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 DS

81,7('67$7(6&28572)$33($/6 )257+(6,;7+&,5&8,7 BBBBBBBBBBBBBBBBB

58)86 :$6+,1*721 ; 3HWLWLRQHU$SSHOODQW    1R  Y  !  *(5$/' +2)%$8(5  5HVSRQGHQW$SSHOOHH  1 $SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW IRUWKH(DVWHUQ'LVWULFWRI0LFKLJDQDW'HWURLW 1R  n*HUDOG(5RVHQ'LVWULFWsXGJH $UJXHG 0DUFK 'HFLGHGDQG)LOHG 2FWREHU %HIRUH s21(6%$7&+(/'(5DQG&/$<&LUFXLW sXGJHV BBBBBBBBBBBBBBBBB &2816(/ $5*8('   'HEUD $ *XWLHUUH] 67$7( $33(//$7( '()(1'(5 2)),&( 'HWURLW 0LFKLJDQ IRU $SSHOODQW sDQHW $ 9DQ &OHYH 2)),&( 2) 7+( $77251(< *(1(5$/ +$%($6 &25386 ',9,6,21 /DQVLQJ 0LFKLJDQIRU$SSHOOHH21%5,() 'HEUD$*XWLHUUH] 67$7( $33(//$7( '()(1'(5 2)),&( 'HWURLW 0LFKLJDQIRU$SSHOODQWsDQHW$9DQ&OHYH2)),&(2)

  :DVKLQJWRQY+RIEDXHU 1R  1R  :DVKLQJWRQY+RIEDXHU 

7+( $77251(< *(1(5$/ +$%($6 &25386 RIGHIHQVHFRXQVHOjVPRVWLPSRUWDQWUROHVLVWRHQVXUHWKDWWKH ',9,6,21/DQVLQJ0LFKLJDQIRU$SSHOOHH SURVHFXWRUGRHVQRWWUDQVJUHVVWKRVHERXQGV BBBBBBBBBBBBBBBBB ,QWKLVFDVHERWKDWWRUQH\VIDLOHGWRSHUIRUPWKHLUUHVSHFWLYH GXWLHV:HILQGWKDWWKHLUIDLOXUHGHSULYHG:DVKLQJWRQRIKLV 23,1,21 FRQVWLWXWLRQDOULJKWVDQGWKDWWKHVWDWHFRXUWVjFRQFOXVLRQVWR BBBBBBBBBBBBBBBBB WKH FRQWUDU\ ZHUH REMHFWLYHO\ XQUHDVRQDEOH  :H WKHUHIRUH 5(9(56(WKHGLVWULFWFRXUWDQGJUDQWDFRQGLWLRQDOZULWRI 1$7+$1,(/5s21(6&LUFXLWsXGJH7KHSHWLWLRQHU KDEHDVFRUSXVJLYLQJWKH6WDWHRI0LFKLJDQQLQHW\GD\VLQ 5XIXV:DVKLQJWRQD0LFKLJDQSULVRQHUFRQYLFWHGRIVHFRQG ZKLFKWRSURYLGH:DVKLQJWRQDQHZWULDORUUHOHDVHKLP GHJUHHFULPLQDOVH[XDOFRQGXFWDSSHDOVWKHGLVWULFWFRXUWjV GLVPLVVDORIKLV†KDEHDVSHWLWLRQ+LVSHWLWLRQDOOHJHG SURVHFXWRULDO PLVFRQGXFW DQG LQHIIHFWLYH DVVLVWDQFH RI FRXQVHO  :H ILQG WKDW WKH SURVHFXWRUjV PLVFRQGXFW ZDV VXIILFLHQWO\ HJUHJLRXV WR YLRODWH :DVKLQJWRQjV GXH SURFHVV ULJKWVWKDW:DVKLQJWRQjVWULDOFRXQVHOZDVLQHIIHFWLYHLQQRW REMHFWLQJ WR WKDW FRQGXFW DQG WKDW WKH VWDWH FRXUW GLG QRW UHDVRQDEO\DSSO\WKHUHOHYDQWODZLQILQGLQJRWKHUZLVH:H DUHWKXVFRPSHOOHGWR5(9(56(DQGLVVXHWKHZULW , ,Q :DVKLQJWRQZDVFKDUJHGZLWKILUVWGHJUHHFULPLQDO VH[XDO FRQGXFW DJDLQVW FRPSODLQDQW 7DPDUD %HDUG LQ YLRODWLRQRI0LFK&RPS/DZV†E  D DQGZLWK EHLQJDKDELWXDORIIHQGHUIRXUWKRIIHQVHXQGHU0LFK&RPS /DZV †   D   2Q sDQXDU\    D 0LFKLJDQ MXU\ IRXQG:DVKLQJWRQJXLOW\RIVHFRQGGHJUHH FULPLQDOVH[XDO FRQGXFW LQ YLRODWLRQ RI 0LFK &RPS /DZV † F :DVKLQJWRQWKHQSOHDGHGJXLOW\WREHLQJDKDELWXDORIIHQGHU IRXUWKRIIHQVH2Q0DUFK WKHWULDOFRXUWVHQWHQFHG :DVKLQJWRQWRWZHQW\WRWKLUW\\HDUVjLPSULVRQPHQWZKLFK ZDVODWHUUHGXFHGWRVHYHQWHHQWRWKLUW\\HDUVjLPSULVRQPHQW $ $WWKHWLPHRIWKHFULPH:DVKLQJWRQZDVWKHER\IULHQGRI 0V&RUD%HDUGWKHPRWKHURIWKHFRPSODLQDQW:DVKLQJWRQ DQG%HDUGOLYHGWRJHWKHUDORQJZLWK%HDUGjVILYHVRQVDQG  :DVKLQJWRQY+RIEDXHU 1R  1R  :DVKLQJWRQY+RIEDXHU 

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jVFORVLQJDUJXPHQWZHUHFOHDUO\LPSURSHU:HDOVRILQG /DWHU WKDW QLJKW 7DPDUD DZRNH LQ KHU PRWKHUj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s$ DFWXDO WHVWLPRQ\ RI WKH ZLWQHVVHV  6HFRQG WKH FRPPHQWV DW   +H GLG QRW VWRS IRU mD ORQJ WLPHl  s$ DW  ZHUH H[WHQVLYH FRPSULVLQJ SDUW RI WKH SURVHFXWRUjV :DVKLQJWRQWKHQRUGHUHG7DPDUDWRKROGKLVSHQLVZKLFKVKH FRQWLQXRXVHIIRUWWRKDYHWKHMXU\GHWHUPLQHFUHGLELOLW\EDVHG GLG7DPDUDWHVWLILHGWKDWVKHGLGQRWWHOOKHUPRWKHURIWKH RQ LPSURSHU FRQVLGHUDWLRQVnHLWKHU VWDWHPHQWV QRW LQ LQFLGHQWEHFDXVH:DVKLQJWRQKDGWKUHDWHQHGWRNLOOKHULIVKH HYLGHQFHRULPSURSHUFKDUDFWHUDVVHVVPHQWV7KLUGLWLVFOHDU GLGVR,QsXQH  DVLPLODUHSLVRGHRFFXUUHG$JDLQDIWHU WKDWWKHUHPDUNVZHUHGHOLEHUDWHO\PDGHZLWKWKHSURVHFXWRU IDOOLQJDVOHHSRQWKHFRXFK7DPDUDDZRNHWR:DVKLQJWRQjV UHSHDWLQJKLVmILWlWKHRU\WKURXJKRXWFORVLQJDUJXPHQW$QG GHPDQGWKDWVKHUHPRYHKHUSDQWLHV+HRQFHDJDLQLQVHUWHG IRXUWKWKHUHZDVQRHYLGHQFHDJDLQVW:DVKLQJWRQRXWVLGHRI KLVILQJHULQWRKHUYDJLQD:KLOHWKHIDPLO\FRQWLQXHGWROLYH 7DPDUD%HDUGjVDFFRXQWZKLFKWKHSURVHFXWRUjVPLVFRQGXFW ZLWK:DVKLQJWRQ7DPDUDWROGQRRQHRIWKHVHLQFLGHQWV LPSHUPLVVLEO\ EROVWHUHG  ,Q VKRUW WKH SURVHFXWRUjV PLVFRQGXFWZDVVXIILFLHQWO\IODJUDQWWRYLRODWH:DVKLQJWRQjV ,Q)HEUXDU\ &RUD%HDUGPRYHGRXWRIWKHKRXVHVKH GXHSURFHVVULJKWV VKDUHGZLWK:DVKLQJWRQDQGEHJDQWRVWD\ZLWKKHUPRWKHU EULQJLQJ KHU WKUHH \RXQJHVW FKLOGUHQ ZLWK KHUnLQFOXGLQJ  ,9 7DPDUD$WWULDOVKHH[SODLQHGWKDWVKHPRYHGRXWEHFDXVH :DVKLQJWRQKDGEHHQERWKPHQWDOO\DQGSK\VLFDOO\DEXVLYH $VWKHSHRSOHjVUHSUHVHQWDWLYHLQRXUV\VWHPRIMXVWLFHD DQG EHFDXVH KH KDG EHJXQ GULQNLQJ KHDYLO\  $IWHU D VKRUW SURVHFXWRUPXVWDGKHUHWRWKHUXOHVDQGSULQFLSOHVWKDWHQVXUH WLPHDQGDIWHU:DVKLQJWRQSOHDGHGIRUKHUWRUHWXUQ%HDUG WKDW D MXU\ GHWHUPLQHV D GHIHQGDQWjV JXLOW EDVHG RQ WKH GHFLGHGWRPRYHEDFNLQWRWKHKRXVHZLWK:DVKLQJWRQ$W HYLGHQFHEHIRUHLW,QDFORVHFUHGLELOLW\FRQWHVWVXFKDVWKLV WKDWWLPH7DPDUDWROGKHUPRWKHUDERXW:DVKLQJWRQjVDFWLRQV ZLWKKRUULEOHDFWVDOOHJHGEXWVFDQWKDUGHYLGHQFHIRUWKHMXU\ WKHSULRU\HDU&RUD%HDUGLPPHGLDWHO\WRRN7DPDUDWRWKH WRZHLJKDSURVHFXWRUPXVWEHGRXEO\FDUHIXOWRVWD\ZLWKLQ KRVSLWDO ZKHUH D VRFLDO ZRUNHU H[DPLQHG KHU  %HDUG DOVR WKHERXQGVRISURSHUFRQGXFW6HH0DUWLQY3DUNHU)G WRRN 7DPDUD WR 'U sR\FH :RRGVRQ RI WKH 0LFKLJDQ   WK &LU    VWDWLQJ WKDW EHFDXVH FDVHV 'HSDUWPHQWRI6RFLDO6HUYLFHVZKRLQWHUYLHZHG7DPDUDRQ LQYROYLQJVH[XDODEXVHmWXUQRQWKHUHODWLYHFUHGLELOLWLHVRI WKH GHIHQGDQW DQG WKH SURVHFXWLQJ ZLWQHVV    D VWULFW DGKHUHQFH WR WKH UXOHV RI HYLGHQFH DQG DSSURSULDWH SURVHFXWRULDOFRQGXFWLVUHTXLUHGWRLQVXUHDIDLUWULDOl 2QH  7DPDUD ZDV  \HDUV ROG DW WKH WLPH RI WKH WULDO  :DVKLQJWRQY+RIEDXHU 1R  1R  :DVKLQJWRQY+RIEDXHU 

