Court Opinion

ID: 2969930
Source: CourtListenerOpinion
Date Created: 2015-09-22 16:00:39.895297+00
Date Added: 2024-06-11T12:40:39.660359
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

 6$1'5$ . /(11,1*               ;
          3ODLQWLII$SSHOODQW     
                                   
                                     1R
            Y                     
                                    !
                                   
 &200(5&,$/ 81,21                  
 ,1685$1&( &203$1<                
                                   
           'HIHQGDQW$SSHOOHH 
                                   
                                  1
       $SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW
    IRUWKH:HVWHUQ'LVWULFWRI.HQWXFN\DW/RXLVYLOOH
   1RnsHQQLIHU%&RIIPDQ'LVWULFWsXGJH
                     $UJXHG$SULO
               'HFLGHGDQG)LOHG$XJXVW
    %HIRUH%2**6DQG&/$<&LUFXLWsXGJHV*:,1
                    'LVWULFWsXGJH

    
     7KH +RQRUDEOH sDPHV 6 *ZLQ 8QLWHG 6WDWHV 'LVWULFW sXGJH IRU WKH
1RUWKHUQ 'LVWULFW RI 2KLR VLWWLQJ E\ GHVLJQDWLRQ

                                   
     /HQQLQJY&RPPHUFLDO8QLRQ,QV&R         1R

                    BBBBBBBBBBBBBBBBB
                         &2816(/
$5*8('  &KDUOHV * 0LGGOHWRQ ,,, 0,''/(721 	
5(87/,1*(5/RXLVYLOOH.HQWXFN\IRU$SSHOODQW5REHUW
3 sRKQVRQ 7+203621 +,1( 	 )/25< &LQFLQQDWL
2KLRIRU$SSHOOHH21%5,()&KDUOHV*0LGGOHWRQ,,,
0,''/(721	5(87/,1*(5/RXLVYLOOH.HQWXFN\IRU
$SSHOODQW  5REHUW 3 sRKQVRQ 7+203621 +,1( 	
)/25<&LQFLQQDWL2KLRIRU$SSHOOHH
                    BBBBBBBBBBBBBBBBB
                        23,1,21
                    BBBBBBBBBBBBBBBBB
  &/$<&LUFXLWsXGJH3ODLQWLII6DQGUD/HQQLQJDSSHDOV
WKHGLVWULFWFRXUWjVRUGHUJUDQWLQJVXPPDU\MXGJPHQWLQIDYRU
RI'HIHQGDQW&RPPHUFLDO8QLRQ,QVXUDQFH&RPSDQ\LQWKLV
GLYHUVLW\DFWLRQDOOHJLQJEUHDFKRIDKRPHRZQHUjVLQVXUDQFH
SROLF\ DQG YLRODWLRQ RI .HQWXFN\ FRQVXPHU SURWHFWLRQ DQG
LQVXUDQFH VWDWXWHV  7KH GLVWULFW FRXUW GHWHUPLQHG WKDW
'HIHQGDQWGLGQRWEUHDFKWKHWHUPVRIWKHSROLF\DQGGLGQRW
DFWLQEDGIDLWKE\GHQ\LQJ3ODLQWLIIDOHJDOGHIHQVHDJDLQVWD
ODZVXLWILOHGDJDLQVWKHU7KHGLVWULFWFRXUWIXUWKHUKHOGWKDW
'HIHQGDQWGLGQRWYLRODWHWKH.HQWXFN\VWDWXWHV:H QRZ
$)),50
                               ,
  7KH IROORZLQJ DFFRXQW RI WKH IDFWV LV DGRSWHG IURP WKH
GLVWULFWFRXUWRSLQLRQ
   3ODLQWLIILVHPSOR\HGE\31&%DQNDVD9LFH3UHVLGHQWLQ
LWVSULYDWHFOLHQWJURXSDSRVLWLRQVKHGHVFULEHVDVDOHQGHU
3ODLQWLIIjV ILDQFp (G *DWWHUGDP KDV ZRUNHG DV D JHQHUDO
FRQWUDFWRU IRU UHVLGHQWLDO KRPHV  +LV RZQ FRQVWUXFWLRQ
EXVLQHVV HQGHG ZLWK KLV SHUVRQDO EDQNUXSWF\ LQ   ,Q
 3ODLQWLII DQG *DWWHUGDP DJUHHG WR EXLOG VL[ KRPHV
XVLQJ WKH SURILWV IURP WKH VDOH RI HDFK KRPH WR ILQDQFH
1R        /HQQLQJY&RPPHUFLDO8QLRQ,QV&R                  

FRQVWUXFWLRQ RI WKH QH[W KRPH  $FFRUGLQJ WR WKHLU SODQ
3ODLQWLII ZRXOG REWDLQ D FRQVWUXFWLRQ ORDQ WR ILQDQFH WKH
EXLOGLQJ RI HDFK KRXVH  *DWWHUGDP ZRXOG WKHQ VHUYH DV
FRQVWUXFWLRQPDQDJHUDQGUHFHLYHDIHHSDLGE\3ODLQWLII7KH
FRXSOHKRSHGWKDWWKHLUSODQZRXOGJHQHUDWHHQRXJKPRQH\VR
WKDW WKH\ FRXOG UHWLUH WR )ORULGD  +RZHYHU 3ODLQWLII QRZ
FODLPVWKDWZKHQVKHSXUFKDVHGWKHILUVWORWLQsXQHRI
VKH LQWHQGHG WR EXLOG D KRPH IRU XVH DV KHU SHUVRQDO
UHVLGHQFH
                          6DOHRIWKH+RPH
  7KH ILUVW KRXVH RQ ZKLFK 3ODLQWLII DQG *DWWHUGDP
FROODERUDWHG ZDV EXLOW DW  7LPEHU 5LGJH LQ 3URVSHFW
.HQWXFN\  :KHQ *DWWHUGDP EHJDQ FOHDULQJ WKH ORW DQG
SRXULQJWKHKRXVHjVFRQFUHWHIRXQGDWLRQ KHHUHFWHGDVLJQ
WKDWUHDGm(	*$VVRFLDWHVZLOOEXLOGWRVXLWl7KHVLJQ
DOVR LQFOXGHG *DWWHUGDPjV KRPH WHOHSKRQH QXPEHU ZKLFK
ZDV DVVLJQHG WR WKH DSDUWPHQW KH VKDUHG ZLWK 3ODLQWLII
6KRUWO\DIWHU*DWWHUGDPSRXUHGWKHIRXQGDWLRQ'HQQLV7DSS
DQLQWHULRUGHFRUDWRUZKROLYHGQHDUE\FRQWDFWHG3ODLQWLIIDQG
*DWWHUGDP E\ WHOHSKRQH DQG H[SUHVVHG KLV LQWHUHVW LQ
SXUFKDVLQJWKHDV\HWXQEXLOWKRXVH3ODLQWLIIEHOLHYHVWKDW
7DSSFRQWDFWHGWKHPDIWHUVHHLQJWKHSKRQHQXPEHURQWKH
VLJQ7DSSPHWZLWK3ODLQWLIIDQG*DWWHUGDPRQD6DWXUGD\
PRUQLQJWRUHYLHZWKHKRXVHjVSODQVDQGWRVXJJHVWGHVLJQ
FKDQJHV2Q$XJXVW3ODLQWLII*DWWHUGDPDQG7DSS
VLJQHGDGRFXPHQWWLWOHGm7UL3DUW\&RQVWUXFWLRQ&RQWUDFWl
XQGHUZKLFK7DSSDJUHHGWRSXUFKDVHWKHKRPHIURP3ODLQWLII
IRUXSRQFRPSOHWLRQ

    
      3ODLQWLII DQG *DWWHUGDP DUH QRZ EXLOGLQJ D IRXUWK KRPH 7KH
VHFRQG KRPH ZDV FRQVWUXFWHG RQ D ORW SXUFKDVHG E\ 3ODLQWLII DURXQG WKH
WLPH VKH SXUFKDVHG WKH 7LPEHU 5LGJH ORW 3ODLQWLII VWDWHV WKDW KHU SURILW
RQ WKH WKUHH FRPSOHWHG KRPHV WRWDOV EHWZHHQ  DQG 
3ODLQWLII DQG *DWWHUGDP FXUUHQWO\ OLYH LQ DQ DSDUWPHQW DQG WKH\ VWLOO SODQ
RQ EXLOGLQJ D WRWDO RI VL[ KRPHV
    
      7KH VLJQ ZDV DSSDUHQWO\ XVHG LQ *DWWHUGDPjV FRQVWUXFWLRQ EXVLQHVV
SULRU WR KLV EDQNUXSWF\
      /HQQLQJY&RPPHUFLDO8QLRQ,QV&R          1R     1R      /HQQLQJY&RPPHUFLDO8QLRQ,QV&R            

