You are on page 1of 47

'03$$6507'..

,&5
) 5

81,7('67$7(6',675,&7&2857
($67(51',675,&72)1(:<25.
; 72%(),/('81'(56($/

81,7('67$7(62)$0(5,&$ &203/$,17 $1'


$)),'$9,7,16833257
 DJDLQVW 2)$33/,&$7,21)25$1
$55(67:$55$17
;,1-,$1*-,1
DOVRNQRZQDV³-XOLHQ-LQ´ 7 86& ††   D  DQG
 I
'HIHQGDQW
1R0-
;

($67(51',675,&72)1(:<25.66

-26(3++8*'$+/EHLQJGXO\VZRUQGHSRVHVDQGVWDWHVWKDWKH LV D

6SHFLDO$JHQW ZLWK WKH )HGHUDO%XUHDXRI,QYHVWLJDWLRQ GXO\DSSRLQWHGDFFRUGLQJWRODZDQG

DFWLQJDVVXFK

&281721(
&RQVSLUDF\WR&RPPLW,QWHUVWDWH+DUDVVPHQW

,QRU DERXWDQGEHWZHHQ-DQXDU\ DQGWKHSUHVHQW ERWKGDWHVEHLQJ

DSSUR[LPDWHDQGLQFOXVLYHZLWKLQ WKH(DVWHUQ'LVWULFWRI1HZ<RUNDQGHOVHZKHUHWKH

GHIHQGDQW ;,1-,$1*-,1DOVRNQRZQDV³-XOLHQ-LQ´ WRJHWKHUZLWKRWKHUVGLGNQRZLQJO\

DQGZLWKWKHLQWHQWWRKDUDVVDQGLQWLPLGDWHDQGSODFHXQGHUVXUYHLOODQFHZLWKWKHLQWHQWWR

KDUDVVDQGLQWLPLGDWHRQHRUPRUHSHUVRQVFRQVSLUHWRXVHRQHRUPRUHLQWHUDFWLYHFRPSXWHU

VHUYLFHV DQGHOHFWURQLFFRPPXQLFDWLRQV\VWHPV RILQWHUVWDWHFRPPHUFHDQGRQHRUPRUH

IDFLOLWLHV RILQWHUVWDWHDQGIRUHLJQFRPPHUFHWRHQJDJHLQDFRXUVHRIFRQGXFWWKDWFDXVHG

DWWHPSWHGWRFDXVHDQGZRXOGEHUHDVRQDEO\H[SHFWHGWRFDXVHVXEVWDQWLDOHPRWLRQDOGLVWUHVV


WRRQHRUPRUHSHUVRQVDQGWKHLULPPHGLDWHIDPLO\PHPEHUVFRQWUDU\WR7LWOH8QLWHG

6WDWHV&RGH6HFWLRQ$  % 

7LWOH8QLWHG6WDWHV&RGH6HFWLRQ 

&28177:2
8QODZIXO&RQVSLUDF\WR7UDQVIHU0HDQVRI,GHQWLILFDWLRQ

,QRUDERXWDQGEHWZHHQ-DQXDU\ DQGWKHSUHVHQWERWKGDWHVEHLQJ

DSSUR[LPDWHDQGLQFOXVLYHZLWKLQWKH(DVWHUQ'LVWULFWRI1HZ<RUNDQGHOVHZKHUHWKH

GHIHQGDQW ;,1-,$1*-,1DOVRNQRZQDV³-XOLHQ-LQ´ WRJHWKHUZLWKRWKHUVGLGNQRZLQJO\

FRQVSLUHWRWUDQVIHUSRVVHVVDQGXVHZLWKRXWODZIXODXWKRULW\DQGDWWHPSWWRWUDQVIHU

SRVVHVVDQGXVHZLWKRXWODZIXODXWKRULW\RQHRUPRUHPHDQVRILGHQWLILFDWLRQRIDQRWKHU

SHUVRQWRZLWRQHRUPRUHHPDLODQGRQOLQHYLGHRWHOHSKRQ\DFFRXQWVLQWKHQDPHVRIRQHRU

PRUHYLFWLPV ZLWKWKHLQWHQWWRFRPPLWDQGWRDLGDQGDEHWDQGLQFRQQHFWLRQZLWK

XQODZIXODFWLYLW\WKDWFRQVWLWXWHVDYLRODWLRQRI)HGHUDOODZWRZLWWKH&RQVSLUDF\WR

&RPPLW,QWHUVWDWH+DUDVVPHQW FKDUJHGLQ&RXQW2QH

7LWOH8QLWHG6WDWHV&RGH6HFWLRQV D  DQG I

7KHVRXUFHRI\RXUGHSRQHQW¶VLQIRUPDWLRQDQGWKHJURXQGVIRUKLV EHOLHIDUH

DVIROORZV 

 ,KDYHEHHQHPSOR\HGDVD6SHFLDO$JHQWE\WKH)HGHUDO%XUHDXRI

,QYHVWLJDWLRQ ³)%,´ IRURYHUVHYHQ\HDUV  'XULQJP\WHQXUHZLWKWKH)%,,KDYH

SDUWLFLSDWHGLQQXPHURXVLQYHVWLJDWLRQVGXULQJWKHFRXUVHRIZKLFK,KDYHDPRQJRWKHU

WKLQJV D FRQGXFWHGSK\VLFDODQGHOHFWURQLFVXUYHLOODQFH E H[HFXWHGVHDUFKZDUUDQWV F 


%HFDXVHWKHSXUSRVHRIWKLV&RPSODLQWLVWRVHWIRUWKRQO\WKRVHIDFWVQHFHVVDU\
WRHVWDEOLVKSUREDEOHFDXVHWRDUUHVW,KDYHQRWGHVFULEHGDOOWKHUHOHYDQWIDFWVDQG
FLUFXPVWDQFHVRIZKLFK,DPDZDUH


UHYLHZHGDQGDQDO\]HGUHFRUGHGFRQYHUVDWLRQVDQGUHFRUGVDQG G GHEULHIHGFRRSHUDWLQJ

ZLWQHVVHV ,DPIDPLOLDUZLWKWKHIDFWVDQGFLUFXPVWDQFHVVHWIRUWKEHORZ IURPP\

SDUWLFLSDWLRQLQWKHLQYHVWLJDWLRQP\UHYLHZRIWKHLQYHVWLJDWLYHILOH DQGIURPUHSRUWVRI

RWKHUODZHQIRUFHPHQWRIILFHUVLQYROYHGLQWKHLQYHVWLJDWLRQ

 7KHVWDWHPHQWVDWWULEXWHGWRLQGLYLGXDOVLQWKLV$IILGDYLWDUHVHWIRUWKLQ

VXPVXEVWDQFHDQGLQSDUWXQOHVVRWKHUZLVHLQGLFDWHG  0DQ\RIWKHVWDWHPHQWVDWWULEXWHGWR

LQGLYLGXDOVZHUHRULJLQDOO\PDGHLQ&KLQHVHDQGDUHVXPPDUL]HGRUTXRWHGLQWKLV$IILGDYLW

EDVHGRQGUDIWWUDQVODWLRQVZKLFKDUHVXEMHFWWRFKDQJH ,KDYHSHUVRQDOO\UHYLHZHGHDFKRI

WKHHOHFWURQLFFRPPXQLFDWLRQVLQFOXGLQJHPDLOV DQGFKDWPHVVDJHV GHVFULEHGLQWKLV

DIILGDYLWDQGSDUWLFLSDWHGSHUVRQDOO\LQVRPHRIWKHLQWHUYLHZVGLVFXVVHGKHUHLQ  0\

NQRZOHGJHRIRWKHULQWHUYLHZVLVEDVHGXSRQP\UHYLHZRIUHSRUWVDQGFRQYHUVDWLRQVZLWK

RWKHUODZHQIRUFHPHQWRIILFHUV

, %DFNJURXQG

$ 7KH'HIHQGDQW DQG&RPSDQ\

 &RPSDQ\ LVD86FRPPXQLFDWLRQV WHFKQRORJ\ FRPSDQ\ZLWK

KHDGTXDUWHUVLQ6DQ-RVH&DOLIRUQLDEXWZLWKRSHUDWLRQVDURXQGWKHZRUOG  &RPSDQ\

SURYLGHVYLGHRWHOHSKRQ\DQGRQOLQHFKDW ³YLGHRFKDW´ VHUYLFHVWKURXJKDFORXGEDVHGSHHU

WRSHHUVRIWZDUHSODWIRUPDQGLVXVHGIRUWHOHFRQIHUHQFLQJWHOHFRPPXWLQJGLVWDQFH

HGXFDWLRQDQGVRFLDOUHODWLRQV  &RPSDQ\¶VXVHUVFDQKRVWRUSDUWLFLSDWHLQYLGHRFKDW

³PHHWLQJV´ WKDWDOORZDVPDQ\DVKXQGUHGVRUWKRXVDQGVRIXVHUVWRVHHKHDU DQGVSHDNZLWK

HDFKRWKHUIURPORFDWLRQVDURXQGWKHZRUOG


 &RPSDQ\ KDVVLJQLILFDQWRSHUDWLRQVLQWKH3HRSOH¶V5HSXEOLFRI

&KLQD ³35&´ ZKHUHLWHPSOR\VKXQGUHGVRIZRUNHUVZKRIRFXVSULPDULO\RQUHVHDUFKDQG

GHYHORSPHQW 

 7KHGHIHQGDQW;,1-,$1*-,1DOVRNQRZQDV³-XOLHQ-LQ´ KHUHDIWHU

³-,1´ LVD\HDUROGFLWL]HQRIWKH35&HPSOR\HGE\&RPSDQ\ DVWKH³6HFXULW\

7HFKQLFDO/HDGHU´ ,QKLVFDSDFLW\DV³6HFXULW\7HFKQLFDO/HDGHU´ -,1LVUHVSRQVLEOHIRU

DPRQJRWKHUWKLQJVVHUYLQJDVSULPDU\OLDLVRQ ZLWK35&DXWKRULWLHVLQFOXGLQJODZ

HQIRUFHPHQWDQGLQWHOOLJHQFHVHUYLFHV DQGIRUSUHYHQWLQJ&RPSDQ\¶VXVHUVIURPXVLQJ

&RPSDQ\¶V FRPPXQLFDWLRQVSODWIRUPVDQGVHUYLFHVWRFRPPLWYLRODWLRQVRIODZRUWR

HQJDJHLQDFWLYLWLHVWKDWRWKHUZLVHYLRODWH&RPSDQ\¶V7HUPVRI6HUYLFH ³726´  -,1

ZKRUHVLGHVLQ DQGZRUNVIURP&RPSDQ\¶VRIILFHVLQ =KHMLDQJ3URYLQFHLQWKH35&KDV

EHHQHPSOR\HGE\&RPSDQ\VLQFH

% 7KH35&*RYHUQPHQW¶V 6XSSUHVVLRQRI3ROLWLFDO'LVVHQWDQG5HOLJLRXV6SHHFK

 7KH 35& LVDRQHSDUW\VWDWHZKRVHJRYHUQPHQWLVHQWLUHO\FRQWUROOHG

E\WKH&KLQHVH&RPPXQLVW3DUW\ ³&&3´   :KLOHWKHFRQVWLWXWLRQDQGODZVRIWKH35&

JRYHUQPHQWSXUSRUWWRJXDUDQWHH35&FLWL]HQVWKHIUHHGRPRIVSHHFK WKH&&3UHJDUGVDQ\

SROLWLFDOGLVVHQWDVDWKUHDWQRWRQO\WRLWVRZQSROLWLFDOLQWHUHVWVEXWDOVRWRWKH 35&¶V RQH

SDUW\V\VWHPRIJRYHUQPHQW LWVHOI  7KXVWKH35&JRYHUQPHQW¶V QDWLRQDOVHFXULW\DQGODZ

HQIRUFHPHQWDJHQFLHVUHJDUGSROLWLFDOGLVVHQWDVDQDWLRQDOVHFXULW\WKUHDWDQGURXWLQHO\

PRQLWRUDQGDFWLYHO\FHQVRUSROLWLFDOVSHHFKLQFRQVLVWHQWZLWK&&3DSSURYHGSROLWLFDO


7KHLQIRUPDWLRQVHWIRUWKLQWKLVVHFWLRQLVEDVHGRQP\UHYLHZRISXEOLFO\
DYDLODEOHLQIRUPDWLRQDQGP\H[SHULHQFHLQYHVWLJDWLQJQXPHURXVFDVHVLQYROYLQJWKH35& 


