T HR Harvard Theological Review
104:1
JANUARY 2011 ISSN 0017-8160
+DUYDUG7KHRORJLFDO5HYLHZ 022'345...
42 downloads
1076 Views
1MB Size
Report
This content was uploaded by our users and we assume good faith they have the permission to share this book. If you own the copyright to this book and it is wrongfully on our website, we offer a simple DMCA procedure to remove your content from our site. Start by pressing the button below!
Report copyright / DMCA form
T HR Harvard Theological Review
104:1
JANUARY 2011 ISSN 0017-8160
+DUYDUG7KHRORJLFDO5HYLHZ 022'3455677(4678('090.070.45945'.095207
+DUYDUG7KHRORJLFDO5HYLHZ
!"#$ #%%& ' ( ) ' !*!$ #%%&+)5HYLHZ, )
-) . , / ) ) ), +01 ), ) ) ,) +
&2(',7256
( ' , 72 5 , $ / % 2 $ 5 '
! $ 6 6 2 & , $7 ( ( ' , 7 2 5 6
"#!$!#! 0$1$*,1*(',725
!!$ ( ' , 7 2 5 , $ / $ 6 6 , 6 7$ 1 7 6
!%%!!&!' " $ ()! (' '"$* + 3 5 2 ' 8 & 7 , 2 1 6 7$ ) )
,& '"-%!! $ ( (' ' $ . (+! ) ),,) , +DUYDUG7KHRORJLFDO 5HYLHZ ' 2) :;( )4 , 4%< =!+4
> ?+ +&+ ( ) 2&@2) , =7KHKXPDQEHLQJ@H[SHULHQFHVDEVROXWHQHVV LQ WKH GHSWKV RI VHOIKRRG DQG LQ WKH OXFLGLW\ RI WUDQVFHQGHQFHµ 7KH PHGLXP WKURXJKZKLFKWKLVFKDQJHRFFXUVLVUHÁHFWLRQKHQFHWKRXJKWQRWVSLULWLVWKH HQJLQHRIKLVWRU\7UDQVFHQGHQFH³ZKLFKLVÀUVWSHUFHLYHGWKURXJKUHÁHFWLRQDQG ODWHUWKURXJKV\PEROV³´PD\EHWKHVSDFHRIQRWKLQJQHVVLQZKLFKHYHU\WKLQJLV WKLVQRWKLQJQHVVZKLFKPD\WKHQVXGGHQO\EHFRPHSOHQLWXGHDQGDXWKHQWLF%HLQJµ ,QIDFLQJWKLVYRLGSOHQWLWXGHZHEHFRPHDZDUHRIRXURZQOLPLWVZLWKUHJDUGWR LWDQGVWULYHWRWUDQVFHQGWKHP7UDQVFHQGHQFHWKHQHQWDLOVDJRLQJZLWKLQWR ´WKHGHSWKVRIVHOIKRRGµ DQGDJRLQJZLWKRXWWRWKH´%HLQJµWKDWLVEH\RQGXV WRZKLFKZHH[LVWLQUHODWLRQ +HUHZHQRWHRQO\DIHZIHDWXUHVRI-DVSHUV·QRWLRQRIWKHWUDQVFHQGHQW)LUVWLW GRHVQRWSRVLWHLWKHUVRFLHW\RUWKHKXPDQ´RWKHUµDVWKHORFXVRIWUDQVFHQGHQFH 6HFRQGO\SKLORVRSK\DSSHDUVDVDUHVSRQVHWRDQGPHDQVRIWUDQVFHQGHQFHQROHVV WKDQGRHVUHOLJLRQ7KLUGO\WKLVQRWLRQRIWUDQVFHQGHQFHLVDFRPPRQSRLQWRI UHIHUHQFHDQGVKDUHGKRUL]RQ³QRWDORZHVWFRPPRQGHQRPLQDWRU-DVSHUVKRSHG WKDWZKDWKHUHJDUGHGDVKLVWKHRUHWLFDOWUDQVFHQGHQFHRIDQGUHRULHQWDWLRQDZD\ IURPWKHYDQWDJHSRLQWRI&KULVWDVWKHGHÀQLWLYHD[LVRIKLVWRU\DQGH[LVWHQWLDO H[SHULHQFH ZRXOG IXUWKHU WROHUDQFH XQGHUVWRRG DV WKH FRQGLWLRQ IRU JOREDO FRPPXQLW\7KHGHPDQGIRUWROHUDQFHUHÁHFWVDSDUWLFXODUXQGHUVWDQGLQJRIWUXWK 6LQFHQRRQHSRVVHVVHVWKHWUXWKLQIXOORQHPXVWFRQYHUVHZLWKRWKHUV´ERXQGOHVV FRPPXQLFDWLRQµLV´WKHSDWKDORQJZKLFKWKHWUXWKLVGLVFORVHGµ+LVQRWLRQRIDQ D[LDODJHLVPHDQWWRVHUYHDVDUHVRXUFHIRUFUHDWLQJDJOREDOFRPPXQLW\RIPHDQLQJ ´WRYLVXDOL]HWKHIDFWRIWKH$[LDO3HULRGDQGPDNH>LW@WKHEDVLVRIRXUXQLYHUVDO FRQFHSWLRQRIKLVWRU\LVWRJDLQSRVVHVVLRQRIVRPHWKLQJFRPPRQWRDOOPDQNLQG EH\RQGDOOGLIIHUHQFHVRIFUHHGµ-DVSHUV·YLVLRQRIDIXWXUHGRHVQRWKRZHYHU
,ELG -DVSHUV7KH2ULJLQDQG*RDORI+LVWRU\6HHDOVR.DUO-DVSHUV7KH3HUHQQLDO6FRSHRI 3KLORVRSK\WUDQV5DOSK0DQKHLP1HZDQG@DJDLQVWSKLORVRSKLFDOWUDQVFHQGHQFHµ LQKLVÀUVWZRUN6DQFWRUXP&RPPXQLRDOWKRXJKLWKDVFRPPRQO\EHHQWKRXJKWWRKDYHDSSHDUHG IRU WKH ÀUVW WLPH LQ KLV OHWWHUV DQG SDSHUV IURP SULVRQ ´7KH &KDOOHQJH RI 'LHWULFK %RQKRHIIHU·V /LIHDQG7KHRORJ\µLQ:RUOG&RPHRI$JHHG5RQDOG*UHJRU6PLWK3KLODGHOSKLD)RUWUHVV3UHVV 2QVRFLDOWUDQVFHQGHQFHLQDFROOHFWLYHVHQVHVHH+DUYH\&R[´)HDVLELOLW\DQG)DQWDV\ 6RXUFHV RI 6RFLDO7UDQVFHQGHQFHµ LQ 7UDQVFHQGHQFH HG +HUEHUW: 5LFKDUGVRQ DQG 'RQDOG 5 &XWOHU%RVWRQ%HDFRQ3UHVV ²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µ´&RPSDUDWLYH5HOLJLRQ³:KLWKHUDQG:K\"µ
68=$11(60,7+
5HFHQWSOXUDOLVWWKRXJKWRIIHUVPXOWLSOHDFFRXQWVRIWUDQVFHQGHQFHQRWDOORI ZKLFKWREHVXUHGHSHQGXSRQWKHDFFHSWDQFHRIDQRWLRQRIXQLYHUVDOWUXWK,Q IDFWTXLWHDIHZDUJXPHQWVIRUSOXUDOLVPDUHIRXQGHGRQWKHQRWLRQWKDWGHWHUPLQDWH WUXWKFODLPVDVVXFKPXVWWKHPVHOYHVEHWUDQVFHQGHGDVZHOODVVNHSWLFLVPDERXW WUDQVFHQGHQFHZKLFKDV,KDYHDOUHDG\LQGLFDWHGLVVRPHWLPHVÀJXUHGLQWHUPV RI WKH GHQLDO RU LUUHWULHYDEOH ORVV RI LW WKDWKH@KDVFKRVHQ\RXWREHDSHRSOHIRUKLVRZQ·µ 7KRPDV%HUU\´7KH&RVPRORJ\RI5HOLJLRQVµLQ3OXUDOLVPDQG2SSUHVVLRQ7KHRORJ\DQG :RUOG3HUVSHFWLYHVHG3DXO).QLWWHU/DQKDP0G8QLYHUVLW\3UHVVRI$PHULFD 'DYLG5D\*ULIÀQDQG+XVWRQ6PLWK3ULPRUGLDO7UXWKDQG3RVWPRGHUQ7KHRORJ\$OEDQ\ 6WDWH8QLYHUVLW\RI1HZLWDOLFVLQRULJLQDO@
68=$11(60,7+
2QWKLVPDWWHURIFRXUVHUHOLJLRXVWUDGLWLRQVDUHFKDUDFWHUL]HGE\LQWHUQDODV ZHOODVH[WHUQDOGLVDJUHHPHQW7KHWKHRU\DQGSUDFWLFHRIUHOLJLRXVSOXUDOLVPPD\ SURYLGHDÀJXUDWLYHVSDFHLQZKLFKTXHVWLRQVDERXWWKHYDULRXVXQGHUVWDQGLQJVRI ORYHDQGMXVWLFHXQGHUSLQQLQJVXFKGLVDJUHHPHQWVFDQEHIUXLWIXOO\H[SORUHG6XFK DVSDFHKRZHYHULVEHVWXQGHUVWRRGQRWDVDQHXWUDOFOHDULQJKRXVHRUSURFHGXUDO PHFKDQLVPIRUWKHVRUWLQJRXWRIGLIIHUHQWFODLPVWRWUDQVFHQGHQFHEXWUDWKHUDV LWVHOIVXJJHVWLYHRIDFODLPWRVRFLDODQGLQWHOOHFWXDOWUDQVFHQGHQFHZKLFKFXUUHQWO\ IDYRUVVRPHXQGHUVWDQGLQJVRIORYHDWWKHH[SHQVHRIRWKHUV7KHSUHIHUHQFHIRU IRUPVRIORYHDQGFRPSDVVLRQWKDWDUHLQDFFRUGZLWKLPSDUWLDOLVWQRUPVRIMXVWLFH PDNHV LW GLIÀFXOW WR XQGHUVWDQG DQG DFFRPPRGDWH D QRWLRQ RI GLYLQH ORYH DV H[FOXVLYHSDVVLRQRUDQRWLRQRIFRYHQDQWDOORYHEHWZHHQVRPHKXPDQEHLQJV³ EXWQRWDOO³DQGDXQLYHUVDOGHLW\,WLVRIFRXUVHQRWXQFRPPRQWRÀQGRQHVHOI ERXQGE\PXOWLSOHFRPPLWPHQWVWRPDUNHGO\GLIIHUHQWIRUPVRIORYHDQGMXVWLFH %XWVXFKDQH[SHULHQFHLVDVOLNHO\WRUHVXOWLQDVHQVHRIWHQVLRQRUHYHQSDUDO\VLV DVLQDFDSDFLW\IRUSHUFHSWLEOHPRYHPHQWEH\RQGRXUYDULRXVHQFORVXUHVDQGZLWK LWWUDQVFHQGHQFH
7KH6RQJVRIWKH6DEEDWK6DFULÀFHDQG %LEOLFDO3ULHVWO\/LWHUDWXUH $/LQJXLVWLF5HFRQVLGHUDWLRQ 1RDP0L]UDKL +HEUHZ8QLYHUVLW\RI-HUXVDOHPDQG*HRUJ$XJXVW8QLYHUVLWlW*|WWLQJHQ
7KH6RQJVRIWKH6DEEDWK6DFULILFHDOLWXUJLFDOFRPSRVLWLRQZKRVHIUDJPHQWVZHUH GLVFRYHUHGDPRQJWKH'HDG6HDVFUROOVFRPSULVHVWKLUWHHQVRQJVWKDWGHVFULEHWKH KHDYHQO\WHPSOHDQGWKHDQJHOVZKRVHUYHLQLWDVSULHVWVDQGZKRVHPDLQULWXDO GXW\LVWRSUDLVHDQGJORULI\*RG7KHVHWRSLFVDUHWDNHQFRPPRQO\WRLQGLFDWH WKDW WKH 6RQJV ZDV FRPSRVHG LQ SULHVWO\ FLUFOHV VWHPV IURP FODVVLFDO SULHVWO\ WUDGLWLRQV DQG UHIOHFWV D SULHVWO\ DJHQGD DQG ZRUOGYLHZ 7KXV IRU LQVWDQFH D SULHVWO\SURYHQDQFHRIWKH6RQJVZDVHQWHUWDLQHGE\-RKDQQ0DLHU,VUDHO.QRKO
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²0DV4 &DURO1HZVRP´6KLURW¶2ODW+D6KDEEDWµ LQ4XPUDQ&DYH9,3RHWLFDODQG/LWXUJLFDO7H[WV3DUW'-'2[IRUG&ODUHQGRQ ²SODWHV[YL²[[[LHDGHPDQGLQ+HEUHZ@ 7KH IROORZLQJ GLVFXVVLRQ SUHVXSSRVHV³LQ DFFRUGDQFH ZLWK D EURDG FRQVHQVXV³WKDW ELEOLFDO SULHVWO\OLWHUDWXUHLVDZHOOGHÀQHGERG\RIWH[WVIURPDVRXUFHFULWLFDOSRLQWRIYLHZLWFRPSULVHV PDLQO\WKH3ULHVWO\6RXUFHRIWKH3HQWDWHXFK³NQRZQDV3³DQGWKHERRNRI(]HNLHO)RUWKHSUHVHQW SXUSRVHVLWLVVXIÀFLHQWWRWDNH3HQEORFZLWKRXWVXEGLYLGLQJLWLQWRYDULRXVVWUDWD
12$00,=5$+,
Qrybd´LQQHUVDQFWXPµ 7KH6RQJVRIWKH6DEEDWK6DFULILFH 7KHILUVWFDVHVWXG\FRQFHUQVDQDUFKLWHFWXUDOWHUPUHODWLQJWRWKHVWUXFWXUHRIWKH WHPSOHWKHZRUG rybdZKLFKGHQRWHVWKHVKULQHRUPRUHVSHFLILFDOO\WKHLQQHU VDQFWXPWKHKROLHVWSDUWRIWKHWHPSOH7KLVOH[HPHLVRQHRIWKHFKDUDFWHULVWLFLWHPV LQWKHOH[LFRQRIWKH6RQJV,WLVDWWHVWHGDERXWWKLUW\WLPHVLQWKHZRUNLQFOXGLQJ SDUWLDOUHVWRUDWLRQV ZKLOHLQWKHUHVWRIWKH'HDG6HDVFUROOVLWLVGRFXPHQWHGLQ DVLQJOHDWWHVWDWLRQZKLFKPD\LQIDFWEHUHDGGLIIHUHQWO\7KHPDQ\RFFXUUHQFHV RI rybdLQWKH6RQJVLQFOXGHIRXUFRQVWUXFWSKUDVHVWKDWDUHUHSHDWHGLQYDULRXV SDUWVRIWKHFRPSRVLWLRQdwbkrybd´JORULRXVVKULQHµ˚lmrybd´UR\DOVKULQHµ alpyrybd´ZRQGURXVVKULQHVµDQGçdwqrybd´KRO\VKULQHµ,QWKHVHFDVHV WKHQRPHQUHFWXPLVDZRUGWKDWUHIHUVWR*RGHLWKHUH[SOLFLWO\RUPHWRQ\PLFDOO\ ,QDGGLWLRQRQHILQGVLQWKHZRUNDWOHDVWILYHRWKHUFRQVWUXFWSKUDVHVWKDWRFFXU RQO\RQFHLQWKHSUHVHUYHGIUDJPHQWVRIWKH6RQJVPRVWO\LQWKHUHPDLQVRI6RQJ 9,,7KHVHSKUDVHVWKRVHDSSHDULQJRQFHDQGWKRVHWKDWDUHUHSHDWHGDUHXQLTXH WRWKH6RQJVDQGDUHQRWGRFXPHQWHGLQRWKHU+HEUHZVRXUFHVIURPDQWLTXLW\ZLWK WKHVROHH[FHSWLRQRIWKHSKUDVHçdwqrybdZKLFKLVURRWHGLQDELEOLFDOYHUVH3V 7KHVLJQLILFDQFHRIWKLVGDWXPLVGLVFXVVHGEHORZ 7KH(YLGHQFHIURP&ODVVLFDO+HEUHZ 7KHOH[HPHrybdLVZHOONQRZQLQELEOLFDO+HEUHZDQGIURPDGLDFKURQLFSRLQWRI YLHZLWEHORQJVWRWKHFODVVLFDOVWUDWXPRIWKHODQJXDJH,WRFFXUVLQWKHGHVFULSWLRQ RI6RORPRQ·VWHPSOHZKHUHRQHDOVRILQGVWZRFRQVWUXFWSKUDVHVHDFKDWWHVWHGRQO\ 4?twr¿a‚mh μya‚x%y wnplm‚? r¿yfib%d yt‚r%ç?mw wykalm¿ μyqrbw twj%w_>r hç[¿ μwrm?b yk¿ WUDQVODWHG E\ LWV ÀQDO HGLWRU DV IROORZV ´>)RU RQ@ KLJK >KH PDGH Z@LQGV DQG OLJKWQLQJV >KLV PHVVHQJHUV DQG V@HUYDQWV RI DQ LQQHU VDQFWX>DU\@ )URP KLV SUHVHQFH JR IRUWK WKH OX>PLQDULHV@µ 6HH'DQLHO)DON´4:RUNVRI*RGµLQ4XPUDQ&DYH;;3RHWLFDODQG/LWXUJLFDO7H[WV 3DUW'-'2[IRUG&ODUHQGRQ ²DW$VQRWHGE\)DONLELGOLQH WKHRULJLQDOHGLWRURIWKHWH[W-RKQ6WUXJQHOOGHFLSKHUHGWKHWUDFHVDV w¿rb%d yt‚r%ç?m´V@HUYDQWV RI>+LV@ZRUGµUDWKHUWKDQ r¿yfib%d yt‚r%ç?m)DONEDVHGKLVUHDGLQJRQDVLPLODUIRUPXODWLRQLQWKH 6RQJV wdwbk rybdb μynp ytrçm4,> IUJL@6RQJ, 6RQJ , 4 , > IUJ L@ 6RQJ ,; 4 * ² > IUJ ² L ·²·@ 6RQJ ;, 49,,> IUJ·@4-> IUJLL²·@ 6RQJ94 6RQJ,;4*²> IUJ²L·²·@ 6RQJ;4+ > IUJLL²·@49> IUJ·@ ,QWKHSOXUDO6RQJ;4+> IUJLL²·@49> IUJ·@ 6RQJ;, 4,²> IUJ·²··@49,²> IUJ··@ 6RQJ 9,, 4 LL 6RQJ ; 4 + > IUJ ·@ 6RQJ ;,,, 4 ; > IUJ·@ $YL+XUYLW]$/LQJXLVWLF6WXG\RIWKH5HODWLRQVKLSEHWZHHQWKH3ULHVWO\6RXUFHDQGWKH%RRN RI(]HNLHO&DK5%3DULV*DEDOGD ²LGHP´7HUPVDQG(SLWKHWV5HODWLQJWRWKH -HUXVDOHP7HPSOH&RPSRXQGLQWKH%RRNRI&KURQLFOHV7KH/LQJXLVWLF$VSHFWµLQ3RPHJUDQDWHV DQG *ROGHQ %HOOV 6WXGLHV LQ %LEOLFDO -HZLVK DQG 1HDU (DVWHUQ 5LWXDO /DZ DQG /LWHUDWXUH LQ +RQRURI-DFRE0LOJURPHG'DYLG3:ULJKW'DYLG1)UHHGPDQDQG$YL+XUYLW]:LQRQD/DNH ,QG(LVHQEUDXQV ²DW²
+$59$5'7+(2/2*,&$/5(9,(:
RQFHrybiDh “ ' jt'P, ´WKHVKULQH·VHQWUDQFHµ.JV DQGtyIBh' ' rybiD“ ´WKHVKULQHRI WKHKRXVHµ.JV&KUVHHDOVR.JV 7KHVHSKUDVHVGHQRWH VSDWLDOIHDWXUHVRIWKHLQQHUVDQFWXPDQGWHVWLI\WRWKHWHFKQLFDOQDWXUHRIrybdDV DQDUFKLWHFWXUDOWHUP$WKLUGFRQVWUXFWSKUDVHLVWKHDIRUHPHQWLRQHG çdwqrybd IRXQGLQRQO\RQHDWWHVWDWLRQRXWVLGHWKHKLVWRULFDOERRNVLQWKHSRHWLFGLFWLRQRI ELEOLFDOSVDOPRG\3V $OWKRXJKrybdIDOOVLQWKHILHOGRISULHVWO\LQWHUHVWLWLVQRWDSULHVWO\WHUPIURP DVW\OLVWLFSRLQWRIYLHZ,WLVIRXQGQRZKHUHLQ3·VGHWDLOHGGHVFULSWLRQVRIWKH WDEHUQDFOHRULQWKHVSHFLILFDWLRQVRI(]HNLHO·VWHPSOH,QSULHVWO\OLWHUDWXUHERWK HDUO\DQGODWHWKHLQQHUPRVWSDUWRIWKHVKULQHLVWHUPHG μyvid:Q’h' vdLQ+HEUHZ@ (GZDUG : /DQH $Q $UDELF(QJOLVK /H[LFRQ YROV /RQGRQ :LOOLDPV DQG 1RUJDWH ² D²E $FFRUGLQJWRDQDOWHUQDWLYHYLHZ+HEUHZrybdLVERUURZHGIURP(J\SWLDQLQZKLFKLWVSXWDWLYH RULJLQFDQEHGHÀQHGE\LWVDFFRPSDQ\LQJGHWHUPLQDWLYHV´KRXVHµDQG´ZRRGµVHH+HUPDQQ6FKXOW ´'HU 'HELU LP VDORPRQLVFKHQ 7HPSHOµ ='39 ² -RKQ $ 7YHGWQHV ´(J\SWLDQ (W\PRORJLHV IRU %LEOLFDO &XOWLF 3DUDSKHUQDOLDµ LQ(J\SWRORJLFDO 6WXGLHV HG 6DUD ,VUDHOLW*UROO 6FU+LHU -HUXVDOHP 0DJQHV ² DW -HDQ 2XHOOHWWH ´7KH 6RORPRQLF 'HEvU DFFRUGLQJWRWKH+HEUHZ7H[WRI.LQJVµ-%/ ²+RZHYHUWKH(J\SWLDQZRUG DOOHJHGWREHWKHVRXUFHRIWKH+HEUHZWHUPLVQRZWDNHQWREHD:HVW6HPLWLFORDQLQWR(J\SWLDQVHH 'DQLHO6LYDQDQG=LSRUD&RFKDYL5DLQH\:HVW6HPLWLF9RFDEXODU\LQ(J\SWLDQ6FULSWRIWKHWKWRWKH WK&HQWXULHV%&(%HHU6KHYD%HHU6KHED8QLYHUVLW\3UHVV QR
12$00,=5$+,
,W LV WKHUHIRUH VDIH WR FRQFOXGH WKDW FODVVLFDO ELEOLFDO +HEUHZ NQRZV PRUH WKDQRQHWHUPGHQRWLQJWKHLQQHUPRVWSDUWRIWKHVDQFWXDU\3ULHVWO\VRXUFHVUHIHU WRLWDV μyçdwqh çdwqZKLOHQRQSULHVWO\VRXUFHVFDOOLW rybd7KHQRQSULHVWO\ WHUPGHVFULEHVWKLVVSDFHLQUHVSHFWWRLWVSK\VLFDOSURSHUWLHVZKLOHWKHSULHVWO\ WHUP³ZKHQXWLOL]HGWRGHQRWHWKDWVSDFH³GRHVVRE\LQYHVWLQJLWZLWKLGHRORJLFDO LPSRUWDQGHQFRGLQJWZRQRWLRQVRISULPHLPSRUWDQFHIRUDQFLHQWSULHVWO\FLUFOHV WKHLGHDRIVHSDUDWLRQHPEHGGHGLQWKHXVHRIDOH[HPHGHULYHGIURPq-d-¡DQG WKHLGHDRIKLHUDUFK\H[SUHVVHGE\DV\QWDFWLFFRQVWUXFWLRQWKDWFRQYH\VWKHQRWLRQ RIWKHVXSHUODWLYH%\FDOOLQJWKLVVSDFH´WKHKRO\RIKROLHVµLWLVGLVWLQJXLVKHG DXWRPDWLFDOO\IURPERWK´WKHKRO\µWKDWLVWKHUHVWRIWKHWDEHUQDFOHRUWKHWHPSOH DVZHOODVIURP´WKHXQKRO\µZKLFKSHUWDLQVWRWKHUHDOPRXWVLGHWKHFRPSRXQG RIWKHVDQFWXDU\ 7KH(YLGHQFHIURP3RVWFODVVLFDO+HEUHZ $FKDQJHLQWKLVVWDWHRIDIIDLUVLVSHUFHSWLEOHLQSRVWH[LOLFOLWHUDWXUHLQZKLFKWKH FODVVLFDOQRQSULHVWO\WHUPZDVGHHPHGREVROHWHDQGZDVUHSODFHGJUDGXDOO\E\ DQDOWHUQDWLYHWHUP μyçdwqh çdwq tyb´WKHKRXVHRUWKHSODFH RIWKHKRO\RI KROLHVµ :KHQYLHZHGIURPDGLDFKURQLFSRLQWRIYLHZWKHHYLGHQFHRIWKH6RQJVSRVHV DFRQVSLFXRXVSUREOHP+RZFDQLWEHWKDWWKHREVROHWHWHUP rybd³RWKHUZLVH H[WUHPHO\ UDUH LQ RWKHU +HEUHZ WH[WV RI WKH 6HFRQG 7HPSOH SHULRG³LV EHLQJ XVHGVRH[WHQVLYHO\DQGWKDWWKHQXPEHURILWVRFFXUUHQFHVIDUH[FHHGVWKHVXP RILWVELEOLFDODWWHVWDWLRQV"$GPLWWHGO\WKLVLVVXHUHTXLUHVXVWRGLJUHVVIURPRXU FXUUHQWGLVFXVVLRQ\HWLWLVZRUWKZKLOHWRSXUVXHLWEHFDXVHLWZLOODOORZXVWRJDLQ DQLQVLJKWLQWRRQHRIWKHIXQGDPHQWDOIDFWRUVWKDWZHUHRSHUDWLYHLQVKDSLQJWKH ODQJXDJHRIWKH6RQJV $JDLQVWWKHRYHUZKHOPLQJDEVHQFHRIrybdIURPERWKELEOLFDODQGH[WUDELEOLFDO +HEUHZVRXUFHVRIWKH6HFRQG7HPSOHSHULRGLWVRFFXUUHQFHLQ6LUDFFRUGLQJ 7KDWWKLVWHUPLQRORJLFDOGLVWLQFWLRQLVVWULFWO\NHSWWKURXJKRXWFODVVLFDOELEOLFDO+HEUHZVXJJHVWV WKDWLWUHÁHFWVDFHUWDLQFXOWXUDOUHDOLW\LQZKLFKSULHVWO\WH[WVZHUHSURGXFHGDQGFLUFXODWHGZLWKLQD OLPLWHGJURXSDQGWKDWWKHLUGLVWLQFWLYHVW\OHZDVWKHUHIRUHFKDUDFWHULVWLFWRDVSHFLÀFVFULEDOVFKRRO *HVHQLXV· +HEUHZ *UDPPDU HG (PLO .DXW]VFK WUDQV$UWKXU ( &RZOH\ G HG 2[IRUG &ODUHQGRQ L3DXO-RRQDQG7DNDPLWVX0XUDRND$*UDPPDURI%LEOLFDO+HEUHZ 6XEVLGLD%LEOLFD5RPH3RQWLÀFDO%LEOLFDO,QVWLWXWH O
7KXVRIHOHYHQRFFXUUHQFHVRI rybdLQWKHERRNRI.LQJVRQO\WKUHHZHUHOHIWLQWDFWLQWKH ERRN RI &KURQLFOHV ,Q RWKHU FDVHV WKH &KURQLFOHU HLWKHU RPLWWHG WKH HQWLUH SDVVDJH .JV RUUHSODFHGWKHWHUPLQTXHVWLRQZLWKLWVODWHHTXLYDOHQW.JV&KU 7KHSKUDVH μyçdwqh çdwq tybDOVRSUHYDLOVLQHDUO\UDEELQLFOLWHUDWXUHZKHUH rybdLV SUDFWLFDOO\ QRQH[LVWHQW7KH ODWH SKUDVH LV EDVHG RQ WKH SULHVWO\ WHUP EXW WKH FRQVWUXFWLRQ ErW ; ´WKH SODFH RI ;µ LV QRW XVHG LQ FODVVLFDO SULHVWO\ WH[WV WR GHVLJQDWH SDUWV RI WKH WDEHUQDFOH DQG LWVVXUURXQGLQJV2QWKHRWKHUKDQGLWLVZLGHO\XVHGLQSRVWH[LOLFDQGUDEELQLF+HEUHZWRGHQRWH YDULRXVSDUWVDQGVHFWLRQVRIWKHWHPSOHVHH+XUYLW]´7HUPVDQG(SLWKHWVµ 7KHFRPSRXQGWHUP μyçdwqh çdwq tybLVWKXVDFOHDUPDUNHURIWKHSRVWFODVVLFDOSHULRGLQZKLFKROGWHUPVDUHXVHG DVEXLOGLQJEORFNVLQRWKHUZLVHQHZFRQVWUXFWLRQV
+$59$5'7+(2/2*,&$/5(9,(:
WR06% DVSDUWRIDGHVFULSWLRQRI$DURQ·VSULHVWO\JDUPHQWVVWDQGVRXW$VDOUHDG\ QRWHGE\FRPPHQWDWRUVWKLVSDVVDJHDOOXGHVWR([RG²VHHDOVRY ² 7KHrybdPHQWLRQHGE\%HQ6LUDWKXVSDUDOOHOVWKH´KRO\µPHQWLRQHG LQ([RGXVZKLFKUHIHUVWRWKHPDLQKDOORIWKHWDEHUQDFOH UDWKHUWKDQWKHLQQHUPRVW ´KRO\RIKROLHVµLQWRZKLFKWKH+LJK3ULHVWZDVDOORZHGWRHQWHURQO\RQFHD\HDU RQWKH'D\RI$WRQHPHQW,WLVWKHUHIRUHFOHDUWKDW%HQ6LUDXVHVWKHWHUP rybd LQDVHQVHGLIIHUHQWIURPLWVXVXDOGHQRWDWLRQLQFODVVLFDOELEOLFDO+HEUHZ7KLV VHPDQWLFGLVFUHSDQF\PD\LQGLFDWHWKDWKHXVHGWKHZRUGDVSDUWRIKLVDUFKDLVWLF VW\OHZKLOHLQUHDOLW\LWZDVDEVHQWIURPKLVYHUQDFXODU 0D\WKHVDPHH[SODQDWLRQEHDSSOLHGWRWKH6RQJVRIWKH6DEEDWK6DFULILFH" :KLOH WKH DVVXPSWLRQ RI DQ DUFKDLVWLF XVDJH LV DQ DSSURSULDWH LQWHUSUHWDWLRQ RI WKHYHU\XVHRIWKHZRUGLWGRHVQRWDGHTXDWHO\H[SODLQZK\ rybdZDVXVHGVR H[WHQVLYHO\LQWKH6RQJV%\WKHVDPHWRNHQRQHFDQQRWEHFRPSOHWHO\VDWLVILHG ZLWK WKH DUJXPHQW WKDW WKH XVH RI WKH WHUP rybd LV UHPLQLVFHQW RI WKH OLWHUDU\ GHSHQGHQFHRIWKHDXWKRURIWKH6RQJVRQWKHERRNRI.LQJV:KLOHWKLVDUJXPHQW DJDLQLVUHDVRQDEOHLWGRHVQRWRIIHUDUHDOH[SODQDWLRQIRUWKHJUHDWSKUDVHRORJLFDO YDULDWLRQW\SLFDORIWKH6RQJV)XUWKHUPRUHWKHRQO\SKUDVHVKDUHGE\WKHWZR FRUSRUDLVWKHSRHWLF çdwq rybdDQGQRWWKHPRUHWHFKQLFDOSKUDVHVDWWHVWHGLQ WKHERRNRI.LQJV2QHPD\WKHUHIRUHFRQFOXGHWKDWWKHODQJXDJHRIWKH6RQJV 0RVKH+6HJDO7KH&RPSOHWH%RRNRI%HQ6LUDGHG-HUXVDOHP%LDOLN,QVWLWXWH ²>LQ+HEUHZ@YY²DFFRUGLQJWRKLVQXPHUDWLRQ 5XGROSK6PHQG'LH:HLVKHLWGHV-HVXV 6LUDFKYROV%HUOLQ*HRUJ5HLPHU ²6HHDOVR3DWULFN:6NHKDQDQG$OH[DQGHU $'L/HOOD7KH:LVGRPRI%HQ6LUD$%*DUGHQ&LW\1LQ+HEUHZ@ $UDPDLFSUHVHQWVDPRUHFRPSOLFDWHGFDVHVLQFHLWLVIRXQGZLWKLQWKH%LEOHLWVHOIDV DUHVXOWOH[HPHVRIELEOLFDO$UDPDLFZHUHFRQVLGHUHGWREHDOHJLWLPDWHFRPSRQHQWRIPiyyu† OH[LV VHH 6KXODPLW (OLW]XU ´7KH ,QFRUSRUDWLRQ RI $UDPDLF (OHPHQWV LQ $QFLHQW 3DOHVWLQLDQ Piyyu†imµLe¡ ²>LQ+HEUHZ@ &RPSDUH WKH FRQVSLFXRXV DEVHQFH RI *UHHN ZRUGV IURP 4XPUDQ +HEUHZ LQFOXGLQJ WKH 6RQJV QRWHGE\(GXDUGULWV@RIWKHZRQGURXVÀUPDPHQWLV m#mulla˙ †ohar WKH >VSL@ULWV RI NQRZOHGJH WUXWK DQG ULJKWHRXVQHVV DUH LQ WKH KRO\ RI >K@ROLHV 4/²> IUJ·²·@49,> IUJ²@² E 6RQJ;,,
twjwrr!hwf jlwmm alp y[bx dwfibk% tm%qwrb hgw?n¿ Û yç[mw alp?h¿ Û twbkrm dwbk μ[ dymt μyklhtm μyyj μyhwl?a¿
jwjyn jyrLQ6HFRQG7HPSOHOLWHUDWXUHVHHHVSHFLDOO\6LU06 % $UDPDLF/HYL'RFXPHQW 06%RGOHLDQIROG 1HZVRP6RQJV²
12$00,=5$+,
$QG WKH ZRUNPDQVKLS RI >O@LJKW ZLWK JORULRXV HPEURLGHU\ ZRQGURXV FRORUV m#mulla˙ †oharWKHVSLULWVRIOLYLQJ>G@LYLQHEHLQJVDOZD\VDFFRPSDQ\WKHJORU\RI >WKH@ZRQGURXVFKDULRWV4-²> IUJLL²·²·@ F 6RQJ;,,,?
