03a0054p.06

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
&$5/721 9,&725 60,7+
7+20$6 $/%(57
1,&+2/6 -2+1
+(5%(57 &5,63
'HIHQGDQWV$SSHOODQWV
;!

1
1RV

$SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW
IRUWKH(DVWHUQ'LVWULFWRI7HQQHVVHHDW&KDWWDQRRJD
1R²&XUWLV/&ROOLHU'LVWULFW-XGJH
$UJXHGDQG6XEPLWWHG6HSWHPEHU
'HFLGHGDQG)LOHG)HEUXDU\
%HIRUH*8<6,/(5DQG%$7&+(/'(5&LUFXLW
-XGJHV
BBBBBBBBBBBBBBBBB
&2816(/
$5*8(' -RKQ ( (EHUO\ (%(5/< /$: ),50
&KDWWDQRRJD 7HQQHVVHH 5LWD & /D/XPLD )('(5$/
'()(1'(5 6(59,&(6 2) ($67(51 7(11(66((

-- 1 of 10 --

8QLWHG6WDWHVY
6PLWKHWDO
1RV
,1& &KDWWDQRJD 7HQQHVVHH IRU $SSHOODQWV 'DYLG &
-HQQLQJV $66,67$17 81,7(' 67$7(6 $77251(<
.QR[YLOOH7HQQHVVHHIRU$SSHOOHH21%5,()-RKQ(
(EHUO\(%(5/</$:),50&KDWWDQRRJD7HQQHVVHH5LWD
& /D/XPLD )('(5$/ '()(1'(5 6(59,&(6 2)
($67(51 7(11(66(( ,1& &KDWWDQRJD 7HQQHVVHH
:LOOOLDP + 2UWZHLQ 257:(,1 257:(,1
&KDWWDQRRJD7HQQHVVHHIRU$SSHOODQWV'DYLG&-HQQLQJV
-HIIUH\ ( 7KHRGRUH $66,67$17 81,7(' 67$7(6
$77251(<6.QR[YLOOH7HQQHVVHHIRU$SSHOOHH
BBBBBBBBBBBBBBBBB
23,1,21
BBBBBBBBBBBBBBBBB
6,/(5&LUFXLW-XGJH'HIHQGDQWV&DUOWRQ9LFWRU6PLWK
-RKQ+HUEHUW&ULVSDQG7KRPDV$OEHUW1LFKROVFKDOOHQJHRQ
VHYHUDO JURXQGV WKHLU FRQYLFWLRQV DQG VHQWHQFHV IRU
FRQVSLUDF\WRFRPPLWEDQNUREEHU\LQYLRODWLRQRI86&
††DQGIROORZLQJEDQNH[WRUWLRQVWKDWRFFXUUHGLQ
.QR[YLOOH&KDWWDQRRJDDQG&ODUNVYLOOH7HQQHVVHH6PLWK
DOVRFKDOOHQJHVKLVPRQH\ODXQGHULQJFRQYLFWLRQLQYLRODWLRQ
RI86&†$GGLWLRQDOO\1LFKROVFKDOOHQJHVWKH
VXIILFLHQF\ RI WKH HYLGHQFH LQ VXSSRUW RI KLV ILUHDUP
FRQYLFWLRQVXQGHU86&†† J DQG F )RU
WKH UHDVRQV WKDW IROORZ ZH DIILUP WKH FRQYLFWLRQV DQG
VHQWHQFHVRIDOOWKUHHGHIHQGDQWV
%$&.*5281'
,Q 'RXJODV 'DLJOH ³'DLJOH´ DQ XQLQGLFWHG FR
FRQVSLUDWRU EHJDQ SODQQLQJ WKH ILUVW RI VHYHUDO EDQN
H[WRUWLRQVWKDWWRRNSODFHRYHUWKHFRXUVHRIVL[WHHQPRQWKV
LQ.QR[YLOOH&KDWWDQRRJDDQG&ODUNVYLOOH7HQQHVVHH6RRQ
WKHUHDIWHU'DLJOHDVNHGKLVZLIH&DSUL'DLJOH ³&DSUL´ WR
DVVLVW KLP ZLWK WKH EDQN H[WRUWLRQ 8VLQJ LQIRUPDWLRQ
FRQWDLQHGLQDFLW\GLUHFWRU\DQGDHULDOPDSVRI.QR[YLOOH
'DLJOHOHDUQHGWKHORFDWLRQVRIYDULRXVEDQNVDQGKRPHVRI
EDQNPDQDJHUV'DLJOHSODQQHGWRWDUJHWWKHKRPHVRIIHPDOH

-- 2 of 10 --

1RV 8QLWHG6WDWHVY
6PLWKHWDO

EUDQFKPDQDJHUVIRUDKRPHLQYDVLRQ2QFHLQVLGHWKHEUDQFK
PDQDJHU¶VKRPH'DLJOHZRXOGDEGXFWWKHEUDQFKPDQDJHU¶V
IDPLO\DQGKROGWKHPKRVWDJHLQRUGHUWRIRUFHWKHPDQDJHUWR
WDNHDODUJHVXPRIFDVKIURPWKHEDQN¶VYDXOWDQGGHOLYHULW
WRDVSHFLILHGORFDWLRQWRVDYHKHUIDPLO\IURPEHLQJNLOOHG
,Q WKH FRXUVH RI SODQQLQJ WKH .QR[YLOOH H[WRUWLRQ 'DLJOH
UHFUXLWHGVHYHUDODGGLWLRQDOLQGLYLGXDOVLQFOXGLQJKLVZLIH¶V
PRWKHU 'HQD )DUPHU KHU PRWKHU¶V OLYHLQ ER\IULHQG 7HG
5REHUWVDQG&ULVS
,Q SUHSDUDWLRQ IRU WKH .QR[YLOOH H[WRUWLRQ WKH ILYH FR
FRQVSLUDWRUV SXUFKDVHG FRPPXQLFDWLRQV HTXLSPHQW DQG
REWDLQHGWKUHHILUHDUPV'DLJOHVHOHFWHGWKH)LUVW$PHULFDQ
%DQN DV WKH WDUJHW DQG DORQJ ZLWK 5REHUWV DQG &ULVS
FRQGXFWHG VXUYHLOODQFH IURP EHKLQG WKH EUDQFK PDQDJHU¶V
KRXVH&DSULSOD\HGWKHUROHRIWKHEUDQFKPDQDJHUDVVKH
DQG 'DLJOH GURYH WKH URXWHV LQYROYHG WR WHVW WKH UDGLR
HTXLSPHQW
2Q6HSWHPEHUDURXQGSP'DLJOHDQG&ULVS
IRUFLEO\LQYDGHGWKHKRPHRI3DWULFLD)DUU\EUDQFKPDQDJHU
RI)LUVW$PHULFDQ%DQN2QFHLQVLGHWKH\FKDLQHG0UDQG
0UV)DUU\¶VDQNOHVSODFHGSLOORZFDVHVRYHUWKHLUKHDGVDQG
H[SODLQHGWKDWWKHLUSXUSRVHZDVWRUREWKHEDQN7KH)DUU\V¶
GDXJKWHUUHPDLQHGDVOHHSLQKHUEHGURRP'DLJOHTXHVWLRQHG
0UV)DUU\DERXWWKHEDQN¶VVHFXULW\V\VWHPVDQGKRZPXFK
PRQH\WKHYDXOWFRQWDLQHG+HWROG0UV)DUU\WKDWVKHZDV
WR JR WR WKH EDQN DV XVXDO WKH QH[W PRUQLQJ UHPRYH WKH
PRQH\DQGGHOLYHULWWRDVSHFLILHGORFDWLRQ,IVKHIDLOHGWR
GRVRE\DPKHUKXVEDQGZRXOGEHNLOOHGZLWKDERPE
WKDWZRXOGEHVWUDSSHGWRKLPLQVLGHDYDQ7KURXJKRXWWKH
QLJKW'DLJOHFRQWLQXHGWRJRRYHUWKHSODQZLWK0UV)DUU\
DQGH[SODLQHGWRKHUKRZWRXVHWKHUDGLRHTXLSPHQWDQGKRZ
WRGLVDUPWKHERPE
(DUO\WKHQH[WPRUQLQJ0U)DUU\ZDVUHPRYHGIURPWKH
KRPH0UV)DUU\ZDVWROGWKDWKHUKXVEDQGZDVWDNHQWR
DQRWKHUORFDWLRQZKLFKZRXOGEHGLVFORVHGWRKHURQFHVKH
GHOLYHUHG WKH PRQH\ ,Q DFWXDOLW\ 0U )DUU\ ZDV WDNHQ

