Court Opinion

ID: 2969593
Source: CourtListenerOpinion
Date Created: 2015-09-22 15:52:37.235264+00
Date Added: 2024-06-11T12:09:53.708663
License: Public Domain

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

     Y1/5%                                                          (/(&7521,& &,7$7,21  )(' $SS 3 WK &LU
                                                                                  )LOH 1DPH DS

JLYH LWV GHFLVLRQ GXH GHIHUHQFH EXW ZH FDQQRW DIILUP D
GHFLVLRQZKHQDQLPSURSHUVWDQGDUGRIODZKDVEHHQDSSOLHG        81,7('67$7(6&28572)$33($/6
DQG ZKHQ LPSRUWDQW IDFWXDO ILQGLQJV DUH QRW VXSSRUWHG E\
VXEVWDQWLDOHYLGHQFHLQWKHUHFRUGDVDZKROH                                  )257+(6,;7+&,5&8,7
                                                                                  BBBBBBBBBBBBBBBBB

                                                                   +$5%256,'( +($/7+&$5(         ;
                                                                   ,1&                           
                                                                                      3HWLWLRQHU 
                                                                                                      1RV
                                                                             &URVV5HVSRQGHQW 
                                                                                                    !
                                                                                                   
                                                                             Y                    
                                                                                                   
                                                                   1$7,21$/ /$%25 5(/$7,216 
                                                                   %2$5'                          
                                                                                    5HVSRQGHQW 
                                                                                                   
                                                                                &URVV3HWLWLRQHU 
                                                                                                  1
                                                                      2Q3HWLWLRQIRU5HYLHZDQG&URVV$SSOLFDWLRQIRU
                                                                                  (QIRUFHPHQWRIDQ2UGHU
                                                                          RIWKH1DWLRQDO/DERU5HODWLRQV%RDUG
                                                                                      1R&$
                                                                                  $UJXHG$XJXVW
                                                                            'HFLGHGDQG)LOHG2FWREHU
                                                                    %HIRUH.583$16.<:(//)25'DQG%2**6
                                                                                   &LUFXLWsXGJHV

                                                                                              
     +DUERUVLGH+HDOWKFDUH                 1RV        1RV                  +DUERUVLGH+HDOWKFDUH         
      Y1/5%                                                                                                        Y1/5%

                     BBBBBBBBBBBBBBBBB                               ZDV FOHDUO\ ZURQJ7KRPDV UHVLJQHG DIWHU WKH HOHFWLRQ RQ
                                                                     2FWREHU7KHUHLVDVHULRXVTXHVWLRQZKHWKHU7KRPDVGLG
                          &2816(/                                    LQ IDFW JLYH VXFK mKLQWVl RU PRUH WKDQ MXVW mKLQWVl RI
                                                                     mSURPLVHRIEHQHILWlRUmWKUHDWRIUHSULVDOlRQWKLVUHFRUGQRW
