03a0014p.06

8QLWHG6WDWHVY
*UHJRU\HWDO
1RV
)RU WKH IRUHJRLQJ UHDVRQV ZH $)),50 /RFNKDUW¶V
FRQYLFWLRQDQGVHQWHQFH$VPHQWLRQHGDERYHZH5(0$1'
*UHJRU\¶V VHQWHQFH WR WKH GLVWULFW FRXUW IRU D WZROHYHO
GRZQZDUGDGMXVWPHQWIRUDFFHSWDQFHRIUHVSRQVLELOLW\
7KH +RQRUDEOH .DWKOHHQ 0 2¶0DOOH\ 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$SSHOOHH
Y
.(11(7+ *5(*25<
/,6$ /2&.+$57

'HIHQGDQWV$SSHOODQWV
;!

1
1RV
$SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW
IRUWKH:HVWHUQ'LVWULFWRI7HQQHVVHHDW0HPSKLV
1R²-RQ3KLSSV0F&DOOD3DWULFN-'XJJDQ
'LVWULFW-XGJHV
$UJXHG'HFHPEHU
'HFLGHGDQG)LOHG-DQXDU\
%HIRUH0$57,1&KLHI&LUFXLW-XGJH'$8*+75(<
&LUFXLW-XGJH2¶0$//(<'LVWULFW-XGJH

-- 1 of 6 --

8QLWHG6WDWHVY
*UHJRU\HWDO
1RV
BBBBBBBBBBBBBBBBB
&2816(/
$5*8(' 6WHSKHQ % 6KDQNPDQ 2)),&( 2) 7+(
)('(5$/ 38%/,& '()(1'(5 )25 7+( :(67(51
',675,&72)7(11(66((0HPSKLV7HQQHVVHH5DQGDOO
3 6DON\ 7+( /$: 2)),&( 2) 5$1'$// 6$/.<
0HPSKLV 7HQQHVVHH IRU $SSHOODQWV 6WXDUW - &DQDOH
$66,67$17 81,7(' 67$7(6 $77251(< 0HPSKLV
7HQQHVVHH IRU $SSHOOHH 21 %5,() 6WHSKHQ %
6KDQNPDQ 0 'LDQQH 6PRWKHUV 2)),&( 2) 7+(
)('(5$/ 38%/,& '()(1'(5 )25 7+( :(67(51
',675,&72)7(11(66((0HPSKLV7HQQHVVHH5DQGDOO
3 6DON\ 7+( /$: 2)),&( 2) 5$1'$// 6$/.<
0HPSKLV 7HQQHVVHH IRU $SSHOODQWV 6WXDUW - &DQDOH
$66,67$17 81,7(' 67$7(6 $77251(< 0HPSKLV
7HQQHVVHHIRU$SSHOOHH
BBBBBBBBBBBBBBBBB
23,1,21
BBBBBBBBBBBBBBBBB
%2<&()0$57,1-5&KLHI&LUFXLW-XGJH.HQQHWK
*UHJRU\DQGKLVVLVWHU/LVD/RFNKDUWDSSHDOWKHLUFRQYLFWLRQV
DQGVHQWHQFHVDULVLQJRXWRIWKHWUDQVIHURIFRQWUDEDQGIURP
/RFNKDUWWR*UHJRU\ZKLOHKHZDVLQSULVRQLQYLRODWLRQRI
86& † D DQG *UHJRU\ FODLPV WKDW KH ZDV
HQWLWOHG WR D WKUHHSRLQW UHGXFWLRQ LQ RIIHQVH OHYHO XQGHU
8QLWHG 6WDWHV 6HQWHQFLQJ *XLGHOLQHV 6HFWLRQ ( IRU
DFFHSWDQFH RI UHVSRQVLELOLW\ HYHQ WKRXJK KH UHFHLYHG D
VHQWHQFHHQKDQFHPHQWIRUREVWUXFWLRQRIMXVWLFHXQGHU6HFWLRQ
&+HDUJXHVKHLVHQWLWOHGWRWKHUHGXFWLRQLQVSLWHRIWKH
HQKDQFHPHQW EHFDXVH KLV LV DQ ³H[WUDRUGLQDU\´ FDVH XQGHU
$SSOLFDWLRQ1RWHRI6HFWLRQ(/RFNKDUWDSSHDOVKHU
FRQYLFWLRQRQWKHJURXQGRIOHJDOLPSRVVLELOLW\6KHIXUWKHU
DSSHDOV KHU VHQWHQFH FODLPLQJ WKDW WKH GLVWULFW FRXUW
LPSURSHUO\ HQKDQFHG KHU VHQWHQFH XQGHU WKH 6HQWHQFLQJ
1RV 8QLWHG6WDWHVY
*UHJRU\HWDO

