Court Opinion

ID: 2970451
Source: CourtListenerOpinion
Date Created: 2015-09-22 16:13:15.642487+00
Date Added: 2024-06-11T15:01:56.790677
License: Public Domain

5(&200(1'(' )25 )8//7(;7 38%/,&$7,21
       5RVVERURXJK0IJ        1RV                           3XUVXDQW WR 6L[WK &LUFXLW 5XOH 

         &RHWDOY7ULPEOH                        (/(&7521,& &,7$7,21  )(' $SS 3 WK &LU
         HWDO                                                                             )LOH 1DPH DS

DUHXQDEOHWRGLVFHUQDQ\IURPWKLVUHFRUG7KLVLVQRWDFDVH            81,7('67$7(6&28572)$33($/6
LQZKLFKmFRQWUDFWXDOULJKWVKDYHDULVHQRUYHVWHGULJKWVKDYH
EHHQDFTXLUHGXQGHU>D@SULRUGHFLVLRQlRIWKH2KLR6XSUHPH                                 )257+(6,;7+&,5&8,7
&RXUW3HHUOHVV(OHF&RY%RZHUV1(G                                      BBBBBBBBBBBBBBBBB
2KLR  VXFK WKDW WKH %UDG\ DQG 0D\ILHOG GHFLVLRQV
ZRXOGQRWUHWURDFWLYHO\DSSO\WRWKHVHSODLQWLIIVjFODLPV7KH
YDOLGLW\RIWKH,QWHQWLRQDO7RUW$FWZDVQHYHUDIILUPHGE\WKH
2KLR 6XSUHPH &RXUW DQG WKH ULJKWV FODLPHG E\ WKHVH                 5266%2528*+                       ;
SODLQWLIIVGLGQRWDULVHXQGHUDQ\SULRUGHFLVLRQRIWKH2KLR               0$18)$&785,1* &2                  
6XSUHPH&RXUW,QGHHGWKH2KLR6XSUHPH&RXUWjVGHFLVLRQ                    s2+1 52%(576           
LQ 0D\ILHOG FDQ EH LQWHUSUHWHG RQO\ DV FRQILUPLQJ LWV                                                  
                                                                            ,QWHUYHQRU3$77<            1RV
DQQRXQFHPHQWLQ%UDG\WKDWWKH,QWHQWLRQDO7RUW$FWZDVYRLG                (/6(5,QWHUYHQRU        !
IURPLWVLQFHSWLRQ$VZHKDYHH[SODLQHGDERYHEHFDXVHWKDW                                                      
$FW ZDV KHOG WR EH XQFRQVWLWXWLRQDO DQG YRLG IURP LWV              1250$ s &5,1(5                       
LQFHSWLRQLWFRQIHUUHGQRULJKWVDQGDIIRUGHGQRSURWHFWLRQV               $GPLQLVWUDWUL[RIWKH(VWDWH           
WRWKHSODLQWLIIV                                                          RI6FRWW'6FKDIIHU              
                                                                            ,QWHUYHQRU:,/(<        
                         &21&/86,21                                         25*$1,&6 ,1&,QWHUYHQRU         
                                                                                                               
  )RUWKHIRUHJRLQJUHDVRQVZHDIILUPWKHGLVPLVVDORIHDFK                75,3/( $ ,1 7+(         
RIWKHFRPSODLQWV                                                          86$ ,1&            
                                                                            5<.21 63(&,$/,=('                  
                                                                            3/$7,1* ,1&           
                                                                            )5$1. 67803,QWHUYHQRU            
                                                                            :,//,$0 <              
                                                                                                               
                                                                            0225(,QWHUYHQRU                  
                                                                            s$0(6 3((7             
                                                                            ,QWHUYHQRU              
                                                                                     3ODLQWLIIV$SSHOODQWV    
                                                                                                               
                                                                                       Y                      
                                                                                                               
                                                                                                               
                                                                            s :(6/(< 75,0%/(                 
     
     $V WKH GLVWULFW FRXUW SRLQWHG RXW WKH SODLQWLIIV PLJKW KDYH D FODLP   s .(11(7+ %/$&.:(//              
IRU UHLPEXUVHPHQW RI WKH SUHPLXPV SDLG LQWR WKH ,QWHQWLRQDO 7RUW )XQG
                                                                            $// 722/6 ,1& s/ )27,         
EXW WKDW FODLP ZRXOG DULVH HQWLUHO\ EHFDXVH WKH ,QWHQWLRQDO 7RUW $FW ZDV
DGMXGJHG XQFRQVWLWXWLRQDO DQG SUHVHQWV QR IHGHUDO TXHVWLRQ
                                                                                                               

                                                                                                         
       5RVVERURXJK0IJ        1RV   1RV   5RVVERURXJK0IJ                 
        &RHWDOY7ULPEOH             &RHWDOY7ULPEOH
        HWDO                                                                                                HWDO

    &216758&7,21 &2 /025                                  SURWHFWLRQLWFUHDWHVQRRIILFHLWLVLQOHJDOFRQWHPSODWLRQDV
                                                              LQRSHUDWLYHDVWKRXJKLWKDGQHYHUEHHQSDVVHGjlTXRWLQJ
    ,1&GRLQJEXVLQHVVDV                                    1RUWRQ Y 6KHOE\ &RXQW\  86   
    'DUOLQJ)LUH	6DIHW\                                    6XEVHTXHQWWRLWVGHFLVLRQLQ%UDG\WKH2KLR6XSUHPH&RXUW
                                   