$5*8('  /DZUHQFH % )LQH 025*$1 /(:,6 	                    DV FDUHIXOO\ SDUVHG E\ WKH KHDULQJ RIILFHU  7KLV FLUFXLWjV
%2&.,86//33KLODGHOSKLD3HQQV\OYDQLDIRU3HWLWLRQHU             UHTXLUHPHQWV GR QRW LQFOXGH GLUHFW SURPLVHV RU WKUHDWV RU
sHIIUH\ +RURZLW] 1$7,21$/ /$%25 5(/$7,216                       FRHUFLRQEXWUDWKHUWKHH[LVWHQFHRIVXSHUYLVRU\DXWKRULW\DQG
%2$5' $33(//$7( &2857 %5$1&+ :DVKLQJWRQ                       RSLQLRQVRQWKHH[WHQWRILWVH[HUFLVH
'& IRU 5HVSRQGHQW  21 %5,()  /DZUHQFH % )LQH
sHQQLIHU 0 &DODEUHVH 025*$1 /(:,6 	 %2&.,86                    :H KDYH JRQH LQWR VRPH GHWDLO RQ WKHVH SUHFLVH 6L[WK
//3 3KLODGHOSKLD 3HQQV\OYDQLD IRU 3HWLWLRQHU  sHIIUH\      &LUFXLW VWDQGDUGV EHFDXVH WKH\ GLIIHU IURP WKH VWDQGDUGV
+RURZLW] $LOHHQ $ $UPVWURQJ &KDUOHV 3 'RQQHOO\ sU      DSSOLHGE\WKHKHDULQJRIILFHUDQGWKH%RDUG7KHTXHVWLRQDV
1$7,21$//$%255(/$7,216%2$5'$33(//$7(                            SRVHGLQ(YHUJUHHQLVZKHWKHU7KRPDVjFRQGXFWmUHDVRQDEO\
&2857%5$1&+:DVKLQJWRQ'&IRU5HVSRQGHQW                      WHQGHGWRKDYHDFRHUFLYHHIIHFWlDQGmZDVOLNHO\WRLPSDLU
                                                                     >WKHHPSOR\HHVj@IUHHGRPRIFKRLFHlQRWZKHWKHU7KRPDV
                     BBBBBBBBBBBBBBBBB                               SURPLVHGEHQHILWVRUPDGHWKUHDWVDVGHWHUPLQHGLQHUURUE\
                                                                     WKHKHDULQJRIILFHU7KH%RDUGPHUHO\mDGRSWHGWKHKHDULQJ
                         23,1,21                                     RIILFHUjVILQGLQJVDQGUHFRPPHQGDWLRQVlZLWKRXWGLVFXVVLQJ
                     BBBBBBBBBBBBBBBBB                               WKHVHFUXFLDOGLVWLQFWLRQVQRWHG,QDGGLWLRQZHKDYHQRWHG
                                                                     VRPHOLPLWHGEXWLPSRUWDQWH[FHSWLRQVWRWKHKHDULQJRIILFHUjV
  +$55< : :(//)25' &LUFXLW sXGJH  +DUERUVLGH                SXUSRUWHGFUHGLELOLW\GHWHUPLQDWLRQV
+HDOWKFDUH,QFm+DUERUVLGHlRSHUDWHVDEHGORQJWHUP
FDUH QXUVLQJ KRPH LQ %HDFKZRRG 2KLR  7KH 6HUYLFH              :H QRWH DOVR WKH UHTXLUHPHQW VWDWHG LQ 6W )UDQFLV
(PSOR\HHV8QLRQm8QLRQlSHWLWLRQHGWKH5HJLRQDO'LUHFWRU           +HDOWKFDUH  GLG WKH FRQGXFW LQ TXHVWLRQ LQWHUIHUH ZLWK
RI WKH 1DWLRQDO /DERU 5HODWLRQV %RDUG m1/5%l VHHNLQJ        IUHHGRPRIFKRLFHVRWKDWmLWPDWHULDOO\DIIHFWHGWKHUHVXOWRI
FHUWLILFDWLRQ DV WKH H[FOXVLYH FROOHFWLYHEDUJDLQLQJ             WKH HOHFWLRQ"l  7KH KHDULQJ RIILFHU GLG QRW GLVFXVV WKLV
UHSUHVHQWDWLYH RI +DUERUVLGHjV VHUYLFH DQG PDLQWHQDQFH          TXHVWLRQLQKLVUHSRUWEHFDXVHKHIRXQGQRKLQWRIWKUHDWHQLQJ
HPSOR\HHV DW WKLV IDFLOLW\ RQ $XJXVW    2QH RI     RUFRHUFLYHDFWLYLW\DOWKRXJKLWZDVFRQFHGHGO\LPSURSHUE\
+DUERUVLGHjV FKDUJH QXUVHV 5RELQ 7KRPDV D OLFHQVHG           7KRPDV
SUDFWLFDO QXUVH m/31l HQJDJHG LQ SURXQLRQ DFWLYLW\ DV
IRXQGE\WKHKHDULQJRIILFHUHYHQDIWHUEHLQJWROGWKDWVKH           %HFDXVHDQLPSURSHUVWDQGDUGZDVDGRSWHGDVUHIOHFWHGLQ
KHOGDVXSHUYLVRU\SRVLWLRQDQGPXVWWHUPLQDWHKHUFDPSDLJQ          RXU RSLQLRQ ZH 5(9(56( WKH DFWLRQ RI WKH %RDUG DQG
HIIRUWVIRUWKH8QLRQ                                               5(0$1'IRUDQDSSURSULDWHGHWHUPLQDWLRQXQGHUWKHSURSHU
                                                                     6L[WK&LUFXLWVWDQGDUG
  7KH5HJLRQDO'LUHFWRUFRQGXFWHGDVHFUHWEDOORWHOHFWLRQRQ
2FWREHUZKLFKUHVXOWHGLQIRUW\QLQHYRWHVLQIDYRU            :HHPSKDVL]HWKDWZHGRQRWRYHUWXUQDQ1/5%GHFLVLRQ
RIXQLRQUHSUHVHQWDWLRQDQGWKLUW\VL[YRWHVDJDLQVW7KHUH         OLJKWO\QRUGRZHUHDFKDGLIIHUHQWGHFLVLRQIURPWKDWRIWKH
ZHUH DOVR WZR FKDOOHQJHG EDOORWV DQG RQH YRLG EDOORW  $   %RDUGEDVHGXSRQFUHGLELOLW\GHWHUPLQDWLRQVDORQH1HLWKHU
FKDQJHRIVL[YRWHVDERXWVHYHQSHUFHQWRIYRWHVFDVWZRXOG        GRZHLQWHQGWRXVXUSWKHSURSHUDXWKRULW\RIWKH%RDUG:H
KDYHEURXJKWDERXWDGLIIHUHQWUHVXOW+DUERUVLGHWLPHO\ILOHG
    +DUERUVLGH+HDOWKFDUH                     1RV         1RV                     +DUERUVLGH+HDOWKFDUH              
      Y1/5%                                                                                                                Y1/5%

