03a0129a.06

7KH +RQRUDEOH (GPXQG $ 6DUJXV -U 8QLWHG 6WDWHV 'LVWULFW -XGJH
IRU WKH 6RXWKHUQ '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 $ WK &LU
)LOH 1DPH DD
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
&/$5(1&( 3(11,1*721
'HIHQGDQW$SSHOODQW
;!

1
1R
$SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW
IRUWKH:HVWHUQ'LVWULFWRI7HQQHVVHHDW0HPSKLV
1R²%HUQLFH%'RQDOG'LVWULFW-XGJH
$UJXHG'HFHPEHU
'HFLGHGDQG)LOHG0D\
%HIRUH.(11('<DQG*,/0$1&LUFXLW-XGJHV
6$5*86'LVWULFW-XGJH
BBBBBBBBBBBBBBBBB
&2816(/
$5*8('*UHJRU\&.URJ-U0HPSKLV7HQQHVVHHIRU
$SSHOODQW 7KRPDV $ &ROWKXUVW $66,67$17 81,7('
67$7(6$77251(<0HPSKLV7HQQHVVHHIRU$SSHOOHH
8QLWHG6WDWHVY3HQQLQJWRQ 1R
21%5,()*UHJRU\&.URJ-U0HPSKLV7HQQHVVHHIRU
$SSHOODQW 7KRPDV $ &ROWKXUVW $66,67$17 81,7('
67$7(6$77251(<0HPSKLV7HQQHVVHHIRU$SSHOOHH
BBBBBBBBBBBBBBBBBBBBB
$0(1'('23,1,21
BBBBBBBBBBBBBBBBBBBBB
6$5*86'LVWULFW-XGJH'HIHQGDQW$SSHOODQW&ODUHQFH
3HQQLQJWRQ ³3HQQLQJWRQ´ SOHDGHGJXLOW\WRSRVVHVVLRQZLWK
LQWHQWWRGLVWULEXWHJUDPVRIFUDFNFRFDLQHLQYLRODWLRQ
RI86&†3HQQLQJWRQUHVHUYHGKLVULJKWWRDSSHDO
WKHRUGHURIWKHGLVWULFWFRXUWGHQ\LQJKLVPRWLRQWRVXSSUHVV
WKHHYLGHQFHREWDLQHGIROORZLQJWKHLVVXDQFHDQGH[HFXWLRQ
RI D VWDWH VHDUFK ZDUUDQW $IWHU D KHDULQJ WKH 0DJLVWUDWH
-XGJHLVVXHGD5HSRUWDQG5HFRPPHQGDWLRQSURSRVLQJWKDW
WKHPRWLRQEHGHQLHG6XEVHTXHQWO\WKHGLVWULFWFRXUWGHQLHG
WKHPRWLRQWRVXSSUHVV
3HQQLQJWRQUDLVHVWKUHHLVVXHVRQDSSHDO)LUVWKHFRQWHQGV
WKDWWKHGLVWULFWFRXUWHUUHGLQILQGLQJWKDWWKHVHDUFKZDUUDQW
ZDVLVVXHGE\DQHXWUDODQGGHWDFKHGPDJLVWUDWH6HFRQGKH
DVVHUWVWKDWWKHJRRGIDLWKH[FHSWLRQLQ8QLWHG6WDWHVY/HRQ
86 GRHV QRW DSSO\ LQ WKH FRQWH[W RI WKH
VHDUFKZDUUDQWLVVXHGLQWKLVFDVH)LQDOO\3HQQLQJWRQFODLPV
WKDWWKHH[HFXWLQJRIILFHUVYLRODWHGKLV)RXUWK$PHQGPHQW
ULJKWVE\IRUFLQJHQWU\LQWRKLVKRPHDIWHUNQRFNLQJZLWKRXW
ZDLWLQJDUHDVRQDEOHSHULRGIRUKLPWRUHVSRQG
,
,W LV ZHOO HVWDEOLVKHG WKDW WKLV &RXUW UHYLHZV WKH GLVWULFW
FRXUW¶VILQGLQJVRIIDFWLQDVXSSUHVVLRQKHDULQJXQGHU WKH
FOHDUO\ HUURQHRXV VWDQGDUG ZKLOH WKH GLVWULFW FRXUW¶V
FRQFOXVLRQVRIODZDUHUHYLHZHGGHQRYR8QLWHG6WDWHVY
$YHU\)G WK&LU

-- 1 of 6 --

1R 8QLWHG6WDWHVY3HQQLQJWRQ
$ 7KH,VVXHURIWKH6HDUFK:DUUDQW
7KHZDUUDQWDWLVVXHLQWKLVFDVHZDVLVVXHGXQGHUVWDWHODZ
E\ D 6KHOE\ &RXQW\ -XGLFLDO &RPPLVVLRQHU (VVHQWLDOO\
3HQQLQJWRQ FRQWHQGV WKDW 6KHOE\ &RXQW\ -XGLFLDO
&RPPLVVLRQHUVDUHQRWQHXWUDODQGGHWDFKHGLQWKDWWKH\DUH
DSSRLQWHGE\DORFDOOHJLVODWLYHDXWKRULW\WKH6KHOE\&RXQW\
&RPPLVVLRQ8QGHU7HQQHVVHHODZWKHOHJLVODWLYHERG\RI
