDW  &ROHPDQY0LWFKHOO 1R 1R &ROHPDQY0LWFKHOO  7KH 6XSUHPH &RXUW KDV IRXQG WKDW FRXQVHOjV IDLOXUH WR WKHFRQYLFWLRQLQVWHDG+RZHYHU+RZDUGIDLOHGWRDGGUHVV LQYHVWLJDWHDGHIHQGDQWjVEDFNJURXQGLQSUHSDUDWLRQIRUWKH WKHUHVMXGLFDWDLVVXHGLUHFWO\0RUHRYHUHYHQDVVXPLQJWKDW SHQDOW\ SKDVH RI D FDSLWDO WULDO FRQVWLWXWHG LQHIIHFWLYH +RZDUGVXSSRUWHG3HWLWLRQHUjVSRVLWLRQRQHGHFLVLRQGRHV DVVLVWDQFH HYHQ ZKHQ FRXQVHO SUHVHQWHG DQ DOWHUQDWLYH QRWOLNHO\HVWDEOLVKmLQFRQVLVWHQWDSSOLFDWLRQlRIDSURFHGXUDO DUJXPHQW KLJKOLJKWLQJ WKH GHIHQGDQWjV UHPRUVH DQG UXOH  m>$@Q RFFDVLRQDO DFW RI JUDFH E\ D VWDWH FRXUW LQ FRRSHUDWLRQZLWKSROLFHLQPLWLJDWLRQ H[FXVLQJ RU GLVUHJDUGLQJ D VWDWH SURFHGXUDO UXOH GRHV QRW UHQGHUWKHUXOHLQDGHTXDWHl$PRVY6FRWW)G WKH IDLOXUH WR LQWURGXFH WKH FRPSDUDWLYHO\ YROXPLQRXV WK&LU FHUWGHQLHG86  )XUWKHU DPRXQWRIHYLGHQFHWKDW>VXSSRUWHGGHIHQGDQW@ZDVQRW DV GLVFXVVHG DERYH sDPHV UHIHUHQFHG mVHYHUDO FDVHVl LQ MXVWLILHGE\DWDFWLFDOGHFLVLRQWRIRFXVRQ>GHIHQGDQWjV@ VXSSRUW RI LWV ILQGLQJ D .HQWXFN\ UXOH WR KDYH EHHQ YROXQWDU\FRQIHVVLRQ>7@KRVHRPLVVLRQVFOHDUO\ LQFRQVLVWHQWO\DSSOLHG:HGRQRWILQGWKDWWKH2KLR6XSUHPH GHPRQVWUDWH WKDW WULDO FRXQVHO GLG QRW IXOILOO WKHLU &RXUWjVIDLOXUHWRDSSO\UHVMXGLFDWDLQ+RZDUGSUHFOXGHVLWV REOLJDWLRQ WR FRQGXFW D WKRURXJK LQYHVWLJDWLRQ RI WKH TXDOLILFDWLRQ DV DQ LQGHSHQGHQW DQG DGHTXDWH VWDWH JURXQG GHIHQGDQW VEDFNJURXQG XQGHU0DXSLQ :LOOLDPVY7D\ORU86  FLWLQJ$%$ 3HWLWLRQHU WKHQ DUJXHV DJDLQVW DSSOLFDWLRQ RI WKH UXOH RI 6WDQGDUGVIRU&ULPLQDOsXVWLFHFRPPHQWDU\S G 2KLR Y 0XUQDKDQ  1( G  2KLR   WR KLV HG  FDVH  ,Q 0XUQDKDQ WKH 6XSUHPH &RXUW RI 2KLR KHOG WKDW FODLPVRILQHIIHFWLYHDVVLVWDQFHRIDSSHOODWHFRXQVHODUHQRW 5HDVRQDEOHLQYHVWLJDWLRQE\FRXQVHOZRXOGKDYHSURGXFHG FRJQL]DEOH LQ SRVWFRQYLFWLRQ SURFHHGLQJV SXUVXDQW WR DWOHDVWDVDPSOLQJRIWKHEDFNJURXQGLQIRUPDWLRQSURYLGHG †,GDW7KH0XUQDKDQFRXUWLQVWUXFWHGWKDW DERYH EHFDXVH WKRVH UHSRUWV UHOLHG RQ YDULHG GLVFRYHUDEOH FRORUDEOHFODLPVRILQHIIHFWLYHDVVLVWDQFHRIDSSHOODWHFRXQVHO VRXUFHV LQFOXGLQJ VFKRRO UHFRUGV KRVSLWDO UHFRUGV SULVRQ IRU ZKLFK WKH DSSOLFDWLRQ RI UHV MXGLFDWD ZRXOG EH XQMXVW UHFRUGVSULVRQPHGLFDOUHFRUGVSROLFHUHFRUGVVWDWHPHQWVE\ VKRXOG EH SUHVHQWHG LQ DQ DSSOLFDWLRQ IRU GHOD\HG IDPLO\PHPEHUVDQGDFTXDLQWDQFHVSUHYLRXVSV\FKLDWULFDQG UHFRQVLGHUDWLRQLQWKHFRXUWRIDSSHDOVZKHUHWKHDOOHJHGHUURU SV\FKRORJLFDO HYDOXDWLRQV DQG SUHVHQWHQFH LQYHVWLJDWLRQ WRRNSODFHSXUVXDQWWR2KLR$SSHOODWH5XOHVDQG %  UHSRUWV:KLOHSURGXFWLRQRIWKH)%,UHFRUGVRQ3HWLWLRQHUjV ,GDW EDFNJURXQG ZRXOG KDYH DVVLVWHG FRXQVHOjV LQYHVWLJDWLRQ )%, UHWHQWLRQ RI WKRVH UHFRUGV GLG QRW UHQGHU FRXQVHO 'HIHQGDQWLQ0XUQDKDQOLNH3HWLWLRQHULQWKLVFDVHKDG KHOSOHVV SXUVXHG KLV FODLP RI LQHIIHFWLYH DVVLVWDQFH RI DSSHOODWH FRXQVHO E\ UHTXHVW IRU SRVWFRQYLFWLRQ UHOLHI SXUVXDQW WR 8QGHU:LOOLDPV&DUWHU6NDJJV$XVWLQDQG*OHQQZHILQG †3HWLWLRQHUDUJXHVWKDWWKH2KLRFRXUWVLQKLVFDVH FRXQVHOjVSHUIRUPDQFHJLYHQWKHFRPELQDWLRQRI3HWLWLRQHUjV DVLQ0XUQDKDQVKRXOGKDYHSHUPLWWHG3HWLWLRQHUWRDSSO\IRU XQLQYHVWLJDWHGSHUVRQDOKLVWRU\DQGWKHFRQVHTXHQWO\GHILFLHQW GHOD\HGUHFRQVLGHUDWLRQLQWKH2KLRFRXUWRIDSSHDOV SHQDOW\ SKDVH FORVLQJ DUJXPHQW WR EH REMHFWLYHO\ XQUHDVRQDEOH  3HWLWLRQHUjV QHJDWLYH UHVSRQVHV WR WKH WULDO 0XUQDKDQZDVGHFLGHGLQ)HEUXDU\RI,QsXQHRI 3HWLWLRQHUILOHGKLV0XUQDKDQDSSOLFDWLRQIRUGHOD\HG UHFRQVLGHUDWLRQRIKLVDSSHDOEDVHGRQLQHIIHFWLYHDVVLVWDQFH DQG RWKHU GUXJV ERUGHUOLQH SHUVRQDOLW\ GLVRUGHU DQG EUDLQ G\VIXQFWLRQ LQ RI DSSHOODWH FRXQVHO  ,Q )HEUXDU\ RI  WKH 2KLR )LUVW FRPELQDWLRQ DOPRVW JXDUDQWHH WKDW KH ZRXOG KDYH H[WUHPHV RI $SSHOODWH'LVWULFWIRXQG3HWLWLRQHUjV0XUQDKDQDSSOLFDWLRQWR EHKDYLRUVl s$ DW   &ROHPDQY0LWFKHOO 1R 1R &ROHPDQY0LWFKHOO  EHWLPHEDUUHGXQGHU$SSHOODWH5XOH % ZKLFKUHTXLUHV s$ DW      'U +LONH\ DOVR IRXQG DSSOLFDWLRQVIRUUHRSHQLQJWREHILOHGZLWKLQQLQHW\GD\VDIWHU 3HWLWLRQHUWRKDYHHOHYDWHGWHVWUHVXOWVXQGHUWKHSV\FKRSDWKLF HQWU\ RI DSSHOODWH MXGJPHQW  $SSHOODWH 5XOH  %  DQ GHYLDQWDQGSDUDQRLDFDWHJRULHVDVZHOODVDIXOOVFDOH,4 DPHQGPHQW WR WKH 2KLR 5XOHV RI $SSHOODWH 3URFHGXUH VFRUHRIIDOOLQJLQWKHORZQRUPDOUDQJHDQGDYHUEDO,4 EHFDPHHIIHFWLYHsXO\DIWHU3HWLWLRQHUKDGILOHGKLV VFRUH RI  IDOOLQJ DW WKH XSSHU OLPLWV RI WKH ERUGHUOLQH 0XUQDKDQDSSOLFDWLRQ UHWDUGHGUDQJH )RUPHU2KLR$SSHOODWH5XOHLQHIIHFWDWWKHWLPHRIWKH 'U sRKQVRQ IRXQG WKDW 3HWLWLRQHU KDG SUREDEOH PL[HG 0XUQDKDQ GHFLVLRQ UHTXLUHG WKDW DSSOLFDWLRQV IRU SHUVRQDOLW\GLVRUGHUZLWKDQWLVRFLDOQDUFLVVLVWLFDQGREVHVVLYH UHFRQVLGHUDWLRQEHILOHGE\WKHODWHURIWKHFRXUWjVILOLQJRIWKH IHDWXUHV  )XUWKHU DQ HDUOLHU SV\FKLDWULF HYDOXDWLRQ RI GHFLVLRQ RU ZLWKLQ WHQ GD\V RI WKH DQQRXQFHPHQW RI WKH 3HWLWLRQHU FRQGXFWHG LQ  E\ /HR 0 *ROGPDQ 0' GHFLVLRQDWLPHOLPLWWKDWWKH FRXUW FRXOGH[WHQGIRUJRRG IRXQGWKDW3HWLWLRQHUTXDOLILHGDVDm%RUGHUOLQH3HUVRQDOLW\l FDXVHXQGHU2KLR$SSHOODWH5XOH %  s$DW 2KLR$SSHOODWH5XOH 0 VWDWHVWKDWDPHQGPHQWVWRWKH ,QDGGLWLRQUHSRUWVFRQGXFWHGVXEVHTXHQWWRWKHWULDOZKLFK 5XOHVRI$SSHOODWH3URFHGXUHWKDWWRRNHIIHFWRQsXO\ LQFOXGHG LQGHSHQGHQW HYDOXDWLRQ RI 3HWLWLRQHUjV SHUVRQDO VXFKDV$SSHOODWH5XOH % JRYHUQSURFHHGLQJVSHQGLQJRQ KLVWRU\GLDJQRVHG3HWLWLRQHUDWWKHWLPHRIWKHWULDODVKDYLQJ  s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mWKH JRRGFDXVH  UHTXLUHPHQWRI$SS5 % VXFFHHGVDQGLQFRUSRUDWHVWKH /HRQDUG (ONXQ 0' sDPHV 5 (YDQV 3K' DQG 0DUN 5DPVGHQ 3K' UHDFKHG WKLV FRQFOXVLRQ LQ VHSDUDWH UHSRUWV 'U (ONXQ FRPPHQWHG JRRGFDXVH UHTXLUHPHQW RI 0XUQDKDQ DQG IRUPHU $SS5 WKDW 3HWLWLRQHU ZDV LQ KLV RSLQLRQ mRQH RI WKH PRVW H[HPSODU\ FDVHV >RI  % l5HGGLFN1(GDW3HWLWLRQHUDUJXHVWKDW ERUGHUOLQH SHUVRQDOLW\ GLVRUGHU@ , KDYH VHHQ LQ TXLWH VRPH WLPH    RQH WKHVL[WHHQPRQWKVVHSDUDWLQJWKH0XUQDKDQGHFLVLRQIURP VHHV D FKLOGKRRG DQG LQIDQF\ DQG HDUO\ DGXOWKRRG UHSOHWH ZLWK DEXVH KLV PRWLRQ IRU UHFRQVLGHUDWLRQ VKRXOG QRW EDU KLV FODLP G\VIXQFWLRQDOLW\ GLVUXSWLYH HQYLURQPHQW    RIWHQ DQ LQGLYLGXDO ZKRjV EHFDXVH GXULQJ WKDW WLPH KH ZDV DFWLYHO\ OLWLJDWLQJ WKH OHIW WR IHQG IRU WKHPVHOYHV DQG WR HVWDEOLVK    WKHLU RZQ UXOHV LI LQ IDFW DSSOLFDELOLW\RI0XUQDKDQWRKLVFDVHEHIRUHWKH2KLR)LUVW WKH\ HVWDEOLVK DQ\l s$ DW  $SSHOODWH'LVWULFW+RZHYHU3HWLWLRQHUKDVQRWRIIHUHGOHJDO  VXSSRUW IRU WKH FODLP WKDW OLWLJDWLQJ WKH DSSOLFDELOLW\ RI 5HSRUW E\ 'U (YDQV 0XUQDKDQWRKLVFDVHFRQVWLWXWHGJRRGFDXVHIRUILOLQJKLV  0XUQDKDQ DSSOLFDWLRQ VL[WHHQ PRQWKV DIWHU WKH 0XUQDKDQ 5HSRUW E\ 'RURWK\ 2WQRZ /HZLV 0' GHFLVLRQ  'U (YDQV GLG QRW FRPPHQW RQ 3HWLWLRQHUjV FRPSHWHQF\ WR (YHQDVVXPLQJWKDW3HWLWLRQHUKDGVKRZQJRRGFDXVHIRU UHSUHVHQW KLPVHOI EXW QRWHG WKDW mSHUVRQV VXIIHULQJ IURP ERUGHUOLQH SHUVRQDOLW\ GLVRUGHU XVXDOO\ VKRZ H[WUHPHV RI HPRWLRQ LPSXOVLYH KLVGHOD\LQILOLQJIRUUHFRQVLGHUDWLRQ3HWLWLRQHULQKLVKDEHDV EHKDYLRUV DQG WUDQVLHQW SV\FKRWLF HSLVRGHV FKDUDFWHUL]HG E\ GHOXVLRQV DSSOLFDWLRQRIIHUHGQRDUJXPHQWWKDWWKHFODLPVRPLWWHGE\ KDOOXFLQDWLRQV DQG GLVDVVRFLDWLRQ ,Q >3HWLWLRQHUjV@ FDVH DEXVH RI DOFRKRO  &ROHPDQY0LWFKHOO 1R 1R &ROHPDQY0LWFKHOO  FRXQVHOZKHUHWKHmXOWLPDWHGHFLVLRQWKDWZDVUHDFKHGQRWWR FRXQVHOZHUHVWURQJHUWKDQWKRVHUDLVHGE\FRXQVHORQDSSHDO FDOO ZLWQHVVHV >IRU PLWLJDWLRQ@ ZDV QRW D UHVXOW RI m*HQHUDOO\RQO\ZKHQLJQRUHGLVVXHVDUHFOHDUO\VWURQJHUWKDQ LQYHVWLJDWLRQ DQG HYDOXDWLRQ EXW ZDV LQVWHDG SULPDULO\ D WKRVHSUHVHQWHGZLOOWKHSUHVXPSWLRQRIHIIHFWLYHDVVLVWDQFH UHVXOW RI FRXQVHOVj HDJHUQHVV WR ODWFK RQWR GHIHQGDQWjV RIFRXQVHOEHRYHUFRPHl*UD\Y*UHHU)G VWDWHPHQWVWKDWKHGLGQRWZDQWDQ\ZLWQHVVHVFDOOHGl WK&LU  &RXQVHOLQWKHFDVHDWKDQGIDLOHGWRSUHVHQWWRWKHMXU\DQ\ $V QRWHG E\ WKH GLVWULFW FRXUW DSSHOODWH FRXQVHO IRU DVSHFWVRI3HWLWLRQHUjVSHUVRQDOKLVWRU\ZKLFKDFFRUGLQJWR 3HWLWLRQHUUDLVHGWZHOYHDVVLJQPHQWVRIHUURURQDSSHDOZKLFK YDULRXVSV\FKLDWULFDQGSV\FKRORJLFDOUHSRUWVFRQWDLQHGLQWKH ZHUH JURXQGHG LQ GR]HQV RI VSHFLILF LVVXHV IRU UHYLHZ UHFRUGZKLFKLQWXUQUHOLHGRQP\ULDGDIILGDYLWVEDFNJURXQG 3HWLWLRQHULQWKHIRUW\IRXUWKJURXQGIRUUHOLHILQKLVKDEHDV UHSRUWV DQG PHQWDO HYDOXDWLRQV  LQFOXGHG WKH IROORZLQJ SHWLWLRQ WR WKH GLVWULFW