    :,//,$0 3)(,))(5&KLHI                                   KHOGWKDW%UDG\KDGmLQYDOLGDWHG>WKHVWDWXWH@LQLWVHQWLUHW\
    ([HFXWLYH2IILFHUDQG                                      QHJDWLQJDQ\ULJKWWRUHLPEXUVHPHQWRIVHWWOHPHQWPRQH\DQG
                                                              DWWRUQH\IHHVl0D\ILHOG1(GDW7KHSODLQWLIIV
    $GPLQLVWUDWRURI2KLR          
                                                              PLVWDNHQO\EHOLHYHWKDW6%nZKLFKIRUPDOO\UHSHDOHG
    %XUHDXRI:RUNHUVj                                         WKHXQFRQVWLWXWLRQDO,QWHQWLRQDO7RUW$FWDQGSURYLGHGIRUWKH
    &RPSHQVDWLRQs$0(6                                       GLVEXUVHPHQW RI WKH PRQH\V LQ WKH ,QWHQWLRQDO 7RUW
    &215$' s26(3+ '(7(56                                    )XQGnLPSDLUHG WKHLU FRQWUDFWXDO ULJKWV WR UHLPEXUVHPHQW
                                  1                            IURPWKHPRQH\VLQWKH,QWHQWLRQDO7RUW)XQG,QIDFWWKDW
            'HIHQGDQWV$SSHOOHHV
                                                               OHJLVODWLRQ KDG QR HIIHFW ZKDWVRHYHU RQ WKH ULJKWV WKH
                                                               SODLQWLIIVFODLPZHUHLPSDLUHG,WZDVWKHMXGJPHQWRIWKH
          $SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW         2KLR 6XSUHPH &RXUW WKDW UHQGHUHG WKH ,QWHQWLRQDO 7RUW
         IRUWKH1RUWKHUQ'LVWULFWRI2KLRDW&OHYHODQG       $FWnDQG KHQFH WKH ,QWHQWLRQDO 7RUW )XQG FUHDWHG E\ WKDW
     1Rn'RQDOG&1XJHQW'LVWULFW        $FWnQXOOLWLHV WKDW FRQIHUUHG QR ULJKWV DQG DIIRUGHG QR
                             sXGJH                            SURWHFWLRQV7KLVMXGJPHQWHYHQLIHUURQHRXVLVQRWZLWKLQ
                                                               WKHUHDFKRI WKHSURKLELWLRQRIWKH&RQVWLWXWLRQDJDLQVWWKH
                   $UJXHG)HEUXDU\                   LPSDLULQJRIFRQWUDFWVE\VWDWHOHJLVODWLRQ/RQJ6DXOW
                                                               86DW
              'HFLGHGDQG)LOHG$XJXVW
                                                               '$GGLWLRQDO&RQVWLWXWLRQDO&ODLPV
 %HIRUH68+5+(,15,&+6,/(5DQG%$7&+(/'(5
                  &LUFXLWsXGJHV                                7KH SODLQWLIIV DOVR DVVHUW YLRODWLRQV RI WKH )LIWK
                                                               $PHQGPHQWjV SURKLELWLRQ DJDLQVW WKH WDNLQJ RI SULYDWH
                     BBBBBBBBBBBBBBBBB                         SURSHUW\IRUSXEOLFXVHZLWKRXWSURYLGLQJMXVWFRPSHQVDWLRQ
                                                               DQG WKH )RXUWHHQWK $PHQGPHQWjV SURWHFWLRQ DJDLQVW
                          &2816(/                              GHSULYDWLRQVRIOLIHOLEHUW\RUSURSHUW\ZLWKRXWGXHSURFHVV
                                                               RI ODZ  7KHVH DOOHJHG YLRODWLRQV GHSHQG RQ WKH GHQLDO RI
$5*8('  sRKQ ' 0DGGR[ $57(5 	 +$''(1                FRQWUDFW SURSHUW\ RU VXEVWDQWLYH ULJKWV WKDW ZHUH ZKROO\
:DVKLQJWRQ'&IRU$SSHOODQWV(OLVH:3RUWHU2)),&(     GHULYHGIURP WKH,QWHQWLRQDO7RUW$FW7KHSODLQWLIIVKDYH
2) 7+( $77251(< *(1(5$/ 2) 2+,2 &ROXPEXV               SURYLGHGQREDVLVRWKHUWKDQWKH,QWHQWLRQDO7RUW$FWIRUWKHLU
2KLR IRU $SSHOOHHV  21 %5,()  3DXO : 1HZHQGRUS   FODLPHGFRQWUDFWSURSHUW\RURWKHUVXEVWDQWLYHULJKWVDQGZH
:(,1(5 68,7 	 &285< :DUUHQ 2KLR sRVHSK &
:LQQHU0&)$''(1:,11(5	6$9$*(&ROXPEXV
2KLR6FRWW(6WHZDUW&OHYHODQG2KLRsRKQ'0DGGR[
$57(5 	 +$''(1 :DVKLQJWRQ '& ,UHQH & .H\VH
    5RVVERURXJK0IJ        1RV            1RV   5RVVERURXJK0IJ                 
      &RHWDOY7ULPEOH                      &RHWDOY7ULPEOH
      HWDO                                                                                                         HWDO

  >L@ILWGLGQRWJLYHHIIHFWWRWKDWDFWHLWKHUH[SUHVVO\RUE\     :DONHU $57(5 	 +$''(1 &OHYHODQG 2KLR 0DUN )
  LPSOLFDWLRQWKLVFRXUWLVZLWKRXWMXULVGLFWLRQWRUHYLHZLWV       .UXVH0&,17<5(.$+1.586(	*,//20%$5'2
