5(&200(1'(' )25 )8//7(;7 38%/,&$7,21  9LQFHQWY6HDEROG 1R 3XUVXDQW WR 6L[WK &LUFXLW 5XOH  (/(&7521,& &,7$7,21  )(' $SS 3 WK &LU JURXQGVZHQHHGQRWDGGUHVVKLVUHPDLQLQJDUJXPHQWVLQDQ\ )LOH 1DPH DS JUHDWGHWDLO :LWKUHJDUGWRKLVPRWLRQIRUVHYHUDQFH9LQFHQWIDLOHGWR 81,7('67$7(6&28572)$33($/6 GHPRQVWUDWHWRWKHWULDOFRXUWmDVWURQJVKRZLQJRIIDFWXDOO\ VSHFLILF DQG FRPSHOOLQJ SUHMXGLFH WKDW >ZRXOG@ PLVOHDG RU )257+(6,;7+&,5&8,7 FRQIXVHWKHMXU\l8QLWHG6WDWHVY&REOHLJK)G BBBBBBBBBBBBBBBBB  WK &LU  TXRWLQJ 8QLWHG 6WDWHV Y 9LQVRQ  )G   WK &LU  LQWHUQDO TXRWDWLRQ PDUNV RPLWWHG:LWKUHJDUGWR9LQFHQWjVFODLPWKDWKHZDVGHQLHG '($1 9,1&(17 ; DVSHHG\WULDOXQGHUWKH6L[WK$PHQGPHQWQRQHRIWKHGHOD\ 3HWLWLRQHU$SSHOODQW  ZDVFDXVHGE\WKHJRYHUQPHQWWKHUHZDVQRVKRZLQJRIEDG  IDLWK RU DWWHPSWV E\ WKH JRYHUQPHQW WR VHHN D WDFWLFDO  1R DGYDQWDJHDQG9LQFHQWZKROO\IDLOHGWRLGHQWLI\DQ\VSHFLILF Y  ZD\LQZKLFKKLVGHIHQVHZDVSUHMXGLFHGDVDUHVXOWRIWKH !  GHOD\  6HH %DUNHU Y :LQJR  86   :,//,$0 6($%2/':DUGHQ  $FFRUGLQJO\WKHVHDVVLJQPHQWVRIHUURUDUHZLWKRXWPHULW 5HVSRQGHQW$SSHOOHH 1 &21&/86,21 $SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW )RUWKHUHDVRQVVHWIRUWKLQ3DUWV,,$DQG,,%DERYHZH IRUWKH:HVWHUQ'LVWULFWRI.HQWXFN\DW%RZOLQJ*UHHQ 5(9(56(WKHGLVWULFWFRXUWjVGHQLDORI9LQFHQWjVSHWLWLRQIRU 1RnsRVHSK+0F.LQOH\sU'LVWULFWsXGJH ZULWRIKDEHDVFRUSXVDQG5(0$1'WRWKHGLVWULFWFRXUWZLWK LQVWUXFWLRQV WR JUDQW WKH SHWLWLRQ IRU KDEHDV FRUSXV XQOHVV $UJXHG$XJXVW ZLWKLQDUHDVRQDEOHWLPHWKH&RPPRQZHDOWKHOHFWVWRDIIRUG 9LQFHQWDQHZWULDO 'HFLGHGDQG)LOHG6HSWHPEHU %HIRUH.(,7+&2/(DQG*,/0$1&LUFXLWsXGJHV BBBBBBBBBBBBBBBBB &2816(/ $5*8('  2OHK 5 7XVWDQLZVN\ '(3$570(17 2) 38%/,&$'92&$& D@VXEVWDQWLDODQGLQMXULRXVHIIHFWRULQIOXHQFH .LQVHU Y &RPPRQZHDOWK  6:G  .\  LQGHWHUPLQLQJWKHMXU\jVYHUGLFWl%UHFKW86DW 9LQFHQWDQGsRKQVRQILOHGSHWLWLRQVIRUZULWVRIKDEHDVFRUSXV :HILQGWKDWWKHLQWURGXFWLRQRI.LQVHUjVVWDWHPHQWVWKURXJK SXUVXDQWWR86&†7KHGLVWULFWFRXUWGHQLHGHDFK *DGGLHjV WHVWLPRQ\ WRJHWKHU ZLWK sRKQVRQjV VWDWHPHQW SHWLWLRQEXWWKLV&RXUWUHYHUVHGFRQFOXGLQJWKDW9LQFHQWDQG WKURXJK 6KHSKDUGjV WHVWLPRQ\ UHQGHUHG WKH JRYHUQPHQWjV sRKQVRQZHUHHQWLWOHGWRKDEHDVUHOLHIRQWKHJURXQGWKDWWKHLU FDVH DJDLQVW 9LQFHQW VLJQLILFDQWO\ PRUH SHUVXDVLYH  :H 6L[WK$PHQGPHQWULJKWVWRFRQIURQWDWLRQKDGEHHQYLRODWHG WKHUHIRUHFRQGLWLRQDOO\*5$179LQFHQWjVSHWLWLRQIRUZULWRI 6HH 9LQFHQW Y 3DUNH  )G   WK &LU  KDEHDV FRUSXV VXEMHFW WR WKH &RPPRQZHDOWK UHWU\LQJ KLP sRKQVRQY3DUNV)G:/WK&LU)HE ZLWKLQDUHDVRQDEOHSHULRGRIWLPH :HUHPDQGHGWKHFDVHIRUUHWULDODQGRQ)HEUXDU\   D MXU\ IRXQG 9LQFHQW DQG sRKQVRQ JXLOW\ RI ILUVW ,,,6HYHUDQFHDQG6SHHG\7ULDO GHJUHH UREEHU\ ILUVW GHJUHH EXUJODU\ DQG ZDQWRQ PXUGHU 9LQFHQWZDVVHQWHQFHGWRILIWHHQ\HDUVjLPSULVRQPHQWRQERWK 9LQFHQWDOVRDUJXHVRQDSSHDOWKDWWKHWULDOFRXUWLPSURSHUO\ WKHUREEHU\DQGEXUJODU\FRQYLFWLRQVDQGOLIHLPSULVRQPHQW GHQLHG KLV PRWLRQ WR VHYHU KLV UHWULDO IURP WKDW RI FR RQ WKH PXUGHU FRQYLFWLRQ WKH VHQWHQFHV ZHUH WR UXQ GHIHQGDQWsRKQVRQjVDQGWKDWKLV6L[WK$PHQGPHQWULJKWWR FRQVHFXWLYHO\  7KH .HQWXFN\ 6XSUHPH &RXUW DIILUPHG DVSHHG\WULDOZDVYLRODWHGLQWKDW.PRQWKVHODSVHGIURP 