Court Opinion

ID: 2970251
Source: CourtListenerOpinion
Date Created: 2015-09-22 16:08:16.643954+00
Date Added: 2024-06-11T11:42:37.647798
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

 7+( /,0,7(' ,1&DQG        ;
 FRQVROLGDWHGVXEVLGLDULHV     
          3HWLWLRQHU$SSHOODQW 
                                   1R
                                
           Y                    !
                                
                                
 &200,66,21(5 2) ,17(51$/       
 5(9(18(                       
        5HVSRQGHQW$SSHOOHH 
                                
                               1
      2Q$SSHDOIURPWKH8QLWHG6WDWHV7D[&RXUW
   1RnsDPHV6+DOSHUQ7D[&RXUWsXGJH
                   $UJXHGsDQXDU\
               'HFLGHGDQG)LOHG$SULO
   %HIRUHs21(6
'$8*+75(<DQG&2/(&LUFXLW
                       sXGJHV
                       BBBBBBBBBBBBBBBBB
                            &2816(/
$5*8('5RJHUssRQHV0$<(5%52:1	3/$77
&KLFDJR ,OOLQRLV IRU $SSHOODQW  7HUHVD ( 0F/DXJKOLQ

    
     7KLV RSLQLRQ ZDV VXEPLWWHG WR WKH FRXUW SULRU WR sXGJH 1DWKDQLHO 5
sRQHVj GHSDUWXUH IURP WKH FRXUW HIIHFWLYH 0DUFK  

                                   
    7KH/LPLWHG,QFY&RPPjU                 1R
     RI,QWHUQDO5HYHQXH

81,7(' 67$7(6 '(3$570(17 2) s867,&(
$33(//$7(6(&7,217$;',9,6,21:DVKLQJWRQ'&
IRU $SSHOOHH  21 %5,()  5RJHU s sRQHV sRHO 9
:LOOLDPVRQ 5XVVHOO 5 <RXQJ 0$<(5 %52:1 	
3/$77&KLFDJR,OOLQRLVsDPHV3)XOOHUsHQQLIHU/)XOOHU
.HQQHWK%&ODUN:LOOLDP)&ROJLQ)(1:,&.	:(67
3DOR$OWR&DOLIRUQLDIRU$SSHOODQW7HUHVD(0F/DXJKOLQ
'RQDOG % 7RELQ 81,7(' 67$7(6 '(3$570(17 2)
s867,&( $33(//$7( 6(&7,21 7$; ',9,6,21
:DVKLQJWRQ '& IRU $SSHOOHH  6WHSKHQ ' *DUGQHU
.521,6+/,(%:(,1(5	+(//0$11HZ<RUN1HZ
<RUNIRU$PLFXV&XULDH
                    BBBBBBBBBBBBBBBBB
                        23,1,21
                    BBBBBBBBBBBBBBBBB
  5*8<&2/(s5&LUFXLWsXGJH3HWLWLRQHUDSSHOODQW
7KH/LPLWHG,QFm7D[SD\HUlLVRQHRIWKHODUJHVWVSHFLDOW\
UHWDLOHUVLQWKH8QLWHG6WDWHV$VWKHFRPPRQSDUHQW RI D
JURXSRIDIILOLDWHGFRUSRUDWLRQV7D[SD\HUILOHGDFRQVROLGDWHG
LQFRPHWD[UHWXUQIRUWKHWD[DEOH\HDUHQGLQJRQsDQXDU\
WKHm7D[<HDUl7KH&RPPLVVLRQHURI,QWHUQDO
5HYHQXH LQIRUPHG 7D[SD\HU RI VHYHUDO GHILFLHQFLHV LQ LWV
IHGHUDOLQFRPHWD[UHWXUQVIRUWZRWD[\HDUVLQFOXGLQJWKH
7D[<HDU7D[SD\HUDQGWKH&RPPLVVLRQHUVHWWOHGDOO
RIWKHLUGLIIHUHQFHVH[FHSWIRUDGLVSXWHUHJDUGLQJ7D[SD\HUjV
VXEVLGLDU\FUHGLW FDUG FRPSDQ\jVVDOHRIPLOOLRQLQ
FHUWLILFDWHVRIGHSRVLWWRDVXEVLGLDU\RIRQHRI7D[SD\HUjV
FRQWUROOHGIRUHLJQFRUSRUDWLRQV,QDWZRVWHSGHFLVLRQWKH
7D[&RXUWFRQFOXGHGWKDW7D[SD\HUVKRXOGKDYHUHFRJQL]HG
WKHSXUFKDVHRIPLOOLRQLQFHUWLILFDWHVRIGHSRVLWDVD
WD[DEOHLQYHVWPHQWLQm8QLWHG6WDWHVSURSHUW\lXQGHU,5&
  DQG   )LUVW WKH 7D[ &RXUW KHOG WKDW WKH
E$H[FHSWLRQWRWKHGHILQLWLRQRIm8QLWHG6WDWHV
SURSHUW\lIRUmGHSRVLWVZLWKSHUVRQVFDUU\LQJRQWKHEDQNLQJ
EXVLQHVVlGRHVQRWDSSO\EHFDXVHWKHVXEVLGLDU\FUHGLWFDUG
FRPSDQ\GLGQRWFDUU\RQWKHEDQNLQJEXVLQHVV6HFRQGDQG
   7KH/LPLWHG,QFY&RPPjU              1R     1R                 7KH/LPLWHG,QFY&RPPjU         
     RI,QWHUQDO5HYHQXH                                                                          RI,QWHUQDO5HYHQXH

&RXUWFDQQRWVWDQGDQGZHQHHGQRWFRQVLGHUWKH5HJXODWLRQ   HTXDOO\YLWDOWRLWVMXGJPHQWWKH7D[&RXUWKHOGWKDWXQGHU
,VVXH7KHUHIRUHZH5(9(56(WKHMXGJPHQWRIWKH7D[         WHPSRUDU\ UHJXODWLRQ  7 WKH  PLOOLRQ LQ
&RXUW                                                        FHUWLILFDWHV RI GHSRVLW VKRXOG KDYH EHHQ DWWULEXWHG WR
                                                              7D[SD\HUjV FRQWUROOHG IRUHLJQ FRUSRUDWLRQ EHFDXVH WKH
                                                              SULQFLSDOSXUSRVHIRUWKHFUHDWLRQRUJDQL]DWLRQRUIXQGLQJRI
                                                              WKHFRQWUROOHGIRUHLJQFRUSRUDWLRQjVVXEVLGLDU\ZDVWRDYRLG
                                                              WKHDSSOLFDWLRQRI7D[SD\HUDSSHDOHGERWKJURXQGVIRU
                                                              WKH7D[&RXUWjVGHFLVLRQ7KH7D[&RXUWHUUHGLQLWVDQDO\VLV
                                                              RIDQGRQWKDWEDVLVZHUHYHUVHLWVMXGJPHQW
                                                                                              ,
                                                                 7KH GLVSXWHG WUDQVDFWLRQ ZDV D sDQXDU\   ZLUH
                                                              H[FKDQJHRIFDVKIRULQWHUHVWEHDULQJFHUWLILFDWHVRIGHSRVLW
                                                              WKHmsDQXDU\7UDQVIHUl7KUHHRI7D[SD\HUjVVXEVLGLDULHV
                                                              ZHUH LQYROYHG LQ WKH sDQXDU\  7UDQVIHU 0DVW ,QGXVWULHV
                                                              )DU(DVW/WGm0)(l0)(1HWKHUODQGV$QWLOOHV19
                                                              m0)(19l DQG WKH :RUOG )LQDQFLDO 1HWZRUN 1DWLRQDO
                                                              %DQNm:)11%l
                                                                                           0)(
                                                                0)(LVD+RQJ.RQJFRUSRUDWLRQWKDWRSHUDWHVWKURXJKRXW
                                                              $VLD PDQXIDFWXULQJ RU REWDLQLQJ JDUPHQWV IRU VDOH LQ
                                                              7D[SD\HUjVVWRUHV0)(LVDWKLUGWLHUVXEVLGLDU\RI7D[SD\HU
                                                              DQG XQGHU ,5&  D 0)( FRQVWLWXWHV D FRQWUROOHG
                                                              IRUHLJQFRUSRUDWLRQDm&)&lRI7D[SD\HU)RUVHYHUDO\HDUV
                                                              EHIRUHWKHFORVHRIWKH7D[<HDU0)(KDGDFFXPXODWHG
                                                              DQGQRWGLVWULEXWHGDSSUR[LPDWHO\PLOOLRQLQHDUQLQJV
                                                              DQGSURILWV
                                                                                         0)(19
                                                                 0)(19LVD1HWKHUODQGV$QWLOOHVFRUSRUDWLRQFUHDWHGLQ
                                                              sDQXDU\DWWKHHQGRIWKH7D[<HDU0)(19LV
                                                              DIRXUWKWLHUVXEVLGLDU\RI7D[SD\HUDQGLVZKROO\RZQHGE\
                                                              0)(  ,WV FRUSRUDWH SXUSRVHV LQFOXGH mHQJDJLQJ LQ JURXS
                                                              ILQDQFLQJDFWLYLWLHVDQGSURYLGLQJIRUDPHDQVRILQYHVWLQJ
                                                              DQG UHLQYHVWLQJ OLTXLG DVVHWV DQG IXQGVl  &RQVLVWHQW ZLWK
     7KH/LPLWHG,QFY&RPPjU                    1R       1R                  7KH/LPLWHG,QFY&RPPjU        
      RI,QWHUQDO5HYHQXH                                                                                   RI,QWHUQDO5HYHQXH

