ABSTRACT
ZKHWKHU D FHUWDLQ NLQG RI NQRZOHGJH IDOOV EH\RQG RXU NQRZLQJ SRZHUV $FFRUGLQJO\ DV RQH FDQ VHH IURP WKH IROORZLQJ GHVFULSWLRQ RI KLV RZQ DSSURDFK KHKDGQRLQWHQWLRQRIFDUU\LQJRQWKHHSLVWHPRORJLFDOGLVFXVVLRQ
ZHEHJLQZLWKZKDW LV DFFHSWHG DV NQRZOHGJH DW WKH JLYHQ VSDFH²WLPH SHULRG RQ WKH JURXQG RI WKH EHVW H[LVWLQJ DXWKRUL]HG WKDW LV WHVWHG PHWKRGVRILQTXLU\ DQGXQGHUWDNHWRREVHUYHDQGUHSRUWWKHPDVIDFWVE\ IXUWKHU XVH RI WKH PHWKRGV E\ ZKLFK WKH NQRZOHGJH XQGHU VWXG\ RU LQTXLU\ZDV LWVHOI DUULYHGDW ,Q VKRUW ZKDW LV DOUHDG\NQRZQ LV WKHGDWD IRUNQRZOHGJHRINQRZOHGJH
7KLVH[SODLQVZK\KHZDVQRWVDWLVILHGZLWKDWKHRU\RINQRZOHGJHEHU KDXSW DVKHOLNHGWRVD\ EXWGHPDQGHGLQVWHDGDUHFLSHIRUJDLQLQJNQRZOHGJH ZKLFKKHIRXQGLQPHWKRGVRI LQTXLU\WKDWKDGDOUHDG\SURYHGWKHLUZRUWK
'HZH\·V UHMHFWLRQRI HSLVWHPRORJ\ LV IDUPRUH LPSRUWDQW WKDQKDV JHQHUDOO\ EHHQUHFRJQL]HG 7REHJLQZLWK KHULJKWO\FODLPHGWKDW WKHHSLVWHPRORJLFDO DSSURDFK RI WKH HPSLULFLVWV VWDUWV ZLWK D GXDOLVP RI VXEMHFWREMHFW DQG DVVXPHV LQ DGYDQFH D FRQFHSWLRQRI NQRZOHGJH DFFRUGLQJ WRZKLFK LW LV DQ HGLILFHEXLOWRQDIRXQGDWLRQRIVHQVHSHUFHSWLRQV RUVHFXUHGDWD WRZKLFKDUH DGGHGJHQHUDOL]DWLRQVOHVVVHFXUHWKDQWKHIRXQGDWLRQRQZKLFKWKH\UHVW $VD QXPEHURIKLVOHWWHUVWR%HQWOH\VKRZ 'HZH\ZDVILUPO\FRQYLQFHGWKDWWKH WHUP´NQRZOHGJHµ VKRXOGKDYHQRPHDQLQJSULRUWRDQLQTXLU\LQWRWKHVRUW RILQTXLU\IURPZKLFKNQRZOHGJHUHVXOWV 7KHSRVLWLRQ'HZH\RSSRVHGLVEHVWXQGHUVWRRGE\DEULHIFRPSDULVRQZLWK
WKDWRI5XVVHOO $OWKRXJKKHVRXJKWWRGLVPLVV-DPHVDQG'HZH\DVSURSRQHQWV RI ZKDW KH FDOOHG ´WUDQVDWODQWLF WUXWKµ 5XVVHOO·V FULWLFLVPV DUH QHYHUWKHOHVV LQVWUXFWLYHEHFDXVH WKH\ VWHPIURPWKH IRUPRI´HPSLULFLVPµ 'HZH\RSSRVHG 'HZH\IRFXVHGRQWKLQJVDQGHYHQWVDVWKH\ILJXUHLQFRQWUROOHGLQTXLU\ ZKHUHDV 5XVVHOO LQWKHWUDGLWLRQRI+XPHDQG0LOO VWUHVVHGWKHSULRULW\RIGDWDRUWUXH SURSRVLWLRQVZKLFK VHUYH DV WKH EDVLV IRU JHQHUDOL]DWLRQV WKDW DUH VHHQ DVPRUH SUHFDULRXV $FFRUGLQJO\ 5XVVHOOFODLPVWKDW'HZH\UHMHFWHGGDWD LQWKHRUGLQDU\ HPSLULFLVWVHQVHDVDVWDUWLQJSRLQWIRUNQRZOHGJHDQGVXEVWLWXWHGLQTXLU\LQVWHDG ,W LV SDUDGR[LFDO LQGHHG WKDW5XVVHOO WKH ORQJ WLPH FKDPSLRQRI D´VFLHQWLILFµ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´H[WHUQDO
ZRUOGµ VWDUWLQJ IURPSULYDWHSHUFHSWLRQV RUKRZ WR H[SODLQZK\ WKHSHQQ\ ´DSSHDUVµ DVDQHOOLSVHZKHQLWLV´ UHDOO\µ URXQG DUHQRWHQGXULQJLVVXHV 7KH\ DUHLQVWHDGWKHDERUWLYHUHVXOWRIWKHQRQHPSLULFDOFRQFHSWLRQRIH[SHULHQFH DV D YHLO RI VXEMHFWLYLW\ VWDQGLQJ EHWZHHQ RXUVHOYHV DQG WKH ZRUOG , VWUHVV 'HZH\·VREMHFWLRQVKHUHFKLHIO\WRVKRZWKDWKHKDGDQXPEHURIUHDVRQVIRU RSSRVLQJWKH´ HPSLULFLVWµ HSLVWHPRORJLFDOHQWHUSULVHWKDWZHQWIDUEH\RQGWKH PRUHREYLRXVREMHFWLRQWKDWLWVHWVRXWIURPDVXEMHFWREMHFWGXDOLVP .QRZLQJDQG WKH.QRZQ ²DZRUN WKDWPD\DOVREH VHHQDVDQDQDO\VLVRI