9LQFHQWjV FRQYLFWLRQV EXW UHPDQGHG WKH FDVH WR WKH %XWOHU WKHWLPHWKLV&RXUWRUGHUHGWKDW9LQFHQWEHUHWULHGZLWKLQD &LUFXLW&RXUWIRUUHVHQWHQFLQJEHFDXVH.HQWXFN\ODZUHTXLUHV UHDVRQDEOHWLPHLQ9LQFHQWY3DUNH)GWK&LU WKDWWKHILIWHHQ\HDUVHQWHQFHVZHUHWRUXQFRQFXUUHQWO\ZLWK XQWLOWKHVWDUWRI9LQFHQWjVUHWULDO1HLWKHURIWKHVH WKHOLIHVHQWHQFH2Q$SULO9LQFHQWILOHGDVHFRQG DVVLJQPHQWV RI HUURU KDV DQ\ PHULW DQG EHFDXVH ZH KDYH SHWLWLRQIRUZULWRIKDEHDVFRUSXVDVVHUWLQJLQWHUDOLDWKDW JUDQWHG9LQFHQWjVKDEHDVSHWLWLRQRQ&RQIURQWDWLRQ&ODXVH YDULRXVWHVWLPRQ\YLRODWHGKLV6L[WK$PHQGPHQWULJKWVXQGHU  9LQFHQWY6HDEROG 1R 1R 9LQFHQWY6HDEROG  WZR\HDUVDIWHUWKHGDWHRIWKHFULPHVKHKDGDFRQYHUVDWLRQ WKH &RQIURQWDWLRQ &ODXVH  8SRQ UHFRPPHQGDWLRQ RI WKH ZLWK5RQQLHsRKQVRQ6KHSKDUGWHVWLILHGm:HOOKHZDVP\ PDJLVWUDWHMXGJHWKHGLVWULFWFRXUWGHQLHG9LQFHQWjVKDEHDV VLVWHUjVER\IULHQGVR,DVNHGKLPGLGKHNLOO+DUROG+D\HV SHWLWLRQ7KLVDSSHDOIROORZV DQGKHVDLGQR,GLGQjWNLOOKLP/HUR\>.LQVHU@DQG'HDQ >9LQFHQW@GLGl )RU WKH UHDVRQV WKDW IROORZ ZH 5(9(56( WKH GLVWULFW FRXUWjV MXGJPHQW DQG 5(0$1' WR WKH GLVWULFW FRXUW ZLWK )ROORZLQJWKLVVWDWHPHQWWKHWULDOFRXUWKHOG DQRWKHULQ LQVWUXFWLRQV WR JUDQW WKH SHWLWLRQ IRU KDEHDV FRUSXV XQOHVV FKDPEHUV FRQIHUHQFH DOORZLQJ GHIHQVH FRXQVHO WR SXW LWV ZLWKLQDUHDVRQDEOHWLPHWKH&RPPRQZHDOWKHOHFWVWRDIIRUG REMHFWLRQVRQUHFRUGDQGPRYHIRUDPLVWULDORQWKHJURXQG 9LQFHQWDQHZWULDO WKDWWKHWHVWLPRQ\YLRODWHG%UXWRQY8QLWHG6WDWHV86 ZKLFKKHOG ',6&866,21 $ GHIHQGDQW PD\ EH SUHMXGLFHG E\ WKH DGPLVVLRQ LQ ,6WDQGDUGRI5HYLHZ HYLGHQFH DJDLQVW D FRGHIHQGDQW RI D VWDWHPHQW RU FRQIHVVLRQPDGHE\WKDWFRGHIHQGDQW7KLVSUHMXGLFH :HUHYLHZDGLVWULFWFRXUWjVOHJDOFRQFOXVLRQVLQDKDEHDV FDQQRW EH GLVSHOOHG E\ FURVVH[DPLQDWLRQ LI WKH SURFHHGLQJGHQRYRDQGLWVIDFWXDOILQGLQJVIRUFOHDUHUURU FRGHIHQGDQW GRHV QRW WDNH WKH VWDQG  /LPLWLQJ 6HH /XFDV Y 2j'HD  )G   WK &LU  LQVWUXFWLRQV WR WKH MXU\ PD\ QRW LQ IDFW HUDVH WKH %HFDXVH9LQFHQWILOHGKLVKDEHDVSHWLWLRQRQ$SULO SUHMXGLFH UHYLHZ RI WKH VWDWH FRXUWjV GHFLVLRQ LV JRYHUQHG E\ WKH VWDQGDUGVVHWIRUWKLQWKH$QWLWHUURULVPDQG(IIHFWLYH'HDWK ,GDWLQWHUQDOTXRWDWLRQPDUNVDQGFLWDWLRQRPLWWHG 3HQDOW\$FWRIm$('3$l6HH/LQGKY0XUSK\ 7KH WULDO FRXUW RYHUUXOHG WKH PRWLRQ DQG JDYH WKH MXU\ D 86+DUSVWHUY2KLR)G OLPLWLQJ LQVWUXFWLRQ ILQGLQJ WKDW WKH HUURU ZDV QRW RI D WK&LU$VDPHQGHG86&†GSURYLGHV VXIILFLHQWPDJQLWXGHVXFKWKDWLWKDGDOLNHOLKRRGRIDIIHFWLQJ WKHRXWFRPHRIWKHWULDO7KHWULDOFRXUWLQVWUXFWHG G$QDSSOLFDWLRQIRUDZULWRIKDEHDVFRUSXVRQEHKDOI RIDSHUVRQLQFXVWRG\SXUVXDQWWRWKHMXGJPHQWRID6WDWH :LWKUHJDUGVWRWKHWHVWLPRQ\WKDWWKH\RXQJODG\JDYH FRXUWVKDOOQRWEHJUDQWHGZLWKUHVSHFWWRDQ\FODLPWKDW MXVW SULRU WR OXQFK WKDW WHVWLPRQ\ ZDV FRQWUDU\ WR WKH ZDVDGMXGLFDWHGRQWKHPHULWVLQ6WDWHFRXUWXQOHVVWKH 5XOHVRI(YLGHQFH$KWKHTXHVWLRQZDVSURSHUEXWWKH DGMXGLFDWLRQRIWKHFODLP DQVZHU ZDV JLYHQ EHIRUH WKH &RXUW FRXOG VWRS KHU RU DQ\RQHHOVHFRXOGVWRSKHULVLQFOHDUYLRODWLRQRIRXU  UHVXOWHG LQ D GHFLVLRQ WKDW ZDV FRQWUDU\ WR RU LQYROYHG DQ XQUHDVRQDEOH DSSOLFDWLRQ RI FOHDUO\ HVWDEOLVKHG )HGHUDO ODZ DV GHWHUPLQHG E\ WKH  