9HU\IHZFRXUWVRIDSSHDOVKDYHFRQVLGHUHGWKLV6HFWLRQDW
DOODQGWKRVHWKDWKDYHKDYHWDNHQLWIRUJUDQWHGWKDWWUDQVIHU
PHDQVGLVWULEXWLRQ,Q8QLWHG6WDWHVY7RUUHMRQ:/
WK &LU 0DU WKH 1LQWK &LUFXLW
IROORZHGWKH DQDO\VLVRIWKHGLVWULFWFRXUWLQWKLVFDVHDQG
7RUUHMRQZDVVHQWHQFHGZLWKDEDVHRIIHQVHOHYHORIWZHQW\
VL[IRUSURYLGLQJKHURLQWRKHUKXVEDQGZKLOHKHZDVLQSULVRQ
ZLWKRXWDQ\GLVFXVVLRQRIGLVWULEXWLRQRUWKHDPRXQWRIGUXJV
DW LVVXH 7KH VDPH LV WUXH LQ WKH FDVH RI 8QLWHG 6WDWHV Y
=DPEUDQD:/ WK&LU-XO\
6LPLODUO\ LQ RQH RI WKH IHZ SXEOLVKHG FDVHV FLWLQJ WKH
6HFWLRQWKH(OHYHQWK&LUFXLWKHOGWKDW6HFWLRQ3 F
DSSOLHG DV D EDVH RIIHQVH OHYHO DQG WKDW &KDSWHU 7KUHH
DGMXVWPHQWVDUHPDGHDIWHUWKHDGMXVWPHQWWRDQRIIHQVHOHYHO
RIWZHQW\VL[8QLWHG6WDWHVY/RQJ)G
WK&LU 7KLVFDVHLQYROYHGHLJKW\ILYHJUDPVRI
FRFDLQHVRGLVWULEXWLRQYHUVXVWUDQVIHUZDVQHYHUGLVFXVVHG
EXWWKHDSSOLFDELOLW\RI6HFWLRQ3 F ZDVSUHVXPHG
:H ILQG QR LQKHUHQW FRQIOLFW LQ 6HFWLRQ 3 F DV WR
/RFNKDUW
1HYHUWKHOHVV ZH GR VHH D FRQIOLFW IRU D SHUVRQ LQ
*UHJRU\¶V VLWXDWLRQ DOWKRXJK *UHJRU\ GLG QRW UDLVH LW
%HFDXVH*UHJRU\YLRODWHG86&† D DSSO\LQJWR
WKHSHUVRQDOUHDG\LQFDUFHUDWHG DQGQRW6HFWLRQ D
WKH VHFRQG VHQWHQFH RI WKH FURVV UHIHUHQFH 6HFWLRQ
3 F GRHVQRWDSSO\WRKLP$VDUHVXOWLWLVXQFOHDU
ZKHWKHU*UHJRU\VKRXOGEHVHQWHQFHGXQGHUWKHILUVWVHQWHQFH
RIWKHFURVVUHIHUHQFHZKLFKUHIHUVWRWKHGUXJTXDQWLW\WDEOHV
VHWRXWDW6HFWLRQ'RUXQGHU6HFWLRQ3 D ZKLFK
UHIHUV WR YDULRXV W\SHV RI FRQWUDEDQG LQFOXGLQJ
PHWKDPSKHWDPLQH6HQWHQFLQJ*UHJRU\XQGHUWKHIRUPHUDV
WKH GLVWULFW FRXUW GLG VHW KLV RIIHQVH OHYHO DW IRXUWHHQ
6HQWHQFLQJXQGHUWKHODWWHUZRXOGKDYHVHW*UHJRU\DWDEDVH
RIIHQVHOHYHORIWKLUWHHQ,QRWKHUFDVHVEDVHGRQWKHDPRXQW
RIGUXJVDWLVVXHWKHGLVSDULW\FRXOGEHPXFKPRUHGUDPDWLF
DQG FRXOG WKHUHE\ KDYH D GUDVWLF HIIHFW RQ WKH OHQJWK RI D
SULVRQHU¶VVHQWHQFH

