00a0314p.06

7KH +RQRUDEOH $UWKXU - 7DUQRZ 8QLWHG 6WDWHV 'LVWULFW -XGJH IRU
WKH (DVWHUQ 'LVWULFW RI 0LFKLJDQ VLWWLQJ E\ GHVLJQDWLRQ

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
&21680(56 (1(5*<
&203$1<
3HWLWLRQHU
Y
)('(5$/ (1(5*<
5(*8/$725< &200,66,21
5HVSRQGHQW
;!

1
1R
2Q3HWLWLRQIRU5HYLHZIURP
WKH)HGHUDO(QHUJ\5HJXODWRU\&RPPLVVLRQ
1RV3535
$UJXHG$XJXVW
'HFLGHGDQG)LOHG6HSWHPEHU
%HIRUH&2/(DQG*,/0$1&LUFXLW-XGJHV7$512:
'LVWULFW-XGJH

-- 1 of 4 --

&RQVXPHUV(QHUJ\&RY)(5& 1R
BBBBBBBBBBBBBBBBB
&2816(/
$5*8(' 'HERUDK $ 0RVV &21680(56 (1(5*<
&2:DVKLQJWRQ'&IRU3HWLWLRQHU'DYLG+&RIIPDQ
)('(5$/ (1(5*< 5(*8/$725< &200,66,21
:DVKLQJWRQ'&IRU5HVSRQGHQW21%5,()'HERUDK$
0RVV :LOOLDP 0 /DQJH &21680(56 (1(5*< &2
:DVKLQJWRQ '& IRU 3HWLWLRQHU %HWK * 3DFHOOD
)('(5$/ (1(5*< 5(*8/$725< &200,66,21
:DVKLQJWRQ'&IRU5HVSRQGHQW
BBBBBBBBBBBBBBBBB
23,1,21
BBBBBBBBBBBBBBBBB
521$/' /(( *,/0$1 &LUFXLW -XGJH &RQVXPHUV
(QHUJ\&RPSDQ\KDVSHWLWLRQHGWKLVFRXUWIRUUHYLHZRIDQ
RUGHURIWKH)HGHUDO(QHUJ\5HJXODWRU\&RPPLVVLRQ )(5&
WKDWJUDQWHG&RQVXPHUV¶VSHWLWLRQWRGHFUHDVHFHUWDLQRILWV
UDWHVEXWDFFRUGLQJWR&RQVXPHUVLQGRLQJVRDWWHPSWHGWR
H[WHQG LWV UHJXODWRU\ DXWKRULW\ EH\RQG WKH ERXQGDULHV
DXWKRUL]HGE\&RQJUHVV)RUWKHUHDVRQVVHWIRUWKEHORZZH
*5$17WKHSHWLWLRQ6(7$6,'(WKHFKDOOHQJHGRUGHUDQG
5(0$1'WKLVFDVHIRUIXUWKHUSURFHHGLQJVFRQVLVWHQWZLWK
WKLVRSLQLRQ
,%$&.*5281'
7KH 1DWXUDO *DV $FW 1*$ 86& †† ]
FRQIHUVXSRQ)(5&FRPSUHKHQVLYHUHJXODWRU\DXWKRULW\RYHU
QDWXUDOJDVFRPSDQLHVWKDWHQJDJHLQWKHVDOHRIQDWXUDOJDV
IRU UHVDOH RU LQWHUVWDWH JDV WUDQVSRUWDWLRQ &RQJUHVV KDV
FDUYHGRXWVHYHUDOH[FHSWLRQVWR)(5&¶VRWKHUZLVHSOHQDU\
DXWKRULW\ ³+LQVKDZ SLSHOLQHV´ PDNH XS RQH RI WKRVH
H[FHSWLRQV$+LQVKDZSLSHOLQHLVDQDWXUDOJDVSLSHOLQHWKDW
