03a0057p.06

7KH +RQRUDEOH 'RQDOG 3 /D\ &LUFXLW -XGJH RI WKH 8QLWHG 6WDWHV
&RXUW RI $SSHDOV IRU WKH (LJKWK &LUFXLW 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
'$1,66+22. -2,17
9(1785( ;;9
3HWLWLRQHU
Y
6(&5(7$5< 2) /$%25
5HVSRQGHQW
;!

1
1R
2Q$SSHDOIURPD'HFLVLRQDQG2UGHURI
WKH2FFXSDWLRQDO6DIHW\DQG+HDOWK5HYLHZ&RPPLVVLRQ
1R
$UJXHG-DQXDU\
'HFLGHGDQG)LOHG)HEUXDU\
%HIRUH0$57,1&KLHI&LUFXLW-XGJH0(55,77DQG
/$<&LUFXLW-XGJHV
BBBBBBBBBBBBBBBBB
&2816(/
$5*8(' *DU\ : $XPDQ '81/(9(< 0$+$1
)855<'D\WRQ2KLRIRU3HWLWLRQHU5RQDOG-*RWWOLHE

-- 1 of 6 --

'DQLV6KRRN-RLQW9HQWXUH
Y6HFUHWDU\RI/DERU
1R
81,7('67$7(6'(3$570(172)/$%252)),&(
2)7+(62/,&,725:DVKLQJWRQ'&IRU5HVSRQGHQW
21%5,()*DU\:$XPDQ'81/(9(<0$+$1
)855<'D\WRQ2KLRIRU3HWLWLRQHU5RQDOG-*RWWOLHE
$QQ 5RVHQWKDO 81,7(' 67$7(6 '(3$570(17 2)
/$%252)),&(2)7+(62/,&,725:DVKLQJWRQ'&
IRU5HVSRQGHQW
BBBBBBBBBBBBBBBBB
23,1,21
BBBBBBBBBBBBBBBBB
%2<&()0$57,1-5&KLHI&LUFXLW-XGJH7KLVFDVH
DULVHV IURP DQ DSSHDO RI D GHFLVLRQ E\ WKH 2FFXSDWLRQDO
6DIHW\DQG+HDOWK5HYLHZ&RPPLVVLRQUHJDUGLQJDGURZQLQJ
DFFLGHQWDWDZRUNVLWHLQ%HDYHUFUHHN2KLR7KDWGHFLVLRQ
UHYHUVHG LQ SDUW DQG DIILUPHG LQ SDUW WKH GHFLVLRQ RI WKH
DGPLQLVWUDWLYH ODZ MXGJH LQ WKLV PDWWHU 'DQLV6KRRN WKH
SHWLWLRQHU FODLPV WKDW WKH MXGJPHQW RI WKH 5HYLHZ
&RPPLVVLRQ ZDV DUELWUDU\ FDSULFLRXV DQG DQ DEXVH RI
GLVFUHWLRQ7KH5HYLHZ&RPPLVVLRQIRXQGWKDW'DQLV6KRRN
KDG YLRODWHG WZR VHFWLRQV RI WKH 2FFXSDWLRQDO 6DIHW\ DQG
+HDOWK$FW)LUVWWKH&RPPLVVLRQIRXQGWKDW'DQLV6KRRN
YLRODWHG &)5 † E LQ IDLOLQJ WR LQVWUXFW
HPSOR\HHVLQWKHUHFRJQLWLRQDQGDYRLGDQFHRIWKHKD]DUGV
DVVRFLDWHG ZLWK HQWHULQJ D EDVLQ ILOOHG ZLWK DFFXPXODWHG
ZDWHU6HFRQGWKH&RPPLVVLRQIRXQGWKDW'DQLV6KRRNKDG
NQRZOHGJH RI WKH IDLOXUH RI LWV HPSOR\HH WR XVH SHUVRQDO
SURWHFWLYHHTXLSPHQWLQYLRODWLRQRI&)5† D
DQG 'DQLV6KRRN¶V XQSUHYHQWDEOH VXSHUYLVRU\ PLVFRQGXFW
GHIHQVHIDLOHG,QHVVHQFHWKH5HYLHZ&RPPLVVLRQIRXQG
WKDW'DQLV6KRRNPDGHVRPHHIIRUWVWRLQVXUHVDIHW\EXWWKDW
LWVHQIRUFHPHQWRIVDIHW\UXOHVZDVQRWVXIILFLHQWO\DJJUHVVLYH
DQGLWVVDIHW\LQVWUXFWLRQVQRWFOHDUDQGGHILQLWH
,Q$SULORI'DQLV,QGXVWULHVDQG6KRRN,QFHQWHUHG
LQWR D MRLQW YHQWXUH IRU WKH H[SDQVLRQ RI WKH %HDYHUFUHHN
ZDVWHZDWHUWUHDWPHQWSODQWLQ2KLR$VSDUWRIWKHH[SDQVLRQ
1R 'DQLV6KRRN-RLQW9HQWXUH
Y6HFUHWDU\RI/DERU