FRXUW LGHQWLILHG VRPH VHYHQW\ILYH 3HWLWLRQHUjV JUDQGPRWKHU ZKR ZDV KLV SULPDU\ FDUHWDNHU DGGLWLRQDO LVVXHV ZKLFK DSSHOODWH FRXQVHO KDG mIDLOHG WR DEXVHGKLPERWKSK\VLFDOO\DQGSV\FKRORJLFDOO\DVZHOODV UDLVHl s$DW QHJOHFWLQJ KLP ZKLOH UXQQLQJ KHU KRPH DV D EURWKHO DQG JDPEOLQJKRXVH3HWLWLRQHUjVJUDQGPRWKHULQYROYHGKLPLQ 7KH 6XSUHPH &RXUW LQ s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jVPRWKHUVSHQWOHQJWK\ UDLVHG SHULRGVRIWLPHLQSV\FKLDWULFKRVSLWDOVDQGZDVVDLGWRKDYH DEDQGRQHG3HWLWLRQHUDVDQLQIDQWE\OHDYLQJKLPLQDJDUEDJH 0RVW FDVHV SUHVHQW RQO\ RQH WZR RU WKUHH VLJQLILFDQW FDQ3HWLWLRQHUZDVDGPLWWHGWRWKHKRVSLWDORQWZRRFFDVLRQV TXHVWLRQV8VXDOO\LI\RXFDQQRWZLQRQDIHZ IRUKHDGLQMXULHV3HWLWLRQHUGURSSHGRXWRIKLJKVFKRROLQWKH PDMRU SRLQWV WKH RWKHUV DUH QRW OLNHO\ WR KHOS DQG WR QLQWKJUDGH DWWHPSWWRGHDOZLWKDJUHDWPDQ\LQWKHOLPLWHGQXPEHU RI SDJHV DOORZHG IRU EULHIV ZLOO PHDQ WKDW QRQH PD\ 3ULRUWRWKHSHQDOW\SKDVHRIWKHWULDO3HWLWLRQHUjVFRXQVHO UHFHLYHDGHTXDWHDWWHQWLRQ7KHHIIHFWRIDGGLQJZHDN GLG QRW FRQWDFW HLWKHU 'U sRKQVRQ RU 'U +LONH\ ERWK RI DUJXPHQWVZLOOEHWRGLOXWHWKHIRUFHRIWKHVWURQJHURQHV ZKRP KDG SUHSDUHG SV\FKRORJLFDO UHSRUWV RI 3HWLWLRQHU LQ FRQQHFWLRQZLWK3HWLWLRQHUjVFRPSHWHQF\WRVWDQGWULDOLQWKH %DUQHV86DW TXRWLQJ56WHUQ$SSHOODWH3UDFWLFH IHGHUDO NLGQDSLQJ FDVH  'UV sRKQVRQ DQG +LONH\ IRXQG LQ WKH 8QLWHG 6WDWHV   ). 3HWLWLRQHU DUJXHV WKDW 3HWLWLRQHU PHQWDOO\ FRPSHWHQW WR VWDQG WULDO LQ WKH IHGHUDO DSSHOODWHFRXQVHOZRXOGKDYHEHHQPRUHHIIHFWLYHE\UDLVLQJ NLGQDSLQJ FDVH EXW WKLV ILQGLQJ ZDV OLPLWHG WR WKH IHGHUDO QHDUO\ QLQHW\ UDWKHU WKDQ WZHOYH LVVXHV RQ DSSHDO  7KH NLGQDSLQJ FKDUJH DQG GLG QRW LQFOXGH DQ\ LQGHSHQGHQW 6XSUHPH&RXUWLQ%DUQHVUHMHFWHGVXFKUHDVRQLQJ LQYHVWLJDWLRQ LQWR 3HWLWLRQHUjV SDVW  'U +LONH\ QRWHG WKDW 3HWLWLRQHU KDG D mQHHG WR SUHVHQW KLPVHOI DV HPRWLRQDOO\ 3HWLWLRQHUDOVRDUJXHVWKDWWKHGLVWULFWFRXUWjVDQDO\VLVRIKLV VRXQGlDQGKDGmDWHQGHQF\WRSURMHFWKLPVHOILQDSRVLWLYH LQHIIHFWLYH DVVLVWDQFH RI DSSHOODWH FRXQVHO FODLP IDLOHG WR SV\FKRORJLFDOOLJKW>DQG@GHQ\SV\FKRORJLFDOSUREOHPVl UHYLHZ UHTXLUHG FRQVLGHUDWLRQV DV SURYLGHG LQ 0DSHV  ,Q 0DSHVWKLV&RXUWVXJJHVWHGHOHYHQFRQVLGHUDWLRQVmWKDWRXJKW  &ROHPDQY0LWFKHOO 1R 1R &ROHPDQY0LWFKHOO  WREHWDNHQLQWRDFFRXQWLQGHWHUPLQLQJZKHWKHUDQDWWRUQH\ SUHVHQWDPHQWDOKHDOWKGHIHQVHRUWRWHVWLI\VKRXOGQRW RQGLUHFWDSSHDOSHUIRUPHGUHDVRQDEO\FRPSHWHQWO\l0DSHV SUHFOXGH FRXQVHOjV LQYHVWLJDWLRQ RI WKHVH SRWHQWLDO )GDW$OWKRXJK3HWLWLRQHUDUJXHVWKDWWKHGLVWULFW IDFWRUV8QGHUWKH$PHULFDQ%DU$VVRFLDWLRQJXLGHOLQHV FRXUWjVDQDO\VLVRIWKHLQGLYLGXDOFODLPVQRWUDLVHGE\FRXQVHO IRU DSSRLQWHG GHDWK SHQDOW\ GHIHQVH FRXQVHO m>W@KH RQ DSSHDO ZDV LQVXIILFLHQW 3HWLWLRQHUjV KDEHDV DSSOLFDWLRQ LQYHVWLJDWLRQ IRU SUHSDUDWLRQ RI WKH VHQWHQFLQJ SKDVH LWVHOIODFNHGDQ\IDFWXDOVSHFLILFVXQGHUO\LQJWKRVHRPLWWHG VKRXOGEHFRQGXFWHGUHJDUGOHVVRIDQ\LQLWLDODVVHUWLRQE\ FODLPV$IWHUHQXPHUDWLQJWKHVHYHQW\ILYHFODLPVXQUDLVHG WKHFOLHQWWKDWPLWLJDWLRQLVQRWWREHRIIHUHGl$PHULFDQ RQDSSHDO3HWLWLRQHUDOOHJHG %DU $VVRFLDWLRQ *XLGHOLQHV IRU WKH $SSRLQWPHQW DQG 3HUIRUPDQFH RI &RXQVHO LQ 'HDWK 3HQDOW\ &DVHV $W WKH WLPH RI >3HWLWLRQHUjV@ DSSHDOV WKH DERYH LVVXHV †F  :HDJUHHWKHUHIRUHZLWKWKHGLVWULFW ZHUH UHFRJQL]HG DQG DFFHSWHG DV YLDEOH LVVXHV E\ FRXUWjV FRQFOXVLRQV WKDW GHIHQVH FRXQVHO PDGH QR HIIHFWLYHDWWRUQH\VSUDFWLFLQJFDSLWDOOLWLJDWLRQDQGKDYLQJ LQYHVWLJDWLRQ LQWR >GHIHQGDQWjV@ IDPLO\ VRFLDO RU NQRZOHGJH FRQFHUQLQJ WKH FDSLWDO OLWLJDWLRQ SURFHVV SV\FKRORJLFDOEDFNJURXQGDQGWKDWWKHIDLOXUHWRGRVR 3UHYDLOLQJ SURIHVVLRQDO QRUPV SUHVFULEHG WKDW FDSLWDO FRQVWLWXWHGUHSUHVHQWDWLRQDWDOHYHOEHORZDQREMHFWLYH DSSHOODWHFRXQVHOPXVWUDLVHWKHVHLVVXHVRQDSSHDO VWDQGDUGRIUHDVRQDEOHQHVV 7KHSHUIRUPDQFHRIDSSHOODWHFRXQVHOLQIDLOLQJWRUDLVH WKHVH LVVXHV ZDV GHILFLHQW  $SSHOODWH FRXQVHOjV &DUWHU)GDW6SHFLILFDOO\WKHGHIHQGDQWLQ&DUWHU SHUIRUPDQFHZDVEHORZSUHYDLOLQJSURIHVVLRQDOQRUPVRI mUHDFWHGYLROHQWO\WRWKHLGHDRIDPHQWDOKHDOWKGHIHQVH>DQG@ UHDVRQDEO\FRPSHWHQWFRXQVHO QHYHU YROXQWHHUHG DQ\ LQIRUPDWLRQ DERXW KLV IDPLO\ EDFNJURXQGRUFKLOGKRRG>DQG@PHPEHUVRI>GHIHQGDQWjV@ s$DW 3HWLWLRQHUGLGQRWDOOHJHLQKLVSHWLWLRQIDFWV IDPLO\ ZHUH XQFRRSHUDWLYHl  ,G  7KXV XQGHU &DUWHU ZKLFK PD\ KDYH OHQW SDUWLFXODU LPSRUWDQFH WR VRPH RI WKH 3HWLWLRQHUjV GHFLVLRQ QRW WR UHTXHVW D SUHVHQWHQFH VHYHQW\ILYHRPLWWHGFODLPVUHODWLYHWRWKHVWUDWHJLFYDOXHRI LQYHVWLJDWLRQRUPHQWDOH[DPLQDWLRQGLGQRWUHOLHYHFRXQVHORI WKH WZHOYH FODLPV DFWXDOO\ UDLVHG RQ DSSHDO   (YHQ LI KLVGXW\WRLQYHVWLJDWH3HWLWLRQHUjVEDFNJURXQGLQSUHSDUDWLRQ UHYLHZLQJWKHPHULWVRI3HWLWLRQHUjVLQHIIHFWLYHDVVLVWDQFHRI IRUWKHSHQDOW\SKDVHRIWKHWULDO DSSHOODWHFRXQVHOFODLP3HWLWLRQHUjVDUJXPHQWWKDWSUHYDLOLQJ SURIHVVLRQDOQRUPVUHTXLUHUHDVRQDEO\FRPSHWHQWFRXQVHOLQ ,W LV QRW RQO\ WKLV &RXUW WKDW KDV VWURQJO\ HVWDEOLVKHG FDSLWDOFDVHVWRUDLVHDSDUWLFXODUVHWRIDWOHDVWVHYHQW\ILYH GHIHQVHFRXQVHOjV6L[WK$PHQGPHQWGXW\WRLQGHSHQGHQWO\ FODLPVRQDSSHDOLVFRQWUDU\WR%DUQHVDQGJLYHQWKHODFNRI LQYHVWLJDWHLQSUHSDUDWLRQIRUWKHSHQDOW\SKDVHRIDFDSLWDO DOOHJHGIDFWVXQGHUO\LQJ3HWLWLRQHUjVFODLPEH\RQGWKHVFRSH WULDO,QDGGLWLRQWRWKH7HQWK&LUFXLW%DWWHQILHOGGHFLVLRQWKH RIIDFWLQWHQVLYHUHYLHZXQGHU0DSHV 6HYHQWK&LUFXLWKDVIRXQGWKDWmGHIHQVHFRXQVHOjVIDLOXUHWR LQYHVWLJDWH WKH PHQWDO KLVWRU\ RI D GHIHQGDQW ZLWK ORZ )LQDOO\3HWLWLRQHUDUJXHVWKDWWKH0XUQDKDQmVXEVWDQWLYH LQWHOOLJHQFHGHPRQVWUDWHVFRQFOXVLYHO\WKDW>FRXQVHO@GLGQRW VKRZLQJl VWDQGDUG YLRODWHV$QGHUV Y &DOLIRUQLD  86 PDNHDVLJQLILFDQWHIIRUWEDVHGRQUHDVRQDEOHLQYHVWLJDWLRQ   DVUHLWHUDWHGLQ6PLWKY5REELQV86 DQGORJLFDODUJXPHQWWRDEO\SUHVHQWWKHGHIHQGDQWjVIDWHWR  7KH6XSUHPH&RXUWFODULILHGLQ5REELQVWKDWVWDWHV WKH MXU\ DQG WR IRFXV WKH DWWHQWLRQ RI WKH MXU\ RQ DQ\ DUHIUHHWRDGRSWSURFHGXUHVIRUSURWHFWLQJDGHIHQGDQWjVULJKW PLWLJDWLQJIDFWRUVl%UHZHUY$LNHQ)G WK WRDSSHOODWHFRXQVHOZKLFKDUHGLIIHUHQWIURPWKHSURFHGXUH &LU  FLWDWLRQ DQG LQWHUQDO TXRWDWLRQV RPLWWHG   7KH SUHVHQWHGE\WKH6XSUHPH&RXUWLQ$QGHUVVRORQJDVVXFK (OHYHQWK &LUFXLW LQ %ODQFR Y 6LQJOHWDU\  )G  SURFHGXUHV mDGHTXDWHO\ VDIHJXDUG D GHIHQGDQWjV ULJKW WR  WK &LU   IRXQG LQHIIHFWLYH DVVLVWDQFH RI  &ROHPDQY0LWFKHOO 1R 1R &ROHPDQY0LWFKHOO  FRXOG QRW EH IRXQG RU WKDW FRXQVHO PDGH D UHDVRQHG DSSHOODWHFRXQVHOl5REELQVDW$SURFHGXUHVDWLVI\LQJ GHFLVLRQ WR ZLWKKROG WKH LQIRUPDWLRQ IRU WDFWLFDO RU WKH mDGHTXDWH VDIHJXDUGl VWDQGDUG LV RQH WKDW mUHDVRQDEO\ VWUDWHJLFUHDVRQV7KHLQIRUPDWLRQZDVQRWSUHVHQWHGWR HQVXUHVWKDWDQLQGLJHQWjVDSSHDOZLOOEHUHVROYHGLQDZD\ WKHMXU\EHFDXVHFRXQVHOQHYHUWRRNWKHWLPHWRGHYHORS WKDWLVUHODWHGWRWKHPHULWRIWKDWDSSHDOl,GDW LW 7KH6XSUHPH&RXUWLQ5REELQVVWDWHGWKDWXQGHU$QGHUV 7KLV&RXUWLQ$XVWLQY%HOO)G WK&LU  WKH)RXUWHHQWK$PHQGPHQWUHTXLUHVWKDWSULRUWRGLVPLVVLQJ UHHQIRUFHG*OHQQ DGLUHFWDSSHDODVWDWHPXVWIDLUO\DVVHVVZKHWKHUVXFKDSSHDO LVIULYRORXV5REELQV86DW,QFRQWUDVWPHUHO\ 7KH(LJKWK$PHQGPHQWUHTXLUHVDMXU\WRFRQVLGHUWKH ILQGLQJDQDSSHDOWREHPHULWOHVVLVDQLQVXIILFLHQWJURXQGIRU FLUFXPVWDQFHV RI WKH FULPH DQG WKH GHIHQGDQWjV H[FXVLQJ WKH VWDWHjV REOLJDWLRQ WR DGGUHVV WKH FODLP EDFNJURXQGDQGFKDUDFWHUGXULQJWKHVHQWHQFLQJSKDVHRI 3HWLWLRQHUDUJXHVWKDWWKH0XUQDKDQVWDQGDUGZKLFKDOORZV DFDSLWDOWULDO7KH&RQVWLWXWLRQDOVRUHTXLUHVGHIHQVH DSSHOODWH FRXUWV WR GLVPLVV D 0XUQDKDQ DSSOLFDWLRQ LI QR FRXQVHO WR UHDVRQDEO\ LQYHVWLJDWH D GHIHQGDQW V mVXEVWDQWLYHlVKRZLQJLQVXSSRUWRIWKHLQHIIHFWLYHDVVLVWDQFH EDFNJURXQG DQG SUHVHQW LW WR WKH MXU\  )DLOXUH WR RIDSSHOODWHFRXQVHOFODLPKDVEHHQPDGH0XUQDKDQ LQYHVWLJDWHRUSUHVHQWPLWLJDWLQJHYLGHQFHDWVHQWHQFLQJ 1( G DW  GHQLHV GHIHQGDQWV WKHLU )RXUWHHQWK PD\FRQVWLWXWHLQHIIHFWLYHDVVLVWDQFHRIFRXQVHO $PHQGPHQWULJKWXQGHU5REELQVWRDGHTXDWHDQGHIIHFWLYH DSSHOODWHUHYLHZ $XVWLQ)GDW FLWLQJ*OHQQ)G  FLWDWLRQVRPLWWHG 7KLV&RXUWLQ$XVWLQWKHQFRQFOXGHG +RZHYHU 3HWLWLRQHUjV 0XUQDKDQ DSSOLFDWLRQ ZDV QRW WKDW FRXQVHOjV IDLOXUH WR LQYHVWLJDWH DQG SUHVHQW PLWLJDWLQJ GLVPLVVHG IRU IDLOXUH WR PDNH D VXEVWDQWLYH VKRZLQJ LQ HYLGHQFH DW WKH SHQDOW\ SKDVH RI WKH WULDO RQ JURXQGV WKDW VXSSRUW RI KLV LQHIIHFWLYH DVVLVWDQFH RI DSSHOODWH FRXQVHO FRXQVHO mGLG QRW WKLQN LW ZRXOG GR DQ\ JRRGl FRQVWLWXWHG FODLPUDWKHUWKH0XUQDKDQDSSOLFDWLRQZDVGLVPLVVHGIRU LQHIIHFWLYHDVVLVWDQFH$XVWLQ)GDW6LPLODUO\ H[FHHGLQJ WKH WLPH OLPLW IRU ILOLQJ XQGHU $SSHOODWH 5XOH WKLV &RXUW LQ 0DSHV IRXQG WKDW mZKHQ D FOLHQW IDFHV WKH  % DSURFHGXUDOEDUWKDWGRHVQRWLPSOLFDWH5REELQVRU SURVSHFW RI EHLQJ SXW WR GHDWK XQOHVV FRXQVHO REWDLQV DQG $QGHUV'XHWRWKLVODWHILOLQJWKH2KLRDSSHDOVFRXUWGLGQRW SUHVHQWVVRPHWKLQJLQPLWLJDWLRQPLQLPDOVWDQGDUGVUHTXLUH UHYLHZ 3HWLWLRQHUjV 0XUQDKDQ DSSOLFDWLRQ IRU VXEVWDQFH VRPHLQYHVWLJDWLRQl0DSHV)GDW7KLV&RXUW 7KXVWKH0XUQDKDQVWDQGDUGWKDW3HWLWLRQHULVFKDOOHQJLQJ KDVDOVRIRXQGLQHIIHFWLYHDVVLVWDQFHZKHUHFRXQVHOmIDLOHGWR XQGHU WKH )RXUWHHQWK $PHQGPHQW ZDV QRW DSSOLHG WR KLV SUHVHQWWKHMXU\ZLWKDUHDOLVWLFYLHZRI>GHIHQGDQWjV@PHQWDO PRWLRQIRUUHFRQVLGHUDWLRQ(YHQLIWKLV&RXUWZHUHWRILQG VWDWXVlGXHWRLQDGHTXDWHSUHSDUDWLRQIRUWKHSHQDOW\SKDVHRI 0XUQDKDQjVmVXEVWDQWLYHVKRZLQJlUHTXLUHPHQWLQYDOLGXQGHU WKHWULDO6NDJJVY3DUNHU)G WK&LU  5REELQV 3HWLWLRQHUjV 0XUQDKDQ DSSOLFDWLRQ ZRXOG UHPDLQ SURFHGXUDOO\ EDUUHG  m$ IXQGDPHQWDO DQG ORQJVWDQGLQJ )XUWKHUGHIHQGDQWUHVLVWDQFHWRGLVFORVXUHRILQIRUPDWLRQ SULQFLSOH RI MXGLFLDO UHVWUDLQW UHTXLUHV WKDW FRXUWV DYRLG GRHVQRWH[FXVHFRXQVHOjVGXW\WRLQGHSHQGHQWO\LQYHVWLJDWH UHDFKLQJFRQVWLWXWLRQDOTXHVWLRQVLQDGYDQFHRIWKHQHFHVVLW\ RI GHFLGLQJ WKHPl /\QJ Y 1RUWKZHVW ,QGLDQ &HPHWHU\ 7KHVROHVRXUFHRIPLWLJDWLQJIDFWRUVFDQQRWSURSHUO\EH 3URWHFWLYH$VVRF86   WKDWLQIRUPDWLRQZKLFKGHIHQGDQWPD\YROXQWHHUFRXQVHO PXVWPDNHVRPHHIIRUWDWLQGHSHQGHQWLQYHVWLJDWLRQLQ :HILQGWKDWXQGHU5XVWDQG5LJJLQVUHVMXGLFDWDXQGHU RUGHUWRPDNHDUHDVRQHGLQIRUPHGGHFLVLRQDVWRWKHLU †LVDQDGHTXDWHDQGLQGHSHQGHQWVWDWHJURXQGIRU XWLOLW\:HILQGWKDWUHOXFWDQFHRQ>GHIHQGDQWjV@SDUWWR  &ROHPDQY0LWFKHOO 1R 1R &ROHPDQY0LWFKHOO  EDUULQJKDEHDVUHYLHZRIFRQVWLWXWLRQDOFODLPV:HDOVRILQG VFKRROHGXFDWHGPDQZKRKDGSUHYLRXVO\UHSUHVHQWHGKLPVHOI WKDW3HWLWLRQHUKDVQRWGHPRQVWUDWHGJRRGFDXVHIRUIDLOLQJWR LQDFULPLQDOSURVHFXWLRQUHDVRQHGWKDWKHGLGQRWZDQWWREH PHHW$SSHOODWH5XOH % ILOLQJUHTXLUHPHQWVDQGWKDWVXFK UHSUHVHQWHG E\ D SXEOLF GHIHQGHU EHFDXVH WKDW RIILFH ZDV SURFHGXUDO GHIDXOW SUHFOXGHV UHYLHZ RI WKH mVXEVWDQWLYH RYHUORDGHG ZLWK FDVHV  ,G DW   'HIHQGDQW LQ )DUHWWD VKRZLQJlVWDQGDUGRI0XUQDKDQLQOLJKWRI5REELQV IDFHGDFULPLQDOFKDUJHRIJUDQGWKHIW %,QHIIHFWLYH$VVLVWDQFHRI$SSHOODWH&RXQVHODV&DXVH $SSO\LQJ)DUHWWDWRDFDSLWDOFDVHLQYROYLQJDGHIHQGDQW ZLWK ORZ LQWHOOLJHQFH OLPLWHG HGXFDWLRQ DQG DQ XQVHWWOLQJ  3HWLWLRQHUQH[WDUJXHVWKDWHYHQLIKLVFODLPRILQHIIHFWLYH SDVW ZKRVH VWURQJHVW GHPDQG IRU VHOIUHSUHVHQWDWLRQ DVVLVWDQFHRIFRXQVHOZDVSURFHGXUDOO\GHIDXOWHGQHYHUWKHOHVV FRQVLVWHGRIm1R,GRQjWlUHVSRQVHVZKHQDVNHGLIKHZDQWHG LW PD\ VHUYH DV FDXVH IRU KLV RWKHU SURFHGXUDOO\ GHIDXOWHG DSUHVHQWHQFHLQYHVWLJDWLRQDQGPHQWDOHYDOXDWLRQKROORZV FODLPV XQGHU &DUSHQWHU Y 0RKU  ) G  WK &LU WKH6L[WK$PHQGPHQW5HTXLULQJFRXQVHOWRLQGHSHQGHQWO\  +RZHYHUWKH6XSUHPH&RXUWKDVVLQFHKHOGWKDWD LQYHVWLJDWH3HWLWLRQHUjVSHUVRQDOEDFNJURXQGGRHVQRWmWKUXVW SURFHGXUDOO\GHIDXOWHGLQHIIHFWLYHDVVLVWDQFHRIFRXQVHOFODLP FRXQVHO XSRQ WKH DFFXVHG DJDLQVW KLV FRQVLGHUHG ZLVKl FDQVHUYHDVFDXVHWRH[FXVHWKHSURFHGXUDOGHIDXOWRIDQRWKHU )DUHWWD86DWHVSHFLDOO\ZKHUHDVLQWKLVFDVHWKH KDEHDV FODLP RQO\ LI WKH KDEHDV SHWLWLRQHU FDQ VDWLVI\ WKH UHFRUG  IDLOV WR LQGLFDWH ERWK 3HWLWLRQHUjV PLWLJDWLRQ mFDXVHDQGSUHMXGLFHlVWDQGDUGZLWKUHVSHFWWRWKHLQHIIHFWLYH SUHIHUHQFHVDQGWKHLQIRUPHGFRQVLGHUDWLRQVXSSRUWLQJVXFK DVVLVWDQFHFODLPLWVHOI(GZDUGVY&DUSHQWHU86 SUHIHUHQFHV,Q)DUHWWDmWKHUHFRUGDIILUPDWLYHO\VKRZ>HG@  3HWLWLRQHUKDVQRWIRUZDUGHGDQ\FDXVHDQGSUHMXGLFH WKDW>GHIHQGDQW@ZDVOLWHUDWHFRPSHWHQWDQGXQGHUVWDQGLQJ DUJXPHQW LQ FRQQHFWLRQ ZLWK KLV GHIDXOWHG LQHIIHFWLYH DQGWKDWKHZDVYROXQWDULO\H[HUFLVLQJKLVLQIRUPHGIUHHZLOOl DVVLVWDQFHRIDSSHOODWHFRXQVHOFODLP7KXVXQGHU(GZDUGV )DUHWWD86DW7KHUHLVQRVXFKUHFRUGVXSSRUWLQ 3HWLWLRQHUjV GHIDXOWHG LQHIIHFWLYH DVVLVWDQFH RI DSSHOODWH WKLV FDVH  $OVR XQGHU )DUHWWD D GHIHQGDQW mPXVW ILUVW EH FRXQVHOFODLPPD\QRWEHXVHGDVFDXVHIRU3HWLWLRQHUjVRWKHU µPDGH DZDUH RI WKH GDQJHUV DQG GLVDGYDQWDJHV RI GHIDXOWHGKDEHDVFODLPV VHOIUHSUHVHQWDWLRQjl0DUWLQH]Y&RXUWRI$SSHDORI&DOLI 86   TXRWLQJ)DUHWWD86DW  ,,(YLGHQWLDU\+HDULQJ $JDLQWKHUHFRUGRIIHUVQRLQGLFDWLRQWKDW3HWLWLRQHUZDVVR PDGHDZDUHLQWKLVFDVH 3HWLWLRQHUUHTXHVWHGDQHYLGHQWLDU\KHDULQJLQWKHGLVWULFW FRXUWWRIXUWKHUGHYHORSWKHIDFWXDOEDVHVRIKLVFRQVWLWXWLRQDO 0RUHRYHUWKHLQGHSHQGHQWREOLJDWLRQRIGHIHQVHFRXQVHOWR FODLPV  7KH GLVWULFW FRXUW GHQLHG 3HWLWLRQHUjV UHTXHVW RQ LQYHVWLJDWH DQG SUHVHQW PLWLJDWLQJ HYLGHQFH DW WKH SHQDOW\ JURXQGVWKDW3HWLWLRQHUKDGIDLOHGWRUHEXWWKHSUHVXPSWLRQRI SKDVHRIDFDSLWDOWULDOLVZHOOHVWDEOLVKHGE\WKLV&RXUW,Q FRUUHFWQHVV DIIRUGHG VWDWH FRXUW ILQGLQJV RI IDFW XQGHU  *OHQQ Y 7DWH  )G   WK &LU   FHUW 86& †  G   3HWLWLRQHU DUJXHV WKDW EHFDXVH WKH VWDWH GHQLHG  86    WKLV &RXUW IRXQG LQHIIHFWLYH SURFHGXUHSURYLGHGZDVLQDGHTXDWHWRDIIRUGDIXOODQGIDLU DVVLVWDQFHRIFRXQVHODWWKHSHQDOW\SKDVHRIDWULDOZKHUH KHDULQJWKHGLVWULFWFRXUWXQGHU7RZQVHQGY6DLQ86   ZDVREOLJDWHGWRJUDQW3HWLWLRQHUDQHYLGHQWLDU\ WKH MXU\ ZDV JLYHQ YLUWXDOO\ QR LQIRUPDWLRQ RQ KHDULQJ,QWKHDOWHUQDWLYH3HWLWLRQHUDUJXHVWKDWWKHGLVWULFW >GHIHQGDQWj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jV DPHQGPHQWV WR  86&† G GRQRWDSSO\WRWKLVFDVH7KLV&RXUWLQ +RZHYHU )DUHWWD LV QRW DSSOLFDEOH WR WKHVH IDFWV DV 6FRWWY0LWFKHOO)G  VXPPDUL]HGRXU LOOXVWUDWHGE\WKH6XSUHPH&RXUWjVHPSKDVLVLQWKHFDVHRQWKH VWDQGDUGRIUHYLHZIRUVWDWHFRXUWIDFWXDOILQGLQJVXQGHUSUH GHIHQGDQWjVLQGHSHQGHQWH[SUHVVDQGOHJLWLPDWHGHVLUHLQVHOI $('3$ †  G  mZH SUHVXPH SULPDU\ RU KLVWRULFDO UHSUHVHQWDWLRQ IDFWXDOILQGLQJVE\WKHVWDWHFRXUWVWREHFRUUHFWUHEXWWDEOH RQO\E\FOHDUDQGFRQYLQFLQJHYLGHQFHXQGHURQHRIWKHHLJKW +HUH ZHHNV EHIRUH WULDO )DUHWWD FOHDUO\ DQG FRQGLWLRQVOLVWHGLQWKHSUH$('3$YHUVLRQRI86&† XQHTXLYRFDOO\GHFODUHGWRWKHWULDOMXGJHWKDWKHZDQWHG  G  l WRUHSUHVHQWKLPVHOIDQGGLGQRWZDQWFRXQVHO7KHUHFRUG DIILUPDWLYHO\VKRZVWKDW)DUHWWDZDVOLWHUDWHFRPSHWHQW 7KHGLVWULFWFRXUWUHOLHGRQ0LWFKHOOY5HHV)G DQGXQGHUVWDQGLQJDQGWKDWKHZDVYROXQWDULO\H[HUFLVLQJ WK&LU ZKHQGHQ\LQJ3HWLWLRQHUjVHYLGHQWLDU\KHDULQJ KLVLQIRUPHGIUHHZLOO7KHWULDOMXGJHKDGZDUQHG)DUHWWD UHTXHVW5HHVKHOGWKDWm>E@HFDXVH† G LVDQH[SUHVV WKDW KH WKRXJKW LW ZDV D PLVWDNH QRW WR DFFHSW WKH OLPLWDWLRQRQWKHGLVWULFWFRXUWjVMXULVGLFWLRQDGLVWULFWFRXUWLV DVVLVWDQFHRIFRXQVHODQGWKDW)DUHWWDZRXOGEHUHTXLUHG ZLWKRXWDXWKRULW\WRKROGDQHYLGHQWLDU\KHDULQJRQDPDWWHU WRIROORZDOOWKH JURXQGUXOHV RIWULDOSURFHGXUH RQZKLFKWKHVWDWHFRXUWKDVPDGHILQGLQJVXQOHVVRQHRIWKH IDFWRUVFRQWDLQHGLQ† G DSSOLHVl,GDW )DUHWWD86DW7KH)DUHWWDGHFLVLRQLQFOXGHGD OHQJWK\ FROORTX\ EHWZHHQ WKH MXGJH DQG WKH XQUHSUHVHQWHG 7RZQVHQGIRXQGWKDWm>Z@KHUHWKHIDFWVDUHLQGLVSXWHWKH GHIHQGDQWGLVFXVVLQJGHIHQGDQWjVLQGHSHQGHQWOHJDOUHVHDUFK IHGHUDO FRXUW LQ KDEHDV FRUSXV PXVW KROG DQ HYLGHQWLDU\ RQH[FHSWLRQVWRWKHKHDUVD\UXOHWKHJURXQGVIRUFKDOOHQJLQJ KHDULQJLIWKHKDEHDVDSSOLFDQWGLGQRWUHFHLYHDIXOODQGIDLU D MXURU IRU FDXVH DQG WULDO SURFHGXUH JHQHUDOO\ XQGHU WKH HYLGHQWLDU\KHDULQJLQDVWDWHFRXUWHLWKHUDWWKHWLPHRIWKH &DOLIRUQLD&RGHV,GDW'HIHQGDQWLQ)DUHWWDDKLJK WULDORULQDFROODWHUDOSURFHHGLQJl7RZQVHQG86DW    7RZQVHQG WKHQ OLVWHG VL[ FLUFXPVWDQFHV LQ ZKLFK D IHGHUDOFRXUWPXVWJUDQWDQHYLGHQWLDU\KHDULQJWRDKDEHDV  6LPLODUO\ WKLV &RXUW KDV UHFHQWO\ IRXQG LQ &ROHPDQ Y 0LWFKHOO DSSOLFDQW  )G   WK &LU  >KHUHLQDIWHU m&ROHPDQ ,l@ WKDW ZKHUH FRXQVHO H[SODLQHG WKH YDULRXV SHQDOW\ SKDVH PLWLJDWLRQ RSWLRQV WR WKH 7RZQVHQG ZDV GHFLGHG SULRU WR SDVVDJH RI WKH  GHIHQGDQW DQG ZKHUH WKH GHIHQGDQW FOHDUO\ LQVWUXFWHG FRXQVHO WR SURFHHG DPHQGPHQWVHPERGLHGLQ† G 7KHDPHQGPHQWV ZLWK D UHVLGXDO GRXEW WKHRU\ LQ PLWLJDWLRQ FRXQVHO ZDV QRW LQHIIHFWLYH IRU ZHUH LQWHQGHG E\ &RQJUHVV WR OLPLW WKH H[HUFLVH RI IHGHUDO IROORZLQJ WKH GHIHQGDQWjV FOHDU DQG LQIRUPHG LQVWUXFWLRQ &RQYHUVHO\ WKH FRXUWMXULVGLFWLRQ6HH5HHV)GDW,Q)RZOHUY