Court Opinion

ID: 2969723
Source: CourtListenerOpinion
Date Created: 2015-09-22 15:55:53.539798+00
Date Added: 2024-06-11T15:01:41.232474
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(< 35,17,1* &203$1<          ;
          3ODLQWLII$SSHOODQW    
              &URVV$SSHOOHH      
                                     1RV
                                     
           Y                       !
                                   
                                   
 s($11,1( %5$171(5                
          'HIHQGDQW$SSHOOHH 
              &URVV$SSHOODQW 
                                   
                                 1
      $SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW
       IRUWKH1RUWKHUQ'LVWULFWRI2KLRDW$NURQ
     1RnsDPHV6*ZLQ'LVWULFWsXGJH
                      $UJXHG0DUFK
              'HFLGHGDQG)LOHG0DUFK
%HIRUH0$57,1&KLHIsXGJH0225(&LUFXLWsXGJH
             7$512:'LVWULFWsXGJH

    
     7KH +RQRUDEOH $UWKXU s 7DUQRZ 8QLWHG 6WDWHV 'LVWULFW sXGJH IRU
WKH (DVWHUQ 'LVWULFW RI 0LFKLJDQ VLWWLQJ E\ GHVLJQDWLRQ

                                    
      +LQH\3ULQWLQJ                   1RV
       &RY%UDQWQHU

                     BBBBBBBBBBBBBBBBB
                          &2816(/
$5*8('  'DUDQ 3 .LHIHU .5(,1(5 	 3(7(56
&OHYHODQG2KLRIRU$SSHOODQW0DUN&:LOOLV:,//,6	
/,11(1$NURQ2KLRIRU$SSHOOHH21%5,()'DUDQ3
.LHIHU .5(,1(5 	 3(7(56 &OHYHODQG 2KLR IRU
$SSHOODQW  0DUN & :LOOLV :,//,6 	 /,11(1 $NURQ
2KLRIRU$SSHOOHH
                     BBBBBBBBBBBBBBBBB
                         23,1,21
                     BBBBBBBBBBBBBBBBB
  %2<&()0$57,1s5&KLHIsXGJH+LQH\3ULQWLQJ
&RPSDQ\DSSHDOVDQGsHDQQLQH%UDQWQHUFURVVDSSHDOVWKH
GLVWULFWFRXUWjVJUDQWRIVXPPDU\MXGJPHQWLQSDUWWR+LQH\
3ULQWLQJDQGLQSDUWWR%UDQWQHULQWKLV(5,6$DFWLRQVHHNLQJ
HQIRUFHPHQW RI WKH WHUPV RI WKH VXEURJDWLRQ DQG
UHLPEXUVHPHQWSURYLVLRQVRI+LQH\jVHPSOR\HHEHQHILWSODQ
)RUWKHIROORZLQJUHDVRQVZHDIILUPWKHGLVWULFWFRXUW
                                ,
  +LQH\ 3ULQWLQJ &RPSDQ\ KDV DQ (PSOR\HH %HQHILW 3ODQ
HVWDEOLVKHG SXUVXDQW WR WKH  (PSOR\HH 5HWLUHPHQW ,QFRPH
6HFXULW\$FWRI(5,6$86&HWVHT7KH
%HQHILW3ODQLVVHWIRUWKLQD0DVWHU'RFXPHQW3ODQDQGLV
