01a0368p.06

8QLWHG6WDWHVY(YHUHWW 1R
ILQDQFLDOUHVSRQVLELOLWLHV7KHUHZDVVXIILFLHQWHYLGHQFHIRU
WKHMXU\WRILQGVKHDLGHGDQGDEHWWHG0DULDQLLQKHULOOHJDO
DFWLRQVDVZHOODVSDUWLFLSDWLQJLQEDQNIUDXGKHUVHOI
,668( $SSHOODQW DUJXHV KHU WULDO FRXQVHOZDV
LQHIIHFWLYH
$SSHOODQWDUJXHVKHUWULDOFRXQVHOZDVLQHIIHFWLYHEHFDXVH
KHIDLOHGWRREMHFWWRWKHMXU\LQVWUXFWLRQVDVGLVFXVVHGDERYH
$SSHOODQW KDV QRW FRQGXFWHG DQ\ DQDO\VLV IRU WKH FRXUW WR
GHPRQVWUDWHKRZWULDOFRXQVHO¶VFRQGXFWVDWLVILHVWKHVWDQGDUG
VHWIRUWKLQ6WULFNODQGY:DVKLQJWRQ86
6LQFHZHKDYHKHOGWKDWWKHLQVWUXFWLRQVZHUHDGHTXDWHZH
DOVRILQGWKLVDUJXPHQWWREHZLWKRXWPHULW
7KHUHIRUHIRUWKHUHDVRQVFLWHGDERYHWKH-XGJPHQWRIWKH
'LVWULFW&RXUWLVKHUHE\$)),50('
7KH +RQRUDEOH :LOOLDP 2 %HUWHOVPDQ 8QLWHG 6WDWHV 'LVWULFW -XGJH
IRU WKH (DVWHUQ 'LVWULFW RI .HQWXFN\ 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$SSHOOHH
Y
-867,1( 7+(5(6$ (9(5(77
'HIHQGDQW$SSHOODQW
;!

1
1R
$SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW
IRUWKH1RUWKHUQ'LVWULFWRI2KLRDW&OHYHODQG
1R²6RORPRQ2OLYHU-U'LVWULFW-XGJH
6XEPLWWHG-XQH
'HFLGHGDQG)LOHG2FWREHU
%HIRUH%$7&+(/'(5DQG0225(&LUFXLW-XGJHV
%(57(/60$1'LVWULFW-XGJH
BBBBBBBBBBBBBBBBB
&2816(/
21 %5,() *RUGRQ 6 )ULHGPDQ )5,('0$1
*,/%(57&OHYHODQG2KLRIRU$SSHOODQW7KRPDV(*HW]