D FRXQW\ KDYLQJ D SRSXODWLRQ LQ H[FHVV RI PD\
DSSRLQW RQH RU PRUH MXGLFLDO FRPPLVVLRQHUV ZKR DUH
DXWKRUL]HGWRLVVXHVHDUFKZDUUDQWVXSRQDILQGLQJRISUREDEOH
FDXVH7HQQ&RGH$QQ† D $ 6XSS
7KH VDPH VWDWXWH SURYLGHV WKDW WKH WHUP RI RIILFH RI VXFK
MXGLFLDOFRPPLVVLRQHUVVKDOOEHHVWDEOLVKHGE\WKHOHJLVODWLYH
ERG\ZLWKWKHSURYLVRWKDWVXFKWHUPPD\QRWH[FHHGIRXU
\HDUV† D % 7KHVWDWXWHIXUWKHUSURYLGHVWKDW
WKH MXGLFLDO FRPPLVVLRQHU VKDOO UHFHLYH FRPSHQVDWLRQ
GHWHUPLQHGE\WKHVDPHOHJLVODWLYHERG\† D
$SSHOODQWFRQWHQGVWKDWWKHVHSURYLVLRQVRI7HQQHVVHHODZ
LPSHUPLVVLEO\ SODFH D OHJLVODWLYH ERG\ WKH 6KHOE\ &RXQW\
&RPPLVVLRQ LQ XOWLPDWH FRQWURO RI WKH MXGLFLDO
FRPPLVVLRQHUV$SSHOODQWDOVRDVVHUWVWKDWVXFKDUUDQJHPHQW
YLRODWHV$UW,,6HFRIWKH&RQVWLWXWLRQRI7HQQHVVHHZKLFK
VHSDUDWHV JRYHUQPHQWDO SRZHUV LQWR WKH IDPLOLDU WKUHHSDUW
DOLJQPHQWRIH[HFXWLYHOHJLVODWLYHDQGMXGLFLDODXWKRULW\
7KH0DJLVWUDWH-XGJHDVZHOODVWKH'LVWULFW-XGJHUHOLHG
XSRQ8QLWHG6WDWHVY/HRQVXSUDWRKROGWKDWWKHRIILFHUV
UHOLHG LQ JRRG IDLWK RQ WKH ZDUUDQW LVVXHG E\ WKH MXGLFLDO
FRPPLVVLRQHU7KH5HSRUWDQG5HFRPPHQGDWLRQZDVLVVXHG
E\ WKH 0DJLVWUDWH -XGJH RQ $XJXVW SULRU WR WKLV
&RXUW¶VGHFLVLRQLQ8QLWHG6WDWHVY6FRWW)G WK
&LU
,Q8QLWHG6WDWHVY6FRWWWKLV&RXUWGHFLGHGWKDWWKH/HRQ
H[FHSWLRQ WR WKH H[FOXVLRQDU\ UXOH LV QRW DSSOLFDEOH LI WKH
MXGLFLDO RIILFHU LVVXLQJ D VHDUFK ZDUUDQW LV ZKROO\ ZLWKRXW
OHJDODXWKRULW\,GDW,Q6FRWWWKHMXGJHZKRLVVXHGWKH
VHDUFKZDUUDQWKDGUHWLUHGDQGKDGQRVWDWHODZDXWKRULW\WR
LVVXH D VHDUFK ZDUUDQW 8QGHU WKHVH FLUFXPVWDQFHV ODZ
8QLWHG6WDWHVY3HQQLQJWRQ 1R
HQIRUFHPHQWRIILFHUVFRXOGQRWUHO\XSRQWKH/HRQH[FHSWLRQ
,G
3HQQLQJWRQ HVVHQWLDOO\ FRQWHQGV WKDW D MXGLFLDO
FRPPLVVLRQHU DSSRLQWHG E\ D OHJLVODWLYH ERG\ RI D FRXQW\
ZKRLVQRWDMXGJHRUHYHQDQDWWRUQH\PD\QRWODZIXOO\LVVXH
DVHDUFKZDUUDQWRUDFWDVDQHXWUDOPDJLVWUDWHIRUSXUSRVHVRI
WKH )RXUWK $PHQGPHQW 7KH FDVHODZ FOHDUO\ UHMHFWV WKLV
SRVLWLRQ
,Q6KDGZLFNY&LW\RI7DPSD86 D
GHIHQGDQWFKDOOHQJHGWKHLVVXDQFHRIDQDUUHVWZDUUDQWE\D
FOHUNRIWKH7DPSD)ORULGD0XQLFLSDO&RXUW7KHFOHUNKDG
QRODZGHJUHHRUVSHFLDOOHJDOWUDLQLQJ)ORULGDODZSHUPLWWHG
DFOHUNDVVLJQHGWRWKHPXQLFLSDOFRXUWWRUHYLHZDIILGDYLWV
SUHVHQWHGDQGWRGHWHUPLQHZKHWKHUDQDUUHVWZDUUDQWVKRXOG
LVVXH6KDGZLFNFRQWHQGHGWKDWZDUUDQWVFRXOGRQO\EHLVVXHG
E\ MXGLFLDO RIILFHUV UDWKHU WKDQ H[HFXWLYH RIILFLDOV QRW
SRVVHVVHGRIOHJDOWUDLQLQJ
$XQDQLPRXV6XSUHPH&RXUWKHOG
7KHVXEVWDQFHRIWKH&RQVWLWXWLRQ¶VZDUUDQWUHTXLUHPHQWV
GRHVQRWWXUQRQWKHODEHOLQJRIWKHLVVXLQJSDUW\7KH