   $OWKRXJK7DSSZDVWKHKRPHEX\HU3ODLQWLIIREWDLQHGWKH          IXOO\GHYHORSHG%XWWKHYHU\QDWXUHRI7DSSjVFRPSODLQW
FRQVWUXFWLRQ ORDQ QHFHVVDU\ WR ILQDQFH WKH EXLOGLQJ RI WKH   FRPELQHG ZLWK 3ODLQWLIIjV RZQ VWDWHPHQWV GXULQJ WKH
KRXVH6KHSHUVRQDOO\SDLGVXEFRQWUDFWRUVDQGREWDLQHGDOO          LQWHUYLHZ LQGLFDWLQJ WKDW VKH ZDV HQJDJHG LQ D EXVLQHVV
QHFHVVDU\ EXLOGLQJ OLFHQVHV DQG SHUPLWV  3ODLQWLII DQG       SXUVXLW PDGH IXUWKHU LQYHVWLJDWLRQ XQQHFHVVDU\ LQVRIDU DV
*DWWHUGDPMRLQWO\VHQWDOHWWHUWRRQHVXEFRQWUDFWRUH[SUHVVLQJ      WKH\GHPRQVWUDWHGWKDWWKHUHZDVQRSRWHQWLDOFRYHUDJH,Q
WKHLU GLVSOHDVXUH ZLWK WKH LQVWDOODWLRQ RI WKH KRPHjV         OLJKW RI WKHVH IDFWV 3ODLQWLIIjV FODLP WKDW WKHUH UHPDLQHG
m'5<9,7lRXWHUFRYHULQJ,QDGGLWLRQWKHWZRMRLQWO\VLJQHG         XQUHVROYHG TXHVWLRQV UHJDUGLQJ WKH QDWXUH RI 7DSSjV
DOO FKDQJH RUGHUV  $OWKRXJK WKH WHUP m6HOOHUl DSSHDUHG      mQHJOLJHQFHlFODLPDQGZKHWKHU3ODLQWLIIZDVLQYROYHGLQD
EHQHDWK3ODLQWLIIjVVLJQDWXUHRQWKHFKDQJHRUGHUVWKHIRUPV        EXVLQHVV SXUVXLW PXVW IDLO  &8,& KDG QR GXW\ WR IXUWKHU
ERUH WKH KHDGLQJ m6 /HQQLQJ( *DWWHUGDP %OGUl  7KH       LQYHVWLJDWH RU ZDLW WR VHH LI WKH DOOHJDWLRQV LQ 7DSSjV
SDUWLHV FORVHG RQ WKH FRQWUDFW RQ sDQXDU\   ZLWK    FRPSODLQW VRPHKRZ PRUSKHG WKURXJK DPHQGPHQW RU
3ODLQWLIIFRQYH\LQJWKHSURSHUW\WR7DSSE\DJHQHUDOZDUUDQW\       RWKHUZLVHIURPHFRQRPLFFODLPVDJDLQVW3ODLQWLIIDVDSURILW
GHHGDWDSURILWRIRYHU3ODLQWLIIQHYHUPRYHGLQWR       GULYHQEXLOGHULQWRFODLPVIDOOLQJZLWKLQWKHFRYHUDJHRIWKH
RUVSHQWDQLJKWDWWKHKRXVH                                       SROLF\)RUWKHVHUHDVRQVZHGRQRWEHOLHYHWKDW3ODLQWLIIFDQ
                                                                     SURYH WKDW &8,& YLRODWHG WKH 8QIDLU &ODLPV 6HWWOHPHQW
             7KH+RPHRZQHUjV,QVXUDQFH3ROLF\                        3UDFWLFHV$FW,QDGGLWLRQLQOLJKWRIRXUILQGLQJWKDW&8,&
                                                                     GLG QRW EUHDFK LWV GXWLHV WR GHIHQG RU DFW LQ JRRG IDLWK
   $IWHUSXUFKDVLQJWKHORWEXWEHIRUHHQWHULQJWKHFRQWUDFW        3ODLQWLIIFDQQRWGHPRQVWUDWHWKDWWKHFRPSDQ\HQJDJHGLQDQ\
ZLWK 7DSS 3ODLQWLII REWDLQHG D FXVWRP KRPHRZQHUjV             XQFRQVFLRQDEOH EXVLQHVV SUDFWLFHV WKDW ZRXOG YLRODWH WKH
LQVXUDQFH SROLF\ WKH mSROLF\l ZULWWHQ E\ WKH &RPPHUFLDO     &RQVXPHU3URWHFWLRQ$FW
8QLRQ,QVXUDQFH&RPSDQ\m&8,&lWKURXJKDQLQGHSHQGHQW
DJHQW WKH /DQJDQ &RPSDQ\ m/DQJDQl  7KH SROLF\                                             9
SXUFKDVHGE\3ODLQWLIILQFOXGHVDVHFWLRQHQWLWOHGm6(&7,21
,,o/,$%,/,7<&29(5$*(6lZKLFKVHWVIRUWKWKHWHUPV                  7KH IDFWV RI WKLV FDVH PDNH FOHDU WKDW WKHUH ZDV QR
IRUFRYHUDJHLQFOXGLQJDOHJDOGHIHQVHIRUSHUVRQDOOLDELOLW\       SRVVLELOLW\RIFRYHUDJHXQGHUWKHSROLF\ZLWKUHVSHFWWRWKH
ODZVXLWV                                                            7DSS ODZVXLW  $V D UHVXOW &8,& GLG QRW KDYH D GXW\ WR
                                                                     GHIHQG3ODLQWLIIDJDLQVWWKDWVXLW,QDGGLWLRQQRHYLGHQFHLQ
    &29(5$*((o3HUVRQDO/LDELOLW\                                  WKHUHFRUGVXSSRUWV3ODLQWLIIjVFODLPWKDW&8,&YLRODWHGWKH
                                                                     .HQWXFN\ FRQVXPHU SURWHFWLRQ DQG LQVXUDQFH FRGHV  :H
    ,I D FODLP LV PDGH RU D VXLW LV EURXJKW DJDLQVW DQ    WKHUHIRUHKROGWKDWWKHGLVWULFWFRXUWFRUUHFWO\GHWHUPLQHGWKDW
    mLQVXUHGlIRUGDPDJHVEHFDXVHRImERGLO\LQMXU\lRU              QRJHQXLQHLVVXHRIPDWHULDOIDFWUHPDLQHGDQGWKDW&8,&ZDV
    mSURSHUW\ GDPDJHl FDXVHG E\ DQ mRFFXUUHQFHl WR             HQWLWOHGWRVXPPDU\MXGJPHQW$FFRUGLQJO\ZH$)),50
    ZKLFKWKLVFRYHUDJHDSSOLHVZHZLOO                            WKHGLVWULFWFRXUWjVMXGJPHQW
     3D\XSWRRXUOLPLWRIOLDELOLW\IRUWKHGDPDJHVIRU
         ZKLFK WKH mLQVXUHGl LV OHJDOO\ OLDEOH  'DPDJHV
         LQFOXGH SUHMXGJPHQW LQWHUHVW DZDUGHG DJDLQVW WKH
         mLQVXUHGlDQG
     3URYLGHDGHIHQVHDWRXUH[SHQVHE\FRXQVHORIRXU
         FKRLFH HYHQ LI WKH VXLW LV JURXQGOHVV IDOVH RU
    /HQQLQJY&RPPHUFLDO8QLRQ,QV&R           1R       1R        /HQQLQJY&RPPHUFLDO8QLRQ,QV&R                  

D ZULWWHQ FODLPV PDQXDO LQVWUXFWLQJ LWV DJHQWV RQ FODLPV               IUDXGXOHQW:HPD\LQYHVWLJDWHDQGVHWWOHDQ\FODLP
LQYHVWLJDWLRQ                                                                 RUVXLWWKDWZHGHFLGHLVDSSURSULDWH2XUGXW\WR
                                                                               VHWWOHRUGHIHQGHQGVZKHQWKHDPRXQWZHSD\IRU
  $V WKH GLVWULFW FRXUW QRWHG .HQWXFN\jV 8QIDLU &ODLPV                 GDPDJHV UHVXOWLQJ IURP WKH mRFFXUUHQFHl HTXDOV
6HWWOHPHQW $FW GRHV QRW UHTXLUH LQVXUHUV WR DGRSW ZULWWHQ              RXUOLPLWRIOLDELOLW\
PDQXDOV  ,Q DGGLWLRQ 3ODLQWLII GRHV QRW SRLQW WR DQ\
SURFHGXUHVWKDWVKRXOGEHFRQWDLQHGLQVXFKDPDQXDOQRU              3ROLF\ S  s$ DW   $FFRUGLQJ WR WKH
GRHV VKH GHPRQVWUDWH KRZ &8,&jV LQYHVWLJDWLRQ ZDV                m'(),1,7,216lVHFWLRQRIWKHSROLF\
VXEVWDQWLYHO\LQDGHTXDWHLQWKHFDVHDWEDU/DVFKWHVWLILHG
WKDWLQLQYHVWLJDWLQJFODLPV                                                m2FFXUUHQFHl PHDQV DQ DFFLGHQW LQFOXGLQJ
                                                                               FRQWLQXRXVRUUHSHDWHGH[SRVXUHWRVXEVWDQWLDOO\WKH
  >W@KHUHDUHQRVSHFLILFV:HKDYHZKHQ\RXILUVWVWDUW                     VDPH JHQHUDO KDUPIXO FRQGLWLRQV ZKLFK UHVXOWV
  WKLVEXVLQHVVVRPHERG\PLJKWKDQG\RXDW\SHGOLVWRI                       GXULQJWKHSROLF\SHULRGLQ
  TXHVWLRQV\RXFDQDVNLQDQLQMXU\FDVHWKDWVRUWRIWKLQJ
  EXWEDVLFDOO\\RXDUHDVNLQJTXHVWLRQVWKDW\RXIHOWDUH                     D m%RGLO\LQMXU\lRU
  JHUPDQHWRWKHLVVXHDQGWKHUHjVQRVHWJXLGHOLQHVRWKHU
  WKDQ QDPH DGGUHVV WHOO WKHP \RXjUH UHFRUGLQJ WU\ WR               E m3URSHUW\GDPDJHl
  PHQWLRQ WKH GDWH DQG WLPH    , MXVW DVN ZKDWHYHU
  TXHVWLRQFRPHVWRPLQG                                              3ROLF\ S  s$ DW   $QRWKHU VHFWLRQ RI WKH SROLF\
                                                                       m6(&7,21,,(;&/86,216lH[FOXGHVFHUWDLQW\SHVRI
s$DW$OWKRXJKVKHKDGQRZULWWHQPDQXDOWRJXLGH            FODLPVIURPSHUVRQDOOLDELOLW\FRYHUDJH
KHU LQYHVWLJDWLRQ RI 3ODLQWLIIjV FODLP /DVFK GLG KDYH WKH
EHQHILWRI\HDUVZRUWKRIH[SHULHQFHLQWKHILHOG,QWHUPV              &RYHUDJH(o3HUVRQDO/LDELOLW\DQG&RYHUDJH)
RISURFHGXUHLWLVFOHDUWKDW&8,&UHVSRQGHGSURPSWO\ZKHQ                    o 0HGLFDO 3D\PHQWV WR 2WKHUV GR QRW DSSO\ WR
QRWLILHG RI WKH FODLP UHFHLYHG DQG UHYLHZHG WKH 7DSS                  mERGLO\LQMXU\lRUmSURSHUW\GDPDJHl
FRPSODLQWLQWHUYLHZHG3ODLQWLIIDQGUHIHUUHGWKHPDWWHUWRLQ
KRXVHFRXQVHOIRUDUHFRPPHQGDWLRQDVWRZKHWKHUDGHIHQVH                     D    :KLFK LV H[SHFWHG RU LQWHQGHG E\ WKH
ZRXOGEHSURYLGHG3ODLQWLIIGRHVQRWHWKDW&8,&jVLQLWLDO                          mLQVXUHGl
UHVSRQVHWRKHUZDVWRVXJJHVWWKDWVKHUHWDLQKHURZQFRXQVHO                 E    $ULVLQJ RXW RI RU LQ FRQQHFWLRQ ZLWK D
XQWLODGHWHUPLQDWLRQZDVPDGHUHJDUGLQJZKHWKHUDGHIHQVH                           mEXVLQHVVl HQJDJHG LQ E\ DQ mLQVXUHGl
ZRXOGEHSURYLGHG%XWWKLVUHVSRQVHLVQRWWKHVDPHDVD                           7KLVH[FOXVLRQDSSOLHVEXWLVQRWOLPLWHGWRDQ
GHQLDO RI D GHIHQVH SULRU WR FRQVLGHUDWLRQ  )XUWKHUPRUH                    DFW RU RPLVVLRQ UHJDUGOHVV RI LWV QDWXUH RU
3ODLQWLII GRHV QRW DUWLFXODWH ZKDW LI DQ\ VWDQGDUGV &8,&                   FLUFXPVWDQFH LQYROYLQJ D VHUYLFH RU GXW\
VKRXOG KDYH DGRSWHG EH\RQG WKRVH WKDW LW DOUHDG\                              UHQGHUHGSURPLVHGRZHGRULPSOLHGWREH
LPSOHPHQWHG6KHFRPSODLQVWKDWVXEVHTXHQWWRUHYLHZLQJ                             SURYLGHG EHFDXVH RI WKH QDWXUH RI WKH
WKHLQLWLDOGRFXPHQWVDQGFRQGXFWLQJWKHWHOHSKRQHLQWHUYLHZ                         mEXVLQHVVl
&8,& FRQGXFWHG QR IXUWKHU LQYHVWLJDWLRQ  ,Q WKLV ZD\ VKH
FRQWHQGV WKDW &8,& ZDV SUHSDUHG WR GHQ\ KHU GHIHQVH
SURWHFWLRQ HYHQ WKRXJK LW GLG QRW NQRZ IRU FHUWDLQ WKDW QR
FRYHUDJHZDVSRVVLEOH3ODLQWLIIDUJXHVWKDWWKHIDFWVZHUHQRW           
                                                                             7KH ODQJXDJH LQ EROG LQ WKLV DQG DOO RWKHU FLWDWLRQV WR WKH LQVXUDQFH
                                                                       SROLF\ LV LQFOXGHG LQ WKH RULJLQDO GRFXPHQW
        /HQQLQJY&RPPHUFLDO8QLRQ,QV&R       1R      1R      /HQQLQJY&RPPHUFLDO8QLRQ,QV&R             

