5(&200(1'(' )25 )8//7(;7 38%/,&$7,21  8QLWHG6WDWHVY+D\HV 1R 3XUVXDQW WR 6L[WK &LUFXLW 5XOH  (/(&7521,& &,7$7,21  )(' $SS 3 WK &LU DVVXPHGFRQILGHQWLDOLW\7KHIDFWWKDW5DGIRUGDQG9DQ'\NH )LOH 1DPH DS GLGQRWXVHPDJLFZRUGVOLNHm,FDQWHVWLI\LQFRXUWDERXWZKDW \RXWHOOPHlDVRSSRVHGWRVLPSO\LPSO\LQJm,FDQWHOOWKH SROLFHDERXWZKDW\RXWHOOPHlVKRXOGQRWEHGHFLVLYH ,Q 81,7('67$7(6&28572)$33($/6 DGGLWLRQKRZHYHU,VHHQRH[SOLFLWVWDWHPHQWLQWKHFRXUWjV )257+(6,;7+&,5&8,7 RSLQLRQWKDWHYHQWKHXVHRIVXFKDPDJLFIRUPXODZRXOGEH BBBBBBBBBBBBBBBBB JRRGHQRXJK )XUWKHUPRUH WKH FRXUW PLVFRQVWUXHV WKH JRYHUQPHQWjV SRVLWLRQ LQ LWV GLVFXVVLRQ DW SDJH  RI mFRQVWUXFWLYH 81,7(' 67$7(6 2) $0(5,&$ ; ZDLYHUl  7KH 8QLWHG 6WDWHV GRHV QRW DUJXH WKDW +D\HV 3ODLQWLII$SSHOODQW  FRQVWUXFWLYHO\ZDLYHGKLVSULYLOHJHZKLFKZRXOGRFFXUKDG  KH UHSHDWHG WKH WKUHDWV WR D WKLUG SDUW\  5DWKHU LW DUJXHV  1R FRUUHFWO\LQP\YLHZWKDW+D\HVZDLYHGDQ\SULYLOHJHSXUHO\ Y  DQGVLPSO\E\FRQWLQXLQJWRWKUHDWHQDIWHUKHKDGEHHQJLYHQ !  QRWLFHWKDWKLVWKUHDWVZRXOGQRWEHKHOGLQFRQILGHQFH 52 KRPLFLGDOLGHDWLRQDJDLQVW2GOH@ZLWKLQWKH FRQILQHVRIWKHURRPQRUFDQ,NHHSFKLOGDEXVHZLWKLQWKH , FRQILQHVl   +H IXUWKHU WHVWLILHG WKDW RQ 0DUFK  KH $VLGHIURPDSHULRGRIPLOLWDU\VHUYLFH+D\HVKDVZRUNHG mUHLWHUDWHGlWKDWVDPHZDUQLQJWR+D\HV1HYHUWKHOHVVRQ IRUWKH8QLWHG6WDWHV3RVWDO6HUYLFHKLVHQWLUHDGXOWOLIH,Q WKDWODWWHURFFDVLRQKDYLQJEHHQZDUQHGWKUHHWLPHV+D\HV sXO\9HGD2GOHDVVXPHGWKHSRVLWLRQRISRVWPDVWHULQ ZHQWRQLQWKHIDFHRIWKHZDUQLQJWRGHWDLOH[DFWO\KRZKH 0DULRQ9LUJLQLDDQGFRQVHTXHQWO\LQWHUDFWHGUHJXODUO\ZLWK SODQQHGWRZD\OD\DQGNLOO2GOH +D\HVZKRZDVWKHXQLRQVWHZDUGIRUWKDWSRVWRIILFHEUDQFK 7KLV FRQVWLWXWHG PRUH WKDQ DPSOH QRWLFH WKDW VXFK GLVFXVVLRQ ZDV RXWVLGH WKH ERXQGV RI DQ\ SURPLVHG RU  8QLWHG6WDWHVY+D\HV 1R 1R 8QLWHG6WDWHVY+D\HV  BBBBBBBBBBBBBBB %HJLQQLQJLQ+D\HVEHJDQWREHKDYHHUUDWLFDOO\DW ZRUNDWWLPHVEHFRPLQJLQFRQVRODEO\GHSUHVVHGDQGXQDEOH ',66(17 WRIXQFWLRQ2Q)HEUXDU\DIWHUVHYHUDOHSLVRGHVRI BBBBBBBBBBBBBBB LUUHJXODU EHKDYLRU +D\HV VRXJKW SURIHVVLRQDO KHOS DW WKH 9HWHUDQV$GPLQLVWUDWLRQ0RXQWDLQ+RPH+RVSLWDO0++ %2**6&LUFXLWsXGJHGLVVHQWLQJ7KHFRXUWjVRSLQLRQ sRKQVRQ&LW\7HQQHVVHH7KHDGPLWWLQJGLDJQRVLVIRU+D\HV TXLWHSURSHUO\GLVWLQJXLVKHVLQ6HFWLRQ,,,VXSUDDWWKH ZDV PDMRU GHSUHVVLRQ DFFRPSDQLHG E\ VHYHUH SV\FKRWLF TXHVWLRQVRIZKHWKHUDPHQWDOKHDOWKSURIHVVLRQDODSSDUHQWO\ IHDWXUHV  'XULQJ WUHDWPHQW +D\HV LQIRUPHG 'U 'LDQQH LQFOXGLQJ LQ WKLV FDVH D VRFLDO ZRUNHU FDQ LQIRUP WKH +DQVHQRIDGHVLUHWRNLOO2GOHDGHVLUH+D\HVFODLPHGKH LQWHQGHGYLFWLPRIDWKUHDWIURPWKHTXHVWLRQRIZKHWKHUWKDW FRXOG UHVLVW RQO\ EHFDXVH KH mUHFRJQL]HGl WKDW VXFK DFWLRQ SHUVRQFDQWHVWLI\LQFRXUW,DJUHHZLWKWKHFRXUWj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jVKROGLQJWRWKHFRQWUDU\ 2Q)HEUXDU\+D\HVUHWXUQHGWR0++DGPLWWLQJKLPVHOI 7KHJRYHUQLQJODZLQWKLVFDVHLV)HGHUDO5XOHRI(YLGHQFH DV DQ LQSDWLHQW IRU VHYHUDO GD\V  'XULQJ WKLV VWD\ +D\HV ZKLFKVLPSO\VD\VWKDWDOOSULYLOHJHVDUHmJRYHUQHGE\ UHLWHUDWHG KLV KRPLFLGDO LQFOLQDWLRQV EXW 0++ GRFWRUV WKHSULQFLSOHVRIWKHFRPPRQODZLQWKHOLJKWRIUHDVRQ FRQFOXGHG WKDW KH ZDV FDSDEOH RI FRQWUROOLQJ KLPVHOI DQG DQG H[SHULHQFHl  7KH 6XSUHPH &RXUW KDV LQWHUSUHWHG WKLV XQGHUVWDQGLQJWKHFRQVHTXHQFHVRIKLVDFWLRQV&RQVHTXHQWO\ FRQFHSWZLWKUHVSHFWWRWKHSULYLOHJHDWLVVXHKHUHLQsDIIHHY RQ )HEUXDU\  0++ DJDLQ UHOHDVHG +D\HV ZLWK D 5HGPRQG86VWDWLQJWKDWmFRQILGHQWLDO SUHVFULSWLRQIRUYDULRXVSV\FKRWURSLFGUXJV FRPPXQLFDWLRQVEHWZHHQDOLFHQVHGSV\FKRWKHUDSLVWDQGKHU SDWLHQWVLQWKHFRXUVHRIGLDJQRVLVRUWUHDWPHQWDUHSURWHFWHG 2Q0DUFK+D\HVZHQWWRWKH9HWHUDQV&HQWHULQ IURP FRPSHOOHG