ZDUUDQW WUDGLWLRQDOO\ KDV UHSUHVHQWHG DQ LQGHSHQGHQW
DVVXUDQFH WKDW D VHDUFK DQG DUUHVW ZLOO QRW SURFHHG
ZLWKRXWSUREDEOHFDXVHWREHOLHYHWKDWDFULPHKDVEHHQ
FRPPLWWHG DQG WKDW WKH SHUVRQ RU SODFH QDPHG LQ WKH
ZDUUDQW LV LQYROYHG LQ WKH FULPH 7KXV DQ LVVXLQJ
PDJLVWUDWHPXVWPHHWWZRWHVWV+HPXVWEHQHXWUDODQG
GHWDFKHGDQGKHPXVWEHFDSDEOHRIGHWHUPLQLQJZKHWKHU
SUREDEOHFDXVHH[LVWVIRUWKHUHTXHVWHGDUUHVWRUVHDUFK
7KLV&RXUWORQJKDVLQVLVWHGWKDWLQIHUHQFHVRISUREDEOH
FDXVHEHGUDZQE\³DQHXWUDODQGGHWDFKHGPDJLVWUDWH
LQVWHDG RI EHLQJ MXGJHG E\ WKH RIILFHU HQJDJHG LQ WKH
RIWHQFRPSHWLWLYHHQWHUSULVHRIIHUUHWLQJRXWFULPH´
7KHUHTXLVLWHGHWDFKPHQWLVSUHVHQWLQWKHFDVHDWKDQG
:KDWHYHUHOVHQHXWUDOLW\DQGGHWDFKPHQWPLJKWHQWDLOLW
LVFOHDUWKDWWKH\UHTXLUHVHYHUDQFHDQGGLVHQJDJHPHQW
IURPDFWLYLWLHVRIODZHQIRUFHPHQW7KHUHKDVEHHQQR

-- 2 of 6 --

1R 8QLWHG6WDWHVY3HQQLQJWRQ
VKRZLQJZKDWHYHUKHUHRISDUWLDOLW\RUDIILOLDWLRQRIWKHVH
FOHUNVZLWKSURVHFXWRUVRUSROLFH7KHUHFRUGVKRZVQR
FRQQHFWLRQ ZLWK DQ\ ODZ HQIRUFHPHQW DFWLYLW\ RU
DXWKRULW\ZKLFKZRXOGGLVWRUWWKHLQGHSHQGHQWMXGJPHQW
WKH)RXUWK$PHQGPHQWUHTXLUHV:KLOHDVWDWXWRULO\
VSHFLILHG WHUP RI RIILFH DQG DSSRLQWPHQW E\ VRPHRQH
RWKHUWKDQ³DQH[HFXWLYHDXWKRULW\´PLJKWEHGHVLUDEOH
WKH DEVHQFH RI VXFK IHDWXUHV LV KDUGO\ GLVTXDOLI\LQJ
-XGJHV WKHPVHOYHV WDNH RIILFH XQGHU GLIIHULQJ
FLUFXPVWDQFHV 6RPH DUH DSSRLQWHG EXW PDQ\ DUH
HOHFWHG E\ OHJLVODWLYH ERGLHV RU E\ WKH SHRSOH 0DQ\
HQMR\EXWOLPLWHGWHUPVDQGDUHVXEMHFWWRUHDSSRLQWPHQW
RUUHHOHFWLRQ0RVWGHSHQGIRUWKHLUVDODU\OHYHOXSRQ
WKHOHJLVODWLYHEUDQFK:HZLOOQRWHOHYDWHUHTXLUHPHQWV
IRU WKH LQGHSHQGHQFH RI D PXQLFLSDO FOHUN WR D OHYHO
KLJKHUWKDQWKDWSUHYDLOLQJZLWKUHVSHFWWRPDQ\MXGJHV
,GDW LQWHUQDOFLWDWLRQVRPLWWHG
$VRPHZKDWVLPLODUFKDOOHQJHWRWKHDXWKRULW\RIDMXGLFLDO
FRPPLVVLRQHU XQGHU 7HQQHVVHH ODZ ZDV DGGUHVVHG E\ WKLV
&RXUWLQ8QLWHG6WDWHVY.LQJ)G WK&LU
XQSXEOLVKHGWDEOHGHFLVLRQ 1RDYDLODEOHDW
:/ ,Q.LQJWKHMXGLFLDOFRPPLVVLRQHUZDVPDUULHG
WRDODZHQIRUFHPHQWRIILFHURIWKHFRXQW\6KHKDGQROHJDO
HGXFDWLRQ UHJDUGLQJ WKH LVVXDQFH RI VHDUFK ZDUUDQWV 7KLV
&RXUWKHOGWKDWKHUODFNRIHGXFDWLRQGLGQRWSUHYHQWKHUIURP
LVVXLQJYDOLGVHDUFKZDUUDQWV)XUWKHUQRWZLWKVWDQGLQJKHU
FRQQHFWLRQWRDODZHQIRUFHPHQWRIILFHUWKLV&RXUWIRXQGWKDW
WKHVHDUFKZDUUDQWVKHLVVXHGVDWLVILHGWKHUHTXLUHPHQWRIWKH
)RXUWK$PHQGPHQW
$SSHOODQWLQWKHFDVHDWEDUVXSSRUWVKLVSRVLWLRQZLWKWKH
WHVWLPRQ\ RI 2IILFHU %ODFN ZKR VWDWHG WKDW WKH MXGLFLDO
FRPPLVVLRQHU LQ WKLV FDVH KDG QHYHU UHMHFWHG D ZDUUDQW