WKHEHKDYLRUFDOOHGNQRZLQJ PLQXVDNQRZHU²ZDVWKHPDLQSURGXFWRIWKH 'HZH\%HQWOH\ FROODERUDWLRQ 6LQFH WKH\ MRLQWO\ VHOHFWHG DQG HQGRUVHG WKH FRQWHQWV DQG WKH WLWOH WKHERRNFDPH WREH UHJDUGHG DQGULJKWO\ VR DV WKH RIILFLDO VXPPDU\ RI WKHLU SKLORVRSKLFDO H[FKDQJH ,W FRQWDLQV D JRRG VWDWH PHQW RI ZKDW 'HZH\ PHDQW E\ ´WUDQVDFWLRQµ WKH WHUP KH VHWWOHG RQ DV SUHIHUDEOH WR ´LQWHUDFWLRQµ IRU H[SUHVVLQJ WKH ZRUNLQJ WRJHWKHU RI GLVWLQ JXLVKDEOHHOHPHQWVRUIDFWRUVLQDQ\RQJRLQJSURFHVV 7KHERRNDOVRLQFOXGHV DQLPSRUWDQWHVVD\E\'HZH\DERXWFRPPRQVHQVHDQGVFLHQFHLQZKLFKWKH PHDQLQJ RI D WUDQVDFWLRQ LV VSHOOHG RXW LQ D FRQFUHWH IDVKLRQ $V ZH QRZ NQRZ IURP WKH SXEOLVKHG OHWWHUV KRZHYHU WKH\ GLVFXVVHG PDQ\ WRSLFV RI
LPSRUWDQFHEH\RQGWKRVH IHDWXUHG LQ WKHLUERRNDQGQRW OHDVWDPRQJWKHVH DUH TXHVWLRQV FRQFHUQLQJ LQTXLU\ DQG ODQJXDJH &DOOLQJ DWWHQWLRQ WR WKHVH TXHVWLRQV LV QRW DV WKH SKUDVH JRHV ´PHUHO\ KLVWRULFDOµ VLQFH WKH LVVXHV LQYROYHGDUHYHU\PXFKDOLYHRQWKHSKLORVRSKLFDOVFHQHWRGD\ 7KH FRUUHVSRQGHQFH EHWZHHQ 'HZH\ DQG %HQWOH\ LV D IRUPLGDEOH
H[FKDQJH WKHSULQWHGOHWWHUVDPRXQWWRSDJHVDQGFRYHUWRSLFVRIPXWXDO LQWHUHVWWRDSKLORVRSKHUZLWKDIRRWLQWKHVRFLDOVFLHQFHVDQGDQHFRQRPLVW ZLWKDSKLORVRSKLFDOEHQW 7KHFRUUHVSRQGHQFHLVLQWHQVH LQPDQ\FDVHVOHWWHU DQGUHVSRQVHDUHWKUHHGD\VDSDUW DVLOHQWFRPPHQWRQWKHPDLOVHUYLFHDVZHOO DV WKH DXWKRUV 7R PDNH WKH VLWXDWLRQ DW DOO PDQDJHDEOH , WRRN $ULVWRWOH·V DGYLFHWKDWWKHLQWHOOLJHQWZD\WRFRQIURQWDPXOWLWXGHLVWKURXJKDSULQFLSOH ZKLFKLQWKLVFDVHZDVWKHTXHVWLRQ ´:KDWLPSDFWGLG%HQWOH\·V VXJJHVWLRQV TXHULHV FRPPHQWVKDYHRQ'HZH\·VLGHDVDERXWODQJXDJHDQGLQTXLU\"µ ,Q UHVSRQVH WR%HQWOH\·V FKDUJH WKDW'HZH\ZDV UHOXFWDQW WR VD\ WKDW WKHUH
ZHUH GLIIHUHQFHV LQ WKHLU YLHZV 'HZH\ FODLPHG WKDW KH VDZ WKHLU UHVSHFWLYH PRGHV RI DSSURDFK DV FRPSOHPHQWDU\ EXW WKHLU LQWHUHVWV DV GLIIHUHQW -XQH 'HZH\DQG%HQWOH\ <RX KHZULWHVWR%HQWOH\ DUHFRQFHUQHG ZLWKNQRZOHGJHDVDVRFLRORJLFDOIDFWZKRVHQDWXUHKDVWREHVSHOOHGRXWVRDV WRSURYLGHDVRXQGEDVLVIRUVRFLRORJLFDOWKHRU\LQUHVHDUFK 0\LQWHUHVW 'HZH\ FRQWLQXHV LVQRWLQWKHERG\RINQRZOHGJHDVDIDFW ´EXWLQLWVIXUWKHUH[WHQ VLRQ WKURXJKXVHRIWKHH[LVWLQJERG\WDNHQIRUJUDQWHG E\PHDQVRILQTXLU\µ 7KRXJKEULHI WKLVLVRQHRIWKHPRVWLPSRUWDQWVWDWHPHQWVLQWKHHQWLUHFRUUH VSRQGHQFH LWVLJQDOVWKHIRFDOSRLQWVWKDWFRPPDQGHG'HZH\·VDWWHQWLRQ²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
ZKLOH WR FRQVLGHU WKH PDWWHU RI ODQJXDJH DQG KRZ %HQWOH\·V JDGIO\ OLNH TXHULHV HVSHFLDOO\ DERXW WHUPLQRORJ\ OHG 'HZH\ WR HQJDJH LQ H[WHQVLYH UHWKLQNLQJ RI VHYHUDO RI KLV EDVLF FRQWHQWLRQV 7KHVH TXHULHV DUH LPSRUWDQW EHFDXVH'HZH\EHOLHYHGWKDWKHKDGIDLOHGLQWKHSDVWWRH[SUHVVPDQ\RIKLV LGHDVLQWKHPRVWSUHFLVHZD\DQG ZLWKWKHSURGGLQJRI%HQWOH\ KHVHWRXWWR LPSURYHWKHVLWXDWLRQ ,Q DIWHUDVHULHVRIOHWWHUVDERXWVLJQV V\PEROVDQG QDPHV 'HZH\ZURWH
,DPQRWVWXFNRQDQ\WKLQJLQWKH/RJLF²FHUWDLQO\>QRW@RQLWVYRFDEX ODU\ « , UDUHO\ ORRN DW ZKDW ,·YH ZULWWHQ LQ WKH SDVW « 6R WKLV
