- 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 6+$521 5 3)(11,* ; 3ODLQWLII$SSHOODQW 1R Y ! +286(+2/' &5(',7 6(59,&(6 ,1&DQG0%1$ $0(5,&$ %$1. 1$ 'HIHQGDQWV$SSHOOHHV 1 $SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW IRUWKH6RXWKHUQ'LVWULFWRI2KLRDW&ROXPEXV 1Rn(GPXQG$6DUJXVsU'LVWULFWsXGJH $UJXHG1RYHPEHU 'HFLGHGDQG)LOHG$SULO %HIRUH&/$ )5%@ LV FRPSHOOHGE\QHFHVVLW\DFRXUWWKDWWULHVWRFKDUWDWUXH 7KHUH DUH WZR SUREOHPV ZLWK WKLV UDWLRQDOH )LUVW WKH FRXUVH WR WKH $FWjV SXUSRVH HPEDUNV XSRQ D YR\DJH SODLQWLIIGRHVQRWDOOHJHLQKHUFRPSODLQWWKDWGHIHQGDQWVKDG ZLWKRXWFRPSDVVZKHQLWGLVUHJDUGVWKHDJHQF\jVYLHZV IRUHNQRZOHGJH RI WKH SODLQWLIIjV RYHUOLPLW FKDUJHV 7KH 7KH FRQFHSW RI mPHDQLQJIXO GLVFORVXUHl WKDW DQLPDWHV PDMRULW\jV IDFWXDO FRQFOXVLRQ DSSHDUV WR EH EDVHG RQ 7,/$FDQQRWEHDSSOLHGLQWKHDEVWUDFW0HDQLQJIXO FRQWHQWLRQVLQSODLQWLIIjVEULHI6LQFHWKLVFDVHZDVGHFLGHG GLVFORVXUH GRHV QRW PHDQ PRUH GLVFORVXUH 5DWKHU LW RQDPRWLRQWRGLVPLVVXQGHU)HG5&LY3EZHDUH GHVFULEHVDEDODQFHEHWZHHQmFRPSHWLQJFRQVLGHUDWLRQV OLPLWHGWRUHYLHZLQJWKHIDFWVDVWKH\DSSHDULQWKHFRPSODLQW RI FRPSOHWH GLVFORVXUH DQG WKH QHHG WR DYRLG 0DUVY%XFNH\H5XUDO(OHF&RRS,QF)G >LQIRUPDWLRQDORYHUORDG@l WK&LU5RVHY+DUWIRUG8QGHUZULWHUV,QF&R )G WK &LU 6HFRQG WKH SODLQWLIIjV ,GLWDOLFVLQWKHRULJLQDO7KLV&RXUWDOVRKDVVWDWHGWKDWmLQ DVVHUWLRQLQKHUEULHIWKDWDFUHGLWFDUGLVVXHUmJHWVWRPDNHWKH 7,/$DFWLRQVLWZLOOGHIHUWRWKHUHJXODWLRQVLQWHUSUHWLQJ GHFLVLRQDVWRZKHWKHURUQRW>DQRYHUOLPLW@FKDUJHZLOOEH WKH$FWl%HJDOD)GDWFLWLQJ0LOKROOLQ86 SHUPLWWHGWRJRWKURXJKlPD\QRWLQDOOFDVHVEHDFFXUDWH DW +RZHYHU ZKLOH WKH )5% KDV EHHQ JLYHQ EURDG )URPRXUSHUVRQDOH[SHULHQFHZHNQRZWKDWPDQ\PHUFKDQWV DXWKRULW\LQSUHVFULELQJUHJXODWLRQVWRFDUU\RXWWKHSXUSRVHV FKHFNFUHGLWFDUGVRQOLQHEHIRUHDFFHSWLQJFXVWRPHUFKDUJHV RI7,/$WKLVDXWKRULW\LVFRQILQHGWRHIIRUWVWRmHIIHFWXDWHWKH +RZHYHUWKLVPD\QRWEHWUXHLQDOOFDVHVDQGRIFRXUVHWKH SXUSRVH RI >WKH $FW@ WR SUHYHQW FLUFXPYHQWLRQ RU HYDVLRQ 7,/$ DQG 5HJXODWLRQ = DSSO\ WR DOO FRQVXPHU FUHGLW WKHUHRI RU WR IDFLOLWDWH FRPSOLDQFH WKHUHZLWKl 86& WUDQVDFWLRQVQRWMXVWWKRVHRIWKHSODLQWLII D7KXVWKH)5%jVDXWKRULW\LVQRWZLWKRXWOLPLWV 6HHHJ$QGHUVRQ%URV)RUGY9DOHQFLD86 :HDUHDGPRQLVKHGE\WKH6XSUHPH&RXUWWKDW KROGLQJ WKDW FRXUWV QHHG RQO\ GHIHU WR )5% UHJXODWLRQV WKDW DUH QRW UHSXJQDQW WR 7,/$ &RQVXPHUV :KHQDFRXUW UHYLHZVDQDJHQF\j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mILQDQFHFKDUJHlDVIROORZV ('*$5 &KLHI 'LVWULFW sXGJH GLVVHQWLQJ LQ SDUW ([FHSWDVRWKHUZLVHSURYLGHGLQWKLVVHFWLRQWKHDPRXQW FRQFXUULQJLQSDUW%HFDXVH,GRQRWWKLQNWKDWWKHODQJXDJH RIWKHILQDQFHFKDUJHLQFRQQHFWLRQZLWKDQ\FRQVXPHU