-- 3 of 10 --

8QLWHG6WDWHVY
6PLWKHWDO
1RV
RXWVLGHLQWRWKH\DUGZKHUHKHZDVKHOGDWJXQSRLQWE\&ULVS
XQWLO0UV)DUU\OHIWIRUWKHEDQN
:KHQ 0UV )DUU\ DUULYHG DW WKH EDQN VKH H[SODLQHG WKH
VLWXDWLRQWRKHUHPSOR\HHVDQGDVNHGIRUWKHLUFRRSHUDWLRQ
7KHYDXOWZDVHPSWLHGDQG0UV)DUU\UHWXUQHGWRWKHYHKLFOH
ZLWKEDJVRIPRQH\DQGZDLWHGIRU'DLJOHWRUDGLRKHUWKH
GURSRIIORFDWLRQ$IWHU0UV)DUU\PDGHWKHGURSDVGLUHFWHG
VKHZDVWROGWRZDONWRDVSHFLILHGSKRQHERRWKDWDQHDUE\
:DIIOH+RXVHUHVWDXUDQWWRDZDLWIXUWKHUGLUHFWLRQVUHJDUGLQJ
WKH ORFDWLRQ RI KHU KXVEDQG 7KH SKRQH FDOO QHYHU FDPH
$IWHU 0UV )DUU\ OHIW IRU WKH EDQN 'DLJOH DQG &ULVS KDG
PRYHG 0U )DUU\ EDFN WR WKH PDVWHU EHGURRP ZKHUH WKH\
ZUDSSHGKLPLQGXFWWDSHDQGFKDLQHGKLPWRWKHEHG7KH
ERPEZDVDIDNH
5REHUWVUHWULHYHGWKHPRQH\IURPWKHGURSRIIORFDWLRQDQG
PHW'DLJOHWRGLYLGHWKHSURFHHGV1H[W)DUPHUDQG5REHUWV
GHOLYHUHG &ULVS¶V VKDUH WR KLV UHVLGHQFH LQ *UHHQEDFN
7HQQHVVHH'DLJOHDQGKLVZLIHIOHG.QR[YLOOHDQGZHQWWR
WKH3LJHRQ)RUJH*DWOLQEXUJDUHD$IHZGD\VODWHU'DLJOH
WROG &DSUL WKDW KH KDG WKURZQ WKH JXQ KH XVHG LQWR DQ
RYHUJURZQ DUHD QHDU ,QWHUVWDWH :KHQ &DSUL EHJDQ
FRRSHUDWLQJZLWKWKH)%,VKHGLVFORVHGWKLVORFDWLRQDQGWKH
JXQZDVIRXQGLQ0DUFK$OWKRXJK)DUPHUZKRDOVR
FRRSHUDWHGZLWKWKH)%,WHVWLILHGWKDW&ULVSWROGKHUWKDWKH
KDGEXULHGKLVJXQQRRWKHUZHDSRQVXVHGLQWKH.QR[YLOOH
H[WRUWLRQZHUHGLVFRYHUHG
%\WKHZLQWHURI'DLJOHZDVUXQQLQJRXWRIPRQH\
DQGGHFLGHGWRWDUJHWDQRWKHUEDQN)DUPHUORDQHG'DLJOH
RI5REHUWV¶VVKDUHRIWKHSURFHHGVIURPWKH.QR[YLOOH
H[WRUWLRQWRILQDQFHWKHVHFRQGH[WRUWLRQLQ&KDWWDQRRJD7KH
VDPHSODQZDVWREHLPSOHPHQWHGRQO\WKLVWLPHGHIHQGDQW
1LFKROVZDVWRMRLQ'DLJOHDVDQ³LQVLGHPDQ´
2Q0DUFK'DLJOHDQG&DSULDORQJZLWK5REHUWV
DQG )DUPHU PHW 1LFKROV DQG &ULVS DW D &UDFNHU %DUUHO
UHVWDXUDQWLQ&KDWWDQRRJDWRSUHSDUHIRUWKHH[WRUWLRQ'DLJOH
1RV 8QLWHG6WDWHVY
6PLWKHWDO

:H KDYH SUHYLRXVO\ KHOG WKDW ³LPSHUPLVVLEOH μGRXEOH
FRXQWLQJ¶ RFFXUV ZKHQ SUHFLVHO\ WKH VDPH DVSHFW RI D
GHIHQGDQW¶VFRQGXFWIDFWRUVLQWRKLVVHQWHQFHLQWZRVHSDUDWH
ZD\V´8QLWHG6WDWHVY)DUURZ)G WK&LU
FLWLQJ8QLWHG6WDWHVY3HUNLQV)G WK
&LU *LYHQ WKH XQLTXH FLUFXPVWDQFHV RI WKLV FDVH
KRZHYHU ZH DUH QRW FRQYLQFHG WKDW DSSO\LQJ ERWK
HQKDQFHPHQWVUHVXOWVLQLPSHUPLVVLEOHGRXEOHFRXQWLQJ1RU
GR ZH EHOLHYH WKDW WKH OLPLWLQJ SURYLVLRQ RI † $
FRQWHPSODWHV D VLWXDWLRQ ZKHUH GLIIHUHQW YLFWLPV DUH ERWK
UHVWUDLQHGDQGDEGXFWHG&ULVSHIIHFWLYHO\DEGXFWHGWKHEDQN
PDQDJHUZKHQKHIRUFHGKHUWRGULYHWRWKHEDQNZLWKUDGLRV
DQGFRPPXQLFDWLRQVDWWDFKHGWRKHUFDUDQG'DLJOHIROORZLQJ
EHKLQG7KHRWKHUPHPEHUVRIWKHEDQNPDQDJHU¶VIDPLO\
ZHUHUHVWUDLQHGDWDGLIIHUHQWORFDWLRQ7KXVLQDSSO\LQJERWK
HQKDQFHPHQWV WKH GLVWULFW FRXUW SHQDOL]HG VHSDUDWH DFWV RI
YLROHQFHGLUHFWHGWRZDUGGLIIHUHQWLQGLYLGXDOVUDWKHUWKDQWKH
VDPH DVSHFW RI &ULVS¶V FRQGXFW %HFDXVH RQH RI WKH
XQGHUO\LQJ SKLORVRSKLHV HPERGLHG LQ WKH JXLGHOLQHV LV WR
FRQVLGHU DOO KDUPV FDXVHG E\ WKH GHIHQGDQW¶V FRQGXFW WKH
GLVWULFWFRXUWGLGQRWHUULQDSSO\LQJERWKHQKDQFHPHQWV
$)),50('

