01a0306p.06

7KH +RQRUDEOH 'DYLG $ .DW] 8QLWHG 6WDWHV 'LVWULFW -XGJH IRU WKH
1RUWKHUQ 'LVWULFW RI 2KLR 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
81,7(' 67$7(6 2) $0(5,&$
3ODLQWLII$SSHOOHH
Y
5$1'$// 678%%/(),(/' -5
'HIHQGDQW$SSHOODQW
;!

1
1R
$SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW
IRUWKH6RXWKHUQ'LVWULFWRI2KLRDW&LQFLQQDWL
1R²6XVDQ-'ORWW'LVWULFW-XGJH
6XEPLWWHG-XO\
'HFLGHGDQG)LOHG6HSWHPEHU
%HIRUH1(/621DQG0225(&LUFXLW-XGJHV.$7=
'LVWULFW-XGJH

-- 1 of 4 --

8QLWHG6WDWHVY6WXEEOHILHOG-U 1R
BBBBBBBBBBBBBBBBB
&2816(/
21 %5,() 5REHUW $QGUHZV 6&+8+ *2/'%(5*
&LQFLQQDWL 2KLR IRU $SSHOODQW 5REHUW %ULFKOHU
$66,67$1781,7('67$7(6$77251(<&LQFLQQDWL
2KLRIRU$SSHOOHH
BBBBBBBBBBBBBBBBB
23,1,21
BBBBBBBBBBBBBBBBB
.$5(11(/6210225(&LUFXLW-XGJH'HIHQGDQW
$SSHOODQW 5DQGDOO 6WXEEOHILHOG -U ³6WXEEOHILHOG´ RU
³GHIHQGDQW´ DSSHDOVWKHGLVWULFWFRXUW¶VGHWHUPLQDWLRQWKDWDQ
DGGLWLRQDOSRLQWVKRXOGEHDGGHGWRKLVFULPLQDOKLVWRU\VFRUH
EDVHG RQ DQ 2KLR PLQRU PLVGHPHDQRU FRQYLFWLRQ IRU WKH
SRVVHVVLRQ RI OHVV WKDQ RQH KXQGUHG JUDPV RI PDULMXDQD
%HFDXVH WKH GLVWULFW FRXUW GLG QRW HUU LQ VR KROGLQJ ZH
$)),506WXEEOHILHOG¶VVHQWHQFH
,%$&.*5281'
2Q 0D\DIHGHUDOJUDQGMXU\UHWXUQHGDIRUW\
WKUHH FRXQW LQGLFWPHQW FKDUJLQJ 6WXEEOHILHOG ZLWK DPRQJ
RWKHU WKLQJV HQJDJLQJ LQ D FRQWLQXLQJ FULPLQDO HQWHUSULVH
LQYROYLQJ WKH GLVWULEXWLRQ RI FRFDLQH DQG PDULMXDQD LQ
YLRODWLRQ RI 86& † DQG PRQH\ ODXQGHULQJ LQ
YLRODWLRQRI86&†6WXEEOHILHOGSXUVXDQWWRD
ZULWWHQSOHDDJUHHPHQWSOHDGHGJXLOW\WRWKHVHWZRFKDUJHV
,QH[FKDQJHWKHJRYHUQPHQWGLVPLVVHGWKHUHPDLQLQJFRXQWV
RIKLVLQGLFWPHQW
)RU SXUSRVHV RI VHQWHQFLQJ WKH VXSHUYLVLQJ SUREDWLRQ
RIILFHU¶VSUHVHQWHQFHLQYHVWLJDWLRQUHSRUW ³365´ FDOFXODWHG
D WRWDO RI WZR FULPLQDO KLVWRU\ SRLQWV WKXV SODFLQJ
6WXEEOHILHOGLQFULPLQDOKLVWRU\FDWHJRU\,,2QHRIWKHWZR
FULPLQDOKLVWRU\SRLQWVZDVDFFUXHGGXHWRWKHGHIHQGDQW¶V
6HSWHPEHUPLQRUPLVGHPHDQRUGUXJDEXVHFRQYLFWLRQ
1R 8QLWHG6WDWHVY6WXEEOHILHOG-U
SRVVHVVLRQFRQYLFWLRQLQGHWHUPLQLQJ6WXEEOHILHOG¶VFULPLQDO
KLVWRU\FDWHJRU\DFFRUGLQJO\ZHFRQFOXGHWKDWWKHGLVWULFW
FRXUW ZDV FRUUHFW LQ DZDUGLQJ D FULPLQDO KLVWRU\ SRLQW WR
6WXEEOHILHOGEDVHGRQWKLVFRQYLFWLRQ
,,,&21&/86,21
)RUWKHIRUHJRLQJUHDVRQVZH$)),50WKHGLVWULFWFRXUW¶V
VHQWHQFHLQWKLVFDVH