YLHZSRLQWV DVZHOODV VSHHFKWKDWWKUHDWHQV WRGDPDJHWKHUHSXWDWLRQRIWKH35&JRYHUQPHQW

RUWKH&&3 RUWKUHDWHQVWRXQGHUPLQHWKH 35&¶V &&3GRPLQDWHGVRFLDORUGHU

 7RHIIHFWXDWHWKLVFHQVRUVKLSVFKHPHWKH35&JRYHUQPHQW UHTXLUHV

HOHFWURQLFFRPPXQLFDWLRQVVHUYLFHSURYLGHUV WKDW RSHUDWHLQWKH35&VXFKDV&RPSDQ\WR

SURDFWLYHO\PRQLWRUXVHUV¶DFWLYLWLHVRQWKHLUQHWZRUNVDQGWRWHUPLQDWHGLVFXVVLRQVRI

SROLWLFDOO\VHQVLWLYHWRSLFV 7KH35&JRYHUQPHQWVLPLODUO\UHTXLUHVVHUYLFHSURYLGHUVWR

UHVSRQGLPPHGLDWHO\ZKHQD35&QDWLRQDOVHFXULW\RUODZHQIRUFHPHQWDJHQF\GHPDQGVWKDW

WKHVHUYLFHSURYLGHUWHUPLQDWHDGLVFXVVLRQRIDSROLWLFDOO\VHQVLWLYHWRSLF  %HJLQQLQJLQ

 WKH35&JRYHUQPHQWH[SDQGHGLWVFRQWURORYHUHOHFWURQLFFRPPXQLFDWLRQVVHUYLFH

SURYLGHUVE\UHTXLULQJWKHPWRVWRUHGDWDIRU&KLQHVHXVHUVZLWKLQWKHQDWLRQDOERUGHUVRIWKH

35&

 6HUYLFHSURYLGHUVZKRIDLOWRDGKHUHWRWKH35&JRYHUQPHQW¶V

FHQVRUVKLSUHTXLUHPHQWV ULVN EHLQJH[FOXGHGIURPWKH35&¶VPDUNHW  7KH35&

JRYHUQPHQW WKURXJKWKH&\EHUVSDFH$GPLQLVWUDWLRQRI&KLQD ³&$&´  WKHSULPDU\RSHUDWRU

RIWKHV\VWHPLQIRUPDOO\NQRZQDVWKH³*UHDW)LUHZDOORI&KLQD´ KDVWKHFDSDELOLW\WREORFN

,QWHUQHWDFFHVVZLWKLQ&KLQDWRSDUWLFXODUVHUYHUVDQGDSSOLFDWLRQVDQGXVHVWKDWFDSDELOLW\ WR

SUHYHQW35&FLWL]HQVIURPDFFHVVLQJWKHQHWZRUNVRIHOHFWURQLFFRPPXQLFDWLRQVVHUYLFH

SURYLGHUV WKDWIDLOWRFRPSO\ZLWKWKH35&JRYHUQPHQW¶VFHQVRUVKLSGHPDQGV

 7KH35&JRYHUQPHQW¶VHIIRUWVWRFHQVRUSROLWLFDOGLVVHQWGRQRWHQGDW

WKH35&¶VQDWLRQDOERUGHUV 7KH35&JRYHUQPHQWDQGLQSDUWLFXODUWKH0LQLVWU\RI6WDWH

6HFXULW\ ³066´ FROORTXLDOO\NQRZQDV³Guoan´ ZKLFKLVWKHIRUHLJQLQWHOOLJHQFHDQG

VHFUHWSROLFHDJHQF\RIWKH35&JRYHUQPHQWUHVSRQVLEOHIRUFRXQWHULQWHOOLJHQFH HVSLRQDJH

DQGSROLWLFDOVHFXULW\DQGWKH)LUVW%XUHDXRIWKH0LQLVWU\RI3XEOLF6HFXULW\ ³036´ 


FROORTXLDOO\NQRZQDVWKH'RPHVWLF6HFXULW\3ROLFHRU³Guobao´ URXWLQHO\PRQLWRUDPRQJ

RWKHUV&KLQHVHSROLWLFDOGLVVLGHQWVZKROLYHLQWKH8QLWHG6WDWHVDQGLQRWKHUORFDWLRQV

RXWVLGHWKH35& 7KH35&JRYHUQPHQW WKH066DQGWKH)LUVW%XUHDXRIWKH036

UHJXODUO\XVHFRRSHUDWLYHFRQWDFWVERWKLQVLGHWKH35&DQGDURXQGWKHZRUOGLQDQHIIRUWWR

LQIOXHQFHWKUHDWHQDQGFRHUFHSROLWLFDOGLVVLGHQWVDEURDG ,QGHHG,DPDZDUHWKDWWKH35&

JRYHUQPHQWKDVWKUHDWHQHGRUFRHUFHG&KLQHVHSROLWLFDOGLVVLGHQWVOLYLQJLQWKH8QLWHG6WDWHV

LQDQHIIRUWWRVLOHQFHWKHP

 7KH-XQH7LDQDQPHQ6TXDUHPDVVDFUH LVRQHRIWKH SROLWLFDOO\

VHQVLWLYH WRSLFVRIGLVFXVVLRQWKDWLVURXWLQHO\FHQVRUHGE\WKH35&JRYHUQPHQW  2QWKH

QLJKWRI-XQH LQWRWKHPRUQLQJRI-XQH IROORZLQJZHHNVRIODUJHVWXGHQWOHG

SURWHVWVDGYRFDWLQJJUHDWHUGHPRFUDWLFUHSUHVHQWDWLRQIRUWKHSHRSOHLQWKH35&¶V&&3

FRQWUROOHGV\VWHPRIJRYHUQDQFHWKH3HRSOH¶V/LEHUDWLRQ$UP\ ³3/$´ YLROHQWO\FUXVKHG

WKHSURWHVWHUVDW7LDQDQPHQ6TXDUHDQGVXUURXQGLQJDUHDVLQ%HLMLQJ35& GXULQJDVWDWHRI

PDUWLDOODZ  7KH3/$¶VFUDFNGRZQOHGWRWKHGHDWKVRIKXQGUHGVRI35&FLWL]HQV DQGZDV

ZLGHO\FRQGHPQHGDVDPDVVDFUH

 7KH7LDQDQPHQ6TXDUHPDVVDFUH KDV EHHQ DQGFRQWLQXHVWREH WKH

VXEMHFWRIGLVFXVVLRQWKURXJKRXWWKHZRUOGLQFOXGLQJERWKLQWKH8QLWHG6WDWHVDQGLQWKH

35&DQG35&SROLWLFDOGLVVLGHQWVDURXQGWKHZRUOGUHJXODUO\FRPPHPRUDWH WKHDQQLYHUVDU\

RIWKH7LDQDQPHQ6TXDUHPDVVDFUH DQGGLVFXVV WKH&&3¶VFRQWURORYHUWKH35&JRYHUQPHQW

7KH35&JRYHUQPHQWKDVDWWHPSWHGWRSUHYHQWVXFKGLDORJXHZLWKLQWKH35&LQFOXGLQJE\

EDQQLQJGLVFXVVLRQVDQGE\XVLQJWKH35&JRYHUQPHQW¶VFRQWURORYHUWKH,QWHUQHWZLWKLQWKH

35&WRVKXWGRZQVXFKGLVFXVVLRQVRQYDULRXVHOHFWURQLFFRPPXQLFDWLRQVSODWIRUPV


 7KH35&JRYHUQPHQWDOVRSURKLELWV XQDXWKRUL]HGUHOLJLRXVDFWLYLWLHV

LQFOXGLQJRQOLQHUHOLJLRXVGLVFXVVLRQV  7KH35&JRYHUQPHQWUHTXLUHVUHOLJLRXVJURXSVWR

UHJLVWHUZLWKJRYHUQPHQWDXWKRULWLHVDQGUHVWULFWVUHOLJLRXVDFWLYLWLHVE\ERWKUHJLVWHUHGDQG

XQUHJLVWHUHGUHOLJLRXVJURXSV  &ROOHFWLYHRUODUJHVFDOHUHOLJLRXVDFWLYLWLHVKHOGRXWVLGHRI

UHJLVWHUHGUHOLJLRXVIDFLOLWLHVIRUH[DPSOHDUHVWULFWO\UHVWULFWHGDQGUHOLJLRXVDFWLYLWLHVE\

XQDXWKRUL]HGUHOLJLRXVJURXSVDUHOLNHZLVHSURKLELWHG 7KH35&JRYHUQPHQWDOVRLPSRVHV

FULPLQDOSHQDOWLHVRQUHOLJLRXVJURXSVLWGHHPVWREH³FXOWV´ DQGXVHVWKHVHODZVWR SHUVHFXWH

DQG VXSSUHVVWKHIUHHH[HUFLVHRIUHOLJLRXVH[SUHVVLRQE\PHPEHUVRIUHOLJLRXVJURXSV

RSSRVHGE\WKH&&3

,, 7KH&ULPLQDO6FKHPH

 $VVHWIRUWKEHORZLQGHWDLOWKHLQYHVWLJDWLRQKDVUHYHDOHGWKDW-,1KDV

FRQVSLUHGZLWKRWKHUVWRXVH &RPSDQ\¶VV\VWHPVLQWKH8QLWHG6WDWHVWRFHQVRUWKH SROLWLFDO

DQGUHOLJLRXVVSHHFKRILQGLYLGXDOVORFDWHGLQWKH8QLWHG6WDWHVDQGDURXQGWKHZRUOGDWWKH

GLUHFWLRQDQGXQGHUWKHFRQWURORIRIILFLDOVRIWKH35&JRYHUQPHQW  $PRQJRWKHUDFWLRQV

WDNHQDWWKHGLUHFWLRQRIWKH35&JRYHUQPHQW-,1 DQGRWKHUV WHUPLQDWHGDWOHDVWIRXU YLGHR

PHHWLQJVKRVWHGRQ&RPSDQ\¶VQHWZRUNVFRPPHPRUDWLQJWKHWKLUW\ILUVWDQQLYHUVDU\RIWKH

7LDQDQPHQ6TXDUHPDVVDFUHPRVWRIZKLFKZHUHRUJDQL]HGDQGDWWHQGHGE\86EDVHG

SDUWLFLSDQWVVXFKDVGLVVLGHQWVZKRKDGSDUWLFLSDWHGLQDQGVXUYLYHGWKH7LDQDQPHQ

6TXDUHSURWHVWV  6RPHRI WKHSDUWLFLSDQWVZKRZHUHXQDEOHWRDWWHQGWKHVHPHHWLQJVZHUH

&RPSDQ\FXVWRPHUVLQ4XHHQVDQG/RQJ,VODQG1HZ<RUNZKRKDGSXUFKDVHG

VXEVFULSWLRQVWR&RPSDQ\¶VVHUYLFHVDQGWKHUHIRUHHQWHUHGLQWRVHUYLFHDJUHHPHQWVZLWK

&RPSDQ\JRYHUQHGE\WKH726


 $VGHVFULEHGEHORZ-,1RIILFLDOVIURPWKH35&JRYHUQPHQWDQG

RWKHUV FROODERUDWHG WRLGHQWLI\PHHWLQJSDUWLFLSDQWVDQGWRGLVUXSWVRPHRIWKHPHHWLQJV

KRVWHGRQ&RPSDQ\¶V86VHUYHUVDW WLPHVFUHDWLQJSUHWH[WXDOUHDVRQVWRMXVWLI\WKHLU

DFWLRQVWRRWKHUHPSOR\HHVDQGH[HFXWLYHVRI&RPSDQ\DVZHOODV&RPSDQ\¶VXVHUV

WKHPVHOYHV ,QSDUWLFXODULQ0D\DQG-XQH-,1WRJHWKHUZLWK RWKHUVLQFOXGLQJRWKHUV

ORFDWHGLQWKH35&DFWHG WRGLVUXSWPHHWLQJVKHOGRQ WKH&RPSDQ\SODWIRUP WRGLVFXVV

SROLWLFDOO\VHQVLWLYHWRSLFVXQDFFHSWDEOHWRWKH35&JRYHUQPHQW E\LQILOWUDWLQJWKHPHHWLQJV

WRJDWKHUHYLGHQFHDERXWSXUSRUWHGPLVFRQGXFWRFFXUULQJLQWKRVHPHHWLQJV  ,QIDFWWKHUH

ZDVQRPLVFRQGXFW-,1DQGKLVFRFRQVSLUDWRUV IDEULFDWHGHYLGHQFHRI726YLRODWLRQVWR

SURYLGHSUHWH[WXDOMXVWLILFDWLRQIRUWHUPLQDWLQJWKHPHHWLQJVDVZHOODVFHUWDLQSDUWLFLSDQWV¶

DFFRXQWV  -,1WKHQWDVNHGDKLJKUDQNLQJHPSOR\HHRI&RPSDQ\LQWKH8QLWHG6WDWHV

³(PSOR\HH´ WRHIIHFWWKHWHUPLQDWLRQRIPHHWLQJVDQGWKHVXVSHQVLRQDQGFDQFHOODWLRQRI

XVHUDFFRXQWV

$ &RPSDQ\¶V726

 %DVHGXSRQP\UHYLHZRI&RPSDQ\¶V726&RPSDQ\¶V726

UHSUHVHQWWR&RPSDQ\¶VXVHUVWKDW³>&RPSDQ\@ZLOOSURYLGHWKH6HUYLFHVDQG\RXPD\

DFFHVVDQGXVHWKH6HUYLFHVLQDFFRUGDQFHZLWKWKLV$JUHHPHQW´ $VUHOHYDQW&RPSDQ\

¶V726UHSUHVHQWWKDW

>&RPSDQ\@ ZLOO PDLQWDLQ UHDVRQDEOH SK\VLFDO DQG WHFKQLFDO VDIHJXDUGV WR


SUHYHQW XQDXWKRUL]HG GLVFORVXUH RI RU DFFHVV WR &RQWHQW LQ DFFRUGDQFH ZLWK
LQGXVWU\ VWDQGDUGV  >&RPSDQ\@ ZLOO QRWLI\ <RX LI LW EHFRPHV DZDUH RI
XQDXWKRUL]HGDFFHVVWR&RQWHQW  >&RPSDQ\@ZLOOQRWDFFHVVYLHZRUSURFHVV
&RQWHQW H[FHSW D  DV SURYLGHG IRU LQ WKLV $JUHHPHQW DQG LQ >&RPSDQ\@¶V
3ULYDF\3ROLF\ E DVDXWKRUL]HGRULQVWUXFWHGE\<RX F DVUHTXLUHGWRSHUIRUP
LWVREOLJDWLRQVXQGHUWKLV$JUHHPHQWRU G DVUHTXLUHGE\/DZ  >&RPSDQ\@
KDVQRRWKHUREOLJDWLRQVZLWKUHVSHFWWR&RQWHQW


8QGHU&RPSDQ\¶V726XVHUVDJUHHDPRQJRWKHUWKLQJVWKDWWKH\ZLOOQRWXVH&RPSDQ\

¶VVHUYLFHVLQDSURKLELWHGIDVKLRQLQFOXGLQJWR

LLL  HQJDJH LQ DFWLYLW\ WKDW LV LOOHJDO IUDXGXOHQW IDOVH RU PLVOHDGLQJ LY 
WUDQVPLW WKURXJK WKH 6HUYLFHV DQ\ PDWHULDO WKDW PD\ LQIULQJH WKH LQWHOOHFWXDO
SURSHUW\ RU RWKHU ULJKWV RI WKLUG SDUWLHV    RU YL  XVH WKH 6HUYLFHV WR
FRPPXQLFDWHDQ\PHVVDJHRUPDWHULDOWKDWLVKDUDVVLQJOLEHORXVWKUHDWHQLQJ
REVFHQHLQGHFHQWZRXOGYLRODWHWKHLQWHOOHFWXDOSURSHUW\ULJKWVRIDQ\SDUW\RU
LVRWKHUZLVHXQODZIXOWKDWZRXOGJLYHULVHWRFLYLOOLDELOLW\RUWKDWFRQVWLWXWHV
RU HQFRXUDJHV FRQGXFW WKDW FRXOG FRQVWLWXWH D FULPLQDO RIIHQVH XQGHU DQ\
DSSOLFDEOH ODZ RU UHJXODWLRQ    L[  XVH WKH 6HUYLFHV LQ YLRODWLRQ RI DQ\
>&RPSDQ\@SROLF\RULQDPDQQHUWKDWYLRODWHVDSSOLFDEOHODZLQFOXGLQJEXW
QRWOLPLWHGWR DQWLVSDP H[SRUWFRQWUROSULYDF\DQGDQWLWHUURULVPODZV DQG
UHJXODWLRQV DQG ODZV UHTXLULQJ WKH FRQVHQW RI VXEMHFWV RI DXGLR DQG YLGHR
UHFRUGLQJV

 7KH726DOVRUHIHUHQFH&RPSDQ\¶V3ULYDF\3ROLF\ ZKLFKVWDWHVLQ

UHOHYDQWSDUWWKDW&RPSDQ\ZLOOXVH³2SHUDWLRQ'DWD´ PHDQLQJ³WHFKQLFDOLQIRUPDWLRQ

IURP>&RPSDQ\@¶VVRIWZDUHRUV\VWHPVKRVWLQJWKH6HUYLFHVDQGIURPWKHV\VWHPV

DSSOLFDWLRQVDQGGHYLFHVWKDWDUHXVHGWRDFFHVVWKH6HUYLFHV´ WRDPRQJRWKHULWHPV³'HWHFW

LQYHVWLJDWHDQGVWRSIUDXGXOHQWKDUPIXOXQDXWKRUL]HGRULOOHJDODFWLYLW\ µIUDXGDQGDEXVH

GHWHFWLRQ¶ ´

 7KH726LQSODFHDWWKHWLPHRIWKHHYHQWVGHWDLOHGEHORZZDVXSGDWHG

RQRUDERXW$SULODQG6HFWLRQG L[ RIWKH726SURKLELWVXVHRI&RPSDQ\¶V

SODWIRUPLQYLRODWLRQRIDQ\&RPSDQ\SROLF\RULQDPDQQHUWKDWYLRODWHVDSSOLFDEOHODZ

LQFOXGLQJEXWQRWOLPLWHGWRDQWLWHUURULVPODZV  7KH726VWDWHGWKDWXVHUVFRXOGQRWLI\


&RPSDQ\RIYLRODWLRQVRIWKH726DJUHHPHQWE\FRQWDFWLQJWKHHPDLODGGUHVV

YLRODWLRQ#>&RPSDQ\@XV!!

% 7KH35&*RYHUQPHQW%ORFNV&RPSDQ\¶V6HUYLFHVLQ&KLQD

 $VVHWIRUWKEHORZEHJLQQLQJDWOHDVWDVHDUO\DV-XQH-,1 DQG

RWKHUV OHG&RPSDQ\¶VHIIRUWVWRFRPSO\ZLWKDQGLPSOHPHQW35&JRYHUQPHQWFHQVRUVKLS

GLUHFWLYHV 

 2QRUDERXW-XQH-,1H[FKDQJHGHOHFWURQLFPHVVDJHVZLWKD

JURXSRILQGLYLGXDOVZKRDUH&RPSDQ\HPSOR\HHVLQFOXGLQJ(PSOR\HHQRWLI\LQJWKHP

RIKLVHIIRUWVWRFROOHFWLQIRUPDWLRQIURPVRFLDOPHGLDWRLGHQWLI\DQGEORFNDJURXSRI

&RPSDQ\¶VXVHUVZKRZHUHSODQQLQJYLGHRFKDWPHHWLQJVWRFRPPHPRUDWHWKHWKLUWLHWK

DQQLYHUVDU\RIWKH-XQH7LDQDQPHQ6TXDUHPDVVDFUH

 6LPLODUO\RQRUDERXW$XJXVW-,1(PSOR\HHDQG RWKHU

LQGLYLGXDOVZKRDUH&RPSDQ\HPSOR\HHVH[FKDQJHGHOHFWURQLFPHVVDJHVGLVFXVVLQJ D

YLGHRPHHWLQJKRVWHGE\D&RPSDQ\XVHURQZKDWRQHRIWKHHPSOR\HHVLGHQWLILHGDVD

&RPSDQ\VHUYHU LQWKH8QLWHG6WDWHV ,QVXPDQGVXEVWDQFH-,1VWDWHGWKDWWKHKRVW

RUJDQL]DWLRQZDVD&KLQHVHFXOWWKDWIUHTXHQWO\PDGHXVHRI&RPSDQ\¶VVHUYLFHVDQGVWDWHG

WKDWWKHXVHUDFFRXQWVKRXOGEHEORFNHGGXHWRWKHUHOLJLRXV VSHFLILFDOO\&KULVWLDQ QDWXUHRI

WKHFRQWHQW  -,1DVNHG(PSOR\HH IRULQVWUXFWLRQVDERXWKRZWRKDQGOHWKHVLWXDWLRQDQG

ZKHWKHUWKHDFFRXQWQHHGHGWREHGHOHWHG  %DVHGXSRQHOHFWURQLFLQIRUPDWLRQJDWKHUHG

GXULQJWKHLQYHVWLJDWLRQ(PSOR\HH ZDVORFDWHGLQWKH8QLWHG6WDWHVDWWKHWLPH  ,Q

UHVSRQVH(PSOR\HH GLUHFWHG-,1WRSODFHWKHDFFRXQWLQD³TXDUDQWLQH´ VWDWXVRUWRFUHDWH

DVHSDUDWHPHHWLQJUHJLRQIRUWKHDFFRXQW ZLWKWKHDSSDUHQWSXUSRVHRIOLPLWLQJWKHIHDWXUHV


DQG FDSDELOLWLHV RI&RPSDQ\¶VVHUYLFHV WKDWZHUHDYDLODEOHWRWKHXVHU DQG H[SUHVVHGWKH

KRSHWKDWGRLQJVRZRXOGFDXVHWKHXVHUWRVWRSXVLQJ&RPSDQ\¶VSODWIRUP

 %DVHGXSRQSXEOLFO\DYDLODEOHLQIRUPDWLRQGHVSLWH-,1¶V(PSOR\HH

¶V DQG&RPSDQ\¶VSURDFWLYHHIIRUWVWRFHQVRUSROLWLFDODQGUHOLJLRXVGLVFXVVLRQV

GLVIDYRUHGE\WKH35&JRYHUQPHQWDQGWKH&&3RQRUDERXW6HSWHPEHUWKH35&

JRYHUQPHQWEORFNHG35&EDVHG,QWHUQHWXVHUVIURPFRQQHFWLQJWR&RPSDQ\¶VVHUYLFH

7KHEORFNDJHKDGWKHHIIHFWRIGLVUXSWLQJVHUYLFHQRWRQO\WRLQGLYLGXDOXVHUVZKRKDG

UHJLVWHUHGIUHHDFFRXQWVWRXVH&RPSDQ\¶VVHUYLFHEXWDOVRRIGLVUXSWLQJWKHDELOLW\RI

&RPSDQ\¶V IHHSD\LQJFRUSRUDWHFXVWRPHUV ZKRVHIHHVFRPSULVHWKHEXONRI&RPSDQ\

¶VUHYHQXH WRXVH&RPSDQ\¶VVHUYLFHVWRFRPPXQLFDWHZLWKWKHLUHPSOR\HHVDQGEXVLQHVV

SDUWQHUVLQWKH35& 

 %DVHGRQHOHFWURQLFFRPPXQLFDWLRQV,KDYHUHYLHZHGEHWZHHQ-,1DQG

RWKHU&RPSDQ\HPSOR\HHVEHWZHHQ2FWREHUDQG-XQHRYHUWKHFRXUVHRI

PXOWLSOHPHHWLQJV EHWZHHQ35&JRYHUQPHQWRIILFLDOVDQG&RPSDQ\HPSOR\HHV 35&

JRYHUQPHQWRIILFLDOVLQGLFDWHGWKDW&RPSDQ\ FRXOG UHVXPHRSHUDWLRQV LQWKH35&RQFH

&RPSDQ\ FRPSOLHGZLWK35&ODZV DQGUHJXODWLRQV  7KHRIILFLDOVDOVRGLUHFWHG

&RPSDQ\WRSUHSDUHDQGVXEPLWWRYDULRXV35&JRYHUQPHQWDJHQFLHVLQFOXGLQJWKH

+DQJ]KRXRIILFHRIWKH35&¶V0361HWZRUN6HFXULW\³UHFWLILFDWLRQ´ SODQVDQGUHSRUWVWR

GHVFULEHKRZ&RPSDQ\ZRXOGGRVR 

 %DVHGRQHOHFWURQLFFRPPXQLFDWLRQV,KDYHUHYLHZHGEHWZHHQ-,1DQG

RWKHU&RPSDQ\HPSOR\HHVEHWZHHQ2FWREHUDQG-XQH DVZHOODVGRFXPHQWV

ORFDWHGRQWKHSHUVRQDOPRELOHGHYLFHVRI-,1DQG(PSOR\HH -,1(PSOR\HH DQGRWKHU

&RPSDQ\HPSOR\HHVLQWKH8QLWHG6WDWHVDQGWKH35&FROODERUDWHGWRSUHSDUH&RPSDQ\


¶V³UHFWLILFDWLRQ´ SODQ  $VSDUWRIWKHUHFWLILFDWLRQSODQV VXEPLWWHG&RPSDQ\DJUHHGWR

DPRQJRWKHUPHDVXUHVSURDFWLYHO\PRQLWRUFRPPXQLFDWLRQVIRUFRQWHQWWKDWLQFOXGHGWKH

H[SUHVVLRQRISROLWLFDOYLHZVXQDFFHSWDEOHWR WKH35&JRYHUQPHQWDQGWRPDNH -,1WKH

SULPDU\OLDLVRQZLWK35&DXWKRULWLHVIRUDOOUHTXHVWV  7KHUHFWLILFDWLRQSODQVVXEPLWWHGWR

35&DXWKRULWLHVLQFOXGHG-,1¶VZRUNHPDLODGGUHVV DVWKHSULPDU\SRLQWRIFRQWDFW $OVRDV

SDUWRIWKHVXEPLWWHGUHFWLILFDWLRQSODQV&RPSDQ\SOHGJHGWRPLJUDWHWKHGDWDVWRUDJHRI

WKHDFFRXQWVRIDSSUR[LPDWHO\RQHPLOOLRQ³&KLQHVHXVHUV´ IURPWKH8QLWHG6WDWHVWRWKH

35&WKHUHE\VXEMHFWLQJWKHVHDFFRXQWVWR35&ODZDQGSURFHVV  ,W LVQRWFOHDUKRZ

&RPSDQ\DQGWKH35&DXWKRULWLHVXOWLPDWHO\GHILQHG³&KLQHVHXVHUV´

 &RPSDQ\ DOVRDJUHHGWRSURYLGH 35&ODZHQIRUFHPHQWDQGQDWLRQDO

VHFXULW\DXWKRULWLHVZLWKVSHFLDODFFHVVWR&RPSDQ\¶VV\VWHPV  )RUH[DPSOHRQRU DERXW

2FWREHU-,1(PSOR\HH &RPSDQ\¶V&(2 ³&(2´ DQGRWKHUVH[FKDQJHG

HOHFWURQLFPHVVDJHVWRGLVFXVVDPHHWLQJWKDW-,1KDGDWWHQGHG DWWKH+DQJ]KRXRIILFHRIWKH

036 1HWZRUN6HFXULW\ -,1H[SODLQHGWKDW&RPSDQ\ KDGGLVFXVVHGZLWKWKH036³WKH

VXSHUYLVLRQRIKRWLOOHJDOLQFLGHQWV´ DQGKDGFRPPLWWHGWR³SURDFWLYHO\UHSRUWDQGJLYHWKHP

HDUO\ZDUQLQJRQDUHJXODUEDVLV´ $FFRUGLQJWR-,1036RIILFHUVKDGDGYLVHGWKDWWKH\

ZRXOGDOVR³FRQYH\KRWVSRWVWR>&RPSDQ\@´ DQGKDGDVNHG&RPSDQ\ ³WRUHSRUWKRZ

PXFKUHVRXUFHVDQGEXGJHWWKHFRPSDQ\SODQVWR LQYHVWLQVDIHW\VXSHUYLVLRQ´ -,1IXUWKHU

H[SODLQHG

>7@KH\ DOVR ZDQW PH WR SURYLGH WKHP ZLWK VRPH GHWDLOHG OLVWV RI RXU GDLO\
PRQLWRULQJVXFKDV+RQJ.RQJGHPRQVWUDWLRQVLOOHJDOUHOLJLRQVIXQGUDLVLQJ
S\UDPLG VFKHPHV HWF , DOVR FRPPXQLFDWHG ZLWK WKHP %HIRUH WKHUH ZHUH
VRPH WKLQJV WKDW ZH ZHUH GLIILFXOW WR GHWHUPLQH ZKHWKHU WKH\ ZHUH OHJDO RU
LOOHJDODQGWKH\ZRXOGKHOSGHWHUPLQHWKHP,QWKHIXWXUH,ZLOORIWHQUXQWR
WKHLU XQLW >SURYLGH@ OLYH GHPRQVWUDWLRQ DQG >HQJDJH LQ@ YDULRXV
FRPPXQLFDWLRQ>V@