-- 4 of 10 --

8QLWHG6WDWHVY
6PLWKHWDO
1RV
IRUFHGDFFRPSDQLPHQWXQGHU†† D DQG H 6HFWLRQ
% E RIWKH³5REEHU\´JXLGHOLQHSURYLGHVIRUDVSHFLILF
RIIHQVHFKDUDFWHULVWLFFRQFHUQHGZLWKWKHW\SHRILQVWLWXWLRQ
UREEHG ,Q FRQWUDVW QR RIIHQVH FKDUDFWHULVWLF XQGHU WKH
³([WRUWLRQE\)RUFHRU7KUHDWRI,QMXU\RU6HULRXV'DPDJH´
JXLGHOLQHFRQWHPSODWHVWKHKDUPWRDILQDQFLDOLQVWLWXWLRQ7KH
GLVWULFWFRXUW¶VGHFLVLRQWRVHQWHQFH&ULVSXQGHUWKHUREEHU\
JXLGHOLQH PRUH IXOO\ WDNHV LQWR DFFRXQW WKH KDUP WR WKH
YLFWLPV DV ZHOO DV WKH ILQDQFLDO LQVWLWXWLRQ 7KHUHIRUH WKH
GLVWULFWFRXUWGLGQRWHUULQVHQWHQFLQJKLPXQGHU†%
) 2IIHQVH/HYHO,QFUHDVHV
&ULVSFODLPVWKDWWKHGLVWULFWFRXUWYLRODWHGKLVGXHSURFHVV
ULJKWV ZKHQ LW DSSOLHG D IRXUOHYHO LQFUHDVH WR KLV EDVH
VHQWHQFHSXUVXDQWWR†% E $ IRUDEGXFWLRQRIWKH
EDQNPDQDJHUVDQGDWZROHYHOLQFUHDVHXQGHU†$IRU
SK\VLFDOUHVWUDLQWRIDYLFWLP6SHFLILFDOO\&ULVSDUJXHVWKDW
WKHGLVWULFWFRXUWHQJDJHGLQLPSHUPLVVLEOH³GRXEOHFRXQWLQJ´
E\SHQDOL]LQJKLPWZLFHIRUUHVWUDLQLQJWKHEDQNPDQDJHUVDQG
WKHLUIDPLOLHV/HJDOFRQFOXVLRQVUHJDUGLQJWKHJXLGHOLQHVDUH
UHYLHZHGGHQRYRKRZHYHUWKLVFLUFXLWJLYHVGXHGHIHUHQFH
WRWKHGLVWULFWFRXUW¶VDSSOLFDWLRQRIWKHJXLGHOLQHVWRWKHIDFWV
SXUVXDQWWR86&† D %XIRUGY8QLWHG6WDWHV
6&W
6HFWLRQ% E $ SURYLGHVIRUDIRXUOHYHOLQFUHDVH
WRDEDVHVHQWHQFH³>L@IDQ\SHUVRQZDVDEGXFWHGWRIDFLOLWDWH
FRPPLVVLRQRIWKHRIIHQVHRUWRIDFLOLWDWHHVFDSH´6HFWLRQ
$ VLPLODUO\ DGMXVWV WKH EDVH VHQWHQFH XSZDUG E\ WZR
OHYHOV ZKHUH ³WKH YLFWLP ZDV SK\VLFDOO\ UHVWUDLQHG LQ WKH
FRXUVH RI WKH RIIHQVH´ EXW DOVR GLUHFWV WKH FRXUW ³QRW >WR@
DSSO\WKLVDGMXVWPHQWZKHUHWKHRIIHQVHJXLGHOLQHVSHFLILFDOO\
LQFRUSRUDWHVWKLVIDFWRURUZKHUHWKHXQODZIXOUHVWUDLQWRID
YLFWLP LV DQ HOHPHQW RI WKH RIIHQVH LWVHOI´ 7KXV LQ PRVW
FLUFXPVWDQFHV ZKHUH WKH YLFWLP LV DEGXFWHG WKH OLPLWLQJ
SURYLVLRQ RI † $ SUHYHQWV WKH VHQWHQFLQJ FRXUW IURP
DSSO\LQJ HQKDQFHPHQWV XQGHU ERWK † % E $ DQG
†$VLQFHUHVWUDLQWRIWHQRFFXUVDVSDUWRIDQDEGXFWLRQ
1RV 8QLWHG6WDWHVY
6PLWKHWDO

KDGVHOHFWHGD6XQ7UXVW%DQNLQ&KDWWDQRRJDDVWKHLUWDUJHW
7KHEUDQFKPDQDJHU7HUHVD%DLOH\OLYHGMXVWDFURVVWKHVWDWH
OLQHLQ5RVVYLOOH*HRUJLD
$WDERXWSP'DLJOHDUULYHGDWWKH%DLOH\KRPHXQGHU
WKH SUHWHQVH RI SXUFKDVLQJ D SXSS\ WKDW WKH %DLOH\V KDG
DGYHUWLVHG2QFHLQVLGH'DLJOHSXOOHGDJXQDQGH[SODLQHG
KLVSODQWRH[WRUWPRQH\IURP0UV%DLOH\¶VEDQN1LFKROV
DOVR DUPHG HQWHUHG DQG WKH\ KHOG 0UV %DLOH\ KRVWDJH DW
JXQSRLQW XQWLO KHU KXVEDQG DQG VRQ DUULYHG KRPH IRU WKH
HYHQLQJ7KHHQWLUHIDPLO\ZDVERXQG0UV%DLOH\¶VVRQ
ZDVWLHGWRKLVEHGDQG0U%DLOH\ZDVWDNHQWRWKHJDUDJH
ZKHUH KH ZDV KHOG IDFH GRZQ RQ WKH IORRU DW JXQSRLQW DOO
QLJKW0UV%DLOH\ZDVWROGWKDWKHUKXVEDQGKDGEHHQWDNHQ
DZD\LQDYDQZLWKDERPEVWUDSSHGWRKLP
7KH QH[W PRUQLQJ 0UV %DLOH\ DQG KHU VRQ ZHQW WR WKH
EDQNJDWKHUHGWKHPRQH\DQGGHOLYHUHGLWWRWKHGURSRIIVLWH
DVLQVWUXFWHGRYHUWKHUDGLRE\'DLJOH0UV%DLOH\ZDVWROG
WKDW KHU KXVEDQG ZDV DW KRPH ZLWK WKH ERPE /LNH WKH
SUHYLRXV RFFDVLRQ WKH ERPE ZDV D IDNH 8SRQ DUULYLQJ
KRPH0UV%DLOH\OHDUQHGWKDWKHUKXVEDQGKDGIUHHGKLPVHOI
DIWHU'DLJOHDQG1LFKROVKDGOHIWKLP
1LFKROVUHWULHYHGWKHPRQH\IURPWKHGURSRIIVLWHDQGPHW
&DSULDWWKHVDPH&UDFNHU%DUUHOUHVWDXUDQWWRORDGWKHPRQH\
LQWR KHU FDU $IWHU GLYLGLQJ WKH PRQH\ WKH FRQVSLUDWRUV
UHWXUQHGWR.QR[YLOOHDQGWKHPRQH\ZDVGLYLGHGEHWZHHQ
1LFKROV'DLJOHDQG5REHUWV'DLJOHLQVWUXFWHG1LFKROVWR
JHW ULGRIWKHZHDSRQVXVHGLQWKHH[WRUWLRQ2QFHDJDLQ
'DLJOHDQG&DSULIOHGWRWKH*DWOLQEXUJDUHD
6HYHUDOPRQWKVODWHULQWKHVXPPHURI'DLJOHEHJDQ
WR SODQ ZKDW ZRXOG EH WKH WKLUG DQG ILQDO H[WRUWLRQ +H
VHOHFWHG WKH )LUVW $PHULFDQ %DQN ORFDWHG LQ &ODUNVYLOOH
6PLWK ZKR ZDV LQWURGXFHG WR 'DLJOH E\ &ULVS MRLQHG WKH
SODQDQGZDVWRDFFRPSDQ\'DLJOHLQWRWKHYLFWLP¶VKRPH
1LFKROVZRXOGFRQGXFWVXUYHLOODQFHDVWKH³RXWVLGHPDQ´7KH