IRXU RFFDVLRQV  $IWHU WKHVH LQWHUYLHZV 'U :RRGVRQ & FRQWDFWHGWKH)OLQWSROLFH :DVKLQJWRQ DUJXHV WKDW WKH 6WDWHjV DFWLRQV DW WULDO $WWULDODOWKRXJK:DVKLQJWRQDFNQRZOHGJHGWKDWKHDQG FRQVWLWXWHG SURVHFXWRULDO PLVFRQGXFW WKDW GHQLHG KLP GXH &RUD%HDUGRIWHQIRXJKWDQGWKDWKHGUDQNDOFRKROKHGHQLHG SURFHVV:KLOHWKH0LFKLJDQ&RXUWRI$SSHDOVKHOGWKDWWKLV FRPPLWWLQJWKHDOOHJHGDVVDXOWVRQ7DPDUD m,QHYHUWRXFKHG FODLPZDVGHIDXOWHGGXHWR.HVWRQjVIDLOXUHWRREMHFWDWWULDO 7DPDUDVH[XDOO\LQDQ\IRUPls$DW+HH[SODLQHG ZH H[FXVH SURFHGXUDO GHIDXOW LI D FULPLQDO GHIHQGDQW FDQ IXUWKHU GHPRQVWUDWH FDXVH IRU WKH SURFHGXUDO GHIDXOW DQG DFWXDO SUHMXGLFHUHVXOWLQJIURPWKHDOOHJHGFRQVWLWXWLRQDOHUURU6HH >7@KHRQO\FRQFOXVLRQ,FDQFRPHWRLVWKDWVKHZDQWHGWR 5XVW Y =HQW  )G   WK &LU     +HUH RXU PD\EH SURWHFW KHU PRWKHU RU WKHUHjV D SRVVLELOLW\ WKDW FRQFOXVLRQ WKDW .HVWRQjV IDLOXUH WR REMHFW FRPSULVHG WKH\ZDVQjWYLVLWLQJWKHLUJUDQGPRWKHUWKDWUHJXODUDQG LQHIIHFWLYH DVVLVWDQFH RI FRXQVHO SURYLGHV WKH UHTXLUHG WKDW VKH PLJKW ZDQW WR VWD\ RYHU WKHUH WKDWjV WKH RQO\ mFDXVHl  6HH *UDYOH\  )G DW  FLWLQJ &ROHPDQ Y UHDVRQ , FDQ WKLQN RI \RX NQRZ  %HFDXVH , FHUWDLQO\ 7KRPSVRQ86   :HDOVRILQGWKDW GLGQjWHYHUPLVWUHDW>WKHFKLOGUHQ@ IRUUHDVRQVVWDWHGVXSUDnWKHVHYHULW\RIWKHPLVFRQGXFWWKH ODFN RI VXEVWDQWLDO HYLGHQFH DJDLQVW :DVKLQJWRQ DQG WKH s$DW2QFURVVH[DPLQDWLRQ:DVKLQJWRQGHQLHGWKH OHQJWK RI WLPH EHWZHHQ WKH ZLWQHVV H[DPLQDWLRQV DQG WKH SURVHFXWLRQjV TXHVWLRQV DERXW ZKHWKHU KH GUDQN KHDYLO\ FORVLQJ DUJXPHQWVn.HVWRQjV HUURU LQIHFWHG WKH HQWLUH WULDO :KHQWKHSURVHFXWRUDVNHGZKHWKHUKHmG>LG@VRPHWKLQJWR ZLWKHUURURIFRQVWLWXWLRQDOGLPHQVLRQV6HH5XVW)GDW 7DPDUDl :DVKLQJWRQ UHVSRQGHG m>Q@R , GLGQjWl  s$ DW 7KXVWKHmFDXVHDQGSUHMXGLFHlWHVWLVPHWZLWKUHVSHFW  $OWKRXJKKHDFNQRZOHGJHGWKDWKHKDGDWRQHWLPHWROG WR :DVKLQJWRQjV FODLP RI SURVHFXWRULDO PLVFRQGXFW  :H &RUD %HDUG KH ZRXOG NLOO KHU KH GHQLHG HYHU WKUHDWHQLQJ WKHUHIRUHPD\SURFHHGWRWKHPHULWVRIKLVDUJXPHQW 7DPDUDs$DW ,QH[DPLQLQJDOOHJHGSURVHFXWRULDOPLVFRQGXFWRQKDEHDV UHYLHZ WKLV &RXUW FDQ RQO\ SURYLGH UHOLHI mLI WKH UHOHYDQW PLVVWDWHPHQWVZHUHVRHJUHJLRXVDVWRUHQGHUWKHHQWLUHWULDO IXQGDPHQWDOO\XQIDLUWRDGHJUHHWDQWDPRXQWWRDGXHSURFHVV YLRODWLRQl  &DOGZHOO Y 5XVVHOO  )G   FLWLQJ  'RQQHOO\  86 DW    ,Q DVVHVVLQJ ZKHWKHU WKH $ PRQWK SDVVHG EHWZHHQ WKH WLPH RI :DVKLQJWRQjV WHVWLPRQ\ DQG DOOHJHGPLVFRQGXFWDPRXQWVWRDFRQVWLWXWLRQDOGHSULYDWLRQ FORVLQJ DUJXPHQWV 7KLV LV EHFDXVH DW WKH FORVH RI WKH 6WDWHjV FDVH WKHFRXUWPXVWYLHZWKHWRWDOLW\RIWKHFLUFXPVWDQFHV6HH :DVKLQJWRQjV FRXQVHO UHTXHVWHG WKDW 'U :D\QH 5RVV WKH GRFWRU ZKR +D\WRQY (JHOHU)G  WK&LU  :H H[DPLQHG 7DPDUD DW WKH KRVSLWDO WHVWLI\ 'U 5RVVjV WHVWLPRQ\ ZDV LPSRUWDQW WR :DVKLQJWRQjV FDVH EHFDXVH DIWHU H[DPLQLQJ 7DPDUD WKH PXVW ILUVW GHWHUPLQH LI WKH FRPPHQWV ZHUH LPSURSHU  6HH GRFWRU KDG QRWHG WKDW 7DPDUD mGHQLHV SHQHWUDWLRQl s$ DW   %HFDXVH %R\OHY0LOOLRQ)G WK&LU :HWKHQ 'U 5RVV ZDV EHGULGGHQ DIWHU HPHUJHQF\ EDFN VXUJHU\ DQG XQDYDLODEOH IRU PXVWGHWHUPLQHLIWKHFRPPHQWVZHUHVXIILFLHQWO\IODJUDQWWR WULDO WKH FRXUW DJUHHG WR WDNH :DVKLQJWRQjV WHVWLPRQ\ RXW RI RUGHU 7KH ZDUUDQWUHYHUVDOE\ORRNLQJWRIRXUIDFWRUV  WKHOLNHOLKRRG WULDO ZDV WKHUHDIWHU DGMRXUQHG XQWLO 'U 5RVV FRXOG WHVWLI\ 2Q sDQXDU\  WKDW WKH UHPDUNV ZRXOG PLVOHDG WKH MXU\ RU SUHMXGLFH WKH   ZLWK 'U 5RVV VWLOO EHGULGGHQ WKH SDUWLHV DJUHHG WR VWLSXODWH WR WKH FRQWHQW RI 'U 5RVVjV QRWHV 6SHFLILFDOO\ WKH FRXUW UHSRUWHU UHDG LQWR DFFXVHG  ZKHWKHUWKHUHPDUNVZHUHLVRODWHGRUH[WHQVLYH HYLGHQFH WKH IROORZLQJ QRWHV m7HQ PRQWKjV DJR PRPjV OLYH LQ WRXFKHG   ZKHWKHU WKH UHPDUNV ZHUH GHOLEHUDWHO\ RU DFFLGHQWDOO\ KHU GRZQ WKHUH UHIHUULQJ WR WKH FURWFK DUHD 3DWLHQW GHQLHV SHQHWUDWLRQ SUHVHQWHGWRWKHMXU\  ZKHWKHURWKHUHYLGHQFHDJDLQVWWKH &KLOG SOD\IXOl s$ DW   :DVKLQJWRQY+RIEDXHU 1R  1R  :DVKLQJWRQY+RIEDXHU 

 % ,Q DGGLWLRQ WR ILQGLQJ FRQVWLWXWLRQDOO\ GHIHFWLYH :DVKLQJWRQ UDLVHV WZR LVVXHV LQ WKLV DSSHDO  )LUVW KH SHUIRUPDQFHZHDOVREHOLHYHWKDWWKHIDLOXUHWRREMHFWWRWKHVH FKDOOHQJHV VHYHUDO LQVWDQFHV RI DOOHJHG SURVHFXWRULDO VWDWHPHQWV SUHMXGLFHG :DVKLQJWRQjV FDVH  $V ERWK SDUWLHV PLVFRQGXFW GXULQJ WKH 6WDWHjV H[DPLQDWLRQ RI :DVKLQJWRQ DJUHH WKLV WULDO ZDV D FUHGLELOLW\ FRQWHVW  7KHUH ZDV QR DQG FORVLQJ DUJXPHQW  6HFRQG KH FKDOOHQJHV DV HYLGHQFHLQWKHUHFRUGLQGLFDWLQJ:DVKLQJWRQjVJXLOWRXWVLGH FRQVWLWXWLRQDOO\LQHIIHFWLYHKLVFRXQVHOjVIDLOXUHWRREMHFWWR RI7DPDUDjVRZQDOOHJDWLRQV7KXVRXWVLGHRIWKHVXEVWDQFH WKLV PLVFRQGXFW DV ZHOO DV KLV IODZHG DUWLFXODWLRQ RI WKH RI:DVKLQJWRQjVDQG7DPDUDjVWHVWLPRQ\QRWKLQJZDVPRUH EXUGHQ RI SURRI  7KHVH LVVXHV UHTXLUH D GHWDLOHG ORRN DW LPSRUWDQWWRWKHFDVHWKDQWKHLQGLFLDWKDWRQHVWRU\ZDVPRUH SRUWLRQVRIWKHWULDOUHFRUG EHOLHYDEOH WKDQ WKH RWKHU  ,Q VXFK D FORVH FDVH WKH SURVHFXWRUjVWZLQDFWVRIPLVFRQGXFWnLPSURSHUO\ERRVWLQJ 7KHUHFRUGVKRZVWKDWWKHSURVHFXWRUH[WHQVLYHO\EHUDWHG 7DPDUDjV FUHGLELOLW\ ZKLOH GLPLQLVKLQJ WKDW RI :DVKLQJWRQjV FKDUDFWHU EHIRUH WKH MXU\ HPSKDVL]LQJ WKDW :DVKLQJWRQnYHU\OLNHO\WLSSHGWKHVFDOHVLQKHUIDYRU7KHUH :DVKLQJWRQ GLG QRW ZRUN EHDW &RUD %HDUG UHJXODUO\ LVWKXVDUHDVRQDEOHSUREDELOLW\WKDW.HVWRQjVIDLOXUHWRKDYH FRQVXPHGDOFRKROH[FHVVLYHO\DQGGLGQRWPDNHSD\PHQWVRQ WKHMXGJHKDOWWKHRQJRLQJPLVFRQGXFWDQGSURYLGHFXUDWLYH &RUDjV KRPH  7KHVH VWDWHPHQWV HPHUJHG LQLWLDOO\ LQ WKH LQVWUXFWLRQVDIIHFWHGWKHRXWFRPHRIWKHWULDO7KHIDFWWKDWLW 6WDWHjV FURVVH[DPLQDWLRQ RI :DVKLQJWRQ  )LUVW WKH KDGEHHQDPRQWKVLQFHWKHMXU\KDGKHDUGDQ\ZLWQHVVHVRQO\ SURVHFXWRU HPSKDVL]HG WKDW :DVKLQJWRQ PRYHG LQWR WKH PDJQLILHG WKH SUHMXGLFLDO LPSDFW RI WKH SURVHFXWRUjV %HDUGjVKRPHnWKDWmLWZDVWKHLUKRPHlQRWKLVs$DW PLVFRQGXFWDQG.HVWRQjVIDLOXUHWRREMHFWWRLW $W D ODWHU SRLQW WKH SURVHFXWRU WULHG WR HOLFLW WKDW WKH FDU :DVKLQJWRQDQG&RUD%HDUGXVHGZDVQRW:DVKLQJWRQjVEXW  KHUVs$DW QRWLQJWKDW:DVKLQJWRQmGLGQjWKDYHDFDUl KLPVHOI 7KHSURVHFXWRUWKHQTXHVWLRQHG:DVKLQJWRQjVZRUN .HVWRQjV IDLOXUH WR DUWLFXODWH FOHDUO\ WKH EH\RQG D KLVWRU\GRXEWLQJWKHUHDVRQVKHSURYLGHGWRH[SODLQSHULRGV UHDVRQDEOHGRXEWVWDQGDUGRISURRILV\HWDQRWKHUWURXEOLQJ ZKHQKHZDVRXWRIZRUN m<RXjUHWHOOLQJWKHMXU\WKHYLUXV LQGLFDWLRQ WKDW KLV SHUIRUPDQFH LQ WKLV FDVH ZDV VHYHUHO\ NHSW\RXIURPZRUNLQJ"7KHQDOORIDVXGGHQ\RXJRWWKLV ZDQWLQJ(TXDOO\WURXEOLQJLVKLVVXJJHVWLRQH[SUHVVHGDWWKH YLUXV"6R\RXGLGQjWNHHSWKLVRWKHUMREWRRORQJHLWKHU *LQWKHU KHDULQJ WKDW WKHUH LV mQR GLIIHUHQFHl EHWZHHQ WKH WKHQ"ls$DW1H[WWKHSURVHFXWRUHPSKDVL]HGWKDW EH\RQGDUHDVRQDEOHGRXEWDQGFOHDUDQGFRQYLQFLQJVWDQGDUGV :DVKLQJWRQmGUDQNDORWlZKHQKHZDVOLYLQJDWWKH%HDUG RISURRIs$DW1RQHWKHOHVVWKHUHFRUGVKRZVWKDWKLV KRPH  s$ DW   )LQDOO\ WKH SURVHFXWRU HPSKDVL]HG PXGGOHGUHFLWDWLRQRIWKHVWDQGDUGRISURRIGLGQRWSUHMXGLFH VHYHUDO WLPHV WKDW :DVKLQJWRQ mVPDFNHGl &RUD %HDUG :DVKLQJWRQjVFDVH ,QKLVUHEXWWDOWKHSURVHFXWRUKLPVHOI UHJXODUO\  s$ DW   2QO\ IRU D EULHI SRUWLRQ RI WKH FRUUHFWHG.HVWRQjVPLVVWDWHPHQWE\UHLWHUDWLQJWKHUHDVRQDEOH FURVVH[DPLQDWLRQGLGWKHSURVHFXWRUIRFXVRQWKHDOOHJHGDFWV GRXEWVWDQGDUG/LNHZLVHWKHWULDOFRXUWLQVWUXFWHGWKHMXU\RI DJDLQVW7DPDUD%HDUGZKLFK:DVKLQJWRQGHQLHG'XULQJWKLV WKHFRUUHFWVWDQGDUG7KXVDOWKRXJK.HVWRQjVGLVFXVVLRQRI FURVVH[DPLQDWLRQ GHIHQVH FRXQVHO 6DQIRUG .HVWRQ RQO\ WKHEXUGHQRISURRIZDVFRQIXVHG:DVKLQJWRQKDVQRWVKRZQ REMHFWHG RQH WLPHnVWDWLQJ DIWHU WKH SURVHFXWRU DVNHG WKDWWKHDUJXPHQWPHWWKHmSUHMXGLFHlSURQJRI6WULFNODQG :DVKLQJWRQLILWZDVKLVmOLIHVW\OHWRVPDFNWKHODG\lWKDWKH ZDVmUHSHDWLQJWKHVDPHTXHVWLRQls$DW  :DVKLQJWRQY+RIEDXHU 1R  1R  :DVKLQJWRQY+RIEDXHU 