-- 1 of 6 --

8QLWHG6WDWHVY(YHUHWW 1R
-$
$66,67$1781,7('67$7(6$77251(<&OHYHODQG
2KLRIRU$SSHOOHH
BBBBBBBBBBBBBBBBB
23,1,21
BBBBBBBBBBBBBBBBB
%(57(/60$1 'LVWULFW -XGJH ,Q WKLV DSSHDO -XVWLQH
7KHUHVD (YHUHWW VHHNV D UHYHUVDO RI KHU FRQYLFWLRQ RQ RQH
FRXQWRIEDQNIUDXGDQGFRPSOLFLW\
352&('85$/$1')$&78$/%$&.*5281'
7KH $SSHOODQW ZDV D FHUWLILHG SXEOLF DFFRXQWDQW )URP
XQWLO$SSHOODQWZRUNHGIRUDQDFFRXQWLQJILUP
:KLOHDWWKHILUPVKHZRUNHGRQWKHDFFRXQWIRU0DUN6WHLQ¶V
([SHUW$XWR%RG\,QF,Q0D\$SSHOODQWOHIWWKHILUP
WRHVWDEOLVKKHURZQSUDFWLFH$W6WHLQ¶VUHTXHVW$SSHOODQW
FRQWLQXHGWRGRDFFRXQWLQJZRUNIRUKLVEXVLQHVV
&RGHIHQGDQW .DWK\ 0DULDQL ZRUNHG IRU WKH VDPH
DFFRXQWLQJILUPDV$SSHOODQW$SSHOODQWLQWURGXFHG0DULDQL
WR6WHLQ$WDERXWWKHVDPHWLPH$SSHOODQWOHIWWKHILUP6WHLQ
KLUHG0DULDQLWRZRUNIRUKLPDVDERRNNHHSHU0DULDQL¶V
GXWLHVLQFOXGHGGRLQJDFFRXQWVUHFHLYDEOHDFFRXQWVSD\DEOH
DQG UHFRUGLQJ DOO WKH FKHFNV ZULWWHQ LQWR D FKHFN UHJLVWHU
0DULDQLZDVDFRVLJQHURQ6WHLQ¶VEXVLQHVVDFFRXQWVEXWVKH
JHQHUDOO\VLJQHG6WHLQ¶VQDPHWRFKHFNV0DULDQLWHVWLILHG
WKDW$SSHOODQWZDVQHYHUOLVWHGZLWKWKHEDQNDVDQDXWKRUL]HG
VLJQHURQWKHDFFRXQW2QRFFDVLRQKRZHYHU6WHLQDQGRU
0DULDQL WROG $SSHOODQW VKH FRXOG VLJQ 6WHLQ¶V QDPH WR
VSHFLILFFKHFNV
:KHQ 0DULDQL TXLW KHU MRE DW 6WHLQ¶V $XWR %RG\ KHU
UHSODFHPHQWGLVFRYHUHGGLVFUHSDQFLHVLQWKHEXVLQHVVUHFRUGV
FRPSDUHGWRWKHEDQNUHFRUGV6KHREWDLQHGFRSLHVRIWKH
FKHFNVLQTXHVWLRQ2QHFKHFNLQWKHDPRXQWRIZDV
1R 8QLWHG6WDWHVY(YHUHWW
6WHLQZDVWKHRZQHURIWKHEXVLQHVVDQGWKHUHSRUWOLVWHGWKH
FKHFNV DW LVVXH DQG WKH FKDUJH QRWHG DV WKHIWODUFHQ\
7KHUHIRUHWKHVWDWHPHQWZDVQRWLPSURSHU
,668( $SSHOODQW DUJXHV WKDW WKH MXU\LQVWUXFWLRQV
ZHUHLPSURSHU
$SSHOODQWDUJXHVWKDWWKHFRXUWHUUHGLQJLYLQJLQVWUXFWLRQV
WKDWLQFOXGHGERWKVSHFLILFDQGJHQHUDOWHUPVLQLGHQWLI\LQJ
ZKR WKH LQWHQGHG YLFWLP QHHGHG WR EH 6KH DUJXHV WKDW
DOWKRXJK WKH FRXUW VSHFLILFDOO\ LQVWUXFWHG WKH MXU\ RI WKH
HVVHQWLDOHOHPHQWVRIWKHFULPHWRLQFOXGHWKHHOHPHQWWKDWWKH
GHIHQGDQWLQWHQGHGWRGHIUDXG%DQN2QHLWWKHQJDYHJHQHUDO
LQVWUXFWLRQV UHIHUULQJ WR GHSULYLQJ DQRWKHU RU GHIUDXGLQJ
DQ\RQH LQVWHDG RI VSHFLI\LQJ %DQN 2QH ,Q OLJKW RI WKH
LQWHUSUHWDWLRQ RI † ZH KDYH DGRSWHG DERYH LW LV
DSSDUHQWWKDWWKHLQVWUXFWLRQVZHUHVXIILFLHQW
,668( $SSHOODQWDUJXHVVKHVKRXOGQRWKDYHEHHQ
FRQYLFWHGRIFRPSOLFLW\
$SSHOODQW DUJXHV KHU FRQYLFWLRQ RQ FRPSOLFLW\ PXVW EH
UHYHUVHG EHFDXVH FRXQW WZR ZDV GLVPLVVHG DQG FRXQW RQH
GHDOWRQO\ZLWKKHUFRQGXFWDQGVKHFDQQRWEHIRXQGJXLOW\RI
DLGLQJDQGDEHWWLQJKHUVHOI
$ UHYLHZ RI WKH LQGLFWPHQW LOOXVWUDWHV WKDW FRXQW RQH
DOOHJHG YLRODWLRQV RI ERWK WKH EDQN IUDXG DQG DLGLQJ DQG
DEHWWLQJVWDWXWHV7KHFRXQWDOVRRXWOLQHVWKHFRQGXFWRIERWK
WKH$SSHOODQWDQG0DULDQL
0DULDQL WHVWLILHG WKDW VKH DQG WKH $SSHOODQW PDGH IDOVH
HQWULHVDQGDOWHUHGUHSRUWVWRFRQFHDOWKHLUDFWLYLW\0DULDQL
DOVRWHVWLILHGWKDWVKHZDVQRWZRUULHGEHFDXVHWKH$SSHOODQW
ZDVDOVRLQYROYHG0DULDQLWHVWLILHGWKDW$SSHOODQWKHOSHGKHU
PRYHDOOWKHROGILQDQFLDOUHFRUGVFDQFHOOHGFKHFNVFKHFN
UHJLVWHUVEDQNVWDWHPHQWVHWFRXWRIWKHEXVLQHVVVRWKHLU
VFKHPHZRXOGQRWEHGHWHFWHG$SSHOODQWWRRNWKHUHFRUGVWR
)ORULGDDQGSODFHGWKHPLQDVWRUDJHXQLW$SSHOODQWZDVWKH
DFFRXQWDQWIRUWKHEXVLQHVVDQGUHVSRQVLEOHIRUUHFRQFLOLQJ
FKHFNERRNVEDQNVWDWHPHQWVSUHSDULQJWD[UHWXUQVDQGRWKHU