-- 2 of 6 --

8QLWHG6WDWHVY
*UHJRU\HWDO
1RV
UHVXOWLQJRIIHQVHOHYHOLVOHVVWKDQOHYHOLQFUHDVHWR
OHYHO
8QGHUWKHILUVWSDUWRIWKLVVHFWLRQ/RFNKDUWZRXOGKDYHDQ
RIIHQVH OHYHO RI WKLUWHHQ 7KH *XLGHOLQHV KRZHYHU
LPPHGLDWHO\ WDNH XV WR WKH FURVVUHIHUHQFH LQ 6HFWLRQ
3 F
:KHQ DSSO\LQJ WKH FURVVUHIHUHQFH LQ 3 F
/RFNKDUW¶V EDVH RIIHQVH OHYHO LV VXEMHFW WR 6HFWLRQ '
8QODZIXO0DQXIDFWXULQJ,PSRUWLQJ([SRUWLQJ7UDIILFNLQJ
RU3RVVHVVLRQ EHFDXVHWKHGLVWULFWFRXUWIRXQGWKHREMHFWRI
WKH RIIHQVH ZDV GLVWULEXWLRQ RI D FRQWUROOHG VXEVWDQFH
/RFNKDUWREMHFWVWRWKLVFKDUDFWHUL]DWLRQRIWKHRIIHQVHVKH
VD\V WKDW KHU DFWLRQV FRQVWLWXWHG D WUDQVIHU EXW QRW D
GLVWULEXWLRQEHFDXVHWKH8QLWHG6WDWHVSUHVHQWHGQRHYLGHQFH
DVWRZKDW*UHJRU\LQWHQGHGWRGRZLWKWKHGUXJV7KHGLVWULFW
FRXUWIRXQGWKDWD³WUDQVIHU´FRQVWLWXWHVD³GLVWULEXWLRQ´IRU
WKHSXUSRVHVRIWKLVLQTXLU\
$V WR WKH VHFRQG SDUW RI WKH FURVVUHIHUHQFH LQ 6HFWLRQ
3 F /RFNKDUWZDVFRQYLFWHGXQGHU6HFWLRQ D
RISURYLGLQJFRQWUDEDQGLQSULVRQZKLFKLVSXQLVKDEOHXQGHU
6HFWLRQ E EHFDXVH WKH REMHFW WUDQVIHUUHG ZDV
PHWKDPSKHWDPLQHRUDQDUFRWLFGUXJ+HURIIHQVHOHYHOIURP
6HFWLRQ'ZDVOHVVWKDQWZHQW\VL[EDVHGRQWKHVPDOO
DPRXQWVDWLVVXH8QGHUWKLV6HFWLRQKRZHYHUKHURIIHQVH
OHYHOWKHQEXPSVXSWRWZHQW\VL[
/RFNKDUWDUJXHVWKDWWRGHFLGHKHUFDVHLQWKLVZD\LVWR
UHQGHU6HFWLRQV3 D DQG VXSHUIOXRXV6KHVD\V
WKDWLIDWUDQVIHULVDOZD\VDGLVWULEXWLRQWKHFURVVUHIHUHQFH
ZLOODOZD\VDSSO\DQGRIIHQGHUVDOOZLOOKDYHDEDVHRIIHQVH
OHYHO RI WZHQW\VL[ :KLOH /RFNKDUW LV FRUUHFW WKDW WKLV
VHFWLRQZDVSRRUO\GUDIWHGZHEHOLHYHWKDWIRUWKHSXUSRVHVRI
WKLV VHFWLRQ D WUDQVIHU FRQVWLWXWHV ³GLVWULEXWLRQ´ ,W LV
LUUHOHYDQWZKDWSXUSRVH*UHJRU\PD\KDYHKDGIRUWKHGUXJV
/RFNKDUW GLG QRW VLPSO\ SRVVHVV WKH FRQWUDEDQG EXW
GLVWULEXWHGLWWRKHUEURWKHU
1RV 8QLWHG6WDWHVY
*UHJRU\HWDO

*XLGHOLQHV 6HFWLRQ 3 IRU GLVWULEXWLRQ RI D FRQWUROOHG
VXEVWDQFH
2Q)HEUXDU\/LVD/RFNKDUWYLVLWHGKHUEURWKHU
.HQQHWK *UHJRU\ DW WKH )HGHUDO &RUUHFWLRQDO ,QVWLWXWH LQ
0HPSKLV7HQQHVVHH%HIRUHKHUYLVLWSULVRQDXWKRULWLHVKDG
UHFHLYHG LQIRUPDWLRQ IURP D FRQILGHQWLDO LQIRUPDQW WKDW
/RFNKDUWPLJKWDWWHPSWWREULQJVRPHVRUWRIFRQWUDEDQGLQWR
WKHSULVRQIRU*UHJRU\$VDUHVXOWSULVRQDXWKRULWLHVXVHG
YLGHRVXUYHLOODQFHWRREVHUYHWKHYLVLWEHWZHHQ/RFNKDUWDQG
*UHJRU\
$WVRPHSRLQWLQWKHYLVLWDXWKRULWLHVREVHUYHG/RFNKDUW
VSLWWLQJVRPHWKLQJLQWRDFXS*UHJRU\WKHQWRRNWKHFXSDQG
VZDOORZHG LWV FRQWHQWV $IWHU WKH YLVLW SULVRQ DXWKRULWLHV
SODFHG*UHJRU\LQD³GU\FHOO´IRUVHYHUDOGD\V(YHQWXDOO\
KH SDVVHG WZR EDOORRQV ILOOHG ZLWK GUXJV 7KHVH EDOORRQV
FRQWDLQHG FRFDLQH DQG PHWKDPSKHWDPLQH *UHJRU\ DOVR
UHFHLYHG PHGLFDO DWWHQWLRQ ODWHU IRU DQ DFFLGHQWDO KHURLQ
RYHUGRVH DSSDUHQWO\ UHVXOWLQJ IURP WKH UXSWXUH RI D WKLUG
EDOORRQ
)HGHUDOLQYHVWLJDWRUVILUVWLQWHUYLHZHG*UHJRU\LQ0DUFK
+HDGPLWWHGWRDFFHSWLQJDQGVZDOORZLQJWKHWKUHHEDOORRQV
RIGUXJVIURP/RFNKDUW+HDOVRDJUHHGWRFRRSHUDWHLQWKH
LQYHVWLJDWLRQLIKLVVLVWHUUHFHLYHGQRSULVRQWLPH
2Q 0D\ SULVRQ RIILFLDOV PRQLWRUHG D SKRQH FDOO
EHWZHHQ*UHJRU\DQGDIHPDOH+HWROGWKLVIHPDOHWRWHOO
DQRWKHUIHPDOHQRWWRWDONWRDQ\RQHRUDGPLWDQ\WKLQJDQG
WKDWPRUHLQIRUPDWLRQZRXOGIROORZ2Q0D\RIILFLDOV
LQWHUFHSWHG D OHWWHU DQG D FDUG IURP *UHJRU\ WR /RFNKDUW
DGYLVLQJ KHU QRW WR FRRSHUDWH ZLWK IHGHUDO RIILFHUV +H
DVVHUWHGWKDWKHGLGQRWWKLQNWKH\KDGHQRXJKHYLGHQFHWR
FKDUJH KHU +H DOVR RIIHUHG DOWHUQDWH H[SODQDWLRQV IRU
/RFNKDUW WR H[SODLQ WKH VXUYHLOODQFH WDSH *UHJRU\ ZDV
LQWHUYLHZHG DJDLQ RQ 0D\ +H DVNHG WR VSHDN ZLWK
/RFNKDUW EHIRUH KH FRRSHUDWHG DQ\ IXUWKHU +H FDOOHG KLV
VLVWHUDQGWROGKHUWRFRRSHUDWHZLWK)%,RIILFLDOV+HWKHQ

