In Re:Steve Robinson v.

Opinion

(/(&7521,&&,7$7,21)('$SS3WK&LU

)LOH1DPHES

%$1.5837&<$33(//$7(3$1(/2)7+(6,;7+&,5&8,7

,QUH 67(9('52%,1621 

'HEWRU

  67(9('52%,1621    

$SSHOODQW

 Y 1R  &+$03$,*1/$1'0$5.,1&  $SSHOOHH  

1

  $SSHDOIURPWKH8QLWHG6WDWHV%DQNUXSWF\&RXUW IRUWKH6RXWKHUQ'LVWULFWRI2KLR(DVWHUQ'LYLVLRQDW&ROXPEXV 1R

$UJXHGsXQH

'HFLGHGDQG)LOHG$XJXVW

%HIRUH%52:1025*(167(51&/$55(1DQG5+2'(6 %DQNUXSWF\$SSHOODWH3DQHOsXGJHV



&2816(/

$5*8('*UDG\/3HWWLJUHZsU&2;67(,1 3(77,*5(:&ROXPEXV2KLRIRU $SSHOODQW5D\$&R[&2; *,1*(5'D\WRQ2KLRIRU$SSHOOHH21%5,()*UDG\ /3HWWLJUHZsU&2;67(,1 3(77,*5(:&ROXPEXV2KLRIRU$SSHOODQW5D\$ &R[&2; *,1*(5'D\WRQ2KLRIRU$SSHOOHH

23,1,21

:,//,$0+286721%52:1%DQNUXSWF\$SSHOODWH3DQHOsXGJH7KH'HEWRU DSSHDOVWKHEDQNUXSWF\FRXUWjVRUGHURYHUUXOLQJKLVREMHFWLRQWRWKHFODLPRI&KDPSDLJQ /DQGPDUN,QF)RUWKHIROORZLQJUHDVRQVZH$)),50WKHGHFLVLRQRIWKHEDQNUXSWF\ FRXUW

,,668(621$33($/

7KHLVVXHVRQDSSHDODUHZKHWKHUWKHEDQNUXSWF\FRXUWDEXVHGLWVGLVFUHWLRQRU HUUHGZKHQLWGHFLGHGWKDWWKHUHZHUHQRJURXQGVZDUUDQWLQJUHYRFDWLRQRIWKHDUELWUDWLRQ DZDUGDQGZKHWKHUWKHEDQNUXSWF\FRXUWHUUHGZKHQLWUXOHGWKDWUHVMXGLFDWDEDUUHGWKH 'HEWRUjVREMHFWLRQWR/DQGPDUNjVFODLP$VDSDUWRIWKHVHLVVXHVWKHUHLVDTXHVWLRQRI ZKHWKHU WKH EDQNUXSWF\ FRXUW HUUHG E\ GHQ\LQJ WKH 'HEWRU DQ RSSRUWXQLW\ WR SUHVHQW HYLGHQFHLQVXSSRUWRIKLVOHJDODUJXPHQWV

,,s85,6',&7,21$1'67$1'$5'2)5(9,(:

7KH%DQNUXSWF\$SSHOODWH3DQHORIWKH6L[WK&LUFXLWKDVMXULVGLFWLRQRYHUILQDORUGHUV RIWKHEDQNUXSWF\FRXUWVRIWKH6RXWKHUQ'LVWULFWRI2KLRSXUVXDQWWR86&††D

DQGF 7KHEDQNUXSWF\FRXUWjVRUGHUGLVSRVLQJRI/DQGPDUNjVFODLPLVDILQDODSSHDODEOH RUGHUEHFDXVHLWmµHQGVWKHOLWLJDWLRQRQWKHPHULWVDQGOHDYHVQRWKLQJIRUWKHFRXUWWRGR EXWH[HFXWHWKHMXGJPHQWjl2IILFLDO8QVHFXUHG&UHGLWRUV&RPPRI9DOOH\9XOFDQ0ROG&R Y$PSFR3LWWVEXUJK&RUS,QUH9DOOH\9XOFDQ0ROG&R %5%$3WK &LU TXRWDWLRQRPLWWHG DIIjG)GWK&LU XQSXEOLVKHG  :HUHYLHZDGHFLVLRQWRFRQILUPRUYDFDWHDQDUELWUDWLRQDZDUGmIRUFOHDUHUURURQ ILQGLQJVRIIDFWDQGGHQRYRRQTXHVWLRQVRIODZl'DZDKDUHY6SHQFHU)G WK&LU FHUWGHQLHG6&W mµ,WLVZHOOHVWDEOLVKHGWKDWFRXUWVVKRXOG SOD\RQO\DOLPLWHGUROHLQUHYLHZLQJWKHGHFLVLRQVRIDUELWUDWRUVj7KH)HGHUDO$UELWUDWLRQ $FWSUHVXPHVWKDWDUELWUDWLRQDZDUGVZLOOEHFRQILUPHGl,GTXRWDWLRQRPLWWHG

2

mµ'HQRYR

UHYLHZUHTXLUHVWKH3DQHOWRUHYLHZTXHVWLRQVRIODZLQGHSHQGHQWRIWKHEDQNUXSWF\FRXUWjV GHWHUPLQDWLRQjl)LUVW0HULW1$&LWL]HQV1DWjO%DQNY*HW],QUH*HW]

