0RGHUQ0RUDO3KLORVRSK\
*(0$QVFRPEH
3KLORVRSK\ 1R -DQXDU\
, ZLOOEHJLQE\VWDWLQJWKUHHWKHVHVZKLFK, SUHVHQWLQWKLV
SDSHU 7KHILUVWLVWKDWLWLVQRWSURILWDEOHIRUXVDWSUHVHQW
WRGRPRUDOSKLORVRSK\ WKDWVKRXOGEHODLGDVLGHDWDQ\
UDWHXQWLOZHKDYHDQDGHTXDWHSKLORVRSK\RISV\FKRORJ\
LQZKLFKZHDUHFRQVSLFXRXVO\ODFNLQJ 7KHVHFRQGLVWKDW
WKHFRQFHSWVRIREOLJDWLRQ DQGGXW\³ PRUDO REOLJDWLRQ
DQG PRUDO GXW\ WKDWLVWRVD\³DQGRIZKDWLV PRUDOO\
ULJKWDQGZURQJ DQGRIWKH PRUDO VHQVHRI´RXJKWµ RXJKW
WREHMHWWLVRQHGLIWKLVLVSV\FKRORJLFDOO\SRVVLEOH EHFDXVH
WKH\DUHVXUYLYDOV RUGHULYDWLYHVIURPVXUYLYDOV IURPDQ
HDUOLHUFRQFHSWLRQRIHWKLFVZKLFKQRORQJHUJHQHUDOO\VXU
YLYHV DQGDUHRQO\KDUPIXOZLWKRXWLW 0\WKLUGWKHVLVLV
WKDWWKHGLIIHUHQFHVEHWZHHQWKHZHOONQRZQ(QJOLVKZULW
HUVRQPRUDOSKLORVRSK\IURP6LGJZLFNWRWKHSUHVHQWGD\
DUHRIOLWWOHLPSRUWDQFH
$Q\RQHZKRKDVUHDG$ULVWRWOH·V (WKLFV DQGKDVDOVRUHDG
PRGHUQPRUDOSKLORVRSK\PXVWKDYHEHHQVWUXFNE\WKH
JUHDWFRQWUDVWVEHWZHHQWKHP 7KHFRQFHSWVZKLFKDUH
SURPLQHQWDPRQJWKHPRGHUQVVHHPWREHODFNLQJ RUDW
DQ\UDWHEXULHGRUIDULQWKHEDFNJURXQG LQ$ULVWRWOH 0RVW
QRWLFHDEO\ WKHWHUP´PRUDOµLWVHOI ZKLFKZHKDYHE\GLUHFW

LQKHULWDQFH$ULVWRWOH MXVWGRHVQ·WVHHPWRILW LQLWVPRGHUQ
VHQVH LQWRDQDFFRXQWRI$ULVWRWHOLDQHWKLFV $ULVWRWOHGLV
WLQJXLVKHVYLUWXHVDVPRUDODQGLQWHOOHFWXDO +DYHVRPHRI
ZKDWKHFDOOV´LQWHOOHFWXDOµYLUWXHVZKDWZHVKRXOGFDOOD
´PRUDOµDVSHFW" ,WZRXOGVHHPVR WKHFULWHULRQLVSUHVXP
DEO\WKDWDIDLOXUHLQDQ´LQWHOOHFWXDOµYLUWXH³OLNHWKDWRI
KDYLQJJRRGMXGJPHQWLQFDOFXODWLQJKRZWREULQJDERXW
VRPHWKLQJXVHIXO VD\LQPXQLFLSDOJRYHUQPHQW³PD\EH
EODPHZRUWK\ %XW³LWPD\UHDVRQDEO\EHDVNHG³FDQ
QRWDQ\IDLOXUHEHPDGHDPDWWHURIEODPHRUUHSURDFK" $Q\
GHURJDWRU\FULWLFLVP VD\RIWKHZRUNPDQVKLSRIDSURGXFW
RUWKHGHVLJQRIDPDFKLQH FDQEHFDOOHGEODPHRUUHSURDFK
6RZHZDQWWRSXWLQWKHZRUG´PRUDOO\µDJDLQ VRPHWLPHV
VXFKDIDLOXUHPD\EHPRUDOO\EODPHZRUWK\ VRPHWLPHVQRW
1RZKDV$ULVWRWOHJRWWKLVLGHDRIPRUDOEODPH DVRSSRVHG
WRDQ\RWKHU" ,IKHKDV ZK\LVQ·WLWPRUHFHQWUDO" 7KHUHDUH
VRPHPLVWDNHV KHVD\V ZKLFKDUHFDXVHV QRWRILQYROXQ
WDULQHVVLQDFWLRQVEXWRIVFRXQGUHOLVP DQGIRUZKLFKDPDQ
LVEODPHG 'RHVWKLVPHDQWKDWWKHUHLVDPRUDOREOLJDWLRQ
QRWWRPDNHFHUWDLQLQWHOOHFWXDOPLVWDNHV" :K\GRHVQ·WKH
GLVFXVVREOLJDWLRQLQJHQHUDO DQGWKLVREOLJDWLRQLQSDUWLF
XODU" ,IVRPHRQHSURIHVVHVWREHH[SRXQGLQJ$ULVWRWOHDQG WKDWDOLHFRXOGEHUHOHYDQWO\GHVFULEHGDVDQ\WKLQJEXWMXVW
WDONVLQDPRGHUQIDVKLRQDERXW´PRUDOµVXFKDQGVXFKKH
PXVWEHYHU\LPSHUFHSWLYHLIKHGRHVQRWFRQVWDQWO\IHHOOLNH
VRPHRQHZKRVHMDZVKDYHVRPHKRZJRWRXWRIDOLJQPHQW XODWLRQVDVWRZKDWVKDOOFRXQWDVDUHOHYDQWGHVFULSWLRQRI
WKHWHHWKGRQ·WFRPHWRJHWKHULQDSURSHUELWH
:HFDQQRWWKHQ ORRNWR$ULVWRWOHIRUDQ\HOXFLGDWLRQRIWKH
PRGHUQZD\RIWDONLQJDERXW´PRUDOµJRRGQHVV REOLJDWLRQ
HWF $QGDOOWKHEHVWNQRZQZULWHUVRQHWKLFVLQPRGHUQ
WLPHV IURP%XWOHUWR0LOO DSSHDUWRPHWRKDYHIDXOWVDV
WKLQNHUVRQWKHVXEMHFWZKLFKPDNHLWLPSRVVLEOHWRKRSHIRU
DQ\GLUHFWOLJKWRQLWIURPWKHP , ZLOOVWDWHWKHVHREMHFWLRQV
ZLWKWKHEUHYLW\ZKLFKWKHLUFKDUDFWHUPDNHVSRVVLEOH
%XWOHUH[DOWVFRQVFLHQFH EXWDSSHDUVLJQRUDQWWKDWDPDQ·V
FRQVFLHQFHPD\WHOOKLPWRGRWKHYLOHVWWKLQJV
+XPHGHILQHV´WUXWKµLQVXFKDZD\DVWRH[FOXGHHWKLFDO
MXGJPHQWVIURPLW DQGSURIHVVHVWKDWKHKDVSURYHGWKDW
WKH\DUHVRH[FOXGHG +HDOVRLPSOLFLWO\GHILQHV´SDVVLRQµ
LQVXFKDZD\WKDWDLPLQJDWDQ\WKLQJLVKDYLQJDSDVVLRQ
+LVREMHFWLRQWRSDVVLQJIURP´LVµWR´RXJKWµZRXOGDS
SO\HTXDOO\WRSDVVLQJIURP´LVµWR´RZHVµRUIURP´LVµWR
´QHHGVµ +RZHYHU EHFDXVHRIWKHKLVWRULFDOVLWXDWLRQ KH
DOLHHJ DV´DOLHLQVXFKDQGVXFKFLUFXPVWDQFHVµ +LV
UXOHDERXWXQLYHUVDOL]DEOHPD[LPVLVXVHOHVVZLWKRXWVWLS
DQDFWLRQZLWKDYLHZWRFRQVWUXFWLQJDPD[LPDERXWLW
%HQWKDPDQG0LOOGRQRWQRWLFHWKHGLIILFXOW\RIWKHFRQFHSW
´SOHDVXUHµ 7KH\DUHRIWHQVDLGWRKDYHJRQHZURQJWKURXJK
FRPPLWWLQJWKH´QDWXUDOLVWLFIDOODF\µ EXWWKLVFKDUJHGRHV
QRWLPSUHVVPH EHFDXVH, GRQRWILQGDFFRXQWVRILWFRKHU
HQW %XWWKHRWKHUSRLQW³DERXWSOHDVXUH³VHHPVWRPHD
IDWDOREMHFWLRQIURPWKHYHU\RXWVHW 7KHDQFLHQWVIRXQGWKLV
FRQFHSWSUHWW\EDIIOLQJ ,WUHGXFHG$ULVWRWOHWRVKHHUEDE
EOHDERXW´WKHEORRPRQWKHFKHHNRI\RXWKµEHFDXVH IRU
JRRGUHDVRQV KHZDQWHGWRPDNHLWRXWERWKLGHQWLFDOZLWK
DQGGLIIHUHQWIURPWKHSOHDVXUDEOHDFWLYLW\ *HQHUDWLRQVRI
PRGHUQSKLORVRSKHUVIRXQGWKLVFRQFHSWTXLWHXQSHUSOH[
LQJ DQGLWUHDSSHDUHGLQWKHOLWHUDWXUHDVDSUREOHPDWLFRQH
RQO\D\HDURUWZRDJRZKHQ5\OHZURWHDERXWLW 7KHUHDVRQ
LVVLPSOH VLQFH/RFNH SOHDVXUHZDVWDNHQWREHVRPHVRUW
RILQWHUQDOLPSUHVVLRQ %XWLWZDVVXSHUILFLDO LIWKDWZDV
WKHULJKWDFFRXQWRILW WRPDNHLWWKHSRLQWRIDFWLRQV 2QH
PLJKWDGDSWVRPHWKLQJ:LWWJHQVWHLQVDLGDERXW´PHDQLQJµ
KDVDSRLQWKHUH ZKLFK, VKDOOUHWXUQWR DQGVD\´3OHDVXUHFDQQRWEHDQLQWHUQDOLPSUHVVLRQ IRUQR
.DQWLQWURGXFHVWKHLGHDRI´OHJLVODWLQJIRURQHVHOIµ ZKLFK LQWHUQDOLPSUHVVLRQFRXOGKDYHWKHFRQVHTXHQFHVRISOHD
LVDVDEVXUGDVLILQWKHVHGD\V ZKHQPDMRULW\YRWHVFRP VXUHµ
PDQGJUHDWUHVSHFW RQHZHUHWRFDOOHDFKUHIOHFWLYHGHFL 0LOODOVR OLNH.DQW IDLOVWRUHDOL]HWKHQHFHVVLW\IRUVWLS
VLRQDPDQPDGHD YRWH UHVXOWLQJLQDPDMRULW\ ZKLFKDV XODWLRQDVWRUHOHYDQWGHVFULSWLRQV LIKLVWKHRU\LVWRKDYH
DPDWWHURISURSRUWLRQLVRYHUZKHOPLQJ IRULWLVDOZD\V FRQWHQW ,WGLGQRWRFFXUWRKLPWKDWDFWVRIPXUGHUDQG
² 7KHFRQFHSWRIOHJLVODWLRQUHTXLUHVVXSHULRUSRZHULQ WKHIWFRXOGEHRWKHUZLVHGHVFULEHG +HKROGVWKDWZKHUHD
WKHOHJLVODWRU +LVRZQULJRULVWLFFRQYLFWLRQVRQWKHVXE SURSRVHGDFWLRQLVRIVXFKDNLQGDVWRIDOOXQGHUVRPHRQH
MHFWRIO\LQJZHUHVRLQWHQVHWKDWLWQHYHURFFXUUHGWRKLP SULQFLSOHHVWDEOLVKHGRQJURXQGVRIXWLOLW\ RQHPXVWJRE\


