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

81,7(' 67$7(6 2) $0(5,&$ ; 3ODLQWLII$SSHOOHH    1R Y  !  s(55< & &528&+  'HIHQGDQW$SSHOODQW  1 $SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW IRUWKH6RXWKHUQ'LVWULFWRI2KLRDW'D\WRQ 1R n:DOWHU+5LFH&KLHI'LVWULFWsXGJH 6XEPLWWHG 'HFHPEHU 'HFLGHGDQG)LOHG 0D\ %HIRUH 6,/(5DQG%$7&+(/'(5&LUFXLWsXGJHV +22''LVWULFWsXGJH BBBBBBBBBBBBBBBBB &2816(/ 21%5,() 0DUWLQ63LQDOHVsRKQ3)HOGPHLHU6,5.,1 3,1$/(60(=,%29 6&+:$57=&LQFLQQDWL2KLRIRU

7KH +RQRUDEOH sRVHSK 0 +RRG 8QLWHG 6WDWHV 'LVWULFW sXGJH IRU WKH (DVWHUQ 'LVWULFW RI .HQWXFN\ VLWWLQJ E\ GHVLJQDWLRQ

  8QLWHG6WDWHVY&URXFK 1R

$SSHOODQW  s 5LFKDUG &KHPD $66,67$17 81,7(' 67$7(6$77251(<'D\WRQ2KLRIRU$SSHOOHH BBBBBBBBBBBBBBBBB 23,1,21 BBBBBBBBBBBBBBBBB $/,&( 0 %$7&+(/'(5 &LUFXLW sXGJH  'HIHQGDQW $SSHOODQWsHUU\&&URXFKDSSHDOVWKHVHQWHQFHLPSRVHGE\ WKHGLVWULFWFRXUWDIWHUKLVFRQYLFWLRQRQFKDUJHVRIFRQVSLUDF\ WRFRQGXFWDQLOOHJDOJDPEOLQJEXVLQHVVLQYLRODWLRQRI 86&††DQG  HQJDJLQJLQPRQHWDU\WUDQVDFWLRQV ZLWK FULPLQDOO\ GHULYHG SURSHUW\ RI YDOXH JUHDWHU WKDQ LQYLRODWLRQRI86&†  DQGPDNLQJIDOVH VWDWHPHQWV RQ KLV LQFRPH WD[ UHWXUQV LQ YLRODWLRQ RI  86&†%HFDXVHZHILQGQRSODLQHUURUZLWKUHJDUGWR WKH DSSOLFDWLRQ RI WKH VSHFLILF RIIHQVH FKDUDFWHULVWLF XQGHU 8QLWHG 6WDWHV 6HQWHQFLQJ *XLGHOLQHV 866* †6 E  DQGEHFDXVHZHODFNMXULVGLFWLRQWRUHYLHZWKH GLVWULFWFRXUWjVUHIXVDOWRGHSDUWGRZQZDUGDVUHTXHVWHGE\WKH GHIHQGDQWZHZLOODIILUPWKHMXGJPHQWRIWKHGLVWULFWFRXUW &URXFKDQGVHYHQFRGHIHQGDQWVZHUHQDPHGLQDFRXQW LQGLFWPHQWFKDUJLQJFRQVSLUDF\WRFRQGXFWDQLOOHJDOJDPEOLQJ EXVLQHVVDQGWRODXQGHUPRQH\ RSHUDWLQJDQLOOHJDOJDPEOLQJ EXVLQHVV  PRQH\ ODXQGHULQJ  HQJDJLQJ LQ PRQHWDU\ WUDQVDFWLRQVZLWKSURSHUW\GHULYHGIURPDVSHFLILHGXQODZIXO DFWLYLW\nWKH LOOHJDO JDPEOLQJ EXVLQHVV  DQG ILOLQJ IDOVH IHGHUDOWD[UHWXUQV7KHLQGLFWPHQWDOVRFRQWDLQHGDIRUIHLWXUH FRXQW  &URXFK ZDV QDPHG LQ  RI WKH LQGLFWPHQWjV  FRXQWV3XUVXDQWWRDZULWWHQSOHDDJUHHPHQW&URXFKSOHDGHG JXLOW\ WR RQH FRXQW RI FRQVSLUDF\ WR RSHUDWH DQ LOOHJDO JDPEOLQJ EXVLQHVV RQH FRXQW RI HQJDJLQJ LQ D PRQHWDU\ WUDQVDFWLRQZLWKSURSHUW\GHULYHGIURPDVSHFLILHGXQODZIXO DFWLYLW\ QDPHO\ WKH JDPEOLQJ EXVLQHVV DQG RQH FRXQW RI ILOLQJDIDOVHIHGHUDOWD[UHWXUQ 7KHSUHVHQWHQFHUHSRUWUHFRPPHQGHGWKDWWKHRIIHQVHVEH JURXSHGDQGWKDWWKHJXLGHOLQHIRUWKHRIIHQVHRIHQJDJLQJLQ LOOHJDOPRQHWDU\WUDQVDFWLRQV866*†6ZKLFKFDUULHG  8QLWHG6WDWHVY&URXFK 1R 1R 8QLWHG6WDWHVY&URXFK 