VRXJKW7KHUHFRUGKRZHYHULVGHYRLGRIDQ\HVWLPDWHRI
KRZ PDQ\ VHDUFK ZDUUDQWV 2IILFHU %ODFN KDG UHTXHVWHG
)XUWKHULQWKHDEVHQFHRIDQ\RWKHUHYLGHQFHRQWKHLVVXHLW
LV MXVW DV ORJLFDO WR FRQFOXGH WKDW 2IILFHU %ODFN SUHVHQWHG
DIILGDYLWVLQVXSSRUWRIVHDUFKZDUUDQWVZKLFKMXVWLILHGWKH
8QLWHG6WDWHVY3HQQLQJWRQ 1R
:LWK UHJDUG WR D VHDUFK ZDUUDQW LVVXHG XQGHU IHGHUDO ODZ )HG 5
&ULP 3 D OLPLWV WKH DXWKRULW\ WR LVVXH VHDUFK ZDUUDQWV WR D )HGHUDO
-XGJH RU 0DJLVWUDWH -XGJH RU D VWDWH MXGJH VLWWLQJ RQ D FRXUW RI UHFRUG
7KXV WKH ZDUUDQW LVVXHG LQ WKLV FDVH FRXOG QRW KDYH EHHQ LVVXHG XQGHU
IHGHUDO ODZ )HG 5 &ULP 3 D GRHV QRW DSSO\ WR VWDWH ZDUUDQWV HYHQ
LI WKH HYLGHQFH RU FRQWUDEDQG UHFRYHUHG LV XVHG LQ D IHGHUDO FULPLQDO
SURVHFXWLRQ 8QLWHG 6WDWHV Y +HDFRFN )G WK &LU
LVVXDQFHRIVXFKUHTXHVWHGSURFHVV7KHUHFRUGLVLQVXIILFLHQW
WRGUDZ DQ\ FRQFOXVLRQVDVWRWKHODFNRIQHXWUDOLW\RIWKH
MXGLFLDOFRPPLVVLRQHUZKRLVVXHGWKHVHDUFKZDUUDQWLQWKLV
FDVH
)LQDOO\ D QXPEHU RI RWKHU FRXUWV KDYH IRXQG WKDW QR
FRQVWLWXWLRQDO YLRODWLRQ RFFXUV ZKHQ D VHDUFK ZDUUDQW LV
LVVXHG E\ D QRQODZ\HU 8QLWHG 6WDWHV Y 0LWUR )G
VW&LU 8QLWHG6WDWHVY&RPVWRFN
)G WK&LU FHUWGHQLHG86

3HQQLQJWRQ¶VFRQVWLWXWLRQDOFKDOOHQJHWRWKHDXWKRULW\RID
6KHOE\&RXQW\-XGLFLDO&RPPLVVLRQHUWRLVVXHDYDOLGVHDUFK
ZDUUDQWLVZLWKRXWPHULW
% .QRFNDQG$QQRXQFH5XOH
7KH$SSHOODQWQH[WFKDOOHQJHVWKHVHDUFKLWVHOIFRQWHQGLQJ
WKDW WKH RIILFHUV YLRODWHG WKH NQRFN DQG DQQRXQFH UXOH DV
DUWLFXODWHG XQGHU )RXUWK $PHQGPHQW MXULVSUXGHQFH
3HQQLQJWRQFRQWHQGVWKDWWKHGLVWULFWFRXUWHUUHGLQILQGLQJ
WKDWWKH RIILFHUVNQRFNHGDQGZDLWHGDVXIILFLHQWSHULRGRI
WLPH XQGHU WKH FLUFXPVWDQFHV EHIRUH IRUFLEO\ HQWHULQJ KLV
GZHOOLQJ
7KH0DJLVWUDWH-XGJHPDGHWKHIROORZLQJIDFWXDOILQGLQJV
ZKLFKZHUHDGRSWHGE\WKHGLVWULFWFRXUW$WDSSUR[LPDWHO\
SP RQ 1RYHPEHU VL[ WR VHYHQ 0HPSKLV
SROLFHRIILFHUVFDPHWR3HQQLQJWRQ¶VUHVLGHQFHWRH[HFXWHWKH
VHDUFK ZDUUDQW $OO RI WKH RIILFHUV ZHUH ZHDULQJ VKLUWV
PDUNHG³3ROLFH´$FKDLQOLQNIHQFHVXUURXQGHGWKHKRXVH

-- 3 of 6 --

1R 8QLWHG6WDWHVY3HQQLQJWRQ
%H\RQGWKHVHIDFWVWKHUHFRUGFRQWDLQVDVKDUSGLYHUJHQFHLQ
WHVWLPRQ\
)RXURIILFHUVWHVWLILHGFRQFHUQLQJWKHWLPLQJRIWKHHQWU\
LQWR3HQQLQJWRQ¶VKRPH'HWHFWLYH:ULJKWWHVWLILHGWKDWKH
ZDVWKHILUVWRIILFHUWRUHDFKWKHIURQWGRRU$VKHEDQJHGRQ
WKH GRRU KH \HOOHG LQ D ORXG YRLFH ³0HPSKLV 3ROLFH
'HSDUWPHQW6HDUFK:DUUDQW´:ULJKWDOVRWHVWLILHGWKDWKH
WKHQKHDUGIRRWVWHSVWKDWVRXQGHGDVLIVRPHRQHZDVUXQQLQJ
DZD\IURPWKHGRRU:ULJKWHVWLPDWHGWKDWDSSUR[LPDWHO\
HLJKWWRWHQVHFRQGVSDVVHGDIWHUKHDQQRXQFHGKLVSUHVHQFH