LQHIIHFWLYH DVVLVWDQFH DQDO\VLV LQ WKLV FDVH FRQFHUQV WZR HOHPHQWV QRW DW LVVXH LQ &ROHPDQ , )LUVW ZKHWKHU 3HWLWLRQHUjV SXUSRUWHG LQVWUXFWLRQ WR FRXQVHO WR OLPLW PLWLJDWLRQ WR 3HWLWLRQHUjV RZQ XQVZRUQ VWDWHPHQW ZDV  JLYHQ DW DOO 6HFRQG DVVXPLQJ 3HWLWLRQHU JDYH VXFK DQ LQVWUXFWLRQ 2I WKH HLJKW †  G FRQGLWLRQV 3HWLWLRQHUjV DUJXPHQW PD\ ZKHWKHU WKH LQVWUXFWLRQ ZDV LQIRUPHG E\ FRXQVHOjV SUHVHQWDWLRQ RI YDULRXV SRWHQWLDOO\ DSSHDO WR VHYHUDO QDPHO\ WKDW  WKH PHULWV RI WKH IDFWXDO PLWLJDWLRQ VWUDWHJ\ RSWLRQV 8QOLNH &ROHPDQ , WKH LQHIIHFWLYH DVVLVWDQFH GLVSXWH ZHUH QRW UHVROYHG LQ WKH 6WDWH FRXUW KHDULQJ  WKH IDFWILQGLQJ RI FRXQVHO FODLP LQ WKLV FDVH UDLVHV GLIIHUHQW TXHVWLRQV VSHFLILFDOO\ WKH SURFHGXUH HPSOR\HG E\ WKH 6WDWH FRXUW ZDV QRW DGHTXDWH WR DIIRUG D IXOO VXEVWDQFH DQG LQIRUPHG QDWXUH RI 3HWLWLRQHUjV SXUSRUWHG LQVWUXFWLRQ WR DQG IDLU KHDULQJ  WKH PDWHULDO IDFWV ZHUH QRW DGHTXDWHO\ GHYHORSHG DW FRXQVHO DQG UHTXLUHV UHYLHZ RI D GLIIHUHQW UHFRUG $FFRUGLQJO\ &ROHPDQ WKH 6WDWH FRXUW KHDULQJ  WKH DSSOLFDQW GLG QRW UHFHLYH D IXOO IDLU DQG , GRHV QRW FRQWURO 3HWLWLRQHUjV LQHIIHFWLYH DVVLVWDQFH RI FRXQVHO FODLP LQ DGHTXDWH KHDULQJ LQ WKH 6WDWH FRXUW SURFHHGLQJ RU  WKH DSSOLFDQW ZDV WKLV FDVH RWKHUZLVH GHQLHG GXH SURFHVV RI ODZ LQ WKH 6WDWH FRXUW SURFHHGLQJ  &ROHPDQY0LWFKHOO 1R 1R &ROHPDQY0LWFKHOO  sDJR)G WK&LU WKLV&RXUWIRXQGWKDW RIPLWLJDWLRQ$VVLPLODUO\H[SUHVVHGLQ%DWWHQILHOGm>L@Q WKH HLJKW H[FHSWLRQV DOORZLQJ IRU WKH VHWWLQJ DVLGH RI WKH DGGLWLRQ WR KDPSHULQJ >GHIHQVH FRXQVHOjV@ DELOLW\ WR PDNH SUHVXPSWLRQ RI FRUUHFWQHVV XQGHU †  G  mDSSHDU WR VWUDWHJLFGHFLVLRQV>GHIHQVHFRXQVHOjV@IDLOXUHWRLQYHVWLJDWH VXEVXPHWKHVL[7RZQVHQGFULWHULDl >GHIHQGDQWjV EDFNJURXQG@ FOHDUO\ DIIHFWHG KLV DELOLW\ WR FRPSHWHQWO\ DGYLVH >GHIHQGDQW@ UHJDUGLQJ WKH PHDQLQJ RI ,QDGGLWLRQZHQRWHGLQ)RZOHUWKDWmLQRUGHUWRHOLPLQDWH PLWLJDWLRQHYLGHQFHDQGWKHDYDLODELOLW\RISRVVLEOHPLWLJDWLRQ WKHQHHGIRUDQLQGHSHQGHQWIHGHUDOHYLGHQWLDU\KHDULQJWKH VWUDWHJLHVl%DWWHQILHOG)GDW GLVWULFWFRXUWPXVWH[DPLQHWKHILQGLQJVRIWKHVWDWHFRXUWWR GHWHUPLQH ZKHWKHU WKH VWDWH WULHU RI IDFW UHOLDEO\ IRXQG WKH 3DUWLFXODUO\ LQ OLJKW RI GHIHQVH FRXQVHOjV SUHVHQWDWLRQ DW PDWHULDOIDFWVDQGUHMHFWHGWKHFODLPRQLWVPHULWVl,GDW PLWLJDWLRQWKHUHFRUGLQWKLVFDVHGRHVQRWVXSSRUWILQGLQJ )XUWKHUm>X@QGHU† G WKHGLVWULFWFRXUWPXVW HLWKHU WKDW 3HWLWLRQHU LQVWUXFWHG KLV FRXQVHO QRW WR SUHVHQW FRQGXFWDQLQTXLU\LQWRZKHWKHUWKHVWDWHFRXUWKDVDGHTXDWHO\ HYLGHQFHDWPLWLJDWLRQRUHYHQDVVXPLQJVXFKDQLQVWUXFWLRQ UHVROYHG WKH IDFWXDO LVVXHV FRQWDLQHG LQ WKH SHWLWLRQHUjV WKDW3HWLWLRQHUKDGDQ\XQGHUVWDQGLQJRIFRPSHWLQJPLWLJDWLRQ FRQVWLWXWLRQDOFODLPl,GDW VWUDWHJLHV:HILQGWKHGLVWULFWFRXUWjVFRQFOXVLRQUHJDUGLQJ PLWLJDWLRQ WKDW 3HWLWLRQHUjV mFRXQVHO VLPSO\ KRQRUHG 7KHGLVWULFWFRXUWLQWKLVFDVHPDGHVXFKDQLQTXLU\ >3HWLWLRQHUjV@LQIRUPHGFKRLFHVlEDVHOHVV s$DW  >7@KLV&RXUWKDVXQGHUWDNHQDQLQGHSHQGHQWDVVHVVPHQW ,I WKH UHFRUG LQGLFDWHG D FOHDU LQIRUPHG DVVHUWLRQ E\ RIWKH WKRXVDQGVRISDJHVRIWULDOWUDQVFULSWVH[KLELWV 3HWLWLRQHU WKDW KH GLG QRW ZLVK KLV FRXQVHO WR SUHVHQW DQ\ PRWLRQV RUGHUV VXEPLVVLRQV DQG RWKHU GRFXPHQWV WR PLWLJDWLRQHYLGHQFHLQ3HWLWLRQHUjVEHKDOIFDVHODZPD\KDYH DVVHVVWKHWKRURXJKQHVVDQGUHDVRQLQJRIWKHVWDWHFRXUWV VXSSRUWHGWKHGLVWULFWFRXUWjVFRQFOXVLRQWKDWFRXQVHOPHUHO\ ,Q VR GRLQJ WKH &RXUW KDV IRXQG WKDW WKH VWDWH FRXUWV UHVSHFWLQJ WKH LQIRUPHG ZLVKHV RI D FOLHQW QHHG QRW KDYH UHDOL]HG WKH HVVHQWLDO DQG FRQVWLWXWLRQDO LPSRUWDQFH RI LQYHVWLJDWHG RU SUHVHQWHG DQ\ HYLGHQFH LQ FRQQHFWLRQ ZLWK WKHVH SURFHHGLQJV DQG FRQGXFWHG WKHLU IDFWILQGLQJ 3HWLWLRQHUjVEDFNJURXQGDWWKHSHQDOW\SKDVHRIWKHWULDO7KH DFFRUGLQJO\  6XIILFLHQW DQG H[WHQVLYH HYLGHQFH ZDV 6XSUHPH&RXUWKDVQRWHG DGGXFHGDWWKH6WRUH\JXLOWDQGSXQLVKPHQWSKDVHVWR HVWDEOLVK HDFK HVVHQWLDO HOHPHQW RI WKH FULPHV DQG WKH >7KH 6L[WK $PHQGPHQW@ VSHDNV RI WKH mDVVLVWDQFHl RI SURSULHW\RIWKHVHQWHQFHVJLYHQ FRXQVHO DQG DQ DVVLVWDQW KRZHYHU H[SHUW LV VWLOO DQ DVVLVWDQW  7KH ODQJXDJH DQG VSLULW RI WKH 6L[WK s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† G ZLWKRXWLGHQWLI\LQJZKLFKVSHFLILFPDWHULDOIDFWV DQDVVLVWDQWEXWDPDVWHUDQGWKHULJKWWRPDNHDGHIHQVH PD\UHEXWVXFKILQGLQJV7KHFDVHV3HWLWLRQHUFLWHVLQVXSSRUW LV VWULSSHG RI WKH SHUVRQDO FKDUDFWHU XSRQ ZKLFK WKH RIKLVHYLGHQWLDU\KHDULQJFODLP&RUUHOOY6WHZDUW)G $PHQGPHQWLQVLVWV  WK&LU DQGsRQHVY:RRG)G WK &LU DUHGLVWLQJXLVKDEOHLQWKDWGHIHQGDQWVLQERWKFDVHV  &ROHPDQY0LWFKHOO 1R 1R &ROHPDQY0LWFKHOO  DmUHVLGXDOGRXEWlWKHRU\VXFKDPLWLJDWLRQVWUDWHJ\KDVVLQFH DOOHJHGVSHFLILFIDFWVFRQWUDU\WRVWDWHFRXUWILQGLQJVZKLFK EHHQ UHMHFWHG E\ WKH 2KLR 6XSUHPH &RXUW  6HFRQG WKH\ DQWLFLSDWHG DQ HYLGHQWLDU\ KHDULQJ ZRXOG IXUWKHU FRXQVHOjVSUHIHUHQFHIRUDJHQHUDOL]HGPHUF\EDVHGFULWLTXH GHYHORS3HWLWLRQHUZRXOGOLNHO\KDYHDVWURQJHUFODLPWRDQ RI WKH HOHFWULF FKDLU RYHU D SDUWLFXODUL]HG DFFRXQW RI HYLGHQWLDU\KHDULQJLIWKHFODLPVRXJKWVRPHWKLQJOHVVWKDQD 3HWLWLRQHUjVVRFLDODQGPHQWDOKLVWRU\PLUURUVWKHUHFHQW7HQWK UHFRQVLGHUDWLRQRIHYHU\IDFWXDOGHWHUPLQDWLRQPDGHE\WKH &LUFXLWGHFLVLRQ%DWWHQILHOGY*LEVRQ)G 2KLRVWDWHFRXUWVDQGZDVEDVHGRQVRPHWKLQJPRUHWKDQWKH WK &LU   ZKHUH FRXQVHOjV mIDLOXUH WR LQYHVWLJDWH XQDUWLFXODWHG IDFWV ZKLFK 3HWLWLRQHU DOOHJHV KH ZDV GHQLHG >GHIHQGDQWjV@ EDFNJURXQG DQG KLV IDLOXUH WR H[SORUH RWKHU IURPSUHVHQWLQJWRWKHVWDWHFRXUWVDQGGLVWULFWFRXUW8QGHU UHDGLO\ DSSDUHQW PLWLJDWLRQ SRVVLELOLWLHV UHQGHUHG 5HHV3HWLWLRQHUKDVQRWLQGLFDWHGDVLGHIURPPHUHSDVVLQJ XQUHDVRQDEOHKLVDOOHJHGSHQDOW\SKDVHVWUDWHJ\RIIRFXVLQJ UHIHUHQFHKRZDQ\SUH$('3$† G H[FHSWLRQDSSOLHV RQV\PSDWK\DQGPHUF\l WRKLVFDVHDQGWKXVWKHGLVWULFWFRXUWGLGQRWHUULQGHQ\LQJ KLVUHTXHVWIRUDQHYLGHQWLDU\KHDULQJ :HILQGGHIHQVHFRXQVHOjVSUHVHQWDWLRQDWWKHSHQDOW\SKDVH RIWKHWULDOVLJQLILFDQWIRUVHYHUDOUHDVRQV)LUVWLWXQGHUPLQHV ,,,sXU\,QVWUXFWLRQV WKHSRVLWLRQWKDW3HWLWLRQHUKDGLQVWUXFWHGKLVFRXQVHOQRWWR SUHVHQWPLWLJDWLRQHYLGHQFHLQ3HWLWLRQHUjVEHKDOI6HFRQGLW 3HWLWLRQHUDUJXHVWKDWLPSURSHUMXU\LQVWUXFWLRQVDWERWKWKH FDVWVGRXEWRQGHIHQVHFRXQVHOjVPLWLJDWLRQVWUDWHJ\XQGHU JXLOWDQGSHQDOW\SKDVHVRIWKHWULDOYLRODWHGKLV)LIWK6L[WK 2KLR5HYLVHG&RGH† % 7KLUGRXUGRXEWDVWR (LJKWK DQG )RXUWHHQWK $PHQGPHQW ULJKWV  6SHFLILFDOO\ FRXQVHOjVPLWLJDWLRQVWUDWHJ\H[WHQGVWRFRXQVHOjVDELOLW\WR 3HWLWLRQHUFODLPVWKDWILYHVHSDUDWHMXU\LQVWUXFWLRQVYLRODWHG FRPSHWHQWO\DGYLVHKLVFOLHQWDERXWWKHSXUSRVHDQGVWUDWHJ\ KLVFRQVWLWXWLRQDOULJKWV 2Q KDEHDV UHYLHZ RI VWDWH FRXUW MXU\ LQVWUXFWLRQV WKH  TXHVWLRQIRUDIHGHUDOFRXUWLVmZKHWKHUWKHDLOLQJLQVWUXFWLRQ m5HVLGXDO GRXEW LV QRW DQ DFFHSWDEOH PLWLJDWLQJ IDFWRU XQGHU >2KLR E\ LWVHOI VR LQIHFWHG WKH HQWLUH WULDO WKDW WKH UHVXOWLQJ 5HYLVHG &RGH †@  %  VLQFH LW LV LUUHOHYDQW WR WKH LVVXH RI ZKHWKHU WKH GHIHQGDQW VKRXOG EH VHQWHQFHG WR GHDWKl $9,90 Y 0F*XLUH  1( G   2KLR     )RU H[DPSOH GHIHQGDQW LQ sRQHV VRXJKW WR REWDLQ mWKUHH FDWHJRULHV 7KH GLUHFW UHODWLRQVKLS EHWZHHQ WKH TXDOLW\ RI EDFNJURXQG RI GRFXPHQWV IURP KLV WULDO FRXQVHO  FRSLHV RI WKH QRWHV >GHIHQGDQW@ LQYHVWLJDWLRQ DQG WKH TXDOLW\ RI PLWLJDWLRQ VWUDWHJ\ LV ZHOOVHWWOHG KDG JLYHQ WR KLV ODZ\HU DW WKH 6QRKRPLVK &RXQW\ sDLO RQ 'HFHPEHU  m>6@WUDWHJLF FKRLFHV PDGH DIWHU OHVV WKDQ FRPSOHWH LQYHVWLJDWLRQ DUH   FRSLHV RI UHSRUWV RI SUHWULDO LQWHUYLHZV FRQGXFW E\ KLV ODZ\HU UHDVRQDEOH SUHFLVHO\ WR WKH H[WHQW WKDW UHDVRQDEOH SURIHVVLRQDO MXGJPHQWV DQG WKH GHIHQVH LQYHVWLJDWRUV DQG  FRSLHV RI DOO GRFXPHQWV ZKLFK VXSSRUW WKH OLPLWDWLRQV RQ LQYHVWLJDWLRQl 6WULFNODQG  86 DW  GLVFXVV RU RWKHUZLVH UHODWH WR WKH SURVHFXWRU V SOHD RIIHUl sRQHV   )G m7KH GHWHUPLQDWLRQ DV WR ZKHWKHU FRXQVHOjV WULDO VWUDWHJ\ DPRXQWV WR DW  LQHIIHFWLYH DVVLVWDQFH RI FRXQVHO VKRXOG EH PDGH ZLWK UHVSHFW WR WKH ,Q &RUUHOO  GHIHQGDQW LQ VHHNLQJ DQ HYLGHQWLDU\ KHDULQJ RQ WKH LVVXH WKRURXJKQHVV RI WKH SUHWULDO LQYHVWLJDWLRQ WKDW FRXQVHO FRQGXFWHGl :KLWH RI LQHIIHFWLYH DVVLVWDQFH RI FRXQVHO DW WKH SHQDOW\ SKDVH RI WKH WULDO LQ Y 0F$QLQFK  )G   WK &LU   