WKRVHSXUSRVHVVKRUWO\DIWHULWZDVFUHDWHG0)(19UHFHLYHG          VXSSRUWRIWKLVDUJXPHQWWKH&RPPLVVLRQHUUHIHUHQFHVVHYHUDO
DPLOOLRQFDSLWDOFRQWULEXWLRQIURP0)(                         DVSHFWV RI WKH sDQXDU\  7UDQVIHU WKDW ZRXOG KDYH
                                                                       GLVFRXUDJHGLQGHSHQGHQWSDUWLHV:)11%jVDVVHWVDQGHTXLW\
                            :)11%                                      ZHUHWRRVPDOOLQUHODWLRQWRWKHDPRXQWRIWKH&'V:)11%
                                                                       ZRXOGQRWKDYHEHHQDEOHWRUDLVHODUJHDPRXQWVRISULYDWH
   :)11%LVDFUHGLWFDUGFRPSDQ\WKDWLVVXHVFUHGLWFDUGVWR          IXQGVEHFDXVHLWKDGQRFRPPHUFLDOFXVWRPHUVRUDQ\EUDQFK
FXVWRPHUV RI 7D[SD\HUjV VWRUHV  7D[SD\HU ZKROO\ RZQV           QHWZRUNDVDFUHGLWFDUGFRPSDQ\IRU7D[SD\HUjVUHWDLOVWRUHV
:)11%  $V D FRQGLWLRQ RI EHLQJ RZQHG E\ D QRQEDQN         :)11% ZDV IRUFHG WR DFFHSW ODUJH QXPEHUV RI VPDOO
:)11% FRPSOLHV ZLWK  86&  F) ZKLFK            RXWVWDQGLQJEDODQFHVZKLFKVWXQWHGLWVORDQTXDOLW\DQGLWV
UHTXLUHV WKDW LW L HQJDJH LQ RQO\ FUHGLW FDUG RSHUDWLRQV   OLQHVRIFUHGLW:)11%FDUULHGRIIEDODQFHVKHHWFUHGLWFDUG
LLQRWDFFHSWGHPDQGGHSRVLWVRUGHSRVLWVWKDWWKHGHSRVLWRU         OLDELOLWLHVRIDOPRVWHLJKWWLPHVLWVWRWDODVVHWVDQGWKH
PD\ZLWKGUDZE\FKHFNRUVLPLODUPHDQVIRUSD\PHQWWRWKLUG            LQWHUHVWUDWHZDVEHORZWKHPDUNHWUDWH:LWKWKRVHIDFWVLQ
SDUWLHVRURWKHUVLLLQRWDFFHSWDQ\VDYLQJVRUWLPHGHSRVLW        PLQGWKH&RPPLVVLRQHUXUJHVXVWRDSSO\WKHVWHSWUDQVDFWLRQ
RIOHVVWKDQLYPDLQWDLQQRPRUHWKDQRQHRIILFH           GRFWULQH7KURXJKWKDWDSSURDFKRIH[DPLQLQJHDFKVWHSRI
WKDWDFFHSWVGHSRVLWVDQGYQRWHQJDJHLQWKHEXVLQHVVRI           WKHsDQXDU\7UDQVIHUWKH&RPPLVVLRQHUFRQWHQGVWKDWWKH
PDNLQJ FRPPHUFLDO ORDQV  :)11% LV DOVR D QDWLRQDOO\           sDQXDU\7UDQVIHULVDWD[DEOHUHSDWULDWLRQRIRIIVKRUH0)(
FKDUWHUHGEDQNDXWKRUL]HGWRFDUU\RQWKHEXVLQHVVRIEDQNLQJ         SURILWVDQGQRWDmGHSRVLWl
XQGHUWKHODZVRIWKH8QLWHG6WDWHV&RQVHTXHQWO\:)11%
LVUHJXODWHGE\WKH2IILFHRIWKH&RPSWUROOHURI&XUUHQF\WKH            :KLOH WKH &RPPLVVLRQHUjV DUJXPHQWV DOO VXSSRUW WKH
)HGHUDO 'HSRVLW ,QVXUDQFH &RPSDQ\ DQG WKH %RDUG RI             FRQFOXVLRQWKDWLWLVLPSUREDEOHWKDWWKHsDQXDU\7UDQVIHU
*RYHUQRUVRIWKH)HGHUDO5HVHUYH                                     ZRXOGKDYHRFFXUUHGEHWZHHQXQUHODWHGSDUWLHVWKDWDUJXPHQW
                                                                       LVWDQJHQWLDOWRWKHTXHVWLRQRIZKHWKHUWKH&'VWKDW0)(19
              7KHsDQXDU\7UDQVIHUV                           SXUFKDVHG IURP :)11% ZHUH mGHSRVLWVl XQGHU
                                                                       E$7KXVWKHTXHVWLRQRIZKHWKHULQGHSHQGHQW
  7KH sDQXDU\  7UDQVIHU ZDV D WZRSDUW WUDQVDFWLRQ            SDUWLHVZRXOGKDYHHQJDJHGLQWKHsDQXDU\7UDQVIHULVQRW
EHWZHHQ 0)( 0)(19 DQG :)11%  ,Q WKH ILUVW SDUW           WKHLVVXHKHUH5DWKHUWKHTXHVWLRQLVZKHWKHUWKH&'VLH
0)(ZLUHGPLOOLRQWR0)(19,QWKHVHFRQGSDUW                 WKH FHUWLILFDWHV RI GHSRVLW WKDW 0)(19 SXUFKDVHG IURP
0)(19XVHGPLOOLRQWRSXUFKDVHHLJKWFHUWLILFDWHVRI           :)11%FRQVWLWXWHGmGHSRVLWVl%HFDXVHWKHWHUPmGHSRVLWl
GHSRVLW ZLWK DQ DQQXDO \LHOG RI  WKH m&'Vl IURP        LVQRWGHILQHGIRUSXUSRVHVRIE$ZHORRNWRLWV
:)11%                                                                RUGLQDU\ PHDQLQJ  5DWKHU WKDQ EHODERU WKLV SRLQW ZLWK
                                                                       GLFWLRQDU\GHILQLWLRQVZHWKLQNWKDWLWLVVXIILFLHQWO\FOHDUWKDW
  7D[SD\HUH[SODLQHGWKDWWKHVROHUHDVRQIRUWKLVWUDQVDFWLRQ         D FHUWLILFDWH RI GHSRVLW FRQVWLWXWHV D mGHSRVLWl DEVHQW D
ZDV WR SURWHFW 0)(jV DVVHWV IURP VHL]XUH E\ WKH 3HRSOHjV      VSHFLDOL]HGGHILQLWLRQRImGHSRVLWl)RUWKDWUHDVRQZHUHMHFW
5HSXEOLF RI &KLQD  7D[SD\HU EHOLHYHG WKDW EHFDXVH +RQJ        WKH&RPPLVVLRQHUjVILQDODUJXPHQWRQWKH,VVXHDVZHOO
.RQJZDVVFKHGXOHGWRUHWXUQWR&KLQDLQ&KLQDZRXOG
EHJLQWRH[SURSULDWHDOODVVHWVLQ+RQJ.RQJFRUSRUDWLRQVRQ                                          ,,,
RUEHIRUHWKDWGDWH7RSUHYHQWWKHH[SURSULDWLRQRI0)(jV
DVVHWV0)(FUHDWHG0)(19WRKROG0)(jVDVVHWVDQGWRDFW               ,QVKRUW7KH7D[&RXUWHUUHGLQLWVGHWHUPLQDWLRQRIWKH
DVDOD\HURISURWHFWLRQIURPDVVHWVHL]XUH$VDIXUWKHUVKLHOG      ,VVXH2QWKDWEDVLVDORQHWKHMXGJPHQWRIWKH7D[
    7KH/LPLWHG,QFY&RPPjU                     1R       1R                 7KH/LPLWHG,QFY&RPPjU        
      RI,QWHUQDO5HYHQXH                                                                                   RI,QWHUQDO5HYHQXH

F)OLPLWDWLRQVRQ:)11%jVEDQNLQJDFWLYLWLHV              DJDLQVW WKH DVVHW H[SURSULDWLRQ 0)(19 SXUFKDVHG &'V
:)11%LVQRWDIXOOVHUYLFHEDQNDQGWKHUHIRUHVKRXOGQRW            IURP:)11%ZLWKPLOOLRQWKDWLWUHFHLYHGIURP0)(
EH YLHZHG DV mFDUU\LQJ RQ WKH EDQNLQJ EXVLQHVVl XQGHU
E$                                                            :KLOH WKLV WUDQVIHU PD\ KDYH EHHQ D JRRG PHDQV RI
                                                                        UHPRYLQJDVVHWVIURP+RQJ.RQJDQGIXQGLQJ:)11%LW
  7KDWDUJXPHQWVKRXOGQRWSUHYDLO,IZHZHUHWRDGRSWWKDW           QRZSUHVHQWVDGLIILFXOWLQWHUQDWLRQDOWD[TXHVWLRQ7D[SD\HU
UHDVRQLQJWKHQDQ\QRQIXOOVHUYLFHEDQNZRXOGEHH[FOXGHG             FODLPHGWKDW0)(19jVSXUFKDVHRIPLOOLRQLQ&'V
IURPmFDUU\LQJRQWKHEDQNLQJEXVLQHVVl0RUHRYHULIZH               IURP :)11% GLG QRW FRQVWLWXWH WD[DEOH m8QLWHG 6WDWHV
ZHUH WR DELGH VWULFWO\ E\ WKH  F GHILQLWLRQV WKHQ   SURSHUW\l XQGHU   DQG WKXV 7D[SD\HU GLG QRW UHSRUW
8QLWHG 6WDWHV EUDQFKHV RI IRUHLJQ EDQNV IHGHUDO VDYLQJV          D% WD[HV  7D[SD\HU DUJXHG WKDW WKH &'V
DVVRFLDWLRQV DQG IHGHUDO VDYLQJV EDQNV ZRXOG QRW EH             DPRXQWHGWRmGHSRVLWVZLWKSHUVRQVFDUU\LQJRQWKHEDQNLQJ
FRQVLGHUHGEDQNV6HH86&F$%VHH               EXVLQHVVlZKLFKLVDQH[FHSWLRQWRm8QLWHG6WDWHVSURSHUW\l
DOVR86&M8QGHUWKDWUHDGLQJ&)&GHSRVLWV             XQGHU E$7KH&RPPLVVLRQHUGLVDJUHHG7KH
ZLWK8QLWHG6WDWHVEUDQFKHVRIIRUHLJQEDQNVIHGHUDOVDYLQJV           &RPPLVVLRQHUEHOLHYHGWKDW0)(19jVSXUFKDVHRIWKH&'V
DVVRFLDWLRQVDQGIHGHUDOVDYLQJVEDQNVZRXOGOLNHZLVHQRW              GLG QRW TXDOLI\ XQGHU WKH  E$ H[FHSWLRQ DQG
TXDOLI\DVH[FHSWLRQVWRm8QLWHG6WDWHVSURSHUW\lDQGZRXOG            WKHUHIRUHZDVDQLQYHVWPHQWLQm8QLWHG6WDWHVSURSHUW\lWKDW
EHWD[DEOH%\H[FOXGLQJWKRVHHQWLWLHVWKH&RPPLVVLRQHUjV            ZDVWD[DEOHXQGHU6XESDUW)RIWKH,QWHUQDO5HYHQXH&RGH
SURSRVHGDSSOLFDWLRQRIF)FRQIOLFWVWRRJUHDWO\           ,5&&RQVHTXHQWO\WKH&RPPLVVLRQHULVVXHG
ZLWKDQRUGLQDU\DQGQRUPDOXQGHUVWDQGLQJRIZKDWLWPHDQV              DQRWLFHRIGHILFLHQF\WR7D[SD\HU7KH&RPPLVVLRQHUDQG
WREHmFDUU\LQJRQWKHEDQNLQJEXVLQHVVl                               7D[SD\HU FRXOG QRW UHVROYH WKLV LVVXH DQG ILQDOO\ LW ZDV
                                                                        OLWLJDWHGEHIRUHWKH7D[&RXUW
  ,QVKRUWEHFDXVHWKHUHLVQROHJDOEDVLVIRUDSSO\LQJWKH
86&F)H[FOXVLRQKHUHDQGEHFDXVHGRLQJVR                           7KH7ZR8QGHUO\LQJ7D[,VVXHV
FRQIOLFWVZLWKDQRUGLQDU\DQGQRUPDOUHDGLQJRIWKHSKUDVH
mWKHEDQNLQJEXVLQHVVlWKHH[FOXVLRQVKRXOGQRWFRQWUROWKH              7ZR FRQFOXVLRQV DUH QHFHVVDU\ WR VXVWDLQ WKH
SKUDVH mWKH EDQNLQJ EXVLQHVVl DV XVHG LQ ,5&                  &RPPLVVLRQHUjVILQGLQJRIDWD[GHILFLHQF\WKDW0)(
E$                                                         19jV SXUFKDVH RI &'V ZDV QRW D GHSRVLW ZLWK SHUVRQV
                                                                        FDUU\LQJRQWKHEDQNLQJEXVLQHVVXQGHUE$WKH
     F   7KH&HUWLILFDWHVRI'HSRVLW$UHm'HSRVLWVlXQGHU              m  ,VVXHl DQG  WKDW XQGHU WHPSRUDU\ UHJXODWLRQ
          E$                                               7WKHSULQFLSDOSXUSRVHIRUFUHDWLQJRUJDQL]LQJRU
                                                                        IXQGLQJ0)(19ZDVWRDYRLGWKHDSSOLFDWLRQRIWKH
  7KHODVWDUJXPHQWWKDWWKH&RPPLVVLRQHUUDLVHVDJDLQVWWKH            m5HJXODWLRQ,VVXHl
DSSOLFDWLRQRIE$LVWKDWWKH&'VWKDW0)(19
SXUFKDVHG IURP :)11% ZHUH QRW mGHSRVLWVl ZLWKLQ WKH                7KHILUVWFRQFOXVLRQLVQHFHVVDU\WRVXVWDLQWKHGHILFLHQF\
PHDQLQJRIWKHSKUDVHmGHSRVLWVZLWKSHUVRQVFDUU\LQJRQWKH            EHFDXVH 6XESDUW)RIWKH,QWHUQDO5HYHQXH&RGHJHQHUDOO\
EDQNLQJEXVLQHVVl7KH&RPPLVVLRQHUDUJXHVWKDWEHFDXVH                WD[HV&)&VZKHQWKH\LQYHVWWKHLUHDUQLQJVLQm8QLWHG6WDWHV
WKHWUDQVIHURI&'VQHYHUZRXOGKDYHWDNHQSODFHRQWKHRSHQ            SURSHUW\l  6HH ,5&  D%  +RZHYHU 6HFWLRQ
PDUNHW EHWZHHQ LQGHSHQGHQW SDUWLHV LW VKRXOG QRW EH             E$H[FOXGHVmGHSRVLWVZLWKSHUVRQVFDUU\LQJRQWKH
SHUPLWWHGWRTXDOLI\DVDmGHSRVLWlXQGHUE$,Q           EDQNLQJ EXVLQHVVl IURP WKH GHILQLWLRQ RI m8QLWHG 6WDWHV
     7KH/LPLWHG,QFY&RPPjU                   1R       1R                  7KH/LPLWHG,QFY&RPPjU        
      RI,QWHUQDO5HYHQXH                                                                                  RI,QWHUQDO5HYHQXH

