Court Opinion

ID: 2969616
Source: CourtListenerOpinion
Date Created: 2015-09-22 15:53:11.005374+00
Date Added: 2024-06-11T12:44:53.909091
License: Public Domain

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 DS

81,7('67$7(6&28572)$33($/6
              )257+(6,;7+&,5&8,7
                BBBBBBBBBBBBBBBBB

%(/,1'$ .,1*E\KHUQH[W          ;
IULHQG6FDUOHW.LQJ5211,(         
s2( 6:25'E\KLVQH[WIULHQG 
                                      1RV
%DUEDUD6ZRUG&/$<721              
+$//E\KLVQH[WIULHQG             !
                                    
'DUOHQH0LWFKHOO                   
           3ODLQWLIIV$SSHOOHHV 
             &URVV$SSHOODQWV 
                                    
            Y                      
                                    
                                    
)/2<' &2817< %2$5' 2)               
('8&$7,21                          
          'HIHQGDQW$SSHOODQW 
               &URVV$SSHOOHH 
                                    
                                   1
       $SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW
     IRUWKH(DVWHUQ'LVWULFWRI.HQWXFN\DW3LNHYLOOH
 1RVnsRVHSK0+RRG
                       'LVWULFWsXGJH
                $UJXHG$SULO
          'HFLGHGDQG)LOHG2FWREHU
%HIRUH(1*(/1(/621DQG1255,6&LUFXLWsXGJHV

                           
     .LQJHWDOY)OR\G&RXQW\           1RV
      %GRI(GXFDWLRQ

                     BBBBBBBBBBBBBBBBB
                          &2816(/
$5*8('  5REHUW / &KHQRZHWK &+(12:(7+ /$:
2)),&()UDQNIRUW.HQWXFN\IRU$SSHOODQWsHIIUH\sRKQ
.XHEOHU5$0%,&85(0,//(5	.8(%/(5/H[LQJWRQ
.HQWXFN\ IRU $SSHOOHHV  21 %5,()  5REHUW /
&KHQRZHWK sRKQ & )RJOH ,,, &+(12:(7+ /$:
2)),&()UDQNIRUW.HQWXFN\IRU$SSHOODQWsHIIUH\sRKQ
.XHEOHU5$0%,&85(0,//(5	.8(%/(5/H[LQJWRQ
.HQWXFN\IRU$SSHOOHHV
  1(/621sGHOLYHUHGWKHRSLQLRQRIWKHFRXUWLQZKLFK
1255,6 s MRLQHG  (1*(/ s SS  GHOLYHUHG D
VHSDUDWHGLVVHQWLQJRSLQLRQ
                     BBBBBBBBBBBBBBBBB
                         23,1,21
                     BBBBBBBBBBBBBBBBB
   '$9,' $ 1(/621 &LUFXLW sXGJH  7KH TXHVWLRQ
SUHVHQWHGLQWKLVFDVHoDQDFWLRQEURXJKWXQGHUWKHVWDWXWH
QRZNQRZQDVWKH,QGLYLGXDOVZLWK'LVDELOLWLHV(GXFDWLRQ$FW
,'($  86&   HW VHT o  LV ZKDW OLPLWDWLRQV
SHULRGDSSOLHVWRWKHILOLQJRIVXLWVIRUDWWRUQH\IHHVLQFXUUHG
LQ DGPLQLVWUDWLYH SURFHHGLQJV ZKHUH WKH VXEVWDQWLYH LVVXHV
ZHUH UHVROYHG LQ IDYRU RI WKH FODLPDQWV  7KH $FW LWVHOI
FRQWDLQVQRVWDWXWHRIOLPLWDWLRQVIRUVXFKVLWXDWLRQVDQGWKHUH
LVDFLUFXLWVSOLWDVWRWKHDSSURDFKWKDWVKRXOGEHIROORZHGLQ
ILOOLQJWKHJDS
   &KDUDFWHUL]LQJIHHFDVHVDVDQFLOODU\WRWKHGLVSXWHWKDWZDV
UHVROYHG DGPLQLVWUDWLYHO\ WKH 6HYHQWK &LUFXLW ERUURZV WKH
VWDWH ODZ OLPLWDWLRQV SHULRG IRU MXGLFLDO UHYLHZ RI
DGPLQLVWUDWLYH DJHQF\ GHFLVLRQV  6HH 3RZHUV Y ,QGLDQD
'HSDUWPHQWRI(GXFDWLRQ'LYLVLRQRI6SHFLDO(GXFDWLRQ
)G  WK &LU  DSSO\LQJ WKH GD\ OLPLWDWLRQV
SHULRGSUHVFULEHGE\,QGLDQDODZIRUVHHNLQJMXGLFLDOUHYLHZ
   .LQJHWDOY)OR\G&RXQW\          1RV       1RV             .LQJHWDOY)OR\G&RXQW\         
     %GRI(GXFDWLRQ                                                                                        %GRI(GXFDWLRQ

:KDWHYHU ZH PLJKW WKLQN DERXW WKH ZLVGRP RI WKH            RI DGPLQLVWUDWLYH GHFLVLRQV LQ VSHFLDO HGXFDWLRQ PDWWHUV
DPHQGPHQWRUDGGLQJIXUWKHUFDVHORDGWRWKHIHGHUDOGRFNHW       5HHG Y 0RNHQD 6FKRRO 'LVWULFW 1R  :LOO &RXQW\
RU RWKHU PRUH VDOXWDU\ UHPHGLHV WKDQ WKDW SURYLGHG E\      ,OOLQRLV)GWK&LUDSSO\LQJWKHGD\
&RQJUHVV , GR QRW EHOLHYH ZH PD\ VR UHVWULFW DQG WKXV   OLPLWDWLRQVSHULRGSUHVFULEHGE\,OOLQRLVODZIRUVXLWVVHHNLQJ
IUXVWUDWH WKH HYLGHQW LQWHQW RI &RQJUHVV E\ WKLV QDUURZ    UHYLHZRIDFWLRQVE\VFKRRODXWKRULWLHV
OLPLWDWLRQ
                                                                      7KH (OHYHQWK &LUFXLW KDV UHMHFWHG WKH 6HYHQWK &LUFXLW
                                                                   DSSURDFK RQ WKH JURXQG WKDW ,'($ FUHDWHV DQ LQGHSHQGHQW
                                                                   DWWRUQH\IHHFODLPFRJQL]DEOHRQO\LQWKHFRXUWV6HH=LSSHUHU
                                                                   Y6FKRRO%RDUGRI6HPLQROH&RXQW\)ORULGD)G
                                                                   WK&LUERUURZLQJWKHIRXU\HDU)ORULGDVWDWXWHRI
                                                                   OLPLWDWLRQVDSSOLFDEOHWRFODLPVEDVHGRQDVWDWXWRU\OLDELOLW\
                                                                   ,Q WKH FDVH DW EDU WKH GLVWULFW FRXUW ILQGLQJ =LSSHUHU
                                                                   SHUVXDVLYH GHFOLQHG WR XVH D GD\ OLPLWDWLRQV SHULRG
                                                                   SUHVFULEHG E\ .HQWXFN\ ODZ IRU DSSHDOV RI DGPLQLVWUDWLYH
                                                                   RUGHUV DQG LQVWHDG DSSOLHG WKH VWDWHjV ILYH\HDU VWDWXWH RI
                                                                   OLPLWDWLRQV IRU DFWLRQV mXSRQ D OLDELOLW\ FUHDWHG E\ VWDWXWH
                                                                   ZKHQ QR RWKHU WLPH LV IL[HG E\ WKH VWDWXWH FUHDWLQJ WKH
                                                                   OLDELOLW\l  6HH .LQJ Y )OR\G &RXQW\ %RDUG RI (GXFDWLRQ
                                                                   )6XSSG('.\
                                                                     8SRQGHQRYRUHYLHZZHFRQFOXGHWKDWWKHGLVWULFWFRXUW
                                                                   HUUHG:HDJUHHZLWKWKH6HYHQWK&LUFXLWWKDWWKHDWWRUQH\IHH
                                                                   FDVH LV DQFLOODU\ WR WKH DGPLQLVWUDWLYH SURFHHGLQJ DQG ZH
                                                                   VKDOOUHYHUVHWKHMXGJPHQWHQWHUHGE\WKHGLVWULFWFRXUW
                                                                                                     ,
                                                                     7KHSODLQWLIIVWKUHHVSHFLDOHGXFDWLRQVWXGHQWVLQWKHVFKRRO
                                                                   V\VWHP RI )OR\G &RXQW\ .HQWXFN\ FKDOOHQJHG WKH )OR\G
                                                                   &RXQW\%RDUGRI(GXFDWLRQXQGHUWKH,'($ZKHQWKHERDUG
                                                                   XQLODWHUDOO\FKDQJHGWKHLUVFKRROSODFHPHQWIRUWKH\HDU
                                                                   7KHSODFHPHQWFKDQJHZDVPDGHZLWKRXWWKHSULRUQRWLFH
                                                                   DQGFRQVXOWDWLRQZLWKWKHVWXGHQWVjm$GPLVVLRQVDQG5HOHDVH
                                                                   &RPPLWWHHlUHTXLUHGE\WKH,'($
                                                                     )ROORZLQJDGPLQLVWUDWLYHGXHSURFHVVKHDULQJVLQZKLFKWKH
                                                                   SODLQWLIIVZHUHUHSUHVHQWHGE\FRXQVHODKHDULQJRIILFHUIRXQG
                                                                   WKDWWKH,'($KDGEHHQYLRODWHGLQDOOWKUHHFDVHV7KH%RDUG
                                                                   RI(GXFDWLRQDSSHDOHGWRWKH([FHSWLRQDO&KLOGUHQ$SSHDOV
       .LQJHWDOY)OR\G&RXQW\               1RV           1RV             .LQJHWDOY)OR\G&RXQW\        
        %GRI(GXFDWLRQ                                                                                                 %GRI(GXFDWLRQ