GLVFORVXUH XQGHU 5XOH  RI WKH )HGHUDO sRKQVRQ&LW\7HQQHVVHHWRGLVFXVVKLVSUREOHPVZLWKVRFLDO 5XOHVRI(YLGHQFHlHPSKDVLVDGGHG)LUVWRIFRXUVHWKLV ZRUNHUsDPHV(GZDUG9DQ'\NH9DQ'\NHFODLPVWRKDYH EDUH KROGLQJ GRHV QRW FRYHU WKH VLWXDWLRQ KHUH ZKHUH WKH DGYLVHG+D\HVWKDWKH9DQ'\NHKDGDGXW\WRZDUQDIIHFWHG VRFLDOZRUNHULVZLOOLQJWRWHVWLI\6HFRQGWKHGHWDLOVRIWKH WKLUGSDUWLHVVKRXOGKHGHWHUPLQHWKDW+D\HVSRVHGDVHULRXV VRFLDOZRUNHU9DQ'\NHjVSV\FKRWKHUDSHXWLFFUHGHQWLDOVDUH WKUHDWWRKLPVHOIRURWKHUV$OWKRXJK+D\HVUHYHDOHGWR9DQ SHUKDSVTXHVWLRQDEOH7KLUGWKHPXFKGLVFXVVHGIRRWQRWH '\NHWKDWKHSODQQHGWRPXUGHU2GOHDQGGHVFULEHGLQVRPH LQ sDIIHH DW OHDVW LQGLFDWHG WKDW WKH 6XSUHPH &RXUW GLG QRW GHWDLOKRZKHZRXOGGRVR9DQ'\NHFRQFOXGHGWKDW+D\HV PHDQWKDWWKHUXOHLWKDGODLGGRZQZDVDEVROXWHZLWKQR ZDV QRW D VHULRXV WKUHDW WR 2GOH DQG DOORZHG KLP WR OHDYH DIWHU +D\HV DJUHHG WR UHWXUQ IRU DGGLWLRQDO WKHUDS\ RQ 0DUFK  ',3 '\NHjV SRVLWLRQ ZDV WKDW RI 5HDGMXVWPHQW &RXQVHOLQJ 2Q 0DUFK   EHFDXVH +D\HV ZDV H[SHULHQFLQJ 6SHFLDOLVW +H KDG D 0DVWHUjV LQ (GXFDWLRQ ZLWK D FRQFHQWUDWLRQ LQ FRXQVHOLQJ KH ZDV QRW \HW OLFHQVHG $OWKRXJK WKH 8QLWHG 6WDWHV KDV QRW FHUWDLQXQGHVLUDEOHVLGHHIIHFWVIURPWKHGUXJVKHZDVWDNLQJ DUJXHG WKDW LW LV UHOHYDQW , QRWH WKDW sDIIHHjV KROGLQJ DSSOLHG WR D mOLFHQVHG 'U +DQVHQ GLVFRQWLQXHG +D\HVjV SUHVFULSWLRQV  6RRQ VRFLDO ZRUNHUl HPSKDVLV DGGHG 6HH  86 DW   8QLWHG6WDWHVY+D\HV 1R 1R 8QLWHG6WDWHVY+D\HV  WKHUHDIWHU DSSDUHQWO\ GXH WR WKH WHUPLQDWLRQ RI KLV ,W LV VXIILFLHQW WR VD\ KHUH WKDW QRQH RI +D\HVjV SUHVFULSWLRQVWKHGHDWKRIKLVXQFOHDQGVOHHS GHSULYDWLRQ SV\FKRWKHUDSLVWVXWWHUHGWKHmPDJLFZRUGVl SULRUWRXQGHUJRLQJDQ((*RQ0DUFK+D\HVEHJDQWR H[SHULHQFH LQFUHDVHG DQ[LHW\ DQG VRPH XQUDYHOLQJ RI KLV )LQDOO\WKHGLVVHQWDUJXHVWKDWRXURSLQLRQLVVKDSHGE\WKH SUHYLRXVVHOIUHVWUDLQW YLHZWKDW+D\HVjVEHKDYLRULVQRWRUVKRXOGQRWEHFRQVLGHUHG FULPLQDO7REHFOHDUZHQHHGQRWDQGGRQRWH[SUHVVDQ\ 2QWKHHYHQLQJRI0DUFK+D\HVDWWHQGHGDVHVVLRQZLWK RSLQLRQ DV WR ZKHWKHU +D\HVjV VWDWHPHQWV WR KLV 9DQ '\NH DW WKH 9HWHUDQV &HQWHU  $W WKDW WLPH +D\HV SV\FKRWKHUDSLVWVDUHFRYHUHGE\86&†:HPHUHO\ RXWOLQHGLQJUHDWGHWDLOKLVSODQWRNLOO2GOHGHVFULELQJWKH KROG WKDW +D\HVjV SV\FKRWKHUDSLVWV FDQQRW WHVWLI\ LQ KLV OD\RXWRI2GOHj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jVSV\FKRWKHUDSLVWVDQG +D\HVjVVWDWHPHQWVDQGWKHVXSHUYLVRUDGYLVHGFRQWDFWLQJWKH GLVPLVVLQJWKHLQGLFWPHQWDJDLQVW+D\HVDUH$)),50(' 9HWHUDQV&HQWHUjVOHJDOFRXQVHOIRUDGYLFHRQKRZWRKDQGOH WKLVSRWHQWLDOO\GDQJHURXVVLWXDWLRQ&RXQVHOIRUWKH9HWHUDQV &HQWHULQIRUPHG9DQ'\NHWKDWKHKDGDOHJDOREOLJDWLRQWR ZDUQ2GOHRIWKHWKUHDWWKDW+D\HVSRVHGDQGDVKRUWWLPH ODWHU9DQ'\NHGLGVR 8SRQUHFHLSWRI9DQ'\NHjVZDUQLQJ2GOHXQGHUVWDQGDEO\ EHFDPH IULJKWHQHG DQG LPPHGLDWHO\ FRQWDFWHG 3RVWDO ,QVSHFWRU 7HUUDQFH 9OXJ ZKR UHTXHVWHG DOO RI +D\HVjV PHGLFDO UHFRUGV IURP 9DQ '\NH  9DQ '\NH SURYLGHG WKH UHFRUGV ZKLFK GLVFORVHG +D\HVjV UHSHDWHG KRPLFLGDO VWDWHPHQWV9OXJWKHQILOHGDFULPLQDOFRPSODLQWRQ$SULO FKDUJLQJ+D\HVZLWKWKUHDWHQLQJWRPXUGHUDIHGHUDO RIILFLDOLQYLRODWLRQRI86&† $JUDQGMXU\LVVXHGDWKUHHFRXQWLQGLFWPHQWDJDLQVW+D\HV FKDUJLQJWKDWRQWKUHHRFFDVLRQV+D\HVjVPXUGHURXVUHPDUNV WRSV\FKRWKHUDSLVWVFRQVWLWXWHGFULPLQDOZURQJGRLQJXQGHU 86&†DZKLFKSURYLGHVLQSHUWLQHQWSDUW :KRHYHUWKUHDWHQVWRDVVDXOWNLGQDSRUPXUGHUD 8QLWHG 6WDWHV RIILFLDO    ZLWK LQWHQW WR LPSHGH  8QLWHG6WDWHVY+D\HV 1R 1R 8QLWHG6WDWHVY+D\HV  '\NHPD\QRWKDYHEHHQDmOLFHQVHGVRFLDOZRUNHUlGXULQJWKH LQWLPLGDWH RU LQWHUIHUH ZLWK VXFK RIILFLDO    ZKLOH SHULRGKHFRXQVHOHG+D\HV7KHUHLVKRZHYHUQRHYLGHQFH HQJDJHG LQ WKH SHUIRUPDQFH RI RIILFLDO