 ,QWKHVDPHVHULHVRIFRPPXQLFDWLRQV-,1DGYLVHGWKHJURXSWKDWKH

ZRXOGFUHDWHILYH&RPSDQ\ DFFRXQWVIRU RIILFHUVRI WKH 036¶V +DQJ]KRX3XEOLF6HFXULW\

%XUHDX&\EHUVHFXULW\'HSDUWPHQW WRXVHRQ&RPSDQ\¶V35&EDVHGQHWZRUNDQG

H[SODLQHGWKDW-,1DQG&(2 KDGDJUHHGZLWKWKH036WRXVHDFRPELQDWLRQRI&RPSDQ\

¶VHPSOR\HHPHVVDJLQJV\VWHP DQG:H&KDW D 35&EDVHG,QWHUQHWPHVVDJLQJDSSOLFDWLRQ

WRFRPPXQLFDWHZLWK35&JRYHUQPHQWRIILFLDOV DQGWRH[FKDQJHFODVVLILHGLQIRUPDWLRQ

-,1HPSKDVL]HGWKDW³>D@OODFWLYLWLHVZLOOEHFODVVLILHGDVVHFUHWLQWHUQDOO\DQGH[WHUQDOO\´

 ,QDQH[FKDQJHRIHOHFWURQLFPHVVDJHVZLWKD86EDVHG&RPSDQ\

HPSOR\HHRQRUDERXW1RYHPEHU-,1VWDWHG ³$V\RXNQRZORFDOZH¶UHZRUNLQJ

ZLWK&KLQD*RYHUQPHQWRQ&\EHUVHFXULW\UHFHQWO\ 7RSE\&(2  $QGKHUH¶VDJRRG

QHZV± >&RPSDQ\¶V,QWHUQHWGRPDLQ@ KDVEHHQXQEORFNHGLQ&KLQDVLQFH\HVWHUGD\´ -,1

FRQWLQXHG³:HGRHVQ¶W >VLF@PDNHDQRIILFLDODQQRXQFHPHQWRQWKLVEHFXDVH>VLF@WKHUH¶UHD

IHZUHFWLILFDWLRQZRUNZH¶UHVWLOOZRUNLQJRQ´ -,1IXUWKHUH[SODLQHG ³%\WKHZD\WKH

GLUHFWUHDVRQORFDOJRYHUQPHQWEORFNHG>&RPSDQ\¶V,QWHUQHWGRPDLQ@WKLVWLPHLVEHFDXVH

WKRVHLOOHJDODFWLYLHV>VLF@RQ>&RPSDQ\@LQ&KLQD ,WKLQNVRPHKRZLW¶VUHDOWHG>VLF@ZLWK

726´

 %DVHGRQP\UHYLHZRIHOHFWURQLFFRPPXQLFDWLRQVEHWZHHQ-,1

(PSOR\HHDQGRWKHULQGLYLGXDOVZKRDUH&RPSDQ\HPSOR\HHVHYHQDIWHUWKH35&

JRYHUQPHQWXQEORFNHG&RPSDQ\¶VVHUYLFHLQWKH35&WKRVHLQGLYLGXDOVGLVFXVVHG

FRQWLQXLQJWKHLUZRUNWRFRPSO\ZLWKWKH35&JRYHUQPHQW¶VGHPDQGVDQG-,1VWDWHGWKDWKH

PHWDQGFRPPXQLFDWHGIUHTXHQWO\ZLWK35&JRYHUQPHQWRIILFLDOVIURPVHYHUDODJHQFLHVLQ

DQHIIRUWWRGHPRQVWUDWH&RPSDQ\¶VFRPSOLDQFHZLWKWKHLUUHTXLUHPHQWV  )RU H[DPSOH




RQRUDERXW1RYHPEHU-,1(PSOR\HH DQGWKHKHDGRI&RPSDQ\¶V+DQJ]KRX

RIILFH²WRZKRP-,1UHSRUWHG²H[FKDQJHGHOHFWURQLFPHVVDJHVWRGLVFXVVEORFNLQJWKH

DFFRXQWRIWKHQLHFHRID35&QDWLRQDOZKRLVDYRFDOFULWLFRIWKH&&3RQVRFLDOPHGLDDQG

ZKRKDGIOHGIURPWKH35&WRWKH8QLWHG6WDWHV 

& 7KH35&*RYHUQPHQW'HPDQGV*UHDWHU&RQWURO2YHU&RPSDQ\¶V
2SHUDWLRQV:RUOGZLGH

 $VVHWIRUWKEHORZDVGHPDQGIRU&RPSDQ\¶VYLGHRPHHWLQJVHUYLFHV

VN\URFNHWHG GXULQJWKH&29,'SDQGHPLFWKH35&JRYHUQPHQWLPSRVHGDGGLWLRQDO

FRQWUROVRYHU&RPSDQ\¶VRSHUDWLRQVDQGGHPDQGHGDSROLF\RILPPHGLDWHUHPHGLDWLRQRI

DQ\LOOHJDOFRQGXFWRQWKH&RPSDQ\SODWIRUP 

 ,QHOHFWURQLFPHVVDJHVIURPRQRUDERXW$SULOWKDWLQFOXGHG-,1

DQG(PSOR\HH-,1VWDWHGWKDW066¶VSUHIHUHQFHZDVIRU&RPSDQ\QRWWRWHUPLQDWH

PHHWLQJVRIWDUJHWXVHUVLPPHGLDWHO\  %DVHGXSRQP\WUDLQLQJDQGH[SHULHQFHKDYLQJ

&RPSDQ\NHHSFHUWDLQPHHWLQJVRSHQZRXOGDOORZWKH066WRREWDLQDGGLWLRQDOGHWDLOVRQ

PHHWLQJSDUWLFLSDQWVPRQLWRUWKHFRQWHQWRIDPHHWLQJDQGJDLQDFWLRQDEOHLQWHOOLJHQFHRQ

WKHSURGHPRFUDF\PRYHPHQW

 2QRUDERXW$SULO-,1VHQWDQHOHFWURQLFPHVVDJHWR

(PSOR\HH VWDWLQJWKDW-,1KDGEHHQVXPPRQHGWRDPHHWLQJZLWK35&JRYHUQPHQW

RIILFLDOVWRGLVFXVVUHFHQWVHFXULW\DQGSULYDF\LVVXHV  /DWHUWKDWGD\-,1DGYLVHG

(PSOR\HH WKDWWKH35&JRYHUQPHQWKDGGLUHFWHG&RPSDQ\WRGHYHORSWKHFDSDELOLW\WR

UHVSRQGWRD35&JRYHUQPHQWGHPDQGWRWHUPLQDWHDQLOOHJDOPHHWLQJDFFRXQWRUUHFRUGLQJ

ZLWKLQRQHPLQXWHZKLFK-,1UHIHUUHGWRDVWKHRQHPLQXWHSURFHVVLQJUHTXLUHPHQW


 ,QKLVHOHFWURQLF FRPPXQLFDWLRQVZLWK(PSOR\HH RQRUDERXW$SULO

 -,1SURYLGHGWKHH[DPSOHRI VKXWWLQJGRZQ SROLWLFDOPHHWLQJVWKDWZHUHLQSURJUHVV

DQGQRWHGKHZDVVWLOOZRUNLQJRQVHYHUDOLQYHVWLJDWLRQVIRU066  ,QUHVSRQVH(PSOR\HH

VXJJHVWHGWKDW DQRWKHU 86EDVHGHPSOR\HH RI&RPSDQ\ ³(PSOR\HH´ FRXOGSURYLGH

-,1ZLWKDFFHVVWRD³UHPRWH´ PDFKLQHLQWKH8QLWHG6WDWHV FRQQHFWHGWR&RPSDQ\¶V86

EDVHGVHUYHUVDQGLQWHUQDOV\VWHPV  (PSOR\HHKDGSUHYLRXVO\VHQWDPHVVDJHWR

(PSOR\HHGLUHFWLQJ(PSOR\HHWRFRRSHUDWHZLWK-,1   %DVHGRQP\WUDLQLQJDQG

H[SHULHQFH,DVVHVVWKDW(PSOR\HH HQGHDYRUHGWRJHW-,1DFFHVVWRVXFKDPDFKLQHLQRUGHU

WRJLYH -,1GLUHFWDFFHVVWR&RPSDQ\¶V 86EDVHGV\VWHPVVRWKDW-,1FRXOGFRPSO\ZLWK

LQVWUXFWLRQVIURPWKH35&JRYHUQPHQW -,1UHSOLHGWKDWWKHPDWWHUQHHGHGWREHKDQGOHG

FRQILGHQWLDOO\VHSDUDWHIURP&RPSDQ\¶VUHJXODUVXSSRUW IXQFWLRQDQGVWDWHGWKDWKHZRXOG

QRWEHDEOHWRGRFXPHQWKLVDFWLRQVLQDUHSRUW (PSOR\HH UHSOLHG ³L VHH´

 2QRUDERXW$SULO-,1H[FKDQJHGHOHFWURQLFPHVVDJHVZLWK

(PSOR\HHWKH86EDVHGHPSOR\HHWKDW(PSOR\HH KDGGLUHFWHGWRFRRSHUDWHZLWK-,1¶V

ZRUN -,1ZURWH ³<HVWHUGD\>066@ DVNHGPHWRWUDFNGRZQDEDGRUJDQL]DWLRQRYHUVHDV´

(PSOR\HH DVNHG-,1 ³,VWKHUHVRPHRQHDSSO\LQJIRUDQDFFRXQWKHUHDQGGRLQJEDGWKLQJV

LQ&KLQD" 2WKHUZLVHLWKDVQRWKLQJWRGRZLWK>066@´ -,1UHSOLHG³$OPRVW %XWHYHQ

DEURDGSROLWLFDODWWDFNVRQOHDGHUVDUHQRWDOORZHG´ +H IXUWKHUVWDWHG ³,I\RXQHHG

DSSURYDO\RX FDQWDONWR>(PSOR\HH@LQSHUVRQ´ (PSOR\HH UHVSRQGHGZLWKDVPLOH\

IDFHHPRML  -,1WKHQFODULILHG ³'RQ¶WZULWHPDLO´ (PSOR\HH UHVSRQGHG ³-XVWDVNIRU

LQVWUXFWLRQV´ (PSOR\HH WKHQFRQWLQXHG ³7REHKRQHVWWKH8QLWHG6WDWHVKDVIUHHGRPRI

VSHHFKDQGWKHUHLVHYHU\WKLQJWKDW\RXOLNHWRVD\\RXUHDOO\GRQ¶WFDUH ,WRQO\PDWWHUVLI


\RXGREDGWKLQJVLQWKHFRXQWU\´ -,1UHVSRQGHG³:HKDYHVRPDQ\SHRSOHDQG

PXOWLQDWLRQDOFRPSDQLHVLQ&KLQD ZHKDYHWRWDNHFDUHRIERWKVLGHVჁ´

 2QRUDERXW$SULO-,1DQG(PSOR\HH H[FKDQJHGHOHFWURQLF

PHVVDJHVUHJDUGLQJDFRQYHUVDWLRQ-,1KDGKDGZLWK&RPSDQ\¶V86EDVHG&KLHI

2SHUDWLQJ2IILFHU ³&22´ DQG*HQHUDO&RXQVHO DERXWWKH35&JRYHUQPHQW¶VRQHPLQXWH

SURFHVVLQJ UHTXLUHPHQW -,1H[SODLQHGWKDWKLV ³ZRUNDURXQGSHUPLVVLRQV´ FRXOGPHHWPRVW

RIKLVQHHGVEXW VWDWHGWKDW &RPSDQ\¶V &22DQG *HQHUDO&RXQVHO DVZHOODV&RPSDQ\

¶VKHDGRIFRPSOLDQFH KDGVWDWHGWKDW&RPSDQ\ZDVREOLJHGWRUHSRUWWKH35&

JRYHUQPHQW¶VRQHPLQXWHSURFHVVLQJUHTXLUHPHQWWR&RPSDQ\¶V86EDVHGFRPSOLDQFH

WHDP -,1FRPPHQWHG WKDWWKLVGLG³QRWFRPSO\ZLWKWKHSULQFLSOHRIFRQILGHQWLDO

SURFHVVLQJUHTXLUHGE\WKHSRZHUIXO&1 DJHQF\´ XVLQJ³&1´ DVDQDSSDUHQWVKRUWKDQGIRU

&KLQD -,1IXUWKHUH[SODLQHG³7KH&1GHSDUWPHQW,FRQWDFWHGDOORZHGPHWRFKHFNWKHLU

GRFXPHQWVEXWZRXOGQRWOHDYHDQ\SURRIVSKRWRVDQGRWKHUWKLQJVWKDWPLJKWEHH[SRVHG´

(PSOR\HH DGYLVHG-,1 ³$OO\RXUDFFHVVULJKWVRQXVFOXVWHUVZLOOEHWDNHQDZD\%XWZLOO

UHWDLQWKHSHUPLVVLRQVRIFQFOXVWHU´²UHIHUULQJWRWKH86EDVHGDQG35&EDVHGVHUYHU

FOXVWHUVWKDW&RPSDQ\XVHGWRVWRUHXVHUGDWDDQGSURYLGH&RPSDQ\¶VVHUYLFHWRXVHUV

-,1UHSOLHG ³0DQ\WKLQJVFDQQRWEHGRQHDQG1HW6HFXULW\´²UHIHUULQJWRWKH35&¶V036

1HW6HFXULW\²´ZLOOQRWDJUHH 8QOHVVZHDOVRYROXQWDULO\EORFNWKHLQWHUQDWLRQDOYHUVLRQRI

>&RPSDQ\@RQWKHPDLQODQG´ (PSOR\HH WKHQDVNHG-,1 ³:KDWLV\RXUFXUUHQW

ZRUNDURXQG"´ -,1UHVSRQGHG ³WRVDGPLQVXSHUDGPLQLVQRORQJHUQHHGHG´ %DVHGXSRQ

LQIRUPDWLRQJDWKHUHGGXULQJWKLVLQYHVWLJDWLRQDQGWKHIRUHJRLQJ,EHOLHYH³WRVDGPLQ´ LVD


UHIHUHQFHWRDGPLQLVWUDWLYHSULYLOHJHVDVVLJQHG WRFHUWDLQ&RPSDQ\HPSOR\HHVWRXVHLQ

HQIRUFLQJ&RPSDQ\¶V726 

 ,QWKHVDPHH[FKDQJHRIHOHFWURQLFFRPPXQLFDWLRQVDIWHU(PSOR\HH

DVNHG³&DQWKLVDFFHVVXVHUGDWD´ -,1UHSOLHG³&DQGHDOZLWKLOOHJDODFFRXQWV´ (PSOR\HH

 H[SODLQHGWKDW³7KHFXUUHQWUHTXLUHPHQW´²DSSDUHQWO\UHIHUULQJWR&RPSDQ\¶VLQWHUQDO

UHVWULFWLRQV²´LVWKDWGRPHVWLFHQJLQHHUVFDQQRWDFFHVVWKHGDWDRIXVFOXVWHUV´²LQGLFDWLQJ

WKDW35&EDVHGVRIWZDUHHQJLQHHUVZHUHQRWSHUPLWWHGWRDFFHVV XVHUGDWDVWRUHGRQ86

EDVHGVHUYHUV  -,1UHVSRQGHG ³1HW6HFXULW\¶VUHTXLUHPHQWLVWKDW>WKHHPSOR\HH@PXVW

KDYHWKHDXWKRULW\WRGLUHFWO\KDQGOHLWDQGLWPXVWEHKDQGOHGZLWKLQRQHPLQXWH)RU

H[DPSOHLQFOXGLQJ86XVHUVLIWKHLVVXHRI-XQHWKLVEHLQJGLVFXVVHGLQDPHHWLQJLWPXVW

EHKDQGOHGZLWKLQRQHPLQXWHRI>WKHPHHWLQJEHLQJUHSRUWHG@ RWKHUZLVHZLOOEH>UDWH@DV

VHFXULW\QRQFRPSOLDQW´ %DVHGXSRQLQIRUPDWLRQJDWKHUHGLQWKLVFDVHP\H[SHULHQFH

LQYHVWLJDWLQJFDVHVLQYROYLQJWKH35&DQGSXEOLFO\DYDLODEOHLQIRUPDWLRQWKHH[DPSOHRI

³WKHLVVXHRI-XQHWK´ UHIHUVWR GLVFXVVLRQVRIWKH-XQH7LDQDQPHQ6TXDUHPDVVDFUH

DQG-,1¶VVWDWHPHQWUHIOHFWVWKH35&JRYHUQPHQW¶VGHPDQGWKDW&RPSDQ\WHUPLQDWH

PHHWLQJVGLVFXVVLQJWKH7LDQDQPHQ6TXDUHPDVVDFUH LQFOXGLQJ PHHWLQJVLQYROYLQJ86

EDVHGXVHUV

 2QRUDERXW0D\-,1ZURWHDQHOHFWURQLF PHVVDJHWRRWKHU

LQGLYLGXDOVZKRDUH&RPSDQ\HPSOR\HHVVWDWLQJWKDWHYHQLIRWKHU86VRFLDO PHGLDDQG

VHDUFKFRPSDQLHVKDGQREXVLQHVVLQWKH35&WKH\VWLOOWHUPLQDWHGDFFRXQWVDQGSRVWVDWWKH

UHTXHVW RIWKH³&1]I´ %DVHGRQRSHQVRXUFHLQIRUPDWLRQDQGP\WUDLQLQJDQGH[SHULHQFH

WKH³&1´ LQ³&1]I´ UHIHUV WR³&KLQD´ WKH35& DQG³]I´ LVVKRUWKDQGIRUzhengfu D

&KLQHVHZRUGIRUJRYHUQPHQW  -,1FRQWLQXHGWKDW WKH&&3LQILOWUDWHGWKH8QLWHG6WDWHV




DQGHYHQLI&RPSDQ\ZLWKGUHZHQWLUHO\IURPWKH35&&RPSDQ\ZRXOGVWLOOQHHGWR

GHDOZLWK³&1]I´ UHTXHVWVLQRUGHUWRDYRLGIXWXUHDWWDFNV

 2QRUDERXW0D\DQG0D\-,1(PSOR\HHDQG

(PSOR\HHH[FKDQJHGHOHFWURQLFPHVVDJHVDERXWWKH35&JRYHUQPHQW¶VRQHPLQXWH

SURFHVVLQJUHTXLUHPHQW ,QWKRVHFRPPXQLFDWLRQV-,1 H[SODLQHG WKDWKHZDVXQDEOHWR

REWDLQELOOLQJLQIRUPDWLRQIRUDODUJHFXVWRPHUDV -,1FRXOGQRORQJHUDFFHVV&RPSDQ\¶V

86EDVHGVHUYHUV -,1DVNHG(PSOR\HH WRUHVWRUH-,1¶VDFFHVVVRWKDW-,1FRXOGXVH

(PSOR\HH¶VUHPRWHFRPSXWHUIRUHPHUJHQF\WURXEOHVKRRWLQJ  (PSOR\HH DJUHHGDQG

LQGLFDWHGWKDWKHVKH ZRXOGPHHW ZLWK-,1ODWHU  -,1WKDQNHG(PSOR\HH

 2QRUDERXW0D\-,1DQG(PSOR\HH H[FKDQJHGLQVWDQW

PHVVDJHV -,1ZDUQHG(PSOR\HH WKDW³´²WKH-XQHWKDQQLYHUVDU\RIWKH7LDQDQPHQ

6TXDUHPDVVDFUH²ZDVFRPLQJVRRQDQGWKDWWKH35&³,QWHUQHW3ROLFH³ ZHUHWUDFNLQJDOO

³FQXVHUV´ RQ &RPSDQ\¶V86EDVHGVHUYHUFOXVWHU (PSOR\HH UHVSRQGHG

³>8@QGHUVWRRG´

 7KHPHVVDJHVVHWIRUWKEHORZVHQWDVSDUWRIWKDWDIRUHPHQWLRQHG

H[FKDQJHRIHOHFWURQLFPHVVDJHVVKRZWKDW-,1HPSKDVL]HGWKHLQFUHDVHGSUHVVXUHDQG

VFUXWLQ\WKDWWKH066036DQG³QHWSROLFH´ ZHUHSODFLQJRQ&RPSDQ\WKHQHHGWRNHHS

VHFUHWWKH066¶VGHPDQGVWRFHQVRUSROLWLFDOFRQWHQWDQGWKHIDFWWKDWWKH35&JRYHUQPHQW

GHPDQGHGWKDW&RPSDQ\FHQVRUWKHSROLWLFDOVSHHFKRI&KLQHVHXVHUVQRPDWWHUZKHUHWKH\

ZHUHORFDWHG

-,1 5HFHQWO\ WKH066 1HW6HFXULW\ DQG1HW 3ROLFHKDYHEHHQFRPLQJ WRRXU


FRPSDQ\ IUHTXHQWO\ DQG ZH DUH KDQGOLQJ WKLQJV FDUHIXOO\ 7KH 066
UHTXHVWVWKDWZH VLJQWKH 1'$DQGWKDWZHFDQQRWGLVFORVHWKHLUUHTXHVW
,QLWUHODWHGWR86 GDWDZHDUHDVNLQJIRU LQVWUXFWLRQVIURPWKH86
ZHQHHGWRGLVFXVVDQGGHWHUPLQH DVWDQGDUG