  GHFLVLRQ IRU WKH UHDVRQ WKDW WKH SURYLVLRQV RI WKH         &OHYHODQG 2KLR *UHJRU\ . 3UDWW 35$77 	 6,1*(5
  &RQVWLWXWLRQ RI WKH 8QLWHG 6WDWHV IRU WKH SURWHFWLRQ RI     0LGGOHWRZQ 2KLR 0DUN ( %DUERXU s())5,(6 .8%(
  FRQWUDFWULJKWVDUHGLUHFWHGRQO\DJDLQVWWKHLPSDLUPHQW            )255(67	0217(/(21(&OHYHODQG2KLR(OL]DEHWK
  RI WKHP E\ FRQVWLWXWLRQV RU ODZV DGRSWHG RU SDVVHG          $5DLHV7=$1*$63/$.$60$1126	5(&83(52
  VXEVHTXHQWWRWKHGDWHRIWKHFRQWUDFWIURPZKLFKVXFK              &DQWRQ2KLR0LFKDHO3+DUYH\0,&+$(/3+$59(<
  ULJKWV VSULQJ DQG GR QRW UHDFK GHFLVLRQV RI FRXUWV         &203$1<5RFN\5LYHU2KLRIRU$SSHOODQWV(OLVH:
  FRQVWUXLQJ FRQVWLWXWLRQV RU ODZV ZKLFK ZHUH LQ HIIHFW        3RUWHU 2)),&( 2) 7+( $77251(< *(1(5$/
  ZKHQWKHFRQWUDFWZDVHQWHUHGLQWR                                 &ROXPEXV2KLRIRU$SSHOOHHV
,GDW7KH&RXUWFRQFOXGHGWKDWWKHVWDWHFRXUWKDGJLYHQ                            BBBBBBBBBBBBBBBBB
WKHUHSHDOQRHIIHFWEXWKDGGHWHUPLQHGnZLWKRXWUHJDUGWR
WKHUHSHDOnWKDWWKHOHJLVODWLRQZDVXQFRQVWLWXWLRQDODQG                                  23,1,21
YRLGXQGHUWKHVWDWHjVFRQVWLWXWLRQ,GDW$FFRUGLQJO\                            BBBBBBBBBBBBBBBBB
WKH&RXUWKHOGEHFDXVHmWKHSURKLELWLRQRIWKH&RQVWLWXWLRQ
DJDLQVWWKHLPSDLULQJRIFRQWUDFWVE\VWDWHOHJLVODWLRQGRHVQRW         $/,&(0%$7&+(/'(5&LUFXLWsXGJH7KHSODLQWLIIV
UHDFKHUURUVFRPPLWWHGE\VWDWHFRXUWVZKHQSDVVLQJXSRQWKH          DSSHDOWKHGLVWULFWFRXUWjVRUGHUGLVPLVVLQJIRUIDLOXUHWRVWDWH
YDOLGLW\DQGHIIHFWRIDFRQWUDFWXQGHUDFRQVWLWXWLRQRUODZV        DFODLPDQGIRUODFNRIMXULVGLFWLRQWKHLUFRPSODLQWGHPDQGLQJ
H[LVWLQJ ZKHQ LW LV PDGHl WKH FDVH SUHVHQWHG QR IHGHUDO     UHLPEXUVHPHQWIURPWKHQRZGHIXQFW,QWHQWLRQDO7RUW)XQG
TXHVWLRQRYHUZKLFKWKH&RXUWKDGMXULVGLFWLRQ,GDW          FUHDWHGE\WKH,QWHQWLRQDO7RUW$FW6HFWLRQRIWKH
                                                                      2KLR5HYLVHG&RGHZKLFKZDVGHFODUHGXQFRQVWLWXWLRQDODQG
  /RQJ6DXOWPDNHVLWFOHDUWKDWWKHFRQWUDFWVFODXVHRIWKH          YRLGDELQLWLRE\WKH2KLR6XSUHPH&RXUWLQ%UDG\Y6DIHW\
&RQVWLWXWLRQSURWHFWVWKHREOLJDWLRQVRIFRQWUDFWVIURPEHLQJ         .OHHQ &RUS  1(G  2KLR   7KH SODLQWLIIV
LPSDLUHGE\OHJLVODWLRQLWGRHVQRWSURWHFWWKRVHREOLJDWLRQV        FRQWHQGWKDWWKHDFWLRQVRIWKH6WDWHGHIHQGDQWVLQGHQ\LQJ
IURPWKHMXGJPHQWVRIFRXUWV,GDWDFFRUG%DUURZVY          WKRVHFODLPVFRQVWLWXWHGDYLRODWLRQRIWKHFRQWUDFWVFODXVHDQ
sDFNVRQ86$VZDVWKHFDVHLQ/RQJ           XQFRQVWLWXWLRQDO WDNLQJ ZLWKRXW MXVW FRPSHQVDWLRQ DQG D
6DXOW WKH VWDWXWH XQGHU ZKLFK WKH SODLQWLIIV KHUH FODLP      GHSULYDWLRQRISODLQWLIIVjGXHSURFHVVULJKWVDQGJDYHULVHDV
FRQWUDFWDQGSURSHUW\ULJKWVZDVGHFODUHGXQFRQVWLWXWLRQDOE\         ZHOO WR D FDXVH RI DFWLRQ XQGHU  86&    7KH
WKHKLJKHVWFRXUWRIWKHVWDWHEHFDXVHLWH[FHHGHGWKHVFRSHRI       7UHDVXUHU RI WKH 6WDWH RI 2KLR DQG WKH 2KLR :RUNHUVj
OHJLVODWLYHDXWKRULW\JUDQWHGWRWKH*HQHUDO$VVHPEO\XQGHU           &RPSHQVDWLRQ $GPLQLVWUDWRU DVVHUW (OHYHQWK $PHQGPHQW
WKH2KLR&RQVWLWXWLRQ%UDG\1(GDW                     LPPXQLW\$VZHVKDOOH[SODLQZHGRQRWILQGWKDWWKHVWDWH
                                                                      GHIHQGDQWVDUH HQWLWOHGWR(OHYHQWK$PHQGPHQWLPPXQLW\
   7KHUXOHLQ2KLRKDVORQJEHHQWKDWZKHQDVWDWXWHLVKHOG         EXW ZH FRQFOXGH WKDW WKH SODLQWLIIV FDQ GHPRQVWUDWH QR
WRKDYHEHHQXQFRQVWLWXWLRQDODVRILWVHQDFWPHQWWKDWVWDWXWH       GHSULYDWLRQRIDQ\RIWKHLUFRQVWLWXWLRQDOULJKWVDQGWKH\FDQ
LVYRLGDELQLWLR&LW\RI0LGGOHWRZQY)HUJXVRQ1(G        VWDWHQRFODLPFRJQL]DEOHXQGHU:HZLOOWKHUHIRUH
2KLRmµ$QXQFRQVWLWXWLRQDODFWLVQRWDODZ         DIILUPWKHMXGJPHQWRIWKHGLVWULFWFRXUW
LW FRQIHUV QR ULJKWV LW LPSRVHV QR GXWLHV LW DIIRUGV QR
      5RVVERURXJK0IJ        1RV            1RV   5RVVERURXJK0IJ                   
       &RHWDOY7ULPEOH                      &RHWDOY7ULPEOH
       HWDO                                                                                                         HWDO