                                                                FODLPDQGOLWLJDWHLWLIWKHFODLPLVGHEDWDEOHRQWKHODZRU
                                                                       WKHIDFWV
          G $ULVLQJRXWRIWKHUHQGHULQJRIRUIDLOXUHWR
              UHQGHUSURIHVVLRQDOVHUYLFHV                          :LWWPHUYsRQHV6:G.\TXRWLQJ
                                                                     )HGHUDO.HPSHU,QV&RY+RUQEDFN6:G
          H   $ULVLQJRXWRIDSUHPLVHV                             .\  /HLEVRQ s GLVVHQWLQJ VWDWLQJ YLHZV
               RZQHGE\DQmLQVXUHGl                             LQFRUSRUDWHGE\UHIHUHQFHLQ&XUU\Y)LUHPDQjV)XQG,QV
                                                               &R  6:G   .\   $V RXU SUHYLRXV
                                                                     GLVFXVVLRQUHIOHFWVLWLVFOHDUWKDW&8,&ZDVQRWREOLJDWHGWR
        &RYHUDJH(o3HUVRQDO/LDELOLW\GRHVQRWDSSO\WR        GHIHQG3ODLQWLIIDJDLQVWWKH7DSSODZVXLW7KHUHIRUHZHQHHG
                                                                     QRWDGGUHVVWKHUHPDLQGHURI3ODLQWLIIjVEDGIDLWKFODLP
                                
                                                                                                     ,9
          E   m3URSHUW\ GDPDJHl WR SURSHUW\ RZQHG E\
               WKHmLQVXUHGl                                    )LQDOO\3ODLQWLIIFRQWHQGVWKDW'HIHQGDQW&8,&YLRODWHG
                                                                     WZR .HQWXFN\ VWDWXWHV E\ IDLOLQJ WR UHDVRQDEO\ DQG
3ROLF\Ss$DW                                        VXIILFLHQWO\ LQYHVWLJDWH KHU FODLP  7KH 8QIDLU &ODLPV
                                                                     6HWWOHPHQW3UDFWLFH$FW.56 KROGVLQVXUHUV
   7KH SROLF\ QDPHV RQO\ 3ODLQWLII DV DQ LQVXUHG SDUW\      OLDEOH IRU LQWHU DOLD m>I@DLOLQJ WR DFNQRZOHGJH DQG DFW
/DQJDQDJHQW7RP%DUUHWWWHVWLILHGDWKLVGHSRVLWLRQWKDWDW         UHDVRQDEO\ SURPSWO\XSRQFRPPXQLFDWLRQVZLWKUHVSHFWWR
WKH WLPH 3ODLQWLII SXUFKDVHG WKH SROLF\ KH EHOLHYHG VKH     FODLPVDULVLQJXQGHULQVXUDQFHSROLFLHV>DQGI@DLOLQJWRDGRSW
LQWHQGHG WR XVH WKH 7LPEHU 5LGJH KRPH DV KHU SHUVRQDO       DQG LPSOHPHQW UHDVRQDEOH VWDQGDUGV IRU WKH SURPSW
UHVLGHQFH  <HW QHLWKHU 3ODLQWLII QRU *DWWHUGDP LQIRUPHG     LQYHVWLJDWLRQRIFODLPVDULVLQJXQGHULQVXUDQFHSROLFLHVl
%DUUHWWRUDQ\RWKHU/DQJDQDJHQWWKDWWKH\KDGHQWHUHGLQWR         .567KH&RQVXPHU3URWHFWLRQ$FW
DWULSDUW\FRQWUDFWZLWK7DSSRUWKDWWKHKRXVHKDGEHHQVROG       .56SURKLELWVFRPSDQLHVLQFOXGLQJLQVXUHUV
SULRU WR LWV FRPSOHWLRQ  %HFDXVH WKH KRPHRZQHUjV SROLF\     IURP HQJDJLQJ LQ m>X@QIDLU IDOVH PLVOHDGLQJ RU GHFHSWLYH
LQFOXGHG D EXLOGHUjV ULVN HQGRUVHPHQW ZKLFK ZRXOG H[SLUH      DFWV RU SUDFWLFHV LQ WKH FRQGXFW RI DQ\ WUDGH RU FRPPHUFH
XSRQ WKH FRPSOHWLRQ RI FRQVWUXFWLRQ /DQJDQ DJHQWV             l.567KHVWDWXWHGHILQHVmXQIDLUlDV
SHULRGLFDOO\FRQWDFWHG3ODLQWLIIRU*DWWHUGDPWRDVFHUWDLQWKH       mXQFRQVFLRQDEOHl,G
EXLOGLQJjV SURJUHVV  /DQJDQjV DFWLYLW\ ORJ IRU 3ODLQWLIIjV
DFFRXQWLQGLFDWHVWKDWRQsDQXDU\ILYHPRQWKVDIWHU          7KHUH LV QR GLVSXWH DV WR ZKHWKHU &8,&jV DFWLRQ ZDV
WKHWULSDUW\FRQWUDFWZDVH[HFXWHGDQGWZRZHHNVSULRUWR           WLPHO\  &8,&jV VHQLRU FODLPV DGMXVWHU /DVFK DWWHPSWHG WR
FORVLQJ 3ODLQWLII LQIRUPHG D /DQJDQ DJHQW WKDW VKH ZRXOG    FRQWDFW 3ODLQWLII RQO\ RQH GD\ DIWHU UHFHLYLQJ QRWLFH RI WKH
FORVHRQWKHKRPHZLWKLQDIHZZHHNVDQGZRXOGDGYLVHWKH            7DSSFRPSODLQWIURP3ODLQWLIIjVDJHQWDW/DQJDQ7KHYHU\
FRPSDQ\ZKHQVKHPRYHGLQWRWKHKRXVH                               QH[WGD\/DVFKLQWHUYLHZHG3ODLQWLII%XW3ODLQWLIIIDXOWVWKH
                                                                     FRXUW IRU SODFLQJ WRR PXFK HPSKDVLV RQ WKH WLPHOLQHVV RI
                                                                     &8,&jVUHVSRQVHLQVWHDGRIWKHVXIILFLHQF\RIWKHUHVSRQVH
                                                                     7R WKLV HQG VKH DUJXHV WKDW &8,&jV LQYHVWLJDWLRQ ZDV
                                                                     XQUHDVRQDEOH EHFDXVH LW HQGHG ZLWK /DVFKjV WHOHSKRQH
                                                                    LQWHUYLHZRI3ODLQWLIIDQGDOVREHFDXVH&8,&KDVQRWDGRSWHG
     7KH SROLF\ GHILQHV mEXVLQHVVl DV D mWUDGH SURIHVVLRQ RU
RFFXSDWLRQl 3ROLF\ S  s$ DW 
    /HQQLQJY&RPPHUFLDO8QLRQ,QV&R            1R       1R         /HQQLQJY&RPPHUFLDO8QLRQ,QV&R                 