SURSHUW\l  ,5&  E$  7KXV LI 0)(19jV         EDQNV7KXVDVWKH7D[&RXUWGLGEHIRUHXVZHUHMHFWWKH
SXUFKDVHRI&'VIURP:)11%LVQRWDmGHSRVLWZLWKSHUVRQV             &RPPLVVLRQHUjVDUJXPHQWWKDWWKHGHILQLWLRQRImEDQNl
FDUU\LQJRQWKHEDQNLQJEXVLQHVVlWKHQLWLVDQLQYHVWPHQWLQ        DSSOLHVWRWKHSKUDVHmFDUU\LQJRQWKHEDQNLQJEXVLQHVVlLQ
m8QLWHG6WDWHVSURSHUW\l                                             E$
  7KHVHFRQGFRQFOXVLRQoWKDWWKH&'VVKRXOGEHDWWULEXWHG                E 7KH  86&  F) ([FHSWLRQ WR WKH
WR 0)( DQG UHFRJQL]HG DV LQFRPH E\ WKH 7D[SD\HU XQGHU                'HILQLWLRQ RI m%DQNl 'RHV 1RW *RYHUQ :KDW
D%oLVDOVRQHFHVVDU\WRVXVWDLQWKHGHILFLHQF\                 &RQVWLWXWHVmWKH%DQNLQJ%XVLQHVVlXQGHU,5&
6HFWLRQDZKLFKWD[HVWKHLQFRPHRI&)&VGRHVQRW                      E$
QRUPDOO\ DSSO\ WR DQ HQWLW\ VXFK DV 0)(19 ZKLFK LV D
ZKROO\RZQHG VXEVLGLDU\ RI D &)& DQG QRW D &)& LWVHOI         ,QDQRWKHUDWWHPSWWRVDOYDJHWKH7D[&RXUWjVUXOLQJRQWKH
&RQVHTXHQWO\ HYHQ LI 0)(19 KDG PDGH LQYHVWPHQWV LQ           ,VVXHWKH&RPPLVVLRQHUDUJXHVWKDWEHFDXVH:)11%
m8QLWHG6WDWHVSURSHUW\lWKDWLQFRPHZRXOGQRWKDYHEHHQ             FRPSOLHV ZLWK WKH  86&  F) UHVWULFWLRQV
VXEMHFW WR WD[DWLRQ +RZHYHU XQGHU WHPSRUDU\ UHJXODWLRQ        :)11%GRHVQRWFDUU\RQWKHEDQNLQJEXVLQHVV*HQHUDOO\
7LIWKHSULQFLSDOSXUSRVHIRUFUHDWLQJRUJDQL]LQJ        QRQEDQNVFDQQRWRZQEDQNVEXWQRQEDQNVFDQRZQFUHGLW
RUIXQGLQJ0)(19ZHUHWRDYRLGWKHDSSOLFDWLRQRI             FDUG FRPSDQLHV WKDW FRPSO\ ZLWK  F) EHFDXVH
WKHQWKH&'VWKDW0)(19SXUFKDVHGZRXOGEHDWWULEXWHGWR             WKRVH FUHGLW FDUG FRPSDQLHV DUH H[FOXGHG IURP WKH
0)(,IWKH&'VZHUHDWWULEXWHGWR0)(ZKLFKLVD&)&               F GHILQLWLRQ RI mEDQNl  6HH  86&
WKHQEXLOGLQJRIIRIWKHILUVWFRQFOXVLRQWKRVH&'VZRXOGEH        F)5HO\LQJRQWKHIDFWWKDW:)11%LVQRWD
VXEMHFW WR WD[DWLRQ DV SDUW RI 0)(jV HDUQLQJV LQYHVWHG LQ    mEDQNlXQGHUF)WKH&RPPLVVLRQHUFRQWHQGV
m8QLWHG6WDWHVSURSHUW\l                                           WKDW :)11% LV QRW mFDUU\LQJ RQ WKH EDQNLQJ EXVLQHVVl
                                                                      (VVHQWLDOO\WKURXJKWKLVDUJXPHQWWKH&RPPLVVLRQHUWULHVIRU
  7KXVIRUDGHILFLHQF\WRVWDQGWKH&RPPLVVLRQHUPXVWZLQ          DVHFRQGWLPHWRLPSRUWDGHILQLWLRQRImEDQNlIURPHOVHZKHUH
WKH   ,VVXH DQG WKH 5HJXODWLRQ ,VVXH  7KH 7D[ &RXUW   LQWKH8QLWHG6WDWHV&RGHWRFRQWUROWKHSKUDVHmWKHEDQNLQJ
UHVROYHGERWKLVVXHVLQIDYRURIWKH&RPPLVVLRQHUDQGIRUWKDW        EXVLQHVVl DV XVHG LQ ,5&  E$  7KH
UHDVRQXSKHOGWKH&RPPLVVLRQHUjVILQGLQJRIDGHILFLHQF\             &RPPLVVLRQHUIDLOVLQWKLVDWWHPSWDVZHOO
      7KH7D[&RXUWjV7UHDWPHQWRIWKH,VVXH                       $VZLWKWKH,5&GHILQLWLRQRImEDQNlWKHUHLVQR
                                                                      VWDWXWRU\ EDVLV IRU DSSO\LQJ WKH  86&  F)
  2QWKH,VVXHWKH7D[&RXUWFRQFOXGHGWKDW0)(               H[FOXVLRQ RI mEDQNl WR ,5&  E$ &RQJUHVV
19jV SXUFKDVH RI  &'V IURP :)11% ZDV QRW D mGHSRVLW         FUHDWHG H[FHSWLRQV WR WKH GHILQLWLRQ RI mEDQNl LQ
ZLWKSHUVRQVFDUU\LQJRQWKHEDQNLQJEXVLQHVVlDQGWKHUHIRUH         F)RQO\IRUSXUSRVHVRI&KDSWHURIWKH8QLWHG
GLGQRWFRQVWLWXWHDQLQYHVWPHQWLQm8QLWHG6WDWHVSURSHUW\l         6WDWHV&RGH6HH86&F)RUWKDWUHDVRQWKH
7KH 7D[ &RXUW LQWHUSUHWHG WKH XVH RI WKH GHILQLWH DUWLFOH   86&  F) H[FOXVLRQ GRHV QRW JRYHUQ ,5&
mWKHl LQ WKH SKUDVH mFDUU\LQJ RQ WKH EDQNLQJ EXVLQHVVl DV   E$
LQGLFDWLQJ mD SXUSRVH WR SDUWLFXODUL]H WKH DFWLYLW\l  ,Q
GHFLGLQJZKLFKSDUWLFXODUL]HGEXVLQHVVDFWLYLW\&RQJUHVVZDV             'HVSLWH WKH ODFN RI VWDWXWRU\ DXWKRULW\ IRU DSSO\LQJ WKH
UHIHUULQJWRLQE$WKH7D[&RXUWUHOLHG RQ WKH          F) H[FOXVLRQ WKH &RPPLVVLRQHU XUJHV XV WR
ODQJXDJHRIWKHVWDWXWHDQGOHJLVODWLYHKLVWRU\%DVHGRQWKRVH      DSSO\LWDQ\ZD\7KH&RPPLVVLRQHUDUJXHVWKDWLQOLJKWRIWKH
    7KH/LPLWHG,QFY&RPPjU                   1R       1R                  7KH/LPLWHG,QFY&RPPjU         
      RI,QWHUQDO5HYHQXH                                                                                  RI,QWHUQDO5HYHQXH