                        %$&.*5281'                                     &,PSDLUPHQWRIWKH2EOLJDWLRQRI&RQWUDFW
$+LVWRU\RI6XLWVIRU:RUN5HODWHG,QMXU\LQ2KLR                      7KHWKUHVKROGLVVXHLQWKLVFDVHLVZKHWKHUnDVVXPLQJIRU
                                                                       SXUSRVHVRIWKLVGLVFXVVLRQWKHH[LVWHQFHRIWKHFRQWUDFWXDO
  ,Q$UWLFOH,,6HFWLRQRIWKH2KLR&RQVWLWXWLRQZDV         ULJKWVWKHSODLQWLIIVFODLPnWKHDFWLRQVRIWKHVWDWHGHIHQGDQWV
DPHQGHGWRSURYLGH                                                    YLRODWHGWKHFRQWUDFWVFODXVHRIWKH8QLWHG6WDWHV&RQVWLWXWLRQ
                                                                       :HFRQFOXGHWKDWWKH\GLGQRW:HEHJLQZLWKWKHODQJXDJH
    )RUWKHSXUSRVHRISURYLGLQJFRPSHQVDWLRQWRZRUNPHQ               RI WKH FODXVH LWVHOI DQG WKH SULQFLSOHV HVWDEOLVKHG LQ /RQJ
    DQGWKHLUGHSHQGHQWVIRUGHDWKLQMXULHVRURFFXSDWLRQDO          6DXOW'HY&RY&DOO86
    GLVHDVH RFFDVLRQHG LQ WKH FRXUVH RI VXFK ZRUNPHQjV
    HPSOR\PHQW ODZV PD\ EH SDVVHG HVWDEOLVKLQJ D VWDWH           $UWLFOH,6HFWLRQRIWKH&RQVWLWXWLRQSURKLELWVWKHVWDWHV
    IXQGWREHFUHDWHGE\FRPSXOVRU\FRQWULEXWLRQWKHUHWRE\           IURP HQJDJLQJ LQ VHYHUDO VSHFLILF NLQGV RI DFWLYLWLHV  ,Q
    HPSOR\HUVDQGDGPLQLVWHUHGE\WKHVWDWHGHWHUPLQLQJWKH          SDUWLFXODUWKDWVHFWLRQGHFUHHVWKDWm1R6WDWHVKDOOSDVV
    WHUPVDQGFRQGLWLRQVXSRQZKLFKSD\PHQWVKDOOEHPDGH              DQ\/DZLPSDLULQJWKH2EOLJDWLRQRI&RQWUDFWVl86
    WKHUHIURP  6XFK FRPSHQVDWLRQ VKDOO EH LQ OLHX RI DOO     &2167$UW,6HFWLRQ,Q/RQJ6DXOWWKH6XSUHPH&RXUW
    RWKHUULJKWVWRFRPSHQVDWLRQRUGDPDJHVIRUVXFKGHDWK          H[SUHVVO\ KHOG WKDW WKH FRQWUDFWV FODXVH DSSOLHG WR VWDWH
    LQMXULHVRURFFXSDWLRQDOGLVHDVHDQGDQ\HPSOR\HUZKR            OHJLVODWLRQEXWQRWWRGHFLVLRQVRIVWDWHFRXUWV,QWKDWFDVH
    SD\VSUHPLXPVRUFRPSHQVDWLRQSURYLGHGE\ODZSDVVHG              WKH&RXUWH[DPLQHGLWVMXULVGLFWLRQWRUHYLHZDGHFLVLRQRIWKH
    LQDFFRUGDQFHKHUHZLWKVKDOOQRWEHOLDEOHWRUHVSRQGLQ          KLJKHVWVWDWHFRXUWLQYDOLGDWLQJD1HZ<RUNVWDWXWHWKDW
    GDPDJHV DW FRPPRQ ODZ RU E\ VWDWXWH IRU VXFK GHDWK       KDG LQFRUSRUDWHG /RQJ 6DXOW 'HYHORSPHQW &RPSDQ\ DQG
    LQMXULHVRURFFXSDWLRQDOGLVHDVH                                  JUDQWHGLWFHUWDLQULJKWVWRWKHXVHRIWKHZDWHUVDQGEHGVRI
                                                                       WKH 6W /DZUHQFH 5LYHU  /RQJ 6DXOW  86 DW 
)ROORZLQJ WKLV DPHQGPHQW WKH 2KLR *HQHUDO $VVHPEO\              6KRUWO\ EHIRUH WKH  ODZ ZDV UHYRNHG E\ WKH VWDWH
FUHDWHG WKH 6WDWH ,QVXUDQFH )XQG IRU SD\PHQW RI                 OHJLVODWXUH LQ  /RQJ 6DXOW EURXJKW DQ DFWLRQ LQ VWDWH
FRPSHQVDWLRQ IRU LQMXULHV FRYHUHG XQGHU WKH ZRUNHUVj             FRXUWWRWHVWLWVFRQVWLWXWLRQDOLW\,GDW7KHKLJKHVWVWDWH
FRPSHQVDWLRQV\VWHP$OO2KLRHPSOR\HUVZHUHUHTXLUHGWR              FRXUWKHOGWKDWWKHUHSHDORIWKHVWDWXWHFRXOGQRWRSHUDWH
SD\SUHPLXPVIRUFRYHUDJHE\WKH6WDWH,QVXUDQFH)XQGRUWR            WRLPSDLUDQ\YDOLGFRQWUDFWRUSURSHUW\ULJKWVFRQIHUUHGE\
PDNHDUUDQJHPHQWVWRVHOILQVXUHWKHFRPSHQVDWLRQGXHWKHLU            WKDWVWDWXWHEXWWKDWWKHVWDWXWHH[FHHGHGWKHSRZHURI
HPSOR\HHV IRU LQMXULHV DULVLQJ RXW RI DQG LQ WKH FRXUVH RI   WKHVWDWHOHJLVODWXUHXQGHUWKHVWDWHFRQVWLWXWLRQDQGWKHUHIRUH
HPSOR\PHQW                                                            /RQJ6DXOWKDGDFTXLUHGQRYDOLGIUDQFKLVHRUSURSHUW\ULJKWV
                                                                       XQGHUWKHVWDWXWH,GDW
  ,QWKH2KLR6XSUHPH&RXUWGHFLGHG%ODQNHQVKLSY
&LQFLQQDWL 0LODFURQ &KHP ,QF  1(G  2KLR             /RQJ6DXOWDSSHDOHGWRWKH8QLWHG6WDWHV6XSUHPH&RXUW
ZKLFKKHOGWKDWWKH2KLR&RQVWLWXWLRQGLGQRWSUHFOXGH          ZKLFK XQGHUWRRN D GH QRYR UHYLHZ RI WKH VWDWH FRXUW
DFWLRQVIRUGDPDJHVIRUZRUNSODFHLQMXULHVVXIIHUHGDVDUHVXOW        SURFHHGLQJVWRGHWHUPLQHZKDWHIIHFWLIDQ\WKHVWDWHFRXUW
RI WKH HPSOR\HUjV LQWHQWLRQDO FRQGXFW  ,G DW   7KH     JDYHWRWKHUHSHDOLQUHDFKLQJLWVGHFLVLRQEHFDXVH
*HQHUDO$VVHPEO\UHVSRQGHGZLWKWKH,QWHQWLRQDO7RUW$FW
2KLR 5HYLVHG &RGH m25&l   ZKLFK EHFDPH
    5RVVERURXJK0IJ        1RV            1RV   5RVVERURXJK0IJ                 
      &RHWDOY7ULPEOH                      &RHWDOY7ULPEOH
      HWDO                                                                                                         HWDO

