Youn v. Track, Inc.
Youn v. Track, Inc.
Opinion
5(&200(1'(' )25 )8//7(;7 38%/,&$7,21 3XUVXDQW WR 6L[WK &LUFXLW 5XOH <RXQHWDOY7UDFN,QF 1R (/(&7521,& &,7$7,21 )(' $SS 3 WK &LU )LOH 1DPH DS sRQDWKDQ <HGRU 6DQ $QWRQLR 7H[DV %ULDQ ( +XUOH\ &5$%%( %52:1 s$0(6 &LQFLQQDWL 2KLR IRU $SSHOOHH 81,7('67$7(6&28572)$33($/6 BBBBBBBBBBBBBBBBB )257+(6,;7+&,5&8,7 BBBBBBBBBBBBBBBBB 23,1,21 BBBBBBBBBBBBBBBBB
%$521 7 <281 .<21* ; &/$< &LUFXLW sXGJH 3ODLQWLIIV %DURQ 7 <RXQ DQG +:$1 &+2,GED&.+ .\RQJ+ZDQ&KRLGED&.+6SRUWVZRUOG/WGDSSHDOWKH GLVWULFW FRXUWjV RUGHU RI 0D\ UHIXVLQJ WR WUDQVIHU 6SRUWVZRUOG/WG WKHLUDFWLRQIRUEUHDFKRIFRQWUDFWDQGGLVPLVVLQJWKHLUDFWLRQ 1R 3ODLQWLIIV$SSHOODQWV ZLWKSUHMXGLFHEDVHGRQODFNRISHUVRQDOMXULVGLFWLRQ7KH\ ! DOVR DSSHDO DQ RUGHU GHQ\LQJ WKHLU UHTXHVW WR UHFXVH WKH PDJLVWUDWHMXGJHRQ0DUFKDQGWKUHHVHSDUDWHRUGHUV Y LPSRVLQJ GLVFRYHU\ VDQFWLRQV RQ $SULO 0D\ DQG sXQH :H $)),50 LQ SDUW DQG 75$&. ,1& 5(9(56(LQSDUW 'HIHQGDQW$SSHOOHH )$&76 1 $SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW ,Q DQG 3ODLQWLII&KRLOLYHGZLWKKLVVLVWHUDQG IRUWKH6RXWKHUQ'LVWULFWRI2KLRDW&LQFLQQDWL KLVEURWKHULQODZ3ODLQWLII%DURQ7<RXQLQ6KDURQYLOOH 1R n+HUPDQs:HEHU'LVWULFWsXGJH 2KLR &KRL UHVLGHV LQ 6RXWK .RUHD DQG VRXJKW WR LPSRUW $PHULFDQPDGHVSRUWVHTXLSPHQW<RXQLVDQ2KLRUHVLGHQW $UJXHG 'HFHPEHU &KRL QRWLFHG D ERZOLQJ EDOO DGYHUWLVHPHQW IURP 7UDFN 'HFLGHGDQG)LOHG 0DUFK m2OG7UDFNl DERZOLQJEDOOVHOOHUEDVHGLQ 6RORQ2KLR &KRLEURXJKWWKHDGWR<RXQjVDWWHQWLRQ<RXQWHOHSKRQHG %HIRUH 5<$1&/$<DQG*,%%216&LUFXLWsXGJHV 2OG 7UDFN DQG DUUDQJHG D PHHWLQJ ZLWK LWV 3UHVLGHQW 3KLO &DUGLQDOH2WKHUWHOHSKRQHDQGID[FRPPXQLFDWLRQVEHWZHHQ BBBBBBBBBBBBBBBBB &DUGLQDOH DQG <RXQ IROORZHG WKHLU LQLWLDO PHHWLQJ &KRL VSHDNVYHU\OLWWOH(QJOLVKVR<RXQDFWLQJDVDQLQWHUSUHWHU &2816(/ HQJDJHGLQDOOFRPPXQLFDWLRQVZLWK2OG7UDFN $5*8(' :LOOLDP + %OHVVLQJ /$: 2)),&(6 2) 3ODLQWLIIVDOOHJHWKDWQHJRWLDWLRQVEHWZHHQ<RXQDQG2OG :,//,$0+%/(66,1*&LQFLQQDWL2KLRIRU$SSHOODQWV 7UDFN OHG WR DQ DJUHHPHQW EHWZHHQ 2OG 7UDFN DQG &.+ sRQDWKDQ <HGRU 6DQ $QWRQLR 7H[DV IRU $SSHOOHH 6SRUWVZRUOG/WG m&.+l WKHQDPHXQGHUZKLFK&KRLZDV 21 %5,() :LOOLDP + %OHVVLQJ /$: 2)),&(6 2) GRLQJEXVLQHVV3XUVXDQWWRWKLVDOOHJHGFRQWUDFWRQRUDERXW :,//,$0+%/(66,1*&LQFLQQDWL2KLRIRU$SSHOODQWV 6HSWHPEHU &.+ EHFDPH WKH H[FOXVLYH .RUHDQ
1R <RXQHWDOY7UDFN,QF <RXQHWDOY7UDFN,QF 1R
GLVWULEXWRURI2OG7UDFNjVSURGXFWVLQFOXGLQJWKHm7UDFNVWHUl RIILFHSHUIRUPHGYDULRXVVKLSSLQJELOOLQJDQGDGPLQLVWUDWLYH RQHRI2OG7UDFNjVERZOLQJEDOOV IXQFWLRQV 3ODLQWLII &KRL RSHUDWHG &.+ DV D VROH SURSULHWRUVKLS LQ $IWHU WKH DVVHW SXUFKDVH WKH GLVWULEXWRU DUUDQJHPHQW 6RXWK.RUHD&.+LPSRUWHGVSRUWLQJJRRGVIRUVDOHLQ6RXWK EHWZHHQ&.+DQG1HZ7UDFNFRQWLQXHGDVLWKDGZLWK2OG .RUHD $OO RI &.+jV HPSOR\HHV UHVLGHG LQ 6RXWK .RUHD 7UDFN&.+SXUFKDVHRUGHUVVWLOORULJLQDWHGIURP<RXQZKR )XUWKHUPRUH&.+VROGSURGXFWVDQGVHUYLFHVRQO\LQ6RXWK VHQW WKHP WR 1HZ 7UDFNj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jV6RORQ2KLR RIILFH 2OG 7UDFN QRUPDOO\ ID[HG FRQILUPDWLRQ RI WKHVH 'XULQJ WKH FRXUVH RI &.+jV EXVLQHVV UHODWLRQVKLSZLWK RUGHUVEDFNWR<RXQLQ6KDURQYLOOH2KLR 1HZ7UDFN<RXQGHVLJQHGERZOLQJEDOOORJRVIRU&.+jVXVH LQWKH.RUHDQPDUNHW<RXQFDOOHGRQHRIWKHVHORJRVWKH 2OG7UDFNLWVHOIGLGQRWPDQXIDFWXUHWKHERZOLQJEDOOV$V m9ROFDQRl,QHDUO\ ZLWK<RXQjVDXWKRUL]DWLRQ&.+ &.+ RUGHUHG EDOOV 2OG 7UDFN KLUHG &ROXPELD D 6DQ HQWHUHGLQWRDFRQWUDFWZLWK1HZ7UDFNZKHUHE\1HZ7UDFN $QWRQLR7H[DVEDVHGFRPSDQ\WREXLOGWKHEDOOV,QLWLDOO\ ZRXOGVHOO&.+WKHVDPHEDOOVPDUNHWHGDVWKHm7UDFNVWHUl 2OG7UDFNVKLSSHGWKHEDOOVWRLWV2KLRORFDWLRQDQGH[SRUWHG EXW IRU OHVV PRQH\ &.+ VROG WKHVH EDOOV XQGHU WKH WKHP WR 6RXWK .RUHD IURP WKHUH /DWHU &ROXPELD m9ROFDQRlORJR3XUVXDQWWRWKH9ROFDQRDJUHHPHQW1HZ VKLSSHGWKHEDOOVIURP6DQ$QWRQLRWR/RV$QJHOHVDQGWKHQ 7UDFNFRXOGVHOO9ROFDQREDOOVLQWKH8QLWHG6WDWHVEXWQRWLQ IURPWKHUHWKHEDOOVWUDYHOHGWR6RXWK.RUHD .RUHD<RXQUHJLVWHUHGWKH9ROFDQRORJRDVDWUDGHPDUNZLWK 2KLRjV6HFUHWDU\RI6WDWHLQ$XJXVWRI ,Q ODWH 2OG 7UDFNjV RZQHU 3DXO 6HHJRWW VROG WKH FRPSDQ\jV DVVHWV WR D QHZ 1HYDGD FRUSRUDWLRQ DOVR FDOOHG $W WKH HQG RI 1HZ 7UDFN PRYHG LWV RIILFHV ,W 7UDFN,QF m1HZ7UDFNl ZLWKLWVSULQFLSDOSODFHRIEXVLQHVV WUDQVIHUUHGLWV2KLRRIILFHVDQG3UHVLGHQW&DUGLQDOHWR6DQ LQ 6DQ $QWRQLR 7H[DV $OO RI 2OG 7UDFNjV DVVHWV ZHUH $QWRQLR,Q <RXQGLUHFWHG&.+SXUFKDVHRUGHUVWRWKH ORFDWHGLQ2KLR$FFRUGLQJWRWKHDVVHWSXUFKDVHDJUHHPHQW QHZ RIILFH LQ 7H[DV 1HZ 7UDFN VWLOO LVVXHG UHJXODU 1HZ7UDFNSXUFKDVHGWKHDVVHWVDQGDVVXPHGWKHOLDELOLWLHV VSHFLILFDOO\PHQWLRQHGLQWKHFRQWUDFW7KHDVVHWSXUFKDVH FRQWUDFW GRHV QRW PHQWLRQ WKH &.+2OG 7UDFN DJUHHPHQW 7KH SDUWLHV YHKHPHQWO\ FRQWHVW HYHU\ IDFHW RI WKLV DJUHHPHQW 7KLV 1HZ7UDFNKLUHG2OG7UDFNjVHPSOR\HHVLQFOXGLQJ&DUGLQDOH GLVSXWHG IDFWXDO LVVXH KDV QR EHDULQJ RQ WKH PHULWV RI WKLV DSSHDO DQG DQG RSHQHG RIILFHV LQ 6RORQ 2KLR 1HZ 7UDFN FRQWLQXHG QRWKLQJ LQ WKLV RSLQLRQ VKRXOG EH FRQVWUXHG DV FRPPHQWDU\ RQ WKH RSHUDWLQJ2OG7UDFNjVERZOLQJEDOOEXVLQHVV,WDUUDQJHGIRU WUDGHPDUN FODLP