DVVHUWVWKDW'DQLV6KRRNGLGQRWHQIRUFHLWVSROLF\DVZULWWHQ
7KHZULWWHQVDIHW\SROLF\UHTXLUHGKD]DUGVQRWFRYHUHGWREH
UHSRUWHGVRWKDWFKDQJHVFRXOGEHPDGHLQWKHSURJUDP7KH
'DQLV6KRRNVXSHUYLVRUZKRRYHUVDZWKHIRUHPHQGLGQRW
UHTXLUHWKHIRUHPHQWRUHSRUWDKD]DUGLIWKH\WKRXJKWWKH\
FRXOGDGGUHVVLWHIIHFWLYHO\WKHPVHOYHV)LQDOO\WKHUHZDVQR
ZRUNUXOHWKDWVSHFLILFDOO\UHTXLUHG:DJQHUWRZHDUSHUVRQDO
SURWHFWLYHHTXLSPHQWZKHQHQWHULQJDFFXPXODWHGZDWHULQWKH
EDVLQV:KLOH'DQLV6KRRNQHHGQRWKDYHDUXOHVRVSHFLILF
LW FRXOG DQG VKRXOG KDYH UHTXLUHG WKDW LWV HPSOR\HHV ZHDU
OLIHOLQHVKDUQHVVHVDQGYHVWVZKHQHYHUWKHUHZDVDGDQJHURI
HQJXOIPHQW 7KH 'DQLV6KRRN UXOH RQ SHUVRQDO SURWHFWLYH
HTXLSPHQWZDVGLVFUHWLRQDU\DQGQRWPDQGDWRU\DQGWKLVZDV
LQVXIILFLHQW
)RU WKH IRUHJRLQJ UHDVRQV WKH ILQDO RUGHU RI WKH
2FFXSDWLRQDO 6DIHW\ DQG +HDOWK 5HYLHZ &RPPLVVLRQ LV
DIILUPHGXSRQWKHUHDVRQLQJHPSOR\HGE\WKH&RPPLVVLRQLQ
LWVGHFLVLRQGDWHG$XJXVW

-- 2 of 6 --

'DQLV6KRRN-RLQW9HQWXUH
Y6HFUHWDU\RI/DERU
1R
,GDW%HFDXVH:DJQHUZDVDIRUHPDQDQGNQHZRIKLV
RZQIDLOXUHWRZHDUSHUVRQDOSURWHFWLYHHTXLSPHQWWKLVIDLOXUH
PD\EHLPSXWHGWR'DQLV6KRRN'RQRYDQY&DSLWDO&LW\
([FDYDWLQJ&R,QF)G WK&LU
$GGLWLRQDOO\WZRRWKHUIRUHPDQNQHZRI:DJQHU¶VLQWHQWLRQ
WRZRUNLQ%DVLQDQGWRLQYHVWLJDWHZK\WKHZDWHUZDVQRW
GUDLQLQJ
)XUWKHUDVWKH6HFUHWDU\FRQWLQXHVWRDUJXH'DQLV6KRRN
NQHZ RI WKH KD]DUG ,WV VXSHUYLVRUV WHVWLILHG WKDW WKH\
FRQVLGHUHGLWDKD]DUGIRUDQ\SHUVRQWRHQWHUWKHDFFXPXODWHG
ZDWHU LQ WKH EDVLQV ZLWKRXW IXOO SHUVRQDO SURWHFWLYH
HTXLSPHQW7KH\ZHUHDZDUHRIWKHVHFRQGLWLRQV\HWWKH\GLG
QRWUHTXLUHSHUVRQDOSURWHFWLYHHTXLSPHQWLQDVLWXDWLRQOLNH
:DJQHU¶V 7KHLU UXOH PHUHO\ UHTXLUHG SHUVRQDO SURWHFWLYH
HTXLSPHQW ³DV QHHGHG´ 7KLV NLQG RI UXOH UHOLHV RQ WKH
MXGJPHQWRIVXSHUYLVRUVDQGDVHYLGHQFHGE\WKHWUDJLFUHVXOW
LQWKLVFDVHWKDWZDVQRWHQRXJK
)LQDOO\ 'DQLV6KRRN DVVHUWV WKDW LW LV HQWLWOHG WR DQ
DIILUPDWLYHGHIHQVHRIXQSUHYHQWDEOHHPSOR\HHPLVFRQGXFW
,Q WKH 6L[WK &LUFXLW LQ RUGHU WR VXFFHVVIXOO\ DVVHUW WKLV
GHIHQVHDQHPSOR\HUPXVWVKRZWKDWLWKDVDWKRURXJKVDIHW\
SURJUDP LW KDV FRPPXQLFDWHG DQG IXOO\ HQIRUFHG WKH
SURJUDPWKHFRQGXFWRIWKHHPSOR\HHZDVXQIRUHVHHDEOHDQG
WKHVDIHW\SURJUDPZDVHIIHFWLYHLQWKHRU\DQGSUDFWLFH6HH
&0&)GDW'DQLV6KRRNDVVHUWVLWKDVPHWDOO
WKHVHFULWHULD
7KH 6HFUHWDU\ SRLQWV RXW WKDW WR EH HIIHFWLYH WKH VDIHW\
SURJUDPPXVWEHGHVLJQHGVXFKWKDWLIIROORZHGLWZRXOG
SUHYHQWWKHYLRODWLRQVDWLVVXH6HH1DWLRQDO(QJLQHHULQJ
&RQWUDFWLQJ &R Y 86 2FFXSDWLRQDO 6DIHW\ DQG +HDOWK
5HYLHZ&RPP Q)G WK&LU DIILUPLQJ
UHMHFWLRQ RI XQSUHYHQWDEOH HPSOR\HH PLVFRQGXFW GHIHQVH
EDVHGRQDEVHQFHRIZRUNUXOHGHVLJQHGWRSUHYHQWYLRODWLRQ
7KH6HFUHWDU\FODLPV'DQLV6KRRNGLGQRWKDYHDQHIIHFWLYH
VDIHW\ SROLF\ EHFDXVH LWV SURJUDP GLG QRW DGGUHVV WKH
HQJXOIPHQWKD]DUGDWLVVXHLQWKLVFDVH7KH6HFUHWDU\DOVR
1R 'DQLV6KRRN-RLQW9HQWXUH
Y6HFUHWDU\RI/DERU

