ABSTRACT

VLPSO\ZLOOQRWZRUNDQGWKDWVLWXDWLRQLVH[DFWO\SDUDOOHOWRFRPEDW&RXQVHOLQJ VWDWHPHQWVGRQRWPDWWHULQFRPEDWHLWKHURQO\UHDOOHDGHUVKLSGRHV

,HQWHUHGWKH,QIDQWU\2IILFHU%DVLF&RXUVH,2%&DW)RUW%HQQLQJWZRZHHNV DIWHU ,UDT LQYDGHG .XZDLW %\ HDUO\ 1RYHPEHU WKH UXPRU DW ,2%& µXQRIILFLDOO\¶ FRQILUPHG E\ P\ ,2%& FRPSDQ\ FRPPDQGHU ZDV WKDW DOO JUDGXDWHVRIP\2%&FODVVZHUHJRLQJWR6DXGL$UDELDWRDFWDVUHSODFHPHQWVIRU OLHXWHQDQWVZKRZRXOGEHFRPHFDVXDOWLHVZKHQWKHJURXQGZDUEHJDQ 7RWKLVGD\,KDYHQRLGHDLIWKDWUXPRUZDVSODXVLEOHEXWLWVHUYHGWRHQVXUH

WKDWZH OLHXWHQDQWV SDLG UDSW DWWHQWLRQ WR WKH FRXUVHV GXULQJ2%& ,Q IDFWZH EHOLHYHGWKHUXPRUVRPXFKWKDWWKHVWDQGDUGMRNHLQP\2%&FODVVZDVµQRQHHG WRZRUU\DERXWDQ([SHUW,QIDQWU\%DGJH±ZH¶OOEHJHWWLQJWKH&RPEDW,QIDQWU\ %DGJHZLWKLQVL[PRQWKVDQ\ZD\¶ ,QHYHUHDUQHGWKH&,%WKHUXPRUZDVIDOVHDQG,QHYHUJRWDQ\FORVHUWRWKH

3HUVLDQ*XOIWKDQ)RUW%HQQLQJ

5HFHSWLRQRIWKH,55SODWRRQ $IWHU,2%&DQGDZHHNDIWHUWKHDLUZDUEHJDQ,DUULYHGLQ+DZDLLDVVLJQHGWR WKHWK%QWK,QIDQWU\µ:ROIKRXQGV¶$ZHHNDIWHUXQLWLQSURFHVVLQJ,ZDV WROG,ZDVJHWWLQJWKHFRYHWHGMRERI5LIOH3ODWRRQ/HDGHU2QO\DIWHUWHOOLQJZH WKUHHQHZ/LHXWHQDQWVWKLVJRRGQHZVGLGWKH%DWWDOLRQ&RPPDQGHUH[SODLQWKH UHVWRIWKHQHZVZHZHUHJRLQJWREHOHDGLQJDJURXSRIVROGLHUVUHFHQWO\FDOOHG EDFN WR DFWLYH GXW\ 7KHVH VROGLHUV ZHUH PHPEHUV RI WKH ,QGLYLGXDO 5HDG\ 5HVHUYH,55 ,KDGDEVROXWHO\QRNQRZOHGJHRIZKDW WKH ,55ZDVDQG,FDQUHFDOOEHLQJ

VXUSULVHGWKDWQRRQHLQWKHXQLWVHHPHGWRKDYHPXFKPRUHNQRZOHGJHRIWKH,55 WKDQ ,:HHYHQWXDOO\ OHDUQHG WKDW WKH ,55 LV FRPSRVHGRI IRUPHU DFWLYHGXW\ VROGLHUV ZKR DUH NHSW RQ D OLVW IRU UHFDOO WR DFWLYH GXW\ LQ WKH HYHQW RI DQ HPHUJHQF\UHTXLULQJDGGLWLRQDOVROGLHUV ,ZDVDVVLJQHGDQDFWLYHGXW\6HUJHDQW)LUVW&ODVVDVP\3ODWRRQ6HUJHDQWDQG

WKHWZRRIXVEHJDQWKHWDVNRISUHSDULQJIRUWKHDUULYDORIWKH,55VROGLHUV:H KDG DEVROXWHO\ QR NQRZOHGJH RI ZKDW EDFNJURXQG H[SHULHQFHV WKHVH VROGLHUV ZRXOGKDYHZKHQ WKH\DUULYHG:HZHUH WROG WKHGDWH WKHFRKRUWZRXOGDUULYH IURP)RUW%HQQLQJZKHUHWKH\KDGXQGHUJRQHSK\VLFDOVDQGLQSURFHVVLQJDQG ZHZHUHDOVRJLYHQDURVWHURIUDQNVDQGQDPHV:KHQWKH,55FRKRUWDUULYHG ERWK WKH VFKHGXOHG GDWH DQG WKH SHUVRQQHO URVWHU WXUQHG RXW WR EH FRPSOHWHO\ LQDFFXUDWH 7KH ,55 VROGLHUV DVVLJQHG WRP\SODWRRQ LQFOXGHGQR $UP\SHUVRQQHO