WKDW ZKHUHLWIDOOVXQGHUQRQHRUVHYHUDO WKHVHYHUDOVXJ 1RZLIRQHPDNHVWKLVFRPSDULVRQ LWFRPHVWROLJKWWKDWWKH
JHVWLQJFRQWUDU\YLHZVRIWKHDFWLRQ WKHWKLQJWRGRLVWR UHODWLRQRIWKHIDFWVPHQWLRQHGWRWKHGHVFULSWLRQ´; RZHV
FDOFXODWHSDUWLFXODUFRQVHTXHQFHV %XWSUHWW\ZHOODQ\DF < VRPXFKPRQH\µLVDQLQWHUHVWLQJRQH ZKLFK, ZLOOFDOO
WLRQFDQEHVRGHVFULEHGDVWRPDNHLWIDOOXQGHUDYDULHW\RI WKDWRIEHLQJ´EUXWHUHODWLYHWRµWKDWGHVFULSWLRQ )XUWKHU
SULQFLSOHVRIXWLOLW\DV, VKDOOVD\IRUVKRUWLILWIDOOVXQGHU
DQ\
, ZLOOQRZUHWXUQWR+XPH 7KHIHDWXUHVRI+XPH·VSKL
ORVRSK\ZKLFK, KDYHPHQWLRQHG OLNHPDQ\RWKHUIHDWXUHV
RILW ZRXOGLQFOLQHPHWRWKLQNWKDW+XPHZDVDPHUH³
EULOOLDQW³VRSKLVW DQGKLVSURFHGXUHVDUHFHUWDLQO\VR
SKLVWLFDO %XW, DPIRUFHG QRWWRUHYHUVH EXWWRDGGWR
WKLVMXGJPHQWE\DSHFXOLDULW\RI+XPH·VSKLORVRSKL]LQJ DGHVFULSWLRQ$WKHQ[\]LVDVHWRXWRIDUDQJHVRPHVHW
QDPHO\WKDWDOWKRXJKKHUHDFKHVKLVFRQFOXVLRQV³ZLWK
ZKLFKKHLVLQORYH³E\VRSKLVWLFDOPHWKRGV KLVFRQVLG
HUDWLRQVFRQVWDQWO\RSHQXSYHU\GHHSDQGLPSRUWDQWSURE
OHPV ,WLVRIWHQWKHFDVHWKDWLQWKHDFWRIH[KLELWLQJWKH
VRSKLVWU\RQHILQGVRQHVHOIQRWLFLQJPDWWHUVZKLFKGHVHUYH
DORWRIH[SORULQJ WKHREYLRXVVWDQGVLQQHHGRILQYHVWLJD
WLRQVDVDUHVXOWRIWKHSRLQWVWKDW+XPHSUHWHQGVWRKDYH
PDGH ,QWKLV KHLVXQOLNH VD\ %XWOHU ,WZDVDOUHDG\ZHOO
NQRZQWKDWFRQVFLHQFHFRXOGGLFWDWHYLOHDFWLRQV IRU%XW
OHUWRKDYHZULWWHQGLVUHJDUGLQJWKLVGRHVQRWRSHQXSDQ\
QHZWRSLFVIRUXV %XWZLWK+XPHLWLVRWKHUZLVH KHQFH
KHLVDYHU\SURIRXQGDQGJUHDWSKLORVRSKHU LQVSLWHRIKLV
WKH´EUXWHµIDFWVPHQWLRQHGKHUHWKHPVHOYHVKDYHGHVFULS
WLRQVUHODWLYHO\WRZKLFK RWKHU IDFWVDUH´EUXWHµ³DV HJ
KHKDGSRWDWRHVFDUWHGWRP\KRXVH DQG WKH\ZHUHOHIWWKHUH
DUHEUXWHIDFWVUHODWLYHWR´KHVXSSOLHGPHZLWKSRWDWRHVµ
$QGWKHIDFW ; RZHV< PRQH\ LVLQWXUQ´EUXWHµUHODWLYHWR
RWKHUGHVFULSWLRQV³HJ ´; LVVROYHQWµ 1RZWKHUHOD
WLRQRI´UHODWLYHEUXWHQHVVµLVDFRPSOLFDWHGRQH 7RPHQ
WLRQDIHZSRLQWV LI[\]LVDVHWRIIDFWVEUXWHUHODWLYHWR
DPRQJZKLFKKROGVLI$ KROGV EXWWKHKROGLQJRIVRPH
VHWDPRQJWKHVHGRHVQRWQHFHVVDULO\HQWDLO$ EHFDXVHH[
FHSWLRQDOFLUFXPVWDQFHVFDQDOZD\VPDNHDGLIIHUHQFH DQG
ZKDWDUHH[FHSWLRQDOFLUFXPVWDQFHUHODWLYHO\WR$ FDQJHQ
HUDOO\RQO\EHH[SODLQHGE\JLYLQJDIHZGLYHUVHH[DPSOHV
DQG QR WKHRUHWLFDOO\DGHTXDWHSURYLVLRQFDQEHPDGHIRUH[
FHSWLRQDOFLUFXPVWDQFHV VLQFHDIXUWKHUVSHFLDOFRQWH[WFDQ
WKHRUHWLFDOO\DOZD\VEHLPDJLQHGWKDWZRXOGUHLQWHUSUHWDQ\
VSHFLDOFRQWH[W )XUWKHU WKRXJKLQQRUPDOFLUFXPVWDQFHV
[\]ZRXOGEHDMXVWLILFDWLRQIRU$RIZKLFKLQVWLWXWLRQ$ LV
RIFRXUVHQRWLWVHOIDGHVFULSWLRQ (J WKHVWDWHPHQWWKDW,
JLYHVRPHRQHDVKLOOLQJLVQRWDGHVFULSWLRQRIWKHLQVWLWXWLRQ
VRSKLVWU\ )RUH[DPSOH RIPRQH\RURIWKHFXUUHQF\RIWKHFRXQWU\ 7KXV WKRXJK
LWZRXOGEHOXGLFURXVWRSUHWHQGWKDWWKHUHFDQEHQRVXFK
6XSSRVHWKDW, VD\WRP\JURFHU´7UXWKFRQVLVWVLQ HLWKHU WKLQJDVDWUDQVLWLRQIURP HJ ´LVµWR´RZHVµ WKHFKDUDF
UHODWLRQVRILGHDV DVWKDWV … RU PDWWHUVRIIDFW DVWKDW WHURIWKHWUDQVLWLRQLVLQIDFWUDWKHULQWHUHVWLQJDQGFRPHV
, RUGHUHGSRWDWRHV \RXVXSSOLHGWKHP DQG\RXVHQWPHD WROLJKWDVDUHVXOWRIUHIOHFWLQJRQ+XPH·VDUJXPHQWV
ELOO 6RLWGRHVQ·WDSSO\WRVXFKDSURSRVLWLRQDVWKDW, RZH
\RXVXFKDQGVXFKDVXPµ 
7KHDERYHWZRSDUDJUDSKVDUHDQDEVWUDFWRIDSDSHU´2Q%UXWH)DFWVµ $QDO\VLV


7KDW, RZHWKHJURFHUVXFKDQGVXFKDVXPZRXOGEHRQH
RIDVHWRIIDFWVZKLFKZRXOGEH´EUXWHµLQUHODWLRQWRWKH
GHVFULSWLRQ´, DPDELONHUµ ´ELONLQJµLVRIFRXUVHDVSHFLHV
RI´GLVKRQHVW\µRU´LQMXVWLFHµ 1DWXUDOO\WKHFRQVLGHUDWLRQ
ZLOOQRWKDYHDQ\HIIHFWRQP\DFWLRQVXQOHVV, ZDQWWRFRP
LVDIIHFWHGE\LWVPRWLYHDQGE\WKHLQWHQWLRQRULQWHQWLRQV
LQLW DQGIRUWKLVDQDFFRXQWRIVXFKFRQFHSWVLVUHTXLUHG
7KHWHUPV´VKRXOGµRU´RXJKWµRU´QHHGVµUHODWHWRJRRG
DQGEDG HJ PDFKLQHU\QHHGVRLO RUVKRXOGRURXJKWWR
PLWRUDYRLGDFWVRILQMXVWLFH EHRLOHG LQWKDWUXQQLQJZLWKRXWRLOLVEDGIRULW RULWUXQV
EDGO\ZLWKRXWRLO $FFRUGLQJWRWKLVFRQFHSWLRQ RIFRXUVH
6RIDU LQVSLWHRIWKHLUVWURQJDVVRFLDWLRQV , FRQFHLYH´ELON ´VKRXOGµDQG´RXJKWµDUHQRWXVHGLQDVSHFLDO´PRUDOµ
LQJµ ´LQMXVWLFHµDQG´GLVKRQHVW\µLQDPHUHO\IDFWXDOZD\ VHQVHZKHQRQHVD\VWKDWDPDQVKRXOGQRWELON ,Q$ULV
7KDW, FDQGRWKLVIRU´ELONLQJµLVREYLRXVHQRXJK ´MXVWLFHµ WRWOH·VVHQVHRIWKHWHUP´PRUDOµпƧƨƩфư WKH\DUHEHLQJ
, KDYHQRLGHDKRZWRGHILQH H[FHSWWKDWLWVVSKHUHLVWKDW XVHGLQFRQQHFWLRQZLWKDPRUDOVXEMHFWPDWWHU QDPHO\
RIDFWLRQVZKLFKUHODWHWRVRPHRQHHOVH EXW´LQMXVWLFHµ LWV WKDWRIKXPDQSDVVLRQVDQGQRQWHFKQLFDODFWLRQV %XW
GHIHFW FDQIRUWKHPRPHQWEHRIIHUHGDVDJHQHULFQDPH WKH\KDYHQRZDFTXLUHGDVSHFLDOVRFDOOHG´PRUDOµVHQVH
FRYHULQJYDULRXVVSHFLHV (J ´ELONLQJµ ´WKHIWµZKLFKLV ³LH DVHQVHLQZKLFKWKH\LPSO\VRPHDEVROXWHYHUGLFW
UHODWLYHWRZKDWHYHUSURSHUW\LQVWLWXWLRQVH[LVW ´VODQGHUµ OLNHRQHRIJXLOW\QRWJXLOW\RQDPDQRQZKDWLVGHVFULEHG
´DGXOWHU\µ ´SXQLVKPHQWRIWKHLQQRFHQWµ LQWKH´RXJKWµVHQWHQFHVXVHGLQFHUWDLQW\SHVRIFRQWH[W
,QSUHVHQWGD\SKLORVRSK\DQH[SODQDWLRQLVUHTXLUHGKRZ QRWPHUHO\WKHFRQWH[WVWKDW$ULVWRWOHZRXOGFDOO´PRUDOµ
DQXQMXVWPDQLVDEDGPDQ RUDQXQMXVWDFWLRQDEDGRQH ³SDVVLRQVDQGDFWLRQV³EXWDOVRVRPHRIWKHFRQWH[WV
WRJLYHVXFKDQH[SODQDWLRQEHORQJVWRHWKLFV EXWLWFDQQRW WKDWKHZRXOGFDOO´LQWHOOHFWXDOµ
HYHQEHEHJXQXQWLOZHDUHHTXLSSHGZLWKDVRXQGSKLORV
RSK\RISV\FKRORJ\ )RUWKHSURRIWKDWDQXQMXVWPDQLV
DEDGPDQZRXOGUHTXLUHDSRVLWLYHDFFRXQWRIMXVWLFHDVD
´YLUWXHµ 7KLVSDUWRIWKHVXEMHFWPDWWHURIHWKLFV LVKRZ
HYHU FRPSOHWHO\FORVHGWRXVXQWLOZHKDYHDQDFFRXQWRI
ZKDW W\SHRIFKDUDFWHULVWLF DYLUWXHLV³DSUREOHP QRWRI
HWKLFV EXWRIFRQFHSWXDODQDO\VLV³DQGKRZLWUHODWHVWR
WKHDFWLRQVLQZKLFKLWLVLQVWDQFHG DPDWWHUZKLFK, WKLQN
$ULVWRWOHGLGQRWVXFFHHGLQUHDOO\PDNLQJFOHDU )RUWKLVZH
FHUWDLQO\QHHGDQDFFRXQWDWOHDVWRIZKDWDKXPDQDFWLRQ
LVDWDOO DQGKRZLWVGHVFULSWLRQDV´GRLQJVXFKDQGVXFKµ
7KH  RUGLQDU\  DQG  TXLWH  LQGLVSHQVDEOH  WHUPV  ´VKRXOGµ
´QHHGVµ ´RXJKWµ ´PXVWµ³DFTXLUHGWKLVVSHFLDOVHQVHE\
EHLQJHTXDWHGLQWKHUHOHYDQWFRQWH[WVZLWK´LVREOLJHGµ RU
´LVERXQGµ RU´LVUHTXLUHGWRµ LQWKHVHQVHLQZKLFKRQHFDQ
EHREOLJHGRUERXQGE\ODZ RUVRPHWKLQJFDQEHUHTXLUHG
E\ODZ
+RZGLGWKLVFRPHDERXW" 7KHDQVZHULVLQKLVWRU\ EH
WZHHQ$ULVWRWOHDQGXVFDPH&KULVWLDQLW\ ZLWKLWVODZFRQ
FHSWLRQRIHWKLFV )RU&KULVWLDQLW\GHULYHGLWVHWKLFDOQR
WLRQVIURPWKH7RUDK 2QHPLJKWEHLQFOLQHGWRWKLQNWKDW
DODZFRQFHSWLRQRIHWKLFVFRXOGDULVHRQO\DPRQJSHRSOH
   ZKRDFFHSWHGDQDOOHJHGO\GLYLQHSRVLWLYHODZ WKDWWKLVLV