FRUUHVSRQGHQFH ZLWK \RX KDV EHHQ WKH ILUVW FRQVFLRXV VHULRXV HIIRUW , HYHUPDGHWRJHWDILUPWHUPLQRORJ\
'HFHPEHU 'HZH\DQG%HQWOH\
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´VHOIµ ´SHUVRQµ ´DJHQWµ DQG DW WLPHV HYHQ´LQGLYLGXDOµ ODUJHO\ EHFDXVH KH WKRXJKW WKHVH H[SUHVVLRQV SXW WRR PXFK HPSKDVLV RQ RQH VLGH RI WKH RUJDQLVPHQYLURQPHQW UHODWLRQ DQG IRVWHUHG VXEMHFWLYLVP 'HZH\ ZDV QHYHU TXLWH VXUH DERXW KRZ WR GHDOZLWK WKH VXEMHFW VLGH RI WKHPDQ\ UHODWLRQV KH DQDO\]HG DQG VRPHWLPHV ZURWH DV WKRXJK RQH FRXOG JHW DORQJ ZLWKRXW WKH VXEMHFW +HUH%HQWOH\·V DWWLWXGH DFWHG DV D VWLPXOXV OHDGLQJ'HZH\ WR SURSRVH GURSSLQJ WKH WHUPVJHQHUDOO\XVHG WRGHQRWH WKH VXEMHFW DQGPDGH DSRLQWRI VD\LQJWKDWWKHWHUP´ DJHQWµ VKRXOGQRWEHXVHG ,WKLQNWKLVSDUWLFXODUFDVHPXVW KDYHEHHQDQRYHUUHDFWLRQRQ'HZH\·VSDUWDVKHPXVWKDYHEHHQ DZDUHRIWKH SDUDGR[LFDOFKDUDFWHURIDSUDJPDWLVPZLWKRXWDQDJHQW%XWKHZDVDZDUHRIWKH SUREOHP DVZHVHHLQKLVFDQGLGUHSRUWDERXWDSDSHUVHQWWRKLPIRUFRPPHQW E\ D VHUJHDQW LQ WKH DUP\ ZKLFK FRQWDLQHG WKH IROORZLQJ TXHVWLRQ ´,VQ·W WKH H[LVWHQFHRIDQLQYHVWLJDWRUDFRQVWDQWIDFWRULQHYHU\HWKLFDORURWKHULQYHVWLJD WLRQ«7KHUHLVDKXPDQEHLQJSUHVHQWZKRLVGRLQJWKHLQTXLULQJµ 2FWREHU 'HZH\DQG%HQWOH\ 'HZH\UHVSRQGHG ILUVWE\ZDUQLQJDJDLQVW PLVXQGHUVWDQGLQJGXHWRWKHFXUUHQF\RIWKHROGVXEMHFW²REMHFWDQGPLQG²ZRUOG GXDOLVPV DQGVHFRQG E\LQVLVWLQJRQWKHQHHGIRUWKHDQDO\VLVRIVXFKZRUGVDV ´DJHQWµ WR VKRZWKDW WKH\ LQGLFDWHQRPRUH WKDQD VLQJOH IDFWRU LQDFRPSOH[ WUDQVDFWLRQ $W WKH HQG RI WKH OHWWHU 'HZH\ H[SUHVVHG KLV ELDV DJDLQVW JLYLQJ SURPLQHQFHWRWKHSHUVRQZKRFDUULHVRXWDQ\SURMHFW DQGGLGVRZLWKDQRWHRI IUXVWUDWLRQ ´7KHUH RXJKW WR EHµ KHZURWH ´VRPHZD\ E\ZKLFK WKLV RU WKDW LQYHVWLJDWRUFRXOGEHWUHDWHGDVDGHSXW\RUUHSUHVHQWDWLYHRU¶DJHQW· RIWKHZKROH GDPQ EXVLQHVV RI NQRZLQJVNQRZQVµ , FDQQRW GHWHUPLQH ZKHWKHU 'HZH\·V TXLWHREYLRXVFRQFHUQWRGRZQSOD\WKHSHUVRQZDVGXHWRKLVFRQFHUQWRDYRLG VXEMHFWLYLVPDQGLGHDOLVP RUWRKLVLQWHUHVWLQSUHVHQWLQJLQTXLU\DQGVFLHQFHDV ERWKXQLYHUVDODQGREMHFWLYHDQGKHQFHLQGHSHQGHQWRIZKDWDQ\ LQGLYLGXDORU JURXS RI LQGLYLGXDOV PD\ WKLQN 3HUKDSV ZH PD\ VD\ ZLWK:LOOLDP -DPHV LQ PLQG WKDWZKHQWKHSHUVRQDOIDFWRUZDVLQYROYHG'HZH\ZDVPRUH FRQFHUQHG WRVKXQHUURUWKDQWRIROORZWUXWKDVKHVDZLW
7KHFKDQJHIURP´LQWHUDFWLRQµ WR´WUDQVDFWLRQµ WKHPRVWLPSRUWDQWUHVXOW RI'HZH\·VQHZFRQFHUQDERXWWHUPLQRORJ\ LQYROYHVWKHSRLQWMXVWGLVFXVVHG +HEHOLHYHGWKDW´WUDQVDFWLRQµ GRHVMXVWLFHWRWKHGLVWLQJXLVKDEOHHOHPHQWVRU IDFWRUVLQDFRPSOH[ ZKLOHKROGLQJWKHPWRJHWKHUVRWKDWQHLWKHUDSSHDUVDVD VHSDUDWHHOHPHQWRUKDVSUHFHGHQFHRYHUWKHRWKHU %\FRQWUDVW ´LQWHUDFWLRQµ VHHPHG WRKLP´GXDOLVWLFµ LQ WKH VHQVHRIEHVWRZLQJ WRRPXFKHPSKDVLVRQ WKH HOHPHQWV LQYROYHG DW WKH H[SHQVH RI WKH XQLW\ DQG FRQWLQXLW\ RI WKH SURFHVV LWVHOI +HKDGXVHG´WUDQVDFWLRQµ LQSUHYLRXVZULWLQJVZKHUH WKHDLP ZDV OLNH KLV XVH RI´LQWHJUDWLRQµ LQ WKH /RJLF WR VWUHVV V\VWHP DQG WKH IXOO HYHQWIRUZKLFKKHGLGQRWWKLQN´ LQWHUDFWLRQµ ZDVDGHTXDWH 7KLVHDUOLHUXVH DVLWWXUQVRXW IRUHVKDGRZVWKHODWHUDFFRXQWRIWUDQVDFWLRQLVP ,Q.QRZLQJDQGWKH.QRZQ 'HZH\VHWIRUWKWKHPHDQLQJRI´ WUDQVDFWLRQµ