( 2N  'LGWKH6KDQJKDL VLGHUHDFKRXW"

-,1 :KDWWKH066LVDVNLQJIRUDUHPRVWO\SROLWLFVUHODWHGWKHUHIRUHWKH\
UHTXHVWWKDWZHFDQQRWGLVFORVHLWRWKHUZLVHLWZLOOJUHDWO\ LPSDFWRXU
FRXQWU\¶VUHSXWDWLRQ

-,1 ,WZDVWKH6KDQJKDL6HFXULW\$JHQF\WKDWVHQWWKRVHSHRSOH

( 8QGHUVWRRG

-,1 &1 >&KLQD@ KDV LPSOHPHQWHG UHDOQDPH UHJLVWUDWLRQYHULILFDWLRQ VR


WKHUHDUHQRWPDQ\WKDWGREDGWKLQJV DQ\PRUH  $OODUHIURPWKH86
LI ZH GRQ¶W KDQGOH WKHP ZHOO QHW VHFXULW\ ZLOO EDQ DOO >&RPSDQ\@
RYHUVHDVVHUYHUVVR,UHVSHFWIXOO\DVN\RXWRWDNHWKLVVHULRXVO\



( :HZLOOKXUU\DQGEDQ DOOWKHIUHHDFFRXQWVIURP86>D&RPSDQ\


VHUYHU@

( 2XU UHSXWDWLRQLVDOUHDG\EDGUHJDUGOHVVჂ

-,1 :H IRXQG RXW WRGD\ WKDW XS XQWLO QRZ >&RPSDQ\¶V 86 LQWHUQHW
GRPDLQ@ VWLOODOORZV&1 IUHHUHJLVWUDWLRQ«

( :LOOUHOHDVHDZHE SDFNDJHWRIL[LW WRPRUURZ

-,1 )URPQHWVHFXULW\ V SHUVSHFWLYHDVORQJDVLWLVD&1 XVHUZHQHHGWR


KDQGOHLW QRPDWWHUZKHUH LWLVLIZHGRQ¶W KDQGOHLWWKH\ZLOOLQLWLDWH
JIZRURWKHUPHWKRGV WREDQLW

,QWKLVFRQWH[WEDVHGXSRQP\H[SHULHQFHLQYHVWLJDWLQJFDVHVLQYROYLQJWKH35&DQGWKLV

PDWWHU,EHOLHYH³1'$´ UHIHUVWRD³QRQGLVFORVXUHDJUHHPHQW´ WKH³6KDQJKDL6HFXULW\

$JHQF\´ UHIHUVWRWKH6KDQJKDL6WDWH6HFXULW\%XUHDX DUHJLRQDORIILFHRIWKH066DQG

³JIZ´ UHIHUVWRWKH*UHDW)LUHZDOORI&KLQD ,QDGGLWLRQ-,1¶VVWDWHPHQW³DVORQJDVLWLVD

FQXVHULWZLOOEHSURFHVVHGQRPDWWHUZKHUHLWLV´ LQGLFDWHVWKDWWKH036¶VGHILQLWLRQRI

³&KLQHVHXVHUV´ LQFOXGHVSHUVRQVRI&KLQHVHGHVFHQWSK\VLFDOO\ORFDWHGLQWKH8QLWHG6WDWHV


' -,1DQG(PSOR\HH &HQVRUWKH3ROLWLFDODQG5HOLJLRXV6SHHFKRI&RPSDQ\


8VHUV/RFDWHG2XWVLGHWKH35&DWWKH'LUHFWLRQRIWKH35&*RYHUQPHQW

 $VVHWIRUWKEHORZ -,1 FROODERUDWHGZLWK35&JRYHUQPHQWRIILFLDOV WR

SURDFWLYHO\ LGHQWLI\PHHWLQJVWKDWWKHRIILFLDOVPLJKWGHHPREMHFWLRQDEOH ,QWKHVSULQJRI

GHVSLWHEHLQJGHSULYHGRIDFFHVVWR&RPSDQ\¶V86EDVHGVHUYHUV-,1 FDXVHG

&RPSDQ\HPSOR\HHVEDVHGLQWKH8QLWHG6WDWHVWRDVVLVWKLPZLWKGLVFORVLQJ86EDVHG

XVHUGDWDWRWKH35&JRYHUQPHQWDQGFHQVRUSROLWLFDODQGUHOLJLRXVVSHHFK %\-XQH

KLVHIIRUWVWRFRPSO\ZLWKWKH35&JRYHUQPHQW¶VGHPDQGV FXOPLQDWHGLQ-,1¶VSDUWLFLSDWLRQ

LQDVFKHPHWRIDEULFDWHSUHWH[WXDOYLRODWLRQVRI&RPSDQ\¶V726 ZKLFKFDXVHG 86EDVHG

HPSOR\HHVRI&RPSDQ\WRWHUPLQDWHWKHDFFRXQWVDQGPHHWLQJVLQYROYLQJLQGLYLGXDOV

ORFDWHGRXWVLGHWKH35&LQFOXGLQJLQWKH8QLWHG6WDWHV

 2QRUDERXW 0D\-,1VHQWDQHOHFWURQLFPHVVDJHWRD 35&

ODZHQIRUFHPHQWRIILFHU KHUHIHUUHGWRDV³2IILFHU-LQ´ ZKLFKPHVVDJHFRQWDLQHGXQLTXH

LGHQWLILHUVIRUPHHWLQJV KRVWHGRQ&RPSDQ\¶V86EDVHGVHUYHUVDVZHOODV WKHSDVVZRUGV

IRUD&RPSDQ\ PHHWLQJ VFKHGXOHGWRWDNHSODFHRQRUDERXW0D\  %DVHGXSRQ

SXEOLFO\DYDLODEOHLQIRUPDWLRQWKLVPHHWLQJZDVRUJDQL]HGWRFRPPHPRUDWHWKHIRUWKFRPLQJ

DQQLYHUVDU\RIWKH7LDQDQPHQ6TXDUHPDVVDFUH $IWHUQRWLI\LQJ³2IILFHU-LQ´ RIWKH

PHHWLQJVWKDWZRXOGEHKRVWHGRQ &RPSDQ\¶V 86EDVHGVHUYHUVZLWKFRQWHQWWKDW-,1

FKDUDFWHUL]HGDV LQYLRODWLRQRI35&ODZ-,1VHQWDQHOHFWURQLF PHVVDJHWRDJURXSRI

&RPSDQ\ HPSOR\HHVLQFOXGLQJ(PSOR\HH DQGXUJHGWKHPWRWDNHDFWLRQ DJDLQVWWKH

PHHWLQJDQGWKHPHHWLQJ¶VRUJDQL]HU VRDV WRSUHYHQWWKH35&¶V³F\EHUVHFXULW\RUJ´ IURP

EORFNLQJDOORI&RPSDQ\ VHUYHUVLQWKH35& %DVHGRQWKHLQYHVWLJDWLRQDQGP\WUDLQLQJ

DQGH[SHULHQFH³F\EHUVHFXULW\RUJ´ UHIHUVWRWKH&$&DQGRU036


 2QRUDERXW0D\-,1QRWLILHG&RPSDQ\ FRPSOLDQFH

HPSOR\HHVLQWKH8QLWHG6WDWHVLQFOXGLQJ(PSOR\HHWKDW RQRUDERXW0D\ D

SURPLQHQW35&GLVVLGHQWEDVHGLQ+RQJ.RQJ ³'LVVLGHQW´ KDGKRVWHG DPHHWLQJXVLQJ

&RPSDQ\¶VVHUYLFH XVLQJ&RPSDQ\¶V86FOXVWHUV %DVHGXSRQSXEOLFO\DYDLODEOH

LQIRUPDWLRQ,NQRZWKDW'LVVLGHQW SURYLGHGVXSSRUWWRWKH7LDQDQPHQ6TXDUHSURWHVWHUVLQ

DQGKDVSDUWLFLSDWHG LQ+RQJ.RQJSROLWLFVDV DSURGHPRFUDF\DFWLYLVW  $IWHU-,1

VHQWKLVPHVVDJH VHYHUDO&RPSDQ\HPSOR\HHVLQFOXGLQJ(PSOR\HH H[FKDQJHG

HOHFWURQLFPHVVDJHVLQZKLFKWKH\LGHQWLILHGVHYHUDOVFKHGXOHGPHHWLQJVWKDW WKH\GHVFULEHG

DV³SROLWLFDO´ DQGWKDW ZHUHDVVRFLDWHGZLWK'LVVLGHQW¶V&RPSDQ\ DFFRXQW

 2QRUDERXW0D\-,1UHFHLYHGDPHVVDJHLQGLFDWLQJWKDW

&RPSDQ\ VXVSHQGHGDQGWHUPLQDWHG'LVVLGHQW¶VDFFRXQWSULRUWRWKHVH SODQQHG

³SROLWLFDO´ PHHWLQJV  -,1WKDQNHGWKH 86EDVHG WHDPIRUWKHSURPSWDFWLRQWKDW

VDIHJXDUGHG&RPSDQ\¶VEXVLQHVVLQWKH35&

 $OVRRQRUDERXW0D\-,1XVHGDQHOHFWURQLFPHVVDJHWR

DGYLVHD86EDVHG JURXSRI&RPSDQ\ HPSOR\HHVLQFOXGLQJ(PSOR\HH WKDW &RPSDQ\

ZDVDWULVNEHFDXVHLWVXVHUVZHUHKRVWLQJPHHWLQJVZLWKUHOLJLRXVWKHPHVDEVHQWWKHUHTXLVLWH

³UHOLJLRXVVHUYLFHOLFHQVH´ LQWKH35&  -,1DGYLVHG(PSOR\HH DQGRWKHUVWKDWEHIRUH

&RPSDQ\ FRXOGDSSO\IRUD³UHOLJLRXVVHUYLFHOLFHQVH´ LQWKH35& &RPSDQ\ PXVW

LPPHGLDWHO\WHUPLQDWH D ³UHOLJLRXV´ PHHWLQJKRVWHGRQLWVSODWIRUPDQGSURYLGHXVHUDFFRXQW

LQIRUPDWLRQUHJDUGLQJWKHPHHWLQJSDUWLFLSDQWVORFDWHGRQ86FOXVWHUVWRWKH35&

JRYHUQPHQW ,QUHVSRQVH(PSOR\HH SURYLGHG-,1ZLWK&KLQHVH FKDUDFWHUVLGHQWLI\LQJ

ZKDWDSSHDUVWREHD 86EDVHG &RPSDQ\ DFFRXQWKROGHUWRJHWKHUZLWKDQ,3DGGUHVV

UHVROYLQJWR&KLQD1HW<XQQDQ3URYLQFH1HWZRUNLQ<XQQDQ35& (PSOR\HH


VXEVHTXHQWO\WHUPLQDWHGWKHDVVRFLDWHGXVHU DFFRXQWRQWKHEDVLVRIDSXUSRUWHG726

YLRODWLRQDQGSURYLGHG-,1ZLWKXVHUDFFRXQWPHWDGDWD %DVHGRQHOHFWURQLFPHVVDJHV

H[FKDQJHGZLWKRWKHU&RPSDQ\HPSOR\HHV(PSOR\HH FLWHGD 726YLRODWLRQFRPPLWWHG

E\WKHPHHWLQJSDUWLFLSDQWV DVWKHMXVWLILFDWLRQIRUWHUPLQDWLQJWKHDFFRXQW  -,1QRWHGWKH

DFFRXQWRZQHUZRXOGVWLOOKDYHDFFHVVWR&RPSDQ\¶VIUHHVHUYLFHDQGUHTXHVWHGIRUFHG

WHUPLQDWLRQRIWKDWDFFHVVDVZHOO  &RPSDQ\¶V86WHDPFRPSOLHGZLWK-,1¶V UHTXHVW

 6LPLODUO\LQDQH[FKDQJHRIHOHFWURQLFPHVVDJHVEHWZHHQ-,1DQGD

35&ODZHQIRUFHPHQWRIILFLDORQRUDERXW0D\WKHRIILFLDODVNHG-,1IRUWKH

DFFRXQWLQIRUPDWLRQIRUWKHLQGLYLGXDOKRVWLQJ DPHHWLQJURRPLQ&RPSDQ\¶V86GDWD

FOXVWHU  -,1H[SODLQHGWKDW&RPSDQ\HPSOR\HHVOLNH-,1ZKRZHUH EDVHGLQWKH35&

FRXOGQRW DFFHVVGDWDLQWKH8QLWHG6WDWHV  -,1WKHQH[FKDQJHGHOHFWURQLFPHVVDJHVZLWK

(PSOR\HHZKRSURYLGHGWKHLQIRUPDWLRQWR-,1  -,1WKHQSDVVHGWKHLQIRUPDWLRQ

HOHFWURQLFDOO\WRWKH35&ODZHQIRUFHPHQWRIILFLDO

 -,1 DOVRVHQWHOHFWURQLF PHVVDJHVWRWDVN&RPSDQ\¶V 86EDVHG

HPSOR\HHVLQFOXGLQJ(PSOR\HH ZLWK SURYLGLQJ KLPZLWKXVHUDFFRXQWLQIRUPDWLRQ

UHTXHVWHGE\WKH066 DQG036¶V'RPHVWLF6HFXULW\3ROLFH 2QRUDERXW-XQH-,1

IRUZDUGHGWR(PSOR\HHDQGRWKHU86HPSOR\HHVZKDWDSSHDUHGWREHIHHGEDFNIURPWKH

066GHVFULELQJWKHLUQHHGIRUXVHULQIRUPDWLRQUHJDUGLQJDQ\ ³&KLQHVH´ SDUWLFLSDQWVLQD

&RPSDQ\PHHWLQJRUJDQL]HGE\DSURPLQHQW86EDVHGGLVVLGHQW ³'LVVLGHQW´ DQG

KRVWHGRQ&RPSDQ\¶VSODWIRUPRQRUDERXW0D\ 

 %DVHGXSRQSXEOLFO\DYDLODEOHLQIRUPDWLRQDQGLQWHUYLHZVFRQGXFWHGLQ

WKLVFDVH'LVVLGHQW ZDVDVWXGHQWOHDGHULQWKH7LDQDQPHQ6TXDUHSURWHVWVDQGKDV

EHHQDQRXWVSRNHQDGYRFDWHIRUKXPDQULJKWVDQGWKHDGYDQFHRIGHPRFUDF\LQWKH35&


'LVVLGHQWZKRLVEDVHGLQWKH8QLWHG6WDWHV XVHGWKH&RPSDQ\DFFRXQWRIDQDVVRFLDWH

³$VVRFLDWH´ WRKRVWWKH0D\PHHWLQJ FRPPHPRUDWLQJWKH7LDQDQPHQ6TXDUH

PDVVDFUH

 (PSOR\HH DJUHHGWRSURYLGH-,1ZLWKUHVSRQVLYHGDWDWR WKH066

UHTXHVWIRULQIRUPDWLRQRQ'LVVLGHQW¶V0D\  PHHWLQJE\GLVFORVLQJ$VVRFLDWH¶V

DFFRXQW LQIRUPDWLRQLQFOXGLQJ WKHDFFRXQWKROGHU QDPHWKHXVHU,'DFFRXQW,'DQG

DFFRXQWQXPEHU  (PSOR\HHDVNHGIRU(PSOR\HH¶VDVVLVWDQFHLQWHUPLQDWLQJWKH

DFFRXQW  (PSOR\HHWKHQWHUPLQDWHG$VVRFLDWH¶VDFFRXQWDQGSURYLGHG-,1ZLWK

FRQILUPDWLRQRIWKHWHUPLQDWLRQWKLVFRPPXQLFDWLRQ LQFOXGHG$VVRFLDWH¶VWUXHQDPHDQG

HPDLO DFFRXQW  2QRUDERXW-XQHDQGLQDVHSDUDWHFKDWLQYROYLQJ-,1DQG

(PSOR\HH(PSOR\HHVHQW-,1QXPHURXVUHFRUGVUHJDUGLQJ $VVRFLDWH¶VDFFRXQW

LQFOXGLQJGRFXPHQWVZLWKGHWDLOVRQDOORI$VVRFLDWH¶VSULRUPHHWLQJKLVWRU\RQ&RPSDQ\

¶VSODWIRUPDVZHOODV WKH,3DGGUHVVHVIURPZKLFK$VVRFLDWH MRLQHGWKHPHHWLQJV

(PSOR\HHDOVRSURYLGHG-,1ZLWKPXOWLSOHGRFXPHQWVFRQWDLQLQJZKDWDSSHDUVIURPP\

UHYLHZWREHWKHQDPHVDQG,3DGGUHVVHVXVHGE\DOOSDUWLFLSDQWVLQ'LVVLGHQW¶V0D\

 PHHWLQJ 7KHSDUWLFLSDQWGDWDSHUWDLQHGWRVHYHUDOXVHUVZKRMRLQHGIURP,3DGGUHVVHV

LQWKH86

 'LVVLGHQW KDVLQIRUPHGWKH)%, LQVXPDQGVXEVWDQFHWKDWOHDGLQJ

XSWRWKH0D\PHHWLQJ'LVVLGHQW KHOGVHYHUDOSUDFWLFHPHHWLQJVLQSUHSDUDWLRQ 

,QLWLDOO\'LVVLGHQW LQWHQGHGWRXVHDSUHH[LVWLQJ&RPSDQ\DFFRXQWRIDQDVVRFLDWHZLWK

H[SHULHQFHXVLQJ&RPSDQ\¶VSODWIRUP  +RZHYHUDIWHUXVHUVLQWKH35&HQFRXQWHUHG

GLIILFXOWLHVLQMRLQLQJ WKHSUDFWLFHPHHWLQJV'LVVLGHQW IRUPHGWKHYLHZ WKDW35&

DXWKRULWLHVZHUHDOUHDG\VXUYHLOOLQJWKHSDUWLFLSDQWV  $VDUHVXOWRIWKLV VHFXULW\FRQFHUQ




'LVVLGHQW GLUHFWHG$VVRFLDWH WRXSJUDGHIURPDIUHHDFFRXQWWRDSDLGDFFRXQWWKDWZRXOG

PD[LPL]HVHUYLFHDQGWKHQXPEHURIXVHUVDOORZHGWRSDUWLFLSDWHLQD&RPSDQ\PHHWLQJ 

 'LVVLGHQW IXUWKHU LQIRUPHGWKH)%,LQVXPDQGVXEVWDQFH WKDW35&

DXWKRULWLHVSUHVVXUHGVHYHUDOSRWHQWLDOPHHWLQJVSHDNHUVLQWKH35&QRWWRDWWHQG'LVVLGHQW

¶VPHHWLQJRQWKH&RPSDQ\SODWIRUP  $FFRUGLQJWR'LVVLGHQW35&SROLFHRIILFHUV