%5 %$3WK&LU TXRWDWLRQRPLWWHG 

,,,)$&76

$SSHOODQW6WHYH5RELQVRQWKHm'HEWRUl

LVDIDUPHU)RUPDQ\\HDUVKHKDGD EXVLQHVV UHODWLRQVKLS ZLWK &KDPSDLJQ /DQGPDUN ,QF m/DQGPDUNl  DQ DJULFXOWXUDO FRRSHUDWLYH WKDW EX\V JUDLQ IRU UHVDOH IURP LWV PHPEHUV  7KH 'HEWRU DQG /DQGPDUN HQWHUHGLQWRFRQWUDFWVXQGHUZKLFKWKH'HEWRUVROGJUDLQWR/DQGPDUN7KHFRQWUDFWVDUH RIDW\SHFRPPRQO\UHIHUUHGWRDVmKHGJHWRDUULYHlFRQWUDFWV8QGHUWKHVHFRQWUDFWVWKH 'HEWRUZDVREOLJDWHGWRGHOLYHUDFHUWDLQDPRXQWRIJUDLQWR/DQGPDUNRQDGDWHWKDWZDV HVWDEOLVKHG DW WKH WLPH WKH FRQWUDFWV ZHUH H[HFXWHG EXW ZKLFK FRXOG EH GHIHUUHG RU mUROOHGl IRU D SHULRG RI QRW PRUH WKDQ WZR FURS \HDUV  7KH FRQWUDFWV FRQWDLQHG DQ DUELWUDWLRQFODXVHZKLFKSURYLGHGmDOOGLVSXWHVDQGFRQWURYHUVLHVRIDQ\QDWXUHZKDWVRHYHU EHWZHHQWKHPZLWKUHVSHFWWRWKLVFRQWUDFWVKDOOEHDUELWUDWHGDFFRUGLQJWRWKH$UELWUDWLRQ UXOHVRIWKH1DWLRQDO*UDLQ )HHG$VVRFLDWLRQWKHm1*)$l DQGWKDWWKHGHFLVLRQDQG DZDUGGHWHUPLQHGWKHUHXQGHUVKDOOEHILQDODQGELQGLQJl $OOHJLQJWKDWWKH'HEWRUKDGGHIDXOWHGRQKLVREOLJDWLRQWRGHOLYHUJUDLQXQGHUWKUHH RIWKHFRQWUDFWV/DQGPDUNFDQFHOHGWKHFRQWUDFWVDQGPDGHDFODLPIRUGDPDJHV7KH 'HEWRUGLVSXWHGKLVOLDELOLW\/DQGPDUNFRPPHQFHGOLWLJDWLRQLQWKH&RPPRQ3OHDV&RXUW RI&KDPSDLJQ&RXQW\2KLRWRHQIRUFHWKHFRQWUDFWVjDUELWUDWLRQSURYLVLRQV/DQGPDUN SUHYDLOHGRQDPRWLRQIRUVXPPDU\MXGJPHQWIRUHQIRUFHPHQWRIWKHDUELWUDWLRQFODXVHV DQGWKDWFRXUWUHIHUUHGWKHSDUWLHVWRDUELWUDWLRQ /DQGPDUN WKHQ ILOHG LWV FRPSODLQW FRPPHQFLQJ DQ DUELWUDWLRQ EHIRUH WKH 1*)$ DOOHJLQJWKDWWKH'HEWRUIDLOHGWRGHOLYHUJUDLQLQDFFRUGDQFHZLWKWKHFRQWUDFWVDQGWKDWWKH 'HEWRU ZDV OLDEOH WR UHLPEXUVH LW IRU GDPDJHV UHVXOWLQJ IURP KLV EUHDFK  7KH 'HEWRU DQVZHUHGDQGDUJXHGWKDW/DQGPDUNKDGXQIDLUO\DQGZLWKRXWFRQVHQWDOWHUHGWKHWHUPV

 )RU D GHVFULSWLRQ RI KHGJH WR DUULYH RU FDVK IRUZDUG FRQWUDFWV VHH 1DJHO Y $'0 ,QYHVWRU 6HUYV ,QF  )

6XSSG   1' ,,,  DPHQGHG E\ 1R  &   :/  1' ,,,   DIIjG  )G  WK &LU   DQG $QGHUVRQ ,QF Y +RUWRQ )DUPV ,QF  IG   WK &LU 

3



RI WKH FRQWUDFWV DQG WKDW WKH DJUHHPHQWV YLRODWHG  86& †  D SURYLVLRQ RI WKH &RPPRGLW\([FKDQJH$FW DQGZHUHQRWHQIRUFHDEOH1HLWKHUSDUW\UHTXHVWHGDKHDULQJ DQGWKHPDWWHUZDVVXEPLWWHGWRDUELWUDWLRQRQWKHSOHDGLQJV $SDQHORIWKUHHDUELWUDWRUVDSSRLQWHGE\1*)$LVVXHGDUHSRUWRQRUDERXWsXQH ILQGLQJWKDWWKHFRQWUDFWVZHUHYDOLGDQGH[HPSWIURPWKH&RPPRGLW\([FKDQJH$FW DQG WKDW WKH 'HEWRU KDG EUHDFKHG WKH FRQWUDFWV  7KH SDQHO DZDUGHG /DQGPDUN SOXVLQWHUHVW7KH'HEWRUGLGQRWILOHDPRWLRQWRYDFDWHWKHDZDUG6HH 86&†/DQGPDUNGLGQRWILOHDMXGLFLDODFWLRQWRFRQILUPWKHDZDUG6HHLG† 7KH'HEWRUILOHGKLV&KDSWHUFDVHRQ$XJXVW/DQGPDUNILOHGDFODLP LQWKDWFDVHEDVHGRQWKHDUELWUDWLRQDZDUGRQ6HSWHPEHUDQGWKH'HEWRUILOHG DQREMHFWLRQWRWKHFODLPRQ)HEUXDU\7KH'HEWRUj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†  DQG WKDW KLV REMHFWLRQZDVQRWEDUUHGE\UHVMXGLFDWDEHFDXVH WKHDUELWUDWLRQSURFHVVZDVIODZHG  WKHDUELWUDWLRQDZDUGZDVQRWFRQILUPHGE\DQ\FRXUWDQG