6SHFLILFDOO\LImWKHMXGJPHQWVRXJKWZRXOGH[SHQGLWVHOIRQ          HIIHFWLYH RQ $XJXVW    7KH ,QWHQWLRQDO 7RUW $FW
WKHSXEOLFWUHDVXU\RUGRPDLQlLWLVDVXLWDJDLQVWWKHVWDWH       GHFODUHGWKHLPPXQLW\IURPFRPPRQODZVXLWHVWDEOLVKHGLQ
,GDWQ                                                  $UWLFOH,,6HFWLRQRIWKH2KLR&RQVWLWXWLRQDQHVVHQWLDO
                                                                      DVSHFW RI WKH 2KLR :RUNHUVj &RPSHQVDWLRQ 6\VWHP DQG
  7KHUH LV DQ H[FHSWLRQ WR WKLV UXOH KRZHYHUnD VXLW          H[SODLQHGWKDWWKH6\VWHPZDVLQWHQGHGWRUHPRYHIURPWKH
FKDOOHQJLQJWKHFRQVWLWXWLRQDOLW\RIDVWDWHRIILFLDOjVDFWLRQLV     FRPPRQODZWRUWV\VWHPDOOGLVSXWHVEHWZHHQHPSOR\HUVDQG
QRW RQH DJDLQVW WKH 6WDWH ([ 3DUWH <RXQJ  86    HPSOR\HHVH[FHSWDVH[SUHVVO\SURYLGHGE\WKH$FW25&
7KHKROGLQJLQ([3DUWH<RXQJDSSOLHVRQO\            %
WR SURVSHFWLYH QRQPRQHWDU\ UHOLHI VXFK DV LQMXQFWLRQV
(GHOPDQYsRUGDQ867KHDZDUG                 7KH ,QWHQWLRQDO 7RUW $FW UHVWRUHG WR HPSOR\HUV WKH
PXVW JRYHUQ WKH RIILFLDOjV IXWXUH FRQGXFW  3HQQKXUVW     FRPSOHWHVWDWHFRQWUROOHGFRYHUDJHRIHPSOR\HHFODLPVIRU
86DW7KXVVXLWVGHPDQGLQJUHWURDFWLYHUHOLHIVXFK       ZRUNSODFHLQMXU\LQWZRZD\V)LUVWLWFUHDWHGWKH,QWHQWLRQDO
DVUHTXHVWVIRUPRQH\WKDWVKRXOGKDYHEHHQSDLGGRQRWIDOO         7RUW )XQG >KHUHLQDIWHU m)XQGl@ WR FRPSOHPHQW WKH 6WDWH
XQGHUWKH([3DUWH<RXQJH[FHSWLRQ(GHOPDQ86DW             ,QVXUDQFH )XQGjV PRQRSRO\ RI LQVXUDQFH FRYHUDJH IRU
                                                                  ZRUNHUVj FRPSHQVDWLRQ FODLPV  7KH $FW UHTXLUHG WKDW
                                                                      HPSOR\HUVSDUWLFLSDWHLQWKH)XQGWRFRYHUWKHLUULVNRIORVV
   ,Q WKH FDVH DW KDQG WKH SODLQWLIIV H[SOLFLWO\ GHPDQG      IURPHPSOR\HHFODLPVIRUZRUNSODFHLQMXU\QRWFRYHUHGE\
SURVSHFWLYH LQMXQFWLYH UHOLHI DQG D GHFODUDWRU\ MXGJPHQW       WKHZRUNHUVjFRPSHQVDWLRQV\VWHP25&'DQG
LPSOLFLWO\WKH\VHHNUHLPEXUVHPHQWWKDWWKHFODLPVKRXOGEH          WKDWWKH2KLR:RUNHUVj&RPSHQVDWLRQ$GPLQLVWUDWRUSD\DOO
SDLGRXWRIWKH)XQG:KLOHLWPD\EHDUJXHGWKDWWKHH[SOLFLW       GDPDJHVGHIHQVHDWWRUQH\IHHVDQGFRVWVRXWRIWKHDVVHWVRI
GHPDQG IRU LQMXQFWLYH UHOLHI DQG D GHFODUDWRU\ MXGJPHQW LV    WKH)XQG25&(
PHUHO\ D FRYHU IRU WKH LPSOLFLW UHTXHVW IRU PRQH\ ZH
FRQFOXGH WKDW WKH ([ 3DUWH <RXQJ H[FHSWLRQ DSSOLHV  7KH       6HFRQG WKH ,QWHQWLRQDO 7RUW $FW UHJXODWHG DQG OLPLWHG
SODLQWLIIVFKDOOHQJHWKHFRQVWLWXWLRQDOLW\RIWKH7UHDVXUHUjVDQG     HPSOR\HHFODLPVRILQMXULHVUHVXOWLQJIURPWKHLQWHQWLRQDODFWV
$GPLQLVWUDWRUjVDGPLQLVWUDWLRQRIWKH)XQG:HUHZHWRILQG          RIHPSOR\HUV(DFKVXFKFODLPZDVUHTXLUHGWREHVXEPLWWHG
WKDWWKHDFWLRQVRIWKRVHRIILFLDOVDUHXQFRQVWLWXWLRQDODQGWR      WRDMXGJHRIWKH2KLR&RXUWRI&RPPRQ3OHDVZKRZRXOG
LVVXHDQLQMXQFWLRQSUHYHQWLQJWKHFRQWLQXHGXQFRQVWLWXWLRQDO         GHWHUPLQHOLDELOLW\IRUGDPDJHVWKDWLVZKHWKHUWKHHPSOR\HU
DGPLQLVWUDWLRQRIWKH)XQGWKHSODLQWLIIVZRXOGQRWQHHGD           FRPPLWWHG DQ LQWHQWLRQDO DFW WKDW FDXVHG WKH LQMXU\  25&
MXGJPHQW DJDLQVW WKH VWDWH DZDUGLQJ WKHP PRQH\ GDPDJHV          '  ,I WKH &RPPRQ 3OHDV &RXUW IRXQG WKH
EHFDXVHWKHLQMXQFWLRQZRXOGOHDGWRWKHODZIXODGPLQLVWUDWLRQ        HPSOR\HUOLDEOHWKH,QGXVWULDO&RPPLVVLRQRI2KLRZRXOG
RI WKH )XQG DQG UHLPEXUVHPHQW IRU WKH SODLQWLIIV              WKHQGHWHUPLQHWKHDPRXQWRIGDPDJHVDQGPDNHDQDZDUG
$FFRUGLQJO\ZHKROGWKDWWKH7UHDVXUHUDQG$GPLQLVWUDWRUDUH         ZKLFKFRXOGQRWH[FHHG,G7KH,QWHQWLRQDO
QRWHQWLWOHGWR(OHYHQWK$PHQGPHQWLPPXQLW\                          7RUW$FWGLGQRWFRQWDLQDQ\SURYLVLRQIRUVHWWOHPHQWRIWKHVH
                                                                      FODLPV
                                                                        )URPXQWLOWKH,QWHQWLRQDO7RUW$FWZDVHQDFWHGLQ
                                                                      2KLRHPSOR\HUVLQFOXGLQJWKHRULJLQDOSODLQWLIILQWKLV
                                                                      DFWLRQ 5RVVERURXJK 0DQXIDFWXULQJ &RPSDQ\ >KHUHLQDIWHU
     5RVVERURXJK0IJ        1RV          1RV   5RVVERURXJK0IJ                   
      &RHWDOY7ULPEOH                    &RHWDOY7ULPEOH
      HWDO                                                                                                       HWDO