UHFHLYHVDOORILWVRXWRIVWDWHJDVIURPSHUVRQV³ZLWKLQRUDW
WKHERXQGDU\RID>V@WDWHLIDOOWKHQDWXUDOJDVVRUHFHLYHGLV
XOWLPDWHO\FRQVXPHG´ZLWKLQWKHVWDWHLQZKLFKLWLVUHFHLYHG
1R &RQVXPHUV(QHUJ\&RY)(5&
7UDQVPLVVLRQ&RY)(5&)G WK&LU
EXW ZH DUH QRW UHTXLUHG WR DFFHSW DQ DJHQF\¶V
UHSUHVHQWDWLRQWKDWDQRUGHUVD\V³GD\´ZKHQLWVHHPVWRXV
WKDW WKH RUGHU VD\V ³QLJKW´ 6HFRQG LI ZH ZHUH WR DFFHSW
)(5&¶VVXJJHVWLRQDQGDVXEVHTXHQWGLVSXWHZHUHWRDULVH
LW ZRXOG EH QHFHVVDU\ WR UHDG DQG LQWHUSUHW WKUHH VHSDUDWH
GRFXPHQWV )(5&¶V RULJLQDO RUGHU )(5&¶V RUGHU GHQ\LQJ
UHKHDULQJDQGWKLVFRXUW¶VRSLQLRQ VLPSO\WRXQGHUVWDQGZKDW
)(5&¶V RUGHU DV ³FODULILHG´ E\ WKLV FRXUW UHTXLUHV
&RQVXPHUV WR GR 7KLV GRHV QRW VWULNH XV DV SDUWLFXODUO\
HIILFLHQW 7KLUG LQ OLJKW RI )(5&¶V DSSDUHQW GLIILFXOW\
UHPDLQLQJZLWKLQWKHOLPLWVRILWVVWDWXWRU\DXWKRULW\ZHILQG
RXUVHOYHV UHOXFWDQW WR FRPPXQLFDWH WKH PHVVDJH WKDW HYHQ
ZKHQ)(5&RYHUVWHSVLWVSHUPLWWHGERXQGVLWVRUGHUVZLOOEH
VDYHGE\KLJKO\VWUDLQHGMXGLFLDO³FODULILFDWLRQV´
,,,&21&/86,21
)RU DOO RI WKH DERYH UHDVRQV WKH SHWLWLRQ IRU UHYLHZ LV
*5$17('WKHFKDOOHQJHGRUGHULV6(7$6,'(DQGWKLV
FDVHLV5(0$1'('IRUIXUWKHUSURFHHGLQJVFRQVLVWHQWZLWK
WKLVRSLQLRQ

-- 2 of 4 --

&RQVXPHUV(QHUJ\&RY)(5& 1R
)(5& RQFH &RQVXPHUV SURYLGHG WKH LQIRUPDWLRQ ³WKH
&RPPLVVLRQZRXOGKDYHWKHEXUGHQWRMXVWLI\DQ\FKDQJHLQ
&RQVXPHUV¶VUDWHZKLFKZRXOGDSSO\SURVSHFWLYHO\´
'HVSLWH)(5&¶VDUJXPHQWV&RQVXPHUV¶VVXVSLFLRQDSSHDUV
MXVWLILHG,IDOO)(5&KDGUHDOO\ZDQWHGWRGRZDVUHTXLUH
&RQVXPHUVWRPDNHSHULRGLF³LQIRUPDWLRQDOILOLQJV´WKHQLW
LVGLIILFXOWWRXQGHUVWDQGZK\IRUH[DPSOH)(5&¶VLQLWLDO
RUGHU SURYLGHV WKDW ³>R@Q RU EHIRUH 'HFHPEHU
&RQVXPHUVVKDOOILOHDSHWLWLRQIRUUDWHDSSURYDOWRMXVWLI\LWV
FXUUHQWUDWHRUWRHVWDEOLVKDQHZPD[LPXPUDWH´ (PSKDVLV
DGGHG $OVRDV&RQVXPHUVFRUUHFWO\REVHUYHVQHLWKHUWKH