%RDUG .HQWXFN\jV KLJKHVW DGPLQLVWUDWLYH UHYLHZ OHYHO IRU                  D FLYLO DFWLRQl LQ mDQ\ 6WDWH FRXUW RI FRPSHWHQW
,'($ GLVSXWHV  %\ RUGHUV GDWHG sDQXDU\   WKH                   MXULVGLFWLRQ RU LQ D GLVWULFW FRXUW RI WKH 8QLWHG 6WDWHV
$SSHDOV%RDUGUXOHGDJDLQVWWKH%RDUGRI(GXFDWLRQDQGLQ                        ZLWKRXW UHJDUG WR WKH DPRXQW LQ FRQWURYHUV\l
IDYRURIWKHVWXGHQWV7KH%RDUGRI(GXFDWLRQGLGQRWVHHN                       H  7KH FRPSODLQW DQG WKHUHIRUH WKH FLYLO
MXGLFLDOUHYLHZ                                                                 DFWLRQ PD\ FRQFHUQ mDQ\ PDWWHU UHODWLQJ WR WKH
                                                                                 LGHQWLILFDWLRQ HYDOXDWLRQ RU HGXFDWLRQDO SODFHPHQW RI
   2Q1RYHPEHUPRUHWKDQQLQHPRQWKVODWHUWKH                         WKHFKLOGRUWKHSURYLVLRQRIDIUHHDSSURSULDWHSXEOLF
SODLQWLIIVILOHGVHSDUDWHVXLWVDJDLQVWWKH%RDUGRI(GXFDWLRQ                   HGXFDWLRQRIVXFKFKLOGlE(
LQWKH8QLWHG6WDWHV'LVWULFW&RXUWIRUWKH(DVWHUQ'LVWULFWRI
.HQWXFN\ VHHNLQJ DWWRUQH\ IHHV SXUVXDQW WR  86&                   5RZOH\86DWVHHDOVR'HOOPXWK86DW
H%7KLVSURYLVLRQoQRZFRGLILHGDW86&                   
 L% o SHUPLWV WKH GLVFUHWLRQDU\ DZDUG RI
UHDVRQDEOH DWWRUQH\ IHHV mWR WKH SDUHQWV   RI D FKLOG ZLWK D            ,Q6PLWKY5RELQVRQ86WKH6XSUHPH
GLVDELOLW\ ZKR LV WKH SUHYDLOLQJ SDUW\l  7KH GLVWULFW FRXUW         &RXUW IRXQG WKDW WKH (+$ DV DPHQGHG FUHDWHG WKH
FRQVROLGDWHG WKH WKUHH DFWLRQV SXUVXDQW WR )HG 5 &LY 3            VXEVWDQWLYHULJKWWRDIUHHDSSURSULDWHSXEOLFHGXFDWLRQDQGDQ
D                                                                         HODERUDWHDQGH[FOXVLYHSURFHGXUDOPHFKDQLVPWRSURWHFWWKDW
                                                                               ULJKW  7KH (+$ GLG QRW LQFOXGH DQ\ H[SUHVV SURYLVLRQ
  &RQFHGLQJWKDWHDFKSODLQWLIIZDVDmSUHYDLOLQJSDUW\lWKH                  DOORZLQJ IRU UHFRYHU\ RI DWWRUQH\V IHHV LQ WKH (+$  7KH
%RDUGRI(GXFDWLRQPRYHGIRUVXPPDU\MXGJPHQWRQVWDWXWH                       6XSUHPH &RXUW LQIHUUHG WKDW WKLV RPLVVLRQ UHSUHVHQWHG D
RIOLPLWDWLRQVJURXQGV7KHERDUGXUJHGDGRSWLRQRIWKH                   EDODQFH VWUXFN E\ &RQJUHVV EHWZHHQ WKH KDQGLFDSSHG
GD\ VWDWXWH RI OLPLWDWLRQV SUHVFULEHG XQGHU .\ 5HY 6WDW            LQGLYLGXDOjVULJKWVDQGWKHILQDQFLDOEXUGHQLPSRVHGXSRQWKH
%IRUDQDSSHDOIURPDQDGPLQLVWUDWLYHRUGHU 7KH                   VWDWHV E\ WKH UHVSRQVLELOLW\ RI SURYLGLQJ HGXFDWLRQ IRU
                                                                               KDQGLFDSSHGFKLOGUHQ86DW7KH&RXUWIRXQG
                                                                               WKDWmDSODLQWLIIPD\QRWFLUFXPYHQWRUHQODUJHWKHUHPHGLHV
    
                                                                               DYDLODEOH XQGHU WKH (+$ E\ UHVRUW WR   >RI WKH
      (DFK RI WKH WKUHH VWXGHQWV EURXJKW VXLW WKURXJK D SDUHQW DV QH[W         5HKDELOLWDWLRQ$FW@l86DW
IULHQG 7HFKQLFDOO\ LW DSSHDUV WKH SDUHQWV VKRXOG KDYH VXHG LQ WKHLU RZQ
QDPHV EXW QHLWKHU WKH %RDUG RI (GXFDWLRQ QRU WKH GLVWULFW FRXUW PDGH DQ         ,Q UHVSRQVH WR 6PLWK Y 5RELQVRQ &RQJUHVV FUHDWHG DQ
LVVXH RI WKLV
                                                                               H[SUHVV IHGHUDO FDXVH RI DFWLRQ IRU DWWRUQH\V IHHV  2Q
                                                                              $XJXVW3UHVLGHQW5RQDOG5HDJDQVLJQHGLQWRODZWKH
     .56 % SURYLGHV LQ SDUW DV IROORZV
                                                                               +DQGLFDSSHG &KLOGUHQjV 3URWHFWLRQ $FW RI  +&3$
    m$OO ILQDO RUGHUV RI DQ DJHQF\ VKDOO EH VXEMHFW WR MXGLFLDO UHYLHZ
                                                                               ZKLFKFUHDWHGWKHFDXVHRIDFWLRQIRUUHFRYHU\RIWKHDWWRUQH\V
    LQ DFFRUGDQFH ZLWK WKH SURYLVLRQV RI WKLV FKDSWHU $ SDUW\ VKDOO           IHHVZKLFKLVDWWKHKHDUWRIWKLVFDVH3XE/1R
    LQVWLWXWH DQ DSSHDO E\ ILOLQJ D SHWLWLRQ LQ WKH &LUFXLW &RXUW RI           6WDW,QWKHZRUGVRIWKH)LIWK&LUFXLW
    YHQXH DV SURYLGHG LQ WKH DJHQF\jV HQDEOLQJ VWDWXWHV ZLWKLQ               m&RQJUHVVUHDGWKH6XSUHPH&RXUWjVGHFLVLRQLQ6PLWKDQG
    WKLUW\  GD\V DIWHU WKH ILQDO RUGHU RI WKH DJHQF\ LV PDLOHG RU
                                                                               DFWHGVZLIWO\GHFLVLYHO\DQGZLWKXQFKDUDFWHULVWLFFODULW\WR
    GHOLYHUHG E\ SHUVRQDO VHUYLFH   l
                                                                               FRUUHFW ZKDW LW YLHZHG DV MXGLFLDO PLVLQWHUSUHWDWLRQ RI LWV
:H KDYH QR UHDVRQ WR GRXEW WKDW WKH GD\ OLPLWDWLRQV SHULRG DSSOLHV WR       LQWHQWl  )RQWHQRW Y /RXLVLDQD %G RI (OHPHQWDU\ 	
VWDWH FRXUW SHWLWLRQV IRU UHYLHZ RI ILQDO RUGHUV RI WKH ([FHSWLRQDO &KLOGUHQ   6HFRQGDU\ (GXF  )G   WK &LU 
$SSHDOV %RDUG
    .LQJHWDOY)OR\G&RXQW\            1RV         1RV              .LQJHWDOY)OR\G&RXQW\           
      %GRI(GXFDWLRQ                                                                                             %GRI(GXFDWLRQ