m5RVVERURXJKl@FRXOGDQGGLGREWDLQFRPPHUFLDOLQVXUDQFH           MXGJPHQWXQGHU5XOHH7KRVHPRWLRQVZHUHGHQLHGDQG
SROLFLHVRUHQGRUVHPHQWVFDOOHGmVWRSJDSlLQVXUDQFHIRUWKH      WKHSODLQWLIIVWLPHO\DSSHDOHGFKDOOHQJLQJRQO\WKHGLVPLVVDO
SXUSRVH RI FRYHULQJ WKH QHZ ULVN RI ORVV IURP HPSOR\HH     RIWKHLUIHGHUDOFODLPV
FODLPVIRUZRUNSODFHLQMXULHVFUHDWHGE\%ODQNHQVKLS)URP
$XJXVW   RQZDUG 2KLR HPSOR\HUV LQFOXGLQJ                                       $1$/<6,6
5RVVERURXJK ZHUH UHTXLUHG WR SXUFKDVH WKHLU LQVXUDQFH
FRYHUDJH IRU WKH SRVW%ODQNHQVKLS HPSOR\HH FODLPV IRU         $6WDQGDUGRI5HYLHZ
ZRUNSODFHLQMXU\IURPWKH,QWHQWLRQDO7RUW)XQG
                                                                       :H UHYLHZ GH QRYR D GLVWULFW FRXUWjV GLVPLVVDO RI D
  2QsDQXDU\WKH2KLR&RXUWRI$SSHDOVH[SOLFLWO\         FRPSODLQW IRU IDLOXUH WR VWDWH D FODLP XQGHU 5XOH E
UHFRJQL]HG WKDW WKH ,QWHQWLRQDO 7RUW $FW GLG QRW PHQWLRQ    %RZHU Y )HG ([SUHVV &RUS  )G   WK &LU
VHWWOHPHQWDJUHHPHQWV&KU\VOHU0RWRUV&RUSY0D\ILHOG          DQGIRUODFNRIVXEMHFWPDWWHUMXULVGLFWLRQXQGHU5XOH
1R $3  :/  DW 
 2KLR &W $SS         EsRQHVY&LW\RI/DNHODQG7HQQ)G
sDQ7KDWFRXUWKHOGWKDWWKH)XQGZDVQRWFUHDWHG      WK &LU   :H PXVW DFFHSW DV WUXH DOO RI WKH ZHOO
WR UHLPEXUVH HPSOR\HUV IRU DPRXQWV SDLG SXUVXDQW WR          SOHDGHG DOOHJDWLRQV RI WKH FRPSODLQW FRQVWUXLQJ WKRVH
VHWWOHPHQWRIFODLPVUDWKHUWKH,QWHQWLRQDO7RUW$FWUHTXLUHG     DOOHJDWLRQVLQWKHOLJKWPRVWIDYRUDEOHWRWKHSODLQWLII%RZHU
DFRXUWGHWHUPLQDWLRQRIOLDELOLW\IROORZHGE\WKH,QGXVWULDO       )GDW)RUDGLVPLVVDOWREHSURSHUmLWPXVWDSSHDU
&RPPLVVLRQjVGHWHUPLQDWLRQRIGDPDJHVZKLFKZHUHWREH             EH\RQGGRXEWWKDWWKHSODLQWLIIZRXOGQRWEHDEOHWRUHFRYHU
SDLGIURPWKH)XQGQRWIURPWKHHPSOR\HUjVSRFNHW,G            XQGHUDQ\VHWRIIDFWVWKDWFRXOGEHSUHVHQWHGFRQVLVWHQWZLWK
                                                                    WKHDOOHJDWLRQVRIWKHFRPSODLQWl,G
   7KH ,QWHQWLRQDO 7RUW $FW UHPDLQHG JRRG ODZ XQWLO
$XJXVWZKHQWKH2KLR6XSUHPH&RXUWKHOGWKH$FW           %(OHYHQWK$PHQGPHQW,PPXQLW\
XQFRQVWLWXWLRQDO LQ WRWR EHFDXVH LW H[FHHGHG WKH VFRSH RI
OHJLVODWLYHDXWKRULW\JUDQWHGWRWKH2KLR*HQHUDO$VVHPEO\             $V D WKUHVKROG PDWWHU ZH PXVW GHWHUPLQH ZKHWKHU WKH
XQGHUWKH2KLR&RQVWLWXWLRQ%UDG\Y6DIHW\.OHHQ&RUS          7UHDVXUHU DQG WKH $GPLQLVWUDWRU DUH HQWLWOHG WR (OHYHQWK
1(G2KLR7KH2KLR6XSUHPH               $PHQGPHQWLPPXQLW\7KH(OHYHQWK$PHQGPHQWSURYLGHV
&RXUWIRXQGWKDWWKH:RUNHUVj&RPSHQVDWLRQ$FWDIIRUGHG             WKDWm>W@KHsXGLFLDOSRZHURIWKH8QLWHG6WDWHVVKDOOQRWEH
SURWHFWLRQIRUQHJOLJHQWDFWVEXWQRWIRULQWHQWLRQDOFRQGXFW       FRQVWUXHGWRH[WHQGWRDQ\VXLWLQODZRUHTXLW\FRPPHQFHG
DQGWKDWWKH,QWHQWLRQDO7RUW$FWGLGQRWIXUWKHUWKHSXUSRVHV      RUSURVHFXWHGDJDLQVWRQHRIWKH8QLWHG6WDWHVE\&LWL]HQVRI
RI$UWLFOH,,6HFWLRQRIWKH2KLR&RQVWLWXWLRQUDWKHULW      DQRWKHU 6WDWH RU E\ &LWL]HQV RU 6XEMHFWV RI DQ\ )RUHLJQ
FLUFXPYHQWHG WKDW VHFWLRQ FRPSOHWHO\  ,G DW            6WDWHl86 &2167 DPHQG;,$QXQFRQVHQWLQJVWDWHLV
$QQRXQFLQJWKDWLQWHQWLRQDODFWVFRPPLWWHGE\DQHPSOR\HU          LPPXQHIURPVXLWVEURXJKWLQIHGHUDOFRXUWVE\FLWL]HQVRI
HYHQLIFRPPLWWHGDWWKHZRUNSODFHDUHRXWVLGHWKHVFRSHRI        WKDWVWDWHDVZHOODVFLWL]HQVRIDQRWKHUVWDWHDQGVXLWVDJDLQVW
WKHSXUSRVHVRIWKH2KLR&RQVWLWXWLRQLGWKH2KLR6XSUHPH        VWDWHRIILFLDOVDUHEDUUHGZKHQmWKHVWDWHLVWKHUHDOVXEVWDQWLDO
&RXUWKHOGWKDWDQHPSOR\HHKDVWKHULJKWWRUHFHLYHZRUNHUVj       SDUW\ LQ LQWHUHVWl  3HQQKXUVW 6WDWH 6FK 	 +RVS Y
FRPSHQVDWLRQEHQHILWVDQGKDVLQDGGLWLRQDFDXVHRIDFWLRQ         +DOGHUPDQ86m>5@HOLHIVRXJKW
DJDLQVW DQ HPSOR\HU IRU DQ H[FHVV RI GDPDJHV RYHU WKH      QRPLQDOO\DJDLQVWDQRIILFHULVLQIDFWDJDLQVWWKHVRYHUHLJQLI
                                                                    WKH GHFUHH ZRXOG RSHUDWH DJDLQVW WKH ODWWHUl  ,G DW 
    5RVVERURXJK0IJ        1RV              1RV   5RVVERURXJK0IJ                  
      &RHWDOY7ULPEOH                        &RHWDOY7ULPEOH
      HWDO                                                                                                           HWDO