ZRUN 'DQLV6KRRN FRQVWUXFWHG WZR LGHQWLFDO HTXDOL]DWLRQ
EDVLQV WR SURYLGH DGGHG FDSDFLW\ IRU VWRUDJH RI VHZDJH
IROORZLQJVWRUPVXUJHV7KHEDVLQVDUHDERYHJURXQGDQG
URXQGXQFRYHUHGFRQFUHWHEDVLQV7KH\KDYHDGLDPHWHURI
DSSUR[LPDWHO\WZRKXQGUHGIHHWDQGWKH\DUHDERXWWZHQW\
IHHWKLJK7KHIORRUVRIWKHEDVLQVVORSHWRZDUGWKHFHQWHUDW
DERXWRQHKDOILQFKSHUIRRW$WWKHFHQWHURIWKHEDVLQVLVD
GUDLQ SLSH IRUW\WZR LQFKHV LQ GLDPHWHU 7KH SLSH GURSV
VWUDLJKWGRZQVL[IHHWEHIRUHUHDFKLQJDQHOERZMRLQWZKHUH
LWWKHUHDIWHUSURFHHGVKRUL]RQWDOO\XQGHUJURXQGWRWKHSXPS
VWDWLRQ
'XULQJWKHFRQVWUXFWLRQRIWKHEDVLQV'DQLV6KRRNFRYHUHG
WKHGUDLQSLSHVZLWKSO\ZRRGFRYHUVOHVVWKDQRQHLQFKWKLFN
:RRGHQ ERDUGV ZHUH VHFXUHG XQGHUQHDWK HDFK RI WKH WZR
SOXJV 'DQLV6KRRN LQVWDOOHG WKH SOXJV WR SUHYHQW IDOOLQJ
LQMXULHVZKLOHWKHEDVLQVZHUHVWLOOXQGHUFRQVWUXFWLRQ7KH
EDVLQV ZHUH FRPSOHWHG LQ WKH IDOO RI EXW WKH SXPS
VWDWLRQ ZDV QRW \HW FRPSOHWHG 7R SUHYHQW ZDWHU IURP
GUDLQLQJIURPWKHEDVLQVWRWKHVWDWLRQ'DQLV6KRRNOHIWWKH
SOXJVLQSODFHWKURXJKWKHZLQWHU7KHFRPSDQ\DOVRFDXONHG
DURXQGWKHSOXJVWRSUHYHQWOHDNDJH
:KHQWKHSXPSVWDWLRQZDVILQLVKHGLQ$SULORIWKH
EDVLQVVWLOOQHHGHGPRUHZRUNLQFOXGLQJSODFLQJEUDFNHWVRQ
WKH ZDOOV IRU VXSSRUWLQJ DHUDWLRQ SLSHV 5DLQZDWHU DQG
VQRZPHOW IURP WKH ZLQWHU KDG DFFXPXODWHG LQ WKH EDVLQV
KRZHYHUWREHWZHHQWZHOYHDQGWKLUW\LQFKHVGHHSDQGWKH
EDVLQVQHHGHGWREHGUDLQHG7RGUDLQWKHPDODERUHUZHDULQJ
ZDGHUVOLIHYHVWKDUQHVVDQGOLIHOLQHHQWHUHGWKHZDWHUDQG
GULOOHGWKUHHKROHVLQHDFKSO\ZRRGSOXJ7KHZDWHUEHJDQWR
GUDLQEXWWKHEDVLQVGLGQRWHPSW\FRPSOHWHO\
$ERXWWZRZHHNVDIWHU'DQLV6KRRNGULOOHGWKHKROHVWKH
SLSHILWWHUV RQ WKH SURMHFW ILQLVKHG WKHLU ZRUN RQ WKH SXPS
VWDWLRQ DQG EHJDQ ZRUNLQJ LQ %DVLQ 7KH SLSHILWWHUV¶
IRUHPDQZDV-DPHV:DJQHU6UDQGKHKDGDFUHZRIWZR
PHQ RQH RI ZKRP ZDV KLV VRQ 7KHUH ZHUH VWLOO VHYHUDO
LQFKHVRIZDWHULQWKHERWWRPRI%DVLQVRWKHFUHZGLGDV