DGPLQLVWHUHG E\ $GPLQLVWUDWLYH 6HUYLFH &RQVXOWDQWV  7KH
%HQHILW 3ODQ FRQWDLQV WZR SURYLVLRQV UHJDUGLQJ DFFLGHQW
PHGLFDO H[SHQVHV D VXEURJDWLRQ SURYLVLRQ DQG D
UHLPEXUVHPHQW SURYLVLRQ  7KHVH SURYLVLRQV SURYLGH DV
IROORZV
                 5,*+72)68%52*$7,21
    7KH 3ODQ VKDOO EH VXEURJDWHG WR WKH H[WHQW RI DQ\
    SD\PHQWVXQGHUWKLV3ODQRIKHDOWKFRYHUDJHWRDOORIWKH
1RV                       +LQH\3ULQWLQJ           
                                            &RY%UDQWQHU

  3ODQ0HPEHUjVULJKWRIUHFRYHU\WKHUHIRUHLUUHJDUGOHVV
  >VLF@RIWKHHQWLW\RULQGLYLGXDOIURPZKRWKHUHFRYHU\
  PD\ EH GXH   7KH 3ODQ ZLOO KDYH WKH ULJKW DW LWV
  GLVFUHWLRQDQG3ODQ$GPLQLVWUDWRUjVVROHLQVWLJDWLRQWR
  WDNHOHJDODFWLRQRQEHKDOIRIWKHLQVXUHGRURQEHKDOIRI
  WKH 3ODQ LWVHOI  $Q\ DPRXQWV VR UHFRYHUHG KRZHYHU
  GHVLJQDWHG VKDOO EH DSSRUWLRQHG DV IROORZV WKLV 3ODQ
  VKDOOEHUHLPEXUVHGWRWKHH[WHQWRILWVSD\PHQWVXQGHU
  WKLVSODQRIKHDOWKFRYHUDJH,IDQ\EDODQFHWKHQUHPDLQV
  IURPVXFKUHFRYHU\LWVKDOOEHDSSOLHGWRUHLPEXUVHWKH
  3ODQ0HPEHUDQGDQ\RWKHUSROLF\SURYLGLQJEHQHILWVWR
  WKH3ODQ0HPEHUDVWKHLULQWHUHVWPD\DSSHDU
                     5(,0%856(0(17
  ,IWKH3ODQPHPEHUUHFRYHUVGDPDJHVIURPDQ\SDUW\RU
  WKURXJKDQ\FRYHUDJHQDPHGDERYHKHPXVWKROGLQWUXVW
  IRUWKH(PSOR\HUWKHSURFHHGVRIWKHUHFRYHU\DQGPXVW
  UHLPEXUVHXVWRWKHH[WHQWRISD\PHQWPDGH
  sHDQQLQH%UDQWQHUZDVDQHPSOR\HHRI+LQH\3ULQWLQJIURP
 XQWLO VKH VXIIHUHG VHULRXV LQMXULHV LQ D PRWRU YHKLFOH
DFFLGHQW RQ 1RYHPEHU    $OWKRXJK %UDQWQHUjV
LQMXULHVSUHYHQWHGKHUIURPFRQWLQXLQJKHUHPSOR\PHQWZLWK
+LQH\ 3ULQWLQJ VKH FRQWLQXHG WR SDUWLFLSDWH LQ LWV %HQHILW
3ODQ  )URP WKH GDWH RI WKH DFFLGHQW XQWLO )HEUXDU\ 
%UDQWQHULQFXUUHGLQPHGLFDOH[SHQVHV%UDQWQHU
KDVDQHLJKWKJUDGHHGXFDWLRQDQGDYRFDWLRQDODVVHVVPHQW
GHHPHGKHUFRPSHWLWLYHO\XQHPSOR\DEOHLQWKHODERUPDUNHW
%UDQWQHU HVWLPDWHV KHU IXWXUH ORVW HDUQLQJV DVVXPLQJ D
UHWLUHPHQWDJHRIVL[W\ILYHWRH[FHHGDQGIXWXUH
PHGLFDO FDUH WR EH  SHU \HDU  %UDQWQHU DOVR ILOHG D
SHUVRQDO LQMXU\ FODLP DJDLQVW WKH SDUW\ UHVSRQVLEOH IRU WKH
DFFLGHQWZKLFKVKHVHWWOHGLQ$XJXVWIRU
  +LQH\jV %HQHILW 3ODQ WKURXJK $GPLQLVWUDWLYH 6HUYLFH
&RQVXOWDQWV SDLG   WRZDUGV %UDQWQHUjV PHGLFDO