4

WKH'HEWRUZDVKRQHVW DQGLQQHHGRIEDQNUXSWF\UHOLHI+HDOVRDUJXHGWKDWWKHDZDUGVKRXOGEHYDFDWHGXQGHU IHGHUDOODZEHFDXVHLWZDVPDGHLQPDQLIHVWGLVUHJDUGRIWKHODZ /DQGPDUNUHVSRQGHGWRWKH'HEWRUjVREMHFWLRQDQGDUJXHGWKDWWKHDUELWUDWLRQDZDUG ZDVELQGLQJDQGZDVHQWLWOHGWRSUHFOXVLYHHIIHFW 7KHEDQNUXSWF\FRXUWHQWHUHGDQDJUHHGRUGHUELIXUFDWLQJWKHKHDULQJRQWKHFODLP REMHFWLRQ7KDWRUGHUSURYLGHGWKDWWKHFRXUWZRXOGILUVWFRQVLGHU/DQGPDUNjVDUJXPHQW WKDWWKH'HEWRUjVREMHFWLRQZDVEDUUHGE\UHVMXGLFDWDDQGFROODWHUDOHVWRSSHO7KHRUGHU SURYLGHGWKDWWKHSUHFOXVLRQLVVXHZDVWREHVXEPLWWHGRQWKHSOHDGLQJVDQGWKDW

 1HLWKHU SDUW\ REMHFWHG WR DQ\ RI WKH DUELWUDWRUV DSSRLQWHG E\ 1*)$ LQ VSLWH RI WKHLU ULJKW WR GR VR 2QH DUELWUDWRU

YROXQWDULO\ ZLWKGUHZ DQG ZDV UHSODFHG

5

2UDODUJXPHQWVKDOOEHKHDUGRQ6HSWHPEHUDWSPDIWHU ZKLFK WKH LVVXH ZLOO EH VXEPLWWHG RQ WKH UHFRUG  ,I WKH &RXUW ILQGV WKDW 'HEWRUjV 2EMHFWLRQ LV EDUUHG E\ UHV MXGLFDWD RU FROODWHUDO HVWRSSHO WKH 2EMHFWLRQRI'HEWRUPD\EHRYHUUXOHGZLWKRXWDQHYLGHQWLDU\KHDULQJDQGWKH &ODLPPD\EHDOORZHG,IWKH&RXUWILQGVWKDWWKH'HEWRUjV2EMHFWLRQLVQRW EDUUHG E\ WKH GRFWULQH RI UHV MXGLFDWD RU FROODWHUDO HVWRSSHO WKHQ DQ HYLGHQWLDU\KHDULQJRQ'HEWRUjV2EMHFWLRQVKDOOEHKHDUGRQ2FWREHU DQG2FWREHU>@

7KHEDQNUXSWF\FRXUWKHDUGRUDODUJXPHQWVRQ6HSWHPEHU7KH'HEWRUjV FRXQVHODUJXHGWKDWWKHREMHFWLRQZDVQRWEDUUHGE\UHVMXGLFDWDEHFDXVHWKHDUELWUDWLRQ SURFHVVZDVIODZHGDVWKHDUELWUDWRUVmDOOFDPHRXWRIWKHLQGXVWU\lDQGEHFDXVHWKH DUELWUDWRUV VKRXOG KDYH UXOHG WKDW WKH SDUWLHVj FRQWUDFWV ZHUH IXWXUHV FRPPRGLWLHV WUDQVDFWLRQVUDWKHUWKDQFDVKIRUZDUGJUDLQVDOHV+HDOVRDUJXHGWKDWWKHDZDUGZDVQRW ELQGLQJEHFDXVHLWKDGQRWEHHQFRQILUPHG/DQGPDUNjVFRXQVHODUJXHGWRWKHFRQWUDU\ 7KHEDQNUXSWF\FRXUWWRRNWKHPDWWHUXQGHUDGYLVHPHQWDQGWKHQRQ2FWREHU ZLWKRXWDVHSDUDWHHYLGHQWLDU\KHDULQJWKHFRXUWHQWHUHGDQRSLQLRQDQGRUGHURYHUUXOLQJ WKH'HEWRUjVREMHFWLRQWR/DQGPDUNjVFODLP7KHEDQNUXSWF\FRXUWKHOGWKDWWKH'HEWRUKDG IDLOHGWRDOOHJHRUWRSURYHDQ\VSHFLILFIDFWVZDUUDQWLQJDUHYRFDWLRQRIWKHDUELWUDWLRQ DZDUGDQGWKHQIRXQGWKDWUHVMXGLFDWDSUHFOXGHGWKHFRXUWIURPDGGUHVVLQJWKHPHULWVRI WKH 'HEWRUjV REMHFWLRQ WR WKH FODLP  7KH 'HEWRU ILOHG D PRWLRQ IRU UHFRQVLGHUDWLRQ RQ 1RYHPEHUDQGWKHEDQNUXSWF\FRXUWGHQLHGWKDWPRWLRQLQDQRUGHUHQWHUHGRQ 1RYHPEHU7KLVDSSHDOIROORZHG