   ,Q&RQJUHVVDPHQGHGWKH(+$WKURXJKHQDFWPHQWRI                GLVWULFW FRXUW GHQLHG WKH ERDUGjV PRWLRQ KROGLQJ WKDW WKH
WKH(GXFDWLRQIRU$OO+DQGLFDSSHG&KLOGUHQ$FW3XE/             DSSURSULDWHOLPLWDWLRQVSHULRGZDVWKHILYH\HDUVSUHVFULEHGE\
6WDW&RQJUHVVVRXJKWWRHQVXUHWKDWWKH           .\5HY6WDW
VWDWHV ZRXOG SURYLGH DOO GLVDEOHG FKLOGUHQ ZLWK D mIUHH
DSSURSULDWHSXEOLFHGXFDWLRQl7KH6XSUHPH&RXUWjV                  $IWHU UHGXFLQJ WKH DPRXQW RI WKH SODLQWLIIVj UHTXHVW DV
GHFLVLRQLQ%GRI(GXFRIWKH+HQGULFN+XGVRQ&HQW6FK              H[FHVVLYHWKHGLVWULFWFRXUWJUDQWHGDWWRUQH\IHHVDQGFRVWVLQ
'LVWY5RZOH\86H[DPLQHGWKH(+$jV                WKH DPRXQW RI   7KH %RDUG RI (GXFDWLRQ KDV
VWDWXWRU\SUHGHFHVVRUVWKHVWUXFWXUHDQGSXUSRVHRIWKH$FW           DSSHDOHG DQG WKH SODLQWLIIV KDYH FURVVDSSHDOHG IURP WKH
DVDPHQGHGDQGWKHQDWXUHRIWKHFDXVHRIDFWLRQLWFUHDWHG           GLVWULFWFRXUWjVGHFLVLRQWRDZDUGOHVVWKDQWKHWRWDODPRXQW
m&RQJUHVV IRXQG WKDW RI WKH URXJKO\ HLJKW PLOOLRQ                FODLPHG
KDQGLFDSSHG FKLOGUHQ LQ WKH 8QLWHG 6WDWHV DW WKH WLPH RI
HQDFWPHQW RQH PLOOLRQ ZHUH µH[FOXGHG HQWLUHO\ IURP WKH                                            ,,
SXEOLFVFKRROV\VWHPjDQGPRUHWKDQRQHKDOIZHUHUHFHLYLQJ
DQLQDSSURSULDWHHGXFDWLRQl86DWTXRWLQJ3XE                m%HFDXVH WKH >,'($@ FRQWDLQV QR VSHFLILF VWDWXWH RI
/E6WDWDW7KH6XSUHPH&RXUW              OLPLWDWLRQVWKHPRVWDSSURSULDWH>VWDWH@VWDWXWHRIOLPLWDWLRQV
IRXQGWKDWWKH(+$mHYLQFHVDFRQJUHVVLRQDOLQWHQWWREULQJ             PXVWEHGHWHUPLQHGE\WKH&RXUWlsDQ]HQY.QR[&RXQW\
SUHYLRXVO\ H[FOXGHG KDQGLFDSSHG FKLOGUHQ LQWR WKH SXEOLF          %GRI(GXF)GWK&LUFLWLQJ:LOVRQ
HGXFDWLRQV\VWHPVRIWKH6WDWHVDQGWRUHTXLUH>LQH[FKDQJH             Y*DUFLD86m*HQHUDOO\FRXUWVGHWHUPLQH
IRUIHGHUDOIXQGLQJWKDW@WKH6WDWHVDGRSWSURFHGXUHVZKLFK             ZKLFKVWDWHFDXVHRIDFWLRQLVPRVWDQDORJRXVWRWKHIHGHUDO
ZRXOGUHVXOWLQLQGLYLGXDOL]HGFRQVLGHUDWLRQDQGLQVWUXFWLRQ            FDXVHRIDFWLRQ7KHVWDWHOLPLWDWLRQVSHULRGIRUWKDWFDXVHRI
IRUHDFKFKLOGl86DWm>7@KH$FWJXDUDQWHHVWR            DFWLRQFDQEHDGRSWHGLILWLVFRQVLVWHQWZLWKWKHSROLF\RIWKH
SDUHQWV WKH ULJKW WR SDUWLFLSDWH LQ WKH GHYHORSPHQW RI DQ      IHGHUDOFDXVHRIDFWLRQl,GFLWDWLRQVRPLWWHG:LWKUHVSHFW
µLQGLYLGXDOL]HG HGXFDWLRQ SURJUDPj ,(3 IRU WKHLU                 WRWKH,'($WKHVHOHFWLRQRIDQDSSURSULDWHVWDWHVWDWXWHRI
KDQGLFDSSHGFKLOGDQGWRFKDOOHQJHWKHDSSURSULDWHQHVVRI              OLPLWDWLRQVLVGRQHRQDFDVHE\FDVHEDVLVmFRQVLGHULQJWKH
WKHLUFKLOGjV,(3LQDQDGPLQLVWUDWLYHKHDULQJZLWKVXEVHTXHQW          SRVWXUHRIWKHFDVHDQGWKHOHJDOWKHRULHVSUHVHQWHGl,GDW
MXGLFLDO UHYLHZl  'HOOPXWK Y 0XWK  86           

                                                                         7KHIHGHUDOFDXVHRIDFWLRQIRUZKLFKDOLPLWDWLRQVSHULRG
  7KH  (+$ DPHQGPHQWV FUHDWHG WKH ULJKW WR EULQJ D         PXVW EH IDVKLRQHG LQ WKH FDVH QRZ EHIRUH XV LV FUHDWHG E\
FLYLODFWLRQFKDOOHQJLQJWKHILQGLQJVRUGHFLVLRQRIWKHVWDWH
DGPLQLVWUDWLYH DJHQF\ WR DQ\ VWDWH FRXUW RI FRPSHWHQW
MXULVGLFWLRQRULQDGLVWULFWFRXUWRIWKH8QLWHG6WDWHVZLWKRXW            
                                                                             .56  SURYLGHV LQ SDUW DV IROORZV
UHJDUGWRWKHDPRXQWLQFRQWURYHUV\3XE/
 6WDW DW  FRGLILHG DW  86&  H  7KH       m7KH IROORZLQJ DFWLRQV VKDOO EH FRPPHQFHG ZLWKLQ ILYH  \HDUV

6XSUHPH &RXUW LQ 5RZOH\ DFNQRZOHGJHG WKH FRQFXUUHQW                   DIWHU WKH FDXVH RI DFWLRQ DFFUXHG

MXULVGLFWLRQRIWKHVWDWHFRXUWV                                               

  >7@KH$FWSHUPLWVDQ\SDUW\DJJULHYHGE\WKHILQGLQJV                          $Q DFWLRQ XSRQ D OLDELOLW\ FUHDWHG E\ VWDWXWH ZKHQ QR
  DQGGHFLVLRQRIWKHVWDWHDGPLQLVWUDWLYHKHDULQJVmWREULQJ                       RWKHU WLPH LV IL[HG E\ WKH VWDWXWH FUHDWLQJ WKH
                                                                                    OLDELOLW\   l
       .LQJHWDOY)OR\G&RXQW\              1RV         1RV              .LQJHWDOY)OR\G&RXQW\        
        %GRI(GXFDWLRQ                                                                                               %GRI(GXFDWLRQ