QRWVRLVVKRZQE\WKHH[DPSOHRIWKH6WRLFV ZKRDOVR FUDIWVPDQRUORJLFLDQ³WKDWZKDWLVQHHGHGIRU WKLV  LV
WKRXJKWWKDWZKDWHYHUZDVLQYROYHGLQFRQIRUPLW\WRKX UHTXLUHGE\GLYLQHODZ 1DWXUDOO\LWLVQRWSRVVLEOHWRKDYH
PDQYLUWXHVZDVUHTXLUHGE\GLYLQHODZ VXFKDFRQFHSWLRQXQOHVV\RXEHOLHYHLQ*RGDVDODZJLYHU
,QFRQVHTXHQFHRIWKHGRPLQDQFHRI&KULVWLDQLW\IRUPDQ\ OLNH-HZV 6WRLFV DQG&KULVWLDQV %XWLIVXFKDFRQFHSWLRQ
FHQWXULHV WKH  FRQFHSWV  RI  EHLQJ  ERXQG SHUPLWWHG RU LVGRPLQDQWIRUPDQ\FHQWXULHV DQGWKHQLVJLYHQXS LWLV
H[FXVHG  EHFDPH  GHHSO\  HPEHGGHG  LQ  RXU  ODQJXDJH  DQG DQDWXUDOUHVXOWWKDWWKHFRQFHSWVRI´REOLJDWLRQµ RIEHLQJ
WKRXJKW 7KH*UHHNZRUG´шƫƠƯƲнƬƤƨƬµ WKHDSWHVWWREH ERXQGRUUHTXLUHGDVE\DODZ VKRXOGUHPDLQWKRXJKWKH\
WXUQHGWRWKDWXVH DFTXLUHGWKHVHQVH´VLQµ IURPKDYLQJ KDGORVWWKHLUURRW DQGLIWKHZRUG´RXJKWµKDVEHFRPHLQ
PHDQW´PLVWDNHµ ´PLVVLQJWKHPDUNµ ´JRLQJZURQJµ 7KH YHVWHGLQFHUWDLQFRQWH[WVZLWKWKHVHQVHRI´REOLJDWLRQµ LW
/DWLQ SHFFDWXP ZKLFKURXJKO\FRUUHVSRQGHGWRшƫƠƯƲƦƫƠ WRRZLOOUHPDLQWREHVSRNHQZLWKDVSHFLDOHPSKDVLVDQG
ZDVHYHQDSWHUIRUWKHVHQVH´VLQµ EHFDXVHLWZDVDOUHDG\ VSHFLDOIHHOLQJLQWKHVHFRQWH[WV
DVVRFLDWHGZLWK´FXOSDµ³´JXLOWµ³DMXULGLFDOQRWLRQ ,WLVDVLIWKHQRWLRQ´FULPLQDOµZHUHWRUHPDLQZKHQFULP
7KHEODQNHWWHUP´LOOLFLWµ ´XQODZIXOµ PHDQLQJPXFKWKH LQDOODZDQGFULPLQDOFRXUWVKDGEHHQDEROLVKHGDQGIRU
VDPHDVRXUEODQNHWWHUP´ZURQJµ H[SODLQVLWVHOI ,WLVLQ JRWWHQ $ +XPHGLVFRYHULQJWKLVVLWXDWLRQPLJKWFRQFOXGH
WHUHVWLQJWKDW$ULVWRWOHGLGQRWKDYHVXFKDEODQNHWWHUP +H WKDWWKHUHZDVDVSHFLDOVHQWLPHQW H[SUHVVHGE\´FULPLQDOµ
KDVEODQNHWWHUPVIRUZLFNHGQHVV³´YLOODLQµ ´VFRXQGUHOµ ZKLFKDORQHJDYHWKHZRUGLWVVHQVH 6R+XPHGLVFRYHUHG
EXWRIFRXUVHDPDQLVQRWDYLOODLQRUDVFRXQGUHOE\WKHSHU WKHVLWXDWLRQZKLFKWKHQRWLRQ´REOLJDWLRQµVXUYLYHG DQG
IRUPDQFHRIRQHEDGDFWLRQ RUDIHZEDGDFWLRQV $QGKH WKHQRWLRQ´RXJKWµZDVLQYHVWHGZLWKWKDWSHFXOLDUIRUKDY
KDVWHUPVOLNH´GLVJUDFHIXOµ ´LPSLRXVµ DQGVSHFLILFWHUPV LQJZKLFKLWLVVDLGWREHXVHGLQD´PRUDOµVHQVH EXWLQ
VLJQLI\LQJGHIHFWRIWKHUHOHYDQWYLUWXH OLNH´XQMXVWµ EXW ZKLFKWKHEHOLHILQGLYLQHODZKDGORQJVLQFHEHHQDEDQ
QRWHUPFRUUHVSRQGLQJWR´LOOLFLWµ 7KHH[WHQVLRQRIWKLV GRQHG IRULWZDVVXEVWDQWLDOO\JLYHQXSDPRQJ3URWHVWDQWV
WHUPLH WKHUDQJHRILWVDSSOLFDWLRQFRXOGEHLQGLFDWHG
LQKLVWHUPLQRORJ\RQO\E\DTXLWHOHQJWK\VHQWHQFH WKDW
LV´LOOLFLWµZKLFK ZKHWKHULWLVDWKRXJKWRUDFRQVHQWHGWR
SDVVLRQRUDQDFWLRQRUDQRPLVVLRQLQWKRXJKWRUDFWLRQ LV
VRPHWKLQJFRQWUDU\WRRQHRIWKHYLUWXHVWKHODFNRIZKLFK
VKRZVDPDQWREHEDG TXD PDQ 7KDWIRUPXODWLRQZRXOG
\LHOGDFRQFHSWFRH[WHQVLYHZLWKWKHFRQFHSW´LOOLFLWµ
7RKDYHD ODZ FRQFHSWLRQRIHWKLFVLVWRKROGWKDWZKDWLV
QHHGHGIRUFRQIRUPLW\ZLWKWKHYLUWXHVIDLOXUHLQZKLFKLV
WKHPDUNRIEHLQJEDG TXD PDQDQGQRWPHUHO\ VD\ TXD

DWWKHWLPHRIWKH5HIRUPDWLRQ 7KHVLWXDWLRQ LI, DPULJKW
ZDVWKHLQWHUHVWLQJRQHRIWKHVXUYLYDORIDFRQFHSWRXWVLGH
WKHIUDPHZRUNRIWKRXJKWWKDWPDGHLWDUHDOO\LQWHOOLJLEOH
RQH
:KHQ+XPHSURGXFHGKLVIDPRXVUHPDUNVDERXWWKHWUDQ

7KH\GLGQRWGHQ\WKHH[LVWHQFHRIGLYLQHODZ EXWWKHLUPRVWFKDUDFWHULVWLFGRF
WULQHZDVWKDWLWZDVJLYHQ QRWWREHREH\HG EXWWRVKRZPDQ·VLQFDSDFLW\WRREH\LW
HYHQE\JUDFH DQGWKLVDSSOLHGQRWPHUHO\WRWKHUDPLILHGSUHVFULSWLRQVRIWKH7RUDK
EXWWRWKHUHTXLUHPHQWVRI´QDWXUDOGLYLQHODZµ &I LQWKLVFRQQHFWLRQWKHGHFUHHRI
7UHQWDJDLQVWWKHWHDFKLQJWKDW&KULVWZDVRQO\WREHWUXVWHGLQDVPHGLDWRU QRWREH\HG
DVOHJLVODWRU
VLWLRQIURP´LVµWR´RXJKWµ KHZDV WKHQ EULQJLQJWRJHWKHU
VHYHUDOTXLWHGLIIHUHQWSRLQWV 2QH, KDYHWULHGWREULQJRXW
E\P\UHPDUNVRQWKHWUDQVLWLRQIURP´LVµWR´RZHVµDQG
RQWKHUHODWLYH´EUXWHQHVVµRIIDFWV ,WZRXOGEHSRVVLEOHWR
EULQJRXWDGLIIHUHQWSRLQWE\HQTXLULQJDERXWWKHWUDQVLWLRQ
IURP´LVµWR´QHHGVµ IURPWKHFKDUDFWHULVWLFVRIDQRUJDQ
LVPWRWKHHQYLURQPHQWWKDWLWQHHGV IRUH[DPSOH 7RVD\
WKDWLWQHHGVWKDWHQYLURQPHQWLVQRWWRVD\ HJ WKDW\RX
ZDQWLWWRKDYHWKDWHQYLURQPHQW EXWWKDWLWZRQ·WIORXULVK
XQOHVVLWKDVLW &HUWDLQO\ LWDOOGHSHQGVZKHWKHU\RX ZDQW
LWWRIORXULVK DV+XPHZRXOGVD\ %XWZKDW´DOOGHSHQGVµ
RQZKHWKHU\RXZDQWLWWRIORXULVKLVZKHWKHUWKHIDFWWKDW
LWQHHGVWKDWHQYLURQPHQW RUZRQ·WIORXULVKZLWKRXWLW KDV
WKHVOLJKWHVWLQIOXHQFHRQ\RXUDFWLRQV 1RZ WKDW VXFKDQG
VXFK´RXJKWµWREHRU´LVQHHGHGµLVVXSSRVHGWRKDYHDQ
LQIOXHQFHRQ\RXUDFWLRQV IURPZKLFKLWVHHPHGQDWXUDOWR
LQIHUWKDWWRMXGJHWKDWLW´RXJKWWREHµZDVLQIDFWWRJUDQW
ZKDW\RXMXGJHG´RXJKWWREHµLQIOXHQFHRQ\RXUDFWLRQV
$QGQRDPRXQWRIWUXWKDVWRZKDWLVWKHFDVHFRXOGSRVVLEO\
KDYHDORJLFDOFODLPWRKDYHLQIOXHQFHRQ\RXUDFWLRQV ,W
LVQRWMXGJPHQWDVVXFKWKDWVHWVXVLQPRWLRQ EXWRXUMXGJ
D´WUXWKµ
&HUWDLQO\LQWKHFDVHRIZKDWWKHSODQWQHHGV WKHWKRXJKW
RIDQHHGZLOORQO\DIIHFWDFWLRQLI\RXZDQWWKHSODQWWR
IORXULVK +HUH WKHQ WKHUHLVQRQHFHVVDU\FRQQHFWLRQEH
WZHHQZKDW\RXFDQMXGJHWKHSODQW´QHHGVµDQGZKDW\RX
ZDQW %XWWKHUHLVVRPHVRUWRIQHFHVVDU\FRQQHFWLRQEH
WZHHQZKDW\RXWKLQN\RXQHHG DQGZKDW\RXZDQW 7KH
FRQQHFWLRQLVDFRPSOLFDWHGRQH LWLVSRVVLEOH QRW WRZDQW
VRPHWKLQJWKDW\RXMXGJH\RXQHHG %XW HJ LWLVQRWSRVVL
EOHQHYHUWRZDQW DQ\WKLQJ WKDW\RXMXGJH\RXQHHG 7KLV
KRZHYHU LVQRWDIDFWDERXWWKHPHDQLQJRIWKHZRUG´WR
QHHGµ EXWDERXWWKHSKHQRPHQRQRI ZDQWLQJ +XPH·VUHD
VRQLQJ ZHPLJKWVD\ LQHIIHFW OHDGVRQHWRWKLQNLWPXVW
EHDERXWWKHZRUG´WRQHHGµ RU´WREHJRRGIRUµ
7KXVZHILQGWZRSUREOHPVDOUHDG\ZUDSSHGXSLQWKHUH
PDUNDERXWDWUDQVLWLRQIURP´LVµWR´RXJKWµ QRZVXSSRV
LQJWKDWZHKDGFODULILHGWKH´UHODWLYHEUXWHQHVVµRIIDFWVRQ
WKHRQHKDQG DQGWKHQRWLRQVLQYROYHGLQ´QHHGLQJµ DQG
´IORXULVKLQJµRQWKHRWKHUWKHUHZRXOG VWLOO UHPDLQDWKLUG
SRLQW )RU IROORZLQJ+XPH VRPHRQHPLJKWVD\ 3HUKDSV
PHQWRQKRZWRJHWRUGRVRPHWKLQJZH ZDQW +HQFHLW
PXVW EHLPSRVVLEOHWRLQIHU´QHHGVµRU´RXJKWWREHµIURP
´LVµ %XWLQWKHFDVHRIDSODQW OHWXVVD\ WKHLQIHUHQFH
IURP´LVµWR´QHHGVµLVFHUWDLQO\QRWLQWKHOHDVWGXELRXV
,WLVLQWHUHVWLQJDQGZRUWKH[DPLQLQJ EXWQRWDWDOOILVK\
,WVLQWHUHVWLVVLPLODUWRWKHLQWHUHVWRIWKHUHODWLRQEHWZHHQ
EUXWHDQGOHVVEUXWHIDFWV WKHVHUHODWLRQVKDYHEHHQYHU\OLW
WOHFRQVLGHUHG $QGZKLOH\RXFDQFRQWUDVW´ZKDWLWQHHGVµ
ZLWK´ZKDWLW·VJRWµ³OLNHFRQWUDVWLQJ GHIDFWR DQG GHLXUH
³WKDWGRHVQRWPDNHLWVQHHGLQJWKLVHQYLURQPHQWOHVVRI