6XSUHPH&RXUWRIWKH8QLWHG6WDWHVRU sRKQVRQ GLG QRW WHVWLI\ DW WKH UHWULDO WKRXJK 9LQFHQW GLG ,QFLGHQWDOO\ LW ZDV D %UXWRQ YLRODWLRQ GXULQJ WKH ILUVW WULDO WKDW UHVXOWHG LQ WKH JUDQW RI 9LQFHQWjV KDEHDV SHWLWLRQ DQG UHWULDO ZKLFK LV WKH VXEMHFW RI WKH SUHVHQW  UHVXOWHG LQ D GHFLVLRQ WKDW ZDV EDVHG XSRQ DQ KDEHDV DFWLRQ 6HH 9LQFHQW Y 3DUNH  )G  WK &LU  ,Q WKH XQUHDVRQDEOHGHWHUPLQDWLRQRIWKHIDFWVLQOLJKWRI ILUVW WULDO 'HWHFWLYH *DGGLH WHVWLILHG WKDW .LQVHUjV VLVWHU (YD 0DH .LQVHU WKHHYLGHQFHSUHVHQWHGLQWKH6WDWHFRXUWSURFHHGLQJ WROG *DGGLH WKDW .LQVHU WROG KHU WKDW 9LQFHQW FRPPLWWHG WKH PXUGHU 7KLV &RXUW KHOG WKDW *DGGLHjV WHVWLPRQ\ KHDUVD\ ZLWKLQ KHDUVD\ YLRODWHG WKH 86&†G,Q:LOOLDPVY7D\ORU6&W 9LQFHQWjV 6L[WK $PHQGPHQW FRQIURQWDWLRQ ULJKWV DQG ZDUUDQWHG D QHZ  WKH 6XSUHPH &RXUW UHFHQWO\ H[SODLQHG WKDW DQ WULDO 6HH LG DW   9LQFHQWY6HDEROG 1R 1R 9LQFHQWY6HDEROG  mXQUHDVRQDEOHDSSOLFDWLRQlRIFOHDUO\HVWDEOLVKHGIHGHUDOODZ LQGLVWLQJXLVKDEOH IURP WKRVH LQ :LOOLDPVRQ UHDFKHG D HVWDEOLVKHGE\6XSUHPH&RXUWSUHFHGHQWRFFXUVLImWKHVWDWH FRQFOXVLRQRSSRVLWHWRWKDWUHDFKHGE\:LOOLDPVRQZHWKLQN FRXUW LGHQWLILHV WKH FRUUHFW JRYHUQLQJ OHJDO UXOH IURP >WKH LWDOVRZDVDQmXQUHDVRQDEOHDSSOLFDWLRQlRIWKHJRYHUQLQJ 6XSUHPH &RXUWjV@ FDVHV EXW XQUHDVRQDEO\ DSSOLHV LW WR WKH OHJDO VWDQGDUG HVWDEOLVKHG LQ :LOOLDPVRQ  6HH  86& IDFWVRIWKHSDUWLFXODUVWDWHSULVRQHUjVFDVHl6HHLGDW †GVHHDOVR:LOOLDPV6&WDWH[SODLQLQJ $VWDWHFRXUWGHFLVLRQFDQEHmFRQWUDU\WRlFOHDUO\HVWDEOLVKHG WKDWmFRQWUDU\WRlDQGmXQUHDVRQDEOHDSSOLFDWLRQlGRLQIDFW IHGHUDOODZLIWKHVWDWHFRXUWDUULYHVDWDFRQFOXVLRQRSSRVLWH KDYHLQGHSHQGHQWPHDQLQJV 'HVSLWHWKHIDFWWKDWWKH WRWKDWUHDFKHGE\WKH6XSUHPH&RXUWRQDTXHVWLRQRIODZRU DGPLVVLRQRI*DGGLHjVWHVWLPRQ\FOHDUO\YLRODWHG9LQFHQWjV FRQIURQWVIDFWVWKDWDUHPDWHULDOO\LQGLVWLQJXLVKDEOHIURPD 6L[WK$PHQGPHQWFRQIURQWDWLRQULJKWVZHUHFRJQL]HWKDWZH UHOHYDQW6XSUHPH&RXUWSUHFHGHQWDQGDUULYHVDWDQRSSRVLWH PD\JUDQW9LQFHQWjVKDEHDVSHWLWLRQRQO\LIZHGHWHUPLQHWKDW UHVXOW6HH0DFKDFHNY+RIEDXHU)GWK WKHHUURUZDVQRWKDUPOHVV6HH:ULJKW86DW &LU0D\FLWLQJ:LOOLDPV6&WDW +LOOY%ULJDQR)GWK&LU7R PDNH VXFK D GHWHUPLQDWLRQ ZH PXVW GHFLGH WKDW WKH WULDO ,,&RQIURQWDWLRQ&ODXVH FRXUWjVHUURUmKDGVXEVWDQWLDODQGLQMXULRXVHIIHFWRULQIOXHQFH LQGHWHUPLQLQJWKHMXU\jVYHUGLFWl6HH1HYHUV)GDW $ KROGLQJWKDWWKH%UHFKWY$EUDKDPVRQ86   VWDQGDUG FRQWLQXHV WR DSSO\ RQ KDEHDV UHYLHZ 9LQFHQWILUVWDVVHUWVWKDWWKHWULDOFRXUWYLRODWHGKLV6L[WK HYHQDIWHUWKHDPHQGPHQWVWR$('3$*DGGLHjVWHVWLPRQ\ $PHQGPHQWULJKWWRFRQIURQWDWLRQZKHQLWDOORZHG'HWHFWLYH DORQHPLJKWQRWKDYHKDGDmVXEVWDQWLDODQGLQMXULRXVHIIHFWl *DGGLH RI WKH .HQWXFN\ 6WDWH 3ROLFH WR WHVWLI\ DV WR SRVW RQWKHRXWFRPHRIWKHFDVHJLYHQWKHRWKHUHYLGHQFHDJDLQVW DUUHVW FXVWRGLDO KHDUVD\ VWDWHPHQWV PDGH E\ IRUPHU FR 9LQFHQWHVWDEOLVKHGDWWULDO+RZHYHUDVZHGLVFXVVEHORZLQ GHIHQGDQW.LQVHU 3ULRUWRWKHUHWULDO9LQFHQWILOHGDPRWLRQ 3DUW % *DGGLHjV WHVWLPRQ\ ZDV QRW WKH RQO\ LPSURSHU WR H[FOXGH .LQVHUjV FRQIHVVLRQ DV YLRODWLYH RI WKH WHVWLPRQ\DGGXFHGDW9LQFHQWjVWULDO &RQIURQWDWLRQ &ODXVH EXW WKH WULDO FRXUW GHQLHG 9LQFHQWjV PRWLRQKROGLQJWKDWWKHFRQIHVVLRQZRXOGEHDGPLVVLEOHLQ % WKHHYHQWWKDW.LQVHUUHIXVHGWRWHVWLI\7KHWULDOFRXUWUHOLHG XSRQ7D\ORUY&RPPRQZHDOWK6:G.