2KLR WHOHSKRQH VHUYLFH DQG UHJLVWHUHG ZLWK YDULRXV 2KLR DJHQFLHVDVDQ2KLRHPSOR\HU KRZHYHU1HZ7UDFNjV7H[DV 1HZ 7UDFN H[SODLQV WKDW LW mRSHUDWHG IURP DQ RIILFH LQ 1RUWKHUQ 2KLR IRU DSSUR[LPDWHO\ HOHYHQ PRQWKV DIWHU WKH >DVVHW@ VDOH DV DQ DFFRPPRGDWLRQ E\ >1HZ 7UDFN@ WR DOORZ >3UHVLGHQW &DUGLQDOH@ WR PDNH DUUDQJHPHQWV WR VHOO KLV KRPH DQG PRYH KLV IDPLO\ WR 7H[DVl ' %U DW 2QH RI WKH VKDUHKROGHUV RI &ROXPELD RZQHG 1HZ 7UDFN 1R <RXQHWDOY7UDFN,QF <RXQHWDOY7UDFN,QF 1R
FRQILUPDWLRQVWR<RXQLQ2KLR2QsDQXDU\ 1HZ 6KRUWO\DIWHU3ODLQWLIIVILOHGWKHLUVXLW1HZ7UDFNLVVXHGLWV 7UDFN QRWLILHG &.+ WKDW LW ZRXOG WHUPLQDWH WKH H[FOXVLYH LQLWLDOGLVFRYHU\UHTXHVWVLQFOXGLQJUHTXHVWVIRUGRFXPHQWV GLVWULEXWRUVKLSDJUHHPHQWDWWKHHQGRIWKDW\HDU 3ODLQWLIIV UHVSRQGHG E\ DQVZHULQJ LQWHUURJDWRULHV DQG SURGXFLQJKXQGUHGVRIGRFXPHQWV,Q$XJXVWRI 1HZ 2Q )HEUXDU\ 3ODLQWLII.\RQJ+ZDQ&KRLGED 7UDFNPDGHDVHFRQGVHULHVRIGRFXPHQWUHTXHVWVLQFOXGLQJ &.+ 6SRUWVZRUOG /WG ILOHG D FRPSODLQW LQ WKH &RXUW RI UHTXHVWVIRU<RXQjVSHUVRQDOLQFRPHWD[UHWXUQVDQG&.+jV &RPPRQ 3OHDV IRU +DPLOWRQ &RXQW\ 2KLR DJDLQVW 1HZ ILQDQFLDO VWDWHPHQWV <RXQ REMHFWHG WR WKH UHTXHVW IRU KLV 7UDFN,QFDOOHJLQJWKDW1HZ7UDFNEUHDFKHGWKHH[FOXVLYH SHUVRQDOLQFRPHWD[UHWXUQVDQGRIIHUHGLQVWHDGWRSURGXFH GLVWULEXWRUVKLSDJUHHPHQW&KRLYROXQWDULO\GLVPLVVHGWKLV DQ\SRUWLRQVRIWKHWD[UHWXUQVWKDWKDGDQ\WKLQJWRGRZLWKWKH FRPSODLQW EHIRUH FRPSO\LQJ ZLWK DQ\ RI 1HZ 7UDFNjV VXEMHFW RI WKH ODZVXLW 3ODLQWLIIV DOVR IDLOHG WR SURGXFH GRFXPHQWUHTXHVWV GRFXPHQWVVXSSRUWLQJWKHLUGDPDJHFDOFXODWLRQVDQG&.+jV ILQDQFLDO VWDWHPHQWV 1HZ 7UDFN WKHQ PRYHG WR FRPSHO 2Q0DUFK &KRLDQG<RXQVXHG1HZ7UDFNLQWKH GLVFRYHU\DQG3ODLQWLIIVDVNHGIRUDSURWHFWLYHRUGHU/HVV 'LVWULFW &RXUW IRU WKH 6RXWKHUQ 'LVWULFW RI 2KLR 7KHLU WKDQ D PRQWK ODWHU 1HZ 7UDFN ILOHG LWV ILUVW PRWLRQ IRU FRPSODLQW DVVHUWHG EUHDFK RI FRQWUDFW FODLPV EDVHG RQ WKH VDQFWLRQV DOOHJHG H[FOXVLYH GLVWULEXWRUVKLS DJUHHPHQW DQG WUDGHPDUN LQIULQJHPHQW UHODWHG WR WKH m9ROFDQRl ORJR 1HZ 7UDFN 2Q)HEUXDU\ WKHFRXUWKHOGDKHDULQJRQWKHWZR UHVSRQGHGRQ0D\ ZLWKDPRWLRQWRGLVPLVVWKDW PRWLRQV 7KH FRXUW JUDQWHG WKH PRWLRQ WR FRPSHO RQ DVVHUWHG WKH GLVWULFW FRXUW ODFNHG SHUVRQDO MXULVGLFWLRQ 0DUFK EXWGHFOLQHGWRLPSRVHVDQFWLRQV7KHFRXUW 3ODLQWLIIV ILOHG D UHVSRQVH LQ RSSRVLWLRQ WR WKH PRWLRQ RQ DOVR JUDQWHG D SURWHFWLYH RUGHU 7KH PRWLRQ WR FRPSHO sXQH GLUHFWHG 3ODLQWLIIV WR SURGXFH DOO GRFXPHQWV UHVSRQVLYH WR 1HZ7UDFNjVVHFRQGVHWRIUHTXHVWVLQFOXGLQJWKHWD[UHWXUQV ,Q6HSWHPEHURI DIWHURQHIHGHUDOMXGJHWRZKRPWKH ILQDQFLDOVWDWHPHQWVDQGGRFXPHQWVVXSSRUWLQJWKHLUGDPDJH FDVHKDGEHHQDVVLJQHGGLHGDQGDQRWKHUWRRNVHQLRUVWDWXV FODLPV7KHRUGHUDOORZHG3ODLQWLIIVILIWHHQGD\VWRFRPSO\ WKHSDUWLHVDJUHHGWRKDYHDPDJLVWUDWHMXGJHDGMXGLFDWHWKHLU DQGIXUWKHUGLUHFWHG3ODLQWLIIVWRSURGXFHDQLQGH[LGHQWLI\LQJ FDVHSXUVXDQWWR86& F 7KHGLVWULFWFRXUWjV ZKLFKGRFXPHQWVZHUHUHVSRQVLYHWRZKLFKVSHFLILFUHTXHVW RUGHU RI UHIHUHQFH UHIHUUHG WKH FDVH WR 0DJLVWUDWH sXGJH 5REHUW $ 6WHLQEHUJ 2Q 6HSWHPEHU DIWHU $FFRUGLQJ WR 3ODLQWLIIV WKH\ SURGXFHG HYHU\ UHTXHVWHG FRQIHUULQJZLWKFRXQVHOIRUWKHSDUWLHV860DJLVWUDWHsXGJH GRFXPHQW LQ WKHLU SRVVHVVLRQ FXVWRG\ RU FRQWURO 7KHLU 6WHLQEHUJ LVVXHG DQ RUGHU GHFODULQJ 1HZ 7UDFNjV SHUVRQDO SURGXFWLRQ LQFOXGHG PRUH WKDQ GRFXPHQWV LQFOXGLQJ MXULVGLFWLRQPRWLRQmZLWKGUDZQlVXEMHFWWRUHLQVWDWHPHQWLI &KRLjV .RUHDQ WD[ UHWXUQV $Q LQGH[ DFFRPSDQLHG WKH VHWWOHPHQWQHJRWLDWLRQVIDLOHG7KHSDUWLHVIDLOHGWRVHWWOHEXW GRFXPHQWVLGHQWLI\LQJZKLFKZHUHSURGXFHGLQUHVSRQVHWR 1HZ7UDFNQHYHUIRUPDOO\PRYHGWRUHLQVWDWHLWVPRWLRQ ZKLFKUHTXHVW1HZ7UDFNFRPSODLQHGKRZHYHUWKDWPDQ\ GRFXPHQWV ZHUH ZULWWHQ LQ .RUHDQ PDNLQJ LW GLIILFXOW WR 0DJLVWUDWHsXGJH6WHLQEHUJUHVLJQHGLQsDQXDU\RI GHWHUPLQHZKHWKHU3ODLQWLIIVKDGFRPSOHWHO\FRPSOLHGZLWK 2Q)HEUXDU\ WKHFDVHZDVWUDQVIHUUHGWRDYLVLWLQJ WKH 0DUFK RUGHU)XUWKHUPRUH3ODLQWLIIVIDLOHG WR 0DJLVWUDWHsXGJH/\QQ9+RRHsU)LYHPRQWKVODWHUWKH SURGXFHDQ\RI<RXQjV2KLRLQFRPHWD[UHWXUQVKLVIHGHUDO FDVHZDVWUDQVIHUUHGDJDLQWRWKHGRFNHWRIDQRWKHUYLVLWLQJ LQFRPH WD[ UHWXUQV IRU FDOHQGDU \HDUV RU DQ\ 0DJLVWUDWH sXGJH sDPHV &RRN ZKR NHSW WKH FDVH XQWLO ILQDQFLDO VWDWHPHQWV &KRL FODLPV QRW WR KDYH SURGXFHG 1RYHPEHU ZKHQ0DJLVWUDWHsXGJH7LPRWK\+RJDQ ILQDQFLDOVWDWHPHQWVIRU&.+EHFDXVHQRVXFKVWDWHPHQWVHYHU UHFHLYHGWKHFDVH 1R <RXQHWDOY7UDFN,QF <RXQHWDOY7UDFN,QF 1R