\RXKDYHPDGHRXW\RXUSRLQWDERXWDWUDQVLWLRQIURP´LVµ
WR´RZHVµDQGIURP´LVµWR´QHHGVµ EXWRQO\DWWKHFRVWRI
VKRZLQJ´RZHVµDQG´QHHGVµVHQWHQFHVWRH[SUHVVD NLQG RI
WUXWKV D NLQG RIIDFWV $QGLWUHPDLQVLPSRVVLEOHWRLQIHU
´PRUDOO\RXJKWµ IURP´LVµVHQWHQFHV
7KLVFRPPHQW LWVHHPVWRPH ZRXOGEHFRUUHFW 7KLVZRUG
´RXJKWµ KDYLQJEHFRPHDZRUGRIPHUHPHVPHULFIRUFH
FRXOGQRW LQWKHFKDUDFWHURIKDYLQJWKDWIRUFH EHLQIHUUHG
IURPDQ\WKLQJZKDWHYHU ,WPD\EHREMHFWHGWKDWLWFRXOG
EHLQIHUUHGIURPRWKHU´PRUDOO\RXJKWµVHQWHQFHV EXWWKDW
FDQQRWEHWUXH 7KHDSSHDUDQFHWKDWWKLVLVVRLVSURGXFHGE\ ´7KHJUHDWHVWKDSSLQHVVSULQFLSOHRXJKWWREHHPSOR\HGLQ
WKHIDFWWKDWZHVD\´$OOPHQDUHƜµ DQG´6RFUDWHVLVDPDQµ DOOGHFLVLRQVµ
LPSOLHV´6RFUDWHVLVƜµ%XWKHUH´Ɯµ LVDGXPP\SUHGL
FDWH :HPHDQWKDWLI\RXVXEVWLWXWHDUHDOSUHGLFDWHIRU , VKRXOGMXGJHWKDW+XPHDQGRXUSUHVHQWGD\HWKLFLVWV
´Ɯµ WKHLPSOLFDWLRQLVYDOLG $ UHDOSUHGLFDWHLVUHTXLUHG KDGGRQHDFRQVLGHUDEOHVHUYLFHE\VKRZLQJWKDWQRFRQ
QRWMXVWDZRUGFRQWDLQLQJQRLQWHOOLJLEOHWKRXJKW DZRUG WHQWFRXOGEHIRXQGLQWKHQRWLRQ´PRUDOO\RXJKWµ LILW
UHWDLQLQJWKHVXJJHVWLRQRIIRUFH DQGDSWWRKDYHDVWURQJ ZHUHQRWWKDWWKHODWWHUSKLORVRSKHUVWU\WRILQGDQDOWHU
SV\FKRORJLFDOHIIHFW EXWZKLFKQRORQJHUVLJQLILHVDUHDO
FRQFHSWDWDOO
)RULWVVXJJHVWLRQLVRQHRID YHUGLFWRQ P\DFWLRQ DF
FRUGLQJDVLWDJUHHVRUGLVDJUHHVZLWKWKHGHVFULSWLRQLQWKH
´RXJKWµVHQWHQFH $QGZKHUHRQHGRHVQRWWKLQNWKHUHLVD
MXGJHRUDODZ WKHQRWLRQRIDYHUGLFWPD\UHWDLQLWVSV\
FKRORJLFDOHIIHFW EXWQRWLWVPHDQLQJ 1RZLPDJLQHWKDW
MXVWWKLVZRUG´YHUGLFWµ ZHUH VRXVHG³ZLWKDFKDUDFWHULV
WLFDOO\VROHPQHPSKDVLV³DVWRUHWDLQLWVDWPRVSKHUHEXW
QRWLWVPHDQLQJ DQGVRPHRQHZHUHWRVD\ ´)RUD YHUGLFW
DIWHUDOO \RXQHHGDODZDQGDMXGJHµ 7KHUHSO\PLJKWEH
PDGH ´1RWDWDOO IRULIWKHUHZHUHDODZDQGDMXGJHZKR
JDYHDYHUGLFW WKHTXHVWLRQIRUXVZRXOGEHZKHWKHUDF
FHSWLQJWKDWYHUGLFWLVVRPHWKLQJWKDWWKHUHLVD 9HUGLFW RQµ
7KLVLVDQDQDORJXHRIDQDUJXPHQWZKLFKLVVRIUHTXHQWO\
UHIHUUHGWRDVGHFLVLYH ,IVRPHRQHGRHVKDYHDGLYLQHODZ
FRQFHSWLRQRIHWKLFV DOOWKHVDPH KHKDVWRDJUHHWKDWKHKDV
QDWLYHYHU\ILVK\FRQWHQWDQGWRUHWDLQWKHSV\FKRORJL
FDOIRUFHRIWKHWHUP ,WZRXOGEHPRVWUHDVRQDEOHWRGURS
LW ,WKDVQRUHDVRQDEOHVHQVHRXWVLGHDODZFRQFHSWLRQRI
HWKLFV WKH\DUHQRWJRLQJWRPDLQWDLQVXFKDFRQFHSWLRQ
DQG\RXFDQGRHWKLFVZLWKRXWLW DVLVVKRZQE\WKHH[
DPSOHRI$ULVWRWOH ,WZRXOGEHDJUHDWLPSURYHPHQWLI
LQVWHDGRI´PRUDOO\ZURQJµ RQHDOZD\VQDPHGDJHQXV
VXFKDV´XQWUXWKIXOµ ´XQFKDVWHµ ´XQMXVWµ :HVKRXOGQR
ORQJHUDVNZKHWKHUGRLQJVRPHWKLQJZDV´ZURQJµ SDVVLQJ
GLUHFWO\IURPVRPHGHVFULSWLRQRIDQDFWLRQWRWKLVQRWLRQ
ZHVKRXOGDVNZKHWKHU HJ LWZDVXQMXVW DQGWKHDQVZHU
ZRXOGVRPHWLPHVEHFOHDUDWRQFH
, QRZFRPHWRWKHHSRFKLQPRGHUQ(QJOLVKPRUDOSKLORV
RSK\PDUNHGE\6LGJZLFN 7KHUHLVDVWDUWOLQJFKDQJHWKDW
VHHPVWRKDYHWDNHQSODFHEHWZHHQ0LOODQG0RRUH 0LOO
DVVXPHV DVZHVDZ WKDWWKHUHLVQRTXHVWLRQRIFDOFXODW
LQJWKHSDUWLFXODUFRQVHTXHQFHVRIDQDFWLRQVXFKDVPXU
WRKDYHDMXGJPHQWWKDWKH RXJKW PRUDOO\RXJKWWRREH\
WKHGLYLQHODZ VRKLVHWKLFLVLQH[DFWO\WKHVDPHSRVLWLRQDV
DQ\RWKHU KHPHUHO\KDVD´SUDFWLFDOPDMRUSUHPLVHµ  ´'L
YLQHODZRXJKWWREHREH\HGµZKHUHVRPHRQHHOVHKDV HJ

$VLWLVDEVXUGO\FDOOHG 6LQFHPDMRUSUHPLVH SUHPLVHFRQWDLQLQJWKHWHUP
ZKLFKLVSUHGLFDWHLQWKHFRQFOXVLRQ LWLVDVROHFLVPWRVSHDNRILWLQWKHFRQQHFWLRQ
ZLWKSUDFWLFDOUHDVRQLQJ

GHURUWKHIW DQGZHVDZWRRWKDWKLVSRVLWLRQZDVVWXSLG
EHFDXVHLWLVQRWDWDOOFOHDUKRZDQDFWLRQFDQIDOOXQGHU
MXVWRQHSULQFLSOHRIXWLOLW\ ,Q0RRUHDQGLQVXEVHTXHQW
DFDGHPLFPRUDOLVWVRI(QJODQGZHILQGLWWDNHQWREHSUHWW\
REYLRXVWKDW´WKHULJKWDFWLRQµLVWKHDFWLRQZKLFKSURGXFHV
WKHEHVWSRVVLEOHFRQVHTXHQFHVUHFNRQLQJDPRQJFRQVH
TXHQFHVWKHLQWULQVLFYDOXHVDVFULEHGWRFHUWDLQNLQGVRIDFW
E\VRPH´2EMHFWLYLVWVµ  1RZLWIROORZVIURPWKLVWKDW
DPDQGRHVZHOO VXEMHFWLYHO\VSHDNLQJ LIKHDFWVIRUWKH
EHVWLQWKHSDUWLFXODUFLUFXPVWDQFHVDFFRUGLQJWRKLVMXGJ
PHQWRIWKHWRWDOFRQVHTXHQFHVRIWKLVSDUWLFXODUDFWLRQ
, VD\WKDWWKLVIROORZV QRWWKDWDQ\SKLORVRSKHUKDVVDLG
SUHFLVHO\WKDW )RUGLVFXVVLRQRIWKHVHTXHVWLRQVFDQRI
FRXUVHJHWH[WUHPHO\FRPSOLFDWHG HJ LWFDQEHGRXEWHG
ZKHWKHU´VXFKDQGVXFKLVWKHULJKWDFWLRQµLVDVDWLVIDF
WRU\IRUPXODWLRQ RQWKHJURXQGVWKDWWKLQJVKDYHWRH[
LVWWRKDYHSUHGLFDWHVVRSHUKDSVWKHEHVWIRUPXODWLRQLV´,
DPREOLJHGµ RUDJDLQ DSKLORVRSKHUPD\GHQ\WKDW´ULJKWµ
LVD´GHVFULSWLYHµWHUP DQGWKHQWDNHDURXQGDERXWURXWH
WKURXJKOLQJXLVWLFDQDO\VLVWRUHDFKDYLHZZKLFKFRPHVWR
WKHVDPHWKLQJDV´WKHULJKWDFWLRQLVWKHRQHSURGXFWLYH
JOLVKDFDGHPLFPRUDOSKLORVRSKHUVKDVSXWRXWDSKLORVR
SK\DFFRUGLQJWRZKLFK HJ LWLVQRWSRVVLEOHWRKROGWKDW
LWFDQQRWEHULJKWWRNLOOWKHLQQRFHQWDVDPHDQVWRDQ\HQG
ZKDWVRHYHUDQGWKDWVRPHRQHZKRWKLQNVRWKHUZLVHLVLQ
HUURU , KDYHWRPHQWLRQERWKSRLQWV EHFDXVH0U +DUH
IRUH[DPSOH ZKLOHWHDFKLQJDSKLORVRSK\ZKLFKZRXOGHQ
FRXUDJHDSHUVRQWRMXGJHWKDWNLOOLQJWKHLQQRFHQWZRXOGEH
ZKDWKH´RXJKWµWRFKRRVHIRURYHUULGLQJSXUSRVHVZRXOG
DOVRWHDFK , WKLQN WKDWLIDPDQFKRRVHVWRPDNHDYRLGLQJ
NLOOLQJWKHLQQRFHQWIRUDQ\SXUSRVHKLV´VXSUHPHSUDFWL
FDOSULQFLSOHµ KHFDQQRWEHLPSXJQHGIRUHUURU WKDWMXVW
LVKLV´SULQFLSOHµ %XWZLWKWKDWTXDOLILFDWLRQ , WKLQNLWFDQ
EHVHHQWKDWWKHSRLQW, KDYHPHQWLRQHGKROGVJRRGRIHY
HU\VLQJOH(QJOLVKDFDGHPLFPRUDOSKLORVRSKHUVLQFH6LGJ
RIWKHEHVWFRQVHTXHQFHVµHJ WKHYLHZWKDW\RXIUDPH ZLFN 1RZWKLVLVDVLJQLILFDQWWKLQJ IRULWPHDQVWKDWDOO
\RXU´SULQFLSOHVµWRHIIHFWWKHHQG\RXFKRRVHWRSXUVXH WKHVHSKLORVRSKLHVDUHTXLWHLQFRPSDWLEOHZLWKWKH+HEUHZ
WKHFRQQHFWLRQEHWZHHQ´FKRLFHµDQG´EHVWµEHLQJVXSSRV &KULVWLDQHWKLF )RULWKDVEHHQFKDUDFWHULVWLFRIWKDWHWKLFWR
HGO\VXFKWKDWFKRRVLQJUHIOHFWLYHO\PHDQVWKDW\RXFKRRVH WHDFKWKDWWKHUHDUHFHUWDLQWKLQJVIRUELGGHQZKDWHYHU FRQ
KRZWRDFWVRDVWRSURGXFHWKHEHVWFRQVHTXHQFHV IXUWKHU VHTXHQFHV WKUHDWHQ VXFKDVFKRRVLQJWRNLOOWKHLQQRFHQWIRU
WKHUROHVRIZKDWDUHFDOOHG´PRUDOSULQFLSOHVµDQGRIWKH DQ\SXUSRVH KRZHYHUJRRG YLFDULRXVSXQLVKPHQW WUHDFK
´PRWLYHRIGXW\µKDYHWREHGHVFULEHG WKHGLIIHUHQFHVEH HU\E\ZKLFK, PHDQREWDLQLQJDPDQ·VFRQILGHQFHLQD
WZHHQ´JRRGµDQG´PRUDOO\JRRGµDQG´ULJKWµQHHGWREH JUDYHPDWWHUE\SURPLVHVRIWUXVWZRUWK\IULHQGVKLSDQGWKHQ
H[SORUHG WKHVSHFLDOFKDUDFWHULVWLFVRI´RXJKWµVHQWHQFHV
LQYHVWLJDWHG 6XFKGLVFXVVLRQVJHQHUDWHDQDSSHDUDQFHRI
VLJQLILFDQWGLYHUVLW\RIYLHZVZKHUHZKDWLVUHDOO\VLJQLIL
FDQWLVDQRYHUDOOVLPLODULW\ 7KHRYHUDOOVLPLODULW\LVPDGH
FOHDULI\RXFRQVLGHUWKDWHYHU\RQHRIWKHEHVWNQRZQ(Q

2[IRUG2EMHFWLYLVWVRIFRXUVHGLVWLQJXLVKEHWZHHQ´FRQVHTXHQFHVµDQG´LQWULQVLF
YDOXHVµDQGVRSURGXFHDPLVOHDGLQJDSSHDUDQFHRIQRWEHLQJ´FRQVHTXHQWLDOLVWVµ %XW
WKH\GRQRWKROGDQG5RVVH[SOLFLWO\GHQLHVWKDWWKHJUDYLW\RI HJ SURFXULQJWKH
FRQGHPQDWLRQRIWKHLQQRFHQWLVVXFKWKDWLWFDQQRWEHRXWZHLJKHGE\ HJ QDWLRQDO
LQWHUHVW +HQFHWKHLUGLVWLQFWLRQLVRIQRLPSRUWDQFH