-- 3 of 6 --

8QLWHG6WDWHVY
*UHJRU\HWDO
1RV
SXW DQ )%, DJHQW RQ WKH SKRQH ZLWK /RFNKDUW 7KH DJHQW
QRWLILHGKHUWKDWDQDJHQWLQ2NODKRPDZRXOGFRQWDFWKHUEXW
WKH)%,ZDVODWHUXQDEOHWRPDNHFRQWDFWZLWK/RFNKDUWLQ
2NODKRPD,QWKLVLQWHUYLHZ*UHJRU\QHYHUPHQWLRQHGWKH
OHWWHUVKHZURWHWKHYHU\VDPHGD\
*UHJRU\ ZDV FKDUJHG ZLWK SRVVHVVLRQ RI FRQWUDEDQG LQ
SULVRQ+HHQWHUHGDSOHDDJUHHPHQWZLWKWKH8QLWHG6WDWHV
DQGWKH8QLWHG6WDWHVDJUHHGWRUHFRPPHQGDUHGXFWLRQLQ
RIIHQVHOHYHOIRUDFFHSWDQFHRIUHVSRQVLELOLW\7KHGLVWULFW
FRXUW GHVFULEHG *UHJRU\¶V OHWWHUV DV DQ DWWHPSW WR REVWUXFW
MXVWLFH DQG JDYH *UHJRU\ D VHQWHQFH HQKDQFHPHQW XQGHU
6HFWLRQ&7KHGLVWULFWFRXUWDOVRE\UHIHUHQFHWRWKH
DGGHQGXP RI WKH SUHVHQWHQFH UHSRUW LPSOLFLWO\ UHMHFWHG
*UHJRU\¶VFDVHDVDQ³H[WUDRUGLQDU\´RQHWKDWZRXOGSHUPLW
DQDFFHSWDQFHRIUHVSRQVLELOLW\UHGXFWLRQ
7KH 8QLWHG 6WDWHV FKDUJHG /RFNKDUW ZLWK SURYLGLQJ
FRQWUDEDQGLQSULVRQ6KHZDVDUUDLJQHGDQGSOHGQRWJXLOW\
LQ 0DUFK RI $IWHU EHLQJ IRXQG JXLOW\ DW WULDO WKH
GLVWULFWFRXUWVHQWHQFHGKHULQ1RYHPEHU$WWKHVHQWHQFLQJ
WKHGLVWULFWFRXUWJUDQWHGDQHQKDQFHPHQWWRDQRIIHQVHOHYHO
RI WZHQW\VL[ XQGHU 866* †3 IRU GLVWULEXWLRQ RI D
FRQWUROOHGVXEVWDQFH
$VWR*UHJRU\¶VFDVHZHUHYLHZIRUFOHDUHUURUDGLVWULFW
FRXUW V GHWHUPLQDWLRQ RI ZKHWKHU D GHIHQGDQW KDV DFFHSWHG
UHVSRQVLELOLW\IRUKLVFULPH8QLWHG6WDWHVY5RELQVRQ
)G WK &LU 7KH DSSOLFDEOH QRWH IRU
6HFWLRQ(RIWKH6HQWHQFLQJ*XLGHOLQHVVD\V³&RQGXFW
UHVXOWLQJ LQ DQ HQKDQFHPHQW XQGHU 6HFWLRQ &
2EVWUXFWLQJ RU ,PSHGLQJ WKH $GPLQLVWUDWLRQ RI -XVWLFH
RUGLQDULO\ LQGLFDWHV WKDW WKH GHIHQGDQW KDV QRW DFFHSWHG
UHVSRQVLELOLW\IRUKLVFULPLQDOFRQGXFW7KHUHPD\KRZHYHU
EH H[WUDRUGLQDU\ FDVHV LQ ZKLFK DGMXVWPHQWV XQGHU ERWK
6HFWLRQV & DQG ( PD\ DSSO\´ 866* †(
FRPPHQW Q $ GLVWULFW FRXUW V GHWHUPLQDWLRQ WKDW D
GHIHQGDQW VFDVHLV³H[WUDRUGLQDU\´XQGHUWKHVHFLUFXPVWDQFHV
LVDTXHVWLRQRIODZWKDWZHUHYLHZGHQRYR8QLWHG6WDWHVY
1RV 8QLWHG6WDWHVY
*UHJRU\HWDO