RIWKH7UXWKLQ/HQGLQJ$FWm7,/$lQHFHVVDULO\ZDUUDQWV FUHGLWWUDQVDFWLRQVKDOOEHGHWHUPLQHGDVWKHVXPRIDOO WKH LQFOXVLRQ RI DQ RYHUOLPLW IHH LQ WKH ILQDQFH FKDUJH , FKDUJHVSD\DEOHGLUHFWO\RULQGLUHFWO\E\WKHSHUVRQWR GLVVHQWIURP3DUW,,,RIWKHPDMRULW\RSLQLRQ ZKRP WKH FUHGLW LV H[WHQGHG DQG LPSRVHG GLUHFWO\ RU LQGLUHFWO\E\WKHFUHGLWRUDVDQLQFLGHQWWRWKHH[WHQVLRQ 86&DJHQHUDOO\GHILQHVDILQDQFHFKDUJHDV RIFUHGLW IROORZV 86&D6LPLODUWR7,/$5HJXODWLRQ=GHILQHV ([FHSWDVRWKHUZLVHSURYLGHGLQWKLVVHFWLRQWKHDPRXQW mILQDQFHFKDUJHlDVmWKHFRVWRIFRQVXPHUFUHGLWlLQFOXGLQJ RIWKHILQDQFHFKDUJHLQFRQQHFWLRQZLWKDQ\FRQVXPHU mDQ\FKDUJHSD\DEOHGLUHFWO\RULQGLUHFWO\E\WKHFRQVXPHUl FUHGLWWUDQVDFWLRQVKDOOEHGHWHUPLQHGDVWKHVXPRIDOO DQGLPSRVHGE\WKHFUHGLWRUDVDUHVXOWRIWKHH[WHQVLRQRI FKDUJHVSD\DEOHGLUHFWO\RULQGLUHFWO\E\WKHSHUVRQWR FUHGLW&)5D5HJXODWLRQ=H[FOXGHV ZKRP WKH FUHGLW LV H[WHQGHG DQG LPSRVHG GLUHFWO\ RU IURPWKLVGHILQLWLRQRIILQDQFHFKDUJHm>F@KDUJHVIRUDFWXDO LQGLUHFWO\E\WKHFUHGLWRUDVDQLQFLGHQWWRWKHH[WHQVLRQ XQDQWLFLSDWHGODWHSD\PHQWIRUH[FHHGLQJDFUHGLWOLPLWRUIRU RIFUHGLW GHOLQTXHQF\ GHIDXOW RU D VLPLODU RFFXUUHQFHl &)5 F 7KHVWDWXWHWKHQVSHFLILHVVRPHH[DPSOHVRIW\SHVRIFKDUJHV WKDWPXVWEHLQFOXGHGDVDSDUWRIWKHILQDQFHFKDUJHGLVFORVHG 5HO\LQJRQ0LOKROOLQWKHGLVWULFWFRXUWIRXQGWKDWLWZDV WR FRQVXPHUV 5HJXODWLRQ = SURPXOJDWHG E\ WKH )HGHUDO ERXQGWRJLYHGHIHUHQFH WRWKH)5%jVLQWHUSUHWDWLRQRIWKH 5HVHUYH %RDUG WR LPSOHPHQW WKH 7,/$ IOHVKHV RXW LQ WHUP ILQDQFH FKDUJH DQG GLVPLVVHG 3ODLQWLIIjV FRPSODLQW FRQVLGHUDEOHGHWDLOZKDWLVDQGZKDWLVQRWWREHLQFOXGHG EHFDXVHRI5HJXODWLRQ=jVH[FOXVLRQRIRYHUOLPLWIHHVIURP ZLWKLQ WKH ILQDQFH FKDUJH $V WKH PDMRULW\ SRLQWV RXW WKHGHILQLWLRQRIILQDQFHFKDUJH7KHGLVWULFWFRXUWQRWHGWKDW 5HJXODWLRQ=FOHDUO\H[FOXGHVIURPWKHGHILQLWLRQRIILQDQFH DOO WKH FDWHJRULHV RI IHHV H[FOXGHG IURP WKH GHILQLWLRQ RI FKDUJHm>F@KDUJHVIRUDFWXDOXQDQWLFLSDWHGODWHSD\PHQWIRU ILQDQFHFKDUJHXQGHUFDULVHZKHQWKHWHUPVXQGHU H[FHHGLQJ D FUHGLW OLPLW RU IRU GHOLQTXHQF\ GHIDXOW RU D VLPLODU RFFXUUHQFHl &)5 F HPSKDVLV VXSSOLHG 3ULRU WR 5HJXODWLRQ = GLG QRW H[FOXGH FKDUJHV IRU H[FHHGLQJ D FUHGLW OLPLW IURP WKH WHUP mILQDQFH FKDUJHl 7KH )5% DPHQGHG WKH 7KH PDMRULW\ FRQFOXGHV FRQWUDU\ WR WKH )HGHUDO 5HVHUYH UHJXODWLRQ DIWHU &RQJUHVV SDVVHG WKH 7UXWK ,Q /HQGLQJ 6LPSOLILFDWLRQ $FW %RDUG WKDW DQ RYHUOLPLW IHH mIDOOV VTXDUHO\ ZLWKLQ WKH 3XE / 1R 6WDW $00 0DVV 3UDF VWDWXWRU\ GHILQLWLRQ RI D ILQDQFH FKDUJH 7KHUH LV QR &RQVXPHU 5LJKWV DQG 5HPHGLHV :HVW )LQDO 5XOH )HG 5HJ $SULO m>3@DUDJUDSK F >RI WKH FXUUHQW DPELJXLW\l , UHVSHFWIXOO\ GLVDJUHH 2YHUOLPLW IHHV DUH UHJXODWLRQ@ FRUUHVSRQGV WR F RI WKH >IRUPHU@ UHJXODWLRQ EXW DGGV