EHWUD\LQJKLPWRKLVHQHPLHV LGRODWU\ VRGRP\ DGXOWHU\
PDNLQJDIDOVHSURIHVVLRQRIIDLWK 7KHSURKLELWLRQRIFHU
WDLQWKLQJVVLPSO\LQYLUWXHRIWKHLUGHVFULSWLRQDVVXFKDQG
VXFKLGHQWLILDEOHNLQGVRIDFWLRQ UHJDUGOHVVRIDQ\IXUWKHU
FRQVHTXHQFHV LVFHUWDLQO\QRWWKHZKROHRIWKH+HEUHZ
&KULVWLDQHWKLF EXWLWLVDQRWHZRUWK\IHDWXUHRILW DQGLI
HYHU\DFDGHPLFSKLORVRSKHUVLQFH6LGJZLFNKDVZULWWHQLQ
VXFKDZD\DVWRH[FOXGHWKLVHWKLF LWZRXOGDUJXHDFHU
WDLQSURYLQFLDOLW\RIPLQGQRWWRVHHWKLVLQFRPSDWLELOLW\DV
WKHPRVWLPSRUWDQWIDFWDERXWWKHVHSKLORVRSKHUV DQGWKH
GLIIHUHQFHVEHWZHHQWKHPDVVRPHZKDWWULIOLQJE\FRPSDU
LVRQ
,WLVQRWLFHDEOHWKDWQRQHRIWKHVHSKLORVRSKHUVGLVSOD\VDQ\
FRQVFLRXVQHVVWKDWWKHUHLVVXFKDQHWKLF ZKLFKKHLVFRQ
WUDGLFWLQJ LWLVSUHWW\ZHOOWDNHQIRUREYLRXVDPRQJWKHP
DOOWKDWDSURKLELWLRQVXFKDVWKDWRQPXUGHUGRHVQRWRSHU
DWHLQIDFHRIVRPHFRQVHTXHQFHV %XWRIFRXUVHWKHVWULFW
QHVVRIWKHSURKLELWLRQKDVDVLWVSRLQW WKDW\RXDUHQRWWR
EHWHPSWHGE\IHDURUKRSHRIFRQVHTXHQFHV
,I\RXQRWLFHWKHWUDQVLWLRQIURP0LOOWR0RRUH \RXZLOO
VXVSHFWWKDWLWZDVPDGHVRPHZKHUHE\VRPHRQH 6LGJ
ZLFNZLOOFRPHWRPLQGDVDOLNHO\QDPH DQG\RXZLOO
LQIDFWILQGLWJRLQJRQ DOPRVWFDVXDOO\ LQKLP +HLV
UDWKHUDGXOODXWKRU DQGWKHLPSRUWDQWWKLQJVLQKLPRFFXULQ
DVLGHVDQGIRRWQRWHVDQGVPDOOELWVRIDUJXPHQWZKLFKDUH
QRWFRQFHUQHGZLWKKLVJUDQGFODVVLILFDWLRQRIWKH´PHWK
RGVRIHWKLFVµ $ GLYLQHODZWKHRU\RIHWKLFVLVUHGXFHG
WRDQLQVLJQLILFDQWYDULHW\E\DIRRWQRWHWHOOLQJXVWKDW´WKH
QRWUHDOL]LQJ
)URPWKHSRLQWRIYLHZRIWKHSUHVHQWHQTXLU\ WKHPRVW
LPSRUWDQWWKLQJDERXW6LGJZLFNZDVKLVGHILQLWLRQRILQ
WHQWLRQ +HGHILQHVLQWHQWLRQLQVXFKDZD\WKDWRQHPXVW
EHVDLGWRLQWHQGDQ\IRUHVHHQFRQVHTXHQFHVRIRQH·VYRO
XQWDU\DFWLRQ 7KLVGHILQLWLRQLVREYLRXVO\LQFRUUHFW DQG,
GDUHVD\WKDWQRRQHZRXOGEHIRXQGWRGHIHQGLWQRZ +H
XVHVLWWRSXWIRUZDUGDQHWKLFDOWKHVLVZKLFKZRXOGQRZEH
DFFHSWHGE\PDQ\SHRSOH WKHWKHVLVWKDWLWGRHVQRWPDNH
DQ\GLIIHUHQFHWRDPDQ·VUHVSRQVLELOLW\IRUVRPHWKLQJWKDW
KHIRUHVDZ WKDWKHIHOWQRGHVLUHIRULW HLWKHUDVDQHQGRU
DVDPHDQVWRDQHQG 8VLQJWKHODQJXDJHRILQWHQWLRQPRUH
FRUUHFWO\ DQGDYRLGLQJ6LGJZLFN·VIDXOW\FRQFHSWLRQ ZH
PD\VWDWHWKHWKHVLVWKXV LWGRHVQRWPDNHDQ\GLIIHUHQFH
WRDPDQ·VUHVSRQVLELOLW\IRUDQHIIHFWRIKLVDFWLRQZKLFK
KHFDQIRUHVHH WKDWKHGRHVQRWLQWHQGLW 1RZWKLVVRXQGV
UDWKHUHGLI\LQJ LWLV, WKLQNTXLWHFKDUDFWHULVWLFRIYHU\EDG
GHJHQHUDWLRQVRIWKRXJKWRQVXFKTXHVWLRQVWKDWWKH\VRXQG
HGLI\LQJ :HFDQVHHZKDWLWDPRXQWVWRE\FRQVLGHULQJDQ
EHVWWKHRORJLDQVµ*RGNQRZVZKRPKHPHDQWWHOOXVWKDW H[DPSOH /HWXVVXSSRVHWKDWDPDQKDVDUHVSRQVLELOLW\IRU
*RGLVWREHREH\HGLQKLVFDSDFLW\RID PRUDO EHLQJ Ʀ WKHPDLQWHQDQFHRIVRPHFKLOG 7KHUHIRUHGHOLEHUDWHO\WR
ƴƮƯƲƨƩфư҄о›ƠƨƬƮưRQHVHHPVWRKHDU$ULVWRWOHVD\LQJ ZLWKGUDZVXSSRUWIURPLWLVDEDGVRUWRIWKLQJIRUKLPWR
´,VQ·WWKHSUDLVHYXOJDU"µ %XW6LGJZLFNLVYXOJDULQWKDW GR ,WZRXOGEHEDGIRUKLPWRZLWKGUDZLWVPDLQWHQDQFHEH
NLQGRIZD\ KHWKLQNV IRUH[DPSOH WKDWKXPLOLW\FRQVLVWV FDXVHKHGLGQ·WZDQWWRPDLQWDLQLWDQ\ORQJHU DQG DOVREDG
LQXQGHUHVWLPDWLQJ\RXURZQPHULWV³LH LQDVSHFLHVRI IRUKLPWRZLWKGUDZLWEHFDXVHE\GRLQJVRKHZRXOG OHWXV
XQWUXWKIXOQHVV DQGWKDWWKHJURXQGIRUKDYLQJODZVDJDLQVW VD\ FRPSHOVRPHRQHHOVHWRGRVRPHWKLQJ :HPD\VXS
EODVSKHP\ZDVWKDWLWZDVRIIHQVLYHWREHOLHYHUV DQGWKDW SRVHIRUWKHVDNHRIDUJXPHQWWKDWFRPSHOOLQJWKDWSHUVRQWR
WRJRDFFXUDWHO\LQWRWKHYLUWXHRISXULW\LVWRRIIHQGDJDLQVW
LWVFDQRQV DWKLQJKHUHSURYHV´PHGLHYDOWKHRORJLDQVµIRU

1LFRPDFKHDQ(WKLFV E
GRWKDWWKLQJLVLQLWVHOITXLWHDGPLUDEOH %XWQRZKHKDVWR
FKRRVHEHWZHHQGRLQJVRPHWKLQJGLVJUDFHIXODQGJRLQJWR
SULVRQ LIKHJRHVWRSULVRQ LWZLOOIROORZWKDWKHZLWKGUDZV
VXSSRUWIURPWKHFKLOG %\6LGJZLFN·VGRFWULQH WKHUHLVQR
GLIIHUHQFHLQKLVUHVSRQVLELOLW\IRUFHDVLQJWRPDLQWDLQWKH
FKLOG EHWZHHQWKHFDVHZKHUHKHGRHVLWIRULWVRZQVDNH
RUDVDPHDQVWRVRPHRWKHUSXUSRVH DQGZKHQLWKDSSHQV
DVDIRUHVHHQDQGXQDYRLGDEOHFRQVHTXHQFHRIKLVJRLQJWR
SULVRQUDWKHUWKDQGRVRPHWKLQJGLVJUDFHIXO ,WIROORZVWKDW
KHPXVWZHLJKXSWKHUHODWLYHEDGQHVVRIZLWKGUDZLQJVXS
SRUWIURPWKHFKLOGDQGRIGRLQJWKHGLVJUDFHIXOWKLQJ DQG
LWPD\HDVLO\EHWKDWWKHGLVJUDFHIXOWKLQJLVLQIDFWDOHVV
YLFLRXVDFWLRQWKDQLQWHQWLRQDOO\ZLWKGUDZLQJVXSSRUWIURP
WKHFKLOGZRXOGEH LIWKHQWKHIDFWWKDWZLWKGUDZLQJVXSSRUW
IURPWKHFKLOGLVDVLGHHIIHFWRIKLVJRLQJWRSULVRQGRHVQRW
PDNHDQ\GLIIHUHQFHWRKLVUHVSRQVLELOLW\ WKLVFRQVLGHUDWLRQ
ZLOOLQFOLQHKLPWRGRWKHGLVJUDFHIXOWKLQJ ZKLFKFDQVWLOO
EHSUHWW\EDG $QGRIFRXUVH RQFHKHKDVVWDUWHGWRORRN
DWWKHPDWWHULQWKLVOLJKW WKHRQO\UHDVRQDEOHWKLQJIRUKLP
WRFRQVLGHUZLOOEHWKHFRQVHTXHQFHVDQGQRWWKHLQWULQVLF
EDGQHVVRIWKLVRUWKDWDFWLRQ 6RWKDW JLYHQWKDWKHMXGJHV
UHDVRQDEO\WKDWQR JUHDW KDUPZLOOFRPHRILW KHFDQGRD
PXFKPRUHGLVJUDFHIXOWKLQJWKDQGHOLEHUDWHO\ZLWKGUDZLQJ
VXSSRUWIURPWKHFKLOG $QGLIKLVFDOFXODWLRQVWXUQRXWLQ
IDFWZURQJ LWZLOODSSHDUWKDWKHZDVQRWUHVSRQVLEOHIRU
WKHFRQVHTXHQFHV EHFDXVHKHGLGQRWIRUHVHHWKHP )RULQ
IDFW6LGJZLFN·VWKHVLVOHDGVWRLWVEHLQJTXLWHLPSRVVLEOHWR
HVWLPDWHWKHEDGQHVVRIDQDFWLRQH[FHSWLQWKHOLJKWRI H[
SHFWHG FRQVHTXHQFHV %XWLIVR WKHQ\RXPXVWHVWLPDWHWKH
EDGQHVVLQWKHOLJKWRIWKHFRQVHTXHQFHV\RXH[SHFW DQGVR
LWZLOOIROORZWKDW\RXFDQH[FXOSDWH\RXUVHOIIURPWKH DF
WXDO FRQVHTXHQFHVRIWKHPRVWGLVJUDFHIXODFWLRQV VRORQJ
DV\RXFDQPDNHRXWDFDVHIRUQRWKDYLQJIRUHVHHQWKHP
:KHUHDV, VKRXOGFRQWHQGWKDWDPDQLVUHVSRQVLEOHIRUWKH
EDGFRQVHTXHQFHVRIKLVEDGDFWLRQV EXWJHWVQRFUHGLWIRU