SKUDVH³LQIRUPDWLRQDOILOLQJV´QRUDQ\REYLRXVV\QRQ\PIRU
WKDWSKUDVHDSSHDUVDQ\ZKHUHLQ)(5&¶VRULJLQDORUGHURULQ
WKHRUGHUGHQ\LQJUHKHDULQJ
:HZLOOWKHUHIRUHJUDQW&RQVXPHUV¶VSHWLWLRQVHWDVLGHWKH
FKDOOHQJHG RUGHU DQG UHPDQG WKLV FDVH IRU IXUWKHU
SURFHHGLQJV )(5& ZLOO EH IUHH WR HQWHU D QHZ RUGHU
DSSURYLQJ &RQVXPHUV¶V SHWLWLRQ WR GHFUHDVH LWV UDWHV IRU
LQWHUUXSWLEOHQDWXUDOJDVWUDQVSRUWDWLRQVHUYLFHVSXUVXDQWWR
†RIWKH1*$6KRXOG)(5&ZLVK&RQVXPHUVWRPDNH
SHULRGLF LQIRUPDWLRQDO ILOLQJV LW PD\ RI FRXUVH VR UHTXLUH
SXUVXDQWWR† D RIWKH1*$7KLVZLOODOORZ)(5&WRGR
ZKDW LW LQVLVWV LW KDV EHHQ WU\LQJ WR GR DOO DORQJ DQG ZLOO
SHUPLWERWKVLGHVWRJHWZKDWWKH\KDYHDVVXUHGXVWKH\ZDQW
:HWUXVWWKDWWKLVWLPHKRZHYHUWKHRUGHUZLOOEHLVVXHGZLWK
FODULW\DQGSUHFLVLRQ
$W RUDO DUJXPHQW FRXQVHO IRU )(5& VXJJHVWHG WKDW WKLV
FRXUWFRXOGUDWKHUWKDQVHWDVLGHWKHFKDOOHQJHGRUGHULQVWHDG
GHQ\WKHSHWLWLRQIRUUHYLHZLQDQRSLQLRQ³FODULI\LQJ´WKDWWKH
RUGHUDFWXDOO\VD\VZKDWLWZRXOGKDYHWRVD\IRULWWREHRQ
OHJDOO\VROLGJURXQGLHWKDWWKHRUGHUUHVWVRQ)(5&¶V†
DXWKRULW\ :H FDQ WKLQN RI DW OHDVW WKUHH UHDVRQV ZK\ ZH
VKRXOGQRWDFFHSWWKLVVXJJHVWLRQ)LUVWRIDOO³FODULI\LQJ´
WKDWDQRUGHUVD\VVRPHWKLQJWKDWWUXO\DSSHDUVWRFRQWUDGLFW
ZKDW WKH RUGHU LQ IDFW VD\V LV QRW FODULILFDWLRQ DW DOO ,W LV
UHZULWLQJ2XUUHYLHZRIDQDJHQF\¶VLQWHUSUHWDWLRQRILWVRZQ
RUGHUVLVRIFRXUVHKLJKO\GHIHUHQWLDOVHHHJ3DFLILF*DV
1R &RQVXPHUV(QHUJ\&RY)(5&
86& † F &RQJUHVV FRQFOXGHG WKDW +LQVKDZ
SLSHOLQHVDUH³PDWWHUVSULPDULO\RIORFDOFRQFHUQ´DQGVRDUH
PRUHDSSURSULDWHO\UHJXODWHGE\SHUWLQHQWVWDWHDJHQFLHVUDWKHU
WKDQE\)(5&
$OWKRXJK WKH\ DUH RUGLQDULO\ RXWVLGH RI )(5&¶V
MXULVGLFWLRQ +LQVKDZ SLSHOLQHV ³FDQ XQTXHVWLRQDEO\ FRPH
XQGHU)(5&DXWKRULW\ZKHQ>WKH\@HQJDJHLQDFWLYLWLHVWKDWJR