H[SHQVHV,Q1RYHPEHUDQG'HFHPEHU6XEUR$XGLW
DFWLQJ RQ EHKDOI RI $GPLQLVWUDWLYH 6HUYLFH &RQVXOWDQWV
     +LQH\3ULQWLQJ                     1RV         1RV                      +LQH\3ULQWLQJ         
      &RY%UDQWQHU                                                                                             &RY%UDQWQHU

FRQWDFWHG %UDQWQHUjV DWWRUQH\ UHJDUGLQJ D SRVVLEOH                DVNHGWREHDGYLVHGLI$GPLQLVWUDWLYH6HUYLFH&RQVXOWDQWVZDV
VXEURJDWLRQFODLP2Q'HFHPEHU%UDQWQHUjVDWWRUQH\VHQW           QRWWKHSODQDGPLQLVWUDWRU2QsDQXDU\6XEUR$XGLW
OHWWHUVWR$GPLQLVWUDWLYH6HUYLFH&RQVXOWDQWVDQG6XEUR$XGLW          UHVSRQGHG ZLWK D VKRUW OHWWHU VWDWLQJ mHQFORVHG LV WKH 3ODQ
UHTXHVWLQJSODQLQIRUPDWLRQZKLFK(5,6$REOLJDWHVWKHSODQ            ODQJXDJH\RXUHTXHVWHGlWRZKLFKZDVDWWDFKHGWKUHHSDJHV
DGPLQLVWUDWRUWRSURYLGHXSRQUHTXHVW6HH86&           RI WKH 3ODQ LQFOXGLQJ D VHFWLRQ HQWLWOHG m6WDWHPHQW RI
E                                                              5LJKWVlZKLFKDGYLVHGWKDWSODQSDUWLFLSDQWVDUHHQWLWOHGWR
                                                                       mREWDLQ FRSLHV RI DOO SODQ GRFXPHQWV DQG RWKHU 3ODQ
  2Q )HEUXDU\   +LQH\ 3ULQWLQJ ILOHG WKLV (5,6$        LQIRUPDWLRQXSRQZULWWHQUHTXHVWWRWKH3ODQ$GPLQLVWUDWRUl
DFWLRQ IRU VSHFLILF SHUIRUPDQFH DQG UHVWLWXWLRQ WKURXJK          DQG D SDJH GHVLJQDWLQJ +LQH\ 3ULQWLQJ DV WKH SODQ
HQIRUFHPHQW RI WKH %HQHILW 3ODQjV VXEURJDWLRQ DQG                DGPLQLVWUDWRUOLVWLQJLWVDGGUHVVDQGWHOHSKRQHQXPEHU7KXV
UHLPEXUVHPHQWSURYLVLRQV+LQH\3ULQWLQJjVVXLWVRXJKWWR             HYHQLI%UDQWQHUKHUVHOIFRXOGKDYHUHDVRQDEO\EHOLHYHGIURP
UHFRYHUIURPWKHVHWWOHPHQWSURFHHGVWKHPHGLFDOEHQHILWVLW           KHU SDVW GHDOLQJV ZLWK $GPLQLVWUDWLYH 6HUYLFH &RQVXOWDQWV
SDLG WR %UDQWQHU  %UDQWQHU FRXQWHUFODLPHG IRU VWDWXWRU\       WKDW D UHTXHVW IRU LQIRUPDWLRQ VKRXOG EH GLUHFWHG WRZDUGV
GDPDJHVSXUVXDQWWR86&FIRUIDLOXUHWR             $GPLQLVWUDWLYH6HUYLFH&RQVXOWDQWVWKLVFRPPXQLFDWLRQIURP
SURGXFH UHTXHVWHG SODQ LQIRUPDWLRQ  7KH GLVWULFW FRXUW         6XEUR$XGLWVKRXOGKDYHLQIRUPHG%UDQWQHUjVFRXQVHOWKDWLQ
JUDQWHG %UDQWQHUjV PRWLRQ IRU VXPPDU\ MXGJPHQW RQ WKH           IDFW +LQH\ 3ULQWLQJ ZDV WKH GHVLJQDWHG SODQ DGPLQLVWUDWRU