WKHJRRGRQHV DQGFRQWUDULZLVHLVQRWUHVSRQVLEOHIRUWKH
EDGFRQVHTXHQFHVRIJRRGDFWLRQV
7KH  GHQLDO  RI DQ\ GLVWLQFWLRQ  EHWZHHQ  IRUHVHHQ  DQG  LQ
WHQGHGFRQVHTXHQFHV DVIDUDVUHVSRQVLELOLW\LVFRQFHUQHG
ZDVQRWPDGHE\6LGJZLFNLQGHYHORSLQJDQ\RQH´PHWKRG
RIHWKLFVµ KHPDGHWKLVLPSRUWDQWPRYHRQEHKDOIRIHY
HU\ERG\DQGMXVWRQLWVRZQDFFRXQW DQG, WKLQNLWSODXVL
EOHWRVXJJHVWWKDW WKLV PRYHRQWKHSDUWRI6LGJZLFNH[
SODLQVWKHGLIIHUHQFHEHWZHHQROGIDVKLRQHG8WLOLWDULDQLVP
DQGWKDW FRQVHTXHQWLDOLVP DV, QDPHLW ZKLFKPDUNVKLP
DQGHYHU\(QJOLVKDFDGHPLFPRUDOSKLORVRSKHUVLQFHKLP
%\LW WKHNLQGRIFRQVLGHUDWLRQZKLFKZRXOGIRUPHUO\KDYH
EHHQUHJDUGHGDVDWHPSWDWLRQ WKHNLQGRIFRQVLGHUDWLRQ
XUJHGXSRQPHQE\ZLYHVDQGIODWWHULQJIULHQGV ZDVJLYHQ
DVWDWXVE\PRUDOSKLORVRSKHUVLQWKHLUWKHRULHV
,WLVDQHFHVVDU\IHDWXUHRIFRQVHTXHQWLDOLVPWKDWLWLVDVKDO
ORZSKLORVRSK\ )RUWKHUHDUHDOZD\VERUGHUOLQHFDVHVLQ
HWKLFV 1RZLI\RXDUHHLWKHUDQ$ULVWRWHOLDQ RUDEHOLHYHULQ
GLYLQHODZ \RXZLOOGHDOZLWKDERUGHUOLQHFDVHE\FRQVLG
HULQJZKHWKHUGRLQJVXFKDQGVXFKLQVXFKDQGVXFKFLU
FXPVWDQFHVLV VD\ PXUGHU RULVDQDFWRILQMXVWLFH DQG
DFFRUGLQJDV\RXGHFLGHLWLVRULWLVQ·W \RXMXGJHLWWREH
DWKLQJWRGRRUQRW 7KLVZRXOGEHWKHPHWKRGRIFDVX
LVWU\ DQGZKLOHLWPD\OHDG\RXWRVWUHWFKDSRLQWRQWKH
FLUFXPIHUHQFH LWZLOOQRWSHUPLW\RXWRGHVWUR\WKHFHQWHU
%XWLI\RXDUHDFRQVHTXHQWLDOLVW WKHTXHVWLRQ´:KDWLVLW
ULJKWWRGRLQVXFKDQGVXFKFLUFXPVWDQFHV"µ LVDVWXSLG
RQHWRUDLVH 7KHFDVXLVWUDLVHVVXFKDTXHVWLRQRQO\WRDVN
´:RXOGLWEH SHUPLVVLEOH WRGRVRDQGVR"µ RU´:RXOGLWEH
SHUPLVVLEOH QRW WRGRVRDQGVR"µ 2QO\LILWZRXOG QRW EH
SHUPLVVLEOH QRW WRGRVRDQGVRFRXOGKHVD\´7KLVZRXOGEH
WKH WKLQJWRGRµ 2WKHUZLVH WKRXJKKHPD\VSHDN DJDLQVW PDGHK\SRWKHWLFDOFKRLFHV³WRFRQVHQWWRVLPLODUEDGDF
VRPHDFWLRQ KHFDQQRWSUHVFULEHDQ\IRULQDQ DFWXDO FDVH WLRQV RUWRSUDLVHDQGIODWWHUWKRVHZKRGRWKHP VRORQJDV
WKHFLUFXPVWDQFHVEH\RQGWKHRQHVLPDJLQHGPLJKWVXJ
JHVWDOOVRUWVRISRVVLELOLWLHV DQG\RXFDQ·WNQRZLQDGYDQFH
ZKDWWKHSRVVLELOLWLHVDUHJRLQJWREH 1RZWKHFRQVHTXHQ
WLDOLVWKDVQRIRRWLQJRQZKLFKWRVD\´7KLVZRXOGEHSHU
PLVVLEOH WKLVQRWµ EHFDXVHE\KLVRZQK\SRWKHVLV LWLVWKH
FRQVHTXHQFHVWKDWDUHWRGHFLGH DQGKHKDVQREXVLQHVVWR
SUHWHQGWKDWKHFDQOD\LWGRZQZKDWSRVVLEOHWZLVWVDPDQ
FRXOGJLYHGRLQJWKLVRUWKDW WKHPRVWKHFDQVD\LV DPDQ
PXVWQRW EULQJDERXW WKLVRUWKDW KHKDVQRULJKWWRVD\
KHZLOO LQDQDFWXDOFDVH EULQJDERXWVXFKDQGVXFKXQ
OHVVKHGRHVVRDQGVR )XUWKHU WKHFRQVHTXHQWLDOLVW LQRU
GHUWREHLPDJLQLQJERUGHUOLQHFDVHVDWDOO KDVRIFRXUVH
WRDVVXPHVRPHVRUWRIODZRUVWDQGDUGDFFRUGLQJWRZKLFK
WKLVLVDERUGHUOLQHFDVH :KHUHWKHQGRHVKHJHWWKHVWDQ
GDUGIURP" ,QSUDFWLFHWKHDQVZHULQYDULDEO\LV IURPWKH
VWDQGDUGVFXUUHQWLQKLVVRFLHW\RUKLVFLUFOH $QGLWKDVLQ
IDFWEHHQWKHPDUNRIDOOWKHVHSKLORVRSKHUVWKDWWKH\KDYH
EHHQH[WUHPHO\FRQYHQWLRQDO WKH\KDYHQRWKLQJLQWKHP
E\ZKLFKWRUHYROWDJDLQVWWKHFRQYHQWLRQDOVWDQGDUGVRI
WKHLUVRUWRISHRSOH LWLVLPSRVVLEOHWKDWWKH\VKRXOGEHSUR
IRXQG %XWWKHFKDQFHWKDWDZKROHUDQJHRIFRQYHQWLRQDO
VWDQGDUGVZLOOEHGHFHQWLVVPDOO ³)LQDOO\ WKHSRLQWRI
FRQVLGHULQJK\SRWKHWLFDOVLWXDWLRQV SHUKDSVYHU\LPSURE
DEOHRQHV VHHPVWR EH WR HOLFLWIURP\RXUVHOIRUVRPHRQH
HOVHDK\SRWKHWLFDOGHFLVLRQWRGRVRPHWKLQJRIDEDGNLQG
, GRQ·WGRXEWWKLVKDVWKHHIIHFWRISUHGLVSRVLQJSHRSOH³
ZKRZLOOQHYHUJHWLQWRWKHVLWXDWLRQVIRUZKLFKWKH\KDYH

1HFHVVDULO\DUDUHFDVH IRUWKHSRVLWLYHSUHFHSWV HJ ´+RQRU\RXUSDUHQWVµ
KDUGO\HYHUSUHVFULEH DQGVHOGRPHYHQQHFHVVLWDWH DQ\SDUWLFXODUDFWLRQ

WKHLUFURZGGRHVVRWRR ZKHQWKHGHVSHUDWHFLUFXPVWDQFHV
LPDJLQHGGRQ·WKROGDWDOO
7KRVHZKRUHFRJQL]HWKHRULJLQVRIWKHQRWLRQVRI´REOLJD
WLRQµDQGRIWKHHPSKDWLF ´PRUDOµ RXJKW LQWKHGLYLQHODZ
FRQFHSWLRQRIHWKLFV EXWZKRUHMHFWWKHQRWLRQRIDGLYLQH
OHJLVODWRU VRPHWLPHVORRNDERXWIRUWKHSRVVLELOLW\RIUH
WDLQLQJDODZFRQFHSWLRQZLWKRXWDGLYLQHOHJLVODWRU 7KLV
VHDUFK , WKLQN KDVVRPHLQWHUHVWLQLW 3HUKDSVWKHILUVW
WKLQJWKDWVXJJHVWVLWVHOILVWKH´QRUPVµRIDVRFLHW\ %XW
MXVWDVRQHFDQQRWEHLPSUHVVHGE\%XWOHUZKHQRQHUH
IOHFWVZKDWFRQVFLHQFHFDQWHOOSHRSOHWRGR VR , WKLQN
RQHFDQQRWEHLPSUHVVHGE\WKLVLGHDLIRQHUHIOHFWVZKDW
WKH´QRUPVµRIDVRFLHW\FDQEHOLNH 7KDWOHJLVODWLRQFDQ
EH´IRURQHVHOIµ, UHMHFWDVDEVXUG ZKDWHYHU\RXGR´IRU
\RXUVHOIµPD\EHDGPLUDEOH EXWLVQRWOHJLVODWLQJ 2QFH
RQHVHHVWKLV RQHPD\VD\ , KDYHWRIUDPHP\RZQUXOHV
DQGWKHVHDUHWKHEHVW, FDQIUDPH DQG, VKDOOJRE\WKHP
XQWLO, NQRZVRPHWKLQJEHWWHU DVDPDQPLJKWVD\´, VKDOO
JRE\WKHFXVWRPVRIP\DQFHVWRUVµ :KHWKHUWKLVOHDGV
WRJRRGRUHYLOZLOOGHSHQGRQWKH FRQWHQW RIWKHUXOHVRU
RIWKHFXVWRPVRIRQH·VDQFHVWRUV ,IRQHLVOXFN\LWZLOO
OHDGWRJRRG 6XFKDQDWWLWXGHZRXOGEHKRSHIXOLQWKLVDW
DQ\UDWH LWVHHPVWRKDYHLQLWVRPH6RFUDWLFGRXEWZKHUH
IURPKDYLQJWRIDOOEDFNRQVXFKH[SHGLHQWV LWVKRXOGEH
FOHDUWKDW6RFUDWLFGRXEWLVJRRG LQIDFWUDWKHUJHQHUDOO\LW
PXVWEHJRRGIRUDQ\RQHWRWKLQN´3HUKDSVLQVRPHZD\,
FDQ·WVHH , PD\EHRQDEDGSDWK SHUKDSV, DPKRSHOHVVO\
ZURQJLQVRPHHVVHQWLDOZD\µ ³7KHVHDUFKIRU´QRUPVµ
PLJKWOHDGVRPHRQHWRORRNIRUODZVRIQDWXUH DVLIWKH
XQLYHUVHZHUHDOHJLVODWRU EXWLQWKHSUHVHQWGD\WKLVLVQRW
OLNHO\WROHDGWRJRRGUHVXOWV LWPLJKWOHDGRQHWRHDWWKH
ZHDNHUDFFRUGLQJWRWKHODZVRIQDWXUH EXWZRXOGKDUGO\
OHDGDQ\RQHQRZDGD\VWRQRWLRQVRIMXVWLFHWKHSUH6RFUDWLF
IHHOLQJDERXWMXVWLFHDVFRPSDUDEOHWRWKHEDODQFHRUKDU
PRQ\ZKLFKNHSWWKLQJVJRLQJLVYHU\UHPRWHWRXV
7KHUHLVDQRWKHUSRVVLELOLW\KHUH ´REOLJDWLRQµPD\EHFRQ
WUDFWXDO -XVWDVZHORRNDWWKHODZWRILQGRXWZKDWDPDQ
VXEMHFWWRLWLVUHTXLUHGE\LWWRGR VRZHORRNDWDFRQ
WUDFWWRILQGRXWZKDWWKHPDQZKRKDVPDGHLWLVUHTXLUHG
E\LWWRGR 7KLQNHUV DGPLWWHGO\UHPRWHIURPXV PLJKW
KDYHWKHLGHDRID IRHGXVUHUXP RIWKHXQLYHUVHQRWDVD
OHJLVODWRUEXWDVWKHHPERGLPHQWRIDFRQWUDFW 7KHQLI\RX
FRXOGILQGRXWZKDWWKHFRQWUDFWZDV \RXZRXOGOHDUQ\RXU
REOLJDWLRQVXQGHULW 1RZ \RXFDQQRWEHXQGHUDODZXQ
OHVVLWKDVEHHQSURPXOJDWHGWR\RX DQGWKHWKLQNHUVZKR
EHOLHYHGLQ´QDWXUDOGLYLQHODZµKHOGWKDWLWZDVSURPXO
JDWHGWRHYHU\JURZQPDQLQKLVNQRZOHGJHRIJRRGDQG
HYLO 6LPLODUO\\RXFDQQRWEHLQDFRQWUDFWZLWKRXWKDYLQJ
FRQWUDFWHG LH JLYHQVLJQVRIHQWHULQJXSRQWKHFRQWUDFW
-XVWSRVVLEO\ LWPLJKWEHDUJXHGWKDWWKHXVHRIODQJXDJH
ZKLFKRQHPDNHVLQWKHRUGLQDU\FRQGXFWRIOLIHDPRXQWV
LQVRPHVHQVHWRJLYLQJWKHVLJQVRIHQWHULQJLQWRYDULRXV
FRQWUDFWV ,IDQ\RQHKDGWKLVWKHRU\ ZHVKRXOGZDQWWRVHH
LWZRUNHGRXW , VXVSHFWWKDWLWZRXOGEHODUJHO\IRUPDO FHSWVWKDWQHHGLQYHVWLJDWLQJVLPSO\DVSDUWRIWKHSKLORV
LWPLJKWEHSRVVLEOHWRFRQVWUXFWDV\VWHPHPERG\LQJWKH
ODZZKRVHVWDWXVPLJKWEHFRPSDUHGWRWKDWRI´ODZVµRI
DQGKDYHQRWWKRXJKWRIDVODZ LWGRHVQRWVHHPUHDVRQDEOH
WRVD\WKDW\RXFDQHQWHUXSRQDFRQWUDFWZLWKRXWNQRZLQJ
WKDW\RXDUHGRLQJVR VXFKLJQRUDQFHLVXVXDOO\KHOGWREH
GHVWUXFWLYHRIWKHQDWXUHRIDFRQWUDFW
,WPLJKWUHPDLQWRORRNIRU´QRUPVµLQKXPDQYLUWXHV MXVW
DV PDQ KDVVRPDQ\WHHWK ZKLFKLVFHUWDLQO\QRWWKHDYHU
DJHQXPEHURIWHHWKPHQKDYH EXWLVWKHQXPEHURIWHHWK
IRUWKHVSHFLHV VRSHUKDSVWKHVSHFLHV PDQ UHJDUGHGQRW
MXVWELRORJLFDOO\ EXWIURPWKHSRLQWRIYLHZRIWKHDFWLYLW\
RIWKRXJKWDQGFKRLFHLQUHJDUGWRWKHYDULRXVGHSDUWPHQWV
RIOLIH³SRZHUVDQGIDFXOWLHVDQGXVHRIWKLQJVQHHGHG³
´KDVµVXFKDQGVXFKYLUWXHV DQGWKLV´PDQµZLWKWKHFRP
SOHWHVHWRIYLUWXHVLVWKH´QRUPµ DV´PDQµZLWK HJ D
FRPSOHWHVHWRIWHHWKLVDQRUP %XWLQ WKLV VHQVH´QRUPµ
KDVFHDVHGWREHURXJKO\HTXLYDOHQWWR´ODZµ ,QWKLVVHQVH
WKHQRWLRQRID´QRUPµEULQJVXVQHDUHUWRDQ$ULVWRWHOLDQ
WKDQDODZFRQFHSWLRQRIHWKLFV 7KHUHLV , WKLQN QRKDUPLQ
WKDW EXWLIVRPHRQHORRNHGLQWKLVGLUHFWLRQWRJLYH´QRUPµ
DVHQVH WKHQKHRXJKWWRUHFRJQL]HZKDWKDVKDSSHQHGWR
WKHQRWLRQ´QRUPµ ZKLFKKHZDQWHGWRPHDQ´ODZ³ZLWK
RXWEULQJLQJ*RGLQµ³LWKDVFHDVHGWRPHDQ´ODZµDWDOO
DQGVRWKHQRWLRQVRI´PRUDOREOLJDWLRQµ ´WKHPRUDORXJKWµ
DQG´GXW\µDUHEHVWSXWRQWKH,QGH[ LIKHFDQPDQDJHLW
%XWPHDQZKLOH³LVLWQRWFOHDUWKDWWKHUHDUHVHYHUDOFRQ
RSK\RISV\FKRORJ\DQG DV, VKRXOGUHFRPPHQG³EDQ
LVKLQJ HWKLFVWRWDOO\ IURPRXUPLQGV" 1DPHO\³WREHJLQ
ORJLF ´ZKDW·VVDXFHIRUWKHJRRVHLVVDXFHIRUWKHJDQGHUµ ZLWK ´DFWLRQµ ´LQWHQWLRQµ ´SOHDVXUHµ ´ZDQWLQJµ 0RUH
EXWKDUGO\RQHGHVFHQGLQJWRVXFKSDUWLFXODULWLHVDVWKHSUR ZLOOSUREDEO\WXUQXSLIZHVWDUWZLWKWKHVH (YHQWXDOO\LW
KLELWLRQRQPXUGHURUVRGRP\ $OVR ZKLOHLWLVFOHDUWKDW PLJKWEHSRVVLEOHWRDGYDQFHWRFRQVLGHULQJWKHFRQFHSW
\RXFDQEHVXEMHFWWRDODZWKDW\RXGRQRWDFNQRZOHGJH ´YLUWXHµ ZLWKZKLFK , VXSSRVH ZHVKRXOGEHEHJLQQLQJ