7KHSURVHFXWRUDJDLQIRFXVHGRQ:DVKLQJWRQjVFKDUDFWHU >.HVWRQ@UHODWHGWKDWKLVODFNRIREMHFWLRQZDVJURXQGHG GXULQJKLVFORVLQJDUJXPHQW6XPPDUL]LQJWKHVHTXHQFHRI RQWULDOVWUDWHJ\EDVHGRQKLVDZDUHQHVVWKDWWKHYLFWLP HYHQWV KH UHPLQGHG WKH MXU\ WKDW m5XIXV KHUH VWD\V LQ WKH KDG JLYHQ SUHYLRXV LQFRQVLVWHQW VWDWHPHQWV GXULQJ WKH KRXVHWKDWKHGRHVQjWVXSSRUWWKDWKHGRHVQjWRZQls$DW LQYHVWLJDWLYH VWDJH RI WKH FDVH  ,Q SURSHU FDVHV D 7KHSURVHFXWRUVSHFXODWHGDVWRZK\7DPDUDGLGQRW GHFLVLRQQRWWRREMHFWWRWKHSURVHFXWRUjVWULDOHIIRUWVPD\ LQLWLDOO\ WHOO KHU PRWKHU RI WKH LQFLGHQWV   m<RX KHDUG KLP EH FRQVLGHUHG VRXQG WULDO VWUDWHJ\  &I 'DUGHQ Y WHVWLI\ WKDW ZKHQ WKLQJV GLGQjW JR KLV ZD\ KH MXVW NLQG RI :DLQZULJKW6&W   ,Q VPDFNHGWKHJLUOIULHQGZKRVHKRXVHKHZDVOLYLQJLQ, WKLV FDVH GHIHQVH FRXQVHOjV VWUDWHJ\ LQYROYHG WKLQNKHWDONHGDERXWKLWWLQJDQGVPDFNLQJDQGLWZDVQjWKDUG LPSHDFKPHQW ZLWK LQFRQVLVWHQW VWDWHPHQWV DQG WKH EXWLWZDVSUHWW\KDUGls$DW7KLVVKRZHGWKDW FRQWUDVWLQJ WKH VDPH ZLWK WKH FODLP WKDW WKH YLFWLPjV 7DPDUDmKD>G@UHDVRQVWREHIHDUIXORIVRPHJX\ZKRVD\V UHSRUWLQJRIFULPHZDVFRQVLVWHQW KHjV JRLQJ WR NLOO KHU    l  s$ DW    )LQDOO\ WKH SURVHFXWRU DVNHG WKH MXU\ WR FRQVLGHU ZKHWKHU 7DPDUDjV s$DW/LNH.HVWRQjVRZQZRUGVWKLVH[SODQDWLRQZKROO\ DOOHJDWLRQV mILWl WKH JHQHUDO GHVFULSWLRQ WKH\ KDG KHDUG RI IDLOVWRDSSUHFLDWHWKDWmWKHFODLPlRIFRQVLVWHQF\LQYROYHG :DVKLQJWRQjV FKDUDFWHU  +H WKHQ DQVZHUHG WKH TXHVWLRQ VWDWHPHQWVQHYHUDGPLWWHGLQWRHYLGHQFH0RUHRYHUZKLOHWKH KLPVHOI m,jOOWHOO\RXWKLVLWILWVZKDWZHNQRZDERXWKLPLQ WULDO FRXUW FLWHG'DUGHQ Y :DLQZULJKW  86   WHUPV RI WKH HYLGHQFH RI WKLV FDVH ZKDW \RXjYH EHHQ WROG    LQ VXSSRUW RI LWV DUJXPHQW WKDW D mGHFLVLRQ QRW WR DERXWKLPls$DW REMHFW WR WKH SURVHFXWRUjV WULDO HIIRUWV PD\ EH FRQVLGHUHG VRXQGWULDOVWUDWHJ\l'DUGHQjVKROGLQJSURYLGHVQRVXSSRUW +HFHUWDLQO\ZRXOGILWWKDWNLQGRISDWWHUQWKDWZDVKLV IRU LWV GHFLVLRQ  7KH FLWHG SRUWLRQ RI 'DUGHQ DGGUHVVHV NLQG RI OLIHVW\OH WKDW PD\ DOORZ LW WR KDSSHQ  7KH SURVHFXWRULDO PLVFRQGXFW WKDW WKH 6XSUHPH &RXUW IRXQG DOFRKROLVPWKHGUXJVDVWHVWLILHGWRE\WKHPRWKHU LQVXIILFLHQWWRFRQVWLWXWHDGXHSURFHVVYLRODWLRQ DVSDUWRIWKH 7KHLUUDWLRQDOEHKDYLRU7KDWKHjVOLYLQJLQKHUKRPH GLVFXVVLRQWKHFRXUWQRWHGWKDWmGHIHQVHFRXQVHOPDGHWKH GULYLQJ KHU FDU NLQG RI VPDFNV KHU DURXQG ZKHQ WDFWLFDO GHFLVLRQ QRW WR SUHVHQW DQ\ ZLWQHVV RWKHU WKDQ VRPHWKLQJGRHVQjWTXLWHVXLWKLP'RHVWKDWVRXQGOLNH SHWLWLRQHUl,GDW HPSKDVLVDGGHG 7KHGHFLVLRQLQQR DORJLFDOFRPSDVVLRQDWHIDPLO\W\SHRISHUVRQRUGRHV ZD\FRQGRQHVDODZ\HUjVIDLOXUHWRREMHFWWRSODLQPLVFRQGXFW WKDW VRXQG OLNH VRPHRQH ZKR OLYHV D OLWWOH ELW RXW RI DVOHJLWLPDWHWULDOVWUDWHJ\ FRQWUROVRPHRQHZKRKDVQRFRQWUROLQIDFWRYHUWKHUH >VLF@ RZQ OLIH VRPHRQH ZKR GRHVQjW DFW DFFRUGLQJ WR ,QVKRUW.HVWRQjVIDLOXUHWRREMHFWIHOOEHORZDQREMHFWLYH ORJLF:KHWKHUWKHPRWLYDWLRQLVDSHUYHUWDFKLOG VWDQGDUG RI UHDVRQDEOHQHVV DQG FRQVWLWXWHG DQ RPLVVLRQ PROHVWHU RU MXVW D VHOILVK DOFRKROLF LQKXPDQH IRU RXWVLGHWKHZLGHUDQJHRISURIHVVLRQDOO\FRPSHWHQWDVVLVWDQFH ZKDWHYHUUHDVRQWKHUHVXOWVDUHWKHVDPHRQWKHYLFWLP :DVKLQJWRQKDVVKRZQWKDWWKHIDLOXUHWRREMHFWZDVEDVHGRQ  VLPSOH LQFRPSHWHQFH DQG QRW RQ VRXQG WULDO VWUDWHJ\ %HFDXVHWKHWULDOFRXUWjVFRQFOXVLRQPHUHO\HFKRHG.HVWRQjV s$DW.HVWRQGLGQRWREMHFWWRWKHVHVWDWHPHQWV GHHSO\IODZHGMXVWLILFDWLRQLWVDSSOLFDWLRQRI6WULFNODQGZDV REMHFWLYHO\XQUHDVRQDEOH )LQDOO\LQKLVUHEXWWDOWKHSURVHFXWRUGLUHFWO\LQVWUXFWHGWKH MXU\WRFRQVLGHU:DVKLQJWRQjVFKDUDFWHULQGHFLGLQJZKHWKHU KHFRPPLWWHGWKHDOOHJHGFULPH  :DVKLQJWRQY+RIEDXHU 1R  1R  :DVKLQJWRQY+RIEDXHU 

RI WKH SXUSRUWHG PLVFRQGXFW RU WKH DGPLVVLELOLW\ RI WKH 'RHV ZKDW 7DPDUD >WROG@ \RX KDSSHQHG ILW KLP LQ WKH HYLGHQFHLQTXHVWLRQ WHVWLPRQ\ WKDW ZDV WROG \RX DERXW KLP FRPLQJ IURP RWKHUSHRSOHDQGIURPKLVRZQPRXWK>'@RHVLWILW 7KH VHFRQG H[SODQDWLRQ IRU .HVWRQjV IDLOXUH WR REMHFW LV WKHVHOIVHUYLQJLOORJLFDOVHOILVKQRQFRPSDVVLRQDWHQR VLPSO\LQFRKHUHQW WKDWWKHMXU\NQHZWKDWWKHSURVHFXWRUjV HPRWLRQDOLQWHUHVWLQDIDPLO\W\SHRISHUVRQ",PHDQ VWDWHPHQW ZDV QRW WUXH EHFDXVH WKHUH ZDV DQ LQFRQVLVWHQW LWZRXOGEHGLIIHUHQWLIKHZDVSRUWUD\HGLQDGLIIHUHQW VWDWHPHQWWRWKHGRFWRULQWKHUHFRUG7KLVMXVWLILFDWLRQLVQRW OLJKWGXULQJWKLVFDVHDQGLWZDVVRPHWKLQJFRQWUDGLFWRU\ VWUDWHJ\EXWDEVROXWHIROO\)LUVWLWRYHUORRNVWKHIDFWWKDWWKH ZLWKZKDW7DPDUDWHVWLILHGKDSSHQHG SURVHFXWRUjVVWDWHPHQWWKDWWKHmVWRU\QHYHUFKDQJHGlZDVQRW EDVHGRQDQ\HYLGHQFHLQWKHUHFRUG7KHMXU\WKHUHIRUHKDG s$DW+HDVNHGZKHWKHU:DVKLQJWRQZDVmDSHUVRQ QREDVLVWRFRQFOXGHZKHWKHUWKHFKDUDFWHUL]DWLRQZDVWUXHRU WKDWMXVWDFWHGLUUDWLRQDOFDXVHGE\GUXJVDQGDOFRKROLVPDQG QRW VLPLODUO\.HVWRQKDGQRZD\WRUHEXWWKHSURVHFXWRUjV DJHQHUDOQRWFDULQJDERXWRWKHUSHRSOHMXVWFDULQJDERXWKLP DVVHUWLRQ ZLWKRXW DOVR UHIHUULQJ WR FRQYHUVDWLRQV QRW LQ DQG KLV UHVHQWPHQWl DQG FRQFOXGHG RQFH DJDLQ WKDW WKH HYLGHQFH,QGHHGZKLOH.HVWRQWHVWLILHGWRWKHWULDOFRXUWWKDW DOOHJHGFULPHmVXUHILWVKLPls$DW,QKLVSHQXOWLPDWH KH KDG mLQWHQGHGl WR DUJXH WR WKH MXU\ WKDW 7DPDUDjV VWDWHPHQW KH XUJHG WKH MXU\ WR FRQVLGHU :DVKLQJWRQjV VWDWHPHQWVWRWKHGRFWRUZHUHLQFRQVLVWHQWZLWKKHUVWRULHVWR mOLIHVW\OHlLQDVVHVVLQJWKHFDVH m$OO,DVN\RXWRGRLVORRN RWKHUVKHGLGQRWLQIDFWGRVR$OWKRXJKKHUHIHUUHGWRWKH DW WKH FDVH FDUHIXOO\l LQFOXGLQJ m5XIXV :DVKLQJWRQjV GRFWRUjV QRWHV WKDW VKH KDG GHQLHG SHQHWUDWLRQ .HVWRQ FKDUDFWHUDVKHSRUWUD\HGLWWR\RXRQWKHVWDQGls$DW FHUWDLQO\GLGQRWHPSKDVL]HWKDWWKLVVKRZHGWKDW7DPDUDjV VWRULHVKDGEHHQLQFRQVLVWHQW,QIDFW.HVWRQKLPVHOIHFKRHG :DVKLQJWRQ DOVR DUJXHV WKDW WKH SURVHFXWRU FRPPLWWHG WKH SURVHFXWLRQjV VXJJHVWLRQ WKDW WKH FRQWHQW RI 7DPDUDjV PLVFRQGXFW ZKHQ LQ FORVLQJ KH FKDUDFWHUL]HG IDFWV QHYHU GLVFXVVLRQV ZDV LQ HYLGHQFH ZKHQ KH DUJXHG WKDW DOO RI LQWURGXFHGLQWRHYLGHQFH6SHFLILFDOO\WKHSURVHFXWRUVWDWHG 7DPDUDjVVWDWHPHQWVFDPHZLWK&RUD%HDUGE\KHUVLGHm<RX KHDUGIURPWKHZLWQHVV VWDQGVKHVDLGWKLVVDLGWKDW6KH 7KLVFKLOGWDONHGWRKHUPRWKHU> @WKLVFKLOGWDONHGWRWKH DOZD\VLGHQWLILHGDQGUHSHDWHGZKDWZDVVDLGls$DW GRFWRU7KLVFKLOGWDONHGWRWKHVRFLDOVHUYLFHZRUNHULQ %XWFRQWUDU\WR.HVWRQjVZRUGVWKHMXU\KDGQRWLQIDFW GHWDLO6KHWHVWLILHG7KLVFKLOGWDONHGWR6HUJHDQW(OIRUG KHDUGDQ\ZLWQHVVHVWHVWLI\DVWRZKDW7DPDUDKDGWROGWKHP LQ GHWDLO  7KLV FKLOG ZHQW WKURXJK D SUHOLPLQDU\ H[DPLQDWLRQ DQG FURVV H[DPLQDWLRQ ZKHUH WKHUH ZDV )LQDOO\DOWKRXJKWKHWULDOFRXUWDWWHPSWHGWRUDWLRQDOL]HWKLV FURVVH[DPLQDWLRQDQGWKLVFKLOGWHVWLILHGEHIRUH\RXDQG mLPSHDFKPHQWGHIHQVHlLWVUHDVRQLQJLVHTXDOO\IODZHG7KH QRZKHUHIRUWKHPRVWSDUWEDVHGXSRQZKDWKDSSHQHG WULDOFRXUWjVH[SODQDWLRQUHDGVDVIROORZV KDVLWFKDQJHG s$DW HPSKDVLVDGGHG :DVKLQJWRQDUJXHVWKDWQRQH  &LUFXLW FDVHV WKDW KDYH VWDWHG WKDW D GHFLVLRQ QRW WR REMHFW ZDV RIWKHSHRSOHWKHSURVHFXWRUUHIHUUHGWRKDGWHVWLILHGDERXW EDVHG LQ SDUW RQ D ODZ\HUjV GHVLUH QRW WR IRFXV DWWHQWLRQ RQ D SRWHQWLDOO\ ZKDW7DPDUDKDGWROGWKHPnQRUFRXOGWKH\KDYHVLQFHVXFK GDPDJLQJ VWDWHPHQW KDYH GRQH VR RQO\ DIWHU FRQFOXGLQJ WKDW LW ZDV XQFOHDU WHVWLPRQ\ZRXOGKDYHEHHQLQDGPLVVLEOHKHDUVD\7KHUHIRUH WKDW WKH FKDOOHQJHG FRQGXFW LWVHOI ZDV LPSURSHU LQ WKH ILUVW SODFH 6HH WKHSURVHFXWRUjVVWDWHPHQWWKDWWKHVWRU\KDGQHYHUFKDQJHG HJ &REE  )G DW  VWDWLQJ WKDW LW ZDV QRW FOHDU ZKHWKHU WKH ZDVQRWVXSSRUWHGE\DQ\HYLGHQFH2QFHDJDLQ.HVWRQGLG SURVHFXWRUjV FRQGXFW ZDV LPSURSHU DQG WKDW &REE KDG RIIHUHG QR EDVLV RQ DSSHDO IRU ZK\ WKH WHVWLPRQ\ VKRXOG KDYH EHHQ H[FOXGHG  ,Q WKLV FDVH QRWREMHFWWRWKLVVWDWHPHQW WKH FRQGXFW ZDV FOHDUO\ LPSURSHU DQG SUHMXGLFLDO VR .HVWRQjV VLOHQFH FDQQRW EH VR MXVWLILHG  :DVKLQJWRQY+RIEDXHU 1R  1R  :DVKLQJWRQY+RIEDXHU 