DFFRUG D UHYHQXH UXOLQJ DQ\ GHIHUHQFH ZKHUH DV KHUH WKH   VRXUFHVWKH7D[&RXUWUHDVRQHGWKDWWKHSKUDVHmWKHEDQNLQJ
UHYHQXHUXOLQJIDLOVWRDGGUHVVWKHUHOHYDQWLVVXHRQDSSHDOl      EXVLQHVVlDVXVHGLQE$DSSOLHGRQO\WRGHSRVLWV
                                                                      ZLWKEDQNVRIIHULQJEDQNLQJVHUYLFHVWKDWIDFLOLWDWHWKH8QLWHG
    ,QOLJKWRIWKHVHSULQFLSOHV5HYHQXH5XOLQJGRHV          6WDWHVEXVLQHVVDFWLYLWLHVRI&)&VoWKHmEXVLQHVVIDFLOLWDWLRQl
QRWDSSO\KHUH5HYHQXH5XOLQJFRQWHPSODWHGDYHU\            UDWLRQDOH%HFDXVH:)11%DVDFUHGLWFDUGFRPSDQ\ZDV
GLIIHUHQWIDFWXDOVLWXDWLRQWKDQWKHSUHVHQWFDVH,Q        UHVWULFWHG IURP HQJDJLQJ LQ EXVLQHVV IDFLOLWDWLRQ DVSHFWV RI
WKH ,56 FRQVLGHUHG WKH TXHVWLRQ RI ZKHWKHU GHSRVLWV ZLWK      EDQNLQJ E\  86&  F) WKH 7D[ &RXUW
IRUHLJQILQDQFLDOLQVWLWXWLRQVFRQVWLWXWHGmSHUVRQVFDUU\LQJRQ       FRQFOXGHG WKDW 0)( GLG QRW SXUFKDVH &'V IURP mSHUVRQV
WKHEDQNLQJEXVLQHVVl6HH5HY5XO&%             FDUU\LQJRQWKHEDQNLQJEXVLQHVVl
  %HFDXVH LW ZDV QRW FOHDU XQGHU 8QLWHG 6WDWHV ODZ
ZKHWKHUWKHIRUHLJQILQDQFLDOLQVWLWXWLRQVZHUHmFDUU\LQJRQ            7KH7D[&RXUWUHDIILUPHGLWVFRQFOXVLRQRQWKH,VVXH
WKHEDQNLQJEXVLQHVVlWKH,56DSSOLHGWKHGHILQLWLRQRI        E\UHDGLQJDUHODWHGSDUW\H[FHSWLRQLQWRE$7KH
mEDQNlWRGHWHUPLQHZKLFKIRUHLJQILQDQFLDOLQVWLWXWLRQVILW          7D[&RXUWUHDVRQHGWKDWLQOLJKWRIWKHGLYLGHQGHTXLYDOHQFH
WKHE$H[FHSWLRQ6HHLG)URPWKHVFRSHRI         WKHRU\DSODLQUHDGLQJRIE$ZRXOGOHDGWRDQ
 QRQH RI WKH K\SRWKHWLFDO IRUHLJQ ILQDQFLDO LQVWLWXWLRQV   XQUHDVRQDEOHUHVXOWLIWKH7D[SD\HUGLGQRWQHHGWRUHFRJQL]H
WKDWWKH,56FRQVLGHUHGKDGQDWLRQDOEDQNFKDUWHUVQRUZHUH          LQFRPHRQWKHPLOOLRQLQYHVWPHQWPDGHEHWZHHQLWV
WKH\UHJXODWHGE\WKH2IILFHRIWKH&RPSWUROOHURI&XUUHQF\           VXEVLGLDULHV  ,Q JHQHUDO XQGHU WKH GLYLGHQG HTXLYDOHQFH
DQGWKH)HGHUDO5HVHUYHQRUZHUHWKH\LQVXUHGE\WKH)',&           WKHRU\8QLWHG6WDWHVVKDUHKROGHUVRI&)&VPXVWLQFOXGHLQ
DV :)11% LV  4XLWH SODLQO\ :)11% LV QRW RQH RI WKH       WKHLULQFRPHWKHDPRXQWRIm8QLWHG6WDWHVSURSHUW\lRZQHG
IRUHLJQILQDQFLDOLQVWLWXWLRQVWKDWWKH,56FRQWHPSODWHGZKHQ         E\ WKH &)&  6HH 6 5(37 12   
LWLVVXHG7KXVZKLOHFRQFOXGHVWKDWWKH        86&&$1m*HQHUDOO\HDUQLQJVEURXJKWEDFN
GHILQLWLRQRImEDQNlLVKHOSIXOLQGHWHUPLQLQJZKHWKHUIRUHLJQ        WR WKH 8QLWHG 6WDWHV DUH WD[HG WR WKH VKDUHKROGHUV RQ WKH
ILQDQFLDOFRUSRUDWLRQVDUHmFDUU\LQJRQWKHEDQNLQJEXVLQHVVl        JURXQGVWKDWWKLVLVVXEVWDQWLDOO\WKHHTXLYDOHQWRIDGLYLGHQG
LWSURYLGHVQRUHDVRQWRH[WHQGLWVDSSOLFDWLRQWRQDWLRQDOO\         EHLQJSDLGWRWKHPl7KH7D[&RXUWLQWHUSUHWHGWKHGLYLGHQG
FKDUWHUHGEDQNV7KXVWKHK\SRWKHWLFDOTXHVWLRQWKDWWKH,56        HTXLYDOHQFH WKHRU\ DV DOVR WUHDWLQJ D 8QLWHG 6WDWHV
DQVZHUHG LQ  LV IDFWXDOO\ GLVWLQFW IURP WKH SUHVHQW     VKDUHKROGHUjV XVH RI D &)&jV HDUQLQJV DV WKRXJK WKRVH
VLWXDWLRQ)RUWKDWUHDVRQZHGRQRWH[SDQGWRDSSO\         HDUQLQJVZHUHDWD[DEOHGLYLGHQG7RDYRLGDQXQUHDVRQDEOH
WRGRPHVWLFILQDQFLDOLQVWLWXWLRQV                                   FRQIOLFWZLWKLWVXQGHUVWDQGLQJRIWKHGLYLGHQGHTXLYDOHQFH
                                                                      WKHRU\WKH7D[&RXUWUHTXLUHGWKDWE$DSSO\RQO\
   7KLVFRQFOXVLRQLVUHLQIRUFHGE\DFRXUWjVGXW\WRLQWHUSUHW       WRLQYHVWPHQWVZLWKDQXQUHODWHGHQWLW\
VWDWXWHVLQFRQIRUPLW\ZLWKWKHLUSODLQODQJXDJH$VH[SODLQHG
DERYHLWPDNHVOLWWOHVHQVHWRVWUHWFKWKHRUGLQDU\PHDQLQJRI         ,Q VKRUW E\ LPSRVLQJ WKH EXVLQHVVIDFLOLWDWLRQ DQG WKH
DQXQGHILQHGWHUP8QGHUDQRUGLQDU\DQGQRUPDOUHDGLQJ             UHODWHGSDUW\FRQGLWLRQVRQWKHE$H[FHSWLRQWKH
:)11%ZKLFKHQJDJHVLQWKHEXVLQHVVRIEDQNLQJFDUULHV              7D[&RXUWKHOGWKDW0)(19jVSXUFKDVHRIPLOOLRQLQ
RQmWKHEDQNLQJEXVLQHVVlIRUSXUSRVHVRIE$,Q         &'VIURP:)11%GLGQRWILWWKHE$H[FHSWLRQ
WKLVFDVHHVSHFLDOO\ZHGHFOLQHWRH[WHQGWKHPHDQLQJRImWKH       WRWKHGHILQLWLRQRIm8QLWHG6WDWHVSURSHUW\l
EDQNLQJ EXVLQHVVl WR LPSRVH D GHILQLWLRQ RI mEDQNl WKDW
&RQJUHVVQHYHUH[SUHVVO\LQWHQGHGDSSO\DQGWKDWWKH
,56 QHYHU FRQVLGHUHG DV DSSO\LQJ WR QDWLRQDOO\ FKDUWHUHG
      7KH/LPLWHG,QFY&RPPjU                  1R      1R                  7KH/LPLWHG,QFY&RPPjU         
       RI,QWHUQDO5HYHQXH                                                                                RI,QWHUQDO5HYHQXH

    7KH7D[&RXUWjV7UHDWPHQWRIWKH5HJXODWLRQ,VVXH                UXOLQJV  ,G  5HYHQXH UXOLQJV GR QRW DSSO\ DV EURDGO\ DV
                                                                     UHJXODWLRQVQRUDVQDUURZO\DVSULYDWHOHWWHUUXOLQJV6HHLG
   ,QGHFLGLQJWKH5HJXODWLRQ,VVXHWKH7D[&RXUWFRQFOXGHG         VHHDOVR7UXH2LO&RY&RPPjURI,QWHUQDO5HYHQXH
WKDW WHPSRUDU\ UHJXODWLRQ  7 DSSOLHG WR WKH           )G WK&LUH[SODLQLQJWKDWUHYHQXH
sDQXDU\  7UDQVDFWLRQ  7HPSRUDU\ UHJXODWLRQ          UXOLQJV mGR QRW KDYH WKH VDPH IRUFH DQG HIIHFW DV WUHDVXU\
7ESURYLGHVWKDWD&)&LQGLUHFWO\KROGVLQYHVWPHQWVLQ         UHJXODWLRQVDQGFRQVHTXHQWO\DUHQRWELQGLQJRQWKLVFRXUWl
m8QLWHG6WDWHVSURSHUW\lZKHUHRQHRILWVVXEVLGLDULHVPDNHV         5DWKHUUHYHQXHUXOLQJVDUHW\SLFDOO\WKH,56jVUHVSRQVHWRD
LQYHVWPHQWV LQ m8QLWHG 6WDWHV SURSHUW\l DQG RQH RI WKH       K\SRWKHWLFDO VLWXDWLRQ DQG DV VXFK DUH DXWKRULWDWLYH DQG
SULQFLSDO SXUSRVHV IRU FUHDWLQJ RUJDQL]LQJ RU IXQGLQJ WKH   ELQGLQJ RQ WKH ,56  6HH %DQNHUV /LIH  )G DW 
VXEVLGLDU\ZDVWRDYRLGWKHDSSOLFDWLRQRI$VDILQGLQJ      m5HYHQXHUXOLQJVW\SLFDOO\FRQWDLQWKH,56jVLQWHUSUHWDWLRQ
RI IDFW WKH 7D[ &RXUW FRQFOXGHG WKDW D SULQFLSDO SXUSRVH   RIKRZWKHODZDSSOLHVWRDVHWRIK\SRWKHWLFDOIDFWV5HYHQXH
EHKLQGWKHFUHDWLRQRUJDQL]DWLRQRUIXQGLQJRI0)(19ZDV          UXOLQJVGRQRWKDYHEURDGDSSOLFDWLRQOLNHUHJXODWLRQVEXWWKH
WRDYRLGWKHDSSOLFDWLRQRI7D[SD\HUjVZLWQHVVHVVWDWHG      ,56 GRHV FRQVLGHU WKHP DXWKRULWDWLYH DQG ELQGLQJl
WKDWWKHVROHUHDVRQEHKLQGWKHFUHDWLRQRI0)(19ZDVWR            $OWKRXJKELQGLQJRQWKH,56UHYHQXHUXOLQJVDUHLQWHUSUHWLYH
VKLHOG 0)(jV DVVHWV IURP &KLQHVH H[SURSULDWLRQ  %XW WKH    UXOLQJVE\DQDGPLQLVWUDWLYHDJHQF\WKDWGRQRWUHTXLUHQRWLFH
7D[ &RXUW GLG QRW EHOLHYH 7D[SD\HUjV H[SURSULDWLRQ             DQG FRPPHQW DQG FRQVHTXHQWO\ DUH QRW ELQGLQJ RQ FRXUWV
MXVWLILFDWLRQIRUWKHFUHDWLRQRI0)(19)RUWKH7D[&RXUW        6HHLGVHHDOVR%DELQY&RPPjURI,QWHUQDO5HYHQXH
WKH VPRNLQJ JXQ ZDV WKH IROORZLQJ SRUWLRQ RI WKH FURVV     )GWK&LUm5HYHQXHUXOLQJVDUHQRW
H[DPLQDWLRQWHVWLPRQ\RI7LPRWK\%/\RQV7D[SD\HUjV9LFH           ELQGLQJ RQ WKLV FRXUWl  1HYHUWKHOHVV DV WKH LQIRUPHG
3UHVLGHQWRI7D[GXULQJWKH\HDUVLQTXHVWLRQ                       RSLQLRQ RI D VSHFLDOL]HG DJHQF\ WKLV &LUFXLW KDV WUHDWHG
                                                                     UHYHQXHUXOLQJVDVKDYLQJSHUVXDVLYHDXWKRULW\6HH%DELQ
    4XHVWLRQ 2ND\:HUHWKHUHDQ\oZDVWKHUHHYHUDQ\             )GDWm>%@HFDXVHUHYHQXHUXOLQJVH[SUHVVWKHVWXGLHG
              FRQVLGHUDWLRQ RI o , WDNH LW WKHUH ZDV QR      YLHZRIWKH,56ZKRVHGXW\LVWRFDUU\RXWWKHSURYLVLRQVRI
              FRQVLGHUDWLRQ JLYHQ WR WKH SRVVLELOLW\ RI         WKH ,QWHUQDO 5HYHQXH &RGH WKH\ DUH HQWLWOHG WR VRPH
              IRUPLQJDGRPHVWLFVXEVLGLDU\RI0)(                  GHIHUHQFHl&RQVWDQWLQRY75:,QF)GWK
                                                                     &LUm8QOLNHWKHUHJXODWLRQV,56UXOLQJVGRQRWKDYH
    $QVZHU     7RGRZKDW"                                          WKHIRUFHRIODZDQGDUHPHUHO\SHUVXDVLYHDXWKRULW\l.LQQLH
                                                                     Y8QLWHG6WDWHV)GWK&LUVHHDOVR
    4XHVWLRQ 7R SURYLGH WKH H[WUD OD\HU RI SURWHFWLRQ LQ     &HQ7UD,QFY8QLWHG6WDWHV)GWK&LU
              RZQHUVKLSLQSODFHRIoUDWKHUWKDQIRUPLQJ           FI8QLWHG6WDWHVY&OHYHODQG,QGLDQV%DVHEDOO&R
              0)(19ZDVWKHUHDQ\FRQVLGHUDWLRQJLYHQ            86UHIUDLQLQJIURPGHFLGLQJWKHOHYHO
              WRIRUPLQJ0)(86"                                   RIGHIHUHQFHGXHUHYHQXHUXOLQJVEXWH[SODLQLQJWKDWEHFDXVH
    $QVZHU     ,WGLGQjWUHDOO\DFFRPSOLVKDQ\WKLQJIURPWKH        WKHUHYHQXHUXOLQJVDWLVVXHUHIOHFWHGWKH,56jVORQJVWDQGLQJ
                DVVHWSURWHFWLRQVLGHEHFDXVHLWZDVVWLOO DQ       LQWHUSUHWDWLRQ RI LWV RZQ UHJXODWLRQV WKDW LQWHUSUHWDWLRQ
                RZQHUVKLSRIWKHoD+RQJ.RQJVXEVLGLDU\           mDWWUDFWVVXEVWDQWLDOMXGLFLDOGHIHUHQFHl+RZHYHUEHFDXVH
                EXW DW WKH VDPH WLPH WKHQ WKHUH LV QR      UHYHQXH UXOLQJV RIWHQ SURYLGH WKH ,56jV LQWHUSUHWDWLRQ RI D
                TXHVWLRQ WKDWLWZRXOGKDYHEHHQGHHPHGD           K\SRWKHWLFDOVHWRIIDFWVFRXUWVVKRXOGQRWH[WHQGWKHVFRSH
                GLYLGHQGRUVRPHWKLQJDWWKDWSRLQW                 RI D UHYHQXH UXOLQJ EH\RQG WKH K\SRWKHWLFDO VLWXDWLRQ
                                                                     SUHVHQWHG  6HH %DELQ  )G DW  m>:@H QHHG QRW
    7KH/LPLWHG,QFY&RPPjU                    1R       1R                  7KH/LPLWHG,QFY&RPPjU          
      RI,QWHUQDO5HYHQXH                                                                                   RI,QWHUQDO5HYHQXH

