5(&200(1'(' )25 )8//7(;7 38%/,&$7,21 +RSVRQY'DLPOHU&KU\VOHU&RUS 1R 3XUVXDQW WR 6L[WK &LUFXLW 5XOH (/(&7521,& &,7$7,21 )(' $SS 3 WK &LU WKH DFWXDO UHDVRQ IRU WKH FRPSDQ\jV DFWLRQV ZDV UDFLDO )LOH 1DPH D S GLVFULPLQDWLRQ 7KHUH LV LQ WKLV UHFRUG KRZHYHU QR LQGLFDWLRQ ZKDWHYHU WKDW WKH GHIHQGDQWjV UHOLDQFH RQ WKH HYDOXDWLRQVLQTXHVWLRQZDVRWKHUWKDQOHJLWLPDWH1RULVWKHUH 81,7('67$7(6&28572)$33($/6 DQ\UHDVRQWRGLVEHOLHYHWKHFRPSDQ\jVDVVHUWLRQWKDWWKHILIWK )257+(6,;7+&,5&8,7 DQG ODVW FDQGLGDWH KDG PDQDJHPHQW H[SHULHQFH ZLWK WKH BBBBBBBBBBBBBBBBB FRPSDQ\ WKDW ZDV VXSHULRU WR +RSVRQjV $JDLQ LW ZDV +RSVRQjVEXUGHQWRSURYHWKDWWKHEXVLQHVVUHDVRQVFLWHGE\ WKHGHIHQGDQWIRULWVGHFLVLRQVZHUHSUHWH[WXDOQRWWKHRWKHU ZD\DURXQG ('',( +23621 ; 3ODLQWLII$SSHOODQW $VWKHPDMRULW\FRQFHGHVRXUFLUFXLWSUHFHGHQWUHFRJQL]HV WKDW m7LWOH 9,, GRHV QRW GLPLQLVK WUDGLWLRQDO PDQDJHPHQW 1R SUHURJDWLYHVLQFKRRVLQJDPRQJTXDOLILHGFDQGLGDWHVl:UHQQ Y Y*RXOG)G WK&LU ,QP\MXGJPHQW ! LW ZDV WKH H[HUFLVH RI WKDW SUHURJDWLYH WKDW OHG WR WKH '$,0/(5&+5<6/(5 GHIHQGDQWjV DFWLRQV LQ WKLV FDVH &HUWDLQO\ , FDQ VHH QR &25325$7,21 JHQXLQHLVVXHRIPDWHULDOIDFWWKDWZRXOGOHDGWRWKHRSSRVLWH 'HIHQGDQW$SSHOOHH FRQFOXVLRQ 8QOLNH WKH PDMRULW\ P\ FUHGXOLW\ LV QRW mVWUDLQHGl E\ WKLV UHFRUG 7KHUH ZDV REYLRXVO\ KHDWHG 1 FRPSHWLWLRQIRUWKHSRVLWLRQVLQTXHVWLRQLQQRFDVHZHUH WKHUHIHZHUWKDQDSSOLFDQWVIRUSURPRWLRQDQGLQRQHFDVH $SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW WKHUH ZHUH DSSOLFDQWV 8QGRXEWHGO\ PDQ\ RI WKHVH IRUWKH(DVWHUQ'LVWULFWRI0LFKLJDQDW'HWURLW DSSOLFDQWVZHUHDWOHDVWPLQLPDOO\TXDOLILHGIRUSURPRWLRQ 1R nsRKQ&RUEHWW2j0HDUD'LVWULFWsXGJH EXWRQO\RQHFRXOGEHFKRVHQLQHDFKLQVWDQFHDQGLWZDVWKH FRPSDQ\jV SUHURJDWLYH WR GHWHUPLQH ZKLFK DPRQJ WKRVH $UJXHG sXQH TXDOLILHGWRSURPRWH+RSVRQKDGEHHQWKHEHQHILFLDU\RIDW OHDVWWKUHHVXFKSURPRWLRQVEHWZHHQ DQG 3HUKDSV 'HFLGHGDQG)LOHG 6HSWHPEHU DIWHUVRPH\HDUVZLWKWKHFRPSDQ\KHKDGDGYDQFHGWRWKH OLPLWWRZKLFKKLVDELOLWLHVFRXOGFDUU\KLPDVZHDOOGRDW %HIRUH .(,7+DQG'$8*+75(<&LUFXLWsXGJHV VRPHSRLQWLQRXUFDUHHUV7KDWFRQFOXVLRQLVDVVRXQGEDVHG 0$5%/(<'LVWULFWsXGJH RQWKLVUHFRUGDVWKHPDMRULW\jVVSHFXODWLRQWKDWKLVIDLOXUHWR DGYDQFH IDUWKHU ZDV VRPHKRZ WKH SURGXFW RI XQODZIXO GLVFULPLQDWLRQ )RU WKHVH UHDVRQV , ZRXOG DIILUP WKH MXGJPHQW RI WKH GLVWULFWFRXUW 7KH +RQRUDEOH $OJHQRQ / 0DUEOH\ 8QLWHG 6WDWHV 'LVWULFW sXGJH IRU WKH 6RXWKHUQ 'LVWULFW RI 2KLR VLWWLQJ E\ GHVLJQDWLRQ +RSVRQY'DLPOHU&KU\VOHU&RUS 1R 1R +RSVRQY'DLPOHU&KU\VOHU&RUS BBBBBBBBBBBBBBBBB QRWUHYHDOWKHEDVLVIRUKLVRSLQLRQlWKDWm+RSVRQjVUDFHZDV D IDFWRU LQ WKH FRPSDQ\jV GHFLVLRQ WR GHQ\ KLP WKH &2816(/ SURPRWLRQVIRUZKLFKKHDSSOLHGl)RUWKLVUHDVRQ6ODWHUjV RSLQLRQPD\ZHOOEHLQDGPLVVLEOHIRUODFNRIDIRXQGDWLRQDQ $5*8(' sDPLO $NKWDU $.+7$5 68&+(5 7UR\ RXWFRPH WKDW LQ P\ MXGJPHQW VHYHUHO\ XQGHUFXWV WKH 0LFKLJDQIRU$SSHOODQW0DUN:0F,QHUQH\&/$5.+,// PDMRULW\jV ODWHU GHWHUPLQDWLRQ WKDW 6ODWHUjV DSSDUHQWO\ 3/&'HWURLW0LFKLJDQIRU$SSHOOHH21%5,() sDPLO JURXQGOHVVRSLQLRQQHYHUWKHOHVVmFRQVWLWXWH>V@FLUFXPVWDQWLDO $NKWDU $.+7$5 68&+(5 7UR\ 0LFKLJDQ IRU HYLGHQFHRIGLVFULPLQDWLRQl $SSHOODQW 0DUN : 0F,QHUQH\ sDFN 9DQ+RRUHOEHNH &/$5.+,//3/&'HWURLW0LFKLJDQIRU$SSHOOHH 7KHGLVWULFWFRXUWDOVRGLVFRXQWHGWKHSODLQWLIIjVVWDWLVWLFDO HYLGHQFHILQGLQJWKDWWKHGLVSDULW\EHWZHHQWKHSHUFHQWDJHRI 0$5%/(<'sGHOLYHUHGWKHRSLQLRQRIWKHFRXUWLQ $IULFDQ$PHULFDQ VHFXULW\ JXDUGV DQG WKDW RI $IULFDQ ZKLFK .(,7+ s MRLQHG '$8*+75(< s SS $PHULFDQPDQDJHUVFRXOGQRWEHXVHGWRHVWDEOLVKSUHWH[W GHOLYHUHGDVHSDUDWHGLVVHQWLQJRSLQLRQ EHFDXVH WKHUH ZDV QR HYLGHQFH mWR VKRZ WKH QXPEHU RI $IULFDQ$PHULFDQDSSOLFDQWVIRUWKRVH>PDQDJHPHQW@MREVRU BBBBBBBBBBBBBBBBB WKHLUTXDOLILFDWLRQVl7KHIDFWWKDWWKHVWDWLVWLFDOHYLGHQFHZDV WKXV OHJDOO\ mLQFRPSOHWHl DV WKH GLVWULFW FRXUW FRUUHFWO\ 23,1,21 GHVFULEHGLWLVVLPSO\QRWDGGUHVVHGE\WKHPDMRULW\DOWKRXJK BBBBBBBBBBBBBBBBB WKH VWDWLVWLFV DUH FLWHG DV D EDVLV IRU FRQFOXGLQJ WKDW WKH $/*(121/0$5%/(<'LVWULFWsXGJH(GGLH+RSVRQ GHIHQGDQWjVSURIIHUHGUHDVRQIRULWVDFWLRQVZDVSUHWH[WXDO sULVDORQJWLPHHPSOR\HHRI'DLPOHU&KU\VOHU&RUSRUDWLRQ +HQFH,FDQQRWDJUHHZLWKWKHPDMRULW\jVGHFLVLRQWRVHQG ZKR KDV DSSOLHG XQVXFFHVVIXOO\ IRU VHYHUDO RSHQ SRVLWLRQV WKHFDVHWRDMXU\EDVHG PHUHO\RQ6ODWHUj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o WKH FRPSDQ\jV GHWHUPLQDWLRQ WKDW RWKHU VXSHULRU WR WKH SODLQWLIIjV 7KH PDMRULW\ LQGLFDWHV WKDW DSSOLFDQWVZHUHPRUHTXDOLILHGWKDQ+RSVRQoZDVSUHWH[WXDO WHVWLPRQ\ UHJDUGLQJ WKH HYDOXDWLRQV VKRXOG EH GLVFRXQWHG 7KHGLVWULFWFRXUWDJUHHGDQGJUDQWHGVXPPDU\MXGJPHQWLQ EHFDXVHLQHDFKFDVHWKHGHIHQGDQWmIDLOHGWRLQGLFDWHWKH IDYRU RI 'DLPOHU&KU\VOHU +RSVRQ QRZ DSSHDOV IURP WKDW H[WHQWWRZKLFK>WKHDSSOLFDQWjV@HYDOXDWLRQVZHUHEHWWHUWKDQ RUGHUDUJXLQJWKDWWKHGLVWULFWFRXUWHUUHGLQLWVFRQFOXVLRQ +RSVRQjVl%XWWKLVUXOLQJWXUQVWKH0F'RQQHOO'RXJODV WKDWKHIDLOHGWRUDLVHDJHQXLQHLVVXHRIPDWHULDOIDFWZLWK DQDO\VLVRQLWVKHDG7KDWDQDO\VLVFOHDUO\DQGXQHTXLYRFDOO\ UHVSHFW WR ZKHWKHU 'DLPOHU&KU\VOHUjV OHJLWLPDWH QRQ SODFHV WKH EXUGHQ RQ WKH SODLQWLII WR SURYH WKDW WKH GLVFULPLQDWRU\UHDVRQIRUVHOHFWLQJRWKHUDSSOLFDQWVIRUFHUWDLQ SHUIRUPDQFHHYDOXDWLRQVZHUHEHLQJXVHGDVDSUHWH[WZKHQ RSHQ SRVLWLRQV ZDV SUHWH[WXDO 7KH GLVWULFW FRXUW SURSHUO\ +RSVRQY'DLPOHU&KU\VOHU&RUS 1R 1R +RSVRQY'DLPOHU&KU\VOHU&RUS BBBBBBBBBBBBBBB H[HUFLVHGMXULVGLFWLRQRYHUWKLVPDWWHUSXUVXDQWWR86& DQG 7KLV &RXUWjV DSSHOODWH MXULVGLFWLRQ LV ',66(17 SURSHUXQGHU86& BBBBBBBBBBBBBBB )RUWKHUHDVRQVGLVFXVVHGEHORZWKLV&RXUWILQGVWKDWWKH 0$57+$ &5$,* '$8*+75(< &LUFXLW sXGJH GLVWULFWFRXUWHUUHGLQLWVFRQFOXVLRQWKDW3ODLQWLII$SSHOODQW GLVVHQWLQJ %HFDXVH , FRQFOXGH WKDW WKH GLVWULFW FRXUW ZDV IDLOHG WR UDLVH D JHQXLQH LVVXH RI PDWHULDO IDFW UHJDUGLQJ FRUUHFW LQ JUDQWLQJ VXPPDU\ MXGJPHQW WR WKH GHIHQGDQW , 'HIHQGDQW$SSHOOHHjVOHJLWLPDWHQRQGLVFULPLQDWRU\UHDVRQ UHVSHFWIXOO\GLVVHQWIURPWKHPDMRULW\j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sU m+RSVRQl DQ$IULFDQ$PHULFDQEHJDQ WKH SODLQWLII IRU WKH SRVLWLRQV LQ TXHVWLRQ 7KXV WKH ZRUNLQJIRU'DLPOHU&KU\VOHU&RUSRUDWLRQ m'DLPOHU&KU\VOHUl GLVSRVLWLYH TXHVWLRQ EHFRPHV ZKHWKHU WKH SODLQWLII FDQ RU m&KU\VOHUl LQ 'DLPOHU&KU\VOHUjV VDODULHG HVWDEOLVKSUHWH[WRQWKHSDUWRIWKHGHIHQGDQWLQUHO\LQJXSRQ ZRUNIRUFH LV RUJDQL]HG IRU SXUSRVHV RI VDODU\ DQG WKLVMXVWLILFDWLRQIRULWVDFWLRQV UHVSRQVLELOLW\ LQWR D EDQG V\VWHP 6DODU\ EDQGV UXQ IURP %DQG WR%DQG (PSOR\HHVDW%DQG DQGDERYHDUH 7KHPDMRULW\FRQFOXGHVWKDWWKHUHLVVXIILFLHQWHYLGHQFHLQ UHJDUGHG DV H[HFXWLYHV RI WKH FRUSRUDWLRQ 6LJQLILFDQW WR WKHUHFRUGWRJLYHULVHWRDJHQXLQHLVVXHRIPDWHULDOIDFWRQ +RSVRQjV ODZVXLW VXSHUYLVRUV DQG PDQDJHUV ZLWKLQ WKH WKH TXHVWLRQ RI SUHWH[W EDVHG VROHO\ RQ D FRPELQDWLRQ RI VHFXULW\RSHUDWLRQRIWKHFRUSRUDWLRQDUHLQ%DQGV RU VXSHUYLVRU 6ODWHUjV RSLQLRQ WKDW UDFLDO GLVFULPLQDWLRQ JHQHUDOO\GHSHQGLQJRQWKHVL]HRIWKHSODQWLQZKLFKWKH\ DFFRXQWHGIRUWKHFRPSDQ\jVDFWLRQVZLWKUHJDUGWR+RSVRQ ZRUN 7KH 6HQLRU 0DQDJHU RI 3ODQW 6HFXULW\ 2SHUDWLRQV DQGVWDWLVWLFDOHYLGHQFHVKRZLQJDGLVSDULW\EHWZHHQPLQRULW\ 'DYLG6WHSDQLDN m6WHSDQLDNl LVD%DQG H[HFXWLYH UHSUHVHQWDWLRQ LQ WKH ZRUN IRUFH DQG WKDW LQ WKH UDQNV RI PDQDJHPHQW,FDQQRWDJUHHZLWKWKLVFRQFOXVLRQSULPDULO\ +RSVRQZDVRULJLQDOO\KLUHGE\&KU\VOHUDVDQDVVHPEO\ EHFDXVHWKHHYLGHQFHFLWHGLVVLPSO\LQVXIILFLHQWWRFUHDWHD ZRUNHUEXWEHFDPHDVHFXULW\JXDUGDIHZPRQWKVODWHU,Q JHQXLQHLVVXHRIIDFWDQGEHFDXVHWKHSODLQWLIIKDVRWKHUZLVH KHZDVSURPRWHGWRDVDODULHGVXSHUYLVRU\SRVLWLRQLQ IDLOHGWRVKRZWKDWWKHOHJLWLPDWHEXVLQHVVUHDVRQSXWIRUZDUG VHFXULW\ +RSVRQ FRQWLQXHG KLV HGXFDWLRQ GXULQJ KLV E\WKHGHIHQGDQWLVSUHWH[WXDO HPSOR\PHQW ZLWK WKH FRPSDQ\ DQG HDUQHG DQ DVVRFLDWHjV GHJUHHLQVHFXULW\DQGORVVSUHYHQWLRQDEDFKHORUjVGHJUHHLQ 7KH PDMRULW\ DJUHHV ZLWK WKH GLVWULFW FRXUW WKDW 6ODWHUjV VDIHW\PDQDJHPHQWDQGDPDVWHUjVGHJUHHLQDGPLQLVWUDWLRQ WHVWLPRQ\GRHVQRWFRQVWLWXWHGLUHFWHYLGHQFHmWKDWXQODZIXO GLVFULPLQDWLRQZDVDPRWLYDWLQJIDFWRULQ'DLPOHU&KU\VOHUjV DFWLRQVlSRLQWLQJRXWWKDW6ODWHUmKDGQRLQYROYHPHQWLQWKH GHFLVLRQPDNLQJSURFHVVZLWKUHVSHFWWRWKHSDUWLFXODUMREVDW LVVXHl,QWKLVUHJDUGWKHPDMRULW\DOVRQRWHVWKDW6ODWHUmGLG 9 WKH WLPH WKDW KH VWDUWHG ZRUNLQJ IRU WKH FRPSDQ\ LW ZDV VWLOO WKH &KU\VOHU &RUSRUDWLRQ +RSVRQY'DLPOHU&KU\VOHU&RUS 1R 1R +RSVRQY'DLPOHU&KU\VOHU&RUS ,Q DSSDUHQWO\LQFRQQHFWLRQZLWKDUHGXFWLRQRILWV 7KH&RXUWILQGVWKDW+RSVRQjVHYLGHQFHUDLVHVDJHQXLQH ZRUNIRUFH&KU\VOHUGHPRWHG+RSVRQWRDQRQVDODULHGJXDUG LVVXHZLWKUHVSHFWWRZKHWKHUWKHSURIIHUHGUHDVRQVFRQVWLWXWH SRVLWLRQ6KRUWO\WKHUHDIWHU+RSVRQDQGRWKHUVDIIHFWHGE\ SUHWH[WIRUGLVFULPLQDWLRQ'U6DVHjVVWDWLVWLFVZKHQFRXSOHG WKHZRUNIRUFHUHGXFWLRQEURXJKWVXLWDJDLQVWWKHFRPSDQ\ ZLWK 6ODWHUjV WHVWLPRQ\ WHQG WR VKRZ WKDW LI 'HIHQGDQW DOOHJLQJ WKDW WKHLU GHPRWLRQV ZHUH WKH UHVXOW RI UDFH $SSHOOHHjV HPSOR\PHQW GHFLVLRQV ZHUH QRW EDVHG RQ GLVFULPLQDWLRQ $V SDUW RI WKH VHWWOHPHQW RI WKDW ODZVXLW OHJLWLPDWHFULWHULDWKHQWKH\ZHUHEDVHGRQUDFLDODQLPXV,Q &KU\VOHU UHSURPRWHG +RSVRQ WR D VDODULHG VXSHUYLVRU\ IDFWZKLOHWKHVWDWLVWLFDOGLVFUHSDQF\PD\KDYHDULVHQGXHWR SRVLWLRQDWRQHRIWKHFRPSDQ\jVDVVHPEO\SODQWV%HWZHHQ VRPH RWKHU IDFWRU QRW \HW WDNHQ LQWR DFFRXQW 6ODWHUjV DQG &KU\VOHU SURPRWHG +RSVRQ WKUHH WLPHV WR WHVWLPRQ\ LQGLFDWHV WKDW WKH RQO\ SRVVLEOH H[SODQDWLRQ IRU KLJKHUVDODULHGSRVLWLRQVDWWKDWSODQW,QSDUWLFXODULQ 'HIHQGDQW$SSHOOHHjV HPSOR\PHQW GHFLVLRQV RWKHU WKDQ KHZDVSURPRWHGWRWKHSRVLWLRQRI&RPSOH[$GPLQLVWUDWRUo OHJLWLPDWHHPSOR\PHQWFULWHULDLVUDFLDOGLVFULPLQDWLRQ D OHDGHUVKLS SRVLWLRQ LQ WKH VHFXULW\ RSHUDWLRQ DW D JLYHQ FRPSOH[ 7KH &RPSOH[ $GPLQLVWUDWRU VXEVWLWXWHV IRU WKH 7KHUHIRUH WKH &RXUW ILQGV WKDW 3ODLQWLII$SSHOODQW KDV &RPSOH[6HFXULW\0DQDJHULQWKHPDQDJHUjVDEVHQFH UDLVHGDJHQXLQHLVVXHRIPDWHULDOIDFWZLWKUHVSHFWWRZKHWKHU 'HIHQGDQW$SSHOOHHjVSURIIHUHGUHDVRQVIRULWVHPSOR\PHQW %HJLQQLQJLQPLG +RSVRQDSSOLHGZLWKRXWVXFFHVV DFWLRQVZHUHSUHWH[WXDODQGKHUHE\5(9(56(6WKHGLVWULFW IRUVHYHQMRERSHQLQJVLQWKHFRPSDQ\ DOORIZKLFKZHUH FRXUWjVMXGJPHQWJUDQWLQJVXPPDU\MXGJPHQWWR'HIHQGDQW SRVWHGLQWHUQDOO\DW'DLPOHU&KUV\VOHU )RUHDFKMRE+RSVRQ $SSHOOHH ZLWK UHVSHFW WR 3ODLQWLII$SSHOODQWjV FODLP RI VXEPLWWHGDQDSSOLFDWLRQEXWZDVUHMHFWHGLQIDYRURIDZKLWH GLVFULPLQDWLRQEURXJKWSXUVXDQWWR0LFKLJDQjV(OOLRWW/DUVHQ HPSOR\HH6WHSDQLDNPDGHHDFKRIWKHHPSOR\PHQWGHFLVLRQV &LYLO5LJKWV$FW0LFK&RPS/DZV HWVHT IRU WKHVH SRVLWLRQV ZLWK WKH DVVLVWDQFH RI YDULRXV RWKHU PDQDJHUV 7KH SRVLWLRQV IRU ZKLFK +RSVRQ DSSOLHG DQG ,9&21&/86,21 6WHSDQLDNjVSURIIHUHGUHDVRQVIRUKLULQJRWKHUHPSOR\HHVDUH DVIROORZV 3ODLQWLII$SSHOODQW KDV SUHVHQWHG VXIILFLHQW HYLGHQFH