VWDWXWRU\ODQJXDJHWKDWRQLWVIDFHPLJKWQRWVHHPDSSOLFDEOH               LQZKLFKWRSHUPLWDQDFWLRQIRUDWWRUQH\IHHVWKDWDVXLWE\
WR WKH SUHVHQW IDFWV DW DOO  7KH UHDVRQ WKLV LV VR WHOOV XV   WKDWWLPHZRXOGXVXDOO\EHSUHWW\VWDOH:KDWWRPHLVPRUH
VRPHWKLQJDERXWWKHQDWXUHRIWKHFDXVHRIDFWLRQWKDWKDVLQ              LPSRUWDQW KRZHYHU LV D WKLUW\GD\ VWDWXWH LV WRR JUXGJLQJ
IDFWEHHQFUHDWHG                                                         HVSHFLDOO\JLYHQWKHDPHOLRUDWLYHREMHFWLYHVRIWKH(GXFDWLRQ
                                                                            RI WKH +DQGLFDSSHG $FW m(+$l DQG LWV VXEVHTXHQW
   $ELWRIEDFNJURXQGILUVW8QGHUWKH,'($VWDWHDQGORFDO              DPHQGPHQWV UHVXOWLQJ LQ ZKDW LV NQRZQ WRGD\ DV WKH
HGXFDWLRQDJHQFLHVWKDWUHFHLYHIHGHUDODVVLVWDQFHDUHUHTXLUHG             ,QGLYLGXDOVZLWK'LVDELOLWLHV(GXFDWLRQ$FWm,'($l
WR HVWDEOLVK SURFHGXUHV XQGHU ZKLFK DGPLQLVWUDWLYH
FRPSODLQWVPD\EHILOHGZLWKUHVSHFWWRDPRQJRWKHUWKLQJV                  ,IWKHULJKWWRUHFRYHUDWWRUQH\IHHVZHUHWREHGHFLGHGLQ
WKHHGXFDWLRQDOSODFHPHQWRIFKLOGUHQZLWKGLVDELOLWLHV6HH               WKHILUVWLQVWDQFHE\WKHDGPLQLVWUDWLYHDJHQF\LWVHOI,PLJKW
 86& D  2SSRUWXQLWLHV IRU LPSDUWLDO GXH              DJUHH ZLWK WKH PDMRULW\ KHUH  ,W GRHV QRW DQG IRU WKH YHU\
SURFHVV KHDULQJV DQG DGPLQLVWUDWLYH DSSHDOV DUH WR EH                JRRGUHDVRQWKHDJHQF\GRHVQRWKDYHWKHSRZHULWVHOIWR
SURYLGHGVHHIDQGJDQGLQ86&L              HQIRUFHWKHULJKW,WFDQRQO\GHWHUPLQHZKRZDVDQGZKR
o IRUPHUO\  H o WKH $FW SURYLGHV WKDW D SDUW\           ZDVQRWWKHSUHYDLOLQJSDUW\
DJJULHYHG E\ WKH ILQGLQJV DQG GHFLVLRQ PDGH XQGHU WKH
SUHVFULEHGDGPLQLVWUDWLYHSURFHGXUHVmVKDOOKDYHWKHULJKWWR                  ,IWKHUHZHUHVRPHFRJHQWUHDVRQIRUDSSO\LQJVRJUXGJLQJ
EULQJ D >VWDWH RU IHGHUDO@ FLYLO DFWLRQ ZLWK UHVSHFW WR WKH       DUXOH,PLJKWEHLQFOLQHGWRLWEXWWKHUHLVQRW7KHUHLVQR
>DGPLQLVWUDWLYH@ FRPSODLQW   l  6WDQGLQJ DORQH WKLV            TXHVWLRQ RI GLVWXUELQJ WKH GHFLVLRQ RI WKH DGPLQLVWUDWLYH
SURYLVLRQ ZRXOG QRW VHHP WR FRQIHU D ULJKW WR VXH RQ WKH         DJHQF\IRULILWLVILQDOWKHQQRWKLQJLQWKHLPSHQGLQJGLVWULFW
VWXGHQWV RU WKHLU SDUHQWV KHUH EHFDXVH WKH\ ZHUH WKH               FRXUWDFWLRQLPSHGHVLWVSURJUHVV7KHUHLVQREXUGHQXSRQ
SUHYDLOLQJ SDUWLHV LQ WKH DGPLQLVWUDWLYH SURFHHGLQJV o WKH\          WKHDGPLQLVWUDWLYHDJHQF\WRUHWDLQMXULVGLFWLRQSHQGLQJWKH
ZHUH QRW LQ WKH QRUPDO VHQVH RI WKH ZRUGV RI WKH VWDWXWH       DWWRUQH\IHHVOLWLJDWLRQ7KHUHLVQRGHOD\LQWKHUHOLHIIRULW
mDJJULHYHGE\WKHILQGLQJVDQGGHFLVLRQl                            LV DOUHDG\ RUGHUHG  7KH FDVH WKHUHIRUH UHGXFHV LWVHOI WR DQ
                                                                            RUGLQDU\ODZVXLWIRUDWWRUQH\IHHVQRWXQOLNHKXQGUHGVRIRWKHU
   %XW LQ  LQ WKH ZDNH RI D 6XSUHPH &RXUW GHFLVLRQ           VXLWV XQGHU VWDWXWH RU FRPPRQ ODZ FRQWUDFW IRU ZKLFK
6PLWKY5RELQVRQ86ZKLFKKHOGWKDWWKH                OLPLWDWLRQVDUHQRUPDOO\PXFKPRUHH[WHQGHG
ULJKWWRVXHGLGQRWLQFOXGHDULJKWWRUHFRYHUDWWRUQH\IHHV
&RQJUHVVHQDFWHGWKH+DQGLFDSSHG&KLOGUHQjV3URWHFWLRQ$FW                    %\ DGRSWLQJ WKH PDMRULW\ YLHZ ZH ZRXOG EH IODWWHULQJ
3/ZKLFKDPHQGHGWKH,'($E\DGGLQJDSURYLVLRQ                   RXUVHOYHVWRWKLQNWKDWWKHDWWRUQH\IRUWKHSUHYDLOLQJSDUW\
FRGLILHGDW86&H%$VQRZUHFRGLILHGLQ                ZLOO FRQVLGHU DSSO\LQJ WR D IHGHUDO FRXUW DV FKLOGjV SOD\
 L% WKLV SURYLVLRQ UHDGV LQ LWV HQWLUHW\ DV          UHTXLULQJRQO\WKLUW\GD\VWRFRQWHPSODWHDQGWRFRPPHQFH
IROORZV                                                                    7KHYDVWPDMRULW\RIZRUNLQJDWWRUQH\VHVSHFLDOO\LQWKHDUHDV
                                                                            RI KLVWRULFDOO\ ORFDO DQG IDPLO\ FRQFHUQ ZLOO UDUHO\ LI HYHU
       m,Q DQ\ DFWLRQ RU SURFHHGLQJ EURXJKW XQGHU WKLV               UHFRXUVHWRWKHPRUHUHPRWHDQGIRUELGGLQJWHPSOHVRIIHGHUDO
    VHFWLRQWKHFRXUWLQLWVGLVFUHWLRQPD\DZDUGUHDVRQDEOH             ODZ  ,Q WKH FRPPRQ SDUODQFH mPDNLQJ D IHGHUDO FDVHl
    DWWRUQH\Vj IHHV DV SDUW RI WKH FRVWV WR WKH SDUHQWV RI D     LPSOLHVH[DFWO\WKDW)HGHUDOFRXUWPD\EHKRPHWRXVEXWQRW
    FKLOGZLWKDGLVDELOLW\ZKRLVWKHSUHYDLOLQJSDUW\l                   WRWKHRUGLQDU\ODZ\HUZKRFDQEHH[SHFWHGWRKDQGOHPRVWRI
                                                                            WKHVHFDVHV
    .LQJHWDOY)OR\G&RXQW\            1RV         1RV              .LQJHWDOY)OR\G&RXQW\           
      %GRI(GXFDWLRQ                                                                                             %GRI(GXFDWLRQ