DUULYHGDWWKHUHVLGHQFHRIDSRWHQWLDOVSHDNHURQWKHPRUQLQJRI0D\DQGSUHYHQWHG

KLPKHUIURPXVLQJDQ\HOHFWURQLFV DQGWKHUHE\DWWHQGLQJWKHPHHWLQJ   7KH35&

JRYHUQPHQWVLPLODUO\SUHVVXUHGDQRWKHUSDUWLFLSDQWZKRKDG SURYLGHG'LVVLGHQW ZLWKDSUH

UHFRUGHGYLGHRWREHSOD\HGGXULQJWKHPHHWLQJRQWKH&RPSDQ\SODWIRUP'LVVLGHQW

UHSRUWHGWRWKH)%,WKDWWKLVSRWHQWLDOVSHDNHUZDVGHWDLQHGE\35&DXWKRULWLHVWZRKRXUV

EHIRUHWKHPHHWLQJVWDUWHGRQ 0D\DQGKHOGXQWLODIWHU-XQH  +HVKH ZDV

UHOHDVHGZLWKWKHZDUQLQJWKDWKHVKHZRXOGEHLQFDUFHUDWHGLIWKHYLGHRWKDWKHVKH KDG

SURYLGHGWR'LVVLGHQW ZDVVHHQ E\PRUHWKDQYLHZHUV   

 ,QDGGLWLRQEDVHGXSRQLQWHUYLHZVFRQGXFWHGGXULQJWKHLQYHVWLJDWLRQ

DQGUHYLHZRIRSHQVRXUFHLQIRUPDWLRQDQRWKHUDQWL&&3GHPRQVWUDWRU ZKRFXUUHQWO\UHVLGHV

LQ$XVWUDOLD WKH³$XVWUDOLDQSDUWLFLSDQW´ UHFHLYHGD:H&KDWFDOOIURPKLVKHUIDWKHULQWKH

35&LQ$SULO  'XULQJWKHFDOODQ036RIILFHUZKRZDVZLWKWKHSDUWLFLSDQW¶VIDWKHU

VWDWHGLQVXPDQGVXEVWDQFHWKDWWKHSDUWLFLSDQWQHHGHGWRVWRSDQWL&&3DFWLYLWLHVSURYLGH

WKHRIILFHUZLWKWKHSDVVZRUGVWRWKHSDUWLFLSDQW¶VVRFLDOPHGLDDFFRXQWVDQGUHWXUQWRWKH

35&  7KH$XVWUDOLDQSDUWLFLSDQWUHIXVHGDQGUHFRUGHGWKHFDOO  'XULQJWKH0D\

PHHWLQJRQ&RPSDQ\¶VSODWIRUPGLVFXVVHGDERYHWKH$XVWUDOLDQSDUWLFLSDQWGLVFXVVHGWKDW

FDOOLQYROYLQJWKH036  2QRUDERXW-XQHWKH$XVWUDOLDQSDUWLFLSDQW¶VSDUHQWV

UHFHLYHGDQHOHFWURQLFPHVVDJHIURPWKH036ZKLFKPHVVDJHFRQWDLQHGDVFUHHQVKRW


VKRZLQJWKH$XVWUDOLDQSDUWLFLSDQWLQWKH0D\PHHWLQJ RQ&RPSDQ\¶VSODWIRUP 

7KH$XVWUDOLDQSDUWLFLSDQW¶VIDWKHUWKHQVHQWWKHSDUWLFLSDQWDQHOHFWURQLFPHVVDJHDVNLQJ

ZKHWKHUWKHSDUWLFLSDQWZDQWHGKLVKHUSDUHQWV³GHDG´ 7KH$XVWUDOLDQSDUWLFLSDQWKDV

VWDWHG LQVXPDQGVXEVWDQFH WKDWKHVKHZDVGLVWUHVVHGE\WKHSUHVVXUHH[HUWHGE\35&

RIILFLDOV RQWKHSDUWLFLSDQWDQGWKHSDUWLFLSDQW¶VIDPLO\SDUWLFXODUO\DIWHUWKH0D\

PHHWLQJ RQ&RPSDQ\¶VSODWIRUP

 2QRUDERXW-XQH-,1VHQWDQHOHFWURQLFPHVVDJHDGYLVLQJ

(PSOR\HHDQGRWKHU86EDVHGHPSOR\HHVRI&RPSDQ\WKDWWKH036'RPHVWLF

6HFXULW\3ROLFH KDGUHTXHVWHG³;LQMLDQJXVHUV¶GDWDXVHUFDWHJRU\WKHQXPEHURIWKH

UHJLVWHUHGDQGQXPEHURI SDUWLFLSDQWVHWF´  $FFRUGLQJWR-,1WKH036IXUWKHUUHTXHVWHG

WKDWWKHGDWDEHSURYLGHGQRODWHUWKDQ³ &KLQDWLPH ´WKHIROORZLQJGD\ %DVHGXSRQ

P\WUDLQLQJDQGH[SHULHQFHDQGSXEOLFO\DYDLODEOHLQIRUPDWLRQ³;LQMLDQJ´UHIHUVWRWKH

;LQMLDQJ3URYLQFHRIWKH35&ZKLFK KDVEHHQWKHIRFXVRILQWHUQDWLRQDOVFUXWLQ\EHFDXVHRI

WKH35&JRYHUQPHQW¶VDOOHJHGZKROHVDOHGHWHQWLRQRIWKHORFDO0XVOLPSRSXODWLRQLQFOXGLQJ

WKH8LJKXUHWKQLFPLQRULW\JURXS

 ,QWKHVDPHVHULHVRIFRPPXQLFDWLRQV-,1VWDWHGWKDWZLWKUHVSHFWWR

WKHGDWDUHTXHVW IURPWKH35&JRYHUQPHQW ³>I@RUJOREDO>DFFRXQWV@LWFDQHLWKHULQFOXGHRU

H[FOXGHFQ´  %DVHGXSRQP\WUDLQLQJDQGH[SHULHQFHDQGWKHLQIRUPDWLRQJDWKHUHGLQWKH

LQYHVWLJDWLRQ-,1¶VUHIHUHQFHWR³JOREDO´DFFRXQWVPHDQWWKDWKHZDQWHGWRSURYLGHWKH35&

JRYHUQPHQWZLWKLQIRUPDWLRQUHODWHGWRDFFRXQWVORFDWHGDQ\ZKHUHLQWKHZRUOGQRWMXVWLQ

WKH35&  0RUHRYHU-,1¶VUHIHUHQFHWRLQFOXGLQJRUH[FOXGLQJ³FQ´PHDQWWKDWWKHGDWD

FRXOGEXWGLGQRWQHHGWRLQFOXGHGDWDDERXWXVHUVZKRVHGDWDZDVVWRUHGRQD&RPSDQ\

VHUYHULQWKH35&


 $VGLVFXVVHGDERYH-,1KLPVHOIORFDWHGLQWKH35&GLGQRWKDYH

DFFHVVWRGDWDVWRUHGRQ&RPSDQ\¶V86VHUYHUV  %DVHGXSRQSXEOLFO\DYDLODEOHUHFRUGV

DQGFRPPXQLFDWLRQV ,KDYHUHYLHZHGWKH&RPSDQ\HPSOR\HHVZKRP-,1DVNHGIRUKHOS

ZLWKWKH35&JRYHUQPHQW¶VGDWDUHTXHVWUHODWHGWR;LQMLDQJLQFOXGLQJ(PSOR\HHZHUH

ORFDWHGLQWKH8QLWHG6WDWHV

 2QRUDERXW-XQHLQUHVSRQVHWR-,1¶VUHTXHVWD&RPSDQ\

HPSOR\HHLQWKH8QLWHG6WDWHVVHQW-,1DQHOHFWURQLFFRPPXQLFDWLRQFRQWDLQLQJD

VSUHDGVKHHWZLWKDSSUR[LPDWHO\DFFRXQW,'VDQGXVHU,'VIRU&RPSDQ\DFFRXQWV 

( -,1DQG2WKHU&RPSDQ\(PSOR\HHV7HUPLQDWH-XQH DQG
0HHWLQJV&RPPHPRUDWLQJWKH7LDQDQPHQ6TXDUH0DVVDFUH

 $VGLVFXVVHGEHORZ-,1VSHDUKHDGHGHIIRUWVWRWHUPLQDWHRURWKHUZLVH

GLVUXSWDVHULHVRIPHHWLQJVRQWKH&RPSDQ\SODWIRUPRQRUDERXW-XQH DQG-XQH

UHODWHGWRWKH7LDQDQPHQ6TXDUHPDVVDFUH  7KHVHHIIRUWV UHSUHVHQWHGDQDFWLYHDQG

GHOLEHUDWHSURFHVVLQYROYLQJFROODERUDWLRQEHWZHHQ-,1&RPSDQ\HPSOR\HHVDQGRWKHUV

EDVHGLQWKH35& WRLGHQWLI\SDUWLFLSDQWVLQDQGWRGLVUXSWWKHVHPHHWLQJVIRUSUHWH[WXDO

UHDVRQV  7KHVFKHPHLQYROYHGDPRQJRWKHUWKLQJV DFRRUGLQDWHGDWWHPSWWRWULJJHUWKH

VXVSHQVLRQDQGRUWHUPLQDWLRQRI&RPSDQ\DFFRXQWVEHORQJLQJWRPHHWLQJRUJDQL]HUVE\

IDEULFDWLQJHYLGHQFH²VRPHRIZKLFKZDVPDQXIDFWXUHGLQWKHQDPHVRI35&GLVVLGHQWV

WKHPVHOYHV²DQGRWKHUZLVHIDOVHO\UHSRUWLQJWKDWWKH-XQH DQG-XQH PHHWLQJV

LQYROYHGGLVFXVVLRQVUHODWHGWRWHUURULVPRUSRUQRJUDSK\DQGWKXVZHUHLQYLRODWLRQRIWKH

726  ,QIDFWQRVXFKGLVFXVVLRQVRUYLRODWLRQVRIWKH726ZHUHRFFXUULQJ  7KURXJKWKHLU

VFKHPH-,1DQGRWKHUPHPEHUVRIWKHFRQVSLUDF\VRXJKWWRIXUWKHUHIIRUWVE\WKH35&


JRYHUQPHQWWRSUHYHQWGLVFXVVLRQVRIWKH7LDQDQPHQ6TXDUHPDVVDFUH WKDWWKH35&

JRYHUQPHQWGHHPHGVXEYHUVLYH 

 ,QIXUWKHUDQFHRIWKHVFKHPHWKHFRFRQVSLUDWRUVFUHDWHGDVHULHVRI

DOLDVHPDLODFFRXQWV WKH³$OLDV(PDLO$FFRXQWV´ ZKLFKWKH\GHSOR\HGLQVHYHUDOZD\VWR

XQGHUPLQHWKH-XQH DQG-XQH PHHWLQJV  )LUVWPHPEHUVRIWKHFRQVSLUDF\

XVHGWKH$OLDV(PDLO$FFRXQWV WRFUHDWH&RPSDQ\DFFRXQWVWRVHWWKHSURILOHSLFWXUHRI

VRPHRIWKRVHDFFRXQWVWRLPDJHVDVVRFLDWHGZLWKWHUURULVPRUSRUQRJUDSK\DQGWRHQWHU

VRPHRIWKHPHHWLQJVXVLQJWKRVHDFFRXQWV  6HFRQGWKHFRFRQVSLUDWRUVXVHGWKH$OLDV

(PDLO$FFRXQWV WRVXEPLWSXUSRUWHGIDOVHUHSRUWVRI726YLRODWLRQV  7KHIDOVHUHSRUWV

LQFOXGHGVFUHHQVKRWVIURPWKHPHHWLQJVRIWKHLPDJHVDVVRFLDWHGZLWKWHUURULVPRU

SRUQRJUDSK\WKDWZHUHJHQHUDWHGE\WKHFRQVSLUDWRUVWKHPVHOYHV

7KH-XQH0HHWLQJ

 %DVHGXSRQLQWHUYLHZVFRQGXFWHGLQWKHFRXUVHRIWKLVLQYHVWLJDWLRQ DV

ZHOODVDUHYLHZRIVFUHHQVKRWVRIPHHWLQJVDQGHOHFWURQLFFRPPXQLFDWLRQV RQ RUDERXW-XQH

 DQG -XQHLQGLYLGXDOVDVVRFLDWHGZLWKDVWXGHQWOHDGHUDQGSDUWLFLSDQWLQWKH

VWXGHQWSURWHVWVDW7LDQDQPHQ6TXDUH ³'LVVLGHQW´ RUJDQL]HGDPHHWLQJRQ

&RPSDQ\¶VSODWIRUPWRFRPPHPRUDWHWKHDQQLYHUVDU\ RI WKH7LDQDQPHQ6TXDUHPDVVDFUH

WKH³-XQH0HHWLQJ´  7KHPHHWLQJZDVLQYLWDWLRQRQO\DQGVRFLDOPHGLDSRVWLQJVDERXW

WKHPHHWLQJGLGQRWLQFOXGHWKHVSHFLILFORFDWLRQRIWKHPHHWLQJRQ&RPSDQ\¶VSODWIRUP

'LVVLGHQW LVDUHVLGHQWRIWKH(DVWHUQ'LVWULFWRI1HZ<RUNDQGSDUWLFLSDWHGLQWKH-XQH

0HHWLQJIURPKLVUHVLGHQFH  7KURXJKRXWWKHFRXUVHRIVHYHUDOKRXUV WKH-XQH0HHWLQJ

ZDVVKXWGRZQE\&RPSDQ\DQGWKHQUHVWDUWHGE\WKHRUJDQL]HUVLQDGLIIHUHQWPHHWLQJ

URRPRQ&RPSDQ\¶VSODWIRUP %DVHGXSRQODZHQIRUFHPHQWLQWHUYLHZVWKH-XQH


0HHWLQJZDVFRQILJXUHGVRWKDWRQO\FHUWDLQLQGLYLGXDOVFKRVHQWRVSHDNE\WKHPHHWLQJ

KRVWFRXOGVSHDNGXULQJWKHPHHWLQJ  0RUHRYHUSDUWLFLSDQWVLQWKH-XQH0HHWLQJ

LQIRUPHGWKH)%, WKDWWKHPHHWLQJVGLGQRWLQFOXGHGLVFXVVLRQVRIFKLOGDEXVHRUH[SORLWDWLRQ

WHUURULVPUDFLVPRULQFLWHPHQWVWRYLROHQFH 

 %DVHGXSRQ ODZHQIRUFHPHQWLQWHUYLHZVDQGP\UHYLHZRIHOHFWURQLF

FRPPXQLFDWLRQVLQFOXGLQJPHHWLQJLQYLWDWLRQV,DVVHVVWKDW'LVVLGHQW LQLWLDWHGWKH-XQH

0HHWLQJXVLQJDQLQFRUUHFWPHHWLQJQXPEHU WKH³,QFRUUHFW-XQH0HHWLQJ´ WKDWKDGQRW

EHHQFLUFXODWHG 

 2Q RUDERXW -XQHDWDSSUR[LPDWHO\$0('7-,1VHQWD

PHVVDJHWRVHYHUDOLQGLYLGXDOVZKRZRUNDW&RPSDQ\VWDWLQJWKDW35&ODZHQIRUFHPHQW

RIILFLDOVKDGQRWLILHGKLPRIDQXSFRPLQJ³SROLWLFDO´ PHHWLQJRQ&RPSDQ\¶VSODWIRUP DQG

SURYLGHGWKHPHHWLQJQXPEHUIRUWKH,QFRUUHFW-XQH0HHWLQJ ,WLVQRWFOHDUKRZ-,1RU

35&ODZHQIRUFHPHQWREWDLQHGWKLVQRQSXEOLFLQIRUPDWLRQ  -,1¶V QRWLILFDWLRQLQFOXGHGWKH

LQIRUPDWLRQWKDWWKHPHHWLQJZRXOGRFFXUDW³$01HZ<RUN´ DQGUHIHUHQFHGDPHHWLQJ

QXPEHU  $VQRWHGDERYHWKHPHHWLQJQXPEHUZDVQRWSXEOLFO\DYDLODEOH -,1UHFRXQWHG

WKDWWKH35&RIILFLDOVUHTXHVWHGWKDWWKHPHHWLQJQRWEHVKXWGRZQLPPHGLDWHO\DV35&ODZ

HQIRUFHPHQWRIILFLDOVLQWHQGHGWRXVHDSXEOLFOLQNWRPRQLWRUWKHFRQWHQWRIWKHPHHWLQJIRU

HYLGHQWLDU\SXUSRVHV  $FFRUGLQJWRWKHLQVWUXFWLRQVDIWHUWRPLQXWHVWKHPHHWLQJ

FRXOGEHWHUPLQDWHG 

 %DVHGRQZLWQHVVLQWHUYLHZVDQGPHWDGDWDUHJDUGLQJWKH,QFRUUHFW-XQH

0HHWLQJWKDWPHHWLQJEHJDQDWDSSUR[LPDWHO\$0('7KRVWHGE\D&RPSDQ\

DFFRXQWOLQNHGWR'LVVLGHQW 1RQHRIWKHLQYLWHGSDUWLFLSDQWVSDUWLFLSDWHGLQWKH,QFRUUHFW

-XQH0HHWLQJWKHRQO\SDUWLFLSDQWVDSSHDUWRKDYHXVHG&RPSDQ\SURILOHVDVVRFLDWHG


ZLWKQRQH[LVWHQWHPDLODFFRXQWV RUHPDLODFFRXQWVWKDWDSSHDUWRKDYHEHHQFUHDWHGIRUWKH

SXUSRVHRIGLVUXSWLQJWKHPHHWLQJ 

 %\DSSUR[LPDWHO\$0('7WKH-XQH0HHWLQJKDGPRYHGIURP

WKH,QFRUUHFW-XQH0HHWLQJURRPWRDURRPKRVWHGE\DQRWKHULQGLYLGXDOZKRKDG

SDUWLFLSDWHGLQWKH7LDQDQPHQ6TXDUHSURWHVWVZKLFKLQGLYLGXDOZDVORFDWHGLQWKH

:DVKLQJWRQ'&DUHD WKH³$VVLVWDQW´   2WKHUSDUWLFLSDQWVLQWKHPHHWLQJLQFOXGHG

UHVLGHQWVRI WKH(DVWHUQ'LVWULFWRI1HZ<RUN 

 2QRUDERXW-XQHEHWZHHQDSSUR[LPDWHO\ $0DQG

$0 ('7 IRXUHOHFWURQLFFRPSODLQWVLQ(QJOLVKZHUHVXEPLWWHGWR&RPSDQ\¶VDXWRPDWHG

LQWHUQHWEDVHG V\VWHPIRUUHSRUWLQJWKHFRQWHQWVRID&RPSDQ\PHHWLQJ  7KHFRPSODLQWV

LGHQWLILHGWKHKRVWDFFRXQWIRUWKH-XQH0HHWLQJDQGUHIHUUHGWR³GLVJXVWLQJSLFV´ ³FKLOG