+HDULQJ2IILFHUjV)LQGLQJVDQG&RQFOXVLRQV                                REMHFWLRQVZLWKWKH5HJLRQDO'LUHFWRUZKRRUGHUHGDKHDULQJ
                                                                          RQDSRUWLRQRIWKHILUVWREMHFWLRQV+DUERUVLGHQRZVHHNV
   7KHKHDULQJRIILFHUjVOHJDOFRQFOXVLRQVZHUHEDVHGXSRQ                UHYLHZ RI WKH DGYHUVHGHFLVLRQ RI WKH KHDULQJ RIILFHU DV
%RDUG DXWKRULW\ 3DFLILF 3K\VLFLDQ 6HUYLFHV  1/5%           DIILUPHGE\WKH1/5% 
6XWWHU5RVHYLOOH0HGLFDO&HQWHU1/5%
 3DFLILF 0LFURQHVLD &RUS  1/5% 1R                 7KHUHDIWHUWKH8QLRQUHTXHVWHGEDUJDLQLQJEXW+DUERUVLGH
WKDWHPSKDVL]HGUHTXLUHPHQWVRIFRHUFLRQDQGWKUHDWV              UHIXVHG7KH8QLRQWKHQILOHGDQXQIDLUODERUSUDFWLFHFKDUJH
LQFRQMXQFWLRQZLWKRWKHUVXSHUYLVRU\SURXQLRQFRQGXFW$V              DQGWKH*HQHUDO&RXQVHOWKHQILOHGDFRPSODLQWDOOHJLQJWKDW
SUHYLRXVO\SRLQWHGRXWRXUFLUFXLWSUHFHGHQWFRQVLGHUVQHLWKHU           +DUERUVLGH YLRODWHG  86&  D DQG 
FRHUFLRQQRUWKUHDWVDVUHTXLUHGWRWDLQWDQHOHFWLRQPDUUHGE\           +DUERUVLGH DQVZHUHG DGPLWWLQJ LWV UHIXVDO WR EDUJDLQ EXW
SURXQLRQ VXSHUYLVRU\ FRQGXFW EXW UDWKHU WKH mGHJUHH RI           GHQ\LQJWKHYDOLGLW\RIWKH%RDUGjVFHUWLILFDWLRQRIWKH8QLRQ
VXSHUYLVRU\ DXWKRULW\ SRVVHVVHGl QRW QHFHVVDULO\ DFWXDOO\           +DUERUVLGHWKHQUHVSRQGHGWRWKH*HQHUDO&RXQVHOjVPRWLRQ
XWLOL]HG DQG mWKH H[WHQW QDWXUH DQG RSHQQHVVl RI VXFK         IRUVXPPDU\MXGJPHQWZKLFKWKH1/5%JUDQWHGRQsXO\
DFWLYLW\(YHUJUHHQDW                                              ILQGLQJWKDW+DUERUVLGHYLRODWHGDDQGE\
                                                                          UHIXVLQJWREDUJDLQ+DUERUVLGHILOHGWKHLQVWDQWSHWLWLRQIRU
  *UDQFDUH,QFGLVFXVVHGLQVRPHGHWDLOWKHQDWXUHRIWKH               UHYLHZ UHTXHVWLQJ UHYHUVDO ZKLOH WKH 1/5% ILOHG D FURVV
GXWLHVDQGUHVSRQVLELOLWLHVLQDKHDOWKFDUHIDFLOLW\RIFKDUJH            DSSOLFDWLRQ WR HQIRUFH LWV sXO\  RUGHU  7KLV &RXUW KDV
QXUVHV VXFK DV 7KRPDV ZKR ZH IRXQG H[HUFLVHG                     MXULVGLFWLRQSXUVXDQWWR86&HI :HQRZ
mLQGHSHQGHQWMXGJPHQWlDQGDFWXDOUDWKHUWKDQmLVRODWHGlRU              5(0$1'WKHSHWLWLRQIRUUHYLHZIRUWKHUHDVRQVVWDWHG
LQFLGHQWDOVXSHUYLVRU\DXWKRULW\)GDW2XU
FRXUWLVDWRGGVZLWKWKH%RDUGLQWKLVUHVSHFWDVWKH8QLRQ
RUJDQL]HU QRWHG LQ VWLSXODWLQJ WKDW 7KRPDV ZDV LQGHHG D                                   ,',6&866,21
VXSHUYLVRU WKRXJK VKH H[SUHVVHG KHU RZQ GRXEWV RQ WKLV
TXHVWLRQ*UDQFDUHHPSKDVL]HGWKDWZKLOHFKDUJHQXUVHVPD\               6WDQGDUGRI5HYLHZ
EHmORZOHYHOlWKH\DUHWKHmUDQNLQJDXWKRULW\lSUHVHQWIRU
PXFK RI WKH WLPH DQG WKH LPPHGLDWH VXSHUYLVRUV LQ WKHLU             7KLVFRXUWUHYLHZVWKH1/5%jVmOHJDOFRQFOXVLRQVGHQRYR
GHSDUWPHQW:HGRQRWGHIHUWRWKH%RDUGjVSUHFHGHQWZLWK                DQG LWV IDFWXDO ILQGLQJV XQGHU D VXEVWDQWLDO HYLGHQFH
UHVSHFWWRZKHWKHUDVXSHUYLVRUjVSURXQLRQFRQGXFWPXVWEH               VWDQGDUGl.HQWXFN\5LYHU&RPPXQLW\&DUH,QFY1/5%
WKUHDWHQLQJDQGFRHUFLYHLQRUGHUWRDIIHFWXQIDLUO\D%RDUG
HOHFWLRQ  m,W LV WKH H[LVWHQFH RI GLVFLSOLQDU\ DXWKRULW\ WKDW
                                                                              