LQFORVH FRQQHFWLRQ WR LQTXLU\ DV UHSUHVHQWHGE\ D WKUHHVWDJH WUDQVIRUPD WLRQLQWKHEDVLFFRQFHSWVXVHGLQSK\VLFVIRUH[SODLQLQJWKHZRUOG 'HZH\ ZDVLQIDFWPDNLQJDVWURQJFODLPIRUKLVFRQFHSWLRQRILQTXLU\ +LVDLPLQ H[DPLQLQJ WKH FKDQJHV RI YLHZSRLQWV LQ SK\VLFV ZDV WR VKRZ WKDW KLV SURSRVHG DSSURDFK WR LQTXLU\ ´KDV EHHQ DOUHDG\ GHYHORSHG E\ WKH PRVW SRWHQW RI DOO H[LVWLQJ VFLHQFHVµ DQG WKDW LW LV ´WUDQVDFWLRQDOµ LQ FKDUDFWHU 'HZH\DQG%HQWOH\ 'HZH\JDYHWRWKHWKUHHLGHDVWKHQDPHVRI ´VHOIDFWLRQµ ´LQWHUDFWLRQµ DQG´WUDQVDFWLRQµ DQG FRUUHODWHG WKHP UHVSHF WLYHO\ ZLWK WKH SK\VLFV RI $ULVWRWOH WKH SK\VLFV RI 1HZWRQ DQG PRGHUQ SK\VLFVIURP0D[ZHOOWR(LQVWHLQ 7KHWKUHHLGHDVLQYROYHGDUH WKDWWKLQJV DFWXQGHUWKHLURZQSRZHUV WKDWWKLQJLVEDODQFHGDJDLQVWWKLQJDVLQFDXVDO FRQQHFWLRQV DQGWKDWV\VWHPVGHDOZLWKDVSHFWVDQGSKDVHVRIDFWLRQZLWKRXW DQ\ DWWULEXWLRQ WR´HOHPHQWVµ RU´HQWLWLHVµ VXSSRVHGO\GHWDFKDEOH IURP WKH V\VWHPWKDWLQFOXGHVWKHP 'HVSLWH WKH IRUHJRLQJFODLPDERXW WKHHPHUJHQFHRI´WUDQVDFWLRQµ LQ WKH
FRXUVH RI FKDQJHV LQ WKH EDVLF FRQFHSWLRQV RI SK\VLFV LW VHHPV FOHDU WKDW 'HZH\IRXQGH[DPSOHVRIWUDQVDFWLRQVLQPDQ\RUGLQDU\VLWXDWLRQVDQGH[SH ULHQFHV $ ILQH H[DPSOH LV IRXQG LQ D QRWH KH DWWDFKHG WR WKH FKDSWHU ´&RPPRQ6HQVH DQG 6FLHQFHµ ,Q FRQVXOWLQJ WKH2[IRUG'LFWLRQDU\ XQGHU ´2UJDQLVPµ KHWHOOVXVWKDWKHIRXQGWKHIROORZLQJSDVVDJH ´:KHQDQDUWLVW KDVILQLVKHGDILGGOHWRJLYHDOOWKHQRWHVLQWKHJDPXW EXWQRWZLWKRXWDKDQG WRSOD\XSRQLW WKLVLVDQRUJDQLVPµ 2QHLVUHPLQGHGRI WKHSRHWLFYHUVLRQLQZKLFKWKHILGGOH LV VDLGWRSOD\
WKHWXQHRQWKHILGGOHU 7KHFRRSHUDWLRQRIWKHWZR 'HZH\VD\V LV´ W\SLFDORI ZKDW D WUDQVDFWLRQ LVµ 'HZH\ DQG %HQWOH\ Q 8SRQ IXUWKHU UHIOHFWLRQ RQHVHHVWKDWZHDUHIDFHWRIDFHZLWKZKDWKHPHDQWE\FRPPXQL FDWLRQ² WKHHVVHQWLDO IXQFWLRQRI ODQJXDJH²ZKLFK LV DW WKH VDPH WLPH WKH RYHUFRPLQJRILVRODWLRQWKURXJKSDUWLFLSDWLRQDQGVKDULQJ ,QZKDWZDVWREH'HZH\·VILQDOVWDWHPHQWDERXWNQRZLQJDVDWUDQVDFWLRQ
² LQ D OHWWHUZULWWHQ LQ $SULO 'HZH\ DQG%HQWOH\ ²KH H[SUHVVHG D KRSH ´,I , HYHU JHW WKH QHHGHG VWUHQJWKµ KHZURWH ´,ZDQW WR ZULWHRQNQRZLQJDVWKHZD\RIEHKDYLQJLQZKLFKOLQJXLVWLFDUWLIDFWVWUDQVDFW EXVLQHVVZLWKSK\VLFDODUWLIDFWV WRROV LPSOHPHQWV DSSDUDWXV ERWKNLQGVEHLQJ