GXWLHV RU ZLWK WKDW +D\HV ZDV DZDUH WKDW 9DQ '\NH ODFNHG SURIHVVLRQDO LQWHQWWRUHWDOLDWHDJDLQVWVXFKRIILFLDORQDFFRXQWRI TXDOLILFDWLRQV,WZRXOGWKHUHIRUHEHJURVVO\XQIDLUWRVWULS WKHSHUIRUPDQFHRIRIILFLDOGXWLHVVKDOOEHSXQLVKHG>@ +D\HV RI WKH SURWHFWLRQV RI D IHGHUDO HYLGHQWLDU\ SULYLOHJH VLPSO\EHFDXVHKLVFRXQVHORUZDVQRWZKDWKHKHOGKLPVHOI 86&†D RXW WR EH  ,I DQ\RQH VKRXOG EH SHQDOL]HG IRU 9DQ '\NHjV GHFLVLRQWRWUHDW+D\HVZLWKRXWDOLFHQVHLWVKRXOGEH9DQ $IWHUDMXGLFLDOGHWHUPLQDWLRQWKDW+D\HVZDVFRPSHWHQWWR '\NH RU VRPH RWKHU PHPEHU RI WKH VWDII DW WKH 9HWHUDQV VWDQG WULDO DQG GLVFXVVLRQ RQ YDULRXV SUHOLPLQDU\ PRWLRQV &HQWHU +D\HV ILOHG D PRWLRQ WR GLVPLVV WKH LQGLFWPHQW DQG WR VXSSUHVV KLV PHGLFDO UHFRUGV DQG DQ\ WHVWLPRQ\ IURP KLV 6HFRQG WKH GLVVHQW GHFODUHV WKDW DOO RI +D\HVjV SV\FKRWKHUDSLVWV DVVHUWLQJ WKH SV\FKRWKHUDSLVWSDWLHQW SV\FKRWKHUDSLVWVSURYLGHGKLPLQVRPDQ\ZRUGVmPRUHWKDQ SULYLOHJH DPSOHQRWLFHlWKDWWKH\ZRXOGWHVWLI\DJDLQVWKLPLQDFULPLQDO SURFHHGLQJLIKHFRQILGHGDQLQWHQWLRQWRKDUPKLPVHOIRUD $PDJLVWUDWHMXGJHUHFRPPHQGHGGLVPLVVLQJWKHILUVWWZR WKLUG SDUW\  5HVSHFWIXOO\ WKLV LV QRW ZKDW RFFXUUHG LQ WKLV FRXQWV RI WKH LQGLFWPHQW EHFDXVH WKRVH DOOHJHG WKUHDWV KDG FDVH:KDWFDQQRWEHIRUJRWWHQLQFDVHVRIWKLVVRUWLVWKDW QHYHU EHHQ GLVFORVHG WR 2GOH E\ GRFWRUV DW 0++  7KH SDWLHQWVVXFKDV+D\HVRIWHQVXIIHUIURPVHULRXVPHQWDODQGRU PDJLVWUDWH MXGJH FRQFOXGHG KRZHYHU WKDW WKH mWKUHDWl HPRWLRQDOGLVRUGHUV&RQVHTXHQWO\LWPXVWEHWKHODZWKDWLQ UHYHDOHGWR2GOHE\9DQ'\NHZDVQRWSULYLOHJHGEHFDXVHWKDW RUGHU WR VHFXUH D YDOLG ZDLYHU RI WKH SURWHFWLRQV RI WKH UHYHODWLRQZDVWKHmRQO\PHDQVlRIDYHUWLQJKDUPWR2GOH SV\FKRWKHUDSLVWSDWLHQW SULYLOHJH IURP D SDWLHQW D 7KXV WKH PDJLVWUDWH MXGJH UHFRPPHQGHG GHQ\LQJ +D\HVjV SV\FKRWKHUDSLVWPXVWSURYLGHWKDWSDWLHQWZLWKDQH[SODQDWLRQ PRWLRQDVLWSHUWDLQHGWRWKHWKLUGFRXQWRIWKHLQGLFWPHQW RIWKHFRQVHTXHQFHVRIWKDWZDLYHUVXLWHGWRWKHXQLTXHQHHGV RI WKDW SDWLHQW  $V GLVFXVVHG DW OHQJWK DOUHDG\ QRQH RI 7KHGLVWULFWFRXUWDFFHSWHGWKLVUHFRPPHQGDWLRQDQGJRLQJ +D\HVjVSV\FKRWKHUDSLVWVGLGDQ\WKLQJRIWKHVRUW HYHQIXUWKHURUGHUHGVXSSUHVVLRQRIDQ\WHVWLPRQ\E\9DQ '\NH&LWLQJ8QLWHG6WDWHVY*ODVV)GWK&LU 0RUH IXQGDPHQWDOO\ WKH GLVVHQWjV DUJXPHQW VHHPV WR  WKH GLVWULFW FRXUW KHOG WKDW D SV\FKRWKHUDSLVW PD\ DVVXPHWKDWWKHGHFLVLRQZKHWKHUWRZDLYHWKHSURWHFWLRQVRI WHVWLI\ DV WR RWKHUZLVH SULYLOHJHG VWDWHPHQWV RI WKUHDWV WKH SV\FKRWKHUDSLVWSDWLHQW SULYLOHJH LV HQWUXVWHG WR WKH DOOHJHGO\PDGHE\DSDWLHQWRQO\ZKHUHVXFKmGLVFORVXUHZDV SV\FKRWKHUDSLVW7KDWDVVXPSWLRQLVLQFRUUHFW5DWKHULWLV WKHRQO\PHDQVRIDYHUWLQJKDUPWRWKH>IHGHUDORIILFLDO@ZKHQ WKH SDWLHQW DORQH ZKR KDV WKH DXWKRULW\ WR ZDLYH WKDW WKHGLVFORVXUHZDVPDGHl,GDW7KHGLVWULFWFRXUWKHOG HYLGHQWLDU\SULYLOHJH6HHsDIIHH86DW Q WKDWDQ\FRPPXQLFDWLRQVPDGHWRSV\FKRWKHUDSLVWVDW0++ UHPDLQHG SULYLOHJHG EHFDXVH WKRVH GRFWRUV KDG QHYHU 7KH GLVVHQW LV TXLWH FRUUHFW WKDW ZH GR QRW HQGRUVH DQ\ GLVFORVHG WR WKLUG SDUWLHV WKH VXEVWDQFH RI WKHLU WKHUDS\ mPDJLF IRUPXODl IRU VHFXULQJ D YDOLG ZDLYHU RI WKH VHVVLRQVZLWK+D\HV%DVHGRQ9DQ'\NHjVDGPLVVLRQVWKDW SV\FKRWKHUDSLVWSDWLHQWSULYLOHJH,WZRXOGEHIRROLVKWRGR KHFRQVLGHUHGQRRSWLRQRWKHUWKDQGLVFORVXUHWRSURWHFW2GOH VR7KHmPDJLFZRUGVlQHFHVVDU\WRDFTXDLQWDQLQGLYLGXDO DQGLQIDFWGLVFORVHG+D\HVjVVWDWHPHQWVRQO\EHFDXVHRIDQ ZKRPD\KDYHVHULRXVPHQWDORUHPRWLRQDOSUREOHPVZLWKWKH RUGHUIURPDVXSHUYLVRUWKHGLVWULFWFRXUWKHOGWKDW9DQ'\NH SV\FKRWKHUDSLVWSDWLHQW SULYLOHJH DQG WKH FRQVHTXHQFHV RI FRXOGQRWWHVWLI\VLQFHKLVGLVFORVXUHZDVQRWmWKHRQO\PHDQV ZDLYLQJWKDWSULYLOHJHZLOOREYLRXVO\YDU\IURPFDVHWRFDVH