FRPSODLQWILQGLQJWKDWWKHVXEURJDWLRQDQGUHLPEXUVHPHQW              FKDUJHG ZLWK VXSSO\LQJ UHTXHVWHG SODQ LQIRUPDWLRQ *LYHQ
SURYLVLRQVZHUHDPELJXRXVDQGWKHUHIRUHWKHPDNHZKROH                WKLV DQG WKH ODFN RI SUHFHGHQW IRU H[SDQGLQJ WKH VWDWXWRU\
UXOH SUHYHQWHG WKHLU HQIRUFHPHQW   7KH GLVWULFW FRXUW DOVR   GHILQLWLRQRIDSODQDGPLQLVWUDWRUXQGHU(5,6$ZHILQGWKDW
JUDQWHG+LQH\3ULQWLQJjVPRWLRQIRUVXPPDU\MXGJPHQWRQ                WKHGLVWULFWFRXUWGLGQRW DEXVHLWVGLVFUHWLRQLQUHIXVLQJWR
WKHFRXQWHUFODLPUHIXVLQJWRLPSRVHILQHVXQGHU(5,6$RQ             LPSRVHVWDWXWRU\SHQDOWLHVRQ+LQH\3ULQWLQJ
WKHJURXQGVWKDW%UDQWQHUIDLOHGWRPDNHDSURSHUUHTXHVWIRU
(5,6$ SODQ GRFXPHQWV DV UHTXLUHG E\  86&                                                   ,9
F
                                                                         :H $)),50 WKH GLVWULFW FRXUWjV JUDQW RI VXPPDU\
                                ,,                                    MXGJPHQWLQSDUWWR%UDQWQHUDQGLQSDUWWR+LQH\3ULQWLQJ
  :HUHYLHZWKHGLVWULFWFRXUWjVJUDQWRIVXPPDU\MXGJPHQW
GH QRYR  6HH /DNH Y 0HWURSROLWDQ /LIH ,QV &R  )G
  WK &LU  FLWDWLRQV RPLWWHG  6XPPDU\
MXGJPHQWLVDSSURSULDWHLIYLHZLQJWKHHYLGHQFHLQWKHOLJKW
PRVW IDYRUDEOH WR WKH QRQPRYLQJ SDUW\ WKH PRYLQJ SDUW\
HVWDEOLVKHVWKDWWKHUHLVQRJHQXLQHLVVXHRIPDWHULDOIDFWDQG
WKH\DUHHQWLWOHGWRMXGJPHQWDVDPDWWHURIODZ,G
                 $7KH6XEURJDWLRQ3URYLVLRQ
  7KHPDNHZKROHUXOHRIIHGHUDOFRPPRQODZmSURYLGHV
WKDWDQLQVXUHUFDQQRWHQIRUFHLWVVXEURJDWLRQULJKWVXQOHVV
DQGXQWLOWKHLQVXUHGKDVEHHQPDGHZKROHE\DQ\UHFRYHU\l
     +LQH\3ULQWLQJ                    1RV         1RV                           +LQH\3ULQWLQJ          
      &RY%UDQWQHU                                                                                                 &RY%UDQWQHU

FRPSO\ZLWKLQWKLUW\GD\VZLWKDUHTXHVWIRULQIRUPDWLRQIURP         &RSHODQG2DNVY+DXSW)GWK&LU
DSODQSDUWLFLSDQWmPD\LQWKHFRXUWjVGLVFUHWLRQEHSHUVRQDOO\       TXRWLQJ&RXFKRQ,QVXUDQFHG&RSHODQG2DNV
OLDEOHWRVXFKSDUWLFLSDQWLQWKHDPRXQWRIXSWRD        H[DPLQHG WKH DSSOLFDELOLW\ RI WKH PDNHZKROH UXOH WR D
GD\IURPWKHGDWHRIVXFKIDLOXUHRUUHIXVDODQGWKHFRXUWPD\       VXEURJDWLRQFODXVHLQDQ(5,6$SODQDQGKHOGmWKDWLQRUGHU