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†6 E   7KH GLVWULFW FRXUW FRQGXFWHG D VHQWHQFLQJ KHDULQJ DQG VSHFLILFDOO\ GHDOW ZLWK HDFK RI &URXFKj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

WUDQVDFWLRQVH[FHHGHGEXWZDVOHVVWKDQ VHH8QLWHG6WDWHVY6REUDO1R  :/ 7KH FRXUW VSHFLILFDOO\ DGGUHVVHG &URXFKjV PRWLRQ IRU DW   WK&LU0D\    XQSXEOLVKHG  UXOLQJWKDW GRZQZDUG GHSDUWXUH DQG GHQLHG WKH PRWLRQ  7KH FRXUW WKHPHDQLQJRImYDOXHRIWKHIXQGVlLQVHFWLRQ6 E  VHQWHQFHG&URXFKWRPRQWKVjLPSULVRQPHQW LQFOXGHVRQO\WKHYDOXHRIODXQGHUHGIXQGVDQGWKDWUHOHYDQW FRQGXFWXQGHUVHFWLRQ%FDQLQFOXGHXQFKDUJHGFRQGXFW :HWXUQILUVWWR&URXFKjVFODLPWKDWWKHGLVWULFWFRXUWHUUHG RQO\ LI WKH XQFKDUJHG FRQGXFW FRXOG KDYH EHHQ FKDUJHG DV LQ DSSO\LQJ WKH VSHFLILF RIIHQVH FKDUDFWHULVWLF RI VHFWLRQ PRQH\ODXQGHULQJZLWKLQWKHPHDQLQJRI†  (YHQLI 6 E  ,WLVZHOOHVWDEOLVKHGLQWKLVFLUFXLWWKDWDOWKRXJK &URXFK FRXOG VKRZ WKDW WKH GLVWULFW FRXUWjV DJJUHJDWLRQ RI ZH KDYH GLVFUHWLRQ WR UHYLHZ IRU SODLQ HUURU REMHFWLRQV WR WUDQVDFWLRQV ZDV HUURU LW FHUWDLQO\ FDQQRW EH SODLQ HUURU VHQWHQFLQJWKDWWKHGHIHQGDQWIDLOHGWRUDLVHEHIRUHWKHGLVWULFW LQDVPXFK DV LW IROORZV WKH ODZ DOEHLW XQSXEOLVKHG RI WKLV FRXUW ZH PD\ QRW H[HUFLVH WKDW GLVFUHWLRQ XQOHVV WKH FLUFXLW DQG WKH ODZ RI DW OHDVW IRXU RWKHU FLUFXLWV GHIHQGDQWGHPRQVWUDWHVWKDWWKHGLVWULFWFRXUWjVGHFLVLRQZDV $FFRUGLQJO\ZHZLOOQRWUHYLHZWKLVDVVLJQPHQWRIHUURU SODLQO\HUURQHRXV8QLWHG6WDWHVY.RHEHUOHLQ)G    WK&LU  7RHVWDEOLVKSODLQHUURU&URXFKPXVW 1RUPD\ZHUHYLHZ&URXFKjVFODLPWKDWWKHGLVWULFWFRXUW