KHU  %DVHG XSRQ WKHVH IDFWV ZH EHOLHYH WKDW 3ODLQWLII ZDV                            7KH7DSS/DZVXLW
HQJDJHG LQ D FRQWLQXRXV DQG SURILWPRWLYDWHG EXVLQHVV
DFWLYLW\  7KXV LW ZDV DSSDUHQW IURP WKH RXWVHW RI WKH         2Q)HEUXDU\7DSSVXHG3ODLQWLIIDQG*DWWHUGDPLQ
OLWLJDWLRQWKDW7DSSjVFRPSODLQWFRQFHUQHGDEXVLQHVVYHQWXUH          sHIIHUVRQ &RXQW\ .HQWXFN\ &LUFXLW &RXUW  3ODLQWLII
WKDWZDVH[FOXGHGIURPFRYHUDJHXQGHUWKHSROLF\                       VXEPLWWHG D FRS\ RI 7DSSjV FRPSODLQW DQG WKH WULSDUW\
                                                                        FRQWUDFW WR /DQJDQ IRU IRUZDUGLQJ WR &8,&  $OWKRXJK KH
        3URSHUW\2ZQHU([FOXVLRQ                                      IRUZDUGHGWKHGRFXPHQWVWR&8,&/DQJDQDJHQW7RP%DUUHWW
                                                                        DGYLVHG3ODLQWLIIWKDWWKHSROLF\GLGQRWDSSHDUWRFRYHUKHU
  &RYHUDJHZDVDOVRSUHFOXGHGE\WKHSROLF\jVH[FOXVLRQIRU             FODLP  2Q )HEUXDU\   D &8,& VXSHUYLVRU .HQ
GDPDJH WR SURSHUW\ WKDW LV RZQHG E\ WKH mLQVXUHGl  ,Q DQ    6FKZDUW] VHQW D KDQGZULWWHQ QRWH WR VHQLRU FODLPV
HIIRUWWRFLUFXPYHQWWKLVH[FOXVLRQ3ODLQWLIIDUJXHVWKDW7DSS         UHSUHVHQWDWLYH.DUHQ/DVFK7KHQRWHLQIRUPHG/DVFKRIWKH
WRRNSRVVHVVLRQRIWKHSURSHUW\RQsDQXDU\DQGWKDW           7DSS ODZVXLW DQG DOHUWHG KHU WR D mSRVVLEOH H[FOXVLRQ IRU
VKHGLGQRWFDQFHOWKHLQVXUDQFHSROLF\XQWLOLPPHGLDWHO\DIWHU         EXVLQHVV RSHUDWLRQ XQOHVV WKLV LV DQ RFFDVLRQDO
WKHFORVLQJ6KHWKHUHIRUHFRQWHQGVWKDWWKHGDPDJHVDOOHJHG           RSHUDWLRQRFFXSDWLRQl/DVFKDWWHPSWHGWRWHOHSKRQH3ODLQWLII
E\ 7DSS DURVH GXULQJ WKH SROLF\ SHULRG \HW QRW ZKLOH WKH     WKDW GD\ EXW UHDFKHG RQO\ *DWWHUGDP  7KH IROORZLQJ
SURSHUW\ ZDV RZQHG E\ 3ODLQWLII EXW UDWKHU ZKHQ LW ZDV        PRUQLQJ/DVFKDJDLQWHOHSKRQHG3ODLQWLIIDQGREWDLQHGKHU
RZQHGE\7DSS+RZHYHUDQ\DOOHJHGSRRUFUDIWVPDQVKLSRU              SHUPLVVLRQ WR UHFRUG WKHLU FRQYHUVDWLRQ  'XULQJ WKH
QHJOLJHQFH DFWXDOO\ DURVH ZKLOH WKH KRXVH ZDV VWLOO XQGHU       FRQYHUVDWLRQ 3ODLQWLII YROXQWHHUHG WKH IDFW WKDW VKH DQG
FRQVWUXFWLRQ  ,QDVPXFK DV 3ODLQWLII RZQHG WKH SURSHUW\          *DWWHUGDPKDGRULJLQDOO\LQWHQGHGWREXLOGDKRXVHDQGWKHQ
GXULQJWKHHQWLUHFRQVWUXFWLRQSHULRGDQGXSXQWLOWKHFORVLQJ         VHOOLW
VKHZDVWKHRZQHUDWWKHWLPHWKHDOOHJHGGDPDJHRFFXUUHG
,Q DGGLWLRQ DQ\ RFFXUUHQFH WKDW DURVH DIWHU 7DSS WRRN
SRVVHVVLRQ FRXOG QRW EH FRYHUHG E\ WKH SROLF\ HYHQ LI             
                                                                             7KH UHFRUGHG FRQYHUVDWLRQ EHWZHHQ 3ODLQWLII DQG /DVFK LQFOXGHG WKH
3ODLQWLII KDG \HW WR FDQFHO LW EHFDXVH WKH SROLF\ ZDV YRLG   IROORZLQJ H[FKDQJH

XSRQWKHFRPSOHWLRQRIWKHWUDQVDFWLRQDWWKDWSRLQW3ODLQWLII
ZDVQRORQJHUWKHRZQHURIWKHLQVXUHGSURSHUW\                            4      $QG 6DQGUD ZKDW    \RX ZRUN IRU 31&"

  % %DG)DLWK                                                              $   &RUUHFW

                                                                            4   $QG ZKDW GR \RX GR WKHUH"
  3ODLQWLIIDOVRFRQWHQGV&8,&KDVYLRODWHGLWVGXW\RIJRRG
IDLWK,QRUGHUWRSURYHDFODLPRIEDGIDLWKIRUUHIXVDOWRSD\           $   ,jP YLFHSUHVLGHQW LQ WKH SULYDWH EDQN

DFODLPRUFRQVHTXHQWO\WRGHIHQGDFODLPDQLQVXUHGSDUW\
PXVWGHPRQVWUDWHWKHH[LVWHQFHRIWKHIROORZLQJIDFWRUV                    4   2ND\ $QG WKHQ GR \RX DOVR KDYH D VLGH EXVLQHVV RU    ,WjV
                                                                                 JRW \RX    \RX DV D VHOOHU 'LG \RX RZQ VRPH SURSHUW\ RXW

  WKHLQVXUHUPXVWEHREOLJDWHGWRSD\WKHFODLPXQGHU                       LQ WKLV 7LPEHU 5LGJH GHYHORSPHQW"

  WKH WHUPV RI WKH SROLF\  WKH LQVXUHU PXVW ODFN D            $   <HV , KDG ERXJKW D ORW   
  UHDVRQDEOHEDVLVLQODZRUIDFWIRUGHQ\LQJWKHFODLPDQG
  LWPXVWEHVKRZQWKDWWKHLQVXUHUHLWKHUNQHZWKHUH                   4   2ND\

  ZDVQRUHDVRQDEOHEDVLVIRUGHQ\LQJWKHFODLPRUDFWHG
  ZLWK UHFNOHVV GLVUHJDUG IRU ZKHWKHU VXFK D EDVLV                   $      DQG WKHQ (G *DWWHUGDP
                                                                                 ILDQF>p@ DQG D EXLOGHU   
                                                                                                                    MXVW KDSSHQV WR EH P\

  H[LVWHG>$@QLQVXUHULVHQWLWOHGWRFKDOOHQJHD
       /HQQLQJY&RPPHUFLDO8QLRQ,QV&R                 1R        1R       /HQQLQJY&RPPHUFLDO8QLRQ,QV&R             