-- 2 of 6 --

8QLWHG6WDWHVY(YHUHWW 1R
ZDV SUHVHQWHG E\ 0DULDQL WKDW LPSOLFDWHG $SSHOODQW LQ
VFKHPHVWRGHIUDXG*LYHQWKHHYLGHQFHRI$SSHOODQW¶VJXLOW
LWLVQRWOLNHO\WKDWWKHMXU\¶VYHUGLFWZDVVXEVWDQWLDOO\VZD\HG
E\WKHIDLOXUHRIWKHWULDOFRXUWWRJLYHDOLPLWLQJLQVWUXFWLRQ
RQWKHXVHRIWKH5XOH E HYLGHQFH
,668( $SSHOODQW DUJXHV KHU ULJKWV ZHUHYLRODWHG
ZKHQ WKH SURVHFXWRU PDGH VWDWHPHQWV LQ
FORVLQJDUJXPHQWDERXWZKDWDQRQWHVWLI\LQJ
ZLWQHVVZRXOGKDYHVDLG
$SSHOODQW DUJXHV KHU ULJKWV ZHUH YLRODWHG ZKHQ WKH
SURVHFXWRUVWDWHGLQKLVUHEXWWDOVWDWHPHQWZKDW6WHLQDQRQ
WHVWLI\LQJ ZLWQHVV ZRXOG KDYH VDLG LI KH KDG WHVWLILHG $
SURVHFXWRU¶VVWDWHPHQWLVLPSURSHULILWEULQJVWRWKHMXU\IDFWV
ZKLFKDUHQRWLQHYLGHQFHDQGSUHMXGLFLDO8QLWHG6WDWHVY
:LHG\N)G WK&LU
,Q WKH FDVH DW EDU WKH SURVHFXWRU PDGH WKH IROORZLQJ
VWDWHPHQWLQUHVSRQVHWRGHIHQVHFRXQVHO¶VFORVLQJVWDWHPHQW
DERXWZK\6WHLQWKHRZQHURIWKHEXVLQHVVDWLVVXHGLGQRW
DSSHDUWRWHVWLI\
7KH\EULQJXS0DUN6WHLQ%XWDV\RXDOUHDG\KHDUG
0DUN6WHLQLVLUUHOHYDQWWRWKLVFDVH+HFRXOGWHOO\RX
WZRWKLQJV2QHRIWKHPLVWKDWKHWUXVWHGWKHGHIHQGDQW
LPSOLFLWO\DQGWKDWKHGLGQ¶WSD\HQRXJKDWWHQWLRQWRKLV
EXVLQHVV7KDWPXFKLVREYLRXVIURPWKHIDFWWKDWZH¶UH
KHUH
7KHVHFRQGWKLQJKHFRXOGWHOO\RXLVWKDWWKHFKHFNV
WKDW HQGHG XS EHLQJ GHSRVLWHG LQWR KHU DFFRXQW ZHUH
IRUJHULHV +H WROG \RX WKDW WKURXJK *RYHUQPHQW¶V
([KLELWWKHSROLFHUHSRUW
-$ 7KH WULDO FRXUW RYHUUXOHG WKH GHIHQVH FRXQVHO¶V
REMHFWLRQ VWDWLQJ WKH VWDWHPHQW UHODWHG WR VRPHWKLQJ LQ
HYLGHQFHWKHSROLFHUHSRUW
7KHSURVHFXWRU¶VVWDWHPHQWGRHVQRWEULQJDQ\QHZIDFWVWR
WKHMXU\7KHRIILFHUWHVWLILHGWKDWDFRPSODLQWZDVPDGHWKDW
([SHUW$XWR%RG\ZDVWKHFRPSODLQDQWWHVWLPRQ\HVWDEOLVKHG
1R 8QLWHG6WDWHVY(YHUHWW
PDGH SD\DEOH WR WKH $SSHOODQW EXW UHFRUGHG LQ WKH FKHFN
UHJLVWU\DVDSD\PHQWWRDYHQGRU7KHRWKHUFKHFNVZHUH
FRQQHFWHGWR0DULDQL$IWHU6WHLQUHSRUWHGWKHWKHIWWRWKH
SROLFHDQ)%,ILQDQFLDODQDO\VWUHYLHZHG6WHLQ¶VEDQNUHFRUGV
DQG ERRNNHHSLQJ UHFRUGV +H IRXQG QHJRWLDWHG FKHFNV
WRWDOLQJWKDWKDGEHHQLVVXHGWRWKH$SSHOODQWRU
PDGHSD\DEOHWRFDVKDQGHQGRUVHGE\$SSHOODQW7KHDJHQW
WHVWLILHGWKDWQHDUO\DOORIWKHFKHFNVZHUHLVVXHGRXWRISURSHU
VHTXHQFH IDOVHO\ UHFRUGHG LQ WKH FKHFN UHJLVWHUV RU QRW
UHFRUGHGDWDOODQGPDQ\FRQWDLQHGLQFRUUHFWLQIRUPDWLRQLQ
WKHPHPRVHFWLRQRIWKHFKHFN
$V D UHVXOW RI WKH )%,¶V LQYHVWLJDWLRQ $SSHOODQW DQG
0DULDQLZHUHMRLQWO\FKDUJHGLQDWZRFRXQWLQGLFWPHQW%RWK
FRXQWV FKDUJHG EDQN IUDXG DQG FRPSOLFLW\ DOWKRXJK HDFK
FRXQW FRQFHUQHG D GLIIHUHQW EDQN 3ULRU WR WULDO 0DULDQL
SOHDGHG JXLOW\ WR EDQN IUDXG IRU KHU FRQGXFW LQ ZULWLQJ
XQDXWKRUL]HGFKHFNVWRKHUVHOI$SSHOODQWSURFHHGHGWRWULDO
$W WULDO WKH JRYHUQPHQW LQWURGXFHG IRXU FKHFNV PDGH
SD\DEOHWR$SSHOODQWWRZKLFK$SSHOODQWDGPLWWHGWRVLJQLQJ
6WHLQ¶VQDPH$SSHOODQWWHVWLILHGWKDWWKHVHIRXUFKHFNVZHUH
VHQWWRKHUSRVWGDWHGDQGZLWKRXWVLJQDWXUHIRUKHUVHUYLFHV
:KHQ VKH TXHVWLRQHG 0DULDQL DERXW WKH XQVLJQHG FKHFNV
$SSHOODQWVWDWHGWKDW0DULDQLWROGKHUVKHFRXOGVLJQ6WHLQ¶V
QDPHWRWKHFKHFNVKHUVHOI
0DULDQL WHVWLILHG WKDW VKH NQHZ $SSHOODQW ZDV ZULWLQJ
XQDXWKRUL]HGFKHFNVWRKHUVHOIEHFDXVHVKHVDZKHUGRLWDQG
VKHDOVRVDZFDQFHOOHGFKHFNVZULWWHQWRWKH$SSHOODQWE\WKH
$SSHOODQWWKDW0DULDQLNQHZZHUHXQDXWKRUL]HG0DULDQL
WHVWLILHGWKDW$SSHOODQWKDGDVNHGKHURQPDQ\RFFDVLRQVWR
LVVXH FKHFNV IRU VHUYLFHV 0DULDQL NQHZ $SSHOODQW KDG QRW
SHUIRUPHG $IWHU LVVXLQJ DQ XQDXWKRUL]HG FKHFN HLWKHU
0DULDQL RU $SSHOODQW ZRXOG HQWHU IDOVH LQIRUPDWLRQ LQ WKH
FKHFN UHJLVWHU WR FRQFHDO WKH LOOHJLWLPDF\ RI WKH FKHFNV
0DULDQLDOVRH[SODLQHGWKDWEHIRUHVKHOHIWKHUHPSOR\PHQW
ZLWK6WHLQVKHDQG$SSHOODQWSDFNHGXSDOOWKHEDQNUHFRUGV
DQGROGFKHFNVVRWKDW$SSHOODQWFRXOGWDNHWKHPWR)ORULGD
ZLWKKHU0DULDQLWHVWLILHGWKDWWKHSXUSRVHRIPRYLQJWKH