FRXQWV XQGHU WKH VWDWXWH DQG QRW WKH IUHTXHQF\ RI LWV                 +HDULQJ RIILFHU 5DQGDOO $ 0DOOR\ DIWHU WKH KHDULQJ RQ 'HFHPEHU 
H[HUFLVHl,GDW  TXRWLQJ%HYHUO\&DOLIRUQLD&RUSY              IRXQG WKDW WKH HOHFWLRQ ZDV QRW WDLQWHG E\ SURXQLRQ VXSHUYLVRU\
1/5%)GQWK&LU                           FRQGXFW DQG UHFRPPHQGHG WKDW WKH %RDUG RYHUUXOH WKH UHPDLQLQJ
                                                                          REMHFWLRQV  7KH 1/5% DGRSWHG WKH 'LUHFWRUjV UHFRPPHQGDWLRQV DQG
                                                                          LVVXHG DQ RUGHU RQ )HEUXDU\   ZKLFK FHUWLILHG WKH 8QLRQ DV WKH
  7KHKHDULQJRIILFHUjVOHJDOFRQFOXVLRQQRWWRVHWDVLGHWKH             H[FOXVLYH EDUJDLQLQJ UHSUHVHQWDWLYH
HOHFWLRQZDVEDVHGXSRQDWOHDVWDSHUFHSWLRQWKDWWKH%RDUG
UHTXLUHGmVRPHµKLQWRIUHWDOLDWLRQRQUHPDQGjl2QHRIWKH                  
                                                                                :H KDYH MXULVGLFWLRQ WR UHYLHZ WKH %RDUGjV DFWLRQV LQ WKH
KHDULQJRIILFHUjVEDVHVIRUQRWILQGLQJVXFKDmKLQWlZDVWKDW            UHSUHVHQWDWLRQ SURFHHGLQJ VROHO\ IRU WKH SXUSRVH RI mHQIRUFLQJ
m7KRPDVYROXQWDULO\TXLWEHIRUHWKHHOHFWLRQl7KLVILQGLQJ              PRGLI\LQJ RU VHWWLQJ DVLGH LQ ZKROH RU LQ SDUW WKH >XQIDLU ODERU SUDFWLFH@
                                                                          RUGHU RI WKH %RDUGl  86&  G
        +DUERUVLGH+HDOWKFDUH                     1RV           1RV                   +DUERUVLGH+HDOWKFDUH           
         Y1/5%                                                                                                                Y1/5%

)GWK&LUFHUWJUDQWHGBBB6&W                       0RQLFD7K\PHDOVRDQH[SHULHQFHGQXUVLQJDLGHWHVWLILHG
BBB  :/  6HSW    :H UHYLHZ WKH                 DWWKHKHDULQJWKDW7KRPDVDVDFKDUJHQXUVHFRXOGGLVFLSOLQH
%RDUGjV XOWLPDWH GHWHUPLQDWLRQ JHQHUDOO\ IRU DEXVH RI                    KHU DV KHU mILUVW VXSHUYLVRUl DQG PDNH HYDOXDWLRQV RI WKHLU
GLVFUHWLRQ  6HH 1/5% Y 6W )UDQFLV +HDOWKFDUH &WU              ZRUN7K\PHKDGRFFDVLRQDOGHDOLQJVZLWK7KRPDVDQGRQH
)G    WK &LU  1/5% Y .LOJRUH                SDUWLFXODUHQFRXQWHUZLWKKHUDERXWDZHHNEHIRUHWKHHOHFWLRQ
&RUS)GWK&LUm7KLV&RXUWZLOO                   ZKLFK VKH GHVFULEHG DV D mFRQIURQWDWLRQlmORXGl DQG
VHW DVLGH WKH %RDUGjV GHWHUPLQDWLRQ RQO\ LI LW KDV DFWHG              mLQWLPLGDWLQJl  6KH IHOW mVOLJKWO\ WKUHDWHQHGl DV D
DUELWUDULO\DQGDEXVHGLWVGLVFUHWLRQl                                     FRQVHTXHQFHDQGVDZ7KRPDVLQYROYHGLQRWKHU8QLRQDQG
                                                                               mMRE VHFXULW\l GLVFXVVLRQV ZLWK RWKHU HPSOR\HHV 7K\PH
    7KH%RDUGjVILQGLQJVRIIDFWDUHFRQFOXVLYHLIVXSSRUWHG                   DWWHQGHGD8QLRQPHHWLQJDW7KRPDVjXUJLQJ
    E\VXEVWDQWLDOHYLGHQFH(YLGHQFHLVVXEVWDQWLDOZKHQLW
    LV mµDGHTXDWH LQ D UHDVRQDEOH PLQG WR XSKROG WKH                   7KRPDVGHQLHGVSHDNLQJWR3DYHOFKDNIRUWKH8QLRQEXW
    >%RDUGjV@GHFLVLRQjl:HPXVWFRQVLGHUWKHUHFRUGDVD                    DGPLWWHGDmGHEDWHlZLWK7K\PHQRWDmKHDWHGGLVFXVVLRQl
    ZKROH LQFOXGLQJ HYLGHQFH WKDW UXQV FRQWUDU\ WR WKH                 LQ KHU YLHZ  6KH DOVR GHQLHG DQ\ FRQWDFW ZLWK &DUWHU WKH
    %RDUGjV ILQGLQJV  'HIHUHQFH WR WKH %RDUGjV IDFWXDO                 8QLRQRUJDQL]HUZKRFRQWUDGLFWHGKHUWHVWLPRQ\
    ILQGLQJV LV SDUWLFXODUO\ DSSURSULDWH ZKHUH FRQIOLFWLQJ
    WHVWLPRQ\ UHTXLUHV WKH %RDUG WR PDNH FUHGLELOLW\                       7KHKHDULQJRIILFHUjVKDLUVSOLWWLQJDQDO\VLVRIWKHHIIHFWRI
    GHWHUPLQDWLRQV7KH%RDUGjVDSSOLFDWLRQRIODZWRIDFWV                   WKH WHVWLPRQ\RI 3DYHOFKDN DQG 7K\PH LQ SDUWLFXODU DQG
    LVDOVRUHYLHZHGXQGHUWKHVXEVWDQWLDOHYLGHQFHVWDQGDUG                  )UDQNsDFNVRQ WRDOHVVHUH[WHQWGHVFULEHGE\KLPDVmP\
    DQG mµWKH %RDUGjV UHDVRQDEOH LQIHUHQFHV PD\ QRW EH                  FUHGLELOLW\ UHVROXWLRQVl LV XQSHUVXDVLYH SDUWLFXODUO\ KLV
    GLVSODFHG RQ UHYLHZ HYHQ WKRXJK WKH FRXUW PLJKW                     UHOLDQFHXSRQ&DUWHUjVWHVWLPRQ\WRTXHVWLRQ3DYHOFKDNjVDQG
    MXVWLILDEO\KDYHUHDFKHGDGLIIHUHQWFRQFOXVLRQKDGWKH                    7K\PHjVHVVHQWLDOO\XQFRQWUDGLFWHGWHVWLPRQ\7KHKHDULQJ
    PDWWHUEHHQEHIRUHLWGHQRYRjl                                           RIILFHUYLHZHG7KRPDVDVPHUHO\ DmORZOHYHOVXSHUYLVRUl
                                                                               ZLWKOLWWOHmLPSDFWl$WWKHVDPHWLPHWKHKHDULQJRIILFHUDW
6W)UDQFLV+HDOWKFDUH&WU)GDWTXRWDWLRQVDQG                   RQHSRLQWLQKLVmFRQFOXVLRQVRIODZlDFNQRZOHGJHG
FLWDWLRQV RPLWWHG VHH 1/5% Y 0DLQ 6WUHHW 7HUUDFH &DUH
&WU)GWK&LUm&RXUWVPXVW                 7KHDVVHVVPHQWRIDVXSHUYLVRUjVFRQGXFWDQGZKHWKHULW
UHVSHFWWKHMXGJPHQWRIWKHDJHQF\HPSRZHUHGWRDSSO\WKH                        FRXOG UHDVRQDEO\ WHQG WR FRHUFH HPSOR\HHV LQ WKHLU
ODZµWRYDU\LQJIDFWSDWWHUQVjHYHQLIWKHLVVXHµZLWKQHDUO\                   FKRLFH RI UHSUHVHQWDWLYH GHSHQGV RQ WKH DELOLW\ RI WKH
                                                                                 VXSHUYLVRUWRUHZDUGRUSXQLVKHPSOR\HHVDQGWKHH[WHQW
                                                                                 RI WKH VXSHUYLVRUjV SURXQLRQ FRQGXFW  &DO:HVWHUQ
                                                                                 7UDQVSRUW1/5%HQIjG)G
                                                                                WK&LU
       +ROO\ )DUPV &RUS Y 1/5%  86   mHVWDEOLVKHV WKH
VWDQGDUG RI UHYLHZ QRZ ELQGLQJ RQ WKH FRXUWV RI DSSHDOV LQ UHYLHZLQJ WKH
1/5%jV LQWHUSUHWDWLRQ RI WKH UHOHYDQW SURYLVLRQV RI WKH 1/5$ 8QGHU            (PSKDVLVDGGHG
WKLV VWDQGDUG RXU ILUVW WDVN LV WR GHWHUPLQH µZKHWKHU &RQJUHVV KDV GLUHFWO\
VSRNHQ WR WKH SUHFLVH TXHVWLRQV DW LVVXHj ,I &RQJUHVV KDV GRQH VR ZH
PXVW JLYH HIIHFW WR LWV H[SUHVVLRQ ,I QRW KRZHYHU µWKH TXHVWLRQ IRU WKH
                                                                                   