VRPHVRUWRIDVWXG\RIHWKLFV RILQMXVWLFH EXWLVQRWLQWULQVLFDOO\XQMXVW FDQDOZD\VEH
, ZLOOHQGE\GHVFULELQJWKHDGYDQWDJHVRIXVLQJWKHZRUG UHQGHUHGMXVWE\DUHDVRQDEOHFDOFXODWLRQRIEHWWHUFRQVH
´RXJKWµLQDQRQHPSKDWLFIDVKLRQ DQGQRWLQDVSHFLDO TXHQFHV IDUIURPLW EXWWKHSUREOHPVWKDWZRXOGEHUDLVHG
´PRUDOµVHQVH RIGLVFDUGLQJWKHWHUP´ZURQJµLQD´PRUDOµ
VHQVH DQGXVLQJVXFKQRWLRQVDV´XQMXVWµ
,WLVSRVVLEOH LIRQHLVDOORZHGWRSURFHHGMXVWE\JLYLQJ
H[DPSOHV WRGLVWLQJXLVKEHWZHHQWKHLQWULQVLFDOO\XQMXVW
DQGZKDWLVXQMXVWJLYHQWKHFLUFXPVWDQFHV 7RDUUDQJHWR
JHWDPDQMXGLFLDOO\SXQLVKHGIRUVRPHWKLQJZKLFKLWFDQ
EHFOHDUO\VHHQKHKDVQRWGRQHLVLQWULQVLFDOO\XQMXVW 7KLV
PLJKWEHGRQH RIFRXUVH DQGRIWHQKDVEHHQGRQH LQDOO
VRUWVRIZD\V E\VXERUQLQJIDOVHZLWQHVVHV E\DUXOHRI
ODZE\ZKLFKVRPHWKLQJLV´GHHPHGµWREHWKHFDVHZKLFK
LVDGPLWWHGO\QRWWKHFDVHDVDPDWWHURIIDFW DQGE\RSHQ
LQVROHQFHRQWKHSDUWRIWKHMXGJHVDQGSRZHUIXOSHRSOH
ZKHQWKH\PRUHRUOHVVRSHQO\VD\ ´$ ILJIRUWKHIDFWWKDW
\RXGLGQRWGRLW ZHPHDQWRVHQWHQFH\RXIRULWDOOWKH
VDPHµ :KDWLVXQMXVWJLYHQ HJ QRUPDOFLUFXPVWDQFHV
LVWRGHSULYHSHRSOHRIWKHLURVWHQVLEOHSURSHUW\ZLWKRXWOH
JDOSURFHGXUH QRWWRSD\GHEWV QRWWRNHHSFRQWUDFWV DQG
DKRVWRIRWKHUWKLQJVRIWKHNLQG 1RZ WKHFLUFXPVWDQFHV
FDQFOHDUO\PDNHDJUHDWGHDORIGLIIHUHQFHLQHVWLPDWLQJ
WKHMXVWLFHRULQMXVWLFHRIVXFKSURFHGXUHVDVWKHVH DQG
WKHVHFLUFXPVWDQFHVPD\ VRPHWLPHV LQFOXGHH[SHFWHGFRQ
VHTXHQFHV IRUH[DPSOH DPDQ·VFODLPWRDELWRISURSHUW\
FDQEHFRPHDQXOOLW\ZKHQLWVVHL]XUHDQGXVHFDQDYHUW
VRPHREYLRXVGLVDVWHU DV HJ LI\RXFRXOGXVHDPDFKLQH
RIKLVWRSURGXFHDQH[SORVLRQLQZKLFKLWZRXOGEHGH
VWUR\HG EXWE\PHDQVRIZKLFK\RXFRXOGGLYHUWDIORRG
RUPDNHDJDSZKLFKDILUHFRXOGQRWMXPS 1RZWKLVFHU
WDLQO\GRHVQRWPHDQWKDWZKDWZRXOGRUGLQDULO\EHDQDFW

LQDQDWWHPSWWRGUDZDERXQGDU\OLQHRUERXQGDU\DUHD
KHUHDUHREYLRXVO\FRPSOLFDWHG $QGZKLOHWKHUHDUHFHU
WDLQO\VRPHJHQHUDOUHPDUNVZKLFKRXJKWWREHPDGHKHUH
DQGVRPHERXQGDULHVWKDWFDQEHGUDZQ WKHGHFLVLRQRQSDU
WLFXODUFDVHVZRXOGIRUWKHPRVWSDUWEHGHWHUPLQHG NDWDWRQ
RUWKRQORJRQ ´DFFRUGLQJWRZKDW·VUHDVRQDEOHµ ³(J WKDW
VXFKDQGVXFKD GHOD\RISD\PHQWRID VXFKDQGVXFK GHEW
WRDSHUVRQVRFLUFXPVWDQFHG RQWKHSDUWRIDSHUVRQVRFLU
FXPVWDQFHG ZRXOGRUZRXOGQRWEHXQMXVW LVUHDOO\RQO\WR
EHGHFLGHG´DFFRUGLQJWRZKDW·VUHDVRQDEOHµ DQGIRUWKLV
WKHUHFDQ LQSULQFLSOH EHQRFDQRQRWKHUWKDQJLYLQJDIHZ
H[DPSOHV 7KDWLVWRVD\ ZKLOHLWLVEHFDXVHRIDELJJDS
LQSKLORVRSK\WKDWZHFDQJLYHQRJHQHUDODFFRXQWRIWKH
FRQFHSWRIYLUWXHDQGRIWKHFRQFHSWRIMXVWLFH EXWKDYHWR
SURFHHGXVLQJWKHFRQFHSWV RQO\E\JLYLQJH[DPSOHV VWLOO
WKHUHLVDQDUHDZKHUHLWLVQRWEHFDXVHRIDQ\JDS EXWLVLQ
SULQFLSOHWKHFDVH WKDWWKHUHLVQRDFFRXQWH[FHSWE\ZD\
RIH[DPSOHV DQGWKDWLVZKHUHWKHFDQRQLV´ZKDW·VUHDVRQ
DEOHµ ZKLFKRIFRXUVHLV QRW DFDQRQ
7KDWLVDOO, ZLVKWRVD\DERXWZKDWLVMXVWLQVRPHFLUFXP
VWDQFHV XQMXVWLQRWKHUV DQGDERXWWKHZD\LQZKLFKH[
SHFWHGFRQVHTXHQFHVFDQSOD\DSDUWLQGHWHUPLQLQJZKDWLV
MXVW 5HWXUQLQJWRP\H[DPSOHRIWKHLQWULQVLFDOO\XQMXVW LI
DSURFHGXUHLVRQHRIMXGLFLDOO\SXQLVKLQJDPDQIRUZKDWKH
LVFOHDUO\XQGHUVWRRGQRWWRKDYHGRQH WKHUHFDQEHDEVR
OXWHO\QRDUJXPHQWDERXWWKHGHVFULSWLRQRIWKLVDVXQMXVW
1RFLUFXPVWDQFHV DQGQRH[SHFWHGFRQVHTXHQFHV ZKLFK
GR QRW PRGLI\WKHGHVFULSWLRQRIWKHSURFHGXUHDVRQHRIMX
GLFLDOO\SXQLVKLQJDPDQIRUZKDWKHLVNQRZQQRWWRKDYH
GRQHFDQPRGLI\WKHGHVFULSWLRQRILWDVXQMXVW 6RPHRQH
ZKRDWWHPSWHGWRGLVSXWHWKLVZRXOGRQO\EHSUHWHQGLQJQRW
WRNQRZZKDW´XQMXVWµPHDQV IRUWKLVLVDSDUDGLJPFDVH
RILQMXVWLFH
$QGKHUHZHVHHWKHVXSHULRULW\RUWKHWHUP´XQMXVWµRYHU
WKHWHUPV´PRUDOO\ULJKWµDQG´PRUDOO\ZURQJµ )RULQWKH
FRQWH[WRI(QJOLVKPRUDOSKLORVRSK\VLQFH6LGJZLFNLWDS
SHDUVOHJLWLPDWHWRGLVFXVVZKHWKHULW PLJKW EH´PRUDOO\
ULJKWµLQVRPHFLUFXPVWDQFHVWRDGRSWWKDWSURFHGXUH EXW
LWFDQQRWEHDUJXHGWKDWWKDWWKHSURFHGXUHZRXOGLQDQ\
FLUFXPVWDQFHVEHMXVW
1RZ, DPQRWDEOHWRGRWKHSKLORVRSK\LQYROYHG³DQG,
WKLQNWKDWQRRQHLQWKHSUHVHQWVLWXDWLRQ
RI(QJOLVKSKL
ORVRSK\ FDQ GRWKHSKLORVRSK\LQYROYHG³EXWLWLVFOHDU
WKDWDJRRGPDQLVDMXVWPDQ DQGDMXVWPDQLVDPDQ
ZKRKDELWXDOO\UHIXVHVWRFRPPLWRUSDUWLFLSDWHLQDQ\XQ
MXVWDFWLRQVIRUIHDURIDQ\FRQVHTXHQFHV RUWRREWDLQDQ\
DGYDQWDJH IRUKLPVHOIRUDQ\RQHHOVH 3HUKDSVQRRQHZLOO
GLVDJUHH %XW LWZLOOEHVDLG ZKDWLVXQMXVWLVVRPHWLPHV
GHWHUPLQHGE\H[SHFWHGFRQVHTXHQFHV DQGFHUWDLQO\WKDWLV
WUXH %XWWKHUHDUHFDVHVZKHUHLWLVQRW QRZLIVRPHRQH
VD\V ´, DJUHH EXWDOOWKLVZDQWVDORWRIH[SODLQLQJµ WKHQ
KHLVULJKW DQG ZKDWLVPRUH WKHVLWXDWLRQDWSUHVHQWLVWKDW
ZHFDQ·WGRWKHH[SODLQLQJ ZHODFNWKHSKLORVRSKLFHTXLS
PHQW %XWLIVRPHRQHUHDOO\WKLQNV LQDGYDQFH WKDWLWLV

,IKHWKLQNVLWLQWKHFRQFUHWHVLWXDWLRQ KHLVRIFRXUVHPHUHO\DQRUPDOO\WHPSWHG
KXPDQEHLQJ ,QGLVFXVVLRQZKHQWKLVSDSHUZDVUHDG DVZDVSHUKDSVWREHH[SHFWHG
WKLVFDVHZDVSURGXFHG DJRYHUQPHQWLVUHTXLUHGWRKDYHDQLQQRFHQWPDQWULHG VHQ
WHQFHGDQGH[HFXWHGXQGHUWKUHDWRID´K\GURJHQERPEZDUµ ,WZRXOGVHHPVWUDQJH
WRPHWRKDYHPXFKKRSHRIVRDYHUWLQJDZDUWKUHDWHQHGE\VXFKPHQDVPDGHWKLV
GHPDQG %XWWKHPRVWLPSRUWDQWWKLQJDERXWWKHZD\LQZKLFKFDVHVOLNHWKLVDUH