UHDVRQVWKHUHLVQRVWDWXWRU\EDVLVIRUDSSO\LQJWKH        (PSKDVLVDGGHG%DVHGRQ/\RQVjVDFNQRZOHGJPHQWWKDW
GHILQLWLRQ RI mEDQNl WR WKH  E$ H[FHSWLRQ           D GRPHVWLF VXEVLGLDU\ RI 0)( VXFK DV WKH K\SRWKHWLFDO
5HYHQXH5XOLQJLVQRWELQGLQJRQWKLV&RXUWDQG             0)(86ZRXOGEHWD[HGIRUSXUFKDVLQJWKH&'VWKH7D[
LV DW EHVW SHUVXDVLYH DXWKRULW\ DQG  JLYHQ LWV VFRSH     &RXUWLQIHUUHGWKDW0)(19ZDVFUHDWHGWRDYRLGSD\LQJWD[
5HYHQXH5XOLQJGRHVQRWDSSO\KHUH                             RQWKHSXUFKDVHRIWKH&'V7KXVWKH7D[&RXUWFRQFOXGHG
                                                                       WKDWWKH&'VKHOGE\0)(19ZHUHDWWULEXWDEOHWR0)(
   1RVWDWXWRU\EDVLVH[LVWVIRUDSSO\LQJWKHGHILQLWLRQ
RI mEDQNl WR WKH  E$ H[FHSWLRQ  ,Q LWV ILUVW                         7D[SD\HUjV$UJXPHQWV
VHQWHQFHH[SUHVVO\VWDWHVWKDWLWVGHILQLWLRQRImEDQNl
LVm>I@RUSXUSRVHVRIVHFWLRQVDQGl,5&               7D[SD\HUDSSHDOVERWKEDVHVIRUWKH7D[&RXUWjVRSLQLRQ
:LWK WKDW UHVWULFWLRQ LW LV FOHDU WKDW &RQJUHVV ZDV QRW      ,WDUJXHVWKDWWKH7D[&RXUWHUUHGLQLWVLQWHUSUHWDWLRQRIWKH
SURYLGLQJ D JHQHUDO GHILQLWLRQ RI mEDQNl EXW UDWKHU D         SKUDVHmFDUU\LQJRQWKHEDQNLQJEXVLQHVVlEHFDXVHQHLWKHUWKH
VSHFLDOL]HG GHILQLWLRQ WKDW DSSOLHG RQO\ WR FHUWDLQ VWDWXWRU\   EXVLQHVVIDFLOLWDWLRQ UHTXLUHPHQW QRU WKH UHODWHGSDUW\
VHFWLRQV                                                            H[FHSWLRQ WKDW WKH 7D[ &RXUW UHDG LQWR  E$ DUH
                                                                       DSSURSULDWHLQWHUSUHWDWLRQVRIWKHVWDWXWH,QFRQWHVWLQJWKH
   2WKHUVHFWLRQVRIWKH7D[&RGHVXSSRUWWKLVLQWHUSUHWDWLRQ         5HJXODWLRQ,VVXH7D[SD\HUH[SODLQVWKDWLWVVROHSXUSRVHIRU
$WWKHWLPHRIWKHsDQXDU\7UDQVIHUVHYHUDOFRGHVHFWLRQV          FUHDWLQJ 0)(19 ZDV DVVHW SURWHFWLRQ DQG QRW WR DYRLG
KDG VSHFLILFDOO\ DGRSWHG WKH   GHILQLWLRQ RI WKH ZRUG     ,IHLWKHURIWKHVHDUJXPHQWVSUHYDLOVWKH7D[&RXUW
mEDQNl  6HH HJ ,5&  O$ ,5&               MXGJPHQWPXVWEHUHYHUVHG
$F%L,5&D,5&F$
,5&  F'LY ,5&  F ,5&                          7KH&RPPLVVLRQHUjV$UJXPHQWV
 D$ ,5&  G%LL ,5&
 E& ,5&   ,5&  I ,5&         7KH &RPPLVVLRQHU XUJHV XV WR DIILUP WKH 7D[ &RXUW
E%\VRGRLQJWKRVHVHFWLRQVLPSOLFLWO\UHFRJQL]HG          MXGJPHQW IRU WKH UHDVRQV RIIHUHG E\ WKH 7D[ &RXUW  ,Q
WKDWWKHGHILQLWLRQZRXOGQRWDSSO\ZLWKRXWWKHH[SUHVV          DGGLWLRQ WKH &RPPLVVLRQHU DUJXHV WKDW WKH 7D[ &RXUWjV
LQFRUSRUDWLRQ RI WKDW GHILQLWLRQ  %HFDXVH   GRHV QRW     UHVROXWLRQ RI WKH   ,VVXH VKRXOG EH DIILUPHG IRU WKUHH
DGRSW WKH   GHILQLWLRQ QR VWDWXWRU\ EDVLV H[LVWV IRU     UHDVRQV  WKH GHILQLWLRQ RI mEDQNl XQGHU ,5&  
DSSO\LQJWKHGHILQLWLRQWRE$                      FRXSOHGZLWK5HYHQXH5XOLQJH[FOXGHV:)11%DVD
                                                                       mEDQNl WKXV :)11% ZDV QRW mFDUU\LQJ RQ WKH EDQNLQJ
   $OWKRXJK WKH 7D[ &RGH QHYHU VXJJHVWV WKDW WKH          EXVLQHVVl  WKH IDFW WKDW :)11% LV RXWVLGH RI WKH
GHILQLWLRQ RI mEDQNl DSSOLHV WR  E$ WKH             GHILQLWLRQRImEDQNlLQ86&F)PHDQVWKDW
&RPPLVVLRQHUDUJXHVWKDWXQGHU5HYHQXH5XOLQJWKH              :)11% ZDV QRW mFDUU\LQJ RQ WKH EDQNLQJ EXVLQHVVl DQG
GHILQLWLRQJRYHUQVE$5HYHQXHUXOLQJVDUH          WKHPLOOLRQWKDW0)(19SDLGIRUWKH&'VGRHV
RQHRIWKHIRXUZD\VWKDWWKH,56FDQSXEOLFO\PHPRULDOL]HLWV         QRWFRQVWLWXWHDmGHSRVLWlXQGHUEHFDXVHWKDWWUDQVDFWLRQ
LQWHUSUHWDWLRQVRIWKH7D[&RGH6HH%DQNHUV/LIH	&DV&R          ZRXOGQRWKDYHWDNHQSODFHEHWZHHQLQGHSHQGHQWLQYHVWRUVRQ
Y8QLWHG6WDWHV)GWK&LU7KHRWKHU        WKH RSHQ PDUNHW  $IWHU FRQVLGHULQJ DOO RI WKH DUJXPHQWV
WKUHHPHWKRGVDUHUHJXODWLRQVLVVXHGSXUVXDQWWRDVSHFLILF            EHIRUHXVZHFRQFOXGHWKDWWKH7D[&RXUWHUUHGLQGHFLGLQJ
FRQJUHVVLRQDOGLUHFWLYHUHJXODWLRQVLVVXHGXQGHUWKH,56jV            WKH,VVXHDQGRQWKDWEDVLVZHUHYHUVHLWVMXGJPHQW
JHQHUDO DXWKRULW\ WR LQWHUSUHW WD[ ODZV DQG SULYDWH OHWWHU
                                                                                                       ,,
    7KH/LPLWHG,QFY&RPPjU                   1R      1R                   7KH/LPLWHG,QFY&RPPjU      
      RI,QWHUQDO5HYHQXH                                                                                  RI,QWHUQDO5HYHQXH