RYHUWKHUDQNRI6*7()RXURIWKHZHUHIRUPHU5DQJHU%DWWDOLRQVROGLHUV PDQ\RWKHUVZHUHIRUPHUOLJKWLQIDQWU\VROGLHUVLQUHJXODU$UP\XQLWVDIHZZHUH LQGLYLGXDOVZKRKDGEHHQFKDSWHUHGRXWRIWKH$UP\IRUYDULRXVUHDVRQVEXWVWLOO UHPDLQHG RQ ,55 VWDWXV QRQH KDG EHHQ FKDSWHUHG IRU VHULRXV GLVFLSOLQH

SUREOHPVDQGRQHZDVD1DY\(ZKRVRPHKRZKDGEHHQOLVWHGDVDQ$UP\ LQIDQWU\VROGLHU 7KHPRVW VLJQLILFDQWFKDOOHQJHHDUO\ LQ WKLV VFHQDULRZDVH[SODLQLQJ WR ,55

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

KH ZDV FRPSOHWHO\ RXW RI FRQWURO ,W ZDV WKH ILUVW WLPH , KDG VHHQ D VROGLHU FRPSOHWHO\ORVHKLVPLOLWDU\EHDULQJDQGZDVQRWVRPHWKLQJ,KDGH[SHFWHGQRU GLG,IHHOSUHSDUHGWRKDQGOHWKHPDWWHULQVXFKDQRSHQIRUXP 7KH 3ODWRRQ 6HUJHDQW KDG WR OLWHUDOO\ RUGHU KLP RXW RI WKH URRP 7KH\

GLVFXVVHGKLVDQJHUPDQDJHPHQWLQSULYDWH7KH3ODWRRQ6HUJHDQW36*ODWHUWROG PHWKDWKHOHWWKH\RXQJPDQH[SUHVVKLVDQJHUIRUDIHZPLQXWHVDQGWKHQVLPSO\ WROGKLPWKDWKHZDVLQWKH$UP\DQGKLVEHKDYLRUZDVLQWROHUDEOH,WZDVDJUHDW OHDGHUVKLSH[DPSOH7KH36*UHPRYHGWKHSHUVRQVRWKDWKLVEHKDYLRUVWRSSHG EHLQJGLVUXSWLYHKHWKHQOHWKLPH[SUHVVKLVDQJHULQDSURSHUHQYLURQPHQWDQG WKHQ ODVWO\ H[SODLQHG WKH UHDOLW\ RI WKH VLWXDWLRQ DQG HVWDEOLVKHG KLPVHOI DV D OHDGHUZLWKRXWHYHUDOORZLQJIRUGHEDWH

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

DWUXHQDWXUDOOHDGHUDQGZDVRQHRIWKHEHVWVTXDGOHDGHUV,KDYHVHHQ+LVVTXDG UHVSHFWHG KLP EHFDXVH KH ZDV DQ H[SHUW LQ WKHLU H\HV DQG WKH\ WUXVWHG KLP )XUWKHUPRUH WKH\ EHOLHYHG WKDW KHZDV ORRNLQJ RXW IRU WKHP ,W ZDV DQRWKHU OHVVRQOHDUQHGUDQNLVRQO\DVJRRGDVWKHSHUVRQZHDULQJLW,KDGDOZD\VKHDUG WKRVHW\SHVRIFOLFKpVLQ527&5HVHUYH2IILFHU7UDLQLQJ&RUSVDQGDW,2%& EXWZKHQ,VDZLWKDSSHQLQWKDW,55SODWRRQ,EHFDPHDEHOLHYHU

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

YHU\PRWLYDWHGWRWUDLQ7KHVLPSOHIDFWWKDWWKH$UP\ZDVDWZDUVHHPHGWRPDNH WUDLQLQJ PXFKPRUH UHOHYDQW )URPP\ SHUVSHFWLYH RIILFHU WUDLQLQJ DW ,2%& LQGLYLGXDOWUDLQLQJZLWKLQWKH,55SODWRRQDQGFROOHFWLYHWUDLQLQJLQWKHUHVWRI WKHµ:ROIKRXQGV¶WRRNRQDPXFKJUHDWHUVHQVHRIXUJHQF\DQGVDOLHQFHWKDQLW GLG EHIRUH RU DIWHU WKH *XOI :DU 7KLV LQFUHDVHG HPSKDVLV RQ WUDLQLQJ E\ LQGLYLGXDOVROGLHUVOLNHZLVHPDGHWUDLQLQJHYHQWVDVDZKROHPRUHVXFFHVVIXO $OWKRXJK JHQHUDOO\PRWLYDWHG WR WUDLQ DPDMRU GLIIHUHQFH EHWZHHQ WKH ,55