    2Q0DUFK&8,&LQIRUPHG3ODLQWLIIWKDWLWUHVHUYHG                  DFWLYHO\SDUWLFLSDWHGLQWKHKRPHEXLOGLQJSODQE\DFTXLULQJ
DOOULJKWVDQGGHIHQVHVXQGHUWKHSROLF\LQFOXGLQJLWVULJKWWR                WKH SURSHUW\ XSRQ ZKLFK WKH KRPH ZDV EXLOW REWDLQLQJ
SXUVXHDMXGLFLDOGHWHUPLQDWLRQWKDWQRFRYHUDJHH[LVWHGXQGHU                  ILQDQFLQJIRUWKHFRQVWUXFWLRQWKURXJKKHUMREDVDOHQGHUIRU
WKHSROLF\2Q0DUFK3ODLQWLIIjVDWWRUQH\PDLOHGWR                 31&EDQNHQWHULQJLQWRWKHWULSDUW\FRQWUDFWVLJQLQJFKDQJH
/DVFK VHYHUDO GRFXPHQWV UHODWLQJ WR 7DSSjV ODZVXLW                       RUGHUIRUPVDQGHYHQFRZULWLQJDOHWWHURIFRPSODLQWWRD
3ODLQWLIIjVDWWRUQH\UHTXHVWHGWKDW&8,&LQIRUPKLPZKHWKHU                     VXEFRQWUDFWRUUHJDUGLQJRQHRILWVSURGXFWV7KHIDFWVRIWKLV
LW LQWHQGHG WR GHIHQG 3ODLQWLII LQ WKH 7DSS OLWLJDWLRQ  2Q           FDVH DOVR VDWLVI\ WKH VHFRQG (\OHU SURQJ EHFDXVH 3ODLQWLII
$SULO/DVFKVHQWDOHWWHUWR3ODLQWLIIH[SODLQLQJWKDW                LQWHQGHG WR SURILW RYHU D SHULRG RI WLPH IURP WKLV DFWLYLW\
                                                                                3ODLQWLII VWDWHG WKDW WKH SXUSRVH RI WKH KRPHEXLOGLQJ SODQ
                                                                                ZDV WR HYHQWXDOO\ DFTXLUH HQRXJK PRQH\ VR WKDW VKH DQG
                                                                                *DWWHUGDPFRXOGPRYHWR)ORULGDDQGWKHUHFRUGUHIOHFWVWKDW
    4   2ND\                                                                  VKH HQMR\HG D VXEVWDQWLDO SURILW IURP WKH VDOH RI WKH ILUVW
    $      VR , VDLG WR KLP , ZLOO EH WKH ILQDQFLDO SHUVRQ RQ WKLV LI
                                                                                KRPH
         \RX ZLOO EXLOG WKH KRPH
                                                                                   3ODLQWLII FODLPV WKDW &8,& FRQGXFWHG DQ LQDGHTXDWH
    4   2ND\ 6R WKH ORW ZDV EXLOW    , PHDQ ZDV WKH ORW SXUFKDVHG          LQYHVWLJDWLRQSULRUWRGHWHUPLQLQJWKDW7DSSjVFODLPDURVHRXW
         E\ \RX SULPDULO\                                                    RIDEXVLQHVVSXUVXLW6KHDWWHPSWVWRGRZQSOD\KHUUROHE\
                                                                                FODLPLQJWKDWLWZDVPDLQO\KHUILDQFp*DWWHUGDPZKRVSRNH
    $   <HV   <HV
                                                                                ZLWK 7DSS UHJDUGLQJ WKH VSHFLILF SODQV  6KH DUJXHV WKDW
    4       DV D    DV DQ LQYHVWPHQW"
                                                                                REWDLQLQJ IXQGLQJ DQG VLJQLQJ WKH FKDQJH RUGHUV ZHUH
                                                                                DFWLYLWLHV VKH HQJDJHG LQ DV D VHOOHU PHUHO\ WR SURWHFW KHU
    $   ([DFWO\                                                               LQYHVWPHQW DQG WR DOORZ KHU WR FRQYH\ FOHDU WLWOH WR 7DSS
                                                                                3ODLQWLIIDOVRFRQWHQGVWKDWVKHGLGQRWLQLWLDOO\SXUFKDVHWKH
    4   2ND\ 1RZ KRZ GLG \RX    KRZ GLG    KRZ GLG 'HQQLV
                                                                                SURSHUW\LQRUGHUWRVHOOLWEXWUDWKHUIRUXVHDVKHUSHUVRQDO
         >7DSS@ FRPH LQWR WKH SLFWXUH" +RZ GLG KH ILQG RXW DERXW LW"
                                                                                UHVLGHQFH VKH QRWHV WKDW VKH QHYHU SXW WKH KRXVH RQ WKH
    $   +H ZDV OLYLQJ LQ DQ DSDUWPHQW FRPSOH[ LQ WKH VDPH DUHD                 PDUNHWDQGWKDW7DSSFRQWDFWHGKHUZLWKRXWEHLQJVROLFLWHGWR
             +H KDG WR GULYH E\ HYHU\ GD\ RXU ORW >VLF@ DQG ZH KDG          SXUFKDVHWKHKRPH)LQDOO\3ODLQWLIIDUJXHVWKDWDWWKHWLPH
         VWDUWHG    ZH KDG FOHDUHG WKH ORW DQG KDG WKH IRXQG    QRW       VKHZDVVXHGVKHDQG*DWWHUGDPQRORQJHUSODQQHGWREXLOG
         WKH IRXQGDWLRQ EXW WKH VODE SRXUHG :H KDG EHHQ ZRUNLQJ                RWKHUKRPHVGXHWRWKHGLIILFXOWLHVWKH\KDGHQFRXQWHUHGLQ
         WKHUH PD\EH WZR WKUHH ZHHNV 7KH LGHD ZDV IRU XV WR EXLOG
         D KRXVH DQG WKHQ WU\ WR VHOO LW                                    EXLOGLQJWKHKRXVHIRU7DSS,QWKLVUHVSHFWVKHFODLPVWKDW
                                                                                QREXVLQHVVSXUVXLWH[LVWHGZKHQVKHSXUFKDVHGWKHORWDQG
s$ DW  3ODLQWLII ODWHU DFNQRZOHGJHG WKDW WKH WUDQVFULSW RI KHU       QRQH H[LVWHG ZKHQ 7DSS ILOHG KLV ODZVXLW  3ODLQWLII WKXV
UHFRUGHG VWDWHPHQW WR /DVFK UHSUHVHQWHG mSUREDEO\ H[DFWO\ ZKDW , VDLGl         DWWHPSWVWRFKDUDFWHUL]HKHULQYROYHPHQWDVDQmRFFDVLRQDO
'HSRVLWLRQ RI 6DQGUD /HQQLQJ s$ DW  1HLWKHU SDUW\ FRQWHVWV WKH         EXVLQHVV SXUVXLWl  +RZHYHU ZH ILQG WKHVH DUJXPHQWV
DGPLVVLELOLW\ RI WKLV WUDQVFULSW LQ IDFW WKH\ ERWK UHO\ XSRQ LW WR VXSSRUW    XQSHUVXDVLYH,QKHULQWHUYLHZZLWK/DVFKRI&8,&3ODLQWLII
WKHLU DUJXPHQWV RQ DSSHDO
                                                                                LQGLFDWHGWKDWVKHDQG*DWWHUGDPLQWHQGHGWRDEXLOGKRPH
    
       7KHVH GRFXPHQWV LQFOXGHG WKH IROORZLQJ *DWWHUGDPjV DQVZHU DQG
                                                                                DQGWKHQWU\WRVHOOLW$OWKRXJKWKHKRPHEXLOGLQJVFKHPH
FRXQWHUFODLP 3ODLQWLIIjV DPHQGHG FRXQWHUFODLP QRWLFH RI 7DSSjV                PD\KDYHRQO\EHHQLQLWVLQIDQF\ZKHQ3ODLQWLIIVHFXUHGWKH
GHSRVLWLRQ 3ODLQWLIIjV UHTXHVW IRU SURGXFWLRQ RI GRFXPHQWV *DWWHUGDPjV        SROLF\ LW ZDV ZHOO XQGHUZD\ DW WKH WLPH VKH GHOLYHUHG
ILUVW VHW RI LQWHUURJDWRULHV DQG *DWWHUGDPjV ILUVW UHTXHVW IRU SURGXFWLRQ RI   SRVVHVVLRQWR7DSSDQGDOVRVXEVHTXHQWO\ZKHQ7DSSVXHG
GRFXPHQWV
     /HQQLQJY&RPPHUFLDO8QLRQ,QV&R                1R     1R       /HQQLQJY&RPPHUFLDO8QLRQ,QV&R               

  HQJDJHPHQWRUDVWDWHGRFFXSDWLRQDQGDVWRWKHODWWHU                 &8,& ZRXOG GHQ\ D GHIHQVH IRU WKH 7DSS ODZVXLW IRU WZR
  WKHUHPXVWEHVKRZQWREHVXFKDFWLYLW\DVDPHDQVRI                    UHDVRQV)LUVW&8,&FKDUDFWHUL]HG7DSSjVFODLPVDVEDVHG
  OLYHOLKRRG D JDLQIXO HPSOR\PHQW PHDQV RI HDUQLQJ D              XSRQ EUHDFK RI FRQWUDFW EUHDFK RI H[SUHVV DQG LPSOLHG
  OLYLQJ SURFXULQJ VXEVLVWHQFH RU SURILW FRPPHUFLDO                  ZDUUDQWLHVDQGVODQGHURIWLWOH&8,&GHWHUPLQHGWKDWQRQH
  WUDQVDFWLRQVRUHQJDJHPHQWV                                             RIWKHVHFODLPVTXDOLILHGDVDQmRFFXUUHQFHlDVGHILQHGLQWKH
                                                                           SROLF\ EXW UDWKHU WKH\ ZHUH EXVLQHVV ULVNV DVVXPHG E\
,GDWTXRWLQJ.ULQJVY6DIHFR,QV&R3G              3ODLQWLII  6HFRQG &8,& H[SODLQHG WKDW HYHQ LI 7DSSjV
.DQ&W$SS)LQGLQJQREXVLQHVVSXUVXLWWKH              FRPSODLQWVWDWHGDQHJOLJHQFHFODLPIRUSURSHUW\GDPDJHWKH
(\OHUFRXUWQRWHGWKDWWKHLQVXUHGjVSDUWLFLSDWLRQZDVOLPLWHG             SROLF\H[FOXGHGFRYHUDJHGXHWRWKHEXVLQHVVULVNH[FOXVLRQ
WRLQYHVWLQJPRQH\DQGSURWHFWLQJKLVLQYHVWPHQW3ODLQWLII
DUJXHVWKDWKHULQYROYHPHQWLQWKHKRPHEXLOGLQJVFKHPHZDV                                     /DZVXLW$JDLQVW&8,&
DQDORJRXVWRWKHOLPLWHGLQYROYHPHQWRIWKHLQVXUHGSDUW\LQ
(\OHU%XWZHEHOLHYH(\OHUVXSSRUWVWKHDSSOLFDELOLW\RIWKH                2Q)HEUXDU\WHQPRQWKVDIWHU&8,&LVVXHGLWV
EXVLQHVVSXUVXLWH[FOXVLRQLQWKHLQVWDQWFDVH                            OHWWHU GHQ\LQJ D GHIHQVH 3ODLQWLII ILOHG D m3HWLWLRQ IRU
                                                                           'HFODUDWLRQ RI 5LJKWVl LQ WKH sHIIHUVRQ &RXQW\ .HQWXFN\
   )LUVWWKHUHLVDVXIILFLHQWGHJUHHRIFRQWLQXLW\3ODLQWLIIDQG       &LUFXLW&RXUW3ODLQWLIIDOOHJHGWKHUHLQWKDW&8,&jVGHQLDORI
*DWWHUGDP KHOG WKHPVHOYHV RXW DV EXLOGHUV DQG 3ODLQWLII             D OHJDO GHIHQVH EUHDFKHG WKH WHUPV RI KHU KRPHRZQHUjV
FRQWUDFWHG ZLWK 7DSS WR EXLOG D KRPH WR PHHW KLV                  LQVXUDQFH SROLF\ DQG FRQVWLWXWHG EDG IDLWK DV ZHOO DV D
VSHFLILFDWLRQV7KHORJRRQWKHFKDQJHRUGHUIRUPVUHDGm6               YLRODWLRQ RI .HQWXFN\ FRQVXPHU SURWHFWLRQ DQG LQVXUDQFH
/HQQLQJ( *DWWHUGDP %OGUl  ,Q DGGLWLRQ 7DSSjV ODZVXLW           VWDWXWHV  $IWHU UHPRYDO WR IHGHUDO FRXUW RQ WKH EDVLV RI
VXHVERWKRIWKHPLQWKHLUFDSDFLW\DVEXLOGHUV7KHVHIDFWV              GLYHUVLW\MXULVGLFWLRQERWKSDUWLHVILOHGPRWLRQVIRUVXPPDU\
DORQHZHUHVXIILFLHQWWRLPPHGLDWHO\DOHUW&8,&WKDW7DSSjV                MXGJPHQW2Q)HEUXDU\WKHGLVWULFWFRXUWLVVXHGD
FODLPLVRQHmDULVLQJRXWRIRULQFRQQHFWLRQZLWKlDEXVLQHVV             0HPRUDQGXP2SLQLRQDQG2UGHUJUDQWLQJ'HIHQGDQW&8,&jV
HQJDJHG LQ E\ 3ODLQWLII 7KH IDFWV RI WKH LQVWDQW FDVH DUH       PRWLRQIRUVXPPDU\MXGJPHQWDQGGLVPLVVLQJWKHDFWLRQZLWK
GLVWLQJXLVKDEOHIURP(\OHU,QWKDWFDVHWKHFRXUWIRXQGWKDW            SUHMXGLFH7KHGLVWULFWFRXUWGHWHUPLQHGWKDW&8,&KDGQR
WKH LQVXUHG SDUW\ KDG QRW DFWLYHO\ SDUWLFLSDWHG LQ WKH             GXW\WRGHIHQG3ODLQWLIIDJDLQVWWKH7DSSODZVXLWEHFDXVHWKH
WUDQVDFWLRQ EHFDXVH    KH GLG QRW DFTXLUH WKH PHUFKDQGLVH RU       7DSS FRPSODLQW GLG QRW DOOHJH DQ mRFFXUUHQFHl ZLWKLQ WKH
QHJRWLDWH LWV VDOH  +RZHYHU LQ WKH FDVH DW EDU 3ODLQWLII    PHDQLQJRIWKHSROLF\3ODLQWLIIZDVHQJDJHGLQDEXVLQHVV
                                                                           SXUVXLWQRWFRYHUHGE\WKHSROLF\E\YLUWXHRIWKHEXVLQHVV
                                                                           H[FOXVLRQ FODXVH DQ\ OLDELOLW\ IRU GDPDJH WR WKH SURSHUW\
                                                                         ZKLOH3ODLQWLIIRZQHGLWLVQRWFRYHUHGE\WKHH[SUHVVWHUPVRI
       7KH GLVWULFW FRXUW VXPPDUL]HG WKH IDFWV RI (\OHU DV IROORZV        WKHSROLF\DQGDQ\GDPDJHWRWKHSURSHUW\DIWHULWZDVVROGWR
     7KH LQVXUHG DVVLVWHG D IDUPHU LQ VHOOLQJ XVHG WLUHV WR WKH &KLQHVH    7DSSZDVQRWFRYHUHGEHFDXVHVXFKDFODLPZRXOGKDYHDULVHQ
     JRYHUQPHQW 7KH LQVXUHG ERUURZHG  DQG EHFDPH D                 DIWHUWKHSROLF\SHULRGHQGHG7KHGLVWULFWFRXUWDOVRJUDQWHG
     SDUWQHU LQ WKH DQWLFLSDWHG VDOH %HFDXVH WKH LQVXUHGjV DVVHWV ZHUH    VXPPDU\ MXGJPHQW WR &8,& ZLWK UHVSHFW WR 3ODLQWLIIjV
     LQVXIILFLHQW FROODWHUDO IRU WKH ORDQ WKH IDUP>HU@ FRQYH\HG WKH
     WLUHVWRUDJH SURSHUW\ WR WKH LQVXUHG ZKR WKHQ REWDLQHG WKH ORDQ
     E\ HQFXPEHULQJ WKH SURSHUW\ DQG KLV SHUVRQDO GZHOOLQJ
                                                                               
s$ DW  8QGHU WKHVH FLUFXPVWDQFHV WKH (\OHU FRXUW IRXQG WKDW WKH        /DVFKjV OHWWHU LQGLFDWHG WKDW &8,& UHVHUYHG LWV ULJKW WR UHO\ XSRQ
LQVXUHG ZDV PHUHO\ DQ LQYHVWRU LQ WKH WLUH YHQWXUH (\OHU  6:G DW   RWKHU IDFWV DQG JURXQGV IRU GHQLDO ZKLFK PLJKW VXEVHTXHQWO\ EH
                                                                       GLVFRYHUHG
    /HQQLQJY&RPPHUFLDO8QLRQ,QV&R           1R       1R      /HQQLQJY&RPPHUFLDO8QLRQ,QV&R           

.HQWXFN\VWDWXWRU\FODLPV3ODLQWLIIILOHGDWLPHO\QRWLFHRI         SDUW\,GDW+RZHYHUDOWKRXJKWKH%URZQ)RXQGDWLRQ
DSSHDO                                                                FRXUWGLGKROGWKDWmWKHWHUPµRFFXUUHQFHjLVWREHEURDGO\DQG
                                                                       OLEHUDOO\ FRQVWUXHG LQ IDYRU RI H[WHQGLQJ FRYHUDJH WR WKH
                                ,,                                    LQVXUHGlLGFLWDWLRQRPLWWHGLWLVFOHDUWKDWLQGHFLGLQJWKDW
                                                                       FDVH WKH .HQWXFN\ 6XSUHPH &RXUW KDG LQ PLQG WKH EURDG
   7KLV&RXUWUHYLHZVDJUDQWRIVXPPDU\MXGJPHQWGHQRYR              QDWXUH RI UHOLHI EHVWRZHG XSRQ SDUWLHV LQVXUHG XQGHU &*/
XVLQJWKHVDPHOHJDOVWDQGDUGDSSOLHGE\WKHGLVWULFWFRXUW           SROLFLHV
KRZHYHU ZH UHYLHZ WKH GHQLDO RI D VXPPDU\ MXGJPHQW
PRWLRQRQO\IRUDEXVHRIGLVFUHWLRQ:LOH\Y8QLWHG6WDWHV            :HPXVWQRZFRQVLGHUWKHGHILQLWLRQRImRFFXUUHQFHlDQG
 )G   WK &LU   6XPPDU\ MXGJPHQW LV         LWVUHODWLRQWRSROLF\H[FOXVLRQV8QGHUWKHGHILQLWLRQRI
DSSURSULDWH ZKHUH mWKH SOHDGLQJV GHSRVLWLRQV DQVZHUV WR          mRFFXUUHQFHlRQO\GDPDJHVH[SHFWHGRULQWHQGHGIURP
LQWHUURJDWRULHV DQG DGPLVVLRQV RQ ILOH WRJHWKHU ZLWK WKH        WKH VWDQGSRLQW RI WKH LQVXUHG DUH H[FOXGHG  7KH
DIILGDYLWVLIDQ\VKRZWKDWWKHUHLVQRJHQXLQHLVVXHDVWRDQ\        LQWHUSUHWDWLRQSODFHGRQWKLVODQJXDJHE\WKHFLUFXLWFRXUW
PDWHULDO IDFW DQG WKDW WKH PRYLQJ SDUW\ LV HQWLWOHG WR D       DQGWKH&RXUWRI$SSHDOVLVFOHDUO\DWYDULDQFHZLWKWKH
MXGJPHQWDVDPDWWHURIODZl)(' 5 &,9 3F&HORWH[            SODLQODQJXDJHRIWKHSROLF\7KHSULPDU\SXUSRVHRID
&RUSY&DWUHWW86%RRNHUY%URZQ              FRPSUHKHQVLYH JHQHUDO OLDELOLW\ SROLF\ LV WR SURYLGH
	:LOOLDPVRQ7REDFFR&R,QF)GWK                 EURDG FRPSUHKHQVLYH LQVXUDQFH  2EYLRXVO\ WKH YHU\
&LU1RWDOOIDFWVDUHFRQVLGHUHGPDWHULDODIDFWLVRQO\       QDPHRIWKHSROLF\VXJJHVWVWKHH[SHFWDWLRQRIPD[LPXP
PDWHULDO LI LWV UHVROXWLRQ ZLOO DIIHFW WKH RXWFRPH RI WKH       FRYHUDJH&RQVHTXHQWO\WKHFRPSUHKHQVLYHSROLF\KDV
ODZVXLW$QGHUVRQY/LEHUW\/REE\,QF86             EHHQ RQH RI WKH PRVW SUHIHUUHG E\ EXVLQHVVHV DQG
  :KHQ UHYLHZLQJ FURVVPRWLRQV IRU VXPPDU\                  JRYHUQPHQWDOHQWLWLHVRYHUWKH\HDUVEHFDXVHWKDWSROLF\
MXGJPHQWWKHFRXUWPXVWHYDOXDWHHDFKPRWLRQ RQ LWVRZQ               KDVSURYLGHGWKHEURDGHVWFRYHUDJHDYDLODEOH$OOULVNV
PHULWV DQG YLHZ DOO IDFWV DQG LQIHUHQFHV LQ WKH OLJKW PRVW     QRWH[SUHVVO\H[FOXGHGDUHFRYHUHGLQFOXGLQJWKRVHQRW
IDYRUDEOHWRWKHQRQPRYLQJSDUW\0DWVXVKLWD(OHF,QG&R             FRQWHPSODWHGE\HLWKHUSDUW\
Y=HQLWK5DGLR&RUS867DIW%URDG
&RY8QLWHG6WDWHV)GWK&LU               ,GHPSKDVLVDGGHG,QWKHLQVWDQWFDVH3ODLQWLIIGLGQRW
                                                                       SXUFKDVHDEURDG&*/SROLF\EXWDKRPHRZQHUjVLQVXUDQFH
                               ,,,                                    SROLF\6KHLVQRWWKHUHIRUHHQWLWOHGWRVXFKEURDGSURWHFWLRQV
  $ 'XW\WR'HIHQG                                                            %XVLQHVV3XUVXLW([FOXVLRQ
   8QGHU .HQWXFN\ ODZ LQ RUGHU WR UHFRYHU LQ DQ\ DFWLRQ        7KHGLVWULFWFRXUWDOVRKHOGWKDW&8,&jVGXW\WRGHIHQGZDV
EDVHG RQ EUHDFK RI D FRQWUDFW D SODLQWLII PXVW VKRZ WKH     DEURJDWHGE\WKHIDFWWKDW7DSSjVFODLPDURVHDVDUHVXOWRI
H[LVWHQFH DQG WKH EUHDFK RI D FRQWUDFWXDOO\ LPSRVHG GXW\      3ODLQWLIIjVEXVLQHVVSXUVXLWV,Q(\OHUY1DWLRQZLGH0XW)LUH
6WURQJY/RXLVYLOOH	1DVKYLOOH5&R6:G              ,QV&R6:G.\WKH.HQWXFN\6XSUHPH
.\   7KH WHUPV RI 3ODLQWLIIjV SROLF\ SURYLGHG WKDW    &RXUW DGRSWHG D WZRSDUW WHVW IRU GHWHUPLQLQJ ZKHWKHU
&8,&KDGDGXW\WRGHIHQGKHUDJDLQVWODZVXLWVWKDWFRXOGEH           DFWLYLWLHVPD\EHFRQVLGHUHGEXVLQHVVSXUVXLWV
FRYHUHGE\WKHSROLF\3ODLQWLIIFRQWHQGVWKDW&8,&EUHDFKHG
LWV GXW\ WR GHIHQG LQVRIDU DV WKH DOOHJDWLRQV LQ WKH 7DSS      7R FRQVWLWXWH D EXVLQHVV SXUVXLW WKHUH PXVW EH WZR
FRPSODLQWZHUHVXIILFLHQWWRUHTXLUHDMXGLFLDOGHWHUPLQDWLRQ            HOHPHQWV ILUVW FRQWLQXLW\ DQG VHFRQGO\ WKH SURILW
SULRUWRGHQ\LQJFRYHUDJH:HGLVDJUHH                                 PRWLYH DV WR WKH ILUVW WKHUH PXVW EH D FXVWRPDU\
       /HQQLQJY&RPPHUFLDO8QLRQ,QV&R                  1R       1R         /HQQLQJY&RPPHUFLDO8QLRQ,QV&R             