ZRXOG DWWHPSW WR LOOHJDOO\ EULQJ FRQWUDEDQG LQWR WKH
LQVWLWXWLRQ ZKHUH WKDW SHUVRQ GRHV QRW KLPVHOI UHO\ RQ WKH
ZDUGHQ VFRQVHQWRUNQRZOHGJHZRXOGQRWGHIHDWDFRQYLFWLRQ
XQGHUWKHVWDWXWH´8QLWHG6WDWHVY$GDPV)G
WK&LU 6HHDOVR8QLWHG6WDWHVY5R\EDO
)G WK&LU /RFNKDUWKDVQRWSURYHQWKDWWKH
ZDUGHQNQHZRUFRQVHQWHGWRKHUWUDQVIHURIFRQWUDEDQGWR
*UHJRU\$VDUHVXOW&)56HFWLRQGRHVDSSO\
/RFNKDUWVHFRQGO\DVVHUWVVKHZDVLPSURSHUO\VHQWHQFHG
XQGHU WKH IHGHUDO 6HQWHQFLQJ *XLGHOLQHV ³:H UHYLHZ D
GLVWULFWFRXUW VIDFWXDOILQGLQJVLQUHODWLRQWRWKHDSSOLFDWLRQRI
WKH VHQWHQFLQJ JXLGHOLQHV XQGHU WKH FOHDUO\ HUURQHRXV
VWDQGDUG´8QLWHG6WDWHVY.ULPVN\)G WK
&LU 7KHDSSOLFDWLRQRIWKRVHIDFWVKRZHYHULVDOHJDO
TXHVWLRQDQGLVWREHUHYLHZHGGHQRYR,G
7XUQLQJWRWKHPHULWVRI/RFNKDUW¶VVHFRQGFODLP6HFWLRQ
3RIWKH6HQWHQFLQJ*XLGHOLQHVVWDWHVLQUHOHYDQWSDUW
†3 3529,',1* 25 3266(66,1*
&2175$%$1',135,621
D %DVH2IIHQVH/HYHO
LIWKHREMHFWZDVDZHDSRQ RWKHUWKDQDILUHDUP
RUDGHVWUXFWLYHGHYLFH DQ\REMHFWWKDWPLJKWEHXVHGDV
D ZHDSRQ RU DV D PHDQV RI IDFLOLWDWLQJ HVFDSH
DPPXQLWLRQ/6'3&3PHWKDPSKHWDPLQHRUDQDUFRWLF
GUXJ
LI WKH REMHFW ZDV DQ DOFRKROLF EHYHUDJH 8QLWHG
6WDWHV RU IRUHLJQ FXUUHQF\ RU D FRQWUROOHG VXEVWDQFH
RWKHUWKDQ/6'3&3PHWKDPSKHWDPLQHRUDQDUFRWLF
GUXJ
F &URVV5HIHUHQFH
,IWKHREMHFWRIWKHRIIHQVHZDVWKHGLVWULEXWLRQRID
FRQWUROOHG VXEVWDQFH DSSO\ WKH RIIHQVH OHYHO IURP
†' 8QODZIXO0DQXIDFWXULQJ,PSRUWLQJ([SRUWLQJ
RU7UDIILFNLQJ$WWHPSWRU&RQVSLUDF\ 3URYLGHGWKDWLI
WKHGHIHQGDQWLVFRQYLFWHGXQGHU86&† D
DQGLVSXQLVKDEOHXQGHU86&† E DQGWKH