E KROGLQJ WKDW XQGHU 2KLR ODZ DQ XQFRQVWLWXWLRQDO        DPRXQWUHFHLYHGRUUHFHLYDEOHXQGHUWKH2KLR&RQVWLWXWLRQ
VWDWXWHZKHWKHUVWDWHRUIHGHUDOLVLQUHDOLW\QRODZWKDWLWV       LGDW
XQFRQVWLWXWLRQDOLW\ GDWHV IURP WKH WLPH RI WKH ODZjV
HQDFWPHQWDQGWKHVWDWXWHLVWKHUHIRUHLQRSHUDWLYHDVLILWKDG          ,QUHVSRQVHWR%UDG\WKH2KLR*HQHUDO$VVHPEO\HQDFWHG
QHYHU EHHQ SDVVHG  7KH GLVWULFW FRXUW IXUWKHU KHOG WKDW D    DQXQFRGLILHGODZ6%WK*HQ$VVHP5HJ6HVV
FRQWUDFW UHVWLQJ RQ DQ XQFRQVWLWXWLRQDO VWDWXWH FUHDWHV QR       2KLRHQDFWHG>KHUHLQDIWHUm6%@ZKLFKZDV
REOLJDWLRQWKDWFRXOGEHLPSDLUHGE\VXEVHTXHQWOHJLVODWLRQ            VLJQHG E\ WKH *RYHUQRU RQ sXQH   DQG EHFDPH
7KH GLVWULFW FRXUW DFNQRZOHGJHG DQ H[FHSWLRQ WR WKLV             HIIHFWLYH RQ 6HSWHPEHU    6%    IRUPDOO\
SULQFLSOH ZKHUH D OHJLVODWLYH DFW KDV EHHQ KHOG WR EH         UHSHDOHGWKHXQFRQVWLWXWLRQDO,QWHQWLRQDO7RUW$FW6HFWLRQ
FRQVWLWXWLRQDO SDUWLFXODUO\ E\ WKH 2KLR 6XSUHPH &RXUW D        RI6%UHTXLUHGWKHWUDQVIHURIWKH)XQGjVDVVHWVLQWRD
VXEVHTXHQWMXGLFLDOGHFLVLRQKROGLQJWKHDFWXQFRQVWLWXWLRQDO           QHZ,QWHQWLRQDO7RUW'LVEXUVHPHQW)XQGWKDWZDVWREHLQWKH
PD\EHOLPLWHGWRSURVSHFWLYHRSHUDWLRQRQO\$FFRUGLQJO\             FXVWRG\ RI WKH 6WDWH 7UHDVXUHU EXW QRW SDUW RI WKH VWDWH
WKHFRXUWVDLGULJKWVDFTXLUHGXQGHUDVWDWXWHDGMXGJHGE\D           WUHDVXU\DQGZDVWREHXVHGVROHO\WRmSD\DWWRUQH\jVIHHV
FRXUW WR EH FRQVWLWXWLRQDO DUH YDOLG OHJDO ULJKWV WKDW DUH     WRDWWRUQH\VIRUVHUYLFHVSURYLGHGRQEHKDOIRIDQHPSOR\HU
SURWHFWHGE\WKHFRQVWLWXWLRQQRWE\MXGLFLDOGHFLVLRQ%XWWKH       XQGHUIRUPHUVHFWLRQRIWKH5HYLVHG&RGHIRUDWWRUQH\jV
FRXUWKHOGWKDWWKLVH[FHSWLRQGLGQRWDSSO\WRWKH,QWHQWLRQDO         IHHV ILOHG RQ RU EHIRUH 2FWREHU  l XS WR D WRWDO
7RUW$FWEHFDXVHWKDWVWDWXWHKDGQHYHUEHHQDGMXGJHGWREH             DPRXQW QRW WR H[FHHG  WR SD\ IRU WKH FRVWV RI
FRQVWLWXWLRQDODQGLWLVWKHJHQHUDOUXOHWKDWDQ\RQHDVVXPLQJ         DGPLQLVWUDWLRQ RI WKH )XQG LQ DQ DPRXQW QRW WR H[FHHG
WKHYDOLGLW\RIOHJLVODWLRQGRHVVRDWKLVRZQSHULO0RUHRYHU        DQGIURPWKHPRQH\VUHPDLQLQJWRSURUDWHDFUHGLW
WKH FRXUW SRLQWHG RXW WKH 2KLR 6XSUHPH &RXUWjV 0D\ILHOG        WRWKHDGPLQLVWUDWLYHDVVHVVPHQWRIHPSOR\HUVWKDWKDGSDLG
GHFLVLRQ PDGH LW FOHDU WKDW %UDG\jV LQYDOLGDWLRQ RI WKH         LQWR WKH ,QWHQWLRQDO 7RUW )XQG UHGXFLQJ VXFK FUHGLW IRU
,QWHQWLRQDO7RUW$FWDSSOLHGUHWURDFWLYHO\                             DPRXQWVSDLGRXWHLWKHULQDZDUGVRUDWWRUQH\jVIHHVSXUVXDQW
                                                                        WRWKHSULRUVHFWLRQ$VRI)HEUXDU\WKH
  %HFDXVHWKHXQFRQVWLWXWLRQDO,QWHQWLRQDO7RUW$FWFUHDWHG             )XQGKDGWRWDODVVHWVRI
QRHQIRUFHDEOHLQWHUHVWRUSURSHUW\ULJKWLQ5RVVERURXJKWKH
GLVWULFW FRXUW FRQFOXGHG WKH FRXQWV LQ 5RVVERURXJKjV               7KH%UDG\GHFLVLRQDQGWKHHQDFWPHQWRI6%ZHUH
FRPSODLQWDOOHJLQJFRQWUDFWVFODXVHDQGGXHSURFHVVYLRODWLRQV          IROORZHGE\DQ2KLR6XSUHPH&RXUWSHUFXULDPGHFLVLRQRQ
DQG DQ XQFRQVWLWXWLRQDO WDNLQJ IDLOHG WR VWDWH FODLPV XSRQ      6HSWHPEHUKROGLQJWKDW%UDG\jVLQYDOLGDWLRQRIWKH
ZKLFK UHOLHI PD\ EH JUDQWHG  %HFDXVH 5RVVERURXJKjV              ,QWHQWLRQDO7RUW$FWLQLWVHQWLUHW\KDGQHJDWHGDQ\ULJKWRI
FRQVWLWXWLRQDOFODLPVIDLOHGWKHFRXUWKHOGLWVFODLP          HPSOR\HUVWRUHLPEXUVHPHQWIURPWKHLQWHQWLRQDOWRUWIXQGIRU
DOVR IDLOHG  6LQFH QR IHGHUDO FODLPV UHPDLQHG WKH GLVWULFW   PRQH\VSDLGRXWLQVHWWOHPHQWRIFODLPVDQGDWWRUQH\IHHV
FRXUW FKRVH QRW WR H[HUFLVH MXULVGLFWLRQ RYHU WKH VWDWH ODZ    &KU\VOHU 0RWRUV &RUS Y 0D\ILHOG  1(G  
FODLPV                                                                 2KLR
  $IWHUWKH7ULSOH$DQG5\NRQFRPSODLQWVZHUHGLVPLVVHG
RQ WKH VDPH JURXQGV DV WKH 5RVVERURXJK FODLPV KDG EHHQ
GLVPLVVHGDOORIWKHSODLQWLIIVPRYHGWRYDFDWHWKHGLVPLVVDOV
XQGHU 5XOH D RU DOWHUQDWLYHO\ WR DOWHU RU DPHQG WKH
         5RVVERURXJK0IJ        1RV                             1RV   5RVVERURXJK0IJ                    
          &RHWDOY7ULPEOH                                       &RHWDOY7ULPEOH
          HWDO                                                                                                                          HWDO