VKRZ HUUHG LQ GHQ\LQJ KLV PRWLRQ IRU D VXEVWDQWLDO GRZQZDUG GHSDUWXUH:HPD\QRWUHYLHZWKHUHIXVDORIDGLVWULFWFRXUW  WKDWDQHUURURFFXUUHGLQWKHGLVWULFWFRXUW   WKDWWKH WRJUDQWDGRZQZDUGGHSDUWXUHLIWKHGLVWULFWFRXUWXQGHUVWRRG HUURUZDVSODLQLHREYLRXVRUFOHDU   WKDWWKHHUURU WKHH[WHQWRILWVDXWKRULW\DQGFRUUHFWO\DSSOLHGWKH6HQWHQFLQJ DIIHFWHGGHIHQGDQWj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†  WKHGLVWULFW GRZQDSHUVHUXOHWKDWSUHFOXGHGWKHFRXUWIURPILQGLQJWKDW FRXUWDJJUHJDWHGWUDQVDFWLRQVWRUHDFKWKHWRWDODPRXQWXSRQ &URXFKjVFDVHZDVRXWVLGHWKHKHDUWODQGRIFDVHVLQYROYLQJ ZKLFKWKHVHQWHQFHZDVFDOFXODWHG DQGWKHUHLVQRHYLGHQFH PRQHWDU\WUDQVDFWLRQRIIHQVHV%XWWKHGLVWULFWFRXUWjVFDUHIXO WKDW DQ\ WUDQVDFWLRQ RWKHU WKDQ RQH  WUDQVDFWLRQ H[SODQDWLRQRILWVUHDVRQVIRUGHQ\LQJ&URXFKjVPRWLRQPDNHV LQFOXGHG LQ WKDW DJJUHJDWLRQ H[FHHGHG   :H KDYH LWFOHDUEH\RQGFDYLOWKDWWKHFRXUWIRXQGQRIDFWVRUIDFWRUVLQ SUHYLRXVO\UHMHFWHGWKLVDUJXPHQWVHH8QLWHG6WDWHVY6HOE\ &URXFKjVFDVHWKDWWRRNLWRXWVLGHWKHKHDUWODQGRUVXSSRUWHG 1RV    :/DW  &URXFKjVFODLPWKDWWKHJXLGHOLQHVVHQWHQFHZDVWRRVHYHUHIRU WK &LU $XJ     XQSXEOLVKHG  DV KDYH PRVW RWKHU WKHRIIHQVHKHKDGFRPPLWWHG1RWKLQJWKHGLVWULFWFRXUWVDLG FLUFXLWVWKDWKDYHDGGUHVVHGWKHLVVXH6HH8QLWHG6WDWHVY LQGLFDWHVWKDWLWYLHZHG)RUGDVOD\LQJGRZQDSHUVHUXOHWKDW 5RGULJXH])G  WK&LU 8QLWHG6WDWHV JDPEOLQJRIIHQVHVFDQQHYHUEHGHWHUPLQHGWREHRXWVLGHWKH Y0XOOHQV)G WK&LU  8QLWHG KHDUWODQG:HODFNMXULVGLFWLRQWRUHYLHZWKLVDVVLJQPHQWRI 6WDWHVY7KRPSVRQ)G G&LU  8QLWHG HUURU 6WDWHVYsRKQVRQ )G WK&LU  %XW