m>&@RXQVHO PXVW DGGLWLRQ WR SURYLGLQJ DQ DIILGDYLW IURP D SUREDWLRQ RIILFHU DQG D PDNH VRPH HIIRUW DW LQGHSHQGHQW LQYHVWLJDWLRQ LQ RUGHU WR PDNH D SV\FKRORJLFDO UHSRUW DVVHUWHG mWKDW GXULQJ WKH PRQWK WKDW HODSVHG EHWZHHQ UHDVRQHG LQIRUPHG GHFLVLRQ DV WR >WKH XWLOLW\ RI PLWLJDWLQJ IDFWRUV RIIHUHG WKH MXU\ YHUGLFW DQG WKH SUHVHQWHQFLQJ KHDULQJ KLV DWWRUQH\ PHW ZLWK KLP E\ GHIHQGDQW@l &DUWHU  )G DW  &RXQVHO mIDLOHG WR FRQGXFW D IRU MXVW ILYH PLQXWHV    >DQG@ WKDW KLV WULDO DWWRUQH\ KDG QRW UHTXHVWHG D FRQVWLWXWLRQDOO\ DGHTXDWH SUHWULDO LQYHVWLJDWLRQ LQWR SRWHQWLDO PLWLJDWLRQ PHQWDO KHDOWK GLDJQRVWLF H[DPLQDWLRQ EHIRUH VHQWHQFLQJ    GHVSLWH KDYLQJ HYLGHQFH ZKLFK LQ WXUQ KDPSHUHG KLV DELOLW\ WR PDNH VWUDWHJLF FKRLFHV SUHYLRXVO\ GHHPHG LW QHFHVVDU\ WR PRYH IRU WKH DSSRLQWPHQW RI D PHQWDO UHJDUGLQJ WKH >SHQDOW\ SKDVH@ SURFHHGLQJVl %DWWHQILHOG  )G DW KHDOWK H[SHUW SXUVXDQW WR $UL] 5 &ULP 3  WR H[SORUH >GHIHQGDQWjV@  FRPSHWHQF\ WR VWDQG WULDOl &RUUHOO   )G DW   &ROHPDQY0LWFKHOO 1R 1R &ROHPDQY0LWFKHOO  FRQYLFWLRQ YLRODWHV GXH SURFHVVl (VWHOOH Y 0F*XLUH  VWDWHPHQWLIDQ\RIWKHRIIHQGHUDQGWKHDUJXPHQWVLI 86  TXRWLQJ&XSSY1DXJKWHQ86 DQ\RIFRXQVHOIRUWKHGHIHQVHDQGSURVHFXWLRQWKDWDUH    UHOHYDQW WR WKH SHQDOW\ WKDW VKRXOG EH LPSRVHG RQ WKH RIIHQGHU $6SHFLILF,QWHQW$JJUDYDWHG0XUGHU 7ZRDGGLWLRQDOHOHPHQWVIXUWKHUFORXGWKHUHFRUGUHJDUGLQJ 3HWLWLRQHUDUJXHVWKDWWKHWULDOFRXUWHUUHGE\UHSODFLQJWKH WKHSUHFLVHXQGHUVWDQGLQJEHWZHHQ3HWLWLRQHUDQGKLVFRXQVHO HOHPHQWRIVSHFLILFLQWHQWUHTXLUHGE\2KLR5HYLVHG&RGH DVWRWKHH[WHQWRIPLWLJDWLRQWREHSUHVHQWHGDWWKHSHQDOW\ † ' WRILQGRQHJXLOW\RIDJJUDYDWHGPXUGHUZLWK SKDVHRIWKHWULDO L WKHWULDOFRXUWjVGHVFULSWLRQWRWKHMXU\ SUR[LPDWHFDXVH6SHFLILFDOO\3HWLWLRQHUDUJXHVWKDWWKHWULDO RI WKH SURFHGXUDO RXWOLQH IRU WKH SHQDOW\ SKDVH DQG FRXUW LQVWUXFWHG WKH MXU\ WKDW WR ILQG 3HWLWLRQHU JXLOW\ RI LL FRXQVHOjVRZQFORVLQJDUJXPHQW DJJUDYDWHGPXUGHUWKHMXU\QHHGRQO\ILQGWKDW3HWLWLRQHUZDV WKHSULQFLSDORIIHQGHULQWKHDJJUDYDWHGEXUJODU\QRWLQWKH $WWKHRXWVHWRIWKHSHQDOW\SKDVH RI WKHWULDOIROORZLQJ DJJUDYDWHGPXUGHU 3HWLWLRQHUjVZDLYHURIDSUHVHQWHQFHLQYHVWLJDWLRQDQGPHQWDO H[DPLQDWLRQ WKH WULDO FRXUW H[SODLQHG WR WKH MXU\ WKDW WKH 7KHFULPHRIDJJUDYDWHGPXUGHUXQGHU2KLRODZVWDWHVmQR GHIHQVH LI LW VKRXOG VR FKRRVH ZRXOG PDNH DQ RSHQLQJ SHUVRQVKDOOSXUSRVHO\DQGZLWKSULRUFDOFXODWLRQDQGGHVLJQ VWDWHPHQWIROORZHGE\DSUHVHQWDWLRQRIHYLGHQFHZKLFKLQ FDXVHWKHGHDWKRIDQRWKHU>@l2KLR5HY&RGH† $  WXUQZRXOGEHIROORZHGE\DFORVLQJDUJXPHQW7KHGHIHQVH 7KHWULDOFRXUWLQVWUXFWHGWKHMXU\DVIROORZV ZDLYHG DQ RSHQLQJ VWDWHPHQW EXW WKHQ SUHVHQWHG ERWK 3HWLWLRQHUjV XQVZRUQ VWDWHPHQW DQG FRXQVHOjV FORVLQJ %HIRUH\RXFDQILQGWKHGHIHQGDQWJXLOW\RIDJJUDYDWHG DUJXPHQW:KLOH3HWLWLRQHUjVZLVKPD\LQGHHGKDYHEHHQWR PXUGHU\RXPXVWILQGWKDWGHIHQGDQWSXUSRVHO\ OLPLW PLWLJDWLRQ WR KLV RZQ XQVZRUQ VWDWHPHQW WKH UHFRUG FDXVHG>6WRUH\jV@GHDWKZLWKSULRUFDOFXODWLRQDQGGHVLJQ GRHVQRWVXSSRUWVXFKDFRQFOXVLRQJLYHQERWKWKHODFNRID 3XUSRVHWRNLOOLVDQHVVHQWLDOHOHPHQWRIWKHFULPH FOHDU H[SUHVVLRQ RI VXFK SUHIHUHQFH E\ 3HWLWLRQHU DQG RIDJJUDYDWHGPXUGHU$SHUVRQDFWVSXUSRVHO\ZKHQLW FRXQVHOjVGHFLVLRQWRSUHVHQWDFORVLQJDUJXPHQWIROORZLQJ LVDVSHFLILFLQWHQWLRQWRFDXVHDFHUWDLQUHVXOW,WPXVWEH DQGHTXDOLQOHQJWKWRWKHXQVZRUQVWDWHPHQW HVWDEOLVKHG LQ WKLV FRXQW WKDW DW WKH WLPH LQ TXHVWLRQ WKHUHZDVSUHVHQWLQWKHPLQGRIWKHGHIHQGDQWDVSHFLILF &RXQVHOjVFORVLQJDUJXPHQWDWWKHSHQDOW\SKDVHRIWKHWULDO LQWHQWLRQWRNLOO7RQQLH6WRUH\1RSHUVRQPD\EH IRFXVHGRQWZRLVVXHVWKHFLUFXPVWDQWLDOQDWXUHRIWKH6WRUH\ FRQYLFWHGRIDJJUDYDWHGPXUGHUXQOHVVKHLVVSHFLILFDOO\ PXUGHU HYLGHQFH DQG WKH HYLOV RI H[HFXWLRQ E\ HOHFWULF IRXQGWRKDYHLQWHQGHGWRFDXVHWKHGHDWKRIDQRWKHU FKDLU7KHFORVLQJDUJXPHQWGLGQRWUHIHUHQFHDQ\DVSHFWRI 3HWLWLRQHUjVSHUVRQDOKLVWRU\ s$DW  )LUVW HYHQ DVVXPLQJ 3HWLWLRQHUjV IRFXV RQ WKH &RQWUDU\WR3HWLWLRQHUjVDVVHUWLRQVWKHMXU\LQVWUXFWLRQVGLG FLUFXPVWDQWLDOQDWXUHRIWKHPXUGHUHYLGHQFHZDVSUHPLVHGRQ QRWFRPPXQLFDWHWKDWILQGLQJ3HWLWLRQHUWREHWKHSULQFLSDO RIIHQGHULQWKHEXUJODU\ZDVVXIILFLHQWIRUILQGLQJJXLOWDVWR DJJUDYDWHGPXUGHU5DWKHUWKHMXU\LQVWUXFWLRQVFOHDUO\VWDWHG  WKDWILQGLQJ3HWLWLRQHUJXLOW\RIDJJUDYDWHGPXUGHUUHTXLUHG 2KLR 5HYLVHG &RGH †  ZDV DPHQGHG LQ  WR SURYLGH WKH ILQGLQJ WKDW 3HWLWLRQHU mSXUSRVHO\ FDXVHG >6WRUH\jV@ GHDWK RSWLRQ IRU OHWKDO LQMHFWLRQ DV D IRUP RI H[HFXWLRQ 5HY &RGH ZLWKSULRUFDOFXODWLRQDQGGHVLJQl †  %  $W WKH WLPH RI 3HWLWLRQHUjV WULDO LQ  HOHFWURFXWLRQ ZDV WKH RQO\ DYDLODEOH IRUP RI H[HFXWLRQ XQGHU 2KLR ODZ  &ROHPDQY0LWFKHOO 1R 1R &ROHPDQY0LWFKHOO  WKHUHTXHVWLVJRLQJWREHJUDQWHG,W %5HFRPPHQGDWLRQRI'HDWK3HQDOW\ ZLOO EH FRQWLQXHG XQWLO WRPRUURZ PRUQLQJ 'HIHQGDQWQH[WDUJXHVWKDWWKHWULDOFRXUWjVLQVWUXFWLRQVOHG MXURUV WR WKLQN WKDW WKH XOWLPDWH GHFLVLRQPDNLQJ s$ DW    7R IXUWKHU VXSSRUW LWV FRQFOXVLRQ WKDW UHVSRQVLELOLW\IRUWKHGHDWKSHQDOW\OD\HOVHZKHUHLQYLRODWLRQ 3HWLWLRQHU ZLVKHG WR OLPLW PLWLJDWLRQ WR KLV RZQ XQVZRUQ RI&DOGZHOOY0LVVLVVLSSL86   VWDWHPHQWWKHGLVWULFWFRXUWTXRWHGIURP3HWLWLRQHUjVXQVZRUQ VWDWHPHQWWRWKHMXU\ &DOGZHOOKHOGWKDWDFDSLWDOVHQWHQFHLVLQYDOLGmZKHQWKH VHQWHQFLQJ MXU\ LV OHG WR EHOLHYH WKDW UHVSRQVLELOLW\ IRU ,DPQRWJRLQJWRGUDZLWRXW,GHFLGHGWRFXWLWVKRUW GHWHUPLQLQJWKHDSSURSULDWHQHVVRIDGHDWKVHQWHQFHUHVWVQRW UHG@>WKDW@\RXFRXOGJREDFNKRPHWRGD\ WKH FDVHl  &DOGZHOO  86 DW   7KLV &RXUW LQ RQ 6XQGD\ DIWHU \RX OHIW FKXUFK  , DP JRLQJ WR FXW LW .RUGHQEURFN Y 6FURJJ\  )G   WK &LU VKRUW,DPQRWJRLQJWRWDONIRUWRPLQXWHV  HQEDQF IRXQGWKDWDMXU\LQVWUXFWLRQDQGSURVHFXWRUjV FKDUDFWHUL]DWLRQ RI D MXU\jV GHDWK VHQWHQFH DV D s$DW mUHFRPPHQGDWLRQlZDVFRQVLVWHQWZLWK.HQWXFN\ODZDQGGLG QRWYLRODWH&DOGZHOO.RUGHQEURFNVWDWHGWKDWm>L@QRUGHUWR 8QOLNHWKHGLVWULFWFRXUWZHVHHDJDSEHWZHHQ3HWLWLRQHUjV PDNHRXWD&DOGZHOOYLRODWLRQ>SHWLWLRQHU@PXVWVKRZWKDWWKH GHFLVLRQ WR ZDLYH D SUHVHQWHQFH LQYHVWLJDWLRQ DQG PHQWDO SURVHFXWRULPSURSHUO\GHVFULEHGWKHMXU\jVUROHXQGHUVWDWH H[DPLQDWLRQ DQG 3HWLWLRQHUjV GHFLVLRQ WR OLPLW PLWLJDWLRQ ODZLQRUGHUWRZDWHUGRZQWKHLUUHVSRQVLELOLW\l,G FLWLQJ H[FOXVLYHO\WRKLVRZQXQVZRUQVWDWHPHQW)LUVWWKHSODLQ 'XJJHUY$GDPV86   ODQJXDJH RI †  '  GLVWLQJXLVKHV D SUHVHQWHQFH LQYHVWLJDWLRQ DQG D PHQWDO H[DPLQDWLRQ IURP mPLWLJDWLRQl 7KHUHOHYDQW2KLRODZLV2KLR5HYLVHG&RGH† '  8QGHU †  '  ZKHUH GHDWK PD\ EH LPSRVHG DV D SHQDOW\m>D@SUHVHQWHQFHLQYHVWLJDWLRQRUPHQWDOH[DPLQDWLRQ ,I WKH WULDO MXU\ XQDQLPRXVO\ ILQGV E\ SURRI EH\RQG D VKDOO QRW EH PDGH H[FHSW XSRQ UHTXHVW RI WKH GHIHQGDQWl UHDVRQDEOHGRXEWWKDWWKHDJJUDYDWLQJFLUFXPVWDQFHVWKH +RZHYHU DOVR XQGHU †  '  D MXU\ ZHLJKLQJ RIIHQGHUZDVIRXQGJXLOW\RIFRPPLWWLQJRXWZHLJKWKH DJJUDYDWLQJDQGPLWLJDWLQJIDFWRUVDWWKHSHQDOW\SKDVHRID PLWLJDWLQJIDFWRUVWKHWULDOMXU\VKDOOUHFRPPHQGWRWKH FDSLWDO WULDOPD\KHDUQRWRQO\UHSRUWVIURPDSUHVHQWHQFH FRXUW WKDW WKH VHQWHQFH RI GHDWK EH LPSRVHG RQ WKH LQYHVWLJDWLRQDQGPHQWDOH[DPLQDWLRQEXWDOVR RIIHQGHU     >,@I DIWHU UHFHLYLQJ    WKH WULDO MXU\jV UHFRPPHQGDWLRQWKDWWKHVHQWHQFHRIGHDWKEHLPSRVHG DQ\ HYLGHQFH UDLVHG DW WULDO WKDW LV UHOHYDQW WR WKH WKHFRXUWILQGVE\SURRIEH\RQGDUHDVRQDEOHGRXEW DJJUDYDWLQJFLUFXPVWDQFHVWKHRIIHQGHUZDVIRXQGJXLOW\ WKDW WKH DJJUDYDWLQJ FLUFXPVWDQFHV WKH RIIHQGHU ZDV RI FRPPLWWLQJ RU WR DQ\ IDFWRUV LQ PLWLJDWLRQ RI WKH IRXQG JXLOW\ RI FRPPLWWLQJ RXWZHLJK WKH PLWLJDWLQJ LPSRVLWLRQRIWKHVHQWHQFHRIGHDWKWHVWLPRQ\DQG IDFWRUVLWVKDOOLPSRVHVHQWHQFHRIGHDWKRQWKHRIIHQGHU RWKHU HYLGHQFH WKDW LV UHOHYDQW WR WKH QDWXUH DQG $EVHQWVXFKDILQGLQJE\WKHFRXUWWKHFRXUWVKDOO FLUFXPVWDQFHV RI WKH DJJUDYDWLQJ FLUFXPVWDQFHV WKH LPSRVH RQH RI WKH IROORZLQJ >OLIH@ VHQWHQFHV RQ WKH RIIHQGHUZDVIRXQGJXLOW\RIFRPPLWWLQJWKHPLWLJDWLQJ RIIHQGHU>@ IDFWRUVVHWIRUWKLQGLYLVLRQ % RIVHFWLRQRIWKH 5HYLVHG&RGHDQGDQ\RWKHUIDFWRUVLQPLWLJDWLRQRIWKH 7KHWULDOFRXUWLQVWUXFWHGWKHMXU\DVIROORZV LPSRVLWLRQRIWKHVHQWHQFHRIGHDWKDQGVKDOOKHDUWKH  &ROHPDQY0LWFKHOO 1R 1R &ROHPDQY0LWFKHOO  $OOWZHOYHMXURUVPXVWDJUHHXSRQDYHUGLFW,IDOOWZHOYH LQYHVWLJDWLRQ RU D SV\FKLDWULF PHPEHUVRIWKHMXU\ILQGE\SURRIEH\RQGDUHDVRQDEOH