,9',6&866,21

$OWKRXJKWKH'HEWRUDUJXHVRQDSSHDOWKDWWKHEDQNUXSWF\FRXUWIDLOHGWRSURYLGHDQ RSSRUWXQLW\ IRU KLP WR SUHVHQW SURRI WR VXSSRUW KLV REMHFWLRQ WR /DQGPDUNjV FODLP WKH FULWLFDOLVVXHLQWKLVDSSHDOLVZKHWKHUWKHUHZHUHDQ\JURXQGVXSRQZKLFKWKHEDQNUXSWF\ FRXUWVKRXOGKDYHUHIXVHGWRUHFRJQL]HWKHSUHEDQNUXSWF\DUELWUDWLRQDZDUGDVWKHEDVLV IRUDFODLPDJDLQVWWKH'HEWRU7KH3DQHOFRQFOXGHVWKDWWKHUHDUHQRVXFKJURXQGVDQG ZH$)),50WKHEDQNUXSWF\FRXUWjVRUGHURYHUUXOLQJWKH'HEWRUjVREMHFWLRQWR/DQGPDUNjV FODLPEXWZHGRVRZLWKRXWUHDFKLQJWKDWFRXUWjVUHVMXGLFDWDUXOLQJ 7KH'HEWRUjVSULQFLSDODUJXPHQWLVWKDWWKHEDQNUXSWF\FRXUWIDLOHGWRFRQGXFWDQ HYLGHQWLDU\KHDULQJWRDFFHSWSURRIRQWKH'HEWRUjVFRQWHQWLRQWKDWWKHDUELWUDWLRQDZDUG ZDVVXEMHFWWRDWWDFNLQWKDWFRXUW:HH[DPLQHHDFKRIWKH'HEWRUjVDUJXPHQWV :HQRWHILUVWWKDWWKHEDQNUXSWF\FRXUWZDVZLWKRXWVXEMHFWPDWWHUMXULVGLFWLRQWR UHYLHZWKHGHFLVLRQRIWKHVWDWHFRXUWWKDWWKH'HEWRUDQG/DQGPDUNmVLJQHGFRQWUDFWXDO GRFXPHQWVl DQG mWKDW UHDVRQDEOH PLQGV FDQQRW GLIIHU RQ WKH TXHVWLRQ RI ZKHWKHU WKH DUELWUDWLRQFODXVHZDVLQFOXGHGLQWKHFRQWUDFWVl2Q'HFHPEHUSULRUWRWKH 'HEWRUjVILOLQJIRU&KDSWHUUHOLHIWKHVWDWHFRXUWUHIHUUHGWKHSDUWLHVjFRQWUDFWXDOGLVSXWHV WRDUELWUDWLRQ7KDWGHFLVLRQLVEH\RQGFROODWHUDODWWDFNLQWKHEDQNUXSWF\FRXUWXQGHUWKH 5RRNHU)HOGPDQGRFWULQHZKLFKJHQHUDOO\SUHFOXGHVDIHGHUDOWULDOFRXUWIURPH[HUFLVLQJ DSSHOODWHUHYLHZRIDVWDWHFRXUWMXGJPHQW6HH6LQJOHWRQY)LIWK7KLUG%DQNRI:HVWHUQ 2KLR ,Q UH 6LQJOHWRQ   %5   %$3 WK &LU    $Q\ SRUWLRQ RI WKH 'HEWRUjVDWWDFNRQWKHDUELWUDWLRQDZDUGWKDWIORZVIURPWKH'HEWRUjVFRQWHQWLRQWKDWWKH LQLWLDODUELWUDWLRQSURFHVVLVIODZHGLVWKHUHIRUHXQIRXQGHG 0RUHSDUWLFXODUO\LIWKH'HEWRULVDJJULHYHGEHFDXVHKHZDVIRUFHGLQWRDUELWUDWLRQ UDWKHUWKDQDMXGLFLDOSURFHHGLQJWKDWDUJXPHQWDOVRLVEH\RQGWKHEDQNUXSWF\FRXUWjVDQG WKLV3DQHOjVMXULVGLFWLRQ7KHUHFRUGEHIRUHWKLV3DQHOFRQWDLQVLQIDFWDVSHFLILFFRQWUDFW IRUDUELWUDWLRQHQWHUHGLQWRE\WKH'HEWRUDQG/DQGPDUNRQ)HEUXDU\VXEPLWWLQJ WKHFRQWURYHUV\RYHUWKHFRQWUDFWVDWLVVXHLQWKLVDSSHDOWRDUELWUDWLRQXQGHUWKH1*)$ UXOHV  7KH 'HEWRUjV DUJXPHQW WR WKH EDQNUXSWF\ FRXUW WKDW WKH DUELWUDWLRQ FODXVH ZDV KLGGHQLQWKHFRQWUDFWDQGWKDWKHZDVQRWIXOO\LQIRUPHGPXVWEHUHMHFWHG 5HJDUGLQJWKH'HEWRUjVFRQWHQWLRQWKDWWKHDUELWUDWLRQSURFHVVZDVIODZHGEHFDXVH RIDQLQKHUHQWELDVWKH'HEWRUGRHVQRPRUHWKDQPDNHDJHQHUDOL]HGDUJXPHQWWKDWDOO RIWKHDUELWUDWRUVZHUHmWDLQWHGlEHFDXVHWKH\mDOOFDPHRXWRIWKH>JUDLQGHDOHU@LQGXVWU\l 7KHFRXUWLQ1DJHOY$'0,QYHVWRU6HUYV,QF)6XSSG1',OO DPHQGHGE\ 1R  &   :/  1' ,OO   DIIjG  )G  WK &LU 