ERDUGDSSURYDOLWVHOIRQFHDWHQWDWLYHDJUHHPHQWLVUHDFKHG              7KHRQO\SDUWRIWKDWDXWKRUL]HVWKHEULQJLQJRIDQ
EHQHFHVVDU\WRILQDOL]HLW"&DQWKLVSRVVLEO\VWLOOEHUHVROYHG       mDFWLRQlLVL$ZKLFKDVZHKDYHVHHQGRHVQRW
EHIRUHWKHWKLUW\GD\VUXQVRXW"$QGZK\FUDQNXSWKHHQWLUH           DSSHDUWRDXWKRUL]HWKHEULQJLQJRIDQDFWLRQE\WKHVLGHWKDW
DQGRIWHQSRQGHURXVPDFKLQHU\RIDIHGHUDOFRXUWLIWKHUHLV           SUHYDLOHGLQWKHDGPLQLVWUDWLYHSURFHHGLQJ7KHVWDWXWH
DUHDVRQDEOHFKDQFHWRDYRLGLWDOWRJHWKHU"                             DOVR XVHG WKH ZRUGV mRU SURFHHGLQJl KRZHYHU DQG WKH
                                                                        6XSUHPH &RXUW KDV KHOG WKDW VLPLODU ODQJXDJH LQ WKH &LYLO
   7KH PDMRULW\ RSLQLRQ LJQRUHV KLJKO\ SHUVXDVLYH                5LJKWV$FWRIDXWKRUL]HVIHHDZDUGVIRUOHJDOZRUNGRQH
DXWKRULW\DOUHDG\H[LVWLQJLQRXURZQFLUFXLWDQGPLVVHV                IRU WKH SUHYDLOLQJ VLGH LQ VWDWH DGPLQLVWUDWLYH SURFHHGLQJV
WKH HVVHQWLDO GLIIHUHQFHV EHWZHHQ DGPLQLVWUDWLYH DQG               6HH 1HZ <RUN *DVOLJKW &OXE ,QF Y &DUH\  86 
IRUPDOFRXUWSURFHHGLQJVZLWKUHVSHFWWRWLPHDOORZDQFHV               7KHOHJLVODWLYHKLVWRU\RIWKHIHHDZDUGDPHQGPHQW
UHFRJQL]HG LQ sDQVHQ Y .QR[ &RXQW\ %G RI (GXF           WRWKH,'($PDNHVH[SUHVVUHIHUHQFHWR*DVOLJKWVHHHJ
)GWK&LU                                               +55HS1RWK&RQJVW6HVVDQGLQ
                                                                        OLJKWRIWKLVOHJLVODWLYHKLVWRU\ZHKDYHKHOGWKDWWKHDPHQGHG
  ,W LV SUREDEO\ LQFRUUHFW WR DUJXH WKDW WKH PDMRULW\ LV       YHUVLRQRIWKH,'($LVEURDGHQRXJKWRDXWKRUL]HFRXUWVXLWV
SUHFOXGHG E\ VWDUH GHFLVLV IURP GHSDUWLQJ IURP D ZHOO           IRU WKH UHFRYHU\ RI OHJDO IHHV LQFXUUHG E\ SDUHQWV ZKR
HVWDEOLVKHGUXOHRIWKHFLUFXLWZLWKRXWHQEDQFKHDULQJ$VWKH        SUHYDLOHGDWWKHDGPLQLVWUDWLYHOHYHO6HH(JJHUVY%XOOLWW
PDMRULW\ FRUUHFWO\ QRWHV WKH SDUWLFXODU ULJKWV LQYROYHG DUH     &RXQW\ 6FKRRO 'LVWULFW  )G  WK &LU   $
GLIIHUHQWLQHDFKFDVH1HYHUWKHOHVVWKHLQKHUHQWJRRGVHQVH          QXPEHURIRWKHUFLUFXLWVKDYHUHDFKHGWKHVDPHFRQFOXVLRQ
DQGOHJDOUHDVRQLQJRIsDQVHQVKRXOGSHUVXDGHXVWRIROORZLWV          6HHHJ0RRUHY'LVWULFWRI&ROXPELD)G'&
SULQFLSOHVDQGDSSO\WKHPKHUH                                         &LUDQGWKHFDVHVFLWHGWKHUHLQDW
   ,W KDV DOZD\V VHHPHG WR PH WKDW LQ ERUURZLQJ VWDWH             $GPLQLVWUDWLYHDJHQFLHVGRQRWW\SLFDOO\KDYHDXWKRULW\WR
OLPLWDWLRQSHULRGVRQHRIWKHPRVWLPSRUWDQWFRQVLGHUDWLRQVLV          DZDUG DWWRUQH\ IHHV DQG .HQWXFN\jV DGPLQLVWUDWLYH
WKHQDWXUHRIWKHIRUXPLQZKLFKWKHFDXVHRIDFWLRQLVWREH           DUUDQJHPHQWVDVWKHSDUWLHVLQWKHFDVHDWEDUDJUHHGRQRW
OLWLJDWHGsDQVHQUHFRJQL]HGWKLVFULWLFDOHOHPHQW                    SURYLGHIRUIHHDZDUGV,QWKLVVLWXDWLRQZHWDNHLWWKHORJLF
                                                                        RI(JJHUVLVWKDWWKHIHHDZDUGDPHQGPHQWWRWKH,'($
   1RUPDOO\DGPLQLVWUDWLYHSURFHHGLQJVDUHOHVVIRUPDODQG            KDG WKH HIIHFW RI PDNLQJ D SDUHQW ZKR SUHYDLOHG LQ WKH
SXEOLFSROLF\IDYRUVDPRUHVSHHG\UHVROXWLRQRIWKHPVRWKDW           DGPLQLVWUDWLYHSURFHHGLQJVZLWKWKHDVVLVWDQFHRIFRXQVHODQ
WKH SDUWLHV PD\ JHW RQ ZLWK WKHLU EXVLQHVV  0RUH IRUPDO      mDJJULHYHGl SDUW\ IRU SXUSRVHV RI  86&  L
SURFHHGLQJVDOORZJUHDWHUWLPHLQZKLFKWRFRPPHQFHWKHP               LQVRIDU DV WKHUH ZDV QR DZDUG RI DWWRUQH\ IHHV  $V DQ
.HQWXFN\ODZDSSHDUVWRIDYRUWKLVE\WKHGLVWLQFWLRQZKLFK             DJJULHYHGSDUW\WKHSDUHQWLVDXWKRUL]HGWRJRWRFRXUWWRVHHN
LWPDNHVEHWZHHQWKHVWDWXWHRIOLPLWDWLRQVLQDSSHDOVIURP             UHDVRQDEOH DWWRUQH\ IHHV  $QG EHFDXVH WKH RQO\ WKLQJ WKDW
DGPLQLVWUDWLYHDJHQFLHVDQGWKRVHPRUHIRUPDORQHVZKLFKDUH            JLYHV VXFK D SDUHQW DQ HQWUHH WR WKH FRXUW LV WKH IDLOXUH WR
H[SHFWHG WR EH OLWLJDWHG LQ WKH VWDWHjV FRXUWV RI JHQHUDO      UHFRYHU IHHV LQFXUUHG LQ WKH DGPLQLVWUDWLYH SURFHHGLQJ WKH
MXULVGLFWLRQ  7KLV LV UHIOHFWHG E\ LWV VKRUW OLPLWDWLRQ IRU   VWDWXWRU\ DXWKRUL]DWLRQIRUWKHFRXUWWRDZDUGDWWRUQH\IHHV
DGPLQLVWUDWLYH SURFHHGLQJV DQG LWV PXFK ORQJHU ILYH\HDU          m>L@Q DQ\ DFWLRQ RU SURFHHGLQJ EURXJKW XQGHU WKLV VHFWLRQl
OLPLWDWLRQLQJHQHUDODFWLRQVXSRQVWDWXWHV                            PXVW LQ WKLV VLWXDWLRQ EH DQ DXWKRUL]DWLRQ IRU WKH FRXUW WR
                                                                        DZDUGDWWRUQH\IHHVLQWKHDGPLQLVWUDWLYHSURFHHGLQJLWVHOI
  , VXVSHFW WKDW PRVW RI XV DV DQ RULJLQDO PDWWHU ZRXOG
FRQFOXGHZLWKWKHPDMRULW\WKDWILYH\HDUVLVWRRORQJDWLPH
       .LQJHWDOY)OR\G&RXQW\              1RV          1RV             .LQJHWDOY)OR\G&RXQW\       
        %GRI(GXFDWLRQ                                                                                               %GRI(GXFDWLRQ