RIDYHUWLQJKDUPl$FFRUGLQJO\WKHFRXUWJUDQWHG+D\HVjV PRWLRQ WR H[FOXGH WKH WHVWLPRQ\ RI KLV SV\FKRWKHUDSLVWV  8QLWHG6WDWHVY+D\HV 1R 1R 8QLWHG6WDWHVY+D\HV  ZKRVHLQIRUPDWLRQIRUPHGWKHEDVLVRIWKHLQGLFWPHQW6RRQ HYLGHQWLDU\SULYLOHJH7RVXSSRUWWKLVWKHRU\WKHJRYHUQPHQW WKHUHDIWHU WKH GLVWULFW FRXUW GLVPLVVHG WKH FDVH DQ RUGHU FLWHV8QLWHG6WDWHVY%LVKRS1R:/ ZKLFKWKHJRYHUQPHQWWLPHO\DSSHDOHG WK&LUsXO\DQXQSXEOLVKHGRSLQLRQKROGLQJWKDW WKHSV\FKRWKHUDSLVWSDWLHQWSULYLOHJHFDQEHmZDLYHGlLIWKH ,, SDWLHQW GLVFORVHV WKH VXEVWDQFH RI WKHUDS\ VHVVLRQV WR XQUHODWHGWKLUGSDUWLHV+D\HVUHVSRQGVWKDWJLYHQWKDWKH 7KH)HGHUDO5XOHVRI(YLGHQFHOHDYHWKHHVWDEOLVKPHQWRI ZDVKRVSLWDOL]HGIRUDVHULRXVPHQWDOGLVRUGHUDQGZDVWDNLQJ WHVWLPRQLDOSULYLOHJHVWRWKHIHGHUDOFRXUWV SV\FKRWURSLFPHGLFDWLRQGXULQJWKHSHULRGZKLFKIRUPVWKH EDVLVIRUWKLVFULPLQDOSURVHFXWLRQWKHJRYHUQPHQWKDVQRW ([FHSWDVRWKHUZLVHSURYLGHGE\$FWRI&RQJUHVV SURYHG WKDW KH mYROXQWDULO\ DQG LQWHOOLJHQWO\l ZDLYHG KLV RULQUXOHVSUHVFULEHGE\WKH6XSUHPH&RXUWSXUVXDQWWR ULJKWV VWDWXWRU\ DXWKRULW\ WKH SULYLOHJH RI D ZLWQHVV SHUVRQ JRYHUQPHQW6WDWHRUSROLWLFDOVXEGLYLVLRQWKHUHRIVKDOO :H GHFOLQH WR DFFHSW WKH JRYHUQPHQWjV mFRQVWUXFWLYH EHJRYHUQHGE\WKHSULQFLSOHVRIWKHFRPPRQODZDVWKH\ ZDLYHUl WKHRU\  ,W LV WUXH WKDW DW WKH RXWVHW RI PD\EHLQWHUSUHWHGE\WKHFRXUWVRIWKH8QLWHG6WDWHVLQ SV\FKRWKHUDSLVWSDWLHQW SULYLOHJH D WKHUDSLVW KDV D WKHOLJKWRIUHDVRQDQGH[SHULHQFH SURIHVVLRQDO UHVSRQVLELOLW\ WR GLVFORVH WR D SDWLHQW mWKH UHOHYDQW OLPLWDWLRQV RQ FRQILGHQWLDOLW\l  6HH $PHULFDQ )HG 5 (YLG   $FFRUGLQJO\ ZH UHYLHZ GH QRYR WKH 3V\FKRORJLFDO$VVRFLDWLRQ(WKLFDO3ULQFLSOHVRI3V\FKRORJLVWV GLVWULFW FRXUWjV DQDO\VLV RI WKH FRQWRXUV RI WKH DQG&RGHRI&RQGXFW6WDQGDUG'HF,WLVDOVR SV\FKRWKHUDSLVWSDWLHQWSULYLOHJH6HH,QUH=XQLJD)G WUXHWKDWWKLVFRXUWKDVKHOGRQYDULRXVRFFDVLRQVWKDWDSDWLHQW WK&LU FDQ ZDLYH WKH SURWHFWLRQV RI WKH SV\FKRWKHUDSLVWSDWLHQW SULYLOHJHE\GLVFORVLQJWKHVXEVWDQFHRIWKHUDS\VHVVLRQVWR $ SV\FKRWKHUDSLVWSDWLHQW HYLGHQWLDU\ SULYLOHJH KDV EHHQ XQUHODWHGWKLUGSDUWLHV6HHHJ6QHOHQEHUJHU)G DW ZHOOHVWDEOLVKHGLQWKH6L[WK&LUFXLWIRUVRPHWLPH6HHLGDW %XWWKDWLVQRWWKHFDVHKHUH,WLVRQHWKLQJWRLQIRUP 7KH6XSUHPH&RXUWUHFHQWO\UHFRJQL]HGWKHSULYLOHJHLQ DSDWLHQWRIWKHmGXW\WRSURWHFWlLWLVTXLWHDQRWKHUWRDGYLVH sDIIHHKROGLQJWKDWmFRQILGHQWLDOFRPPXQLFDWLRQVEHWZHHQD DSDWLHQWWKDWKLVmWUXVWHGlFRQILGDQWPD\RQHGD\DVVLVWLQ OLFHQVHG SV\FKRWKHUDSLVW DQG KHU SDWLHQWV LQ WKH FRXUVH RI SURFXULQJKLVFRQYLFWLRQDQGLQFDUFHUDWLRQ1RQHRI+D\HVjV GLDJQRVLV RU WUHDWPHQW DUH SURWHFWHG IURP FRPSHOOHG SV\FKRWKHUDSLVWV HYHU LQIRUPHG KLP RI WKH SRVVLELOLW\ WKDW GLVFORVXUHXQGHU5XOHRIWKH)HGHUDO5XOHVRI(YLGHQFHl WKH\PLJKWWHVWLI\DJDLQVWKLPDQGWKHUHIRUH+D\HVFDQQRWEH sDIIHH Y 5HGPRQG  86     7KH &RXUW VDLGWRKDYHmNQRZLQJO\lRUmYROXQWDULO\lZDLYHGKLVULJKWWR REVHUYHG WKDW UHFRJQL]LQJ DV SULYLOHJHG DVVHUW WKH SV\FKRWKHUDSLVWSDWLHQW SULYLOHJH KHUH  :H SV\FKRWKHUDSLVWSDWLHQWGLVFXVVLRQVLQWKHFRXUVHRIWKHUDS\ FRQFOXGH WKHUHIRUH WKDW WKH JRYHUQPHQWjV FRQVWUXFWLYH ZRXOG OLNHO\ IDFLOLWDWH mDQ DWPRVSKHUH RI FRQILGHQFH DQG ZDLYHUDUJXPHQWLVPHULWOHVV WUXVWl FRQGXFLYH WR PHDQLQJIXO WUHDWPHQW  ,G DW   7KH &RXUW DOVR UHDVRQHG WKDW D IHGHUDO SV\FKRWKHUDSLVWSDWLHQW 9, SULYLOHJHZRXOGmVHUY>H@SXEOLFHQGVlDVm>W@KHPHQWDOKHDOWK RI>WKH$PHULFDQFLWL]HQ@LVDSXEOLFJRRGRIWUDQVFHQGHQW ,QKLVGLVVHQWLQJRSLQLRQsXGJH%RJJVHVVHQWLDOO\SUHVHQWV LPSRUWDQFHl,GDW7KH&RXUWREVHUYHGWKDWDOO6WDWHV WZRSXUSRUWHGIODZVKHSHUFHLYHVLQRXURSLQLRQ)LUVWWKH DQGWKH'LVWULFWRI&ROXPELDKDGmHQDFWHGLQWRODZVRPHIRUP GLVVHQW VXJJHVWV WKDW ZLWK UHJDUG WR 9DQ '\NH