6

 SRLQWHG RXW WKH HVVHQWLDO IODZ LQ WKLV DUJXPHQW  sXVW DV LQ1DJHO WKLV 'HEWRU KDV QRW DUJXHG WKDW mDQ\ RI WKH DUELWUDWRUV LV ELDVHG LQ WKH VHQVH WKDW KH KDV D VWDNH LQ WKH RXWFRPHl1DJHO)6XSSGDW7KHEDQNUXSWF\FRXUWJDYH'HEWRUjVFRXQVHOD IXOORSSRUWXQLW\WRSUHVHQWKLVWKHRULHVRIZK\WKHDUELWUDWLRQZDVVXEMHFWWRMXGLFLDOUHYLHZ 7KHDUJXPHQWLQUHIHUHQFHWRELDVZDVOLPLWHGWRWKHFRQFHSWWKDWQRQHRIWKHDUELWUDWRUV FRXOGEHIDLUGXHWRWKHLUHPSOR\PHQWDVJUDLQGHDOHUPHPEHUVRIWKH1*)$m7KDWVRPH RUDOO RIWKHDUELWUDWRUVPD\EHJUDLQPHUFKDQWVGRHVQRWHTXDWHWRSDUWLDOLW\PRUHOLNHO\ LWHTXDWHVWRH[SHUWLVHDQGREWDLQLQJWKHEHQHILWVRIWKHODZPHUFKDQWLVDELJUHDVRQZK\ VRSKLVWLFDWHGFRPPHUFLDOSDUWLHVFKRRVHDUELWUDWLRQRYHUOLWLJDWLRQl,GDW 8QGHUWKHODQJXDJHRIWKHFRQWUROOLQJVWDWXWHLQRUGHUWRHVWDEOLVKELDVWKHUHPXVW EHDVKRZLQJRImHYLGHQWSDUWLDOLW\l86&†D  7KH6L[WK&LUFXLWKDVGHFOLQHGWR KROG WKDW DUELWUDWLRQ XQGHU WKH 1*)$ UXOHV LV V\VWHPDWLFDOO\ ELDVHG DQG LWV GHFLVLRQ FRQILUPV WKDW WKH REMHFWLQJ SDUW\ PXVW VKRZ WKDW D mUHDVRQDEOH SHUVRQ ZRXOG KDYH WR FRQFOXGHWKDWDQDUELWUDWRUZDVSDUWLDOWRRQHSDUW\WRWKHDUELWUDWLRQl$QGHUVRQV,QFY +RUWRQ)DUPV,QF)GWK&LU TXRWLQJ$SSHUVRQY)OHHW&DUULHU &RUS)GWK&LU DGGLWLRQDOTXRWDWLRQRPLWWHG  7KH'HEWRUQRZVD\VWKDWKHZDVQRWJLYHQWKHRSSRUWXQLW\WRSUHVHQWSURRIRQELDV EXWLQWKHDEVHQFHRIDQ\DUJXPHQWRWKHUWKDQWKHJHQHUDORQHGHVFULEHGDERYHWKHUHLV QRWKLQJWRLQGLFDWHWKDWKHKDGDQ\VXEVWDQWLYHSURRIWRRIIHU:HILQGQRHUURULQWKHWULDO FRXUWjVUXOLQJZKHQWKHUHZDVQRSURIIHURISURRIWRWKHEDQNUXSWF\FRXUW 7KH'HEWRUQH[WDUJXHVWKDWWKHDUELWUDWRUVH[FHHGHGWKHLUDXWKRULW\7KH6L[WK &LUFXLWKDVVWDWHGWKDWVXFKDQDUJXPHQWPXVWEHJURXQGHGLQWKHUHOHYDQWVWDWXWHWKH )HGHUDO $UELWUDWLRQ $FW  86& ††  WKH m)$$l   $QGHUVRQV  )G DW  m&RXUWVSOD\RQO\DOLPLWHGUROHLQUHYLHZLQJDUELWUDWLRQGHFLVLRQVDQGµDUHQRWSHUPLWWHG WRFRQVLGHUWKHPHULWVRIDQDUELWUDWLRQDZDUGHYHQLIWKHSDUWLHVDOOHJHWKDWWKHDZDUGUHVWV RQHUURUVRIIDFWRUPLVLQWHUSUHWDWLRQVRIWKHFRQWUDFWj$IHGHUDOFRXUWPD\VHWDVLGHDQ DUELWUDWLRQ DZDUG XQGHU WKH )$$ RQO\ XSRQ D ILQGLQJ WKDW FHUWDLQ VWDWXWRU\ RU MXGLFLDO JURXQGVDUHSUHVHQWl FLWDWLRQVRPLWWHG 7KH'HEWRUVLPSO\DUJXHVWKDWWKHDUELWUDWRUV PLVLQWHUSUHWHGWKHFRQWUDFWVDWLVVXHZKHQWKH\IRXQGWKHPWREHKHGJHWRDUULYHFRQWUDFWV 7KLVDUJXPHQWWKDWWKHDUELWUDWRUVPDGHDPLVWDNHHLWKHURIIDFWRUODZIDLOVXQGHUWKH DXWKRULW\LQWKLV&LUFXLWWKDWRQHFDQQRWGHPRQVWUDWHDQH[FHVVRIDXWKRULW\PHUHO\EHFDXVH RQHGLVDJUHHVZLWKWKHDUELWUDWRUVjGHFLVLRQ)HGHUDWHG'HSjW6WRUHV,QFYs9%,QGXV ,QF  )G   WK &LU 

7

 m7KLV FLUFXLW KDV GHWHUPLQHG WKDW mµ>P@DQLIHVW GLVUHJDUGRIWKHODZjlPHDQVPRUHWKDQDPHUHHUURULQLQWHUSUHWDWLRQRUDSSOLFDWLRQRIWKH