)LQDOO\ :DVKLQJWRQ DUJXHV WKDW .HVWRQ ZDV QRWREMHFWEHFDXVHWKHMXU\NQHZWKHVWDWHPHQWZDVmQRWWUXH FRQVWLWXWLRQDOO\LQHIIHFWLYHIRUPLVVWDWLQJWKHSURVHFXWLRQjV EHFDXVHWKHUH>ZDV@DQLQFRQVLVWHQWVWDWHPHQWWRWKHGRFWRUl EXUGHQRISURRI,QGHHGWKHUHFRUGHYLQFHVWKDWRQVHYHUDO ZKLFKKHKDGHOLFLWHGDWWULDOs$DW  RFFDVLRQVGXULQJKLVFORVLQJDUJXPHQW.HVWRQVWDWHGWKDWWKH 6WDWHKDGWRSURYHLWVFDVHE\FOHDUDQGFRQYLQFLQJHYLGHQFH :H ILQG ERWK H[SODQDWLRQV XQUHDVRQDEOH  .HVWRQjV 6LPXOWDQHRXVO\ KRZHYHU .HVWRQ VHYHUDO WLPHV PHQWLRQHG H[SODQDWLRQWKDWKHZDVZRUULHGWKHREMHFWLRQZRXOGUHQGHU WKDWWKHSURVHFXWRUKDGWRSURYHHYHU\HOHPHQWRIWKHDOOHJHG GDPDJHWKDWDQLQVWUXFWLRQFRXOGQRWFXUHLVFOHDUO\QRWYLDEOH FULPHEH\RQGDUHDVRQDEOHGRXEW IRUWZRUHDVRQV)LUVWDFFHSWLQJDVDSURSHUWULDOVWUDWHJ\D ODZ\HUjV GRXEWV RYHU WKH HIIHFWLYHQHVV RI REMHFWLRQV DQG & FXUDWLYHLQVWUXFWLRQVZRXOGSUHFOXGHLQHIIHFWLYHQHVVFODLPVLQ HYHU\ FDVH VXFK DV WKLV QR PDWWHU KRZ RXWUDJHRXV WKH 8OWLPDWHO\WKHMXU\DFTXLWWHG:DVKLQJWRQRQWKHFKDUJHG SURVHFXWRULDOPLVFRQGXFWPLJKWEH,QRWKHUZRUGVZHUHZH RIIHQVH RI ILUVWGHJUHH FULPLQDO VH[XDO FRQGXFW ZKLFK WRDFFHSWWKH6WDWHjVDUJXPHQWQRIDLOXUHWRREMHFWFRXOGHYHU UHTXLUHV D ILQGLQJ RI SHQHWUDWLRQ  6HH 0LFK &RPS /DZV FRPSULVHLQHIIHFWLYHDVVLVWDQFHRIFRXQVHODQGQRFODLPRI † E  D   ,W UHWXUQHG D JXLOW\ YHUGLFW RQ VHFRQG SURVHFXWRULDOPLVFRQGXFWKRZHYHUHJUHJLRXVFRXOGEHUDLVHG GHJUHH FULPLQDO VH[XDO FRQGXFW ZKLFK GRHV QRW UHTXLUH RQ KDEHDV UHYLHZ LI QRW REMHFWHG WR  6HFRQG ZH PXVW SHQHWUDWLRQ6HH0LFK&RPS/DZV†F SUHVXPHWKDWMXULHVIROORZWKHLULQVWUXFWLRQV6HH5LFKDUGVRQ 86DW VWDWLQJWKDWWKLVSUHVXPSWLRQLVmURRWHGOHVV $IWHU VHQWHQFLQJ :DVKLQJWRQ ILOHG DQ DSSHDO IRU KLV LQWKHDEVROXWHFHUWLWXGHWKDWWKHSUHVXPSWLRQLVWUXHWKDQLQ FRQYLFWLRQDQGVHQWHQFHZLWKWKH0LFKLJDQ&RXUWRI$SSHDOV WKH EHOLHI WKDW LW UHSUHVHQWV D UHDVRQDEOH SUDFWLFDO DQGILOHGDPRWLRQWRUHPDQGWRWKHWULDOFRXUWIRUD*LQWKHU DFFRPPRGDWLRQRIWKHLQWHUHVWVRIWKHVWDWHDQGWKHGHIHQGDQW KHDULQJ RQ KLV FODLP RI LQHIIHFWLYH DVVLVWDQFH RI FRXQVHO LQWKHFULPLQDOMXVWLFHSURFHVVl ,QGHHGZHDUHH[FXVHGIURP 7KHDSSHDOVFRXUWJUDQWHGWKHPRWLRQDQGWKHWULDOFRXUWKHOG PDNLQJ WKLV SUHVXPSWLRQ RQO\ ZKHQ WKHUH LV D mVWURQJ D KHDULQJ RQ 6HSWHPEHU    ZKHUH LW FRQFOXGHG WKDW OLNHOLKRRG WKDW WKH HIIHFW RI WKH HYLGHQFH ZRXOG EH .HVWRQ KDG QRW EHHQ VXIILFLHQWO\ LQHIIHFWLYH WR YLRODWH µGHYDVWDWLQJj WR WKH GHIHQGDQWl DQG WKDW WKHUH LV DQ 6WULFNODQG  5HJDUGLQJ .HVWRQjV IDLOXUH WR REMHFW WR WKH mRYHUZKHOPLQJ SUREDELOLW\ WKDW WKH MXU\ ZLOO EH XQDEOH WR SURVHFXWRUjVFKDUDFWHUDWWDFNVWKHFRXUWKHOGWKDWWKHHYLGHQFH IROORZWKHFRXUWjVLQVWUXFWLRQVl8QLWHG6WDWHVY)RUG ZDVQRWREMHFWLRQDEOHEHFDXVHLWZHQWWRWKHYLFWLPjVIHDURI )G  WK&LU   FLWDWLRQVRPLWWHG )RU :DVKLQJWRQ1H[WWKHFRXUWFRQFOXGHGWKDW.HVWRQKDGQRW ERWKRIWKHVHUHDVRQVDFRXUWUHYLHZLQJDIDLOXUHWRREMHFW EHHQ LQHIIHFWLYH IRU IDLOLQJ WR REMHFW WR WKH SURVHFXWLRQjV PXVWORRNDWIDFWRUVLQGHSHQGHQWRIWKHJHQHUDOHIIHFWLYHQHVV VWDWHPHQW WKDW 7DPDUDjV VWRU\ KDG QHYHU FKDQJHG ILQGLQJ RIREMHFWLQJVXFKDVRWKHUSRVVLEOHWULDOVWUDWHJLHVWKHGHJUHH .HVWRQjVH[SODQDWLRQWRUHIOHFWVRXQGWULDOVWUDWHJ\)LQDOO\ WKH FRXUW FRQFOXGHG WKDW DOWKRXJK .HVWRQ XVHG WKH ZRUGV mFOHDUDQGFRQYLQFLQJlLQKLVRSHQLQJDQGFORVLQJDUJXPHQWV WKHMXU\KDGEHHQSURSHUO\LQVWUXFWHGRQWKHUHDVRQDEOHGRXEW VWDQGDUG,QVXPWKHFRXUWFRQFOXGHGWULDOFRXQVHOjVDFWLRQV PDWWHU RI WULDO VWUDWHJ\ LQWHQGHG WR DYRLG GUDZLQJ IXUWKHU DWWHQWLRQ WR WKH ZHUHQRWmVRVHULRXVWKDWFRXQVHOZDVQRWIXQFWLRQLQJDVWKH SURVHFXWRUjV VWDWHPHQWl 

 8QGHU WKLV DQDO\VLV LI .HVWRQ WUXO\ ZRUULHG WKDW WKH LPSURSULHW\  ,Q 0LFKLJDQ D KHDULQJ RQ LQHIIHFWLYH DVVLVWDQFH FODLPV LV KHOG ZDV WRR JUHDW IRU DQ LQVWUXFWLRQ WR RYHUFRPH KH VKRXOG KDYH REMHFWHG DQG SXUVXDQW WR 3HRSOH Y *LQWKHU  1:G  0LFK    FDOOHG IRU D PLVWULDO UDWKHU WKDQ FKRVHQ QRW WR REMHFW DW DOO  :DVKLQJWRQY+RIEDXHU 1R  1R  :DVKLQJWRQY+RIEDXHU

E µFRXQVHOjJXDUDQWHHGWKHGHIHQGDQWE\WKH6L[WK$PHQGPHQWl s$DW TXRWLQJ6WULFNODQGY:DVKLQJWRQ86 :HDOVRILQGWKDW.HVWRQjVIDLOXUHWRREMHFWWRWKH6WDWHjV    m'HIHQGDQWZDVFKDUJHGZLWK&6&ILUVWGHJUHH LPSURSHUFKDUDFWHUL]DWLRQRI7DPDUDjVVWDWHPHQWVWRRWKHUV DQG ZDV FRQYLFWHG RI WKH OHVVHU RIIHQVH RI &6& VHFRQG FRQVWLWXWHVDVHFRQGLQVWDQFHRIFRQVWLWXWLRQDOLQHIIHFWLYHQHVV GHJUHH2QEDODQFHGHIHQVHFRXQVHODSSHDUVWRKDYHGRQHD $JDLQ ZH ILQG WKH WULDO FRXUWjV DQDO\VLV RI .HVWRQjV JRRGMREZLWKDYHU\GLIILFXOWFDVHls$DW LQHIIHFWLYHQHVVDQGmWULDOVWUDWHJ\lWRKDYHEHHQREMHFWLYHO\ XQUHDVRQDEOH 2Q $SULO    WKH 0LFKLJDQ &RXUW RI $SSHDOV UHYLHZHG:DVKLQJWRQjVFDVHDVHFRQGWLPH7KHFRXUWGLGQRW .HVWRQjV H[SODQDWLRQ RI ZK\ KH GLG QRW REMHFW WR WKH FRQVLGHU KLV FODLP IRU SURVHFXWRULDO PLVFRQGXFW EHFDXVH SURVHFXWRUjVFKDUDFWHUL]DWLRQRIVWDWHPHQWVQRWLQHYLGHQFHLV .HVWRQKDGQRWREMHFWHGWRWKHDOOHJHGO\LPSURSHUUHPDUNV DJDLQXQFRQYLQFLQJ$WWKH*LQWKHUKHDULQJ KHH[SODLQHG 7KHDSSHDOVFRXUWWKHQDJUHHGZLWKWKHWULDOFRXUWjVFRQFOXVLRQ WKDWKHIHDUHGDQREMHFWLRQZRXOGGRPRUHKDUPWKDQJRRG WKDW.HVWRQjVIDLOXUHWRREMHFWmZDVDPDWWHURIWULDOVWUDWHJ\l EHFDXVH LW ZRXOG IRFXV WKH MXURUVj DWWHQWLRQ RQ WKH s$DWDQGWKDW.HVWRQjVPLVVWDWHPHQWRIWKHEXUGHQRI SURVHFXWRUjV VWDWHPHQW HYHQ LI WKH FRXUW LQVWUXFWHG WKHP SURRI ZDV QRW SUHMXGLFLDO  7KH FRXUW DOVR UHMHFWHG RWKHU RWKHUZLVH5DWKHUWKDQULVNLQJWKHVHQHJDWLYHFRQVHTXHQFHV FKDOOHQJHV WR WKH FRQYLFWLRQ QRW EURXJKW EHIRUH WKLV FRXUW KLVFKRLFHZDVQRWWRREMHFW .HVWRQDOVRVWDWHGWKDWKHGLG 0HDQZKLOH WKH FRXUW UHYHUVHG :DVKLQJWRQjV VHQWHQFH DQG UHPDQGHGWRWKHWULDOFRXUWIRUUHVHQWHQFLQJ7KH0LFKLJDQ 6XSUHPH &RXUW GHQLHG :DVKLQJWRQ OHDYH WR DSSHDO  2Q  +H VWDWHG 'HFHPEHU :DVKLQJWRQZDVUHVHQWHQFHGWRDWHUPRI VHYHQWHHQWRWKLUW\\HDUVjLPSULVRQPHQW >$@ FRXSOH DYHQXHV FDQ SUHVHQW LWVHOI >VLF@ >@ DW WKH PRPHQW >WKH SURVHFXWRU@ PDNHV WKLV VWDWHPHQW     >,@I , REMHFW WKH MXU\ ,Q :DVKLQJWRQILOHGDKDEHDVSHWLWLRQLQWKHGLVWULFW ZRXOG ZDQW WR NQRZ o >W@KHLU DWWHQWLRQ LV VXGGHQO\ GUDZQ WR WKLV FRXUWSXUVXDQWWR86&†2Q6HSWHPEHU  IDFWRU DQG WKH IDFW WKDW WKHUH DUH SULRU FRQVLVWHQW VWDWHPHQWV DUH HPSKDVL]HG ZKHWKHU WKH\ DUH LQVWUXFWHG WR LJQRUH LW RU QRW 0DJLVWUDWH sXGJH 'RQDOG 6FKHHU LVVXHG D UHSRUW DQG UHFRPPHQGDWLRQ WKDW WKH SHWLWLRQ EH GHQLHG WR ZKLFK s$ DW   0RUHRYHU KH H[SODLQHG ZHUH KH WR KDYH REMHFWHG KH IHDUHG :DVKLQJWRQILOHGREMHFWLRQVRQ6HSWHPEHU2Q2FWREHU WKDW WKH SURVHFXWRU PLJKW KDYH UHWRUWHG mZHOO LI WKHUH ZDV DQ   sXGJH *HUDOG 5RVHQ GHQLHG :DVKLQJWRQjV SHWLWLRQ LQFRQVLVWHQF\ ZRXOGQjW \RX KDYH KHDUG LW" :RXOGQjW 0U .HVWRQ KDYH 3HWLWLRQHUILOHGDFODLPRIDSSHDORQ2FWREHU  2Q EURXJKW LW RXW"l s$ DW   $SULO WKLV&RXUWJUDQWHGDFHUWLILFDWHRIDSSHDODELOLW\