DWZKLFKSRLQWKHXVHGDSU\EDUGHYLFHWRIRUFHRSHQWKHIURQW
GRRU
2IILFHU7LOWRQDOVRWHVWLILHGWKDWKHKHDUG:ULJKWNQRFNRQ
WKH GRRU DQG DQQRXQFH ³3ROLFH´ 7LOWRQ HVWLPDWHG
DSSUR[LPDWHO\WHQVHFRQGVHODSVHGEHWZHHQWKHNQRFNDQGWKH
SU\LQJRSHQRIWKHGRRU'HWHFWLYH%ODFNIXUWKHUFRUURERUDWHG
'HWHFWLYH :ULJKW DQG 2IILFHU 7LOWRQ DQG HVWLPDWHG WKDW
DSSUR[LPDWHO\ HLJKW VHFRQGV HODSVHG EHWZHHQ WKH
DQQRXQFHPHQW DQG WKH EUHDNLQJ RI WKH GRRU )LQDOO\
/LHXWHQDQW%HUU\KLOOWHVWLILHGWKDWKHKHDUG'HWHFWLYH:ULJKW
DQQRXQFH WKH SROLFH SUHVHQFH +H HVWLPDWHG WKDW EHWZHHQ
HLJKWDQGILIWHHQVHFRQGVHODSVHGEHWZHHQWKHDQQRXQFHPHQW
DQGWKHIRUFHGHQWU\
7KUHHGHIHQVHZLWQHVVHVWHVWLILHGDWWKHKHDULQJ$OOWKUHH
VWDWHGWKDWWKH\GLGQRWKHDUDNQRFNRQWKHGRRUDQGGLGQRW
KHDUWKHSROLFHDQQRXQFHWKHLUSUHVHQFHEHIRUHWKHGRRUZDV
IRUFHGRSHQ$OOWKUHHZLWQHVVHVLQVWHDGWHVWLILHGWKDWWKHILUVW
WLPHWKHSROLFHDQQRXQFHGWKHLUSUHVHQFHRFFXUUHGDIWHUWKH
IRUFHGHQWU\RIWKHGZHOOLQJ
7KH0DJLVWUDWH-XGJHIRFXVHGRQIDFWXDOLQFRQVLVWHQFLHV
LQYROYHG LQ WKH WHVWLPRQ\ RI WZR RI WKH WKUHH GHIHQVH
ZLWQHVVHV:LOOLDP-HQQLQJVIRUH[DPSOHWHVWLILHGWKDWKH
ZDVVHDWHGRQWKHIURQWSRUFKRIDIULHQG¶VKRXVHDFURVVWKH
VWUHHWIURP3HQQLQJWRQ¶VUHVLGHQFH$VHFRQGGHIHQVHZLWQHVV
WHVWLILHGKRZHYHUWKDWKHDQG-HQQLQJVZHUHRFFXS\LQJDFDU
RQ WKH VWUHHW DW WKH WLPH WKH RIILFHUV SXOOHG XS WR WKH
3HQQLQJWRQUHVLGHQFH,QDGGLWLRQDOOWKUHHGHIHQVHZLWQHVVHV
8QLWHG6WDWHVY3HQQLQJWRQ 1R
WHVWLILHGWKDWWKH\GLGQRWGLVFXVVWKHLUREVHUYDWLRQVRI WKH
HYHQWVLQTXHVWLRQZLWKDQ\RWKHUSHUVRQEHWZHHQWKHWLPHRI
WKHHYHQWVDQGWKHLUWHVWLPRQ\EHIRUHWKH0DJLVWUDWH-XGJH
ZKLFKWKH0DJLVWUDWH-XGJHIRXQGXQEHOLHYDEOH
7KH0DJLVWUDWH-XGJHZKRVHILQGLQJVZHUHDGRSWHGE\WKH
'LVWULFW&RXUWUHVROYHGWKHGLVSXWHGWHVWLPRQ\E\FRQFOXGLQJ
WKDWWKHRIILFHUV¶WHVWLPRQ\ZDVPRUHFUHGLEOHLQOLJKWRIDOO
WKHFLUFXPVWDQFHV$FFRUGLQJO\WKH'LVWULFW&RXUWFRQFOXGHG
WKDW EHWZHHQ HLJKW WR WHQ VHFRQGV HODSVHG EHWZHHQ WKH
NQRFNLQJRQWKHGRRUDQGWKHIRUFHGHQWU\LQWR3HQQLQJWRQ¶V
GZHOOLQJ7KLVIDFWXDOILQGLQJLVQRWFOHDUO\HUURQHRXVDQG
WKHUHIRUHLVDFFHSWHGE\WKLV&RXUW
7KH OHJDO LVVXH SUHVHQWHG E\ 3HQQLQJWRQ LV ZKHWKHU WKH
RIILFHUVYLRODWHGWKHNQRFNDQGDQQRXQFHSULQFLSOHVVHWIRUWK
LQ:LOVRQY$UNDQVDV86 ,Q:LOVRQD
XQDQLPRXV6XSUHPH&RXUWKHOGWKDWWKH)RXUWK$PHQGPHQW
SURKLELWLRQRQXQUHDVRQDEOHVHDUFKHVDQGVHL]XUHVLQFOXGHV
WKHJHQHUDOUXOHWKDWDQRIILFHU¶VXQDQQRXQFHGHQWU\LQWRD
KRPHDEVHQWVSHFLDOFLUFXPVWDQFHVLVXQFRQVWLWXWLRQDO,G
DW$XQDQLPRXV&RXUWGHFODUHG
*LYHQWKHORQJVWDQGLQJFRPPRQODZHQGRUVHPHQWRIWKH