-- 4 of 6 --

8QLWHG6WDWHVY
*UHJRU\HWDO
1RV
/RFNKDUWFLWHVRQO\WRWKHFDVHRI8QLWHG6WDWHVY%HUULJDQ
)G G &LU ³2QH RI WKH HOHPHQWV RI D
YLRODWLRQRI†LVWKHDEVHQFHRIμNQRZOHGJHDQGFRQVHQW
RIWKHZDUGHQRUVXSHULQWHQGHQW¶&)5†)URP
WKLV WKH GHIHQVH UHDVRQV WKDW LI WKH ZDUGHQ NQRZV RI WKH
VPXJJOLQJWKHSXUSRVHRIWKHODZLVVDWLVILHGDQGQRFULPH
FDQH[LVW´,GDW/RFNKDUWFODLPVWKDWWKHZDUGHQNQHZ
RIKHULQWHQWWREULQJFRQWUDEDQGLQWRWKHSULVRQEHFDXVHKH
ZDVWLSSHGDQGDVDUHVXOWVKHFDQQRWKDYHFRPPLWWHGWKLV
FULPH
7KH8QLWHG6WDWHVKRZHYHUVD\VWKDWWKH%HUULJDQFDVHLV
WKHPLQRULW\YLHZRIOHJDOLPSRVVLELOLW\7KH1LQWK&LUFXLW
H[SODLQHGLQ8QLWHG6WDWHVY(YHUHWW)G
WK &LU LQWHUQDO FLWDWLRQV RPLWWHG ³%HUULJDQ LV
FRQVLGHUHGDPLQRULW\YLHZRQWKHLVVXHRIOHJDOLPSRVVLELOLW\
DQG PRVW FRXUWV DQG FRPPHQWDWRUV KDYH QRW DGRSWHG WKH
%HUULJDQ DSSURDFK &OHDUO\ WKLV FRXUW KDV UHMHFWHG
%HUULJDQ´7KH7KLUG&LUFXLWLWVHOIVDLGLQ8QLWHG6WDWHVY
+VX)G G&LU LQWHUQDOFLWDWLRQV
RPLWWHG ³,QIDFWZHDUHWKHRQO\FLUFXLWZKLFKFRQWLQXHVWR
UHFRJQL]HDFRPPRQODZGHIHQVHRIOHJDOLPSRVVLELOLW\
,QVXEVHTXHQW\HDUVKRZHYHUZHKDYHH[SORUHGDQGGHILQHG
%HUULJDQ V UHDFK DQG KDYH UHFRJQL]HG H[FHSWLRQV WR WKH
%HUULJDQUXOH´6HHDOVR8QLWHG6WDWHVY*RRGSDVWHU
)G Q WK &LU 0DUWLQ - GLVVHQWLQJ
8QLWHG6WDWHVY<DQJ)G WK&LU
8QLWHG6WDWHVY3HHWH)G WK&LU
(YHQLIZHDFFHSWHGWKHUXOHRI%HUULJDQ/RFNKDUW¶VFDVH
SXWVIRUWKQRHYLGHQFHWKDWWKHZDUGHQDFWXDOO\NQHZVKHZDV
EULQJLQJFRQWUDEDQGLQWRWKHSULVRQ)XUWKHUVKHRIIHUVQR
HYLGHQFHWKDWKHFRQVHQWHGWRWKHWUDQVIHU5DWKHUGXULQJWKH
WULDO WKH ZDUGHQ WHVWLILHG VSHFLILFDOO\ WKDW KH GLG QRW KDYH
NQRZOHGJH WKDW /RFNKDUW ZRXOG EULQJ LQ FRQWUDEDQG +H
PHUHO\ VXVSHFWHG VKH PLJKW EDVHG RQ WKH WLS +H IXUWKHU
WHVWLILHGWKDWKHFHUWDLQO\GLGQRWFRQVHQWWRDQ\FRQWUDEDQG
$V WKH (OHYHQWK &LUFXLW KHOG LQ D VLPLODU FDVH ³7KDW WKH
ZDUGHQ PD\ KDYH VXVSHFWHG RU HYHQ NQRZQ WKDW D SHUVRQ
1RV 8QLWHG6WDWHVY
*UHJRU\HWDO