LQLWVGLVFUHWLRQRUGHUVXFKRWKHUUHOLHIDVLWGHHPVSURSHUl     IRUSODQODQJXDJHWRFRQFOXVLYHO\GLVDYRZWKHGHIDXOWUXOHLW
86&F(5,6$GHILQHVWKHSODQDGPLQLVWUDWRUDV           PXVWEHVSHFLILFDQGFOHDULQHVWDEOLVKLQJERWKDSULRULW\WRWKH
mWKH SHUVRQ VSHFLILFDOO\ VR GHVLJQDWHG E\ WKH WHUPV RI WKH   IXQGVUHFRYHUHGDQGDULJKWWRDQ\IXOORUSDUWLDOUHFRYHU\l
LQVWUXPHQW XQGHU ZKLFK WKH SODQ LV RSHUDWHGl   86&     ,G  %HFDXVH WKH SODQ ODQJXDJH DW LVVXH LQ &RSHODQG 2DNV
$                                                       IDLOHGWRHVWDEOLVKDULJKWWRDQ\SDUWLDOUHFRYHU\WKHPDNH
                                                                      ZKROHUXOHDSSOLHG
  %UDQWQHU DUJXHV WKDW HYHQ WKRXJK +LQH\ 3ULQWLQJ LV WKH
GHVLJQDWHG SODQ DGPLQLVWUDWRU DQG VKH UHTXHVWHG SODQ               +LQH\3ULQWLQJDUJXHVWKDWWKHPDNHZKROHUXOHGRHVQRW
LQIRUPDWLRQIURP$GPLQLVWUDWLYH6HUYLFH&RQVXOWDQWV+LQH\            DSSO\WRWKHVXEURJDWLRQSURYLVLRQEHFDXVHWKHVXEURJDWLRQ
3ULQWLQJ FDQ EH KHOG OLDEOH IRU $GPLQLVWUDWLYH 6HUYLFH         SURYLVLRQ XQDPELJXRXVO\ HVWDEOLVKHV WKDW WKH %HQHILW 3ODQ
&RQVXOWDQWVj IDLOXUH WR SURGXFH WKH UHTXHVWHG LQIRUPDWLRQ       HQMR\V SULRULW\ RYHU WKH LQVXUHG LQ UHFRYHULQJ GDPDJHV
EHFDXVH $GPLQLVWUDWLYH 6HUYLFH &RQVXOWDQWV ZDV WKH mGH          :KLOH LW PD\ EH WUXH DV +LQH\ 3ULQWLQJ DUJXHV WKDW WKH
IDFWRlDGPLQLVWUDWRU%UDQWQHUSRLQWVWRRWKHUVHFWLRQVRIWKH       ODQJXDJHFRQWDLQHGLQWKHVXEURJDWLRQSURYLVLRQHVWDEOLVKHV
0DVWHU 3ODQ 'RFXPHQW LGHQWLI\LQJ $GPLQLVWUDWLYH 6HUYLFH          ILUVWSULRULW\WRDQ\IXQGVUHFRYHUHGIURPDUHVSRQVLEOHSDUW\
&RQVXOWDQWVDVWKHSODQVXSHUYLVRUDQGLQVWUXFWLQJTXHVWLRQV          &RSHODQG2DNVFRPPDQGVWKDWWRDYRLGWKHDSSOLFDWLRQRIWKH
UHJDUGLQJ FODLPV WR EH GLUHFWHG WR LW  %UDQWQHU KRZHYHU   PDNHZKROHUXOHWKH3ODQPXVWDOVRXQDPELJXRXVO\HVWDEOLVK
RIIHUVQRELQGLQJFDVHODZIURPWKLV&LUFXLWWRVXSSRUWKHU           DULJKWWRDQ\IXOORUSDUWLDOUHFRYHU\7KLVWKHVXEURJDWLRQ
DVVHUWLRQWKDWDSODQDGPLQLVWUDWRUPD\EHKHOGOLDEOHEDVHGRQ       SURYLVLRQIDLOVWRGR1RUGRHVWKHSKUDVHmWRWKHH[WHQWRI
LQIRUPDWLRQ UHTXHVWV GLUHFWHG WR VRPHRQH RWKHU WKDQ WKH        DQ\SD\PHQWVlFOHDUO\GLVDYRZWKHPDNHZKROHUXOH:KLOH