\ 9LQFHQWDVVHUWVWKDWWKHWULDOFRXUWDOVRYLRODWHGKLV6L[WK KROGLQJ WKDW D FRGHIHQGDQWjV FRQIHVVLRQ ZDV DGPLVVLEOH $PHQGPHQWULJKWWRFRQIURQWDWLRQZKHQLWDOORZHG7DPP\ XQGHUH[FHSWLRQWRKHDUVD\UXOHIRUVWDWHPHQWDJDLQVWSHQDO 6HDEROW6KHSKDUGWRWHVWLI\WKDWD\HDURUWZRIROORZLQJWKH LQWHUHVWE\XQDYDLODEOHGHFODUDQWQRWZLWKVWDQGLQJWKHIDFWWKDW FULPH'HIHQGDQWsRKQVRQWROGKHUWKDWKHKDGQRWPXUGHUHG WKH FRQIHVVLRQ LPSOLFDWHG WKH GHIHQGDQW EHFDXVH WKH FR +D\HVEXWWKDWLWZDV9LQFHQWDQG.LQVHU6KHSKDUGZDVWKH GHIHQGDQWDGPLWWHGWRKDYLQJEHHQDQDFWLYHSDUWLFLSDQWLQWKH HLJKWHHQWK ZLWQHVV FDOOHG LQ WKH &RPPRQZHDOWKjV FDVH LQ FULPH FHUW GHQLHG  86   RYHUUXOHG RQ FKLHI%HIRUH6KHSKDUGWHVWLILHGWKHWULDOFRXUWKHOGDQLQ RWKHUJURXQGV6W&ODLUY5RDUN6:G.\ FKDPEHUVFRQIHUHQFHWRGHWHUPLQHZKDWWKH&RPPRQZHDOWK WKRXJKW WKH VXEVWDQFH RI KHU WHVWLPRQ\ ZRXOG EH  7KH %HIRUH.LQVHUZDVFDOOHGWRWKHVWDQGWKHFRXUWFRQGXFWHG &RPPRQZHDOWK VWDWHG WKDW EDVHG RQ 6KHSKDUGjV UHEXWWDO DQ LQFKDPEHUV FRQIHUHQFH ZLWK DOO FRXQVHO SUHVHQW WR VWDWHPHQWVPDGHGXULQJWKHILUVWWULDOLWDQWLFLSDWHGWKDWVKH ZRXOGWHVWLI\WKDWmsRKQVRQWROGKHUWKDWWKH\ZHUHDOOWKHUH DQG WKH\ NLOOHG +DUROG +D\HVl  7KH FRXUW WKHQ DOORZHG  .LQVHU ZKR ZDV FRQYLFWHG DORQJ ZLWK 9LQFHQW DQG sRKQVRQ LQ WKH ILUVW 6KHSKDUGWRWHVWLI\DQGVKHVWDWHGWKDWDSSUR[LPDWHO\RQHRU WULDO ZDV QRW RQ UHWULDO  9LQFHQWY6HDEROG 1R 1R 9LQFHQWY6HDEROG  7KXVERWK:LOOLDPVRQDQG/LOO\LQVWUXFWWKDWWKHVWDWHPHQWV GHWHUPLQHLI.LQVHUZRXOGWHVWLI\YROXQWDULO\$V.LQVHUKDG PDGHE\.LQVHUDUHSUHVXPSWLYHO\XQUHOLDEOHDQGWRUHEXWWKLV EHHQWULHGDQGFRQYLFWHGDQGKLVVHQWHQFHKDGEHHQDIILUPHG SUHVXPSWLRQ ZH PXVW HYDOXDWH WKH mLQGLFLD RI UHOLDELOLW\l LWZDVGHWHUPLQHGWKDW.LQVHUSRVVHVVHGQR)LIWK$PHQGPHQW DVVRFLDWHGZLWKHDFKLQGLYLGXDOUHPDUNRUGHFODUDWLRQPDGH ULJKW WKDW ZRXOG DOORZ KLP WR UHIXVH WR WHVWLI\  7KH FRXUW E\.LQVHU,QVRGRLQJZHPXVWEHDULQPLQGWKDWLWLVKLJKO\ GHFLGHGWKDWLWZRXOGDOORZWKH&RPPRQZHDOWKWRFDOO.LQVHU XQOLNHO\WKDW.LQVHUjVSRVWDUUHVWFXVWRGLDOVWDWHPHQWVZKLFK WRWKHVWDQG2QFHRQWKHVWDQG.LQVHUUHIXVHGWRWDNHWKH FOHDUO\VKLIWWKHEUXQWRIWKHEODPHWRGHIHQGDQWV9LQFHQWDQG RDWK DQG ZRXOG QRW WHVWLI\ GHVSLWH WKH IDFW WKDW WKH FRXUW sRKQVRQHIIHFWLYHO\FDQEHUHEXWWHG6HHLG DGYLVHGKLPKHSRVVHVVHGQR)LIWK$PHQGPHQWULJKWDJDLQVW VHOILQFULPLQDWLRQ DQG WKDW KH ZRXOG EH KHOG LQ FRQWHPSW +HUH *DGGLHjV WHVWLPRQ\ UHYHDOV WKDW ZKLOH .LQVHUj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sRKQVRQ.LQVHU $IWHU.LQVHUDJDLQUHIXVHGWRWHVWLI\WKHFRXUWRUGHUHGKLPLQ WROG*DGGLH FRQWHPSWDQGKHOGKLPWREHDQmXQDYDLODEOHZLWQHVVlXQGHU .