WR UDLVHDJHQXLQHLVVXHRIPDWHULDOIDFWZLWKUHVSHFWWRZKHWKHU )LUVW LQ $XJXVW +RSVRQ DSSOLHG IRU D %DQG 'HIHQGDQW$SSHOOHHjVOHJLWLPDWHQRQGLVFULPLQDWRU\UHDVRQV VXSHUYLVRU\ SRVLWLRQ DV D VHFXULW\ PDQDJHU IRU WKH 0RSDU IRULWVHPSOR\PHQWGHFLVLRQVDUHSUHWH[WXDODQGZKHWKHUWKH\ 3DUWV'LYLVLRQ7KHMRESRVWLQJIRUWKLVSRVLWLRQFDOOHGIRUD DUHDSUHWH[WIRUGLVFULPLQDWLRQ7KHUHIRUHWKHMXGJPHQWRI EDFKHORUjV GHJUHH LQ ORVV SUHYHQWLRQ FULPLQDO MXVWLFH RU D WKH GLVWULFW FRXUW LV 5(9(56(' DQG WKH FDVH LV UHODWHGILHOGDQGILYHWRVHYHQ\HDUVRIVXSHUYLVRU\H[SHULHQFH 5(0$1'('IRUIXUWKHUSURFHHGLQJVLQDFFRUGDQFHZLWKWKLV 2SLQLRQ +RSVRQ DWWULEXWHG UHWDOLDWLRQ DV WKH FDXVH IRU KLV QRW EHLQJ DEOH WR REWDLQ WZR RI WKH VHYHQ SRVLWLRQV IRU ZKLFK KH DSSOLHG +H KDV DEDQGRQHG KLV UHWDOLDWLRQ FODLP RQ DSSHDO DQG WKHUHIRUH WKH &RXUW ZLOO DGGUHVV RQO\ WKH ILYH HPSOR\PHQW DFWLRQV FXUUHQWO\ DW LVVXH ,Q DGGLWLRQ +RSVRQ FODLPV WKDW LQ 'HFHPEHU KH ZDV GHPRWHG IURP KLV SRVLWLRQ DV FRPSOH[ DGPLQLVWUDWRU WR WKH SRVLWLRQ RI OLQH VXSHUYLVRU +RSVRQ KDV QRW FODLPHG KRZHYHU WKDW WKLV GHPRWLRQ ZDV EDVHG RQ UDFH +RSVRQY'DLPOHU&KU\VOHU&RUS 1R 1R +RSVRQY'DLPOHU&KU\VOHU&RUS (OOLRWW/DUVHQ&LYLO5LJKWV$FW LQ mVHFXULW\ILUH SUHYHQWLRQl 7ZHQW\WKUHH HPSOR\HHV LQFOXGLQJ +RSVRQ DSSOLHG IRU WKH SRVLWLRQ $FFRUGLQJ WR 7KHEDVLFEXUGHQVKLIWLQJDQDO\VLVDSSOLFDEOHWR+RSVRQj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mUDWHGPRUHKLJKO\WKDQ0U+RSVRQLQ WKDWWKHHPSOR\HUjVVWDWHGUHDVRQLVSUHWH[WIRUGLVFULPLQDWLRQ KLVDQQXDOHYDOXDWLRQl 6HH/\WOHY0DODG\ 1:G 0LFK ,Q /\WOHWKHFRXUWVWDWHG 6HFRQG LQ 1RYHPEHU +RSVRQ DSSOLHG IRU WKH SRVLWLRQRIWUDLQLQJDGPLQLVWUDWRUDOVRD%DQG SRVLWLRQ >'@LVSURRI RI DQ HPSOR\HUjV DUWLFXODWHG UHDVRQ IRU DQ 'DLPOHU&KU\VOHUjVSRVWLQJIRUWKLVSRVLWLRQLQGLFDWHVWKDWD DGYHUVH HPSOR\PHQW GHFLVLRQ GHIHDWV VXPPDU\ EDFKHORUjVGHJUHHLQFULPLQDOMXVWLFHHGXFDWLRQRUDUHODWHG GLVSRVLWLRQRQO\LIVXFKGLVSURRIDOVRUDLVHVDWULDEOHLVVXH ILHOGLVUHTXLUHGDORQJZLWKILYH\HDUVVXSHUYLVRU\H[SHULHQFH WKDW GLVFULPLQDWRU\ DQLPXV ZDV D PRWLYDWLQJ IDFWRU LQ mVHFXULW\ILUH SUHYHQWLRQl +RSVRQ DQG VL[WHHQ RWKHU XQGHUO\LQJ WKH HPSOR\HUjV DGYHUVH DFWLRQ ,Q RWKHU HPSOR\HHVSRVWHGIRUWKHMRE:LWKUHVSHFWWRWKLVSRVLWLRQ ZRUGVSODLQWLIIPXVWQRWPHUHO\UDLVHDWULDEOHLVVXHWKDW 6WHSDQLDNVWDWHVWKDWKHDQGWKHRWKHUGHFLVLRQPDNHUFKRVH WKHHPSOR\HUjVSURIIHUHGUHDVRQZDVSUHWH[WXDOEXWWKDW 6HDQsR\FHDZKLWHPDOHZKRPWKH\FRQVLGHUHGWREHWKH LWZDVDSUHWH[WIRUGLVFULPLQDWLRQ PRVWTXDOLILHGSHUVRQIRUWKHMRE$FFRUGLQJWR6WHSDQLDN sR\FHKDGH[SHULHQFHWUDLQLQJVHFXULW\HPSOR\HHVDVDVHFXULW\ ,G$OWKRXJK/\WOHZDVLVVXHGEHIRUH5HHYHVLWDSSHDUVWKDW PDQDJHU ZKLOH +RSVRQ ODFNHG H[SHULHQFH DV D VHFXULW\ /\WOHLVVWLOOJRRGODZZLWKUHVSHFWWRWKLVLVVXHLQ0LFKLJDQ PDQDJHU,QDGGLWLRQ6WHSDQLDNQRWHVWKDWsR\FHZDVUDWHG 7KXVKDYLQJFRQFOXGHGWKDW+RSVRQKDVPHWKLVEXUGHQRI PRUHKLJKO\WKDQ+RSVRQLQKLVDQQXDOHYDOXDWLRQV UDLVLQJ D JHQXLQH LVVXH RI PDWHULDO IDFW ZLWK UHVSHFW WR ZKHWKHU'DLPOHU&KU\VOHUjVVWDWHGUHDVRQVIRULWVHPSOR\PHQW 7KLUGRQ0DUFK +RSVRQDSSOLHGIRUWKHSRVLWLRQ GHFLVLRQVDUHSUHWH[WWKH&RXUWQRZWXUQVWRWKHTXHVWLRQRI RIVXSSRUWVHUYLFHVDQDO\VWD%DQG SRVLWLRQ$FFRUGLQJ ZKHWKHU+RSVRQKDVUDLVHGDJHQXLQHLVVXHRIPDWHULDOIDFW WRWKHSRVWLQJWKLVSRVLWLRQmUHTXLUHVDEDFKHORUjVGHJUHHl ZLWKUHVSHFWWRZKHWKHU'DLPOHU&KU\VOHUjVVWDWHGUHDVRQVDUH 7KHSRVWLQJDOVRLQGLFDWHVKRZHYHUWKDWmVLJQLILFDQWUHOHYDQW SUHWH[WIRUGLVFULPLQDWLRQ H[SHULHQFH PD\ EH FRQVLGHUHG LQ OLHX RI D GHJUHHl 7KH SRVLWLRQ IXUWKHU UHTXLUHV ILYH \HDUV RI mSURJUHVVLYHO\ UHVSRQVLEOH H[SHULHQFH LQ VHFXULW\ RU ODERU UHODWLRQV PDQDJHPHQWl7KLUW\HLJKWSHRSOHDSSOLHGIRUWKHSRVLWLRQ LQFOXGLQJ +RSVRQ 8OWLPDWHO\ 0LFKDHO 6HSDQLF D ZKLWH 0LFKLJDQ ODZ DOVR DFFHSWV VWDWLVWLFDO HYLGHQFH DV SURRI WKDW WKH PDOHZDVKLUHGWRILOOWKHSRVLWLRQ6WHSDQLDNVWDWHVWKDWKH GHIHQGDQWjV OHJLWLPDWH QRQGLVFULPLQDWRU\ UHDVRQ IRU LWV HPSOR\PHQW GHFLVLRQV FRQVWLWXWHV SUHWH[W 6HH 'L[RQ Y :: *UDLQJHU ,QF DQGWKHRWKHUGHFLVLRQPDNHUGHWHUPLQHGWKDW6HSDQLFZDVWKH 1:G 0LFK &W $SS m7KH XVH RI VWDWLVWLFV PD\ EH PRVWTXDOLILHGSHUVRQIRUWKHMREGHVSLWHWKHIDFWWKDWXQOLNH UHOHYDQW LQ HVWDEOLVKLQJ D SULPD IDFLH FDVH RI GLVFULPLQDWLRQ RU LQ VKRZLQJ +RSVRQ KH ODFNHG D EDFKHORUjV GHJUHH $FFRUGLQJ WR WKDW WKH SURIIHUHG UHDVRQV IRU D GHIHQGDQWjV FRQGXFW DUH SUHWH[WXDOl +RSVRQY'DLPOHU&KU\VOHU&RUS 1R 1R +RSVRQY'DLPOHU&KU\VOHU&RUS 6WHSDQLDNmODERUUHODWLRQVDFWLYLWLHVZRXOGEHDVLJQLILFDQW DUH HQWLWOHG WR VXPPDU\ MXGJPHQW XQOHVV WKH SODLQWLIIV FDQ FRPSRQHQWlRIWKHSRVLWLRQDQG6HSDQLFZDVFKRVHQIRUKLV HLWKHUVKRZWKDWWKHGHIHQGDQWVjH[SODQDWLRQVDUHLQKHUHQWO\ mVLJQLILFDQW H[SHULHQFH DV D PDQDJHPHQW UHSUHVHQWDWLYH LQ VXVSHFWRUWKHSODLQWLIIVSUHVHQWRWKHUGLUHFWRUFLUFXPVWDQWLDO ODERUUHODWLRQVlZKLFK+RSVRQODFNHG,QDGGLWLRQ6WHSDQLDN HYLGHQFHVXJJHVWLQJWKDWWKHSURIIHUHGUHDVRQVDUHQRWWUXH QRWHVWKDW6HSDQLFZDVmUDWHGPRUHKLJKO\WKDQ0U+RSVRQ 7KXVE\SUHVHQWLQJVWDWLVWLFDOHYLGHQFHDORQJZLWK6ODWHUjV LQKLVDQQXDOHYDOXDWLRQVl WHVWLPRQ\+RSVRQKDVUDLVHGDJHQXLQHLVVXHZLWKUHVSHFWWR ZKHWKHU 'DLPOHU&KU\VOHUjV SURIIHUHG UHDVRQV IRU LWV )RXUWK LQ sXQH +RSVRQ DSSOLHG IRU D VHFXULW\ HPSOR\PHQWGHFLVLRQVFRQVWLWXWHSUHWH[W PDQDJHPHQWSRVLWLRQDW'DLPOHU&KU\VOHUjV'HWURLW&RPSOH[ 7KHUHTXLUHPHQWVIRUWKLVMRELQFOXGHDEDFKHORUjVGHJUHHLQ 7KH&RXUWUHFRJQL]HVWKDWRQUHPDQG'HIHQGDQW$SSHOOHH