-- 3 of 6 --

'DQLV6KRRN-RLQW9HQWXUH
Y6HFUHWDU\RI/DERU
1R
PXFKZRUNDURXQGWKHGU\XSSHUHGJHVRIWKHVORSHGIORRUDV
SRVVLEOH7KHZRUNGLGQRWLQYROYHJRLQJLQWKHZDWHUDWDOO
%HFDXVH WKH\ FRXOG JR QR IXUWKHU LQ %DVLQ XQWLO WKH
UHPDLQGHURIWKHZDWHUZDVJRQH)RUHPDQ:DJQHUPDGHD
GHFLVLRQ WR EHJLQ ZRUNLQJ RQ %DVLQ RQ $SULO
:KLOHWKHWZRFUHZPHPEHUVZRUNHGRQDVVHPEOLQJWRROVDQG
FOHDQLQJWKHZDOOFDVWLQJV)RUHPDQ:DJQHUZHDULQJZDGHUV
ZDONHGLQWRWKHDFFXPXODWHGZDWHULQ%DVLQ7KHZDWHUZDV
PRUHWKDQWKLUW\WZRLQFKHVGHHSDWWKHGUDLQ7KHIRUHPDQ
ZDQWHG WR VHH ZK\ WKH SLSH ZDV QRW GUDLQLQJ +LV FUHZ
ZDWFKHGKLPSXOODSLHFHRISODVWLFVKHHWLQJDZD\IURPWKH
SOXJ 1H[W )RUHPDQ :DJQHU XVHG D ORQJ PHWDO SLHFH RI
HTXLSPHQWWRVOLGHRYHUWKHSOXJ³WKXPSLQJ´WKHEDURQWKH
SOXJ7KHSOXJGLVORGJHGDQG)RUHPDQ:DJQHUZDVVXFNHG
GRZQWKHGUDLQDQGGURZQHG
:LWKLQDQKRXUDQGDKDOIRIWKHDFFLGHQWDQ2FFXSDWLRQDO
6DIHW\DQG+HDOWK$GPLQLVWUDWLRQVDIHW\VSHFLDOLVWZDVDWWKH
FRQVWUXFWLRQ VLWH WR PDNH REVHUYDWLRQV DQG FRQGXFW
LQWHUYLHZV2QWKHEDVLVRIWKHLQIRUPDWLRQVKHJDWKHUHGWKH
6HFUHWDU\RI/DERULVVXHGD³VHULRXVFLWDWLRQ´WR'DQLV6KRRN
6KHDOOHJHG³VHULRXVYLRODWLRQV´RI 6HFWLRQ D RIWKH
2FFXSDWLRQDO6DIHW\DQG+HDOWK$FWIRUIDLOLQJWRSURYLGHD
ZRUNSODFHIUHHRIUHFRJQL]HGKD]DUGVE\H[SRVLQJHPSOR\HHV
ZKRHQWHUHGWKHDFFXPXODWHGZDWHULQWKHEDVLQWRDSRWHQWLDO
HQJXOIPHQWKD]DUG &)5† E IRUIDLOLQJWR
LQVWUXFW HPSOR\HHV LQ WKH UHFRJQLWLRQ DQG DYRLGDQFH RI
KD]DUGV DVVRFLDWHG ZLWK HQWHULQJ D EDVLQ ILOOHG ZLWK
DFFXPXODWHGZDWHUDQG &)5† D IRUIDLOLQJ
WRUHTXLUHHPSOR\HHVHQWHULQJWKHZDWHULQWKHEDVLQWRZHDU
DSSURSULDWH SHUVRQDO SURWHFWLYH HTXLSPHQW VXFK DV VDIHW\
KDUQHVVHVDQGOLIHOLQHV7KHDGPLQLVWUDWLYHODZMXGJHYDFDWHG
WKH ILUVW FLWDWLRQ DQG WKDW KROGLQJ ZDV QRW DSSHDOHG 7KH
MXGJH DOVR YDFDWHG WKH FLWDWLRQ IRU IDLOLQJ WR LQVWUXFW LQ
YLRODWLRQ RI 6HFWLRQ E 7KH MXGJH IRXQG WKH
FLWDWLRQ ZDV DSSURSULDWH IRU 6HFWLRQ D DQG KH
UHMHFWHG 'DQLV6KRRN¶V DIILUPDWLYH GHIHQVH WKDW )RUHPDQ
:DJQHUHQJDJHGLQXQSUHYHQWDEOHVXSHUYLVRU\PLVFRQGXFW
7KH5HYLHZ&RPPLVVLRQIRXQGYLRODWLRQVIRUERWKVHFWLRQV
1R 'DQLV6KRRN-RLQW9HQWXUH
Y6HFUHWDU\RI/DERU