SODQQHG IRU WKH SXUSRVH DQG UHQGHULQJ LQTXLU\ RI QHFHVVLW\ DQ H[SHULPHQWDO WUDQVDFWLRQµ 7KLV LV 'HZH\·VPRVW DEVWUDFW FKDUDFWHUL]DWLRQ RI NQRZLQJ LW LV DNLQLQWKLVUHVSHFWWRKLVLQLWLDOGHILQLWLRQRILQTXLU\DVWKHWUDQVIRUPDWLRQRI DQ LQGHWHUPLQDWH VLWXDWLRQ LQWR VRPHWKLQJ GHWHUPLQDWH +HUH NQRZLQJ ² D ZD\RIEHKDYLQJ²LVLGHQWLILHGDVDWUDQVDFWLRQRUD´ GRLQJEXVLQHVVµ EHWZHHQ ZKDWLVDFWXDOO\WZRVHWVRIWRROV´ODQJXDJHLVWKHWRRORIWRROVµPDGHIRUWKH SXUSRVH :K\ LQTXLU\ LV QHFHVVDULO\ ´H[SHULPHQWDOµ LV QRW FOHDU IURP WKH SUHYLRXV VWDWHPHQW EXW LW GRHV LQGLFDWH D FRQFHUQ WR WDNH LQWR DFFRXQW WKH WHQWDWLYHRUSURYLVLRQDOFKDUDFWHURIWKHRXWFRPHRILQTXLU\ , KDYH SXUSRVHO\ HPSKDVL]HG WKHVH H[DPSOHV RI KLV FRQFHUQ IRU WHUPL
QRORJ\ LQ RUGHU WR XQGHUOLQHP\ JHQHUDO FRQFOXVLRQ WKDW KLV QHZ HIIRUW WR ILQGDGHTXDWH WHUPV LVQRWDQ LQGLFDWLRQ WKDWKHKDGFKDQJHGKLVEHOLHI WKDW WKH IXQFWLRQ RI ODQJXDJH LV FRPPXQLFDWLRQ 7KH IROORZLQJ VWDWHPHQW IURP ([SHULHQFH DQG 1DWXUH LV W\SLFDO DQG LV FRQILUPHG WLPH DQG DJDLQ E\ KLV RWKHUZRUNVDQGKLVOHWWHUV ´7KHKHDUWRIODQJXDJH«LVFRPPXQLFDWLRQ WKH HVWDEOLVKPHQWRIFRRSHUDWLRQLQDQDFWLYLW\LQZKLFKWKHUHDUHSDUWQHUVDQGLQ ZKLFKWKHDFWLYLW\RIHDFKLVPRGLILHGDQGUHJXODWHGE\SDUWQHUVKLSµ 'HZH\ FI 'HZH\·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´KDYHGLVFRXUVHGVRIOXHQWO\DERXWPDQ\WRSLFV WKH\ KDYHGLVFRXUVHGVROLWWOHDERXWGLVFRXUVHLWVHOI µ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
DQ\ VLJQV RI EHFRPLQJ D´OLQJXLVWLFµ SKLORVRSKHU RU RI WDNLQJ WKH OLQJXLVWLF WXUQ 1RUGRHVLWDSSHDUWKDWKHHYHUWKRXJKWRIWKHZRUOGDVVRHQFDSVXODWHG LQODQJXDJHWKDWZHDUHIRUFHGWRDVNZKHWKHUWKHUHLVDQ\UHDOLW\EH\RQGLW , FDQQRW VD\ZKHWKHU'HZH\ UHJDUGHG WKH WXUQ WR ODQJXDJH DV H[FHVVLYH DQG EHOLHYHG DV ,GR WKDW UHJDUGOHVVRI LWVFRQWULEXWLRQ LWKDV VHUYHGDORQJZLWK HSLVWHPRORJ\ WRSRVWSRQHGLVFXVVLRQRIPDQ\ ILUVWRUGHUSKLORVRSKLFDOTXHV WLRQV ,Q DQ\ FDVH LW VHHPV FOHDU WKDW LQ YLHZ RI KLV ULFK XQGHUVWDQGLQJ RI
ODQJXDJH HVSHFLDOO\ RI LWV FUXFLDO UROH LQ DFWXDOL]LQJ WKH KXPDQ DVVRFLDWLRQV VXVWDLQLQJFLYLOL]HGOLIH WKHQHZOLQJXLVWLFRULHQWDWLRQGLGQRWDWWUDFWKLP :KLOH,VHHQRIXQGDPHQWDOFKDQJHLQ'HZH\·VXQGHUVWDQGLQJRIODQJXDJH
GXULQJWKHSHULRGXQGHUFRQVLGHUDWLRQ WKHVDPHFDQQRWEHVDLGRIKLVUHIOHF WLRQVRQWKHWKHRU\RILQTXLU\ 7HQ\HDUVKDGSDVVHGVLQFHWKHSXEOLFDWLRQRI KLV/RJLF ZLWKLWVDPELWLRXVSURJUDPRIVKRZLQJKRZORJLFDOIRUPV LQFOXGLQJ WKHFRQVWDQWV DUHGHULYHGIURPWKHSDWWHUQRILQTXLU\ 7KLVSURJUDPGRHVQRW FRPHXSIRUDQ\H[WHQVLYHGLVFXVVLRQLQWKHOHWWHUV EXWWKHUHLVQRLQGLFDWLRQ WKDW'HZH\JDYHLWXSDQGZHQHHGQRWFRQVLGHULWKHUH +HZDVPRUHWURX EOHGE\KLVRZQTXHVWLRQVDERXWLQTXLU\DQGNQRZOHGJHWKDQE\WKHFULWLFLVP RIRWKHUV +HZDVQRWERWKHUHG IRUH[DPSOH E\5XVVHOO·VDWWDFNRQKLVLQLWLDO GHVFULSWLRQRILQTXLU\DVWKHWUDQVIRUPDWLRQRIDQLQGHWHUPLQDWHVLWXDWLRQLQWR DGHWHUPLQDWHRQH 5XVVHOOFODLPHGWKDWWKLVFRQGLWLRQLVWRRDEVWUDFWIRUWKH SXUSRVHVLQFHLWLVIXOILOOHGE\DGULOOVHUJHDQWWXUQLQJDJURXSRIUDZUHFUXLWV LQWR DQRUJDQL]HG FRPSDQ\RU E\ DPDVRQEXLOGLQJ DZDOOZLWKEULFNV +LV PDLQ FRQFHUQ DERXW LQTXLU\ KDG WR GR ZLWK XQFHUWDLQWLHV DERXW LWV H[DFW FRQQHFWLRQZLWK´ NQRZOHGJHµ DQGWKHVHZHUHSURPSWHGE\KLVH[FKDQJHZLWK %HQWOH\DERXWZKDWWKH\FDOOHGNQRZLQJVNQRZQV 7KHVHXQFHUWDLQWLHVZHUH WZRIROG ILUVW WKHRYHUZKHOPLQJDPELJXLWLHVKHIRXQGLQWKHXVHRIWKHWHUP ´NQRZOHGJHµ ERWK LQ RUGLQDU\ GLVFRXUVH DQG WHFKQLFDO GLVFXVVLRQV VHFRQG ZKHWKHU LW LV OHJLWLPDWH WR XVH WKH WHUP ´NQRZOHGJHµ WR GHVLJQDWH WKH RXWFRPHRILQTXLU\ZKHQLQTXLU\LVE\QDWXUHQHYHUHQGLQJ 7KLV LVWKHFRUH RIWKHSUREOHPFLWHGHDUOLHUDERXWKRZEHVWWRDFFRXQWIRUWKH WHQWDWLYH FKDU DFWHU ² WKH´IDOOLELOLW\µ IDFWRU ²RI NQRZOHGJH VLQFH LW FDQEH DFTXLUHGRQO\ WKURXJK D SURFHVVZKRVH RXWFRPH FDQ QHYHU EH FDOOHG ILQDO 7KH IROORZLQJ FRPPHQW E\ 'HZH\ )HEUXDU\ 'HZH\ DQG %HQWOH\ H[SUHVVHVWKLVFRQFHUQ RQHWKDWEHFDPHYLUWXDOO\DQREVHVVLRQ
7KHNLQGRIIDFWLYLW\>DWHUPLQOLQJXLVWLFVLQGLFDWLQJWKDWWKHWUXWKRIDQ LQFOXGHGVHQWHQFHLVSUHVXSSRVHG DV´ UHDOL]Hµ LQ´ ,GLGQRWUHDOL]HWKDWKH KDG OHIWµ@ PDUNLQJ WKH SDUWLFXODU ZDUUDQWHG DVVHUWLRQ RI D VSHFLILHG LQTXLU\GRHVQRWKDYHWREHQDPHGDVDFDVHRINQRZOHGJH²LWLVDFDVHRI ZKDW LV WKHUH WKDWZKLFKLVGRQH PDGH WLOO WKHUHLVRFFDVLRQIRUIXUWKHU LQTXLU\
7KLV VWDWHPHQW LV QRW ZLWKRXW DPELJXLW\ RQ WKH RQH KDQG LW LQGLFDWHV 'HZH\·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´ NQRZOHGJHµ
VKRXOGKDYHQRPHDQLQJRWKHU WKDQ´RXWFRPHRI LQTXLU\µ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´NQRZOHGJHLVUHODWHGWRLQTXLU\DVDSURGXFWWRWKHRSHUDWLRQVE\ ZKLFK LW LVSURGXFHGµ 'HZH\ 1HYHUWKHOHVV KHGLGTXHVWLRQKLV WKHVLV FKLHIO\ ,EHOLHYH EHFDXVHKHFRXOGQRWUHFRQFLOHWKHDVSHFWWKDWNQRZO HGJHUHYHDOVRI LWVHOIZKHQ LWFRPHVDVDSRVVHVVLRQ DGHILQLWHRXWFRPHRID SDUWLFXODULQTXLU\ ZLWKWKHIDFWWKDWLQTXLU\FDQQHYHUFRPHWRDQHQG %XW, UXQDKHDGRIWKHUHFRUG %HQWOH\SUHFLSLWDWHG WKH LVVXH IRU'HZH\ZKHQKH UHPLQGHGKLP 0D\
'HZH\ DQG %HQWOH\ WKDW LQ WKH /RJLF KH´RIILFLDOO\µ PDGH NQRZOHGJHWKHHQGRURXWFRPHRI LQTXLU\ EXW WKDW´LQVRPHUHFHQW OHWWHUµ KH VDLGGLUHFWO\´ NQRZOHGJHLVLQTXLU\µ %HQWOH\·VUHVSRQVHZDV´7KLVPDGHDFRQVLG HUDEOHLPSUHVVLRQRQPH²RQHWKDWLVJURZLQJµ DQGKHZHQWRQWRH[SODLQWKDW LWJLYHVNQRZOHGJHD´ ORFDOL]HGPHDQLQJµ LWQHYHUKDGEHIRUHVLQFHLQTXLU\ILQGV LWVSODFHLQDFWLYHKXPDQRUJDQLVPV $VDUXOH 'HZH\WRRNUHVSRQVHVRIWKLVVRUW IURP%HQWOH\ YHU\ VHULRXVO\ DQG ZKLOH KLV DQVZHU LQ WKH QH[W OHWWHU LV UDWKHU REOLTXH KHGHYRWHGPXFKWKRXJKWWRWKHKRSHWKDWLGHQWLI\LQJNQRZOHGJHZLWK LQTXLU\FRXOGRYHUFRPHWKHGLIILFXOWLHVWKDWWURXEOHGKLP $OWKRXJK ZH GR QRW KDYH WKH OHWWHU %HQWOH\ UHIHUUHG WR 'HZH\·V UHSO\
PDNHV LW FOHDU WKDW KH KDG ZULWWHQ´NQRZOHGJH LV LQTXLU\µ -XQH 'HZH\ DQG %HQWOH\ DQG KH DGGHG ´LQTXLU\ DV NQRZLQJ « ¶LQWULJXHV· PH« ,·OO KDYH WR JLYH WKH ZKROH PDWWHU FRQVLGHUDEOH WKRXJKW EHIRUH,·OOEHDEOHWRVHHMXVWZKHUHLWWDNHVPHµ 6XEVHTXHQWH[FKDQJHVPDNHLWFOHDUWKDW'HZH\·VXQHDVLQHVVRYHUKLVRULJ