  7KH IRUXP VKLIWV WR EH VXUH ZKHQ WKH SDUHQW JRHV LQWR            % :LWKLQWKHVDPHWKLUW\GD\VWKH/($ZLWKWKHSDUHQWVj
FRXUWEXWWKHVWDWXWHVHHPVWRWUHDWWKHDZDUGRIDWWRUQH\IHHV             DJUHHPHQWZDVWRHQJDJHDQH[SHUWmLQWKHDUHDRIDXWLVPl
DVDQRWKHUSKDVHRIWKHDGPLQLVWUDWLYHSURFHHGLQJ,IDVWKH               ZKRVH UHVSRQVLELOLW\ ZDV WR SURYLGH IRU FRQVXOWDWLRQ
ZRUGLQJ RI WKH VWDWXWH VXJJHVWV WKH FRXUW PD\ DZDUG WKH            6XSSRVH LW GLGQjW RU WKH SDUHQWV ZHUH GLVVDWLVILHG ZLWK WKH
SUHYDLOLQJSDUHQWDIHHm>L@QlWKHDGPLQLVWUDWLYHSURFHHGLQJ                H[SHUWHQJDJHGRUZHUHQRWFRQVXOWHG"
ZHWKLQNWKDWWKH6HYHQWK&LUFXLWZDVFRUUHFWLQFRQFOXGLQJ
WKDWWKHIHHFODLPLVmDQFLOODU\WRWKHXQGHUO\LQJ     HGXFDWLRQ              & :LWKLQ VL[W\ GD\V DIWHU WKH DSSHDOV ERDUG RUGHU WKH
GLVSXWHl3RZHUV)GDW                                          $5&ZDVRUGHUHGWRREWDLQDmFRPSUHKHQVLYHHYDOXDWLRQlRI
                                                                             WKHVWXGHQWjVDXWLVPDQGGHWHUPLQHDQDSSURSULDWHSODFHPHQW
   ,WLVWUXHWKDWWKHUHZRXOGEHQRFODLPIRUDWWRUQH\IHHVZHUH            IRU WKH FKLOG  6XSSRVH LW GLGQjW RU FRPSOLDQFH ZDV
LWQRWIRUWKHVWDWXWH%XWZKHUHWKHVWDWXWHFUHDWLQJWKHFODLP            LQVXIILFLHQWRULQDGHTXDWH"
PDNHV WKH FODLP SDUW DQG SDUFHO RI WKH DGPLQLVWUDWLYH
SURFHHGLQJLWVHHPVWRXVWKDWWKHVWDWXWHPDNHVWKHFODLP                     7KH IRUHJRLQJ DUH RQO\ D IHZ RI D PXOWLWXGH RI
DQDORJRXV WR D FDXVH RI DFWLRQ IRU MXGLFLDO UHYLHZ RI WKH          FRQVLGHUDWLRQV ZKLFK  PLJKW UHDVRQDEO\ RFFXS\ FRXQVHOjV
SURFHHGLQJWRZKLFKWKHFODLPLVDSSHQGHG7KDWDQDORJ\LV                  DWWHQWLRQ SUDFWLFDO DQG HWKLFDO FRQVLGHUDWLRQV ZKLFK PXVW
FORVHUDVZHVHHLWWKDQWKHDQDORJ\LQYROYLQJ.HQWXFN\jV                  KDYH JLYHQ SDXVH WR FRXQVHO KHUH DV WKH\ ZRXOG WR DQ\
JHQHUDOILYH\HDUVWDWXWHRIOLPLWDWLRQVIRUDFWLRQVRQVWDWXWRU\            FRXQVHORUWU\LQJIDLWKIXOO\WRUHSUHVHQWDKDQGLFDSSHGFKLOG
OLDELOLWLHVQRWVXEMHFWWRVRPHRWKHUOLPLWDWLRQVSHULRG,WLV             DQGWKHLUIDPLO\7KLUW\GD\VLVVLPSO\QRWHQRXJKWLPH,W
GLIILFXOW IRU XV WR FRQFHLYH RI D OHJLVODWXUH LQWHQWLRQDOO\          VHHPVDOPRVWFHUWDLQWKDWWKHWHQPRQWKGHOD\E\FRXQVHOKHUH
DXWKRUL]LQJWKHILOLQJRIDIHHDSSOLFDWLRQXSWRILYH\HDUVDIWHU           ZDV FDXVHG LQ ODUJH SDUW E\ WKHVH FRQFHUQV  $V IRU WKH
WHUPLQDWLRQRIWKHSURFHHGLQJWRZKLFKWKHDSSOLFDWLRQUHODWHV              PDMRULW\jV FRQFHUQ DERXW WKH ILYH \HDU OHQJWK DOORZHG E\
LW VHHPV PRVW XQOLNHO\ LQ RWKHU ZRUGV WKDW WKH ILYH\HDU          .HQWXFN\ODZLWVWDQGVWRUHDVRQWKDWRQO\UDUHO\LIHYHUZLOO
VWDWXWHZDVGHVLJQHGIRUDQFLOODU\SURFHHGLQJVRIWKHVRUWLQ                DQ DWWRUQH\ ZDQW WR GHOD\ ILYH \HDUV LQ VHHNLQJ WR FROOHFW
TXHVWLRQ KHUH DV RSSRVHG WR FODLPV WKDW FDQ SURSHUO\ EH            DWWRUQH\IHHVIURPDFOLHQWRUDQ\RQHHOVHIRUWKDWPDWWHULIKH
FKDUDFWHUL]HGDVLQGHSHQGHQW                                              FDQJHWSDLGVRRQHU
                                                                                7KH KDVWH LQHYLWDEO\ JHQHUDWHG E\ D WKLUW\GD\
    
                                                                             OLPLWDWLRQ ZLOO EH ZDVWHIXO IRU WKH SODLQWLIIV WKH VFKRRO
      3RLQWLQJ WR D SURYLVLRQ QRZ FRGLILHG DW  L$ ZKLFK JLYHV   DXWKRULWLHVDQGIRUWKHGLVWULFWFRXUW
WKH IHGHUDO GLVWULFW FRXUW MXULVGLFWLRQ RI DFWLRQV EURXJKW XQGHU  
ZLWKRXW UHJDUG WR WKH DPRXQW LQ FRQWURYHUV\ WKH SODLQWLIIV DUJXH WKDW          :LWKDWKLUW\GD\OLPLWDWLRQFRXQVHOWRSURWHFWKLPVHOIDQG
 L$ DQG % WRJHWKHU FUHDWH D FDXVH RI DFWLRQ o HQIRUFHDEOH
VROHO\ LQ IHGHUDO FRXUW o VHSDUDWH DQG GLVWLQFW IURP WKH FDXVH RI DFWLRQ
                                                                             WKH FOLHQWV ZLOO WRR RIWHQ EH SURSHOOHG LQWR SUHFLSLWDWH
FUHDWHG E\  L 7KHUH LV VXSSRUW IRU WKLV YLHZ LQ WKH FDVH ODZ o    OLWLJDWLRQ ZKLFK PLJKW EH UHVROYHG SHDFHIXOO\ DQG ZLWKRXW
VHH HJ =LSSHUHU  )G DW  mWKH ,'($ SURYLGHV WZR                 UHFRXUVHWRDIHGHUDOFRXUW:KHUHLVWKHWLPHQHHGHGDIWHU
GLVWLQJXLVKDEOH FDXVHV RI DFWLRQl o EXW RQO\  L SXUSRUWV WR       WRWDOLQJXSWKHELOOWRQHJRWLDWHIRULWVVHWWOHPHQWRXWRIFRXUW"
FRQIHU D ULJKW WR VXH DQG WKH ODQJXDJH FRQIHUULQJ MXULVGLFWLRQ ZLWKRXW      :LOOQRWDSURWHFWLYHVXLWDWOHDVWEHQHHGHGZKLOHQHJRWLDWLRQV
UHJDUG WR WKH DPRXQW LQ FRQWURYHUV\ ZDV SDUW RI WKH ,'($ ZHOO EHIRUH WKH
 DPHQGPHQW 6HH s+5 Y %RDUG RI (GXFDWLRQ RI WKH 7RZQVKLS RI
                                                                             SURFHHG":KRZLOOZDQWWRJRWKH&RXUWRI$SSHDOVDUJXLQJ
(DVW %UXQVZLFN  $G   1s 6XSHULRU &RXUW $SS 'LY
                                                                             LVVXHV RI WROOLQJ RU FROODWHUDO HVWRSSHO LI IRU DQ\ UHDVRQ
 KROGLQJ WKDW DFWLRQV RI WKH VRUW DW LVVXH KHUH PD\ EH EURXJKW LQ      VHWWOHPHQWFDQQRWEHUHDFKHGLQWKLUW\GD\V"$QGZLOO QRW
HLWKHU VWDWH RU IHGHUDO FRXUW XQGHU ZKDW LV QRZ  L
    .LQJHWDOY)OR\G&RXQW\            1RV         1RV             .LQJHWDOY)OR\G&RXQW\          
      %GRI(GXFDWLRQ                                                                                            %GRI(GXFDWLRQ