WKH RISV\FKRWKHUDSLVWSULYLOHJHl,GDW7KH&RXUWUHMHFWHG SV\FKRWKHUDSLVWSDWLHQWSULYLOHJHPLJKWQRWDSSO\EHFDXVH9DQ D mEDODQFLQJ FRPSRQHQW    >P@DNLQJ WKH SURPLVH RI  8QLWHG6WDWHVY+D\HV 1R 1R 8QLWHG6WDWHVY+D\HV  RIZKLFKDSSUR[LPDWHGZKDWLVSURSRVHGKHUH6HH5XOHVRI FRQILGHQWLDOLW\FRQWLQJHQWXSRQDWULDOMXGJHjVODWHUHYDOXDWLRQ (YLGHQFHIRU8QLWHG6WDWHV&RXUWVDQG0DJLVWUDWHV)5' RIWKHUHODWLYHLPSRUWDQFHRIWKHSDWLHQWjVLQWHUHVWLQSULYDF\ 7RFRQFOXGHmUHDVRQDQGH[SHULHQFHlWHDFK DQGWKHHYLGHQWLDU\QHHGIRUGLVFORVXUHl,GDW7KH&RXUW XVWKDWDmGDQJHURXVSDWLHQWlH[FHSWLRQZKLFKZRXOGDOORZD ZLVHO\GHFOLQHGWRLGHQWLI\DOOVLWXDWLRQVZKHUHWKHSULYLOHJH SV\FKRWKHUDSLVW WR WHVWLI\ DJDLQVW D SDWLHQW LQ FULPLQDO ZRXOG DQG ZRXOG QRW DSSO\ EXW REVHUYHG LQ D IRRWQRWH SURFHHGLQJVVKRXOGQRWEHFRPHSDUWRIWKHIHGHUDOFRPPRQ m>:@H GR QRW GRXEW WKDW WKHUH DUH VLWXDWLRQV LQ ZKLFK WKH ODZ SULYLOHJHPXVWJLYHZD\IRUH[DPSOHLIDVHULRXVWKUHDWRI KDUPWRWKHSDWLHQWRUWRRWKHUVFDQEHDYHUWHGRQO\E\PHDQV :HKROGWKHUHIRUHWKDWWKHIHGHUDOSV\FKRWKHUDSLVWSDWLHQW RIDGLVFORVXUHE\WKHWKHUDSLVWl,GDWQHPSKDVLV SULYLOHJH GRHV QRW LPSHGH D SV\FKRWKHUDSLVWjV FRPSOLDQFH DGGHG ZLWKKLVSURIHVVLRQDODQGHWKLFDOGXW\WRSURWHFWLQQRFHQWWKLUG SDUWLHV D GXW\ ZKLFK PD\ UHTXLUH DPRQJ RWKHU WKLQJV $PRQJWKHFRXUWVRIDSSHDOVRQO\WKH7HQWK&LUFXLWKDV GLVFORVXUH WR WKLUG SDUWLHV RU WHVWLPRQ\ DW DQ LQYROXQWDU\ GHFLGHGZKHWKHUWKHUHH[LVWVDmGDQJHURXVSDWLHQWlH[FHSWLRQ KRVSLWDOL]DWLRQSURFHHGLQJ&RQYHUVHO\FRPSOLDQFHZLWKWKH WRWKHIHGHUDOSV\FKRWKHUDSLVWSDWLHQWSULYLOHJH,Q*ODVVWKH SURIHVVLRQDOGXW\WRSURWHFWGRHVQRWLPSO\DGXW\WRWHVWLI\ GHIHQGDQWWROGKLVSV\FKRWKHUDSLVWWKDWKHLQWHQGHGWRNLOOWKH DJDLQVW D SDWLHQW LQ FULPLQDO SURFHHGLQJV RU LQ FLYLO 3UHVLGHQW6HH*ODVV)GDW$OWKRXJKLQLWLDOO\ SURFHHGLQJV RWKHU WKDQ GLUHFWO\ UHODWHG WR WKH SDWLHQWjV WKH GHIHQGDQWjV WKUHDWV ZHUH QRW WDNHQ VHULRXVO\ DIWHU WKH LQYROXQWDU\KRVSLWDOL]DWLRQDQGVXFKWHVWLPRQ\LVSULYLOHJHG GHIHQGDQWFRXOGQRWEHORFDWHGIRUGD\VDQXUVHUHSRUWHG DQG LQDGPLVVDEOH LI D SDWLHQW SURSHUO\ DVVHUWV WKH WKH WKUHDW WR ORFDO ODZ HQIRUFHPHQW  ,G  (YHQWXDOO\ WKH SV\FKRWKHUDSLVWSDWLHQWSULYLOHJH 6HFUHW 6HUYLFH EHFDPH LQYROYHG DQG WKH GHIHQGDQWjV SV\FKRWKHUDSLVW UHYHDOHG WKH GHIHQGDQWjV WKUHDWHQLQJ )LQDOO\ RXU KROGLQJ WRGD\ DQG WKH 6XSUHPH &RXUWjV VWDWHPHQWV,G$IWHUWKHJRYHUQPHQWFKDUJHGWKHGHIHQGDQW GLVFXVVLRQRIWKHSV\FKRWKHUDSLVWSDWLHQWSULYLOHJHLQsDIIHH XQGHU86&†WKHGHIHQGDQWPRYHGWRH[FOXGHKLV UHTXLUHDUHYLVLWDWLRQRI6QHOHQEHUJHUDFDVHZKLFKSUHFHGHG SV\FKRWKHUDSLVWjVWHVWLPRQ\DVSULYLOHJHG7KHGLVWULFWFRXUW sDIIHH:HFRQFOXGHWKDWWRWKHH[WHQWWKDWWKLVFRXUWKHOG GHQLHGWKHPRWLRQ,G WKDWRQFHWKH0LFKLJDQmGXW\WRSURWHFWlDWWDFKHGWKHIHGHUDO SV\FKRWKHUDSLVWSDWLHQW SULYLOHJH FHDVHG WR DSSO\ LQ DQ\ 2Q DSSHDO WKH 7HQWK &LUFXLW UHYHUVHG DQG KHOG WKDW WKH IXUWKHUFRXUWSURFHHGLQJVsDIIHHUHTXLUHVWKHFRQFOXVLRQWKDW DOOHJHG mH[FHSWLRQl WR WKH sDIIHH SULYLOHJH GHVFULEHG LQ 6QHOHQEHUJHULVQRORQJHUJRRGODZ6HH6QHOHQEHUJHU IRRWQRWHLVDSSOLFDEOHRQO\ZKHUHWKHWKUHDWZDVVHULRXV )GDW ZKHQ PDGH DQG GLVFORVXUH ZDV OLWHUDOO\ WKH RQO\ PHDQV RI DYHUWLQJKDUP6HHLGDW7KHFRXUWFRQFOXGHGWKDW 9 JLYHQ WKDW WKH SV\FKRWKHUDSLVW KDG LQLWLDOO\ UHOHDVHG WKH GHIHQGDQWKLVWKUHDWFRXOGQRWEHFODVVLILHGDVVHULRXV,G 7KHJRYHUQPHQWjVDOWHUQDWLYHDUJXPHQWLVWKDWHYHQLIWKH 0RUHRYHUWKHFRXUWUXOHGWKHJRYHUQPHQWIDLOHGWRVKRZWKDW mGDQJHURXVSDWLHQWlH[FHSWLRQLVQRWDSSOLFDEOHLQWKLVFDVH GLVFORVXUH ZDV WKH RQO\ PHDQV RI SURWHFWLQJ WKH 3UHVLGHQW +D\HVFDQQRWFODLPWKDWKHmUHDVRQDEO\H[SHFWHGlKLVWKUHDWV IURP KDUP DQG WKHUHIRUH WKH SULYLOHJH DSSOLHG WR WKH WRUHPDLQFRQILGHQWLDOEHFDXVHKLVWKHUDSLVWVDGYLVHGKLPRI