ORVVSUHYHQWLRQFULPLQDOMXVWLFHRUDUHODWHGILHOGDQGILYHWR PD\ FKDOOHQJH YDULRXV DVSHFWV RI +RSVRQjV VWDWLVWLFV $V VHYHQ\HDUVH[SHULHQFHLQmVHFXULW\ILUHSUHYHQWLRQl)LIWHHQ 'DLPOHU&KU\VOHUSRLQWVRXWRQDSSHDO'U6DVHjVVWDWLVWLFVGR HPSOR\HHVDSSOLHGLQFOXGLQJ+RSVRQ6WHSDQLDNVWDWHVWKDW QRWLGHQWLI\WKHSHUFHQWDJHRI$IULFDQ$PHULFDQZRUNHUVZKR KH DORQJ ZLWK WKH RWKHU GHFLVLRQPDNHU VHOHFWHG /DUU\ ZHUHTXDOLILHGIRUVXSHUYLVRU\DQGPDQDJHULDOSRVLWLRQVQRU 'XE\DNDZKLWHPDOHZKRPWKH\GHWHUPLQHGWREHmWKHEHVW GR WKH\ LGHQWLI\ WKH QXPEHU RI $IULFDQ$PHULFDQV ZKR FDQGLGDWHIRUWKHMREl'XE\DNKDGmWKHUHTXLVLWHGHJUHHDQG DSSOLHGIRUVXFKSRVLWLRQV1RQHWKHOHVVm>D@WWKHVXPPDU\ KDV QHDUO\ WKLUW\ \HDUV RI H[SHULHQFH LQ VHFXULW\ LQFOXGLQJ MXGJPHQWVWDJHDSODLQWLIILVQRWUHTXLUHGWRDQWLFLSDWHDQG VWDII SRVLWLRQV DW 'DLPOHU&KU\VOHU KHDGTXDUWHUV DQG UHEXW HYHU\ SRVVLEOH ZHDNQHVV LQ KLV RWKHUZLVH YDOLG H[SHULHQFH DV D VHFXULW\ PDQDJHUl DW DQRWKHU FRPSDQ\ VWDWLVWLFDOHYLGHQFHl,GDWQ IDFLOLW\6WHSDQLDNDOVRQRWHVWKDWWKHSRVLWLRQDPRXQWHGWRD ODWHUDOPRYHIRU'XE\DNZKRKDGUHTXHVWHGDWUDQVIHUWRD 7KHUHIRUH WKLV &RXUW ILQGV WKDW 3ODLQWLII$SSHOODQW KDV IDFLOLW\FORVHUWRKLVKRPH$FFRUGLQJWR6WHSDQLDN'XE\DNjV UDLVHGDJHQXLQHLVVXHRIPDWHULDOIDFWZLWKUHVSHFWWRZKHWKHU VHOHFWLRQ mDOORZHG >WKH FRPSDQ\@ WR DFFRPPRGDWH >KLV@ 'HIHQGDQW$SSHOOHHjVSURIIHUHGUHDVRQVIRULWVHPSOR\PHQW UHTXHVWl,QDGGLWLRQ6WHSDQLDNFODLPVWKDWZKLOH+RSVRQ DFWLRQVZHUHSUHWH[WXDODQGKHUHE\5(9(56(6WKHGLVWULFW PHW WKH EDVLF TXDOLILFDWLRQV IRU WKLV SRVLWLRQ KH ODFNHG FRXUWjVMXGJPHQWJUDQWLQJVXPPDU\MXGJPHQWWR'HIHQGDQW 'XE\DNjVH[SHULHQFHDVDVHFXULW\PDQDJHUDQGZDVQRWDV $SSHOOHH ZLWK UHVSHFW WR 3ODLQWLII$SSHOODQWjV FODLP RI KLJKO\UDWHGLQKLVDQQXDOHYDOXDWLRQV GLVFULPLQDWLRQ EURXJKW SXUVXDQW WR 7LWOH 9,, 86& HH )LQDOO\+RSVRQDSSOLHGIRUWKHSRVLWLRQRI0DQDJHU2XWRI 6WDWH3ODQWV'DLPOHU&KU\VOHUjVSRVWLQJIRUWKLVMRELQGLFDWHV WKDWDEDFKHORUjVGHJUHHLQORVVSUHYHQWLRQFULPLQDOMXVWLFH RU D UHODWHG ILHOG LV UHTXLUHG mEXW PD\ EH RIIVHW E\ D FRPELQDWLRQRIHGXFDWLRQFXUUHQWO\LQSURFHVVDQGFRPSDUDEOH H[SHULHQFH LQ VHFXULW\ILUH SUHYHQWLRQl 7KH H[SHULHQFH UHTXLUHPHQW LQFOXGHV VHYHQ WR WHQ \HDUV mRI SURJUHVVLYHO\ 7KH &RXUW DOVR QRWHV WKH TXHVWLRQDEOH EDVLV RI WKH DOOHJHGO\ UHVSRQVLEOH DVVLJQPHQWV ZLWKLQ D SODQW VHFXULW\ IXQFWLRQ OHJLWLPDWH FULWHULD WKDW VXSSRUW 'DLPOHU&KU\VOHUjV GHFLVLRQV ZLWK UHVSHFW SUHIHUDEO\LQFOXGLQJPDQDJHULDODVVLJQPHQW V l)LIWHHQ WR WKH SURPRWLRQV IRU ZKLFK +RSVRQ DSSOLHG ,Q SDUWLFXODU HDFK HPSOR\HHV DSSOLHG IRU WKH SRVLWLRQ LQFOXGLQJ +RSVRQ HPSOR\HH ZKR ZDV VHOHFWHG IRU D MRE RYHU +RSVRQ ZDV QRWHG WR KDYH EHHQ UDWHG PRUH KLJKO\ RQ KLV DQQXDO HYDOXDWLRQ 7KH SDUWLHV GLG QRW SUHVHQW 8OWLPDWHO\ 6WHSDQLDN VHOHFWHG 7KRPDV .RQGUDWRZLF] D HYLGHQFH H[SODLQLQJ KRZ VXFK HYDOXDWLRQV DUH FRQGXFWHG :LWKRXW KDYLQJ ZKLWHPDOHWRILOOWKHSRVLWLRQEDVHGRQKLVFRQFOXVLRQWKDW WKDW LQIRUPDWLRQ WKH &RXUW UHFRJQL]HV WKH SRVVLELOLW\ WKDW WKH DQQXDO HYDOXDWLRQV WKHPVHOYHV DUH LQKHUHQWO\ GLVFULPLQDWRU\ +RSVRQY'DLPOHU&KU\VOHU&RUS 1R 1R +RSVRQY'DLPOHU&KU\VOHU&RUS RSHUDWLRQV LQ SDUWLFXODU KDV WHVWLILHG WKDW KH EHOLHYHG .RQGUDWRZLF]ZDVWKHmEHVWTXDOLILHGlDSSOLFDQW:KHQKH GLVFULPLQDWLRQWREHLQYROYHGFOHDUO\SURYLGHVVRPHHYLGHQFH ZDV KLUHG .RQGUDWRZLF] ZDV LQ WKH SURFHVV RI JHWWLQJ D WKDW WKLV ZDV WKH FDVH DQG WKDW 'HIHQGDQW$SSHOOHHjV EDFKHORUjVGHJUHHDQGKDGDOPRVWWKLUW\\HDUVH[SHULHQFHDW SURIIHUHGUHDVRQVIRULWVHPSOR\PHQWGHFLVLRQVZHUHIDOVH WKH FRPSDQ\ LQFOXGLQJ PDQDJHULDO H[SHULHQFH +RSVRQ KRZHYHUGLGQRWKDYHPDQDJHULDOH[SHULHQFH )LQDOO\+RSVRQSUHVHQWVVWDWLVWLFDOHYLGHQFHWKDWFUHDWHVD JHQXLQH LVVXH RI PDWHULDO IDFW ZLWK UHVSHFW WR ZKHWKHU %3URFHGXUDO+LVWRU\ 'DLPOHU&KU\VOHUjVQRQGLVFULPLQDWRU\UHDVRQLVSUHWH[W,Q SDUWLFXODU +RSVRQ SUHVHQWV WKH DIILGDYLW RI 'U 6DVH ZKR %DVHG RQ WKH IRUHJRLQJ DGYHUVH HPSOR\PHQW GHFLVLRQV REVHUYHVWKDWRIWKHVHFXULW\JXDUGVDW'DLPOHU&KU\VOHU +RSVRQ ILOHG VXLW DJDLQVW WKH FRPSDQ\ LQ $XJXVW DUH EODFN ZKLOH RQO\ RI WKH FRPSDQ\jV VHFXULW\ DOOHJLQJ WKDW KLV HPSOR\HU YLRODWHG 7LWOH 9,, 86& PDQDJHUVDUHEODFN'U6DVHFRQFOXGHVWKDWWKLVGLVSDULW\LV HHDQGWKH(OOLRWW/DUVHQ&LYLO5LJKWV$FW VWDWLVWLFDOO\ VLJQLILFDQW DQG WKDW LW LQGLFDWHV WKDW $IULFDQ 0LFK &RPS /DZV HW VHT E\ GLVFULPLQDWLQJ $PHULFDQV DUH XQGHUUHSUHVHQWHG LQ VXSHUYLVRU\ DQG DJDLQVWKLPRQWKHEDVLVRIKLVUDFH,QKLVFRPSODLQW+RSVRQ PDQDJHPHQWSRVLWLRQVLQWKHFRPSDQ\jVVHFXULW\RSHUDWLRQV DOVR DOOHJHG WKDW WKH FRPSDQ\ UHWDOLDWHG DJDLQVW KLP IRU EULQJLQJKLVSULRUFRPSODLQWRIUDFHGLVFULPLQDWLRQ m:KHQ D SODLQWLIIjV VWDWLVWLFV LQGLFDWH D GLVSURSRUWLRQDWH >HPSOR\PHQW@ UDWH IRU D SURWHFWHG JURXS WKHUH DUH WKUHH $IWHU D SHULRG RI GLVFRYHU\ 'DLPOHU&KU\VOHU PRYHG IRU SRVVLEOH H[SODQDWLRQV IRU WKH GLVFUHSDQF\ WKH RSHUDWLRQ RI VXPPDU\MXGJPHQW)RUSXUSRVHVRIWKHPRWLRQWKHFRPSDQ\ OHJLWLPDWHVHOHFWLRQFULWHULDFKDQFHRUWKHGHIHQGDQWjVELDVl FRQFHGHGWKDW+RSVRQKDGPDGHRXWDSULPDIDFLHFDVHRI %DUQHVY*HQ&RUS,QF )G WK&LU GLVFULPLQDWLRQ ZLWK UHVSHFW WR WKH HPSOR\PHQW DFWLRQV FLWDWLRQV RPLWWHG +RSVRQ KDV GHPRQVWUDWHG WKDW WKH LGHQWLILHGLQKLVFRPSODLQW7KHFRPSDQ\WKHQSUHVHQWHGLWV GLVSDULW\ EHWZHHQ WKH SHUFHQWDJH RI $IULFDQ$PHULFDQ OHJLWLPDWH QRQGLVFULPLQDWRU\ UHDVRQV IRU LWV HPSOR\PHQW VHFXULW\JXDUGVDQG$IULFDQ$PHULFDQPDQDJHUVLVQRWGXHWR