,Q LWV EULHI WKH 6WDWH GHIHQGHG .HVWRQjV UDWLRQDOH ,, (YHU\ WULDO DWWRUQH\ NQRZV WKDW DQ REMHFWLRQ LQ VXFK FLUFXPVWDQFHV LV D GRXEOH HGJHG VZRUG $Q REMHFWLRQ VQDSV WKH %HFDXVH :DVKLQJWRQjV SHWLWLRQ ZDV ILOHG DIWHU $SULO  MXU\ WR DWWHQWLRQ IRFXVLQJ RQ WKH YHU\ VWDWHPHQW WKH DWWRUQH\   WKH UXOHV RI WKH $QWLWHUURULVP DQG (IIHFWLYH 'HDWK EHOLHYHV WKH\ VKRXOG QRW KDYH KHDUG $WWRUQH\V DOVR GLVDJUHH RQ 3HQDOW\ $FW RI   m$('3$l  DSSO\  6HH 7XFNHU Y WKH YDOXH RI FXUDWLYH LQVWUXFWLRQV     $Q DWWRUQH\ LQ WKH 3UHOHVQLN)G WK&LU 7KLVPHDQVWKDW FRXUWURRP LV EHWWHU HTXLSSHG WR JDXJH D SDUWLFXODU MXU\jV DELOLW\ DZULWRIKDEHDVFRUSXVPD\QRWEHJUDQWHGXQOHVVWKHVWDWH WR LJQRUH LPSURSHU LQIRUPDWLRQ WKDQ D UHYLHZLQJ FRXUW FRXUWSURFHHGLQJV +RIEDXHUjV %U DW  7KLV LV DOVR WKH DUJXPHQW DUWLFXODWHG E\ WKH PDJLVWUDWH FRXUW s$ DW  m>&@RXQVHOjV GHFLVLRQ QRW WR REMHFW ZDV D  :DVKLQJWRQY+RIEDXHU 1R  1R  :DVKLQJWRQY+RIEDXHU 

 UHVXOWHGLQDGHFLVLRQWKDWZDVFRQWUDU\WRRULQYROYHG VLOHQFHDIWHUWKHDOOHJHGDFWVs$DW ZKHQLWLVFU\VWDO DQ XQUHDVRQDEOH DSSOLFDWLRQ RI FOHDUO\ HVWDEOLVKHG FOHDU IURP WKH UHFRUG WKDW WKH 6WDWH ZHQW ZHOO EH\RQG WKDW )HGHUDOODZDVGHWHUPLQHGE\WKH6XSUHPH&RXUWRIWKH OLPLWHGXVHSURIIHULQJDQDUJXPHQWWKDWZDVDSURWRW\SLFDO 8QLWHG6WDWHV RU H[DPSOHRIKRZFKDUDFWHUHYLGHQFHVKRXOGQRWEHXVHG1RW KDYLQJUHFRJQL]HGWKHFOHDUSUHGLFDWHSUREOHPLWVHOIWKHWULDO   UHVXOWHG LQ D GHFLVLRQ WKDW ZDV EDVHG RQ DQ FRXUWjVFRQFOXVLRQWKDW.HVWRQGLGQRWYLRODWH6WULFNODQGE\ XQUHDVRQDEOH GHWHUPLQDWLRQ RI WKH IDFWV LQ OLJKW RI WKH IDLOLQJWRREMHFWWRWKDWSUREOHPLVWKXVLQKHUHQWO\IODZHG7R HYLGHQFHSUHVHQWHGLQWKH6WDWHFRXUWSURFHHGLQJV FKDUDFWHUL]HWKLVFRQFOXVLRQDVDQmREMHFWLYHO\UHDVRQDEOHl DSSOLFDWLRQRI6WULFNODQGZRXOGEHWRGLOXWHRXUUHYLHZXQGHU  86&$ †  G  :HVW    7KH 6XSUHPH &RXUW WKH$('3$WRDJHQHURXVDSRORJ\IRUWKHFOHDUHVWRIHUURUV UHFHQWO\LQVWUXFWHGWKDW† G  GHILQHVWZRFDWHJRULHVRI FDVHVLQZKLFKDVWDWHSULVRQHUPD\JDLQKDEHDVUHOLHI6HH )LQDOO\ZHQRWHWKDWZKLOHWKHGHIHQVHjVVWUDWHJ\FDUULHGDQ :LOOLDPV Y 7D\ORU  6&W     LQKHUHQW ULVN RI VRPH SUHMXGLFH WKDW DGGHG ULVN GLG QRW  2j&RQQRU s FRQFXUULQJ   7R JDLQ KDEHDV UHOLHI GLPLQLVKWKHIDUJUHDWHUSUHMXGLFHWKDWUHVXOWHGIURP.HVWRQjV XQGHUWKHILUVWFDWHJRU\LQYROYLQJVWDWHGHFLVLRQVmFRQWUDU\ LQH[SOLFDEOH VLOHQFH DV WKH SURVHFXWRU PLVXVHG WKDW VDPH WRlIHGHUDOODZDGHIHQGDQWPXVWVKRZWKDWmWKHVWDWHFRXUW HYLGHQFH IRU SDWHQWO\ LPSURSHU SXUSRVHV  2XU UXOHV DUULYH>G@ DW D FRQFOXVLRQ RSSRVLWH WR WKDW UHDFKHG E\ >WKH DGGUHVVLQJFKDUDFWHUHYLGHQFHLPSOLFLWO\UHFRJQL]HWKHILQH\HW 6XSUHPH@&RXUWRQDTXHVWLRQRIODZlRUWKDWmWKHVWDWHFRXUW YLWDO GLVWLQFWLRQ EHWZHHQ WKH ULVN RI SUHMXGLFH ERUQH E\ GHFLGH>G@DFDVHGLIIHUHQWO\WKDQ>WKH6XSUHPH@&RXUWKDVRQ HYLGHQFH LQWURGXFHG IRU SHUPLVVLEOH UHDVRQV DQG WKH FOHDU D VHW RI PDWHULDOO\ LQGLVWLQJXLVKDEOH IDFWVl  ,G DW  SUHMXGLFHWKDWUHVXOWVIURPDQXQFXUHGDQGIODJUDQWO\LPSURSHU 8QGHU WKH VHFRQG FDWHJRU\ LQYROYLQJ  WKH mXQUHDVRQDEOH XVH RI WKDW VDPH HYLGHQFH  7KXV HYHQ LI VRPH SRWHQWLDO DSSOLFDWLRQRIlIHGHUDOODZE\DVWDWHFRXUWDIHGHUDOKDEHDV SUHMXGLFHDULVHVIURPWKHLQWURGXFWLRQRIFHUWDLQHYLGHQFHWKLV FRXUWPXVWDVNZKHWKHUWKHVWDWHFRXUWjVDSSOLFDWLRQRIFOHDUO\ &RXUWJHQHUDOO\SUHVXPHVWKDWLISURSHUO\LQVWUXFWHGE\MXGJHV HVWDEOLVKHGIHGHUDOODZZDVmREMHFWLYHO\UHDVRQDEOHl,GDW DQG JXLGHG E\ FRXQVHO MXULHV DUH FDSDEOH RI FRQVLGHULQJ ,IWKHIHGHUDOFRXUWILQGVWKDWYLHZHGREMHFWLYHO\WKH HYLGHQFH IRU RQH SXUSRVH EXW QRW DQRWKHU  6HH JHQHUDOO\ VWDWH FRXUW KDV FRUUHFWO\ LGHQWLILHG WKH JRYHUQLQJ OHJDO 5LFKDUGVRQY0DUVK86   ,QWKLVFDVH SULQFLSOH IURP WKH 6XSUHPH &RXUWjV GHFLVLRQV mEXW DQREMHFWLRQZRXOGKDYHSURPSWHGWKHMXGJHWRLQIRUPWKH XQUHDVRQDEO\ DSSOLH>G@ WKDW SULQFLSOH WR WKH IDFWV RI WKH MXURUVWKDWFRXQWHUWRWKHSURVHFXWRUjVVXJJHVWLRQWKH\FRXOG SULVRQHUjV FDVHl LW PD\ JUDQW WKH ZULW  ,G DW   ,Q QRWFRQYLFW:DVKLQJWRQEHFDXVHKHZDVWKHmW\SHlRISHUVRQ :LOOLDPV WKH 6XSUHPH &RXUW UHMHFWHG WKH )RXUWK &LUFXLWjV ZKRZRXOGFRPPLWWKHDOOHJHGFULPH ZHWKHQZRXOGSUHVXPH GHILQLWLRQ RI DQ mXQUHDVRQDEOH DSSOLFDWLRQl RI WKH ODZ E\ WKDWWKHMXU\KHHGHGWKDWLQVWUXFWLRQLQUHQGHULQJLWVYHUGLFW UHIHUHQFH WR D mUHDVRQDEOH MXULVWl  ,G DW   %\ 2QWKHRWKHUKDQG.HVWRQjVVLOHQFHDOORZHGWKHSURVHFXWRUjV LPSOLFDWLRQWKHVWDQGDUGIRU$('3$UHYLHZWKLV&RXUWVHW LPSURSHU XVH RI WKDW HYLGHQFH DV ZHOO DV LWV LPSURSHU IRUWKLQ7XFNHULVDOVRRYHUUXOHG6HH)GDW VWDWLQJ VXJJHVWLRQVWRWKHMXU\RIKRZWRFRQVLGHUWKDWHYLGHQFHWRJR WKDW D ZULW ZLOO LVVXH mLI WKH XQUHDVRQDEOHQHVV RI WKH VWDWH XQFRUUHFWHG)RUWKLVUHDVRQDQGEHFDXVHWKLVZDVDFORVH FRXUWjV DSSOLFDWLRQ RI FOHDUO\ HVWDEOLVKHG SUHFHGHQW LV QRW FDVH ULGLQJ RQ :DVKLQJWRQjV FUHGLELOLW\ VHH LQIUD GHEDWDEOHDPRQJUHDVRQDEOHMXULVWVl  :DVKLQJWRQZDVSUHMXGLFHGE\KLVFRXQVHOjVIDLOXUHWRREMHFW WRWKHFORVLQJDUJXPHQW  :DVKLQJWRQY+RIEDXHU 1R  1R  :DVKLQJWRQY+RIEDXHU 

7RREMHFWWRWKH6WDWHjVmILWlUKHWRULFZRXOGVLPSO\KDYHEHHQ ,,, mLQFRQVLVWHQWl .HVWRQ EHOLHYHG    7KLV EDVLF PLVXQGHUVWDQGLQJRIXQLYHUVDOWULDODQGHYLGHQFHSULQFLSOHV 1HLWKHU SDUW\ GLVSXWHV WKDW :DVKLQJWRQjV FODLP RI IDOOVZHOOEHORZDQREMHFWLYHVWDQGDUGRIUHDVRQDEOHQHVV6HH SURVHFXWRULDO PLVFRQGXFW LV SURFHGXUDOO\ EDUUHG DEVHQW D *UDYOH\)GDW VWDWLQJWKDWZKHQFRXQVHOIDLOHGWR VKRZLQJ RI FDXVH DQG SUHMXGLFH DQG ERWK UHFRJQL]H WKDW REMHFWEHFDXVHRIDODFNRIDZDUHQHVVRIWKHODZ6WULFNODQG LQHIIHFWLYHDVVLVWDQFHRIFRXQVHOFDQSURYLGHWKHQHFHVVDU\ ZDVYLRODWHG 5DFKHO )GDW FRQFOXGLQJWKDWWKH mFDXVHlIRUWKHSURFHGXUDOGHIDXOW%XW:DVKLQJWRQjVFODLP 6L[WK $PHQGPHQW ZDV YLRODWHG EHFDXVH DWWRUQH\Vj RI 6WULFNODQG LQHIIHFWLYHQHVV KLQJHV RQ ZKHWKHU WKH LQH[SHULHQFHLQDWWHQWLRQRUODFNRINQRZOHGJHRIWKHODZOHG SURVHFXWRUjVPLVFRQGXFWZDVSODLQHQRXJKIRUDPLQLPDOO\ WRWKHLUIDLOXUHWRREMHFWWRPLVFRQGXFW )RUVLPLODUUHDVRQV FRPSHWHQWFRXQVHOWRKDYHREMHFWHG)RUWKHVDNHRIFODULW\ ZHILQGWKDWWKHVWDWHWULDOFRXUWjVDQDO\VLVRIWKLVLVVXHZDV ZHWKHUHIRUHZLOODGGUHVV:DVKLQJWRQjVDSSHDOLQWKUHHVWHSV REMHFWLYHO\XQUHDVRQDEOH2QFHDJDLQWKDWFRXUWFRQFOXGHG )LUVWZHZLOOFRQVLGHUZKHWKHUWKHSURVHFXWRUjVFRQGXFWZDV WKDW WKH SURVHFXWRU KDG RQO\ VRXJKW WR SURYLGH D mIDFWXDO SODLQO\LPSURSHU6HFRQGZHZLOOFRQVLGHUZKHWKHU.HVWRQ EDFNGURSlWRWKHFULPHDVZHOODVDQH[SODQDWLRQIRU7DPDUDjV ZDV FRQVWLWXWLRQDOO\ LQHIIHFWLYH IRU IDLOLQJ WR REMHFW WR WKH SURVHFXWRULDOPLVFRQGXFW7KLUGZHZLOOFRQVLGHUZKHWKHU WKDW LQHIIHFWLYHQHVV VDWLVILHV WKH mFDXVH DQG SUHMXGLFHl H[FHSWLRQWRSURFHGXUDOGHIDXOWDOORZLQJXVWRDVNZKHWKHU  WKHPLVFRQGXFWLWVHOISURYLGHVJURXQGVIRUKDEHDVUHOLHI:H +LV IXOO H[SODQDWLRQ LV DV IROORZV ILQGIRU:DVKLQJWRQRQDOOWKUHHTXHVWLRQV 4 >RI .HVWRQ@ ><@RX ZDQWHG WR JR LQWR >:DVKLQJWRQjV EDG FKDUDFWHU@ IRU D GLIIHUHQW UHDVRQ WKDQ , ZDQWHG WR JR LQWR LW $ REYLRXVO\ <RX ZDQWHG WR JR LQWR LW WR VKRZ WKDW LW ZDV VR EDG WKDW WKLV \RXQJ ODG\ ZRXOG KDYH D UHDO UHDVRQ WR PDNH XS VRPHWKLQJ RI WKLV QDWXUH %HIRUHDVVHVVLQJZKHWKHU.HVWRQZDVLQHIIHFWLYHIRUIDLOLQJ $ 7R EH DEOH WR VLW LQ KHUH DQG OLH XQGHU RDWK WR D MXU\ LW KDV WRREMHFWWRWKHSURVHFXWRUjVDFWLRQVZHPXVWILUVWGHWHUPLQH WR EH VHULRXV RU LW FDQjW EH VROG ZKHWKHUWKHSURVHFXWRUFRPPLWWHGPLVFRQGXFW6HHJHQHUDOO\ 4 6R DIWHU , ZHQW LQWR LW LQ JHQHUDO     \RX WKHQ RQ FURVV &REE Y 3HULQL  )G   WK &LU   H[DPLQDWLRQ ZHQW LQWR LW LQ PXFK JUHDWHU GHWDLO GLG \RX QRW" UHMHFWLQJ FODLP WKDW FRXQVHOjV IDLOXUH WR REMHFW FRPSULVHG $ 7KDW LV FRUUHFW 4 $QG \RX ZDQWHG WR GLGQjW \RX" LQHIIHFWLYHQHVV LQ SDUW EHFDXVH LW ZDV XQFOHDU ZKHWKHU $ 7KDW LV FRUUHFW FKDOOHQJHGHYLGHQFHZDVLPSURSHU %DUWRQY0RUULV1R 4 $QG WKHQ RQFH , XVHG WKDW LQ P\ ILQDO VXPPDWLRQ o $QG ,    :/  DW  WK &LU sXO\     XVHG D ORW RI WKLQJV WKDW \RX EURXJKW RXW LQ FURVV XQSXEOLVKHGGHFLVLRQ  FRQFOXGLQJWKDWFRXQVHOjVIDLOXUHWR H[DPLQDWLRQ GLGQjW ," REMHFWWRSURVHFXWRUjVFORVLQJDUJXPHQWZDVQRWLQHIIHFWLYH $ 4 , H[SHFW VR $OO ULJKW 6R RQFH , VWDUWHG XVLQJ ZKDW \RX KDG DFWXDOO\ EHFDXVH mWKRVH FRPPHQWV GLG QRW DPRXQW WR SURVHFXWRULDO EURXJKW RXW LQ P\ FORVLQJ VXPPDWLRQ \RX KDG QR UHDVRQ WR PLVFRQGXFWDQGZRXOGQRWKDYHSURYLGHGWKHEDVLVIRUDFWLRQ REMHFW WR WKDW EHFDXVH \RX ZDQWHG LW EURXJKW RXW GLGQjW E\WKHWULDOMXGJHl sX[WDSRVLQJSUHFHGHQWIURPWKLVFLUFXLW \RX" DORQJVLGHWKHWULDOUHFRUGFRQYLQFHVXVWKDWVHYHUDODVSHFWVRI $ 7KDWjV FRUUHFW WKHSURVHFXWRUjVEHKDYLRUFOHDUO\FURVVHGWKHOLQHLQWRSODLQ 4 <RX ZHUH MXVW JRLQJ WR XVH LW LQ D GLIIHUHQW ZD\ WKDQ , XVHG LW DQGSUHMXGLFLDOLPSURSULHW\ $ ,W ZRXOG EH UDWKHU LQFRQVLVWHQW RI PH WR REMHFW