DEXVH´ DQG³LQFLWLQJYLROHQFH´ 1RWDEO\DOOIRXUFRPSODLQWVUHIHUHQFHGWKHHPDLODGGUHVV

DVVRFLDWHGZLWK'LVVLGHQW¶V&RPSDQ\DFFRXQW UDWKHUWKDQWKH&RPSDQ\DFFRXQWRIWKH

$VVLVWDQW ZKRZDVDFWXDOO\ KRVWLQJWKHPHHWLQJ $GGLWLRQDOO\WKHIRXUFRPSODLQWV

UHIHUHQFHGVSHFLILFWLPHVRIWKHDOOHJHGDEXVHV 30RU 30 \HWWKHVHWLPHVGRQRW

FRUUHODWHZLWKWKHWLPLQJRI WKH,QFRUUHFW-XQH0HHWLQJDQGDOVRDSSHDU WRUHIOHFWD 35&

WLPH]RQH 1RWDEO\DWDSSUR[LPDWHO\$0('7DQG$0('7WZRFRPSODLQWV

IURPHPDLODFFRXQWVGLVFXVVHGIXUWKHUEHORZ WKH³)25(,*1$&&28176´ ZHUHVHQWWR

WKH&RPSDQ\HPDLODGGUHVVHVWDEOLVKHGIRUUHSRUWLQJSRVVLEOHYLRODWLRQVRIWKH726

7KHVHFRPSODLQWV VWDWHGWKDW'LVVLGHQW¶V&RPSDQ\DFFRXQWZDVEHLQJXVHGWRLQFLWH

UDFLDOGLYLVLRQYLROHQFH DQGUHVLVWDQFH  0RUHRYHUDOWKRXJKWKH-XQH0HHWLQJZDV

FRQGXFWHGLQ0DQGDULQ²H[FHSWIRUDSUD\HUWKDWZDVJLYHQLQ*HUPDQEXWWUDQVODWHGLQWR

0DQGDULQ²DOORIWKHVH FRPSODLQWVZHUHPDGHLQ(QJOLVK


 %DVHGXSRQLQIRUPDWLRQREWDLQHGIURPHPDLOVHUYLFHSURYLGHUVWZRRI

WKHDIRUHPHQWLRQHGFRPSODLQWVZHUHDVVRFLDWHGZLWKDQHPDLODGGUHVVFUHDWHGLQWKHQDPHRI

DQLQGLYLGXDO ZKREDVHGXSRQSXEOLFO\DYDLODEOHLQIRUPDWLRQUHVLGHV LQ-DSDQDQGLVDYLFH

SUHVLGHQWRIDJURXSHVWDEOLVKHGLQWRSURPRWHGHPRFUDF\LQWKH35& WKH³'LVVLGHQW

´   7KHHPDLODFFRXQWLQWKHQDPHRI'LVVLGHQW ZDVFUHDWHGRQRUDERXW-XQHDW

DSSUR[LPDWHO\$0 ('7VKRUWO\EHIRUHWKHFRPSODLQWVZHUHILOHG  7KHHPDLODFFRXQW

LQWKHQDPHRI'LVVLGHQW LVDOVRDVVRFLDWHGZLWKD&RPSDQ\DFFRXQWLQWKHQDPHRI

'LVVLGHQWZKLFKDFFRXQWDWWHQGHGVRPHRIWKH-XQH0HHWLQJ %DVHGRQP\WUDLQLQJ

H[SHULHQFHDQGNQRZOHGJHRIWKHLQYHVWLJDWLRQWRGDWH ,DVVHVVWKDWPHPEHUVRIWKH

FRQVSLUDF\FUHDWHGD &RPSDQ\DFFRXQWGHVLJQHGWRPDNHLWORRNDVLIDQLQGLYLGXDOFULWLFDO

RIWKH35&JRYHUQPHQWZDVDWWHQGLQJWKH-XQH0HHWLQJ  7KHRWKHUFRPSODLQWVGHVFULEHG

DERYHLQWKHSUHFHGLQJSDUDJUDSK DUHDOVRDVVRFLDWHGZLWKHPDLODFFRXQWVFUHDWHGEHWZHHQ

DSSUR[LPDWHO\$0DQG$0('7RQRUDERXW-XQH²VKRUWO\EHIRUHWKH

FRPSODLQWVZHUHVXEPLWWHG  1RWDEO\WKHLQYHVWLJDWLRQKDVIRXQGQRHYLGHQFHVKRZLQJWKDW

'LVVLGHQW DWWHQGHG WKH-XQH0HHWLQJ

 %DVHGXSRQP\UHYLHZRILQIRUPDWLRQSURYLGHGE\HPDLOVHUYLFH

SURYLGHUVRWKHUHOHFWURQLFFRPPXQLFDWLRQVDQGP\WUDLQLQJDQGH[SHULHQFH RQHRI-,1¶V

FRFRQVSLUDWRUV ³&&´ FUHDWHGDQG XVHGVHYHUDO GLIIHUHQWHPDLODFFRXQWVLQIXUWKHUDQFHRI

WKHFRQVSLUDF\¶VDFWLYLWLHVRQ-XQH DQG-XQH  6SHFLILFDOO\

D && XVHGDQHPDLODFFRXQWFUHDWHGLQKLVKHURZQQDPH WKH


³+<:$&&2817´   7KHVXEVFULEHUQDPHIRUWKDWDFFRXQWLV
&&¶VQDPH

E 2QRUDERXW0D\WZRHPDLODGGUHVVHVZHUHFUHDWHGZLWKLQ
DSSUR[LPDWHO\PLQXWHVRIHDFKRWKHU  (DFKRIWKRVHDFFRXQWV
ZDVFUHDWHGIURPWKHVDPH,3DGGUHVVZKLFKDFFRUGLQJWRRSHQ


VRXUFHLQIRUPDWLRQLVKRVWHGE\DQLQWHUQHWVHUYLFHSURYLGHULQ
+RQJ.RQJWKDWSURYLGHVLQWHUQHWVHUYLFHIRUUHVLGHQWLDOFXVWRPHUV 
7KHILUVWVXFKDFFRXQW WKH³4$=$&&2817´ ZDVVXEVHTXHQWO\
XSGDWHGWRLQFOXGH&&¶V SHUVRQDOHPDLODFFRXQWWKH+<:
$&&2817DVWKH³UHFRYHU\´DGGUHVV  ,QDGGLWLRQWKH
³5HFRYHU\606´QXPEHUDQG³6LJQLQ3KRQH1XPEHUV´IRUWKH
4$=$&&2817DUHWKHVDPHWHOHSKRQHQXPEHU  7KHODVWHLJKW
GLJLWVRIWKDWQXPEHUDUHDOVRFRQWDLQHGLQWKHVDPHRUGHULQWKH
HPDLODGGUHVVDVVRFLDWHGZLWKWKH4$=$&&2817  

F 2QRUDERXW-XQHGXULQJWKHFRQGXFWGHVFULEHGEHORZWKH
+<:$&&2817ZDVDFFHVVHGIURPDVSHFLILF,3DGGUHVVDW
DSSUR[LPDWHO\$0('7  7KH4$=$&&2817ZDV
DFFHVVHGIURPWKDWVDPH,3DGGUHVVDSSUR[LPDWHO\PLQXWHVODWHU
DQGWKHQDSSUR[LPDWHO\WZRKRXUVDIWHUWKDW

G 7KHRWKHUDFFRXQWFUHDWHGRQRUDERXW0D\ WKH³4$$
$&&2817´ ²FUHDWHGDSSUR[LPDWHO\PLQXWHVEHIRUHWKH4$=
$&&2817²DOVRZDVXVHGLQIXUWKHUDQFHRIWKHVFKHPH RQ-XQH
DQG-XQHDVGHVFULEHGEHORZ 

H 7KH4$=$&&2817ZDVDFFHVVHGIURP DSDUWLFXODU,3DGGUHVVDW
DSSUR[LPDWHO\$0DQG$0('7RQRUDERXW-XQH
DVLWZDVHQJDJHGLQFRQGXFWGLVFXVVHGEHORZ  $ IRXUWK
HPDLODFFRXQWDOVRLQYROYHGLQWKHFRQGXFWGLVFXVVHGEHORZ WKH
³+8+$&&2817´ ZDVDFFHVVHGIURPWKDWVDPH ,3DGGUHVVDW
DSSUR[LPDWHO\$0$0DQG$0('7WKDWVDPH
GD\ 

I 2QRUDERXWDQGEHWZHHQ0D\DQG0D\DQ
LQGLYLGXDOZKRZDVORJJHGLQWRWKH+<:$&&2817DFFHVVHG
PXOWLSOHFKDWWKUHDGVDERXWFXUUHQWDIIDLUVRQ+RQJ.RQJEDVHG
IRUXPZHEVLWHWKDWEDVHGRQRSHQVRXUFHUHFRUGVDQGP\WUDLQLQJ
DQGH[SHULHQFHLVNQRZQDVRQHRIWKHSODWIRUPVXVHGE\SURWHVWHUV
DJDLQVWWKH&&3 WKH³)RUXP:HEVLWH´   'XULQJWKDWVDPHWLPH
IUDPHDQLQGLYLGXDOXVLQJWKH+8+$&&2817DFFHVVHGGLIIHUHQW
FKDWWKUHDGVRQWKH)RUXP:HEVLWH  1RWDEO\DOWKRXJKDFFHVV
IURPWKHWZRDFFRXQWVRFFXUUHGFORVHLQWLPH²LQFOXGLQJDW
DSSUR[LPDWHO\ 30('7IRUWKH+8+$&&281730
('7IRUWKH+<:$&&2817DQG30('7DJDLQIRUWKH
+8+$&&2817²QRDFFHVVE\RQHDFFRXQWRFFXUUHGH[DFWO\WKH
VDPHWLPHDVDFFHVVE\WKHRWKHUDFFRXQW  %DVHGRQP\WUDLQLQJ
DQGH[SHULHQFHDQGWKHIRUHJRLQJ&&VZLWFKHGEDFNDQGIRUWK
EHWZHHQWKHWZRDFFRXQWVWRVLPXOWDQHRXVO\WUDFNWZRWKUHDGVRI


LQWHUHVWRUWRDSSHDUDVLIWZRGLIIHUHQWXVHUVZHUHSDUWLFLSDWLQJLQ
GLVFXVVLRQVDWWKHVDPHWLPH

 %DVHGXSRQLQIRUPDWLRQREWDLQHGIURPDQHPDLOVHUYLFHSURYLGHU RQ RU

DERXW-XQHEHWZHHQDSSUR[LPDWHO\$0DQG$0('7DQLQGLYLGXDO

ORJJHGLQWRWKH+8+$&&2817FRQGXFWHGLQWHUQHWVHDUFKHV IRU³>'LVVLGHQW@ >&RPSDQ\

@ PHHWLQJ´ IRUWKHQDPHVRIRWKHUSROLWLFDORSSRQHQWVRIWKH&&3ZKRKDGSURWHVWHGWKH

7LDQDQPHQ6TXDUHPDVVDFUHIRUDZHEWUDQVODWLRQIXQFWLRQDQGIRUWKHQDPHRIDQ

LQGLYLGXDOLQ*HUPDQ\ZKRZDVKHOSLQJWRRUJDQL]HWKHPHHWLQJZLWK 'LVVLGHQW

 %HWZHHQDSSUR[LPDWHO\ $0DQG$0 ('7 &&DQGRWKHUV

VHQWVL[HPDLOVWRWKH&RPSDQ\HPDLODGGUHVVHVWDEOLVKHGIRUUHSRUWLQJSRVVLEOHYLRODWLRQV

RIWKH726  7KRVHHPDLOVZULWWHQLQ(QJOLVKFRPSODLQHGWKDWWKH$VVLVWDQW¶VDFFRXQW

ZKLFKZDVWKHQKRVWLQJ'LVVLGHQW¶VPHHWLQJ ZDVLQFLWLQJUDFLDOFRQIOLFWVYLROHQFHDQG

UHVLVWDQFH

D $W$0DQG('7&&DQGRWKHUVXVHGWKH)25(,*1
$&&28176WRZULWHWKDWWKH $VVLVWDQW¶V DFFRXQW³LQFLWHGUDFLDO
FRQIOLFWVLQFLWHGYLROHQFHDQGUHVLVWDQFH´ 7KHVXEMHFWV DQG
FRQWHQWRIERWKHPDLOVZHUHLGHQWLFDO

E $W$0('7WKH4$$$&&2817ZURWHWKDWWKHKRVWDFFRXQW
IRUWKDWPHHWLQJ³LVFRQVWDQWO\LQFLWLQJUDFLDOFRQIOLFWVLQFLWLQJ
YLROHQFH´

F $W$0('7WKH+8+$&&2817 ZURWH ³,QHHGWRUHSRUW


WKDW>WKHXVHURIWKHKRVWDFFRXQW@LVDVXVSHFWHGRUJDQLFH>VLF@RID
PHHWLQJWKDWLQFLWHVUDFLDOGLVFULPLQDWLRQ´

G 7KHRWKHUWZRHPDLOVDW$0DQG$0('7UHSRUWHGWKDW
WKHKRVWDFFRXQW³LVLQFLWLQJUDFLDOFRQIOLFWVLQFLWLQJYLROHQFHDQG
UHVLVWDQFH´ DQG³LVFRQVWDQWO\LQFLWLQJUDFLDOFRQIOLFWVLQFLWLQJ
HYHU\RQHWRILJKWYLROHQWO\´ 7KRVHWZRHPDLOVZHUHVHQWIURPWKH
VDPHDFFRXQW WKH³:%$&&2817´ 


7KH:%$&&2817ZDVFUHDWHGRQRUDERXW-XQHXVLQJDQ,3DGGUHVVKRVWHGE\D

FRPSDQ\LQ6LQJDSRUH  ,3DGGUHVVHVKRVWHGE\WKDWFRPSDQ\ZHUHDOVRXVHGWRFUHDWHWKUHH

RWKHUHPDLODFFRXQWVRQRUDERXW-XQHHDFKRIZKLFKDFFRXQWVZHUHXVHGLQDQ

DSSDUHQWDWWHPSWWRWULJJHU&RPSDQ\726YLRODWLRQVRQ-XQHDVGLVFXVVHGEHORZ 

 1RWZLWKVWDQGLQJWKHFRPSODLQWHPDLOVIURPWKH4$$$&&2817DQG

WKH+8+$&&2817EDVHGXSRQLQWHUYLHZVZLWKPHHWLQJSDUWLFLSDQWVDQGP\UHYLHZRI

HOHFWURQLFGDWDJDWKHUHGLQWKHLQYHVWLJDWLRQQRXVHUDVVRFLDWHGZLWKHLWKHUDGGUHVVDWWHQGHG

WKH-XQH0HHWLQJRQ&RPSDQ\¶VSODWIRUP

 %HWZHHQDSSUR[LPDWHO\DQG$0('7-,1VHQW YLD HOHFWURQLF

PHVVDJHVWRRWKHU&RPSDQ\HPSOR\HHVORFDWHGLQWKH86WZRLPDJHVWKHILUVWRIZKLFK

LQFOXGHG'LVVLGHQW¶VQDPHWKHQDPHRI&RPSDQ\DQG³´²DUHIHUHQFHWRWKH

-XQH0HHWLQJ 7KHVHFRQGLPDJHFRQWDLQHGZKDWDSSHDUHGWREHDVFUHHQVKRWRID

&RPSDQ\PHHWLQJ  -,1ZURWH³PHHWLQJ´ DQGDVNHGWKH86EDVHGHPSOR\HHVWR

VXVSHQGWKHUHOHYDQWDFFRXQW  -,1 XUJHGRWKHU&RPSDQ\HPSOR\HHVORFDWHGLQWKH8QLWHG

6WDWHVWRVKXWGRZQWKHDFFRXQWKRVWLQJWKH-XQH0HHWLQJ²ZKLFKDWWKDWWLPHZDVWKH

$VVLVWDQW DQGQRW'LVVLGHQW²WHOOLQJWKHPWKDWWKHPHHWLQJZDVLQSURJUHVVDQGZDUQLQJ

WKHPWKDWWKH³F\EHUVSDFHSHRSOH´ ZHUHZDLWLQJIRU&RPSDQ\¶VUHVSRQVH ,QWKHFRQWH[W

RIWKHLQYHVWLJDWLRQDQGEDVHGRQWKHIRUHJRLQJ³F\EHUVSDFHSHRSOH´ UHIHUVWRRIILFHUV RIWKH

066DQGRUWKH036 $IWHUDUHTXHVWIURP&RPSDQ\HPSOR\HHVORFDWHGLQWKH8QLWHG

6WDWHV-,1SURYLGHGWKHPHHWLQJGHWDLOV DWDSSUR[LPDWHO\$0('7  1RWDEO\-,1

UHTXHVWHGVXVSHQVLRQRIWKH$VVLVWDQW¶VDFFRXQW EHIRUH&RPSDQ\KDGUHFHLYHGDQ\

FRPSODLQWVVSHFLILFWRWKH$VVLVWDQW ZKLFKILUVWDUULYHGDW$0('7  ,QWKH

FRPPXQLFDWLRQVD&RPSDQ\ HPSOR\HHUHSRUWHGWKDWKHVKHKDGWHUPLQDWHGWKHPHHWLQJDW


DSSUR[LPDWHO\$0('7DQGDOVRUHSRUWHGWKDWKHVKHKDGWHUPLQDWHGWKH$VVLVWDQW¶V

DFFRXQW DIWHUQRWLQJWKDWDFFRXQWZDVD³IUHH´ DFFRXQW UDWKHUWKDQDSDLGRQH

 7KRXJK -,1VXFFHVVIXOO\FDXVHGWHUPLQDWLRQRIWKHPHHWLQJE\FODLPLQJ

WKDW&RPSDQ\KDGUHFHLYHGFRPSODLQWVRISXUSRUWHG726YLRODWLRQV WKHFRPSODLQWV

HPDLOHGRQRUDERXW-XQHZHUHQRWVHQWWR-,1¶VHPDLODGGUHVVEXWUDWKHUWRDJHQHULF

86EDVHGHPDLOPDLOER[ YLRODWLRQ#>&RPSDQ\@XV DQGD&RPSDQ\FRPSODLQWGHVN

1RWDEO\WKHVDPHJURXSRIDFFRXQWVWKDWHPDLOHGFRPSODLQWVGLUHFWO\WR-,1¶VSHUVRQDO

&RPSDQ\HPDLODGGUHVVRQRUDERXW-XQH GLVFXVVHGEHORZ ZHUHVLPLODUO\

UHVSRQVLEOHIRUWKH-XQHFRPSODLQWVVHQWWRYLRODWLRQ#>&RPSDQ\@XV!! 