rhwf ¿y[bx yjwr grwa yç[mk hmqwr% twjwr μhyalp dm[mb hla gfirwa yç[m%k‚ bçj rhwf jlwmm μhybçjm lwkw rwj yarm ˚wtb% ?¿t‚rç ‚ l alp yçwbl yçar
,QWKHLUZRQGURXVVWDWLRQDUHVSLULWVRIHPEURLGHU\OLNHWKHZRUNPDQVKLSRIDZHDYHU VSLULWVRI>SXUH@FRORUVDUHLQWKHPLGVWRIWKHDSSHDUDQFHRIZKLWHQHVV DQG DOOWKHLUGHVLJQVDUHm#mulla˙ †oharDQDUWLVWU\OLNHWKHZRUNPDQVKLSRIDZHDYHU WKHVH DUH WKH FKLHIV RI WKRVH ZKR DUH ZRQGURXVO\ GUHVVHG IRU VHUYLFH 4 / ²> IUJLL·²·@ G 6RQJ;,,,
rhwf jlwmm? grwa yç[¿m‚k hmqwr? ¿trap‚t ylyt%?p rdh?wdw?h¿ Û y[bx
6SOHQGLG >WK@UHDGV> @ HPEURLGHU\ OLNH WKH ZR>UNPDQVKLS RI D ZHDYHU @ m#mulla˙ †ohar FRORUV RI > DQG VS@OHQGRU DQG@ PDMHVW\µ 4 ,; > IUJ ²@ ²
1HZVRPFRUUHFWO\QRWHGWKDWWKHODFNRIJUDPPDWLFDODJUHHPHQWDWOHDVWLQWKH WKLUGTXRWDWLRQDQGSHUKDSVDOVRLQWKHVHFRQGRQH LQGLFDWHVWKDWWKHFROORFDWLRQ rhwf jlwmmLVDOUHDG\DIUR]HQH[SUHVVLRQLQWKHODQJXDJHRIWKH6RQJV,QGHHG WKHUHLVQRGRXEWWKDWLWLVERUURZHGIURPDVSHFLÀFELEOLFDOYHUVHIRUWKHSDUWLFLSOH jlwmmLVGRFXPHQWHGLQELEOLFDO+HEUHZLQDVLQJOHSODFHWKHSULHVWO\UHFLSHRI WKH μyms trwfq ´VSLFH LQFHQVHµ GHVLJQDWHG IRU XVH ZLWKLQ WKH WDEHUQDFOH DV RSSRVHG WR WKH UHJXODU XQTXDOLÀHG ´LQFHQVHµ ZKLFK LV XVHG LQ WKH RXWHU FRXUW ([RG² $QGWKH/25'VDLGWR0RVHV7DNHVSLFHV³VWDFWHRQ\FKDDQGJDOEDQXP³ VSLFHVDQGSXUHIUDQNLQFHQVHOHWWKHUHEHDQHTXDOSDUWRIHDFKhyLQ+HEUHZ@ -RQDK,EQJana˙FRQVLGHUHGWKHSRVVLELOLW\WRLQWHUSUHWjL;mum]LQ([RGDFFRUGLQJWR$UDELF ÷ąÛ»´EHDXW\µDQGΐʙ¹»´EHDXWLIXOµLQ6HSKHU+DVFKRUDVFKLP:XU]HOZ|UWHUEXFKGHUKHEUlLVFKHQ
6SUDFKH YRQ Abulwalªd Merwân Ibn ˝anâh 5 -RQD ³$XV GHP $UDELVFKHQ LQ·V +HEUlLVFKH EHUVHW]WYRQ-HKXGD,EQ7LEERQHG:LOKHOP%DFKHU%HUOLQ,W]NRZVNL $GPLWWHGO\WKLV LQWHUSUHWDWLRQLVQRWLPSRVVLEOHVLQFHÀJXUDWLYHXVDJHVRIZRUGVGHQRWLQJWDVWHVDQGÁDYRUVDUHZHOO GRFXPHQWHGLQYDULRXVODQJXDJHVVHHIRULQVWDQFH&KULVWLDQH3HUULFKHW7KRPDV´/DV\PEROLTXHGX VHOGDQVOHVWH[WHVDQFLHQVµLQ0pODQJHV3LHUUH/pYrTXHHG0DULH0DGHOHLQH0DFWRX[DQG(YHO\QH *HQ\YROV3DULV%HOOHV/HWWUHV ²7KHUHYHUVHGHYHORSPHQWLVDOVRDWWHVWHGLQWKH 6HPLWLFODQJXDJHVWKH$NNDGLDQZRUGIRU´VDOWµ†åbtuLVGHULYHGIURP†åbu´JRRGµFI&$'ˇD 1HYHUWKHOHVV Ibn Jana˙·VH[SODQDWLRQGRHVQRWVHHPWRÀWLQWKLVVSHFLÀFFDVHVLQFHWKHPHDQLQJ ´EHDXW\µPD\EHDQLQQHU$UDELFGHYHORSPHQWDVGHPRQVWUDWHGE\WKH$UDELFSURYHUETXRWHGE\
+$59$5'7+(2/2*,&$/5(9,(:
7KHYHUVLRQVRI([RGFDQEHMRLQHGZLWK6LU06% trfqkwhyçay μç jqwr hç[m jlmmh μyms ´-RVLDK·VQDPHLVOLNHVSLFHLQFHQVHZKLFKLVm#mullå˙ DV DSURGXFWRIDQH[SHUWEOHQGHUµ7KLVYHUVHLVDWUDQVSDUHQWDOOXVLRQWR([RG DQGLWVWKHPHLVFOHDUHQRXJK,WFRPSDUHVWKHQDPHRI-RVLDKWKDWLVKLV UHSXWDWLRQ WRDIUDJUDQWSHUIXPHFRPSDUH(FFOD VXJJHVWLQJWKDWKHLVULJKWO\ IDPRXVIRUKLVODZIXOGHHGV%XWWKLVWKHPHLVQRWVHUYHGE\UHQGHULQJjlmmhDV ´VDOWHGµDQGWKHZRUGRUGHUPDNHVLWUHDVRQDEOHWRLQWHUSUHWWKHZRUGDV´PL[HGµ ,QIDFWWKLVLVH[DFWO\WKHZD\LQZKLFKLWZDVXQGHUVWRRGE\WKH6\ULDFWUDQVODWRU anm\sbd atwaygsb fyljd am\sbd amryp Kya aycwyd hmç ´-RVLDK·VQDPHLVOLNHVSLFHLQFHQVHZKLFKLVPL[HGRIPDQ\VSLFHVµ 7KH FRQVHQVXV RI ERWK GLUHFW DQG LQGLUHFW ZLWQHVVHV LQGLFDWHV WKDW WKH LQWHUSUHWDWLRQRIjlwmmDV´PL[HGµ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´PL[HGµRU´EOHQGHGµLVDSSURSULDWHIRUWKHRFFXUUHQFHVRI
Ibn Jana˙KLPVHOI KHQFHLWFDQQRWEHDSSOLHGWR+HEUHZ,QODWHUVWUDWDRI+HEUHZjlwmmLVLQGHHG XVHGÀJXUDWLYHO\EXWLWPHDQV´VPDUWFOHYHUµQRW´EHDXWLIXOµRU´SOHDVDQWµDVLQ$UDELF6HHIRU LQVWDQFHE4LGGXVKLQE hdwhy ybr wnbl μdwq awh ³ dwmll wnbw dwmll awh .˜nbr wnt wmdwq wnb ³ ?alwmm .aùùn¿ jlwmmw zyrz wnb μa .rmwa´2XU5DEELVWDXJKW,IKHKDVKLPVHOI WRVWXG\DQGKLVVRQWRVWXG\KHWDNHVSUHFHGHQFHRYHUKLVVRQ5-XGDKVDLG,IKLVVRQLVDJLOH DQGFOHYHU>DOWHUQDWLYHUHDGLQJIXOORI7RUDK @KLVVRQWDNHVSUHFHGHQFHRYHUKLPµVHHDOVR .DOODK5DEEDWL0DVHNKWRW.DODKHG0LFKDHO+LJJHU1HZ@t‚rç ‚ l alp yçwbl
$QGWKHLUGHVLJQVDUHm#mulla˙ †oharDQDUWLVWU\OLNHWKHZRUNPDQVKLSRIDZHDYHU WKHVHDUHWKHFKLHIVRIWKRVHZKRDUHZRQGURXVO\FORWKHGIRUVHUYLFH4/ > IUJLL·@ 6RQJ;,,,
rhwf jlwmm? grwa yç[¿m‚k hmqwr? ¿trap‚t ylyt%?p rdh?wdw?h¿ Û y[bx
6SOHQGLG >WK@UHDGV> @ HPEURLGHU\ OLNH WKH ZR>UNPDQVKLS RI D ZHDYHU @ m#mulla˙ †ohar FRORUV RI > DQG VS@OHQGRU DQG@ PDMHVW\ 4 ,; > IUJ ²@ ²
7KHODVWWZRSDVVDJHVDUHWDNHQIURP6RQJ;,,,ZKLFKPD\GHVFULEHWKHZRQGURXV JDUPHQWVRIWKHDQJHOVZKRVHUYHDV+LJK3ULHVWVLQWKHKHDYHQO\WHPSOH 7KLVDVVRFLDWLRQLQGLFDWHVWKDWDOLQNDJHEHWZHHQWKHSULHVWO\JDUPHQWVDQGWKH VSLFHLQFHQVHZDVLQGHHGHVWDEOLVKHGLQWKHH[HJHWLFDOFRQVFLRXVQHVVRIDXWKRURI WKH6RQJV)XUWKHUPRUHLWPD\EHWDNHQDVDQLQGLFDWLRQWKDWWKHSKUDVHrhwf jlwmm ZDVXQGHUVWRRGQRWPHUHO\LQDJHQHUDOZD\DVPHDQLQJ´PL[HGµEXWDVKDYLQJWKH PRUHVSHFLILFVHQVHRIEHLQJ´PL[HGLQFRORUµWKDWLV´FRORUIXOµ 7KLVFRQFOXVLRQLIFRUUHFWLVVXJJHVWLYHLQLWVRZQULJKW,WDOORZVRQHWRHQWHUWDLQ WKHSRVVLELOLW\WKDWWKHOLQNEHWZHHQWKHVSLFHLQFHQVHDQGWKHSULHVWO\JDUPHQWVLVQRW RQO\WKHUHVXOWRIDQDEVWUDFWFRQFHSWXDODQDORJ\EXWLVUDWKHUDQFKRUHGLQDOH[LFDO LQWHUSUHWDWLRQRIDVSHFLILFWHUP7KHRULJLQDOFRQWH[WRIWKHSKUDVHrhwf jlwmmLVDQ LQVWUXFWLRQDERXWKRZWRSUHSDUHμyms trwfqEXWLQ5DEELQLF+HEUHZWKHOH[HPH μsDFTXLUHGWKHPHDQLQJ´SLJPHQWFRORUG\Hµ*LYHQWKLVIDFW,DPLQFOLQHGWR SURSRVHWKDWWKHVHPDQWLFVKLIWLQWKHPHDQLQJRI jlwmmXOWLPDWHO\UHVXOWVIURP DQDQDFKURQLVWLFDQGDWRPLVWLFLQWHUSUHWDWLRQRI([RG7KHWHUP μymsZDV XQGHUVWRRGE\WKHDXWKRURIWKH6RQJVDVUHIHUULQJWR´FRORUVµLQDFFRUGDQFHZLWK DPHDQLQJRIWKDWOH[HPHWKDWZDVFXUUHQWLQKLVYHUQDFXODU 6LQFH WKH FROORFDWLRQ rhwf jlwmm LV DSSOLHG LQ WKH 6RQJV WR WKH YLVXDO DVSHFW RI FHUWDLQ FXOWLFREMHFWVLQWKHKHDYHQO\UHDOPLWPD\DOVRFRQQRWH´EULJKWQHVVVKLQ\DSSHDUDQFHµVHH([RG ³WKLVVHQVHPD\EHPHWRQ\PLFDOO\UHODWHGWRWKHQRWLRQRISXULW\DQGFRXOGDOVREHLQWHUSUHWHG DVUHODWHGWR rh'zO1RWHWKDW4LFRXOGDWWHVWWRDFRQIXVLRQRIWKHWZRQRXQV7KHVFULEH EHJDQWRZULWH wz [yqrSHUKDSVKDYLQJLQPLQG rhwz [yqr´VKLQ\ÀUPDPHQWµ EXWWKHQHUDVHG WKH ODVW WZR OHWWHUV DQG ZURWH LQVWHDG μyrwhf rhwf [yqr ´PRVW SXUH ÀUPDPHQWµ FRPSDUH WKH RYHUODSSLQJWH[WRI4&> IUJ·@ )RULQVWDQFHynwnyb μs aybm twynwnyb twnbl twrwjç twrwx μyrx ˜hç ˜ynmms μyryyxl çy ynwnybk hartw ≈wjbm wpyqmw P1HJD¶LP ´3DLQWHUVKDYHFRORXUVZKHUHZLWKWKH\GHSLFWÀJXUHV
LQEODFNDQGZKLWHDQGLQWKHLQWHUPHGLDWHVKDGH$PDQVKRXOGEULQJSDLQWRIDQLQWHUPHGLDWHVKDGH DQGHQFRPSDVVWKHOHSURV\VLJQWKHUHZLWKDQGLWZLOOWKHQDSSHDUDVRQRQH>ZKRVHVNLQLV@RIWKH LQWHUPHGLDWHVKDGHµ7KH0LVKQDKWUDQV+HUEHUW'DQE\2[IRUG&ODUHQGRQLWDOLFVPLQH 6XFK D SKHQRPHQRQ LV QRW XQFRPPRQ LQ 4XPUDQ +HEUHZ DQG D FRPSDUDEOH VHPDQWLF GHYHORSPHQW FDQ EH WUDFHG LQ DQRWKHU SKUDVH WDNHQ IURP WKH VDPH SULHVWO\ UHFLSH IRU WKH VSLFH LQFHQVH7KHGXDOLVWLF7UHDWLVHRIWKH7ZR6SLULWVLQFOXGHGLQWKH&RPPXQLW\5XOHGHVFULEHVWKHWZR VSLULWVWKDWJRYHUQWKHZRUOGWKH6SLULWVRI7UXWKDQG,QMXVWLFHDQGPDNHVWKHIROORZLQJVWDWHPHQW μtwglpm ˜yb μlw[ tbya ˜tyw ˜wrja ≈q d[ dbb db ˜mç la ayk´)RU*RGVHWWKHPbad b#bad
+$59$5'7+(2/2*,&$/5(9,(:
%HWKDWDVLWPD\RQHPD\DFNQRZOHGJHWKDWWKHUHLVQRUHDOVHPDQWLFFRQWLQXLW\ EHWZHHQWKHELEOLFDOXVDJHDQGWKHRQHDWWHVWHGLQWKH6RQJV7KHODWWHULVQRWKLQJ EXWDVHFRQGDU\DQGLQFRUUHFWLQWHUSUHWDWLRQRIWKHIRUPHU &RQFOXVLRQ 7KHOLWHUDOPHDQLQJRIWKHZRUGjlwmm´VDOWHGµLQ([RGLVQRWUHSUHVHQWHGLQ WKHDQFLHQWYHUVLRQVZKLFKUHQGHULWLQVWHDGDV´PL[HGµ7KLVH[HJHWLFDOWUDGLWLRQLV DOVRUHÁHFWHGLQWKH6RQJVRIWKH6DEEDWK6DFULÀFHEXWLWVXVDJHWKHUHLVUHVWULFWHG ERWKVHPDQWLFDOO\E\EHLQJDSSOLHGVSHFLÀFDOO\WRPL[HGFRORUV DQGLGLRPDWLFDOO\ E\ WDNLQJ rhwf jlwmm DV D ERXQG H[SUHVVLRQ , KDYH VXJJHVWHG WZR SRVVLEOH H[SODQDWLRQVIRUWKLVVLWXDWLRQ$FFRUGLQJWRWKHÀUVWWKLVXVDJHLVDSURGXFWRID FRQFHSWXDODQDORJ\EHWZHHQWKHSULHVWO\LQVWUXFWLRQFRQFHUQLQJWKHVSLFHLQFHQVH DQGWKHOHJDOQRWLRQRIμyyalk$FFRUGLQJWRWKHVHFRQGLWLVDUHVXOWRIDQDWRPLVWLF OH[LFDOLQWHUSUHWDWLRQRIWKHZRUGμymsDV´FRORUVµ7KHVHWZRH[SODQDWLRQVDUHQRW PXWXDOO\H[FOXVLYHDQGWKH\PD\EHWDNHQDVFRPSOHPHQWDU\ZD\VLQZKLFKWKH DXWKRURIWKH6RQJVFRXOGKDYHDWWULEXWHGVXFKDGLYHUJHQWPHDQLQJWRWKHELEOLFDO H[SUHVVLRQ%XWHYHQLIERWKSURSRVDOVDUHUHMHFWHGLWLVHYLGHQWWKDWWKHXVDJH DWWHVWHGLQWKH6RQJVGRHVQRWUHSUHVHQWDQRXWJURZWKRIWKHRULJLQDOSULHVWO\XVDJH RIWKHH[SUHVVLRQGLVFXVVHGDERYH5DWKHULWGHULYHVIURPDQRQOLWHUDOH[HJHVLV WKDWPDQLSXODWHVWKHELEOLFDOZRUGVLQDZD\WKDWUHÁHFWVGLVUHJDUGIRUWKHRULJLQDO PHDQLQJDQGFRQWH[WRIWKHWHUPVLQTXHVWLRQ
Q*HQHUDO&RQFOXVLRQ 7KHFRPPRQGHQRPLQDWRURIWKHWKUHHH[DPSOHVGLVFXVVHGDERYH³DVZHOODVPDQ\ RWKHUVQRWPHQWLRQHG³LVWKHPDUNHGOLQJXLVWLFDQGVW\OLVWLFGLIIHUHQFHEHWZHHQWKH 6RQJVRIWKH6DEEDWK6DFULÀFHDQGELEOLFDOSULHVWO\OLWHUDWXUH,WLVQRVXUSULVHWKDW QXPHURXVOLQJXLVWLFHOHPHQWVLQWKH6RQJVEHWUD\DODWHOLQJXLVWLFEDFNJURXQGIRU WKHUHLVQRGRXEWWKDWWKLVZRUNZDVFRPSRVHGGXULQJWKH6HFRQG7HPSOHSHULRG %XWDQ\RQHZKRFODLPVWKDWWKH6RQJVLVDIÀOLDWHGZLWKDQFLHQWSULHVWO\OLWHUDWXUH QHHGVWRH[SODLQZK\WKHDXWKRURIWKH6RQJVUHIUDLQVIURPXVLQJWKHFODVVLFDOSULHVWO\ VWRFNRIH[SUHVVLRQVDVLQWKHFDVHRI jwjyn jyr DQGSUHIHUVWRXVHQRQSULHVWO\ XQWLOWKHÀQDOSHULRGDQGHVWDEOLVKHGHWHUQDOHQPLW\EHWZHHQWKHLUSDUWLHVµ46VHHDOVROLQH -DFRE/LFKWQRWHGWKDWWKHDGYHUELDOH[SUHVVLRQdbb dbLVGLUHFWO\ERUURZHGIURP([RG EXWLWLVXVHGWKHUHLQDGLIIHUHQWVHQVH/LFKW7KH5XOH6FUROO-HUXVDOHP%LDOLN,QVWLWXWH >LQ+HEUHZ@,Q([RGXVWKHSKUDVHLVEHVWWDNHQDVPHDQLQJ´SDUWE\SDUWµWKDWLV´LQHTXDOSDUWVµ ZKLOH LQ WKH &RPPXQLW\ 5XOH LW PHDQV ´RQH DORQJVLGH WKH RWKHUµ WKH ODWWHU PHDQLQJ KRZHYHU LVQRWWDNHQRXWRIWKHEOXHEXWUDWKHUUHÁHFWVDXVDJHGRFXPHQWHGLQ5DEELQLF+HEUHZ ytkd yam
˜yqsw[w dbb db˜ybçwyç μymkj ydymlt lç μhyanwç yrawx l[ brjùwlawnw μydbh la brjù hrwtb ´:KDW LV WKH PHDQLQJ RI ZKDW LV ZULWWHQ ¶$ VZRUG LV XSRQ WKH baddªm DQG WKH\ VKDOO EHFRPHIRROV·>-HU@"$VZRUGLVXSRQWKHHQHPLHVRIWKHGLVFLSOHVRIWKHZLVHZKRVLWbad b#badDQGVWXG\WKH7RUDKµE%HUDNKRWEVHHDOVRE0DNNRWD7D¶DQLWD )RUDQDO\VLVRIPDQ\RWKHUVXFKH[DPSOHVVHH1RDP0L]UDKL´7KH/H[LFRQDQG3KUDVHRORJ\ RIWKH6RQJVRIWKH6DEEDWK6DFULÀFHµ3K'GLVV+HEUHZ8QLYHUVLW\RI-HUXVDOHP
12$00,=5$+,
WHUPVDVLQWKHFDVHRIrybd ,IKHZDVDGHVFHQGHQWRUDQKHLURIDQFLHQWSULHVWO\ FLUFOHVKRZFRXOGKHWUDQVIRUPDQGREVFXUHWKHWUDQVSDUHQWZRUGLQJRIWHFKQLFDO LQVWUXFWLRQVDVLQWKHFDVHRIrhwf jlwmm LQVXFKDUDGLFDOZD\WKDWLWVUHODWLRQ WRWKHRULJLQDOFRQWH[WFDQKDUGO\EHUHFRYHUHG" 6XFKTXHULHVDUHGXOOHGLIRQHUHFRJQL]HVWKDWWKHDVVXPSWLRQXQGHUO\LQJWKH SUREOHPLVLQIDFWDQDFKURQLVWLF7KHDXWKRURIWKH6RQJVKDGQRVSHFLDOUHODWLRQ WRWKHSULHVWO\OLWHUDWXUHEHFDXVHQRVXFKOLWHUDWXUH³DVDGLVWLQFWDQGUHFRJQL]DEOH ERG\RIWH[WV³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·V SUHRFFXSDWLRQ ZLWK WKHPHVSHUWDLQLQJWRWKHWHPSOHWKHKHDYHQO\SULHVWKRRGDQGWKHFXOWPD\WKHQ EHLQWHUSUHWHGDVUHIOHFWLQJDQRWKHUVSLULWXDOWUHQGZKLFKKDVQRWKLQJWRGRZLWK ´UHDOµ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
$VLPLODUFRQFOXVLRQZDVUHDFKHGE\$OH[DQGHU0\VWLFDO7H[WV²DOWKRXJKKLVJHQHUDO DSSURDFKWRWKHLVVXHGLVFXVVHGKHUHLVTXLWHGLIIHUHQW ,Q WKLV UHVSHFW WKH 6RQJV FDQ EH FRQWUDVWHG WR WKH ERRN RI (]HNLHO ZKLFK GUDZV IURP DXWKHQWLF³\HW LQGHSHQGHQW³SULHVWO\ WUDGLWLRQV DQG VW\OH DQG PD\ WKHUHIRUH EH VHHQ DV D ODWH RXWJURZWKRISULHVWO\OLWHUDWXUHVHH0HQDKHP+DUDQ´7KH/DZ&RGHRI(]HNLHO;/²;/9,,,DQG ,WV5HODWLRQWRWKH3ULHVWO\6FKRROµ+8&$ ²DW²LGHP´(]HNLHO3DQGWKH 3ULHVWO\6FKRROµ97 ²
7KH/RUG·V3UD\HUDQGCMG 7ZR&KULVWLDQ3DS\UXV$PXOHWV %UHQW1RQJEUL 0DFTXDULH8QLYHUVLW\
7KH ODVW IHZ \HDUV KDYH VHHQ D UHQHZHG LQWHUHVW LQ WKH VWXG\ RI SDS\URORJLFDO UHPDLQVDVDPHDQVRIVKHGGLQJOLJKWRQHDUO\&KULVWLDQLW\7RDGGIXUWKHUHYLGHQFH WRWKLVGLVFXVVLRQ,GUDZDWWHQWLRQWRWZRSDS\ULLQ&3@ DQG´,QWKHRULJLQDODQQXQFLDWLRQRIWKHJRVSHO UHSHQWDQFHDQGIDLWKDUHMRLQWO\SURSRVHGDVFRQGLWLRQVRIVDOYDWLRQµS>&3 @VHHDOVR:&)DQGLWV/DUJHU&DWHFKLVP 7KXVWKHSURPLVHRIHWHUQDO OLIHDQGIRUJLYHQHVVRIVLQVLVIXOÀOOHGZKHQ*RG·VFRQGLWLRQVDUHPHWZKHUHE\ WKHJXLOW\VLQQHUHQWHUVLQWRFRYHQDQWZLWKKLP 7KLUG*RG·VDWWLWXGHWRZDUGVLQFRPPLWWHGE\WKHHOHFW'RFWULQDODQWLQRPLDQV ZHUHDFFXVHGRIEHOLHYLQJWKDW*RG·VDWWLWXGHWREHOLHYHUVLVDOZD\VORYHKHWDNHVQR GLVSOHDVXUHLQWKHP7REHVXUHKHPLJKWGHDOZLWKWKHPVRWKDWWKH\PLJKWFRQVLGHU WKHLUZD\VEXWWKLVLVQRWGLVSOHDVXUHUDWKHU*RG·VVHHPLQJDQJHULVD´IUXLWRIKLV XQFKDQJHDEOHORYLQJNLQGQHVVWRWKHPµ7KLVQRWLRQDSSDUHQWO\VWHPPHGIURP DQH[WUHPHYLHZRILPSXWDWLRQDVZHOODVDIDWDOLVWLFYLHZRISHUVHYHUDQFH*LYHQ WKDWWKHHOHFW·VVLQVZHUHLPSXWHGWR&KULVW&KULVWKLPVHOIEHFRPHVSHUVRQDOO\D VLQQHU,QOLNHPDQQHUVLQFHWKHULJKWHRXVQHVVRI&KULVWZDVLPSXWHGWRWKHEHOLHYHU WKDWULJKWHRXVQHVVPDNHVWKHEHOLHYHUSHUVRQDOO\ULJKWHRXVLQFRQWUDGLVWLQFWLRQ WR/XWKHU·VFRQFHSWRIDSHUSHWXDO´DOLHQµULJKWHRXVQHVV 7KHUHIRUH*RGFDQVHH QRVLQDPRQJKLVHOHFWDWDOO7RWKLVZHQHHGRQO\PHQWLRQ0LOWRQ·VGRFWULQHRI SHUVHYHUDQFHWKHYHU\GRFWULQHWKDWÁRZVRXWRIWKHJUHDWHUGRFWULQHRIWKHFRYHQDQW :HKDYHDOUHDG\VHHQWKDW0LOWRQFRQVLGHUVWKHFRYHQDQWRIJUDFHWREHSULPDULO\ FRQGLWLRQDO 'RFWULQDO DQWLQRPLDQV KRZHYHU ZRXOG VD\ QR VXFK WKLQJ 7KH\ IXUWKHUDUJXHGWKDW*RGGRHVQRWVHHVLQLQWKHHOHFWEHFDXVH*RGJLYHVKLVVDYLQJ JUDFHXQFRQGLWLRQDOO\WRWKHSRLQWWKDWWKH\ZKRUHFHLYHLWZLOOEHSUHVHUYHGXQWRWKH HQGQRPDWWHUZKDW,QRWKHUZRUGVWKH\FRXOGQRWJRWRKHOOLIWKH\WULHG0LOWRQ WKLQNVRWKHUZLVH,QKLVFKDSWHURQLPSHUIHFWJORULÀFDWLRQLHVDQFWLÀFDWLRQLQWKLV OLIH KHDUJXHVWKDWWKHÀQDOSHUVHYHUDQFHRIWKHVDLQWVLVDJLIWRI*RGDQGWKDW WKHVDLQWVZLOOQHYHUHQWLUHO\IDOODZD\WKURXJKDQ\SRZHURXWVLGHRIWKHPVHOYHV ´VRORQJDVQRWKLQJLVZDQWLQJRQWKHLURZQSDUWVDQGWKH\FRQWLQXHWRWKHXWPRVW