GHFLVLRQV DV GHVFULEHG E\ 6WHSDQLDN DQG VHW IRUWK DERYH FKDQFHDV'U6DVHKDVIRXQGWKHGLIIHUHQFHWREHVWDWLVWLFDOO\ 'DLPOHU&KU\VOHUWKHQDUJXHGWKDW+RSVRQFRXOGQRWUDLVHD VLJQLILFDQW6HHLGDW ILQGLQJWKDWZKHQDSODLQWLII JHQXLQH LVVXH RI PDWHULDO IDFW ZLWK UHVSHFW WR ZKHWKHU WKH GHPRQVWUDWHV D mVLJQLILFDQW VWDWLVWLFDO GLVSDULW\l LQ WKH FRPSDQ\jV OHJLWLPDWH QRQGLVFULPLQDWRU\ UHDVRQ IRU LWV HPSOR\PHQW UDWH KH KDV SURYLGHG mVWURQJ HYLGHQFHl WKDW DFWLRQV FRQVWLWXWHG SUHWH[W ,Q DGGLWLRQ WKH FRPSDQ\ FKDQFHLVQRWWKHFDXVHRIWKHHPSOR\PHQWSDWWHUQ 7KXVWKH FRQWHQGHGWKDW+RSVRQFRXOGQRWVKRZDFDXVDOFRQQHFWLRQ &RXUWLVOHIWWRGHWHUPLQHZKHWKHUWKHPRUHOLNHO\FDXVHRIWKH EHWZHHQKLVSULRUGLVFULPLQDWLRQFRPSODLQWDQGDQ\DGYHUVH GLVSDULW\LV'HIHQGDQW$SSHOOHHjVLPSURSHUELDVRUOHJLWLPDWH HPSOR\PHQWDFWLRQ VHOHFWLRQFULWHULD:HKROGWKDWZKHUHDVKHUHVLJQLILFDQW VWDWLVWLFV DUH FRXSOHG ZLWK LQGHSHQGHQW FLUFXPVWDQWLDO ,QUHVSRQVH+RSVRQDUJXHGWKDWKHKDGSUHVHQWHGVXIILFLHQW HYLGHQFHRIGLVFULPLQDWLRQWKHSODLQWLIIKDVPHWKLVEXUGHQRI HYLGHQFHWHQGLQJWRVKRZWKDWWKHFRPSDQ\jVVWDWHGUHDVRQV GHPRQVWUDWLQJWKDWWKHVWDWLVWLFDOGLVSDULW\LVPRUHOLNHO\WKDQ ZHUH SUHWH[WXDO ,Q SDUWLFXODU +RSVRQ SRLQWHG WR WKH QRW GXH WR WKH GHIHQGDQWjV ELDV DQG WKH GHIHQGDQW LV QRW GHSRVLWLRQWHVWLPRQ\RI(WKHOEHUW6ODWHU m6ODWHUl DPDQDJHU HQWLWOHGWRVXPPDU\MXGJPHQW6HHLGDW FRQFOXGLQJ LQWKHVHFXULW\DUHDDQGRQHRI+RSVRQjVVXSHUYLVRUV:KHQ WKDW ZKHQ LQ WKH IDFH RI VWDWLVWLFV GHIHQGDQWV SUHVHQW D DVNHGZKHWKHUKHEHOLHYHGWKDW+RSVRQjVUDFHZDVDIDFWRULQ OHJLWLPDWH QRQGLVFULPLQDWRU\ UHDVRQ WR H[SODLQ HDFK KLVQRWREWDLQLQJWKHMREVIRUZKLFKKHDSSOLHG6ODWHUUHSOLHG DOOHJHGO\GLVFULPLQDWRU\HPSOR\PHQWDFWLRQWKHGHIHQGDQWV m>L@Q P\ RSLQLRQ \HVl +RSVRQ DOVR HPSKDVL]HG KLV RZQ TXDOLILFDWLRQV DQG DUJXHG WKDW mLW LV HYLGHQW WKDW >WKH +RSVRQY'DLPOHU&KU\VOHU&RUS 1R 1R +RSVRQY'DLPOHU&KU\VOHU&RUS FRPSDQ\@WDLORUPDGHWKHMREVSHFLILFDWLRQVWRILWWKH>ZKLWH@ FRQFXUULQJ m>7@KHHQWLUHSXUSRVHRIWKH0F'RQQHOO'RXJODV SHUVRQZKRXOWLPDWHO\ZDVSURPRWHGLQWRWKHSRVLWLRQl SULPD IDFLH FDVH LV WR FRPSHQVDWH IRU WKH IDFW WKDW GLUHFW HYLGHQFHRILQWHQWLRQDOGLVFULPLQDWLRQLVKDUGWRFRPHE\l )LQDOO\ +RSVRQ VXEPLWWHG DQ DIILGDYLW IURP sRKQ 6DVH ,QOLJKWRIWKHVHFRQVLGHUDWLRQVWKH&RXUWILQGVWKDWDWWKH 3K'DQHFRQRPLVWDW2DNODQG8QLYHUVLW\,QKLVDIILGDYLW YHU\OHDVWWKHFLUFXPVWDQFHVLQWKHPDWWHUVXEMXGLFHJLYHULVH 'U6DVHVWDWHGWKDWKHSHUIRUPHGDVWDWLVWLFDODQDO\VLVRIGDWD WR D JHQXLQH LVVXH RI PDWHULDO IDFW DV WR ZKHWKHU SURYLGHGE\'DLPOHU&KU\VOHUUHJDUGLQJWKHUDFLDOFRPSRVLWLRQ 'DLPOHU&KU\VOHUjV SURIIHUHG UHDVRQV DFWXDOO\ PRWLYDWHG LWV RI WKH FRPSDQ\jV VHFXULW\ GHSDUWPHQW +H FRPSDUHG WKH HPSOR\PHQWGHFLVLRQV QXPEHU RI VXSHUYLVRUV DQG PDQDJHUV WR WKH QXPEHU RI VHFXULW\JXDUGVDQGIRXQGWKDWRIXQLRQVHFXULW\JXDUGV ,QDGGLWLRQWRWKHIRUHJRLQJHYLGHQFH+RSVRQKDVSUHVHQWHG HPSOR\HGE\'DLPOHU&KU\VOHUDUH$IULFDQ$PHULFDQZKLOH WKH GHSRVLWLRQ WHVWLPRQ\ RI (WKHOEHUW 6ODWHU D %DQG RQO\ RI VXSHUYLVRUV DQG PDQDJHUV DUH $IULFDQ PDQDJHULQ'DLPOHU&KU\VOHUjVVHFXULW\RSHUDWLRQ'XULQJKLV $PHULFDQ%DVHGRQWKLVILQGLQJ'U6DVHRIIHUHGKLVRSLQLRQ GHSRVLWLRQ6ODWHUWHVWLILHGWKDWLQKLVRSLQLRQ+RSVRQjVUDFH mWKDWWKHUHH[LVWVDQXQGHUUHSUHVHQWDWLRQRIEODFNHPSOR\HHV ZDVDIDFWRULQWKHFRPSDQ\jVGHFLVLRQVQRWWRKLUHKLPIRUWKH LQWKH%DQG DQG FODVVLILFDWLRQVRIVXSHUYLVRUVDQG MREVIRUZKLFKKHDSSOLHG$OWKRXJK6ODWHUjVRSLQLRQGRHVQRW PDQDJHUV LQ WKH VHFXULW\ RSHUDWLRQV RI 'DLPOHU&KU\VOHU FRQVWLWXWH GLUHFW HYLGHQFH RI GLVFULPLQDWLRQ DV 6ODWHU KDV &RUSRUDWLRQl FRQFHGHGWKDWKHZDVQRWDGHFLVLRQPDNHUZLWKUHVSHFWWR WKHVH MRE RSHQLQJV LW FHUWDLQO\ FRQVWLWXWHV FLUFXPVWDQWLDO $IWHU KHDULQJ RUDO DUJXPHQW WKH GLVWULFW FRXUW JUDQWHG HYLGHQFHRIGLVFULPLQDWLRQ$VD%DQG PDQDJHU6ODWHU 'DLPOHU&KU\VOHUjVPRWLRQIRUVXPPDU\MXGJPHQW7KHFRXUW SUHVXPDEO\KDGNQRZOHGJHUHJDUGLQJWKHFRPSDQ\jVSUDFWLFHV FRQFOXGHGWKDW+RSVRQZDVXQDEOHWRUDLVHDJHQXLQHLVVXHRI DQGSROLFLHVIRUHPSOR\PHQWGHFLVLRQVDQGWKHTXDOLWLHVDQG PDWHULDOIDFWDVWRZKHWKHU'DLPOHU&KU\VOHUjVVWDWHGUHDVRQV H[SHULHQFH WKDW PXVW EH SRVVHVVHG E\ HPSOR\HHV DQG IRULWVHPSOR\PHQWDFWLRQVZHUHSUHWH[WXDO)LUVWWKHGLVWULFW PDQDJHUV ZLWKLQ WKH VHFXULW\ RSHUDWLRQ )XUWKHUPRUH DV FRXUWIRXQGWKDW6ODWHUjVWHVWLPRQ\ZDVQRWSUREDWLYHEHFDXVH +RSVRQjVVXSHUYLVRU6ODWHUZDVDZDUHRIKLVVWUHQJWKVDQG 6ODWHU DGPLWWHG WKDW KH KDG QRWKLQJ WR GR ZLWK WKH KLULQJ ZHDNQHVVHV DQG KRZ KH PLJKW SHUIRUP LQ WKH YDULRXV GHFLVLRQVLQTXHVWLRQ6HFRQGWKHFRXUWUHMHFWHG+RSVRQjV SRVLWLRQVIRUZKLFKKHDSSOLHG,QOLJKWRIWKLVNQRZOHGJH DVVHUWLRQWKDWWKHMREVSHFLILFDWLRQVLQTXHVWLRQZHUHmWDLORU 6ODWHU ZDV QR GRXEW DEOH WR IRUP D FRPSHWHQW RSLQLRQ PDGHlWRVXLWWKHSHUVRQXOWLPDWHO\VHOHFWHGILQGLQJWKDWWKLV UHJDUGLQJ ZK\ +RSVRQ ZDV SDVVHG RYHU IRU FHUWDLQ MREV DOOHJDWLRQmLVQRWVXSSRUWHGE\HYLGHQFHl7KLUGWKHFRXUW &HUWDLQO\ DW WULDO +RSVRQ ZLOO KDYH WR GHPRQVWUDWH WKDW KHOGWKDWWKHVWDWLVWLFDOHYLGHQFHSUHVHQWHGE\+RSVRQGLGQRW 6ODWHUjVRSLQLRQLVFRQQHFWHGWRWKHGHFLVLRQPDNHUVjDFWXDO GHPRQVWUDWH SUHWH[W $FFRUGLQJ WR WKH GLVWULFW FRXUW WKH DWWLWXGHV6HHsDFNO\QY6FKHULQJ3ORXJK+HDOWKFDUH3URGV VWDWLVWLFV ZHUH mLQFRPSOHWHl EHFDXVH WKH\ IDLOHG WR UHIOHFW 6DOHV&RUS)G WK&LU VWDWLQJWKDW mWKHQXPEHURI$IULFDQ$PHULFDQDSSOLFDQWVIRUWKRVHMREVRU IRUDOD\ZLWQHVVjVRSLQLRQWHVWLPRQ\WREHDGPLVVLEOHWKH WKHLUTXDOLILFDWLRQVl)LQDOO\WKHFRXUWIRXQGmQRHYLGHQFHl