\ 5 (YLG D UHFRJQL]LQJ WKH XQDYDLODELOLW\ RI D >9LQFHQW@ KLW >+D\HV@ ZLWK D ELOO\ FOXE     5RQQLH ZLWQHVVLQVLWXDWLRQZKHUHGHFODUDQWmSHUVLVWVLQUHIXVLQJWR sRKQVRQZDVRYHUWKHUHE\0U+D\HV+HKDGDKNLFNHG WHVWLI\ FRQFHUQLQJ WKH VXEMHFW PDWWHU RI WKH GHFODUDQWjV KLP>,@DWWKHWLPHZDVEDFNLQWKHNLWFKHQDURXQG VWDWHPHQWGHVSLWHDQRUGHURIWKHFRXUWWRGRVRl WKHWDEOH>,@ZDVORRNLQjDURXQGWRoWRVHHZKDW>,@FRXOG ILQG'HDQR>9LQFHQW@FDPHRXWRIWKHEDFNURRP 7KHUHDIWHUWKH&RPPRQZHDOWKDQQRXQFHGLWVLQWHQWLRQWR DQGKHKROOHUHGWR0U+D\HVmZKHUHLVLWDWlDQG0U FDOO'HWHFWLYH*DGGLHWRWKHVWDQGWRWHVWLI\DVWRWKHSRVW +D\HVVDLGWKHUHZDVQjWDQ\omWKHUHjVQRWDQ\PRUHlDQG DUUHVWFXVWRGLDOVWDWHPHQWVPDGHE\.LQVHU%HIRUHDOORZLQJ 'HDQRZHQWRYHUWKHUHDQGKLWKLPWKUHHRUIRXUPRUH *DGGLH WR LQWURGXFH .LQVHUjV FRQIHVVLRQ WKH FRXUW KHOG WLPHZLWKWKDWELOO\FOXE5RQQLH>sRKQVRQ@SXWWKH DQRWKHULQFKDPEHUVFRQIHUHQFHWRGLVFXVV*DGGLHjVLQWHQGHG WDSHRQ0U+D\HVRQKLVH\HVDQGRQKLVPRXWK WHVWLPRQ\FRQFHUQLQJWKH VXEVWDQFHRI.LQVHUjVFRQIHVVLRQ DQG WKH WDNLQJ RI KLV VWDWHPHQWV  *DGGLH H[SODLQHG WKDW 7KH WULDO FRXUW KHOG WKDW .LQVHUjV VWDWHPHQWV ZHUH VHOI .LQVHUKDGVLJQHGDSURSHUO\H[HFXWHG0LUDQGDULJKWVIRUP LQFXOSDWRU\LQWKDWWKH\VKRZWKDW.LQVHUZDVDQDFWLYHDQG DQGWKDW.LQVHUjVDWWRUQH\*DU\/RJVGRQKDGDGYLVHGKLPWR ZLOOLQJSDUWLFLSDQWLQWKHFULPHDQGPDGHQRHIIRUWWRSUHYHQW JLYHDVWDWHPHQW7KHFRXUWDOVRUHYLHZHGWKHWUDQVFULSWIURP RUGLPLQLVKWKHVHYHULW\RIWKHEORZV9LQFHQWDQGsRKQVRQ DVXSSUHVVLRQKHDULQJLQZKLFK/RJVGRQWHVWLILHGWKDWKH JDYHWR+D\HV7KHPDJLVWUDWHMXGJHDQGLQWXUQWKHGLVWULFW DQG.LQVHUKDGGLVFXVVHGDWOHQJWK.LQVHUjVRSWLRQRIPDNLQJ FRXUW DJUHHG  :H KRZHYHU GLVDJUHH  $OO RI WKHVH DVWDWHPHQW/RJVGRQWHVWLILHGWKDW.LQVHUmVLQFHUHO\GHVLUHG VWDWHPHQWVDWWHPSWWRGLVWDQFH.LQVHUIURPWKHPXUGHUDQG WRPDNHDVWDWHPHQWlXQGHUVWRRGKLV0LUDQGDULJKWVZDVQRW PLQLPL]HKLVSDUWLFLSDWLRQLQWKHFULPH.LQVHUFOHDUO\ZDV XQGHU GXUHVV RU FRPSXOVLRQ DQG XQGHUVWRRG WKDW QR DWWHPSWLQJ WR VKLIW WKH EODPH DZD\ IURP KLPVHOI DQG RQWR LQGXFHPHQWV RU SURPLVHV KDG EHHQ PDGH E\ WKH SROLFH RU 9LQFHQWDQGsRKQVRQ)LQGLQJRWKHUZLVHZDVmFRQWUDU\WRl SURVHFXWRU'HIHQVHFRXQVHODUJXHGWKDW.LQVHUjVFRQIHVVLRQ WKHFOHDUO\HVWDEOLVKHGIHGHUDOODZVHWIRUWKLQ:LOOLDPVRQLQ ZDV QRW D VWDWHPHQW DJDLQVW SHQDO LQWHUHVW XQGHU KHDUVD\ WKDW WKH WULDO FRXUW IDFHG ZLWK IDFWV PDWHULDOO\ H[FHSWLRQ .\ 5 (YLG E EHFDXVH LW VRXJKW WR  9LQFHQWY6HDEROG 1R 1R 9LQFHQWY6HDEROG  LQFXOSDWH 9LQFHQW DQG sRKQVRQ ZKLOH PLQLPL]LQJ .LQVHUjV GHIHQGDQW5DWKHULWVLPSO\PHDQVWKDWWKH*RYHUQPHQWPXVW RZQ SDUWLFLSDWLRQ LQ WKH FULPH  +RZHYHU WKH FRXUW VDWLVI\WKHVHFRQGSURQJRIWKH2KLRY5REHUWV86 GHWHUPLQHG WKDW .LQVHUjV FRQIHVVLRQ ZDV VXIILFLHQWO\ VHOI  WHVW LQ RUGHU WR LQWURGXFH VXFK VWDWHPHQWVl  ,G LQFXOSDWRU\LQVRIDUDVKHLQGLFDWHGWKDWKHZDVDQDFWLYHDQG LQWHUQDOTXRWDWLRQPDUNVDQGDOWHUDWLRQVRPLWWHG/LOO\DOVR ZLOOLQJSDUWLFLSDQWLQWKHFULPHDQGPDGHQRHIIRUWWRSUHYHQW UHFRJQL]HG RUGLPLQLVKWKHVHYHULW\RIWKHEORZV9LQFHQWDQGsRKQVRQ JDYHWR+D\HV7KHFRXUWWKHQDOORZHG*DGGLHWRWHVWLI\DVWR 1RWKLQJ LQ RXU SULRU RSLQLRQV KRZHYHU VXJJHVWV WKDW .LQVHUjVFRQIHVVLRQVWDWLQJmWKHSUHVXPSWLRQRIXQUHOLDELOLW\ DSSHOODWH FRXUWV VKRXOG GHIHU WR ORZHU FRXUWVj KDVEHHQRYHUFRPHE\WKHHYLGHQFHWKDWZHjYHKHDUGDQG GHWHUPLQDWLRQVUHJDUGLQJZKHWKHUDKHDUVD\VWDWHPHQWKDV WKHFRQIHVVLRQWRWKHH[WHQWWKDWLWLVUHOHYDQWWRWKHPDWWHUV SDUWLFXODUL]HG JXDUDQWHHV RI WUXVWZRUWKLQHVV  7R WKH FKDUJHGLVDGPLVVLEOHDVHYLGHQFHl FRQWUDU\WKRVHRSLQLRQVLQGLFDWHWKDWZHKDYHDVVXPHG DV ZLWK RWKHU IDFWLQWHQVLYH PL[HG TXHVWLRQV RI 'HWHFWLYH*DGGLHWKHQWHVWLILHGWKDWRQ$XJXVW