QRZKHUHPHQWLRQHGLQD7KHPDMRULW\QRQHWKHOHVV RQH LWHP WR WKH OLVW 7KH UHYLVHG UHJXODWLRQ VSHFLILFDOO\ H[FOXGHV FKDUJHV IRU H[FHHGLQJ D FUHGLW OLPLW IURP WKH ILQDQFH FKDUJHl 3IHQQLJY+RXVHKROG 1R 1R 3IHQQLJY+RXVHKROG &UHGLW6HUYVHWDO &UHGLW6HUYVHWDO ZKLFK WKH FUHGLW ZDV H[WHQGHG KDYH EHHQ EUHDFKHG E\ WKH LPSRVHGIRUH[FHHGLQJKHUFUHGLWOLPLW:HWKHUHIRUHDIILUP ERUURZHU7KHGLVWULFWFRXUWGHWHUPLQHGWKDWm3ODLQWLIIVHHNV WKHGLVPLVVDORIFRXQW,,RI3ODLQWLIIjVFRPSODLQWWRWKHH[WHQW D OLEHUDO LQWHUSUHWDWLRQ RI 7,/$ QRWZLWKVWDQGLQJ WKH SODLQ VKHVHHNVPRQHWDU\GDPDJHV ODQJXDJH RI 5HJXODWLRQ =l ,W FRQFOXGHG WKDW WKH )5% mUDWLRQDOO\lH[FOXGHGIHHVIRUH[FHHGLQJDFUHGLWOLPLWIURP &21&/86,21 WKH GHILQLWLRQ RI mILQDQFH FKDUJHl EHFDXVH VXFK IHHV DUH mFKDUJHVIRUSDVWFUHGLWH[WHQVLRQHYHQWVWKDWZHUHQRWDJUHHG 7KHGLVWULFWFRXUWHUUHGLQIDLOLQJWRFRQVWUXH7,/$OLEHUDOO\ WR E\ WKH SDUWLHVl $FFRUGLQJ WR WKH GLVWULFW FRXUW QR LQ 3ODLQWLIIjV IDYRU DQG LQ FRQFOXGLQJ WKDW WKH IHH DVVHVVHG DJUHHPHQW ZDV UHDFKHG E\ WKH SDUWLHV UHJDUGLQJ FXVWRPHUV 3ODLQWLII LQ WKLV FDVH UHVXOWHG IURP D XQLODWHUDO EUHDFK RQ mXQLODWHUDOO\H[FHHGLQJWKHLUFUHGLWOLPLWl7KXVLWKHOGWKDW 3ODLQWLIIVj SDUW ZKHQ VKH H[FHHGHG KHU FUHGLW OLPLW WKH)5%UDWLRQDOO\KDGGHWHUPLQHGWKDWEHFDXVHIHHVVXFKDV &RQVWUXLQJ WKH DOOHJDWLRQV LQ 3ODLQWLIIjV FRPSODLQW LQ KHU WKHRQH3ODLQWLIIZDVFKDUJHGLQWKLVFDVHZHUHRQO\DVVHVVHG IDYRU WKH RYHUOLPLW IHH ZDV LPSRVHG LQFLGHQW WR WKH ZKHUHWKHFXVWRPHUEUHDFKHGWKHRULJLQDOWHUPVRIWKHFUHGLW H[WHQVLRQRIFUHGLWWKDW'HIHQGDQWVDJUHHGWRJUDQW3ODLQWLII DJUHHPHQWDQ\IHHVLPSRVHGLQFLGHQWWRWKDWEUHDFKFRXOGQRW DQGWKHUHIRUHIDOOVVTXDUHO\ZLWKLQWKHVWDWXWRU\GHILQLWLRQRI EHFRQVWUXHGDVILQDQFHFKDUJHV WKHmILQDQFHFKDUJHl1HYHUWKHOHVV'HIHQGDQWVXQGLVSXWHGO\ UHOLHGRQWKHSODLQODQJXDJHRI5HJXODWLRQ=ZKLFKDOWKRXJK 'HIHQGDQWVDUJXHWKDWWKHGLVWULFWFRXUWZDVFRUUHFWDQGWKDW LW FRQIOLFWV ZLWK WKH SODLQ ODQJXDJH RI 7,/$ H[SUHVVO\ WKLV&RXUWPXVWXSKROGWKH)5%jVLQWHUSUHWDWLRQRI5HJXODWLRQ H[FOXGHVIHHVFKDUJHGIRUH[FHHGLQJDFUHGLWOLPLWIURPWKH =EHFDXVHLWLVmUDWLRQDOO\EDVHGlsXVWDVWKHGLVWULFWFRXUW GHILQLWLRQRIWKHmILQDQFHFKDUJHl7KXVSXUVXDQWWR7,/$ IRXQG 'HIHQGDQWV FRQWHQG WKDW WKH RYHUOLPLW IHH DQG DOO 'HIHQGDQWV PD\ QRW EH KHOG OLDEOH IRU GDPDJHV IRU VXFK RWKHUIHHVH[FOXGHGIURPWKHVWDWXWRU\GHILQLWLRQRImILQDQFH RPLVVLRQ KRZHYHU 3ODLQWLII PD\ SURFHHG ZLWK KHU FODLP FKDUJHl XQGHU F VKDUH D mFRPPRQ WKHPHl DJDLQVW'HIHQGDQWVIRUHTXLWDEOHUHOLHIXSRQUHPDQG)RUWKH 5HO\LQJ RQ ODQJXDJH IURP WKH GLVWULFW FRXUWjV RSLQLRQ IRUJRLQJUHDVRQVZH$)),50LQSDUW5(9(56(LQSDUW 'HIHQGDQWVFODLP DQG5(0$1'WKHPDWWHUWRWKHGLVWULFWFRXUW $OORIWKHVHSRVWFUHGLWH[WHQVLRQRFFXUUHQFHVDUHGRQHLQ YLRODWLRQRIWKHDJUHHGXSRQWHUPVXSRQZKLFKWKHFUHGLW ZDVH[WHQGHG6XFKFKDUJHVDUHQHYHULPSRVHGXSRQD ERUURZHUZKRVLPSO\IROORZVWKHWHUPVRIWKHDJUHHPHQW 3ODLQWLII LV LQ QR ZD\ SUHMXGLFHG E\ RXU GHFLVLRQ ,QGHHG LQ KHU 7KH )HGHUDO 5HVHUYH %RDUG UDWLRQDOO\ GHWHUPLQHG WKDW UHSO\ EULHI VKH VWDWHV WKDW 'HIHQGDQWVj JRRG IDLWK GHIHQVH VKRXOG QRW EDU KHU FODLPV LQDVPXFK DV VKH QRW RQO\ VHHNV PRQHWDU\ EXW DOVR HTXLWDEOH WKHVH FKDUJHV IRU DFWV DPRXQWLQJ WR EUHDFKHV RI WKH UHOLHI 'XULQJ RUDO DUJXPHQWV KHU FRXQVHO UHDVVHUWHG WKLV SRVLWLRQ DJUHHGXSRQFUHGLWH[WHQVLRQDUHQRWILQDQFHFKDUJHV +RZHYHU E\ KROGLQJ WKDW RQ WKH IDFWV RI WKLV FDVH LW LV EH\RQG FDYLO WKDW 'HIHQGDQWV FRPSOLHG ZLWK 5HJXODWLRQ = DQG SXUVXDQW WR 86& 'HIHQGDQWj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jV JRRG IDLWK FRQIRUPDQFH GHIHQVH ZRXOG EH XQDYDLOLQJ 3IHQQLJY+RXVHKROG 1R 1R 3IHQQLJY+RXVHKROG &UHGLW6HUYVHWDO &UHGLW6HUYVHWDO ZH H[HUFLVH RXU GLVFUHWLRQ WR HQWHUWDLQ WKHLU DUJXPHQW LQFUHGLWWUDQVDFWLRQV6HH%HJDOD)GDWsRQHV DOWKRXJKLWZDVQRWSDVVHGXSRQEHORZ )GDW7KXV7,/$PXVWEHLQWHUSUHWHGOLEHUDOO\ LQ3ODLQWLIIjVIDYRULQWKHLQVWDQWFDVH)XUWKHUGHVSLWHWKH 2Q LWV IDFH 5HJXODWLRQ = H[SUHVVO\ VWDWHV WKDW FKDUJHV ODQJXDJHLQFRI5HJXODWLRQ=ZHEHOLHYHWKHIHH LPSRVHG IRU H[FHHGLQJ FUHGLW OLPLWV DUH H[FOXGHG IURP WKH LPSRVHG LQ WKLV FDVH IDOOV VTXDUHO\ ZLWKLQ WKH VWDWXWRU\ mILQDQFH FKDUJHl 6HH &)5 F (YHQ GHILQLWLRQRIDILQDQFHFKDUJH DVVXPLQJDOODOOHJDWLRQVLQ3ODLQWLIIjVFRPSODLQWDUHWUXHDQG FRQVWUXLQJ WKRVH DOOHJDWLRQV LQ WKH OLJKW PRVW IDYRUDEOH WR ,WLVUXGLPHQWDU\WKDWmWKHVWDUWLQJSRLQWIRULQWHUSUHWLQJD 3ODLQWLIILWLVXQGLVSXWHGWKDWWKHIHHDWLVVXHLQWKLVFDVHZDV VWDWXWHLVWKHODQJXDJHRIWKHVWDWXWHLWVHOIl&RQVXPHU3URG LPSRVHGIRUmH[FHHGLQJDFUHGLWOLPLWl&RQVHTXHQWO\HYHQ 6DIHW\ &RPPjQ Y *7( 6\OYDQLD ,QF 86 LI WKH VWDWXWH UHTXLUHG 'HIHQGDQWV WR GLVFORVH WKLV IHH DV D m$EVHQWDFOHDUO\H[SUHVVHGOHJLVODWLYHLQWHQWLRQWR ILQDQFHFKDUJHXQHTXLYRFDOO\5HJXODWLRQ=GLGQRW6HH WKH FRQWUDU\ WKDW ODQJXDJH PXVW RUGLQDULO\ EH UHJDUGHG DV 86&IQROLDELOLW\IRUmDQ\DFWGRQHRURPLWWHGLQ FRQFOXVLYHl,GVHHDOVR%UDGOH\Y$XVWLQ)G JRRGIDLWKLQFRQIRUPLW\ZLWKlD)5%UHJXODWLRQ%DVKDPY WK&LUH[SODLQLQJWKDWm>L@QGHWHUPLQLQJWKH )LQ $P &RUS )G WK &LU PHDQLQJ RI OHJLVODWLRQ ZH PXVW ILUVW ORRN WR WKH SODLQ DIILUPLQJ GLVPLVVDO DQGRU JUDQW RI VXPPDU\ MXGJPHQW LQ ODQJXDJHRIWKHVWDWXWHLWVHOIlm7KHRUGLQDU\PHDQLQJRIWKH IDYRURIGHIHQGDQWVDQGH[SODLQLQJWKDWEHFDXVHGHIHQGDQWV ZRUGVXVHGDUHSUHVXPHGWRH[SUHVVFRQJUHVVLRQDOSXUSRVHV XQGLVSXWHGO\ FRPSOLHG ZLWK 5HJXODWLRQ = DOWKRXJK WKH l )LUVW 1DWjO %DQN RI &RXQFLO %OXIIV Y 2IILFH RI WKH 5HJXODWLRQ FRQIOLFWHG ZLWK GLVFORVXUH UHTXLUHPHQWV XQGHU &RPSWUROOHURIWKH&XUUHQF\)GWK 7,/$WKH\FRXOGQRWSXUVXDQWWRIEHKHOGFLYLOO\ &LU FLWDWLRQ RPLWWHG $V VWDWHG SUHYLRXVO\ 7,/$ OLDEOHIRUWKHLUIDLOXUH WR IROORZ7,/$VHHDOVR&KDUOHV GHILQHVWKHILQDQFHFKDUJHDVWKHVXPRImDOOFKDUJHVlSDLG $ODQ :ULJKW $UWKXU 5 0LOOHU )HGHUDO 3UDFWLFH DQG E\WKHSHUVRQWRZKRPFUHGLWLVH[WHQGHGDQGDVVHVVHGE\WKH 3URFHGXUH DW G HG H[SODLQLQJ WKDW FUHGLWRUmDVDQLQFLGHQWWRWKHH[WHQVLRQRIFUHGLWl86& DOWKRXJKJHQHUDOUXOHSUHYHQWVDVVHUWLQJDIILUPDWLYHGHIHQVH D HPSKDVLV DGGHG 3ODLQWLII DOOHJHV WKDW RQDPRWLRQWRGLVPLVVZKHUHGHIHQVHLVSODLQRQLWVIDFH 'HIHQGDQWV LPSRVHG WKH RYHUOLPLW IHH DIWHU VKH FRXUWV JHQHUDOO\ DOORZ LW IRRWQRWH FLWDWLRQV RPLWWHG ,Q UHTXHVWHGDQGZDVJUDQWHGDGGLWLRQDOFUHGLW+DG'HIHQGDQWV DGGLWLRQ 3ODLQWLII KDV QRW SRLQWHG WR DQ\ GLVSXWHG IDFWXDO QRW JUDQWHG 3ODLQWLIIjV UHTXHVW IRU DGGLWLRQDO FUHGLW ZKLFK LVVXHUHJDUGLQJ ZKHWKHU'HIHQGDQWVDFWHGLQJRRGIDLWKE\ UHVXOWHGLQKHUH[FHHGLQJKHUFUHGLWOLPLWWKH\ZRXOGQRWKDYH UHO\LQJRQWKHH[FOXVLRQDU\SURYLVLRQVLQ5HJXODWLRQ=&I LPSRVHGWKHRYHUOLPLWIHH7KXVXQGHUDSODLQUHDGLQJRI /HRQY:DVKLQJWRQ0XW%DQN1$)6XSSG DDQGWKHJHQHUDOUXOHVRIVWDWXWRU\LQWHUSUHWDWLRQWKH 1' ,OO QRWLQJ WKDW FRQWUDU\ WR GHIHQGDQWj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jVPRQWKO\VWDWHPHQWVWKHIHH 3IHQQLJY+RXVHKROG 1R 1R 3IHQQLJY+RXVHKROG &UHGLW6HUYVHWDO &UHGLW6HUYVHWDO 'HIHQGDQWV IDLO WR DUJXH WKDW WKH IHH ZDV QRW VKHVHHNVHTXLWDEOHUHOLHIZKLFKLVXQDIIHFWHGE\'HIHQGDQWVj LPSRVHG LQFLGHQW WR WKH H[WHQVLRQ RI FUHGLW EXW LQVWHDG JRRG IDLWK UHOLDQFH GHIHQVH 6HH 86& I YHKHPHQWO\FRQWHQGWKDWWKLV&RXUWPXVWGHIHUWR5HJXODWLRQ UHOLHYLQJFUHGLWRUOHQGHUDFWLQJLQJRRGIDLWKIURPOLDELOLW\ = :H GLVDJUHH m>:@H GHIHU WR DQ DJHQF\ V UHDVRQDEOH LQWHUSUHWDWLRQRIDVWDWXWHLWDGPLQLVWHUVXQOHVVWKHLQWHQWRI $OWKRXJK WKH GLVWULFW FRXUW GLG QRW H[SUHVVO\ VWDWH LQ LWV &RQJUHVVLVFOHDUl+DPDPDY,16)GWK RSLQLRQ ZK\ LW IDLOHG WR FRQVLGHU 'HIHQGDQWVj JRRG IDLWK &LU FLWDWLRQ DQG LQWHUQDO TXRWDWLRQ PDUNV RPLWWHG DUJXPHQWZHQRWHWKDWGLVWULFWFRXUWVDGKHUHWRWKHJHQHUDO :KHUHDVWDWXWHDQGDQDJHQF\UHJXODWLRQUHJDUGLQJWKHVDPH mZHOOVHWWOHGlUXOHWKDWmDSDUW\PD\QRWUDLVHDQLVVXHIRUWKH PDWWHUVFRQIOLFWFRXUWVPXVWGHIHUWRWKHVWDWXWH6HHHJ. ILUVWWLPHLQDUHSO\EULHIl6HHHJ%RRNV$0LOOLRQ,QFY+ 0DUW &RUS Y &DUWLHU ,QF 86 1(QWHUV,QF)6XSSG6'2KLR H[SODLQLQJWKDWWRGHWHUPLQHZKHWKHUDUHJXODWLRQFRQIOLFWV FLWLQJ$HWQD&DVDQG6XU&RY/HDKH\&RQVW&R,QF ZLWK D VWDWXWH WKH VWDUWLQJ SRLQW LV WKH VWDWXWH LWVHOI LI WKH )G WK &LU 7KH FRXUWV RI DSSHDO VWDWXWHLVFOHDUDQGXQDPELJXRXVWKHPDWWHULVRYHUDQGWKH W\SLFDOO\UHIUDLQIURPFRQVLGHULQJLVVXHVQRWSDVVHGXSRQE\ FRXUWVDQGDJHQF\PXVWJLYHHIIHFWWR&RQJUHVVLRQDOLQWHQW WKHORZHUFRXUWV6HH%OXH&URVV %OXH6KLHOG0XWRI2KLR m,QDVFHUWDLQLQJWKHSODLQPHDQLQJRIWKHVWDWXWHWKHFRXUW Y%OXH&URVVDQG%OXH6KLHOG$VV Q)GWK PXVWORRNWRWKHSDUWLFXODUVWDWXWRU\ODQJXDJHDWLVVXHDVZHOO &LU7KDWUXOHKRZHYHULVQRWLQIOH[LEOH$VZHKDYH DVWKHODQJXDJHDQGGHVLJQRIWKHVWDWXWHDVDZKROHl,G H[SODLQHG 8QLWHG6WDWHVY%XWOHU)GWK&LU VDPH$VZHKDYHH[SODLQHG7,/$LVDUHPHGLDOVWDWXWH >W@KH PDWWHU RI ZKDW TXHVWLRQV PD\ EH WDNHQ XS DQG WKDW PXVW EH FRQVWUXHG EURDGO\ LQ WKH FRQVXPHUjV IDYRU UHVROYHGIRUWKHILUVWWLPHRQDSSHDOLVRQHOHIWSULPDULO\ %HJDOD )G DW 7KH RYHUOLPLW IHH 'HIHQGDQWV WRWKHGLVFUHWLRQRIWKHFRXUWVRIDSSHDOVWREHH[HUFLVHG LPSRVH IDOOV VTXDUHO\ ZLWKLQ WKH VWDWXWRU\ GHILQLWLRQ RI D RQWKHIDFWVRILQGLYLGXDOFDVHV&HUWDLQO\WKHUHDUH ILQDQFH FKDUJH 6HH 86& D 7KHUH LV QR FLUFXPVWDQFHV LQ ZKLFK D IHGHUDO DSSHOODWH FRXUW LV DPELJXLW\)XUWKHUDVLVHYLGHQWIURPRWKHUSURYLVLRQVRIWKH MXVWLILHGLQUHVROYLQJDQLVVXHQRWSDVVHGRQEHORZDV $FWm>W@KHGLVFORVXUHRIWKHILQDQFHFKDUJHLVDWWKHKHDUWRIl ZKHUHWKHSURSHUUHVROXWLRQLVEH\RQGDQ\GRXEWRU 7,/$ (OL]DEHWK 5HQXDUW .DWKOHHQ ( .HHVW 1DWLRQDO ZKHUHmLQMXVWLFHPLJKWRWKHUZLVHUHVXOWl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mGLVFORVHG VKRXOG FRQVLGHU ZKHWKHU WKH UHVROXWLRQ RI WKH LVVXH LV PRUH FRQVSLFXRXVO\ WKDQ RWKHU LWHPV GDWD RU LQIRUPDWLRQ FOHDUDQGZKHWKHULQMXVWLFHPLJKWRWKHUZLVHUHVXOW lHPSKDVLVDGGHG86&DLQFOXGLQJWKH ILQDQFHFKDUJHDVRQHRIWKHUHTXLUHGGLVFORVXUHVm6HHLQJ ,GFLWDWLRQVRPLWWHGDQGHPSKDVLVDGGHG WKH FROG KDUG ILJXUHV >LH WKH ILQDQFH FKDUJH@ KHOSV FRQVXPHUVWRGHWHUPLQHZKHWKHUWRXVHFUHGLWRUQRWlDVKLJK %HFDXVHZHEHOLHYHWKDWWKHLVVXHUHJDUGLQJ'HIHQGDQWVj FUHGLW FRVWV HQFRXUDJH UHVWUDLQW 5HQXDUW .HHVW VXSUD JRRGIDLWKFRPSOLDQFHZLWK5HJXODWLRQ=LVFOHDULQWKLVFDVH DW7RWKDWHQGWKHIDLOXUHWRDFFXUDWHO\UHSUHVHQW 3IHQQLJY+RXVHKROG 1R 1R 3IHQQLJY+RXVHKROG &UHGLW6HUYVHWDO &UHGLW6HUYVHWDO ,9 WKH ILQDQFH FKDUJH FRQWUDYHQHV 7,/$jV VWDWXWRU\ JRDO RI SURYLGLQJDGHTXDWHGLVFORVXUHLQRUGHUWKDWWKHFRQVXPHUZLOO 'HIHQGDQWVDUJXHWKDWHYHQLIWKLV&RXUWmLQYDOLGDWH>V@WKH NQRZOHGJHDEO\EHDEOHWRFRPSDUHFUHGLWRSWLRQVDQGmDYRLG SURYLVLRQRI5HJXODWLRQ=DWLVVXHKHUHlWKH\DUHHQWLWOHGWR WKHXQLQIRUPHGXVHRIFUHGLWl86&DsRQHV WKHJRRGIDLWKLPPXQLW\GHIHQVHRII,QSHUWLQHQW )G DW 7KXV FRQVLGHULQJ WKH ODQJXDJH LQ SDUW86&ISURYLGHV DGHILQLQJWKHILQDQFHFKDUJHDQGWKHODQJXDJHDQG SXUSRVHRI7,/$DVDZKROH5HJXODWLRQ=jVH[FOXVLRQRI 1RSURYLVLRQRIWKLVVHFWLRQLPSRVLQJDQ\OLDELOLW\ RYHUOLPLWIHHVVXFKDVWKRVHLPSRVHGLQWKLVFDVHIURPWKH VKDOODSSO\WRDQ\DFWGRQHRURPLWWHGLQJRRGIDLWKLQ mILQDQFHFKDUJHlFRQIOLFWVZLWKWKHH[SUHVVODQJXDJHRI7,/$ FRQIRUPLW\ ZLWK DQ\ UXOH UHJXODWLRQ RU LQWHUSUHWDWLRQ ,QVXFKLQVWDQFHVWKHUHJXODWLRQFDQQRWVWDQG&DUWLHU