-- 5 of 10 --

8QLWHG6WDWHVY
6PLWKHWDO
1RV
PRGXV RSHUDQGL ZDV WKH VDPH DV WKH .QR[YLOOH DQG
&KDWWDQRRJDH[WRUWLRQV
2Q 'HFHPEHU ZKLOH EUDQFK PDQDJHU &DURO\Q
3LHUFHZDVVWLOODWZRUN'DLJOHHQWHUHGKHUKRPHXQGHUWKH
JXLVHRIDUHDOHVWDWHDJHQW0UV3LHUFH¶VIDWKHU/HRQDUG
%HDXGRLQDQGKLVZLIHZKRZHUHEDE\VLWWLQJWKH3LHUFHV¶
VRQ XQVXVSHFWLQJO\ DOORZHG 'DLJOH LQWR WKH KRPH 2QFH
LQVLGH'DLJOHKHOGWKH%HDXGRLQVDQGWKHLUJUDQGVRQKRVWDJH
DW JXQSRLQW $FFRUGLQJ WR 0U %HDXGRLQ¶V WHVWLPRQ\ DQ
DUPHGPDQZHDULQJDVNLPDVNDQGJORYHVODWHULGHQWLILHGDV
6PLWKMRLQHG'DLJOH6KRUWO\WKHUHDIWHU0U3LHUFHDUULYHG
KRPH IURP ZRUN DQG ZDV LPPHGLDWHO\ ERXQG DQG
EOLQGIROGHG :KHQ 0UV 3LHUFH DUULYHG KRPH 'DLJOH
H[SODLQHGKLVGHPDQGVDQGWROGKHUWKDWKHUKXVEDQGZRXOGEH
NLOOHGE\DERPELIVKHGLGQRWFRPSO\$WRQHSRLQWGXULQJ
WKHQLJKW'DLJOHIRUFHG&DURO\Q3LHUFHWRGLVUREHIURPWKH
ZDLVW GRZQ DQG WKUHDWHQHG WR UDSH KHU ZKLOH KHU IDPLO\
ZDWFKHG 'DLJOH DOVR WKUHDWHQHG WKDW KH ZRXOG IRUFH KHU
KXVEDQGWRSHUIRUPRUDOVH[RQ6PLWK
'XULQJWKHQLJKW0U%HDXGRLQPDQDJHGWRKLGHVRPHRI
6PLWK¶VFLJDUHWWHEXWWVLQDZDVWHEDVNHW7KHEXWWVZHUHODWHU
GHWHUPLQHGWRFRQWDLQWKH'1$RI6PLWK
2QWKHZD\WRWKHEDQNWKHIROORZLQJPRUQLQJ0UV3LHUFH
GURSSHG'DLJOHRIIQHDUD0F'RQDOG¶VUHVWDXUDQWZKHUHKH
DQG&DSULLQVWUXFWHG0UV3LHUFHYLDUDGLR6KHSURFHHGHGWR
WKHEDQNZLWKGUHZWKHPRQH\DQGOHIWLWLQKHUSLFNXSWUXFN
DWWKHORFDWLRQVSHFLILHGE\'DLJOH6PLWKDQG1LFKROVSODFHG
0U 3LHUFH ZKR ZDV VWLOO ERXQG DQG EOLQGIROGHG LQWR KLV
YHKLFOHDQGGURYHKLPWRWKHSDUNLQJORWRID:DIIOH+RXVH
UHVWDXUDQWZKHUHKHZDVODWHUIRXQG
6PLWK&ULVSDQG1LFKROVZHUHLQGLFWHGDQGWULHGLQWKH
(DVWHUQ'LVWULFWRI7HQQHVVHHDW&KDWWDQRRJD'DLJOHZDV
DUUHVWHGEXWFRPPLWWHGVXLFLGHEHIRUHWULDO(YLGHQFHDWWULDO
LQFOXGHGWKHWHVWLPRQ\RIFRFRQVSLUDWRUV&DSULDQG)DUPHU
ZKR FRRSHUDWHG ZLWK WKH )%, $OO WKUHH GHIHQGDQWV ZHUH
1RV 8QLWHG6WDWHVY
6PLWKHWDO

( 6HQWHQFLQJ*XLGHOLQH
&ULVS FRQWHQGV WKDW WKH GLVWULFW FRXUW HUUHG ZKHQ LW
VHQWHQFHGKLPXQGHUWKH866*†%HQWLWOHG³5REEHU\´
UDWKHUWKDQ†%HQWLWOHG³([WRUWLRQE\)RUFHRU7KUHDWRI
,QMXU\ RU 6HULRXV 'DPDJH´ 7KH EDVH RIIHQVH OHYHO XQGHU
†%LVZKHUHDVWKHEDVHRIIHQVHOHYHOXQGHU†%
LV $ GLVWULFW FRXUW¶V LQWHUSUHWDWLRQ RI WKH 8QLWHG 6WDWHV
6HQWHQFLQJ*XLGHOLQHVLVUHYLHZHGGHQRYR8QLWHG6WDWHVY
0RRUH)G WK&LU
,QVHOHFWLQJWKHDSSOLFDEOHJXLGHOLQH†% D GLUHFWVWKH
FRXUWWRXVHWKHJXLGHOLQHUHIHUHQFHGLQWKH6WDWXWRU\,QGH[
$SSHQGL[$ IRUWKHRIIHQVHRIFRQYLFWLRQ³,QWKHFDVHRID
SDUWLFXODU VWDWXWH WKDW SURVFULEHV D YDULHW\ RI FRQGXFW WKDW
PLJKWFRQVWLWXWHWKHVXEMHFWRIGLIIHUHQWRIIHQVHJXLGHOLQHV
WKH 6WDWXWRU\ ,QGH[ PD\ VSHFLI\ PRUH WKDQ RQH RIIHQVH
JXLGHOLQH IRU WKDW SDUWLFXODU VWDWXWH DQG WKH FRXUW ZLOO
GHWHUPLQHZKLFKRIWKHUHIHUHQFHGJXLGHOLQHVHFWLRQVLVPRVW
DSSURSULDWHIRUWKHRIIHQVHFRQGXFWFKDUJHGLQWKHFRXQWRI
ZKLFK WKH GHIHQGDQW ZDV FRQYLFWHG´ 866* † %
FRPPHQW Q 7KXV DV &ULVS FRUUHFWO\ DVVHUWV WKH
JXLGHOLQHVSURYLGHWKDWDFRQYLFWLRQRI86&† D
PD\EHVHQWHQFHGXQGHU†%RU†%
2XUUHYLHZRIWKLVFDVHKRZHYHUOHDGVXVWRFRQFOXGHWKDW
VHQWHQFLQJXQGHUWKHUREEHU\JXLGHOLQHLVPRVWDSSURSULDWH
&ULVS¶VFRQGXFWZDVQRWOLPLWHGWRWKUHDWVRIIXWXUHYLROHQFH
W\SLFDORIPRVWH[WRUWLRQVZKHUHWKHYLFWLPVWKHPVHOYHVDUH
IRUFHG WR ³SD\ XS´ )URP WKH RXWVHW WKH FRQVSLUDF\ ZDV
GLUHFWHGDWDFFRPSOLVKLQJRQHRYHUDUFKLQJREMHFWLYHDEDQN
UREEHU\7KHHYHQWVWKDW&ULVSFKDUDFWHUL]HVDVLQGLFDWLYHRI
H[WRUWLRQLQYDGLQJ EUDQFK PDQDJHUV¶ KRPHV WKUHDWHQLQJ
WKHLU IDPLO\ PHPEHUV DQG SURPLVLQJ WKH UHOHDVH RI WKHLU
KXVEDQGVLQUHWXUQIRUPRQH\ZHUHPHUHO\LQWHUPHGLDWHVWHSV
WRZDUGFRPSOHWLQJWKHXOWLPDWHJRDORIUREELQJDEDQN
&ULVSZDVFRQYLFWHGRIDUPHGEDQNH[WRUWLRQLQYLRODWLRQRI
86&†† D DQG G DVZHOODVEDQNUREEHU\ZLWK