SUDFWLFHRIDQQRXQFHPHQWZHKDYHOLWWOHGRXEWWKDWWKH
)UDPHUV RI WKH )RXUWK $PHQGPHQW WKRXJKW WKDW WKH
PHWKRGRIDQRIILFHU¶VHQWU\LQWRDGZHOOLQJZDVDPRQJ
WKH IDFWRUV WR EH FRQVLGHUHG LQ DVVHVVLQJ WKH
UHDVRQDEOHQHVVRIDVHDUFKRUVHL]XUH&RQWUDU\WRWKH
GHFLVLRQEHORZZHKROGWKDWLQVRPHFLUFXPVWDQFHVDQ
RIILFHU¶V XQDQQRXQFHG HQWU\ LQWR D KRPH PLJKW EH
XQUHDVRQDEOHXQGHUWKH)RXUWK$PHQGPHQW
7KLVLVQRWWRVD\RIFRXUVHWKDWHYHU\HQWU\PXVWEH
SUHFHGHG E\ DQ DQQRXQFHPHQW 7KH )RXUWK
$PHQGPHQW¶V IOH[LEOH UHTXLUHPHQW RI UHDVRQDEOHQHVV
VKRXOG QRW EH UHDG WR PDQGDWH D ULJLG UXOH RI
DQQRXQFHPHQWV WKDW LJQRUHV FRXQWHUYDLOLQJ ODZ
HQIRUFHPHQWLQWHUHVWV
,GDW

-- 4 of 6 --

1R 8QLWHG6WDWHVY3HQQLQJWRQ
7KH VHDUFK ZDUUDQW DW LVVXH LQ WKLV FDVH ZDV LVVXHG DQG H[HFXWHG
XQGHU VWDWH ODZ $ VHDUFK ZDUUDQW H[HFXWHG XQGHU IHGHUDO ODZ PXVW DOVR
PHHW WKH FRQGLWLRQV VHW IRUWK LQ 86& † 8QGHU WKH VWDWXWH
EHIRUH DQ RIILFHU PD\ IRUFLEO\ HQWHU D KRXVH WR H[HFXWH D VHDUFK ZDUUDQW
WKH RIILFHU PXVW EH ³UHIXVHG DGPLWWDQFH´ RU WKH RIILFHU PXVW EH LQ WKH
SURFHVV RI OLEHUDWLQJ KLPVHOI RU D SHUVRQ DLGLQJ LQ WKH H[HFXWLRQ RI WKH
ZDUUDQW 7KH )RXUWK $PHQGPHQW VWDQGDUG DUWLFXODWHG LQ :LOVRQ LV
VRPHZKDW VLPLODU WR WKDW VHW IRUWK LQ † LQ WKDW XQGHU WKH VWDWXWH DIWHU
ODZ HQIRUFHPHQW DQQRXQFH WKHLU SUHVHQFH DQG LQWHQWLRQ WR VHDUFK WKH
KRPH D GHOD\ RI D FHUWDLQ SHULRG RI WLPH LQ HIIHFW FRQVWLWXWHV D ³UHIXVHG
DGPLWWDQFH´ 6HH 8QLWHG 6WDWHV Y 5DPHUL] 86
,Q 8QLWHG 6WDWHV Y 6SLNHV )G WK &LU
WKLV &RXUW UHIXVHG WR DGRSW D ULJLG UXOH EDVHG XSRQ
QXPEHURIVHFRQGVEHWZHHQWKHWLPHWKHSROLFHDQQRXQFHWKHLU
SUHVHQFHE\VHHNLQJHQWUDQFHLQWRDKRPHDQGWKHSRLQWDW
ZKLFKWKHKRPHLVIRUFLEO\HQWHUHG7KLV&RXUWKHOG
1RQHWKHOHVV ZH GHFOLQH WKHLU LQYLWDWLRQ WR FUHDWH D
EULJKWOLQHUXOHIRUHYHU\FDVHLHWKDWZDLWLQJOHVVWKDQ
ILYHVHFRQGVLVSHUVHXQUHDVRQDEOHZKLOHZDLWLQJPRUH
WKDQILYHVHFRQGVLVSHUVHUHDVRQDEOHXQGHUWKH)RXUWK
$PHQGPHQW
7KH )RXUWK $PHQGPHQW¶V ³NQRFN DQG DQQRXQFH´
SULQFLSOH JLYHQ LWV IDFWVHQVLWLYH QDWXUH FDQQRW EH
GLVWLOOHGLQWRDFRQVWLWXWLRQDOVWRSZDWFKZKHUHDIUDFWLRQ
RIDVHFRQGDVVXPHVFRQWUROOLQJVLJQLILFDQFH
,GDW
,Q 6SLNHV WKH &RXUW FRQVLGHUHG D QXPEHU RI IDFWRUV LQ
GHWHUPLQLQJZKHWKHUWKHIRUFLEOHHQWU\PDGHWRVHFRQGV
DIWHUWKHSROLFHNQRFNHGDQGDQQRXQFHGWKHLUSUHVHQFHZDV
UHDVRQDEOH XQGHU WKH )RXUWK $PHQGPHQW 7KH &RXUW ILUVW
QRWHGWKDWWKHRIILFHUVZHUHDXWKRUL]HGWRVHDUFKIRUGUXJVDQG
WKDWWKH\FRXOGDVVXPHWKDWSHUVRQVLQVLGHWKHUHVLGHQFHPLJKW
GHVWUR\WKHHYLGHQFH³EHIRUHLWFRXOGEHVHL]HG´,G6HFRQG
