&KDSWHU  $XGLWLQJ DQG $VVXUDQFH 6HUYLFHV

7UXH  )DOVH 4XHVWLRQV

 )LQDQFLDO GHFLVLRQ PDNHUV GHPDQG UHOLDEOH LQIRUPDWLRQ WKDW LV SURYLGHG E\ DFFRXQWDQWV 7UXH )DOVH

 )LQDQFLDO GHFLVLRQ PDNHUV REWDLQ WKHLU DFFRXQWLQJ LQIRUPDWLRQ IURP OHQGHUV RI IXQGV 7UXH )DOVH

 )RXU FRQGLWLRQV WKDW FUHDWH GHPDQG IRU UHOLDEOH LQIRUPDWLRQ DUH FRPSOH[LW\ UHPRWHQHVV WLPHOLQHVV DQG FRQVHTXHQFHV 7UXH )DOVH

 7KH OHQGLQJ RI FUHGLELOLW\ WR ILQDQFLDO LQIRUPDWLRQ LV NQRZQ DV FHUWLILFDWLRQ 7UXH )DOVH

 ,QGHSHQGHQW DXGLWRUV DUH HPSOR\HHV RI WKH FOLHQW 7UXH )DOVH

 $VVXUDQFH VHUYLFH LV WKH V\VWHPDWLF SURFHVV RI REMHFWLYHO\ REWDLQLQJ DQG HYDOXDWLQJ HYLGHQFH 7UXH )DOVH

 (YLGHQFH FRQVLVWV RI DVVHUWLRQV DERXW HFRQRPLF DFWLRQV DQG HYHQWV 7UXH )DOVH

 7KH SXUSRVH RI REWDLQLQJ DQG HYDOXDWLQJ HYLGHQFH LV WR DVFHUWDLQ WKH GHJUHH RI FRUUHVSRQGHQFH EHWZHHQ WKH DVVHUWLRQV DQG HVWDEOLVKHG FULWHULD 7UXH )DOVH

 7KH $,&3$ 6WDWHPHQW RQ $XGLWLQJ 6WDQGDUGV GHILQHV DXGLWLQJ PRUH EURDGO\ WKDQ WKH $$$ GHILQLWLRQ RI DXGLWLQJ 7UXH )DOVH

 7KH 3&$2% DXGLW REMHFWLYH UHODWHG WR WKH FRPSOHWHQHVV DVVHUWLRQ LV WR HVWDEOLVK HYLGHQFH WKDW DVVHWV OLDELOLWLHV DQG HTXLWLHV DFWXDOO\ H[LVW 7UXH )DOVH

 7KH $6% EDODQFH DXGLW REMHFWLYH UHODWHG WR YDOXDWLRQ RU DFFXUDF\ LV WR GHWHUPLQH ZKHWKHU SURSHU YDOXHV KDYH EHHQ DVVLJQHG WR DVVHWV OLDELOLWLHV HTXLWLHV UHYHQXHV DQG H[SHQVHV 7UXH )DOVH

 7KH REMHFWLYH RI LQWHUQDO DXGLWLQJ LV WR DVVLVW PHPEHUV RI DQ RUJDQL]DWLRQ WR HIIHFWLYHO\ SHUIRUP WKHLU REOLJDWLRQV 7UXH )DOVH

 ,QWHUQDO DXGLWRUV SHUIRUP RQO\ RSHUDWLRQDO DXGLWV 7UXH )DOVH

 *RYHUQPHQW DXGLWRUV SHUIRUP ERWK ILQDQFLDO DQG SHUIRUPDQFH DXGLWV 7UXH )DOVH

 ([SDQGHG VFRSH JRYHUQPHQWDO DXGLWLQJ LQFOXGHV HFRQRP\ DQG HIILFLHQF\ DQG SURJUDP UHVXOWV DXGLWV 7UXH )DOVH

 7KH $,&3$ OLFHQVHV &3$V WR SUDFWLFH LQ WKH 8QLWHG 6WDWHV 7UXH )DOVH

 3URIHVVLRQDO VNHSWLFLVP LV DQ DXGLWRU V WHQGHQF\ QRW WR EHOLHYH DQ\RQH 7UXH )DOVH

 $VVXUDQFH VHUYLFHV DUH LQGHSHQGHQW SURIHVVLRQDO VHUYLFHV WKDW LPSURYH WKH TXDOLW\ RI LQIRUPDWLRQ RU LWV FRQWH[W IRU GHFLVLRQ PDNHUV 7UXH )DOVH