7KH TXHVWLRQ IRU UHYLHZ LV ZKHWKHU 'DQLV6KRRN KDG
NQRZOHGJHRIWKHYLRODWLRQ:HKDYHKHOGLQ$&(OHF&R
Y2FFXSDWLRQDO6DIHW\DQG+HDOWK5HYLHZ&RPP Q)G
WK &LU FLWLQJ /( 0\HUV WKDW WKH
6HFUHWDU\ PDNHV RXW D SULPD IDFLH FDVH RI WKH HPSOR\HU V
DZDUHQHVV RI D SRWHQWLDOO\ SUHYHQWDEOH KD]DUG XSRQ WKH
LQWURGXFWLRQ RI SURRI RI WKH HPSOR\HU V IDLOXUH WR SURYLGH
DGHTXDWH VDIHW\ HTXLSPHQW RU WR SURSHUO\ LQVWUXFW LWV
HPSOR\HHVRQQHFHVVDU\VDIHW\SUHFDXWLRQV
,QWKLVFRXUWDQHPSOR\HU³FDQQRWIDLOWRSURSHUO\WUDLQDQG
VXSHUYLVH LWV HPSOR\HHV DQG WKHQ KLGH EHKLQG LWV ODFN RI
NQRZOHGJHFRQFHUQLQJWKHLUGDQJHURXVZRUNLQJSUDFWLFHV´
$&(OHF)GDW LQWHUQDOFLWDWLRQVRPLWWHG 'DQLV
6KRRNDUJXHVKRZHYHUWKDWLWODFNHGNQRZOHGJHRI:DJQHU¶V
H[SRVXUHWRWKHKD]DUGFUHDWHGE\KLVIDLOXUHWRZHDUSHUVRQDO
SURWHFWLYH HTXLSPHQW DQG LW FRXOG QRW SRVVLEO\ KDYH
SUHYHQWHGLWHFKRLQJPDQ\RILWVDUJXPHQWVIURPWKHILUVWSDUW
RI WKH FDVH 'DQLV6KRRN DJDLQ UHOLHV RQ WKH WKUHH
FRQYHUVDWLRQV:DJQHUKDGZLWKGLIIHUHQWVXSHUYLVRUVDUJXLQJ
WKDW :DJQHU VKRXOG KDYH NQRZQ IURP WKRVH FRQYHUVDWLRQV
WKDWWKHHTXLSPHQWZDVUHTXLUHG$VQRWHGDERYHKRZHYHU
WKRVHFRQYHUVDWLRQVZHUHQRWGLUHFWLYHVDQGWKH\SHUWDLQHG
RQO\WRGULOOLQJLQWKHSOXJ
'DQLV6KRRNDOVRQRWHVWKDW:DJQHUWZLFHSDVVHGXSWKH
RSSRUWXQLW\WRXVHWKHHTXLSPHQWLQWKHPLQXWHVEHIRUHWKH
DFFLGHQWRQFHDVKHZHQWWRJHWWKHZDGHUVDQGWKHQDJDLQLQ
KLVRZQWRROER[:DJQHUFRPPXQLFDWHGWKHVDIHW\SROLF\WR
KLVRZQHPSOR\HHV:DJQHUDEDQGRQHGXQILQLVKHGZRUNLQ
%DVLQWRJRWR%DVLQDQGWKHRWKHUVXSHUYLVRUVRQVLWH
FRXOGQRWVHHLQWRWKHEDVLQV
7KH5HYLHZ&RPPLVVLRQIRXQGWKDWWKH6HFUHWDU\PDGHRXW
DSULPDIDFLHVKRZLQJRINQRZOHGJHEHFDXVH'DQLV6KRRN
HLWKHUNQHZRUZLWKUHDVRQDEOHGLOLJHQFHFRXOGKDYHNQRZQ
RI WKH SUHVHQFH RI WKH KD]DUGRXV FRQGLWLRQ 86&
† N VHHDOVR/(0\HUV)GDW)XUWKHUWKH
NQRZOHGJHRIDVXSHUYLVRUPD\EHLPSXWHGWRWKHHPSOR\HU