H[LVWHG<RXQSURGXFHGILYH\HDUVRIKLVIHGHUDOLQFRPHWD[ 3ODLQWLIIV WKHQ PRYHG WKH FRXUW EHORZ WR PRGLI\ WKH UHWXUQV DQG ODWHU SURYLGHG 1HZ 7UDFN ZLWK D VLJQHG IRUP WUDQVODWLRQRUGHU7KHFRXUWDJUHHGWRDQHZSURFHGXUHWKDW DXWKRUL]LQJ 1HZ 7UDFNjV FRXQVHO WR REWDLQ WKH UHPDLQLQJ ZRXOGQRORQJHUUHTXLUH3ODLQWLIIVWRSD\IRUWKHWUDQVODWLRQRI IHGHUDO UHWXUQV <RXQ DOVR GHQLHG ILOLQJ 2KLR LQFRPH WD[ DOO GRFXPHQWV IURP ,QVWHDG WKH FRXUW SURSRVHG WR UHWXUQV VHOHFWDQDFFRXQWDQWIOXHQWLQ.RUHDQZKRZRXOGH[DPLQHWKH GRFXPHQWVDW3ODLQWLIIVjH[SHQVHDQGGHWHUPLQHZKHWKHUDQ\ 1HZ 7UDFN ILOHG D VHFRQG PRWLRQ IRU VDQFWLRQV VHHNLQJ TXDOLILHG DV mILQDQFLDO VWDWHPHQWVl 1HZ 7UDFN HYLGHQWO\ ERWK PRQHWDU\ SHQDOWLHV DQG WKH GLVPLVVDO RI 3ODLQWLIIVj H[SUHVVHGFRQFHUQWKDWD.RUHDQVSHDNLQJDFFRXQWDQWZRXOG FODLPV2Q$SULO WKHFRXUWKHOGDKHDULQJRQWKH EH SDUWLDO WR 3ODLQWLIIV $IWHU FKRRVLQJ D .RUHDQVSHDNLQJ VDQFWLRQVPRWLRQ)LQGLQJWKDW3ODLQWLIIVKDGQRWFRPSOLHG DFFRXQWDQW 6DPXHO /HH RI &ROXPEXV 2KLR WKH FRXUW ZLWKWKHHDUOLHURUGHUWKHFRXUWLPSRVHGPRQHWDU\VDQFWLRQV SURKLELWHG FRXQVHO IURP UHYHDOLQJ KLV FOLHQWV WR /HH /HH RQ$SULO 7KHFRXUWXOWLPDWHO\RUGHUHG3ODLQWLIIVWR FRQILUPHGWKDWQRQHRIWKH GRFXPHQWVZHUHmILQDQFLDO SD\LQVDQFWLRQVDIWHU1HZ7UDFNILOHGDQDIILGDYLW VWDWHPHQWVl DV 1HZ 7UDFN KDG GHILQHG WKDW WHUP LQ LWV VHWWLQJIRUWKWKHFRVWVLWKDGLQFXUUHGLQFRQQHFWLRQZLWKILOLQJ GLVFRYHU\UHTXHVWV WKH VHFRQG VDQFWLRQV PRWLRQ )LQDOO\ WKH FRXUW RUGHUHG 3ODLQWLIIV WR ILOH VZRUQ GHFODUDWLRQV VWDWLQJ ZKHWKHU RU QRW $V WKH FRXUW H[SODLQHG WKLV OHIW RQH LVVXH mZKHWKHU WKH\ KDG FRPSOLHG ZLWK 1HZ 7UDFNjV GLVFRYHU\ UHTXHVWV SODLQWLIIKDVUHWDLQHGGRFXPHQWVILWWLQJWKHDJUHHGGHILQLWLRQ 3ODLQWLIIVVWDWHGXQGHURDWKWKDWWKH\KDGDOUHDG\SURGXFHGDOO RIµILQDQFLDOVWDWHPHQWVjRUZKHWKHUWKH\VLPSO\GRQRWH[LVWl GRFXPHQWV LQ WKHLU SRVVHVVLRQ FRYHUHG E\ 1HZ 7UDFNjV s$ DW 7R WKLV HQG RQ $SULO WKH FRXUW UHTXHVWVDQGWKDWILQDQFLDOVWDWHPHQWVIRU&.+QHYHUH[LVWHG DXWKRUL]HG 1HZ 7UDFN mWR REWDLQ WKH ILQDQFLDO UHFRUGV IRU &KRLIURPKLVDFFRXQWDQWLQ.RUHDl ,G $WWKDWSRLQWDQ 3ODLQWLIIVPRYHGIRUUHFRQVLGHUDWLRQRIWKHVDQFWLRQVRUGHU LQGHSHQGHQW DFFRXQWDQW IOXHQW LQ ERWK .RUHDQ DQG (QJOLVK 7KH FRXUW GHQLHG WKH PRWLRQ DQG OHYLHG DQ DGGLWLRQDO DQGIDPLOLDUZLWK.RUHDQLQFRPHWD[ODZVZRXOGUHYLHZWKH SHQDOW\ mDV D UHDVRQDEOH IHH IRU SUHSDULQJ DQG GRFXPHQWV WR GHWHUPLQH ZKHWKHU DQ\ ZHUH mILQDQFLDO SUHVHQWLQJ DUJXPHQWV LQ UHODWLRQ WR SODLQWLIIVj PRWLRQ IRU VWDWHPHQWVl UHFRQVLGHUDWLRQl s$DW &KRLVLJQHGUHOHDVHVDXWKRUL]LQJKLVDFFRXQWDQW<63DUN 'LVEHOLHYLQJ3ODLQWLIIVjGHFODUDWLRQVRQ0D\ WKH RI6HRXO6RXWK.RUHDWRSURYLGH&.+jVILQDQFLDOUHFRUGVWR FRXUW RUGHUHG 3ODLQWLIIV WR SD\ WR KDYH DOO RI WKH .RUHDQ 1HZ 7UDFNjV FRXQVHO 3DUN WROG 1HZ 7UDFNjV FRXQVHO GRFXPHQWVSURGXFHGIURP WUDQVODWHGLQWR(QJOLVK2QFH KRZHYHUWKDWKHKDGQRUHVSRQVLYHGRFXPHQWVEHFDXVHKH WUDQVODWHGWKHFRXUWZRXOGFRQGXFWDQLQFDPHUDLQVSHFWLRQ KDGDOUHDG\SURYLGHGWKHPDOOWR&KRL&KRLLQWXUQFODLPHG WR GHWHUPLQH ZKHWKHU DQ\ ZHUH mILQDQFLDO VWDWHPHQWVl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
PHUHO\DXWKRUL]HG 3ODLQWLIIVWRSURGXFH&.+jV6RXWK.RUHDQ 7KHFRXUWVWUXFNWKHDPHQGHGFRPSODLQWXQGHU)HG5&LY3 LQFRPHWD[UHWXUQV D EHFDXVHSXUVXDQWWRWKLVUXOHRQFHWKHGHIHQGDQWKDV VHUYHG D UHVSRQVLYH SOHDGLQJ D SDUW\ PD\ DPHQG KLV 3ODLQWLIIVUHWDLQHG(OLMDK0LQD.RUHDQVSHDNLQJ&3$DQG FRPSODLQWRQO\E\OHDYHRIFRXUWRUZLWKWKHFRQVHQWRIWKH JUDGXDWHRI6HRXO8QLYHUVLW\/DZ6FKRRO3ODLQWLIIVDVNHG DGYHUVHSDUW\ 0LQ WR H[DPLQH &.+jV GRFXPHQWV DQG TXHVWLRQ &KLRjV DFFRXQWDQW+HGLGVRDQGRQ0D\ 3ODLQWLIIVILOHG )ROORZLQJ DQRWKHU \HDU RI DGGLWLRQDO GLVFRYHU\UHODWHG 0LQjVDIILGDYLW0LQVWDWHGWKDW&.+ZDVDVPDOOEXVLQHVV PRWLRQVLQFOXGLQJDQHZPRWLRQE\'HIHQGDQWWRGLVPLVVWKH VLPLODUWRPDQ\.RUHDQIDPLO\EXVLQHVVHV$FFRUGLQJWR0LQ FDVHDVDVDQFWLRQIRUGLVFRYHU\YLRODWLRQV3ODLQWLIIVPRYHG WKHUH ZDV QR EXVLQHVV UHDVRQ ZK\ D FRPSDQ\ DV VPDOO DV WRUHFXVH0DJLVWUDWHsXGJH7LPRWK\+RJDQRQ1RYHPEHU &.