EH\RQGWKHLQWUDVWDWHWUDQVSRUWRIJDV´3XEOLF8WLOV&RPP¶Q
RI &D Y )(5& )G '& &LU
1HYHUWKHOHVV)(5&KDVSURPXOJDWHGDUHJXODWLRQWKDWDOORZV
+LQVKDZ SLSHOLQHV LQ OLPLWHG FLUFXPVWDQFHV WR HQJDJH LQ
DFWLYLWLHV WKDW ZRXOG RWKHUZLVH EULQJ WKHP IXOO\ ZLWKLQ
)(5&¶VMXULVGLFWLRQZKLOHVWLOOPDLQWDLQLQJ IRUWKHPRVWSDUW
WKHLUVWDWXVDV+LQVKDZSLSHOLQHV6HH&)5†
,QRUGHUWRDYDLOLWVHOIRIWKHUHJXODWLRQD+LQVKDZSLSHOLQH
PXVWDSSO\IRUDEODQNHW³FHUWLILFDWHRISXEOLFFRQYHQLHQFH
DQG QHFHVVLW\´ WKH WULJJHULQJ HYHQW IRU IXOO )(5&
MXULVGLFWLRQ SXUVXDQWWR†RIWKH1*$86&†I
EXWRQO\ZLWKUHJDUGWRWKHSLSHOLQH¶VLQWHUVWDWHDFWLYLWLHV
7KH+LQVKDZSLSHOLQHLVWKHQSHUPLWWHGWRHQJDJHLQFHUWDLQ
LQWHUVWDWHDFWLYLWLHVZLWKRXWEHLQJVXEMHFWHGWRWKHIXOOUDQJH
RIWKH1*$¶VUHTXLUHPHQWVZKLFKLQFOXGHH[WHQVLYHILOLQJ
DQGUHSRUWLQJREOLJDWLRQV,QH[FKDQJHWKHDFWLYLWLHVRIWKH
SLSHOLQH WKDW ZRXOG RUGLQDULO\ VXEMHFW LW WR IXOO )(5&
MXULVGLFWLRQPXVWEHSURYLGHGZLWKRXWXQGXHGLVFULPLQDWLRQ
DQGDW³IDLUDQGHTXLWDEOH´UDWHV7KH+LQVKDZSLSHOLQHPD\
WKHQ EDVH LWV UDWHV RQ WKH UDWHV IRU FRPSDUDEOH VHUYLFH DV
DSSURYHGE\WKHSHUWLQHQWVWDWHUHJXODWRU\DJHQF\RULWPXVW
DSSO\WR)(5&IRUDSSURYDORILWVSURSRVHGUDWHV
&RQVXPHUV RSHUDWHV D +LQVKDZ SLSHOLQH SXUVXDQW WR D
³EODQNHWFHUWLILFDWH´REWDLQHGXQGHU&)5†2Q
1RYHPEHU &RQVXPHUV SHWLWLRQHG )(5& IRU
DSSURYDO WR GHFUHDVH LWV SUHYLRXVO\ DXWKRUL]HG UDWH IRU
LQWHUUXSWLEOH QDWXUDO JDV WUDQVSRUWDWLRQ VHUYLFHV )(5&
DSSURYHG WKH SURSRVHG UHGXFWLRQ EXW LWV RUGHU UHTXLUHG
&RQVXPHUVWRILOHRQRUEHIRUH'HFHPEHUDQGWKHQ
DJDLQDWWKUHH\HDULQWHUYDOVSHWLWLRQV³IRUUDWHDSSURYDOWR

-- 3 of 4 --

&RQVXPHUV(QHUJ\&RY)(5& 1R
MXVWLI\LWVFXUUHQWUDWHRUWRHVWDEOLVKDQHZPD[LPXPUDWH´
&RQVXPHUV UHTXHVWHG D UHKHDULQJ HVVHQWLDOO\ DUJXLQJ WKDW
)(5& H[FHHGHG LWV VWDWXWRU\ DXWKRULW\ E\ SODFLQJ RQ