-- 2 of 4 --

8QLWHG6WDWHVY6WXEEOHILHOG-U 1R
IXQFWLRQDOHTXLYDOHQWRIVHDOLQJWKHUHFRUGDJDLQVWDOOSHUVRQV
H[FHSWWKRVHH[SUHVVO\DXWKRUL]HG>XQGHU2KLRODZ@´,G
,QGHHGDOWKRXJK† ' DOORZVGHIHQGDQWVWRUHIUDLQ
IURPUHSRUWLQJDPLQRUPLVGHPHDQRUPDULMXDQDFRQYLFWLRQWR
YDULRXV LQGLYLGXDOV 2KLR FRXUWV KDYH KHOG WKDW PLQRU
PLVGHPHDQRU FRQYLFWLRQV FDQ ³EH WDNHQ LQWR DFFRXQW IRU
SXUSRVHVRILPSRVLQJWKHSHQDOW\IRUDVXEVHTXHQWFRQYLFWLRQ
RIDGUXJDEXVHRIIHQVH´6WDWHY&ROHPDQ1(G
2KLR &W $SS 6XFK SUDFWLFH FOHDUO\
GHPRQVWUDWHVWKDW† ' ZDVQRWPHDQWWRH[SXQJHD
PLQRUPLVGHPHDQRUPDULMXDQDFRQYLFWLRQIURPDGHIHQGDQW¶V
UHFRUG
0RUHRYHULWLVFOHDUIURPHYHQDEULHI ORRNDWWKH2KLR
5HYLVHG&RGHWKDWWKHVWDWHOHJLVODWXUHZDVIDPLOLDUZLWKWKH
SUDFWLFH RI H[SXQJHPHQW DQG SURYLGHG IRU LW LQ VHYHUDO
LQVWDQFHV6HHHJ2KLR5HY&RGH† ) VWDWLQJ
WKDW³>D@Q\SHUVRQZKRKDVEHHQDUUHVWHGDQGFKDUJHGZLWK
EHLQJDGHOLQTXHQWFKLOGRUDMXYHQLOHWUDIILFRIIHQGHUDQGZKR
LVDGMXGLFDWHGQRWJXLOW\RIWKHFKDUJHVLQWKHFDVHRUKDVWKH
FKDUJHVLQWKHFDVHGLVPLVVHGPD\DSSO\WRWKHFRXUWIRUDQ
H[SXQJHPHQWRIWKHUHFRUGLQWKHFDVH´ † ) VWDWLQJ
WKDWFROOHJHVWXGHQWVDQGVWDIILIDUUHVWHGRQYDULRXVFKDUJHV
VHWIRUWKLQWKHVWDWXWHDQGVXVSHQGHGDVDUHVXOW KDYHWKH
ULJKW WR H[SXQJHPHQW RI WKH VXVSHQVLRQ LI QRW FRQYLFWHG
† ' SURYLGLQJ SURFHGXUHV IRU H[SXQJLQJ DOO
HYLGHQFH RI DQ LQYHVWLJDWLRQ LQWR D ORQJWHUP FDUH RU
UHVLGHQWLDOFDUHIDFLOLW\¶VHPSOR\HH¶VDOOHJHGQHJOHFWRUDEXVH
RIDUHVLGHQWLIVXFKDOOHJDWLRQVFDQQRWEHVXEVWDQWLDWHG 7KH
IDFWWKDWWKH2KLROHJLVODWXUHFKRVHWRSURYLGHWKHRSSRUWXQLW\
WR³H[SXQJH´UHFRUGVLQYDULRXVFLUFXPVWDQFHVEXWGLGQRWVR
SURYLGHKHUHLVWHOOLQJHYLGHQFHWKDW† ' ZDVQRW
LQWHQGHG WR H[SXQJH D GHIHQGDQW¶V UHFRUGV RI D PLQRU
PLVGHPHDQRUGUXJDEXVHFRQYLFWLRQ
8OWLPDWHO\ ZH FRQFOXGH WKDW 6WXEEOHILHOG¶V PLQRU
PLVGHPHDQRUFRQYLFWLRQIRUSRVVHVVLRQRIPDULMXDQDZDVQRW
H[SXQJHG SXUVXDQW WR † ' 1R RWKHU H[FHSWLRQV
DSSO\ WKDW ZRXOG SUHFOXGH FRQVLGHUDWLRQ RI WKH PDULMXDQD