+ZRXOGSD\VRPHRQHWRFUHDWHILQDQFLDOVWDWHPHQWV ,QWKHLUPRWLRQ3ODLQWLIIVVWUHVVHGWKDWWKH0DJLVWUDWH sXGJHKDGDOUHDG\VWDWHGWKDWKHZRXOGQRWEHOLHYHDQ\IXUWKHU 1HZ 7UDFN KDG QRW \HW ILOHG DQ DQVZHU WR 3ODLQWLIIVj mWDOHVlDERXWWKHQRQH[LVWHQFHRIILQDQFLDOVWDWHPHQWV s$ RULJLQDO FRPSODLQW 2Q sXQH 3ODLQWLIIV ILOHG DQ DW 7KHFRXUWGHQLHGWKHPRWLRQIRUUHFXVDORQ0DUFK DPHQGHGFRPSODLQWWKDWDGGHG2OG7UDFNDVDGHIHQGDQW7KH DGGLWLRQ RI 2OG 7UDFN ZRXOG KDYH GHIHDWHG WKH FRXUWjV GLYHUVLW\MXULVGLFWLRQDV <RXQ LVDQ2KLRUHVLGHQWVR1HZ 3ODLQWLIIVQH[WPRYHGWKHGLVWULFWFRXUWWRYDFDWHLWV2UGHU 7UDFN PRYHG WR VWULNH WKH DPHQGHG FRPSODLQW 7KH FRXUW RI5HIHUHQFHRQ'HFHPEHU2QsDQXDU\ GHHPHG1HZ7UDFNjVHDUOLHUMXULVGLFWLRQDOPRWLRQUHLQVWDWHG ZKLOHWKDWPRWLRQZDVSHQGLQJWKH0DJLVWUDWHsXGJHKHOGDQ DVRI'HFHPEHU ZKHQVHWWOHPHQWQHJRWLDWLRQVIDLOHG HYLGHQWLDU\ KHDULQJ RQ 1HZ 7UDFNjV PRWLRQ WR GLVPLVV IRU 7KHFRXUWLQFRUUHFWO\GHWHUPLQHGWKDWWKHPRWLRQWRGLVPLVV ODFNRIMXULVGLFWLRQ2Q0D\WKHFRXUWIRXQGWKDW IRUODFNRISHUVRQDOMXULVGLFWLRQZDVDUHVSRQVLYHSOHDGLQJ 1HZ7UDFNODFNHGVXIILFLHQWPLQLPXPFRQWDFWVZLWK2KLRIRU WKH UHDVRQDEOH H[HUFLVH RI SHUVRQDO MXULVGLFWLRQ &RUUHVSRQGLQJO\WKHFDVHZDVGLVPLVVHGZLWKSUHMXGLFH 7KH &RXUW H[SODLQHG WKDW LWV m2UGHU RI $SULO DOORZHG >1HZ 7UDFN@ WKH RSSRUWXQLW\ WR REWDLQ WKH ILQDQFLDO UHFRUGV IURP 3ODLQWLII 7KHSDUWLHVFDQQRWDJUHHZK\WKHFRXUWGLVPLVVHGWKHFDVH &KRLjV DFFRXQWDQW :KDW WKH &RXUW GLG QRW PDNH FOHDU ZDV WKDW WKLV 1HZ 7UDFNjV EULHI DWWHPSWV WR FKDUDFWHUL]H WKH FRXUWjV VKRXOG EH DFFRPSOLVKHG ZLWK 3ODLQWLIIVj IXOO FRRSHUDWLRQl s$ DW GHFLVLRQDVDVDQFWLRQIRU3ODLQWLIIVjPLVFRQGXFW,QIDFWWKH HPSKDVLV LQ RULJLQDO 3ODLQWLIIV YHKHPHQWO\ FRQWHQG WKDW WKH\ KDG DOUHDG\ SURYLGHG 1HZ 7UDFN ZLWK &.+jV 6RXWK .RUHDQ LQFRPH WD[ FRXUWGLVPLVVHGWKHFDVHIRUODFNRISHUVRQDOMXULVGLFWLRQ7KH UHWXUQ RQ 0DUFK DQG WKDW WKH FRXUWjV RUGHU UHIOHFWV LWV FRQIXVLRQ GLVWULFWFRXUWZURWHmWKHH[HUFLVHRIMXULVGLFWLRQLQWKLVFDVH 7KLV &RXUW KDV QR EDVLV WR TXHVWLRQ WKH GLVWULFW FRXUWjV IDFWXDO FRQFOXVLRQ ZRXOGµRIIHQGWUDGLWLRQDOQRWLRQVRIIDLUSOD\DQGVXEVWDQWLDO MXVWLFHj ,QWHUQDWLRQDO 6KRH 86 DW DQG >1HZ@ 7UDFNjV PRWLRQ WR GLVPLVV >EDVHG RQ ODFN RI SHUVRQDO 1HZ 7UDFN PRYHG WR VWULNH 0LQjV DIILGDYLW EHFDXVH 3ODLQWLIIV GLG QRW RIIHU 0LQ DV DQ H[SHUW DQG KLV HYDOXDWLRQV DQG RSLQLRQV DOOHJHGO\ GLG MXULVGLFWLRQ@VKRXOGEHDQGLVJUDQWHGl s$DW $IWHU QRW FRPSO\ ZLWK )HG 5 (YLG JRYHUQLQJ OD\ WHVWLPRQ\ 7KH FRXUW FRQFOXGLQJLWVDQDO\VLVRISHUVRQDOMXULVGLFWLRQWKHRSLQLRQ QHYHU UXOHG RQ WKLV PRWLRQ
0RWLRQV WR GLVPLVV DUH QRW mUHVSRQVLYH SOHDGLQJVl ZLWKLQ WKH PHDQLQJ RI 5XOH D .DPHUPDQ Y 3DNFR &RV ,QF )5' &LU m$ PRWLRQ WR GLVPLVV LV QRW D UHVSRQVLYH SOHDGLQJ IRU WKH 6'1< KROGLQJ WKDW PRWLRQ WR GLVPLVV EDVHG RQ ODFN RI LQ SXUSRVHV RI 5XOH D l :RUFHVWHU &RXQW\ 1DWjO %DQN Y &RKQ SHUVRQDP MXULVGLFWLRQ LV QRW D mUHVSRQVLYH SOHDGLQJl VHH DOVR 'RPLQR )5' 6'1< KROGLQJ WKDW PRWLRQ WR GLVPLVV EDVHG RQ 6XJDU &RUS Y 6XJDU :RUNHUV /RFDO 8QLRQ )G WK ODFN RI VXEMHFW PDWWHU MXULVGLFWLRQ LV QRW D mUHVSRQVLYH SOHDGLQJl 1R <RXQHWDOY7UDFN,QF <RXQHWDOY7UDFN,QF 1R
GLVFXVVHV1HZ7UDFNjVUHTXHVWWRWUDQVIHUWKHFDVHZKLFKPD\ , H[SODLQ1HZ7UDFNj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mSULPDIDFLHVKRZLQJl,G3ODLQWLII DSSURSULDWH DYHQXH $V WKH SDUWLHV DQG WKLV &RXUW DUH PXVW HVWDEOLVK MXULVGLFWLRQ E\ D SUHSRQGHUDQFH RI WKH IXOO\ DZDUH RI WKH WRUWXUHG DQG OHQJWK\ KLVWRU\ RI WKLV HYLGHQFH6HUUDVY)LUVW7HQQ%DQN1DWjO$VVRFV)G FDVHSULPDULO\GXHWR3ODLQWLIIVj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jO$PDWHXU$WKOHWLF)HGjQ 3ODLQWLIIVjGLODWRU\FRQGXFWFRXOGKDYHEHHQWUDQVIHUUHG )G WK&LU :HOVKY*LEEV)G ZLWKLQ WKH VWDWXWH RI OLPLWDWLRQV SHULRG :H DUH ZHOO WK &LU ,Q)OLJKW 'HYLFHV &RUS Y 9DQ DZDUH WKDW GLVPLVVDO RI WKLV DFWLRQ ZLOO PRVW FHUWDLQO\ 'XVHQ$LU,QF)G WK&LU SUHFOXGH3ODLQWLIIVIURPUHILOLQJWKLVDFWLRQLQ7H[DVGXH WRWKHDSSOLFDEOHVWDWXWHRIOLPLWDWLRQVEXWFDQQRWVD\LQ 7KHEHGURFNSULQFLSOHRISHUVRQDOMXULVGLFWLRQGXHSURFHVV JRRG FRQVFLHQFH WKDW 3ODLQWLIIVj FRQGXFW KDV QRW DQDO\VLVLVWKDWZKHQWKH'HIHQGDQWLVQRWSK\VLFDOO\SUHVHQW ZDUUDQWHGVXFKDVDQFWLRQ)RUWKLVUHDVRQZHGHFOLQHWR LQWKHIRUXPVKHPXVWKDYHmFHUWDLQPLQLPXPFRQWDFWVZLWK WUDQVIHUWKLVDFWLRQWRWKH:HVWHUQ'LVWULFWRI7H[DV LW VXFK WKDW WKH PDLQWHQDQFH RI WKH VXLW GRHV QRW RIIHQG µWUDGLWLRQDOQRWLRQVRIIDLUSOD\DQGVXEVWDQWLDOMXVWLFHjl,QWjO s$DW FLWDWLRQRPLWWHG 7KLVSDVVDJHDGGUHVVHV 6KRH&RY:DVKLQJWRQ86 TXRWLQJ WKHGHFLVLRQQRWWRWUDQVIHUDVRSSRVHGWRWKHGLVPLVVDOEDVHG 0LOOLNHQ Y 0H\HU 86 VHH DOVR RQODFNRISHUVRQDOMXULVGLFWLRQ +DQVRQY'HQFNOD86 KROGLQJWKDWD 'HIHQGDQW PD\ QRW EH UHTXLUHG WR GHIHQG DQ DFWLRQ LQ D 2QsXQH3ODLQWLIIVWLPHO\DSSHDOHG IRUHLJQWULEXQDOXQOHVVKHKDVKDGPLQLPDOFRQWDFWVZLWKWKH IRUXP VWDWH m0LQLPXP FRQWDFWVl H[LVW ZKHQ mWKH ',6&866,21 'HIHQGDQWjVFRQGXFWDQGFRQQHFWLRQZLWKWKHIRUXP6WDWHDUH VXFK WKDW KH VKRXOG UHDVRQDEO\ DQWLFLSDWH EHLQJ KDOHG LQWR :H EHJLQ ZLWK WKH XQGHUO\LQJ TXHVWLRQ RI ZKHWKHU WKH FRXUWWKHUHl:RUOG:LGH9RONVZDJHQ&RUSY:RRGVRQ 'LVWULFW &RXUW IRU 6RXWKHUQ 'LVWULFW RI 2KLR KDG SHUVRQDO 86 ,W LV QHFHVVDU\ WKDW WKH 'HIHQGDQW MXULVGLFWLRQRYHU'HIHQGDQW1HZ7UDFN 1R <RXQHWDOY7UDFN,QF <RXQHWDOY7UDFN,QF 1R