&RQVXPHUV WKH EXUGHQ RI MXVWLI\LQJ LWV UDWH DV IDLU DQG
HTXLWDEOH 8QGHU WKH DSSURSULDWH VHFWLRQ RI WKH 1*$
&RQVXPHUVDUJXHGLWLV)(5&WKDWPXVWVKRXOGHUWKHEXUGHQ
RIVKRZLQJWKDW&RQVXPHUV¶VUDWHLVXQIDLURULQHTXLWDEOH
)(5& GHQLHG WKH UHTXHVW IRU UHKHDULQJ UHDVRQLQJ WKDW
EHFDXVH&RQVXPHUVLVQRWVXEMHFWWRWKHIXOODUUD\RIUHSRUWLQJ
REOLJDWLRQVWKDWDSSO\WRLQWHUVWDWHSLSHOLQHVLWZDVLPSRUWDQW
WR UHTXLUH &RQVXPHUV WR SHULRGLFDOO\ WXUQ RYHU UHOHYDQW
LQIRUPDWLRQVRWKDW)(5&FRXOGHQVXUHWKHFRQWLQXHGIDLUQHVV
DQGHTXLWDELOLW\RI&RQVXPHUV¶VUDWH,I&RQVXPHUVGLGQRW
ZDQWWRILOHWRUHHVWDEOLVKLWVUDWHHYHU\WKUHH\HDUV)(5&
FRQFOXGHG&RQVXPHUVZDVIUHHWRILOHDEODQNHWDSSOLFDWLRQ
XQGHU†DQGEHWUHDWHGOLNHDQLQWHUVWDWHSLSHOLQH³ZLWKDOO
RIWKHDWWHQGDQWUHJXODWRU\REOLJDWLRQV´
7KLVSHWLWLRQIRUUHYLHZIROORZHG&RQVXPHUVPDLQWDLQV
WKDW LW ZDV QRW DQG LV QRW REMHFWLQJ WR EHLQJ UHTXLUHG WR
SURYLGH)(5&ZLWKLQIRUPDWLRQVRWKDW)(5&FDQIRUPXODWH
LQIRUPHGFRQFOXVLRQVDERXWWKHIDLUQHVVDQGHTXLWDELOLW\RI
&RQVXPHUV¶VUDWH5DWKHU&RQVXPHUVLQVLVWVLWLVREMHFWLQJ
WRZKDWLWSHUFHLYHVWREHDQDWWHPSWE\)(5&WRMXVWLI\LWV
RUGHUDVDYDOLGH[HUFLVHRI)(5&¶VDXWKRULW\XQGHU†RIWKH
1*$86&†F 6HFWLRQDSSOLHVZKHQDQDWXUDO
JDVFRPSDQ\ILOHVIRUDUDWHFKDQJH6HFWLRQDSSOLHVZKHQ
)(5& ³WDNH>V@ WKH LQLWLDWLYH DQG GHWHUPLQH>V@ WKDW UDWHV
DOUHDG\ILOHGDUHQRWMXVWDQGUHDVRQDEOH7KHXQLI\LQJ
SULQFLSOHLVWKDWWKHSURSRQHQWRIFKDQJHEHDUVWKHEXUGHQ´
3XEOLF6HUY&RPP¶QRI1<Y)(5&)G
'&&LU +DG)(5&LVVXHGLWVRUGHUXQGHU†RI
WKH1*$86&†G²ZKLFK&RQVXPHUVPDLQWDLQV
ZDVDFWXDOO\WKHRQO\SURSHUEDVLVRIDXWKRULW\IRU)(5&¶V
RUGHU²)(5& ZRXOG KDYH WR VKRXOGHU WKH EXUGHQ RI
HVWDEOLVKLQJWKDW&RQVXPHUV¶VUDWHLVXQIDLURULQHTXLWDEOH
0RUHRYHUXQGHU†RIWKH1*$UDWHFKDQJHVPD\RQO\EH
LPSRVHGSURVSHFWLYHO\6HFWLRQSHUPLWVFHUWDLQUHWURDFWLYH
DGMXVWPHQWV