DGPLQLVWUDWRU                                                       WKLVSKUDVHPD\HVWDEOLVKWKH%HQHILW3ODQjVVXEURJDWLRQULJKWV
                                                                      UHJDUGLQJ DQ\ DPRXQW LW SDLG WRZDUGV %UDQWQHUjV PHGLFDO
  7KH ODZ LQ WKLV &LUFXLW LV FOHDU WKDW m>R@QO\ D SODQ      H[SHQVHV LW VXIIHUV IURP WKH VDPH DPELJXLW\ DV WKH SODQ
DGPLQLVWUDWRU FDQ EH KHOG OLDEOH XQGHU VHFWLRQ Fl       ODQJXDJHLQ&RSHODQG2DNVLWGRHVQRWDGGUHVVZKHWKHUWKLV
9DQGHUNORNY3URYLGHQW/LIH	$FFLGHQW,QVXUDQFH&R            ULJKWDSSOLHVZKHQ%UDQWQHUKDVQRWEHHQIXOO\FRPSHQVDWHG
)GWK&LU,WLVXQGLVSXWHGWKDWWKH0DVWHU      IRUKHULQMXULHV:HWKHUHIRUHILQGWKHVXEURJDWLRQSURYLVLRQ
3ODQ 'RFXPHQW GHILQHV +LQH\ 3ULQWLQJ DV WKH SODQ               DPELJXRXV EHFDXVH LW LV VLOHQW DV WR ZKHWKHU WKH ULJKW RI
DGPLQLVWUDWRUDQGWKDW%UDQWQHUWKURXJKFRXQVHOGLUHFWHGKHU
UHTXHVW IRU SODQ LQIRUPDWLRQ WR $GPLQLVWUDWLYH 6HUYLFH
&RQVXOWDQWVDQG6XEUR$XGLWUDWKHUWKDQ+LQH\3ULQWLQJ
  0RUHRYHU %UDQWQHUjV FODLP WKDW mDW QR WLPH ZDV >VKH@
                                                                          
                                                                           5HOHYDQW   SRUWLRQV RI WKH SODQ SURYLVLRQ DW LVVXH LQ   &RSHODQG 2DNV
LQIRUPHGWKDW$GPLQLVWUDWLYH6HUYLFH&RQVXOWDQWVZDVQRWWKH          SURYLGHG WKDW m7KH &RYHUHG SHUVRQ DJUHHV WR UHFRJQL]H WKH 3ODQjV ULJKW WR

SODQDGPLQLVWUDWRUlLVEHOLHGE\WKHUHFRUG7KH'HFHPEHU           VXEURJDWLRQ DQG UHLPEXUVHPHQW       7KHVH ULJKWV SURYLGH WKH 3ODQ ZLWK D
                                                                      SULRULW\ RYHU DQ\ IXQGV SDLG E\ D WKLUG SDUW\ WR D &RYHUHG 3HUVRQ UHODWLYH
OHWWHUVIURP%UDQWQHUjVDWWRUQH\WR$GPLQLVWUDWLYH6HUYLFH         WR WKH LQMXU\ RU VLFNQHVV LQFOXGLQJ D SULRULW\ RYHU DQ\ FODLP IRU QRQ
&RQVXOWDQWVDQG6XEUR$XGLWUHTXHVWHGSODQLQIRUPDWLRQDQG            PHGLFDO RU GHQWDO FKDUJHV DWWRUQH\ IHHV RU RWKHU FRVWV DQG H[SHQVHVl
                                                                      &RSHODQG 2DNV     )G DW 
     +LQH\3ULQWLQJ                      1RV         1RV                      +LQH\3ULQWLQJ         