FRXUW LV ZKHWKHU WKH DJHQF\jV DQVZHU LV EDVHG RQ D SHUPLVVLEOH                      7KH KHDULQJ RIILFHU PLVWDNHQO\ LGHQWLILHG sDFNVRQ DV sRKQVRQ ZKRP
FRQVWUXFWLRQ RI WKH VWDWXWHjl 1/5% Y :HEFRU 3DFNDJLQJ ,QF  )G        KH IRXQG ZDV QRW WKUHDWHQHG EXW ZDV PHUHO\ mHQFRXUDJHG >E\ 7KRPDV@
  WK &LU  TXRWDWLRQV FLWDWLRQ DQG IRRWQRWH RPLWWHG       WR VXSSRUW WKH 3HWLWLRQHU 8QLRQl
       +DUERUVLGH+HDOWKFDUH                      1RV            1RV                  +DUERUVLGH+HDOWKFDUH             
         Y1/5%                                                                                                                 Y1/5%

GHFLGHGQRWWRMRLQ7KRPDVmEDGJHUHGlKHURQmMXVWDERXW                        HTXDO UHDVRQ >PLJKW@ EH UHVROYHG RQH ZD\ UDWKHU WKDQ
HYHU\lHQFRXQWHUDQGLQTXLUHGZK\VKHZDVQRWDWWHQGLQJWKH                      DQRWKHUjl+ROO\)DUPV&RUSY1/5%86
XQLRQPHHWLQJV3DYHOFKDNDOVRVDZ7KRPDVSRVWLQJXQLRQ                          TXRWHGLQ*UDQFDUH,QFY1/5%)G
VLJQV$OWKRXJK7KRPDVZDVKHUGLUHFWVXSHUYLVRURQO\RQH                       WK&LU0RRUHsFRQFXUULQJ
GD\3DYHOFKDNIHOWWKUHDWHQHGDQGLQWLPLGDWHGZKHQ7KRPDV
WROGKHURQWKDWGD\WKDWVKHZRXOGORVHKHUMRELIVKHGLGQRW                       $ SDUW\ ZKR VHHNV WR RYHUWXUQ WKH UHVXOWV RI D
YRWH IRU WKH XQLRQ EHFDXVH +DUERUVLGH ZRXOG ILUH KHU IRU                 UHSUHVHQWDWLRQHOHFWLRQEHDUVWKHEXUGHQRIGHPRQVWUDWLQJ
KDYLQJ VLJQHG WKH XQLRQ FDUG  3DYHOFKDN WHVWLILHG WKDW                    WKDWWKHHOHFWLRQZDVFRQGXFWHGXQIDLUO\7RPHHWWKLV
7KRPDV ZRXOG VHH KHU LQ WKH EUHDN URRP WKHUHDIWHU DQG                    EXUGHQ mWKH REMHFWLQJ SDUW\ PXVW GHPRQVWUDWH WKDW
7KRPDVZRXOGUHLWHUDWHWKDW3DYHOFKDNZRXOGORVHKHUMRELI                        µXQODZIXO FRQGXFW RFFXUUHG ZKLFK LQWHUIHUHG ZLWK
WKHXQLRQGLGQRWJHWLQ3DYHOFKDNPRUHRYHUILOHGDIRUPDO                     HPSOR\HHVjH[HUFLVHRIIUHHFKRLFHWRVXFKDQH[WHQWWKDW
JULHYDQFHDJDLQVW7KRPDVRQ6HSWHPEHUVWDWLQJWKDW                       LWPDWHULDOO\DIIHFWHGWKHUHVXOWRIWKHHOHFWLRQjl:KLOH
VKHFRQWLQXHGWRKDUDVVKHU                                                      WKH %RDUG VWULYHV WR DFKLHYH mODERUDWRU\ FRQGLWLRQVl
                                                                                   GXULQJUHSUHVHQWDWLRQHOHFWLRQVZHKDYHUHFRJQL]HGWKDW
  7KHJULHYDQFHLQFOXGHGDUHIHUHQFHWRDQDGGLWLRQDOLQFLGHQW                     WKLV FDQ EH DQ HOXVLYH JRDO DQG VR mHOHFWLRQV DUH QRW
LQYROYLQJ7KRPDVRQ6HSWHPEHUDQGJHQHUDOO\UHLWHUDWHG                         DXWRPDWLFDOO\ YRLGHG ZKHQHYHU WKH\ IDOO VKRUW RI
WKH HSLVRGHV UHODWHG LQ KHU WHVWLPRQ\  7KH KHDULQJ RIILFHU               SHUIHFWLRQl
FRQFOXGHGEDVHGRQ3DYHOFKDNjVHYLGHQFHDQGWKDWRIRWKHU
HPSOR\HHV7KRPDVZDVmLQYROYHGZLWKHQFRXUDJLQJHOLJLEOH                        6W )UDQFLV +HDOWKFDUH &WU  )G DW  TXRWDWLRQV
YRWHUV WR YRWH IRU WKH >8QLRQ@l  2Q WKH RWKHU KDQG WKH              RPLWWHG  +DUERUVLGH EHDUV WKH EXUGHQ RI SURYLQJ WKDW WKH
KHDULQJRIILFHUFRQFOXGHGWKDW3DYHOFKDNGLGQRWXVHWKHVDPH                    DOOHJHG FDPSDLJQ PLVFRQGXFW WHQGHG WR SUHYHQW D IDLU
ODQJXDJHDERXWKHU7KRPDVHQFRXQWHUVZKHQH[DPLQHGDQG                           HOHFWLRQFRQWUDU\WRWKH%RDUGjVGHWHUPLQDWLRQ
FURVVH[DPLQHGDQGLQKHUZULWWHQJULHYDQFH+HVHHPLQJO\
GLVFRXQWHG KHU FUHGLELOLW\ DQG WKH HIIHFW RI KHU RYHUDOO                    (YHUJUHHQ+HDOWKFDUH,QFY1/5%)GWK&LU
HYLGHQFHEDVHGXSRQWKLVDQDO\VLV:HWKLQNWKLVERWKXQIDLU                     LV WKH FDVH PRVW DQDORJRXV WR WKLV GLVSXWH  +ROO\
DQGQREDVLVIRUTXHVWLRQLQJ3DYHOFKDNjVFUHGLELOLW\DIWHURXU                  )DUPV WKH 6XSUHPH &RXUW FDVH LQYROYHG D GLIIHUHQW
FDUHIXO UHDGLQJ RI KHU HQWLUH WHVWLPRQ\ LQFOXGLQJ KHU                    VLWXDWLRQ  FRQVWUXFWLRQ RI UHJXODWLRQV GHDOLQJ ZLWK
JULHYDQFH  7KLV LV SDUWLFXODUO\ VR LQ OLJKW RI WKH KHDULQJ           mDJULFXOWXUDO ODERU HPSOR\HHVl +ROO\ )DUPV GLG QRW GHDO
RIILFHUjV SURSHU ILQGLQJ  RI D QXPEHU RI LQFRQVLVWHQFLHV LQ              ZLWK VXSHUYLVRU\ VWDWXV DQG ZKHWKHU VXSHUYLVRU\ DFWLRQV
7KRPDVjWHVWLPRQ\                                                              GXULQJWKHHOHFWLRQSURFHVVRQEHKDOIRIWKH8QLRQSUHFOXGHD
                                                                                 IDLUHOHFWLRQXQGHU1/5$
                                                                                 9LRODWLRQRIULJKWVE\DVXSHUYLVRU
                                                                                  7KH1/5$JLYHVHPSOR\HHVmWKHULJKWWRVHOIRUJDQL]DWLRQ
     3DYHOFKDN   DWWHQGHG   IRXU
+DUERUVLGHjV WUDLQLQJ SURJUDP
                                   \HDUV   RI   FROOHJH   DQG   ZHQW   WKURXJK
                                                                                 WR IRUP MRLQ RU DVVLVW ODERU RUJDQL]DWLRQV WR EDUJDLQ
                                                                                 FROOHFWLYHO\WKURXJKUHSUHVHQWDWLYHVRIWKHLURZQFKRRVLQJ
     
     7KH WHVWLPRQ\ RI 7KRPDV GLIIHUHG LQGHHG LQ LPSRUWDQW SDUWLFXODUV
                                                                                 DQGWRHQJDJHLQRWKHUFRQFHUWHGDFWLYLWLHVIRUWKHSXUSRVHRI
IURP WKDW RI &DUWHU WKH 8QLRQ UHSUHVHQWDWLYH DV ZHOO DV D QXPEHU RI
                                                                                 FROOHFWLYHEDUJDLQLQJRURWKHUPXWXDODLGRUSURWHFWLRQl
+DUERUVLGH HPSOR\HHV                                                            86&7KH$FWSURYLGHVWKDWDQXQIDLUODERUSUDFWLFH
     +DUERUVLGH+HDOWKFDUH                   1RV        1RV                  +DUERUVLGH+HDOWKFDUH          
      Y1/5%                                                                                                          Y1/5%