s$ DW  HPSKDVLV DGGHG   :DVKLQJWRQY+RIEDXHU 1R  1R  :DVKLQJWRQY+RIEDXHU 

 .HVWRQjV mSURWHFWLRQl VWUDWHJ\ ZDV QRW VR GHILFLHQW DV WR FRQVWLWXWH LQHIIHFWLYH DVVLVWDQFH  &HUWDLQO\ WKH VWUDWHJ\ )LUVW ZH DGGUHVV WKH SURVHFXWLRQjV HPSKDVLV RQ ZDONHG D ILQH DQG ULVN\ OLQH  ,Q DGGLWLRQ WR SURYLGLQJ D :DVKLQJWRQjV mEDG FKDUDFWHUl  $ IXQGDPHQWDO UXOH RI FRKHUHQWDQGSODXVLEOHH[SODQDWLRQIRUZK\7DPDUDPD\KDYH HYLGHQFHLVWKDWDGHIHQGDQWjVmEDGFKDUDFWHUlFDQQRWEHXVHG FRQWULYHGWKHLQFLGHQW.HVWRQjVVWUDWHJ\ZDVRQHRISHUKDSV WRDUJXHWKDWWKHGHIHQGDQWFRPPLWWHGWKHFULPHIRUZKLFKKH IHZZD\VWRmVSLQlWKHHYLGHQFHRI:DVKLQJWRQjVXQDSSHDOLQJ LV EHLQJ WULHG RU KDG WKH SURSHQVLW\ WR FRPPLW WKDW FULPH FKDUDFWHULQWRDSRWHQWLDOO\H[FXOSDWRU\XVH2IFRXUVHDQ\ 6HH HJ )HG 5 (YLG  D  m(YLGHQFH RI D SHUVRQjV PLQLPDOO\FRPSHWHQWDWWRUQH\ZRXOGDOVRKDYHDSSUHFLDWHG FKDUDFWHU RU D WUDLW RI FKDUDFWHU LV QRW DGPLVVLEOH IRU WKH WKDWWKLVVWUDWHJ\ULVNHGVZD\LQJWKHMXU\jVGHWHUPLQDWLRQRI SXUSRVH RI SURYLQJ DFWLRQ LQ FRQIRUPLW\ WKHUHZLWK RQ D JXLOWYHUVXVLQQRFHQFHZLWKLPSURSHULQIHUHQFHVEDVHGRQKLV SDUWLFXODU RFFDVLRQ    l  0LFK 5 (YLG  D  VDPH mEDG FKDUDFWHUl  6WLOO GXH LWV SRVLWLYH SRWHQWLDOLWLHV ZH 0LFKHOVRQY8QLWHG6WDWHV86     VWDWLQJ FDQQRWLQKLQGVLJKWILQGWKDW.HVWRQjVRYHUDOOGHIHQVHVWUDWHJ\ WKDWLPSURSHUFKDUDFWHUHYLGHQFHmZHLJK>V@WRRPXFKZLWKWKH ZDVVRSRRUDVWREHFRQVWLWXWLRQDOO\GHIHFWLYH MXU\DQGRYHUSHUVXDGH>V@WKHPDVWRSUHMXGJHRQHZLWKD EDGJHQHUDOUHFRUGDQGGHQ\KLPDIDLURSSRUWXQLW\WRGHIHQG 1RQHWKHOHVVHYHQWKLVDUWLFXODWHGVWUDWHJ\ZKROO\IDLOVWR DJDLQVWDSDUWLFXODUFKDUJHl 8QLWHG6WDWHVY9DQFH)G H[SODLQZK\.HVWRQGLGQRWREMHFWWRWKHSURVHFXWLRQjVPRVW  WK&LU   SURYLGLQJWKDWmEDGDFWVHYLGHQFHLV HJUHJLRXVFKDUDFWHUDWWDFNVGXULQJFORVLQJDUJXPHQW,QGHHG QRW DGPLVVLEOH WR SURYH FKDUDFWHU RU FULPLQDO SURSHQVLW\l WKHULVNRISUHMXGLFHLQKHUHQWLQ.HVWRQjVDUWLFXODWHGVWUDWHJ\ XQGHU)HG5(YLG E 8QLWHG6WDWHVY5LQJ)G ZRXOG KDYH PDGH D UHDVRQDEO\ FRPSHWHQW DWWRUQH\ GRXEO\  WK&LU   VWDWLQJWKDWLQMXU\WULDOVHYLGHQFH FDXWLRXVDERXWWKHSRWHQWLDOPLVXVHRIWKDWHYLGHQFH6XFKDQ RI D FULPLQDO GHIHQGDQWjV EDG DFWV RU SULRU PLVFRQGXFW LV DWWRUQH\ZRXOGKDYHDOVRXQGHUVWRRGWKDWZKLOHWKHSURVHFXWRU LQDGPLVVLEOHWRVKRZFULPLQDOSURSHQVLW\EHFDXVHLWmWHQGVWR ZDVSHUPLWWHGWRXVHWKHmEDGFKDUDFWHUlHYLGHQFHWRH[SODLQ FRQIXVHWKHLVVXHRIJXLOWRULQQRFHQFHRIWKHVSHFLILFRIIHQVHV 7DPDUDjV VLOHQFH DQG .HVWRQ ZDV SHUPLWWHG WR XVH LW WR FKDUJHGDQGWRZHLJKWRRKHDYLO\ZLWKWKHMXU\l :KHQD H[SODLQ7DPDUDjVDOOHJDWLRQVWKHSURVHFXWRUZDVVWLOOFOHDUO\ SURVHFXWRU GZHOOV RQ D GHIHQGDQWjV EDG FKDUDFWHU LQ WKLV SURKLELWHG IURP XVLQJ :DVKLQJWRQjV mEDG FKDUDFWHUl DV D SURKLELWHG PDQQHU ZH PD\ ILQG SURVHFXWRULDO PLVFRQGXFW EDVLV WR DUJXH KLV JXLOW RI WKH FULPH FKDUJHG  <HW WKLV LV 6HHHJ&RRNY%RUGHQNLUFKHU)G WK&LU SUHFLVHO\ WKH DUJXPHQW WKH 6WDWH PDGH WR WKH MXU\ ZKHQ LW    QRWLQJWKDWWKHmSURVHFXWRUjVPLVFRQGXFWLQWKLVFDVH XUJHGWKDW:DVKLQJWRQjVFKDUDFWHUmILWVlWKHDOOHJHGFULPH LVVHYHUHlGXHWRKLVmSHUVLVWHQW$GKRPLQHPDWWDFNRQWKH :KLOHDPLQLPDOO\FRPSHWHQWODZ\HUZRXOGKDYHUHFRJQL]HG SHWLWLRQHUjVFKDUDFWHUl  WKHVH VWDWHPHQWV WR EH EODWDQWO\ LPSURSHU DQG KLJKO\ SUHMXGLFLDO UHTXLULQJ DQ REMHFWLRQ DQG FXULQJ LQVWUXFWLRQV ,Q WKLV FDVH ZH ILQG WKDW ZKLOH WKH HYLGHQFH DV WR .HVWRQVDLGQRWKLQJ :DVKLQJWRQjV FKDUDFWHU ZDV DGPLVVLEOH IRU FHUWDLQ OLPLWHG SXUSRVHV WKH SURVHFXWRU ZHQW IDU EH\RQG WKH ERXQGV RI 0RUHRYHU .HVWRQjV H[SODQDWLRQ DW WKH *LQWKHU KHDULQJ SHUPLWWHGFRQGXFWZKHQSUHVHQWLQJWKDWHYLGHQFHWRWKHMXU\ VKRZVWKDWKLVVLOHQFHDURVHIURPLQFRPSHWHQFHDQGLJQRUDQFH %HFDXVH.HVWRQLQWURGXFHGPXFKRIWKLVHYLGHQFHDVSDUWRI RIWKHODZUDWKHUWKDQVWUDWHJ\)DLOLQJWRDSSUHFLDWHWKDWWKH KLV GHIHQVH VWUDWHJ\ VHH LQIUD DQG EHFDXVH DVSHFWV RI HYLGHQFHRI:DVKLQJWRQjVFKDUDFWHUZDVVXVFHSWLEOHWRVRPH :DVKLQJWRQjVFKDUDFWHUVKHGOLJKWRQZK\7DPDUDKDGQRW XVHV DQG QRW RWKHUV .HVWRQ DUWLFXODWHG KLV PLVWDNHQ LQIRUPHGRWKHUVRIWKHDOOHJHGDFWVZHGRQRWILQGWKDWWKH DVVXPSWLRQWKDWRQFHKHKDGLQWURGXFHGHYLGHQFHDVSDUWRI 6WDWHjV FURVVH[DPLQDWLRQ RI :DVKLQJWRQ FRQVWLWXWHG KLVGHIHQVHWKH6WDWHFRXOGXVHLWLQDQ\PDQQHULWGHVLUHG  :DVKLQJWRQY+RIEDXHU 1R  1R  :DVKLQJWRQY+RIEDXHU 