SV\FKRWKHUDSLVWjVWHVWLPRQ\,G WKHLUmGXWLHVWRSURWHFWl&RQVHTXHQWO\LWLVWKHJRYHUQPHQWjV WKHRU\WKDWZKHQ+D\HVFKRVHWRFRQWLQXHGLVFXVVLRQVZLWK %HIRUHsDIIHHZDVKDQGHGGRZQWKLVFRXUWGHFLGHG8QLWHG WKHWKHUDSLVWVDIWHUUHFHLYLQJVXFKDGYLFHKHFRQVWUXFWLYHO\ 6WDWHVY6QHOHQEHUJHU)GWK&LULQZKLFK ZDLYHG WKH SURWHFWLRQV RI WKH SV\FKRWKHUDSLVWSDWLHQW  8QLWHG6WDWHVY+D\HV 1R 1R 8QLWHG6WDWHVY+D\HV  6QHOHQEHUJHUDWWHPSWLQJWRHVWDEOLVKDQHQWLWOHPHQWWRVRFLDO SURFHHGLQJVVXFKDVWKRVHIRUWKHLQYROXQWDU\FRPPLWPHQWRI VHFXULW\ EHQHILWV LQIRUPHG KLV SV\FKRWKHUDSLVW WKDW KH DSDWLHQWWRFRPSO\ZLWKWKHLUmGXW\WRSURWHFWlWKHSDWLHQWRU LQWHQGHGWRNLOODQDGPLQLVWUDWLYHODZMXGJHZKRKDGUXOHG LGHQWLILDEOHWKLUGSDUWLHV$IWHULQYROXQWDU\KRVSLWDOL]DWLRQ DJDLQVWKLPRQDSUHYLRXVFODLPWREHQHILWV,GDW$IWHU IRU H[DPSOH WKH SDWLHQW ZRXOG QR ORQJHU SRVH D mVHULRXV KHDULQJ WKLV DQG RWKHU VLPLODUO\ GLVWXUELQJ VWDWHPHQWV WKH WKUHDW RI KDUPl WR DQ\RQH DQG KRSHIXOO\ WKH SV\FKRWKHUDSLVWGHFLGHGWKDWLQYROXQWDU\KRVSLWDOL]DWLRQZDV SV\FKRWKHUDSLVWSDWLHQWUHODWLRQVKLSFDQFRQWLQXHGXULQJWKH DSSURSULDWHDQGGLUHFWHG6QHOHQEHUJHUWRWKHKRVSLWDOVWDIIIRU SDWLHQWjVKRVSLWDOL]DWLRQ:KLOHWKDWSDWLHQWE\GHILQLWLRQ WUDQVSRUWDWLRQWRDQLQVWLWXWLRQ,G:KLOHLQWKHFXVWRG\RI ZLOO LQLWLDOO\ UHMHFW WKH SURVSHFW RI KRVSLWDOL]DWLRQ LW PD\ WKHKRVSLWDOVWDII6QHOHQEHUJHUUHSHDWHGVHYHUDOWLPHVKLVSODQ XOWLPDWHO\LPSURYHKLVPHQWDOVWDWHDQGVKRXOGQRWOHDYHD WRNLOOWKH$/s,G(YHQWXDOO\6QHOHQEHUJHUZDVLQGLFWHGRQ VWLJPDDIWHUWKHVWD\FRQFOXGHV,QVXFKDFDVHWKHUHIRUHERWK WKUHHFRXQWVRIWKUHDWHQLQJWRPXUGHUDQ$/sLQYLRODWLRQRI mSXEOLFHQGVlZLOOOLNHO\EHVHUYHG 86&†D%,G2YHU6QHOHQEHUJHUjVREMHFWLRQ WKH SV\FKRWKHUDSLVW WHVWLILHG DJDLQVW KLP DW KLV WULDO  7KLV 2QWKHRWKHUKDQGDSV\FKRWKHUDSLVWjVWHVWLPRQ\XVHGWR FRXUW UXOHG WKDW VXFK WHVWLPRQ\ ZDV SURSHU EHFDXVH WKH SURVHFXWHDQGLQFDUFHUDWHDSDWLHQWZKRFDPHWRKLPRUKHU 0LFKLJDQ OHJLVODWXUH KDG HQDFWHG D VWDWXWH UHTXLULQJ D IRUSURIHVVLRQDOKHOSFDQQRWEHVLPLODUO\MXVWLILHG2QFHLQ SV\FKRWKHUDSLVW WR WDNH VWHSV WR SURWHFW WKRVH mVHULRXVO\ SULVRQHYHQSDUWO\DVDFRQVHTXHQFHRIWKHWHVWLPRQ\RID WKUHDWHQHGl,GDW,QWKHDOWHUQDWLYHWKLVFRXUWUXOHGWKDW WKHUDSLVWWRZKRPWKHSDWLHQWFDPHIRUKHOSWKHSUREDELOLW\RI 6QHOHQEHUJHU KDG ZDLYHG WKH SULYLOHJH E\ GLVFORVLQJ KLV WKHSDWLHQWjVPHQWDOKHDOWKLPSURYLQJGLPLQLVKHVVLJQLILFDQWO\ LQWHQWLRQVWRZDUGWKH$/sWRYDULRXVSDUWLHVDIWHUVSHDNLQJ DQGDVWLJPDFHUWDLQO\DWWDFKHVDIWHUWKHSDWLHQWjVVHQWHQFHLV ZLWKWKHSV\FKRWKHUDSLVW,G VHUYHG  :KLOH DV ZLWK LQYROXQWDU\ KRVSLWDOL]DWLRQ LQFDUFHUDWLRQZRXOGVHUYHWKHmSXEOLFHQGlRIQHXWUDOL]LQJWKH 7KHJRYHUQPHQWDUJXHVWKDWWKHSXUSRUWHGH[FHSWLRQWRWKH WKUHDW SRVHG E\ D SDWLHQW WKH SULFH SDLG LQ DFKLHYLQJ WKDW SV\FKRWKHUDSLVWSDWLHQW SULYLOHJH VHW IRUWK LQ WKH sDIIHH QHXWUDOL]DWLRQPD\RIWHQEHWKDWPDQ\SDWLHQWVZLOOQRWVHHN IRRWQRWH DSSOLHV KHUH DQG WKDW 9DQ '\NHjV WHVWLPRQ\ LV WKH SURIHVVLRQDO KHOS WKH\ QHHG WR UHJDLQ WKHLU PHQWDO DQG DGPLVVLEOH DQ DUJXPHQW ZKLFK UHOLHV KHDYLO\ RQ HPRWLRQDO KHDOWK  7KXV ZH FRQFOXGH WKDW WKH SURSRVHG 6QHOHQEHUJHUDQGLVVWUXFWXUHGDVIROORZV7HQQHVVHHODZ mGDQJHURXV SDWLHQWl H[FHSWLRQ LV XQQHFHVVDU\ WR DOORZ D SODFHGDQDIILUPDWLYHREOLJDWLRQRQ9DQ'\NHWRSURWHFW2GOH SV\FKRWKHUDSLVW WR FRPSO\ ZLWK KLV RU KHU SURIHVVLRQDO DIWHUKHOHDUQHGRIWKHVHULRXVWKUHDW+D\HVSRVHG7HQQ&RGH UHVSRQVLELOLWLHVDQGZRXOGVHULRXVO\GLVVHUYHWKHmSXEOLFHQGl $QQ†D9DQ'\NHFRPSOLHGZLWKWKLVGXW\ RILPSURYLQJWKHPHQWDOKHDOWKRIRXU1DWLRQjVFLWL]HQV DQG  DIWHU 9DQ '\NH PDGH WKLV GLVFORVXUH WKH SV\FKRWKHUDSLVWSDWLHQWSULYLOHJHEHFDPHLQDSSOLFDEOHIRUDOO 7KLUG ZH DUH SHUVXDGHG WKDW