$6WDQGDUGRI5HYLHZDQG%XUGHQRI3URRI                           FRQFOXGLQJ WKDW D SODLQ ODQJXDJH UHDGLQJ o QRW DSSO\LQJ D
                                                                     UHODWHGSDUW\H[FHSWLRQoZRXOGEHXQUHDVRQDEOH7KHSODLQ
   'LIIHUHQWVWDQGDUGVRIUHYLHZDSSO\WRGLIIHUHQWFRPSRQHQWV       WH[W RI  E$ HQFRXUDJHV IRUHLJQ FRPSDQ\
RI WKH 7D[ &RXUWjV GHFLVLRQ  7KH 7D[ &RXUWjV IDFWXDO       LQYHVWPHQW LQ GRPHVWLF EDQNV o HYHQ LI WKRVH EDQNV DUH
GHWHUPLQDWLRQVDUHVXEMHFWWRDFOHDUO\HUURQHRXVVWDQGDUGRI        UHODWHG WR WKH IRUHLJQ FRPSDQ\  :KLOH REYLRXVO\ QRW WKH
UHYLHZ .HDUQV Y &RPPjU RI ,QWHUQDO 5HYHQXH  )G      SROLF\ WKDW WKH 7D[ &RXUW ZRXOG SURPRWH ZHUH LW DQ EHU
WK&LUm:HJHQHUDOO\UHYLHZWKH7D[             OHJLVODWXUHLQWHUSUHWLQJE$ZLWKRXWDUHODWHGSDUW\
&RXUWjVILQGLQJVRIIDFWRQWKHFOHDUO\HUURQHRXVVWDQGDUGl       SURKLELWLRQKDUGO\ULVHV WRDOHYHORIXQUHDVRQDEOHQHVVWKDW
VHHDOVR*URVVY&RPPjURI,QWHUQDO5HYHQXH)G          PHULWVLJQRULQJWKHSODLQWH[WRIWKHVWDWXWH
WK&LU8QGHUWKLVVWDQGDUGWKH7D[&RXUWjV
ILQGLQJVRIIDFWZLOOEHRYHUUXOHGRQO\LIZHDUHmOHIWZLWKD                 7KH &RPPLVVLRQHUjV 5HDVRQV IRU 5HVROYLQJ WKH
GHILQLWHDQGILUPFRQYLFWLRQWKDWDPLVWDNHKDVEHHQPDGHl                      ,VVXHLQ,WV)DYRU$UH1RW&RQYLQFLQJ
.HDUQV)GDW7KXVZHmPXVWXSKROGWKH>7@D[
>&@RXUWjVDFFRXQWRIWKHHYLGHQFHLILWLVSODXVLEOHLQOLJKWRI        3RVVLEO\ VHQVLQJ WKDW WKH 7D[ &RXUWjV UHDVRQV IRU
WKHUHFRUGYLHZHGLQLWVHQWLUHW\l*URVV)GDW,Q     LQWHUSUHWLQJWKHSKUDVHmFDUU\LQJRQWKHEDQNLQJEXVLQHVVlDUH
FRQWUDVWWKH7D[&RXUWjVOHJDOFRQFOXVLRQVDUHVXEMHFWWRGH        LQDGHTXDWHWKH&RPPLVVLRQHURIIHUVWKUHHDOWHUQDWLYHEDVHV
QRYRUHYLHZ.HDUQV)GDW:KHQUHYLHZLQJ              IRUFRQFOXGLQJWKDW:)11%ZDVQRWmFDUU\LQJRQWKHEDQNLQJ
PL[HGTXHVWLRQVRIIDFWDQGODZZHUHYLHZWKHXQGHUO\LQJ            EXVLQHVVl)LUVWWKH&RPPLVVLRQHUDUJXHVWKDWWKHGHILQLWLRQ
IDFWXDOGHWHUPLQDWLRQVXQGHUDFOHDUO\HUURQHRXVVWDQGDUGDQG        RImEDQNlXQGHU,5&FRXSOHGZLWK5HYHQXH5XOLQJ
WKH DSSOLFDWLRQ RI WKH IDFWV WR WKH ODZ XQGHU D GH QRYR   VKRXOGEHUHDGWRH[FOXGH:)11%DVDmEDQNlWKXV
VWDQGDUG6HH)ULHGPDQY&RPPjURI,QWHUQDO5HYHQXH           :)11%FDQQRWFDUU\RQmWKHEDQNLQJEXVLQHVVl6HFRQGWKH
)GWK&LUm7KLV&RXUWUHYLHZVWKH7D[           &RPPLVVLRQHUFRQWHQGVWKDWEHFDXVHWKHGHILQLWLRQRImEDQNl
&RXUWjVILQGLQJVRIIDFWIRUFOHDUHUURUDQGLWVDSSOLFDWLRQRI      LQ86&F)H[FOXGHVFUHGLWFDUGFRPSDQLHV
ODZ GH QRYRl 076 ,QWjO ,QF Y &RPPjU RI ,QWHUQDO       VXFK DV :)11% :)11% FDQQRW mFDUU\ RQ WKH EDQNLQJ
5HYHQXH)GWK&LUm7KLVFRXUW            EXVLQHVVl)LQDOO\WKH&RPPLVVLRQHUVXEPLWVWKDWWKH&'V
UHYLHZVWKH>7@D[>&@RXUWjVOHJDOFRQFOXVLRQVGHQRYRDQGLWV        LHWKHFHUWLILFDWHVRIGHSRVLWWKDW0)(19UHFHLYHGIURP
ILQGLQJVRIIDFWXQGHUWKHµFOHDUO\HUURQHRXVjVWDQGDUGl          :)11% VKRXOG QRW EH FRQVLGHUHG mGHSRVLWVl XQGHU
                                                                     E$(DFKRIWKHVHDUJXPHQWVIDLOV
   7KHVH VWDQGDUGV RI UHYLHZ DUH HYDOXDWHG DJDLQVW WKH
EDFNGURSRIHDFKSDUW\jVEXUGHQRISURRILQWKH7D[&RXUW                  D     1HLWKHUWKH'HILQLWLRQRIm%DQNlLQ,5&
7KH &RPPLVVLRQHUjV GHWHUPLQDWLRQ WKDW D WD[ GHILFLHQF\                       1RU5HYHQXH5XOLQJ$SSO\+HUH
H[LVWHGLVJHQHUDOO\SUHVXPHGWREHFRUUHFW.HDUQV)G
DW   &RQVHTXHQWO\ D WD[SD\HU EHDUV WKH EXUGHQ RI         7KH&RPPLVVLRQHUDUJXHVWKDWWKHGHILQLWLRQRImEDQNlLQ
SURYLQJWKDWWKH&RPPLVVLRQHUjVILQGLQJRIDGHILFLHQF\LV           ,5&FRQWUROVKHUHDQGH[FOXGHV:)11%DVmDSHUVRQ
HUURQHRXVRUDUELWUDU\E\DSUHSRQGHUDQFHRIWKHHYLGHQFH           FDUU\LQJRQWKHEDQNLQJEXVLQHVVl7KH&RPPLVVLRQHUUHOLHV
6HH,5&5XOHD.HDUQV)GDW                 XSRQ 5HYHQXH 5XOLQJ  ZKLFK DSSOLHG WKH  
                                                                     GHILQLWLRQ RI mEDQNl WR  E$ H[FHSWLRQV LQ WKH
                                                                     FRQWH[WRIIRUHLJQEDQNV6HH5HY5XO&%
                                                                       7KH &RPPLVVLRQHUjV DUJXPHQW LV LQFRUUHFW IRU WKUHH
    7KH/LPLWHG,QFY&RPPjU                       1R        1R                   7KH/LPLWHG,QFY&RPPjU          
      RI,QWHUQDO5HYHQXH                                                                                        RI,QWHUQDO5HYHQXH

5(3 12  DW   UHSULQWHG LQ                    % 7KH,VVXH
86&&$1%HFDXVHWKLVHQDFWPHQWWRRNSODFH
EHIRUH WKH &RPSHWLWLYH (TXDOLW\ %DQNLQJ $FW ZKLFK                     7D[SD\HUDSSHDOVWKH7D[&RXUWjVOHJDOLQWHUSUHWDWLRQRIWKH
SHUPLWWHGFUHGLWFDUGEDQNVWREHRZQHGE\QRQEDQNVWKH                  SKUDVH mGHSRVLW ZLWK SHUVRQV FDUU\LQJ RQ WKH EDQNLQJ
7D[ &RXUW EHOLHYHG WKDW &RQJUHVV QHYHU FRQVLGHUHG WKH               EXVLQHVVlDVXVHGLQE$%HFDXVHWKLVFKDOOHQJH
SRVVLELOLW\WKDWD&)&ZRXOGPDNHDWUDQVIHUWRDGRPHVWLF                 LQYROYHVDQLQWHUSUHWDWLRQRIODZZHUHYLHZWKH7D[&RXUWjV
VXEVLGLDU\EDQN0RUHRYHUWKH7D[&RXUWUHDVRQHGWKDWLW                 GHFLVLRQGHQRYR
PDNHVOLWWOHVHQVHWRSHUPLWGHSRVLWVZLWKDUHODWHGEDQNEXW
SURKLELW LQYHVWPHQWV LQ D UHODWHG FRUSRUDWLRQ  7R DYRLG              %HIRUHLQWHUSUHWLQJE$ZHILUVWUHYLHZUHOHYDQW
UHQGHULQJ &RQJUHVVjV LQWHQW WR LPSRVH D UHODWHGSDUW\                FDQRQV RI VWDWXWRU\ FRQVWUXFWLRQ  6HWWLQJ WKH WRQH IRU RXU
SURKLELWLRQ PHDQLQJOHVV DIWHU WKH HQDFWPHQW RI WKH                   VWDWXWRU\DQDO\VLVLVWKHSULQFLSOHWKDWVWDWXWHVLPSRVLQJDWD[
&RPSHWLWLYH(TXDOLW\%DQNLQJ$FWWKH7D[&RXUWUHDVRQHG                   DUHFRQVWUXHGOLEHUDOO\LQIDYRURIWKHWD[SD\HU:HLQJDUGHQ
WKDWWKHUHODWHGSDUW\SURKLELWLRQLQE)PXVWDSSO\            Y&RPPjURI,QWHUQDO5HYHQXH)GWK&LU
WR  E$jV UHIHUHQFH WR mGHSRVLWV ZLWK D SHUVRQ           :LWKWKDWSHUVSHFWLYHLQPLQGZHORRNILUVWWRWKH
FDUU\LQJRQWKHEDQNLQJEXVLQHVVl7KH7D[&RXUWHUUHGLQLWV             SODLQ ODQJXDJH RI WKH VWDWXWH  6HH 8QLWHG 6WDWHV Y +HDOWK
DQDO\VLV                                                                  3RVVLELOLWLHV36&)GWK&LU
                                                                           m7KHVWDUWLQJSRLQWLQDVWDWXWRU\LQWHUSUHWDWLRQFDVHLVWKH
   $JDLQ WKH 7D[ &RXUW DEDQGRQHG WKH SODLQ ODQJXDJH RI            ODQJXDJHRIWKHVWDWXWHLWVHOIl8QLWHG6WDWHVY$EOHV
 E$  6HFWLRQ E$ KDV QR UHODWHGSDUW\          )GWK&LU8QLWHG6WDWHVY0LOOV
SURKLELWLRQ  ,Q IDFW WKH VWDWXWRU\ WH[W RI   FRQWDLQV D   )G   WK &LU   :KHQ WKH WH[W RI D VWDWXWH
UHODWHGSDUW\SURKLELWLRQRQO\LQE&DQG)DQG               FRQWDLQVDQXQGHILQHGWHUPWKDWWHUPUHFHLYHVLWVRUGLQDU\DQG
E,ILWKDGLQWHQGHGWRLPSRVHDUHODWHGSDUW\SURKLELWLRQ          QDWXUDOPHDQLQJ6HH)HG'HSRVLW,QV&RUSY0H\HU
RQWUDQVIHUVXQGHUE$&RQJUHVVFRXOGKDYHHDVLO\              866PLWKY8QLWHG6WDWHV86
PDGHWKDWSURKLELWLRQPRUHJHQHUDORUDSSOLHGLWEH\RQGVROHO\             8QLWHG6WDWHVY0RVHV)GWK
WKRVHVXEVHFWLRQV&RQJUHVVGLGQRWGRHLWKHU5HJDUGOHVVRI             &LUVHHDOVR:XHENHUY&RPPjURI,QWHUQDO5HYHQXH
LWV UHDVRQV IRU QRW GRLQJ VR WKH SODLQ ODQJXDJH RI                )G   WK &LU  sRQHV s GLVVHQWLQJ
 E$ KDV QR UHODWHGSDUW\ SURKLELWLRQ DQG WKXV          LQWHUSUHWLQJDQXQGHILQHGWHUPLQWKH,QWHUQDO5HYHQXH&RGH
WKHUHLVQRQHHGWRH[DPLQHOHJLVODWLYHKLVWRU\KHUH                      LQDFFRUGZLWKLWVRUGLQDU\PHDQLQJ  $VDIXUWKHUDLGHLQ
                                                                           GHWHUPLQLQJWKHPHDQLQJRIDQXQGHILQHGWHUPWKHPD[LPRI
  7KH 7D[ &RXUW H[DPLQHG OHJLVODWLYH KLVWRU\ EHFDXVH LW             QRVFLWXUDVRFLLVoLWLVNQRZQIURPLWVDVVRFLDWHVoGLUHFWVXV
IRXQG WKDW WKH &RPSHWLWLYH (TXDOLW\ %DQNLQJ $FW PDGH                WR ORRN WR DFFRPSDQ\LQJ ZRUGV WR GHGXFH WKH XQGHILQHG
UHDGLQJ  E$ ZLWKRXW LPSO\LQJ D UHODWHGSDUW\              ZRUGjVPHDQLQJ6HH3DUNHUY0HWUR/LIH,QV&R)G
H[FHSWLRQXQUHDVRQDEOH7KH7D[&RXUWH[SODLQHGWKDWKDG                    WK &LU  VHH DOVR .XULQVN\ Y 8QLWHG
&RQJUHVVNQRZQWKDWEDQNVFRXOGFRQVWLWXWHUHODWHGSDUWLHV                 6WDWHV)GWK&LU:KHUHWKLVWH[WXDO
ZKHQ LW HQDFWHG  E$ LW ZRXOG KDYH DGGHG D             DQDO\VLVIDLOVWRSURGXFHDFRQFOXVLYHUHVXOWRUZKHUHLWOHDGV
UHODWHGSDUW\ H[FHSWLRQ WR  E$  $V D PDWWHU RI        WR DPELJXRXV RU XQUHDVRQDEOH UHVXOWV D FRXUW PD\ ORRN WR
SROLF\ WKDW DUJXPHQW PDNHV VHQVH EXW LW LV QRW WKH 7D[          OHJLVODWLYHKLVWRU\WRLQWHUSUHWDVWDWXWH6HH3DOPHUY8QLWHG
&RXUWjVUROHWRLQMHFWLWVRZQSROLF\GHWHUPLQDWLRQVLQWRWKH              6WDWHV ,Q UH 3DOPHU  )G   WK &LU 
SODLQODQJXDJHRIVWDWXWHV0RUHRYHUWKH7D[&RXUWHUUHGLQ              +RIIPDQY&RPVKDUH,QF,QUH&RPVKDUH,QF6HFV/LWLJ
     7KH/LPLWHG,QFY&RPPjU                   1R       1R                 7KH/LPLWHG,QFY&RPPjU         
       RI,QWHUQDO5HYHQXH                                                                                 RI,QWHUQDO5HYHQXH