H[DPLQDWLRQ GRXEW WKDW WKH DJJUDYDWLQJ FLUFXPVWDQFH ZKLFK >'HIHQGDQW@ZDVIRXQGJXLOW\RIFRPPLWWLQJRXWZHLJK 7+(&2857 ,ZRXOGOLNHWRKHDUWKDWIURP\RXU WKHPLWLJDWLQJIDFWRUVWKHQ\RXPXVWUHWXUQVXFKILQGLQJ FOLHQWKLPVHOI>3HWLWLRQHU@GR\RX WRWKH&RXUWDQGDVDPDWWHURIODZ\RXZRXOGKDYHQR ZLVK WR KDYH D SUHVHQWHQFH FKRLFHEXWWRUHFRPPHQGWRWKH&RXUWWKDWWKHVHQWHQFH LQYHVWLJDWLRQ" RIGHDWKEHRUGHUHG >3(7,7,21(5@ 1R,GRQjW 7KHILQDOGHFLVLRQDVWRZKHWKHUWKHGHDWKSHQDOW\VKDOO EH LPSRVHG XSRQ WKH GHIHQGDQW UHVWV XSRQ WKLV &RXUW 7+(&2857  'R \RX ZLVK WR KDYHDPHQWDO DIWHU WKH &RXUW IROORZV FHUWDLQ DGGLWLRQDO SURFHGXUHV H[DPLQDWLRQ" UHTXLUHGE\WKHODZVRIWKLV6WDWH7KHUHIRUHHYHQLI\RX UHFRPPHQGWKHGHDWKSHQDOW\WKHODZUHTXLUHVWKH&RXUW >3(7,7,21(5@ 1R,GRQjW WRGHFLGHZKHWKHURUQRWWKH>'@HIHQGDQWZLOODFWXDOO\ EHVHQWHQFHGWRGHDWKRUWROLIHLPSULVRQPHQW 7+(&2857 9HU\ZHOO$Q\UHDVRQWKDW\RX NQRZ RI >3HWLWLRQHU@ ZK\ WKH s$DW VHQWHQFLQJ SRUWLRQ RI WKLV SURFHHGLQJVKRXOGQRWSURFHHG" m7RHVWDEOLVKD&DOGZHOOYLRODWLRQDGHIHQGDQWQHFHVVDULO\ PXVWVKRZWKDWWKHUHPDUNVWRWKHMXU\LPSURSHUO\GHVFULEHG >3(7,7,21(5@ 2QHPRPHQW WKHUROHDVVLJQHGWRWKHMXU\E\ORFDOODZl'XJJHU86 DW,Q.RUGHQEURFN.HQWXFN\ODZSURYLGHGWKDWmWKHMXU\ FRQIHUULQJZLWKFRXQVHO VKDOO UHWLUH WR GHWHUPLQH ZKHWKHU DQ\ PLWLJDWLQJ RU >&2816(/@ sXGJH DW WKLV WLPH >3HWLWLRQHU@ DJJUDYDWLQJ FLUFXPVWDQFHV    H[LVW DQG WR UHFRPPHQG D DGYLVHV XV WKDW KH IHHOV WKDW KH VHQWHQFHIRUWKHGHIHQGDQW8SRQWKHILQGLQJVRIWKHMXU\WKH ZRXOGOLNHWRKDYHVRPHDGGLWLRQDO MXGJHVKDOOIL[DVHQWHQFHZLWKLQWKHOLPLWVSUHVFULEHGE\ODZl WLPH WR WKLQN DERXW WKH VWDWHPHQW .RUGHQEURFN)GDW TXRWLQJ.\5HY6WDW$QQ WKDW KH ZRXOG OLNH WR PDNH WR WKH †  E %HFDXVHWKHMXGJHjVFKDUDFWHUL]DWLRQRIWKH MXU\ MXU\jV VHQWHQFH DV D mUHFRPPHQGDWLRQl ZDV IRXQG LQ .RUGHQEURFN QRW WR YLRODWH &DOGZHOO ZH ILQG WKH VLPLODU 7+(&2857 :LOO \RX FRQVXOW ZLWK \RXUFOLHQW FKDUDFWHUL]DWLRQRImUHFRPPHQGDWLRQlLQWKLVFDVHZKHQ2KLR DQG DVN KLP KRZ ORQJ RI WLPH KH ODZUHTXLUHVDVHSDUDWHSRVWUHFRPPHQGDWLRQILQGLQJE\WKH WKLQNVLVUHTXLUHG" FRXUWFRQILUPLQJWKHMXU\jVVHQWHQFHZDVDOVRQRWLQYLRODWLRQ RI&DOGZHOO >&2816(/@ +HKDVLQGLFDWHGMXVWLQWKHSUHYLRXV GLVFXVVLRQ WKDW KH ZRXOG OLNH WR &5HDVRQDEOH'RXEWDW6HQWHQFLQJ KDYHDWOHDVWRYHUQLJKW 3HWLWLRQHUDUJXHVWKDWWKHWULDOMXGJHjVmUHDVRQDEOHGRXEWl 7+(&2857 9HU\ZHOO,QOLJKWRIWKHIDFWRI LQVWUXFWLRQ DW WKH SHQDOW\ SKDVH RI WKH WULDO YLRODWHG GXH WKHVHULRXVQHVVRIWKLVSURFHHGLQJ SURFHVV7KHGLVWULFWFRXUWKHOGWKLVFODLPWREHSURFHGXUDOO\  &ROHPDQY0LWFKHOO 1R 1R &ROHPDQY0LWFKHOO  m7KH&RQVWLWXWLRQUHTXLUHV6WDWHVWRDOORZFRQVLGHUDWLRQRI EDUUHGEHFDXVHLWKDGQRWEHHQSUHVHQWHGRQGLUHFWDSSHDODQG PLWLJDWLQJHYLGHQFHLQFDSLWDOFDVHVl&DUWHU)GDW WKH2KLRFRXUWVKDGUHOLHGRQDGHTXDWHDQGLQGHSHQGHQWVWDWH TXRWLQJ 0F.R\ Y 1RUWK &DUROLQD  86   JURXQGVLQEDUULQJSRVWFRQYLFWLRQFRQVLGHUDWLRQRIWKHFODLP    &RQVLVWHQW ZLWK WKLV UHTXLUHPHQW 2KLR 5HYLVHG &RGH† % SURYLGHVWKDWLQDFDSLWDOFDVHLIRQHRU (YHQDVVXPLQJWKHFODLPLVQRWEDUUHGWKHMXU\LQVWUXFWLRQ PRUHDJJUDYDWLQJFLUFXPVWDQFHVKDYHEHHQSURYHGEH\RQGD ZDV QRW LPSURSHU  :H UHYLHZ MXU\ LQVWUXFWLRQV DW WKH UHDVRQDEOH GRXEW WKH MXU\ PXVW FRQVLGHU DQG ZHLJK WKH VHOHFWLRQSKDVHRIWKHFDSLWDOVHQWHQFLQJSRUWLRQRIDWULDOWR mQDWXUH DQG FLUFXPVWDQFHV RI WKH RIIHQVH WKH KLVWRU\ GHWHUPLQHmZKHWKHUWKHUHLVDUHDVRQDEOHOLNHOLKRRGWKDWWKH FKDUDFWHUDQGEDFNJURXQGRIWKHRIIHQGHUlDVZHOODVVHYHUDO MXU\ KDV DSSOLHG WKH FKDOOHQJHG LQVWUXFWLRQ LQ D ZD\ WKDW HQXPHUDWHG PLWLJDWLQJ IDFWRUV ZKLFK LQFOXGH ZKHWKHU SUHYHQWV WKH FRQVLGHUDWLRQ RI FRQVWLWXWLRQDOO\ UHOHYDQW GHIHQGDQWVXIIHUHGIURPDPHQWDOGLVHDVHRUGHIHFWDWWKHWLPH HYLGHQFHl  %XFKDQDQ Y $QJHORQH  86   WKHRIIHQVHZDVFRPPLWWHG  FLWDWLRQVRPLWWHG 7KHMXU\LQVWUXFWLRQDWLVVXHZDVDV IROORZV 7KH GLVWULFW FRXUW IRXQG WKDW FRXQVHO KDG mKRQRUHG >3HWLWLRQHUjV@ GHVLUH WR FRQGXFW D PLWLJDWLRQ SKDVH KHDULQJ 7KH6WDWHRI2KLRVHHNVUHFRPPHQGDWLRQVIURP\RXRID ZLWKRQO\>3HWLWLRQHUjV@XQVZRUQVWDWHPHQWl s$DW GHDWK VHQWHQFH  ,Q RUGHU WR EH HQWLWOHG WR WKLV %\ VLPSO\ KRQRULQJ 3HWLWLRQHUj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jVFRXQVHO7KLVFROORTX\ \RXZLOOFRQVLGHUDOOHYLGHQFHSUHVHQWHGLQWKHILUVWWULDO GLVFXVVHG3HWLWLRQHUj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jVFRUUHFW 3URRI EH\RQG D UHDVRQDEOH GRXEW LV SURRI RI VXFK FKDUDFWHUWKDWDQRUGLQDU\SHUVRQZRXOGEHZLOOLQJWRUHO\ 7+(&2857 +DVKHPDGHDGHFLVLRQ" DQGDFWXSRQLWLQWKHPRVWLPSRUWDQWRIKLVRUKHURZQ DIIDLUV,IDIWHUDIXOOIDLUDQGLPSDUWLDOFRQVLGHUDWLRQRI >&2816(/@ ,WjV P\ XQGHUVWDQGLQJ WKDW DW WKLV DOOUHOHYDQWHYLGHQFHIURPERWKWULDOV\RXDUHFRQYLQFHG WLPHZHGRQRWZLVKDSUHVHQWHQFH  &ROHPDQY0LWFKHOO 1R 1R &ROHPDQY0LWFKHOO  EH\RQG D UHDVRQDEOH GRXEW WKDW WKH DJJUDYDWLQJ UHVSRQVHWROHDGLQJTXHVWLRQVE\WKHVKHULIIl5LGHDX FLUFXPVWDQFHVZKLFKWKHGHIHQGDQWZDVIRXQGJXLOW\RI 86DW,QWKLVFDVH3HWLWLRQHUKDVQRWDOOHJHGWKDWDQ\ FRPPLWWLQJ LV VXIILFLHQW WR RXWZHLJK WKH IDFWRUV LQ SDUWLFXODUMXURUZDVSUHMXGLFHGE\PHGLDFRYHUDJH5DWKHU PLWLJDWLRQ WKHQ WKH 6WDWH KDV SURYHQ LWV ULJKW WR EH 3HWLWLRQHU DUJXHV WKDW VXFK SUHMXGLFH VKRXOG EH SUHVXPHG HQWLWOHGWRWKHUHFRPPHQGDWLRQRIWKHGHDWKSHQDOW\ IURPWKHH[WHQWRIPHGLDFRYHUDJH+RZHYHUERWK,UYLQDQG 5LGHDX LQYROYHG FOHDUO\ HVWDEOLVKHG DFWXDO SUHMXGLFH s$DW  3HWLWLRQHUjVLQIHUHQFHWKDWH[WHQVLYHORFDOPHGLDFRYHUDJHRI KLV SULRU LQGLFWPHQWV DQG PXUGHU FRQYLFWLRQ HQVXUHG MXURU 3HWLWLRQHUDUJXHVWKDWWKLVLQVWUXFWLRQZDVGRXEO\IODZHG LPSDUWLDOLW\DQGYLRODWLRQRIGXHSURFHVVLVLQFRQVLVWHQWZLWK )LUVWWKHFRXUWjVFKDUDFWHUL]DWLRQRIUHDVRQDEOHGRXEWDVQRW 'REEHUW  :H ILQG WKDW H[WHQVLYH ORFDO PHGLD FRYHUDJH RI EHLQJmILUPO\FRQYLQFHGlUHIHUVWRWKHFOHDUDQGFRQYLQFLQJ 3HWLWLRQHUjVFULPLQDODFWLYLW\ZLWKRXWPRUHGRHVQRWYLRODWH HYLGHQFHVWDQGDUGQRWUHDVRQDEOHGRXEW6HFRQGLQVWUXFWLQJ GXHSURFHVV WKH MXU\ WKDW WKH\ ZHUH WR FRQVLGHU ZKHWKHU WKH\ KDG UHDVRQDEOH GRXEW DV WR WKH FKDUJH UDWKHU WKDQ ZKHWKHU 9,,,QHIIHFWLYH$VVLVWDQFHRI7ULDO&RXQVHO DJJUDYDWLQJ HYLGHQFH RXWZHLJKHG PLWLJDWLQJ HYLGHQFH PLVGLUHFWHG WKH MXU\ WRZDUG D FRQFOXVLRQ WKDW KDG DOUHDG\ 3HWLWLRQHUDUJXHVWKDWKLVFRXQVHOjVIDLOXUHWRLQGHSHQGHQWO\ EHHQGHWHUPLQHGDWWKHJXLOWSKDVHRIWKHWULDO LQYHVWLJDWH PLWLJDWLQJ HYLGHQFH LQ 3HWLWLRQHUj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j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mVXEVWDQWLDO GRXEWl RU VWDWHFRXUWDQGGLVWULFWFRXUWGHWHUPLQDWLRQVGHQRYR&DUWHU mQRWDPHUHSRVVLEOHGRXEWlGRHVQRWYLRODWHGXHSURFHVV,G Y%HOO)G FLWLQJ5LFNPDQ)GDW  2XU GH QRYR UHYLHZ LQFOXGHV ERWK WKH SHUIRUPDQFH DQG ,Q WKLV FDVH WKH FRXUW GHVFULEHG mUHDVRQDEOH GRXEWl LQ SUHMXGLFHFRPSRQHQWVRIDQLQHIIHFWLYHDVVLVWDQFHFODLP,G VHYHUDOZD\VLQFOXGLQJmQRWDPHUHSRVVLEOHGRXEWlZKLFK FLWLQJ6WULFNODQG86DW   &ROHPDQY0LWFKHOO 1R 1R &ROHPDQY0LWFKHOO  UHGUHVVHG E\ 3HWLWLRQHUjV RSWLQJ DJDLQVW H[HFXWLRQ E\ ZDV VSHFLILFDOO\ XSKHOG LQ 9LFWRU  3HWLWLRQHU KDV QRW HOHFWURFXWLRQXQGHU† %  DUWLFXODWHGKRZmILUPO\FRQYLQFHGlWDNHQWRJHWKHUZLWKWKH FRXUWj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mWKH6WDWHKDVWKHEXUGHQRISURYLQJE\SURRIEH\RQGD UHDVRQDEOHGRXEWWKDWWKHDJJUDYDWLQJFLUFXPVWDQFHVZKLFK 7R KROG WKDW WKH PHUH H[LVWHQFH RI DQ\ SUHFRQFHLYHG WKHGHIHQGDQWZDVIRXQGJXLOW\RIFRPPLWWLQJLVVXIILFLHQWWR QRWLRQDVWRWKHJXLOWRULQQRFHQFHRIDQDFFXVHGZLWKRXW RXWZHLJKWKHIDFWRUVLQPLWLJDWLRQl s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mVXSSUHVVLRQE\WKHSURVHFXWLRQRIHYLGHQFHIDYRUDEOHWRDQ SUHVXPH XQIDLUQHVV RI FRQVWLWXWLRQDO PDJQLWXGH DW KLV DFFXVHGXSRQUHTXHVWYLRODWHVGXHSURFHVVZKHUHWKHHYLGHQFH WULDO  7KLV ZH ZLOO QRW GR LQ WKH DEVHQFH RI D WULDO LVPDWHULDOHLWKHUWRJXLOWRUWRSXQLVKPHQWLUUHVSHFWLYHRIWKH DWPRVSKHUHXWWHUO\FRUUXSWHGE\SUHVVFRYHUDJH JRRGIDLWKRUEDGIDLWKRIWKHSURVHFXWLRQl,GDW 'REEHUWY)ORULGD86  FLWDWLRQV 3HWLWLRQHUDUJXHVWKDWWKH6WDWHRI2KLRIDLOHGWRGLVFORVH DQGLQWHUQDOTXRWDWLRQVRPLWWHG  H[FXOSDWRU\ LQIRUPDWLRQ SRVVHVVHG E\ WKH )%, DQG WKH &LQFLQQDWL SROLFH  6SHFLILFDOO\ 3HWLWLRQHU DUJXHV WKDW WKH 3HWLWLRQHUDUJXHVWKDWDGYHUVHSXEOLFLW\LQKLVFDVHZDVVR )%,ZDVLQSRVVHVVLRQRIGHWDLOHGDQGPDWHULDOEDFNJURXQG SHUYDVLYH DQG SUHMXGLFLDO WKDW MXU\ SUHMXGLFH PD\ EH LQIRUPDWLRQ RQ 3HWLWLRQHU  3HWLWLRQHUjV KDEHDV DSSOLFDWLRQ SUHVXPHG FLWLQJ,UYLQ Y 'RZG  86    DQG DOOHJHGWHQFDWHJRULHVRIHYLGHQFHWKDWWKH6WDWHRI2KLRKDG 5LGHDXY/RXLVLDQD86  ,Q,UYLQPHGLD IDLOHGWRGLVFORVHLQFOXGLQJH[FXOSDWRU\EDFNJURXQGSURILOHV FRYHUDJHFDXVHGQLQHW\SHUFHQWRIWKHSURVSHFWLYHMXURUV DQGUHSRUWVFRQFHUQLQJ3HWLWLRQHUDQGPHPEHUVRI3HWLWLRQHUjV WR KDYH DQ RSLQLRQ RQ GHIHQGDQWjV JXLOW UDQJLQJ IURP IDPLO\3HWLWLRQHUDOVRDOOHJHGWKDWWKH6WDWHRI2KLRjVIDLOXUH VXVSLFLRQWRQHDUFHUWDLQW\,UYLQ86DW(LJKWRI WR GLVFORVH VXFK LQIRUPDWLRQ WR 3HWLWLRQHUjV WULDO FRXQVHO WKH WZHOYH MXURUV ZKR ZHUH XOWLPDWHO\ HPSDQHOHG DOUHDG\ GLUHFWO\ DQG DGYHUVHO\ DIIHFWHG WULDO FRXQVHOjV DELOLW\ WR FRQVLGHUHGGHIHQGDQWJXLOW\,G,Q5LGHDXWKUHHMXURUVKDG DGHTXDWHO\SUHVHQWHYLGHQFHRQ3HWLWLRQHUjVEHKDOIDWERWKWKH VHHQDWHOHYLVHGmLQWHUYLHZlZLWKGHIHQGDQWmLQMDLOIODQNHG JXLOWDQGSHQDOW\SKDVHVRIWKHWULDO E\WKHVKHULIIDQGWZRVWDWHWURRSHUVDGPLWWLQJLQGHWDLOWKH FRPPLVVLRQ RI WKH UREEHU\ NLGQDSSLQJ DQG PXUGHU LQ  &ROHPDQY0LWFKHOO 1R 1R &ROHPDQY0LWFKHOO  %UDG\ DVVXUHV WKH SURGXFWLRQ RI H[FXOSDWRU\ HYLGHQFH IXQFWLRQPD\QRWEHSHUIRUPHGE\MXU\ILQGLQJVDWHLWKHU PDWHULDO WR HLWKHU WKH JXLOW RU SHQDOW\ SKDVHV RI D WULDO  ,Q WKHVHQWHQFLQJSKDVHRIWKHWULDORUWKHJXLOWSKDVH 8QLWHG 6WDWHV Y %DJOH\  86     WKH 6XSUHPH &RXUW FODULILHG WKH %UDG\ PDWHULDOLW\ VWDQGDUG :HILQGWKH2KLRUHTXLUHPHQWWKDWDJJUDYDWLQJFLUFXPVWDQFHV mHYLGHQFHLVPDWHULDORQO\LIWKHUHLVDUHDVRQDEOHSUREDELOLW\ EHSURYHQDWWKHJXLOWUDWKHUWKDQSHQDOW\SKDVHRIWKHWULDOLV WKDWKDGWKHHYLGHQFHEHHQGLVFORVHGWRWKHGHIHQVHWKHUHVXOW FRQVLVWHQWZLWK/RZHQILHOG RIWKHSURFHHGLQJZRXOGKDYHEHHQGLIIHUHQWl7KH%UDG\UXOH GRHVQRWDVVLVWDGHIHQGDQWZKRLVDZDUHRIHVVHQWLDOIDFWVWKDW 6L[WK3HWLWLRQHUDUJXHVWKDWKLVGHDWKVHQWHQFH L YLRODWHV ZRXOG DOORZ KLP WR WDNH DGYDQWDJH RI WKH H[FXOSDWRU\ $UWLFOH 9, RI WKH &RQVWLWXWLRQ XQGHU ZKLFK HYHU\ VWDWH LV HYLGHQFHDWLVVXH6HH8QLWHG6WDWHVY7RGG)G ERXQGE\WHUPVRILQWHUQDWLRQDOWUHDWLHVWRZKLFKWKH8QLWHG  WK&LU FLWLQJ8QLWHG6WDWHVY:LOVRQ)G 6WDWHVLVDSDUW\DQG LL YLRODWHVFXVWRPDU\LQWHUQDWLRQDOODZ  WK&LU 8QLWHG6WDWHVY+LFNV)G 7KHGLVWULFWFRXUWIRXQGWKLVFODLPWREHSURFHGXUDOO\EDUUHG VW&LU 8QLWHG6WDWHVY*URVVPDQ)G DQGIRUZKLFK'HIHQGDQWKDGQRWVKRZQFDXVHDQGSUHMXGLFH G&LU  +RZHYHUHYHQPHULWVUHYLHZRIWKLVFODLPZRXOGQRWKDYH DIIRUGHG3HWLWLRQHUKDEHDVUHOLHI 7KHGLVWULFWFRXUWIRXQGWKDW3HWLWLRQHUKDGQRWVKRZQWKDW DQ\RIWKHZLWKKHOGLQIRUPDWLRQPLJKWKDYHDVVLVWHGLQKLV 6HYHQWK3HWLWLRQHUDUJXHVWKDWH[HFXWLRQE\HOHFWURFXWLRQ GHIHQVHDQGFRQFOXGHGWKDW3HWLWLRQHUKDGQRWHVWDEOLVKHGWKDW YLRODWHV WKH (LJKWK $PHQGPHQW  2KLR 5HYLVHG &RGH WKHZLWKKHOGHYLGHQFHZRXOGKDYHPDGHDGLIIHUHQFHLQWKH † % SURYLGHVWKHRSWLRQIRUOHWKDOLQMHFWLRQDVDIRUP RXWFRPHRIWKHWULDO RIH[HFXWLRQ$UHFHQWDPHQGPHQWWR)ORULGDODZSURYLGLQJ WKHRSWLRQIRUOHWKDOLQMHFWLRQLQSODFHRIHOHFWURFXWLRQFDXVHG :H DJUHH ZLWK WKH GLVWULFW FRXUW WKDW QR %UDG\ YLRODWLRQ WKH6XSUHPH&RXUWWRGLVPLVVDQHDUOLHUJUDQWRIFHUWLRUDULWR RFFXUUHGLQWKLVFDVHEXWRQGLIIHUHQWJURXQGV:HDJUHHWKDW FRQVLGHU ZKHWKHU H[HFXWLRQ E\ HOHFWURFXWLRQ YLRODWHV WKH WKH6WDWHRI2KLRLVQRWXOWLPDWHO\UHVSRQVLEOHIRUWKHIDLOXUH (LJKWK$PHQGPHQW%U\DQY0RRUH86   RI3HWLWLRQHUjVFRXQVHOWRSUHVHQWDWWKHSHQDOW\SKDVHRIWKH 8QGHU† % H[HFXWLRQLQ2KLROLNH)ORULGDQHHGQRW WULDODQ\PLWLJDWLQJHYLGHQFHLQFRQQHFWLRQZLWK3HWLWLRQHUjV RFFXUE\HOHFWURFXWLRQ7KHUHIRUH3HWLWLRQHUjVFODLPPD\EH SHUVRQDO EDFNJURXQG  7KHUHIRUH XQGHU 7RGG ZH ILQG QR %UDG\YLRODWLRQ+RZHYHUDVGHWDLOHGLQWKHGLVFXVVLRQRI LQHIIHFWLYHDVVLVWDQFHRIWULDOFRXQVHOLQSDUW9,,EHORZZH ILQGWKDWLWLVUHDVRQDEO\SUREDEOHWKDWSUHVHQWLQJPLWLJDWLQJ  HYLGHQFHRQ3HWLWLRQHUjVEDFNJURXQGWRWKHMXU\DWWKHSHQDOW\ 0HULWV UHYLHZ RI 3HWLWLRQHUjV LQWHUQDWLRQDO WUHDW\ DQG FXVWRPDU\ SKDVHRIWKHWULDOZRXOGKDYHSURGXFHGDQRXWFRPHGLIIHUHQW LQWHUQDWLRQDO ODZ FODLP ZRXOG RQO\ KDYH REVHUYHG WKDW WR GDWH WKH FODLP IURPWKHGHDWKVHQWHQFH:HWKHUHIRUHGHSDUWIURPWKHGLVWULFW WKDW mLQWHUQDWLRQDO ODZ FRPSOHWHO\ EDUV WKLV QDWLRQ V XVH RI WKH GHDWK FRXUWjVILQGLQJRQWKHPDWHULDOLW\RIWKHEDFNJURXQGHYLGHQFH SHQDOW\    LV XQVXSSRUWDEOH VLQFH WKH 8QLWHG 6WDWHV LV QRW SDUW\ WR DQ\ WUHDW\ WKDW SURKLELWV FDSLWDO SXQLVKPHQW SHU VH DQG VLQFH WRWDO DEROLVKPHQW DWLVVXH RI FDSLWDO SXQLVKPHQW KDV QRW \HW ULVHQ WR WKH OHYHO RI FXVWRPDU\ LQWHUQDWLRQDO ODZl 8QLWHG 6WDWHV Y %LQ /DGHQ  ) 6XSS G   0DWHULDOHYLGHQFHRQ3HWLWLRQHUjVEDFNJURXQGZRXOGKDYH 6'1<  FLWDWLRQ RPLWWHG  &XVWRPDU\ LQWHUQDWLRQDO ODZ GHULYHG EHHQGLVFRYHUDEOHZLWKPLQLPDOLQYHVWLJDWLRQE\3HWLWLRQHUjV IURP WKH ODZ RI QDWLRQV LV GHILQHG DV WKH mJHQHUDO DQG FRQVLVWHQW SUDFWLFH RI VWDWHV IROORZHG E\ WKHP IURP D VHQVH RI OHJDO REOLJDWLRQl 6LGHUPDQ GH FRXQVHO6XFKLQIRUPDWLRQZDVDYDLODEOHIURPYDULHGVRXUFHV %ODNH Y 5HSXEOLF RI $UJHQWLQD   )G   WK &LU  EH\RQGFRQWURORIWKH)%,LQFOXGLQJDVGHWDLOHGLQSDUW9,, TXRWLQJ 5HVWDWHPHQW 7KLUG RI WKH )RUHLJQ 5HODWLRQV /DZ RI WKH 8QLWHG 6WDWHV †      &ROHPDQY0LWFKHOO 1R 1R &ROHPDQY0LWFKHOO  7KLUGXQGHU† '  LWLVWKHSURVHFXWLRQjVEXUGHQ EHORZ VFKRRO KRVSLWDO DQG SULVRQ UHFRUGV PHQWDO WRSURYLGHEH\RQGDUHDVRQDEOHGRXEWWKDWWKHDJJUDYDWLQJ HYDOXDWLRQVIDPLO\PHPEHUVDQGDFTXDLQWDQFHVDVZHOODV FLUFXPVWDQFHVRXWZHLJKPLWLJDWLQJFLUFXPVWDQFHV)RXUWKLI 3HWLWLRQHUKLPVHOI:KLOHWKH)%,EDFNJURXQGUHSRUWVDQG WKH MXU\ UHFRPPHQGV WKH GHDWK VHQWHQFH XQGHU † SURILOHVZRXOGOLNHO\KDYHSURYLGHGKHOSIXOGHWDLOWKHHVVHQFH  '  WKHFRXUWPXVWWKHQLQGHSHQGHQWO\HYDOXDWHWKH RI 3HWLWLRQHUjV PLWLJDWLQJ FLUFXPVWDQFHV WKDW KLV OLIH IXOOUHFRUGWRUHFRQILUPWKDWWKHDJJUDYDWLQJFLUFXPVWDQFHVGR H[SHULHQFH KDG ODUJHO\ EHHQ FKDUDFWHUL]HG E\ YLROHQFH DQG LQGHHGRXWZHLJKPLWLJDWLQJFLUFXPVWDQFHV DEXVH ZDV LQGHSHQGHQWO\ DYDLODEOH WR 3HWLWLRQHU DQG LPSRUWDQWO\ 3HWLWLRQHUjV FRXQVHO  7KXV XQGHU 7RGG WKH 7KH2KLRVFKHPHGRHVQRWUHVHPEOHWKHVFKHPHLQ*RGIUH\ GLVWULFWFRXUWGLGQRWHUULQIDLOLQJWRILQGD%UDG\YLRODWLRQLQ ZKHUHWKHm*HRUJLD6XSUHPH&RXUWDIILUPHGDVHQWHQFHRI WKLVFDVHDOWKRXJKZHGRQRWDJUHHZLWKWKHGLVWULFWFRXUWRQ GHDWKEDVHGXSRQQRPRUHWKDQDILQGLQJWKDWWKHRIIHQVHZDV WKH PDWHULDOLW\ RI HYLGHQFH UHODWLQJ WR 3HWLWLRQHUjV mRXWUDJHRXVO\ RU ZDQWRQO\ YLOH KRUULEOH DQG LQKXPDQl EDFNJURXQGZKLFKKDGLWEHHQSUHVHQWHGWRWKHMXU\ZRXOG *RGIUH\  86 DW   6SHFLILFDOO\ WKH DJJUDYDWLQJ OLNHO\KDYHDIIHFWHGWKHRXWFRPHRIWKHSHQDOW\SKDVHRIWKH FLUFXPVWDQFHV XQGHU †  $  SURYLGH mVSHFLILF DQG WULDODVLQGLFDWHGE\SDUW9,,EHORZ GHWDLOHG JXLGDQFHl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jVKDQGZULWLQJ FRPPLWWHGWKHDJJUDYDWHGPXUGHUZLWKFDOFXODWLRQDQGGHVLJQ :HILQGWKHGHWDLOHGJXLGDQFHRQDJJUDYDWLQJFLUFXPVWDQFHV +DEHDVUHOLHIEDVHGRQSURVHFXWRULDOPLVFRQGXFWUHTXLUHV XQGHU† $ WREHGLVWLQJXLVKDEOHIURPWKHLOOGHILQHG WKDWWKHPLVFRQGXFWEHVRHJUHJLRXVDVWRGHQ\SHWLWLRQHUGXH VHQWHQFLQJVFKHPHLQ*RGIUH\ SURFHVV6HH'RQQHOO\Y'H&KULVWRIRUR86   $OWKRXJKm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lDSURVHFXWRUPD\QHYHUWKHOHVVWHVWLI\ RI =DQW Y 6WHSKHQV  86     7KH 6XSUHPH VR ORQJDVWKH\RWKHUZLVHZLWKGUDZIURPWKHWULDO8QLWHG &RXUW LQ /RZHQILHOG Y 3KHOSV  86   6WDWHVY%LUGPDQ)G G&LU 7KH  IRXQG WHVWLI\LQJSURVHFXWRULQWKLVFDVHKRZHYHUKDGQRRWKHUUROH LQWKHFDVH)XUWKHUWKHVFRSHRIKLVWHVWLPRQ\ZDVQDUURZ 7KHXVHRImDJJUDYDWLQJFLUFXPVWDQFHVlLVQRWDQHQGLQ LWVHOIEXWDPHDQVRIJHQXLQHO\QDUURZLQJWKHFODVVRI GHDWKHOLJLEOHSHUVRQVDQGWKHUHE\FKDQQHOLQJWKHMXU\ V  ,Q WKH FRQWH[W RI D WHVWLI\LQJ IHGHUDO SURVHFXWRU WKH 6HFRQG &LUFXLW GLVFUHWLRQ  :H VHH QR UHDVRQ ZK\ WKLV QDUURZLQJ KDV IRXQG WKDW ZKLOH WHVWLPRQ\ E\ DQ\ PHPEHU RI D 8QLWHG 6WDWHV $WWRUQH\jV 6WDII LV GLVFRXUDJHG VXFK PHPEHUV DUH QRW GLVTXDOLILHG DV  &ROHPDQY0LWFKHOO 1R 1R &ROHPDQY0LWFKHOO  DQGSUREDWLYHLGHQWLI\LQJ'HIHQGDQWjVKDQGZULWLQJLQVHYHUDO GHDWKSHQDOW\GHFLVLRQPDNLQJSURFHVVLVQRWVKLHOGHGIURP PRWLRQVIURPWKH:DOWHUVFDVHZKLFKZDVWKHQFRPSDUHGWR MXGLFLDO UHYLHZ  )XUWKHU LQ%R\GH Y &DOLIRUQLD  86 WKHKDQGZULWLQJRQWKHZDOOGLUHFWO\ZKHUHWKHYLFWLPj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† % LQFOXGHVIHORQ\PXUGHUZKLFKGRHVQRWUHTXLUH