-- 3 of 6 --

8QLWHG6WDWHVY(YHUHWW 1R
86& † UHDGV ³:KRHYHU NQRZLQJO\ H[HFXWHV RU DWWHPSWV
WR H[HFXWH D VFKHPH RU DUWLILFH ± WR GHIUDXG D ILQDQFLDO LQVWLWXWLRQ RU
WR REWDLQ DQ\ RI WKH PRQH\V IXQGV FUHGLWV DVVHWV VHFXULWLHV RU RWKHU
SURSHUW\ RZQHG E\ RU XQGHU WKH FXVWRG\ RU FRQWURO RI D ILQDQFLDO
LQVWLWXWLRQ E\ PHDQV RI IDOVH RU IUDXGXOHQW SUHWHQVHV UHSUHVHQWDWLRQV RU
SURPLVHV VKDOO EH ILQHG QRW PRUH WKDQ RU LPSULVRQHG QRW PRUH
WKDQ \HDUV RU ERWK´
EDQN UHFRUGV DQG FKHFNV ZDV WR SUHYHQW GHWHFWLRQ RI WKHLU
VFKHPH
$IWHUSUHVHQWDWLRQRIWKHHYLGHQFHWKHWULDOFRXUWJUDQWHG
$SSHOODQW¶VPRWLRQWRGLVPLVVFRXQWWZRRIWKHLQGLFWPHQW
EHFDXVHWKHFKHFNVLQTXHVWLRQLQFRXQWWZRKDGEHHQVLJQHG
E\0DULDQLDQDXWKRUL]HGVLJQDWRU\7KXVWKHEDQNZRXOG
QRWEHVXEMHFWWRDULVNRIORVVHYHQLIWKHFKHFNVZHUHZULWWHQ
IRUDQXQDXWKRUL]HGSXUSRVH7KHWULDOFRXUWVHQWFRXQWRQHWR
WKHMXU\7KHMXU\UHWXUQHGDYHUGLFWRIJXLOW\DQG$SSHOODQW
ZDVVHQWHQFHGWRIRXUWHHQPRQWKVRILQFDUFHUDWLRQ$SSHOODQW
QRZDSSHDOVKHUFRQYLFWLRQ
',6&866,21
$SSHOODQWPDNHVVHYHQDUJXPHQWVDVWRZK\KHUFRQYLFWLRQ
VKRXOGEHUHYHUVHG:HZLOOGLVFXVVHDFKLVVXHLQWXUQ
,668( $SSHOODQWDUJXHVVKHZDVDXWKRUL]HGWRVLJQ
6WHLQ¶VQDPHWKXVWKHUHZDVQREDQNIUDXG
$SSHOODQWDUJXHVWKDW6WHLQRZQHURIWKHDXWRERG\VKRS
DXWKRUL]HGKHUWRVLJQKLVQDPHRQWKHFKHFNVLQTXHVWLRQ
6KH DUJXHV WKDW WKH VLJQLQJ RI DQRWKHU¶V QDPH ZKHQ
DXWKRUL]HGE\WKDWSHUVRQWRGRVRLVQRWIRUJHU\DQGFDQQRW
EHDYLRODWLRQRIWKH%DQN)UDXG6WDWXWH86&†