-- 6 of 10 --

8QLWHG6WDWHVY
6PLWKHWDO
1RV
VXFK IXQGV KDYLQJ EHHQ GHULYHG IURP VSHFLILHG XQODZIXO DFWLYLW\
WKDW LV D EDQN H[WRUWLRQ LQ YLRODWLRQ RI 86& †
6HFWLRQ D SURYLGHV LQ UHOHYDQW SDUW ³WKDW LW LV XQODZIXO WR
NQRZLQJO\ >HQJDJH RU DWWHPSW@ WR HQJDJH LQ D PRQHWDU\ WUDQVDFWLRQ LQ D
FULPLQDOO\ GHULYHG SURSHUW\ RI D YDOXH JUHDWHU WKDQ DQG LV GHULYHG
IURP VSHFLILHG XQODZIXO DFWLYLW\´ 6HFWLRQ F IXUWKHU LQGLFDWHV WKDW
WKH GHIHQGDQW¶V NQRZOHGJH WKDW WKH SURSHUW\ LV IURP D VSHFLILHG XQODZIXO
DFWLYLW\ LV QRW DQ HOHPHQW RI WKH RIIHQVH
$OWKRXJK6PLWKFRQFHGHVWKDWWKHMXU\LQVWUXFWLRQVZHUHDQ
DFFXUDWHUHIOHFWLRQRIWKHODZKHQHYHUWKHOHVVFRQWHQGVWKDW
WKHLQVWUXFWLRQVVKRXOGKDYHUHTXLUHGWKHMXU\WRILQGWKDWKH
NQHZ WKH SURSHUW\ ZDV GHULYHG IURP WKH EDQN UREEHU\ E\
H[WRUWLRQ UDWKHU WKDQ DQ XQVSHFLILHG FULPH DV SHU WKH
LQGLFWPHQW7KLVFRXUWUHYLHZVGHQRYRWKHGHWHUPLQDWLRQDV
WRZKHWKHUWKHUHKDVEHHQDQDPHQGPHQWWRRUYDULDQFHIURP
DQLQGLFWPHQW6HH8QLWHG6WDWHVY0DQQLQJ)G
WK&LU
$FRQVWUXFWLYHDPHQGPHQWUHVXOWVZKHQWKHWHUPVRIDQ
LQGLFWPHQWDUHLQHIIHFWDOWHUHGE\WKHSUHVHQWDWLRQRIHYLGHQFH
DQGMXU\LQVWUXFWLRQVZKLFKVRPRGLI\HVVHQWLDOHOHPHQWVRI
WKHRIIHQVHFKDUJHGWKDWWKHUHLVDVXEVWDQWLDOOLNHOLKRRGWKDW
WKHGHIHQGDQWPD\KDYHEHHQFRQYLFWHGRIDQRIIHQVHRWKHU
WKDQWKHRQHFKDUJHGLQWKHLQGLFWPHQW6HH8QLWHG6WDWHVY
6WLURQH86 8QLWHG6WDWHVY&XVPDQR
)G WK &LU ,Q WKH LQVWDQW FDVH ZH ILQG QR
YDULDQFH RU DPHQGPHQW WR WKH LQGLFWPHQW 1HLWKHU WKH
LQGLFWPHQWQRUWKHLQVWUXFWLRQVUHTXLUHGWKHJRYHUQPHQWWR
SURYHWKDWWKHGHIHQGDQWNQHZWKHPRQH\ZDVGHULYHGIURP
EDQN UREEHU\ E\ H[WRUWLRQ WKH ODQJXDJH RI WKH MXU\
LQVWUXFWLRQVPLUURUVWKHWHUPVRIWKHLQGLFWPHQW7KXVWKHMXU\
LQVWUXFWLRQV GLG QRW EURDGHQ WKH LQGLFWPHQW EH\RQG WKH
FKDUJHVFRQWHPSODWHGE\WKHJUDQGMXU\
1RV 8QLWHG6WDWHVY
6PLWKHWDO

FRQYLFWHGRQPXOWLSOHFRXQWV6PLWK&ULVSDQG1LFKROVZHUH
HDFKRUGHUHGWRSD\UHVWLWXWLRQDQGVHQWHQFHGWRDQG
PRQWKVRILPSULVRQPHQWUHVSHFWLYHO\
',6&866,21
$6LQJOHYHUVXV0XOWLSOH&RQVSLUDF\
6PLWKDQG&ULVSERWKDUJXHWKDWQRUHDVRQDEOHMXURUFRXOG
KDYH IRXQG WKH H[LVWHQFH RI D VLQJOH FRQVSLUDF\ WR H[WRUW
EDQNVEDVHGRQWKHHYLGHQFHSUHVHQWHGDWWULDO7KH\PDLQWDLQ
WKDW WKH HYLGHQFH SURYHV WKUHH VHSDUDWH FRQVSLUDFLHV WKDW
HQGHG ZLWK WKH GLVEXUVHPHQW RI WKH PRQLHV H[WRUWHG
)XUWKHUPRUH 6PLWK DQG &ULVS FRQWHQG WKDW WKH\ ZHUH
SUHMXGLFHG E\ WHVWLPRQ\ GHWDLOLQJ WKH FULPLQDO DFWV RI
PHPEHUVLQYROYHGLQWKHFRQVSLUDFLHVLQZKLFKWKH\GLGQRW
SDUWLFLSDWH
7KH 8QLWHG 6WDWHV 6XSUHPH &RXUW KDV KHOG WKDW ³LI DQ
LQGLFWPHQW DOOHJHV RQH FRQVSLUDF\ EXW WKH HYLGHQFH FDQ
UHDVRQDEO\ EH FRQVWUXHG RQO\ DV VXSSRUWLQJ D ILQGLQJ RI
PXOWLSOH FRQVSLUDFLHV WKH UHVXOWLQJ YDULDQFH EHWZHHQ WKH
LQGLFWPHQWDQGWKHSURRILVUHYHUVLEOHHUURULIWKHDSSHOODQW
FDQVKRZWKDWKHZDVSUHMXGLFHGWKHUHE\´8QLWHG6WDWHVY
:DUQHU)G WK&LU FLWLQJ.RWWHDNRV
Y 8QLWHG 6WDWHV 86 7KH SULQFLSDO
FRQVLGHUDWLRQVLQGHWHUPLQLQJWKHQXPEHURIFRQVSLUDFLHVDUH
WKHH[LVWHQFHRIDFRPPRQJRDOWKHQDWXUHRIWKHVFKHPHDQG
WKH RYHUODSSLQJ RI WKH SDUWLFLSDQWV LQ YDULRXV GHDOLQJV
³:KHWKHUVLQJOHRUPXOWLSOHFRQVSLUDFLHVKDYHEHHQVKRZQLV
XVXDOO\DTXHVWLRQRIIDFWWREHUHVROYHGE\WKHMXU\DQG>LV@
WREHFRQVLGHUHGRQDSSHDOLQWKHOLJKWPRVWIDYRUDEOHWRWKH
JRYHUQPHQW´8QLWHG6WDWHVY6FKXOW])G
WK&LU LQWHUQDOTXRWDWLRQVRPLWWHG
9LHZHGLQWKHOLJKWPRVWIDYRUDEOHWRWKHJRYHUQPHQWD
UDWLRQDOWULHURIIDFWFRXOGKDYHIRXQGWKDW6PLWKDQG&ULVS
KDG NQRZOHGJH RI DQG DJUHHG WR SDUWLFLSDWH LQ D VLQJOH
RYHUDUFKLQJFRQVSLUDF\7KHJRDORIDOOWKUHHH[WRUWLRQVZDV
WRVWHDOODUJHDPRXQWVRIEDQNPRQH\WKURXJKDFRPPRQSODQ