HYLGHQFH YLRODWHG GXH SURFHVV EHFDXVH WKH HYLGHQFH ZDV SULRUFDOFXODWLRQDQGGHVLJQLPSRVLQJWKHGHDWKSHQDOW\IRU LQIODPPDWRU\ DQG GLVVLPLODU WR WKH 6WRUH\ FDVH  $OWKRXJK IHORQ\ PXUGHU LV FRQVLVWHQW ZLWK WKH (LJKWK $PHQGPHQW 3HWLWLRQHU FKDUDFWHUL]HV WKLV FODLP DV SURVHFXWRULDO XQGHU7LVRQY$UL]RQD86  ZKHUHWKH PLVFRQGXFW KH LV DFWXDOO\ FKDOOHQJLQJ D VWDWH FRXUW 6XSUHPH&RXUWIRXQGWKDWmPDMRUSDUWLFLSDWLRQLQWKHIHORQ\ HYLGHQWLDU\GHFLVLRQ)HGHUDOKDEHDVFRXUWVUHYLHZVWDWHFRXUW FRPPLWWHG FRPELQHG ZLWK UHFNOHVV LQGLIIHUHQFH WR KXPDQ HYLGHQWLDU\GHFLVLRQVRQO\IRUFRQVLVWHQF\ZLWKGXHSURFHVV OLIHLVVXIILFLHQWWRVDWLVI\WKHFXOSDELOLW\UHTXLUHPHQWlIRU 3DWWHUVRQY1HZWKHRWKHUDFWV@HYLGHQFHZDV JXLGDQFHl  *RGIUH\ Y *HRUJLD  86   WZRIROG  )LUVW WKH VWDWH V EXUGHQ RI SURRI RQ WKH ILUVW  FLWDWLRQVDQGLQWHUQDOTXRWDWLRQPDUNVRPLWWHG $V GHDWKSHQDOW\ VSHFLILFDWLRQ ZDV WR VKRZ D mFRXUVH RI WKH GLVWULFW FRXUW GLVFXVVHG LQ GHWDLO WKH 2KLR VFKHPH FRQGXFWl RQ WKH SDUW RI WKH GHIHQGDQW LQYROYLQJ WKH SURYLGHVVXFKJXLGDQFH)LUVW† $ SURYLGHVWKDWWKH NLOOLQJ RU DWWHPSWHG NLOOLQJ RI WZR RU PRUH SHUVRQV GHDWKSHQDOW\IRUDJJUDYDWHGPXUGHULVSURKLELWHGXQOHVVRQH 6HFRQGWKHHYLGHQFHZDVLQWURGXFHGSXUVXDQWWR>2KLR RIHLJKWDJJUDYDWLQJFLUFXPVWDQFHVFDQEHVKRZQ6HFRQGLI GHIHQGDQW LV FRQYLFWHG RI DJJUDYDWHG PXUGHU DQG DQ DJJUDYDWLQJFLUFXPVWDQFHFDQEHVKRZQ† % DIIRUGV ZLWQHVVHV LQ FDVHV ZKHUH WKH\ SOD\ QR RWKHU UROH $00 8QLWHG 6WDWHV Y GHIHQGDQW JUHDW ODWLWXGH LQ SUHVHQWLQJ PLWLJDWLQJ IDFWRUV $UPHGR6DUPLHQWR  )G   QG &LU    &ROHPDQY0LWFKHOO 1R 1R &ROHPDQY0LWFKHOO  $VQRWHGE\IRXUGLVVHQWLQJsXVWLFHVLQ0F&OHVNH\VXFK 5HYLVHG&RGH†@WRSURYHLGHQWLW\E\VKRZLQJ UDFLDOGLVSDULWLHVLQWKHFDSLWDOVHQWHQFLQJV\VWHPFDVWGRXEW WKDWWKHDSSHOODQWKDGXVHGDVLPLODUmVFKHPHSODQRU RQZKHWKHUFDSLWDOVHQWHQFLQJGHWHUPLQDWLRQVKDYHEHHQLQ V\VWHPlLQFRPPLWWLQJRWKHUDFWV SUDFWLFHSDUWLFXODUL]HGDVUHTXLUHGE\WKH(LJKWK$PHQGPHQW m>F@RQVLGHULQJWKHUDFHRIDGHIHQGDQWRUYLFWLPLQGHFLGLQJ 6WDWHY&ROHPDQ1(GDW LIWKHGHDWKSHQDOW\VKRXOGEHLPSRVHGLVFRPSOHWHO\DWRGGV ZLWK>WKH@FRQFHUQWKDWDQLQGLYLGXDOEHHYDOXDWHGDVDXQLTXH 7KH RWKHU DFWV HYLGHQFH VXSSRUWHG ERWK WKH FRXUVH RI KXPDQ EHLQJl  0F&OHVNH\  86 DW  %UHQQDQ s FRQGXFWDQGVLPLODUVFKHPHHOHPHQWVE\LOOXVWUDWLQJDVWKH GLVVHQWLQJ   6XEVHTXHQW 6XSUHPH &RXUW GHFLVLRQV mKDYH 2KLR6XSUHPH&RXUWQRWHGmD XQLTXHLGHQWLILDEOHSODQRI UHDIILUPHG WKDW WKH (LJKWK $PHQGPHQW PDQGDWHV DQ FULPLQDODFWLYLW\l,GDW7KHFKDUDFWHULVWLFVRIWKLVSODQ LQGLYLGXDOL]HGDVVHVVPHQWRIWKHDSSURSULDWHQHVVRIWKHGHDWK LQFOXGHG WDUJHWLQJ $IULFDQ$PHULFDQ SUHWHHQ DQG WHHQDJH SHQDOW\l3HQU\Y/\QDXJK86   JLUOVWKHIWRIDXWRPRELOHVPXUGHUE\OLJDWXUHVWUDQJXODWLRQ DQG GLVFDUGLQJ RI FRUSVHV LQ DEDQGRQHG EXLOGLQJV  0RVW 1HYHUWKHOHVV0F&OHVNH\ UHPDLQV FRQWUROOLQJ ODZ RQ WKH VLJQLILFDQWDEUDFHOHWPLVVLQJIURPWKHKRPHRIDSULRUYLFWLP DELOLW\ RI VWDWLVWLFDOO\EDVHG DUJXPHQWV FRQFHUQLQJ UDFLDO ZDVIRXQGXQGHUWKHYLFWLPjVERG\LQWKLVFDVH)XUWKHUWKH GLVSDULW\WRHVWDEOLVKDQXQFRQVWLWXWLRQDODSSOLFDWLRQRIWKH SUHMXGLFLDO SRWHQWLDO RI VXFK HYLGHQFH ZDV OHVVHQHG E\ WKH GHDWKSHQDOW\$OWKRXJKWKHUDFLDOLPEDODQFHLQWKH6WDWHRI WULDO FRXUWjV VSHFLILF LQVWUXFWLRQ WR WKH MXU\ WKDW ILQGLQJ 2KLRjVFDSLWDOVHQWHQFLQJV\VWHPLVJODULQJO\H[WUHPHLWLVQR 3HWLWLRQHUJXLOW\RIDJJUDYDWHGPXUGHULQWKLVFDVHUHTXLUHG PRUHVRWKDQWKHVWDWLVWLFDOGLVSDULWLHVFRQVLGHUHGDQGUHMHFWHG ILQGLQJ EH\RQG D UHDVRQDEOH GRXEW WKDW 3HWLWLRQHU KDG WKH E\ WKH 6XSUHPH &RXUW LQ 0F&OHVNH\ DV LQVXIILFLHQW WR VSHFLILFLQWHQWWRPXUGHU6WRUH\ mGHPRQVWUDWHDFRQVWLWXWLRQDOO\VLJQLILFDQWULVNRIUDFLDOELDV DIIHFWLQJWKHFDSLWDOVHQWHQFLQJSURFHVVl0F&OHVNH\ *LYHQWKHUHOHYDQFHRIWKHRWKHUDFWVHYLGHQFHWRERWKWKH 86DW$QGWKRXJKWKHUDFLDOLPEDODQFHLVWRVD\WKH GHDWKSHQDOW\VSHFLILFDWLRQjVFRXUVHRIFRQGXFWUHTXLUHPHQW OHDVW H[WUHPHO\ WURXEOLQJ ZH ILQG WKDW WKH SURVHFXWRULDO GLVFUHWLRQ XQGHU WKH 2KLR GHDWK SHQDOW\ VFKHPH DQG WKH GLVFRQFHUWLQJ UDFLDO LPEDODQFHV DFFRPSDQ\LQJ VXFK  2KLR 5HYLVHG &RGH †  SURYLGHV WKDW mDQ\ DFWV RI WKH GLVFUHWLRQ QHYHUWKHOHVV IDOO XQGHU FXUUHQW 6XSUHPH &RXUW GHIHQGDQW ZKLFK WHQG WR VKRZ KLV PRWLYH RU LQWHQW WKH DEVHQFH RI PLVWDNH ODZ ZLWKLQ WKH mFRQVWLWXWLRQDOO\ SHUPLVVLEOH UDQJH RI RU DFFLGHQW RQ KLV SDUW RU WKH GHIHQGDQW V VFKHPH SODQ RU V\VWHP LQ GRLQJ GLVFUHWLRQLQLPSRVLQJWKHGHDWKSHQDOW\l,GDW WKH DFW LQ TXHVWLRQ PD\ EH SURYHGl ZKHUH VXFK HOHPHQWV DUH PDWHULDO LQ D FULPLQDO FDVH 6HFRQG 3HWLWLRQHU DUJXHV WKDW 2KLRjV VFKHPH DV D  PDQGDWRU\ GHDWK SHQDOW\ VWDWXWH VKLHOGV GHDWK SHQDOW\ $V GHWDLOHG LQ ERWK WKH 2KLR 6XSUHPH &RXUW DQG GLVWULFW FRXUW GHFLVLRQV IURP MXGLFLDO UHYLHZ LQ YLRODWLRQ RI :RRGVRQ Y RSLQLRQV 3HWLWLRQHUjV FULPLQDO DFWLYLW\ LQ WKH VXPPHU RI  LQFOXGHG 1RUWK&DUROLQD86  2KLR5HYLVHG WKH DEGXFWLRQ DQG PXUGHU E\ OLJDWXUH VWUDQJXODWLRQ RI D QLQH \HDU ROG $IULFDQ$PHULFDQ JLUO LQ :LVFRQVLQ FDU WKHIW LQ ,OOLQRLV DEGXFWLRQ RI WZR &RGH† ' SURYLGHVWKDWDWWKHVHQWHQFLQJVWDJHRID QLQH RU WHQ\HDU ROG $IULFDQ$PHULFDQ JLUOV LQ ,QGLDQD RQH RI ZKRP ZDV WULDO D MXU\j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† ' WKH DQG DQ DGGLWLRQDO PXUGHU DQG FDU WKHIW LQ 2KLR 6HH &ROHPDQ   1( G DW  Q  &ROHPDQY0LWFKHOO 1R 1R &ROHPDQY0LWFKHOO  DQGHVWDEOLVKLQJDFRPPRQVFKHPHXQGHU2KLR5HYLVHG&RGH 92KLR'HDWK3HQDOW\6FKHPH †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m,W LV ZHOO VHWWOHG WKDW D RIWKHGHDWKSHQDOW\LQYLRODWLRQRIWKH(LJKWK$PHQGPHQW SULVRQHU VHHNLQJ KDEHDV UHOLHI LQ IHGHUDO FRXUW PXVW KDYH XQGHU)XUPDQY*HRUJLD86  6SHFLILFDOO\ SUHVHQWHGWKHFODLPXSRQZKLFKKHVHHNVUHOLHIWRWKHVWDWH 3HWLWLRQHU QRWHV WKH VWULNLQJ UDFLDO GLVFUHSDQF\ EHWZHHQ DSSHOODWHFRXUWVl*RQ]DOHVY(OR)G WK $IULFDQ$PHULFDQ UHSUHVHQWDWLRQ LQ WKH 2KLR SRSXODWLRQ &LU    m$ KDEHDV SHWLWLRQHU FDQ RQO\ RYHUFRPH JHQHUDOO\  DQGVXFKUHSUHVHQWDWLRQRQ2KLRjVGHDWKURZ SURFHGXUDOGHIDXOWLQWZRLQVWDQFHV)LUVWKHFDQGHPRQVWUDWH   FDXVHIRUWKHSURFHGXUDOGHIDXOWDQGDFWXDOSUHMXGLFHUHVXOWLQJ IURP WKH DOOHJHG FRQVWLWXWLRQDO HUURU    $OWHUQDWLYHO\ D +RZHYHU DQ\ VWDWLVWLFDOO\EDVHG DUJXPHQW OLNH GHIHQGDQW FDQ VKRZ WKDW IDLOXUH WR FRQVLGHU WKH FODLP ZLOO 3HWLWLRQHUjVFRQFHUQLQJUDFLDOGLVSDULWLHVLQWKHDSSOLFDWLRQRI UHVXOW LQ D IXQGDPHQWDO PLVFDUULDJH RI MXVWLFHl  *DOO Y WKH GHDWK SHQDOW\ PXVW FRQIURQW 0F&OHVNH\ Y .HPS  3DUNHU)G WK&LU FLWDWLRQVRPLWWHG  86    7KH 6XSUHPH &RXUW LQ  0F&OHVNH\ 3HWLWLRQHULQWKLVFDVHKDVQHLWKHUDWWHPSWHGWRGHPRQVWUDWH HVWDEOLVKHG D GHPDQGLQJ HYLGHQWLDU\ VWDQGDUG IRU ILQGLQJ FDXVHIRUIDLOLQJWRUDLVHKLVFORVLQJDUJXPHQWVFODLPVEHIRUH SURVHFXWRULDODEXVHRIGLVFUHWLRQLQVHHNLQJWKHGHDWKSHQDOW\ WKH 2KLR VWDWH FRXUWV QRU VKRZ D UHVXOWLQJ IXQGDPHQWDO m>E@HFDXVH GLVFUHWLRQ LV HVVHQWLDO WR WKH FULPLQDO MXVWLFH PLVFDUULDJH RI MXVWLFH  $FFRUGLQJO\ WKLV &RXUW PD\ QRW SURFHVVZHZRXOGGHPDQGH[FHSWLRQDOO\FOHDUSURRIEHIRUH UHYLHZ KLV SURVHFXWRULDO PLVFRQGXFW FODLPV LQ FRQQHFWLRQ ZHZRXOGLQIHUWKDWWKHGLVFUHWLRQKDVEHHQDEXVHGl,GDW ZLWKFORVLQJDUJXPHQWVDWWKHJXLOWDQGSHQDOW\SKDVHVRIWKH 7KHSURRIQRWPHHWLQJWKLVVWDQGDUGLQ0F&OHVNH\ZDV WULDO DVWDWLVWLFDOVWXG\RQWKHLPSRVLWLRQRIWKHGHDWKVHQWHQFHLQ *HRUJLD WKDW IRXQG DPRQJ RWKHU UDFLDO GLVSDULWLHV WKDW mSURVHFXWRUV VHHN WKH GHDWK SHQDOW\ IRU  RI EODFN GHIHQGDQWVZLWKZKLWHYLFWLPVEXWIRURQO\RIZKLWH GHIHQGDQWV ZLWK EODFN YLFWLPV  ,G DW  %UHQQDQ s  GLVVHQWLQJ FLWDWLRQRPLWWHG  0HULWV UHYLHZ RI 3HWLWLRQHUjV FODLPV ZRXOG QRW KDYH DIIHFWHG WKH RXWFRPH RI RXU GHFLVLRQ 8QGHU 8QLWHG 6WDWHV Y &DUUROO  )G   WK &LU   QRQIODJUDQW LPSURSHU SURVHFXWRULDO UHPDUNV PD\ JLYH ULVH WR D QHZ WULDO RQO\ LI SURRI RI GHIHQGDQWjV JXLOW ZDV QRW RYHUZKHOPLQJ GHIHQGDQW REMHFWHG WR WKH LPSURSHU UHPDUNV DW WULDO DQG WKH FRXUW IDLOHG WR FXUH WKH HUURU ZLWK DQ DGPRQLVKPHQW WR WKH MXU\ $W WKH  YHU\ OHDVW 3HWLWLRQHU GLG QRW REMHFW WR WKH UHPDUNV DW WULDO DQG WKXV ZRXOG 5DFLDO ,PEDODQFH RQ 'HDWK 5RZ 3URPSWV &DOO IRU sXU\ WR *HW QRW EH HQWLWOHG WR UHYHUVDO XQGHU &DUUROO 'DWD  7+( 3/$,1 '($/(5 $XJXVW    :/