DGRSWLRQ RI D mGDQJHURXV IXWXUH FRXUW SURFHHGLQJV  0RUHRYHU WKH JRYHUQPHQW SDWLHQWlH[FHSWLRQDVSDUWRIWKHIHGHUDOFRPPRQODZLVLOO FRQWHQGVRQFH+D\HVjVVWDWHPHQWVWR9DQ'\NHFHDVHGWREH DGYLVHG7KHPDMRULW\RIVWDWHVKDYHQRVXFKH[FHSWLRQDV SULYLOHJHG+D\HVFRXOGQRORQJHUFODLPWKDWVWDWHPHQWVPDGH SDUW RI WKHLU HYLGHQFH MXULVSUXGHQFH &DOLIRUQLD DORQH KDV GXULQJWKHUDS\VHVVLRQVZLWKSV\FKRWKHUDSLVWVRWKHUWKDQ9DQ HQDFWHG D mGDQJHURXV SDWLHQWl H[FHSWLRQ DV SDUW RI LWV '\NHZHUHSULYLOHJHG HYLGHQFHFRGHZKLFKZRXOGDUJXDEO\DSSO\LQDFULPLQDOFDVH :$%j$$QQ&$/(9,'&2'(†:HQRWHWRRWKDW 7KHJRYHUQPHQWDOVRDUJXHVWKDWWKHGLVWULFWFRXUWVKRXOG WKH3URSRVHG5XOHVRI(YLGHQFHRQWKHVXEMHFWRISULYLOHJHV QRW KDYH UHOLHG RQ WKH 7HQWK &LUFXLWjV *ODVV RSLQLRQ VXEPLWWHG E\ WKH 6XSUHPH &RXUW LQ  UHFRJQL]HG D VXJJHVWLQJ WKDW WKHUH DUH WZR VHULRXV GHILFLHQFLHV LQ WKDW SV\FKRWKHUDSLVWSDWLHQWSULYLOHJHZLWKWKUHHH[FHSWLRQVQRQH  8QLWHG6WDWHVY+D\HV 1R 1R 8QLWHG6WDWHVY+D\HV  WKHSXUSRVHRIIHGHUDOHYLGHQFHODZRIZKLFKWKH6XSUHPH FRXUWjVUHDVRQLQJ7KHJRYHUQPHQWPDLQWDLQVILUVWWKDWLW &RXUWVSRNHLQsDIIHH6HHsDIIHH86DW ZDV HUURQHRXV IRU WKH *ODVV FRXUW WR FRQFOXGH WKDW D SV\FKRWKHUDSLVW FRXOG QRW WDNH LQWR DFFRXQW GHYHORSPHQWV )LUVWUHFRJQLWLRQRIDmGDQJHURXVSDWLHQWlH[FHSWLRQVXUHO\ VXEVHTXHQWWRWKHPDNLQJRIDWKUHDWLQGHFLGLQJZKHWKHUWR ZRXOG KDYH D GHOHWHULRXV HIIHFW RQ WKH mDWPRVSKHUH RI GLVFORVH D SDWLHQWjV WKUHDWHQLQJ UHPDUNV DQG VHFRQG WKDW FRQILGHQFH DQG WUXVWl LQ WKH SV\FKRWKHUDSLVWSDWLHQW OLPLWLQJWKHmGDQJHURXVSDWLHQWlH[FHSWLRQWRVLWXDWLRQVZKHUH UHODWLRQVKLS  :KLOH HDUO\ DGYLFH WR WKH SDWLHQW WKDW LQ WKH GLVFORVXUH LV WKH mRQO\l PHDQV RI DYHUWLQJ KDUP VHWV DQ HYHQW RI WKH GLVFORVXUH RI D VHULRXV WKUHDW RI KDUP WR DQ LPSRVVLEO\KLJKVWDQGDUG LGHQWLILDEOHYLFWLPWKHWKHUDSLVWZLOOKDYHDGXW\WRSURWHFWWKH LQWHQGHGYLFWLPPD\KDYHDPDUJLQDOHIIHFWRQDSDWLHQWjV +D\HV UHVSRQGV WKDW WKH 7HQWK &LUFXLWjV YHUVLRQ RI WKH FDQGRU LQ WKHUDS\ VHVVLRQV DQ DGGLWLRQDO ZDUQLQJ WKDW WKH mGDQJHURXVSDWLHQWlH[FHSWLRQLVVRXQGDQGVKRXOGEHDGRSWHG SDWLHQWjVVWDWHPHQWVPD\EHXVHGDJDLQVWKLPLQDVXEVHTXHQW E\WKLVFRXUW,WLV+D\HVjVSRVLWLRQWKDW9DQ'\NHIDLOHGWR FULPLQDO SURVHFXWLRQ ZRXOG FHUWDLQO\ FKLOO DQG YHU\ OLNHO\ FRQVLGHU IHDVLEOH DOWHUQDWLYHV VKRUW RI GLVFORVXUH WR SURWHFW WHUPLQDWHRSHQGLDORJXH6HHHJ*UHJRU\%/HRQJHWDO 2GOHDQGKHQFHGLGQRWDFWDVDUHDVRQDEOHPHQWDOKHDOWK 7KH 3V\FKRWKHUDSLVW DV :LWQHVV IRU WKH 3URVHFXWLRQ 7KH SURIHVVLRQDO$FFRUGLQJWR+D\HVWKH7HQQHVVHHVWDWXWRU\ &ULPLQDOL]DWLRQRI7DUDVRII$0s36 HV@>D@SXEOLFHQGlEXW JUDIW D mGDQJHURXV SDWLHQWl H[FHSWLRQ IRU FULPLQDO LW LV DQ HQG WKDW GRHV QRW MXVWLI\ WKH PHDQV  7KH sDIIHH SURFHHGLQJVRQWRWKHIHGHUDOSV\FKRWKHUDSLVWSDWLHQWSULYLOHJH IRRWQRWHUHFRJQL]HVWKDWLQFDVHVVXFKDVWKLVWKHUHDUHDWOHDVW ZH ZLOO ILUVW FODULI\ D PLVSHUFHSWLRQ KHOG E\ +D\HV WKH WZR LQWHUHVWV DW VWDNH WKH LPSURYHPHQW RI RXU FLWL]HQVj JRYHUQPHQWDQGWRVRPHH[WHQWWKH7HQWK&LUFXLWWKDWWKH PHQWDO KHDOWK DFKLHYHG LQ SDUW E\ RSHQ GLDORJXH LQ VWDQGDUGRIFDUHH[HUFLVHGE\DWUHDWLQJSV\FKRWKHUDSLVWSULRU SV\FKRWKHUDS\ RQ WKH RQH KDQG DQG WKH SURWHFWLRQ RI WRFRPSO\LQJZLWKRUIRUWKDWPDWWHUIDLOLQJWRFRPSO\ZLWK LQQRFHQWWKLUGSDUWLHVRQWKHRWKHU%RWKDUHmSXEOLFHQGVl DVWDWHjVmGXW\WRSURWHFWlUHTXLUHPHQWLVVRPHKRZSHUWLQHQW ZKLFKWKHIHGHUDOFRPPRQODZVKRXOGIRVWHU:HEHOLHYH WRWKHDSSOLFDELOLW\RIWKHSV\FKRWKHUDSLVWSDWLHQWSULYLOHJHLQ WKHUHIRUHWKDWWKHsDIIHHIRRWQRWHLVQRPRUHWKDQDQDVLGHE\ FULPLQDO SURFHHGLQJV  :H WKLQN WKHUH LV OLWWOH FRUUHODWLRQ sXVWLFH 6WHYHQV WR WKH HIIHFW WKDW WKH IHGHUDO EHWZHHQWKRVHWZRLQTXLULHV SV\FKRWKHUDSLVWSDWLHQWSULYLOHJHZLOOQRWRSHUDWHWRLPSHGH