7KUHHHOHPHQWVDUHUHTXLUHGIRUDFRQYLFWLRQIRUEDQNIUDXG
XQGHU 86&† WKDWWKHGHIHQGDQWNQRZLQJO\
H[HFXWHG RU DWWHPSWHG WR H[HFXWH D VFKHPH WR GHIUDXG D
ILQDQFLDOLQVWLWXWLRQ WKDWWKHGHIHQGDQWGLGVRZLWKWKH
LQWHQWWRGHIUDXGDQG WKDWWKHILQDQFLDOLQVWLWXWLRQZDV
1R 8QLWHG6WDWHVY(YHUHWW
-$ 7KHUHLVQRVSHFLILFVWDWHPHQWDVWRZKDWWKH
MXU\ FRXOG XVH WKH HYLGHQFH DW LVVXH IRU RU HYHQ ZKDW
HYLGHQFHZDVUHVWULFWHGWRDVSHFLILFSXUSRVH7KXVWKHMXU\
LQVWUXFWLRQVZHUHQRWDGHTXDWHWROLPLWWKHMXU\¶VXVHRIWKH
5XOH E HYLGHQFH
1HYHUWKHOHVVWKHHUURULVKDUPOHVV7KLVFRXUWKDVKHOGWKDW
5XOH E LVQRWDSSOLFDEOHZKHUHWKHFKDOOHQJHGHYLGHQFH
LV ³LQH[WULFDEO\ LQWHUWZLQHG´ ZLWK HYLGHQFH RI WKH FULPH
FKDUJHG 8QLWHG 6WDWHV Y %DUQHV )G WK &LU
+HUHWKH$SSHOODQWDUJXHVWKDWVKHZDVHQWLWOHGWRDOO
WKHPRQH\VKHUHFHLYHGIURPWKHEXVLQHVVDVSD\PHQWIRUKHU
VHUYLFHV 7KH LWHPV RI HYLGHQFH EHLQJ FKDOOHQJHG FKHFNV
VLJQHG E\ 0DULDQL DUH SDUW RI WKH WRWDO QXPEHU RI FKHFNV
JRLQJ LQWR WKH $SSHOODQW¶V DFFRXQWV DQG VKRZ WKH DPRXQW
$SSHOODQW UHFHLYHG OHJLWLPDWHO\ RU RWKHUZLVH IURP WKH
EXVLQHVV IRU SDUWLFXODU WLPH SHULRGV 0DULDQL WHVWLILHG WKDW
$SSHOODQWZDVSDUWRIWKHVFKHPHDQGZDVDOVRWDNLQJPRQH\
IURPWKHEXVLQHVV7KHHYLGHQFHRIWKHFKHFNVWKHUHIRUHZDV
DGPLVVLEOH DV EHLQJ LQH[WULFDEO\ LQWHUWZLQHG EHFDXVH LW
IRUPHGDSDUWRIWKHZLWQHVVHV¶DFFRXQWV ERWK$SSHOODQW¶V
WHVWLPRQ\ DQG 0DULDQL¶V WHVWLPRQ\ RI WKH FLUFXPVWDQFHV
VXUURXQGLQJWKHRIIHQVH,G
,QDGGLWLRQ³>L@QGHWHUPLQLQJZKHWKHUDQHUURULVKDUPOHVV
>WKHFRXUW@PXVWWDNHDFFRXQWRIZKDWWKHHUURUPHDQWWR>WKH
MXU\@QRWVLQJOHGRXWDQGVWDQGLQJDORQHEXWLQUHODWLRQWRDOO
HOVHWKDWKDSSHQHG´8QLWHG6WDWHVY6SLNHV)G
WK&LU FHUWGHQLHG86 TXRWLQJ
8QLWHG6WDWHVY0HUULZHDWKHU)G WK&LU
LQWHUQDOTXRWDWLRQPDUNVRPLWWHG
,QWKLVFDVHWKHMXU\ZDVDOVRSUHVHQWHGZLWKHYLGHQFHWKDW
$SSHOODQWUHFHLYHGIURPWKHEXVLQHVV1HDUO\DOO
RI WKH FKHFNV ZHUH LVVXHG RXW RI SURSHU VHTXHQFH IDOVHO\
UHFRUGHG LQ WKH FKHFN UHJLVWHUV RU QRW UHFRUGHG DW DOO
7HVWLPRQ\ ZDV SUHVHQWHG WKDW WKH DPRXQWV RI WKH FKHFNV
UHFHLYHGE\WKH$SSHOODQWIDUH[FHHGHGWKHDPRXQWVHQWHUHG
LQWKHEXVLQHVVOHGJHUIRUDFFRXQWLQJIHHVWKHEXVLQHVVWD[
UHWXUQVDQGWKH)RUPLVVXHGWR$SSHOODQW7HVWLPRQ\