      &RY%UDQWQHU                                                                                              &RY%UDQWQHU

VXEURJDWLRQDSSOLHVWRSDUWLDOUHFRYHU\DQGDFFRUGLQJO\WKH           WR ZKHWKHU WKH ULJKW RI UHLPEXUVHPHQW DSSOLHV WR SDUWLDO
PDNHZKROHUXOHDSSOLHV                                               UHFRYHU\DQGDFFRUGLQJO\WKHPDNHZKROHUXOHDSSOLHV
               %7KH5HLPEXUVHPHQW3URYLVLRQ                                      &$SSOLFDWLRQRIWKH0DNH:KROH5XOH
  +LQH\3ULQWLQJDUJXHVWKDWWKHPDNHZKROHUXOHGRHVQRW                 +DYLQJ IRXQG ERWK WKH VXEURJDWLRQ DQG UHLPEXUVHPHQW
DSSO\WRUHLPEXUVHPHQWSURYLVLRQVDQGWKDWHYHQLIWKHPDNH           SURYLVLRQVDPELJXRXVEHFDXVHWKH\GRQRWFOHDUO\HVWDEOLVK
ZKROH UXOH GLG DSSO\ WR UHLPEXUVHPHQW SURYLVLRQV WKH            WKDWWKH\DSSO\WRDSDUWLDOUHFRYHU\E\WKHLQVXUHGWKHPDNH
UHLPEXUVHPHQW SURYLVLRQ FRQWDLQHG LQ WKH %HQHILW 3ODQ LV         ZKROHUXOHZLOOEDUWKHLUHQIRUFHPHQWLI%UDQWQHUKDVQRWEHHQ
XQDPELJXRXVDQGUHTXLUHV%UDQWQHUWRUHSD\WKH%HQHILW3ODQ             IXOO\FRPSHQVDWHGIRUKHULQMXULHV7KHGLVWULFWFRXUWIRXQG
LQIXOOIURPKHUVHWWOHPHQW                                          WKDW %UDQWQHU KDV QRW EHHQ PDGH ZKROH E\ KHU 
                                                                        VHWWOHPHQW LQ OLJKW RI KHU FRQWLQXHG PHGLFDO FRVWV DQG ORVW
  :KLOH VXEURJDWLRQ DQG UHLPEXUVHPHQW DUH GLVWLQFW                 ZDJHV7KHVHPHGLFDOFRVWVXQGLVSXWHGE\+LQH\3ULQWLQJ
GRFWULQHV ZH VHH QR SULQFLSOHG UHDVRQ IRU WUHDWLQJ WKHP        LQFOXGHDSSUR[LPDWHO\SHU\HDULQPHGLFDOH[SHQVHV
GLIIHUHQWO\ ZKHQ LW FRPHV WR WKH GHIDXOW DSSOLFDWLRQ RI WKH    DQGSHU\HDULQFKLURSUDFWLFH[SHQVHVDQG%UDQWQHUjV
PDNHZKROH UXOH WR DPELJXRXV SURYLVLRQV ,QGHHG WKH              ORVWZDJHVH[FHHG%HFDXVHWKHUHLVQRFOHDUHUURU
SURYLVLRQ DW LVVXH LQ &RSHODQG 2DNV ZKLOH GHVLJQDWHG D         LQ WKLV IDFWXDO ILQGLQJ WKDW %UDQWQHU KDV QRW EHHQ IXOO\
VXEURJDWLRQFODXVHDGGUHVVHGERWKDULJKWRIVXEURJDWLRQDQG           FRPSHQVDWHGWKHPDNHZKROHUXOHSUHYHQWV+LQH\3ULQWLQJ
DULJKWRIUHLPEXUVHPHQW6HH&RSHODQG2DNV)GDW                IURPUHFRYHULQJWKHEHQHILWVLWSDLG%UDQWQHU
m3DUWRIWKHVXEURJDWLRQFODXVHRIWKH3ODQSURYLGHV7KH