IURP.HQWXFN\jVDGPLQLVWUDWLYHUXOHVWRFRPPHQFHPHQWRID                  :HVHHQRWKLQJWRWKHFRQWUDU\LQsDQ]HQZKLFKZDVQRWDQ
IRUPDOOHJDODFWLRQLQDQHQWLUHO\GLIIHUHQWIRUXP7KLVPD\           DWWRUQH\IHHFDVH7KHUHWKHIDPLO\RIDFKLOGZLWKVSHFLDO
VRPHWLPHV EH VXIILFLHQW EXW WKH WKLUW\GD\ OLPLW LV IDU WRR   HGXFDWLRQDO QHHGV E\SDVVHG WKH DGPLQLVWUDWLYH SURFHVV
VKRUWIRUWKHZLGHYDULHW\RIFLUFXPVWDQFHVZKLFKDUHERXQG             DOWRJHWKHU DQG ZHQW GLUHFWO\ WR FRXUW LQ DQ HIIRUW WR REWDLQ
WRDULVHLQWKHPLQHUXQRIWKHVHFDVHVHYHQZKHUHGLOLJHQFH           UHLPEXUVHPHQW RI FRVWV LQFXUUHG LQ HGXFDWLQJ WKH FKLOG
RFFXUV                                                                 SULYDWHO\,QKROGLQJWKDWWKHUHLPEXUVHPHQWFODLPZDVEDUUHG
                                                                        E\DWKUHH\HDUOLPLWDWLRQVSHULRGERUURZHGIURPD7HQQHVVHH
  7KHSODLQWLIIVH[HUFLVHGJRRGMXGJPHQWDQGGLOLJHQFHKHUH            VWDWXWH RI OLPLWDWLRQV DSSOLFDEOH WR VXLWV IRU VHUYLFHV
HYHQWKRXJKVXLWZDVQRWFRPPHQFHGXQWLOQHDUO\WHQPRQWKV              SHUIRUPHGEXWQRWSDLGIRUZHUHMHFWHGDQDUJXPHQWWKDWWKH
DIWHUWKHmILQDORUGHUl7KHUHZDVVWLOOPXFKWREHGRQHDIWHU         FODLPZDVDQDORJRXVWRRQHVXEMHFWWRDGD\OLPLWDWLRQV
sDQXDU\   DQG EHIRUH SODLQWLIIVj FRXQVHO FRXOG           SHULRGSUHVFULEHGE\7HQQHVVHHODZIRUDSSHDOVIURPDJHQF\
UHDVRQDEO\ FRQFOXGH WKDW WKHLU OHJDO UHVSRQVLELOLWLHV FRXOG       UXOLQJVsDQ]HQ)GDW7KHUHZDVQRVXFKDQDORJ\
VDIHO\EHWHUPLQDWHG                                                   ZHVDLGmEHFDXVHWKHsDQ]HQVKDGQRUXOLQJRIDQ\NLQGIURP
                                                                        ZKLFKWRDSSHDOl,Gm+DGDGXHSURFHVVKHDULQJEHHQKHOGl
   7KH WKLUW\GD\ OLPLWDWLRQ LV XQIDLU WR WKH SDUWLHV          RQWKHRWKHUKDQGWKHsDQ]HQSDQHODFNQRZOHGJHGWKDWmWKH
XQGHUWKHIDFWVRIWKLVFDVH                                          SRVWXUH RI WKH VLWXDWLRQ ZRXOG KDYH EHHQ PRUH DNLQ WR DQ
                                                                        DSSHDOIURPDQDJHQF\UXOLQJl,G
  ,IDVWKHPDMRULW\LPSOLHVEXWHYLGHQWO\GRHVQRWGHFLGH
WKHWKLUW\GD\SHULRGEHJDQWRUXQIURPWKHWLPHRILVVXDQFH               7KHsDQ]HQSDQHOGLGJRRQWRVXJJHVWLQGLFWDWKDWWKH
RIWKHGHFLVLRQRIsDQXDU\SUHVXPDEO\ZLWKLQWKLUW\          GD\SHULRGZRXOGEHLQDSSOLFDEOHWRDQDSSHDORQWKHPHULWV
GD\VWKHUHDIWHUWKHSDUHQWRUUHSUHVHQWDWLYHRIWKHSDUHQWRU           HYHQLIDQDGPLQLVWUDWLYHSURFHHGLQJKDGEHHQFRQGXFWHGILUVW
FKLOG KDG WR PDNH VHYHUDO FULWLFDO GHFLVLRQV LQ DGGLWLRQ WR    ,G DW   %XW LQ D VXEVHTXHQW HGXFDWLRQ FRVW
FRPSXWLQJDQGPDUVKDOLQJWKHHYLGHQFHWRMXVWLI\DQRULJLQDO            UHLPEXUVHPHQWFDVHZKHUHDGPLQLVWUDWLYHUHPHGLHVKDGEHHQ
DFWLRQLQDQRWKHUFRXUW                                                LQYRNHGSULRUWRWKHODZVXLW&OHYHODQG+HLJKWV8QLYHUVLW\
                                                                        +HLJKWV&LW\6FKRRO'LVWULFWY%RVV)G
  &RQVLGHUWKHGLOHPPDRISODLQWLIIVDQGWKHLUDWWRUQH\VKHUH          WK &LU  ZH KHOG WKDW WKH DSSURSULDWH VWDWXWH RI
                                                                        OLPLWDWLRQV WR ERUURZ IRU WKH DSSHDO ZDV D GD\ 2KLR
   7KHmILQDOlRUGHURIsDQXDU\KDGILUVWWREHDQDO\]HGLQ          VWDWXWH2KLR5HY&RGH)WKDWJRYHUQHGDSSHDOV
LWVQLQHWHHQSDJHHQWLUHW\WRGHWHUPLQHZKHWKHUDLWZDVLQ           WR WKH VWDWH FRXUWV IURP ILQDO RUGHUV RI UHYLHZLQJ RIILFHUV
IDFW D ILQDO RUGHU E ZKHWKHU WKH SODLQWLIIV ZHUH WKH        DSSRLQWHGE\WKHVWDWHERDUGRIHGXFDWLRQ
SUHYDLOLQJSDUWLHVDQGHYHQLIVRFZKHWKHUWKHRUGHULWVHOI
ZDVDGHTXDWHWRDFKLHYHLWVLQWHQGHGUHVXOW*LYHQWKHRUGHUjV           %RWKWKHsDQ]HQDQG&OHYHODQG+HLJKWV8QLYHUVLW\+HLJKWV
FRPSOH[LW\WKLVZDVQRWDQHDV\WDVN(YHQDVVXPLQJWKLV              SDQHOV DWWDFKHG VLJQLILFDQFH WR WKH VWDQGDUG RI UHYLHZ
DQDO\VLV ZDV TXLFNO\ DQG VDWLVIDFWRULO\ DFFRPSOLVKHG              DSSOLFDEOH XQGHU VWDWH ODZ ZKHUH DGPLQLVWUDWLYH RUGHUV DUH
VLJQLILFDQWDGGLWLRQDOZRUNPLJKW\HWEHUHDVRQDEO\QHFHVVDU\           DSSHDOHGWRWKHFRXUWV7KHVWDWHODZVWDQGDUGRIUHYLHZPD\
XQGHUWKHVWDWXWHV8QGHUWKHWHUPVRIWKHsDQXDU\RUGHU           EH UHOHYDQW WR WKH VHOHFWLRQ RI  DQ DSSURSULDWH OLPLWDWLRQV
                                                                        SHULRGLIWKHRUGHUDSSHDOHGIURPLVWKHGLUHFWSURGXFWRIDQ
  $ 7KHVFKRROGLVWULFWKDGWKLUW\GD\VmRIUHFHLSWRIWKLV           HYLGHQWLDU\KHDULQJ%XWLQWKHVLWXDWLRQEHIRUHXVKHUHDVZH
GHFLVLRQlLQZKLFKWRGHFLGHZKHWKHUWRREH\WKHmVWD\SXWl            KDYHH[SODLQHG&RQJUHVVKDVDXWKRUL]HGWKHFRXUWVWRDZDUG
SURYLVLRQVRIWKHsDQXDU\RUGHU6XSSRVHLWGLGQjW"
    .LQJHWDOY)OR\G&RXQW\           1RV        1RV             .LQJHWDOY)OR\G&RXQW\       
      %GRI(GXFDWLRQ                                                                                          %GRI(GXFDWLRQ