DSV\FKRWKHUDSLVWjVFRPSOLDQFHZLWKWKHSURIHVVLRQDOGXW\WR 7KH mGXW\ WR SURWHFWl QRZ LPSRVHG RQ SV\FKRWKHUDSLVWV SURWHFWLGHQWLILDEOHWKLUGSDUWLHVIURPVHULRXVWKUHDWVRIKDUP WKURXJKRXWWKHFRXQWU\EHJDQZLWK7DUDVRIIY5HJHQWVRIWKH :H WKLQN WKH sDIIHH IRRWQRWH ZDV UHIHUULQJ WR WKH IDFW WKDW 8QLYHUVLW\RI&DOLIRUQLD3G&DO,QWKDW SV\FKRWKHUDSLVWV ZLOO VRPHWLPHV QHHG WR WHVWLI\ LQ FRXUW FDVHWKH&DOLIRUQLD6XSUHPH&RXUWKHOGWKDWmRQFHDWKHUDSLVW GRHV LQ IDFW GHWHUPLQH RU XQGHU DSSOLFDEOH SURIHVVLRQDO  8QLWHG6WDWHVY+D\HV 1R 1R 8QLWHG6WDWHVY+D\HV  VWDQGDUGVUHDVRQDEO\VKRXOGKDYHGHWHUPLQHGWKDWDSDWLHQW XSRQVWDWHGHWHUPLQDWLRQVRIZKDWFRQVWLWXWHVmUHDVRQDEOHl SRVHVDVHULRXVGDQJHURIYLROHQFHWRRWKHUVKHEHDUVDGXW\ SURIHVVLRQDOFRQGXFW7KXVZHUHMHFWWKHSXUSRUWHGUHOHYDQFH WRH[HUFLVHUHDVRQDEOHFDUHWRSURWHFWWKHIRUHVHHDEOHYLFWLP RI WKH GHJUHH RI FDUH H[HUFLVHG E\ 9DQ '\NH RU WKH RIWKDWGDQJHUl,GDW7KHREYLRXVUDWLRQDOHEHKLQGWKLV SV\FKRWKHUDSLVWV DW 0++ RQ WKH LVVXH RI +D\HVjV ULJKW WR UXOHLVWKDWWKHSUHVHUYDWLRQDQGSURWHFWLRQRIWKHKHDOWKDQG DVVHUWWKHSV\FKRWKHUDSLVWSDWLHQWSULYLOHJH*LYHQWKDWWKH VDIHW\RILQQRFHQWWKLUGSDUWLHVRXWZHLJKVWKHJRRGDFKLHYHG mGDQJHURXVSDWLHQWlH[FHSWLRQFUDIWHGE\WKH7HQWK&LUFXLWLQ E\ PDLQWDLQLQJ WKH FRQILGHQWLDOLW\ RI OLIHWKUHDWHQLQJ *ODVV LV OLQNHG WR WKH VWDQGDUG RI FDUH H[HUFLVHG E\ WKH FRPPXQLFDWLRQV$IWHUWKDWGHFLVLRQ7HQQHVVHHOLNHPRVW SV\FKRWKHUDSLVWZHUHVSHFWIXOO\GHFOLQHWRIROORZWKDWFRXUWjV RWKHUVWDWHVFRGLILHGWKHSV\FKRWKHUDSLVWjVmGXW\WRSURWHFWl WUHDWPHQWRIWKHSULYLOHJH WKLUGSDUWLHVIURPVHULRXVWKUHDWV6HHHJ7HQQ&RGH$QQ † ,9 :HVHHRQO\DPDUJLQDOFRQQHFWLRQLIDQ\DWDOOEHWZHHQD $W WKH WKUHVKROG ZH QRWH WKH SDUDGR[LFDO QDWXUH RI WKLV SV\FKRWKHUDSLVWjVDFWLRQLQQRWLI\LQJDWKLUGSDUW\IRUKLVRZQ FDVH  2Q WKH RQH KDQG  +D\HV VKRXOG EH DSSODXGHG IRU VDIHW\RIDSDWLHQWjVWKUHDWWRNLOORULQMXUHKLPDQGDFRXUWjV VHHNLQJ SURIHVVLRQDO KHOS IRU WKH PHQWDO DQG HPRWLRQDO UHIXVDOWRSHUPLWWKHWKHUDSLVWWRWHVWLI\DERXWVXFKWKUHDWLQ GLIILFXOWLHV KH ZDV VXIIHULQJ  :@HGRQRWGRXEW WKDWWKHUHDUHVLWXDWLRQVLQZKLFKWKHSULYLOHJHPXVWJLYHZD\ 0RUHRYHUZHWKLQNWKDWFRQGLWLRQLQJWKHDSSOLFDELOLW\RI IRUH[DPSOHLIDVHULRXVWKUHDWRIKDUPWRWKHSDWLHQWRUWR WKHSURSRVHGmGDQJHURXVSDWLHQWlH[FHSWLRQRQWKHVWDQGDUG RWKHUVFDQEHDYHUWHGRQO\E\PHDQVRIDGLVFORVXUHE\WKH RIFDUHH[HUFLVHGE\DWUHDWLQJSV\FKRWKHUDSLVWLVXQVRXQGLQ WKHUDSLVWlsDIIHH86DWQ2XUWDVNLVWRGHFLGH WKHRU\ DQG LQ SUDFWLFH  :HUH ZH WR DGRSW WKH DQDO\WLFDO ZKHWKHU WKLV GLFWXP HVWDEOLVKHV D SUHFHGHQWLDOO\ ELQGLQJ PHWKRGRORJ\SURSRVHGE\+D\HVDQGWKHJRYHUQPHQWIXWXUH mGDQJHURXV SDWLHQWl H[FHSWLRQ WR WKH IHGHUDO FDVHV RI WKLV VRUW ZLOO GHYROYH LQWR D EDWWOH RI H[SHUWV SV\FKRWKHUDSLVWSDWLHQW WHVWLPRQLDO SULYLOHJH DSSOLFDEOH LQ WHVWLI\LQJ ZKHWKHU D SV\FKRWKHUDSLVW EHKDYHG mUHDVRQDEO\l FULPLQDOSURFHHGLQJVXQGHU)HG5(YLG EHIRUHGLVFORVLQJZKDWZDVEHOLHYHGWREHDVHULRXVWKUHDW 6XFKDQLQTXLU\ZRXOGDWDPLQLPXPEHKLJKO\VSHFXODWLYH 3DVVLQJIRUWKHPRPHQWWKHTXHVWLRQZKHWKHUWKH6XSUHPH DQGYHU\OLNHO\OHDGWRHUUDWLFUHVXOWV0RUHIXQGDPHQWDOO\ &RXUW DGRSWHG D mGDQJHURXV SDWLHQWl H[FHSWLRQ WR WKH ZHWKLQNLWZRXOGEHUDWKHUSHUYHUVHDQGXQMXVWWRFRQGLWLRQ SV\FKRWKHUDSLVWSDWLHQWSULYLOHJHLQDIRRWQRWHZHEHJLQE\ WKHIUHHGRPRILQGLYLGXDOVRQWKHFRPSHWHQF\RIDWUHDWLQJ H[DPLQLQJWKHHIIHFWVXFKDQH[FHSWLRQZRXOGKDYHRQWKH SV\FKRWKHUDSLVW  0RUHRYHU LW FDQQRW EH WKH FDVH WKDW WKH mFRQILGHQFH DQG WUXVWl WKDW LV LPSOLFLW LQ WKH FRQILGHQWLDO VFRSHRIDIHGHUDOWHVWLPRQLDOSULYLOHJHVKRXOGYDU\GHSHQGLQJ UHODWLRQVKLSEHWZHHQWKHUDSLVWDQGSDWLHQWDQGSDUWLFXODUO\ ZKHWKHUVXFKDQH[FHSWLRQZRXOGmVHUY>H@SXEOLFHQGVlDQG