-- 4 of 6 --

'DQLV6KRRN-RLQW9HQWXUH
Y6HFUHWDU\RI/DERU
1R
WK&LU $GGLWLRQDOO\WKLVFRXUWKDVIRXQGWKDW³,Q
FDVHVLQYROYLQJQHJOLJHQWEHKDYLRUE\DVXSHUYLVRURUIRUHPDQ
ZKLFKUHVXOWVLQGDQJHURXVULVNVWRHPSOR\HHVXQGHUKLVRUKHU
VXSHUYLVLRQVXFKIDFWUDLVHVDQLQIHUHQFHRIOD[HQIRUFHPHQW
DQGRUFRPPXQLFDWLRQRIWKHHPSOR\HU VVDIHW\SROLF\´/(
0\HUV)GDW
'DQLV6KRRN DOVR DUJXHV WKDW )RUHPDQ :DJQHU ZDV D
SLSHILWWHUDQGSLSHILWWHUVDUHQRWVXSSRVHGWRGRDQ\ZRUNRI
ODERUHUVDW'DQLV6KRRN$VDSLSHILWWHU)RUHPDQ:DJQHU
VKRXOGQHYHUKDYHJRQHQHDUWKHZDWHULQ%DVLQDQG'DQLV
6KRRN FRXOG QRW DQWLFLSDWH WKDW KH ZRXOG 'DQLV6KRRN
KRZHYHU LPEXHV LWV VXSHUYLVRUV ZLWK D JUHDW GHDO RI
GLVFUHWLRQDQG:DJQHUKDGWKHGLVFUHWLRQWRPRYHKLVFUHZ
IURP%DVLQWR%DVLQ+HZDVDXWKRUL]HGWRZRUNLQDUHDV
WKDWKDGQRWEHHQGHVLJQDWHGUHDG\IRUZRUNVRORQJDVKH
GHWHUPLQHGWKDWWKHDUHDZDVQRWKD]DUGRXV)RUHPDQ:DJQHU
GLGQRWSHUFHLYHWKHZRUNLQ%DVLQDVKD]DUGRXV)XUWKHU
:DJQHU¶VVRQWHVWLILHGWKDWWKHGLIIHUHQWWUDGHVPHQRQVLWHGLG
QRWQHFHVVDULO\SHUIRUPH[FOXVLYHO\WKHLUVSHFLILFMREV
7KH VHFRQG LVVXH LV ZKHWKHU 'DQLV6KRRN YLRODWHG
&)5 † D E\ IDLOLQJ WR UHTXLUH LWV HPSOR\HHV
HQWHULQJWKHZDWHULQWKHEDVLQVWRZHDUDSSURSULDWHSHUVRQDO
SURWHFWLYHHTXLSPHQWVXFKDVVDIHW\KDUQHVVHVOLIHOLQHVRU
EXR\DQWYHVWV6HFWLRQ D UHTXLUHV
3URWHFWLYH HTXLSPHQW LQFOXGLQJ SHUVRQDO SURWHFWLYH
HTXLSPHQW IRU H\HV IDFH KHDG DQG H[WUHPLWLHV
SURWHFWLYHFORWKLQJUHVSLUDWRU\GHYLFHVDQGSURWHFWLYH
VKLHOGV DQG EDUULHUV VKDOO EH SURYLGHG XVHG DQG
PDLQWDLQHGLQDVDQLWDU\DQGUHOLDEOHFRQGLWLRQZKHUHYHU
LW LV QHFHVVDU\ E\ UHDVRQ RI KD]DUGV RI SURFHVVHV RU
HQYLURQPHQWFKHPLFDOKD]DUGVUDGLRORJLFDOKD]DUGVRU
PHFKDQLFDOLUULWDQWVHQFRXQWHUHGLQDPDQQHUFDSDEOHRI
FDXVLQJLQMXU\RULPSDLUPHQWLQWKHIXQFWLRQRIDQ\SDUW
RIWKHERG\WKURXJKDEVRUSWLRQLQKDODWLRQRUSK\VLFDO
FRQWDFW
1R 'DQLV6KRRN-RLQW9HQWXUH
Y6HFUHWDU\RI/DERU

7KH6XSUHPH&RXUWKDVGHILQHGWKHGXWLHVRIWKH5HYLHZ
&RPPLVVLRQVD\LQJ³7KH&RPPLVVLRQLVDVVLJQHGWRμFDUU>\@
RXW DGMXGLFDWRU\ IXQFWLRQV¶ XQGHU WKH $FW´ 0DUWLQ Y
2FFXSDWLRQDO6DIHW\DQG+HDOWK5HYLHZ&RPP Q86
LQWHUQDOFLWDWLRQVRPLWWHG 7KH&RXUWZHQW
RQWRVD\³,QLWLDOGHFLVLRQVDUHPDGHE\DQDGPLQLVWUDWLYHODZ
MXGJHZKRVHUXOLQJEHFRPHVWKHRUGHURIWKH&RPPLVVLRQ
XQOHVVWKH&RPPLVVLRQJUDQWVGLVFUHWLRQDU\UHYLHZ´,GDW
LQWHUQDOFLWDWLRQVRPLWWHG ³>:@KHQWKH&RPPLVVLRQ
UHYHUVHVWKHIDFWXDOILQGLQJVRIWKH$/-ZKRKDGWKHXQLTXH
RSSRUWXQLW\RIREVHUYLQJWKHGHPHDQRURIWKHZLWQHVVHVDQG
DFFHSWLQJ RU UHMHFWLQJ WKHLU WHVWLPRQ\ EDVHG RQ WKRVH
REVHUYDWLRQVWKH&RPPLVVLRQPXVWDUWLFXODWHUHDVRQVIRULWV
IDLOXUHWRFUHGLWWKRVHILQGLQJV´%URFNY/(0\HUV&R
+LJK 9ROWDJH 'LY )G WK &LU FHUW
GHQLHG86
7KH5HYLHZ&RPPLVVLRQ¶VGXWLHVDUHQRWLGHQWLFDOWRRXUV
LQUHYLHZLQJLWVGHFLVLRQ³2XUUHYLHZRIWKHIDFWVDVIRXQG
E\WKHDJHQF\RUWKHRIILFLDOFKDUJHGZLWKDJHQF\RSHUDWLRQV
LVZKHWKHURUQRWWKHUHLVVXEVWDQWLDOHYLGHQFHLQWKHUHFRUGDV
DZKROHWRVXSSRUWWKHIDFWVDVIRXQG´1HOVRQ7UHH6HUYLFHV
,QFY2FFXSDWLRQDO6DIHW\DQG+HDOWK5HYLHZ&RPP Q
)G WK &LU ³7KH &RPPLVVLRQ V
FRQFOXVLRQV RI ODZ DUH YLHZHG IDYRUDEO\ XQOHVV WKH\ DUH
DUELWUDU\FDSULFLRXVDQDEXVHRIGLVFUHWLRQRURWKHUZLVHQRW
LQDFFRUGDQFHZLWKODZ´,G LQWHUQDOFLWDWLRQVRPLWWHG 6HH
DOVR7ULQLW\,QGXV,QFY2FFXSDWLRQDO6DIHW\DQG+HDOWK
5HYLHZ&RPP¶Q)G WK&LU 7KLVLV
D KLJKO\ GHIHUHQWLDO VWDQGDUG 6HH -/ )RWL &RQVW &R Y
2FFXSDWLRQDO6DIHW\DQG+HDOWK5HYLHZ&RPP Q)G
WK&LU ³,IWKHUHLVZDUUDQWLQWKHUHFRUGIRU
WKHUHVXOWEHORZWKDWUHVXOWPXVWVWDQGHYHQLIZHPLJKWKDYH
LQWHUSUHWHGWKHHYLGHQFHGLIIHUHQWO\LQDWULDOGHQRYR´
7KHILUVWLVVXHLVZKHWKHUWKH5HYLHZ&RPPLVVLRQDEXVHG
LWVGLVFUHWLRQZKHQLWIRXQGWKDW'DQLV6KRRNYLRODWHG6HFWLRQ
E E\IDLOLQJWRLQVWUXFWHPSOR\HHVZKRHQWHUHG
WKH EDVLQV LQ WKH UHFRJQLWLRQ DQG DYRLGDQFH RI KD]DUGV