DWWRUQH\ IHHV LQ DGPLQLVWUDWLYH SURFHHGLQJV ZKHUH WKHUH LV                          BBBBBBBBBBBBBBBBB
W\SLFDOO\ QR DXWKRULW\ DW DOO IRU IHH DSSOLFDWLRQV WR EH
HQWHUWDLQHG DW WKH DGPLQLVWUDWLYH OHYHO  7KH FRQWHQW RI D                            ',66(17
VWDQGDUG RI UHYLHZ WKDW PLJKW KDYH EHHQ DSSOLFDEOH XQGHU                           BBBBBBBBBBBBBBBBB
RWKHUFLUFXPVWDQFHVWKXVVHHPVLUUHOHYDQWWRWKHWDVNDWKDQG
KHUH                                                                   (1*(/ &LUFXLW sXGJH GLVVHQWLQJ  )RU WKH UHDVRQV
                                                                      H[SUHVVHGE\sXGJH+RRGLQKLVRSLQLRQLQWKHGLVWULFWFRXUW
  ,WUHPDLQVWREHFRQVLGHUHGZKHWKHUDGRSWLRQRIDGD\            DQG IRU WKH UHDVRQV H[SUHVVHG E\ WKH (OHYHQWK &LUFXLW LQ
OLPLWDWLRQV SHULRG IRU WKH PDWWHU EHIRUH XV ZRXOG EH          =LSSHUHUY6FKRRO%GRI6HPLQROH&RXQW\)/)G
mLQFRQVLVWHQWZLWKIHGHUDOODZRUSROLF\l6HH:LOVRQY      WK&LU,ZRXOGDIILUPWKHMXGJPHQWRIWKHGLVWULFW
*DUFLD  86     :H VHH QR              FRXUW,QP\RSLQLRQWKHUHVXOW UHDFKHGE\WKHPDMRULW\LV
LQFRQVLVWHQF\                                                        XQIDLUXQV\PSDWKHWLFWRWKHHYLGHQWLQWHQWRI&RQJUHVVDQG
                                                                      HQWLUHO\ DW RGGV ZLWK WKH FDUHIXO UHDVRQLQJ RI &KLHI sXGJH
   ,ILQVRPHRWKHUFRQWH[WWKHSDUHQWVZHUHQRWUHSUHVHQWHGE\       0DUWLQLQsDQVHQY.QR[&RXQW\%GRI(GXF)G
FRXQVHOVXFKDVKRUWOLPLWDWLRQVSHULRGPLJKWFRQIOLFWZLWK          WK&LU
WKH ,'($ JRDO RI SDUHQWDO SDUWLFLSDWLRQ LQ WKH HGXFDWLRQDO
SURFHVV%XWLQWKHSUHVHQWFRQWH[WDVWKH6HYHQWK&LUFXLW            ,DJUHHWKDWZHUHYLHZWKHGLVWULFWFRXUWjVGHWHUPLQDWLRQRI
SRLQWHGRXWLQ3RZHOOWKHODZ\HUKDVDOUHDG\EHHQKLUHGoVR       WKH DSSOLFDEOH VWDWXWH RI OLPLWDWLRQV GH QRYR &OHYHODQG
LQDGRSWLQJDGD\GHDGOLQHIRUDVVHUWLQJDFODLPIRUWKH           +HLJKWV8QLYHUVLW\+HLJKWV6FK'LVWY%RVV)UG
ODZ\HUjVIHHVmZHGRQRWUXQWKHULVNRIKXUWLQJYXOQHUDEOH           WK &LU  EXW WKDW LV QR UHDVRQ WR DEDQGRQ DQ
XQUHSUHVHQWHGSDUHQWVl3RZHOO)GDW7KH3RZHOO          DSSURDFKZKLFKKDVVHUYHGXVVRZHOOLQWKHSDVW
FRXUWIRXQGGD\VWREHmDFFHSWDEOHlLGDQGZHWKLQNLWLV
DFFHSWDEOH WRR  :H DUH VWUHQJWKHQHG LQ WKLV YLHZ E\ WKH      7KHPDMRULW\HUUVLQP\RSLQLRQLQDWOHDVWIRXUUHVSHFWV
WKRXJKW WKDW LI WKH SODLQWLIIV KDG QRW SUHYDLOHG RQ WKH
XQGHUO\LQJHGXFDWLRQDOLVVXHVXQWLOWKHMXGLFLDOUHYLHZVWDJH           7KHWKLUW\GD\OLPLWDWLRQLVXQUHDOLVWLFDQGKDVWKH
WKH\ZRXOGKDYHKDGRQO\GD\VDIWHUWKHHQWU\RIMXGJPHQW          HIIHFWRIFKLOOLQJULJKWVHPSKDWLFDOO\FUHDWHGE\&RQJUHVV
ZLWKLQ ZKLFK WR PRYH IRU DWWRUQH\ IHHV  6HH 5XOH
G%)HG5&LY37KLUW\GD\VGRHVQRWVHHPWRR              8QGHU:LOVRQY*DUFLD86DQGHYHU\
VWLQJ\E\FRPSDULVRQDQGILYH\HDUVVHHPVIDUWRRJHQHURXV          RWKHUFDVH,KDYHVHHQDSSO\LQJWKHERUURZLQJSULQFLSOHVWKH
                                                                      SULPDU\FRQVLGHUDWLRQLVWKDWWKHOLPLWDWLRQDGRSWHGPXVWQRW
  7KHMXGJPHQWHQWHUHGE\WKHGLVWULFWFRXUWLV5(9(56('             EH LQFRQVLVWHQW ZLWK WKH LQWHQW RI &RQJUHVV LQ FUHDWLQJ WKH
DQGWKHFDVHLV5(0$1'('IRUHQWU\RIMXGJPHQWIRUWKH                ULJKWLQWKHILUVWSODFH,QSOD\LQJGRZQWKLVUHTXLUHPHQWWKH
GHIHQGDQW7KHSODLQWLIIVjFURVVDSSHDOLVGLVPLVVHGDVPRRW        PDMRULW\HPSKDVL]HVZKDWLWFRQFOXGHVLVWKHH[FHVVLYHILYH
                                                                      \HDUPD[LPXPIRUEULQJLQJDQDFWLRQEDVHGXSRQVWDWXWHWKDW
                                                                      IDYRUHGE\WKH(OHYHQWK&LUFXLWDQGLQ.HQWXFN\E\WKHWULDO
                                                                      MXGJHKHUH7KLVWRP\PLQGVKRZVDJUHDWHUFRQFHUQIRUWKH
                                                                      FRQYHQLHQFH RI WKH VWDWH DJHQF\ WKDQ IRU WKH KDQGLFDSSHG
                                                                      FKLOGRUWKHLUSDUHQWV,WDVVXPHVWKDWEHFDXVHWKHVXLWLVRQO\
                                                                      IRUDWWRUQH\IHHVWKDWVRPHKRZZLWKH[SHUWOHJDOKHOSLWZLOO
                                                                      EHDVLPSOHPDWWHUWRDSSO\WKHWKLUW\GD\SHULRGERUURZHG