LQGHHGSXUVXHGWKLVVWUDWHJ\WKURXJKRXWWKHWULDO$OWKRXJK SUHMXGLFLDOPLVFRQGXFWRQLWVRZQ+RZHYHUWKHSURVHFXWRUjV .HVWRQ GLG QRW PHQWLRQ WKLV mSURWHFWLRQ WKHRU\l LQ KLV DQLPDWHGUHFLWDWLRQRIWKLVFKDUDFWHUHYLGHQFHGXULQJFORVLQJ RSHQLQJDUJXPHQWKHFOHDUO\SXUVXHGWKHWKHRU\LQH[DPLQLQJ DUJXPHQWVZDVSODLQO\LPSURSHU,QKLVLQLWLDOVXPPDWLRQWKH ZLWQHVVHV+HDVNHG&RUD%HDUGLQGHWDLODERXW:DVKLQJWRQjV SURVHFXWRULPSURSHUO\LPSOLHGWKDWWKHMXURUVVKRXOGFRQVLGHU SK\VLFDODEXVHKLVGULQNLQJKLVXVHRIGUXJVKLVVSHQGLQJRI :DVKLQJWRQjV XQVHHPO\ FKDUDFWHU ZKHQ UHQGHULQJ WKHLU %HDUGjVPRQH\KLVODFNRIHPSOR\PHQWDQGKLVJHQHUDOODFN YHUGLFW  LQ KLV UHEXWWDO KH H[SOLFLWO\ XUJHG WKHP WR GR VR RIVHOIFRQWURO+HDOVRDVNHG7DPDUDDERXW:DVKLQJWRQjV 0HDQZKLOH KH DWWDFNHG :DVKLQJWRQ DV D mVHOIVHUYLQJ GULQNLQJDQGZKHWKHUVKHKDGVHHQ:DVKLQJWRQEHDW&RUD LOORJLFDOVHOILVKQRQFRPSDVVLRQDWHQRHPRWLRQDOLQWHUHVWLQ ZKHQVKHVDLGWKDWVKHKDGKHDVNHGKHU m$QGRIFRXUVH DIDPLO\W\SHRISHUVRQlZKRDFWHGLUUDWLRQDOGXHWRmGUXJV \RXZRXOGQjWZDQWWRVHHWKDWKDSSHQWR\RXUPRWKHUDJDLQ DQGDOFRKROLVPDQGDJHQHUDOQRWFDULQJDERXWRWKHUSHRSOHl ZRXOG\RX"l6KHDQVZHUHGm1Rls$DW$QGGXULQJ s$DW7KHFULPHKHLPSORUHGWRWKHMXU\m>V@XUHILWV KLVGLUHFWH[DPLQDWLRQRI:DVKLQJWRQ.HVWRQHOLFLWHGIURP KLPls$DW7KHSURVHFXWRUWKXVDUWLFXODWHGSHUKDSV :DVKLQJWRQ WKDW WKH RQO\ UHDVRQ WKDW 7DPDUD ZRXOG KDYH WKHSDUDGLJPRIWKHLPSURSHUmEDGFKDUDFWHUlDUJXPHQWnWKDW PDGHXSWKHVWRU\mLVWKDWVKHZDQWHGWRSURWHFWKHUPRWKHUl WKHDOOHJHGFULPLQDODFWVmILWlWKHHYLGHQFHRI:DVKLQJWRQjV s$DW,QFORVLQJDUJXPHQWFRXQVHOVWDWHGWKDWZKLOH FKDUDFWHU DQG OLIHVW\OH  %HFDXVH WKLV FKDUDFWHU DWWDFN 7DPDUDjV DFFRXQW FRXOG QHLWKHU mEH SURYHG RU GLVSURYHGl SHUYDGHGWKHFORVLQJDUJXPHQWDQGUHEXWWDOZHILQGWKDWWKH WKHUHZDVRQHH[SODQDWLRQs$DWm>:@HNQRZLWPHDQV SURVHFXWRUjVPLVFRQGXFWZDVVHYHUH6HH&RRN)GDW 5XIXV:DVKLQJWRQZRQjWEHDURXQGDQ\PRUH>7DPDUD@FDQ  PDNLQJWKHVDPHFRQFOXVLRQDIWHUDSHUYDVLYHFKDUDFWHU VHH WKDW  6KH NQRZV QRW ZK\ EXW KH ZRQjW EH DURXQG DWWDFN  DQ\PRUHKHKDGQjWEHHQDURXQGIRUWHQPRQWKVls$DW 2YHUDOOWKHUHIRUH.HVWRQjVFKRLFHWRDOORZWKHSURVHFXWRUWR  FULWLFL]H :DVKLQJWRQjV FKDUDFWHU GXULQJ FURVVH[DPLQDWLRQ VWHPPHGDWOHDVWSDUWLDOO\IURPWULDOVWUDWHJ\ :HDOVRDJUHHZLWK3HWLWLRQHUWKDWWKHSURVHFXWRUHQJDJHG LQVHULRXVPLVFRQGXFWZKHQKHFKDUDFWHUL]HG7DPDUDjVVWRU\ %XWZHFDQQRWVWRSWKHUHIRUZHPXVWDOVRDVVHVVLIWKLV DV KDYLQJ EHHQ FRQVLVWHQW RYHU WLPH ZKHQ WKHUH ZDV QR VWUDWHJ\LWVHOIZDVFRQVWLWXWLRQDOO\GHILFLHQW6HH0DUWLQY HYLGHQFHVXSSRUWLQJWKDWIDFWXDODVVHUWLRQ 5RVH)G  WK&LU   VWDWLQJWKDWmHYHQ GHOLEHUDWHWULDOWDFWLFVPD\FRQVWLWXWHLQHIIHFWLYHDVVLVWDQFHRI 0LVUHSUHVHQWLQJIDFWVLQHYLGHQFHFDQDPRXQWWRVXEVWDQWLDO FRXQVHOLIWKH\IDOORXWVLGHWKHZLGHUDQJHRISURIHVVLRQDOO\ HUURUEHFDXVHGRLQJVRmPD\SURIRXQGO\LPSUHVVDMXU\DQG FRPSHWHQW DVVLVWDQFHl  LQWHUQDO TXRWDWLRQV DQG FLWDWLRQ PD\KDYHDVLJQLILFDQWLPSDFWRQWKHMXU\jVGHOLEHUDWLRQVl RPLWWHG  VHH DOVR /RYHWW Y )ROW] 1R     :/ 'RQQHOO\Y'H&KULVWRIRUR86   )RU DW  WK&LU6HSW   XQSXEOLVKHGRSLQLRQ VLPLODUUHDVRQVDVVHUWLQJIDFWVWKDWZHUHQHYHUDGPLWWHGLQWR VWDWLQJWKDWmWKHODEHOµVWUDWHJ\jLVQRWDEODQNHWMXVWLILFDWLRQ HYLGHQFHPD\PLVOHDGDMXU\LQDSUHMXGLFLDOZD\6HH%HUJHU IRUFRQGXFWZKLFKRWKHUZLVHDPRXQWVWRLQHIIHFWLYHDVVLVWDQFH Y8QLWHG6WDWHV 86   7KLVLVSDUWLFXODUO\ RIFRXQVHOl ,QGRLQJVRZHDJDLQDJUHHZLWKWKH6WDWHWKDW WUXHZKHQDSURVHFXWRUPLVUHSUHVHQWVHYLGHQFHEHFDXVHDMXU\ JHQHUDOO\ KDV FRQILGHQFH WKDW D SURVHFXWLQJ DWWRUQH\ LV IDLWKIXOO\ REVHUYLQJ KLV REOLJDWLRQ DV D UHSUHVHQWDWLYH RI D PDNH KLP VR EDG WKDW LQ WKH \RXQJ ODG\jV H\HV KH LV WR EH NHSW VRYHUHLJQW\6HHLGDW DZD\ QR PDWWHU ZKDW OHQJWK VKH KDV WR JR WR GR LW *LYHQ WKLV SUHFHGHQW FKDUDFWHUL]LQJ 7DPDUDjV s$ DW    FRQYHUVDWLRQV ZLWK GLIIHUHQW LQGLYLGXDOV DV FRQVLVWHQW  :DVKLQJWRQY+RIEDXHU 1R  1R  :DVKLQJWRQY+RIEDXHU 

FRPSULVHG FOHDU SURVHFXWRULDO PLVFRQGXFW  7KH 6WDWH DVVHVVPHQWRIWKHVHHYHQWVZDVZKROO\LQDGHTXDWHIDLOLQJWR VXJJHVWHGWKDW7DPDUDKDGEHHQFRQVLVWHQWZKHQLWVWDWHGWKH DSSUHFLDWHRUHYHQFRQVLGHUWKHFULWLFDOLVVXHVLQYROYHG IROORZLQJ D 7KLVFKLOGWDONHGWRKHUPRWKHUWKLVFKLOGWDONHGWRWKH GRFWRU7KLVFKLOGWDONHGWRWKHVRFLDOVHUYLFHZRUNHULQ )LUVWWKHWULDOFRXUWGLGQRWUHDVRQDEO\DSSO\6WULFNODQGWR GHWDLO6KHWHVWLILHG7KLVFKLOGWDONHGWR6HUJHDQW(OIRUG WKHIDFWVRIWKLVFDVHZKHQLWGHWHUPLQHGWKDW.HVWRQjVFKRLFH LQ GHWDLO  7KLV FKLOG ZHQW WKURXJK SUHOLPLQDU\ QRW WR REMHFW WR WKH 6WDWHjV LPSURSHU HPSKDVLV RQ H[DPLQDWLRQ DQG FURVV H[DPLQDWLRQ ZKHUH WKHUH ZDV :DVKLQJWRQjVmEDGFKDUDFWHUlZDVDFFHSWDEOH,QLWVZULWWHQ FURVVH[DPLQDWLRQDQGWKLVFKLOGWHVWLILHGEHIRUH\RXDQG RUGHUWKHFRXUWPHUHO\FRQFOXGHGWKDWWKHSURVHFXWRUjVXVHRI QRZKHUHIRUWKHPRVWSDUWEDVHGXSRQZKDWKDSSHQHG WKHEDGFKDUDFWHUHYLGHQFHKDGQRWEHHQLPSURSHUEHFDXVHWKH KDVLWFKDQJHG 6WDWH ZDV PHUHO\ mVHHN>LQJ@ WR HVWDEOLVK D UDWLRQDO IDFWXDO EDFNGURSlRIWKHFULPHDQGH[SODLQ7DPDUDjVUHDFWLRQWRLW s$DW HPSKDVLVDGGHG <HWDSDUWIURPWKHGRFWRUjV %XW DV H[SODLQHG VXSUD WKH UHFRUG GHPRQVWUDWHV EH\RQG D QRWHVnWR ZKLFK WKH SDUWLHV VWLSXODWHGn WKH SURVHFXWRU GRXEW WKDW WKH 6WDWHjV FORVLQJ DUJXPHQW ZHQW ZHOO EH\RQG HOLFLWHG QR HYLGHQFH RQ WKH VSHFLILFV RI 7DPDUDjV VXFKDQDUURZSXUSRVH7KHFRXUWWKXVIDLOHGHYHQWRVFUDWFK FRQYHUVDWLRQVZLWKDQ\RIWKHVHLQGLYLGXDOVHVWDEOLVKLQJRQO\ WKHVXUIDFHRIWKHUHTXLUHGLQTXLU\nZKHWKHU.HVWRQjVIDLOXUH WKDWFRQYHUVDWLRQVKDGRFFXUUHG6XUHO\WKHQWKHUHZDVQR WRREMHFWWRWKHSODLQPLVFRQGXFWVWHPPHGIURPDUHDVRQDEOH HYLGHQFHDVWRZKHWKHURUQRWKHUVWRU\KDGFKDQJHG WULDOVWUDWHJ\,WPRVWFOHDUO\GLGQRW,QGHHGKLVIDLOXUHWR REMHFWWRFHUWDLQVWDWHPHQWVIHOOEHORZDQREMHFWLYHVWDQGDUG :KHQ7DPDUDKHUVHOIWHVWLILHGVKHVWDWHGRQO\WKDWVKHKDG RI UHDVRQDEOHQHVV DQG ZDV RXWVLGH WKH ZLGH UDQJH RI FRQYHUVDWLRQVZLWKWKHUHIHUHQFHGSHRSOHDQGWKDWVKHKDG SURIHVVLRQDOO\FRPSHWHQWDVVLVWDQFH WROGWKHPmZKDWKDSSHQHGl7KHSURVHFXWRUGLGQRWDVNKHU WR GHVFULEH WKHGHWDLOV RI WKRVH FRQYHUVDWLRQV QRU GLG VKH )LUVWKRZHYHUZHDJUHHZLWKWKH6WDWHDQGWKHWULDOFRXUW YROXQWHHUWKHP 0RUHRYHUQRRWKHUZLWQHVVHVWHVWLILHGDERXW WKDW .HVWRQjV IDLOXUH WR REMHFW GXULQJ WKH 6WDWHjV FURVV H[DPLQDWLRQZDVJHQHUDOO\FRQVLVWHQWZLWKKLVEURDGHUWULDO VWUDWHJ\$V.HVWRQH[SODLQHGDWWKH*LQWKHUKHDULQJKLVWULDO  VWUDWHJ\ ZDV WR SURYLGH WKH MXU\ D EDVLV mIRU GLVEHOLHYLQJl 7DPDUD%HDUGjVWHVWLPRQ\7KHWULDOUHFRUGUHYHDOVWKDWKH 4 'LG \RX WHOO \RXU PRWKHU VRPHWKLQJ WKDW KDSSHQHG WR \RX WKHQ" $ <HV 4 :K\jG \RX WHOO KHU" $ µ&DXVH , GLGQjW ZDQW WR JR EDFN WKHUH     7KH FRXUW HODERUDWHG WKDW m>W@KH FKLOGYLFWLPjV IHDU RI GHIHQGDQW DQG 4 'LG \RX WDON WR VRPH QXUVHV RU PD\EH RQH QXUVH>"@ WKH EHDWLQJV RI WKH YLFWLPjV PRWKHU KHOSHG H[SODLQ WR WKH MXU\ ZK\ WKH $ , WDONHG WR D GRFWRU DQG D QXUVH    YLFWLP GLG QRW UHSRUW GHIHQGDQWjV VH[XDO DEXVH    l s$ DW   4 'LG \RX WHOO WKHP ZKDW KDSSHQHG WR \RX>@" $ <HV  4 2ND\ $QG WKHQ    GLG D ODG\ FRPH RXW WR VHH \RX DW \RXU .HVWRQ H[SODLQHG VFKRRO" $ <HV , KDYH WR SRVLWLRQ KHU DV EHLQJ WKH FKDPSLRQ IRU KHU PRWKHU D 4 'LG VKH WDON WR \RX DORQH" ILJKWHU IRU KHU PRWKHU RU HYHQ LQ KHU PRWKHUjV SODFH E\ QR $ <HV ORQJHU OHWWLQJ KHU PRWKHU DOORZ 0U :DVKLQJWRQ WR EH D PHPEHU 4 $QG GLG \RX WHOO KHU ZKDW KDG KDSSHQHG WR \RX" RI WKHLU KRXVHKROG     6R , KDYH WR PDNH KLP QRW VLPSO\ D $ <HV VZRUG LQ WKH PRWKHUjV VLGH EXW D UHDO EDG JX\    ,jYH JRW WR  :DVKLQJWRQY+RIEDXHU 1R  1R  :DVKLQJWRQY+RIEDXHU 