-- 5 of 6 --

'DQLV6KRRN-RLQW9HQWXUH
Y6HFUHWDU\RI/DERU
1R
DVVRFLDWHGZLWKHQJXOIPHQWRUEHLQJVXFNHGLQWRWKHSLSHDV
WKHZDWHUZDVGUDLQHGIURPLW7KHDGPLQLVWUDWLYHODZMXGJH
YDFDWHG WKH YLRODWLRQ EHFDXVH KH IRXQG WKDW DOWKRXJK
)RUHPDQ :DJQHU PD\ QRW KDYH DSSUHFLDWHG WKH GDQJHU LQ
ZRUNLQJ DURXQG WKH SOXJ 'DQLV6KRRN VDWLVILHG LWV
REOLJDWLRQVE\JHQHUDOO\SRLQWLQJRXWDQHQJXOIPHQWKD]DUG
DQG E\ SURYLGLQJ D JHQHUDO UXOH IRU WKH XVH RI SHUVRQDO
SURWHFWLYHHTXLSPHQW
7KHPDWHULDOVSURYLGHGWR'DQLV6KRRNHPSOR\HHVGRQRW
VDWLVI\WKHUHJXODWLRQWKH6HFUHWDU\DUJXHVDVQRQHRIWKHP
DGGUHVVHGWKHXVHRIVDIHW\HTXLSPHQWZKLOHLQDVLWXDWLRQOLNH
WKHRQHDWLVVXHQRUGLGWKH\IXOO\DGGUHVVZRUNLQJLQZDWHU
7KRVH LQ FKDUJH DW 'DQLV6KRRN FHUWDLQO\ XQGHUVWRRG WKH
GDQJHUDWPLQLPXPEHFDXVHWKHVWDQGLQJZDWHUKDGEHHQLQ
WKH EDVLQV DOO ZLQWHU 7KH RULHQWDWLRQ DQG RWKHU VDIHW\
PDWHULDOV VKRXOG KDYH VSHFLILFDOO\ DGGUHVVHG WKH GDQJHUV
SUHVHQWHGE\WKHEDVLQVDQGWKHSOXJVDWWKHLUGUDLQSLSHV
'DQLV6KRRN DUJXHV WKDW LW GLG IXOILOO LWV REOLJDWLRQV LQ
ZDUQLQJLWVHPSOR\HHVRIWKHHQJXOIPHQWGDQJHUDQGQHHGIRU
SHUVRQDO SURWHFWLYH HTXLSPHQW 'DQLV6KRRN KDG D
FRPSUHKHQVLYH VDIHW\ SURJUDP LQFOXGLQJ D ZULWWHQ VDIHW\
SURJUDPDVLWHVSHFLILFVDIHW\SURJUDPDQHPSOR\HHVDIHW\
JXLGH ZULWWHQ SURJUDPV GHDOLQJ VSHFLILFDOO\ ZLWK SHUVRQDO
SURWHFWLYHHTXLSPHQWZHHNO\³WRROER[WDONV´RQVDIHW\DQG
RQHRQRQH LQVWUXFWLRQ 7KH ZULWWHQ VDIHW\ SURJUDP LQ
UHOHYDQWSDUWUHTXLUHGWKDWSHUVRQDOSURWHFWLYHHTXLSPHQWEH
XVHGDVQHHGHGDQGLWUHTXLUHGHPSOR\HHVWRZHDUDEXR\DQW
OLIHYHVWZKHQZRUNLQJQHDUZDWHURIDGHSWKWKDWFUHDWHGD
ULVNRIGURZQLQJ7KH6XSHULQWHQGHQWZDONHGWKHZRUNVLWH
HYHU\GD\ZDWFKLQJIRUVDIHW\YLRODWLRQV
'DQLV6KRRN IXUWKHU DUJXHV WKDW )RUHPDQ :DJQHU ZDV
LQVWUXFWHGWKUHHWLPHVLQWKHZHHNVSULRUWRWKHDFFLGHQWDERXW
WKHQHFHVVLW\RIZHDULQJKDUQHVVHVDQGOLIHOLQHVZKHQZRUNLQJ
QHDUWKHEDVLQSOXJV$VXSHUYLVRUWROG:DJQHUDIHZZHHNV
EHIRUHWKDWWKHODERUHUVZKRKDGGULOOHGWKHKROHVLQWKHSOXJV
KDG ZRUQ OLIHOLQHV YHVWV DQG VDIHW\ KDUQHVVHV 7KH VDPH
1R 'DQLV6KRRN-RLQW9HQWXUH
Y6HFUHWDU\RI/DERU