m&*/lSROLFLHVZKLFKDUHRIWHQXVHGWRLQVXUHODUJHVFDOH                        .HQWXFN\FRXUWVKDYHUHFRJQL]HGWKDWWKHGXW\WRGHIHQGLV
EXVLQHVV YHQWXUHV  6HH HJ 3XUVHOO &RQVW ,QF Y                   EURDGHU WKDQ WKH GXW\ WR LQGHPQLI\  6HH sDPHV *UDKDP
+DZNH\H6HF ,QV &R  1:G   ,RZD                      %URZQ)RXQG,QFY6W3DXO)LUH	0DULQH,QV&R
m>'@HIHFWLYHZRUNPDQVKLSVWDQGLQJDORQHWKDWLVUHVXOWLQJ                     6:G.\,QVXUHUVKDYHDQREOLJDWLRQWR
LQ GDPDJHV RQO\ WR WKH ZRUN SURGXFW LWVHOI LV QRW DQ                  GHIHQGLIWKHUHLVDQDOOHJDWLRQmZKLFKSRWHQWLDOO\SRVVLEO\RU
RFFXUUHQFHXQGHUD&*/SROLF\l+HLOHY+HUUPDQQ                         PLJKW FRPH ZLWKLQ WKH FRYHUDJH RI WKH SROLF\l  %URZQ
1(G2KLR&W$SSm>&@RXUWVLQ2KLRDV                      )RXQG6:GDWFLWLQJ2j%DQQRQY$HWQD&DV
ZHOODVWKHPDMRULW\RIFRXUWVLQMXULVGLFWLRQVWKURXJKRXWWKH                   DQG6XU&R6:G.\FI0DWKHQ\Y
FRXQWU\KDYHFRQFOXGHGWKDWGHIHFWLYHZRUNPDQVKLSGRHVQRW                      /XGZLJ6RG/D&W$SSKROGLQJWKDW
FRQVWLWXWHDQµRFFXUUHQFHjLQSROLFLHVVXFKDVWKHRQHKHUH                     WKH LQVXUHU LV REOLJDWHG WR GHIHQG XQOHVV WKH FRPSODLQW
7KHFRXUWVJHQHUDOO\FRQFOXGHWKDWGHIHFWLYHZRUNPDQVKLSLV                      XQDPELJXRXVO\ H[FOXGHV FRYHUDJH  7KHUHIRUH HYHQ LI DQ
QRWZKDWLVPHDQWE\WKHWHUPµDFFLGHQWjXQGHUWKHGHILQLWLRQ                    LQVXUDQFHFRPSDQ\GHQLHVFRYHUDJHEDVHGRQWKHPLVWDNHQ
RIµRFFXUUHQFHjl0F$OOLVWHUY3HHUOHVV,QV&R1+                    EHOLHIWKDWLWLVMXVWLILHGLQGRLQJVRWKHFRPSDQ\PD\VWLOO
 1+  m7KH IRUWXLW\ LPSOLHG E\ UHIHUHQFH WR                   EUHDFKLWVFRQWUDFWZLWKWKHLQVXUHG6HH(VNULGJHY(GXFDWRU
DFFLGHQW RU H[SRVXUH LV QRW ZKDW LV FRPPRQO\ PHDQW E\                   	([HFXWLYH,QVXUHUV,QF6:G.\
IDLOXUHRIZRUNPDQVKLSl                                                       +RZHYHU LQ WKH LQVWDQW FDVH WKHUH ZDV QR SRWHQWLDO IRU
                                                                                 FRYHUDJHXQGHUWKHSROLF\m7KHGHWHUPLQDWLRQRIZKHWKHUD
  3ODLQWLIIDUJXHVWKDWKHUSROLF\FRYHUVIDXOW\FUDIWVPDQVKLS                   GHIHQVH LV UHTXLUHG PXVW EH PDGH DW WKH RXWVHW RI WKH
FODLPVFDXVHGE\DFRQWUDFWRUEHFDXVHDQLQVXUHGZRXOGQRW                       OLWLJDWLRQl E\ UHIHUHQFH WR WKH FRPSODLQW DQG NQRZQ IDFWV
QRUPDOO\ H[SHFW VXFK D SRRU SHUIRUPDQFH WR RFFXU  ,Q                  %URZQ)RXQG6:GDWFLWLQJ.QDSSY&KHYURQ
VXSSRUWRIWKLVFODLPVKHFLWHV%URZQ)RXQGDWLRQLQZKLFK                      86$,QF)GWK&LU7DSSjVFRPSODLQW
WKH.HQWXFN\6XSUHPH&RXUWKHOGWKDWRQO\WKRVHGDPDJHV                          GLGQRWDOOHJHWKHW\SHRIFODLPVWKDWZRXOGEHFRYHUHGE\WKH
WKDW DUH H[SHFWHG RU LQWHQGHG IURP WKH VWDQGSRLQW RI WKH                SROLF\,QDGGLWLRQWKHODQJXDJHRIWKHFRPSODLQWUHYHDOVWKDW
LQVXUHG DUH H[FOXGHG IURP WKH GHILQLWLRQ RI WKH WHUP                     DQ\ SRWHQWLDO FRYHUDJH ZDV DEURJDWHG E\ WZR H[SOLFLW
mRFFXUUHQFHl6:GDW,QWKHFDVHVXEMXGLFHWKH                   FRYHUDJHH[FOXVLRQV
GLVWULFWFRXUWGLVWLQJXLVKHG%URZQ)RXQGDWLRQQRWLQJWKDWLQ
WKDWFDVHWKHFRXUWGHILQHGmRFFXUUHQFHlLQWKHFRQWH[WRID                             7KHm2FFXUUHQFHl5HTXLUHPHQW
&*/ SROLF\ LQVWHDG RI D KRPHRZQHUVj SROLF\  3ODLQWLII
FRQWHQGVWKDWE\GLVWLQJXLVKLQJ.HQWXFN\ODZRQWKLVJURXQG                      7DSSjVFRPSODLQWDOOHJHGWKDWWKH7LPEHU5LGJHKRPHZDV
WKHGLVWULFWFRXUWPDGHDGLVWLQFWLRQZLWKRXWDGLIIHUHQFH6KH                 EXLOWZLWKSRRUZRUNPDQVKLSDQGWKDWKHZDVIRUFHGWRILQLVK
DUJXHVWKDWWKHGLVWULFWFRXUWHUUHGE\QRWIROORZLQJZKDWVKH                   FRQVWUXFWLRQDWKLVRZQH[SHQVH6SHFLILFDOO\7DSSDOOHJHG
FRQVLGHUVFOHDU.HQWXFN\SUHFHGHQWWKDWOLEHUDOO\FRQVWUXHV                      WKDW
WKH WHUP mRFFXUUHQFHl DV EHLQJ PRUH H[SDQVLYH WKDQ
mDFFLGHQWlDQGLQFOXGLQJDOOULVNVQRWFRQWHPSODWHGE\HLWKHU                      7KH 'HIHQGDQWV EUHDFKHG WKH &RQWUDFW E\ QHJOLJHQWO\
                                                                                   FRQVWUXFWLQJDKRXVHIRUWKH3ODLQWLIIZKLFKZDVQRWLQ