RSLQLRQ PXVW EH UDWLRQDOO\ EDVHG RQ WKH ZLWQHVVjV WKDW DQ\ DGYHUVH HPSOR\PHQW DFWLRQ ZDV EDVHG XSRQ SHUFHSWLRQV )HD]HOO Y 7URSLFDQD 3URGV ,QF )G UHWDOLDWLRQ IRU +RSVRQjV SUHYLRXVO\ ILOHG FRPSODLQW RI UDFH WK&LU ILQGLQJWKDWDPDQDJHUjVRSLQLRQ GLVFULPLQDWLRQ7KHGLVWULFWFRXUWHQWHUHGMXGJPHQWLQIDYRU DERXW KLV VXSHULRUVj DFWLRQV LV LUUHOHYDQW XQOHVV FOHDUO\ RIWKH'HIHQGDQW$SSHOOHHRQsDQXDU\+RSVRQQRZ FRQQHFWHG WR WKH VXSHULRUVj DWWLWXGHV $W WKH VXPPDU\ DSSHDOVIURPWKDWMXGJPHQW MXGJPHQWVWDJHKRZHYHUWKHIDFWWKDWD%DQG PDQDJHU ZLWK NQRZOHGJH DERXW WKH FRPSDQ\ DQG WKH VHFXULW\ +RSVRQY'DLPOHU&KU\VOHU&RUS 1R 1R +RSVRQY'DLPOHU&KU\VOHU&RUS KLVSULRUPDQDJHPHQWH[SHULHQFH6WHSDQLDNIRUUHDVRQVQRW ,,67$1'$5'2)5(9,(: HYLGHQFHG LQ WKH UHFRUG FRPSOHWHO\ GLVFRXQWHG DQ\ PDQDJHPHQWH[SHULHQFHWKDW+RSVRQKDGDVZHOODV+RSVRQjV $GLVWULFWFRXUWjVJUDQWRIVXPPDU\MXGJPHQWLVVXEMHFWWR EDFKHORUjVDQGPDVWHUjVGHJUHHV GHQRYRUHYLHZE\WKLV&RXUW3HWHUVY/LQFROQ(OHF&R )G WK&LU FLWDWLRQVRPLWWHG ,QHDFKRIWKHIRUHJRLQJLQVWDQFHVWKHDOOHJHGOHJLWLPDWH QRQGLVFULPLQDWRU\ UHDVRQ ZDV YDJXH IDLOHG WR VSHFLI\ WKH 6XPPDU\ MXGJPHQW LV DSSURSULDWH m>L@I WKH SOHDGLQJV PDQQHULQZKLFKWKHZKLWHHPSOR\HHVZHUHEHWWHUTXDOLILHG GHSRVLWLRQV DQVZHUV WR LQWHUURJDWRULHV DQG DGPLVVLRQV RQ RU WKH GHJUHHV RI GLIIHUHQFH LQ WKH DQQXDO HYDOXDWLRQV ILOH WRJHWKHU ZLWK WKH DIILGDYLWV LI DQ\ VKRZ WKHUH LV QR 0RUHRYHU LW LV YLUWXDOO\ XQIDWKRPDEOH JLYHQ +RSVRQjV JHQXLQHLVVXHDVWRDQ\PDWHULDOIDFWDQGWKHPRYLQJSDUW\LV HGXFDWLRQDQGPDQDJHPHQWH[SHULHQFHWKDWKHZDVQRWHYHQ HQWLWOHG WR MXGJPHQW DV D PDWWHU RI ODZl )(' 5 &,9 3 LQWHUYLHZHGIRUDQ\RIWKHVHSRVLWLRQV,QGHHGDUHDVRQDEOH F 7KHPRYDQWKDVWKHEXUGHQRIHVWDEOLVKLQJWKDWWKHUH MXURUFRXOGILQGWKDWWKHVHFLUFXPVWDQFHVEHVSHDNDSDWWHUQRU DUH QR JHQXLQH LVVXHV RI PDWHULDO IDFW ZKLFK PD\ EH SUDFWLFHRIGLVFULPLQDWLRQZKLFKUHVXOWHGLQWKH3ODLQWLIIjVQRW DFFRPSOLVKHG E\ GHPRQVWUDWLQJ WKDW WKH QRQPRYLQJ SDUW\ EHLQJSURPRWHG,QRXUYLHZWKLVUHFRUGFRQWDLQVDJHQXLQH ODFNV HYLGHQFH WR VXSSRUW DQ HVVHQWLDO HOHPHQW RI LWV FDVH LVVXH RI PDWHULDO IDFW WKDW PDNHV VXPPDU\ MXGJPHQW &HORWH[ &RUS Y &DWUHWW 86 LQDSSURSULDWH %DUQKDUWY3LFNUHO6FKDHIIHU (EHOLQJ&R)G WK&LU ,QUHVSRQVHWKHQRQPRYLQJSDUW\ :H UHFRJQL]H WKDW m7LWOH 9,, GRHV QRW GLPLQLVK ODZIXO PXVWSUHVHQWmVLJQLILFDQWSUREDWLYHHYLGHQFHlWRVKRZWKDW WUDGLWLRQDO PDQDJHPHQW SUHURJDWLYHV LQ FKRRVLQJ DPRQJ mWKHUH LV >PRUH WKDQ@ VRPH PHWDSK\VLFDO GRXEW DV WR WKH TXDOLILHGFDQGLGDWHVl:UHQQY*RXOG)G PDWHULDO IDFWVl0RRUHY3KLOLS0RUULV&RV)G WK&LU :HDOVRUHFRJQL]HKRZHYHUWKDW WK&LU m>6@XPPDU\MXGJPHQWZLOOQRWOLHLI WKHGLVSXWHLVDERXWDPDWHULDOIDFWWKDWLVµJHQXLQHjWKDWLVLI µ>G@LVFULPLQDWLRQYLFWLPVRIWHQFRPHWRWKHOHJDOSURFHVV WKH HYLGHQFH LV VXFK WKDW D UHDVRQDEOH MXU\ FRXOG UHWXUQ D ZLWKRXW ZLWQHVVHV DQG ZLWK OLWWOH GLUHFW HYLGHQFH YHUGLFW IRU WKH QRQPRYLQJ SDUW\l $QGHUVRQ Y /LEHUW\ LQGLFDWLQJ WKH SUHFLVH QDWXUH RI WKH ZURQJV WKH\ KDYH /REE\,QF86 VHHDOVR0DWVXVKLWD VXIIHUHGj &DVHV FKDUJLQJ GLVFULPLQDWLRQ DUH (OHF,QGXV&RY=HQLWK5DGLR&RUS86 XQLTXHO\ GLIILFXOW WR SURYH DQG RIWHQ GHSHQG XSRQ FRQFOXGLQJ WKDW VXPPDU\ MXGJPHQW LV DSSURSULDWH FLUFXPVWDQWLDOHYLGHQFHµ7KLVLVWUXHLQSDUWEHFDXVH ZKHQWKHHYLGHQFHFRXOGQRWOHDGWKHWULHURIIDFWWRILQGIRU GLVFULPLQDWLRQ LV RIWHQ VXEWOHj µ>$@Q WKHQRQPRYLQJSDUW\ HPSOR\HUZKRNQRZLQJO\GLVFULPLQDWHVPD\OHDYHQR ZULWWHQUHFRUGVUHYHDOLQJWKHIRUELGGHQPRWLYHDQGPD\ ,QHYDOXDWLQJDPRWLRQIRUVXPPDU\MXGJPHQWWKHHYLGHQFH FRPPXQLFDWH LW RUDOO\ WR QR RQHj 7KH GLVWLQFW PXVWEHYLHZHGLQWKHOLJKWPRVWIDYRUDEOHWRWKHQRQPRYLQJ PHWKRGRISURRILQHPSOR\PHQWGLVFULPLQDWLRQFDVHV SDUW\$GLFNHVY6+.UHVV &R 86 DURVHRXWRIWKH6XSUHPH&RXUWjVUHFRJQLWLRQWKDWGLUHFW 7KHQRQPRYLQJSDUW\KRZHYHUmPD\QRWUHVWXSRQLWVPHUH HYLGHQFH RI DQ HPSOR\HUjV PRWLYDWLRQ ZLOO RIWHQ EH DOOHJDWLRQVEXWPXVWVHWIRUWKVSHFLILFIDFWVVKRZLQJ XQDYDLODEOHRUGLIILFXOWWRDFTXLUH WKDWWKHUHLVDJHQXLQHLVVXHIRUWULDOl)(' 5 &,9 3 H VHH&HORWH[86DW 6HDUF\Y&LW\RI'D\WRQ 6KHULGDQY(,'X3RQWGH1HPRXUV &R)G )G WK &LU )XUWKHUPRUH WKH PHUH G&LU FLWDWLRQVRPLWWHG VHH3ULFH:DWHUKRXVH H[LVWHQFH RI D VFLQWLOOD RI HYLGHQFH LQ VXSSRUW RI WKH QRQ Y +RSNLQV 86 2j&RQQRU s +RSVRQY'DLPOHU&KU\VOHU&RUS 1R 1R +RSVRQY'DLPOHU&KU\VOHU&RUS PRYLQJSDUW\jVSRVLWLRQZLOOQRWEHVXIILFLHQW WKHUHPXVWEH RUODERUUHODWLRQVPDQDJHPHQW$FFRUGLQJWRFRXQVHODWRUDO HYLGHQFHRQZKLFKWKHMXU\FRXOGUHDVRQDEO\ILQGIRUWKHQRQ DUJXPHQWDQGQRWFRQWUDGLFWHGE\WKHUHFRUG+RSVRQKDGWKLV PRYLQJ SDUW\ $QGHUVRQ 86 DW &RSHODQG Y H[SHULHQFH $V QRWHG DERYH +RSVRQ KDG QRW RQO\ D 0DFKXOLV)G WK&LU EDFKHORUjV GHJUHH EXW D PDVWHUjV GHJUHH 1RQHWKHOHVV 6WHSDQLDN KLUHG D ZKLWH PDOH RQH 0LFKDHO 6HSDQLF ZKR ,,,',6&866,21 ODFNHG D EDFKHORUjV GHJUHH EXW LQ 6WHSDQLDNjV ZRUGV KDG mVLJQLILFDQW H[SHULHQFH DV D PDQDJHPHQW UHSUHVHQWDWLYH LQ 2QDSSHDO+RSVRQGRHVQRWFKDOOHQJHWKHGLVWULFWFRXUWjV ODERUUHODWLRQVl2QFHDJDLQ6WHSDQLDNUHOLHGRQWKHIDFWWKDW UXOLQJ ZLWK UHVSHFW WR WZR RI WKH VHYHQ DOOHJHGO\ 6HSDQLF ZDV UDWHG PRUH KLJKO\ WKDQ +RSVRQ LQ KLV DQQXDO GLVFULPLQDWRU\HPSOR\PHQWDFWLRQVWKDWZHUHEURXJKWEHIRUH HYDOXDWLRQVDOWKRXJKWKH'HIHQGDQWIDLOHGWRRIIHUHYLGHQFH WKHGLVWULFWFRXUWQRUGRHVKHFKDOOHQJHWKHGLVWULFWFRXUWjV RIWKLVKLJKHUUDWLQJ UXOLQJZLWKUHVSHFWWRKLVUHWDOLDWLRQFODLP7KXVWKRVHFODLPV