SODWRRQDQGDQDFWLYHGXW\XQLWZDVWKH,55XQLW¶VDWWLWXGHDERXWWKHWHPSRUDU\ QDWXUHRIWKHMRE7KHVROGLHUVZHUHQRWDWDOOPRWLYDWHGE\SURIHVVLRQDORUFDUHHU JRDOV7KHLUSULPDU\PRWLYDWLRQZDVWRQRW ORRNEDGLQIURQWRIWKHRWKHUVRUWR QRWORRNOLNHDµVOXJ¶)RUH[DPSOHIRUPDQ\,55VROGLHUVDQHJDWLYHFRXQVHOLQJ VWDWHPHQWZDVRQO\EDGEHFDXVHRIRQH¶VRZQSULGHDQGQRWEHFDXVHLWZRXOGKXUW WKH FKDQFH IRU D SURPRWLRQ )RU WKH IHZZKR GLGQ¶W FDUH DERXW SULGH WKH VWDU SHUIRUPHUV ZLWKLQ WKH VTXDG DQG WKHUH ZHUH PDQ\ ZHUH JHQHUDOO\ DEOH WR SURYLGHHQRXJKSHHUSUHVVXUHWRJHQHUDOO\NHHSWKHPLQOLQH

5HGHSOR\PHQW $OPRVW LPPHGLDWHO\DIWHU WKH ,UDTL VXUUHQGHU LQ WKH*XOI WKH ,55SODWRRQZDV RUGHUHGEDFNWR)RUW%HQQLQJZKHUHLWZRXOGODWHUVWDQGGRZQDQGEHVHQWEDFN KRPH,QWHUHVWLQJO\WKUHHRIWKHQLQHW\VROGLHUVZKRKDGEHHQUHFDOOHGDWWHPSWHG WR VWD\ LQ WKH$UP\ RQ DFWLYH GXW\ 8QIRUWXQDWHO\ GHVSLWH RXU EHVW HIIRUWV WR PDLQWDLQWKHVHJRRGVROGLHUVRQDFWLYHGXW\WKH$UP\UHIXVHGWKHLUUHTXHVWDQG WKH\ZHUHVHQWEDFNKRPH $OWKRXJK WKH\ XQGHUZHQW DSSUR[LPDWHO\ ILYH ZHHNV RI WUDLQLQJ , GR QRW

EHOLHYHWKLV,55XQLWZDVDQ\ZKHUHQHDUFRPEDWUHDG\,EHOLHYHLWZRXOGKDYH WDNHQDPLQLPXPRIQLQHW\GD\VEHIRUHWKHSODWRRQZRXOGKDYHEHHQDEOHWREH SURILFLHQWLQSODWRRQFROOHFWLYHWDVNV

&RQFOXVLRQV $OWKRXJK QRW SDUW RI WKH FRPEDW H[SHULHQFH LQ WKH*XOI:DUP\ H[SHULHQFHV VKRZVDSDUWRIWKHµRWKHUVLGHRIWKHFRLQ¶IRUWKH$UP\WKDWZDVQRWGHSOR\HG 7KHYDVWLQGLYLGXDOGLIIHUHQFHVLQWKH,55FRKRUWWKDWDUULYHGLQWKHEDWWDOLRQ

VKRZRQDODUJHVFDOHWKHGLIILFXOW\LQPRELOL]LQJDQDWLRQIRUZDU)RUH[DPSOH QRW KDYLQJ D FRUUHFW URVWHU RI LQFRPLQJ VROGLHUV DQG UHFHLYLQJ D IRUPHU1DY\ 1&2 LQ DQ $UP\ XQLW VKRZ KRZ FRQIXVLQJ WKLV SHULRG ZDV IRU PDQ\ RUJDQL]DWLRQVDQGDJHQFLHV 2QDPRUHSHUVRQDOOHYHOVLQFHWKDWH[SHULHQFHZLWKWKH,55DQGGXULQJWKH

*XOI :DU SHULRG , EHFDPH PXFK PRUH DZDUH RI WKH LPSRUWDQFH RI PDNLQJ WUDLQLQJERWKUHDOLVWLFDQGUHOHYDQW:KHWKHULWLVLQVWLOOLQJFRPSHWLWLRQLQWUDLQLQJ HYHQWVHJµZHZDQWWRNLFNWKHKHOORXWRIWKH23)25>2SSRVLQJ)RUFH@¶RU WDNLQJWKHWLPHWRFRQYLQFHVXERUGLQDWHVRIWKHYDOXHRIWUDLQLQJWKH*XOI:DU IURP P\ SHUVSHFWLYH VKRZHG WKH LPSRUWDQFH RI IDFLOLWDWLQJ JRRG WUDLQLQJ E\ PDNLQJLWERWKUHOHYDQWDQGLPSRUWDQWWRVROGLHUVDQGOHDGHUV$OWKRXJKH[WUHPHO\ GLIILFXOWWRGRLQDµSHDFHWLPH¶$UP\ZKHQWKLVLVGRQHLWSODFHVWUDLQLQJLQWKH FRUUHFWIRFXVDQGFRQWH[WZLWKLQXQLWV