SXUSRVHIXOO\ DYDLO> @ LWVHOI RI WKH SULYLOHJH RI FRQGXFWLQJ PXVWSXUSRVHIXOO\DYDLOKLPVHOIRIWKHSULYLOHJHRIDFWLQJLQ DFWLYLWLHVZLWKLQWKHIRUXP6WDWHWKXVLQYRNLQJWKHEHQHILWV WKHIRUXPVWDWHRUFDXVLQJDFRQVHTXHQFHLQWKHIRUXPVWDWH l DQGSURWHFWLRQVRILWVODZV%XUJHU.LQJ&RUSY5XG]HZLF] mWKH FDXVH RI DFWLRQ PXVW DULVH IURP WKH GHIHQGDQW V 86 VHH DOVR 'HDQ Y 0RWHO DFWLYLWLHV WKHUH l DQG mWKH DFWV RI WKH GHIHQGDQW RU 2SHUDWLQJ/3)G WK&LU 7KLV FRQVHTXHQFHVFDXVHGE\WKHGHIHQGDQWPXVWKDYHDVXEVWDQWLDO SXUSRVHIXO DYDLOPHQW UHTXLUHPHQW HQVXUHV WKDW D GHIHQGDQW HQRXJKFRQQHFWLRQZLWKWKHIRUXPVWDWHWRPDNHWKHH[HUFLVH ZLOO QRW EH KDOHG LQWR D MXULVGLFWLRQ VROHO\ DV D UHVXOW RI RIMXULVGLFWLRQRYHUWKHGHIHQGDQWUHDVRQDEOHl UDQGRPIRUWXLWRXVRUDWWHQXDWHGFRQWDFWVRURIWKHXQLODWHUDO DFWLYLW\ RI DQRWKHU SDUW\ RU D WKLUG SHUVRQ ,G TXRWDWLRQ 'XULQJ WKH \HDU LQ ZKLFK 1HZ 7UDFN RZQHG DQG PDUNV DQG FLWDWLRQV RPLWWHG m5DQGRPl mIRUWXLWRXVl RU RSHUDWHG 2OG 7UDFNjV EXVLQHVV EXW KDG QRW \HW PRYHG LW mDWWHQXDWHGlDFWLYLW\LVQRWDFRQVWLWXWLRQDOO\DGHTXDWHEDVLV HQWLUHO\ WR 6DQ $QWRQLR 1HZ 7UDFN KDG ILYH VLJQLILFDQW IRUMXULVGLFWLRQ.HHWRQY+XVWOHU0DJD]LQH,QF86 FRQWDFWVZLWK2KLR)LUVWDOWKRXJK1HZ7UDFNZDVIRUPHG XQGHU 1HYDGDODZPRVWRI1HZ7UDFNjVWDQJLEOHSURSHUW\ ZDVLQ2KLR6HFRQG1HZ7UDFNVHFXUHG2KLR WHOHSKRQH 7KH 6XSUHPH &RXUW GLVWLQJXLVKHV EHWZHHQ mJHQHUDOl VHUYLFHDQGUHJLVWHUHGZLWKYDULRXV2KLRDJHQFLHVDVDQ2KLR MXULVGLFWLRQDQGmVSHFLILFlMXULVGLFWLRQHLWKHURQHRIZKLFKLV HPSOR\HU 7KLUG ZKDWHYHU WKH FRQWUDFWXDO UHODWLRQVKLS DQDGHTXDWHEDVLVIRUSHUVRQDOMXULVGLFWLRQ6HHHJ%XUJHU EHWZHHQWKHSDUWLHV<RXQSXUFKDVHGKXQGUHGVRIWKRXVDQGV .LQJ 86 DW Q VHH DOVR &RQWL Y RIGROODUVZRUWKRIERZOLQJEDOOVIURP1HZ7UDFNE\VHQGLQJ 3QHXPDWLF3URGV&RUS )G WK&LU RUGHUVWR1HZ7UDFNjV2KLRRIILFHV)RXUWK<RXQQHJRWLDWHG QRWLQJ WKDW D GLVWLQFWLRQ EHWZHHQ JHQHUDO DQG VSHFLILF WKH m9ROFDQRl DJUHHPHQW ZLWK &DUGLQDOH ZKLOH &DUGLQDOH MXULVGLFWLRQH[LVWVIRUWKHSXUSRVHRIGXHSURFHVVDQDO\VLV $ UHPDLQHG EDVHG LQ 2KLR )LQDOO\ WKH WUDGH UHODWLRQVKLS IHGHUDOFRXUWKDVJHQHUDOMXULVGLFWLRQZKHQWKHGHIHQGDQWjV LQFOXGLQJWUDQVDFWLRQVUHODWHGWRWKH9ROFDQRDJUHHPHQWDQG FRQWDFWV ZLWK WKH IRUXP VWDWH DUH mVXEVWDQWLDOl DQG WKHDOOHJHGLQLWLDOZULWWHQFRQWUDFW SURVSHUHGLQ2KLRGXULQJ mFRQWLQXRXVDQGV\VWHPDWLFlVRWKDWWKHVWDWHPD\H[HUFLVH 3ODLQWLIIVFRQWHQGWKHVHFRQWDFWVDUHVXIILFLHQWIRUWKH SHUVRQDO MXULVGLFWLRQ RYHU WKH GHIHQGDQW HYHQ LI WKH DFWLRQ GLVWULFWFRXUWWRKDYHDVVXPHGVSHFLILFSHUVRQDOMXULVGLFWLRQ GRHVQRWUHODWHWRWKHGHIHQGDQWjVFRQWDFWVZLWKWKHVWDWH6HH HJ3HUNLQVY%HQJXHW&RQVRO0LQLQJ&R86 1HZ7UDFNUHVSRQGVE\DUJXLQJWKDWLWPDLQWDLQHGRQO\D %LUG )GDW FLWLQJ7KLUG1DWjO%DQNLQ WHPSRUDU\ RIILFH LQ 2KLR LWV 2KLR RIILFH GLG YLUWXDOO\ QR 1DVKYLOOHY:('*(*URXS,QF)G WK EXVLQHVV ZLWK DQ\RQH LQ RWKHU WKDQ 3ODLQWLIIV DQG &LU 6SHFLILF MXULVGLFWLRQ H[LVWV ZKHQ mD 6WDWH QHLWKHU&.+QRU&KRL WKHVROHRZQHURI&.+ KDGDQRIILFH H[HUFLVHV SHUVRQDO MXULVGLFWLRQ RYHU D GHIHQGDQW LQ D VXLW LQ2KLR DULVLQJRXWRIRUUHODWHGWRWKHGHIHQGDQWjVFRQWDFWVZLWKWKH IRUXPl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mWKH GHIHQGDQW 6SHFLILFMXULVGLFWLRQH[LVWVEHFDXVH1HZ7UDFNjVFRQWDFWV PHHW WKH 6RXWKHUQ 0DFKLQH WHVW ZLWK UHVSHFW WR ERWK WKH 1R <RXQHWDOY7UDFN,QF <RXQHWDOY7UDFN,QF 1R
H[FOXVLYH GLVWULEXWRUVKLS DJUHHPHQW DQG WKH 9ROFDQR 7KHVHFRQGSURQJRIWKH6RXWKHUQ0DFKLQHWHVWUHTXLUHV DJUHHPHQW 6HH )G DW ,QLWLDOO\ mWKH GHIHQGDQW WKDWWKHFDXVHRIDFWLRQDULVHIURPWKHGHIHQGDQWjVDFWLYLWLHV PXVWSXUSRVHIXOO\DYDLOKLPVHOIRIWKHSULYLOHJHRIDFWLQJLQ ZLWKLQWKHIRUXP)GDWm7KHODZRIWKLVFLUFXLWLV WKHIRUXPVWDWHRUFDXVLQJDFRQVHTXHQFHLQWKHIRUXPVWDWHl WKDWWKHµDULVLQJIURPjUHTXLUHPHQWLVVDWLVILHGLIWKHFDXVHRI ,G $ GHIHQGDQW KDV mSXUSRVHIXOO\ DYDLOHGl KLPVHOI RI D DFWLRQ LV µUHODWHG WRj RU µFRQQHFWHG ZLWKj WKH GHIHQGDQWjV IRUXP E\ HQJDJLQJ LQ DFWLYLW\ WKDW VKRXOG SURYLGH mIDLU IRUXPFRQWDFWVl7KLUG1DWjO%DQN )G DW Q ZDUQLQJl WKDW KH PD\ KDYH WR GHIHQG D ODZVXLW WKHUH 6HH 7KLVWHVWLVHDVLO\PHWKHUHEHFDXVH3ODLQWLIIVjFODLPVDULVH :RUOG:LGH 9RONVZDJHQ 86 DW H[SODLQLQJ WKDW IURP2KLRFRPPHUFLDODFWLYLW\LQ 6HHLG KROGLQJWKDW SXUSRVHIXODYDLOPHQWUHTXLUHPHQWDVVXUHVWKDWGHIHQGDQWZLOO FRXUWPD\H[HUFLVHVSHFLILFMXULVGLFWLRQZKHQSODLQWLIIjVFODLP