 $OWKRXJK -,1 EURXJKWWKH-XQH FRPSODLQWVWRWKHDWWHQWLRQRI

RWKHU&RPSDQ\HPSOR\HHV QRQHRIWKRVHFRPSODLQWVDSSHDUWRKDYHEHHQVHQWWRKLVZRUN

DFFRXQWDQGWKHLQYHVWLJDWLRQKDVQRWLGHQWLILHGDQ\ZD\KHZRXOGKDYHKDGUHDVRQWRNQRZ

RIWKHH[LVWHQFHRIWKHFRPSODLQWV LIKHZHUHQRWLQYROYHGLQ RUDZDUHRI WKHVFKHPHRI

PDQXIDFWXULQJSUHWH[WXDOFRPSODLQWVWRFDXVHWHUPLQDWLRQVRIPHHWLQJVDQGDFFRXQWV

 $IWHUOHDUQLQJWKDWWKH-XQH0HHWLQJKDGEHHQVKXWGRZQ-,1

WKDQNHGWKHRWKHUHPSOR\HHVDQGQRWHG DWDSSUR[LPDWHO\$0('7²QLQHPLQXWHVDIWHU

WKHFRPSODLQWVZHUHILUVWORGJHGDJDLQVWWKH$VVLVWDQW²³:HUHSRUWHGVHYHUDODEXVHIRUWKLV

PHHWLQJ  6RZHPD\UHIHUWRWKLVWKH\DJDLQVWWRV´ -,1DOVRZDUQHGWKH86EDVHG

&RPSDQ\HPSOR\HHVWKDWWKH³F\EHUSHRSOHKHUH´ EHOLHYHGWKDW&RPSDQ\VKRXOGWDNH

³DOOPHDVXUHVWRWHUPLQDWHLOOHJDODFWLYLWLHVE\RXUVHOYHV´ DV35&DXWKRULWLHVH[SHFWHG

&RPSDQ\WRHQVXUHWKHUHZHUHQRPRUHSROLWLFDODQGDQWL35&SXEOLFPHHWLQJV %DVHG

XSRQWKHLQYHVWLJDWLRQDQGP\WUDLQLQJDQGH[SHULHQFH³F\EHUSHRSOHKHUH´ UHIHUVWRRIILFHUV

RIWKH066DQGRUWKH036 2QHRI-,1¶VVXERUGLQDWHVODWHUVHQWDQHOHFWURQLFPHVVDJHWR


-,1DQGRWKHUHPSOR\HHVDVVLJQHGWR WKH&RPSDQ\ JURXS PRQLWRULQJ WKHXVHRI&RPSDQ\

¶VV\VWHPVIRU WKHH[SUHVVLRQRISROLWLFDOYLHZVXQDFFHSWDEOHWRWKH35&JRYHUQPHQW

DVNLQJLIWKH35&³LQWHUQHWSROLFH´ ZKLFKDVGLVFXVVHG LVDUHIHUHQFH WRWKH036ZHUH

VDWLVILHGZLWKWKHJURXS¶VPHDVXUHVRQ-XQH

7KH-XQH0HHWLQJ

 $VVHWIRUWKLQWKLVVHFWLRQRQRUDERXW-XQHLQGLYLGXDOV

DVVRFLDWHGZLWKDQRWKHUSDUWLFLSDQWLQWKHVWXGHQWSURWHVWVDW7LDQDQPHQ6TXDUH

³'LVVLGHQW´ RUJDQL]HGDPHHWLQJRQ&RPSDQ\¶VSODWIRUPWRFRPPHPRUDWHWKHHYHQW 

7KURXJKRXWWKHFRXUVHRIVHYHUDOKRXUVRQRUDERXW-XQHWKHPHHWLQJZDVVKXWGRZQ

WZLFHE\&RPSDQ\DQGWKHQUHVWDUWHGE\WKHRUJDQL]HUVLQDVHULHVRIGLIIHUHQWPHHWLQJ

URRPV RQ&RPSDQ\¶VSODWIRUP  7KH -XQHPHHWLQJ RUPHHWLQJVDUHFROOHFWLYHO\UHIHUUHG

WR DVWKH³-XQH0HHWLQJ´ 7KHPHHWLQJRU PHHWLQJVZHUHDOOKRVWHGE\LQGLYLGXDOVORFDWHG

LQWKH(DVWHUQ'LVWULFWRI1HZ<RUNZKRKDGJDWKHUHGLQDVLQJOHUHVLGHQFHIRUSXUSRVHVRI

SDUWLFLSDWLQJLQDQGKRVWLQJWKH-XQH0HHWLQJ

 %DVHGXSRQLQWHUYLHZVFRQGXFWHGGXULQJWKLVLQYHVWLJDWLRQWKHOHDG

RUJDQL]HURI'LVVLGHQW¶VPHHWLQJ ³2UJDQL]HU´ ZDVKLPKHUVHOIDSURWHVWHUGXULQJWKH

7LDQDQPHQ6TXDUHPDVVDFUH  2QRUDERXW0D\2UJDQL]HUXSJUDGHGKLVKHU

SDLG&RPSDQ\DFFRXQWIRUDQDGGLWLRQDOIHHIRUHQKDQFHGIXQFWLRQDOLW\WRDFFRPPRGDWHD

UHTXHVWE\DSURPLQHQWQRQJRYHUQPHQWDORUJDQL]DWLRQWRVLPXOWDQHRXVO\EURDGFDVWWKH-XQH

0HHWLQJ  %DVHGXSRQLQWHUYLHZVFRQGXFWHGGXULQJWKLVLQYHVWLJDWLRQ2UJDQL]HUZDVQRW

DZDUHRI&RPSDQ\¶VDFWLRQVWRVKXWGRZQWKH-XQH0HHWLQJ DQG ZRXOGQRWKDYHKRVWHG

WKH-XQH0HHWLQJRQ&RPSDQ\¶VSODWIRUPKDGKHVKHEHHQDZDUHRIWKRVHDFWLRQV


 ,QDGGLWLRQWKH-XQH0HHWLQJZDVSXEOLFO\DGYHUWLVHGDQGRUJDQL]HG

WRRFFXURQWKH&RPSDQ\SODWIRUPVSHFLILFDOO\WRHQFRXUDJHSDUWLFLSDWLRQE\35&

LQGLYLGXDOV  0RUHRYHU EDVHGXSRQLQWHUYLHZVFRQGXFWHGGXULQJWKLVLQYHVWLJDWLRQ

RUJDQL]HUVRIWKHPHHWLQJFUHDWHGDOLVWRIGHVLJQDWHGVSHDNHUVDQGVHWWKHPHHWLQJWRVHWWLQJV

WKDWZRXOGSUHYHQWQRQGHVLJQDWHGVSHDNHUVIURPGLVUXSWLQJWKHPHHWLQJZLWKYHUEDO

RXWEXUVWV²DFRPPRQZD\35&DXWKRULWLHVGLVUXSWHG GLVVLGHQWSROLWLFDOVSHHFKGXULQJSDVW

FRPPHPRUDWLRQVRIWKH7LDQDQPHQ6TXDUHPDVVDFUH 2UJDQL]HUVDOVRLQVWLWXWHGVHWWLQJV

ZLWKLQWKH&RPSDQ\SODWIRUPWRVFUHHQRXWSRWHQWLDOO\VXVSLFLRXVXVHUQDPHVWKDWFRXOGEH

35&JRYHUQPHQWUHSUHVHQWDWLYHVVHHNLQJWRLQILOWUDWHWKHPHHWLQJ

 $VGHVFULEHGEHORZ&&XVHGDWOHDVWWKUHHHPDLODFFRXQWV LQDQ

HIIRUWWRGLVUXSWWKH-XQH0HHWLQJ  (DFKRIWKRVHDFFRXQWVHPDLOHG -,1¶V ZRUN DGGUHVVWR

UHSRUWSXUSRUWHGYLRODWLRQVRI&RPSDQ\¶V726UHODWHGWRWKH-XQH0HHWLQJ  1RWDEO\

-,1¶V ZRUNHPDLODGGUHVVLVQRWOLVWHGE\&RPSDQ\ LQDQ\SXEOLFO\DYDLODEOHZHEVLWHDVDQ

HPDLODGGUHVVWRZKLFKWRGLUHFWFRQFHUQVDERXW726YLRODWLRQV EXW-,1¶VHPDLOZDV

SURYLGHGDVDSULPDU\FRQWDFWWRWKH35&JRYHUQPHQWDVSDUWRI&RPSDQ\¶VZULWWHQ

³UHFWLILFDWLRQ´ SURSRVDOV  ,QGHHGDVGLVFXVVHGDERYH&RPSDQ\KDVHVWDEOLVKHGDVSHFLILF

DQGZHOOSXEOLFL]HGHPDLODFFRXQWIRUUHSRUWLQJVXFKFRQFHUQV $GGLWLRQDOO\EDVHGRQWKH

LQYHVWLJDWLRQWRGDWH-,1GRHVQRWDSSHDUWRKDYHKDGDQ\RWKHUGLUHFWFRPPXQLFDWLRQZLWK

WKHDFFRXQWVXVHGWRVHQGWKHIDOVHUHSRUWV  $FFRUGLQJO\ LWDSSHDUVWKDW&&DQGRWKHU

SRVVLEOHFRFRQVSLUDWRUVREWDLQHG-,1¶VHPDLODGGUHVVGLUHFWO\IURPWKHUHFWLILFDWLRQUHSRUW

IURPRWKHU35&JRYHUQPHQWRIILFLDO V FRPPXQLFDWLQJZLWK-,1RQ&RPSDQ\¶V

UHFWLILFDWLRQSODQVRUIURP-,1KLPVHOIWKURXJKVRPHRWKHUPHDQVRIFRPPXQLFDWLRQ


 2QRUDERXW-XQHDWDSSUR[LPDWHO\$0('7-,1 QRWLILHG

86EDVHG&RPSDQ\ HPSOR\HHVRI³>D@QRWKHUVHULRXV-XQHWK PHHWLQJE\>'LVVLGHQW@

7RGD\ ´ QRWHGWKDW'LVVLGHQW ³LVDOHDGRIVXFKLOOHJDOSROLWLFDODFWLYLWLHV´ DQGDVNHG

³&RXOGZHGRVRPHWKLQJWRSUHYHQWVXEVHTXHQWKXJHLQIOXHQFHRQXV"  (J7HUPLQDWHRU

WHPSO\>WHPSRUDULO\@VXVSHQGWKDWDFFRXQWIRUKRXUVXQWLODV726YLRODWLRQ"´

 $WDSSUR[LPDWHO\$0('7DIWHU&RPSDQ\KDGQRW\HWVKXW

GRZQWKHPHHWLQJ-,1 VXJJHVWHG³3XWWKHPLQWR48$5>TXDUDQWLQH@LVDQRWKHUDSSURDFKDV

LI>&RPSDQ\@ LVKDYLQJVHUYHULVVXHV$ERXWKRXUVODWHU\RXFRXOGUHFRYHUWKDW

,W¶VDSXEOLFPHHWLQJVRZHFRXOGMRLQDQGUHSRUWWR>&RPSDQ\@XVDVDEXVHPHHWLQJWKHQ

\RX86PD\KDYHHYLGHQFHWRVXVSHQGLW´ 1RWDEO\PHWDGDWDUHJDUGLQJWKHPHHWLQJ

VXJJHVWVWKDWRQHRI-,1¶VDVVRFLDWHVDW&RPSDQ\ORFDWHGLQWKH35&DWWHQGHGDOO

LWHUDWLRQVRIWKH-XQH0HHWLQJ $IWHUUHFHLYLQJ-,1¶VUHTXHVW(PSOR\HH WHUPLQDWHGWKH

DFFRXQWXVHGWRKRVW'LVVLGHQW¶VPHHWLQJ EHIRUHWKHDFWXDOFRPPHPRUDWLRQRIWKH

7LDQDQPHQ6TXDUHPDVVDFUH KDGEHJXQDVZHOODVWKHKRVWDFFRXQW

 %DVHGXSRQLQWHUYLHZVFRQGXFWHGLQWKLVLQYHVWLJDWLRQDQGP\UHYLHZ

RIHOHFWURQLFGDWDJDWKHUHGGXULQJWKHLQYHVWLJDWLRQDIWHU WKDWPHHWLQJZDVWHUPLQDWHG DQGWKH

DFFRXQWFDQFHOOHG WKH-XQH0HHWLQJRUJDQL]HUVXSJUDGHGDIUHH&RPSDQ\DFFRXQWWRD

SDLGRQHZLWKGLIIHUHQWVXEVFULEHULQIRUPDWLRQLQRUGHUWRVKLHOGWKHDFFRXQWIURPVFUXWLQ\E\

WKH35&JRYHUQPHQWDQGXVHGWKHDFFRXQWWRLQLWLDWHDQHZPHHWLQJLQDGLIIHUHQWURRPRQ

&RPSDQ\¶VSODWIRUP 

 $JDLQEDVHGXSRQLQIRUPDWLRQSURYLGHGE\HPDLOVHUYLFHSURYLGHUV

&&¶VVHDUFKDFWLYLW\VXJJHVWVWKDWPHPEHUVRIWKHFRQVSLUDF\XVHGIDOVHFRPSODLQWV WR

WHUPLQDWH'LVVLGHQW¶VVHFRQGPHHWLQJ RQ-XQH 7KDWLQIRUPDWLRQDOVRVKRZVWKDW




VWDUWLQJDWDSSUR[LPDWHO\$0('7&& FRQGXFWHGDQ LQWHUQHWVHDUFKIRU&RPSDQ\

YLGHRFRQIHUHQFLQJIROORZHGDSSUR[LPDWHO\WZRPLQXWHVODWHUZLWKVHDUFKHVLQ&KLQHVHIRU

³QDNHGJLUO´ DQG³SRUQRJUDSK\´ LQDQLPDJHGDWDEDVHDQGZRUGVHDUFKHVIRU³QDNHGJLUO´

³QDNHGJLUOLPDJHV´ DQG³,6>,6,6@SLFWXUHV´ 7KHUHZHUHDOVRVHDUFKHVIRU³YLROHQFH

SLFWXUH´ DQG³JDPEOLQJZHEVLWH´ %DVHGXSRQP\WUDLQLQJDQGH[SHULHQFH³,6´ LVD

UHIHUHQFH WRWKH,VODPLF6WDWHRI,UDTDQGDO6KDP RU³,6,6´ DIRUHLJQWHUURULVWRUJDQL]DWLRQ

,PDJHVHDUFKHVZHUHDOVRFRQGXFWHGGXULQJWKHVDPHWLPHSHULRGIRU³QDNHGJLUO´ DQG

³SRUQRJUDSK\´

 7KH+8+$&&2817WKH4$$$&&2817DQGWKH4$=

$&&2817DOODVVRFLDWHGZLWK&&DVGLVFXVVHGDERYHWKHQHPDLOHG&RPSDQ\DERXW

SXUSRUWHGYLRODWLRQVRI&RPSDQ\¶V726UHODWHGWRWKHVHFRQG-XQH0HHWLQJ

D $WDSSUR[LPDWHO\$0('7WKH+8+$&&2817VHQWDQ
HPDLOWR-,1¶VZRUNHPDLOZLWKWKHVXEMHFW³6RPHRQHLQWKLVJURXS
LQFLWHVWHUURULVPDQGYLROHQFH´ 7KHHPDLOVWDWHGWKDWVRPHRQHLQ
WKH-XQH0HHWLQJZDVLQFLWLQJWHUURULVPDQGYLROHQFH  7KHHPDLO
FRQWDLQHGDQLPDJHWKDWDSSHDUVIURPP\UHYLHZWREHDVFUHHQVKRW
RIXVHUSURILOHVIURPWKUHHPHHWLQJVVWDFNHGRQWRSRIHDFKRWKHU 
7KHVFUHHQVKRWVLQFOXGHG  D&RPSDQ\SURILOHZLWKWKHQDPH
³.DWH6WHYH´ DQGDSLFWXUHLQFOXGLQJWKHPRWWRDQGLFRQRJUDSK\RI
WKH%DVTXHVHSDUDWLVW JURXS(XVNDGL7D$VNDWDVXQD ³(7$´    
D&RPSDQ\SURILOHZLWKWKHQDPH³2\VWHLQ$OPH´ DQGDSLFWXUH
RIZKDWDSSHDUHGWREHDJURXSRI,VODPLFFOHULFVVWDQGLQJLQIURQW
RIGDUNO\FODGDQGPDVNHGPHQKROGLQJZHDSRQVDQG  D
&RPSDQ\SURILOHZLWKWKHQDPH³)UHHPDQ´ DQGSLFWXUHRID
PDVNHGSHUVRQKROGLQJDIODJUHVHPEOLQJWKDWRIWKH,VODPLF6WDWH
WHUURULVWJURXS

E $WDSSUR[LPDWHO\$0('7WKH+8+$&&2817VHQWWZR
HPDLOVWR-,1ZLWKWKHVDPHVXEMHFW³6RPHRQHLQWKLVJURXSLQFLWHV


%DVHGXSRQSXEOLFO\DYDLODEOHLQIRUPDWLRQ (7$KDVDKLVWRU\RIFRQGXFWLQJ
DVVDVVLQDWLRQVDQGNLGQDSSLQJVWKURXJKRXW6SDLQVLQFHWKDW KDYH UHVXOWHGLQWKHGHDWKV
RIVHYHUDOKXQGUHGSHRSOH


WHUURULVPDQGYLROHQFH´ 7KHILUVWHPDLODOVRLQFOXGHGWKHPHHWLQJ
QXPEHUIRUWKH-XQH0HHWLQJ  7KHVHFRQGHPDLODOVRFRQWDLQHG
ZKDWDSSHDUVIURPP\UHYLHZWREHWKHVDPHLPDJHVGHSLFWHGLQWKH
HPDLOVHQWDW$0('7

F %HWZHHQDSSUR[LPDWHO\$0DQG$0('7DSDUWLFLSDQW
ZLWKWKHSURILOHQDPH³.DWH6WHYH´ XVLQJWKH4$$$&&2817
HQWHUHGWKH-XQH0HHWLQJ  7KHSURILOHSLFWXUHIRU³.DWH6WHYH´
ZDVWKHSLFWXUHDVVRFLDWHGZLWK(7$GLVFXVVHGDERYH

G $WDSSUR[LPDWHO\$0('7WKH4$$$&&2817HPDLOHGWKH
&RPSDQ\HPDLODGGUHVVIRUUHSRUWLQJ726YLRODWLRQV  7KH
VXEMHFWRIWKHHPDLOZDV³>'LVVLGHQW HPDLODFFRXQW@WKLVDFFRXQW
LVFRQVWDQWO\LQFLWLQJUDFLDOFRQIOLFWVDQ>VLF@YLROHQFHDQG
SRUQRJUDSK\´ 6LJQLILFDQWO\DOWKRXJKWKLVHPDLOUHIHUUHGWR
'LVVLGHQW¶VHPDLODFFRXQW'LVVLGHQW GLGQRWDWWHQGWKH-XQH
0HHWLQJLQVWHDG'LVVLGHQW KRVWHGWKH-XQH0HHWLQJ

H $WDSSUR[LPDWHO\$0('7WKH4$$$&&2817HPDLOHG
-,1ZLWKDVXEMHFWWKDWLGHQWLILHG'LVVLGHQW¶VHPDLODFFRXQWDQG
WKHVHQWHQFH³7KLVDFFRXQWLVFRQVWDQWO\LQFLWLQJUDFLDOFRQIOLFWVDQG
YLROHQFH´ 7KHHPDLOFRQWDLQHGRQO\DQLPDJHRIZKDWDSSHDUV
IURPP\UHYLHZWREHDVFUHHQVKRWRIYDULRXVXVHUVLQD&RPSDQ\
PHHWLQJ  7KHLPDJHLQFOXGHGXVHUVLGHQWLILHGDV³2\VWHLQ$OPH´
ZLWKDSURILOHSLFWXUHRIWZRQDNHGZRPHQ³)UHHPDQ´ ZLWKD
SURILOHSLFWXUHLQFOXGLQJDQ,VODPLF6WDWHIODJDQGDQRWKHU
LQGLYLGXDOZLWKDSURILOHSLFWXUHRIDQ,VODPLF6WDWHIODJ  $JDLQ
DOWKRXJKWKHHPDLOUHIHUUHGWR'LVVLGHQW 'LVVLGHQW GLGQRW
DWWHQGWKH-XQH0HHWLQJ

I %HWZHHQDSSUR[LPDWHO\$0DQG$0('7D&RPSDQ\
XVHUZKRVHDFFRXQWZDVDVVRFLDWHGZLWKWKH4$=$&&2817
HQWHUHGWKH-XQH0HHWLQJ 

J $WDSSUR[LPDWHO\$0('7WKH4$=$&&2817HPDLOHG-,1
ZLWKWKHVXEMHFW³UHSRUW´ 7KHHPDLOLQGLFDWHGWKDWDQXQLGHQWLILHG
DFFRXQW³IUHTXHQWO\LQFLWHVYLROHQWDQGWHUURULVWFRQWHQW´ 7KH
HPDLODOVRSURYLGHGZKDWDSSHDUVIURPP\UHYLHZWREHD
VFUHHQVKRWRID&RPSDQ\PHHWLQJZLWKSURILOHVWKDWLQFOXGHG
³2\VWHLQ$OPH´ ZLWKDSLFWXUHRIDFDUGGHDOHUDSSDUHQWO\WR
VXJJHVWVRPHIRUPRIJDPEOLQJDQGVHYHUDOXVHUVLQFOXGLQJ³)UHH
PDQ´ ZLWKLPDJHVGHSLFWLQJWKH,VODPLF6WDWHIODJ 

K $SSUR[LPDWHO\IRXUPLQXWHVODWHUWKH4$= $&&2817VHQWD
VHFRQGHPDLOWR-,1  7KHVXEMHFWRIWKHHPDLOZDV³WKHDFFRXQW


IUHTXHQWLQFLWHVYLROHQWDQGWHUURULVWFRQWHQW´ 7KHHPDLOLQFOXGHG
WKHVDPHWH[WDVWKHHDUOLHUHPDLODQGZKDWDSSHDUVIURPP\UHYLHZ
WREHDVLPLODUVFUHHQVKRWRISURILOHVLQD&RPSDQ\PHHWLQJ

L $VGLVFXVVHGDERYHLQSDUDJUDSKGXULQJWKH-XQH0HHWLQJWKH
4$=$&&2817DQGWKH+<:$&&2817ZHUHDFFHVVHGIURP
WKHVDPHVSHFLILF,3DGGUHVV  'XULQJWKDWVDPHWLPHSHULRGWKH
&RPSDQ\SURILOHDVVRFLDWHGZLWKWKH4$=$&&2817ZDV
DFFHVVHGIURPWKDWVDPHVSHFLILF,3DGGUHVV  ,QDGGLWLRQGXULQJ
WKDWVDPHWLPHSHULRGWKH4$=$&&2817DQGWKH+8+
$&&2817ZHUHDFFHVVHGIURPDQRWKHUVSHFLILF,3DGGUHVV 
$QRWKHU&RPSDQ\DFFRXQWSDUWLFLSDWLQJLQWKH-XQH0HHWLQJ
ZDVDOVRDFFHVVHGIURPWKDWVDPHVSHFLILF,3DGGUHVV