-- 7 of 10 --

8QLWHG6WDWHVY
6PLWKHWDO
1RV
WRLQYDGHWKHKRPHVRIEDQNPDQDJHUVKROGWKHLUIDPLOLHV
KRVWDJH DQG WKUHDWHQ WKH OLYHV RI WKH KXVEDQGV (DFK
H[WRUWLRQIROORZHGDQLGHQWLFDOPRGXVRSHUDQGLDQGZDVOHG
E\'DLJOHZKR³SLFNHGWKHWDUJHWV´DQG³GUHZXSWKHSODQV´
&DSULDQG)DUPHUERWKWHVWLILHGWKDWLQWKHPRQWKVEHWZHHQ
WKHUREEHULHV'DLJOHZRXOGLQLWLDOO\ZDLWXQWLO³WKLQJVGLHG
GRZQFRROHGRII´EXWZRXOGWKHQEHJLQVFRXWLQJRXWRWKHU
SRVVLEOHWDUJHWVVRPHWLPHVDEDQGRQLQJKLVLQLWLDOFKRLFHIRU
DEHWWHUORFDOH7KHRYHUODSSLQJSDUWLFLSDQWV'DLJOH&DSUL
)DUPHU DQG 5REHUWVLQ HDFK H[WRUWLRQ ZHUH IULHQGV DQG
IDPLO\ZKRUHJXODUO\DVVRFLDWHGZLWKRQHDQRWKHU)DUPHU
DOVRORDQHG'DLJOHIURP5REHUWV¶VVKDUHRIWKHPRQH\
IURP WKH .QR[YLOOH H[WRUWLRQ WR SXUFKDVH FRPPXQLFDWLRQV
HTXLSPHQWDQGDQROGFDUWRXVHLQWKH&KDWWDQRRJDH[WRUWLRQ
7KHIDFWWKDW6PLWKDQG&ULVSGLGQRWSDUWLFLSDWHLQHYHU\
EDQNH[WRUWLRQGRHVQRWWUDQVIRUPWKHVFKHPHIURPDVLQJOH
FRQVSLUDF\LQWRPXOWLSOHFRQVSLUDFLHV6HH:DUQHU)G
DW ³>$@ VLQJOH FRQVSLUDF\ GRHV QRW EHFRPH PXOWLSOH
FRQVSLUDFLHVVLPSO\EHFDXVHHDFKPHPEHURIWKHFRQVSLUDF\
GLGQRWNQRZHYHU\RWKHUPHPEHURUEHFDXVHHDFKPHPEHU
GLGQRWNQRZRIRUEHFRPHLQYROYHGLQDOORIWKHDFWLYLWLHVLQ
IXUWKHUDQFH RI WKH FRQVSLUDF\´ 7R SURYH D VLQJOH
FRQVSLUDF\WKHJRYHUQPHQWQHHGRQO\VKRZWKDWHDFKDOOHJHG
FRQVSLUDWRU KDG NQRZOHGJH RI DQG DJUHHG WR SDUWLFLSDWH LQ
ZKDWKHNQHZWREHDFROOHFWLYHYHQWXUHGLUHFWHGWRZDUGD
FRPPRQJRDO,G.QRZOHGJHRIDVLQJOHFRQVSLUDF\PD\EH
SURYHGE\FLUFXPVWDQWLDOHYLGHQFHVXFKDVLQIHUHQFHVIURPWKH
FRQGXFW RI WKH DOOHJHG SDUWLFLSDQWV RU IURP FLUFXPVWDQWLDO
HYLGHQFHRIDVFKHPH8QLWHG6WDWHVY/HH)G
WK&LU FLWLQJ8QLWHG6WDWHVY3RXORV)G
WK&LU
,Q WKH LQVWDQW FDVH &DSUL WHVWLILHG WKDW &ULVS EHFDPH
LQYROYHG LQ WKH SODQQLQJ SKDVH RI WKH ILUVW H[WRUWLRQ DQG
UHPDLQHGLQFRQWDFWZLWKWKHJURXSWKURXJKRXWWKHFRPSOHWLRQ
RIWKHVHFRQG6PLWKZKRSDUWLFLSDWHGLQWKHWKLUGH[WRUWLRQ
RQO\ ZDV LQWURGXFHG WR 'DLJOH E\ &ULVS 3ULRU WR WKH
&ODUNVYLOOHH[WRUWLRQ6PLWKVSHQWDJUHDWGHDORIWLPHZLWK
1RV 8QLWHG6WDWHVY
6PLWKHWDO

&RXQW )RXUWHHQ RI WKH LQGLFWPHQW FKDUJHG WKH IROORZLQJ >2@Q RU
DERXW -DQXDU\ LQ WKH (DVWHUQ 'LVWULFW RI 7HQQHVVHH GHIHQGDQW
&$5/721 9,&725 60,7+ NQRZLQJO\ XVHG FULPLQDOO\ GHULYHG
SURSHUW\ RI D YDOXH JUHDWHU WKDQ WR HQJDJH LQ D PRQHWDU\
WUDQVDFWLRQ E\ WKURXJK DQG WR D ILQDQFLDO LQVWLWXWLRQ DIIHFWLQJ LQWHUVWDWH
FRPPHUFH WKDW LV WKH SXUFKDVH RI D +DUOH\'DYLGVRQ PRWRUF\FOH ZLWK
SURYH RQO\ D PLQLPDO QH[XV EHWZHHQ WKH ILUHDUP DQG
LQWHUVWDWHFRPPHUFH,GDW
:KHQ YLHZHG LQ WKH OLJKW PRVW IDYRUDEOH WR WKH
JRYHUQPHQWWKHHYLGHQFHLVVXIILFLHQWIRUDUHDVRQDEOHMXURU
WR LQIHU WKDW 1LFKROV SRVVHVVHG WKH JXQ LQ 7HQQHVVHH DQG
FDUULHGLWDFURVVWKHVWDWHOLQHLQWR*HRUJLDZKHUHKHXVHGLWWR
KROG WKH %DLOH\ IDPLO\ KRVWDJH &DSUL WHVWLILHG WKH
FRQVSLUDWRUVSUHSDUHGDQGDUPHGWKHPVHOYHVIRUWKHLULQYDVLRQ
RIWKH%DLOH\KRPHDWD&UDFNHU%DUUHOUHVWDXUDQWSDUNLQJORW
QHDU WKH +DPLOWRQ 0DOO LQ 7HQQHVVHH )URP WKHUH VKH
LQGLFDWHG WKDW WKH GHIHQGDQWV GURYH WR WKH %DLOH\ KRPH LQ
*HRUJLD7HUHVD%DLOH\WHVWLILHGWKDW'DLJOHDQG1LFKROVHDFK
SRVVHVVHG JXQV DQG KHOG KHU IDPLO\ KRVWDJH DW JXQSRLQW
WKURXJKRXWWKHQLJKW+HUKXVEDQG:LOOLDP%DLOH\WHVWLILHG
WKDW 1LFKROV WRRN KLP LQWR WKH JDUDJH DQG JXDUGHG KLP DW
JXQSRLQW DOO QLJKW &DSUL IXUWKHU WHVWLILHG WKDW VKH VDZ
1LFKROVORDGLQJEDJVLQWRKHUPRWKHU¶VZKLWH+RQGDLQWKH
VDPH7HQQHVVHH&UDFNHU%DUUHOSDUNLQJORWLPPHGLDWHO\DIWHU
WKHH[WRUWLRQKDGEHHQFRPSOHWHG$OWKRXJKFLUFXPVWDQWLDO
WKLVHYLGHQFHLVVXIILFLHQWIRUDMXURUWRUHDVRQDEO\LQIHUWKDW
VRPHWLPHEHWZHHQWKHLQYDVLRQRIWKH%DLOH\¶VKRPHDQGWKH
FRQFOXVLRQRIWKHEDQNUREEHU\1LFKROVFURVVHGWKHVWDWHOLQH
ZLWKDILUHDUP$VVXFKWKHLQWHUVWDWHQH[XVHOHPHQWRI
86&† J DQGWKHMXULVGLFWLRQDOHOHPHQWRI86&
† F DUHVDWLVILHG
' &RQVWUXFWLYH$PHQGPHQWRIWKH,QGLFWPHQW
6PLWK DUJXHV WKDW WKH MXU\ LQVWUXFWLRQV UHVXOWHG LQ D
FRQVWUXFWLYHDPHQGPHQWWRWKHLQGLFWPHQWZKLFKFKDUJHGRQH
FRXQW RI PRQH\ ODXQGHULQJ XQGHU 86& †