1R 8QLWHG6WDWHVY6WXEEOHILHOG-U
IRUSRVVHVVLRQRIOHVVWKDQRQHKXQGUHGJUDPVRIPDULMXDQD
3XUVXDQW WR 2KLR 5HY &RGH † & ' WKH
SRVVHVVLRQRIOHVVWKDQRQHKXQGUHGJUDPVRIPDULMXDQDLVD
PLQRU PLVGHPHDQRU ZKLFK ³GRHV QRW FRQVWLWXWH D FULPLQDO
UHFRUGDQGQHHGQRWEHUHSRUWHGE\WKHSHUVRQVRDUUHVWHGRU
FRQYLFWHG LQ UHVSRQVH WR DQ\ LQTXLULHV DERXW WKH SHUVRQ¶V
FULPLQDO UHFRUG LQFOXGLQJ DQ\ LQTXLULHV FRQWDLQHG LQ DQ\
DSSOLFDWLRQ IRU HPSOR\PHQW OLFHQVH RU RWKHU ULJKW RU
SULYLOHJHRUPDGHLQFRQQHFWLRQZLWKWKHSHUVRQ¶VDSSHDUDQFH
DVDZLWQHVV´
6WXEEOHILHOG ILOHG DQ REMHFWLRQ WR WKH SUREDWLRQ RIILFHU¶V
GHFLVLRQ WR DVVLJQ D FULPLQDO KLVWRU\ SRLQW WR KLV PLQRU
PLVGHPHDQRUGUXJDEXVHFRQYLFWLRQDUJXLQJWKDWEHFDXVHWKH
2KLROHJLVODWXUHKDVGHHPHGWKDWVXFKDFRQYLFWLRQGRHVQRW
HYHQFRQVWLWXWHDFULPLQDOUHFRUGLWZRXOGEHLQDSSURSULDWHWR
IDFWRU VXFK D FRQYLFWLRQ LQWR D FULPLQDO KLVWRU\ FDWHJRU\
GHWHUPLQDWLRQ:LWKRXWDFULPLQDOKLVWRU\SRLQWIRUWKLVPLQRU
PLVGHPHDQRUGUXJDEXVHFRQYLFWLRQ6WXEEOHILHOGZRXOGIDOO
ZLWKLQFULPLQDOKLVWRU\FDWHJRU\,LQVWHDGRI,,8QLWHG6WDWHV
6HQWHQFLQJ*XLGHOLQHV ³866*´ 6HQWHQFLQJ7DEOH
,Q OLJKW RI 6WXEEOHILHOG¶V EDVH RIIHQVH OHYHO RI WKH
VHQWHQFLQJUDQJHIRUDFULPLQDOKLVWRU\FDWHJRU\RI,ZRXOGEH
PRQWKV,G8QGHUFULPLQDOKLVWRU\FDWHJRU\,,WKH
VHQWHQFLQJUDQJHMXPSVWRPRQWKV,G
7KHGLVWULFWFRXUWRYHUUXOHGWKHGHIHQGDQW¶VREMHFWLRQDQG
VHQWHQFHGKLPWRPRQWKV¶LPSULVRQPHQWDQGIRXU\HDUV¶
VXSHUYLVHGUHOHDVH6WXEEOHILHOGQRZDSSHDOVKLVVHQWHQFHWR
WKLVFRXUW
,,$1$/<6,6
2Q DSSHDO 6WXEEOHILHOG UDLVHV WKH VDPH REMHFWLRQ WR KLV
VHQWHQFHWKDWKHUDLVHGLQWKHGLVWULFWFRXUW$OWKRXJKLWLVWUXH
WKDW 2KLR 5HY &RGH † ' VWDWHV WKDW D PLQRU
PLVGHPHDQRU FRQYLFWLRQ IRU WKH SRVVHVVLRQ RI PDULMXDQD
³GRHV QRW FRQVWLWXWH D FULPLQDO UHFRUG DQG QHHG QRW EH
UHSRUWHGE\WKHSHUVRQLQUHVSRQVHWRDQ\LQTXLULHVDERXW
WKH SHUVRQ¶V FULPLQDO UHFRUG´ ZH EHOLHYH WKDW XQGHU WKH
*XLGHOLQHV WKH GLVWULFW FRXUW ZDV FRUUHFW LQ LQFOXGLQJ WKLV