WKHUHRIE\WKH%RDUGQRWZLWKVWDQGLQJWKDWDIWHUVXFK 86DW DFW RU RPLVVLRQ KDV RFFXUUHG VXFK UXOH UHJXODWLRQ LQWHUSUHWDWLRQ RU DSSURYDO LV DPHQGHG UHVFLQGHG RU :HDOVRGLVDJUHHZLWKWKHGLVWULFWFRXUWjVILQGLQJWKDWWKH GHWHUPLQHGE\MXGLFLDORURWKHUDXWKRULW\WREHLQYDOLGIRU IHH ZDV LPSRVHG EHFDXVH 3ODLQWLII mXQLODWHUDOO\ DQ\UHDVRQ H[FHHGHGKHUFUHGLWOLPLWl3ODLQWLIIDOOHJHVLQKHUFRPSODLQW WKDW'HIHQGDQWVSHUPLWWHGKHUWRH[FHHGKHURULJLQDOFUHGLW ,Gm7KLVGHIHQVHLVDYDLODEOHWRDFUHGLWRURQO\LIKHDFWVµLQ OLPLW6KH IXUWKHUFRQWHQGVLQKHUEULHIWKDWWKHDGGLWLRQDO FRQIRUPLW\jZLWKFHUWDLQRIILFLDOLQWHUSUHWDWLRQVRIWKH7UXWK FUHGLW ZDV H[WHQGHG WR DOORZ KHU WR PDNH QHZ SXUFKDVHV LQ/HQGLQJ$FWl&R[Y)LUVW1DWj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j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mV\VWHPDWLFDOO\l SRVW WKLV IHH RQ WKHLU FXVWRPHUVj PRQWKO\ ELOOLQJ XOWLPDWH GHFLVLRQ VTXDUHO\ UHVWV LQ WKH KDQGV RI 'HIHQGDQWV &RQWUDU\ WR VWDWHPHQWV DV D QHZ SXUFKDVH RQ ZKLFK DGGLWLRQDO ILQDQFH FKDUJHV DUH WKH GLVVHQWjV FRQWHQWLRQ RXU KROGLQJ LV RI FRXUVH OLPLWHG WR WKRVH FDOFXODWHG s$ DW 3ODLQWLII HVVHQWLDOO\ DOOHJHV WKDW VKH LQVWDQFHV LQ ZKLFK WKH FUHGLWRU NQRZLQJO\ SHUPLWV WKH FUHGLW FDUG KROGHU LV LQFXUULQJ D GRXEOH SHQDOW\ DV VKH LV DVVHVVHG DQ RYHUOLPLW IHH DV D WR H[FHHG KLV RU KHU FUHGLW OLPLW DQG WKHQ LPSRVHV D IHH LQFLGHQW WR WKH SHQDOW\ DQG WKHQ PXVW SD\ ILQDQFH FKDUJHV RQ WKDW IHH ,Q OLJKW RI RXU H[WHQVLRQ RI WKDW FUHGLW KROGLQJ ZH QHHG QRW DGGUHVV WKLV LVVXH 3IHQQLJY+RXVHKROG 1R 1R 3IHQQLJY+RXVHKROG &UHGLW6HUYVHWDO &UHGLW6HUYVHWDO 0RUHRYHUGHVSLWH'HIHQGDQWVjDUJXPHQWVWRWKHFRQWUDU\ ODWH SD\PHQW WKH OHQGHU LV SODFHG LQ D SRVLWLRQ RI KDYLQJ ZH VHH D YDVW GLVWLQFWLRQ EHWZHHQ WKH RYHUOLPLW FKDUJH DW XQH[SHFWHGO\WREHDUWKHFRVWRIWKHERUURZHUjVWDUGLQHVV:H LVVXHLQWKLVFDVHDQGWKHRWKHUFKDUJHVOLVWHGLQ&)5 ILQGSHUVXDVLYH3ODLQWLIIjVDUJXPHQWWKDWLQVXFKLQVWDQFHV F'HIHQGDQWVFLWHVHYHUDOFDVHVLQZKLFKFRXUWV mWKH OHQGHU LV DUJXDEO\ DW ULVN IRU IDLOLQJ WR PHHW LWV RZQ KDYHKHOGWKDWEHFDXVHIHHVLPSRVHG IRUXQDQWLFLSDWHGODWH REOLJDWLRQVLILWVFXVWRPHUVDUHQRWPHHWLQJWKHLUV>DQG@WKH SD\PHQW GHIDXOW RU GHOLQTXHQF\ DUH H[FOXGHG IURP WKH OHQGHU>VKRXOGFHUWDLQO\EHDOORZHGWR@LPSRVHDODWHIHHRU GHILQLWLRQRIILQDQFHFKDUJHVXQGHUFWKH\DUHQRW GHIDXOWIHHWRDFFRXQWIRUWKLVDVVXPHGULVNl3ODLQWLIIjV%U ILQDQFHFKDUJHVZLWKLQWKHPHDQLQJRI7,/$6HHHJ8QLWHG DW+RZHYHUWKHVFHQDULRLVHQWLUHO\GLIIHUHQWZKHUHDV 6WDWHVY&LWULQ)GWK&LUKROGLQJ KHUHWKHERUURZHUKDVUHDFKHGKHUFUHGLWOLPLWUHTXHVWVPRUH WKDW JRYHUQPHQW GLG QRW EUHDFK 7,/$ EHFDXVH LW IDLOHG WR FUHGLWDQGWKHOHQGHUDJUHHVWRWKDWH[WHQVLRQRIH[WUDFUHGLW