HYDOXDWHWKHUHDVRQDEOHQHVVRIFRXQVHOjVSHUIRUPDQFHZLWKLQ ZKDW7DPDUDWROGWKHPEHFDXVHVXFKWHVWLPRQ\ZRXOGKDYH WKHFRQWH[W RI WKHFLUFXPVWDQFHVDWWKHWLPHRIWKHDOOHJHG EHHQLQDGPLVVLEOHKHDUVD\)LUVWDV&RUD%HDUGZDVDERXWWR HUURUV6HH0F4XHHQY6FURJJ\ )G WK H[SODLQWRWKHMXU\ZKDW7DPDUDKDGWROGKHU.HVWRQREMHFWHG &LU  7KLV&RXUWKDVRQVHYHUDORFFDVLRQVIRXQGWKDWD RQ KHDUVD\JURXQGV6KHWKHUHIRUHWHVWLILHGRQO\WKDWDVD FRXQVHOjV IDLOXUH WR REMHFW WR SURVHFXWRULDO PLVFRQGXFW UHVXOWRI7DPDUDjVVWDWHPHQWVVKHGLGQRWPRYHEDFNLQZLWK FRQVWLWXWHVGHIHFWLYHSHUIRUPDQFHZKHQWKDWIDLOXUHLVGXHWR :DVKLQJWRQDQGVKHWRRN7DPDUDWRWKHKRVSLWDO'XULQJKLV FOHDULQH[SHULHQFHRUODFNRINQRZOHGJHRIFRQWUROOLQJODZ H[DPLQDWLRQRI6HUJHDQW(OIRUGWKHSURVHFXWRURQO\HOLFLWHG UDWKHU WKDQ UHDVRQDEOH WULDO VWUDWHJ\  6HH HJ *UDYOH\ Y WKDW(OIRUGLQWHUYLHZHG7DPDUD%HDUGDQGWKDWKHVSRNHWR 0LOOV  )G    WK &LU    5DFKHO Y WKH SURVHFXWRUjV RIILFH DIWHU WKDW LQWHUYLHZ  6LPLODUO\ %RUGHQNLUFKHU )G WK&LU   :RRGVRQWKHVRFLDOVHUYLFHZRUNHUZKRH[DPLQHG7DPDUD WHVWLILHGRQO\WKDWVKHKDGWDONHGZLWK7DPDUDIRXUWLPHVWKDW 6HFRQGHYHQLIFRXQVHOjVSHUIRUPDQFHLVGHHPHGGHILFLHQW 7DPDUD KDG EHHQ DORQH ZLWK KHU IRU WKUHH RI WKRVH D GHIHQGDQW PXVW VKRZ WKDW WKRVH GHILFLHQFLHV ZHUH FRQYHUVDWLRQV DQG WKDW DV D UHVXOW RI WKHLU WDONV VKH KDG SUHMXGLFLDOWRWKHGHIHQVH6HH6WULFNODQG86DW  FRQWDFWHG6HUJHDQW(OIRUG6KHVDLGQRWKLQJRIWKHFRQWHQWRI 7RPDNHWKLVVKRZLQJWKHGHIHQGDQWPXVWGHPRQVWUDWHWKDW WKHLUFRQYHUVDWLRQV WKHUH mLV D UHDVRQDEOH SUREDELOLW\ WKDW EXW IRU FRXQVHOjV XQSURIHVVLRQDOHUURUVWKHUHVXOWRIWKHSURFHHGLQJZRXOGKDYH *LYHQ WKLV WHVWLPRQ\ ZH ILQG WKDW WKH 6WDWH FRPPLWWHG EHHQ GLIIHUHQW  $ UHDVRQDEOH SUREDELOLW\ LV D SUREDELOLW\ SODLQ PLVFRQGXFW E\ VWDWLQJ WKDW 7DPDUDjV VWRU\ KDG QRW VXIILFLHQWWRXQGHUPLQHFRQILGHQFHLQWKHRXWFRPHl,GDW FKDQJHGDVVKHWDONHGWRWKHVHGLIIHUHQWLQGLYLGXDOV1RWRQO\    7KH HVVHQWLDO TXHVWLRQ LV mZKHWKHU EHWWHU ODZ\HULQJ GLG WKH SURVHFXWRU LPSURSHUO\ UHIHU WR VWDWHPHQWV QRW LQ ZRXOGKDYHSURGXFHGDGLIIHUHQWUHVXOWl0F4XHHQ )G HYLGHQFHEXWLWLVFOHDUWKDWWKHSURVHFXWRUjVSXUSRVHZDVWR DW TXRWLQJ:DUGY8QLWHG6WDWHV )G HQKDQFH7DPDUDjVFUHGLELOLW\LQWKHH\HVRIWKHMXU\6HHHJ WK&LU   )LQDOO\ EHFDXVH WKH $('3$ DSSOLHV WR :DVKLQJWRQjV SHWLWLRQZHFDQRQO\FRQVLGHU:DVKLQJWRQjVFKDOOHQJHZLWKLQ 4 6KH DVNHG \RX GLGQjW VKH"

WKH PRUH OLPLWHG DVVHVVPHQW RI ZKHWKHU WKH VWDWH FRXUWjV $ <HV

DSSOLFDWLRQ RI 6WULFNODQG WR WKH IDFWV RI WKLV FDVH ZDV 4 2ND\ $QG WKHQ ODWHU RQ WKHUH ZDV VRPH SROLFHPHQ 6HUJHDQW (OIRUG WKLV JHQWOHPDQ ULJKW KHUH" REMHFWLYHO\XQUHDVRQDEOH6HH:LOOLDPV6&WDW $ <HV 4 'LG KH WDON WR \RX DQG DVN \RX ZKDW KDSSHQHG"

 $ <HV 4 *R RYHU LW ZLWK \RX"

:HILQGWKDWWKHWULDOFRXUWjVDSSOLFDWLRQRI6WULFNODQGLQ $ <HV

WKLV FDVH ZDV QRW VLPSO\ LQFRUUHFW EXW ZDV REMHFWLYHO\ 4 $QG WKHQ WKHUH FDPH D WLPH D ZKLOH DJR WKDW \RX WHVWLILHG DFURVV WKH VWUHHW RYHU KHUH LQ WKH 'LVWULFW &RXUW EXLOGLQJ XQUHDVRQDEOHPHHWLQJHYHQWKHKLJKWKUHVKROGUHTXLUHGE\WKH EHIRUH D MXGJH GLGQjW \RX" $('3$7KHSURVHFXWLRQjVWDFWLFVDQGFKDOOHQJHGVWDWHPHQWV $ <HV

DPRXQWHG WR XQIDLU DQG SUHMXGLFLDO PLVFRQGXFW SODLQO\ 4 $QG KH DVNHG DERXW WHOOLQJ WKH WUXWK DQG \RX ZHUH XQGHU

PHULWLQJDQREMHFWLRQDQGFXUDWLYHLQVWUXFWLRQ\HW.HVWRQVDW RDWK LV WKDW ULJKW"

VLOHQW$WWKHPRVWSLYRWDOPRPHQWVZHFRQFOXGHKLVVLOHQFH $ <HV

ZDVGXHWRLQFRPSHWHQFHDQGLJQRUDQFHRIWKHODZUDWKHUWKDQ 4 $QG \RX WROG WKH FRXUW ZKDW KDSSHQHG" $ <HV DV SDUW RI D UHDVRQDEOH WULDO VWUDWHJ\  7KH WULDO FRXUWjV s$ DW   :DVKLQJWRQY+RIEDXHU 1R  1R  :DVKLQJWRQY+RIEDXHU 

s$DW m<RXWKLQNWKDWDWHQ\HDUROGFKLOGLVJRLQJWR WRDMXU\WKDWDQXQGHUO\LQJIDFWXDOSUHGLFDWHRIDFULPHPXVW JR WKURXJK DOO RI WKDW IRRO HYHU\ERG\ WDONLQJ DERXW WZR EHWUXHGXHWRWKHIDFWRILQGLFWPHQWRUSURVHFXWLRQ)RUWKHVH LQVWDQFHVl 6XFKEROVWHULQJLVDOVRLPSURSHU&I8QLWHG UHDVRQVZHILQGWKH6WDWHjVERRVWLQJRI7DPDUDjVFUHGLELOLW\ 6WDWHVY)UDQFLV)G WK&LU  VWDWLQJ EDVHGRQIDFWVQRWLQHYLGHQFHWRFRQVWLWXWHFOHDUPLVFRQGXFW WKDW LPSURSHU m>E@ROVWHULQJ RFFXUV ZKHQ WKH SURVHFXWRU LPSOLHV WKDW WKH ZLWQHVVjV WHVWLPRQ\ LV FRUURERUDWHG E\ % HYLGHQFH NQRZQ WR WKH JRYHUQPHQW EXW QRW NQRZQ WR WKH MXU\l 8QLWHG6WDWHVY'XYDO1R   :/ :HQRZPXVWDVVHVVZKHWKHU.HVWRQjVIDLOXUHWRREMHFWWR DW  WK&LU$SULO   XQSXEOLVKHGGHFLVLRQ  VWDWLQJ WKLVFOHDUPLVFRQGXFWYLRODWHG6WULFNODQG:HILQGWKDWLWGLG WKDW LPSURSHU ZLWQHVV YRXFKLQJ RFFXUV ZKHQ D SURVHFXWRU 0RUHLPSRUWDQWO\ZHILQGWKDWWKHWULDOFRXUWjVDSSOLFDWLRQRI DOOXGHV WR HYLGHQFH RXWVLGH WKH UHFRUG DV VXSSRUWLQJ WKH 6WULFNODQG ZDV QRW VLPSO\ LQFRUUHFW EXW ZDV REMHFWLYHO\ ZLWQHVVjVWHVWLPRQ\  XQUHDVRQDEOH

)LQDOO\ZHDUHXQPRYHGE\WKH6WDWHjVIHHEOHDWWHPSWWR  MXVWLI\LWVSODLQPLVFRQGXFW7KH6WDWHDUJXHVLQLWVEULHIWKDW LQmWKLVFDVH3HWLWLRQHUZDVFKDUJHGZLWKILUVWGHJUHHFULPLQDO $QHVVHQWLDOLQJUHGLHQWRIWKH6L[WK$PHQGPHQWULJKWWR VH[XDO FRQGXFW LQYROYLQJ SHQHWUDWLRQ  2EYLRXVO\ 7DPDUD FRXQVHO LV WKDW FRXQVHO SURYLGH FRQVWLWXWLRQDOO\ HIIHFWLYH PXVW KDYH JLYHQ D VWDWHPHQW WR VRPHRQH SULRU WR WULDO LQ DVVLVWDQFH6HH3RZHOOY$ODEDPD86    ZKLFKVKHFODLPHGSHQHWUDWLRQl+RIEDXHUjV%UDW,QD ,Q 6WULFNODQG WKH 6XSUHPH &RXUW HVWDEOLVKHG WKDW WKH VLPLODU YHLQ WKH 6WDWH FRQWHQGHG DW RUDO DUJXPHQW WKDW WKH EHQFKPDUN RI HIIHFWLYHQHVV mPXVW EH ZKHWKHU FRXQVHOjV SURVHFXWRUZDVVLPSO\SRLQWLQJRXWWRWKHMXU\WKDW7DPDUD FRQGXFW VR XQGHUPLQHG WKH SURSHU IXQFWLRQLQJ RI WKH GLGQRWmUHFDQWlKHUVWRU\DSRVLWLRQWKH6WDWHDUJXHVZDVD DGYHUVDULDOSURFHVVWKDWWKHWULDOFDQQRWEHUHOLHGRQDVKDYLQJ UHDVRQDEOH LQIHUHQFH JLYHQ WKDW WKH 6WDWH EURXJKW WKH SURGXFHG D MXVW UHVXOWl   86 DW   7KH 6WULFNODQG SURVHFXWLRQ7KLVH[SODQDWLRQLVVSHFLRXVIRUWZRUHDVRQV &RXUW VHW RXW D WZRSDUW LQTXLU\ WR GHWHUPLQH ZKHWKHU D )LUVW WKLV MXVWLILFDWLRQ VLPSO\ VLGHVWHSV WKH LPSURSULHW\ DW FRXQVHOjVDVVLVWDQFHLVFRQVWLWXWLRQDOLQHIIHFWLYH LVVXH7KHSURVHFXWLRQGLGIDUPRUHWKDQPHUHO\LQIRUPWKH MXU\WKDW7DPDUDmPXVWKDYHlVWDWHGWKDWSHQHWUDWLRQRFFXUUHG )LUVWDGHIHQGDQWPXVWVKRZWKDWFRXQVHOjVSHUIRUPDQFH DWVRPHSRLQWRUWKDWVKHGLGQRWmUHFDQWlKHUVWRU\,QVWHDG ZDVmGHILFLHQWlLQYROYLQJmHUURUVVRVHULRXVWKDWFRXQVHOZDV LW LQIRUPHG WKH MXU\ WKDW 7DPDUDjV VWRU\ WR HDFK DQG HYHU\ QRWIXQFWLRQLQJDVWKHµFRXQVHOjJXDUDQWHHGWKHGHIHQGDQWE\ ZLWQHVV KDG QHYHU FKDQJHG ZKHQ WKHUH ZDV LQ IDFW QR WKH 6L[WK $PHQGPHQWl  ,G DW   7KLV UHTXLUHV WKDW HYLGHQFHWRWKDWHIIHFW7KLVDUJXPHQWZDVDFOHDUDWWHPSWWR FRXQVHOjV FRQGXFW mIHOO EHORZ DQ REMHFWLYH VWDQGDUG RI ERRVWWKHFUHGLELOLW\RI7DPDUDDQGWKHEHOLHYDELOLW\RIKHU UHDVRQDEOHQHVVl7XFNHU)GDWDQGWKDWFRXQVHOjV VWRU\6HFRQGWKHYHU\SUHPLVHRIWKH6WDWHjVMXVWLILFDWLRQRQ mLGHQWLILHGDFWVDQGRPLVVLRQVZHUHRXWVLGHWKHZLGHUDQJHRI DSSHDOLVIODZHG,QGHHGLIWKH6WDWHKDGEHHQDWWHPSWLQJWR SURIHVVLRQDOO\FRPSHWHQWDVVLVWDQFHl6WULFNODQG86DW DUJXHWKHmUHDVRQDEOHLQIHUHQFHlLWGHVFULEHGDWRUDODUJXPHQW  ,QPDNLQJWKLVGHWHUPLQDWLRQDFRXUWPXVWmLQGXOJHD DQGLQLWVEULHIWKDWHIIRUWLWVHOIZRXOGKDYHFRQVWLWXWHGJURVV VWURQJ SUHVXPSWLRQ WKDW FRXQVHOjV FRQGXFW IDOOV ZLWKLQ WKH PLVFRQGXFW  m>,@W LV DOZD\V LPSURSHU IRU D SURVHFXWRU WR ZLGHUDQJHRIUHDVRQDEOHSURIHVVLRQDODVVLVWDQFHlDQGWKDWLW VXJJHVWWKDWDGHIHQGDQWLVJXLOW\PHUHO\EHFDXVHKHLVEHLQJ LVWKH GHIHQGDQWZKRmEHDUVWKHEXUGHQRIRYHUFRPLQJWKH SURVHFXWHGRUKDVEHHQLQGLFWHGl8QLWHG6WDWHVY%HVV  SUHVXPSWLRQWKDWWKHFKDOOHQJHGDFWLRQPLJKWEHFRQVLGHUHG )G  WK&LU  ,WLVHTXDOO\LPSURSHUWRLPSO\ VRXQG WULDO VWUDWHJ\l  7XFNHU  )G DW  FLWDWLRQ RPLWWHG &RXUWVPXVWQRWYLHZDWULDOLQKLQGVLJKWEXWPXVW