-- 3 of 4 --

8QLWHG6WDWHVY6WXEEOHILHOG-U 1R
7KH GHIHQGDQW DUJXHV WKDW EHFDXVH LW LV LQDSSURSULDWH XQGHU 866*
† % WR LQFOXGH DV ³UHOHYDQW FRQGXFW´ EHKDYLRU IRU ZKLFK WKH GHIHQGDQW
FRXOG QRW EH LQFDUFHUDWHG 8QLWHG 6WDWHV Y 6KDIHU )G
WK &LU LW LV VLPLODUO\ LPSURSHU WR FRQVLGHU D PLQRU PLVGHPHDQRU
FRQYLFWLRQ IRU ZKLFK D SULVRQ VHQWHQFH LV XQDYDLODEOH DV SDUW RI D
GHIHQGDQW¶V FULPLQDO KLVWRU\ ,W LV FOHDU KRZHYHU WKDW † $
FRQWHPSODWHV WKH DVVLJQPHQW RI FULPLQDO KLVWRU\ SRLQWV HYHQ IRU
FRQYLFWLRQV QRW UHVXOWLQJ LQ LPSULVRQPHQW 866* † $ FPW
EDFNJURXQG
FRQYLFWLRQ IRU SXUSRVHV RI FULPLQDO KLVWRU\ FDWHJRU\
GHWHUPLQDWLRQ
3XUVXDQWWR866*†$ D F RQHFULPLQDOKLVWRU\
SRLQWLVDGGHGIRUHYHU\SULRUVHQWHQFHZKLFKGLGQRWLQFOXGH
DVHQWHQFHRILPSULVRQPHQWRIDWOHDVWVL[W\GD\V6HQWHQFHV
IRUPLVGHPHDQRUVDQGSHWW\RIIHQVHV³LQFOXGLQJXQFRXQVHOHG
PLVGHPHDQRU VHQWHQFHV ZKHUH LPSULVRQPHQW ZDV QRW
LPSRVHG>@´ FRXQW ZKHQ FDOFXODWLQJ WKH FULPLQDO KLVWRU\
FDWHJRU\XQOHVVDQH[FHSWLRQDSSOLHV866*†$ F
FPW EDFNJURXQG $FFRUGLQJO\ 6WXEEOHILHOG¶V 6HSWHPEHU
FRQYLFWLRQIRUSRVVHVVLQJOHVVWKDQRQHKXQGUHGJUDPV
RIPDULMXDQDZLOOIDFWRULQWRKLVFULPLQDOKLVWRU\VFRUHXQOHVV
DQH[FHSWLRQDSSOLHV
%HFDXVHWKHH[FHSWLRQVVHWIRUWKLQ†$ F GRQRWDSSO\
WKHRQO\SURYLVLRQWKDWFRXOGH[FOXGH6WXEEOHILHOG¶VPDULMXDQD
SRVVHVVLRQ FRQYLFWLRQ IURP FRXQWLQJ WRZDUG KLV FULPLQDO
KLVWRU\ VFRUH LV † $ M ZKLFK VWDWHV WKDW ³H[SXQJHG
FRQYLFWLRQV´ DUH QRW WR EH FRXQWHG WRZDUG D GHIHQGDQW¶V
FULPLQDO KLVWRU\ VFRUH 7KH TXHVWLRQ WKHQ LQ WKLV FDVH LV
ZKHWKHU 6WXEEOHILHOG¶V PDULMXDQD SRVVHVVLRQ FRQYLFWLRQ
EHFDXVHLWGRHVQRWFRQVWLWXWHDFULPLQDOUHFRUGXQGHU2KLR
ODZVKRXOGEHFRQVLGHUHGDQH[SXQJHGFRQYLFWLRQXQGHUWKH
*XLGHOLQHV
7KH *XLGHOLQHV GR QRW GHILQH ZKDW FRQVWLWXWHV DQ
³H[SXQJHG FRQYLFWLRQ´ $SSOLFDWLRQ 1RWH WR † $
KRZHYHUGRHVSURYLGHVRPHJXLGDQFH