     
     2QH RI WKH FRYHUDJH H[FOXVLRQV SURYLGHV WKDW DQ\ RFFXUUHQFH WKDW LV
H[SHFWHG RU LQWHQGHG E\ WKH LQVXUHG LV QRW FRYHUHG       +RZHYHU WKLV GRHV
                                                                                     
QRW PHDQ WKDW DQ\ RFFXUUHQFH WKDW LV       QRW H[SHFWHG LV DXWRPDWLFDOO\              3ULRU WR ILOLQJ WKH ODZVXLW 7DSS SRVWHG RXWVLGH KLV LQWHULRU GHVLJQ
FRYHUHG    )XUWKHUPRUH   DQ   LQFLGHQW   PXVW   ILUVW   EH   FRQVLGHUHG   DQ   VWRUH DQG QHZ KRPH ODUJH VLJQV VWDWLQJ m(G *DWWHUGDP DQG 6DQG\
mRFFXUUHQFHl EHIRUH ZH HYHQ UHDFK WKH VFRSH RI WKLV H[FOXVLRQ                   /HQQLQJ %XLOGHUV"   7KH\ QHYHU ILQLVK D MREl
    /HQQLQJY&RPPHUFLDO8QLRQ,QV&R           1R       1R      /HQQLQJY&RPPHUFLDO8QLRQ,QV&R           

  FRQIRUPLW\ ZLWK WKH &RQWUDFW DQG DSSOLFDEOH SODQV             EXLOGHUjV SHUIRUPDQFH LQ FRQVWUXFWLQJ UHVLGHQFH QRW
  VSHFLILFDWLRQVDQGVWDQGDUGV                                        FRQVLGHUHGmSURSHUW\GDPDJHlVHHDOVR$OOVWDWH,QV&RY
                                                                       0RUJDQ  ) 6XSS   1' &DO  D
7DSS &RPSODLQW s$ DW   7DSS DOVR FODLPHG WKDW        FODLPIRUQHJOLJHQWPLVUHSUHVHQWDWLRQVDQGRPLVVLRQVGRHVQRW
3ODLQWLIIDQG*DWWHUGDPLPSURSHUO\ILOHGDPHFKDQLFjVOLHQ             FRQVWLWXWH SURSHUW\ GDPDJH DQG WKHUHIRUH LPSOLFDWHV QR
DJDLQVW WKH SURSHUW\ DQG IUDXGXOHQWO\ PLVUHSUHVHQWHG WKHLU       mRFFXUUHQFHl$OOVWDWH,QV&RY+DQVWHQ)6XSS
FRQVWUXFWLRQSUDFWLFHV3ODLQWLIIGLVSXWHV&8,&jVFRQFOXVLRQ          1'&DOKROGLQJWKDWQRFRYHUDJHH[LVWHGIRU
WKDW WKH FRPSODLQW DOOHJHG D QHJOLJHQW EUHDFK RI FRQWUDFW     DOOHJDWLRQV UHVXOWLQJ IURP ODUJHO\ LQWHQWLRQDO FRQGXFW
,QVWHDG VKH FKDUDFWHUL]HV WKH FRPSODLQW DV DOOHJLQJ             VWHPPLQJIURPDUHVLGHQWLDOVDOHVFRQWUDFW
QHJOLJHQFHDSDUWIURPEUHDFKRIFRQWUDFW3ODLQWLIIFRQWHQGV
WKDW &8,& GUHZ DQ XQZDUUDQWHG FRQFOXVLRQ WKDW WKH                 6HFRQGWRWKHH[WHQWWKDWWKHFRPSODLQWDOOHJHVDEUHDFKRI
DOOHJDWLRQV LQ WKH FRPSODLQW XQDPELJXRXVO\ H[FOXGHG               FRQWUDFWWKHUHLVVLPLODUO\QRmRFFXUUHQFHlFRXUWVKDYHKHOG
FRYHUDJHVKHDUJXHVWKDWWKHFRPSODLQWUHYHDOHGDSRVVLELOLW\         WKDW D EUHDFK RI FRQWUDFW FODLP FDQQRW FRQVWLWXWH DQ
RIOLDELOLW\XQGHUWKHSROLF\,QVXSSRUWRIWKLVFRQWHQWLRQ         mRFFXUUHQFHlXQGHUOLDELOLW\SROLFLHVWULJJHUHGE\DQDFFLGHQW
3ODLQWLIIFODLPVWKDW&8,&DGPLWWHGWKURXJKLWVVHQLRUFODLPV          RUDQRFFXUUHQFH6HHHJsDNREVRQ6KLS\DUG,QFY$HWQD
DGMXVWHU /DVFK WKDW WKH 7DSS FRPSODLQW ZDV mYDJXHl DQG         &DV	6XU&R)GG&LUILQGLQJQR
mSRRUO\ ZRUGHGl DQG WKDW LW LV SRVVLEOH WKDW WKH 7DSS VXLW   DFFLGHQW ZKHUH LQVXUHG VKLSEXLOGHU SURYLGHG WXJ ERDW ZLWK
FRXOGKDYHFRPHZLWKLQWKHWHUPVRIWKHSROLF\7KHUHIRUH            GHIHFWLYH VWHHULQJ PHFKDQLVP FRQWUDU\ WR FRQWUDFW
VKHFRQWHQGV&8,&VKRXOGKDYHFRQGXFWHGDPRUHWKRURXJK               VSHFLILFDWLRQV 3DFH &RQVWU &R Y 8QLWHG 6WDWHV )LG 	
LQYHVWLJDWLRQ WR GHWHUPLQH LI VXFK FRYHUDJH ZDV SRVVLEOH       *XDU,QV&R)GWK&LUQRDFFLGHQW
+RZHYHUHYHQDOLEHUDOFRQVWUXFWLRQRIWKHFRPSODLQWZRXOG            ZKHUH LQVXUHG VXEFRQWUDFWRU EUHDFKHG FRQWUDFWXDO GXW\ WR
QRWVXSSRUW3ODLQWLIIjVDUJXPHQWV                                     SURFXUH LQVXUDQFH IRU FRQWUDFWRU VHH DOVR 0DJLF 9DOOH\
                                                                       3RWDWR6KLSSHUVY&RQWjO,QV3G,GDKR
  )LUVW LQVRIDU DV WKH FRPSODLQW DVVHUWHG OLDELOLW\ IRU        %XWVHH$XWR2ZQHUV,QV&RY7RROH)6XSS
QHJOLJHQFHLWFDQQRWEHVDLGWRDOOHJHDQmRFFXUUHQFHlXQGHU            0' $OD  GHFOLQLQJ WR DGRSW D EURDG
WKH SROLF\  3ODLQWLIIjV SROLF\ FRYHUV mERGLO\ LQMXU\l DQG     KROGLQJWKDWFRQWUDFWFODLPVDUHQRWRFFXUUHQFHVDQGLQVWHDG
mSURSHUW\GDPDJHlWKHODWWHURIZKLFKLVGHILQHGDVmSK\VLFDO         ORRNLQJWRWKHmVSHFLILFµNLQGRIFODLPjEHLQJDVVHUWHG
LQMXU\WRGHVWUXFWLRQRIRUORVVRIXVHRIWDQJLEOHSURSHUW\l       UHJDUGOHVVDVWRZKHWKHULWLVODEHOHGDFRQWUDFWFODLPDWRUW
3ODLQWLIIFRQWHQGVWKDWWKLVGHILQLWLRQHQFRPSDVVHVSK\VLFDO           FODLPRUZKDWHYHUDQGWKHµSXUSRVHRIWKHJHQHUDOOLDELOLW\
GDPDJHWRWKHKRPHDVZHOODVDVVRFLDWHGORVVRIWKHGDPDJHG           SROLF\j IURP ZKLFK FRYHUDJH LV VRXJKWl TXRWLQJ &LW\ RI
SRUWLRQVRIWKHKRPHWKDWPD\EHLQFOXGHGLQ7DSSjVODZVXLW           %XUOLQJWRQY1DWjO8QLRQ)LUH,QV&R$G
<HW7DSSKDVQRWDOOHJHGDQ\GDPDJHWRGHVWUXFWLRQRIRU            9W
ORVVRIWKHXVHRISURSHUW\)XUWKHUPRUH7DSSKDVQRWDOOHJHG
DQ\ ERGLO\ LQMXU\  ,QVWHDG KH PHUHO\ FODLPV WKDW KH ZDV      ,Q DGGLWLRQ WKHUH LV QR mRFFXUUHQFHl WR WKH H[WHQW WKDW
IRUFHGDWWUHPHQGRXVH[SHQVHWRFRPSOHWHWKHFRQVWUXFWLRQ            7DSSjV FRPSODLQW DOOHJHV SURSHUW\ GDPDJH DULVLQJ RXW RI
MREWKDW3ODLQWLIIDQG*DWWHUGDPKDGOHIWXQILQLVKHG&RXUWV          GHIHFWLYHRUIDXOW\FUDIWVPDQVKLS7KHPDMRULW\RIFRXUWVWR
LQRWKHUVWDWHVKDYHKHOGWKDWVXFKDSXUHO\HFRQRPLFFODLP            FRQVLGHUWKHLVVXHKDYHFRQFOXGHGWKDWSROLFLHVGRQRWSURYLGH
FDQQRW FRQVWLWXWH DQ mRFFXUUHQFHl  6HH HJ <HJJH Y        FRYHUDJH ZKHUH WKH GDPDJHV FODLPHG DUH WKH FRVW RI
,QWHJULW\0XW,QV&R1:G,RZD               FRUUHFWLQJWKHZRUNLWVHOIHYHQLQWKHFRQWH[WRIWKHEURDG
KRPHRZQHUVj LQWDQJLEOH HFRQRPLF ORVVHV IURP LQVXUHG              SURWHFWLRQV RIIHUHG E\ D FRPSUHKHQVLYH JHQHUDO OLDELOLW\