LQDOVWUDLJKWIRUZDUGWKHVLVWKDW´ NQRZOHGJHLVWKHDLPRILQTXLU\µ VWHPPHG DV , KDYH VXJJHVWHG DERYH IURP WKH VHQVH WKDW WKHUH LV DQ LQFRPSDWLELOLW\ EHWZHHQ FDOOLQJ WKH RXWFRPH RI DQ\ LQTXLU\ E\ WKH QDPH RI´NQRZOHGJHµ ZKHQ IXUWKHU LQTXLU\ LV DOZD\V QHFHVVDU\ +LV KRSH WKDW NQRZLQJ FRXOG VRPHKRZEHXQGHUVWRRG DV DQ LQJUHGLHQWZLWKLQ LQTXLU\² DPXWLQJRI WKH RULJLQDO WKHVLV ² LV H[SUHVVHG LQ D OHWWHU D IHZPRQWKV ODWHU 6HSWHPEHU 'HZH\DQG%HQWOH\ LQFRQQHFWLRQZLWKWKHSUHSDUDWLRQRI FRS\ IRU WKHLU ERRN ´7KH LQVHUWLRQµ 'HZH\ ZURWH ´RI NQRZLQJ DV ¶JRDO ZLWKLQLQTXLU\· LVDOOWRWKHJRRGDQGVKRXOGEHHPSOR\HGV\VWHPDWLFDOO\WLOOLW JHWV UHFRJQLWLRQµ ,WPD\ KDYH EHHQ WKDW WKH LGHD RI´JRDO ZLWKLQ LQTXLU\µ DWWUDFWHGKLPDVDPLGGOHZD\EHWZHHQNQRZOHGJHDVWKHHQGRILQTXLU\DQG NQRZOHGJHDVLQTXLU\LWVHOI 7KHUHLVQRILQDOUHVROXWLRQRIWKHPDWWHUHLWKHULQ .QRZLQJDQGWKH.QRZQ RULQWKHUHPDLQLQJOHWWHUV ,ZLVKQRZWRRIIHUVRPHUHIOHFWLRQVRQWKH'HZH\ZKRUHYHDOHGKLPVHOI
LQZKDWZHPD\FDOOWKH%HQWOH\HUD 7REHJLQZLWK KHVHHPVWRKDYHORVWWKDW
VHQVHRISURSRUWLRQ3HLUFHKDGLQPLQGZKHQKHVDLGWKDWLIDGGLQJXSVRPH ILJXUHVLQRQH·VKHDGDVGLVWLQFWIURPXVLQJSHQFLODQGSDSHUZHUHWDNHQWREH D GLIIHUHQFH LQ SUDFWLFH SUDJPDWLVP ZRXOG EH H[SORGHG )XUWKHU 3HLUFH LQVLVWHGWKDWWKHGHJUHHRISUHFLVLRQUHTXLUHGLQDQ\VLWXDWLRQGHSHQGVRQWKH SXUSRVH DW KDQG )RU H[DPSOH LW LV SHUIHFWO\ VHQVLEOH IRU WKH FOHUN WR XVH D \DUGVWLFNLQPHDVXULQJIRXU\DUGVRIFORWKLQVWHDGRIXVLQJDPHDVXULQJGHYLFH DSSURSULDWH RQO\ IRU WKH ODERUDWRU\ 'HZH\·V SURWUDFWHG TXHVW IRU HYHUPRUH SUHFLVH WHUPLQRORJ\GLVSOD\VDQXQFKDUDFWHULVWLFDEVROXWLVP WKDWZDVZLWKRXW DQ\VHQVHRISURSRUWLRQ $QG DVZHKDYHVHHQ KHFDUULHGKLVXQHDVLQHVVDERXW WKHWHUP´ NQRZOHGJHµ WRDQH[WUHPHE\GHQ\LQJWKDWWKHZDUUDQWHGRXWFRPH RILQTXLU\LVNQRZOHGJHEHFDXVHIXUWKHULQTXLU\PLJKWEHQHHGHG +H EHFDPH , EHOLHYH H[FHVVLYHO\ FULWLFDO RI KLV SUHYLRXV YLHZV WKH EHVW
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
IRU H[DPSOH KLV DQDO\VLV RI K\SRWKHVLV IRUPDWLRQ KHPLJKW KDYH FRQVLGHUHG WKDWHYHU\SXUSRVHIXOSURFHVVKDVZKDWZHPD\FDOOLQWHULPUHDOL]DWLRQVRIWKH DLPWKDWGHILQHVWKHSURFHVV ,WLVLQWHUHVWLQJWKDWERWK+HJHO DQG:KLWHKHDG FRQVLGHUHG WKLV IDFWRU HDFK LQ KLV RZQ ZD\ +HJHO VDLG WKDW LQ EHFRPLQJ XQOHVVWKHUHDUHGHILQLWHUHVXOWVIURPWLPHWRWLPH²´ VRPHWKLQJKDVEHFRPHµ ² ZH DUH OHIW ZLWK VKHHU EHFRPLQJ DQG QR SURJUHVV ,Q WKH VDPH YHLQ :KLWHKHDGVDZWKDWZLWKRXWDSULQFLSOHRIOLPLWDWLRQPDNLQJSRVVLEOHGHILQLWH RXWFRPHVWKHUHLVRQO\SURFHVV 'HZH\FRXOGKDYHDYDLOHGKLPVHOIRIVXFKDQ LGHD LQ RUGHU WR GHDOZLWK WKH SUREOHP WKDW WURXEOHG KLPPRVW ² FDOOLQJ D WHQWDWLYH DQG LQFRPSOHWH UHVXOW RI DQ LQTXLU\ E\ WKH QDPHRI´NQRZOHGJHµ $FFRUGLQJO\ KH FRXOG KDYH VDLG WKDW WKH RXWFRPHV RI SDUWLFXODU LQTXLULHV UHSUHVHQWWKHDLPRILQTXLU\LWVHOI²NQRZOHGJH²HYHQWKRXJKIXUWKHULQTXLU\ LVVWLOOFDOOHGIRU 7KHSUREOHPRIJURZWKLQNQRZOHGJH RIKRZWR LQ-DPHV·VZRUGV PDUU\