6HH 'H GRFWULQD FK SS ² >&3 ²@ IRU KLV YLHZV DERXW WKH SXQLVKPHQW RIWKHGDPQHG
7RRQ3XULWDQV&LWHGIURP,VDDF&KDXQF\·V1HRQRPLDQLVP8QPDVN·GWKLUGSDUW 7REHVXUHQHLWKHUZRXOGPRVWRIWKHRUWKRGR[&DOYLQLVWVRIKLVGD\DWOHDVWQRWLQWKHPDQQHU
0LOWRQGLG
+$59$5'7+(2/2*,&$/5(9,(:
LQWKHPDLQWHQDQFHRIIDLWKDQGORYHµS>&3@ ,WIROORZVWKHQWKDW LIRQHQHJOHFWVWKHPDLQWHQDQFHRIIDLWKDQGORYHWKHQKHRUVKHZLOOEHVXEMHFW WRWKHKRO\GLVSOHDVXUHRI*RG,IWKHQHJOHFWFRQWLQXHV*RGZLOOFXWRIIWKHGHDG EUDQFK0LOWRQFLWHV-RKQDQG5RPDVSURRI &OHDUO\0LOWRQ·V *RGGRHVQRWWXUQDEOLQGH\HWRVLQ 7KHIRXUWKDQGÀQDOSRLQWVHHVWKHGRFWULQDODQWLQRPLDQVPDLQWDLQLQJWKDWVLQFH &KULVWERUHWKHIXOOSHQDOW\IRUVLQEXWDOVRPHWWKHSRVLWLYHGHPDQGVRIWKH0RVDLF ODZWKHEHOLHYHULVIUHHIURPWKHREOLJDWLRQWRREVHUYHLW$WÀUVWJODQFHLWPLJKW VHHP0LOWRQIDOWHUVRQWKLVSRLQW,QKLVUHEXWWDORI3RODQXVLQFKDSWHU´2IWKH *RVSHODQG&KULVWLDQ/LEHUW\µ0LOWRQZULWHV´6LQFHWREHIUHHIURPWKHUHVWUDLQW RIWKHODZFDQPHDQQRWKLQJEXWWKDWIRUZKLFK,FRQWHQGDQHQWLUHH[HPSWLRQIURP WKHREOLJDWLRQRIWKHODZµ/LNHWKHGRFWULQDODQWLQRPLDQV0LOWRQLVKHUHVSHDNLQJ VSHFLÀFDOO\RIWKH0RVDLFODZ³QRWRIDOOODZLQHDFKRILWVPDQLIHVWDWLRQV/DZ LVVLJQLÀFDQWLQKLVWKRXJKWHVSHFLDOO\WKHODZRIQDWXUHZKLFK0LOWRQKLPVHOI EHOLHYHVLVZULWWHQ´E\>&KULVW·V@6SLULWRQWKHKHDUWVRIEHOLHYHUVDQGOHDGVWKHP DVZLOOLQJIROORZHUVµS>&3@ %XW0LOWRQ·VPDLQUHDVRQIRUGHQ\LQJ REOLJDWRU\VWDWXVWRWKH0RVDLFODZGLIIHUVGUDPDWLFDOO\IURPWKDWRIWKHGRFWULQDO DQWLQRPLDQ-HVXV·PHHWLQJWKHSRVLWLYHGHPDQGVRI7RUDKLVEHVLGHWKHSRLQWIRU 0LOWRQDVZHVKDOOVHHGRHVQRWHVSRXVHD´FRYHQDQWRIZRUNVµRUDWOHDVWKHGRHV QRWDVVRFLDWHDZRUNVFRYHQDQWZLWKWKH0RVDLFODZ7R0LOWRQWKHHQWLUHROG FRYHQDQWFRGHDVDSDUHQWKHWLFGLVSHQVDWLRQLQWKHFRXUVHRI*RG·VGHDOLQJVZLWK WKHKXPDQUDFHZDVDOZD\VLQWHQGHGWRHQG,WVOLWHUDOSXUSRVHZDVIXOÀOOHGLQWKH GDZQLQJRIWKHJRVSHO,WLVRQWKLVEDVLVWKDW0LOWRQDUJXHVIRUFRPSOHWHDEURJDWLRQ RIWKH7RUDK:KHWKHURUQRWKHZRXOGVWLOOUHFHLYHWKHFKDUJHRI´DQWLQRPLDQLVPµ DWWKLVSRLQWLVPRRW$VZHZLOOVHHKHFOHDUO\FKDPSLRQVWKHQRWLRQWKDWQHZ FRYHQDQWEHOLHYHUVIXOÀOO*RG·VODZDVWKH6SLULWXSRQWKHLUKHDUWVZULWHVLWVVXP DQGHVVHQFH7KXVIRU0LOWRQZKLOHJRRGZRUNVVWHPIURPIDLWKQRWIURPWKH 'HFDORJXHWKH\DUHQRQHWKHOHVVVWLOODUHVXOWRIVDYLQJIDLWK 7KHDERYHSRLQWVDQGWKHIDFWWKDWWKHHQWLUHW\RI%RRN,,RI'HGRFWULQDSS ² >&3 ²@ VHYHQWHHQ FKDSWHUV LQ DOO GHDOV ZLWK WKH VHUYLFH RI 7KLVQRWLRQLVQRWXQIRXQGHGDPRQJWKHPDMRULW\RIGLYLQHVLQ0LOWRQ·VGD\7KXVZHPXVW EHFHUWDLQRIWKRVHZLWKZKRP0LOWRQZDVFRQWHQGLQJQRW&DOYLQLVWVEXWWKHLQFUHDVLQJO\H[SOLFLW K\SHU&DOYLQLVPRI(QJOLVK1RQFRQIRUPLW\ WRFRUUHFWO\XQGHUVWDQGKLVSURSRVHG´FRUUHFWLRQVµ 'HGRFWULQD>&3@$PDQGXV3RODQXVYRQ3RODQVGRUI² ZDVWKHOHDGHU RIWKH´FRQVHUYDWLYHµ&DOYLQLVWVLQ%DVHO+HDOVRFRPSRVHGFRPPHQWDULHVRQWKHERRNVRIWKH2OG 7HVWDPHQWDQGSURGXFHGD*HUPDQWUDQVODWLRQRIWKH1HZ7HVWDPHQW $QGKHUHLQOLHVWKHIRGGHUIRUPXFKFXUUHQWGHEDWHLQ5HIRUPHGFLUFOHV:DVWKH0RVDLFODZ D NLQG RI UHFDSLWXODWLRQ RI WKH FRYHQDQW RI ZRUNV DV LQ DUJXDEO\ :&) ² DQG WKH /DUJHU &DWHFKLVP ",VLWWREHDVVRFLDWHGVROHO\ZLWKWKHFRYHQDQWRIJUDFHHJDJDLQWKLVWLPH FOHDUO\LQWKH:&)² ",VWKHUHDQRWKHUDOWHUQDWLYH"0LOWRQWKRXJKWVR6HHRXUGLVFXVVLRQ LQVHFWLRQ,9EHORZIRUPRUHRQWKLV
(YHQWKRXJK%XUQVDFNQRZOHGJHVWKLVKHVWLOOVHHV0LOWRQ·VOLEHUW\DVH[SUHVVUDGLFDOLVPVHH ´0LOWRQ·V$QWLQRPLDQLVPµ²
&+5,6723+(5-2+1'21$72
*RGDQGWKHYLUWXHVDQGGXWLHVPDQKDVWRKLPDQGKLVQHLJKERUQRWWRPHQWLRQ KHHPSOR\VWKH2OG7HVWDPHQWWKURXJKRXW RXJKWWRFOHDU0LOWRQRIWKHGRFWULQDO DQWLQRPLDQFKDUJH+HPLJKWKDYHEHHQDGRFWULQDODQGHFFOHVLDVWLFDODQGSROLWLFDO OLEHUWDULDQEXWKHZDVQRWDJDLQVWWKHODZ´*RRGZRUNVDUHWKRVHZKLFKZHSHUIRUP E\WKH6SLULWRI*RGZRUNLQJLQXVWKURXJKWUXHIDLWKWRWKHJORU\RI*RGWKHDVVXUHG KRSHRIRXURZQVDOYDWLRQDQGWKHHGLÀFDWLRQRIRXUQHLJKERUµS>&3@ 1RWRQO\ZDVKHHQWLUHO\DWRGGVZLWKWKHOLFHQWLRXV´5DQWHUµDQWLQRPLDQVKH ZDVDOVRDWRGGVZLWKWKHDVKHSHUFHLYHGWKHP K\SHU&DOYLQLVWLFDQWLQRPLDQV WKDWVXUURXQGHGKLPGXULQJWKHVDQGEH\RQG 'HVSLWHDOOWKLV0LOWRQFULWLFVVWLOOWHQGWRYLHZKLPDVDQDQWLQRPLDQ-RDQ 6%HQQHWWDERXWWZHQW\ÀYH\HDUVDJRSODFHG0LOWRQÀUPO\LQZKDWVKHFDOOHG ´KXPDQLVW DQWLQRPLDQLVPµ ZKLFK LQGLFDWHV ´WKDW WKHVH WKLQNHUV >WKH$UPLQLDQ -RKQ *RRGZLQ DQG -RKQ 0LOWRQ@ GHVFHQG LQ WKH &KULVWLDQ KXPDQLVW OLQH WKDW UHDFKHVIURP6DLQW7KRPDV$TXLQDVWKURXJK5LFKDUG+RRNHULQWKHVHYHQWHHQWK FHQWXU\µ+HUDQDO\VLVLPPHGLDWHO\PDQLIHVWVWKHSUHFLVHHUURUZHKRSHWRUHFWLI\ WKURXJKRXWWKLVHVVD\QDPHO\PDLQWDLQLQJ0LOWRQ·VGLVWLQFWLRQVLQKLVXVHRIWKH ZRUGODZ0RVWWLPHVZKHQVSHDNLQJRIWKHODZKHVLPSO\PHDQV´7RUDKµWKH ROGFRYHQDQW0RVDLFFRGHLQLWVHQWLUHW\DVRSSRVHGWRWKH´ODZRIQDWXUHµRU´RI *RGµ0LVVLQJWKLVZLOORQO\OHDGWRLPSUHFLVLRQDQGFRQIXVLRQZKHQGLVFXVVLQJ 0LOWRQ·VFRYHQDQWDOWKHRORJ\+HPD\QRWKDYHZULWWHQLWOLNHWKLVEXWWKHXQZULWWHQ FRYHQDQWRUODZRI*RGELQGV&KULVWLDQV,WVVXPDQGHVVHQFH³ORYH³H[SORGHV LQWROLEHUW\%HQQHWW·VELJJHVWPLVWDNHZDVGLVDVVRFLDWLQJWKHRQHYLWDODVSHFWRI 0LOWRQLFOLEHUW\³´WKHEHOLHYHU·VIUHHGRPWRZRUNFRQÀGHQWO\LQDQHWKLFDOVLWXDWLRQ ZLWKWKHGLYLQHVSLULWWKDWGZHOOVLQKLVRUKHUKHDUWµ³IURPWKHODZRIQDWXUHWKDW ´LQWKHUHJHQHUDWHXQGHUWKHLQÁXHQFHRIWKH+RO\6SLULWLVGDLO\WHQGLQJWRZDUGV DUHQHZDORILWVSULPLWLYHEULJKWQHVVµ)XUWKHUDFFRUGLQJWR%HQQHWW0LOWRQDQG *RRGZLQ EDVHG WKHLU DQWLQRPLDQLVP RQ IUHH ZLOO &RUUHFWO\ VXUPLVLQJ WKDW WKH ELJJHVWREVWDFOHWRWKLVQRWLRQOD\LQWKHIDFWWKDW$UPLQLDQLVPVHHPVWRGLUHFWO\ FRQWUDGLFWDQWLQRPLDQLVPLQWKDW$UPLQLDQWKHRORJ\WHQGVWRZDUGWKHRSSRVLWHRI DQWLQRPLDQLVP VKHFRQIURQWHGWKLVLVVXHÀUVW:KLOH%HQQHWWGLGPDNHDJRRG FDVHIRUWKHLQWULQVLFUHODWLRQVKLSEHWZHHQIUHHGRPDQG&KULVWLDQKXPDQLVPVKH QHYHUMXVWLÀHGKHU´KXPDQLVWDQWLQRPLDQµDVDYLDEOHFDWHJRU\RISHUVRQVZKRDSDUW IURPVSHFLDOJUDFHDQG*RG·V:RUGORRNHGSULPDULO\WRDQDPELJXRXVQDWXUDOODZ
´/LFHQFHWKH\PHDQZKHQWKH\FU\OLEHUWLHµDFFXVHG0LOWRQLQKLVVRQQHW;,,DJDLQVWWKH5DQWHUV
-RDQ6%HQQHWW´0LOWRQ·V$QWLQRPLDQLVPDQGWKH6HSDUDWLRQ6FHQHLQ3DUDGLVH/RVW%RRN µ30/$ ²DW %HQQHWW´0LOWRQ·V$QWLQRPLDQLVPµ'HGRFWULQDFKS>&3@%XWPD\EH , SUHVXPH WRR PXFK RQ KHU VLOHQFH UHJDUGLQJ WKLV SRLQW 6HH %HQQHWW 5HYLYLQJ /LEHUW\ 5DGLFDO &KULVWLDQ+XPDQLVPLQ0LOWRQ·V*UHDW3RHPV&DPEULGJH0DVV+DUYDUG8QLYHUVLW\3UHVV ²ZKHUHVKHGRHVDUJXHWKDWWKH´KXPDQLVWDQWLQRPLDQµLVRQHZKRDSSUHKHQGVWKHODZRI QDWXUHRQO\E\WKH´VWUHQXRXVHIIRUWVRIWKHUHJHQHUDWHPRUDOUHDVRQµ>HPSKDVLVPLQH@
,QW\SLFDOIDVKLRQ%HQQHWWWKLQNV0LOWRQZDV$UPLQLDQ
+$59$5'7+(2/2*,&$/5(9,(:
WRRUGHUWKHLUPRUDOYLVLRQV9LUWXRXVSDJDQVPD\KDYHGRQHWKLVEXW&KULVWLDQ KXPDQLVWV"%URDGO\VSHDNLQJ$TXLQDV(UDVPXV+RRNHUDQGHYHQ0LOWRQVDZ WKHPVHOYHVHQWUHQFKHGLQDQWKURSRORJLFDO$XJXVWLQLDQLVP$VVXFKWKHIUHHGRP WKH\SURFODLPHGZDVOLPLWHG(YHQDUHJHQHUDWHSHUVRQ·VIUHHGRPDFFRUGLQJWR 0LOWRQLQ'HGRFWULQDLVERXQGE\DWOHDVWRQHWKLQJ´:HVKRXOGJLYHQRMXVWFDXVH RIRIIHQFHWRDZHDNEURWKHUµDQLQMXQFWLRQZHPLJKWDGGQRWFOHDUO\GLVFHUQHG IURPQDWXUHDORQHEXWIURPVFULSWXUH7KXV0LOWRQDUJXDEO\VHHVKLPVHOIDVD IUHHWKHRORJLDQZRUNLQJZLWKLQWKHSDUDPHWHUVRIWKH:RUG+HFRQVWDQWO\ELQGV KLPVHOIWRLWWKURXJKRXW'HGRFWULQDXQOLNHUDWLRQDOLVWV/RFNH%LGGOHRU*RRGZLQ ZKRDFFHSWHGQRSDUDGR[HVDWDOORSWLQJIRUVNHSWLFLVPÀUVW0LOWRQRQWKHRWKHU KDQGZDVPRUHWKDQKDSS\WR´GLVFDUGUHDVRQLQVDFUHGPDWWHUVDQGIROORZWKH GRFWULQHRI+RO\6FULSWXUHH[FOXVLYHO\µS>&3@ ,QWKHHQGHYHQLI %HQQHWW·VDUWLFXODWLRQRI0LOWRQ·VYLHZVRQWKLVVXEMHFWKROGXSXQGHUVFUXWLQ\VKH XQGHUPLQHVWKHDUJXPHQWE\ODEHOLQJKLPDQWLQRPLDQ
Q7KH3RVVLEOH,QÁXHQFHXSRQ0LOWRQ·V&RYHQDQW7KHRORJ\DQG E\([WHQVLRQ+LV'RFWULQHRI&KULVWLDQ/LEHUW\ ,Q 3DXO 6HOOLQ FRQWULEXWHG DQ HVVD\ WR D ERRN RQ YDULRXV LQWHUSUHWDWLRQV RI 0LOWRQ WLWOHG ´¶,I 1RW 0LOWRQ:KR 'LG:ULWH WKH ''&"·7KH$P\UDOGLDQ &RQQHFWLRQµ6HOOLQGLVFXVVHVLQGHWDLOWKHGRFWULQHRISUHGHVWLQDWLRQHPSOR\LQJ WKHRULJLQDOPDQXVFULSWRI'HGRFWULQD³RQHRIWKHIHZVFKRODUVLQUHFHQW\HDUV WR PDNH WKH HIIRUW WR UHWUDQVODWH WKH SDVVDJHV KH XVHG %DVLFDOO\ KH FDOOV LQWR TXHVWLRQ0LOWRQ·VORQHFRPPLWPHQWWR'HGRFWULQD+HGRHVVRE\VXFFHVVIXOO\ FRPSDULQJSULPDULO\ 0RwVH$P\UDXW·V%ULHIWUDLWpGHODSUHGHVWLQDWLRQ DQGFKDSWHUVDQGRI'HGRFWULQD&KULVWLDQD´2IWKH'LYLQH'HFUHHVµDQG´2I 3UHGHVWLQDWLRQµ1RWRQO\GRHVKHVKRZWKHDIÀQLWLHVRI$P\UDXW·VWKRXJKWZLWK 'HGRFWULQDKHVKRZVH[DFWO\KRZDQXPEHURIWKHODWWHU·VSHUWLQHQWIHDWXUHVGLIIHU IURP$UPLQLDQLVPZKLFK0LOWRQVXSSRVHGO\KHOGDFFRUGLQJWRPRVWFULWLFV ,WLV LQVKRUWDPXFKQHHGHGDQGFODULI\LQJZRUNLQ0LOWRQWKHRORJLFDOVWXGLHV 6HOOLQUHIHUVWRWKUHHDXWKRUVWKDWPDGHPHQWLRQRI$P\UDXWEXWGLGQRWGUDZDQ\ FRQQHFWLRQVEHWZHHQKLVWKHRORJ\DQG'HGRFWULQD2QHRIWKHP'HQQLV'DQLHOVRQ LQ0LOWRQ·V*RRG*RGGRHVPHQWLRQWKH´IRXQGHUµRI$P\UDXW·VWKRXJKWWKH 6FRW -RKQ &DPHURQ "² EXW RQO\ LQ FRQQHFWLRQ ZLWK -RKQ 2ZHQ DV ,Q RWKHU ZRUGV VKH IDLOHG WR SURYLGH D FRQYLQFLQJ DUJXPHQW WKDW &KULVWLDQ KXPDQLVP LV ODWHQWO\DQWLQRPLDQ
'HGRFWULQD>&3@ ´5HDVRQµWKDWLVXQGHUVWRRGSHMRUDWLYHO\³DV/XWKHURIWHQXVHGLWFS%HQQHWW´0LOWRQ·V$QWL
QRPLDQLVPµQ ,Q/LYLQJ7H[WV,QWHUSUHWLQJ0LOWRQHG.ULVWLQ$3UXLWWDQG&KDUOHV:'XUKDP6HOOLQVJURYH 3HQQ6XVTXHKDQQD8QLYHUVLW\3UHVV ²
0LOWRQ·V*RRG*RG$6WXG\LQ/LWHUDU\7KHRGLF\&DPEULGJH&DPEULGJH8QLYHUVLW\3UHVV QQ²6HHDOVR6HOOLQ´,I1RW0LOWRQµQ
&+5,6723+(5-2+1'21$72
&DOYLQLVWVZKRVRXJKWWRUHFODLP&DOYLQLVPIURPWKHFOXWFKHVRIK\SHU&DOYLQLVP 'DQLHOVRQGRHVQRWPDNHDGLVWLQFWLRQEHWZHHQWKHWZRDQRYHUVLJKWWKDWZRXOG FDXVHERWK&DPHURQDQG2ZHQWRVSLQLQWKHLUJUDYHV+RZHYHU'DQLHOVRQGRHV JRRQWRPHQWLRQWKHSRVVLELOLW\WKDW0LOWRQ·VVRWHULRORJ\RXJKWWREHWDNHQDVD PLGGOHSRVLWLRQEHWZHHQWKHWZRPDMRUFRPSHWLQJV\VWHPVRIKLVGD\+HFLWHV 5LFKDUG%D[WHUDVDQH[DPSOHZKLFKDWÀUVWJODQFHDSSHDUVWREHKHDGHGLQWKH ULJKWGLUHFWLRQEXWXSRQFORVHUFRPSDULVRQLVIRXQGZDQWLQJ7KHEHWWHUFKRLFHLV &DPHURQDVZHVKDOOVHHWKURXJKRXWWKLVHVVD\ ,QGHSHQGHQWO\ RI 6HOOLQ DQG RI WKHVH RWKHU 0LOWRQ VFKRODUV , EHJDQ WR VHH WKH VLPLODULWLHV EHWZHHQ 6DOPXULDQ WKHRORJ\ DQG WKH HSLF SRHP 3DUDGLVH /RVWSDUWLFXODUO\LQWKH)DWKHU·VVRPHZKDWSX]]OLQJVSHHFKLQ%RRN² ,URQLFDOO\ 6HOOLQ EDVHG KLV MXGJPHQW WKDW 'H GRFWULQD LV ´D GLVSURSRUWLRQDWH FROOHFWLRQRIDVVRFLDWHGLGHDVµ³VRPH0LOWRQLFRWKHUVQRW³RQZKDWKHVDZDV DPRQJRWKHUWKLQJVDQ$P\UDOGLDQLQÁXHQFHXSRQWKHWH[WZKHUHDV,GHHPHG WKH HSLF SRHP KHDYLO\ LQÁXHQFHG E\ 6DOPXULDQ LGHDV7KXV LI 6HOOLQ GLVWDQFHV 0LOWRQIURPVROHDXWKRUVKLSRI'HGRFWULQDEDVHGRQLWVGLVMRLQWHGHQWHOHFK\³RI ZKLFKWKH$P\UDOGLDQFRQQHFWLRQUHPDLQVDSDUW³DQGLIP\FRQFOXVLRQVWDQGV WKDW3/LVHVVHQWLDOO\6DOPXULDQGRHVWKDWQRWEULQJWKHDXWKRUVKLSTXHVWLRQEDFN WRVTXDUHRQHLQWKDW6HOOLQUHJDUGVWKH$P\UDOGLDQSRUWLRQVDVQRQ0LOWRQLF " 0D\EH WKH RQO\ UHFRQFLOLDWLRQ EHWZHHQ 6HOOLQ DQG P\VHOI WKHQ ZRXOG EH WR VXJJHVWWKDWDOOWKHRYHUWO\UDGLFDOSRUWLRQVRI'HGRFWULQDDUHDFWXDOO\LQDXWKHQWLF OHDYLQJWKHPRGHUDWHO\FRQVHUYDWLYHVWUHDNWKURXJKRXWRULJLQDOWR0LOWRQ·VRZQ WKRXJKWV0\WHQWDWLYHFRQFOXVLRQVUHJDUGLQJ3/FDPHPRUHRUOHVVDVDUHVXOW RIP\EHLQJDVWXGHQWLQ5HIRUPHGWKHRORJLFDOKLVWRU\ZKHUHDV6HOOLQFDPHWRWKH ´ODUJHUSLFWXUH>E\@TXHVWLRQLQJWKHVPDOOSRLQWVLQWKH/DWLQµ>RIWKHRULJLQDO 06RI'HGRFWULQD@6HOOLQWKXVFRQFOXGHVWKDWWKHWUHDWLVHLVDWEHVWDSDWFKZRUN WKHRORJ\ ZLWK$P\UDOGLDQ LGHDV FUDPPHG LQ MX[WDSRVHG ZLWK RWKHU LGHDV WKDW ´DUHVRPHWLPHVFRKHUHQWDQGFRQVLVWHQWVRPHWLPHVORRVHO\UHODWHGVRPHWLPHV PLVSODFHGVRPHWLPHVKHWHURJHQHRXVDQGVRPHWLPHVHYHQVHOIFRQWUDGLFWRU\µ 1RZWKLVLVDVHQWLPHQWZLWKZKLFK,DJUHHEXWVHH%HQMDPLQ0\HUV´3UHGHVWLQDWLRQDQG )UHHGRPLQ0LOWRQ·V3DUDGLVH/RVWµ6-7 ²IRUDQDWWHPSWWRHOHYDWHWKHSRHW·V LQJHQXLW\DQGWKXVKLVSODFHLQWKHKLVWRULFDOGHYHORSPHQWRIWKLVSDUWLFXODUGRFWULQHDORQJWKHOLQHV RI6FKOHLHUPDFKHUDQG%DUWK ,QVKRUWWKHWKHRORJ\SURGXFHGE\&DPHURQDQGKLVVWXGHQW$P\UDXWDWWKH6DXPXUDFDGHP\ IDFHGWKHLUHRIWKHRUWKRGR[SDUW\IRUÁLUWLQJZLWKZKDWWKH\GHHPHGWREHWKLQO\YHLOHG$UPLQLDQLVP 6HHWKH+HOYHWLF&RQVHQVXV IRUDSRLQWE\SRLQWGHIHQVHDJDLQVWWKLVPRGHUDWHIRUPRI&DOYLQLVP 7KRVH RWKHU VRXUFHV SULPDULO\ EHLQJ :LOOLDP$PHV ² DQG -RKDQQHV :ROOHELXV ² ³ERWKRIZKRPIHOOZHOOZLWKLQWKHERXQGVRI5HIRUPHGRUWKRGR[\6HH6HOOLQ´,I 1RW0LOWRQµ ,DPQRWVXJJHVWLQJ,DIÀUPWKLV%HVLGHVWKHJXDUGLDQVRI0LOWRQ·VKHWHURGR[\ZRXOGKDYH P\KHDG6HH6HOOLQ´,I1RW0LOWRQµ²
3DXO6HOOLQHPDLOPHVVDJHWRDXWKRU0DUFK 6HOOLQ´,I1RW0LOWRQµ
+$59$5'7+(2/2*,&$/5(9,(:
,WRRFRQWLQXHWRVHHWKLV´$P\UDOGLDQFRQQHFWLRQµYHU\RIWHQZLWKLQWKHSDJHV RI'HGRFWULQDDQGLQWKDWVDPHVSLULW,ZDQWWREULHÁ\VSHFXODWHDERXWDSRVVLEOH FRQQHFWLRQEHWZHHQ0LOWRQDQGWKLV&DOYLQLVWLF´KHUHV\µWKRXJKP\UHDVRQVIRU GRLQJVRKDYHOLWWOHWRGRZLWKWKHDXWKRUVKLSTXHVWLRQ,DPPXFKPRUHFRQFHUQHG ZLWK'HGRFWULQD·VWKHRORJ\EXWLIWKHTXHVWLRQRIDXWKRUVKLSLVDOVRFODULÀHGVR PXFKWKHEHWWHU $URXQGDWWKHDJHRIWZHOYH0LOWRQDUULYHGDWWKHDFDGHP\RI6W3DXO·V /RQGRQZKHUHKHTXLFNO\EHIULHQGHG&KDUOHV'LRGDWLVRQRIDSURPLQHQW,WDOLDQ QRZ QDWXUDOL]HG (QJOLVKPDQ GRFWRU QDPHG 7KHRGRUH 'LRGDWL 7KHRGRUH·V UHSXWDWLRQKLQJHGQRWRQO\RQKLVSURIHVVLRQEXWRQKLVEHLQJWKHEURWKHURIWKH IDPRXV3URWHVWDQWWKHRORJLDQ*LRYDQQL'LRGDWLRI*HQHYD&KDUOHVKHDGHGIRU KLV IDWKHU·V SURIHVVLRQ HYHQWXDOO\ PDWULFXODWHG WR 7ULQLW\ &ROOHJH &DPEULGJH LQ 0LOWRQ IROORZHG VXLW LQ HQWHULQJ &KULVW·V &ROOHJH &DPEULGJH RQO\ WR EH EULHÁ\ VXVSHQGHG D \HDU ODWHU ,Q GXH FRXUVH KH UHWXUQHG DQG WKHQ JUDGXDWHGFXPODXGHLQDWZKLFKSRLQWKHHPEDUNHGRQDÀYH\HDUVWXG\LQJ KLDWXVDWKLVIDWKHU·VH[SHQVH,Q\RXQJ'LRGDWLHQWHUHGWKH8QLYHUVLW\RI *HQHYDXQGRXEWHGO\VSHQGLQJPXFKWLPHZLWKKLVIDPRXVXQFOH0LOWRQDQGKH FRUUHVSRQGHG UHJXODUO\ GXULQJ WKLV GHFDGH 6HYHUDO \HDUV ODWHU ZKLOH WUDYHOLQJ DEURDGLQZHVWHUQ(XURSH0LOWRQFDQFHOOHGDSODQQHGWULSWR*UHHFHLQXSRQ KHDULQJUXPRUVRIFLYLOZDULQ(QJODQG%HIRUHKHJRWKRPHKRZHYHU0LOWRQZKLOH YLVLWLQJ&KDUOHV·VXQFOH*LRYDQQLRQKLVZD\WKURXJK*HQHYDUHFHLYHGQHZVRIWKH \RXQJ'LRGDWL·VGHDWK+HWKHQLPPHGLDWHO\UHWXUQHGWR/RQGRQFRPPHPRUDWLQJ KLVIULHQG·VGHPLVHLQ/DPHQWIRU'DPRQ 2XU FRQFHUQ DW WKLV SRLQW LV WKH UHODWLRQVKLS EHWZHHQ *LRYDQQL 'LRGDWL DQG DQRWKHU LQIDPRXV WKHRORJLDQ QDPHO\ WKH 6FRW -RKQ &DPHURQ RI WKH 6DXPXU $FDGHP\ LQ )UDQFH &DPHURQ VWXGLHG XQGHU 'LRGDWL DW *HQHYD LQ ² $SSDUHQWO\ 'LRGDWL ZDV D KLJK &DOYLQLVW DQG DFFRUGLQJ WR %ULDQ$UPVWURQJ GHVSLWHWKLVKHUHPDLQHGIULHQGO\ZLWK&DPHURQWKURXJKRXWKLVOLIH1RZ0LOWRQ PDNHVPHQWLRQRI&DPHURQLQ'HGRFWULQDDWOHDVWRQFH´,KDYHDOVRREVHUYHGWKDW &DPHURQVRPHZKHUHH[SUHVVHVWKHVDPHRSLQLRQUHVSHFWLQJWKHDEROLWLRQRIWKH ZKROH/DZµS>&3@ &KDUOHV56XPQHUWKHWUHDWLVH·VÀUVWWUDQVODWRU ZURWHDIRRWQRWHDWWKLVSRLQWZKLFKLVTXRWHGLQIXOO 'LRGDWL ² D &DOYLQLVW VFKRODU DQG WKHRORJLDQ RI D IDPLO\ RI ,WDOLDQ 3URWHVWDQW UHIXJHHVVXFFHHGHG7KHRGRUH%H]DLQDVSURIHVVRURIWKHRORJ\LQ*HQHYD,QKHVHUYHG DVDGHSXW\WRWKH6\QRGRI'RUWDQGZDVFKRVHQWRDVVLVWLQFRPSLOLQJWKHFDQRQV+HZDVFKLHÁ\ NQRZQIRUKLVWUDQVODWLRQRIWKH%LEOHLQWR,WDOLDQ DQG0LOWRQPHQWLRQV'LRGDWLDVD%LEOH WUDQVODWRURI´EHVWQRWHµLQ7HWUDFKRUGRQ&3 +HPD\KDYHPHWKLPHDUOLHULQDQGZKHQ*LRYDQQLYLVLWHG/RQGRQ6HH'RQDOG& 'RULDQ7KH(QJOLVK'LRGDWLV1HZ%UXQVZLFN1-5XWJHUV8QLYHUVLW\3UHVV ²HVS
$UPVWURQJ&DOYLQLVPDQGWKH$P\UDXW+HUHV\3URWHVWDQW6FKRODVWLFLVPDQG+XPDQLVPLQ 6HYHQWHHQWK&HQWXU\)UDQFH0DGLVRQ:LV7KH8QLYHUVLW\RI:LVFRQVLQ3UHVV $UPVWURQJ DOVR UHIHUV WR WZR OHWWHUV IURP &DPHURQ WR 'LRGDWL WKDW KDYH EHHQ SULQWHG LQ WKH %XOOHWLQ RI WKH 6RFLHW\DQG+LVWRU\RI3URWHVWDQWLVPLQ)UDQFH ²DWQ
&+5,6723+(5-2+1'21$72
&DPHURQDSSHDUVWRKDYHEHHQDIDYRXULWHDXWKRUZLWK0LOWRQ+HHOVHZKHUH FDOOVKLPD´ODWHZULWHUPXFKDSSODXGHGµDQGFKDUDFWHUL]HVDQREVHUYDWLRQ ZKLFKKHPDNHVRQ0DWW[L[DV´DFXWHDQGOHDUQHGµ7HWUDFKRUGRQ3URVH :RUNV,, 0U7RGGDOVRLQQRWLFLQJWKDW&DPHURQZDVRQHRIWKHIHZFRQWHPSRUDU\ DXWKRUVZKRP0LOWRQKDVPHQWLRQHGLQWHUPVRIUHVSHFWTXRWHVDQRWKHUSDV VDJH LQ SUDLVH RI KLP IURP WKH WUHDWLVH FLWHG DERYH ZKHUH KH LV VSRNHQ RI DV´DQLQJHQLRXVZULWHUDQGLQKLJKHVWHHPµ7HWUDFKRUGRQ,,/LIHRI 0LOWRQS
$SSHDOVWR&DPHURQRFFXUÀYHWLPHVLQ7HWUDFKRUGRQDQGHDFKWLPH0LOWRQ ODYLVKHVKLPZLWKGHIHUHQFH7KHUHDVRQIRUWKLVLVVLPSOH&DPHURQZDVQRWDQ LPSHFFDEO\RUWKRGR[ORJLFLDQDQGGRJPDWLVWUDWKHUKHZDVD´UHVWOHVVRULJLQDO WKLQNLQJEURDGPLQGHGH[HJHWHDQGWKHRORJLDQµ2QHJODQFHDW'HGRFWULQDDQG WKHUHDGHUZLOOVHHWKHUHYHUHQFH0LOWRQJLYHVWRELEOLFDOH[HJHVLVZKHWKHURUQRW WKHUHVXOWLVVHOISHUFHLYHGLQJHQXLW\)RURXUSXUSRVHVLWLVZRUWKQRWLQJWKDW GXULQJ0LOWRQ·VLPSUHVVLRQDEOH\HDUVDW6W3DXO·VZKHUHKHDQG&KDUOHV'LRGDWL EHFDPHWKHEHVWRIIULHQGV&DPHURQZDVUHDGLQJSULYDWHOHFWXUHVRQGLYLQLW\LQ /RQGRQEHWZHHQ²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·V7HWUDFKRUGRQ WKHQPD\EH0LOWRQKDGEHHQDÁHGJOLQJ¶&DPHURQLWH·IRUTXLWHVRPHWLPHEHIRUHKLV JUHDWHVWZRUNVZHUHHYHQEHJXQ"7KRVHZKRDUHVNHSWLFDORI0LOWRQ·VVXSSRVHG DQWLQRPLDQLVPEXWVWLOOÀQGKLPQRRUWKRGR[SXULWDQFDQÀQGDWRXFKVWRQHLQ
6HH:ROIH&3 $UPVWURQJ &DOYLQLVP DQG WKH $P\UDXW +HUHV\ 7KLV DOVR KLJKOLJKWV ZKDW , WKLQN LV D
PLVWDNHLQ-HUDOG%UDXHU·VFDWHJRUL]DWLRQRI0LOWRQDVSULQFLSDOO\DUDWLRQDOLVWOLNH%LGGOHRU/RFNH 7KHUHLVQRGRXEWWKDW0LOWRQGLVSOD\HGUDWLRQDOLVWLFWHQGHQFLHVEXWKLVSLHW\³WKDWLVKLVSUDFWLFH ZKHQGRLQJWKHRORJ\³ZDVWKRURXJKO\HYDQJHOLFDO 0LOWRQ·V GLVFODLPHU DW WKH EHJLQQLQJ RI FK RI 'H GRFWULQD ´2I WKH 6RQ RI *RGµ LV DQ H[DPSOHRIWKLV´,HQUROP\VHOIDPRQJWKHQXPEHURIWKRVHZKRDFNQRZOHGJHWKHZRUGRI*RG DORQHDVWKHUXOHRIIDLWKDQGIUHHO\DGYDQFHZKDWDSSHDUVWRPHPXFKPRUHFOHDUO\GHGXFLEOHIURP WKH+RO\6FULSWXUHVWKDQWKHFRPPRQO\UHFHLYHGRSLQLRQµS>&3@
1RWHWKDWDOORI&DPHURQ·VZRUNVZHUHSXEOLVKHGDIWHUKLVGHDWKLQ 2U IRU WKDW PDWWHU PDQ\ RI WKH GRFWULQHV WKDW 0LOWRQ LV DFFXVHG RI KROGLQJ 7KHVH GD\V
LW VHHPV WKH PRUH UDGLFDO RQH FDQ PDNH KLP WKH EHWWHU 6HH 0LOWRQ DQG +HUHV\ HG 6WHSKHQ % 'REUDQVNLDQG-RKQ35XPULFK&DPEULGJH&DPEULGJH8QLYHUVLW\3UHVV IRUDJRRGH[DPSOH RIWKLVWHQGHQF\
+$59$5'7+(2/2*,&$/5(9,(:
-RKQ&DPHURQWKHIRUHUXQQHURIZKDWZRXOGHYHQWXDOO\EHFDOOHGLQ%ULWDLQ´1HZ 0HWKRGLVPµ´WKH0LGGOH:D\µRU´QHRQRPLDQLVPµWKRXJKWKLVODWWHUVFKRROZDV PXFKPRUHRIDQDGDSWDWLRQ $W WKH RXWVHW LW VKRXOG EH QRWHG WKDW ZH DUH RI WKH RSLQLRQ WKDW HYHQ E\ VHYHQWHHQWKFHQWXU\VWDQGDUGV0LOWRQZDVQRW´DJDLQVWWKHODZµ5DWKHUKLVFRQFHUQ ZDVWRKLJKOLJKWWKHVXSHULRULW\RIWKHJRVSHODJHRYHUDOOSUHYLRXVDJHVDQGWR UHEXWWKHOHJDOLVPKHIRXQGWREHLPSOLFLWLQWKHSRSXODURUWKRGR[KDUPRQL]DWLRQ RIWKHROG0RVDLFODZDQGWKHJRVSHO
Q'H'RFWULQD&KULVWLDQD&KDSWHU;;9,´2IWKH0DQLIHVWDWLRQ RIWKH&RYHQDQWRI*UDFH,QFOXGLQJWKH/DZRI*RGµ 7KHPRUHVSHFLÀFTXHVWLRQRIWKHUROHRIWKHODZLQWKHOLIHRIWKHEHOLHYHUIURP ERWKELEOLFDODQGV\VWHPDWLFSHUVSHFWLYHVLVDOZD\VRURXJKWWREH FRXFKHGLQWKH ODUJHUFRQWH[WRIFRYHQDQW+RZRQHDQVZHUVWKHGLV FRQWLQXLW\TXHVWLRQEHWZHHQ WKHROGDQGWKHQHZFRYHQDQWVRIWHQGLFWDWHVWKHDQVZHUWRWKHPRUHVSHFLÀFODZ JRVSHOGLVWLQFWLRQDQGZKHWKHUWKDWGLVWLQFWLRQLVUHDOO\DQRSSRVLWLRQHJGRFWULQDO DQWLQRPLDQVDQGVRPHZRXOGVD\/XWKHUDQV RUMXVWDSHGDJRJLFDOFDWHJRUL]DWLRQ WKDWUHWDLQVDFHUWDLQDPELJXLW\HJLQYDULRXVGHJUHHVWKH5HIRUPHGLIQRWDIHZ /XWKHUDQVWRR %HIRUHZHDWWHQGWRWKDWSDUWLFXODUPDWWHUDVZHOODVWR0LOWRQ·V VXSSRVHGDQWLQRPLDQLVPLQWKHWUHDWLVHZHPXVWÀUVWEULHÁ\GLVFXVVWKHFRYHQDQWDO FRQWRXUVRIFKDSWHURI'HGRFWULQDZKLFKSUHFHGHVWKHFKDSWHURQWKHJRVSHO DQGLWVUDPLÀFDWLRQVIRU&KULVWLDQOLEHUW\*LYHQRXUVSDFHOLPLWDWLRQVZHZLOOKDYH WRIRFXVPDLQO\RQWKRVHSRLQWVRILQWHUVHFWLRQEHWZHHQ0LOWRQDQG&DPHURQ 0LOWRQ LQ FKDSWHUV ² RI 'H GRFWULQD KDV EHHQ GLVFXVVLQJ UHQRYDWLRQ UHQHZHG KXPDQLW\ DV LW LV GHYHORSHG LQ WKLV OLIH +H WKHQ WXUQV WR VKRZ KRZ WKHFRYHQDQWRIJUDFHKDVEHHQPDQLIHVWHGLQVSDFHDQGWLPH,QGHHGIRU0LOWRQ WKHUHGRHVQRWVHHPWREHDQ\FRYHQDQWLQZKLFK*RGKDVDFFRPPRGDWHGKLPVHOI LQHVWDEOLVKLQJDPHDQVIRUKLVUHVWRUHGUHODWLRQVKLSZLWKPDQRXWVLGHRIVSDFH DQGWLPH7KHUHLVQRPHQWLRQRIDQHWHUQDO´FRYHQDQWRIUHGHPSWLRQµIURPZKLFK WKLVFRYHQDQWRIJUDFHÁRZV+RZHYHUWKHUHLVPXFKWDONDERXWJHQHUDODEVROXWH GHFUHHVDQGVSHFLDOFRQGLWLRQDOGHFUHHV´IURPDOOHWHUQLW\µLQ'HGRFWULQDFKDSWHUV DQG%XWDJDLQQRWHWKDW´*RGGHFUHHGQRWKLQJDEVROXWHO\ZKLFKKHOHIWLQWKH SRZHURIIUHHDJHQWVµFKS>&3@ 7KXV´ODZRI*RGµLQWKHFKDSWHU ,QWKLVKLVGHVLUHVDUHQRWXQOLNHWKHGRFWULQDODQWLQRPLDQVEXWLWLVKRZWKH\ÁHVKLWRXWDQG WRZKDWHQGVRWRVSHDNWKDWJUHDWO\GLIIHUHQWLDWHVWKHP 1RWHDJDLQWKHWLWOHRIWKLVFKDSWHUWKHODZRI*RG³LQHDFKRILWVPDQLIHVWDWLRQV³LVLQFOXGHG XQGHUWKHUXEULF´FRYHQDQWRIJUDFHµ$OOSDJHQXPEHUVLQWKHWH[WXQOHVVRWKHUZLVHLQGLFDWHGDUH IRXQGLQWKLVFKDSWHU
7KURXJKRXWWKHUHPDLQGHURIWKLVHVVD\,ZLOODWWHPSWWRGLVWLQJXLVKEHWZHHQ7RUDKDQGWKH ´ODZµ DV D JHQHUDO WKHRORJLFDO FDWHJRU\ ³IURP ZKLFK SRUWLRQV RI7RUDK DUH GHULYHG DFFRUGLQJ WRWKHFODVVLFDO&KULVWLDQSHUVSHFWLYH 7KLVLVDYHU\LPSRUWDQWIHDWXUHRI0LOWRQ·VDUJXPHQW³RQH RIWHQRYHUORRNHGE\FULWLFVGLVFXVVLQJWKLVYHU\VXEMHFW
&+5,6723+(5-2+1'21$72
WLWOH³ZKLFKLQFOXGHVWKHODZRIQDWXUH7RUDKDQGWKHODZRIIDLWK³IDOOVXQGHU WKHUXEULFRIFRQGLWLRQDOLW\,WVKRXOGEHSRLQWHGRXWDGGLWLRQDOO\WKDWWKLVQRWLRQ RIFRQWLQJHQWGHFUHHVLVDPDMRUIDFHWRI&DPHURQ·VFRYHQDQWWKHRORJ\$UPVWURQJ GHVFULEHVLWWKXV´,Q>&DPHURQ·V@K\SRWKHWLFDOFRYHQDQW*RGGRHVZKDWKHKDV SURPLVHGEHFDXVHWKHFUHDWXUHIXOÀOOVWKHUHTXLUHPHQWVWKHUHWR*RG·V@DQWHFHGHQWORYHZKLFKSURGXFHVZKDWHYHUJRRGWKHUH PD\EHLQWKDW>FUHDWXUH@,WLVWKLVIRHGXVK\SRWKHWLFXPZKLFKKDVWRGRZLWK*RG·V UHGHPSWLYHDFWLYLW\µ *RGÀUVWGHFODUHGWKHFRYHQDQWRIJUDFHLQWKHFRXUVHRISURQRXQFLQJMXGJPHQW RQWKHVHUSHQWDIWHUWKHIDOOLQWKHJDUGHQ%RWKWKHH[KLELWLRQDQGUDWLÀFDWLRQRI WKH FRYHQDQW RI JUDFH H[LVWHG XQGHU WKH ROG FRYHQDQW ´WKRXJK REVFXUHO\ DQG LQGLVWLQFWO\µS>&3@ DQGERWKFRQWLQXHXQGHUWKHJRVSHOH[FHSWWKDW XQGHU WKH JRVSHO ERWK WKH 5HGHHPHU DQG WKH WUXWK RI KLV UHGHPSWLRQ DUH PRUH H[SOLFLWO\XQGHUVWRRG 7KHODZRI*RGLWVHOIFDQEHHLWKHUZULWWHQRUXQZULWWHQ,WZDVGHOLYHUHGWR$GDP DVWKH´ODZRIQDWXUHRIZKLFKDFHUWDLQUHPQDQWRULPSHUIHFWLOOXPLQDWLRQ VWLOOGZHOOVLQWKHKHDUWVRIDOOPDQNLQGµS>&3@ 7KHUHJHQHUDWHE\ WKHSRZHURIWKH+RO\6SLULWDUHGDLO\PRYLQJWRZDUGDUHQHZDORILWV´SULPLWLYH EULJKWQHVVµLELG $VSURRI0LOWRQFLWHV5RP²ZKHUHLQQHZFRYHQDQW *HQWLOHEHOLHYHUVDUHVDLGWRGR7RUDKGHVSLWHQRWKDYLQJWKH7RUDKE\KHULWDJH ZKLFKVKRZVWKDWLWKDVEHHQZULWWHQRQWKHLUKHDUWVVHH-HUUHPHPEHU DJDLQWKDWWKHODZRIQDWXUHLVVXPPHGXSLQWKHODZRI0RVHV ,QWHUHVWLQJO\ PRVW5HIRUPHGH[HJHWHVKDGWUHDWHGWKH*HQWLOHVLQWKLVSDVVDJHDVXQUHJHQHUDWH SHRSOHZKRQRQHWKHOHVVNQRZWKHGLIIHUHQFHEHWZHHQULJKWDQGZURQJEHFDXVHLW HDVHVWKHEXUGHQRIPDNLQJVHQVHRIWKHDSRVWOH·VPDWWHURIIDFWVWDWHPHQWWKDW´WKH GRHUVRIWKHODZVKDOOEHMXVWLÀHGµLIWKHZKROHSHULFRSHYY² LVWUHDWHGDV DK\SRWKHWLFDOSRVWXODWLRQVLQFHQRRQHFDQGR7RUDKQRRQHFDQEHMXVWLÀHGLQ WKDWZD\0D\EH0LOWRQLVDOOXGLQJWRWKHSHUIHFWO\XQSRSXODULQPRVW3URWHVWDQW
$UPVWURQJ&DOYLQLVPDQGWKH$P\UDXW+HUHV\² 7KHUHDGHUZLOOQRWHWKHSUHOLPLQDU\VRXQGRIV\PPHWU\VRFRPPRQLQ5HIRUPHGWKHRORJ\
EXWQRWDVZHKDYHVHHQDFRPPRQUHIUDLQDPRQJGRFWULQDODQWLQRPLDQV JUDFHH[LVWHGXQGHUWKH ROGFRYHQDQWDQGFRQWLQXHVXQGHUWKHJRVSHO 6HH$UPVWURQJ&DOYLQLVPDQGWKH$P\UDXW+HUHV\ZKHUH&DPHURQLVTXRWHGDVZULWLQJ WKDWNQRZOHGJHRIWKHFRYHQDQWRIQDWXUH´ZDVQRWFRPSOHWHO\REOLWHUDWHGIURPWKHPLQGRIIDOOHQ PDQVLQFHLWZDVPDGHE\*RGWRUHVWUDLQPDQIURPVLQDQGOHDGKLPWR&KULVWµ1RWHIRU0LOWRQ WKDWLWLVQRWFOHDUO\GHVFULEHGLQWHUPVRID´ZRUNVFRYHQDQWµLQWKHWUDGLWLRQDOSXULWDQVHQVHIRULW LVQRWVHSDUDWHIURPWKHFRYHQDQWRIJUDFH,VWKLVQRWKLQJPRUHWKDQWKHOH[QDWXUDHHVSRXVHGE\ WKHHDUO\5HIRUPHUV"&DOYLQ·VVHQVXVGLYLQLWDWXV"7KHZD\LWLVXVHGKHUHVXJJHVWVWKHDIÀUPDWLYH 7KHODZRIQDWXUHLVGLYLQHO\VXPPHGXSLQWKH'HFDORJXHDQGUHFDSLWXODWHGE\WKH&KULVW$VD PRUDOODZXQLYHUVDOO\LPSRVHGE\*RGZLWKLQDOOSHUVRQVLWHLWKHUEOHVVHVRUFXUVHVWKHLQGLYLGXDO GHSHQGLQJRIFRXUVHXSRQKLVRUKHUUHJHQHUDWLRQ´E\WKHSRZHURIWKH+RO\6SLULWµ6LQFHLWGZHOOV LQHYHU\RQHLWLVWKHEDVLVIRUERWKQDWXUDOODZDQGQDWXUDOWKHRORJ\
7KDWLVLIWKHDSRVWOH3DXOLVVSHDNLQJRI*HQWLOH&KULVWLDQVLQWKHQKHLVTXLWHFOHDUO\VD\LQJ WKDWWKH\DUHMXVWLÀHGRQWKDWÀQDOGD\E\IXOÀOOLQJWKHODZWKDWKDVEHHQZULWWHQXSRQWKHLUKHDUWV
+$59$5'7+(2/2*,&$/5(9,(:
FLUFOHV QRWLRQWKDWWKHDSRVWOHLVVSHDNLQJRIDIXWXUHMXVWLÀFDWLRQWREHGHFODUHG RQMXGJPHQWGD\DQWLFLSDWHGLQSUHVHQWMXVWLÀFDWLRQ "$WDQ\UDWHLWLVQRVPDOO SRLQWWKDW0LOWRQLQWHUSUHWVWKHSDVVDJHLQWKLVPDQQHU+LVFKDSWHURQMXVWLÀFDWLRQ LQWKHWUHDWLVHZRXOGQRWVXLWWKH*QHVLR/XWKHUDQDQGKLVFRYHQDQWDOWKHRORJ\ LQJHQHUDOVHSDUDWHVKLPIURP)UDQFLV7XUUHWLQDQGKLVKHLUV$WWKLVSRLQW0LOWRQ VHHVWKHXVHRIWKHZRUGODZLQWKLVSDVVDJHLQ5RPDQVLQLWVDOOLQFOXVLYHVHQVH ´KHDYHQO\ GRFWULQH LQ WKH DEVWUDFW RU WKH ZLOO RI *RG DV GHFODUHG XQGHU ERWK FRYHQDQWVµ,WLVYHU\LQWHUHVWLQJWKDWKHXVHVWKHZRUGFRYHQDQWVWRGHVFULEHERWK WKHODZRIQDWXUHDQGWKHODZRI0RVHV:DVKHQRWGLVFXVVLQJWKHRQHFRYHQDQW RIJUDFHWKDWLQFOXGHGERWKRIWKHVH"&DPHURQ@VWULNHVDWWKHYHU\URRWVRIDQ\ LGHDWKDWHWHUQDOOLIHZDVDWWDLQDEOHWKURXJKWKHODZ1DPHO\>WKH0RVDLFFRYHQDQW@ ZDVDFRYHQDQWRIERQGDJHDQGQRWRIVSLULWXDOGHOLYHUDQFH,WSURPLVHGVLPSO\ D EOHVVHG OLIH LQ &DQDDQ 7KHUHIRUH RQH ZRXOG QRW EH VDYHG E\ LWV REVHUYDQFH +HFOHDUO\VSHDNVRIVXFKDIXWXUHYLQGLFDWLRQLQFKRQMXVWLÀFDWLRQ7KH0HVVLDKSDVVHV MXGJPHQWRQWKHÀQDOGD\QRWZLWKUHVSHFWWRIDLWK´ZKLFKLVWKHLQWHUQDOFDXVHRIMXVWLÀFDWLRQEXW WRWKHHIIHFWVDQGVLJQVRIWKDWIDLWKQDPHO\WKHZRUNVGRQHLQIDLWKWKDWKHPD\WKHUHE\PDNHWKH HTXLW\RIKLVMXGJPHQWPDQLIHVWWRDOOPDQNLQGµS>&3@ $VDQDVLGH´LQWHUQDOµFDXVH IRU0LOWRQPHDQVOLWWOHPRUHWKDQDQ´LQVWUXPHQWDOSUR[LPDWHµFDXVHLHDVRQHRILWVVXEVHWV &RPSDUHZLWK&DOYLQ·V,QVWLWXWHV7KLVDOVRPD\H[KLELWD5DPHDQLQÁXHQFH6HH&DUO%DQJV $UPLQLXV$6WXG\LQWKH'XWFK5HIRUPDWLRQVHFRQGHGLWLRQ*UDQG5DSLGV)UDQFLV$VEXU\3UHVV ²DQG/HRQ+RZDUG´,Q-XVWLI\LQJWKH:D\VRI*RGWR0DQ7KH,QYHQWLRQRI0LOWRQ·V *UHDW$UJXPHQWµLQ(VVD\VRQ3XULWDQVDQG3XULWDQLVPHG-DPHV%DUERXUDQG7KRPDV4XLUN $OEXTXHUTXH108QLYHUVLW\RI1HZ0H[LFR3UHVV ²
'HGRFWULQD>&3@ $JDLQVHH$UPVWURQJ&DOYLQLVPDQGWKH$P\UDXW+HUHV\²
&+5,6723+(5-2+1'21$72