 %DVHGXSRQLQIRUPDWLRQIURPHPDLOVHUYLFHSURYLGHUVDQGWKH

LQIRUPDWLRQVHWIRUWKKHUHLQVRPHRIWKHXVHUDFFRXQWVUHSRUWHGLQWKHDIRUHPHQWLRQHGHPDLO

FRPSODLQWVZHUHDVVRFLDWHGZLWKHPDLODFFRXQWVFUHDWHGE\PHPEHUVRIWKHFRQVSLUDF\ 

0RVWQRWDEOHWKHSURILOHSLFWXUHWKDWZDVUHSRUWHGDVLQFLWLQJYLROHQFHE\WKH+8+

$&&2817ZDVDVVRFLDWHGZLWKWKH4$$$&&2817  ,QRWKHUZRUGVEDVHGXSRQP\

WUDLQLQJDQGH[SHULHQFHPHPEHUVRIWKHFRQVSLUDF\LQWURGXFHGDWOHDVWRQHLPDJHWKDW

SXUSRUWHGO\LQFLWHGYLROHQFHDQGWKHQUHSRUWHGWKHLPDJHWKH\LQWURGXFHG  0RUHRYHUWKH

DFFRXQWIRUWKHXVHUSURILOH³)UHHPDQ´ZDVDVVRFLDWHGZLWKDQHPDLODGGUHVV WKH³)5((

0$1$&&2817´ FUHDWHGRQRUDERXW-XQHIURPDQ,3DGGUHVVUHVROYLQJWR

6LQJDSRUHDQGKRVWHGE\WKHVDPHFRPSDQ\WKDWKRVWHG,3DGGUHVVHVXVHGRQRUDERXW-XQH

WRFUHDWHRWKHUHPDLODGGUHVVHVXVHGE\WKHFRQVSLUDF\ ,QDGGLWLRQEDVHGRQ

LQIRUPDWLRQIURPHPDLOVHUYLFHSURYLGHUVDQGPHWDGDWDIURP&RPSDQ\WKH)5((0$1

$&&2817DQGWZRRWKHUDFFRXQWV SDUWLFLSDWHGLQWKH-XQH0HHWLQJIURPWKHVDPH

HOHFWURQLFGHYLFHWKH&RPSDQ\SURILOHVDVVRFLDWHGZLWKWKRVHWZRRWKHUDFFRXQWVHDFK

VKRZHGDSURILOHSLFWXUHGHSLFWLQJDQ,6,6UHODWHGLPDJH


 ,QWRWDOEDVHGXSRQP\UHYLHZRIHOHFWURQLFFRPPXQLFDWLRQVREWDLQHG

GXULQJWKHLQYHVWLJDWLRQHPDLOFRPSODLQWV UHODWHGWRWKH-XQH0HHWLQJDQGWKH-XQH

0HHWLQJZHUHVHQWWR-,1RQRUDERXW-XQHEHWZHHQ$0DQG$0('7²

DSHULRGRIDSSUR[LPDWHO\PLQXWHV $VVHWIRUWKDERYH-,1LVQRWLGHQWLILHGSXEOLFO\E\

&RPSDQ\DVDQLQGLYLGXDOWRZKRPWRHPDLOFRPSODLQWVDERXWPHHWLQJVDQGKLVHPDLO

DGGUHVVLVQRWSXEOLFO\GLVSOD\HGDOWKRXJKLWZDVSURYLGHGWR35&DXWKRULWLHV  7KHHPDLOV

WR-,1DSSHDUHGWR EHIURPWHQGLIIHUHQWFRPSODLQDQWVEXWEDVHGRQWKHLQIRUPDWLRQVHWIRUWK

KHUHLQ DQGP\WUDLQLQJDQGH[SHULHQFH ,EHOLHYH WKDWWKH\UHSUHVHQWHGFRRUGLQDWHGHIIRUWVE\

35&EDVHGFRFRQVSLUDWRUVLQFOXGLQJ&& ,QGHHGWKHFRPSODLQWVRIWHQXVHGYHUEDWLP

ODQJXDJHLQFOXGLQJLGHQWLFDOVSHOOLQJDQGJUDPPDWLFDOPLVWDNHVDQGUHIHUHQFLQJWKHGDWH

-XQHUDWKHUWKDQ-XQH WRFRPSODLQDERXWSXUSRUWHGSDUWLFLSDQWVLQWKH

PHHWLQJVZKRZHUHSURPRWLQJYLROHQFHSRUQRJUDSK\RU,VODPLFWHUURULVPDWWDFKHGLGHQWLFDO

VFUHHQVKRWVRIXVHUSURILOHVZLWK,6,6IODJVDQGXVHGLGHQWLFDO,3DGGUHVVHV  ,QDGGLWLRQ

PDQ\RIWKHFRPSODLQWVGLGQRWUHIHUWRDVSHFLILFPHHWLQJRQWKH&RPSDQ\SODWIRUPRU

LQFOXGHGVFUHHQVKRWVRIPHHWLQJVWKDWKDGDOUHDG\ODSVHGPDQ\RIWKHVFUHHQVKRWVKDGWLPH

VWDPSVUHIOHFWLQJ35&WLPH]RQHV 0RUHRYHUDOWKRXJKWKH-XQH0HHWLQJZDVFRQGXFWHG

LQ0DQGDULQDOORIWKHFRPSODLQWVZHUHPDGHLQ(QJOLVK  %DVHGXSRQP\UHYLHZRI

SXEOLFO\DYDLODEOHLQIRUPDWLRQDQGWKHIRUHJRLQJ,DVVHVVWKDWWKHVHFRPSODLQWVZHUH

VXEPLWWHGLQ(QJOLVKEHFDXVHWKHLQGLYLGXDOVVHQGLQJWKHPNQHZWKDW&RPSDQ\LVEDVHGLQ

WKH8QLWHG6WDWHV DQGWKDWWKHOLNHO\GHFLVLRQPDNHUVIRUWHUPLQDWLQJDQ\PHHWLQJVZRXOGEH

(QJOLVKVSHDNHUV

 $WDSSUR[LPDWHO\$0('7 RQRUDERXW-XQH -,1VHQWDQ

PHVVDJHWR&RPSDQ\ HPSOR\HHV PRQLWRULQJFRQWHQWWKDWLQFOXGHGWKHH[SUHVVLRQRI




SROLWLFDOYLHZVXQDFFHSWDEOHWRWKH35&JRYHUQPHQW LQZKLFKPHVVDJH-,1WROGKLV

VXERUGLQDWHVWKDW³WKHUHDUHVRPDQ\ RIRZQSHRSOHIULHQGOLHV´ $IWHURQHRI-,1¶V

VXERUGLQDWHVDVNHGLIWKH³IULHQGOLHV´ ZHUHIURP&RPSDQ\-,1UHSOLHGWKDW036¶V³1HW

6HFXULW\´ ZDV³ZRUNLQJRYHUWLPH´

 $WDSSUR[LPDWHO\$0('7 RQ RUDERXW-XQHVKRUWO\

DIWHUVRPHRIWKHDIRUHPHQWLRQHGHPDLOFRPSODLQWVKDGEHHQVHQW-,1 ZURWHWRYDULRXV

&RPSDQ\HPSOR\HHV³:HJHWUHSRUWDERXW6RPHRQHLQVLGHWKLVJURXSLQFLWHVWHUURULVP

DQGYLROHQFH7KH\DOVRVHQGVXFKDEXVHLQIRWR>&RPSDQ\@XVVLWH,WKLQN>D&RPSDQ\

HPSOR\HH¶V@WRVWHDPUHFHLYHGWKDWWRR´ -,1DGGHG ³WKHUH¶UH>VLF@,6>,VODPLF6WDWH@IODJ

RQVRPHRQH¶VSKRWR  &DQ\RXVXVSHQGWKDWDVWHUURULVPDQGYLROHQFHPHHWLQJV"´

 $IWHU-,1VHQWDQHOHFWURQLFPHVVDJHZLWKDVFUHHQVKRWRIDXVHUSURILOH

ZLWKWKH,VODPLF6WDWHIODJ --
VHH )LJXUH (PSOR\HHDJUHHGWRWHUPLQDWHWKHPHHWLQJDV

ZHOODVWKHSDLGDFFRXQWXVHGWRKRVWWKH'LVVLGHQW¶VPHHWLQJ  1RWDEO\ EDVHGXSRQP\

IDPLOLDULW\ZLWK&RPSDQ\¶VSODWIRUP XVHUVRI&RPSDQ\¶VSODWIRUPDSSHDUWREHDEOHWR

FKDQJHWKHLUSURILOHSLFWXUHVE\VHOHFWLQJIURPLPDJHVLQWKHSKRWRJDOOHULHV RIWKHXVHUV¶

GHYLFHVLWLVQRWFOHDULI&RPSDQ\DOORZVXVHUVWRVWRUHLPDJHVLQWKHLU&RPSDQ\

SURILOHV  -,1WKDQNHG(PSOR\HHDQGRWKHUVIRUWKHLULPPHGLDWHVXSSRUW 7KHLPDJH

SURYLGHGE\-,1 DSSHDUVIURPP\UHYLHZWREHLGHQWLFDOWRLPDJHVDWWDFKHGWRWZRHPDLOV-,1

UHFHLYHGDW$0DQG$0('7IURPWZRGLIIHUHQWHPDLODGGUHVVHV 


)LJXUH
JuhPn .J n 06/04 •o 14 AM

fl
........
~
[,] ., ,.
r·:
.... ,..
1)111.tJ!ol!L

a ·-
8 ,_.....,. """:
,,•/\
...,...,,,
-· .......
- @

.....,.
-- ,.,_

 ,QDQ H[FKDQJHRIHOHFWURQLFPHVVDJHVDPRQJ-,1DQGRWKHULQGLYLGXDOV

ZKRZHUHWKH&RPSDQ\ HPSOR\HHV PRQLWRULQJFRQWHQWWKDWLQFOXGHGWKHH[SUHVVLRQRI

SROLWLFDOYLHZVXQDFFHSWDEOHWRWKH35&JRYHUQPHQW RQHRI-,1¶VVXERUGLQDWHVDVNHG-,1DW

DSSUR[LPDWHO\$0('7 ³:KDWWKHKHFN,6,6"´ 7KHVXERUGLQDWHFRQWLQXHG ³,DOVR

FKDQJHGP\SURILOHSLFWXUHMRLQHGLQWRWDNHDORRN´ +HWKHQDVNHG-,1³6RKRZZDVLW

WKH,QWHUQHW3ROLFHZDVVDWLVILHGZLWKRXUPHDVXUHV\HVWHUGD\"´ 1RWDEO\RQHRIWKH

FRPSODLQWV VHQWWR&RPSDQ\ VHH UHGDFWHG)LJXUHEHORZ LQFOXGHGDVFUHHQFDSWXUHRID

XVHUSURILOHIURP WKHPHHWLQJ FRQWDLQLQJWKHLPDJHRIDQ ,6,6IODJ 7KDW VFUHHQFDSWXUH

FRQWDLQHGD&RPSDQ\LGHQWLILFDWLRQLQWHQWLRQDOO\PDUNHGRXWZLWKZKDWDSSHDUHGWREHD

FRPSXWHUJHQHUDWHGEODFNPDUNHU %DVHGXSRQP\WUDLQLQJDQGH[SHULHQFHWKHEODFNLQJ

RXWRILQIRUPDWLRQZDVGHVLJQHGWRGLVJXLVHWKHVHQGHU¶VLGHQWLW\LQRUGHUWRFRQFHDOWKDWWKH

VHQGHURIWKHFRPSODLQWZDVWKHXVHUGLVSOD\LQJWKH,6,6IODJRUDQRWKHULQGLYLGXDOZRUNLQJ

ZLWKWKHFRPSODLQDQW


)LJXUH

 $VQRWHGDERYHWKH-XQH0HHWLQJZDVFRQILJXUHGVRWKDWRQO\FHUWDLQ

LQGLYLGXDOVFKRVHQWRVSHDNE\WKHPHHWLQJKRVWFRXOGVSHDNGXULQJWKHPHHWLQJ 

0RUHRYHUSDUWLFLSDQWVLQWKH-XQH0HHWLQJKDYHVWDWHGWR)%,DJHQWVWKDWWKHPHHWLQJVGLG

QRWLQFOXGHGLVFXVVLRQVRIFKLOGDEXVHRUH[SORLWDWLRQWHUURULVPUDFLVPRULQFLWHPHQWVWR

YLROHQFH 7KH)%,DOVRKDVUHYLHZHGDYLGHRRIWKHPHHWLQJDQGREVHUYHGWKDWWKHRQO\

YLROHQFHGLVFXVVHGLQWKHPHHWLQJZDVWKHYLROHQFHLQIOLFWHGE\WKH3/$RQSURWHVWHUV DW

7LDQDQPHQ6TXDUHLQ

 %DVHGXSRQLQWHUYLHZVFRQGXFWHGDVSDUWRIWKLVLQYHVWLJDWLRQWKH

WHUPLQDWLRQRIWKH-XQH0HHWLQJKDVFDXVHGVXEVWDQWLDOHPRWLRQDOGLVWUHVVWRSDUWLFLSDQWVLQ

WKHPHHWLQJ  )RUH[DPSOHRQHRI WKHVSHDNHUVDWWKH-XQH0HHWLQJ ³6SHDNHU´ 

UHSRUWHGVHQGLQJDPHVVDJHRQRUDERXW-XQHYLD:H&KDWWRKLVKHUIDWKHU¶V:H&KDW

DFFRXQWLQGLFDWLQJWKDW6SHDNHU ZDVJRLQJWRSDUWLFLSDWHLQDQHYHQWDERXWWKH7LDQDQPHQ


6TXDUHPDVVDFUH  $IWHUVHQGLQJWKHPHVVDJH6SHDNHU UHFHLYHGDPHVVDJHRQKLVKHU

:H&KDWDFFRXQWWKDW6SHDNHU¶VDFFRXQWKDGYLRODWHGWKHXVHUDJUHHPHQWDQGZDVVKXW

GRZQ  $GGLWLRQDOO\DSSUR[LPDWHO\WZRZHHNVDIWHUWKH-XQH0HHWLQJWKHORFDO036

FDOOHGWKHPRELOHWHOHSKRQHRI6SHDNHU¶VIDWKHULQWKH35&  'XULQJWKHFDOOWKH036

LQVWUXFWHG6SHDNHU¶VIDWKHUWRWHOO6SHDNHU WRVWRSVSHDNLQJRXWDJDLQVWWKH&&3DQGWR

VXSSRUWVRFLDOLVPDQGWKH&&3  7KH036DOVRLQTXLUHGDERXW6SHDNHU¶VOLIHLQWKH86

DQGDVNHGZKHQ 6SHDNHU LQWHQGHGWRUHWXUQWRWKH35&

 $VGLVFXVVHGDERYHRWKHU35&JRYHUQPHQWDFWLRQVUHODWHGWRWKHSUR

GHPRFUDF\GLVFXVVLRQVRQWKH&RPSDQ\SODWIRUPLQ0D\DQG-XQHDOVRFDXVHG

VLJQLILFDQWHPRWLRQDOGLVWUHVVWRRWKHUSDUWLFLSDQWVLQFOXGLQJWRWKH$XVWUDOLDQSDUWLFLSDQW

7KH&RQVSLUDF\¶V8VHRIWKH1DPHVRI5HDO,QGLYLGXDOV

 $VGLVFXVVHGDERYHPHPEHUVRIWKHFRQVSLUDF\XVHGWKHQDPHVRIUHDO

LQGLYLGXDOVWRIXUWKHUWKHLUVFKHPH 7KLVDLGHGWKHLUDELOLW\WRLQILOWUDWHWKH-XQH0HHWLQJ

DQGWKH-XQH0HHWLQJDVWKHRUJDQL]HUVRIWKHPHHWLQJVZHUHVFUHHQLQJIRUSRWHQWLDO&&3

UHSUHVHQWDWLYHVVHHNLQJWRFDXVHGLVUXSWLRQV

 ,QIRUPDWLRQSURYLGHGE\WKHHPDLOVHUYLFHSURYLGHUIRUWKH)5((0$1

$&&2817 DQG&RPSDQ\VXEVFULEHULQIRUPDWLRQVKRZVWKDWWKHDFFRXQWLVOLQNHGWRD

&RPSDQ\DFFRXQWXVHGE\WKHFRQVSLUDF\WRGLVSOD\LPDJHVDVVRFLDWHGZLWK,6,6 DQG

FRQWDLQVWKHQDPHRIDQLQGLYLGXDOZKRLVD VWXGHQWOHDGHUDQGSDUWLFLSDQWLQWKHVWXGHQW

SURWHVWVDW7LDQDQPHQ6TXDUH  7KDWLQGLYLGXDOKDVWROGWKHJRYHUQPHQWWKDWWKHHPDLO

DGGUHVVLVXQIDPLOLDUWRKLPKHUDQGWKDWKHVKHQHYHUXVHGWKHDFFRXQW %DVHGXSRQP\

IDPLOLDULW\ZLWK&RPSDQ\¶VSODWIRUPD&RPSDQ\HPSOR\HHORRNLQJDWLQIRUPDWLRQ


DVVRFLDWHGZLWKWKH&RPSDQ\DFFRXQWKRZHYHUZRXOGKDYHVHHQWKHQDPHRIWKHVWXGHQW

OHDGHULQWKDWHPDLODGGUHVVDVSDUWRIWKHLQIRUPDWLRQDERXWWKHDFFRXQW

 7KH&RPSDQ\DFFRXQWFUHDWHGLQWKHQDPHRI'LVVLGHQWDVVRFLDWHG

ZLWKDQHPDLODGGUHVVLQWKHQDPHRI'LVVLGHQWVLPLODUO\ZRXOGKDYHJLYHQWKHLPSUHVVLRQ

WKDWDQLQGLYLGXDONQRZQWREHFULWLFDORIWKH35&JRYHUQPHQWZDVSDUWLFLSDWLQJLQWKH-XQH

0HHWLQJ

 )LQDOO\WKH&RPSDQ\DFFRXQWDVVRFLDWHGZLWKWKHQDPH³2\VWHLQ

$OPH´ ZDVXVHGWRGLVSOD\YDULRXVLPDJHVDVVRFLDWHGZLWKWHUURULVPDQGSRUQRJUDSK\ 

%DVHGXSRQSXEOLFO\DYDLODEOHLQIRUPDWLRQ‘\VWHLQ$OPHLVD1RUZHJLDQZULWHUNQRZQIRU

WKHSXEOLFDWLRQRIWKHERRNWLWOHG³6LOHQFHG± &KLQD¶V*UHDW:DOORI&HQVRUVKLS´ DQGLV

DVVRFLDWHGZLWKDQHZVSXEOLFDWLRQ UHJDUGLQJ7LEHW $VDUHVXOWXSRQLQIRUPDWLRQDQG

EHOLHIPHPEHUVRIWKHFRQVSLUDF\XVHG$OPH¶VQDPHLQRUGHUWRJDLQHQWU\WRWKHPHHWLQJ²

EHFDXVHPHHWLQJRUJDQL]HUVZKRZHUH VFUHHQLQJSDUWLFLSDQWVZRXOGQRWKDYHUHMHFWHGWKHUHDO

$OPH²DQGWRJLYHWKHLPSUHVVLRQWKDW$OPHZDVSDUWLFLSDWLQJLQWKHPHHWLQJZKHQKHZDV

QRW

&RQWLQXHG(IIRUWVWR6KXW'RZQ0HHWLQJV

 %DVHGXSRQP\UHYLHZRIHOHFWURQLFFRPPXQLFDWLRQVEHWZHHQ-,1DQG

RWKHULQGLYLGXDOVZKRDUH&RPSDQ\HPSOR\HHVRQRUDERXW-XQH-,1 QRWLILHG

&RPSDQ\HPSOR\HHVLQWKH8QLWHG6WDWHVRIKLVUHFHLSWRIDPHVVDJHIURPWKH³&1

F\EHUVHFXULW\´²DVGLVFXVVHGDUHIHUHQFHWRRIILFHUVRIWKH066DQGRUWKH036²LQGLFDWLQJ

WKDWFRPPXQLFDWLRQVSODWIRUPVGLGQRWWDNHLQVWDQWDFWLRQRQLOOHJDOFRQWHQWLQWKH³-XQH

WK´ SHULRGDQGZHUHWKHUHDIWHUILQHGRUIRUFHGRIIOLQHE\35&DXWKRULWLHV  7KHUHDIWHU

(PSOR\HHWHUPLQDWHG WZRRIWKHDFFRXQWVWKDWKRVWHGRQHRIWKH86EDVHGPHHWLQJV
47

commemorating th anniversary of the Tiananmen Square massacre on the basis of purported

TOS violations.

95 . Based upon my review of electronic communications between JIN and

other individuals who are Company- I employees. when senior Company-1 executives asked

JI to provide documentation detailing all of the PRC law enforcement requests he had

received in connection with the action taken against accounts hosting Tiananmen Square

anniver ary meetings, JIN stated that there was no legal documentation for the PRC

government request to terminate the' June 4 th political accounts:· Instead, JIN wrote that

Company-I should indicate that' Incites terror i m and vio lence'· was the basis for the

termination of the accounts, meaning that the users committed TOS violations.

WH EREFORE. your deponent respectfully requests that an arrest warrant

issue so that the defendant XI JIA G JI . also known as' Julien Jin," may be dealt with

according to law.

JOSEPH HUGDAHL
Special Agent
Federal Bureau of Investigation

worn to me through the transmission of this


Affidavit by reliable telephonic and electronic means
pursuant to Federal Rule of riminal Procedure 4.1. this
19th
_ day of ovember, 2020

THE HO E. REYES. JR.


U ITED TE JUDGE
EASTE ISTRlCT EW YORK

You might also like