-- 4 of 6 --

8QLWHG6WDWHVY(YHUHWW 1R
7KLV LQWHUSUHWDWLRQ PDNHV WKH EDQN IUDXG VWDWXWH PRUH
KDUPRQLRXV ZLWK WKH PDLO DQG ZLUH IUDXG VWDWXWHV ZKLFK
UHTXLUHRQO\WKDWWKHPDLORUZLUHFRPPXQLFDWLRQEHXVHGWR
IDFLOLWDWHWKHIUDXG7KLVDSSURDFKDOVRLVPRUHLQDFFRUGZLWK
WKHODQJXDJHRI†
,668( $SSHOODQW DUJXHV WKH WULDO FRXUW HUUHGLQ
DGPLWWLQJHYLGHQFHRIFLUFXPVWDQWLDOHYLGHQFH
ZLWKRXWJLYLQJDOLPLWLQJLQVWUXFWLRQ
$SSHOODQW DUJXHV WKDW WKH WULDO FRXUW HUUHG LQ DGPLWWLQJ
HYLGHQFH WKDW ZDV UHOHYDQW WR WKH GLVPLVVHG FRXQW RI EDQN
IUDXG ZLWKRXW JLYLQJ D VSHFLILF OLPLWLQJ LQVWUXFWLRQ 7KH
HYLGHQFH DW LVVXH LQFOXGHG FKHFNV DQG D VXPPDU\ RI WKH
FKHFNVWKDWUHODWHGWRWKHFKHFNVVLJQHGE\0DULDQL7KHWULDO
FRXUWSHUPLWWHGWKHHYLGHQFHWRJRWRWKHMXU\HYHQWKRXJK
FRXQW WZR ZDV GLVPLVVHG IRU XVH DV )HG 5 (YLG E
HYLGHQFHDQGDVFLUFXPVWDQWLDOHYLGHQFH
:KHQ DGPLWWLQJ HYLGHQFH XQGHU 5XOH E WKH FRXUW
³PXVW FDUHIXOO\ LGHQWLI\ LQ LWV LQVWUXFWLRQV WR WKH MXU\ WKH
VSHFLILFIDFWRUQDPHGLQWKHUXOHWKDWLVUHOLHGXSRQWRMXVWLI\
DGPLVVLRQRIWKHRWKHUDFWVHYLGHQFHH[SODLQZK\WKDWIDFWRU
LVPDWHULDODQGZDUQWKHMXURUVDJDLQVWXVLQJWKHHYLGHQFHWR
GUDZWKHLQIHUHQFHVH[SUHVVO\IRUELGGHQLQWKHILUVWVHQWHQFH
RI5XOH E ´8QLWHG6WDWHVY6SLNHV)G
WK&LU FHUWGHQLHG86 TXRWLQJ
8QLWHG 6WDWHV Y -RKQVRQ )G WK &LU

+HUH WKH HYLGHQFH ZDV SURSHU 5XOH E HYLGHQFH WR
VKRZSODQRSSRUWXQLW\NQRZOHGJHSUHSDUDWLRQPRWLYHDQG
DEVHQFHRIPLVWDNH7KHFRXUWGLGQRWKRZHYHUJLYHOLPLWLQJ
LQVWUXFWLRQVRQKRZWKHHYLGHQFHZDVWREHXVHG7KHFRXUW
WROGWKHMXU\
³,PD\KDYHWROG\RXWKURXJKWKHFRXUVHRIWKHWULDOWKDW
,DGPLWWHGFHUWDLQ WHVWLPRQ\DQGFHUWDLQH[KLELWVIRUD
OLPLWHG SXUSRVH 7R WKH H[WHQW , GLG WKDW \RX PD\
FRQVLGHU VXFK HYLGHQFH RQO\ IRU WKH VSHFLILF OLPLWHG
SXUSRVHIRUZKLFKLWZDVDGPLWWHG´
1R 8QLWHG6WDWHVY(YHUHWW
LQVXUHGE\WKH)',&8QLWHG6WDWHVY+RJOXQG)G
WK &LU $ FRQYLFWLRQ XQGHU † VKRXOG EH
UHYHUVHGRQO\LIYLHZLQJWKHUHFRUGDVDZKROHWKHMXGJPHQW
LV QRW VXSSRUWHG E\ VXEVWDQWLDO DQG FRPSHWHQW HYLGHQFH
8QLWHG6WDWHVY0DQQ)G:/
WK&LU XQSXEOLVKHG FHUWGHQLHGBB86BB6
&W
$SSHOODQWDUJXHVWKDWEHFDXVHVKHZDVDXWKRUL]HGWRVLJQ
6WHLQ¶VQDPHWRFKHFNVVKHFDQQRWEHJXLOW\RIEDQNIUDXG
HYHQLIVKHZDVQRWHQWLWOHGWRWKHIXQGV6WHLQGLGQRWWHVWLI\
DVWRZKHWKHUKHFRQVHQWHGWR$SSHOODQW¶VVLJQLQJRIKLVQDPH
WR WKH FKHFNV DW LVVXH +RZHYHU WKH SROLFH UHSRUW ZDV
LQWURGXFHG ZKLFK VWDWHG D FRPSODLQW ZDV PDGH DJDLQVW
$SSHOODQWDQGOLVWHG6WHLQDVWKHRZQHURIWKHEXVLQHVV7KH
UHSRUW DOVR LQGLFDWHG WKDW WKH ORVV ZDV GXH WR
FRXQWHUIHLWIRUJHGQHJRWLDEOHLQVWUXPHQWVDQGLGHQWLILHGWKH
VSHFLILFFKHFNVE\QXPEHU
7KHFDVHVFLWHGE\WKH$SSHOODQWDUHGLVWLQJXLVKDEOHIURP
WKHFDVHDWEDU,QERWK8QLWHG6WDWHVY/DOMLH)G
G&LU DQG8QLWHG6WDWHVY5RGULJXH])G
G&LU WKHFKHFNVIRXQGQRWWRFRQVWLWXWHEDQNIUDXG
FRQWDLQHG WKH DXWKHQWLF VLJQDWXUHV RI WKH SHUVRQV OLVWHG DV
DXWKRUL]HGVLJQDWRULHVZLWKWKHEDQN+HUH$SSHOODQWZDVQRW
OLVWHGDVDQDXWKRUL]HGVLJQHUZLWKWKHEDQNDQGLQIDFWVKH
GLG QRW VLJQ KHU RZQ QDPH EXW WKDW RI 6WHLQ 7KHUH ZDV
VXIILFLHQWHYLGHQFHLHWKHSROLFHUHSRUWDQGWKHWHVWLPRQ\RI
0DULDQLWRLQGLFDWH$SSHOODQWGLGQRWKDYHDXWKRULW\WRVLJQ
WKHFKHFNVDWLVVXH7KHHYLGHQFHRQWKHLVVXHZDVVXEPLWWHG
WRWKHMXU\LQFOXGLQJWKHWHVWLPRQ\RIERWKWKH$SSHOODQWDQG
0DULDQL7KHHYLGHQFHZDVVXIILFLHQWIRUDUDWLRQDOMXURUWR
ILQG$SSHOODQWVLJQHGWKHFKHFNVZLWKRXWDXWKRUL]DWLRQDQG
WKHILUVWLVVXHLVZLWKRXWPHULW
,668( $SSHOODQWDUJXHVWKHUHZDVQRHYLGHQFHWKDW
VKH VSHFLILFDOO\ LQWHQGHG WR GHIUDXG D
IHGHUDOO\LQVXUHGEDQN
$SSHOODQWDUJXHVWKDWWKH8QLWHG6WDWHVKDVIDLOHGWRSURYH
WKHVSHFLILFLQWHQWUHTXLUHGIRUDFRQYLFWLRQXQGHU86&