+DUSHU)G WK&LU RYHUWXUQHGRQ
RWKHUJURXQGV :HKDYHKHOGKRZHYHU6L[WK&LUFXLWODZ
LQWHUSUHWLQJ WKLV SURYLVLRQ KDV FRQVLVWHQWO\ JUDQWHG GLVWULFW
FRXUWVJUHDWOHHZD\ZKHQPDNLQJWKLVGHWHUPLQDWLRQ8QLWHG
6WDWHVY5REHUWV)G WK&LU
,Q HYDOXDWLQJ ZKHWKHU *UHJRU\¶V FDVH ZDV DQ
³H[WUDRUGLQDU\´RQHZHPXVWORRNDWWKHUHODWLRQVKLSEHWZHHQ
KLVREVWUXFWLYHFRQGXFWDQGKLVDFFHSWDQFHRIUHVSRQVLELOLW\
:HVDLGLQ8QLWHG6WDWHVY:LOOLDPV)G WK
&LU ³&RXUWVKDYHHPSOR\HGDQH[DFWLQJVWDQGDUGWR
GHWHUPLQH ZKHWKHU D GHIHQGDQW KDV DFFHSWHG UHVSRQVLELOLW\
DIWHUKDYLQJREVWUXFWHGMXVWLFH´$SSURSULDWHFRQVLGHUDWLRQV
IRUGHWHUPLQLQJZKHWKHUDUHGXFWLRQLVZDUUDQWHGLQFOXGHWKH
GHIHQGDQW V WUXWKIXO DGPLVVLRQ RI WKH RIIHQVH FRQGXFW WKH
GHIHQGDQW VYROXQWDU\DVVLVWDQFHWRDXWKRULWLHVLQUHVROYLQJWKH
RIIHQVH DQG WKH WLPHOLQHVV RI WKH GHIHQGDQW V FRQGXFW LQ
DIILUPDWLYHO\DFFHSWLQJUHVSRQVLELOLW\IRUKLVDFWLRQV
$W KLV LQWHUYLHZ WKH ZHHN DIWHU WKH WUDQVIHU *UHJRU\
DGPLWWHGWRDFFHSWLQJDQGVZDOORZLQJWKHWKUHHEDOORRQVRI
GUXJV7KHSUHVHQWHQFHUHSRUWLQGLFDWHVWKDW*UHJRU\DJUHHG
WRFRRSHUDWHDWWKLVSRLQWDOWKRXJKKHGLGQRWZDQWKLVVLVWHU
WRJHWLQDQ\WURXEOH7KH8QLWHG6WDWHVDJUHHGWRUHFRPPHQG
WKDW *UHJRU\ EH JUDQWHG D UHGXFWLRQ LQ RIIHQVH OHYHO IRU
DFFHSWDQFH RI UHVSRQVLELOLW\ DV SDUW RI KLV SOHD DJUHHPHQW
SURYLGHGWKDWKHFRQWLQXHWRFRRSHUDWH+HGLGVRDQGWKH
8QLWHG6WDWHVPDGHLWVUHFRPPHQGDWLRQ*UHJRU\DUJXHVWKDW
DOWKRXJK KH KDG VHQW WKH OHWWHUV WR KLV VLVWHU WKH VDPH GD\
XUJLQJKHUQRWWRFRRSHUDWHKHHIIHFWLYHO\XQGLGWKDWFRQGXFW
E\FDOOLQJ/RFNKDUWRQ0D\ZLWKWKH)%,DJHQW
XUJLQJ KHU WR FRRSHUDWH $OO RI KLV REVWUXFWLYH FRQGXFW
SUHGDWHG WKH LQGLFWPHQW DQG WKH JXLOW\ SOHD +H KDV IXOO\
FRRSHUDWHGVXEVHTXHQWO\
*UHJRU\FLWHVD1LQWK&LUFXLWFDVH8QLWHG6WDWHVY+RSSHU
)G WK&LU DVVXSSRUWLQJKLVYLHZWKDWKH
ZDVHQWLWOHGWRDQDFFHSWDQFHRIUHVSRQVLELOLW\DGMXVWPHQW
7KH1LQWK&LUFXLWZURWH³&DVHVLQZKLFKREVWUXFWLRQLVQRW

-- 5 of 6 --

8QLWHG6WDWHVY
*UHJRU\HWDO
1RV
LQFRQVLVWHQWZLWKDQDFFHSWDQFHRIUHVSRQVLELOLW\DULVHZKHQ
D GHIHQGDQW DOWKRXJK LQLWLDOO\ DWWHPSWLQJ WR FRQFHDO WKH
FULPH HYHQWXDOO\ DFFHSWV UHVSRQVLELOLW\ IRU WKH FULPH DQG
DEDQGRQVDOODWWHPSWVWRREVWUXFWMXVWLFH´,GDW:H
KDYH LPSOLFLWO\ DGRSWHG WKH VWDQGDUG RI +RSSHU LQ
XQSXEOLVKHG FDVHV 6HH 8QLWHG 6WDWHV Y 0L]HOO :/
WK &LU 6HSW 8QLWHG 6WDWHV Y
/XQVIRUG:/ WK&LU)HE 7KH
FRXUWLQ+RSSHUZHQWRQWRVD\³>$@VORQJDVWKHGHIHQGDQW V
DFFHSWDQFHRIUHVSRQVLELOLW\LVQRWFRQWUDGLFWHGE\DQRQJRLQJ
DWWHPSWWRREVWUXFWMXVWLFHWKHFDVHLVDQH[WUDRUGLQDU\FDVH
ZLWKLQWKHPHDQLQJRI$SSOLFDWLRQ1RWHDQGVLPXOWDQHRXV
DGMXVWPHQWVXQGHU††&DQG(DUHSHUPLVVLEOH´
)G DW *UHJRU\ FODLPV WKDW KLV REVWUXFWLRQ ZDV QRW
RQJRLQJDQGKHLVHQWLWOHGWRDQDGMXVWPHQWIRUDFFHSWDQFHRI
UHVSRQVLELOLW\
7ZRFDVHVIURPWKLV&RXUWPD\SURYHLQVWUXFWLYHDVWRKRZ
ZHHYDOXDWHWKHVHFDVHV,Q8QLWHG6WDWHVY+DUSHU)G
DWZHGHDOWZLWKVRPHZKDWVLPLODUIDFWV:HVDLGLWLV
WKH GHIHQGDQW V EXUGHQ WR GHPRQVWUDWH WKDW KLV FDVH LV
μH[WUDRUGLQDU\¶ VXFK WKDW KH GHVHUYHV WKH GRZQZDUG
DGMXVWPHQW7KLVEXUGHQLVQRWKRZHYHULQVXUPRXQWDEOH
)RUH[DPSOHLIDGHIHQGDQWDZDLWLQJWULDOHVFDSHVIURP
FXVWRG\ EXW WKHQ LPPHGLDWHO\ WXUQV KLPVHOI LQWR
DXWKRULWLHVWKLVFRXOGFRQVWLWXWHDQ³H[WUDRUGLQDU\´FDVH
LQZKLFKDGHIHQGDQWDFFHSWVUHVSRQVLELOLW\VXEVHTXHQWWR
DQDWWHPSWWRREVWUXFWMXVWLFH
$VIXUWKHULQVWUXFWLRQRQZKDWFRQVWLWXWHV³H[WUDRUGLQDU\´LQ
8QLWHG6WDWHVY:LOOLDPVRQHRIWKHFRGHIHQGDQWV³UHFDQWHG
KLVWULDOWHVWLPRQ\DQGPRYHGWRZLWKGUDZKLVSOHDDJUHHPHQW
VXEMHFWLQJWKHFRXUWWRDKHDULQJRQWKHLVVXHEHIRUHUHVWDWLQJ
KLVRULJLQDOSRVLWLRQDQGDFFHSWLQJUHVSRQVLELOLW\´)G
WK&LU 7KLVGHIHQGDQWZDVQHYHUWKHOHVV
HQWLWOHGWRDUHGXFWLRQIRUDFFHSWDQFHRIUHVSRQVLELOLW\:H
FRQFOXGHG ³7KLV FDVH GRHV LQGHHG VHHP WR EH RQH RI WKH
H[WUDRUGLQDU\ FLUFXPVWDQFHV FRQWHPSODWHG E\ $SSOLFDWLRQ
1RV 8QLWHG6WDWHVY
*UHJRU\HWDO