FRQVWLWXWLRQDOODZWKDWLQGHSHQGHQWUHYLHZLVQHFHVVDU\ .LQVHUPDGHDVWDWHPHQWWR*DGGLHDWWKH6WDWH3ROLFH3RVWLQ WRPDLQWDLQFRQWURORIDQGWRFODULI\WKHOHJDOSULQFLSOHV %RZOLQJ*UHHQ.HQWXFN\.LQVHUWROG*DGGLHWKHIROORZLQJ JRYHUQLQJWKHIDFWXDOFLUFXPVWDQFHVQHFHVVDU\WRVDWLVI\ +H 9LQFHQW DQG sRKQVRQ EURNH LQWR WKH KRPH RI +DUROG WKHSURWHFWLRQVRIWKH%LOORI5LJKWV +D\HV ILQGLQJ +D\HV DVOHHS RQ WKH FRXFK  9LQFHQW DSSURDFKHG+D\HVDQGVWUXFNKLPWZLFHLQWKHKHDGZLWKD  ELOO\FOXEDQGEHJDQWRVHDUFKWKHKRXVHIRUPRQH\sRKQVRQ NLFNHG+D\HVDQGWKHQEHJDQWRXVHGXFWWDSHWRFRQVWUDLQ 7KH&RPPRQZHDOWKFRUUHFWO\QRWHVWKDWWKHSUHVXPSWLRQ KLP9LQFHQWUHWXUQHGWRWKHURRPDQGEHJDQLQWHUURJDWLQJ RIXQUHOLDELOLW\WKDWDWWDFKHVWRFRGHIHQGDQWVjFRQIHVVLRQV +D\HVDERXWWKHZKHUHDERXWVRIVRPHPRQH\WKDWGHIHQGDQWV PD\EHUHEXWWHG:HKDYHKHOGLQIDFWWKDWDQ\LQKHUHQW EHOLHYHGZDVLQWKHKRXVH9LQFHQWDJDLQVWUXFN+D\HVZLWK XQUHOLDELOLW\WKDWDFFRPSDQLHVFRFRQVSLUDWRUVWDWHPHQWV WKHFOXEWKUHHRUIRXUPRUHWLPHVEHIRUHFRQWLQXLQJKLVVHDUFK PDGH GXULQJ WKH FRXUVH DQG LQ IXUWKHUDQFH RI WKH $OOWKHZKLOH.LQVHUZDVVHDUFKLQJWKHKRXVHIRUWKHPRQH\ FRQVSLUDF\LVSHUVHUHEXWWHGE\WKHFLUFXPVWDQFHVJLYLQJ 9LQFHQW WKHQ \HOOHG WR WKH RWKHUV WKDW mKHjG IRXQG LWl DQG ULVH WR WKH ORQJ KLVWRU\ RI DGPLWWLQJ VXFK VWDWHPHQWV UHWXUQHGWRWKHURRPZLWKDVDFNRIPRQH\  sRKQVRQWKHQ 1RQHWKHOHVV WKH KLVWRULFDO XQGHUSLQQLQJV RI WKH WDSHGVKXW+D\HVjVH\HVDQGPRXWKDQGWKHWKUHHGHIHQGDQWV &RQIURQWDWLRQ &ODXVH DQG WKH VZHHS RI RXU SULRU OHIWWKHKRXVH 9LQFHQWDVVHUWVWKDW*DGGLHjVWHVWLPRQ\ FRQIURQWDWLRQ FDVHV RIIHU RQH FRJHQW UHPLQGHU  ,W LV YLRODWHGKLV6L[WK$PHQGPHQWULJKWWRFRQIURQWDWLRQ7KH KLJKO\ XQOLNHO\ WKDW WKH SUHVXPSWLYH XQUHOLDELOLW\ WKDW 6L[WK$PHQGPHQWSURYLGHVWKDWLQmDOOFULPLQDOSURVHFXWLRQV DWWDFKHVWRDFFRPSOLFHVjFRQIHVVLRQVWKDWVKLIWRUVSUHDG WKHDFFXVHGVKDOOHQMR\WKHULJKWWREHFRQIURQWHGZLWK EODPHFDQEHHIIHFWLYHO\UHEXWWHGZKHQWKHVWDWHPHQWV ZLWQHVVHVDJDLQVWKLPl,GDKRY:ULJKW86 DUH JLYHQ XQGHU FRQGLWLRQV WKDW LPSOLFDWH WKH FRUH FLWLQJ86&RQVWDPHQG9,,Q,GDKRY:ULJKW FRQFHUQVRIWKHROGH[SDUWHDIILGDYLW SUDFWLFHWKDWLV WKH6XSUHPH&RXUWUHFRJQL]HG ZKHQ WKH JRYHUQPHQW LV LQYROYHG LQ WKH VWDWHPHQWVj SURGXFWLRQDQGZKHQWKHVWDWHPHQWVGHVFULEHSDVWHYHQWV DQGKDYHQRWEHHQVXEMHFWHGWRDGYHUVDULDOWHVWLQJ  ,W ZDV HVWDEOLVKHG DW WULDO WKDW DOWKRXJK +D\HV GLHG RI EOXQW IRUFH LQMXULHV WR WKH KHDG KH ZRXOG KDYH GLHG RI VXIIRFDWLRQ UHVXOWLQJ IURP KLV ,G DW  LQWHUQDO TXRWDWLRQ PDUNV FLWDWLRQV DQG EURNHQ QRVH DQG WKH VZHOOLQJ RI KLV PRXWK DQG WRQJXH FDXVHG E\ WKH GXFW DOWHUDWLRQVRPLWWHG WDSH  9LQFHQWY6HDEROG 1R 1R 9LQFHQWY6HDEROG  LQWKHGHFODUDQWjVSRVLWLRQZRXOGQRWKDYHPDGHWKHVWDWHPHQW )URP WKH HDUOLHVW GD\V RI RXU &RQIURQWDWLRQ &ODXVH XQOHVVEHOLHYLQJLWWREHWUXHjDQGWKLVTXHVWLRQFDQRQO\EH MXULVSUXGHQFHZHKDYHFRQVLVWHQWO\KHOGWKDWWKH&ODXVH DQVZHUHGLQOLJKWRIDOOWKHVXUURXQGLQJFLUFXPVWDQFHVl,G GRHVQRWQHFHVVDULO\SURKLELWWKHDGPLVVLRQ RIKHDUVD\ DW  TXRWLQJ )(' 5 (9,' E IRRWQRWH VWDWHPHQWVDJDLQVWDFULPLQDOGHIHQGDQWHYHQWKRXJKWKH RPLWWHG DGPLVVLRQRIVXFKVWDWHPHQWVPLJKWEHWKRXJKWWRYLRODWH WKHOLWHUDOWHUPVRIWKH&ODXVH %HFDXVH WKH GHFODUDQW LQ :LOOLDPVRQ LPSOLFDWHG WKH GHIHQGDQWZKLOHLQSROLFHFXVWRG\DQGDIWHUDOUHDG\KDYLQJ  FRQIHVVHGWRWKHFULPHWKH&RXUWFRQFOXGHGWKDWQDPLQJWKH GHIHQGDQWGLGOLWWOHWRLPSOLFDWHWKHGHFODUDQWDQ\IXUWKHUDQG >6@WDWHPHQWVDGPLWWHGXQGHUDmILUPO\URRWHGlKHDUVD\ ZDVSUREDEO\DQHIIRUWWRVHFXUHDOHVVHUSXQLVKPHQWWKURXJK H[FHSWLRQ DUH VR WUXVWZRUWK\ WKDW DGYHUVDULDO WHVWLQJ FRRSHUDWLRQ  6HH LG DW  RSLQLRQ RI 2j&RQQRU s LQ ZRXOGDGGOLWWOHWRWKHLUUHOLDELOLW\ ZKLFK6FDOLDsMRLQHGLGDWRSLQLRQRI*LQVEXUJ sLQZKLFK%ODFNPXQ6WHYHQVDQG6RXWHUssMRLQHG6HH ,GDKR Y :ULJKW  86 DW   LQWHUQDO FLWDWLRQV DOVR8QLWHG6WDWHVY%R\FH)GG&LU RPLWWHG7KH&RXUWKHOGWKDWLIWKHKHDUVD\VWDWHPHQWIDOOV KROGLQJWKDWDVWDWHPHQWJLYHQLQFXVWRG\ZDVQRWUHOLDEOH ZLWKLQDILUPO\URRWHGH[FHSWLRQLWGRHVQRWUXQDIRXORIWKH EHFDXVH FLUFXPVWDQFHV LQGLFDWHG WKDW LW PD\ KDYH EHHQ &RQIURQWDWLRQ&ODXVH,G7KRVHVWDWHPHQWVWKDWGRQRWIDOO mPRWLYDWHGE\DGHVLUHWRFXUU\IDYRUl+RZHYHUEHFDXVH ZLWKLQDWUDGLWLRQDOH[FHSWLRQEXWIDOOZLWKLQWKHUHVLGXDORU WKH ORZHU FRXUW IDLOHG WR FRQGXFW WKH DSSURSULDWH DQDO\VLV FDWFKDOOKHDUVD\H[FHSWLRQDOVRPD\EHDGPLWWHGZLWKRXW EUHDNLQJGRZQHDFKUHPDUNVHQWHQFHE\VHQWHQFH:LOOLDPVRQ LPSOLFDWLQJWKH&RQIURQWDWLRQ&ODXVHLIWKHSURSRQHQWVKRZV UHPDQGHGWKHFDVHZLWKRXWUHDFKLQJWKHLVVXHRIZKHWKHUWKH WKDWmSDUWLFXODUL]HGJXDUDQWHHVRIWUXVWZRUWKLQHVVlPDNHWKH &RQIURQWDWLRQ&ODXVHUHQGHUHGWKHVWDWHPHQWVLQDGPLVVLEOH VWDWHPHQWV VR WUXVWZRUWK\ WKDW FURVVH[DPLQDWLRQ RI WKH H[SUHVVO\ GHFOLQLQJ WR GHWHUPLQH ZKHWKHU WKH KHDUVD\ KHDUVD\ GHFODUDQW ZRXOG DGG OLWWOH WR WKH UHOLDELOLW\ RI WKH H[FHSWLRQIRUVWDWHPHQWVDJDLQVWLQWHUHVWLVmILUPO\URRWHGlIRU VWDWHPHQWV,G6HHDOVR2KLRY5REHUWV86 &RQIURQWDWLRQ&ODXVHSXUSRVHV6HHLGDW  KROGLQJ WKDW KHDUVD\ VWDWHPHQWV GR QRW YLRODWH WKH &RQIURQWDWLRQ&ODXVHZKHQWKH SURVHFXWLRQVKRZVWKDWWKH $OWKRXJK WKH 6L[WK &LUFXLW KDV KHOG WKDW WKH KHDUVD\ GHFODUDQWLVXQDYDLODEOHDQGWKDWWKHVWDWHPHQWEHDUVDGHTXDWH H[FHSWLRQIRUVWDWHPHQWVDJDLQVWSHQDOLQWHUHVWFRQVWLWXWHVD mLQGLFLDRIUHOLDELOLW\lFLWLQJ%DUEHUY3DJH86 ILUPO\URRWHGH[FHSWLRQIRUSXUSRVHVRI&RQIURQWDWLRQ&ODXVH  KROGLQJ WKDW WKH JRYHUQPHQW PXVW VKRZ WKH DQDO\VLVVHH*LOOLDPY0LWFKHOO)GWK&LU XQDYDLODELOLW\ RI D ZLWQHVV EHIRUH LW PD\ LQWURGXFH OHVV 1HXPDQY5LYHUV)GWK&LU UHOLDEOHDFFRXQWVRIZLWQHVVjVVWDWHPHQWVDWWULDO WKH6XSUHPH&RXUWUHFHQWO\HQGHG D FLUFXLWVSOLWE\ KROGLQJ WKDW mDFFRPSOLFHVj FRQIHVVLRQV WKDW LQFXOSDWH D 5XOHRIWKH)HGHUDO5XOHRI(YLGHQFHVHWVIRUWKFHUWDLQ FULPLQDOGHIHQGDQWDUHQRWZLWKLQDILUPO\URRWHGH[FHSWLRQWR H[FHSWLRQVWRWKHKHDUVD\UXOHWKDWDSSO\ZKHQWKHGHFODUDQW WKH KHDUVD\ UXOH DV WKDW FRQFHSW KDV EHHQ GHILQHG LQ RXU LV DQ XQDYDLODEOH ZLWQHVV  5XOH  VWDWHV WKDW &RQIURQWDWLRQ&ODXVHMXULVSUXGHQFHl/LOO\Y9LUJLQLD m>X@QDYDLODELOLW\DVDZLWQHVVLQFOXGHVVLWXDWLRQVLQZKLFKWKH 86    HPSKDVLV DGGHG  /LOO\ QRWHG WKDW GHFODUDQW    SHUVLVWV LQ UHIXVLQJ WR WHVWLI\ FRQFHUQLQJ WKH m>W@KLVRIFRXUVHGRHVQRWPHDQWKDWWKH&RQIURQWDWLRQ &ODXVH LPSRVHV D EODQNHW EDQ RQ WKH JRYHUQPHQWjV XVH RI  QRQWHVWLI\LQJ DFFRPSOLFH VWDWHPHQWV WKDW LQFULPLQDWH D 5XOH  RI WKH .HQWXFN\ 5XOHV RI (YLGHQFH PLUURUV WKH ODQJXDJH RI WKH )HG 