-- 5 of 6 --

8QLWHG6WDWHVY(YHUHWW 1R
8QLWHG 6WDWHV Y 0F&DXOH\ )G WK &LU PXVW
HVWDEOLVK EDQN SODFHG DW HLWKHU ULVN RI ORVV RU FLYLO OLDELOLW\ 8QLWHG 6WDWHV
Y /DPDUUH )G WK &LU FHUW GHQLHG BB 86BB 6 &W
VSHFLILF LQWHQW WR GHIUDXG UHTXLUHV GHIHQGDQW DFW ZLOOIXOO\ ZLWK
VSHFLILF LQWHQW WR GHFHLYH RU FKHDW EDQN 8QLWHG 6WDWHV Y .HQULFN
)G VW &LU FHUW GHQLHG 86 86 UHTXLUHG WR
HVWDEOLVK LQWHQW WR GHFHLYH EDQN LQ RUGHU WR REWDLQ PRQH\ RU RWKHU SURSHUW\
IURP LW LQWHQW WR KDUP QRW UHTXLUHG 8QLWHG 6WDWHV Y 6SULFN )G
WK &LU EDQN PXVW EH SODFHG DW ULVN RI FLYLO OLDELOLW\ 8QLWHG
6WDWHV Y $NHUV )G WK &LU FHUW GHQLHG 86
SRWHQWLDO ULVN RI ORVV LV QRW VHSDUDWH HOHPHQW 8QLWHG 6WDWHV Y
/DOMLH )G G &LU DFWXDO RU SRWHQWLDO ORVV QRW UHTXLUHG
HYLGHQFH RI LQWHQW WR H[SRVH EDQN WR ORVV VXFK DV E\ SUHVHQWDWLRQ RI
IRUJHU\ VXIILFLHQW 8QLWHG 6WDWHV Y -DFREV )G G &LU
PXVW HVWDEOLVK EDQN H[SRVHG WR ULVN RI ORVV 8QLWHG 6WDWHV Y %UDQGRQ
)G VW &LU GHIHQGDQW PXVW NQRZLQJO\ H[HFXWH D
IUDXGXOHQW VFKHPH ZKLFK H[SRVHG D IHGHUDOO\ LQVXUHG EDQN WR D ULVN RI
ORVV
† QDPHO\ WKDW WKH $SSHOODQW LQWHQGHG WR GHIUDXG D
IHGHUDOO\LQVXUHGEDQNRUDWOHDVWSXWWKHEDQNDWDULVNRI
ORVV$SSHOODQWDFNQRZOHGJHVWKDWWKHUHLVHYLGHQFHWKDWVKH
LQWHQGHGWRGHIUDXGKHUFOLHQWEXWWKDWWKHEDQNZDVDWQRULVN
RIORVVEHFDXVHVKHZDVDXWKRUL]HGWRVLJQKHUFOLHQW¶VQDPH
WRFKHFNV
7KH&LUFXLWVDUHQRWLQDFFRUGDVWRWKHLQWHQWUHTXLUHGWR
YLRODWH†7KH6L[WK&LUFXLWSUHFHGHQWVDUHDOVRQRW
HQWLUHO\ FRQVLVWHQW ,Q 8QLWHG 6WDWHV Y :DONHU )G
Q WK&LU WKHFRXUWQRWHGWKDW³EDQN
IUDXG UHTXLUHV RQO\ D IUDXGXOHQW VWDWHPHQW GHVLJQHG WR
LQIOXHQFH D EDQN¶V DFWLRQ´ +RZHYHU LQ 8QLWHG 6WDWHV Y
+RJOXQG)G WK&LU WKHFRXUWVWDWHG
WKDW³DGHIHQGDQWQHHGQRWKDYHH[SRVHGDEDQNWRDULVNRI
ORVVDVDQHOHPHQWRIEDQNIUDXG´EXWDQLQVWUXFWLRQVWDWLQJ
³WKDWWKHGHIHQGDQWPXVWKDYHLQWHQGHGWRSXWDEDQNDWDULVN
RIORVVZDVVXIILFLHQWWRVXSSRUWDFRQYLFWLRQIRUEDQNIUDXG´