SULRU WR H[HFXWLQJ WKH ZDUUDQW WKH RIILFHUV UHDVRQDEO\
EHOLHYHGWKDWSRWHQWLDOGUXJWUDIILFNHUVDWWKHUHVLGHQFHPLJKW
KDYHORRNRXWVDQGEHDUPHG,G5LVNVWRWKHRIILFHUVZRXOG
8QLWHG6WDWHVY3HQQLQJWRQ 1R
LQFUHDVHWKHORQJHUWKH\GHOD\HGHQWU\LQWRWKHKRPH7KLUG
WKH RIILFHUV H[HFXWHG WKH ZDUUDQW GXULQJ WKH PLGGOH RI WKH
PRUQLQJDWLPHSHRSOHDUHW\SLFDOO\DZDNHDQGLQYROYHGLQ
HYHU\GD\DFWLYLWLHV,GDW&RQVHTXHQWO\OHVVWLPHLV
QHHGHGWRUHVSRQGWRDNQRFNRQWKHGRRU)LQDOO\WKH&RXUW
QRWHGWKDWWKHRIILFHUVXVHGDEXOOKRUQWRDGYLVHWKRVHLQVLGH
WKHUHVLGHQFHRIWKHLUSUHVHQFH,G7KHEXOOKRUQZDVORXG
HQRXJKWRDOHUWPDQ\SHRSOHLQWKHQHLJKERUKRRGWKDWDVHDUFK
ZDVXQGHUZD\DQGPDQ\QHLJKERUVFDPHRXWRIWKHLUKRPHV
WRREVHUYHZKDWZDVKDSSHQLQJ%DVHGXSRQWKHVHIDFWRUVWKH
&RXUWFRQFOXGHGWKDWWKHRIILFHUVGLGQRWYLRODWHWKHNQRFN
DQG DQQRXQFH UXOH E\ ZDLWLQJ WR VHFRQGV EHIRUH
HQWHULQJWKHUHVLGHQFH,G
0RUHUHFHQWO\LQ8QLWHG6WDWHVY3LQVRQ±)G±
:/ WK&LU)HE WKLV&RXUWFRQVLGHUHG
ZKHWKHUSROLFHODZIXOO\PDGHDIRUFLEOHHQWU\LQWRDGZHOOLQJ
WRH[HFXWHDVHDUFKZDUUDQW7KHRIILFHUVDQQRXQFHGWKHLU
SUHVHQFHZDLWHGILYHWRWHQVHFRQGVDQGWKHQIRUFHGWKHLU
ZD\LQWRWKHUHVLGHQFH&LWLQJ6SLNHVWKH&RXUWIRXQGWKDW
WKHQXPEHURIVHFRQGVVWDQGLQJDORQHZDVQRWGHWHUPLQDWLYH
RIWKHLVVXH,GDW ,QVWHDGWKH&RXUWIRXQGLWVLJQLILFDQW
WKDW³WKHRIILFHUV¶RYHUDOODFWLRQVEHUHDVRQDEOHQRWWKDWWKH\
ZDLWDSUHVFULEHGOHQJWKRIWLPHEHIRUHIRUFLEOHHQWU\´,G
FLWLQJ6SLNHV)GDW
,QWKLVFDVHWKHRIILFHUVZHUHDOVRVHDUFKLQJIRUGUXJV7KH
UHFRUGGRHVQRWFRQWDLQHYLGHQFHWKDWWKHRZQHURIWKHKRPH
RU RFFXSDQWV WKHUHRI ZHUH DUPHG %XW WKH ZDUUDQW ZDV
H[HFXWHG DW LQ WKH DIWHUQRRQ ZKLFK DV LQ 6SLNHV DQG
3LQVRQZDVDWLPHWKDWSHRSOHZHUHSUHVXPDEO\DZDNHDQG
HQJDJHGLQHYHU\GD\DFWLYLWLHV$VREVHUYHGLQ6SLNHV³WKH
DPRXQWRIWLPHRIILFHUVQHHGWRZDLWEHIRUHHQWHULQJDKRPH
QHFHVVDULO\GHSHQGVRQKRZPXFKWLPHLWZRXOGWDNHIRUD
SHUVRQ LQ WKH KRXVH WR RSHQ WKH GRRU :KHQ WKH SROLFH
H[HFXWHDZDUUDQWLQWKHGHDGRIWKHQLJKWWKHOHQJWKRI
WLPHWKHRIILFHUVVKRXOGZDLWLQFUHDVHV´6SLNHV)GDW

-- 5 of 6 --

1R 8QLWHG6WDWHVY3HQQLQJWRQ
,Q KLV 3HWLWLRQ IRU 5HKHDULQJ 3HQQLQJWRQ DUJXHV WKDW WKH RULJLQDO
RSLQLRQ LQ WKLV FDVH LV LUUHFRQFLODEOH ZLWK WKH GHFLVLRQ LQ 8QLWHG 6WDWHV Y
'LFH )G WK &LU ,Q 'LFH KRZHYHU WKH
JRYHUQPHQW FRQFHGHG WKDW WKH WLPH EHWZHHQ WKH NQRFN DQG WKH HQWU\ ZDV
XQUHDVRQDEOH XQGHU WKH )RXUWK $PHQGPHQW ,G DW 7KH XQUHIXWHG
WHVWLPRQ\ LQ 'LFH GHPRQVWUDWHG WKDW DIWHU WKH SROLFH SUHVHQFH ZDV
DQQRXQFHG WKH RIILFHUV KHDUG RQO\ ³PRYHPHQW LQ WKH KRXVH´ DQG ZDLWHG