5 (YLG   9LQFHQWY6HDEROG 1R 1R 9LQFHQWY6HDEROG  VXEMHFWPDWWHURIWKHGHFODUDQWjVVWDWHPHQWGHVSLWHDQRUGHURI QRWWRPDNHVHOILQFXOSDWRU\VWDWHPHQWVXQOHVVWKH\EHOLHYH WKHFRXUWWRGRVRl)(' 5 (9,'D7KH5XOH WKHPWREHWUXHl,GDW5HDVRQLQJWKDWWKLVSULQFLSOH SURYLGHV WKDW LI WKH GHFODUDQW LV LQ IDFW XQDYDLODEOH DV D PDQGDWHV D QDUURZ GHILQLWLRQ RI mVWDWHPHQWl DV mD VLQJOH ZLWQHVVVWDWHPHQWVDJDLQVWLQWHUHVWDUHQRWH[FOXGHGE\WKH GHFODUDWLRQRUUHPDUNlUDWKHUWKDQDEURDGGHILQLWLRQDVmD KHDUVD\ UXOH  )(' 5 (9,' E  $ mVWDWHPHQW DJDLQVW UHSRUWRUQDUUDWLYHlWKH&RXUWKHOG LQWHUHVWlLVGHILQHGDVIROORZV ,QRXUYLHZWKHPRVWIDLWKIXOUHDGLQJRI5XOHE $VWDWHPHQWZKLFKZDVDWWKHWLPHRILWVPDNLQJVRIDU LV WKDW LW GRHV QRW DOORZ DGPLVVLRQ RI FRQWUDU\ WR WKH GHFODUDQWjV SHFXQLDU\ RU SURSULHWDU\ QRQVHOILQFXOSDWRU\VWDWHPHQWVHYHQLIWKH\DUHPDGH LQWHUHVWRUVRIDUWHQGHGWRVXEMHFWWKHGHFODUDQWWRFLYLO ZLWKLQ D EURDGHU QDUUDWLYH WKDW LV JHQHUDOO\ RUFULPLQDOOLDELOLW\RUWRUHQGHULQYDOLGDFODLPE\WKH VHOILQFXOSDWRU\7KHGLVWULFWFRXUWPD\QRWMXVWDVVXPH GHFODUDQWDJDLQVWDQRWKHUWKDWDUHDVRQDEOHSHUVRQLQWKH IRU SXUSRVHV RI 5XOH E WKDW D VWDWHPHQW LV GHFODUDQWjVSRVLWLRQZRXOGQRWKDYHPDGHWKHVWDWHPHQW VHOILQFXOSDWRU\EHFDXVHLWLVSDUWRIDIXOOHUFRQIHVVLRQ XQOHVV EHOLHYLQJ LW WR EH WUXH  $ VWDWHPHQW WHQGLQJ WR DQGWKLVLVHVSHFLDOO\WUXHZKHQWKHVWDWHPHQWLPSOLFDWHV H[SRVHWKHGHFODUDQWWRFULPLQDOOLDELOLW\DQGRIIHUHGWR VRPHRQHHOVH H[FXOSDWH WKH DFFXVHG LV QRW DGPLVVLEOH XQOHVV FRUURERUDWLQJ FLUFXPVWDQFHV FOHDUO\ LQGLFDWH WKH ,GDWVHHDOVR8QLWHG6WDWHVYsLQDGX)G WUXVWZRUWKLQHVVRIWKHVWDWHPHQW WK&LUKROGLQJWKDWDFRXUWPXVWHYDOXDWH WKH DGPLVVLELOLW\ RI HDFK GHFODUDWLRQ RU UHPDUN ZLWKLQ WKH )(' 5 (9,' E+HUHQHLWKHUSDUW\FKDOOHQJHVWKH FRQIHVVLRQZKHQGHWHUPLQLQJZKHWKHUWKRVHVWDWHPHQWVDUH WULDO FRXUWjV GHWHUPLQDWLRQ WKDW .LQVHU ZDV LQ IDFW DQ DGPLVVLEOHXQGHUWKHKHDUVD\H[FHSWLRQIRUVWDWHPHQWVDJDLQVW XQDYDLODEOH ZLWQHVV XQGHU 5XOH   9LQFHQW DUJXHV SHQDOLQWHUHVW8QLWHG6WDWHVY&DQDQ)GWK&LU KRZHYHU WKDW *DGGLHjV WHVWLPRQ\ GRHV QRW IDOO ZLWKLQ WKH m>:@KHQUXOLQJXSRQDQDUUDWLYHjVDGPLVVLELOLW\XQGHU KHDUVD\ H[FHSWLRQ EHFDXVH .LQVHUjV FRQIHVVLRQ ZDV QRW mD >5XOHE@DFRXUWPXVWEUHDNLWGRZQDQGGHWHUPLQH VWDWHPHQWDJDLQVWLQWHUHVWlLQWKDW.LQVHUHVVHQWLDOO\VRXJKWWR WKH VHSDUDWH DGPLVVLELOLW\ RI HDFK VLQJOH GHFODUDWLRQ RU GLVWDQFHKLPVHOIIURPWKHPXUGHU UHPDUNl LQWHUQDO TXRWDWLRQ PDUNV DQG FLWDWLRQ RPLWWHG :LOOLDPVRQZHQWRQWRH[SODLQ ,Q:LOOLDPVRQY8QLWHG6WDWHV86WKH 6XSUHPH&RXUWGHILQHGWKHVFRSHRI5XOHEZKHQWKH 7KHUHDUHPDQ\FLUFXPVWDQFHVLQZKLFK5XOHE GHFODUDQWj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7KXVWKHSURSHU5XOHE :LOOLDPVRQILUVWFRQVLGHUHGWKHTXHVWLRQRIZKDWLVPHDQWE\ DQDO\VLV XQGHU :LOOLDPVRQ UHTXLUHV H[DPLQLQJ WKH DmVWDWHPHQWlLQOLJKWRIWKHSULQFLSOHWKDWm5XOHELV FLUFXPVWDQFHVLQZKLFKWKHVWDWHPHQWVDUHPDGHLQRUGHUWR IRXQGHGRQWKHFRPPRQVHQVHQRWLRQWKDWUHDVRQDEOHSHRSOH GHWHUPLQHZKHWKHUWKH\DUHVHOILQFXOSDWRU\RUVHOIVHUYLQJ HYHQUHDVRQDEOHSHRSOHZKRDUHQRWHVSHFLDOO\KRQHVWWHQG 7KHSURSHULQTXLU\LVmZKHWKHUWKHVWDWHPHQWZDVVXIILFLHQWO\ DJDLQVWWKHGHFODUDQWjVSHQDOLQWHUHVWµWKDWDUHDVRQDEOHSHUVRQ