HYHQ LI SHUIHFW REHGLHQFH ZHUH SRVVLEOH ZKLFK LW LV QRW µ 7KLV WKRXJKW ZDV LQWHQGHG E\ &DPHURQ³DQG 0LOWRQ VHHPV WR DJUHH³WR FRUUHFW WKH WHQGHQF\ RI WKHRUWKRGR[WRZDUGWKHOHJDOLVPWRZKLFKZHDOOXGHGWRDERYHWKHFRQÁDWLQJRI ODZDQGJRVSHO ,Q GXH WLPH´WKLVZDOORI SDUWLWLRQEHWZHHQWKH*HQWLOHVDQG WKH ,VUDHOLWHVµ 0LOWRQZULWHV´ZDVDWOHQJWKEURNHQGRZQE\WKHGHDWKRI&KULVW(SKLLXQWLO ZKLFKWLPHWKH*HQWLOHVZHUHDOLHQVIURPWKHZKROHRIWKHFRYHQDQWµS>&3 ²@ 7KHPDLQJRDORI7RUDKZDVWKDWWKH,VUDHOLWHVZRXOGEHIDFHGZLWK PDQNLQG·VGHSUDYLW\DQGFRQVHTXHQWO\WKHLURZQVRWKH\PLJKWÀQGUHIXJHLQWKH ULJKWHRXVQHVVRIWKHSURPLVHG6DYLRU7KHODZRIQDWXUHPHQWLRQHGDERYHLVDOVR LQWHQGHGWRVHUYHWKLVVDPHSXUSRVHIRUWKRVHZKRDUHQRW\HWUHJHQHUDWHDQGGR QRWKDYHWKHODZRI0RVHV7KHUHGHPSWLYHSXUSRVHVRI7RUDKDOVRLQFOXGHWKH QRWLRQWKDWWKH,VUDHOLWHVZRXOGDORQJZLWKDOORWKHUQDWLRQVLQGXHWLPH EHOHG E\WKHJRVSHORXWIURPXQGHUWKH´ZHDNDQGVHUYLOHUXGLPHQWVRIWKLVHOHPHQWDU\ LQVWLWXWLRQWRWKHIXOOVWUHQJWKRIWKHQHZFUHDWXUHDQGDPDQO\OLEHUW\ZRUWK\WKH VRQVRI*RGµS>&3@ 7KLVOLEHUW\LVIRXQGRIFRXUVHLQWKHULJKWHRXVQHVVRIWKHSURPLVHG6DYLRU DQGLWVSULQJVIRUWKIURP*RG·VSRZHUDQGPHUF\LQWRDVSRQWDQHRXVLQFOLQDWLRQ WRGRJRRG%XWWKHOHWWHURIWKHODZRI0RVHVNLOOVLWGRHVQRWOHDGWROLEHUW\LW FDQQRWMXVWLI\WKHXQJRGO\LWGRHVQRWSURPLVHHWHUQDOOLIH7KDWWKH0RVDLFODZ NLOOVDQGZRUNVZUDWKLVHVSHFLDOO\LPSRUWDQWWR0LOWRQ$SSDUHQWO\LWZDVDOVR LPSRUWDQWWR&DPHURQ6R$UPVWURQJ´&DPHURQHYHQVHHPVWR¶RXW/XWKHU·/XWKHU IRUKHGLVFXVVHVQRRWKHUXVHRIWKHODZWKDQDVD¶NLOOHU·µ7KHLPSRUWDQFHRI WKLVLQ0LOWRQ·VWKHRORJ\LVFOHDUWKHQHZFRYHQDQWLVUDGLFDOO\VXSUHPHLQWKDW LW DFFRPSOLVKHV ZKDW WKH ROG FRXOG QRW$V DQ H[DPSOH RI WKLV 0LOWRQ IRFXVHV RQ 5RPDQV ZKHUH WKH ´FRQÁLFW LQ WKH PLQGµ RI WKH DSRVWOH 3DXO H[SDQGV WR LQFOXGHWKHSRVLWLRQRIWKRVHZKRKDYH7RUDKEXWQRWWKHULJKW´VWXIIµZLWKZKLFK WRZRUNLWRXWWKDWLVWKH´ÁHVKµRUSXWGLIIHUHQWO\WKHQDWXUDOPDQLQ$GDPDV \HW XQUHJHQHUDWH ZLWKRXW WKH SRZHU RI WKH 6SLULW7KH ´FRQÁLFW LQ WKH PLQGµ RIWKHDSRVWOHLVDEVWUDFWUHÁHFWLYHHYHQDQDORJLFDOVRDVWRWHDFKKLVIHOORZ FRXQWU\PHQDERXWWKHZHDNQHVVRI7RUDKWKURXJKWKHÁHVKDQGWKHVXSUHPDF\ RIWKH´ODZRIWKH6SLULWRIOLIHLQ&KULVW-HVXVµVRWKDWWKHSURPLVHVRI*RGLQ &KULVWDUHUHFHLYHGWKURXJKWKH´ULJKWHRXVQHVVRIIDLWKµ5RP 7KXV
,ELG 7KLVYHU\LPSRUWDQWWKHPHRIXQLYHUVDOGHVLJQLQWKHQHZFRYHQDQWLVLQWHJUDOWRXQGHUVWDQGLQJ
0LOWRQ·VFRYHQDQWWKHRORJ\,WVWHPVIURPKLVFRQFHUQZLWKWKHSURJUHVVLYHQDWXUHRI*RG·VUHYHODWLRQ DQRWKHULPSRUWDQWWKHPH
$UPVWURQJ&DOYLQLVPDQGWKH$P\UDXW+HUHV\Q 1RWH WKDW WKLV LV GLVWLQFWLYHO\ QRW *UHHN GXDOLVP DV PDQ\ FULWLFV LPDJLQH 6HH +HUPDQ
5LGGHUERV·V3DXO$Q2XWOLQHRI+LV7KHRORJ\*UDQG5DSLGV(HUGPDQV ² &RPSDUH WKLV ZLWK 0LOWRQ·V RZQ VHQWLPHQW LQ KLV FKDSWHU RQ MXVWLÀFDWLRQ ´+HQFH ZH DUH MXVWLÀHG E\ IDLWK ZLWKRXW WKH ZRUNV RI >7RUDK@ EXW QRW ZLWKRXW WKH ZRUNV RI IDLWKµ S >&3 @ %RDVWLQJLVH[FOXGHGE\WKHODZRIIDLWK5RP² DQG´ZKDWLVWKHODZRIIDLWKEXW
+$59$5'7+(2/2*,&$/5(9,(:
WKHZHDNQHVVRIWKHÁHVKWKHLPSHUIHFWLRQRIWKHROGODZ´ZDVPDQLIHVWHGLQWKH SHUVRQRI0RVHVKLPVHOIIRU0RVHVZKRZDVDW\SHRI>7RUDK@FRXOGQRWEULQJWKH FKLOGUHQRI,VUDHOLQWRWKHODQGRI&DQDDQWKDWLVLQWRHWHUQDOUHVWEXWDQHQWUDQFH ZDVJLYHQWRWKHPXQGHU-RVKXDRU-HVXVµ'HGRFWULQDFKS>&3@ +HQFH6DLQW3HWHUSUHDFKHVWKDWWKURXJKWKHVHFRQG-RVKXDDORQHHWHUQDOVDOYDWLRQ FDPHXQGHUWKHROGFRYHQDQWHTXDOO\DVXQGHUWKHJRVSHODOWKRXJKWKH5HGHHPHU ZDVQRWWKHQUHYHDOHG2QFHDJDLQ0LOWRQUHLWHUDWHVWKDWWKHSURPLVHRI7RUDKRQO\ H[WHQGHGWRKDSSLQHVVLQWKLVOLIHWKDWLWFRXOGQRWVDYH´%XWZKDWQHLWKHU>7RUDK@ LWVHOIQRUWKHREVHUYHUVRILWFRXOGDWWDLQIDLWKLQ*RGWKURXJK&KULVWKDVDWWDLQHG DQGWKDWHYHQWRHWHUQDOOLIHµS>&3@ ,WLVLPSRUWDQWWRQRWHKHUHWKDW 0LOWRQLVQRWVSHDNLQJRIWKH0RVDLFODZLQWHUPVRIDFRYHQDQWRIZRUNVDVLIRQH ZDVH[SHFWHGWRHDUQKLVRUKHURZQVDOYDWLRQE\IXOÀOOLQJLW+HZRXOGQRWDIWHU RQFHDJDLQUHPLQGLQJWKHUHDGHUWKDWWKHSURPLVHRIWKHODZRI0RVHVLQYROYHG RQO\WHPSRUDOOLIHLPPHGLDWHO\SURFHHGWRGHVFULEH*RG·VLQWHQWLQJLYLQJWKDW ODZDVDPHDQVIRUSHRSOHWRDWWHPSWWRDFKLHYHWKHLURZQULJKWHRXVQHVVRUHWHUQDO VDOYDWLRQ7KHSRLQWKHUHIRU0LOWRQLVWKDW7RUDKFRXOGQRWHYHQGRZKDWLWSURPLVHG ORQJOLIHLQWKHODQGRI&DQDDQ EHFDXVHRIVLQIXOVDU[FRYHQDQWUHQHZDOFDQQRW FRPHLIZHDUHVWLOOLQ$GDP5DWKHULWLVRQO\WKURXJK&KULVWDQGWKH6SLULWWKDW WKHSURPLVHHWHUQDOOLIHRQWKHUHQHZHGHDUWK LVDWWDLQHG :HQRZFRPHWR0LOWRQ·VYLHZRIWKHJRVSHODQG&KULVWLDQOLEHUW\
Q'H'RFWULQD&KULVWLDQD&KDSWHU;;9,,´2IWKH*RVSHODQG &KULVWLDQ/LEHUW\µ 2QWKHJRVSHOGLVSHQVDWLRQ 0LOWRQEHJLQVWKLVFKDSWHUDVIROORZV 7KHJRVSHOLVWKHQHZGLVSHQVDWLRQRIWKHFRYHQDQWRIJUDFHIDUPRUHH[FHOOHQW DQG SHUIHFW WKDQ 7RUDK DQQRXQFHG ÀUVW REVFXUHO\ E\ 0RVHV DQG WKH SURSKHWV DIWHUZDUGVLQWKHFOHDUHVWWHUPVE\&KULVWKLPVHOIDQGKLVDSRVWOHVDQGHYDQJHOLVWV ZULWWHQVLQFHE\WKH+RO\6SLULWLQWKHKHDUWRIEHOLHYHUVDQGRUGDLQHGWRFRQWLQXH HYHQWRWKHHQGRIWKHZRUOGFRQWDLQLQJDSURPLVHRIHWHUQDOOLIHWRDOOLQDOOQDWLRQV ZKRVKDOOEHOLHYHLQ&KULVWZKHQUHYHDOHGWRWKHPDQGDWKUHDWRIHWHUQDOGHDWKWR VXFKDVVKDOOQRWEHOLHYH %XW WKH ´DOUHDG\µ RI WKH JRVSHO GLVSHQVDWLRQ VWLOO ORRNV IRUZDUG WR WKH ´QRW \HWµ7KXVWKLVSUHVHQWGLVSHQVDWLRQZLOOFRQWLQXHDVLWKDVXQWLOWKH´HQGRIWKH ZRUOGµ$QG OLNH WKH SUHYLRXV GLVSHQVDWLRQV RI *RG·V UHYHODWLRQ LW FRQWDLQV SURPLVHVDQGFRQGLWLRQVWRWKRVHZKREHOLHYHHWHUQDOOLIHWRWKRVHZKRGRQRW HWHUQDOGHDWK-XVWDVEHOLHYHUVDUHWKRVHZKRWUXVW&KULVW´ZKHQ>KHLV@UHYHDOHG WRWKHPµ´XQEHOLHYHUVµUHIHURQO\WRWKRVHWRZKRP-HVXVKDVEHHQDQQRXQFHG LQWKHJRVSHOS>&3@ 7KLVFUDFNLQWKHGRRUWRUHGHPSWLRQRXWVLGHRI WKHZRUNVRIIDLWK"µS>&3@ 6HH'HQQLV%HUWKROG·V´7KH&RQFHSWRI0HULWLQ3DUDGLVH /RVWµ6(/ ²IRUDJRRGGLVFXVVLRQRIWKLVWRSLFLQWKHSRHP
&+5,6723+(5-2+1'21$72
DVDYLQJNQRZOHGJHRI&KULVW0LOWRQLJQRUHVIRUQRZWKDWLVEHFDXVHKHDOUHDG\ PHQWLRQVLWHOVHZKHUH )RUWKHVDPHUHDVRQLWRXJKWQRWWRDSSHDUZRQGHUIXOLIPDQ\ERWK-HZVDQG RWKHUVZKROLYHGEHIRUH&KULVWDQGPDQ\DOVRZKRKDYHOLYHGVLQFHKLVWLPH EXW WR ZKRP KH KDV QHYHU EHHQ UHYHDOHG VKRXOG EH VDYHG E\ IDLWK LQ *RG DORQH VWLOO KRZHYHU WKURXJK WKH VROH PHULWV RI &KULVW LQDVPXFK DV KH ZDV JLYHQDQGVODLQIURPWKHEHJLQQLQJRIWKHZRUOGHYHQIRUWKRVHWRZKRPKH ZDVQRWNQRZQSURYLGHGWKH\EHOLHYHGLQ*RGWKH)DWKHUFK´2Q6DY LQJ)DLWKµS>&3@
:KRHYHUHOVHLVLQFOXGHGDPRQJWKHVHWKH2OG7HVWDPHQWSDWULDUFKVVHUYHDVWKH RQO\H[DPSOHVIRU0LOWRQ,QWHUHVWLQJO\ZKLOH&DPHURQZDVQHYHUDFFXVHGRIWKLV KLVVWDUSXSLO0RwVH$P\UDXW²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´ZLWK DKLJKKDQGµ DIWHUKDYLQJUHFHLYHGWKHNQRZOHGJHRIWKHWUXWK+HE² 2QWKHDEROLWLRQRIWKHODZRI0RVHV 1H[WZHFRPHWRWKHPRVWLQWULJXLQJSRUWLRQRIWKLVFKDSWHUDSRUWLRQWKDWKDV XQGRXEWHGO\ OHG VRPH WR FRQFOXGH WKDW 0LOWRQ ZDV DQ DQWLQRPLDQ ´2Q WKH LQWURGXFWLRQRIWKHJRVSHORUQHZFRYHQDQWWKURXJKIDLWKLQ&KULVWµKHZULWHV ´WKHZKROHRIWKHSUHFHGLQJFRYHQDQWLQRWKHUZRUGVWKHHQWLUH0RVDLFODZZDV DEROLVKHGµS>&3²@ $VSURRIWH[WV0LOWRQUHIHUVWKHUHDGHUWR/XNH $FWVDQG5RP²UHVSHFWLYHO\7KLVODVWUHIHUHQFH 5RP 0LOWRQDUJXHVLVYHU\WHOOLQJZLWKUHVSHFWWRWKHQHZFRYHQDQWEHOLHYHU·V UHODWLRQVKLSWRWKHROGODZ)RUZKHQ6DLQW3DXOZULWHVWKDWKHKDGQRWNQRZQVLQ EXWE\7RUDKWKHZKROHODZLVLQWHQGHGKHUHEHFDXVHWKHH[SUHVVLRQLVXQOLPLWHG $QGZKHQWKHDSRVWOHIXUWKHUTXRWHVIURPWKH0RVDLFODZKHTXRWHVVSHFLÀFDOO\ IURPWKH'HFDORJXH5RPE 7KXVZHDUH´DEVROYHGIURPVXEMHFWLRQWRWKH 'HFDORJXHDVIXOO\DVWRWKHUHVWRI>7RUDK@µS>&3@ +HUH0LOWRQPDNHV SODLQWKDWLQKLVRSLQLRQLWZDVLQFRQVLVWHQWZLWKWKHOLEHUW\RIWKHJRVSHOWRFRQVLGHU WKH'HFDORJXHDVDUXOHELQGLQJRQQHZFRYHQDQWEHOLHYHUV,IDQ\ZRXOGFRQWHQG 0LOWRQRIIHUVDOLWDQ\RIVFULSWXUDOWH[WVWKDWVSHDNRIWKHQHZO\IRXQGIUHHGRP IRUWKRVHLQXQLRQZLWK&KULVWSS²>&3²@ 7KHZDOOEHWZHHQ-HZV DQG*HQWLOHVZDVQRWMXVWFRQWDLQHGLQWKHFHUHPRQLDOFRGHHLWKHU$FFRUGLQJWR 0LOWRQWKHZKROHSRVLWLYHODZRI0RVHVZDVDODZRIFRPPDQGPHQWVDQGFRQWDLQHG
6HH$UPVWURQJ&DOYLQLVPDQGWKH$P\UDXW+HUHV\²²
+$59$5'7+(2/2*,&$/5(9,(:
LQRUGLQDQFHV´1RUZDVLWWKHFHUHPRQLDOODZZKLFKIRUPHGWKHVROHJURXQGRI GLVWLQFWLRQEHWZHHQWKH-HZVDQG*HQWLOHVDV=DQFKLXVRQWKLVSDVVDJH>(SK@ FRQWHQGVEXWWKHZKROHODZµS>&3@ )RUWKH*HQWLOHVZHUHSUHYLRXVO\ ´VWUDQJHUVIURPWKHFRYHQDQWRISURPLVHµ(SK ZKLFKSURPLVH0LOWRQZULWHV ´ZDVPDGHWRWKHZRUNVRIWKHZKROHODZQRWWRWKRVHRIWKHFHUHPRQLDODORQHQRU ZDVLWWRWKHVHODWWHURQO\WKDWWKHHQPLW\EHWZHHQ*RGDQGXVZDVRZLQJµLELG 0LOWRQWKHQWXUQVKLVDWWHQWLRQWRWKHJHQHUDOUHEXWWDOWKDWDOORIWKHSDVVDJHVKH KDVRIIHUHGWKXVIDUDUHWREHXQGHUVWRRGDVSHUWDLQLQJRQO\WRWKHDEROLWLRQRIWKH FHUHPRQLDODVSHFWVRIWKH0RVDLFODZ 7KLVUHIXWDWLRQLWVHOILVUHIXWHGDFFRUGLQJWR0LOWRQSULPDULO\E\WKHGHÀQLWLRQ RI7RUDK LWVHOI7KH GHÀQLWLRQ RI WKH7RUDK VSHFLÀHV WKH YDULRXV UHDVRQV IRU LWV HQDFWPHQW DQG LI DOO WKH FDXVHV RI LWV HQDFWPHQW FRQVLGHUHG DV D ZKROH KDYH EHHQUHYRNHGRUUHQGHUHGREVROHWHWKHQ´LWIROORZVWKDWWKHZKROHODZLWVHOIPXVW EHDQQXOOHGDOVRµS>&3@ 7KHSULQFLSDOUHDVRQV0LOWRQJLYHVIRUWKH HQDFWPHQWRIWKHODZRI0RVHVDUHDVIROORZVLELG WRPDNHXVPLQGIXORI RXUGHSUDYLW\VRWKDWLWPLJKWZRUNZUDWK WRLPSUHVVXSRQXVD´VODYLVKIHDU WKURXJKFRQVFLRXVQHVVRIGLYLQHHQPLW\µ WREULQJXVDVDVFKRROPDVWHUWRWKH ULJKWHRXVQHVVRI&KULVWDQGRWKHUUHDVRQVRIVLPLODUGHVFULSWLRQ7KXVWKHROGODZ HQGVXSFRQGHPQLQJRQO\WKHXQUHJHQHUDWHIRUQRZLWJLYHVZD\WRWKHJRVSHORI JUDFHEHOLHYHUVRIZKLFKÀQGQRFRQGHPQDWLRQZKDWVRHYHUIDWKHUO\GLVSOHDVXUH >+HEUHZV@\HVEXWQRWDFFXVDWLRQ :HPLJKWDWÀUVWJODQFHEHLQFOLQHGWRDVVRFLDWHWKLVIXOO\ZLWKWKHGRFWULQDO DQWLQRPLDQ·VODZJRVSHOGLYLGH$QGZHZRXOGEHULJKW+HGRHVVKDUHWKLVFRQFHUQ ZLWKWKHP%XWDVZHFRQWLQXHGLVFXVVLQJ0LOWRQ·VYLHZVUHJDUGLQJWKHUHODWLRQVKLS RIWKHROGODZWRWKHQHZFRYHQDQWEHOLHYHUZHPXVWNHHSLQPLQGWKDWWKHHQGVIRU ZKLFKKHPDNHVKLVFDVHLVQRWVKDUHGE\WKHDQWLQRPLDQVQDPHO\WRDFFHQWXDWH WKHQHFHVVLW\RIWKHZRUNVRIIDLWKVHHQDERYH QRWODZ+HLVPDNLQJDVKDUS GLVWLQFWLRQEHWZHHQWKHWZRDGPLQLVWUDWLRQVVRPXFKVRWKDWRQHFRXOGVD\WKDW WKHODZRI0RVHVLVDQRWKHUWKLUG FRYHQDQWPD\EHD´FRYHQDQWXQGHUWKHVHUYLFH RIJUDFHµWKDWFDPHDORQJVLGHWKH$EUDKDPLFFRYHQDQWRIJUDFH DVDSUHSDUDWRU\ FRYHQDQWRQWKHZD\WRWKHUHYHODWLRQRI*RG·VNLQJGRPLQ&KULVW$WDQ\UDWH 0LOWRQ·VWKHPHKHUHPXVWEHUHVWDWHGWKHUHGHPSWLYHKLVWRULFDOUHDGLQJRIWKHROG LVWKDWWKHQHZLVUDGLFDOO\VXSHULRU$VVXFKLWRXJKWWREHQRVXUSULVHWKDWWKHROG FRYHQDQWZDVDOZD\VLQWHQGHGWREHDEURJDWHG7KLVFRQWUROOLQJSDUDGLJPGLFWDWHV PXFK RI ZKDW IROORZV LQ WKH WUHDWLVH DW WKLV SRLQW 0LOWRQ WKHQ JRHV RQ WR JLYH VHYHQUHDVRQVZK\WKHZKROHRI7RUDKQRWMXVWLWVFHUHPRQLDOSDUWLVDEROLVKHG SS²>&3²@ -HURPH=DQFKLXV² ,WDOLDQ3URWHVWDQWFOHUJ\PDQDQGHGXFDWRUZDVWKHSXSLORI WKH IDPHG3HWHU0DUW\U9HUPLJOL LQ WKH SULRU\ RI 6DQ )UHGLDQR LQ /XFFD ,WDO\ 0LOWRQ ZDV SUREDEO\ UHIHUULQJ WR =DQFKLXV·V &RPPHQWDULXV LQ HSLVWRODP 6DQFWL 3DXOL DG (SKHVLRV ODVW SXEOLVKHG LQ %LEOLRWKHFD5HIRUPDWDYROVDQGHGHG$+GH+DUWRJ$PVWHORGDPL-$:RUPVHU²
6HH$UPVWURQJ&DOYLQLVPDQGWKH$P\UDXW+HUHV\²
&+5,6723+(5-2+1'21$72
)LUVWWKHZKROHODZZDVDODZRIZRUNVDQGZDVDOZD\VLQWHQGHGWRJLYHSODFH WRWKH´ODZRIJUDFHµS>&3@ 6HFRQGZKHUHDV7RUDKZRUNHGZUDWK EHFDXVHRIWKHZKROHVDOHIDLOXUHRI,VUDHOWRNHHSFRYHQDQWQRODZPHDQVQREUHDFK RIWKDWODZ5RP 7KLUGLWLVZULWWHQWKDW&KULVWUHGHHPHGKLVSHRSOHIURPWKH ZKROHODZDQGLWVFXUVH*DO )RXUWKWKHDSRVWOHWHDFKHVXVWKDWWKH0RVDLF ODZ´ZULWWHQDQGHQJUDYHQLQVWRQHVµZDV´WKHPLQLVWUDWLRQRIGHDWKµDQGWKHUHIRUH ´ZDVGRQHDZD\µ&RU 7KH´HQJUDYHQµODZKHUH0LOWRQSRLQWVRXWZDVQRW WKHFHUHPRQLDODVSHFWRIWKHODZEXWWKH'HFDORJXHLWVHOI)LIWKWKHODZLQYLHZKHUH LVFHUWDLQO\QRWMXVWDSDUWRIWKHODZEXWWKHZKROHODZ,WLVD´ODZRIVLQµEHFDXVH LWSURYRNHVVLQLWLVD´ODZRIGHDWKµEHFDXVHLWLVLQRSSRVLWLRQWRWKHODZRIWKH VSLULWRIOLIH0LOWRQSRLQWVWKHUHDGHUWR5RPZKHUHWKHVXPDQGHVVHQFHRI 7RUDKLVVDLGWRLPSDUWOLIH 6L[WKLWZDVXQGRXEWHGO\QRWWKHFHUHPRQLDODVSHFW DORQHWKDWWKH´PRWLRQVRIVLQZKLFKZHUHE\WKHODZZURXJKWLQRXUPHPEHUVWR EULQJIRUWKIUXLWXQWRGHDWKµ5RP %XWRIWKHODZWKDWGRHVWKLVLWLVVDLGWKDW ZH´DUHEHFRPHGHDGXQWRµ5RP 6HYHQWKVLQFHDOOEHOLHYHUVDUHMXVWLÀHG E\*RGWKURXJKIDLWKWKHQDOODUHXQGRXEWHGO\UHFNRQHGULJKWHRXV,QFRQWUDVWWKH DSRVWOHDVVHUWVWKDW´WKHODZLVQRWPDGHIRUDULJKWHRXVPDQµ7LPVHHDOVR *DO² DQG´WKHFHUHPRQLDOODZDORQHZDVVRIDUIURPMXVWLI\LQJWKDWHYHQ WKHHQWLUH0RVDLFODZKDGQRWSRZHUWRHIIHFW>MXVWLÀFDWLRQ@µS>&3@ 7KHUHIRUH0LOWRQDUJXHVWKHZKROHODZQRWMXVWWKHFHUHPRQLDODVSHFWKDVEHHQ DEURJDWHGE\UHDVRQRILWVLQDELOLW\WRMXVWLI\ )URPKHUH0LOWRQIRUJHVDKHDGGLVFXVVLQJKRZWKHVXPDQGHVVHQFHRI7RUDK KDVQRWEHHQDEURJDWHG,QVRGRLQJKHLQGLUHFWO\DWWDFNVWKHOHJDOLVWLFWHQGHQFLHV KHSHUFHLYHVLQKLVIHOORZSXULWDQVVORZO\EXLOGLQJKLVFDVHIRU&KULVWLDQOLEHUW\ DWZKLFKSRLQWWKHZKROHFKDSWHUÀQDOO\HQGV 2QWKHFRQWLQXDWLRQRIWKHVSLULWRI>7RUDK@ 6RWKHQZKLOHWKH0RVDLFODZKDVEHHQDEROLVKHGE\WKHJRVSHOWKHHVVHQFHRI LWKDVQRWEHHQDEROLVKHGJLYHQWKDWLWVSXUSRVHZDVDWWDLQHGLQWKDWORYHRI*RG DQGRXUQHLJKERUZKLFKLVERUQRIWKH6SLULWWKURXJKIDLWK+RZWKHQGRHV0LOWRQ H[SODLQ&KULVW·VDVVHUWLRQWKDWKHGLGQRWFRPHWRGHVWUR\WKHODZ0DWW "7KDW ZKLFK-HVXVGLGQRWFRPHWRGHVWUR\ZDVWKHHVVHQFHDQGVXPRIWKHODZQRWWKH ZULWWHQ0RVDLFFRGH$QRWKHUZD\WRGHVFULEHLWLVWKDW7RUDKDVIXOÀOOHGE\WKH &KULVWFRQWLQXHVRQQRWWKHODZLQLWVRULJLQDOIRUP0LOWRQWKHQLPDJLQHVDOHJDOLVWLF LQWHUORFXWRU´:LOOWKLVQRWOHDGWROLFHQWLRXVQHVV"µ1RIRUWKHDSRVWOH3DXOKLPVHOI DQWLFLSDWHVWKLVREMHFWLRQLQ5RP²ZKHUHKH´H[SUHVVO\WHDFKHVWKDWE\ WKLVDEURJDWLRQRIWKHODZVLQLIQRWWDNHQDZD\LVDWOHDVWZHDNHQHGUDWKHUWKDQ LQFUHDVHGLQSRZHUµS>&3@ 7KXVWKHVXPRI7RUDK³WKHORYHRI*RG DQGQHLJKERU³LVQRWDEROLVKHGIRUWKHEHOLHYHULVQRWXQGHUVLQEXWXQGHUJUDFH ,QRWKHUZRUGVOLFHQWLRXVQHVVZLOOQRWUHVXOWIURPWKHDEROLWLRQRI7RUDKEHFDXVH
+$59$5'7+(2/2*,&$/5(9,(:
WKH6SLULW·VZRUNQHFHVVDULO\UHVXOWVLQREHGLHQWIXOÀOOPHQWRI*RG·VQDWXUDO ODZ -XVWWKHWDEOHWRIWKHODZLVFKDQJHGLQDPDQQHURIVSHDNLQJ WKH6SLULWKDVQRZ ZULWWHQLWVSUHFHSWVXSRQWKHKHDUW(YHQWKRXJK0LOWRQVHHVWKH6SLULWWREHDW YDULDQFHZLWKWKHOHWWHURIWKH0RVDLFODZRQFHUWDLQSRLQWV´DUHJDUGWRWKHODZRI ORYHLVGHFODUHGWREHEHWWHUWKDQDFRPSOLDQFHZLWKWKHZKROHZULWWHQODZµLELG %XWLIWKHUHDGHUGHHPVWKLVHYHQD´TXDOLÀHGµDQWLQRPLDQLVPFRQVLGHU0LOWRQ·V DUJXPHQWWKDWWKHWZRSUHFHSWVORYLQJ*RGDQGQHLJKERU UHSUHVHQW7RUDKLQWRWHP /RYHIXOÀOOLQJWKHODZLVQRWRQO\WKHWHORVRIWKH0RVDLFFRGHLWLVWKHJRDORI WKHHYDQJHOLFDVZHOOVHH-DV 7KXVDOO´UDWLRQDOLQWHUSUHWHUVµKDYHH[SODLQHG -HVXV·6HUPRQRQWKH0RXQWDVDQH[SRVLWLRQRI7RUDK³QRWDFFRUGLQJWRLWVOHWWHU EXWDFFRUGLQJWRWKHVSLULWRIWKHROGODZLQORYHVRWKDWWKHUHLV´QRWUDQVJUHVVLRQLQ GLVUHJDUGLQJWKHOHWWHURIWKHODZSURYLGHGWKDWXQGHUWKHGLUHFWLRQRIWKH6SLULWWKH HQGRIWKHLQVWLWXWLRQEHDWWDLQHGLQWKHORYHRI*RGDQGRXUQHLJKERUµS>&3 @ ,QRWKHUZRUGVORYHWUDQVFHQGVLQGHHGVXSHUVHGHVWKHROG0RVDLFFRGH 0LOWRQWKHQVWRSVWREULQJXSDIHZ´QREOHµFRQÀUPDWLRQVVWDUWLQJZLWK=DQFKLXV IRUWKH,WDOLDQ5HIRUPHULQKLVFRPPHQWDU\RQWKHVHFRQGFKDSWHURI(SKHVLDQV VHHPVWRDJUHHGHVSLWHKLVSUHYLRXVFRPPHQWVWKDWWKHROGODZLVDEURJDWHG%XW OLNHVRPDQ\GLYLQHVWKDWVXUURXQGKLP0LOWRQODPHQWVKLVH[FHVVLYHTXDOLI\LQJ DQGVXEVHTXHQWYDFLOODWLRQRYHUWKHLVVXHWKDWLWOHDGVWKHUHDGHU´LIQRWH[WUHPHO\ DWWHQWLYHLQDVWDWHRIXQFHUWDLQW\µS>&3²@ +HWKHQHQGVWKLVVHFWLRQ ZLWKZKDWZHFDQRQO\FRQVLGHUWKHFOLQFKHU´,KDYHDOVRREVHUYHGWKDW&DPHURQ VRPHZKHUHH[SUHVVHVWKHVDPHRSLQLRQUHVSHFWLQJWKHDEROLWLRQRIWKHZKROHODZµ 0LOWRQ·VYHU\QH[WVHQWHQFHLVWHOOLQJ7KURXJKRXW'HGRFWULQDKHDOPRVWDOZD\V UHIHUVWRKLVWKHRORJLFDODQWDJRQLVWVWKHKLJK&DOYLQLVWV LQDSDUWLFXODUZD\´,W LV DVVHUWHGE\ GLYLQHV LQ JHQHUDOµ >HPSKDVLV DGGHG@ WKH&3@ )XUWKHUKHDGGVGRLQJ WKHODZZLOOQRWOHDGWRFRQYLFWLRQDQGDVXEVHTXHQWDFFHSWDQFHRIWKHJUDFHRI &KULVWIRUWKLVLVHIIHFWHGE\DNQRZOHGJHRIWKHODZLWVHOI'RLQJWKHZRUNVRIWKH 0RVDLFODZDVQRWHGDERYHZLOORQO\OHDGXVIXUWKHUIURP&KULVW 4XLWH FOHDUO\ IRU 0LOWRQ JUHDWHU KROLQHVV LV UHTXLUHG LQ WKH QHZ FRYHQDQW EXWDORQJZLWKWKDWJUHDWHUUHTXLUHPHQWFRPHVWKH*RGJLYHQJUDFHWRIXOÀOOLWV KROLQHVV:KLOHWKRVHZKREHOLHYHGXQGHUWKHODZZHUHMXVWLÀHGE\IDLWKWKH\ VWLOORXWRIQHFHVVLW\OLYHGDFFRUGLQJWRWKH0RVDLFODZ·VSUHFHSWV&RQWUDULO\WKH JRVSHOMXVWLÀHVE\IDLWKDSDUWIURP7RUDK7KXVQHZFRYHQDQWEHOLHYHUVEHLQJ IUHHGIURPWKHRXWZDUGPDUNVRIWKH0RVDLFFRGHQRORQJHUIROORZWKHOHWWHUEXW WKHVSLULWGRLQJZRUNVRIIDLWKQRWRIWKHODZ)RU0LOWRQORYHMXVWDVPXFKDV FLUFXPFLVLRQLVDZRUN7KHGLIIHUHQFHEHWZHHQWKHWZRKRZHYHULVJUHDW´ORYHµ LVWKHVXPDQGHVVHQFHRIWKH0RVDLFODZDQGLWLVWKHVXPDQGHVVHQFH³QRWWKH ROGFRPPDQGPHQWV³WKURXJKZKLFK*RGDOZD\VLQWHQGHGWRMXVWLI\KLVSHRSOH -XVWDVIDLWKLVQRWFRPSXOVRU\QHLWKHUDUHWKHZRUNVRIIDLWKZKLFKEULQJVXVWR 0LOWRQ·VGRFWULQHRI&KULVWLDQOLEHUW\ 2Q&KULVWLDQ/LEHUW\ 7KH GDZQLQJ RI WKH QHZ FRYHQDQW DJH PDUNHG WKH DEURJDWLRQ RI WKH ODZ RI VHUYLWXGHDQGIURPWKLVVSULQJV&KULVWLDQOLEHUW\7KRXJKOLEHUW\IRU0LOWRQVWULFWO\ VSHDNLQJLVWKHSHFXOLDUIUXLWRIWKHEHOLHYHU·VDGRSWLRQDQGFRQVHTXHQWO\ZDVQRW XQNQRZQGXULQJWKHWLPHRIWKHROGDGPLQLVWUDWLRQRIWKHODZ+RZHYHUJLYHQ WKDWOLEHUW\ZDVXQDEOHWREHSHUIHFWHGRUPDGHIXOO\PDQLIHVWXQWLOWKHFRPLQJRI WKH0HVVLDKOLEHUW\PXVWWKHUHIRUHEHFRQVLGHUHGDVEHORQJLQJHVSHFLDOO\WRWKH JRVSHODJH7KHUHDVRQVIRUWKLVDUHWZRIROG %HFDXVHWUXWKLVSULQFLSDOO\NQRZQ E\WKHSURFODPDWLRQRIWKHJRRGQHZVVHHHJ-RKQ² DQG
,VKHVXJJHVWLQJWKDWWKHEHOLHYHURXJKWWRLQ0DUFLRQLWHIDVKLRQOHDYHRIIUHDGLQJWKH2OG 7HVWDPHQW"1RUHPHPEHUWKDWIRU0LOWRQWKHJRVSHOFDQEHVHHQLQERWKHUDV7KXVWKHZULWLQJV RIWKHROGHUDPD\EHHPSOR\HGDQGSURÀWHGIURPVRORQJDVWKH\DUHXQGHUVWRRGLQOLJKWRIWKH JRVSHOLQOLJKWRIWKHLUIXOÀOOPHQWLQWKH&KULVW0RUHRYHUWKHHQWLUHKLVWRULFDOFDQRQLVHPSOR\HG WKURXJKRXWWKHWUHDWLVHDVLWVSUHVXSSRVHGVWDQGDUG 0LJKWWKLVEHFRQVWUXHGDVDQHRQRPLDQVHQWLPHQWLHWKDWWKHJRVSHOLVDQHDVLHUWRIROORZ ´QHZODZµ ",IVRWKHQLWLVQRWZRUGHGLQWKHOLNHQHVVRI5LFKDUG%D[WHURU'DQLHO:LOOLDPV6HH WKHLUZRUNV$SKRULVPVRQ-XVWLÀFDWLRQ DQG$'HIHQFHRI*RVSHO7UXWK UHVSHFWLYHO\ 6HHFKLQ'HGRFWULQD´2I$GRSWLRQµ>&3²@
+$59$5'7+(2/2*,&$/5(9,(:
%HFDXVHWKHSHFXOLDUJLIWRIWKHJRVSHOLVWKH+RO\6SLULW&RU +LVVXEVHTXHQW VXPPDU\VWDWHPHQWRQ&KULVWLDQOLEHUW\LVZRUWKTXRWLQJLQIXOO &KULVWLDQOLEHUW\LVWKDWZKHUHE\ZHDUHORRVHGDVLWZHUHE\HQIUDQFKLVHPHQW WKURXJK&KULVWRXUGHOLYHUHUIURPWKHERQGDJHRIVLQDQGFRQVHTXHQWO\IURP WKH UXOH RI >7RUDK@ DQG RI PDQ WR WKH LQWHQW WKDW EHLQJ PDGH VRQV LQVWHDG RIVHUYDQWVDQGSHUIHFWPHQLQVWHDGRIFKLOGUHQZHPD\VHUYH*RGLQORYH WKURXJKWKHJXLGDQFHRIWKH6SLULWRIWUXWKS>&3@
:HRXUVHOYHVDUHWRZLWKVWDQGWKHRSLQLRQVRIRWKHUVLIWKHLUPRWLYHVDUHXQZRUWK\ RIWKHJRVSHO6RLWIROORZVWKDWWKHZHDNHUEURWKHURXJKWWRLQDOOKXPLOLW\JLYH KLPVHOIXSWREHLQVWUXFWHGE\WKHVWURQJHUIDLWKRIWKHIXOO\IUHH&KULVWLDQ´1HLWKHU WKLVUHDVRQWKHUHIRUHQRUDSUHWHQGHGFRQVLGHUDWLRQIRUWKHZHDNHUEUHWKUHQDIIRUG DVXIÀFLHQWZDUUDQWIRUWKRVHHGLFWVRIWKHPDJLVWUDWHZKLFKFRQVWUDLQEHOLHYHUVRU GHSULYHWKHPLQDQ\UHVSHFWRIWKHLUUHOLJLRXVOLEHUW\µS>&3@ :KHQWKH FLYLOPDJLVWUDWHLQIULQJHVXSRQWKLVOLEHUW\KHVHL]HVWKHJRVSHOLWVHOIKHGHSULYHV WKHJRRGDQGWKHEDGLQGLVFULPLQDWHO\RIWKHLUSULYLOHJHRIIUHHMXGJPHQWFRQWUDU\ WRWKHVSLULWRIWKHZHOONQRZQSUHFHSWIRXQGLQ0DWW²´OHVWZKLOH\H JDWKHUXSWKHWDUHV\HURRWXSDOVRWKHZKHDWZLWKWKHPOHWERWKJURZWRJHWKHU XQWLOWKHKDUYHVWµ +HUHFRQFOXGHV0LOWRQ·VGLVFXVVLRQRI&KULVWLDQOLEHUW\
Q&RQFOXVLRQ 7KURXJKRXWWKLVHVVD\ZHKDYHVRXJKWWRPDNHFOHDU0LOWRQ·VYLHZVLQ'HGRFWULQD RQWKHODZDQGWKHJRVSHODQGWKHUROHWKHIRUPHUSOD\VLQWKHOLIHRIWKHQHZ FRYHQDQWEHOLHYHU:HKDYHDOVRDWWHPSWHGDVDQDVLGHWRUHYHDOWKHPRUHREYLRXV SDUDOOHOVEHWZHHQKLVWKHRORJ\DQG&DPHURQ·VZLWKKRSHVRIIXUWKHUFODULI\LQJ ZKDWFRQQHFWLRQLIDQ\PD\EHGUDZQEHWZHHQWKH6FRW·VUHGHPSWLYHKLVWRULFDO FRYHQDQWDOWKHRORJ\DQG0LOWRQ·VWKHRORJLFDOWUHDWLVH7KXVZHPLJKWVD\LQOLQH ZLWKWKHWKRXJKWVRI,VDDF&KDXQF\WKDWKHDWÀUVWDSSHDUVWREHD´VXSHUODWLYH DQWLQRPLDQµEXWKLVVXEVHTXHQWGHIHQVHRIWKHUROHRIWKHZRUNVRIIDLWKDQGORYH LQMXVWLÀFDWLRQRQWKHGD\RIMXGJPHQWVKRZWKDWKLVDOOHJLDQFHOLHVHOVHZKHUH
0LOWRQFLWHV5RP&RU*DODQG-DVDVSURRI ,ELG 0LOWRQ SXW WKLV VHQWLPHQW WR YHUVH LQ KLV SRHP ´2Q WKH 1HZ )RUFHUV RI &RQVFLHQFH
XQGHU WKH /RQJ 3DUOLDPHQWµ ZKHUHLQ KH ZURWH WKDW WKH ´1HZ 3UHVE\WHU LV EXW 2OG 3ULHVW ZULW/DUJHµO 7KHQH[WFKDSWHU LQ'HGRFWULQD´2IWKH([WHUQDO6HDOLQJRIWKH&RYHQDQWRI*UDFHµ GHDOVZLWKWKHVDFUDPHQWVWKDWVHDOWKHFRYHQDQW8QGHUWKHODZRI0RVHVWKH\ZHUHFLUFXPFLVLRQ DQGWKH3DVVRYHUEXWXQGHUWKHJRVSHOWKH\DUHEDSWLVPDQGWKH/RUG·V6XSSHU$WÀUVWJODQFHLW VHHPV0LOWRQ·VYLHZRIWKH/RUG·V6XSSHUWDNHVWKHPLGGOHSRVLWLRQEHWZHHQ&DOYLQDQG=ZLQJOL UHPHPEHUHGLQWKHSHUVRQRI%XOOLQJHUKHJRHVRQWRUHMHFWLQIDQWEDSWLVPKRZHYHUSS² >&3²@ &KDXQF\ZURWHDERXWVXFKYLHZV´>+H@$VVHUWVWKH2OG/DZLVDEROLVKHGDQGWKHUHLQLVD VXSHUODWLYH$QWLQRPLDQEXWSOHDGVIRUD1HZ/DZDQG-XVWLÀFDWLRQE\WKH:RUNVRILWDQGWKHUHLQ LVD1HRQRPLDQµ1HRQRPLDQLVP´7KH(SLVWOH'HGLFDWRU\µ$SDJHV 6HHQDERYH
&+5,6723+(5-2+1'21$72
-RKQ0LOWRQDWOHDVWRQWKLVFRXQWPD\QRWKDYHEHHQVWULYLQJWRZDUGLQJHQXLW\ VR PXFK DV KH ZDV VLPSO\ UHDFWLQJ WR WKH LQFUHDVLQJO\ RYHUW OHJDOLVWLF DQG DXWKRULWDULDQVWUDLQZLWKLQWKHSXULWDQUHYROXWLRQQRWOHDVWLQVRWHULRORJLFDODQG HFFOHVLRORJLFDOPDWWHUV DVZHOODVWRWKRVHZKRVH´/LIH/HDUQLQJ)DLWKDQGSXUH LQWHQW:RXOGKDYHEHHQKHOGLQKLJKHVWHHPµLIQRWIRUWKHLU´SORWVDQGSDFNLQJµ WKDWDUH´ZRUVWKHQWKRVHRI7UHQWµ,QWKHHQGWKHUHIRUHZHFDQEHFHUWDLQWKDW 0LOWRQRQO\H[SUHVVHVYLULOHDQWLSDWK\WRZDUGDVLQJXODUODZWKHRQHWKDWGDUHV ´DGMXUHWKH&LYLOO6ZRUG7RIRUFHRXU&RQVFLHQFHVWKDW&KULVWVHWIUHH$QGULGH XVZLWKDFODVVLF+LHUDUFK\µ
´2QWKH1HZ)RUFHUVµOO²²
)LFKWH(EHUKDUGDQGWKH3V\FKRORJ\ RI5HOLJLRQ %HQ&URZH 8QLYHUVLW\RI8WDK
,Q PDUNHG FRQWUDVW WR PXFK RI WZHQWLHWKFHQWXU\ SV\FKRORJ\ DQG SKLORVRSK\ SUHYDLOLQJDFFRXQWVRIDIIHFWHPRWLRQDQGVHQWLPHQWLQWKHHLJKWHHQWKFHQWXU\WRRN WKHVHSKHQRPHQDWREHUDWLRQDODQGWRDFHUWDLQH[WHQWFRJQLWLYH%HFDXVHRID FRPELQDWLRQRIGLVFLSOLQDU\GLIIXVLRQDQGJHQHUDOODFNRISK\VLFDOLVWDVVXPSWLRQV DFFRXQWVRIDIIHFWLYLW\LQWKHHLJKWHHQWKFHQWXU\DOVRWHQGHGWREHTXLWHÁH[LEOHDQG QXDQFHG7KLVLVSDUWLFXODUO\WUXHRIDQLQÁXHQWLDOVWUHDPRI$QJOR6FRWWLVKDQG *HUPDQWKRXJKWRQPRUDOLW\DHVWKHWLFVDQGWKHSKLORVRSK\RIUHOLJLRQ)ROORZLQJ 6KDIWHVEXU\PDQ\RIWKHPRVWSURPLQHQWSKLORVRSKHUVRIWKHFHQWXU\UHJDUGHG DIIHFWLYHVWDWHVDQGSURFHVVHVDVSOD\LQJDFUXFLDOUROHLQDFFRXQWVRIYDOXH,Q PRVWFDVHVWKLVWHQGHQF\ZDVFRPELQHGZLWKDVRUWRIDQWLUDWLRQDOLVPWKDWLV ZLWKDWHQGHQF\WRPLQLPL]HWKHUROHRIUHDVRQLQHYHU\WKLQJIURPFRPPRQVHQVH SHUFHSWXDONQRZOHGJHWRUHOLJLRXVEHOLHI+XWFKHVRQ·VPRUDOVHQVHWKHRU\DQGKLV ZHOONQRZQDQGLQÁXHQWLDOFULWLFLVPVRIPRUDOUDWLRQDOLVPH[HPSOLI\WKLVWUHQG,W LVSHUKDSVPRUHSURQRXQFHGLQ/RUG.DPHVZKRIROORZHGWKHOHDGRI6KDIWHVEXU\ )RU DQ HUXGLWH DQG LQIRUPDWLYH DFFRXQW RI WKH KLVWRULFDO SURFHVV XQGHUO\LQJ WKLV VKLIW LQ SHUVSHFWLYHVHH7KRPDV'L[RQ)URP3DVVLRQVWR(PRWLRQV7KH&UHDWLRQRID6HFXODU3V\FKRORJLFDO &DWHJRU\&DPEULGJH8.&DPEULGJH8QLYHUVLW\3UHVV +XWFKHVRQ·VPRVWZHOONQRZQDQGLQÁXHQWLDOZRUNVDUH$Q,QTXLU\LQWRWKH2ULJLQDORI2XU ,GHDVRI%HDXW\DQG9LUWXHHG:ROIJDQJ/HLGKROG,QGLDQDSROLV,QG/LEHUW\)XQG DQG$Q (VVD\RQWKH1DWXUHDQG&RQGXFWRIWKH3DVVLRQVDQG$IIHFWLRQVZLWK,OOXVWUDWLRQVRQWKH0RUDO 6HQVHHG$DURQ*DUUHWW,QGLDQDSROLV,QG/LEHUW\)XQG 7KHVHZRUNVRULJLQDOO\DSSHDUHGLQ DQGUHVSHFWLYHO\+XWFKHVRQ·VSKLORVRSK\RIUHOLJLRQLVPRUHSURQRXQFHGLQ$6\VWHPRI 0RUDO3KLORVRSK\HG'DQLHO&DUH\/RQGRQ&RQWLQXXP ZKLFKÀUVWDSSHDUHGSRVWKXPRXVO\ 0RVWFRQWHPSRUDU\VFKRODUVKLSLVFRQFHUQHGZLWK+XWFKHVRQ·VSODFHLQWKHGHYHORSPHQWRIPRGHUQ PRUDOSKLORVRSK\$IHZZRUNVKRZHYHULQFOXGHGLVFXVVLRQVRIKLVUHOLJLRXVYLHZV6HHIRUH[DPSOH 3HWHU .LY\ 7KH 6HYHQWK 6HQVH )UDQFLV +XWFKHVRQ DQG (LJKWHHQWK&HQWXU\ %ULWLVK $HVWKHWLFV 2[IRUG&ODUHQGRQ ².LY\·VYHUGLFWLVXQVSDULQJO\QHJDWLYH)RUWZRPRUHEDODQFHG DFFRXQWVVHH)UHGHULFN5DXVFKHU´0RUDO5HDOLVPDQGWKH'LYLQH(VVHQFHLQ+XWFKHVRQµ+LVWRU\RI
+75 ²
+$59$5'7+(2/2*,&$/5(9,(:
DQG+XWFKHVRQLQDHVWKHWLFVPRUDOWKHRU\SKLORVRSK\RIUHOLJLRQDQWKURSRORJ\ DQG KLVWRU\ ,Q *HUPDQ\ WKLV VWUHDP RI WKRXJKW ZDV TXLWH ZHOOUHFHLYHG E\ SKLORVRSKHUVERWKLQVLGHDQGRXWVLGHWKHGRPLQDQW:ROIÀDQWUDGLWLRQ3DUWLFXODUO\ LPSRUWDQWDQGLQÁXHQWLDOLQWKLVUHVSHFWZHUH-RKDQQ*HRUJ+DPDQQZKRGUHZ XSRQ+XWFKHVRQ+XPHDQGWKH´&RPPRQ6HQVHµVFKRROWRGHIHQGDFRQFHSWLRQ RIIDLWKDV´VHQWLPHQW(PSÀQGXQJ µDQG-RKDQQ*RWWIULHG+HUGHUDSRO\PDWK DQG SKLORVRSKLFDO SLRQHHU ZKRVH ZRUN LQ SV\FKRORJ\ DQWKURSRORJ\ KLVWRU\ DHVWKHWLFVELEOLFDOFULWLFLVPDQGWKHRORJ\FRQVLVWHQWO\VWUHVVHVWKHIXQGDPHQWDO UROHRISDVVLRQDIIHFWDQGVHQVLELOLW\LQHYHU\DVSHFWRIKXPDQFXOWXUH $WKHRU\RIWKHRULJLQVDQGQDWXUHRIUHOLJLRQLQWHUPVRIHPRWLRQDQGDIIHFWÀUVW GHYHORSHGE\VRPHRIWKHWKLQNHUVPHQWLRQHGDERYHKDVFRPHWRKDYHDQHQRUPRXV DQGODVWLQJLPSDFWRQERWKWKHRORJ\DQGWKHVHFXODUVWXG\RIUHOLJLRQ,QGHHGWKH ODWWHUDVDQLQGHSHQGHQWGLVFLSOLQHRZHVLWVRULJLQVWRWKHZRUNRISHRSOHOLNH/RUG .DPHVDQG+HUGHU1LQHWHHQWKFHQWXU\JLDQWVOLNH6FKOHLHUPDFKHUDQGGH:HWWH FHPHQWHGWKLV´VHQWLPHQWDOLVWSDUDGLJPµLQWKHVWXG\RIUHOLJLRQDQGNH\WZHQWLHWK FHQWXU\WKLQNHUVOLNH:LOOLDP-DPHV*HRUJ6LPPHODQG5XGROI2WWRIROORZHGZLWK WKHLURZQLPSRUWDQWFRQWULEXWLRQVWRWKLVWUDGLWLRQ7RSRLQWWRRQHFOHDUH[DPSOH RIWKHVXEWHUUDQHDQLQÁXHQFHRIWKLVOLQHRIWKRXJKWFRQWHPSRUDU\ZRUNRQWKH SV\FKRORJ\RIUHOLJLRQDGLVFLSOLQHWKDWKDVÁRXULVKHGLQWKHODVWWZHQW\\HDUV LV DOVR FKDUDFWHUL]HG E\ D PDUNHG SUHIHUHQFH IRU DWWLWXGLQDO DQG PRWLYDWLRQDO FRQFHSWLRQVRIUHOLJLRQRYHUPRUHFRJQLWLYHEHOLHIRULHQWHGDSSURDFKHV $ FUXFLDO ÀJXUH LQ WKH SRVW.DQWLDQ WUDGLWLRQ -RKDQQ *RWWOLHE )LFKWH KDV ODUJHO\ EHHQ OHIW RXW RI VHPLQDO DFFRXQWV RI WKH HLJKWHHQWKFHQWXU\ WUDGLWLRQ DV RXWOLQHGDERYH+LVYLHZVRQUHOLJLRQKDYHEHHQREVFXUHGE\WKHIRJVXUURXQGLQJ WKHVRFDOOHG´$WKHLVP&RQWURYHUV\µRI7KLVLVXQGHUVWDQGDEOHGXHWRWKH IDFWWKDWWKHSDPSKOHWHHULQJRI)LFKWHDQGKLVRSSRQHQWVFRQWDLQVPRUHLQWKHZD\ 3KLORVRSK\4XDUWHUO\ ²DQG0LFKDHO%*LOO7KH%ULWLVK0RUDOLVWVRQ+XPDQ1DWXUH DQGWKH%LUWKRI6HFXODU(WKLFV&DPEULGJH8.&DPEULGJH8QLYHUVLW\3UHVV ² +HQU\+RPH/RUG.DPHV² LVYLUWXDOO\LJQRUHGWRGD\EXWZDVPXFKDGPLUHGLQ %ULWDLQDQGLQ*HUPDQ\LQWKHHLJKWHHQWKFHQWXU\+LVYLHZVRQUHOLJLRQDUHIRXQGLQ (VVD\V RQ WKH 3ULQFLSOHV RI 0RUDOLW\ DQG 1DWXUDO 5HOLJLRQ HG 0DU\ &DWKHULQH 0RUDQ ,QGLDQDSROLV ,QG /LEHUW\ )XQG DQG 6NHWFKHV RI WKH +LVWRU\ RI 0DQ HG -DPHV$ +DUULV YROV ,QGLDQDSROLV,QG/LEHUW\)XQG -RKDQQ &KULVWRSK *RWWVFKHG ² DQG 0RVHV 0HQGHOVVRKQ ² ZHUH WZR SURPLQHQWUHSUHVHQWDWLYHVRIWKH:ROIÀDQWUDGLWLRQZKRZHUHDOVRUHFHSWLYHWRPDQ\LGHDVIRXQG LQWKH$QJOR6FRWWLVKWUDGLWLRQGHULYLQJIURP6KDIWHVEXU\SDUWLFXODUO\LQWKHÀHOGRIDHVWKHWLFV 6HH$UPDQG 1LYHOOH .XQVW XQG 'LFKWXQJVWKHRULHQ ]ZLVFKHQ $XINOlUXQJ XQG .ODVVLN G HG %HUOLQGH*UX\WHU )RU D GLVFXVVLRQ RI +HUGHU WKDW DOVR IRFXVHV RQ KLV LQQRYDWLYH GHSDUWXUH IURP :ROIÀDQ SV\FKRORJ\VHHP\´%H\RQG7KHRORJLFDO5DWLRQDOLVP7KH&RQWHPSRUDU\5HOHYDQFHRI+HUGHU·V 3V\FKRORJ\RI5HOLJLRQµ0HWKRGDQG7KHRU\LQWKH6WXG\RI5HOLJLRQ ² 7ZR H[FHOOHQW VWXGLHV RI WKH KLVWRU\ RI WKH PRGHUQ VFLHQFH RI UHOLJLRQ WKDW GLVFXVV LWV HLJKWHHQWKFHQWXU\ EDFNJURXQG DUH (ULF - 6KDUSH &RPSDUDWLYH 5HOLJLRQ $ +LVWRU\ /RQGRQ 'XFNZRUWK DQG3HWHU%\UQH1DWXUDO5HOLJLRQDQGWKH1DWXUHRI5HOLJLRQ7KH/HJDF\RI 'HLVP/RQGRQ5RXWOHGJH
%(1&52:(