&RYHUHG 3HUVRQ DJUHHV WR UHFRJQL]H WKH 3ODQjV ULJKW WR                                          ,,,
VXEURJDWLRQDQGUHLPEXUVHPHQW7KHVHULJKWVSURYLGHWKH3ODQ
ZLWKSULRULW\RYHUDQ\IXQGVSDLGE\DWKLUGSDUW\WRD&RYHUHG            :HUHYLHZWKHGLVWULFWFRXUWjVGHFLVLRQRQWKHLPSRVLWLRQRI
3HUVRQl1RULVWKHKROGLQJRI&RSHODQG2DNVDSSO\LQJ          SHQDOWLHV XQGHU  F IRU DEXVH RI GLVFUHWLRQ  6HH
WKHPDNHZKROHUXOHWRmSODQODQJXDJHlWKDWZDVQRWmVSHFLILF           %DUWOLQJ Y )UXHKDXI &RUS  )G   WK &LU
DQGFOHDULQHVWDEOLVKLQJERWKDSULRULW\WRWKHIXQGVUHFRYHUHG        QRWLQJWKHDEXVHRIGLVFUHWLRQVWDQGDUGDSSOLHVEHFDXVH
DQG D ULJKW WR DQ\ IXOO RU SDUWLDO UHFRYHU\l UHVWULFWHG WR   mWKH VWDWXWH H[SUHVVO\ JUDQWV D GLVWULFW FRXUW GLVFUHWLRQ LQ
VXEURJDWLRQFODXVHV,GDW                                      LPSRVLQJSHQDOWLHVIRUDQHPSOR\HUjVIDLOXUHWRGLVFORVHl$Q
                                                                        DEXVHRIGLVFUHWLRQmH[LVWVRQO\ZKHQWKHUHYLHZLQJFRXUWLV
  ,QWKHSUHVHQWFDVHWKHUHLPEXUVHPHQWSURYLVLRQOLNHWKH            ILUPO\FRQYLQFHGWKDWDPLVWDNHKDVEHHQPDGHl,G
VXEURJDWLRQ SURYLVLRQ IDLOV WR FOHDUO\ HVWDEOLVK WKDW +LQH\
3ULQWLQJjVULJKWWRUHLPEXUVHPHQWDSSOLHVWRDQ\IXOORUSDUWLDO          (5,6$LPSRVHVSDUWLFXODUGXWLHVRQDSODQDGPLQLVWUDWRUWR
UHFRYHU\7KHSURYLVLRQPHUHO\REOLJDWHVSODQPHPEHUVWR               SURYLGH LQIRUPDWLRQ WR D SODQ SDUWLFLSDQW  6HH  86&
mUHLPEXUVH >WKH %HQHILW 3ODQ@ WR WKH H[WHQW RI SD\PHQWV         E6SHFLILFDOO\DSODQDGPLQLVWUDWRUVKDOOmXSRQ
PDGHl,WWKXVIDLOVWRDGHTXDWHO\LQIRUP%UDQWQHUWKDW+LQH\          ZULWWHQ UHTXHVW RI DQ\ SDUWLFLSDQW RU EHQHILFLDU\ IXUQLVK D
3ULQWLQJFRXOGHQIRUFHWKLVSURYLVLRQHYHQLIVKHKDGQRWEHHQ          FRS\ RI WKH ODWHVW XSGDWHG VXPPDU\ SODQ GHVFULSWLRQ SODQ
FRPSOHWHO\FRPSHQVDWHGIRUWKHILQDQFLDOH[SHQVHVLQFXUUHG              GHVFULSWLRQDQGWKHODWHVWDQQXDOUHSRUWDQ\WHUPLQDOUHSRUW
DVDUHVXOWRIKHUVHULRXVPHGLFDOLQMXULHV:HWKHUHIRUHILQG         WKHEDUJDLQLQJDJUHHPHQWWUXVWDJUHHPHQWFRQWUDFWRURWKHU
WKHUHLPEXUVHPHQWSURYLVLRQDPELJXRXVEHFDXVHLWLVVLOHQWDV           LQVWUXPHQWXQGHUZKLFKWKHSODQLVHVWDEOLVKHGRURSHUDWHGl
                                                                         86&  E  $Q DGPLQLVWUDWRU ZKR IDLOV WR