LQFOXGHV DQ HPSOR\HUjV LQWHUIHULQJ ZLWK UHVWUDLQLQJ RU           LQWKHHOHFWLRQWKHQXUVHVFXUWDLOHGPXFKRIWKHLUXQLRQ
FRHUFLQJHPSOR\HHVLQWKHH[HUFLVHRIWKHULJKWVJXDUDQWHHGLQ           DFWLYLW\EXWZKHQ>RQH@ZDVDVNHGZKHWKHUKHURSLQLRQV
  RU GRPLQDWLQJ RU LQWHUIHULQJ ZLWK WKH IRUPDWLRQ RU        KDGFKDQJHGDERXWWKHXQLRQVKHUHSOLHGWKH\KDGQRW
DGPLQLVWUDWLRQ RI DQ\ ODERU RUJDQL]DWLRQ RU FRQWULEXWLQJ           DQG VKH ZDV RYHUKHDUG PDNLQJ VHYHUDO SURXQLRQ
ILQDQFLDORURWKHUVXSSRUWWRLW6HH86&D        VWDWHPHQWVWRHPSOR\HHV
7KH 1/5$ SURYLGHV WKDW WKH WHUP mHPSOR\HHl mVKDOO QRW
LQFOXGHDQ\LQGLYLGXDOHPSOR\HGDVDVXSHUYLVRUl            ,GDWFLWDWLRQRPLWWHG
86&    m7KH WHUP µVXSHUYLVRUj PHDQV DQ\
LQGLYLGXDOKDYLQJDXWKRULW\LQWKHLQWHUHVWRIWKHHPSOR\HUWR         (YHUJUHHQGLVWLQJXLVKHG:ULJKW0HPjO+RVSY1/5%
KLUH WUDQVIHU VXVSHQG OD\ RII UHFDOO SURPRWH GLVFKDUJH   )G  WK &LU  UHOLHG RQ E\ WKH %RDUG EHFDXVH
DVVLJQUHZDUGRUGLVFLSOLQHRWKHUHPSOR\HHVRUUHVSRQVLEO\          WKUHHFKDUJHQXUVHVZKRDFWLYHO\FDPSDLJQHGIRUWKHXQLRQ
WRGLUHFWWKHPRUWRDGMXVWWKHLUJULHYDQFHVRUHIIHFWLYHO\WR       GLGQRWGLVWULEXWHFDUGVRUEXWWRQVZLWKSUHVVXUHRUSHUVXDVLRQ
UHFRPPHQGVXFKDFWLRQLILQFRQQHFWLRQZLWKWKHIRUHJRLQJ             DQGmQRQHUHTXLUHGHPSOR\HHVWRVLJQDXWKRUL]DWLRQFDUGVRU
WKHH[HUFLVHRIVXFKDXWKRULW\LVQRWRIDPHUHO\URXWLQHRU           UHWXUQWKHFDUGVWRWKHP,QDGGLWLRQQRQHRIWKHWKUHHSOD\HG
FOHULFDOQDWXUHEXWUHTXLUHVWKHXVHRILQGHSHQGHQWMXGJPHQWl        OHDGHUVKLSUROHVLQWKHHOHFWLRQFDPSDLJQl(YHUJUHHQ
86&,QWKLVFDVHWKHDFWLRQVRIDVXSHUYLVRU        )G DW   7KH KHDULQJ RIILFHU IRXQG WKDW 7KRPDV
RQEHKDOIRIWKH8QLRQUDWKHUWKDQKHUHPSOR\HUZHUHWKH             HQFRXUDJHGXQLRQVXSSRUWGXULQJWKHFULWLFDOSHULRGDQGWKDW
EDVLVRIFRQWURYHUV\                                                  VKHVSRNHZLWKHPSOR\HHVDERXWMREVHFXULW\ZLWKWKHXQLRQ
                                                                       (PSOR\HUZLWQHVVHVWHVWLILHGWKDW7KRPDVFRQWLQXHGWRWU\WR
  +DUERUVLGHFODLPHGWKDW5RELQ7KRPDVZDVDVXSHUYLVRU                JHW WKHP WR ZHDU XQLRQ SLQV DWWHQG XQLRQ PHHWLQJV VLJQ
ZLWKLQ WKH PHDQLQJ RI    7KH +HDULQJ RIILFHU         XQLRQFDUGVDQGUHWXUQWKHPWRKHU7KH8QLRQRUJDQL]HU
DVVXPHGKHUVXSHUYLVRU\VWDWXVLQKLVRSLQLRQDQGWKH%RDUG           &DUWHUZKRVHWHVWLPRQ\WKH+HDULQJRIILFHUFUHGLWHGWHVWLILHG
GRHVQRWGLVSXWHWKDWILQGLQJ7KH+HDULQJRIILFHUDQGWKH            WKDW7KRPDVWXUQHGLQDOORIWKH/31XQLWFDUGVWKH8QLRQ
1/5% KRZHYHU PD\ WDNH LQWR DFFRXQW WKH GHJUHH RI KHU        UHFHLYHG(YHUJUHHQDQG5LYHU:DONGRQRWUHTXLUHSURRIRI
VXSHUYLVRU\VWDWXV6HH*UDQFDUH,QFY1/5%)G              mVRPH µKLQW RI UHWDOLDWLRQ RU UHZDUGjl DV GLG WKH KHDULQJ
  WK &LU  m7KH %RDUG KDV WKH EXUGHQ RI       RIILFHU7KHXOWLPDWHWHVWLVZKHWKHUWKHFRQGXFWmUHDVRQDEO\
SURYLQJWKDWHPSOR\HHVDUHQRWVXSHUYLVRUVl                       WHQGHGWRKDYHVXFKDFRHUFLYHHIIHFWRQWKHHPSOR\HHVWKDWLW
                                                                       ZDVOLNHO\WRLPSDLUWKHLUIUHHGRPVRIFKRLFHLQWKHHOHFWLRQl
  +DUERUVLGH FRQWHQGV WKDW WKH KHDULQJ RIILFHU TXHVWLRQHG        (YHUJUHHQ)GDWHPSKDVLVDGGHG
LPSRUWDQWHOHPHQWVRIWKHEDVLVRI7KRPDVjVXSHUYLVRU\VWDWXV
DQGWKDWWKH%RDUGHUUHGLQUHO\LQJRQWKH+HDULQJRIILFHUjV           7KH+HDULQJ
FRQFOXVLRQVLQWKLVUHJDUGLQVWHDGRIPDNLQJDQLQGHSHQGHQW
GHWHUPLQDWLRQm,QFRQFOXGLQJZKHWKHUVXEVWDQWLDOHYLGHQFH              ,Q WKH SUHVHQW FDVH QXUVLQJ DVVLVWDQW /\QQH 3DYHOFKDN
VXSSRUWV WKH %RDUGjV GHFLVLRQ WKH FRXUW PXVW FRQVLGHU WKH     WHVWLILHG DW WKH KHDULQJ WKDW FKDUJH QXUVH 5RELQ 7KRPDV
HQWLUHUHFRUG(YLGHQFHZKLFKWKH%RDUGKDVLJQRUHGEXWLV            mDSSURDFKHG PH ZLWK D XQLRQ FDUG LQ WKH HPSOR\HH EUHDN
GLUHFWO\ UHOHYDQW FDQQRW EH GLVUHJDUGHGl  ,G FLWDWLRQ        DUHDDQGDVNHGPHWRVLJQLWDQGWROGPHWKDW,QHHGHGWR
RPLWWHG                                                              FRPHWRDXQLRQPHHWLQJWKDW,KDGWRDWWHQGDOORIWKH
                                                                       XQLRQPHHWLQJVVRWKDW,FRXOGNHHSXSZLWKZKDWZDVJRLQJ
                                                                       WR EH JRLQJ RQl DQG DIWHU VKH DWWHQGHG WKH PHHWLQJ DQG
    +DUERUVLGH+HDOWKFDUH                   1RV        1RV                   +DUERUVLGH+HDOWKFDUH           
      Y1/5%                                                                                                           Y1/5%