RI FKDUDFWHU DVVDVVLQDWLRQ DQG UHFULPLQDWLRQ WKDQ RI VXEVWDQWLYH SKLORVRSKLFDO GHEDWH$QRWHZRUWK\H[FHSWLRQWRWKLVKRZHYHUFDQEHIRXQGLQ)LFKWH·VH[FKDQJH ZLWK-RKDQQ$XJXVW(EHUKDUG/LNHWKHLUSUHGHFHVVRUVERWK)LFKWHDQG(EHUKDUG KLJKOLJKWWKHFHQWUDOUROHRIDIIHFWLQUHOLJLRQPRUHRYHUOLNHRWKHUSHRSOHLQWKH WUDGLWLRQVWHPPLQJIURP6KDIWHVEXU\ERWK)LFKWHDQG(EHUKDUGVWUHVVWKDWPRUDO DQGUHOLJLRXVIHHOLQJVDUHUDWLRQDO7KHLUGLVDJUHHPHQWFRQFHUQVSUHFLVHO\ZKDWLWLV WKDWPDNHVPRUDODQGUHOLJLRXVIHHOLQJVUDWLRQDO)RU(EHUKDUGWKHEHVWDFFRXQWLVD :ROIÀDQRQHWKDWWDNHVPRUDODQGUHOLJLRXVIHHOLQJVRU´VHQVDWLRQV(PSÀQGXQJHQ µ WREHFRQIXVHGFOXVWHUVRIUHSUHVHQWDWLRQVWKDWLPSOLFLWO\FRQWDLQDEVWUDFWWUXWKV GLVFHUQLEOHE\UHDVRQ)RU(EHUKDUGWRVHSDUDWHUHOLJLRXVIHHOLQJVIURPWKHRUHWLFDO UDWLRQDOLW\DVKHWKLQNVWKH%ULWLVK´PRUDOVHQVHµWKHRULVWVDQG)LFKWHWU\WRGRLV WRRSHQWKHGRRUWRWKHGUHDGHGEXJEHDURIHDUO\PRGHUQSKLORVRSK\RIUHOLJLRQ ´HQWKXVLDVPµ)RU)LFKWHRQWKHRWKHUKDQGWKH:ROIÀDQFRQFHSWLRQRISKLORVRSK\ DVDVFLHQFHZKLFKGULYHV(EHUKDUG·VDFFRXQWLVQRORQJHUFRPSHOOLQJ,QVWHDG )LFKWHLVLQWHUHVWHGLQGHYHORSLQJD´SUDJPDWLFKLVWRU\RIWKHKXPDQPLQGµWKDW DFFRXQWV IRU IXQGDPHQWDO IHDWXUHV RI ÀUVWRUGHU KXPDQ H[SHULHQFH LQFOXGLQJ UHOLJLRQE\WUHDWLQJWKHPDVFRQGLWLRQVRIKXPDQDJHQF\,QWKHHQGWKH´$WKHLVP &RQWURYHUV\µFDQEHYLHZHGDVDPRPHQWLQWKHELUWKSDQJVRIWKHPRGHUQVWXG\RI UHOLJLRQ)LFKWH·VUHSXGLDWLRQRI:ROIÀDQUDWLRQDOLVPVHWVWKHVWDJHIRUWKHEURDGO\ KLVWRULFDODQWKURSRORJLFDODSSURDFKWRUHOLJLRQWKDWHPHUJHGLQWKHFHQWXU\DIWHU KLVGLVPLVVDOIURP-HQD
Q(EHUKDUG·V&ULWLTXHRI)LFKWH 7KH ´$WKHLVP &RQWURYHUV\µ LV WKH QDPH JLYHQ WR WKH IXURU FDXVHG E\ )LFKWH·V HVVD\2QWKH%DVLVRI2XU%HOLHILQWKH'LYLQH*RYHUQDQFHRIWKH:RUOG ,URQLFDOO\)LFKWHSXEOLVKHGWKLVHVVD\E\ZD\RIDFULWLFDOUHSO\WRDSLHFHE\KLV FROOHDJXH)RUEHUJZKLFKFDQEHPRUHSODXVLEO\UHDGDVDWOHDVWLPSO\LQJLIQRW DVVHUWLQJDWKHLVP)LFKWH·VLQWHQWLRQVQRWZLWKVWDQGLQJDSXEOLFRXWFU\DURVHÀUVW LQ(OHFWRUDO6D[RQ\DQGWKHQLQ6D[RQ\:HLPDU)LFKWH·VLQWHUYHQWLRQVRQKLVRZQ EHKDOIVXFKDVWKH$SSHDOWRWKH3XEOLFZHUHLOOFRQFHLYHGDQGRQO\VHUYHG WRGHHSHQWKHKRVWLOLW\RIKLVFULWLFV2QHRIWKHVH-$(EHUKDUG² ZKR RFFXSLHG D SUHVWLJLRXV FKDLU RI SKLORVRSK\ DW +DOOH SXEOLVKHG KLV RZQ UHVSRQVHWR)LFKWH·V$SSHDOWRWKH3XEOLF+LVHVVD\HQWLWOHG&RQFHUQLQJ3URI
5HIHUHQFHV WR )LFKWH·V ZRUNV DUH JLYHQ EHJLQQLQJ ZLWK WKH FULWLFDO HGLWLRQ -* )LFKWH *HVDPWDXVJDEHGHUED\HULVFKHQ$NDGHPLHGHU:LVVHQVFKDIWHQHG5HLQKDUG/DXWKHWDO6WXWWJDUW %DG &DQVWDWW )URPPDQQ+RO]ERRJ ² :KHQ DSSOLFDEOH UHIHUHQFH LV DOVR PDGH WR WKH UHOHYDQW(QJOLVKWUDQVODWLRQVDFFRUGLQJWRWKHIROORZLQJDEEUHYLDWLRQV ,: ,QWURGXFWLRQV WR WKH :LVVHQVFKDIWVOHKUH DQG 2WKHU :ULWLQJV WUDQV 'DQLHO %UHD]HDOH,QGLDQDSROLV,QG+DFNHWW 6( 7KH 6\VWHP RI (WKLFV HG 'DQLHO %UHD]HDOH DQG *QWHU =|OOHU &DPEULGJH &DPEULGJH8QLYHUVLW\3UHVV :/QP )RXQGDWLRQVRI7UDQVFHQGHQWDO3KLORVRSK\:LVVHQVFKDIWVOHKUH QRYDPHWKRGR HG'DQLHO%UHD]HDOH,WKDFD1URK@ ZKLOH LW LV SURSHU UHÀQHG DQG FRPSUHKHQVLYH >ZHLWXPIDVVHQG@ LQ WKH FXOWXUHG DQG HQOLJKWHQHG >SHUVRQ@" ,V LW QRW EHFDXVH WKH IRUPHU LV GHYRLG RI FRQFHSWV ZKLOHWKHODWWHULVULFKLQFRUUHFWFOHDU>KHOOHQ@HIIHFWLYHFRQFHSWV":K\KDV WKHKRUURURIVXSHUVWLWLRQGLVÀJXUHGPRUDOLW\",VLWQRWWKHIDXOWRIWKHIDOVH FRQFHSWVRI*RGWKDWWKHVXSHUVWLWLRXVSHUVRQKDVFRQVWUXFWHGIRUKLPVHOI"
7KHSULQFLSDOSRLQWRIWKHVHUKHWRULFDOTXHVWLRQVLVHYLGHQWO\WKDWPRUDOIHHOLQJ LV GHSHQGHQW XSRQ FRQFHSWV 7KH PRUH DQG EHWWHU FRQFHSWV RQH KDV WKH PRUH UHÀQHGRQH·VPRUDOVHQVLELOLW\ZLOOEH+HPDNHVVXEVWDQWLDOO\WKHVDPHSRLQWE\ FRQVLGHULQJFKLOGGHYHORSPHQW,QKLV$SSHDOWRWKH3XEOLF)LFKWHKDGVXJJHVWHG WKDWWKHDWWHPSWWRPDNHPRUDOIHHOLQJGHSHQGXSRQFRQFHSWVRIWKHGHLW\LVDV DEVXUGDVPDNLQJVHQVRU\IHHOLQJVOLNHWKRVHRIZDUPWKRUFROGQHVVGHSHQGXSRQ VRPHSULRUXQGHUVWDQGLQJRIWKHPHFKDQLFVRISHUFHSWLRQ(EHUKDUG·VUHVSRQVHLV WRGHQ\WKDWWKHUHLVDQ\DQDORJ\EHWZHHQVHQVRU\IHHOLQJVDQGPRUDOIHHOLQJ+H GRHVWKLVE\SRLQWLQJRXWWKDWFKLOGUHQFHUWDLQO\KDYHVHQVRU\IHHOLQJVEXWGRXEWIXO ZKHWKHUWKH\KDYHPRUDOIHHOLQJV(EHUKDUGVXPPDUL]HVKLVEDVLFFODLPDVIROORZV 7KHPRUDOIHHOLQJLVH[SDQGHGFRUUHFWHGDQGUHÀQHGWRWKHH[WHQWWKDWWKH VXSSO\ RI FRQFHSWV LV LQFUHDVHG WKH LQWHOOHFW LV HQOLJKWHQHG DQG UHDVRQ LV H[HUFLVHG%XWUHDVRQLVH[HUFLVHGQRWRQO\E\OHDUQLQJWRPDNHPRUHFRUUHFW LQIHUHQFHVEXWDOVRE\KDYLQJPRUHFRUUHFWSUHPLVHVSURYLGHGWRLWIRUWKHVH LQIHUHQFHV5HDVRQZLOOEHSURYLGHGZLWKPRUH>FRUUHFWSUHPLVHV@WKHPRUH DQGPRUHFRUUHFWFRQFHSWVLWKDVRIWKLQJV
(EHUKDUG8HEHUGHQ*RWW ,ELG² ,ELG>LWDOLFVLQRULJLQDO@
%(1&52:(
(EHUKDUGQH[WSURYLGHVZKDWLVPHDQWWREHDGLDJQRVLVRIYLHZVOLNH)LFKWH·V 2QWKLVDFFRXQWDQXQFXOWXUHGSHUVRQDEVRUEVTXLWHLQYROXQWDULO\WKH´GHYHORSHG FRQFHSWVDQGMXGJPHQWVµRIKHUPRUHHQOLJKWHQHGDVVRFLDWHVDQGWKHQPLVWDNHQO\ DVFULEHVWKHUXGLPHQWDU\MXGJPHQWVWKDWIROORZWR´DQRULJLQDOIHHOLQJµ6XFKD SHUVRQRQO\ODWHULVDEOHWRGHYHORSWKHFDSDFLW\´WRDQDO\]HWKHFRQFHSWVWKDWOLH DWWKHEDVLVRIKLVIHHOLQJVµ+HUH(EHUKDUGLVUHO\LQJRQWKH:ROIÀDQGLVWLQFWLRQ EHWZHHQ´FRPPRQµ´YXOJDUµRU´QDWXUDOµNQRZOHGJHDQGVFLHQWLÀFNQRZOHGJH 2QWKH:ROIÀDQYLHZERWKDLPDWFHUWDLQW\EXWRQO\WKHODWWHULVUHDOO\FDSDEOHRILW EHFDXVHUHDVRQFDQGLVFHUQWKHSULQFLSOHVWKDWDUHLPSOLFLWLQ´YXOJDUµNQRZOHGJH )RU(EHUKDUGKLVRZQYLHZLVWKHRQO\RQHWKDWFRXOGSRVVLEO\VHFXUHD´UDWLRQDO HGXFDWLRQDQGDSXUSRVLYHPRUDOFXOWXUH>%LOGXQJ@µ2QWKHRWKHUKDQGDYLHZ OLNHWKHRQH(EHUKDUGVHHVLQ)LFKWH´OHDGVWRDIRROLVKHQWKXVLDVP>6FKZlUPHUH\@ DQGWRDFRQWHPSWIRUVFLHQFHWKDWLVFRPPRQWRDOOHQWKXVLDVWVDQGLVWKHPRVW QRWDEOHHOHPHQWRIWKHLUFKDUDFWHUVµ2QWKH:ROIÀDQYLHZDVFLHQFHPXVWEH ULJRURXVO\GHGXFWLYHDQGGHSHQGVXSRQRQH·VÀUVWKDYLQJVHFXUHGSULQFLSOHVWKDW FRQWDLQQRWKLQJEXWFOHDUDQGGLVWLQFWLGHDV0RUHRYHUIROORZLQJ:ROIIKLPVHOI PRVW PHPEHUV RI KLV VFKRRO UHJDUGHG VFLHQFH LQ WKLV VHQVH DV FUXFLDO WR WKH LPSURYHPHQWRIKXPDQLW\WKDWLVWRZKDW(EHUKDUGDQGKLVV\PSDWKL]HUVFDOOHG ´HQOLJKWHQPHQW>$XINOlUXQJ@µ+LVFODLPLVWKDW)LFKWH·VSRVLWLRQLPSHGHVKXPDQ SURJUHVVE\XQGHUPLQLQJWKHEDVHVIRUVFLHQWLÀFWUHDWPHQWVRIPRUDOLW\DQGUHOLJLRQ 0RVWRI)LFKWH·VRSSRQHQWVLQWKH´$WKHLVP&RQWURYHUV\µZHUHZRUULHGWKDWKH KDGWDNHQWKHÀQDOVWHSIURPWKLQWKHLVPRUGHLVPWRIXOOEORZQXQEHOLHI(EHUKDUG FXULRXVO\HQRXJKVHHPVWRKDYHWKHRSSRVLWHZRUU\´(QWKXVLDVPµDFDWFKDOOWHUP IRUUHOLJLRXVIDQDWLFLVPZKLFKZDVXVHGLQ*HUPDQVSHDNLQJGLVFXVVLRQVSULPDULO\ WRUHIHUWRYDULRXVUDGLFDO3LHWLVWVDQGRWKHUUHYLYDOLVWVZKRSODFHGJUHDWHPSKDVLV RQUHOLJLRXVDIIHFWLRQVZDVQRWDODEHOW\SLFDOO\DIÀ[HGWRSXWDWLYHIUHHWKLQNHUV (EHUKDUG·VSRLQWKRZHYHULVWKDWE\PDNLQJPRUDOIHHOLQJLQGHSHQGHQWRIFRQFHSWV )LFKWHKDVHIIHFWLYHO\PDGHUHOLJLRQZKLFKLVIRXQGHGLQPRUDOIHHOLQJWRWDOO\ LQGHSHQGHQWRIUHDVRQ(EHUKDUGWDNHVLWWKDWKHKDVVKRZQWKDWLIPRUDOIHHOLQJLV LQGHHGWKHEDVLVRIUHOLJLRQWKHQLWLVRQO\SUR[LPDWHO\VR7KHUHDOEHGURFNFRQVLVWV RI´FRUUHFWFRQFHSWVRIWKHH[LVWHQFHRI*RGDQGRI+LVDWWULEXWHVµZKLFKDUHPDWWHUV
,ELG>LWDOLFVLQRULJLQDO@ 6HH IRU H[DPSOH WKH ´*HUPDQ /RJLFµ RU 9HUQQIWLJH *HGDQNHQ YRQ GHQ .UlIWHQ GHV PHQVFKOLFKHQ 9HUVWDQGHV 8QG LKUHP ULFKWLJHQ *HEUDXFKH LQ GHU (UNHQQWQLV GHU :DKUKHLW E\ &KULVWLDQ:ROII+DOOH>UHSU+LOGHVKHLP2OPV@ O[[[OL (EHUKDUGhEHUGHQ*RWW ,ELG (EHUKDUG·V IHOORZ QHRORJLDQ - - 6SDOGLQJ DXWKRUHG DQ LQÁXHQWLDO UDWLRQDOLVW FULWLTXH RI ´HQWKXVLDVPµ WKDW ZHQW WKURXJK ÀYH HGLWLRQV EHWZHHQ DQG 6HH - - 6SDOGLQJ *HGDQNHQ EHU GHQ :HUWK GHU *HIKOH LQ GHP &KULVWHQWKXP HG $OEUHFKW %HXWHO DQG 7RELDV -HUVDN 7ELQJHQ 0RKU 6LHEHFN (EHUKDUG SURYLGHV KLV RZQ DQDO\VLV RI HQWKXVLDVP LQ $OOJHPHLQH7KHRULHGHV'HQNHQVXQG(PSÀQGHQV%HUOLQ9RUHSU%UXVVHOV&XOWXUHHW &LYLOLVDWLRQ ²
+$59$5'7+(2/2*,&$/5(9,(:
IRUWKHRUHWLFDOUDWKHUWKDQSUDFWLFDOUHDVRQ)ROORZLQJ:ROII(EHUKDUGVWUHVVHV WKDWZKDWLVLPSUHVVLYHDERXW*RGLV+LVSHUIHFW´ZLVGRPµDQG´UHDVRQµUHYHDOHG LQ´WKHKDUPRQ\DQGEHDXW\RIWKHXQLYHUVHLQZKLFKHYHU\WKLQJWKDWDJUHHVLV DUUDQJHGDQGIROORZVDFFRUGLQJWRXQLYHUVDOUHDVRQV>*UQGHQ@µVXFKWKDWWKH HPSOR\PHQWRIWKHRUHWLFDOUHDVRQFRQVWLWXWHVDZD\RIZRUVKLSSLQJ*RG7KLV LVPRUHRUOHVVDVXPPDU\VWDWHPHQWRIWKHQHRORJLDQV·SURJUDP7KURXJKWKH FRPSOHWHUDWLRQDOL]DWLRQRI&KULVWLDQGRFWULQHWKHQHRORJLDQVFODLPHGWRKDYH UHGXFHG &KULVWLDQLW\ WR LWV RULJLQDO SULVWLQH VWDWH DV D SXUH UHOLJLRQ RI UHDVRQ DLPHGDWSURPRWLQJPRUDOSHUIHFWLRQ3HUKDSVLURQLFDOO\WKLVSURJUDPHDUQHG WKHQHRORJLDQVWKHVXVSLFLRQVRIRUWKRGR[/XWKHUDQVPDQ\RIZKRPODWHUKDG VLPLODUZRUULHVDERXW)LFKWH·VSKLORVRSK\ (EHUKDUG·VGLIÀFXOW\ZLWK)LFKWH·VYLHZLVDSSDUHQWEXWZK\ZHPLJKWDVNZDV (EHUKDUGPRYHGWRUHVSRQGLQWKHÀUVWSODFH"$QVZHULQJWKLVTXHVWLRQUHTXLUHV DQ H[DPLQDWLRQ RI VRPH RI KLV RWKHU HDUOLHU ZULWLQJV LQ ZKLFK KH RXWOLQHV KLV UDWLRQDOSV\FKRORJ\7KLVUDWLRQDOSV\FKRORJ\WXUQVRXWWREHWKHGHHSHUSRLQWDW ZKLFK(EHUKDUGDQG)LFKWHSDUWZD\V7KHÀUVWSODFHWRORRNIRUWKHXQGHUO\LQJ PRWLYHVEHKLQG(EHUKDUG·VFULWLFLVPRI)LFKWHOLHVQDWXUDOO\HQRXJKLQKLVHDUOLHU FULWLFLVPVRIPRUDOVHQVHWKHRULHV(EHUKDUGLVLQVLVWHQWWKDW)LFKWHEHORQJVLQWKLV FDPS)LFKWH·VRZQUHPDUNVLQWKH'LYLQH*RYHUQDQFHHVVD\DQGHOVHZKHUHVHHP WRUHQGHU(EHUKDUG·VUHDGLQJTXLWHSODXVLEOH,QGHHGRQHRIWKHLQWHUHVWLQJWKLQJV WKDWFRQWHPSRUDU\VFKRODUVFDQOHDUQIURPWKH(EHUKDUG)LFKWHH[FKDQJHFRQFHUQV SUHFLVHO\WKHH[WHQWWRZKLFK)LFKWH·VYLHZVGRLQGHHGHFKRWKHSRVLWLRQVRIKLV SUHGHFHVVRUVLQERWKWKH$QJOR6FRWWLVKDQG*HUPDQSKLORVRSKLFDOWUDGLWLRQVRI WKHHLJKWHHQWKFHQWXU\ 1HDU WKH EHJLQQLQJ RI KLV 5DWLRQDO 7KHRU\ RI (WKLFV >6LWWHQOHKUH GHU 9HUQXQIW@(EHUKDUGVLJQDOVKLVLQWHQWLRQWRDVVHUWWKHULJKWRIUHDVRQWREHWKHÀQDO DUELWHURIPRUDOLW\FODLPLQJWKDW´VHQWLPHQW>(PSÀQGXQJ@µLVTXLWHLQDGHTXDWH IRUWKHSXUSRVHVRIPRUDOMXGJPHQW$ELWIXUWKHURQLQKLVGLVFXVVLRQ(EHUKDUG JUDQWV WKDW WKHUH DUH ´JHQXLQH PRUDO VHQWLPHQWVµ ZKLFK KH GHÀQHV LQ:ROIÀDQ ODQJXDJHDV´WKHYLYLGUHSUHVHQWDWLRQRIPRUDOSHUIHFWLRQLQRQHVHOIDQGRWKHUVµ DQG KH VLQJOHV RXW )UDQFLV +XWFKHVRQ DQG $GDP 6PLWK DV WKHRULVWV ZKR KDYH GRQH PXFK WR LOOXPLQDWH WKHVH FUXFLDO HOHPHQWV RI PRUDO SV\FKRORJ\ +RZHYHUKHDOVRVHHPVWRUHJDUGWKHHIIRUWVRIWKH%ULWLVKPRUDOLVWVDVVRPHKRZ LQFRPSOHWH)RU(EHUKDUGWKHUHDOSKLORVRSKLFDOZRUNFRPHVLQGHULYLQJWKHVH PRUDOVHQWLPHQWVIURP´WKHSULPDU\EDVLFGULYHRIWKHKXPDQVRXOµ,QVHFWLRQV
(EHUKDUG8HEHUGHQ*RWW ,ELG )RUDQDFFRXQWRIWKLVDVSHFWRIWKHQHRORJLDQV·SURJUDPVHH+HQU\($OOLVRQ/HVVLQJDQG WKH (QOLJKWHQPHQW +LV 3KLORVRSK\ RI 5HOLJLRQ DQG ,WV 5HODWLRQ WR (LJKWHHQWK&HQWXU\ 7KRXJKW $QQ$UERU0LFK8QLYHUVLW\RI0LFKLJDQ3UHVV ² -$(EHUKDUG6LWWHQOHKUHGHU9HUQXQIW)UDQNIXUWDP0DLQ$WKHQlXP ,ELG² ,ELG
%(1&52:(
ÀIW\RQHWKURXJKÀIW\ÀYHKLVFULWLFLVPRIPRUDOVHQVHWKHRU\LVPRUHGLUHFWDQG IRUFHIXO+HUHKHRQFHDJDLQGHÀQHVWKHPRUDOVHQVHDVWKHFDSDFLW\IRUKDYLQJ LQGLVWLQFW´FRQIXVHGµUHSUHVHQWDWLRQVRIPRUDOTXDOLWLHV$VKHZRXOGODWHUXUJH DJDLQVW)LFKWH(EHUKDUGPDLQWDLQVWKDWWKHPRUDOVHQVHLVQRW´RULJLQDOµEXWUDWKHU GHSHQGVXSRQ´RWKHUFDSDFLWLHVRIWKHVRXOµ5HIHUULQJWR+XWFKHVRQ·V$Q(VVD\ RQWKH1DWXUHDQG&RQGXFWRIWKH3DVVLRQVDQG$IIHFWLRQVDQGWR/RUG.DPHV·V (VVD\VRQWKH3ULQFLSOHVRI0RUDOLW\DQG1DWXUDO5HOLJLRQ(EHUKDUGUHMHFWVWKH SRVLWLRQRI´HWKLFLVWVµZKR´KDYHKHOGWKHPRUDOVHQVHQRWRQO\WREHDQLQQDWH IDFXOW\EXWDOVRWREHRQHWKDWLVLQGHSHQGHQWRIWKHEDVLFIDFXOW\RIWKHVRXOµ (EHUKDUGGRHVQRWH[SODLQZK\WKLVLVDUHDVRQWRUHMHFWWKH%ULWLVKPRUDOVHQVH WKHRU\+RZHYHUKHGRHVJRRQWRRIIHUFRPPHQWVWKDWDQWLFLSDWHWKHFRUHRIKLV DUJXPHQWDJDLQVW)LFKWH 0RUDOMXGJPHQWVOLHZUDSSHGXSLQWKHLQQHUVHQWLPHQWVRIWKHVRXODQGDUH WKXVLQWKLVVHQVHLQQDWH7KHPRUDOVHQVHLVWKHUHIRUHOLNHHYHU\RWKHUFD SDFLW\RIDQDFWXDOVRXOQRWDEDUHFDSDFLW\EXWUDWKHUFRQWDLQVFRQFHSWVDQG MXGJPHQWVWKDWFDQEHPDGHFOHDUWKURXJKWKLVFDSDFLW\WKRXJKRQO\REVFXUHO\ DQGLQDUWLFXODWHO\
7KDW LV WKH PRUDO VHQVH WKHRULVWV DUH FRUUHFW LQ DVVHUWLQJ WKDW SHRSOH KDYH VRPHWKLQJOLNHPRUDOLQWXLWLRQV%XWWKHVHDUHRQO\PRUDOLQWXLWLRQVEHFDXVHWKHUH DUHDOUHDG\LQQDWHFRQFHSWVDQGHYHQLQQDWHMXGJPHQWVWKDWDUHGLPO\UHSUHVHQWHG E\WKHIDFXO\WKDWWKH\FDOOWKH´PRUDOVHQVHµ,QRWKHUZRUGVWKHIHHOLQJVRU VHQWLPHQWVWKDWDUHFRPPRQO\DWWULEXWHGWRWKHPRUDOVHQVHUHDOO\GHSHQGXSRQ FRQFHSWVRIWKHSHUIHFWLRQRIKXPDQDFWLRQV7KHVHIHHOLQJVDVPRUDOIHHOLQJV FHUWDLQO\ VXFFHHG LQ UHSUHVHQWLQJ WKLV SHUIHFWLRQ³EXW RQO\ ´REVFXUHO\ DQG LQDUWLFXODWHO\µ 7KXV WKH FDSDFLW\ WKDW SURGXFHV WKHVH VRUWV RI LQWXLWLRQV FDQ DFFRUGLQJWR(EHUKDUGEHLWVHOILPSURYHGWKURXJKWKHFXOWLYDWLRQRIUHDVRQDQG LWVFRQWLQXDODSSOLFDWLRQWRPRUDOMXGJPHQW 7KH XQH[SODLQHG FRPPHQW DERXW D ´EDVLF IDFXOW\ RI WKH VRXOµ PHQWLRQHG DERYHSRLQWVEDFNWRDQHYHQHDUOLHUSLHFHE\(EHUKDUGKLVSUL]HZLQQLQJ*HQHUDO 7KHRU\RI7KRXJKWDQG6HQVDWLRQRI2QWKH:ROIÀDQPRGHOLQRUGHUWREHD SURSHUVFLHQFHSV\FKRORJ\PXVWGHULYHLWVFRQFHSWVIURPDVLQJOHÀUVWSULQFLSOH )ROORZLQJ:ROII(EHUKDUGPDLQWDLQVWKDWDOORIWKHRSHUDWLRQVRIWKHVRXOFDQEH GHULYHGIURPDVLQJOHSRZHURIUHSUHVHQWDWLRQDQGLWVLQKHUHQWOLPLWDWLRQV2Q WKLVDFFRXQWWKHUHFDQQRWEHDQ\ULJLGGLVWLQFWLRQEHWZHHQWKRXJKWRUUHDVRQDQG WKHVRFDOOHG´ORZHUIDFXOWLHVµRIWKHVRXOZKLFK(EHUKDUGODEHOV´VHQVDWLRQµRU ´VHQWLPHQW>(PSÀQGHQ@µ,QVWHDGWKHGLVWLQFWLRQEHWZHHQWKHWZROLHVLQDVRUWRI
,ELG ,ELG ,ELG ,ELG² ,ELG (EHUKDUG$OOJHPHLQH7KHRULH
+$59$5'7+(2/2*,&$/5(9,(:
FRQWLQXXPRIFODULW\DQGGLVWLQFWQHVVRIUHSUHVHQWDWLRQV6HQVDWLRQLVFKDUDFWHUL]HG DVDFRQIXVHGV\QWKHVLVRI´DODUJHQXPEHURIVPDOOHUSDUWLDOUHSUHVHQWDWLRQVLQWR D WRWDO UHSUHVHQWDWLRQµ ZLWKLQ ZKLFK WKHVH FRQVWLWXHQW SDUWV FDQQRW EH FOHDUO\ GLVWLQJXLVKHGIURPRQHDQRWKHU7KRXJKWRUUHDVRQRQWKHRWKHUKDQGFRQVLVWV LQ ´WKH HOHYDWLRQ RI RQH LQGLYLGXDO SHUFHSWLRQ WR D FHUWDLQ OHYHO RI FODULW\ DQG GLVWLQFWQHVVµ (EHUKDUG XVHV WKH FRQFHSW RI JRRGQHVV WR LOOXVWUDWH WKH GLVWLQFWLRQ KH LV GHIHQGLQJ+HFKDUWVDQDVFHQGLQJRUGHURIFODULW\DQGGLVWLQFWQHVVIURPDYDJXH VHQVHRIEHDXW\RUDWWUDFWLYHQHVVWRWKHSHUFHSWLRQRIWKHÀWQHVVRIDPHDQVWR DQHQGWRWKHSHUIHFWLRQRIWKHHQGLWVHOIDQGÀQDOO\WRWKHDEVWUDFWXQLYHUVDO SHUIHFWLRQWKDWXQGHUOLHVDOORIWKHVHYDULRXVUHSUHVHQWDWLRQV6HQVDWLRQLVDEOHWR KDYHDFRQIXVHGUHSUHVHQWDWLRQRIDPDQLIROGKHOGWRJHWKHUE\YDULRXVUHODWLRQV EXWRQO\WKRXJKWRUUHDVRQFDQJUDVSWKHVRUWRIFOHDUDQGGLVWLQFWFRQFHSWUHTXLUHG IRUGHÀQLWLYHPRUDOMXGJPHQW7RZDUGWKHHQGRIWKLVHVVD\(EHUKDUGGHVFULEHV KRZZKDWKLVFRQWHPSRUDULHVFDOOHG´FRPPRQVHQVHµUHOLHVXSRQDQ´XQH[SODLQHG IHHOLQJ RI WUXWKµ LQ PDNLQJ SULPLWLYH WKHRUHWLFDO MXGJPHQWV :KLOH ´FRPPRQ VHQVHµVXUHO\FDQEHXVHIXOLWLVDOVRXOWLPDWHO\XQUHOLDEOH$IWHUDOOLQGLIIHUHQW QDWLRQVDWGLIIHUHQWWLPHV´FRPPRQVHQVHµVHHPVWRKDYHDXWKRUL]HG´WKHPRVW UHSXOVLYH>DEJHVFKPDFNWHVWHQ@SULQFLSOHVµ0RUHRYHU´SURIRXQGLQWHOOHFWµRIWHQ GHPRQVWUDWHVWUXWKVWKDWDUHTXLWHFRXQWHULQWXLWLYHIURPWKHVWDQGSRLQWRIFRPPRQ VHQVH7KXVRQHLVQRWDWDOOVXUSULVHGWRÀQG(EHUKDUGDVVHUWLQJWKHIROORZLQJ 6RPHWKLQJ LV WUXH LI RQH FDQ JUDVS LW FRQFHSWXDOO\ ZKLOH LW LV IDOVH LI RQH FDQQRWJUDVSLWFRQFHSWXDOO\6KRXOGRQHZDQWWRH[SODLQWKLVFRQFHLYDELOLW\ WKHQLWLVHYLGHQWWKDWRQHFDQJXDUDQWHHLWIRURQHVHOILQQRRWKHUZD\WKDQ WKURXJK PHWKRGLFDO >VWXIHQZHLVH@ UHGXFWLRQ >=XUFNNHKUHQ@ WR LQGXELWDEOH SULQFLSOHV>*UXQGVDW]H@
7KLVLVLQ(EHUKDUG·VZRUGVWKH:ROIÀDQFRQFHSWLRQRIVFLHQWLÀFNQRZOHGJH+H JRHVRQWRPDNHDVLPLODUDUJXPHQWZLWKUHVSHFWWRWKHPRUDOVHQVH+HZULWHV ,WIROORZVIURPWKLVWKDWWKHNQRZOHGJHRIWKHWUXWKLVQRWWKHZRUNRIVHQ VDWLRQ DQG WKHUHIRUH WKDW D SDUWLFXODU IHHOLQJ FDQQRW EH DQ XQPLVWDNDEOH FKDUDFWHULVWLFRIWKHWUXWK7KLVD[LRPH[WHQGVQRWRQO\WRWKHRUHWLFDOEXWDOVR WRSUDFWLFDONQRZOHGJH0RUDOSURSRVLWLRQVPXVWEHNQRZQ>HUNDQQW@WKURXJK WKHVDPHPRGHRIDUJXPHQWDWLRQDVWKHWKHRUHPV>/HKUVlW]H@RIWKHRWKHUVFL HQFHVEHFDXVHWKH\FRQWDLQMXGJPHQWVZKRVHWUXWKRQHFDQVXEVWDQWLDWHLQQR
,ELG² ,ELG ,ELG ,ELG² ,ELG ,ELG ,ELG ,ELG ,ELG
%(1&52:(
RWKHUZD\WKDQE\VKRZLQJWKHFRKHUHQFHRIWKHLUHOHPHQWV-XVWDVWKHUHDUH WUXWKVWKDWDUHEH\RQGWKHKRUL]RQRIFRPPRQVHQVHVRWRRWKHUHDUHPRUDO PDWWHUVWKHHYDOXDWLRQRIZKLFKLVEH\RQGWKHKRUL]RQRIPRUDOIHHOLQJ
0RUDO VHQVH WKHRULVWV (EHUKDUG PHQWLRQV +XWFKHVRQ DQG /RUG .DPHV DUH JXLOW\RIJLYLQJVHQVDWLRQDEULHIWKDWJRHVEH\RQGLWVQDWXUH(EHUKDUGGHPXUV ZLWKUHVSHFWWRHQXPHUDWLQJDOORIWKHGHOHWHULRXVFRQVHTXHQFHVRIVXFKDYLHZ EXWGRHVQRWPLVVWKHRSSRUWXQLW\WRSURFODLPORXGO\WKDW´>L@WLVWKHGXW\RI SKLORVRSK\WREDQLVKWKLVIHHOLQJIURPSKLORVRSK\LWVHOIDQGGLUHFWLWWRZDUGVLWVWUXH FDOOLQJµ(EHUKDUG·VUHVSRQVHWR)LFKWH·V$SSHDOWRWKH3XEOLFLVWKXVHQWLUHO\ LQOLQHZLWKYLHZVWKDWKHKDGEHHQGHIHQGLQJIRURYHUWZRGHFDGHVSULRUWRWKH RXWEUHDNRIWKH´$WKHLVP&RQWURYHUV\µLQ(EHUKDUG·VUDWLRQDOSV\FKRORJ\ DQGKLVFRQFHSWLRQRIWKHQDWXUHRINQRZOHGJHFRPPLWKLPWRUHMHFWLQJDQ\YLHZ WKDWPDNHVPRUDOVHQVHRUIHHOLQJLQGHSHQGHQWRIWKHRUHWLFDOUHDVRQ6XFKDYLHZ LVSUHFLVHO\ZKDWKHVHHVLQ)LFKWH·VFRQWURYHUVLDOZULWLQJVRQUHOLJLRQ
Q)LFKWH·V5HVSRQVHWR(EHUKDUG )LFKWH·V XQSXEOLVKHG 5HFROOHFWLRQV $QVZHUV 4XHVWLRQV XQWLO UHFHQWO\ RQO\ DYDLODEOHLQDKHDYLO\HGLWHGYHUVLRQSXEOLVKHGE\,+)LFKWHFRQVWLWXWHVDGLUHFW UHSO\WRPDQ\RI(EHUKDUG·VDUJXPHQWV)RUWKHPRVWSDUW)LFKWHVHHPVFRQWHQW WR UHLWHUDWH FODLPV PDGH HOVHZKHUH 0RUHRYHU WKH IUDJPHQWDU\ DQG XQÀQLVKHG QDWXUHRIWKLVWH[WPDNHVLWVRPHZKDWXQVDWLVIDFWRU\DVDUHVSRQVHWR(EHUKDUG·V GHWDLOHGFULWLFLVPV,WGRHVKRZHYHUSURYLGHVRPHLQVLJKWLQWR)LFKWH·VFRQFHSWLRQ RIKLVSKLORVRSKLFDOSURMHFWDVZHOODVLQWRKLVYLHZRIWKHLPSRUWDQFHRIIHHOLQJ DQGDIIHFWLQKXPDQOLIH $FFRUGLQJ WR )LFKWH (EHUKDUG DQG E\ H[WHQVLRQ RWKHU :ROIÀDQV PDNH ´NQRZOHGJH >(UNHQQWQL@µ WKH SULPDU\ RU VXSHULRU IDFXOW\ RI WKH KXPDQ PLQG ZKLOH´OLIHµ)LFKWH·VFDWFKDOOWHUPIRU´WKHV\VWHPRIIHHOLQJVDQGRIGHVLUHVµ LQWRVRPHWKLQJLQIHULRURUGHSHQGHQWXSRQWKHIRUPHU)LFKWHE\KLVRZQDFFRXQW UHYHUVHVWKLVSULYLOHJLQJRIWKHUDWLRQDOIDFXOW\,QVWHDGRIPDNLQJLWIXQGDPHQWDO KHOHDYHVWRLWWKHWDVNRI´REVHUYLQJ>=XVHKHQ@µ7KDWLVRQ)LFKWH·VDFFRXQWWKH SULPDU\´UHDOLW\µRIKXPDQOLIHLVDV\VWHPRI´IHHOLQJVµ5HDVRQKDVWKHWDVNRI UHFRQVWUXFWLQJDQGH[SODLQLQJWKLVV\VWHP)LFKWHDUWLFXODWHVWKLVFRQFHSWLRQRI WKHWDVNRISKLORVRSK\LQPDQ\RIKLVZULWLQJVIURPWKLVSHULRG)RUH[DPSOHLQ KLV´)LUVW,QWURGXFWLRQµWRWKHLQFRPSOHWH$WWHPSWDWD1HZ3UHVHQWDWLRQRIWKH :LVVHQVFKDIWVOHKUH KHDVVHUWVWKDW´WKHWDVNRISKLORVRSK\LVWRLQGLFDWH WKH EDVLVRUIRXQGDWLRQRIH[SHULHQFHµDQGWKHDFWXDOFRQWHQWRISKLORVRSK\LV
,ELG²>LWDOLFVLQRULJLQDO@ ,ELG ,ELG² ,, ,ELG
+$59$5'7+(2/2*,&$/5(9,(:
EHVWYLHZHGDVDSXUHO\UDWLRQDOFRQVWUXFWLRQ,QKLV´6HFRQG,QWURGXFWLRQµKH LQVLVWVWKDWKLVSKLORVRSK\´FDQQHYHUEHDZD\RIWKLQNLQJLQVWHDGLWLVQRWKLQJ PRUHWKDQVSHFXODWLRQµ+LVFRQWHPSRUDQHRXVOHFWXUHVRQWKH:LVVHQVFKDIWVOHKUH ´DFFRUGLQJWRDQHZPHWKRGµFRQWDLQVLPLODUUHPDUNV 7KLV FRQVWLWXWHV WKH YHU\ HVVHQFH RI WUDQVFHQGHQWDO SKLORVRSK\ WKDW LW KDV QRGHVLUHWREHFRPHDZD\RIWKLQNLQJWKDWFRXOGEHHPSOR\HGZLWKLQOLIH LQVWHDGLWREVHUYHVDQ>DFWXDO@,ZKLFKHPERGLHVZLWKLQOLIHWKLVV\VWHPRI WKLQNLQJGHVFULEHGE\WUDQVFHQGHQWDOSKLORVRSK\
)RU)LFKWHNQRZOHGJHLQWKHVWULFW:ROIÀDQVHQVHRIVFLHQFHLVQRWWKHSULPDU\ HQGRIKXPDQOLIH$FFRUGLQJWRWKHFRPPRQ:ROIÀDQYLHZRISKLORVRSKHUVOLNH (EHUKDUGWKHUHLVDGULYHIRUFHUWDLQW\HYHQDWWKHOHYHORIFRPPRQVHQVHDQG WKHWDVNRISKLORVRSK\LVWRIXOÀOOWKLVGULYHE\FRQVWUXFWLQJDGHGXFWLYHV\VWHP EDVHG RQ WKH LQQDWH SULQFLSOHV WKDW FDQ EH IRXQG HYHQ ZLWKLQ FRPPRQ VHQVH )LFKWH RQ WKH RWKHU KDQG SURSRVHV ZKDW KH FDOOV D ´SUDJPDWLF KLVWRU\ RI WKH KXPDQPLQGµ+HIDPRXVO\DVVHUWVWKDWSKLORVRSKHUV´DUHQRWWKHOHJLVODWRUVRI WKHKXPDQPLQGµ)LFKWHDFFXVHV(EHUKDUGRIGRLQJMXVWWKDWEHLQJDOHJLVODWRU 7KLV LV W\SLÀHG IRU )LFKWH LQ (EHUKDUG·V DSSDUHQW DWWHPSW WR ´SURGXFH FHUWDLQ FRJQLWLRQV DQG FRQFHSWV WKURXJK IUHH YROXQWDU\ WKRXJKWµ DQG WKHQ WR ´DIIHFW >DIÀFLUHQ@WKHIDFXOW\RIGHVLUHZLWKWKHVHSURGXFHIHHOLQJVDQGGHWHUPLQHWKH DFWLRQVRIKXPDQEHLQJVµ $ ´SUDJPDWLF KLVWRULDQµ KRZHYHU LV DOVR VXSSRVHG WR DYRLG EHLQJ D PHUH ´MRXUQDOLVWµ 3UHVXPDEO\ D MRXUQDOLVW VLPSO\ UHODWHV D VHULHV RI HYHQWV RU D JURXSRIIDFWV7RGRKLVWRU\OLNHDMRXUQDOLVWZRXOGEHWREHDFKURQLFOHU)LFKWH KRZHYHUPHDQVIRUKLV´KLVWRU\RIWKHKXPDQPLQGµWREHV\VWHPDWLF%XWLQZKDW ZD\SUHFLVHO\",QWKHHLJKWHHQWKFHQWXU\WKHQRWLRQRI´SUDJPDWLFKLVWRU\µZDV XVHGPRVWRIWHQWRGHVFULEHDVW\OHRIQDUUDWLYHKLVWRULFDOZULWLQJWKDWDWWHPSWHGWR VKRZWKHXQGHUO\LQJFDXVHVRIDQGFDXVDOUHODWLRQVEHWZHHQVLJQLÀFDQWHYHQWV$W WKHVDPHWLPHDVWKHQDPHVXJJHVWV´SUDJPDWLFKLVWRU\µZDVDOVRKLVWRU\ZLWKD PHVVDJH7KH$QQDOVRI7DFLWXVZHUHWDNHQDVH[HPSODU\LQWKLVUHJDUG7DFLWXV·V JRDOLVWRSURYLGHDQDQDO\VLVRIWKHRULJLQVRIFHUWDLQSROLWLFDODUUDQJHPHQWVDQG DFDXWLRQDU\WDOHDERXWWKHLUGHOHWHULRXVHIIHFWV7KXVIRU+HUGHUDQRWHZRUWK\
,²,:² ,,:>LWDOLFVLQRULJLQDO@ :/QP , , ,, , 0\ DFFRXQW RI ´SUDJPDWLF KLVWRU\µ LQ )LFKWH FORVHO\ IROORZV 'DQLHO %UHD]HDOH ´)LFKWH·V &RQFHSWLRQRI3KLORVRSK\DVD¶3UDJPDWLF+LVWRU\RIWKH+XPDQ0LQG·DQGWKH&RQWULEXWLRQVRI .DQW3ODWQHUDQG0DLPRQµ-+, ²)RUDGLVFXVVLRQRI´SUDJPDWLFKLVWRU\µLQ +HUGHUDQGRWKHUHLJKWHHQWKFHQWXU\WKLQNHUVVHH-RKQ+=DPPLWR.DQW+HUGHUDQGWKH%LUWKRI $QWKURSRORJ\&KLFDJR8QLYHUVLW\RI&KLFDJR3UHVV ²
%(1&52:(
SUDFWLWLRQHURI´SUDJPDWLFKLVWRU\µLW´VKRXOGDVSLUHWREHZKDWLWZDVIRUWKH DQFLHQWVWKHYRLFHRISDWULRWLFZLVGRPDQGWKHUHIRUPHURIWKHSHRSOHµ.DQW GUDZV DWWHQWLRQ WR WKLV LGHD DV ZHOO LQ KLV *URXQGZRUN RI WKH 0HWDSK\VLFV RI 0RUDOVZKHUHKHREVHUYHVWKDW´$KLVWRU\LVSUDJPDWLFDOO\FRPSRVHGZKHQLW PDNHVRQHSUXGHQW>NOXJ@WKDWLVZKHQLWWHDFKHVWKHZRUOGKRZWRSXUVXHZKDW LVDGYDQWDJHRXVEHWWHURUDWOHDVWDVZHOODVWKHSUHFHGLQJDJHZDVDEOHWRGRµ +RZLV)LFKWH·VSURMHFW´SUDJPDWLFKLVWRU\µ")LFKWHRIIHUVOLWWOHLQWKHZD\RI SRVLWLYHLQVWUXFWLRQVRQKRZRQHVKRXOGOLYH+HGRHVKRZHYHUIDPRXVO\PDNH SUDFWLFDOUHDVRQWKHIRXQGDWLRQRIKLVHQWLUHV\VWHP,QWKLVPXFKKHDOVRUHÁHFWV .DQW·VGHÀQLWLRQRID´SUDJPDWLFµDQWKURSRORJ\DVRQHWKDWLVSULPDULO\FRQFHUQHG ZLWK´ZKDWPDQFRQVLGHUHGDVDIUHHO\DFWLQJEHLQJPDNHVRIKLPVHOIRUZKDW KHFDQDQGVKRXOGPDNHRIKLPVHOIµ7KHWZRVHQVHVÀWWRJHWKHUIRU)LFKWHLQ WKDWE\PDNLQJSUDFWLFDOUHDVRQWKHIRXQGDWLRQRIKLVV\VWHPKHDLPVWRGRZKDW SUHYLRXV SKLORVRSKHUV KDG E\ KLV OLJKWV DOO IDLOHG WR GR QDPHO\ WR LQWHJUDWH RXUFRQFHSWLRQVRIRXUVHOYHVDVUDWLRQDODJHQWVZLWKRXUSLFWXUHRIWKHZRUOGDV JRYHUQHGE\FDXVDOQHFHVVLW\+RZHYHUWKLQJVPLJKWIDUHZLWKWKLVUDWKHUJUDQG SURMHFWWKHPDLQLVVXHKHUHLVKRZ)LFKWH·VDFFRXQWRIUHOLJLRQDVRULJLQDWLQJLQ PRUDOIHHOLQJUHÁHFWVKLVFRPPLWPHQWWRWKHQRWLRQRISKLORVRSK\DVD´SUDJPDWLF KLVWRU\RIWKHKXPDQPLQGµ)LUVW)LFKWHLVDVKHVWDWHVTXLWHFOHDUO\LQDOHFWXUH
- * +HUGHU ´2Q 5HFHQW *HUPDQ /LWHUDWXUH )LUVW &ROOHFWLRQ RI )UDJPHQWVµ LQ 6HOHFWHG (DUO\:RUNV²$GGUHVVHV(VVD\VDQG'UDIWV)UDJPHQWVRQ5HFHQW*HUPDQ/LWHUDWXUH WUDQV(UQHVW$0HQ]HDQG0LFKDHO3DOPD8QLYHUVLW\3DUN3HQQ3HQQV\OYDQLD6WDWH8QLYHUVLW\ 3UHVV .DQW·V ZRUNV DUH FLWHG KHUH IURP WKH VWDQGDUG HGLWLRQ .DQWV *HVDPPHOWH 6FKULIWHQ HG 'HXWVFKHQ$NDGHPLHGHU:LVVHQVFKDIWHQ%HUOLQGH*UX\WHU² Q 7KHUHLVDYROXPLQRXVDQGFRQWHQWLRXVOLWHUDWXUHRQWKHSULPDF\RISUDFWLFDOUHDVRQLQ)LFKWH )RU VRPH RI WKH PRVW LPSRUWDQW UHFHQW GLVFXVVLRQV VHH )UHGHULFN 1HXKRXVHU )LFKWH·V 7KHRU\ RI 6XEMHFWLYLW\ &DPEULGJH 8. &DPEULGJH 8QLYHUVLW\ 3UHVV ²:D\QH 0 0DUWLQ ´¶:LWKRXWD6WULYLQJ1R2EMHFWLV3RVVLEOH·)LFKWH·V6WULYLQJ'RFWULQHDQGWKH3ULPDF\RI3UDFWLFHµ LQ1HZ3HUVSHFWLYHVRQ)LFKWHHG7RP5RFNPRUHDQG'DQLHO%UHD]HDOH$WODQWLF+LJKODQGV1- +XPDQLWLHV ² 'DQLHO %UHD]HDOH ´&HUWDLQW\ 8QLYHUVDO9DOLGLW\ DQG &RQYLFWLRQ7KH 0HWKRGRORJLFDO3ULPDF\RI3UDFWLFDO5HDVRQZLWKLQWKH-HQD:LVVHQVFKDIWVOHKUHµLQ1HZ3HUVSHFWLYHV ²:D\QH00DUWLQ,GHDOLVPDQG2EMHFWLYLW\8QGHUVWDQGLQJ)LFKWH·V-HQD3URMHFW6WDQIRUG &DOLI 6WDQIRUG 8QLYHUVLW\ 3UHVV ² 'DQLHO %UHD]HDOH ´7KH7KHRU\ RI 3UDFWLFH DQG WKH3UDFWLFHRI7KHRU\)LFKWHDQGWKH3ULPDF\RI3UDFWLFDO5HDVRQµ,QWHUQDWLRQDO3KLORVRSKLFDO 4XDUWHUO\ ² $OOHQ : :RRG ´7KH ¶,· DV 3ULQFLSOH RI 3UDFWLFDO 3KLORVRSK\µ LQ 7KH5HFHSWLRQRI.DQW·V&ULWLFDO3KLORVRSK\)LFKWH6FKHOOLQJDQG+HJHOHG6DOO\6HGJZLFN &DPEULGJH 8. &DPEULGJH 8QLYHUVLW\ 3UHVV ² .DUO$PHULNV ´)LFKWH·V$SSHDO 7RGD\7KH+LGGHQ3ULPDF\RIWKH3UDFWLFDOµLQ7KH(PHUJHQFHRI*HUPDQ,GHDOLVPHG0LFKDHO %DXUDQG'DQLHO2'DKOVWURP:DVKLQJWRQ'&&DWKROLF8QLYHUVLW\RI$PHULFD3UHVV ²DQG.DUO$PHULNV´7KH3UDFWLFDO)RXQGDWLRQRI3KLORVRSK\LQ.DQW)LFKWHDQG$IWHUµ LQ7KH5HFHSWLRQRI.DQW·V&ULWLFDO3KLORVRSK\² .DQW*HVDPPHOWH6FKULIWHQ 6HH IRU H[DPSOH )LFKWH·V FULWLTXH RI ´GRJPDWLVPµ LH 6SLQR]LVP IRU IDLOLQJ WR DFKLHYH SUHFLVHO\WKLVLQWHJUDWLRQ,²,:²
+$59$5'7+(2/2*,&$/5(9,(:
RQ3ODWQHU·V3KLORVRSKLFDO$SKRULVPVKLVSURMHFWLVWRDFFRXQWIRUWKHJHQHVLVRI UHOLJLRQDVDFHQWUDOSKHQRPHQRQLQKXPDQOLIH :KHQFHGRHV>EHOLHILQ*RG@HQWHUWKHKXPDQVSLULW"+RZLVLWWREHGHGXFHG" ,WPXVWOLHGHHSO\KLGGHQIRUWKHJURXQG>RILW@OLHVZLWKLQXVDVVRPHWKLQJ KLGGHQEXWDOVRDVLWZHUHDVVRPHWKLQJZHDUHFHUWDLQO\DEOHWRGLVFRYHU %XWKRZGRZHNQRZLW">%HOLHILQ*RG@LVVRPHWKLQJWKDWLVDEVROXWHO\SUHV HQWIRUXVDQGIRUHYHU\RQH³WKHÀUVW>DQG@KLJKHVW>EHOLHI@+RZWRWUDFNLW GRZQKRZWRSURYLGHDSURSHUGHGXFWLRQRILW"7KLVLVWKHKLJKHVWOHYHORI SKLORVRSK\7KH >SKLORVRSK\@ WKDW FRUUHFWO\ GHGXFHV EHOLHI LQ WKH GHLW\ KDV WKHUHE\DFFRPSOLVKHGHYHU\WKLQJ
6HFRQG )LFKWH·V DFFRXQW RI WKH JHQHVLV RI UHOLJLRQ ZLOO EHJLQ ZLWK KXPDQ DJHQF\UDWKHUWKDQZLWKWKHRUHWLFDOUHDVRQ7KDWLV)LFKWHZDQWVWRUHFRQVWUXFW UHOLJLRQDVDFRQGLWLRQRIRXUVHOIFRQVFLRXVQHVVDVPRUDODJHQWV7KLVHPHUJHVTXLWH FOHDUO\LQWKHLQIDPRXV'LYLQH*RYHUQDQFHHVVD\5HMHFWLQJZKDWHLJKWHHQWKFHQWXU\ ZULWHUV FDOOHG ´SK\VLFRWKHRORJ\µ )LFKWH LQVLVWV WKDW KLV GHGXFWLRQ EHJLQV ZLWK RXUVHOIFRQVFLRXVQHVVDVDJHQWV+HGHVFULEHVWKLVVHOIFRQVFLRXVQHVVDVIROORZV ,GLVFRYHUP\VHOIWREHIUHHRIDQ\LQÁXHQFHIURPWKHVHQVLEOHZRUOGDEVR OXWHO\DFWLYHLQDQGWKURXJKP\VHOIDQGWKXV,GLVFRYHUP\VHOIWREHDSRZHU HOHYDWHGDERYHHYHU\WKLQJVHQVLEOH7KLVIUHHGRPKRZHYHULVQRWLQGHWHUPL QDWHLWSRVVHVVHVDJRDORILWVRZQ
)LFKWH·VFRUHFODLPDERXWUHOLJLRQLVVXPPDUL]HGQHJDWLYHO\LQKLV´&RQFOXGLQJ 5HPDUN E\ WKH (GLWRUµ WKXV ´LI WR DVVXPH IRU WKH PRPHQW VRPHWKLQJ WKDW LV LPSRVVLEOH WKRXJK LW LV SUHFLVHO\ ZKDW LV DVVXPHG E\ DOO SURRIV RI WKH VRUW H[DPLQHGKHUH PDQZHUHQRWKLQJEXWDFUHDWXUHDZDUHRIQDWXUHDQGZHUHQRWDOVR DQHWKLFDOEHLQJWKHQWKHFRQFHSWRID*RGZRXOGVLPSO\QHYHUDULVHZLWKLQKLV VRXOµ)RU)LFKWHWKHQWKHUDWLRQDOLW\RIUHOLJLRQFRQVLGHUHGDVDSUHUHÁ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·V OLIH,QRWKHUZRUGVWKHH[HUFLVHRIRXUDJHQF\GHSHQGVRQDVRUWRIWUXVWRUIDLWK IRUDV)LFKWHREVHUYHVHOVHZKHUH´:KRHYHUDFWVYLUWXRXVO\FRQIHVVHV*RGLQD
,,² ,,: ,,: ,,
%(1&52:(
SUDFWLFDOZD\ZKHWKHURUQRWKHGRHVVRZLWKKLVPRXWKµ-XVWDVDIDUPHUIRU H[DPSOHPXVWWUXVWWKHFDXVDORUGHURIQDWXUHLQRUGHUWRXQGHUWDNHKHUODERUVVR WRRDQ\KXPDQEHLQJPXVWKDYHDVRUWRIWUXVWRUIDLWKLQWKHHIÀFDF\RIKHURZQ DJHQF\3HUKDSVWKHPRVWLQVWUXFWLYHGLVFXVVLRQRIWKLVSRLQWFRPHVLQWKH 6\VWHPRI(WKLFVLQWKHPLGGOHRIDGLVFXVVLRQRIWKHPRUDOUHODWLRQVKLSVEHWZHHQ SDUHQWVDQGFKLOGUHQ)LFKWHREVHUYHVWKDWWKHREHGLHQFHRIFKLOGUHQGHSHQGVXSRQ ´DFKLOGOLNHEHOLHILQWKHKLJKHUZLVGRPDQGJRRGQHVVRIWKHSDUHQWVDVVXFKµ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·VKDQGV
7KLVDFFRXQWSDUDOOHOVPDQ\UHPDUNVIURP)LFKWH·VOHFWXUHVRQ3ODWQHU)RUH[DPSOH KHGHVFULEHVUHOLJLRQDVDVRUWRI´FRQÀGHQFHµRUDVHQVHWKDW*RGLVWKDW´ZLWKRXW ZKLFK,QHLWKHUOLYHQRUPRYHµ*RGLV´WKDWZKLFKSURPRWHV>EHI|UGHUW@RXU IUHHGRPLQIURQWDQGEHKLQGµ+HOLNHQVEHOLHILQ*RGWREHOLHILQRWKHUPLQGV LQWKDW´>L@WFRXOGEHRWKHUZLVH³EXWLWLVWKLVZD\ZHIHHOLWµ7KXV´,QSURRIV IRUWKHH[LVWHQFHRI*RGRQHVLPSO\IHHOVWKDWLWRXJKWWREHWKLVZD\µ)LFKWH·V DSSURYLQJTXRWDWLRQIURP)DXVW3DUW,LVDOVRUHYHDOLQJKHUH´7KH$OO(PEUDFLQJ >@7KH$OO6XVWDLQLQJ'RHVKHQRWHPEUDFHDQGVXVWDLQ