-- 8 of 10 --

8QLWHG6WDWHVY
6PLWKHWDO
1RV
PDGH LQ IXUWKHUDQFH RI WKH FRQVSLUDF\ XQGHU 5XOH
G ( 6HH &ODUN )G DW KROGLQJ WKDW
VWDWHPHQWVLGHQWLI\LQJSDUWLFLSDQWVDQGWKHLUUHVSHFWLYHUROHV
LQWKHFRQVSLUDF\DUHPDGHLQIXUWKHUDQFHRIDFRQVSLUDF\
7KHUHIRUH WKH GLVWULFW FRXUW GLG QRW DEXVH LWV GLVFUHWLRQ LQ
UXOLQJWKDWWKHRXWRIFRXUWVWDWHPHQWVZHUHDGPLVVLEOH
& 6XIILFLHQF\ RI WKH (YLGHQFH 6XSSRUWLQJ WKH )LUHDUP
&RQYLFWLRQV
1LFKROV FKDOOHQJHV WKH VXIILFLHQF\ RI WKH HYLGHQFH LQ
VXSSRUWRIKLVFRQYLFWLRQVIRUEHLQJDIHORQLQSRVVHVVLRQRI
D ILUHDUP LQ YLRODWLRQ 86& † J DQG XVH RI D
ILUHDUP LQ D FULPH RI YLROHQFH LQ YLRODWLRQ RI 86&
† F +HDUJXHVWKDWWKHJRYHUQPHQWIDLOHGWRHVWDEOLVK
WKDW KH SRVVHVVHG WKH ILUHDUP LQ 7HQQHVVHH DQG WKDW WKH
ILUHDUP WUDYHOHG LQ RU DIIHFWHG LQWHUVWDWH FRPPHUFH ,Q
UHYLHZLQJ D FKDOOHQJH WR WKH VXIILFLHQF\ RI WKH HYLGHQFH
SUHVHQWHGWRHVWDEOLVKWKHGHIHQGDQW¶VJXLOWWKLVFRXUWYLHZV
DOOHYLGHQFHLQWKHOLJKWPRVWIDYRUDEOHWRWKHJRYHUQPHQWDQG
GHWHUPLQHV ZKHWKHU WKHUH LV DQ\ HYLGHQFH IURP ZKLFK D
UHDVRQDEOHMXU\FRXOGILQGJXLOWEH\RQGDUHDVRQDEOHGRXEW
6HH 8QLWHG 6WDWHV Y 7DOOH\ )G WK &LU

³,Q RUGHU WR FRQYLFW XQGHU 86& † J WKH
*RYHUQPHQWPXVWSURYHWKHIROORZLQJWKUHHHOHPHQWV WKDW
WKHGHIHQGDQWKDGDSUHYLRXVIHORQ\FRQYLFWLRQ WKDWWKH
GHIHQGDQW SRVVHVVHG D ILUHDUP WKDW WKH ILUHDUP KDG
WUDYHOHGLQRUDIIHFWHGLQWHUVWDWHFRPPHUFH´8QLWHG6WDWHVY
:DONHU)G WK&LU FLWDWLRQDQG
TXRWDWLRQVRPLWWHG 8QOLNH6HFWLRQ J KRZHYHUD
FRQYLFWLRQXQGHU86&† F GRHVQRWUHTXLUHSURRI
RIDQLQWHUVWDWHQH[XVHOHPHQW6HH8QLWHG6WDWHVY*LEEV
)G WK &LU 3RVVHVVLRQ FDQ EH
HLWKHUDFWXDORUFRQVWUXFWLYHDQGPD\EHSURYHGE\GLUHFWRU
FLUFXPVWDQWLDOHYLGHQFH8QLWHG6WDWHVY0XUSK\)G
WK&LU 7KHJRYHUQPHQWLVUHTXLUHGWR
1RV 8QLWHG6WDWHVY
6PLWKHWDO

'DLJOHDQGDFFRPSDQLHGKLPWR*RRGOHWWVYLOOHZKHUH'DLJOH
DQG 1LFKROV ZHUH SUHSDULQJ IRU WKH ILQDO H[WRUWLRQ $
UHDVRQDEOH MXURU FRXOG LQIHU IURP WKRVH DVVRFLDWLRQV WKDW
'DLJOHKDGGLVFORVHGWKHSULRUUREEHULHVDQGWKHFRQWLQXLQJ
QDWXUHRIWKHVFKHPHWRERWK&ULVSDQG6PLWK
'HVSLWHWKLVHYLGHQFHWKHGHIHQGDQWVXUJHXVWRILQGWKUHH
VHSDUDWHFRQVSLUDFLHVDUJXLQJWKDWLWLVDQDFFHSWHGSULQFLSDO
RIFRQVSLUDF\ODZWKDW³RQFHWKHSURFHHGVRIWKHFRQVSLUDF\
DUHGLYLGHGWKHFRQVSLUDF\KDVHQGHG´7KHFDVHVXSRQZKLFK
WKHGHIHQGDQWVUHO\KRZHYHUGRQRWKROGWKDWFRQVSLUDFLHV
DXWRPDWLFDOO\WHUPLQDWHDWHDFKSD\RXW,QVWHDGWKHVHFDVHV
PHUHO\LOOXVWUDWHWKHIDFWWKDWDVZLWKDOOW\SHVRIFRQVSLUDFLHV
D FRQVSLUDF\ FRQWLQXHV XQWLO WKH REMHFWLYH IRU ZKLFK LW LV
IRUPHGLVDWWDLQHG6HH0F'RQDOGY8QLWHG6WDWHV)G
WK &LU KROGLQJ WKDW WKH FRQVSLUDF\
LQFOXGHG WKH H[FKDQJH RI WKH PDUNHG UDQVRP PRQH\ IRU
XQPDUNHGELOOVVHYHQPRQWKVDIWHUWKHNLGQDSLQJWRRNSODFH
VLQFHWKLVDFWZDVFOHDUO\FRQWHPSODWHGE\WKHFRQVSLUDWRUV
VHHDOVR.UXOHZLWFKY8QLWHG6WDWHV86
.RXU\ Y 8QLWHG 6WDWHV )G WK
&LU
$GHIHQGDQWPD\EHFRQYLFWHGIRUDVLQJOHFRQVSLUDF\LIWKH
HYLGHQFH VXSSRUWV D ILQGLQJ WKDW KH KDG NQRZOHGJH RU
IRUHVLJKWRIWKHFRQVSLUDF\¶VPXOWLSOLFLW\RIREMHFWLYHVHYHQ
ZKHUHWKH³FRQVSLUDF\LVRSHQHQGHG HJDFRQVSLUDF\WRURE
EDQNV DQG WKH VSHFLILFV RI WKH IXWXUH FULPHV HJ ZKLFK
EDQNV LVXQGHWHUPLQHGRUDWOHDVWXQNQRZQWRWKHGHIHQGDQW´
8QLWHG6WDWHVY0RUURZ)G VW&LU
VHHDOVR8QLWHG6WDWHVY/L&DXVL)G VW&LU
8QLWHG6WDWHVY-DPHV)G WK&LU
UHMHFWLQJWKHGHIHQGDQW¶VFODLPWKDWWKHHYLGHQFHIDLOHG
WR OLQN KLP WR WKH ODUJHU VLQJOH FRQVSLUDF\ ZKHUH WKH
GHIHQGDQWSDUWLFLSDWHGLQRQO\DVLQJOHUREEHU\QRWLQJWKDWLW
ZDVSHUPLVVLEOHIRUWKHMXU\WRLQIHUWKDWWKHGHIHQGDQWOLNHO\
OHDUQHGRISUHYLRXVUREEHULHVGXULQJKLVFRQWLQXHGDVVRFLDWLRQ
ZLWKVHYHUDOFRFRQVSLUDWRUVGXULQJWKHSODQQLQJSKDVHRIKLV
UREEHU\ %DVHG RQ WKH HYLGHQFH SUHVHQWHG DW WULDO D