RSHQWRTXHVWLRQZKHWKHUVXFKDQDFWLRQDVSURFXULQJWKH
MXGLFLDOH[HFXWLRQRIWKHLQQRFHQWVKRXOGEHTXLWHH[FOXGHG
IURPFRQVLGHUDWLRQ³, GRQRWZDQWWRDUJXHZLWKKLP KH
VKRZVDFRUUXSWPLQG
,QVXFKFDVHVRXUPRUDOSKLORVRSKHUVVHHNWRLPSRVHD
GLOHPPDXSRQXV ´,IZHKDYHDFDVHZKHUHWKHWHUP¶XQ
MXVW·DSSOLHVSXUHO\LQYLUWXHRIDIDFWXDOGHVFULSWLRQ FDQ·W
RQHUDLVHWKHTXHVWLRQZKHWKHURQHVRPHWLPHVFRQFHLYDEO\
RXJKWWRGRLQMXVWLFH" ,I¶ZKDWLVXQMXVW·LVGHWHUPLQHGE\
FRQVLGHUDWLRQRIZKHWKHULWLV ULJKW WRGRVRDQGVRLQVXFK
DQGVXFKFLUFXPVWDQFHV WKHQWKHTXHVWLRQZKHWKHULWLV
¶ULJKW·WRFRPPLWLQMXVWLFHFDQ·WDULVH MXVWEHFDXVH¶ZURQJ·
KDVEHHQEXLOWLQWRWKHGHILQLWLRQRILQMXVWLFH %XWLIZH
KDYHDFDVHZKHUHWKHGHVFULSWLRQ¶XQMXVW·DSSOLHVSXUHO\LQ
YLUWXHRIWKHIDFWV ZLWKRXWEULQJLQJ¶ZURQJ·LQ WKHQWKH
TXHVWLRQFDQDULVHZKHWKHURQH¶RXJKW·SHUKDSVWRFRP
PLWDQLQMXVWLFH ZKHWKHULWPLJKWQRWEH¶ULJKW·WR" $QG
RIFRXUVH¶RXJKW·DQG¶ULJKW·DUHEHLQJXVHGLQWKHLU PRUDO
VHQVHVKHUH 1RZHLWKHU\RXPXVWGHFLGHZKDWLV¶PRUDOO\
ULJKW·LQWKHOLJKWRIFHUWDLQ RWKHU ¶SULQFLSOHV· RU\RXPDNH
D¶SULQFLSOH·DERXW WKLV DQGGHFLGHWKDWDQLQMXVWLFHLVQHYHU
¶ULJKW· EXWHYHQLI\RXGRWKHODWWHU\RXDUHJRLQJEH\RQG
WKHIDFWV \RXDUHPDNLQJDGHFLVLRQWKDW\RXZLOOQRW RUWKDW
LWLVZURQJWR FRPPLWLQMXVWLFH %XWLQHLWKHUFDVH LIWKH
WHUP¶XQMXVW·LVGHWHUPLQHGVLPSO\E\WKHIDFWV LWLVQRWWKH
WHUP¶XQMXVW·WKDWGHWHUPLQHVWKDWWKHWHUP¶ZURQJ·DSSOLHV
EXWDGHFLVLRQWKDWLQMXVWLFH LVZURQJ WRJHWKHUZLWKWKHGLDJ
QRVLVRIWKH¶IDFWXDO·GHVFULSWLRQDVHQWDLOLQJLQMXVWLFH %XW
LQYHQWHGLQGLVFXVVLRQV LVWKHDVVXPSWLRQWKDWRQO\WZRFRXUVHVDUHRSHQ KHUH FRP
SOLDQFHDQGRSHQGHILDQFH 1RRQHFDQVD\LQDGYDQFHRIVXFKDVLWXDWLRQZKDWWKH
SRVVLELOLWLHVDUHJRLQJWREH³HJ WKDWWKHUHLVQRQHRIVWDOOLQJE\DIHLJQHGZLOOLQJ
QHVVWRFRPSO\ $FFRPSDQLHGE\DVNLOOIXOO\DUUDQJHG´HVFDSHµRIWKHYLFWLP
WKHPDQZKRPDNHVDQDEVROXWHGHFLVLRQWKDWLQMXVWLFHLV
¶ZURQJ·KDVQRIRRWLQJRQZKLFKWRFULWLFL]HVRPHRQHZKR
GRHV QRW PDNHWKDWGHFLVLRQDVMXGJLQJIDOVHO\µ
,QWKLVDUJXPHQW´ZURQJµRIFRXUVHLVH[SODLQHGDVPHDQ
LQJ´PRUDOO\ZURQJµ DQGDOOWKHDWPRVSKHUHRIWKHWHUPLV
UHWDLQHGZKLOHLWVVXEVWDQFHLVJXDUDQWHHGTXLWHQXOO 1RZ
OHWXVUHPHPEHUWKDW´PRUDOO\ZURQJµLVWKHWHUPZKLFKLV
WKHKHLURIWKHQRWLRQ´LOOLFLWµ RU´ZKDWWKHUHLVDQREOLJD
WLRQ QRW WRGRµ ZKLFKEHORQJVLQDGLYLQHODZWKHRU\RU
HWKLFV +HUHLWUHDOO\GRHVDGGVRPHWKLQJWRWKHGHVFULSWLRQ
´XQMXVWµWRVD\WKHUHLVDQREOLJDWLRQQRWWRGRLW IRUZKDW
REOLJHVLVWKHGLYLQHODZDVUXOHVREOLJHLQDJDPH 6RLI
WKHGLYLQHODZREOLJHVQRWWRFRPPLWLQMXVWLFHE\IRUELG
GLQJLQMXVWLFH LWUHDOO\GRHVDGGVRPHWKLQJWRWKHGHVFULS
GHWHVWDEOHGHVLUHWRUHWDLQWKHDWPRVSKHUHRIWKHWHUP
,WPD\EHSRVVLEOH LIZHDUHUHVROXWH WRGLVFDUGWKHQRWLRQ
´PRUDOO\RXJKWµ DQGVLPSO\UHWXUQWRWKHRUGLQDU\´RXJKWµ
ZKLFK ZHRXJKWWRQRWLFH LVVXFKDQH[WUHPHO\IUHTXHQW
WHUPRIKXPDQODQJXDJHWKDWLWLVGLIILFXOWWRLPDJLQHJHWWLQJ
RQZLWKRXWLW 1RZLIZHGRUHWXUQWRLW FDQ·WLWUHDVRQDEO\
EHDVNHGZKHWKHURQHPLJKWHYHUQHHGWRFRPPLWLQMXVWLFH
RUZKHWKHULWZRQ·WEHWKHEHVWWKLQJWRGR" 2IFRXUVHLWFDQ
$QGWKHDQVZHUVZLOOEHYDULRXV 2QHPDQ³DSKLORVRSKHU
³PD\VD\WKDWVLQFHMXVWLFHLVDYLUWXH DQGLQMXVWLFHDYLFH
DQGYLUWXHVDQGYLFHVDUHEXLOWXSE\WKHSHUIRUPDQFHVRI
WKHDFWLRQLQZKLFKWKH\DUHLQVWDQFHG DQDFWRILQMXVWLFH
ZLOOWHQGWRPDNHDPDQEDG DQGHVVHQWLDOO\WKHIORXULVK
LQJRIDPDQTXDPDQFRQVLVWVLQKLVEHLQJJRRGHJ LQ
WLRQ´XQMXVWµWRVD\WKHUHLVDQREOLJDWLRQQRWWRGRLW $QG
LWLVEHFDXVH´PRUDOO\ZURQJµLVWKHKHLURIWKLVFRQFHSW
EXWDQKHLUWKDWLVFXWRIIIURPWKHIDPLO\RIFRQFHSWVIURP
ZKLFKLWVSUDQJ WKDW´PRUDOO\ZURQJµ ERWKJRHV EH\RQGWKH
PHUHIDFWXDOGHVFULSWLRQ´XQMXVWµ DQG VHHPVWRKDYHQRGLV
FHUQLEOHFRQWHQWH[FHSWDFHUWDLQFRPSHOOLQJIRUFH ZKLFK
, VKRXOGFDOOSXUHO\SV\FKRORJLFDO $QGVXFKLVWKHIRUFH
RIWKHWHUPWKDWSKLORVRSKHUVDFWXDOO\VXSSRVHWKDWWKHGL
YLQHODZQRWLRQFDQEHGLVPLVVHGDVPDNLQJQRHVVHQWLDO
GLIIHUHQFHHYHQLILWLVKHOGEHFDXVHWKH\WKLQNWKDWD´SUDF
YLUWXHV EXWIRUDQ\; WRZKLFKVXFKWHUPVDSSO\ ; QHHGV
ZKDWPDNHVLWIORXULVK VRDPDQQHHGV RURXJKWWRSHUIRUP
RQO\YLUWXRXVDFWLRQV DQGHYHQLI DVLWPXVWEHDGPLWWHG
PD\KDSSHQ KHIORXULVKHVOHVV RUQRWDWDOO LQLQHVVHQ
WLDOV E\DYRLGLQJLQMXVWLFH KLVOLIHLVVSRLOHGLQHVVHQWLDOV
E\QRWDYRLGLQJLQMXVWLFHVRKHVWLOOQHHGVWRSHUIRUPRQO\
MXVWDFWLRQV 7KDWLVURXJKO\KRZ3ODWRDQG$ULVWRWOHWDON
EXWLWFDQEHVHHQWKDWSKLORVRSKLFDOO\WKHUHLVDKXJHJDS DW
SUHVHQWXQILOODEOHDVIDUDVZHDUHFRQFHUQHG ZKLFKQHHGV
WREHILOOHGE\DQDFFRXQWRIKXPDQQDWXUH KXPDQDFWLRQ
WLFDOSULQFLSOHµUXQQLQJ´, RXJKW LH DPPRUDOO\REOLJHG WKHW\SHRIFKDUDFWHULVWLFDYLUWXHLV DQGDERYHDOORIKX
WRREH\GLYLQHODZVµLVUHTXLUHGIRUWKHPDQZKREHOLHYHV PDQ´IORXULVKLQJµ $QGLWLVWKHODVWFRQFHSWWKDWDSSHDUV
LQGLYLQHODZV %XWDFWXDOO\WKLVQRWLRQRIREOLJDWLRQLVD WKHPRVWGRXEWIXO )RULWLVDELWPXFKWRVZDOORZWKDWDPDQ
QRWLRQZKLFKRQO\RSHUDWHVLQWKHFRQWH[WRIODZ $QG, LQSDLQDQGKXQJHUDQGSRRUDQGIULHQGOHVVLV´IORXULVKLQJµ
VKRXOGEHLQFOLQHGWRFRQJUDWXODWHWKHSUHVHQWGD\PRUDO DV$ULVWRWOHKLPVHOIDGPLWWHG )XUWKHU VRPHRQHPLJKWVD\
SKLORVRSKHUVRQGHSULYLQJ´PRUDOO\RXJKWµRILWVQRZGHOX WKDWRQHDWOHDVWQHHGHGWRVWD\DOLYHWR´IORXULVKµ $QRWKHU
VLYHDSSHDUDQFHRIFRQWHQW LIRQO\WKH\GLGQRWPDQLIHVWD PDQXQLPSUHVVHGE\DOOWKDWZLOOVD\LQDKDUGFDVH´:KDW


ZHQHHGLVVXFKDQGVXFK ZKLFKZHZRQ·WJHWZLWKRXWGR WRIUDPHDPRUDOSULQFLSOHXQGHUZKLFKKH´PDQDJHGµWR
LQJWKLVZKLFKLVXQMXVWVRWKLVLVZKDWZHRXJKWWRGRµ XVH0U 1RZHOO6PLWK·VSKUDVHV WREULQJWKHDFWLRQ RU
$QRWKHUPDQ ZKRGRHVQRWIROORZWKHUDWKHUHODERUDWHUHD LWPLJKWEHDQHZ´GHFLVLRQRISULQFLSOHµ PDNLQJZKLFK
VRQLQJRIWKHSKLORVRSKHUV VLPSO\VD\V´, NQRZLWLVLQDQ\ ZDVDQDGYDQFHLQWKHIRUPDWLRQRIKLVPRUDOWKLQNLQJWR
FDVHDGLVJUDFHIXOWKLQJWRVD\WKDWRQHKDGEHWWHUFRPPLW DGRSW0U +DUH·VFRQFHSWLRQ WRGHFLGH LQVXFKDQGVXFK
WKLVXQMXVWDFWLRQµ 7KHPDQZKREHOLHYHVLQGLYLQHODZV FLUFXPVWDQFHVRQHRXJKWWRSURFXUHWKHMXGLFLDOFRQGHPQD
ZLOOVD\SHUKDSV´,WLVIRUELGGHQ DQGKRZHYHULWORRNV LW WLRQRIWKHLQQRFHQW $QGWKDWLVP\FRPSODLQW
FDQQRWEHWRDQ\RQH·VSURILWWRFRPPLWLQMXVWLFHµ KHOLNH
WKH*UHHNSKLORVRSKHUVFDQWKLQNLQWHUPVRI´IORXULVKLQJµ
,IKHLVD6WRLF KHLVDSWWRKDYHDGHFLGHGO\VWUDLQHGQRWLRQ
RIZKDW´IORXULVKLQJFRQVLVWVµLQ LIKHLVD-HZRU&KULV
WLDQ KHQHHGQRWKDYHDQ\YHU\GLVWLQFWQRWLRQ WKHZD\LW
ZLOOSURILWKLPWRDEVWDLQIURPLQMXVWLFHLVVRPHWKLQJWKDWKH
OHDYHVLWWR*RGWRGHWHUPLQH KLPVHOIRQO\VD\LQJ´,WFDQ·W
GRPHDQ\JRRGWRJRDJDLQVWKLVODZµ %XWKHDOVRKRSHV
IRUDJUHDWUHZDUGLQDQHZOLIHODWHURQ HJ DWWKHFRPLQJ
RI0HVVLDK EXWLQWKLVKHLVUHO\LQJRQVSHFLDOSURPLVHV

,WLVOHIWWRPRGHUQPRUDOSKLORVRSK\WKHPRUDOSKLORVRSK\
RIDOOWKHZHOONQRZQ(QJOLVKHWKLFLVWVVLQFH6LGJZLFN³
WRFRQVWUXFWV\VWHPVDFFRUGLQJWRZKLFKWKHPDQZKRVD\V
´:HQHHGVXFKDQGVXFK DQGZLOORQO\JHWLWWKLVZD\µPD\
EHDYLUWXRXVFKDUDFWHU WKDWLVWRVD\ LWLVOHIWRSHQWRGH
EDWHZKHWKHUVXFKDSURFHGXUHDVWKHMXGLFLDOSXQLVKPHQWRI
WKHLQQRFHQWPD\QRWLQVRPHFLUFXPVWDQFHVEHWKH´ULJKWµ
RQHWRDGRSW DQGWKRXJKWKHSUHVHQW2[IRUGPRUDOSKLORVR
SKHUVZRXOGDFFRUGDPDQ SHUPLVVLRQ WR´PDNHLWKLVSULQFL
SOHµQRWWRGRVXFKDWKLQJ WKH\WHDFKDSKLORVRSK\DFFRUG
LQJWRZKLFKWKHSDUWLFXODUFRQVHTXHQFHVRIVXFKDQDFWLRQ
FRXOG´PRUDOO\µEHWDNHQLQWRDFFRXQWE\DPDQZKRZDV
GHEDWLQJZKDWWRGR DQGLIWKH\ZHUHVXFKDVWRFRQIOLFW
ZLWKKLV´HQGVµ LWPLJKWEHDVWHSLQKLVPRUDOHGXFDWLRQ 
(WKLFV  S