ODZl TXRWLQJ$QDFRQGD&RY'LVWULFW/RGJH1RRIWKH,QWjO$VVjQRI0DFKLQLVWVDQG $HURVSDFH:RUNHUV)GWK&LU  7KH6L[WK&LUFXLWUHFRJQL]HVWKDWDQDUELWUDWLRQDZDUGFDQEHYDFDWHGmZKHUHWKH DUELWUDWRUVKDYHPDQLIHVWO\GLVUHJDUGHGWKHODZl'DZDKDUH)GDWFLWDWLRQ RPLWWHG 7KH'HEWRUKRZHYHUKDVIDLOHGWRLGHQWLI\ZKDWODZWKHDUELWUDWRUVGLVUHJDUGHG ,QKLVDUJXPHQWWKDWWKHEDQNUXSWF\FRXUWGHQLHGKLPDQRSSRUWXQLW\WRSUHVHQWSURRIWKDW WKHDUELWUDWRUVPDQLIHVWO\GLVUHJDUGHGWKHODZWKH'HEWRURQO\PHQWLRQVWKDWKHZRXOGKDYH RIIHUHGWKHFRQWUDFWVEHWZHHQWKHVHSDUWLHVWKHDIILGDYLWRIWKH'HEWRUDQGWKHDIILGDYLWRI DQH[SHUWZLWQHVV$WWKHFRQFOXVLRQRIWKH6HSWHPEHUKHDULQJ&KDPSDLJQjV DWWRUQH\WHQGHUHGWKHUHFRUGRIWKHDUELWUDWLRQSDQHODQGWKH'HEWRUjVDWWRUQH\FRQVHQWHG WRLWVDGPLVVLRQ7KHEDQNUXSWF\FRXUWWKHUHIRUHKDGWKHFRQWUDFWVEHIRUHLWE\FRQVHQW RIWKHSDUWLHV0RUHRYHUWKH'HEWRUjVDWWRUQH\TXRWHGUHOHYDQWSRUWLRQVIURPWKHFRQWUDFWV LQKLVSUHVHQWDWLRQWRWKHEDQNUXSWF\FRXUW7KHEDQNUXSWF\FRXUWjVRSLQLRQLQGLFDWHVWKDW WKHFRXUWIXOO\UHYLHZHGHYHU\WKLQJEHIRUHLWLQFOXGLQJWKHFRQWUDFWV:HILQGQRPHULWWR WKH'HEWRUjVDUJXPHQWWKDWWKHEDQNUXSWF\FRXUWIDLOHGWRFRQVLGHUWKHFRQWUDFWV (VVHQWLDOO\ WKH 'HEWRU QRZ DUJXHV WKDW WKH DUELWUDWRUV ZHUH ZURQJ LQ WKHLU LQWHUSUHWDWLRQRIWKHSDUWLHVjFRQWUDFWVEXWDJDLQZHILQGQRWKLQJLQWKH'HEWRUjVDUJXPHQW WRLQGLFDWHWKDWDQ\SURRIFRXOGKDYHEHHQRIIHUHGLQVXSSRUWRIWKDWSRLQW7KH'HEWRUjV FRQWHQWLRQ WR WKH EDQNUXSWF\ FRXUW ZDV WKDW WKH DUELWUDWRUV ZKR ZHUH IURP WKH JUDLQ LQGXVWU\VKRXOGKDYHUHFRJQL]HGWKDWWKHVHFRQWUDFWVZHUHRQWKHLUIDFHIXWXUHVFRQWUDFWV JRYHUQHGE\WKH&RPPRGLW\([FKDQJH$FW7KHFRQWUDFWVGRVSHDNIRUWKHPVHOYHVDQG WKHSURIIHUHGDIILGDYLWRIWKH'HEWRUPHUHO\VD\VWKDWWKHFRQWUDFWVDWWDFKHGWRWKHDIILGDYLW ZHUHWKHSDUWLHVjFRQWUDFWV $VWRWKHH[SHUWjVDIILGDYLWLWPHUHO\H[SUHVVHVDQRSLQLRQWKDWWKHFRQWUDFWVZHUH mIXWXUHVFRQWUDFWVlDQRSLQLRQZKLFKWKHEDQNUXSWF\FRXUWZRXOGKDYHEHHQFRPSHOOHGWR UHMHFWLQYLHZRIWKH$QGHUVRQVDXWKRULW\,QWKDWRSLQLRQWKH6L[WK&LUFXLWFOHDUO\KHOG WKDWLQGHWHUPLQLQJZKHWKHUDSDUWLFXODUFRPPRGLWLHVFRQWUDFWIDOOVZLWKLQWKH FDVK IRUZDUG H[FHSWLRQ >WR WKH &RPPRGLW\ ([FKDQJH $FW m&($l  DQG &RPPRGLW\)XWXUHV7UDGLQJ&RPPLVVLRQm&)7&l