RQO\ D ³IHZ´ VHFRQGV ,G DW ,Q WKLV FDVH RIILFHUV DQQRXQFHG WKHLU
SUHVHQFH KHDUG D SHUVRQ UXQ DZD\ IURP WKH GRRU DQG HQWHUHG WKH
UHVLGHQFH HLJKW WR WHQ VHFRQGV ODWHU ,Q 'LFH PRYHPHQW LQ WKH KRXVH
FRXOG KDYH LQGLFDWHG WKDW DQ RFFXSDQW ZDV FRPLQJ WR RSHQ WKH GRRU
+HUH WKH XQUHIXWHG WHVWLPRQ\ UHYHDOHG WKDW WKH RFFXSDQW ZDV PRYLQJ
DZD\ IURP WKH GRRU ZKLFK LV HYLGHQFH WKDW DGPLVVLRQ WR WKH SUHPLVHV ZDV
QRW IRUWKFRPLQJ
2QHDGGLWLRQDOIDFWRUSUHVHQWLQWKLVFDVHLVWKHWHVWLPRQ\
RI'HWHFWLYH:ULJKWWKDWKHKHDUG WKH VRXQGRIIRRWVWHSV
LQGLFDWLQJVRPHRQHZDVUXQQLQJDZD\IURPWKHIURQWGRRU
6XFKIDFWZRXOGLQGLFDWHWRDUHDVRQDEOHSROLFHRIILFHUWKDW
WKHUHTXHVWIRUHQWU\ZDVEHLQJHIIHFWLYHO\GHQLHGWKDWWKH
SHUVRQ LQVLGH WKH KRPH ZDV WDNLQJ VRPH W\SH RI HYDVLYH
DFWLRQLQFOXGLQJWKHSRVVLEOHGHVWUXFWLRQRIFRQWUDEDQGDQG
WKDWWKHSHUVRQLQVLGHWKHKRPHZDVDZDUHWKDWSROLFHZHUH
VHHNLQJHQWU\WRKLVKRPH
8QGHU WKH DQDO\VLV LQ 6SLNHV DQG 3LQVRQ DQG JLYHQ WKH
WHVWLPRQ\RI'HWHFWLYH:ULJKWHLJKWWRWHQVHFRQGV ZDVD
UHDVRQDEOH SHULRG RI WLPH IRU WKH RIILFHUV WR ZDLW EHIRUH
IRUFLQJHQWU\LQWRWKHKRPH2XUFRQFOXVLRQLVEROVWHUHGE\
WKHIDFWWKDWXQOLNHWKHFLUFXPVWDQFHVLQ6SLNHVDQG3LQVRQ
WKHRIILFHUZKRNQRFNHGRQWKHGRRUWHVWLILHGWKDWKHKHDUGD
SHUVRQ UXQQLQJ DZD\ IURP WKH GRRU DIWHU KH NQRFNHG DQG
DQQRXQFHG WKH SUHVHQFH RI WKH SROLFH 8QGHU VXFK
FLUFXPVWDQFHVDQHLJKWWRWHQVHFRQGZDLWE\WKHSROLFHLV
REMHFWLYHO\UHDVRQDEOHXQGHUWKH)RXUWK$PHQGPHQWWRMXVWLI\
D IRUFHG HQWU\ LQWR WKH UHVLGHQFH EDVHG XSRQ D VHDUFK
ZDUUDQW2WKHUFRXUWVLQFOXGLQJRWKHUSDQHOVRIWKLV&RXUW
KDYHIRXQGVLPLODUSHULRGVRIWLPHVXIILFLHQW WRMXVWLI\WKH
HQWU\LQWRWKHKRPHZLWKRXWWKHRZQHU¶VSHUPLVVLRQ8QLWHG
6WDWHVY-RKQVRQ)G XQSXEOLVKHGWDEOHGHFLVLRQ
1RDYDLODEOHDW:/ VHFRQGV
8QLWHG6WDWHVY3HQQLQJWRQ 1R
7KH 1LQWK &LUFXLW DORQH KDV IRFXVHG VROHO\ RQ WKH QXPEHU RI
VHFRQGV EHWZHHQ WKH NQRFN DQG WKH IRUFHG HQWU\ ,Q 8QLWHG 6WDWHV Y
%DQNV )G WK &LU FHUW JUDQWHG 6 &W
:/ 86 )HE WKH &RXUW KHOG WKDW RIILFHUV DFWLQJ
ZLWKRXW H[LJHQW FLUFXPVWDQFHV WR H[HFXWH D VHDUFK ZDUUDQW LQ SXUVXLW RI
GUXJV YLRODWHG WKH )RXUWK $PHQGPHQW E\ ZDLWLQJ RQO\ ILIWHHQ WR WZHQW\
VHFRQGV DIWHU DQQRXQFLQJ WKHLU SUHVHQFH 7KH KROGLQJ LQ %DQNV LV
LQFRQVLVWHQW ZLWK WKLV &RXUW¶V SUHFHGHQW LQ 6SLNHV DQG 3LQVRQ
8QLWHG6WDWHVY-RQHV)G WK&LU
WRVHFRQGV 8QLWHG6WDWHVY*DWHZRRG)G
WK&LU VHFRQGV 8QLWHG6WDWHVY*DUFLD
)G VW&LU WRVHFRQGV 8QLWHG
6WDWHVY.QDSS)G WK&LU WR
VHFRQGV
,,
%DVHGXSRQWKHIRUHJRLQJWKHGHFLVLRQRIWKHGLVWULFWFRXUW
LV$)),50('LQDOOUHVSHFWV

-- 6 of 6 --