EHDZDUHWKDWLWLVVXEMHFWWRVXLWLQIRUXPVWDWH %HQVPLOOHU KDV mD VXEVWDQWLDO UHODWLRQ WR WKH GHIHQGDQWjV LQVWDWH Y(,'XSRQWGH1HPRXUV &R)G G&LU DFWLYLWLHVl m>3@XUSRVHIXOFRQGXFWSURYLGHVDGHIHQGDQWZLWKµIDLU ZDUQLQJj WKDW KH DQG KLV SURSHUW\ PD\ EH VXEMHFW WR WKH )LQDOO\mWKHDFWVRIWKHGHIHQGDQWRUFRQVHTXHQFHVFDXVHG H[HUFLVHRIDIRUXPVWDWHjVSRZHUl sRQHVY3HWW\5D\ E\WKHGHIHQGDQWPXVWKDYHDVXEVWDQWLDOHQRXJKFRQQHFWLRQ )GDW m7KRVHDFWLYLWLHVZKHWKHUGLUHFWDFWLRQLQWKH ZLWKWKHIRUXPVWDWHWRPDNHWKHH[HUFLVHRIMXULVGLFWLRQRYHU IRUXPRUFRQGXFWRXWVLGHWKHIRUXPPXVWMXVWLI\DFRQFOXVLRQ WKHGHIHQGDQWUHDVRQDEOHl60DFK)GDW VHH WKDWWKHGHIHQGDQWVKRXOGUHDVRQDEO\DQWLFLSDWHEHLQJFDOOHG DOVR$VDKL0HWDO,QGXV&R/WGY6XSHULRU&RXUW86 LQWR FRXUW WKHUHl $ VLQJOH DFW PD\ PHHW WKH SXUSRVHIXO GHFOLQLQJWRILQGVSHFLILFMXULVGLFWLRQEDVHG DYDLOPHQWUHTXLUHPHQW0F*HHY,QWj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jV 2KLR RIILFHV UHFHLYHG &.+jV SURGXFW 3ODLQWLIIVKDYHQRWEURXJKWWKHLUDFWLRQLQWKH2KLRFRXUWVWKH RUGHUV1HZ7UDFNjV2KLRRIILFHDOVRID[HGFRQILUPDWLRQVRI H[LVWHQFH RI IHGHUDO DYHQXHV IRU UHOLHI LQ 2KLR VWLOO VHUYHV WKRVHRUGHUVWR<RXQ)XUWKHUPRUH1HZ7UDFNQHJRWLDWHGWKH 2KLRjVLQWHUHVWLQSURWHFWLQJLWVUHVLGHQWVjOHJDORSWLRQV&I DOOHJHG9ROFDQRDJUHHPHQWLQ2KLRDQGEHJDQWUDQVDFWLRQV %XUJHU.LQJ86DW QRWLQJWKDWIRUXPVWDWHKDG UHODWHGWRWKDWGHDOIURP2KLR7KHVHFRQWDFWVDUHGLUHFWO\ mPDQLIHVW LQWHUHVWl LQ SURYLGLQJ D IRUXP IRU LWV UHVLGHQWV UHODWHG WR WKH 3ODLQWLIIVj DFWLRQ DQG PHDQLQJIXO HQRXJK WR 0F*HH86DW m,WFDQQRWEHGHQLHGWKDW&DOLIRUQLD FRQVWLWXWHSXUSRVHIXODYDLOPHQW&I&DOLIRUQLD6RIWZDUH,QF KDVDPDQLIHVWLQWHUHVWLQSURYLGLQJHIIHFWLYHPHDQVRIUHGUHVV Y5HOLDELOLW\5HVHDUFK,QF)6XSS &' IRULWVUHVLGHQWVZKHQWKHLULQVXUHUVUHIXVHWRSD\FODLPVl &DO m>:@KHUH WKH GHIHQGDQWV H[SUHVVO\ DLP WKHLU ,WZRXOGXQGRXEWHGO\EXUGHQ1HZ7UDFNWRGHIHQGWKLVFDVH FRQGXFWDQGGLUHFWWKHLQMXU\IORZLQJWKHUHIURPDWDUHVLGHQW IURP 7H[DV EXW >Z@KHQ PLQLPXP FRQWDFWV KDYH EHHQ LQWKHIRUXPVWDWHWKHGHIHQGDQWVVKRXOGDQWLFLSDWHDQVZHULQJ HVWDEOLVKHGRIWHQWKHLQWHUHVWVRIWKHSODLQWLIIDQGWKHIRUXP IRUWKHLUFRQGXFWLQWKHIRUXPl LQ WKH H[HUFLVH RI MXULVGLFWLRQ ZLOO MXVWLI\ HYHQ WKH VHULRXV EXUGHQVSODFHGRQWKHDOLHQGHIHQGDQW$VDKL86DW 1R <RXQHWDOY7UDFN,QF <RXQHWDOY7UDFN,QF 1R
7KDWEXUGHQH[LVWVSDUWO\EHFDXVH1HZ7UDFNYROXQWDULO\ 2Q0D\ 3ODLQWLIIVPRYHGWKHFRXUWWRUHFRQVLGHU PRYHG:HKDYHDOVRXSKHOGVSHFLILFMXULVGLFWLRQLQFDVHV LWV HDUOLHU SHQDOW\ 7KH FRXUW UHVSRQGHG E\ LPSRVLQJ DQ ZKHUH GRLQJ VR IRUFHG WKH GHIHQGDQW WR WUDYHO 6HH HJ DGGLWLRQDOVDQFWLRQ3ODLQWLIIVDSSHDOWKLVILQHDV /DQLHUY$P%GRI(QGRGRQWLFV)G WK ZHOO &LU XSKROGLQJMXULVGLFWLRQLQ0LFKLJDQRYHU,OOLQRLV GHIHQGDQW $P *UHHWLQJV &RUS Y &RKQ )G $GLVWULFWFRXUWKDVWKHLQKHUHQWSRZHUWRVDQFWLRQDSDUW\ WK&LU DOORZLQJMXULVGLFWLRQLQ0LFKLJDQ ZKHQ WKDW SDUW\ H[KLELWV EDG IDLWK LQFOXGLQJ WKH SDUW\jV RYHU &DOLIRUQLD GHIHQGDQW $FFRUGLQJO\ ZH ILQG WKDW WKH UHIXVDO WR FRPSO\ ZLWK WKH FRXUWjV RUGHUV &KDPEHUV Y 6RXWKHUQ'LVWULFWRI2KLRKDVSHUVRQDOMXULVGLFWLRQRYHU1HZ 1DVFR,QF86 5RDGZD\([SUHVV 7UDFN ,QFY3LSHU86 5D\$6FKDUHU &RY3ODEHOO3URGV,QF)G WK&LU ,, 6KLSPDQY,QWjO8QLRQRI2SHUDWLQJ(QJjUV/RFDO )G WK &LU HQ EDQF 7KH :H QH[W FRQVLGHU WKH GLVFRYHU\ VDQFWLRQV 7KLV &RXUW mLPSRVLWLRQRILQKHUHQWSRZHUVDQFWLRQVUHTXLUHVDILQGLQJRI UHYLHZVWKHLPSRVLWLRQRIVDQFWLRQVIRUDEXVHRIGLVFUHWLRQ EDGIDLWKl)LUVW%DQNRI0DULHWWDY+DUWIRUG8QGHUZULWHUV 6WRXJKY0D\YLOOH&PW\6FK)G WK&LU ,QVXUDQFH&R)G WK&LU RUFRQGXFW +DUPRQY&6;7UDQVS)G WK&LU mWDQWDPRXQW WR EDG IDLWKl 5RDGZD\ ([SUHVV 86 DW m$QDEXVHRIGLVFUHWLRQRFFXUVZKHQ WKHGLVWULFW 0RUHRYHU)HG5&LY3 F H[SUHVVO\DXWKRUL]HV FRXUW VGHFLVLRQLVEDVHGRQDQHUURQHRXVFRQFOXVLRQRIODZ DGLVWULFWFRXUWWRLPSRVHPRQHWDU\VDQFWLRQVRQDSDUW\IRUD WKHGLVWULFWFRXUW VILQGLQJVDUHFOHDUO\HUURQHRXVRU WKH UHIXVDOWRREH\DGLVFRYHU\RUGHU$VWKHUXOHUHDGLQ GLVWULFWFRXUW VGHFLVLRQLVFOHDUO\XQUHDVRQDEOHDUELWUDU\RU ZKHQWKHFRXUWLPSRVHGVDQFWLRQV IDQFLIXOl,G $ SDUW\ WKDW ZLWKRXW VXEVWDQWLDO MXVWLILFDWLRQ IDLOV WR 1HZ7UDFNILOHGLWVILUVWPRWLRQWRFRPSHORQsDQXDU\ GLVFORVHLQIRUPDWLRQUHTXLUHGE\5XOH D RU H DOOHJLQJWKDW3ODLQWLIIVIDLOHGWRSURGXFH<RXQjV2KLR VKDOOQRWXQOHVVVXFKIDLOXUHLVKDUPOHVVEHSHUPLWWHGWR DQGIHGHUDOLQFRPHWD[UHWXUQVPDWHULDOUHODWHGWR3ODLQWLIIVj XVHDVHYLGHQFHDWDWULDODWDKHDULQJRURQDPRWLRQDQ\ GDPDJHFDOFXODWLRQVDQG&.