QHZIDFWWRROGWUXWKZLWKDPD[LPXPRIFRQWLQXLW\DQGDPLQLPXPRIMROW KDVEHHQWKHVXEMHFWRIH[WHQVLYHGLVFXVVLRQGXULQJWKHSDVWKDOIFHQWXU\ ,I, UHDG WKH UHFRUG DFFXUDWHO\ FXUUHQW WKLQNLQJ DERXW WKH PDWWHU LV PXFK LQ DJUHHPHQWZLWKWKHLGHDWKDW-DPHVSURSRVHG 'HZH\·VDFFRXQWRI LQTXLU\LQ KLV/RJLFHFKRHVDVLPLODUQRWH DQGWDNHVLQWRDFFRXQWWKHVRUWRIJURZWKLQ NQRZOHGJHWKDWWDNHVSODFHLQHYHU\DFWLYHILHOGRIUHVHDUFK ,EHOLHYHWKHEULHI
LOOXVWUDWLRQ,DPDERXWWRRIIHU²ERUURZHGIURP0LFKDHO3RODQ\L²H[SUHVVHV WKHFRPLQJWRJHWKHURIFKDQJHDQGFRQWLQXLW\LQNQRZLQJZKLFK,WDNHWREH RQHRIWKHKDOOPDUNVRIWKHSUDJPDWLFRXWORRN 7KH IRFXV KHUH LV RQ WKH UHVSRQVH RI VFLHQWLVWV WR WKH GLVFRYHU\ RI VRPH
VHULRXV DQRPDOLHV LQ WKH3HULRGLF7DEOHRI WKHHOHPHQWV 7REHJLQZLWK WKH 7DEOH WKDW DUUDQJHV WKH HOHPHQWV LQ JURXSV DQG DFFRUGLQJ WR WKHLU DWRPLF QXPEHUV UHSUHVHQWV WKH UHVXOWV RI D YDVW FRRSHUDWLYH HQGHDYRU E\ PDQ\ LQTXLUHUV LQ D QXPEHU RI ILHOGV DQG VWUHWFKLQJ RYHU PDQ\ GHFDGHV 7KH GLVFRYHU\ WKDW VRPH HOHPHQWV WKRXJK VKDULQJ DQ LGHQWLFDO DWRPLF QXPEHU SURYHG WR KDYH GLIIHUHQW DWRPLF ZHLJKWV SUHVHQWHG D PDMRU SUREOHP LQ 'HZH\·V WHUPV WKH GLIILFXOW\ RU REVWDFOH GHPDQGLQJ LQTXLU\ $Q LPPHGLDWH EXWXQUHIOHFWLYH UHVSRQVHPLJKWKDYHEHHQDSURSRVDO WR VHW WKH7DEOHDVLGH 7KLVUHVSRQVH 3RODQ\LSRLQWHGRXW ZRXOGKDYHEHHQPRVWXQZLVH HVSHFLDOO\ LQ YLHZ RI WKH IDFW WKDW WKH KXJH ERG\ RI HYLGHQFH RQZKLFK WKH7DEOH LV EDVHG FDQQRW VLPSO\ EH LJQRUHG DQG LQ DGGLWLRQ LW H[FHHGV LQ VFRSH WKH HYLGHQFHRQZKLFKWKHVRXUFHRIWKHDQRPDOLHVZDVEDVHG 7KHZLVHUFRXUVH WKHRQHLQIDFWDGRSWHG ZDVWRFRQMHFWXUHWKDWRWKHU DV\HWXQNQRZQ IDFWRUV DUH DW ZRUN DQG LQTXLUH IXUWKHU LQ WKH KRSH RI PRGLI\LQJ ZKDW LV DOUHDG\ NQRZQLQDFRKHUHQWZD\ $V LVQRZZHOONQRZQ WKHSUREOHPZDVUHVROYHG WKURXJK WKH GLVFRYHU\ RIZKDWZHUH FDOOHG´LVRWRSHVµ RU IRUPV RI WKH VDPH HOHPHQWKDYLQJGLIIHUHQWDWRPLFZHLJKWV 7KXVWKHDQRPDOLHVZHUHUHVROYHGE\ WKHGLVFRYHU\RIDQHZIDFWRUZLWKWKHVDFULILFHRIDVOLWWOHDVSRVVLEOHRIZKDW ZDVSUHYLRXVO\ZDUUDQWHG 'DWD LQIRUPDWLRQVXFKDVWKDWXSRQZKLFKWKH7DEOHLVEDVHGGHVHUYHVWR
EHFDOOHGNQRZOHGJH GHVSLWHWKHDSSHDUDQFHRIDQRPDOLHVDQGWKHFRQVHTXHQW QHHG IRU IXUWKHU LQTXLU\ 'HZH\·V FKLHI SUREOHP LQKLV SHULRGRI UHWKLQNLQJ ZDVWKDWKHEHFDPHWRRIDVWLGLRXVDERXWXVHRIWKHWHUP´ NQRZOHGJHµ DQGZDV XQHDV\ DERXW XVLQJ LW IRU WKH WHQWDWLYH DQG SURYLVLRQDO &XULRXVO\ HQRXJK KRZHYHU LW EHORQJHG WR WKH VSLULW RI SUDJPDWLVP IURP WKH EHJLQQLQJ WR DEDQGRQWKHTXHVW IRUFHUWDLQW\EXWQRW WRJLYHZD\WR VNHSWLFLVP ,QVKRUW WKHSUDJPDWLVWVUHFRJQL]HGWKDWNQRZOHGJHGHYHORSV WKDWDWDQ\WLPHZHKDYH ZKDW LV LQFRPSOHWH DQG VXEMHFW WR UHYLVLRQ DQG WKDW LW LV IROO\ WR GHQ\ WKH VWDWXVRINQRZOHGJHWRWKHRXWFRPHRIUHOLDEOHLQTXLU\ ,GRQRWVHHWKDWWKHUH LVDQ\WKLQJLQ'HZH\·VPDLQOHJDF\WKDWEDVLFDOO\UXQVFRXQWHUWRWKLVRXWORRN 3HUKDSVLQWKHHQGLWLVQRWWKHEHWWHUSDUWRIZLVGRPIRUDJLQJSKLORVRSKHUV WRHQWHUWDLQWRRPDQ\GRXEWVDERXWWKHLULQVLJKWV HVSHFLDOO\ZKHQRWKHUVKDYH IRXQGWKHPSURIRXQGDQGWUXVWZRUWK\