-- 9 of 10 --

8QLWHG6WDWHVY
6PLWKHWDO
1RV
UHDVRQDEOH MXURU FRXOG KDYH IRXQG WKDW 6PLWK DQG &ULVS
SDUWLFLSDWHG LQ D VLQJOH FRQVSLUDF\ WR H[WRUW EDQNV DQG
WKHUHIRUHZHUHQRWSUHMXGLFHGE\WKHDGPLVVLRQRIWHVWLPRQ\
UHJDUGLQJ FULPLQDO DFWV RI WKH RWKHU FRFRQVSLUDWRUV
$FFRUGLQJO\WKHGHIHQGDQWV¶FODLPPXVWIDLO
%$GPLVVLRQRI&RFRQVSLUDWRU6WDWHPHQWV
6PLWK &ULVS DQG 1LFKROV FRQWHQG WKDW WKH WULDO FRXUW
LPSURSHUO\ DGPLWWHG WKH WHVWLPRQ\ RI WZR FRFRQVSLUDWRUV
'DLJOHDQG)DUPHU,QRUGHUWRSURSHUO\DGPLWFRFRQVSLUDWRU
VWDWHPHQWVDVQRQKHDUVD\WKHJRYHUQPHQWPXVWVKRZE\D
SUHSRQGHUDQFHRIWKHHYLGHQFHWKDW WKHFRQVSLUDF\H[LVWHG
WKHGHIHQGDQWDJDLQVWZKRPWKHKHDUVD\LVRIIHUHGZDVD
PHPEHURIWKHFRQVSLUDF\DQG WKHKHDUVD\VWDWHPHQWZDV
PDGHLQWKHFRXUVHRIDQGLQIXUWKHUDQFHRIWKHFRQVSLUDF\
8QLWHG 6WDWHV Y (QULJKW )G WK &LU
7KLVSUHOLPLQDU\ILQGLQJLVWKHVROHSURYLQFHRIWKH
MXGJH ZKR PD\ DV ZDV GRQH KHUH DGPLW WKH KHDUVD\
VWDWHPHQWVVXEMHFWWRDODWHUUXOLQJWKDWWKHJRYHUQPHQWKDV
PHWLWVEXUGHQ8QLWHG6WDWHVY9LQVRQ)G
WK &LU 7KLV FRXUW UHYLHZV WKH GLVWULFW FRXUW¶V
FRQFOXVLRQVZLWKUHVSHFWWRZKHWKHUFRFRQVSLUDWRUVWDWHPHQWV
PD\EHSURSHUO\DGPLWWHGXQGHU)HG5(YLG G (
IRUDEXVHRIGLVFUHWLRQ7UHSHOY5RDGZD\([SUHVV,QF
)G WK&LU
$ GLVWULFW FRXUW PD\ UHO\ RQ D FRFRQVSLUDWRU¶V KHDUVD\
VWDWHPHQW WR GHWHUPLQH ZKHWKHU D FRQVSLUDF\ KDV EHHQ
HVWDEOLVKHGKRZHYHUWKHUHPXVWDOVREHVRPHLQGHSHQGHQW
FRUURERUDWLQJHYLGHQFHRIWKHGHIHQGDQW¶VNQRZOHGJHRIDQG
SDUWLFLSDWLRQ LQ WKH FRQVSLUDF\ WR VXIILFLHQWO\ UHEXW WKH
³SUHVXPHGXQUHOLDELOLW\RIRXWRIFRXUWVWDWHPHQWV´8QLWHG
6WDWHV Y &ODUN )G WK &LU 7KH
GHIHQGDQWV FODLP WKDW WKH WULDO FRXUW HUUHG E\ IDLOLQJ WR
LQGLFDWHRQWKHUHFRUGWKDWLWUHOLHGRQLQGHSHQGHQWHYLGHQFH
VXSSRUWLQJWKHDGPLVVLELOLW\RIWKHFRFRQVSLUDWRUVWDWHPHQWV
DQGDVDUHVXOWWKHMXU\ZDVDOORZHGWRFRQYLFWVROHO\RQWKH
1RV 8QLWHG6WDWHVY
6PLWKHWDO

EDVLV RI WKH FRFRQVSLUDWRU WHVWLPRQ\ 7KLV FRQWHQWLRQ LV
ZLWKRXWPHULW
$WWKHFORVHRIWKHJRYHUQPHQW¶VFDVHLQFKLHIWKHFRXUW
GHWHUPLQHG E\ D SUHSRQGHUDQFH RI WKH HYLGHQFH WKDW ³WKH
JRYHUQPHQW KDV SXW LQ VXIILFLHQW IDFWV IURP ZKLFK D
UHDVRQDEOH MXURU FRXOG GHWHUPLQH WKDW WKH DOOHJHG >VLQJOH@
FRQVSLUDF\GLGLQIDFWH[LVW´&I8QLWHG6WDWHVY0RVV)G
WK &LU FDXWLRQLQJ WKDW PRUH VSHFLILF
(QULJKWILQGLQJVDUHSUHIHUUHGEXWILQGLQJQRUHYHUVLEOHHUURU
ZKHUHWKHGLVWULFWFRXUWPDGHDFRQFOXVRU\VWDWHPHQWWKDWLW
³GLGQ¶W PDNH WKDW GHWHUPLQDWLRQ RQ WKH UHFRUG EXW FOHDUO\
WKHUH LV QR SUREOHP´ LQ UHVSRQVH WR WKH JRYHUQPHQW¶V
SURPSWLQJ ,QDGGLWLRQWRWKHGLUHFWREVHUYDWLRQVRI&DSUL
DQG )DUPHU WKH GLVWULFW FRXUW UHOLHG XSRQ LQGHSHQGHQW
FRUURERUDWLQJHYLGHQFHLQFOXGLQJ&ULVS¶VDGPLVVLRQWRDQ)%,
DJHQW WKDW KH KDG SUHYHQWHG D UDSH GXULQJ WKH .QR[YLOOH
H[WRUWLRQ ZKLFK LPSOLFLWO\ SODFHV KLP DW WKH VFHQH DQG
SUHVXSSRVHVWKDWKHZDVDPHPEHURIWKHFRQVSLUDF\$VIRU
6PLWKWKHFRXUWUHOLHGRQWKHWHVWLPRQ\RI6PLWK¶VFRXVLQ
*HUDOG5LFNHWWV5LFNHWWVWHVWLILHGWKDW6PLWKPDGHVHYHUDO
VWDWHPHQWV WKDW ZRXOG LQGLFDWH KH ZDV D PHPEHU RI WKH
FRQVSLUDF\QDPHO\WKDWKH³GLGDEDQNMRE´QHDU1DVKYLOOH
ZKHUHWKH\JRWDQGWKDWKHKDGEXULHGVRPHRIWKH
PRQH\5LFNHWWVDOVRWHVWLILHGWKDWDURXQG&KULVWPDVKH
RYHUKHDUG6PLWKDQG1LFKROVODXJKLQJDERXWKRZWKH\QHHGHG
WRGLJXSPRUHPRQH\WRSXUFKDVHJLIWV
$GGLWLRQDOO\WKHWULDOFRXUWSURSHUO\GHWHUPLQHGWKDWWKH
WHVWLPRQ\ JLYHQ E\ &DSUL DQG )DUPHU LQFOXGHG VWDWHPHQWV
PDGHLQIXUWKHUDQFHRIWKHDOOHJHGFRQVSLUDF\8QLWHG6WDWHV
Y+DPLOWRQ)G WK&LU KROGLQJ
WKDW D VWDWHPHQW LV LQ IXUWKHUDQFH RI D FRQVSLUDF\ LI LW LV
LQWHQGHG WR SURPRWH WKH REMHFWLYHV RI WKH FRQVSLUDF\
$OWKRXJK WKH GHIHQGDQWV GR QRW VHW IRUWK WKH VSHFLILF
VWDWHPHQWV WR ZKLFK WKH\ REMHFW WKH UHFRUG LV UHSOHWH ZLWK
WHVWLPRQ\GLVFXVVLQJ'DLJOH¶VVWDWHPHQWVZKLFKLGHQWLI\WKH
GHIHQGDQWV¶ UHVSHFWLYH UROHV DQG GLUHFW WKHLU SDUWLFLSDWLRQ
GXULQJ WKH SODQQLQJ SKDVH 7KHVH VWDWHPHQWV ZHUH FOHDUO\

-- 10 of 10 --