7KHFRXUWFKDUDFWHUL]HGULVNRIORVVDV³PHUHO\RQHZD\RI
HVWDEOLVKLQJLQWHQWWRGHIUDXGLQEDQNIUDXGFDVHV´
,Q8QLWHG6WDWHVY.URSS)G:/
DW WK&LU KRZHYHUWKHFRXUWVWDWHGWKDWLWZDV
1R 8QLWHG6WDWHVY(YHUHWW
8QLWHG 6WDWHV Y /DOMLH )G G &LU
QRWDGHIHQVHWKDWWKHGHIHQGDQW³PD\QRWKDYHLQWHQGHGWR
FDXVHWKHEDQNWRORVHDQ\PRQH\LWLVVXIILFLHQWWKDWKHZDV
VKRZQ WR KDYH LQWHQGHG WR IDFLOLWDWH WKH WUDQVIHU RI EDQN
IXQGV´LQSXUVXLWRIDIUDXGXOHQWVFKHPH.URSSDOVRKHOG
WKDW ³WKH JRYHUQPHQW QHHG QRW VKRZ WKDW WKH YLFWLP EDQN
VXIIHUHGDQ\ORVVIURPWKHFULPH´,GDW
:H EHOLHYH WKDW .URSS LV FRUUHFW DQG WKDW WR KDYH WKH
VSHFLILFLQWHQWUHTXLUHGIRUEDQNIUDXGWKHGHIHQGDQWQHHGQRW
KDYHSXWWKHEDQNDWULVNRIORVVLQWKHXVXDOVHQVHRULQWHQGHG
WR GR VR ,W LV VXIILFLHQW LI WKH GHIHQGDQW LQ WKH FRXUVH RI
FRPPLWWLQJIUDXGRQVRPHRQHFDXVHVDIHGHUDOO\LQVXUHGEDQN
WRWUDQVIHU IXQGVXQGHULWVSRVVHVVLRQDQGFRQWURO6HH
86&†
,WKDVEHHQVWDWHGWKDWWKHSXUSRVHRI†LVWRSURWHFWWKH
IHGHUDO JRYHUQPHQW¶V LQWHUHVW DV DQ LQVXUHU RI ILQDQFLDO
LQVWLWXWLRQV7KXVHYHQLIWKH$SSHOODQWGLGQRWLQWHQGWR
GHIUDXGWKHEDQNFDXVLQJDEDQNWRWUDQVIHUIXQGVSXUVXDQWWR
DIUDXGXOHQWVFKHPHUHGXFHVWKHIXQGVWKHEDQNKDVDYDLODEOH
IRULWVORDQVDQGRWKHUDFWLYLWLHVDQGDOPRVWLQHYLWDEO\FDXVHV
LWVRPHORVV
7KDWLVQRWWRVD\WKDWLQFDVHVZKHUHWKHEDQNKDVPLQLPDO
LQYROYHPHQWVXFKDVZKHUHDVZLQGOHUGHFHLYHVVRPHRQHLQWR
YROXQWDULO\ZULWLQJFKHFNVWRWKHVZLQGOHURQDJRRGDFFRXQW
WKHJRYHUQPHQWZRXOGQRWEHEHWWHUDGYLVHGWRSURFHHGXQGHU
WKHZLUHRUPDLOIUDXGVWDWXWHV1HYHUWKHOHVVZHEHOLHYHWKDW
WKHPLQLPDOLQYROYHPHQWRIWKHEDQNVSHFLILHGDERYHLVDOO
WKDWLVUHTXLUHGLIWKHVSHFLILFLQWHQWWRGHIUDXGVRPHRQHLV
SUHVHQW,QVXFKVLWXDWLRQVWKHIHGHUDOO\LQVXUHGEDQNZLOO
DOPRVWDOZD\VEHSODFHGDWVRPHULVNRIORVVLIRQO\LQWKH
ORVVRIVRPHRIWKHGHSRVLWVDOWKRXJKWKHSHUSHWUDWRUPD\
LQWHQGWRGHIUDXGVRPHRQHRWKHUWKDQWKHEDQN:HEHOLHYH
WKLVLVHQRXJKWREULQJWKHIUDXGXOHQWVFKHPHRUDFWZLWKLQWKH
DPELWRIWKHEDQNIUDXGVWDWXWHWKHSXUSRVHRIZKLFKLVWR
SURWHFWWKHIHGHUDOO\LQVXUHGGHSRVLWV

-- 6 of 6 --