8

UHJXODWLRQV@FRXUWVPXVW IRFXVRQZKHWKHUWKHUHLVDOHJLWLPDWHH[SHFWDWLRQWKDWSK\VLFDOGHOLYHU\RI WKHDFWXDOFRPPRGLW\E\WKHVHOOHUWRWKHRULJLQDOFRQWUDFWLQJEX\HUZLOORFFXU LQWKHIXWXUH $QGHUVRQV)GDW+HUHWKH'HEWRUZRXOGFOHDUO\IDLOLQKLVDWWDFNDVWKHUHLV QRGLVSXWHLQWKHUHFRUGRUDUJXPHQWVDERXWWKH'HEWRUjVNQRZOHGJHWKDWDFWXDOGHOLYHU\ ZDVUHTXLUHGXQGHUWKHVHFRQWUDFWV7KHILQGLQJRIWKHDUELWUDWRUVLQWKLVUHJDUGLVQRWD PDQLIHVWGLVUHJDUGRIWKHODZUDWKHULWLVDIDFWXDOILQGLQJWKDWWKH'HEWRUDGPLWWHG 7KH'HEWRUDUJXHVDSSDUHQWO\DVDPDWWHURIODZWKDWWKHFRQWUDFWVDUHIXWXUHV FRQWUDFWVEXWRQO\EHFDXVHRIWKHLUUROOLQJIHDWXUH+HGRHVQRWDUJXHWKHUHOHYDQFHRIDQ\ RI WKH RWKHU IDFWRUV GHVFULEHG LQ $QGHUVRQV  )G DW  IRU KHGJH WR DUULYH FRQVLGHUDWLRQ7KH'HEWRUFRXOGUROOWKHVHFRQWUDFWVIRUZDUGIRUGHOLYHU\EXWWKDWIHDWXUH PHUHO\PDNHVWKHVHFRQWUDFWVmIOH[LEOHlQRWIODZHG,GDW7KDWLVWKHVHOOHUjVRSWLRQ WRUROOIRUZDUGWKHRULJLQDOGHOLYHU\GDWHWRDIXWXUHEXWGHILQLWHGDWHGRHVQRWFRQYHUWDQ RWKHUZLVHYDOLGKHGJHWRDUULYHFRQWUDFWLQWRDIXWXUHVFRQWUDFW7KH'HEWRUjVFRQWHQWLRQ WKDWWKHDUELWUDWRUVZHUHLQHUURUGLVUHJDUGVWKHFRQWUROOLQJODZLQWKLV&LUFXLWm$OWKRXJK WKH\PD\DOORZPRUHIOH[LELOLW\WKDQLQDWUDGLWLRQDOFDVKIRUZDUGFRQWUDFWZHQRQHWKHOHVV KROGWKDW+7$FRQWUDFWVZKLFKFRQWHPSODWHDFWXDOSK\VLFDOGHOLYHU\RIDFRPPRGLW\DUH FDVKIRUZDUGFRQWUDFWVDQGDUHWKHUHIRUHH[FOXGHGIURPFRYHUDJHE\WKH&($DQG&)7& UHJXODWLRQVl,G,QYLHZRIWKH'HEWRUjVDGPLVVLRQWKDWXOWLPDWHGHOLYHU\ZDVH[SHFWHGZH ILQGQRHUURULQWKHEDQNUXSWF\FRXUWjVUXOLQJXSKROGLQJWKHDUELWUDWLRQDZDUG 1RULVWKHUHHUURULQWKHDOOHJHGGHQLDORIDQHYLGHQWLDU\KHDULQJVLQFHWKH'HEWRUjV DGPLVVLRQ ZRXOG KDYH EHHQ SURRI LQ VXSSRUW RI WKH EDQNUXSWF\ FRXUWjV UHVSHFW IRU WKH DUELWUDWLRQSURFHVVDQGDZDUG:HQRWHWKDWWKHEDQNUXSWF\FRXUWjVRSLQLRQVD\VWKDWWKH 'HEWRU IDLOHG WR SUHVHQW mDXWKRULW\l UDWKHU WKDQ SURRI  WR VKRZ WKDW WKH DUELWUDWRUV

 47 D GLVFXVVLRQ RI WKH HIIHFW RI WKH mUROOLQJl RU IOH[LEOH GHOLYHU\ IHDWXUH RI KHGJH WR DUULYH FRQWUDFWV VHH 1DJHO  ) 6XSSG DW  DQG $QGHUVRQV  )G DW  &DVK IRUZDUG FRQWUDFWV ZKLFK LQFOXGH IOH[LEOH KHGJH WR DUULYH FRQWUDFWV DUH QRW FRQWUROOHG E\ WKH &RPPRGLW\ ([FKDQJH $FW DQG WKH &RPPRGLW\ )XWXUHV 7UDGLQJ &RPPLVVLRQ UHJXODWLRQV ZKLFK LQVWHDG JRYHUQ mIXWXUHV FRQWUDFWVl GHILQHG E\ WKH $FW DV mµFRQWUDFWV RI VDOH RI D FRPPRGLW\ IRU IXWXUH GHOLYHU\jl $QGHUVRQV  )G DW  TXRWLQJ  86&$ †

HPSKDVLV DGGHG  7KH $FW H[SOLFLWO\ H[FOXGHV IURP WKH GHILQLWLRQ RI mIXWXUH GHOLYHU\l mµDQ\ VDOH RI DQ\ FDVK FRPPRGLW\ IRU GHIHUUHG VKLSPHQW RU GHOLYHU\jl 1DJHO  ) 6XSSG DW  TXRWLQJ  86& † D

HPSKDVLV DGGHG  DFFRUG $QGHUVRQV  )G DW  Q 

 ,W LV XQGLVSXWHG WKDW WKH FRQWUDFWV DW LVVXH SURYLGHG IRU GHIHUUHG GHOLYHU\ 'HEWRU DGPLWWHG WKDW WKH FRQWUDFWV GLG

QRW DOORZ LQGHILQLWH UROOLQJ EXW UDWKHU UHTXLUHG GHOLYHU\ ZLWKLQ WZR \HDUV +H IXUWKHU WHVWLILHG LQ WKH DUELWUDWLRQ SURFHVV

WKDWKH GLG QRW FRQWUDFW WR VHOO PRUH JUDLQ WKDQ KH H[SHFWHG WR EH DEOH WR GHOLYHU EXW WKDW WKH ZHDWKHU SUHYHQWHG KLP IURP SURGXFLQJ HQRXJK FURSV WR GHOLYHU XQGHU WKHVH FRQWUDFWV 7KH SDUWLHV KDG GRQH EXVLQHVV WRJHWKHU IRU \HDUV DQG WKH 'HEWRU SUHYLRXVO\ KDG H[HUFLVHG KLV ULJKWV WR UROO WKH FRQWUDFWV DQG KDG DOZD\V GHOLYHUHG $00 3/078438  )G DW  LQFOXGLQJ WKHVH IDFWRUV LQ FRQVLGHULQJ ZKHWKHU KHGJH WR DUULYH FRQWUDFWV ILW ZLWKLQ WKH mFDVK IRUZDUG H[FHSWLRQl RI WKH &RPPRGLW\ ([FKDQJH $FW