+jVILQDQFLDOVWDWHPHQWV1HZ ZLWQHVVRULQIRUPDWLRQQRWVRGLVFORVHG,QDGGLWLRQWRRU 7UDFN ILOHG IRU VDQFWLRQV OHVV WKDQ RQH PRQWK ODWHU $IWHU LQOLHXRIWKLVVDQFWLRQWKHFRXUWRQPRWLRQ DQGDIWHU KROGLQJDKHDULQJRQWKHWZRPRWLRQVWKHFRXUWGHFOLQHGWR DIIRUGLQJDQRSSRUWXQLW\WREHKHDUGPD\LPSRVHRWKHU LPSRVHVDQFWLRQVEXWGLGLVVXHDPRWLRQWRFRPSHO DSSURSULDWHVDQFWLRQV $OWKRXJK3ODLQWLIIVSURGXFHGVRPHGRFXPHQWVWKH\GLGQRW )(' 5 &,9 3 F )HGHUDO&LYLOsXGLFLDO3URFHGXUH SURGXFHILQDQFLDOVWDWHPHQWVDQGFHUWDLQLQFRPHWD[UHWXUQV 5XOHV :HVW ,IWKHFRXUWJUDQWVDPRWLRQWRFRPSHO 1HZ7UDFNDJDLQPRYHGIRUVDQFWLRQV2Q$SULO WKHFRXUWKHOGDKHDULQJRQWKHPRWLRQ7KHFRXUWLPSRVHG WKHFRXUWVKDOODIWHUDIIRUGLQJDQRSSRUWXQLW\WREHKHDUG VDQFWLRQVDQGGLUHFWHG1HZ7UDFNWRILOHDQDIILGDYLWDWWHVWLQJ UHTXLUHWKHSDUW\RUGHSRQHQWZKRVHFRQGXFWQHFHVVLWDWHG WR WKH FRVWV LQFXUUHG DV D UHVXOW RI 3ODLQWLIIVj GLVFRYHU\ YLRODWLRQV 7KH FRXUW XOWLPDWHO\ DVVHVVHG FRVWV DJDLQVW 3ODLQWLIIVLQWKHDPRXQWRI3ODLQWLIIVDUJXHWKDW &RQJUHVV VXEVWDQWLDOO\ DPHQGHG )HG 5 &LY 3 F LQ WKLVZDVLPSURSHU EXW QRW LQ DQ\ UHVSHFW UHOHYDQW KHUH 6HH 7RWK Y *UDQG 7UXQN 55 )G WK &LU 1R <RXQHWDOY7UDFN,QF <RXQHWDOY7UDFN,QF 1R
WKHPRWLRQRUWKHSDUW\RUDWWRUQH\DGYLVLQJVXFKFRQGXFW DEXVHLWVGLVFUHWLRQE\H[FOXGLQJDQ\IXUWKHUHYLGHQFHIURP RUERWKRIWKHPWRSD\WRWKHPRYLQJSDUW\WKHUHDVRQDEOH >WKH SODLQWLIIV@ DV D 5XOH VDQFWLRQ DIWHU WKH\ UHSHDWHGO\ H[SHQVHV LQFXUUHG LQ PDNLQJ WKH PRWLRQ LQFOXGLQJ IDLOHG WR SURYLGH FRPSOHWH DQG DSSURSULDWH UHVSRQVHV WR DWWRUQH\ VIHHVXQOHVVWKHFRXUWILQGVWKDWWKHPRWLRQZDV GLVFRYHU\UHTXHVWVl XQSXEOLVKHG 7KHUHIRUHWKHGLVWULFW ILOHGZLWKRXWWKHPRYDQW VILUVWPDNLQJDJRRGIDLWKHIIRUW FRXUW GLG QRW HUU LQ LPSRVLQJ GLVFRYHU\ VDQFWLRQV RQ WRREWDLQWKHGLVFORVXUHRUGLVFRYHU\ZLWKRXWFRXUWDFWLRQ 3ODLQWLIIV RUWKDWWKHRSSRVLQJSDUW\ VQRQGLVFORVXUHUHVSRQVHRU REMHFWLRQ ZDV VXEVWDQWLDOO\ MXVWLILHG RU WKDW RWKHU 7KH GLVWULFW FRXUW ZDV LQFRUUHFW KRZHYHU WR LPSRVH DQ FLUFXPVWDQFHVPDNHDQDZDUGRIH[SHQVHVXQMXVW DGGLWLRQDO SHQDOW\ EDVHG RQ 3ODLQWLIIVj UHTXHVW IRU UHFRQVLGHUDWLRQRIWKHGLVFRYHU\VDQFWLRQV8QIRUWXQDWHO\DV )(' 5 &,9 3 D $ 7KXVRQFHWKHFRXUWJUDQWVD ZLWKWKHHDUOLHUVDQFWLRQVRUGHUWKHFRXUWGLGQRWVSHFLI\WKH PRWLRQ WR FRPSHO DQG SURYLGHV WKH UHVSRQGLQJ SDUW\ DQ DXWKRULW\XSRQZKLFKLWUHOLHG RSSRUWXQLW\WREHKHDUGLWmVKDOOlUHTXLUHWKHUHVSRQGLQJSDUW\ WR SD\ WKH PRYLQJ SDUW\jV H[SHQVHV XQOHVV WKH UHVSRQGLQJ $FRXUWFDQQRWLPSRVHVDQFWLRQVXQGHU)HG&LY3&LY SDUW\ KDG D mVXEVWDQWLDO MXVWLILFDWLRQl RU VRPH RWKHU ZLWKRXWILUVWSURYLGLQJmQRWLFHDQGDUHDVRQDEOHRSSRUWXQLW\ FLUFXPVWDQFHPDNHVVXFKDQDZDUGXQMXVW5XOHKDVQR WRUHVSRQGlZKLFKWKHFRXUWGLGQRWGRZLWKUHVSHFWWRWKRVH EDGIDLWKUHTXLUHPHQW6HH5HJjO5HIXVH6\V,QFY,QODQG VDQFWLRQV VSHFLILFDOO\ UHODWHG WR WKH PRWLRQ WR UHFRQVLGHU 5HFODPDWLRQ&R)G WK&LU OLVWLQJ 6HH)HG5&LY3 F 5XOHDOORZVFRXUWVWRLPSRVH EDG IDLWK DV RQO\ RQH IDFWRU DPRQJ PDQ\ D FRXUW VKRXOG WKHIHHVDQGFRVWVLQFXUUHGLQPDNLQJDPRWLRQWRFRPSHODV FRQVLGHUEHIRUHGLVPLVVLQJDFDVHDVD5XOHVDQFWLRQ DGLVFRYHU\VDQFWLRQEXWLWGRHVQRWDXWKRUL]HVDQFWLRQVIRU RWKHU H[SHQVHV LQFOXGLQJ H[SHQVHV UHODWHG WR GHIHQGLQJ D 7KH GLVWULFW FRXUWjV VDQFWLRQV RUGHU GRHV QRW H[SODLQ PRWLRQIRUUHFRQVLGHUDWLRQ7HOOXULGH0JPW6ROXWLRQV,QF ZKHWKHUWKHFRXUWjVLQKHUHQWDXWKRULW\RU)HG5&LY3LV Y7HOOXULGH,QY*URXS )G WK&LU WKHEDVLVIRUWKHSHQDOW\6LQFHWKHFRXUWEHORZGLGQRWILQG )LQDOO\WKHFRXUWjVLQKHUHQWDXWKRULW\FDQQRWVHUYHDVDEDVLV EDGIDLWKRUWKDW3ODLQWLIIVjFRQGXFWZDVmWDQWDPRXQWWREDG IRUWKHVHVDQFWLRQVEHFDXVHWKHFRXUWPDGHQRILQGLQJRIEDG IDLWKl5RDGZD\([SUHVV86DWZHPXVWSUHVXPH IDLWK RU FRQGXFW WDQWDPRXQW WR EDG IDLWK 6HH 5RDGZD\ WKHFRXUWVDQFWLRQHG3ODLQWLIIVXQGHU5XOH ([SUHVV86DW)LUVW%DQNRI0DULHWWD)GDW 7KXV QR OHJDO EDVLV H[LVWV IRU WKH LPSRVLWLRQ RI WKH %HIRUHLPSRVLQJWKHSHQDOW\WKHFRXUWKHOGDKHDULQJWKDW DGGLWLRQDO VDQFWLRQV UHODWHG WR WKH PRWLRQ WR UHFRQVLGHU JDYH3ODLQWLIIVDQRSSRUWXQLW\WREHKHDUG3ODLQWLIIVFODLPHG &RQVHTXHQWO\ZHUHYHUVHWKRVHVDQFWLRQVLVVXHGLQUHVSRQVH WKDWWKHUHTXHVWHGILQDQFLDOVWDWHPHQWVQHYHUH[LVWHGDQGWKDW WR3ODLQWLIIVjPRWLRQWRUHFRQVLGHU WKH\ WXUQHG RYHU DOO WKH PDWHULDOV WKH\ KDG 1HZ 7UDFN FODLPHG 3ODLQWLIIV KDYH KLGGHQ RU GHVWUR\HG WKH ILQDQFLDO VWDWHPHQWV DQG RWKHUZLVH QRW FRRSHUDWHG 7KLV LV D SXUH GLVSXWHRIIDFW1RWKLQJVXJJHVWVWKHFRXUWFOHDUO\HUUHGLQ VLGLQJ ZLWK 1HZ 7UDFN E\ FRQFOXGLQJ 3ODLQWLIIV YLRODWHG ,I WKH FRXUW KDG PHQWLRQHG 5XOH DQG IROORZHG DSSURSULDWH
VHYHUDO GLVFRYHU\ RUGHUV 5HSHDWHGO\ YLRODWLQJ GLVFRYHU\ 5XOH SURFHGXUHV WKDW UXOH SRVVLEO\ FRXOG KDYH VHUYHG DV D EDVLV IRU WKH
RUGHUV LV FHUWDLQO\ FRQWXPDFLRXV DQG MXVWLILHV VDQFWLRQV VDQFWLRQV EHFDXVH LW FRQIHUV WKH DXWKRULW\ XSRQ D IHGHUDO FRXUW WR LPSRVH