%7LPH/LQHRI(YHQWVIRUWKH3UHVHQW$FWLRQ                                               ,Q 'HFHPEHU  DQG sDQXDU\  DIWHU WKH %UDG\
                                                                                           GHFLVLRQ DIWHU 6%  EHFDPH HIIHFWLYH DQG DIWHU WKH
   ,Q sDQXDU\  5RVVERURXJK ZDV VXHG IRU GDPDJHV LQ                            0D\ILHOG GHFLVLRQ 5RVVERURXJK VHWWOHG WKH VWDWH FRXUW
VWDWHFRXUWSXUVXDQWWR25&E\DZRUNHUZKRKDG                                 ODZVXLWV DULVLQJ RXW RI WKH  H[SORVLRQ DQG SDLG WKH
EHHQLQMXUHGDQGE\WKHHVWDWHVRIWZRZRUNHUVZKRKDGEHHQ                                SODLQWLIIV WKH DJUHHG DPRXQWV  5RVVERURXJK WKHQ VRXJKW
NLOOHG LQ DQ H[SORVLRQ DW LWV 2KLR PDQXIDFWXULQJ SODQW RQH                        UHLPEXUVHPHQWIURPWKH)XQGDQGXQVXFFHVVIXOLQWKDWHIIRUW
\HDUHDUOLHU1RGHWHUPLQDWLRQRIOLDELOLW\ZDVPDGHE\WKH                               DPHQGHGWKHFRPSODLQWLQWKLVDFWLRQWRLQFOXGHWKHIDFWRI
VWDWHFRXUW,Q6HSWHPEHUVKRUWO\EHIRUHWKHHIIHFWLYH                              VHWWOHPHQW RI WKH VWDWH ODZVXLWV DQG WKH VWDWH GHIHQGDQWVj
GDWHRI6%5RVVERURXJKEURXJKWWKLVDFWLRQLQIHGHUDO                               IDLOXUHWRUHLPEXUVH
FRXUWDJDLQVWs:HVOH\7ULPEOH$GPLQLVWUDWRURIWKH2KLR
%XUHDXRI:RUNHUVj&RPSHQVDWLRQDQG0DU\(OOHQ:LWKURZ                                      5RVVERURXJKjVFRPSODLQWDOOHJHGVL[VHSDUDWHFRXQWV)LUVW
7UHDVXUHURIWKH6WDWHRI2KLRLQWKHLURIILFLDOFDSDFLWLHV                       
                                                                                           5RVVERURXJKFODLPHGWKDWWKH,QWHQWLRQDO7RUW$FWKDGYHVWHG
VHHNLQJDMXGJPHQWGHFODULQJWKDW6%YLRODWHGYDULRXV                                LQ2KLRHPSOR\HUVFRQWUDFWXDOULJKWVWRLQGHPQLILFDWLRQE\WKH
RI 5RVVERURXJKjV FRQVWLWXWLRQDO ULJKWV DQG UHTXLULQJ WKDW                            )XQG IRU GDPDJHV DWWRUQH\jV IHHV DQG FRVWV UHODWHG WR
SD\PHQW EH PDGH IURP WKH ,QWHQWLRQDO 7RUW 'LVEXUVHPHQW                              ZRUNSODFH LQMXULHV WKDW LQ UHOLDQFH RQ WKH ,QWHQWLRQDO 7RUW
)XQGRIDQ\GDPDJHVDWWRUQH\VIHHVDQGFRVWVUHVXOWLQJIURP                              $FW5RVVERURXJKKDGSDLGSUHPLXPVLQWRWKH,QWHQWLRQDO7RUW
WKHVWDWHFRXUWDFWLRQV,QDQRUGHUVWLSXODWHGWRE\WKHSDUWLHV                        )XQGDQGQRZKDGYHVWHGFRQWUDFWXDOULJKWVWRUHLPEXUVHPHQW
WKH GLVWULFW FRXUW VWD\HG WKH WUDQVIHU RI WKH PRQH\V LQ WKDW                     IURPWKDW)XQGDQGWKDW6%YLRODWHV$UWLFOH,6HFWLRQ
)XQGSHQGLQJUHVROXWLRQRIWKLVOLWLJDWLRQ                                                &ODXVH  WKH FRQWUDFWV FODXVH RI WKH 8QLWHG 6WDWHV
                                                                                           &RQVWLWXWLRQ EHFDXVH LW LPSDLUV 5RVVERURXJKjV YHVWHG
                                                                                           FRQWUDFWXDO ULJKWV WR UHLPEXUVHPHQW IURP WKDW )XQG  7KH
                                                                                          VHFRQG FRXQW FODLPHG WKDW 5RVVERURXJK KDG SDLG LWV
       $,3/7,    +   'HYHU\      :LOOLDP    3IHLIIHU    DQG    &   sDPHV      &RQUDG
VXFFHHGHG      7ULPEOH      s   .HQQHWK    %ODFNZHOO     DQG    sRVHSK     7   'HWHUV   SUHPLXPVLQWRWKH,QWHQWLRQDO7RUW)XQGDVUHTXLUHGE\2KLR
VXFFHHGHG :LWKURZ                                                                         ODZDQGWKHGHQLDORILWVFODLPVIRUUHLPEXUVHPHQWIURPWKDW
                                                                                          )XQG YLRODWHG WKH GXH SURFHVV FODXVH RI WKH )RXUWHHQWK
       $OVR QDPHG DV GHIHQGDQWV LQ WKLV DFWLRQ DUH VHYHUDO FRUSRUDWH                       $PHQGPHQW,QWKHWKLUGFRXQW5RVVERURXJKFODLPHGWKDW
HQWLWLHV ZKLFK 5RVVERURXJK VXHV ERWK LQGLYLGXDOO\ DQG DV UHSUHVHQWDWLYHV
                                                                                           6%  DQG WKH VWDWH GHIHQGDQWVj GHQLDO RI LWV FODLPV IRU
RI D FHUWLILHG FODVV RI SULYDWH HPSOR\HUV VHHNLQJ LQ D VWDWH FRXUW DFWLRQ WR
KDYH WKH DVVHWV RI WKH ,QWHQWLRQDO 7RUW )XQG WUDQVIHUUHG WR WKH :RUNHUVj
                                                                                           UHLPEXUVHPHQWIURPWKH)XQGGHSULYHGLWRISURSHUW\ZLWKRXW
&RPSHQVDWLRQ )XQG )XUWKHU WKHUH DUH DOVR VHYHUDO DGGLWLRQDO SODLQWLIIV
                                                                                           FRPSHQVDWLRQ LQ YLRODWLRQ RI WKH )LIWK DQG )RXUWHHQWK
ZKR ZHUH SHUPLWWHG WR LQWHUYHQH LQ WKH LQVWDQW DFWLRQ HDFK RI WKHP DVVHUWV                $PHQGPHQWV5RVVERURXJKjVIRXUWKFRXQWDVVHUWHGD
FODLPV DJDLQVW WKH ,QWHQWLRQDO 7RUW )XQG )LQDOO\ SODLQWLIIV 7ULSOH $ DQG                 FODLP DJDLQVW WKH VWDWH GHIHQGDQWVj DFWLRQV  IRU WKH DOOHJHG
5\NRQ     VXHG WKH VWDWH GHIHQGDQWV LQ VHSDUDWH DFWLRQV UDLVLQJ FODLPV
                                                                                           FRQVWLWXWLRQDOYLRODWLRQV7KHILIWKFRXQWGHPDQGHGWKDWWKH
HVVHQWLDOO\ VLPLODU WR WKRVH UDLVHG E\ 5RVVERURXJK WKH 7ULSOH $ DQG
                                                                                           DVVHWV RI WKH )XQG EH SODFHG LQ D FRQVWUXFWLYH WUXVW WR
                                                                                           LQGHPQLI\5RVVERURXJK&RXQWVL[DVVHUWHGVWDWXWRU\ULJKWV
5\NRQ DFWLRQV ZHUH FRQVROLGDWHG ZLWK 5RVVERURXJKjV DFWLRQ LQ WKH GLVWULFW
FRXUW DQG GLVPLVVHG DQG KDYH EHHQ FRQVROLGDWHG ZLWK 5RVVERURXJKjV
DSSHDO IRU EULHILQJ DQG DUJXPHQW %HFDXVH RXU GLVSRVLWLRQ RI WKLV DFWLRQ                   XQGHUWKH,QWHQWLRQDO7RUW$FW
ZLWK UHJDUG WR 5RVVERURXJK LV GLVSRVLWLYH RI WKH FODLPV RI DOO SODLQWLIIV
DJDLQVW DOO GHIHQGDQWV LW LV QRW QHFHVVDU\ IRU XV WR GHVFULEH LQ DQ\ GHWDLO                 2Q6HSWHPEHUWKHGLVWULFWFRXUWJUDQWHGWKHVWDWH
WKH   FODLPV   RI   WKH   LQWHUYHQRU   SODLQWLIIV   RU   7ULSOH   $    DQG   5\NRQ   RU
                                                                                           GHIHQGDQWVjPRWLRQWRGLVPLVVSXUVXDQWWR5XOHVEDQG
5RVVERURXJKjV FODLPV DJDLQVW WKH FRUSRUDWH GHIHQGDQWV