1R &RQVXPHUV(QHUJ\&RY)(5&
,,$1$/<6,6
7KLVLVRQHRIWKRVHSHFXOLDUFDVHVLQZKLFKLWLVQRWHDV\WR
XQGHUVWDQGZKDWWKHOLWLJDQWVDUHGLVSXWLQJ&RQVXPHUVDQG
)(5& DJUHH WKDW XQGHU † D RI WKH 1*$ 86&
†L D )(5&FDQUHTXLUH&RQVXPHUVWRSURYLGHLWZLWK
LQIRUPDWLRQDWUHJXODULQWHUYDOV7KH\DOVRDJUHHWKDWLI)(5&
ZDQWVWRUHYLVH&RQVXPHUV¶VUDWHV)(5&ZLOOKDYHWREHDU
WKHEXUGHQRIMXVWLI\LQJDQ\FKDQJHDVLWPXVWXQGHU†RI
WKH1*$
7KH RQO\ DSSDUHQW VRXUFH RI FRQWHQWLRQ LV &RQVXPHUV¶V
VXVSLFLRQWKDW)(5&ZDVWU\LQJWRVOLGHWKURXJKDQDWWHPSWWR
UHJXODWHLWXQGHU†RIWKH1*$UDWKHUWKDQXQGHU†,W
ZRXOG QRW EH WKH ILUVW WLPH WKDW )(5& KDV XWLOL]HG VXFK D
WDFWLF6HHHJ3XEOLF6HUY&RPP¶QRI1<)GDW
³2QIRXURFFDVLRQVLQWKHODVWWKUHH\HDUVWKLVFRXUW
KDVUHYLHZHG&RPPLVVLRQHIIRUWVWRFRPSURPLVH†¶VOLPLWV
RQLWVSRZHUWRUHYLVHUDWHV2QHDFKWKHFRXUWKDVUHSHOOHG
WKH&RPPLVVLRQ¶VJDPELW7KLVLVQXPEHUILYH´ :HVWHUQ
5HVRXUFHV,QFY)(5&)G '&&LU
³:HQRZPDNHLWDQHYHQVL[´ &RQVXPHUVFODLPVWKDW
RQO\DIWHULWSHWLWLRQHGWKLVFRXUWIRUUHYLHZKDV)(5&WDNHQ
WKHSRVLWLRQWKDWWKHFKDOOHQJHGRUGHUUHVWVRQ)(5&¶V†
SRZHUVUDWKHUWKDQRQ†
)(5& DUJXHV WKDW &RQVXPHUV ³IXQGDPHQWDOO\
PLVFRPSUHKHQGV WKH FKDOOHQJHG RUGHUV´ FRQWHQGLQJ WKDW
)(5&ZDVQRWSXUSRUWLQJWRDFWXQGHULWV†SRZHU$IWHU
DOO )(5& SRLQWV RXW † D RI WKH 1*$ 86&
†L D H[SOLFLWO\DXWKRUL]HV)(5&WRGHPDQGWKDWSLSHOLQH
FRPSDQLHVVXFKDV&RQVXPHUVSHULRGLFDOO\ILOHLQIRUPDWLRQ
ZLWK)(5&VRWKDW)(5&FDQVDWLVI\LWVREOLJDWLRQVXQGHU†
RIWKH1*$6HH86& † L D ³(YHU\QDWXUDOJDV
FRPSDQ\VKDOOILOHZLWKWKH&RPPLVVLRQVXFKUHSRUWVDV
WKH&RPPLVVLRQPD\SUHVFULEHDVQHFHVVDU\RUDSSURSULDWH
WRDVVLVWWKH&RPPLVVLRQLQWKHSURSHUDGPLQLVWUDWLRQRIWKLV
FKDSWHU7KH&RPPLVVLRQPD\UHTXLUHIURPVXFKQDWXUDO
JDVFRPSDQLHVVSHFLILFDQVZHUVWRDOOTXHVWLRQVXSRQZKLFK
WKH &RPPLVVLRQ PD\ QHHG LQIRUPDWLRQ´ $FFRUGLQJ WR

-- 4 of 4 --