+DUULVY$NURQ'HSjWRI3XE+HDOWK1R :/ VDQFWLRQV ZKHQ D SDUW\ KDV ILOHG D IULYRORXV SOHDGLQJ PRWLRQ RU RWKHU SDSHU %RGHQKDPHU %OGJ &RUS Y $UFKLWHFWXUDO 5HVHDUFK &RUS WK&LU0D\ m7KHGLVWULFWFRXUWGLGQRW )G WK &LU 7KH FRXUW PLJKW KDYH IRXQG WKH PRWLRQ WR UHFRQVLGHU IULYRORXV 1R <RXQHWDOY7UDFN,QF <RXQHWDOY7UDFN,QF 1R
,,, MXVWLFH MXGJH RU PDJLVWUDWH RI WKH 8QLWHG 6WDWHV VKDOO GLVTXDOLI\KLPVHOILQDQ\SURFHHGLQJLQZKLFKKLVLPSDUWLDOLW\ )LQDOO\SODLQWLIIVDUJXHWKHPDJLVWUDWHMXGJHVKRXOGKDYH PLJKWUHDVRQDEO\EHTXHVWLRQHGl8QGHUDMXGJHPXVW UHFXVHGKLPVHOIm7KLVFRXUWµUHYLHZVGHFLVLRQVGHQ\LQJ VXD VSRQWH UHFXVH KLPVHOI LI KH NQRZV RI IDFWV WKDW ZRXOG PRWLRQVWRUHFXVHXQGHUWKHDEXVHRIGLVFUHWLRQVWDQGDUGjl XQGHUPLQHWKHDSSHDUDQFHRILPSDUWLDOLW\/LWHN\Y8QLWHG 8OOPRH[UHO8OOPRY*LOPRXU$FDGHP\)G 6WDWHV 86 $OVR UHOHYDQW LV WK&LU TXRWLQJ8QLWHG6WDWHVY+DUWVHO )G 86&ZKLFKVWDWHV WK&LU :HPXVWKDYHDmGHILQLWHDQGILUP FRQYLFWLRQ WKDW WKH WULDO FRXUW FRPPLWWHG D FOHDU HUURU RI :KHQHYHUDSDUW\WRDQ\SURFHHGLQJLQDGLVWULFWFRXUW MXGJPHQWl EHIRUH UHYHUVLQJ XQGHU WKH DEXVH RI GLVFUHWLRQ PDNHVDQGILOHVDWLPHO\DQGVXIILFLHQWDIILGDYLWWKDWWKH VWDQGDUG/RJDQY'D\WRQ+XGVRQ&RUS)G MXGJHEHIRUHZKRPWKHPDWWHULVSHQGLQJKDVDSHUVRQDO WK&LU ELDVRUSUHMXGLFHHLWKHUDJDLQVWKLPRULQIDYRURIDQ\ DGYHUVH SDUW\ VXFK MXGJH VKDOO SURFHHG QR IXUWKHU 3ODLQWLIIVPDNHWZRDUJXPHQWV)LUVWWKH\FODLPWKHMXGJH WKHUHLQEXWDQRWKHUMXGJHVKDOOEHDVVLJQHGWRKHDUVXFK KDGDOUHDG\GHFLGHGQRWWREHOLHYHWKHP7KHFRXUWZURWHLQ SURFHHGLQJ RQHRUGHUWKDWLWZRXOGmQRWHQWHUWDLQDQ\IXUWKHUWDOHVWKDW >WKHILQDQFLDOVWDWHPHQWV@GRQRWH[LVWl s$DW +H $QDIILGDYLWILOHGXQGHUPXVWDOOHJH>@IDFWVZKLFKD DOVR FDOOHG 3ODLQWIIVj DIILGDYLWV mXQEHOLHYDEOHl DQG WKHLU UHDVRQDEOHSHUVRQZRXOGEHOLHYHZRXOGLQGLFDWHDMXGJHKDV GLVFRYHU\FRQGXFWmGHSORUDEOHl s$DW 6HFRQG DSHUVRQDOELDVDJDLQVWWKHPRYLQJSDUW\*HQ$YLDWLRQ,QF 3ODLQWLIIV DFFXVH WKH MXGJH RI UDFLVP ,Q WKHLU EULHI WKH\ Y&HVVQD$LUFUDIW&R )G WK&LU DUJXH 7KHDOOHJHGELDVPXVWVWHPIURPDQH[WUDMXGLFLDOVRXUFH 6WHUHRW\SHG GLVWUXVW RI WKH .RUHDQV UHDFKHG LWV DSH[ DQGUHVXOWLQDQRSLQLRQRQWKHPHULWVRQVRPHEDVLVRWKHU ZKHQWKHPDJLVWUDWHHPEUDFHG>1HZ@7UDFNjVSURSRVHG WKDQ ZKDW WKH MXGJH OHDUQHG IURP KLV SDUWLFLSDWLRQ LQ WKH HWKQLFFODVVLILFDWLRQSURFHGXUH2XWRIDQH[SOLFLWIHDU FDVH8QLWHG6WDWHVY*ULQQHOO&RUS86 WKDWWKHVHOHFWHG.RUHDQDFFRXQWDQWZRXOGVLGHZLWKKLV ([WUDMXGLFLDOFRQGXFWHQFRPSDVVHVRQO\SHUVRQDO RZQNLQGFRXQVHOIRUWKHSDUWLHVZHUHSURKLELWHGIURP ELDVDVGLVWLQJXLVKHGIURPDMXGLFLDORQHDULVLQJRXWRIWKH GLVFORVLQJ DQ\WKLQJ DERXW WKH FDVH WR WKH .RUHDQ MXGJH VEDFNJURXQGDQGDVVRFLDWLRQDQGQRWIURPWKHMXGJH V DFFRXQWDQWoSURKLELWHGHYHQIURPGLVFORVLQJWKHSDUWLHV YLHZ RI WKH ODZ ,G DW LQWHUQDO TXRWDWLRQ PDUNV WKDWWKH\UHSUHVHQWHG7KHPDJLVWUDWHHYHQSUHVFULEHGD RPLWWHG 3HUVRQDO ELDV LV SUHMXGLFH WKDW HPDQDWHV IURP mVDQLWL]HGl SURWHFWLYH RUGHUnmVDQLWL]HGl WKDW LV WR VRPH VRXUFH RWKHU WKDQ SDUWLFLSDWLRQ LQ WKH SURFHHGLQJV RU SUHYHQWWKHVHOHFWHG.RUHDQDFFRXQWDQWIURPILQGLQJRXW SULRUFRQWDFWZLWKUHODWHGFDVHV:KHHOHUY6RXWKODQG&RUS WKHLGHQWLW\RIWKHSDUWLHVZKRZDVUHSUHVHQWLQJZKRP )G WK&LU FLWLQJ'HPMDQMXNY RUDQ\WKLQJHOVHDERXWWKHGLVSXWH 3HWURYVN\)G WK&LU 3O %U DW 3ODLQWLIIV DUJXH WKDW WKH PDJLVWUDWH MXGJH $VZHKDYHH[SODLQHGm>L@WLVZHOOVHWWOHGWKDWVHFWLRQV VKRXOG KDYHUHFXVHGKLPVHOIEHFDXVHRIKLVDOOHJHGUDFLVP DQG µPXVW EH FRQVWUXHG LQ SDUL PDWHULDj DQG µWKDW DQGJHQHUDOSUHGLVSRVLWLRQWRGLVEHOLHYH3ODLQWLIIV GLVTXDOLILFDWLRQXQGHUVHFWLRQ D PXVWEHSUHGLFDWHGDV SUHYLRXVO\ XQGHU VHFWLRQ XSRQ H[WUDMXGLFLDO FRQGXFW 3ODLQWLIIV EURXJKW WKHLU PRWLRQ WR UHFXVH WKH PDJLVWUDWH UDWKHUWKDQRQMXGLFLDOFRQGXFWjl8QLWHG6WDWHVY6WRU\ MXGJH XQGHU 86& D ZKLFK SURYLGHV m$Q\ 1R <RXQHWDOY7UDFN,QF
)G WK&LU TXRWLQJ&LW\RI&OHYHODQGY .UXSDQVN\ )G WK&LU )URPWKHRXWVHWSODLQWLIIVGLGQRWILOHWKHUHTXLUHGDIILGDYLW VHWWLQJIRUWKDOOHJDWLRQVRIELDVRUSUHMXGLFH5HFXVDOLVQHYHU JUDQWHGZLWKRXWWKHDIILGDYLW8QLWHG6WDWHVY6DPPRQV )G WK&LU )XUWKHUPRUHUHFXVDOLVDOVR XQZDUUDQWHG EHFDXVH 3ODLQWLIIV GR QRW DOOHJH ELDV IURP H[WUDMXGLFLDOVRXUFHV:KHHOHU)GDW3ODLQWLIIV EDVHWKHLUDOOHJDWLRQVH[FOXVLYHO\RQWKHPDJLVWUDWHMXGJHjV RUGHUVDQGRUDOVWDWHPHQWVGXULQJSURFHHGLQJVUHODWHGWRWKLV DFWLRQ )LQDOO\ 3ODLQWLIIVj EHKDYLRU SUREDEO\ MXVWLILHV WKH MXGJHjVSHUVSHFWLYH3ODLQWLIIVIDLOWRDOOHJHDQ\WKLQJmZKLFK DUHDVRQDEOHSHUVRQZRXOGEHOLHYHZRXOGLQGLFDWH>WKH@MXGJH KDVDSHUVRQDOELDVDJDLQVWWKH>P@*HQ$YLDWLRQ )G DW3ODLQWLIIVjUHTXHVWIRUUHFXVDOLVEDVHOHVV )RUWKHUHDVRQVVWDWHGDERYHZH5(9(56(WKHGLVPLVVDO ZLWK SUHMXGLFH EDVHG RQ SHUVRQDO MXULVGLFWLRQ DQG WKRVH VDQFWLRQVUHODWHGWRWKHPRWLRQWRUHFRQVLGHUDQG$)),50 DOORWKHUVDQFWLRQVDQGWKHGHQLDORIWKHPRWLRQWRUHFXVH
Reference
- Status
- Published