FRQVWLWXWHREMHFWLRQDEOHFRQGXFWl.X[0IJ&RY1/5%          2EMHFWLRQDEOH&RQGXFW
)GWKFLU(YHUJUHHQKHOGWKDWWKH
%RDUG HUUHG LQ FRQFOXGLQJ WKDW WKH VXSHUYLVRU\ QXUVHV KDG           7KH SDUWLFLSDWLRQ RI D VXSHUYLVRU LQ WKH FDPSDLJQ
PHUHO\H[SUHVVHGWKHLURSLQLRQVUHJDUGLQJWKHXQLRQEHFDXVH            SUHFHGLQJ D XQLRQ HOHFWLRQ PD\ XQGHUPLQH WKH
DVWKLVFRXUWQRWHGWKHVXSHUYLVRUVmFDPSDLJQHGDFWLYHO\RQ             HPSOR\HHVj IUHHGRP RI FKRLFH VR PXFK VR WKDW WKH
EHKDOI RI WKH 8QLRQ  7KH\ ZRUH XQLRQ EXWWRQV WR ZRUN         HOHFWLRQPXVWEHVHWDVLGH+RZHYHUDQHOHFWLRQLVQRW
DWWHQGHG XQLRQ PHHWLQJV KDQGHG RXW XQLRQ EXWWRQV                 DXWRPDWLFDOO\LQYDOLGDWHGZKHQWKHUHKDVEHHQSURXQLRQ
GLVWULEXWHGDXWKRUL]DWLRQFDUGVDQGVSRNHDERXWWKH8QLRQDW            DFWLYLW\E\DVXSHUYLVRU$QHOHFWLRQZLOOEHLQYDOLGDWHG
XQLRQPHHWLQJVl(YHUJUHHQ)GDW7KRPDV                 ZKHQWKHSHWLWLRQHUGHPRQVWUDWHVWKDWmWKHVXSHUYLVRUjV
SDUWLFLSDWHG LQ DOO RI WKHVH DFWLYLWLHV EXW WKH (YHUJUHHQ       FRQGXFWUHDVRQDEO\WHQGHGWRKDYHVXFKDFRHUFLYHHIIHFW
VXSHUYLVRUV DOVR FRQWDFWHG HPSOR\HHV DW KRPH  7KH                RQ WKH HPSOR\HHV WKDW LW ZDV OLNHO\ WR LPSDLU WKHLU
VXSHUYLVRUVLQ(YHUJUHHQDOVRVSRNHRIWHQDERXWWKHGLVSOD\              IUHHGRPV RI FKRLFH LQ WKH HOHFWLRQl  7KH SDUW\
RIFDPSDLJQEXWWRQVVRWKDWDQXUVHDLGHWHVWLILHGVKHGLGQRW           FKDOOHQJLQJ WKH HOHFWLRQ QHHG QRW LQWURGXFH SURRI RI
ZDQWWRZHDUDEXWWRQEXWGLGVRWRmJHWWKHPRIIP\EDFNl              DFWXDOFRHUFLRQ
$VXSHUYLVRUWROGDQXUVHDLGHWRZHDUWKHEXWWRQDQGmKHOS
ERRVWWKHXQLRQlDQGRQWKHGD\RIWKHHOHFWLRQDVNHGDQRWKHU          (YHUJUHHQ+HDOWKFDUH,QFY1/5%)GWK
QXUVH DLGH LI VKH KDG YRWHG IRU WKH 8QLRQ EHFDXVH LI VKH   &LUHPSKDVLVDGGHGFLWDWLRQVDQGTXRWDWLRQRPLWWHG
ZRXOGYRWHIRUWKHXQLRQWKH\ZRXOGKDYHPRUHEHQHILWV7KH           :KLOHWKHKHDULQJRIILFHUDQG%RDUGGLGQRWDFWXDOO\VWDWHWKDW
DLGHWHVWLILHGWKDWVKHmZHQWDORQJZLWKWKHP>EHFDXVHWKH\            SURRIRIDFWXDOFRHUFLRQZDVUHTXLUHG+DUERUVLGHFRQWHQGV
ZHUH@P\FRZRUNHUVDQG,ZDQWHGWREHDEOHWRZRUN              WKDW ERWK HUUHG E\ WDNLQJ LQWR DFFRXQW mWKDW WKH FRQGXFW DW
WKHUHl,GDW,QWKHSUHVHQWFDVHZLWQHVVHVWHVWLILHGWKDW    LVVXHµGLGQRWKDYHDFRHUFLYHHIIHFWjDQGWKDWWKHUHZDVQR
WKH\ZHUHFRQWDFWHGE\7KRPDVEXWQHYHUWKHOHVVUHIXVHGWR            µDFFRPSDQ\LQJFRHUFLRQjl
ZHDUWKHSLQRUDWWHQGWKHXQLRQPHHWLQJV(YHUJUHHQIRXQG
VXSSRUWLQ1/5%Y5LYHU:DON0DQRU,QF1R                    7R GHWHUPLQH ZKHWKHU D VXSHUYLVRUjV FRQGXFW
 :/  WK &LU 2FW   XQSXEOLVKHG            UHDVRQDEO\WHQGHGWRKDYHVXFKDFRHUFLYHHIIHFWRQWKH
ZKLFKKHOGWKDWDQHOHFWLRQZDVLQYDOLGDWHGE\VXSHUYLVRU\               HPSOR\HHVWKDWLWZDVOLNHO\WRLPSDLUWKHLUIUHHGRPVRI
QXUVHVDWDXQLRQPHHWLQJHQFRXUDJLQJHPSOR\HHVWRRUJDQL]H              FKRLFHLQWKHHOHFWLRQWKH%RDUGDQGWKHFLUFXLWFRXUWV
DQHIIRUWWRVXSSRUWWKHXQLRQDWWHQGLQJXQLRQPHHWLQJVDQG             KDYH FRQVLGHUHG WKH IROORZLQJ WZR IDFWRUV   WKH
GLVWULEXWLQJDXWKRUL]DWLRQFDUGVYRLFLQJVXSSRUWIRUWKHXQLRQ          GHJUHHRIVXSHUYLVRU\DXWKRULW\SRVVHVVHGE\WKRVHZKR
GLUHFWO\ WR HPSOR\HHV VKH VXSHUYLVHG DQG VROLFLWLQJ XQLRQ         HQJDJHG LQ WKH SURXQLRQ DFWLYLW\ DQG  WKH H[WHQW
DXWKRUL]DWLRQFDUGVIURPVHYHUDOHPSOR\HHV6HH(YHUJUHHQ              QDWXUHDQGRSHQQHVVRIWKHSURXQLRQDFWLYLW\
)GDW
                                                                       (YHUJUHHQ)GDWHPSKDVLVDGGHG
    )ROORZLQJ WKH ILOLQJ RI WKH HOHFWLRQ SHWLWLRQ WKH
  VXSHUYLVRUVFRQWLQXHGWRDWWHQGXQLRQPHHWLQJVDQGXUJHG               5HFHQWO\WKH%RDUGRYHUWXUQHGDIRUW\WKUHH\HDUSUHFHGHQW
  HPSOR\HHVWRmVWLFNWRJHWKHUDQGYRWH\HVIRUWKHXQLRQ             DQG KHOG WKDW D XQLRQjV XVH RI D VWDWXWRU\ VXSHUYLVRU DV DQ
  EHFDXVHZHZLOOJHWEHWWHUZDJHVEHWWHUMREVHFXULW\DQG           HOHFWLRQ REVHUYHU FRQVWLWXWHV REMHFWLRQDEOH FRQGXFW  6HH
  EHWWHU EHQHILWVl  $IWHU WKH 1/5% UXOHG WKDW WKH IRXU       )DPLO\6HUY$JHQF\1/5%1R3DUDJRQ
  QXUVHVZHUHVXSHUYLVRUVDQGH[FOXGHGWKHPIURPYRWLQJ                5XEEHU&R1/5%3ODQW&LW\:HOGLQJ	
                                                                       7DQN &R  1/5%     7KHVH UHFHQW
      +DUERUVLGH+HDOWKFDUH                  1RV        1RV                 +DUERUVLGH+HDOWKFDUH          
       Y1/5%                                                                                                        Y1/5%