mFOHDUO\LQIRUPl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jV FRPSODLQW DQG KROGLQJ WKDW IHH EDQN FKDUJHG EHFDXVH SODLQWLIIjV DFFRXQW ZDV RYHUGUDZQ ZDV QRW DQ XQGLVFORVHG ILQDQFH FKDUJH EHFDXVH LW ZDV QRW D ILQDQFH FKDUJH XQGHU 5HJXODWLRQ = 6WUXWPDQ Y &KHP %DQN 1R &LY :/ DW 6'1< 6HSW 7KH GLVVHQW FRQWHQGV WKDW 3DUW ,,, RI WKH PDMRULW\ RSLQLRQjV UDWLRQDOH KROGLQJ WKDW IHH LPSRVHG E\ EDQN WR GHOLYHU VHFXULW\ WR LV SUREOHPDWLF IRU WZR UHDVRQV 3ODLQWLII IDLOHG WR DOOHJH WKDW SODLQWLIIVj QHZ OHQGHU ZDV QRW D ILQDQFH FKDUJH EHFDXVH WKH IHH ZDV QRW 'HIHQGDQWV KDG IRUHNQRZOHGJH RI KHU RYHUOLPLW FKDUJHV DQG FUHGLW DVVHVVHG DV DQ LQFLGHQW WR WKH H[WHQVLRQ RI FUHGLW 1HLWKHU RI WKHVH FDVHV FDUG LVVXHUV VXFK DV 'HIHQGDQWV PD\ QRW LQ DOO FDVHV GHFLGH ZKHWKHU LQYROYH IHHV IRU H[FHHGLQJ D FUHGLW OLPLW XQGHU F )XUWKHU RYHUOLPLW FKDUJHV mZLOO EH SHUPLWWHG WR JR WKURXJKl 7KH ILUVW DVVHUWLRQ 6WUXWPDQ LV HDVLO\ GLVWLQJXLVKDEOH EHFDXVH WKH FRXUW LQ WKDW FDVH H[SUHVVO\ LV LQFRUUHFW DQG WKH VHFRQG LV LUUHOHYDQW LQ OLJKW RI RXU KROGLQJ 3ODLQWLII KHOG DQG WKH IDFWV RI WKDW FDVH VKRZ WKDW WKH IHH LPSRVHG ZDV QRW DOOHJHV WKDW 'HIHQGDQWV URXWLQHO\ SHUPLW FRQVXPHUV WR H[FHHG WKHLU FUHGLW LQFLGHQW WR WKH H[WHQVLRQ RI FUHGLW 6WUXWPDQ :/ DW OLPLWV DQG GLG VR LQ WKLV FDVH DV WR mHDFK DQG HYHU\ SXWDWLYH FODVV 7KH VDPH KROGV WUXH IRU +DKQ Y +DQNjV $PEXODQFH 6HUY ,QF )G PHPEHUl s$ DW 6KH IXUWKHU DOOHJHV WKDW 'HIHQGDQWV WK &LU DOVR FLWHG E\ 'HIHQGDQWV ZKHUH WKH FRXUW IRXQG SHUPLWWHG DOO SXUSRUWHG FODVV PHPEHUV WR PDNH WKH FKDUJHV WKDW DOORZHG SHUVXDVLYH WKH UHDVRQLQJ WKDW WKH VHUYLFHV UHQGHUHG E\ DQ DPEXODQFH WKHP WR H[FHHG WKHLU DSSOLFDEOH FUHGLW OLPLWV s$ DW FRPSDQ\ GLG QRW UHVXOW LQ H[WHQGLQJ FUHGLW ,G DW ,Q WKH LQVWDQW FDVH 7KXV FRQVWUXLQJ WKH DOOHJDWLRQV LQ WKH FRPSODLQW LQ WKH OLJKW PRVW LW LV XQTXHVWLRQDEOH WKDW WKH IHH ZDV LPSRVHG EHFDXVH 3ODLQWLII ZDV IDYRUDEOH WR 3ODLQWLII VKH FOHDUO\ DOOHJHV WKDW 'HIHQGDQWV KDG H[WHQGHG DGGLWLRQDO FUHGLW ZKLFK FDXVHG KHU WR H[FHHG KHU RULJLQDOO\ IRUHNQRZOHGJH RI KHU RYHUOLPLW FKDUJHV ,Q DGGLWLRQ WKHVH DOOHJDWLRQV DJUHHG XSRQ FUHGLW OLPLW ,Q DQ\ HYHQW WKH XQSXEOLVKHG RSLQLRQV FLWHG E\ VXSSRUW 3ODLQWLIIjV DUJXPHQW WKDW 'HIHQGDQWV PDNH WKH GHFLVLRQ DV WR 'HIHQGDQWV GR QRW VHUYH DV ELQGLQJ DXWKRULW\ RQ WKLV &RXUW 6HH HJ ZKHWKHU RYHUOLPLW FKDUJHV mZLOO EH SHUPLWWHG WR JR WKURXJKl :KLOH WKH 8QLWHG 6WDWHV Y %DUQHV )G Q WK &LU GLVVHQW FODLPV FUHGLW FDUG LVVXHUV mPD\ QRW LQ DOO FDVHVl PDNH VXFK
Document Info
Docket Number: 00-4213
Filed Date: 4/11/2002
Precedential Status: Precedential
Modified Date: 9/22/2015