)GWK&LU9HUJRVY*UHJJjV(QWHUV          LQWHUSUHWWKHSODLQODQJXDJHRIE$%HIRUHWKH
,QF)GWK&LU5HVRUWWROHJLVODWLYH        7D[ &RXUW UHDG LQ WKH FRPSOH[ EXVLQHVVIDFLOLWDWLRQ
KLVWRU\LVQRWDSSURSULDWHKRZHYHULIWKHWH[WRIWKHVWDWXWH        UHTXLUHPHQWLWVKRXOGKDYHLQVWHDGUHOLHGRQDQRWKHUSULQFLSOH
PD\EHUHDGXQDPELJXRXVO\DQGUHDVRQDEO\.RHQLJ6SRUWLQJ             RIVWDWXWRU\LQWHUSUHWDWLRQoVWDWXWHVLPSRVLQJDWD[VKRXOGEH
*RRGV,QFY0RUVH5G&R,QUH.RHQLJ6SRUWLQJ*RRGV            LQWHUSUHWHGOLEHUDOO\LQIDYRURIWKHWD[SD\HU:HLQJDUGHQ
 )G   WK &LU  m:KHQ D VWDWXWH LV        )GDW7KXVUDWKHUWKDQIRUFHDFRPSOH[PHDQLQJ
XQDPELJXRXV UHVRUW WR OHJLVODWLYH KLVWRU\ DQG SROLF\            IURPOHJLVODWLYHKLVWRU\WKH7D[&RXUWVKRXOGKDYHLQVWHDG
FRQVLGHUDWLRQVLVLPSURSHUl0LOOV)GDWm2QO\           FRQVWUXHGE$LQ7D[SD\HUjVIDYRU
ZKHQWKHODQJXDJHRIWKHOHJLVODWLRQLVXQFOHDUVKRXOGZHORRN
EH\RQG WKH ZRUGLQJ RI WKH VWDWXWH WR WKH LQWHQW RI WKH          ,QVXPERWKWKH7D[&RXUWjVDQDO\WLFDOIUDPHZRUNDQGLWV
OHJLVODWXUHl                                                        FRQFOXVLRQVUHJDUGLQJWKHGHILQLWLRQRIWKHSKUDVHmFDUU\LQJ
                                                                       RQ WKH EDQNLQJ EXVLQHVVl DUH LQFRUUHFW  8QGHU D FRUUHFW
      ,W,V,PSURSHUWR,PSXWHWKH%XVLQHVV)DFLOLWDWLRQ             VWDWXWRU\LQWHUSUHWDWLRQ:)11%LVmFDUU\LQJRQWKHEDQNLQJ
        0HDQLQJWRE$                                     EXVLQHVVl$OWKRXJKLWLVQRWQHFHVVDU\WRORRNEH\RQGWKH
                                                                       RUGLQDU\PHDQLQJRIWKHZRUGVLQE$WRUHDFKWKDW
   7KHSDUWLHVGLVDJUHHRYHUZKHWKHUWKH&'VWKDW0)(19               FRQFOXVLRQDQDSSOLFDWLRQRIQRVFLWXUDVRFLLVFRQILUPVWKDW
SXUFKDVHGIURP:)11%FRQVWLWXWHmGHSRVLWVZLWKSHUVRQV                 UHVXOW)RUWKRVHUHDVRQV:)11%VKRXOGEHLQWHUSUHWHGDV
FDUU\LQJRQWKHEDQNLQJEXVLQHVVl7KH7D[&RXUWLQWHUSUHWHG          mFDUU\LQJRQWKHEDQNLQJEXVLQHVVlXQGHUE$
WKH ZRUG mWKHl LQ mWKH EDQNLQJ EXVLQHVVl DV UHIHUULQJ WR D
SDUWLFXODUL]HG EDQNLQJ EXVLQHVV DQG H[DPLQHG OHJLVODWLYH               7KH 7D[ &RXUW (UUHG LQ )LQGLQJ DQ ,PSOLHG
KLVWRU\WRGLVFHUQZKLFKSDUWLFXODUEDQNLQJEXVLQHVV&RQJUHVV                 5HODWHG3DUW\3URKLELWLRQLQE$
LQWHQGHGWRJRYHUQ7KH7D[&RXUWjVFRQFOXVLRQZDV
LQFRUUHFWEHFDXVHWKHSKUDVHmSHUVRQVFDUU\LQJRQWKHEDQNLQJ             $QRWKHUEDVLVIRUWKH7D[&RXUWjVUHVROXWLRQRIWKH
EXVLQHVVlKDVDQRUGLQDU\DQGQDWXUDOPHDQLQJZKHUHLQFUHGLW           ,VVXHZDVLWVILQGLQJRIDQLPSOLHGUHODWHGSDUW\SURKLELWLRQLQ
FDUG FRPSDQLHV VXFK DV :)11% FRQVWLWXWH mSHUVRQV                E$ 8QGHU WKH 7D[ &RXUWjV UHDGLQJ RI
FDUU\LQJRQWKHEDQNLQJEXVLQHVVl+RZHYHULIWKHXVHRIWKH          E$ mGHSRVLWV ZLWK SHUVRQV FDUU\LQJ RQ WKH
ZRUG mWKHl LV FDSDEOH RI WZR GLVWLQFW PHDQLQJV LW LV PRUH   EDQNLQJEXVLQHVVlDUHH[FHSWHGIURPWKHGHILQLWLRQRIm8QLWHG
DSSURSULDWHWRLQWHUSUHWmWKHlDVOLPLWLQJWKHmEXVLQHVVlWRWKDW      6WDWHVSURSHUW\lRQO\LIWKHmSHUVRQVFDUU\LQJRQWKHEDQNLQJ
RImEDQNLQJl8QGHUWKDWUHDGLQJ:)11%VWLOOmFDUULHVRQ             EXVLQHVVlDUHXQUHODWHGWRWKHHQWLW\PDNLQJWKHGHSRVLW7KH
WKHEDQNLQJEXVLQHVVl%HFDXVHDSODLQODQJXDJHUHDGLQJRI            7D[ &RXUW UHDFKHG WKLV FRQFOXVLRQ ZKLFK FRQWUDGLFWV WKH
E$LVQHLWKHUDPELJXRXVQRUXQUHDVRQDEOHWKHUH            SODLQPHDQLQJRIE$EDVHGRQOHJLVODWLYHKLVWRU\
LVQRQHHGWRORRNWROHJLVODWLYHKLVWRU\KHUH                        RI WKH  DPHQGPHQWV WR  E) DQG *  ,Q
                                                                       FUHDWLQJ WKHVH QHZ H[FHSWLRQV WR WKH GHILQLWLRQ RI m8QLWHG
  7KHSDUWLHVGLVSXWHZKHWKHUE$jVUHIHUHQFHWR            6WDWHV SURSHUW\l LQ  &RQJUHVV H[SOLFLWO\ OLPLWHG WKH
mFDUU\LQJ RQ WKH EDQNLQJ EXVLQHVVl DSSOLHV WR FUHGLW FDUG       E) H[FHSWLRQ WR WUDQVIHUV EHWZHHQ XQUHODWHG
FRPSDQLHVOLNH:)11%$VPHQWLRQHGDERYHLQFRQVWUXLQJ               FRUSRUDWLRQV6HH7D[5HIRUP$FWRI3XE/1R
DVWDWXWHDFRXUWVWDUWVZLWKWKHSODLQODQJXDJH6HH+HDOWK           ,5&  E)  7KH OHJLVODWLYH KLVWRU\
3RVVLELOLWLHV)GDW$EOHV)GDW            H[SODLQHGWKDW8QLWHG6WDWHVVKDUHKROGHUVRID&)&VKRXOGQRW
0LOOV  )G DW   5HJUHWWDEO\ WKDW FDQRQ RI           EHDEOHWRXVHWKHHDUQLQJVRIWKH&)&ZLWKRXWSD\LQJWD[6
    7KH/LPLWHG,QFY&RPPjU                    1R       1R                 7KH/LPLWHG,QFY&RPPjU        
      RI,QWHUQDO5HYHQXH                                                                                  RI,QWHUQDO5HYHQXH