VXSHUYLVRUWZRGD\VEHIRUHWKHDFFLGHQWDJDLQWROG:DJQHU
DERXWWKHHTXLSPHQWXVHG)LQDOO\RQWKHPRUQLQJ RIWKH
DFFLGHQW ZKHQ )RUHPDQ :DJQHU ZHQW WR JHW WKH ZDGHUV
DQRWKHUVXSHUYLVRUWROGKLPWKDWZKHQWKHODERUHUVKDGGULOOHG
WKHKROHVWKH\KDGZRUQYHVWVOLQHVDQGKDUQHVVHV
7KH 6HFUHWDU\ DUJXHV WKDW WKH WKUHH FRQYHUVDWLRQV ZLWK
)RUHPDQ:DJQHUZHUHQRWHQRXJKWRVDWLVI\WKHUHJXODWLRQ
,QIRUPDO FRPPHQWV GR QRW FRQVWLWXWH LQVWUXFWLRQ $V WKH
5HYLHZ&RPPLVVLRQVDLG³$QHPSOR\HU>PXVW@LQVWUXFWLWV
HPSOR\HHVLQWKHUHFRJQLWLRQDQGDYRLGDQFHRIKD]DUGVWKDW
DUHVSHFLILFWRWKHZRUNVLWHDERXWZKLFKDUHDVRQDEO\SUXGHQW
HPSOR\HUZRXOGKDYHEHHQDZDUH´ HPSKDVLVDGGHG ,QQRQH
RI WKHVH FRQYHUVDWLRQV ZDV WKH VXSHUYLVRU H[SOLFLW WKDW
:DJQHU QHHGHG WR ZHDU OLQHV D YHVW DQG D KDUQHVV 7KH
FRQYHUVDWLRQVDOOLQYROYHGDUHSRUWWKDWWKHODERUHUVGULOOLQJLQ
WKHSO\ZRRGZRUHWKHHTXLSPHQWQRQHVSHFLILFDOO\SHUWDLQHG
WRFKHFNLQJWKHSOXJ7KHVXSHUYLVRUVQHYHUWROG:DJQHUKH
ZDVUHTXLUHGWRZHDUWKHHTXLSPHQWQRUGLGWKH\DGHTXDWHO\
FRQYH\ WKH GDQJHU WKH SOXJV SUHVHQWHG 2QH RI :DJQHU¶V
FUHZ JDYH HYLGHQFH WKDW D IHZ ZHHNV EHIRUH WKH DFFLGHQW
:DJQHUKDGWROGKLPWKDWKHQHHGHGWRZHDUWKHSURWHFWLYH
HTXLSPHQW LI KH ZDV JRLQJ WR ZRUN RQ WKH SOXJ 7KLV
FUHZPDQ DOVR WHVWLILHG KRZHYHU WKDW KH GLG QRW UHPLQG
:DJQHU RI WKH FRQYHUVDWLRQ ZKHQ :DJQHU ZDGHG LQWR WKH
ZDWHUEHFDXVH³,WGLGQ¶WVHHPXQVDIHWRGRLW´
)XUWKHUDVHYHQWKHDGPLQLVWUDWLYHODZMXGJHSRLQWHGRXW
)RUHPDQ :DJQHU ZDV D VXSHUYLVRU DQG KLV IDLOXUH WR XVH
VDIHW\ HTXLSPHQW ZKLOH DW WKH SOXJ ³LQGLFDWHV KLV ODFN RI
XQGHUVWDQGLQJ RU DSSUHFLDWLRQ RI WKH KD]DUG´ )RUHPDQ
:DJQHU DQG KLV FUHZ DOO RI ZKRP KDG EHHQ IRUHPHQ
WKHPVHOYHV FRXOG QRW DSSUHFLDWH WKH GDQJHU RI )RUHPDQ
:DJQHU¶VDFWLRQVDQGWKH\KDGQRWEHHQDSSURSULDWHO\ZDUQHG
RIWKHGDQJHU7KLVLVWKHSUHFLVHVLWXDWLRQWKDWWKHUHJXODWLRQV
VHHN WR DYRLG (PSOR\HUV FDQQRW FRXQW RQ HPSOR\HHV¶
FRPPRQ VHQVH DQG H[SHULHQFH WR SUHFOXGH WKH QHHG IRU
LQVWUXFWLRQV6HH&0&(OHF,QFY2FFXSDWLRQDO6DIHW\DQG
+HDOWK$GPLQ86'HS¶WRI/DERU)G

-- 6 of 6 --