1RWH WR 866* † ( ZKHUH DQ DFFHSWDQFH RI
UHVSRQVLELOLW\ GRZQZDUG DGMXVWPHQW FDQ FRH[LVW ZLWK DQ
REVWUXFWLRQRIMXVWLFHHQKDQFHPHQWXQGHU866*†& LQ
>WKH GHIHQGDQW DW LVVXH¶V@ FDVH IRU UHFDQWDWLRQ RI KLV
WHVWLPRQ\ ´,G
:LWKWKRVHFDVHVLQPLQGZHILQGWKDW*UHJRU\¶VVLWXDWLRQ
ZDVDQH[WUDRUGLQDU\RQHDVFRQWHPSODWHGE\WKH*XLGHOLQHV
$OORIKLVREVWUXFWLYHFRQGXFWSUHGDWHGKLVLQGLFWPHQWDQGKH
KDV QHYHU GHQLHG KLV RZQ UHVSRQVLELOLW\ DQG JXLOW /RQJ
EHIRUH KH ZDV HYHU FKDUJHG ZLWK DQ RIIHQVH *UHJRU\
FRRSHUDWHGZLWKSULVRQRIILFLDOVDQGKHSOHDGHGJXLOW\+H
FHUWDLQO\QHYHUGLGVRPHWKLQJVRH[WUHPHDVWRZLWKGUDZKLV
SOHD+HLVHQWLWOHGWRDGRZQZDUGDGMXVWPHQWIRUDFFHSWDQFH
RIUHVSRQVLELOLW\
)RU WKH IRUHJRLQJ UHDVRQV ZH 5(0$1' *UHJRU\¶V
VHQWHQFH WR WKH GLVWULFW FRXUW IRU D WZROHYHO GRZQZDUG
DGMXVWPHQWIRUDFFHSWDQFHRIUHVSRQVLELOLW\
7XUQLQJQRZWR/RFNKDUW¶VFODLPVVKHFODLPVILUVWWKDWVKH
FDQQRW EH JXLOW\ RI WKH XQGHUO\LQJ RIIHQVH RI SURYLGLQJ
FRQWUDEDQGLQSULVRQEHFDXVHWKHSULVRQRIILFLDOVNQHZVKH
ZDV EULQJLQJ FRQWUDEDQG $V D UHVXOW VKH FODLPV VKH
FRPPLWWHGQRFULPHXQGHU&)5†6KHIXUWKHUFODLPV
WKDWKHUVHQWHQFHZDVLPSURSHUO\HQKDQFHGXQGHUWKHFURVV
UHIHUHQFHLQ6HFWLRQ3RIWKH6HQWHQFLQJ*XLGHOLQHV
7XUQLQJ WR /RFNKDUW¶V ILUVW FODLP ZH QRWH WKDW WKH
UHJXODWLRQJRYHUQLQJWKLVRIIHQVHVD\V³7KHLQWURGXFWLRQRU
DWWHPSWWRLQWURGXFHLQWRRUXSRQWKHJURXQGVRIDQ\)HGHUDO
SHQDORUFRUUHFWLRQDOLQVWLWXWLRQRUWKHWDNLQJRUDWWHPSWWR
WDNH RU VHQG WKHUHIURP DQ\WKLQJ ZKDWVRHYHU ZLWKRXW WKH
NQRZOHGJHDQGFRQVHQWRIWKHZDUGHQRUVXSHULQWHQGHQWRI
VXFK)HGHUDOSHQDORUFRUUHFWLRQDOLQVWLWXWLRQLVSURKLELWHG´
&)5†/RFNKDUWSRLQWVWRWKLVVHFWLRQDVWKHEDVLV
IRUKHUDVVHUWLRQWKDWVKHFDQQRWEHJXLOW\RIDYLRODWLRQRI
6HFWLRQ

-- 6 of 6 --