GLFWLRQDU\ H[DPSOH RI mWKH VHDIRRG  LQGXVWU\l LW LV DOVR     FRQVWUXFWLRQE\LWVHOISURYLGHVOLWWOHKHOSKHUHEHFDXVHQHLWKHU
UHDVRQDEOHWRUHDGmWKHlDVOLPLWLQJmEXVLQHVVlWRDEXVLQHVV          WKH,QWHUQDO5HYHQXH&RGHQRUWKH8QLWHG6WDWHV&RGHGHILQHV
GHDOLQJZLWKmEDQNLQJl)RUWKDWUHDVRQWKHDSSOLFDWLRQRI           WKH SKUDVH mWKH EDQNLQJ EXVLQHVVl  )RUWXQDWHO\ WZR RWKHU
'HILQLWLRQ  LV FRQVLVWHQW ZLWK WKH SODLQ ODQJXDJH RI         FDQRQVRIFRQVWUXFWLRQDVVLVWRXUHIIRUWVXQGHILQHGWHUPV
E$                                                        DUHFRQVWUXHGLQDFFRUGDQFHZLWKWKHLURUGLQDU\DQGQDWXUDO
                                                                       PHDQLQJVDQGWKHPHDQLQJRIDQXQGHILQHGWHUPPD\EH
   ,Q VKRUW D K\SHUWHFKQLFDO DQDO\VLV RI WKH WHUP mWKHl       GHGXFHGIURPQHDUE\ZRUGVXQGHUQRVFLWXUDVRFLLV
VXJJHVWVWKDWLWPD\EHFDSDEOHRIWZRPHDQLQJVZKHQXVHGLQ
E$WRPRGLI\mEDQNLQJEXVLQHVVl7HVWLQJWKHVH                D   &RQVWUXLQJ8QGHILQHG7HUPVLQ$FFRUGDQFHZLWK
WZR SRWHQWLDO GHILQLWLRQV LQ FRQWH[W UHYHDOV WKDW RQO\                   7KHLU2UGLQDU\DQG1DWXUDO0HDQLQJV:)11%
'HILQLWLRQFDQEHVHQVLEO\DSSOLHG&RQVHTXHQWO\mWKHl                    ,Vm&DUU\LQJRQWKH%DQNLQJ%XVLQHVVl
DVXVHGLQWKHFRQWH[WRIE$OLPLWVmEXVLQHVVlWR
D EXVLQHVV GHDOLQJ ZLWK EDQNLQJ  %HFDXVH :)11% LV D            :KHQDZRUGLVQRWGHILQHGE\VWDWXWHFRXUWVFRQVWUXHWKH
EXVLQHVVGHDOLQJZLWKEDQNLQJDVWKH7D[&RXUWFRQFHGHG             XQGHILQHGWHUPLQDFFRUGZLWKLWVRUGLQDU\RUQDWXUDOPHDQLQJ
:)11%mFDUULHVRQWKHEDQNLQJEXVLQHVVlIRUSXUSRVHVRI                6HH0H\HU86DW6PLWK86DW0RVHV
E$                                                       )GDW%HFDXVHWKHUHLVQRGLVSXWHWKDW:)11%
                                                                       FDUULHVRQDmEXVLQHVVlZHGRQRWIRFXVRQWKDWWHUP5DWKHU
     F   7KH7D[&RXUW(UUHGLQ([DPLQLQJ/HJLVODWLYH                 ZH WXUQ WR WKH WHUP mEDQNLQJl DQG QRWH WKDW DW WKH WLPH
          +LVWRU\                                                     &RQJUHVVHQDFWHGE$LWZDVFRPPRQO\GHILQHG
                                                                       DV
   5DWKHUWKDQUHVROYHWKLVGLVSXWHWKURXJKDQRUGLQDU\DQG
QDWXUDO UHDGLQJ RI  E$ RU E\ FRQVLGHULQJ ZKLFK        WKHEXVLQHVVRIDEDQNRULJUHVWULFWHGWRPRQH\FKDQJLQJ
GHILQLWLRQ RI mWKHl VKRXOG KDYH FRQWUROOHG WKH 7D[ &RXUW        DQGQRZGHYRWHGWRWDNLQJPRQH\RQGHSRVLWVXEMHFWWR
UDFHG WR WKH OHJLVODWLYH KLVWRU\ RI   WR VXSSRUW LWV       FKHFN RU GUDIW ORDQLQJ PRQH\ DQG FUHGLW DV E\
SDUWLFXODUL]HGGHILQLWLRQRImWKHl)URPWKH6HQDWHDQG+RXVH           GLVFRXQWLQJQRWHVDQGELOOVLVVXLQJGUDIWVDQGDQ\RWKHU
5HSRUWV FRYHULQJ WKH HQDFWPHQW RI   WKH 7D[ &RXUW          DVVRFLDWHGIRUPRUJHQHUDOGHDOLQJLQPRQH\RUFUHGLW
FRQFOXGHG WKDW WKH H[FHSWLRQV WR WKH GHILQLWLRQ RI m8QLWHG
6WDWHV SURSHUW\l ZHUH PHDQW WR DSSO\ mRQO\ ZKHUH WKH           :(%67(5j6 7+,5' 1(: ,17(51$7,21$/ ',&7,21$5< 
SURSHUW\ORFDWHGLQWKH8QLWHG6WDWHVLVRUGLQDU\DQGQHFHVVDU\        3KLOLS%DEFRFN*RYHHG
WRWKHDFWLYHFRQGXFWRIWKHIRUHLJQFRUSRUDWLRQjVEXVLQHVVRU
VXEVWDQWLDOO\WKHVDPHWUDGHRUEXVLQHVVlTXRWLQJ+5 5(3            ,QOLJKWRIWKDWGHILQLWLRQ:)11%FDUULHVRQmWKHEDQNLQJ
12  DW   HPSKDVLV DGGHG E\ WKH 7D[           EXVLQHVVl:)11%LVDQDWLRQDOO\FKDUWHUHGEDQNWKDWLVVXHV
&RXUW8QGHUWKLVUHDGLQJWKH7D[&RXUWFRQFOXGHGWKDW             FUHGLWFDUGV$VVXFKLWH[WHQGVFUHGLWDQGUHFHLYHVSD\PHQW
mWKHlUHIHUUHGWRDSDUWLFXODUEDQNLQJEXVLQHVVWKDWDLGVWKH          IRU WKRVH ORDQV  :)11% DOVR DFFHSWV FHUWDLQ GHSRVLWV
GRPHVWLFEXVLQHVVDFWLYLWLHVRI&)&V                                0RUHRYHU :)11% LV UHJXODWHG E\ WKH 2IILFH RI WKH
                                                                       &RPSWUROOHURI&XUUHQF\DQGWKH)HGHUDO5HVHUYH$OVRLWLV
  7KH7D[&RXUWHUUHGLQDWWULEXWLQJWKDWLPSOLHGEXVLQHVV            LQVXUHGE\WKH)HGHUDO'HSRVLW,QVXUDQFH&RUSRUDWLRQ$QG
IDFLOLWDWLRQPHDQLQJWRWKHZRUGmWKHl$QGLQLWV]HDOmWR          DV7D[SD\HUSRLQWVRXWLQOLJKWRILWVQDWLRQDOFKDUWHUWKHRQO\
HIIHFWXDWH WKH LQWHQW RI &RQJUHVVl WKH 7D[ &RXUW IDLOHG WR   EXVLQHVVWKDW:)11%FRXOGSRVVLEO\EHHQJDJHGLQLVmWKH
                                                                       EDQNLQJ EXVLQHVVl  7KXV XQGHU DQ RUGLQDU\ DQG QDWXUDO
    7KH/LPLWHG,QFY&RPPjU                 1R      1R                  7KH/LPLWHG,QFY&RPPjU         
      RI,QWHUQDO5HYHQXH                                                                               RI,QWHUQDO5HYHQXH

UHDGLQJ :)11% FDUULHV RQ mWKH EDQNLQJ EXVLQHVVl  )RU                         DGMHFWLYH RU E\ WKH DWWULEXWLYH QRXQ a
WKRVH UHDVRQV WKHUH LV OLWWOH QHHG WR VWUHWFK D FRPPRQ                       ULJKW DQVZHU! a SULYLOHJHG FODVVHV!
XQGHUVWDQGLQJRImWKHEDQNLQJEXVLQHVVlWRH[FOXGH:)11%                               a (QJOLVK ODQJXDJH! a JUHDWHVW
KHUH                                                                                 GLIILFXOW\!aWKLUGWLPH!a%RVWRQURDG!
                                                                                       aVHDIRRGLQGXVWU\!
     E 8VLQJ 1RVFLWXU D 6RFLLV WR ,QWHUSUHW
         E$ :)11% ,V m&DUU\LQJ RQ WKH            :(%67(5j6 7+,5' 1(: ,17(51$7,21$/ ',&7,21$5<
        %DQNLQJ%XVLQHVVl                                         3KLOLS%DEFRFN*RYHHG7KH7D[&RXUWFRQVLGHUHG
                                                                   RQO\'HILQLWLRQDQGFRQFOXGHGWKDWmWKHlKDGWRUHIHUWRD
  5DWKHUWKDQFRQGXFWWKHDERYHSODLQODQJXDJHDQDO\VLVWKH       SDUWLFXODUL]HGEDQNLQJEXVLQHVV%XWIURP'HILQLWLRQLW
7D[ &RXUW IRFXVHG RQ WKH WHUP mWKHl LQ WKH SKUDVH mWKH   LVDOVRSRVVLEOHWKDWmWKHlLVDIXQFWLRQZRUGXVHGWROLPLWWKH
EDQNLQJEXVLQHVVl5HDGLQJPHDQLQJLQWRDGHILQLWHDUWLFOH        QRXQ mEXVLQHVVl WR PHDQ RQO\ mEDQNLQJ EXVLQHVVl  ,Q
KDVEHHQUHMHFWHGE\DWOHDVWRQHRWKHUFLUFXLWDQGLWLVKDUGO\   GHFLGLQJZKLFKRIWKHVHWZRGHILQLWLRQVVKRXOGDSSO\ZHORRN
WKH ZLVHVW SODFH WR EHJLQ VWDWXWRU\ LQWHUSUHWDWLRQ  6HH   WRQHDUE\ZRUGVLQWKHVWDWXWH
*HRUJHWRZQ8QLY+RVSY6XOOLYDQ)GQ
'&&LUUHIXVLQJWRXVHGLVWLQFWLRQVEHWZHHQmWKHl          8QGHU'HILQLWLRQmWKHlUHIHUVWRmVRPHWKLQJSUHYLRXVO\
DQGmDQlLQLQWHUSUHWLQJDVWDWXWHEHFDXVHWKDWDSSURDFKZDV       PHQWLRQHG RU FOHDUO\ XQGHUVWRRG IURP WKH FRQWH[W RU
mRYHUO\IRUPDOLVWLFDQGLQFRQVLVWHQWZLWK6XSUHPH&RXUWFDVH       VLWXDWLRQl  )RU mWKHl WR PHDQ D SDUWLFXODUL]HG EDQNLQJ
ODZl1HYHUWKHOHVVHYHQLIWKHWHUPmWKHlLVFDSDEOHRIWZR     EXVLQHVV XQGHU 'HILQLWLRQ  WKH SDUWLFXODUL]HG EDQNLQJ
PHDQLQJVXQGHUQRVFLWXUDVRFLLVRQO\RQHPHDQLQJPDNHV          EXVLQHVV PXVW KDYH EHHQ SUHYLRXVO\ PHQWLRQHG RU FOHDUO\
VHQVHLQWKHFRQWH[WRIE$                            XQGHUVWRRGIURPWKHFRQWH[WRIWKHVLWXDWLRQ8QGRXEWHGO\
                                                                   PDNHVQRSULRUUHIHUHQFHWRDVSHFLILFEDQNLQJEXVLQHVV
  8QGHU D K\SHUWHFKQLFDO DQDO\VLV DW RGGV ZLWK D SODLQ    7KXVWKHRQO\ZD\WKDWmWKHlFRXOGILW'HILQLWLRQLVLID
ODQJXDJHLQWHUSUHWDWLRQRIWKHVWDWXWHWKHZRUGmWKHlDVXVHG     SDUWLFXODUL]HGEDQNLQJEXVLQHVVLVFOHDUO\XQGHUVWRRGIURPWKH
LQ mWKH EDQNLQJ EXVLQHVVl DW WKH WLPH &RQJUHVV HQDFWHG     FRQWH[W RU WKH VLWXDWLRQ  +HUH WKHUH LV QR SDUWLFXODUL]HG
E$PD\KDYHKDGWZRUHOHYDQWPHDQLQJV                 EDQNLQJEXVLQHVVWKDWFRXOGEHUHDVRQDEO\LQIHUUHGIURPWKH
                                                                   FRQWH[WRIWKHVWDWXWH'XHWRWKHDEVHQFHRIHLWKHUDSULRU
  'HILQLWLRQ XVHGDVDIXQFWLRQZRUGWRLQGLFDWHWKDWD        UHIHUHQFHRUDFOHDUFRQWH[WXDOPHDQLQJWKHWH[WRIGRHV
                 IROORZLQJQRXQRUQRXQHTXLYDOHQWUHIHUVWR       QRWVXSSRUWWKHXVHRI'HILQLWLRQKHUH
                 VRPHRQH RU VRPHWKLQJ SUHYLRXVO\
                 PHQWLRQHGRUFOHDUO\XQGHUVWRRGIURPWKH            ,QFRQWUDVWWKHSODLQODQJXDJHRIE$VXSSRUWV
                 FRQWH[WRUWKHVLWXDWLRQLIDQ\RQHRIIHUV       WKH XVH RI 'HILQLWLRQ  KHUH  8QGHU 'HILQLWLRQ  mWKHl
                 \RXDGROODUIRUWKDWSLFWXUHWDNHaGROODU!     PRGLILHVDGMHFWLYHQRXQSKUDVHVDVLQWKHGLFWLRQDU\H[DPSOH
                 SXWaFDWRXW!WKLVLVDJRRGVKLUWEXWa      mWKHVHDIRRGLQGXVWU\lWROLPLWWKHDSSOLFDWLRQRIWKHQRXQWR
                 VOHHYHVDUHWRRORQJ!                            WKDWVSHFLILHGE\WKHDGMHFWLYH,QWKHH[DPSOHmWKHVHDIRRG
                                                                   LQGXVWU\lWKHmLQGXVWU\lUHIHUUHGWRLVOLPLWHGWRDQLQGXVWU\
  'HILQLWLRQ XVHG DV D IXQFWLRQ ZRUG ZLWK DQRXQ         GHDOLQJZLWKmVHDIRRGl$SSO\LQJ'HILQLWLRQLVUHDVRQDEOH
                 PRGLILHG E\ DQ DGMHFWLYH RU E\ DQ           KHUH EHFDXVH DV XVHG LQ  E$ mWKHl PRGLILHV DQ
                 DWWULEXWLYHQRXQWROLPLWWKHDSSOLFDWLRQRI      DGMHFWLYHQRXQSKUDVHmEDQNLQJEXVLQHVVl$QGDVZLWKWKH
                 WKHPRGLILHGQRXQWRWKDWVSHFLILHGE\WKH