1R 8QLWHG6WDWHVY6WXEEOHILHOG-U
&RQYLFWLRQV 6HW $VLGH RU 'HIHQGDQW 3DUGRQHG $
QXPEHURIMXULVGLFWLRQVKDYHYDULRXVSURFHGXUHVSXUVXDQW
WRZKLFKSUHYLRXVFRQYLFWLRQVPD\EHVHWDVLGHRUWKH
GHIHQGDQW PD\ EH SDUGRQHG IRU UHDVRQV XQUHODWHG WR
LQQRFHQFHRUHUURUVRIODZHJLQRUGHUWRUHVWRUHFLYLO
ULJKWVRUWRUHPRYHWKHVWLJPDDVVRFLDWHGZLWKDFULPLQDO
FRQYLFWLRQ6HQWHQFHVUHVXOWLQJIURPVXFKFRQYLFWLRQV
DUHWREHFRXQWHG+RZHYHUH[SXQJHGFRQYLFWLRQVDUH
QRWFRXQWHG
$IWHUH[DPLQLQJWKH2KLRVWDWXWHDWLVVXHLQWKLVFDVHLWLV
FOHDUWKDW† ' ¶VGLUHFWLRQWKDWDPLQRUPLVGHPHDQRU
PDULMXDQDFRQYLFWLRQ³QRWFRQVWLWXWHDFULPLQDOUHFRUG´KDV
QRWKLQJWRGRZLWKDGHIHQGDQW¶VLQQRFHQFHRUHUURUVRIODZ
PDGHE\WKHVWDWH5DWKHUDVZHVWDWHGLQRXUXQSXEOLVKHG
RSLQLRQLQ8QLWHG6WDWHVY6PRRW1R:/
DW WK &LU 0D\ ³>W@KH 2KLR VWDWXWH
DWWHPSWV WR PLQLPL]H WKH VWLJPD DVVRFLDWHG ZLWK D PLQRU
PLVGHPHDQRUGUXJDEXVHFRQYLFWLRQLQYROYLQJDVPDOODPRXQW
RI PDULMXDQD E\ SURYLGLQJ WKDW D GHIHQGDQW DUUHVWHG RU
FRQYLFWHG RI VXFK FKDUJHV QHHG QRW UHYHDO WKH DUUHVW RU
FRQYLFWLRQZKHQDVNHGLIKHRUVKHKDVDFULPLQDOUHFRUG´
7KDW† ' LVQRWDQH[SXQJHPHQWSURYLVLRQLVFOHDU
XQGHU2KLRODZDVZHOO,Q6WDWHY:HEHU1(G
2KLR &W $SS D GHIHQGDQW FRQYLFWHG RI WKH VDPH
PLQRUPLVGHPHDQRURIIHQVHRIPDULMXDQDSRVVHVVLRQVRXJKW
WR H[SXQJH KLV FRQYLFWLRQ 7KH VWDWH DUJXHG WKDW WKH
GHIHQGDQW GLG QRW TXDOLI\ IRU H[SXQJHPHQW EHFDXVH
† ' HIIHFWLYHO\SUHFOXGHGKLPIURPTXDOLI\LQJDVDQ
³RIIHQGHU´IRUSXUSRVHVRI2KLR¶VH[SXQJHPHQWSURYLVLRQV
2KLR5HY&RGH†HWVHT7KH2KLRFRXUWRIDSSHDOV
UHMHFWHG WKH VWDWH¶V DUJXPHQW KRZHYHU VWDWLQJ WKDW
† ' ³REYLRXVO\GRHVQRWVHDORUH[SXQJHWKHUHFRUG
RIFRQYLFWLRQ´,GDW7KHFRXUWFRQWLQXHGRQWRVWDWH
WKDWZKLOH³>L@WLVTXLWHWUXHWKDW5& ' UHOLHYHVWKH
RIIHQGHUIURPKDYLQJWRUHSRUWWKHFRQYLFWLRQKLPVHOIDVD
μFULPLQDO UHFRUG¶ ZKHQ KH UHVSRQGV WR LQTXLULHV IURP
HPSOR\HUVDQGRWKHUVWKLVLVQHLWKHUWKHWKHRUHWLFDOQRU

-- 4 of 4 --