DUHGHHPHGDEDQGRQHG6HH%R\GY)RUG0RWRU&R )RXUWK LQ sXQH +RSVRQ DSSOLHG IRU D VHFXULW\ )G WK&LU FRQFOXGLQJWKDWDQ\LVVXHVQRW PDQDJHPHQW SRVLWLRQ 7KLV MRE DOVR UHTXLUHG D EDFKHORUjV UDLVHG E\ WKH DSSHOODQW ZLWK UHVSHFW WR WKH GLVWULFW FRXUWjV GHJUHH DQG ILYH WR VHYHQ \HDUV H[SHULHQFH LQ VHFXULW\ILUH UXOLQJDUHFRQVLGHUHGDEDQGRQHGRQDSSHDODQGQRWUHYLHZDEOH SUHYHQWLRQ6WHSDQLDNVHOHFWHG/DUU\'XE\DNDZKLWHPDOH E\ WKLV &RXUW 3HQGLQJ IRU UHYLHZ LV WKH GLVWULFW FRXUWjV ZKRP KH GHWHUPLQHG WR EH WKH EHVW FDQGLGDWH IRU WKH MRE GLVSRVLWLRQRI+RSVRQjVGLVSDUDWHWUHDWPHQWFODLPVUHJDUGLQJ 'XE\DNKDGDGHJUHHDQGDFRPSDUDEOHDPRXQWRIH[SHULHQFH WKHDERYHILYHHPSOR\PHQWDFWLRQVEURXJKWSXUVXDQWWR7LWOH LQVHFXULW\LQFOXGLQJVWDIISRVLWLRQVDW'DLPOHU&KU\OVHUDQG 9,,DQG0LFKLJDQjV(OOLRWW/DUVHQ&LYLO5LJKWV$FW DVDVHFXULW\PDQDJHUDWDQRWKHUFRPSDQ\IDFLOLW\6WHSDQLDN LQGLFDWHG WKDW LQ DGGLWLRQ WR WKH TXDOLILFDWLRQV DZDUGLQJ $'LUHFW(YLGHQFHRI'LVFULPLQDWLRQ 'XE\DNWKHMREDOORZHGWKHFRPSDQ\WRKRQRUKLVUHTXHVWIRU DWUDQVIHUWRDIDFLOLW\FORVHUWRKRPH$GGLWLRQDOO\6WHSDQLDN 8QGHUERWK7LWOH9,,DQG0LFKLJDQODZDSODLQWLIIPD\VHW DJDLQLQWRQHGWKDW'XE\DNUDWHGPRUHKLJKO\LQKLVDQQXDO IRUWK D SULPD IDFLH FDVH RI HPSOR\PHQW GLVFULPLQDWLRQ E\ HYDOXDWLRQVWKDQGLG+RSVRQ2WKHUWKDQ6WHSDQLDNjVFODLP SUHVHQWLQJGLUHFWHYLGHQFHRIWKHGHIHQGDQWjVGLVFULPLQDWRU\ WKHUHZDVQRHYLGHQFHWKDW'XE\DNUDWHGPRUHKLJKO\WKDQ LQWHQW1JX\HQY&LW\RI&OHYHODQG )G WK +RSVRQ QRU ZDV WKHUH DQ\ HYLGHQFH WKDW 6WHSDQLDN &LU FLWLQJ3ULFH:DWHUKRXVHY+RSNLQV 86 FRQVLGHUHG +RSVRQjV UHTXHVW IRU D VXSHUYLVRU\ UROH LQ WKH SOXUDOLW\RSLQLRQ +DUULVRQY2OGH)LQ&RUS VDPHYHLQWKDWKHFRQVLGHUHG'XE\DNjVUHTXHVWWRPRYHFORVHU 1:G 0LFK&W$SS KROGLQJWKDWZKHQ WRKRPH WKHSODLQWLIISUHVHQWVGLUHFWHYLGHQFHRIGLVFULPLQDWLRQIHGHUDO ODZ SURYLGHV DSSURSULDWH JXLGDQFH IRU DQDO\]LQJ FODLPV )LQDOO\+RSVRQDSSOLHGIRUWKHSRVLWLRQRIPDQDJHURIRXW EURXJKW XQGHU WKH 0LFKLJDQ &LYLO 5LJKWV $FW m>'@LUHFW RIVWDWH SODQWV ZKLFK UHTXLUHG D EDFKHORUjV GHJUHH EXW HYLGHQFH LV WKDW HYLGHQFH ZKLFK LI EHOLHYHG UHTXLUHV WKH mZKLFKPD\EHRIIVHWE\DFRPELQDWLRQRIHGXFDWLRQFXUUHQWO\ FRQFOXVLRQ WKDW XQODZIXO GLVFULPLQDWLRQ ZDV DW OHDVW D LQ SURJUHVV DQG FRPSDUDEOH H[SHULHQFH LQ VHFXULW\ILUH PRWLYDWLQJ IDFWRU LQ WKH HPSOR\HUjV DFWLRQVl sDFNO\Q Y SUHYHQWLRQl +RSVRQ RI FRXUVH PHW WKH HGXFDWLRQ 6FKHULQJ3ORXJK +HDOWKFDUH 3URGV 6DOHV &RUS )G UHTXLUHPHQW EXW 6WHSDQLDN JDYH WKH SRVLWLRQ WR 7KRPDV WK&LU FLWDWLRQVRPLWWHG .RQGUDWRZLF]DZKLWHPDOHZKRGLGQRWKDYHDEDFKHORUjV GHJUHH EXW ZDV LQ WKH SURFHVV RI JHWWLQJ RQH 6WHSDQLDN +RSVRQ FRQWHQGV WKDW KH SUHVHQWHG GLUHFW HYLGHQFH RI IRXQG.RQGUDWRZLF]WKHEHVWTXDOLILHGDSSOLFDQWEHFDXVHRI 'DLPOHU&KU\VOHUjV GLVFULPLQDWLRQ E\ YLUWXH RI 6ODWHUjV +RSVRQY'DLPOHU&KU\VOHU&RUS 1R 1R +RSVRQY'DLPOHU&KU\VOHU&RUS LQ VHFXULW\ ILUH SUHYHQWLRQ 7KH 3ODLQWLII QRW RQO\ KDG WKH GHSRVLWLRQWHVWLPRQ\WKDWLQKLVRSLQLRQ+RSVRQjVUDFHZDV UHTXLUHGEDFKHORUjVGHJUHHEXWDOVRKDGDPDVWHUjVGHJUHH,Q D IDFWRU LQ WKH FRPSDQ\jV GHFLVLRQ WR GHQ\ KLP WKH DGGLWLRQ WKH 'HIHQGDQW FRQFHGHG WKDW +RSVRQ KDG WKH SURPRWLRQV IRU ZKLFK KH DSSOLHG $OWKRXJK 6ODWHU LV D UHTXLUHGVXSHUYLVRU\H[SHULHQFH'HVSLWHWKHIDFWWKDW+RSVRQ PDQDJHU LQ WKH FRPSDQ\ KH DGPLWWHG WKDW KH KDG QR PHW WKHVH UHTXLUHPHQWV 'DLPOHU&KU\VOHU XOWLPDWHO\ FKRVH LQYROYHPHQWLQWKHGHFLVLRQPDNLQJSURFHVVZLWKUHVSHFWWR :DUUHQ+DZNLQVDZKLWHPDOHWRILOOWKHSRVLWLRQEHFDXVH WKHSDUWLFXODUMREVDWLVVXH)XUWKHUPRUHKHGLGQRWUHYHDOWKH mKHKDGPDQDJHULDOH[SHULHQFHWKDW+RSVRQODFNHGlDQGKH EDVLV IRU KLV RSLQLRQ 7KXV ZKLOH 6ODWHUjV RSLQLRQ PD\ mUDWHG PRUH KLJKO\ WKDQ 0U +RSVRQ LQ KLV DQQXDO FRQVWLWXWHFLUFXPVWDQWLDOHYLGHQFHRIGLVFULPLQDWLRQHYHQLI HYDOXDWLRQl7KH'HIHQGDQWGLGQRWVWDWHQRULVWKHUHFRUG EHOLHYHG LW GRHV QRW UHTXLUH WKH FRQFOXVLRQ WKDW XQODZIXO FOHDUDVWRWKHPDQQHULQZKLFK+DZNLQVUDWHGPRUHKLJKO\ GLVFULPLQDWLRQZDVDPRWLYDWLQJIDFWRULQ'DLPOHU&KU\VOHUjV WKDQ +RSVRQ 1RU GLG WKH 'HIHQGDQW VWDWH ZKDW W\SH RI DFWLRQV 6HH 1JX\HQ )G DW VWDWLQJ WKDW GLUHFW PDQDJHULDOH[SHULHQFH+DZNLQVKDGWKDW+RSVRQODFNHG HYLGHQFHLQFOXGHVDGHFLVLRQPDNHUjVH[SUHVVVWDWHPHQWRID GHVLUHWRWDNHDFWLRQDJDLQVWHPSOR\HHVZKRDUHPHPEHUVRI 6LPLODUO\LQ1RYHPEHU ZKHQ+RSVRQDSSOLHGIRUD DSURWHFWHGFODVV WUDLQLQJDGPLQLVWUDWRUSRVLWLRQZKLFKUHTXLUHGDEDFKHORUjV GHJUHHLQFULPLQDOMXVWLFHHGXFDWLRQRUDUHODWHGILHOGDORQJ 7KHUHIRUH WKH GLVWULFW FRXUW SURSHUO\ FRQFOXGHG WKDW ZLWK ILYH \HDUV VXSHUYLVRU\ H[SHULHQFH LQ mVHFXULW\ILUH 3ODLQWLII$SSHOODQWIDLOHGWRUDLVHDJHQXLQHLVVXHRIPDWHULDO SUHYHQWLRQlKHZDVUHMHFWHGIRUHVVHQWLDOO\WKHVDPHUHDVRQ IDFWE\SUHVHQWLQJGLUHFWHYLGHQFHRI'HIHQGDQW$SSHOOHHjV 6WHSDQLDN WKH GHFLVLRQ PDNHU FKRVH D ZKLWH PDOH 6HDQ GLVFULPLQDWRU\LQWHQW sR\FHZKRPKHFRQVLGHUHGPRUHTXDOLILHGEHFDXVHsR\FHKDG H[SHULHQFHWUDLQLQJVHFXULW\HPSOR\HHVDVDVHFXULW\PDQDJHU %&LUFXPVWDQWLDO(YLGHQFHRI'LVFULPLQDWLRQ ZKLOH+RSVRQDOOHJHGO\ODFNHGWKDWH[SHULHQFH7KHUHFRUG UHIOHFWVKRZHYHUWKDWGXULQJRQHSHULRGZLWKWKHFRPSDQ\ 7LWOH9,, +RSVRQKDGDFWXDOO\VXSHUYLVHGSHUVRQVZKRWUDLQHGVHFXULW\ HPSOR\HHV$GGLWLRQDOO\6WHSDQLDNFRQWHQGHGWKDWsR\FHZDV 7KHDQDO\WLFDOIUDPHZRUNJRYHUQLQJ7LWOH9,,FDVHVLQWKH UDWHG PRUH KLJKO\ WKDQ +RSVRQ LQ KLV DQQXDO HYDOXDWLRQ o DEVHQFH RI GLUHFW HYLGHQFH RI GLVFULPLQDWLRQ LV ZHOO VHHPLQJO\DPDQWUDIRU6WHSDQLDNLQDUWLFXODWLQJKLVUHDVRQV