GHFLVLRQV RI WKH %RDUG HPSKDVL]H WKDW WKH DFWLRQV RI D        WHUPLQDWLRQ RI HPSOR\HHV  7KLV LV PDGH FOHDU E\ MRE
VXSHUYLVRURQEHKDOIRIWKHXQLRQDUHYLHZHGVHULRXVO\E\WKH        GHVFULSWLRQV8QLRQRUJDQL]HU+RSH&DUWHUZKRVWLSXODWHG
%RDUGZLWKUHVSHFWWRDWDLQWLQJRIWKHHOHFWLRQSURFHVV              /31VDVVXSHUYLVRUVDQGWKHUHIRUHRXWRIWKHXQLWWHVWLILHGVKH
                                                                       GLG VR WR DYRLG D KHDULQJ RQ WKLV LVVXH EXW 'LUHFWRU RI
'HJUHHRIVXSHUYLVRU\DXWKRULW\                                     1XUVLQJ 0RJXV WHVWLILHG WKDW 7KRPDV ZDV LQGHHG D
                                                                       VXSHUYLVRU  1LFROH 'HQQLV 5HJLRQDO +XPDQ 5HVRXUFHV
  (YHUJUHHQ FRQFOXGHG WKDW WKH QXUVHV LQYROYHG KDG               'LUHFWRUIRU+DUERUVLGHWHVWLILHGDWWKHKHDULQJWKDW7KRPDV
VLJQLILFDQWVXSHUYLVRU\DXWKRULW\ZKLFKZRXOGOLNHO\KDYHD            ZDV LQ DWWHQGDQFH DV UHTXLUHG DW +DUERUVLGHjV PHHWLQJ IRU
FRHUFLYHHIIHFWRQHPSOR\HHV6HH(YHUJUHHQ)GDW              VXSHUYLVRUVDWZKLFKWKH\ZHUHWROGQRWWRLQYROYHWKHPVHOYHV
  7KH %RDUG LQ (YHUJUHHQ IRXQG WKDW WKH OLFHQVHG DQG     RQEHKDOIRIWKH8QLRQ8QLWPDQDJHU.LUNZRRGVDLG7KRPDV
UHJLVWHUHGQXUVHVZHUHVXSHUYLVRUVEXWWKLVFRXUWFRQFOXGHG           ZDVSUHVHQWDWDPLG6HSWHPEHUPHHWLQJRIVXSHUYLVRUVZKHUH
WKHKHDULQJRIILFHUIDLOHGWRFRQVLGHUWKHH[WHQWRIWKHQXUVHVj       WKLVGLUHFWLRQZDVUHLWHUDWHG7KHKHDULQJRIILFHUQRWHGWKDW
VXSHUYLVRU\SRZHUZKHQGHWHUPLQLQJZKHWKHUWKHLUFRQGXFW               7KRPDV KDG OHVV VXSHUYLVRU\ DXWKRULW\ WKDQ LQ RWKHU FDVHV
LQYDOLGDWHGWKHHOHFWLRQ7KHKHDULQJRIILFHUHUUHGLQQRWLQJ         EHFDXVHRIKHUODFNRIGLUHFWDXWKRULW\RYHUWKH+DUERUVLGH
                                                                       HPSOR\HHZLWQHVVHV2QHVXFKHPSOR\HH3DYHOFKDNZRUNHG
     WKH QXUVHVj VWDWXV DV VXSHUYLVRU\ ZDV XQGHFLGHG         IRU7KRPDVRQO\RQHGD\EXWVKHWHVWLILHGWKDW7KRPDVKDG
    GXULQJWKHFDPSDLJQLQJ(YHUJUHHQWUHDWHGWKHQXUVHV           WKHDELOLW\WRZULWHKHUXSVHQGKHUKRPHDQGXOWLPDWHO\KDYH
    DVXQLWHPSOR\HHVE\DOORZLQJWKHPWRFDPSDLJQDQG                KHU WHUPLQDWHG  1XUVLQJ DVVLVWDQW 7K\PH DQ HPSOR\HH
     WKH HPSOR\HHV GLG QRW EHOLHYH WKH QXUVHV ZHUH          WHVWLILHGWKDW7KRPDVRFFDVLRQDOO\ZDVKHUVXSHUYLVRUDQGWKDW
    VXSHUYLVRUVEHFDXVHWKH\FDPSDLJQHGVLGHE\VLGH1RQH            VKHGLUHFWHGKHUDQGKDGDXWKRULW\WRGLVFLSOLQHKHU1XUVLQJ
    RIWKHVHUHDVRQVKRZHYHUUHQGHUWKHVXSHUYLVRU\VWDWXV           DVVLVWDQW )UDQN sDFNVRQ WHVWLILHG WKDW 7KRPDV ZDV GLUHFWO\
    RIWKHQXUVHVLQFRQVHTXHQWLDO                                     RYHUKLPRQRQO\RQHRFFDVLRQEXWWKDWVKHZDVDVXSHUYLVRU
                                                                       EHFDXVHVKHFRXOGmZULWH\RXXSDQGPDNH\RXORVH\RXUMREl
,GHPSKDVLVDGGHG                                                  DQGVKHJDYHKLPVRPHGLUHFWLRQV
  ,QWKHSUHVHQWFDVHWKH%RDUGDGRSWHGWKHKHDULQJRIILFHUjV             ([WHQW1DWXUHDQG2SHQQHVVRI3URXQLRQ$FWLYLW\E\
GHFLVLRQLQZKLFKKHDVVXPHGZLWKRXWDFWXDOO\GHFLGLQJWKDW               7KRPDV
7KRPDVZDVDVXSHUYLVRU7KLVIDFWZDVVWLSXODWHG7KRPDV
KDG DXWKRULW\ WR H[HUFLVH LQGHSHQGHQW MXGJPHQW WR PDNH           7KHKHDULQJRIILFHUUHOLHGRQ%RDUGFDVHVZKHUHWKH%RDUG
GHFLVLRQV LQ FULVLV VLWXDWLRQV DQG WR GLUHFW DQG GLVFLSOLQH   KHOGWKDWVXSHUYLVRUVjVWDWHPHQWVZHUHVLPSO\H[SUHVVLRQVRI
HPSOR\HHV7KHGLUHFWRURIQXUVLQJWHVWLILHGWRWKHQDWXUHRI         WKHLUSHUVRQDORSLQLRQVDQGZHUHQRWLQKHUHQWO\FRHUFLYH,Q
FKDUJHQXUVHVjVXSHUYLVRU\UHVSRQVLELOLWLHVVWDWLQJWKDWWKH\         RQHFDVHWKHVXSHUYLVRUVVROLFLWHGDXWKRUL]DWLRQFDUGVIRUWKH
ZHUHWKHLPPHGLDWHVXSHUYLVRUVRIWKHQXUVLQJDVVLVWDQWVDQG           XQLRQDQGXUJHGHOLJLEOHYRWHUVWRVXSSRUWWKHXQLRQDWXQLRQ
KDGWKHDXWKRULW\WRLQLWLDWHGLVFLSOLQDU\DFWLRQ,QDGGLWLRQ       PHHWLQJVDQGWROGWKHPWKHXQLRQZRXOGSURWHFWWKHLUMREV
FKDUJHQXUVHVFRXOGGLUHFWQXUVHVDVVLJQQXUVHVjVFKHGXOHV           EXWWKH%RDUGIRXQGWKDWWKHVXSHUYLVRUVGLGQRWPDNHWKUHDWV
PDNH LQGHSHQGHQW MXGJPHQWV LQWHUYLHZ DQG UHFRPPHQG               RI UHWDOLDWLRQ RU UHZDUG DQG WKHUHIRUH WKH FRPPHQWV ZHUH
SURVSHFWLYHHPSOR\HHVJLYHWKHSULQFLSDOLQSXWRQQXUVLQJ             LQQRFXRXV H[SUHVVLRQV RI SHUVRQDO RSLQLRQ 6HH 3DFLILF
DVVLVWDQWVjHYDOXDWLRQVZKLFKDIIHFWUHWHQWLRQDQGSD\UDLVHV       3K\VLFLDQV6HUYV,QF1/5%:HKDYH
LPPHGLDWHO\ VXVSHQG DQG VHQG KRPH HPSOR\HHV UHTXHVW             DOVRVWDWHGWKDWm>D@QRQFRHUFLYHSUHHOHFWLRQSROOGRHVQRW
HPSOR\HHV WR VWD\ RYHU DQG UHFRPPHQG VXVSHQVLRQ DQG