9



PDQLIHVWO\GLVUHJDUGHGWKHDSSOLFDEOHODZ7KHEDQNUXSWF\FRXUWUHFRJQL]HGDVZHGR WKDWWKHFRQWUROOLQJDXWKRULW\LQWKLV&LUFXLWUHMHFWVWKH'HEWRUjVDUJXPHQW 7KH'HEWRUDOVRDUJXHVWKDWKHLVHQWLWOHGWRMXGLFLDOUHYLHZRIWKHDUELWUDWLRQDZDUG VLQFHWKDWDZDUGKDVQRWEHHQFRQILUPHGE\DQ\FRXUW$QLQLWLDOIODZLQWKLVDUJXPHQWLV WKDWWKH'HEWRULVODWHLIKLVREMHFWLRQWR/DQGPDUNjVSURRIRIFODLPLVFRQVWUXHGDVKLVHIIRUW WRYDFDWHWKHDUELWUDWLRQDZDUG8QGHU86&†DQRWLFHRIDPRWLRQWRYDFDWHPXVW EHVHUYHGRQWKHDGYHUVHSDUW\ZLWKLQWKUHHPRQWKVRIWKHDZDUGjVILOLQJRUGHOLYHU\7KH DUELWUDWLRQDZDUGDSSHDUVWRKDYHEHHQHQWHUHGRQsXO\7KH'HEWRUjVREMHFWLRQ ZDVILOHGRQ)HEUXDU\$IDLOXUHWRWLPHO\VHUYHQRWLFHUHVXOWVLQDIRUIHLWXUHRIWKH ULJKWWRMXGLFLDOUHYLHZRIWKHDZDUG6HH&RUH\Y1HZ<RUN6WRFN([FK)G WK&LU FLWDWLRQVRPLWWHG  :LWKRXW VKXWWLQJ WKH GRRU RQ WKH 'HEWRU RQ WKH WLPHOLQHVV LVVXH KRZHYHU ZH FRQFOXGHWKDWWKHDEVHQFHRISUHEDQNUXSWF\MXGLFLDOFRQILUPDWLRQRIWKHDUELWUDWLRQDZDUG LVQRWVLJQLILFDQWsXGLFLDOFRQILUPDWLRQVHHPVWREHLPSRUWDQWIRUFROOHFWLRQSXUSRVHVXQGHU WKH)$$EXWLWLVQRWUHTXLUHGIRUSXUSRVHVRIUHFRJQL]LQJWKHYDOLGLW\RIWKHDZDUG6HH .HQWXFN\5LYHU0LOOVYsDFNVRQ)GWK&LU m7KHODQJXDJHRI> 86&†@DVWRDSSOLFDWLRQWRWKHFRXUWIRUDQRUGHU>RIFRQILUPDWLRQ@LVQRWPDQGDWRU\EXW SHUPLVVLYH$SDUW\PD\WKHUHIRUHDSSO\WRWKHFRXUWIRUDQRUGHUFRQILUPLQJWKHDZDUG EXWLVQRWOLPLWHGWRVXFKUHPHG\3ULRUWRWKHHQDFWPHQWRIWKH8QLWHG6WDWHV$UELWUDWLRQ $FWDQDFWLRQDWODZRQWKHDZDUGZDVWKHSURSHUPHWKRGRIHQIRUFLQJLWl FLWLQJ8QLWHG )XHO*DV&RY&ROXPELDQ)XHO&RUS)GWK&LU /HKLJK6WUXFWXUDO 6WHHO&RY5XVW(QJjJ&R)G'&&LU FI&RQVROLGDWHG5DLO&RUS Y'HODQG+XGVRQ5\&R,QUH&RQVROLGDWHG5DLO&RUS )6XSS''&  KROGLQJWKDWWKHODQJXDJHLVQHLWKHUSHUPLVVLYHQRUPDQGDWRU\

10

m7KLVFRXUWKROGV WKDWWKHSODLQUHDGLQJRI†LQGLFDWHVWKDWLIDSDUW\GRHVQRWEULQJDQDFWLRQWRFRQILUPLWV DUELWUDWLRQDZDUGZLWKLQRQH\HDUDIWHUWKHDZDUGLVPDGHWKHSDUW\ZLOOEHWLPHEDUUHGIURP DYDLOLQJLWVHOIRIWKHVXPPDU\FRQILUPDWLRQSURFHVVSURYLGHGE\†6LQFH†ZDV PHDQW WR VXSSOHPHQW DQG QRW SUHFOXGH RWKHU UHPHGLHV FRQILUPDWLRQ XQGHU †  LV QRW PDQGDWRU\DQGDVVXFKDSDUW\LVQRWSUHYHQWHGIURPXVLQJHLWKHUVWDWHODZRUFRPPRQODZ

SURFHGXUHVWRFRQILUPWKHDZDUG7RUXOHRWKHUZLVHZRXOGFRQVWLWXWHDOHJDOLQFRQJUXLW\ ZKLFKWKLVFRXUWGHWHUPLQHVZDVQRWLQWHQGHGE\&RQJUHVVl

11



9&21&/86,21

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jVDUJXPHQWXQGHUUHVMXGLFDWDPRRW 7KHGHFLVLRQRIWKHEDQNUXSWF\FRXUWLV$)),50('