HVWDEOLVKHG)LUVWWKHSODLQWLIIPXVWVHWIRUWKDSULPDIDFLH IRUQRWKDYLQJJLYHQ+RSVRQDQ\RQHRIWKHVHILYHSRVLWLRQV FDVH ZKLFK JLYHV ULVH WR DQ LQIHUHQFH RI GLVFULPLQDWLRQ 2QFHDJDLQ'HIHQGDQWIDLOHGWRLQGLFDWHWKHH[WHQWWRZKLFK 7H[DV'HSjWRI&PW\$IIDLUVY%XUGLQH86 sR\FHjVHYDOXDWLRQVZHUHEHWWHUWKDQ+RSVRQjV FLWLQJ0F'RQQHOO'RXJODV&RUSY*UHHQ 86 VHH1HZPDQY)HG([SUHVV&RUS 2Q 0DUFK +RSVRQ DSSOLHG IRU D SRVLWLRQ RI )G WK&LU VWDWLQJWKDWWRHVWDEOLVKDSULPD VXSSRUWVHUYLFHVDQDO\VWZKLFKUHTXLUHGDEDFKHORUj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mH[FHOOHQWl DQQXDO HYDOXDWLRQV 86DW ,IWKHGHIHQGDQWPHHWVWKLVEXUGHQWKHQWKH +RSVRQY'DLPOHU&KU\VOHU&RUS 1R 1R +RSVRQY'DLPOHU&KU\VOHU&RUS EXUGHQ RI SURGXFWLRQ VKLIWV EDFN WR WKH SODLQWLII WR 'LFN &R )G WK &LU FLWDWLRQ GHPRQVWUDWHWKDWWKHSURIIHUHGUHDVRQLVDSUHWH[W,G FLWLQJ RPLWWHG 7KLV &RXUW ILQGV WKDW +RSVRQ KDV SUHVHQWHG 0F'RQQHOO 'RXJODV 86 DW :KHQ WKH EXUGHQ HYLGHQFHRQWKHEDVLVRIZKLFKDUHDVRQDEOHMXURUFRXOGILQG VKLIWVEDFNWRWKHSODLQWLIIDOWKRXJKKHPXVWFRPHIRUZDUG WKDW 'DLPOHU&KU\VOHUjV SURIIHUHG UHDVRQV GLG QRW DFWXDOO\ ZLWKHYLGHQFHWKDWWKHFRPSDQ\jVUHDVRQIRUWKHHPSOR\PHQW PRWLYDWHLWVHPSOR\PHQWGHFLVLRQV DFWLRQLVIDOVHKHQHHGQRWSUHVHQWLQGHSHQGHQWHYLGHQFHWKDW WKH SURIIHUHG UHDVRQ LV SUHWH[W IRU UDFLDO GLVFULPLQDWLRQ +RSVRQ KDV SUHVHQWHG HYLGHQFH WKDW KH DSSOLHG IRU ILYH 5HHYHVY6DQGHUVRQ3OXPELQJ3URG,QF86 SRVLWLRQV IRU ZKLFK 'HIHQGDQW$SSHOOHH FRQFHGHV KH ZDV m>$@ SODLQWLIIjV SULPD IDFLH FDVH FRPELQHG ZLWK TXDOLILHGDQGIRUZKLFKKHZDVUHMHFWHGEHIRUHKHZDVHYHQ VXIILFLHQW HYLGHQFH WR ILQG WKDW WKH HPSOR\HUjV DVVHUWHG JLYHQDQLQWHUYLHZ,WVWUDLQVFUHGXOLW\WRFRQFOXGHWKDWQRW MXVWLILFDWLRQLVIDOVHPD\SHUPLWWKHWULHURIIDFWWRFRQFOXGH RQFHEXWILYHWLPHVWKHRWKHUHPSOR\HHVZKRDSSOLHGIRUWKH WKDWWKHHPSOR\HUXQODZIXOO\GLVFULPLQDWHGl RSHQ SRVLWLRQV ZHUH VR VLJQLILFDQWO\ PRUH TXDOLILHG WKDQ +RSVRQ WKDW KH ZDV QRW HYHQ ZRUWK\ RI DQ LQWHUYLHZ $ +HUHWKHUHLVQRGLVSXWHWKDW+RSVRQKDVVHWIRUWKDSULPD UHYLHZ RI HDFK LQVWDQFH LQ ZKLFK +RSVRQ ZDV UHMHFWHG LV IDFLHFDVH1RUGRWKHSDUWLHVGLVSXWHWKDW'DLPOHU&KU\VOHU WHOOLQJ KDVSUHVHQWHGDOHJLWLPDWHQRQGLVFULPLQDWRU\UHDVRQIRULWV HPSOR\PHQWGHFLVLRQV+RSVRQjVFKLHIFRPSODLQWRQDSSHDO )LUVW LQ $XJXVW +RSVRQ DSSOLHG IRU D %DQG LVWKDWWKHGLVWULFWFRXUWHUUHGLQUXOLQJWKDW+RSVRQIDLOHGWR VXSHUYLVRU\SRVLWLRQDVDVHFXULW\PDQDJHUZKLFKUHTXLUHGD UDLVH DQ LVVXH RI IDFW ZLWK UHVSHFW WR ZKHWKHU EDFKHORUjV GHJUHH LQ ORVV SUHYHQWLRQ FULPLQDO MXVWLFH RU D 'DLPOHU&KU\VOHUjV VWDWHG UHDVRQV IRU WKH HPSOR\PHQW UHODWHGILHOGDQGILYHWRVHYHQ\HDUVRIVXSHUYLVRU\H[SHULHQFH GHFLVLRQVDWLVVXHZHUHSUHWH[WXDO m$SODLQWLIIFDQGHPRQVWUDWHSUHWH[WE\VKRZLQJWKDWWKH +RSVRQ KDV DOVR UDLVHG RQH IDFWXDO LVVXH ZLWK UHVSHFW WR WKH UHDVRQV SURIIHUHGUHDVRQ KDVQREDVLVLQIDFW GLGQRWDFWXDOO\ VHW IRUWK E\ 6WHSDQLDN IRU 'DLPOHU&KU\VOHUjV HPSOR\PHQW GHFLVLRQV PRWLYDWH WKH GHIHQGDQWjV FKDOOHQJHG FRQGXFW RU ZDV 6SHFLILFDOO\ +RSVRQ SRLQWV RXW WKDW :DUUHQ +DZNLQV WHVWLILHG GXULQJ KLV LQVXIILFLHQWWRZDUUDQWWKHFKDOOHQJHGFRQGXFWl'HZVY$% GHSRVLWLRQ WKDW KH ZDV KLUHG DV WKH 0RSDU 'HSRW 6HFXULW\ 0DQDJHU LQ $SULO 7KH FRPSDQ\ GLG QRW SRVW WKH MRE KRZHYHU XQWLO sXO\ RI WKDW \HDU +RSVRQ DUJXHV WKDW WKLV GLVFUHSDQF\ VKRZV WKH FRPSDQ\ KDG QR LQWHQWLRQ RI FRQGXFWLQJ D PHDQLQJIXO VHDUFK IRU TXDOLILHG FDQGLGDWHV 7KH GLVVHQW VWDWHV WKDW WKH SODLQWLII KDV WKH EXUGHQ RI SURYLQJ WKDW WKH 0RUH OLNHO\ KRZHYHU +DZNLQV ZDV VLPSO\ PLVWDNHQ DERXW WKH GDWH RQ GHIHQGDQWjV QRQGLVFULPLQDWRU\ UHDVRQ LV SUHWH[W DQG WKDW WKH DFWXDO ZKLFK KH ZDV SURPRWHG DV FRPSDQ\ UHFRUGV LQGLFDWH WKDW +DZNLQV ZDV UHDVRQ IRU WKH GHIHQGDQWjV DFWLRQ LV GLVFULPLQDWLRQ 7KH PDMRULW\ QRW SURPRWHG XQWLO $XJXVW 7KHUHIRUH WKH GLVWULFW FRXUW GLG QRW HUU UHFRJQL]HV WKDW WKH SODLQWLII DOZD\V PDLQWDLQV WKH EXUGHQ RI SURYLQJ WKDW LQ UHMHFWLQJ WKLV DOOHJHG GLVFUHSDQF\ DV D EDVLV IRU ILQGLQJ WKDW +RSVRQ KDG WKH GHIHQGDQW HQJDJHG LQ LQWHQWLRQDO GLVFULPLQDWLRQ 6HH %XUGLQH UDLVHG D JHQXLQH LVVXH RI PDWHULDO IDFW ZLWK UHVSHFW WR ZKHWKHU 86 DW 5HHYHV FODULILHG KRZHYHU WKDW WKH SODLQWLII QHHG QRW SUHVHQW 'DLPOHU&KU\VOHUjV OHJLWLPDWH QRQGLVFULPLQDWRU\ UHDVRQ ZDV SUHWH[WXDO LQGHSHQGHQW SURRI RI GLVFULPLQDWLRQ DIWHU WKH GHIHQGDQW KDV SUHVHQWHG D OHJLWLPDWH QRQGLVFULPLQDWRU\ UHDVRQ WR VDWLVI\ WKLV EXUGHQ 7R WKH +RSVRQ DOVR DVVHUWV WKDW 'DLPOHU&KU\VOHU GLVFULPLQDWHG DJDLQVW KLP E\ FRQWUDU\ WKH SODLQWLII FDQ PHHW KLV EXUGHQ RI SURYLQJ LQWHQWLRQDO mWDLORUPD>NLQJ@ >WKH@ TXDOLILFDWLRQV WR ILW WKH ZKLWH PDOH DSSOLFDQWVl $W GLVFULPLQDWLRQ VLPSO\ E\ SUHVHQWLQJ HYLGHQFH WKDW WKH GHIHQGDQWjV ERWWRP WKLV DPRXQWV WR D FRQFOXVRU\ DOOHJDWLRQ WKDW LV QRW VXSSRUWHG E\ SURIIHUHG UHDVRQ LV QRW ZRUWK\ RI FUHGHQFH 5HHYHV 86 DW VSHFLILF IDFWV LQ WKH UHFRUG 7KXV WKH GLVWULFW FRXUW SURSHUO\ UHMHFWHG WKLV QRWLQJ WKDW mRQFH WKH HPSOR\HUjV MXVWLILFDWLRQ KDV EHHQ HOLPLQDWHG DUJXPHQW DV ZHOO $00 :DGH Y .QR[YLOOH 8WLOLWLHV %G )G GLVFULPLQDWLRQ PD\ ZHOO EH WKH PRVW OLNHO\ DOWHUQDWLYH H[SODQDWLRQl :H WK &LU QRWLQJ WKDW mFRQFOXVRU\ DOOHJDWLRQV DQG >WKH SODLQWLIIjV KDYH DGKHUHG WR WKDW HYLGHQWLDU\ JXLGHOLQH LQ RXU HYDOXDWLRQ RI +RSVRQjV VXEMHFWLYH@ SHUFHSWLRQV DUH QRW VXIILFLHQW WR VWDYH RII VXPPDU\ FDVH MXGJPHQWl