 7KH FRQFHSW SURIHVVLRQDO VNHSWLFLVP UHTXLUHV WKDW DXGLWRUV DVVXPH PDQDJHPHQW LV GLVKRQHVW DQG VKRXOG QRW EH WUXVWHG 7UXH )DOVH

 )RU LQGHSHQGHQW DXGLWRUV RI ILQDQFLDO VWDWHPHQWV LQ WKH 8QLWHG 6WDWHV HVWDEOLVKHG FULWHULD ODUJHO\ FRQVLVW RI WKH JHQHUDOO\ DFFHSWHG DFFRXQWLQJ SULQFLSOHV *$$3  7UXH )DOVH

0XOWLSOH &KRLFH 4XHVWLRQV

 7KH DXGLW REMHFWLYH RI SUHVHQWLQJ DOO WUDQVDFWLRQV DQG DFFRXQWV LQ WKH ILQDQFLDO VWDWHPHQWV DUH LQ IDFW LQFOXGHG LV UHODWHG WR ZKLFK RI WKH 3&$2% DVVHUWLRQV"

$ ([LVWHQFH % 5LJKWV DQG REOLJDWLRQV & &RPSOHWHQHVV ' 9DOXDWLRQ  7R EH SURILFLHQW DV DQ DXGLWRU D SHUVRQ PXVW ILUVW EH DEOH WR DFFRPSOLVK ZKLFK RI WKHVH WDVNV LQ D GHFLVLRQPDNLQJ SURFHVV"

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

 :KLFK RI WKH IROORZLQJ LV DQ XQGHUO\LQJ FRQGLWLRQ WKDW LQ SDUW FUHDWHV WKH GHPDQG E\ XVHUV IRU UHOLDEOH LQIRUPDWLRQ"

$ (FRQRPLF WUDQVDFWLRQV DUH QXPHURXV DQG FRPSOH[ % 'HFLVLRQV DUH WLPH VHQVLWLYH & 8VHUV DUH VHSDUDWHG IURP DFFRXQWLQJ UHFRUGV E\ GLVWDQFH DQG WLPH ' )LQDQFLDO GHFLVLRQV DUH LPSRUWDQW WR LQYHVWRUV DQG XVHUV ( $OO RI WKH DERYH  :KLFK RI WKH IROORZLQJ LV QRW LQFOXGHG LQ 7KH $PHULFDQ $FFRXQWLQJ $VVRFLDWLRQ $$$ GHILQLWLRQ RI DXGLWLQJ"

$ 3RWHQWLDO FRQIOLFW RI LQWHUHVW % 6\VWHPDWLF SURFHVV & $VVHUWLRQV DERXW HFRQRPLF DFWLRQV ' (VWDEOLVKHG FULWHULD  :KDW LV WKH WHUP XVHG WR LGHQWLI\ WKH ULVN WKDW WKH FOLHQW V ILQDQFLDO VWDWHPHQWV PD\ EH PDWHULDOO\ IDOVH DQG PLVOHDGLQJ"

$ %XVLQHVV ULVN % ,QIRUPDWLRQ ULVN & &OLHQW ULVN ' 5LVN DVVHVVPHQW

 :KLFK RI WKH IROORZLQJ LV QRW D UHFRPPHQGDWLRQ XVXDOO\ PDGH IROORZLQJ WKH FRPSOHWLRQ RI DQ RSHUDWLRQDO DXGLW"

$ (FRQRPLF DQG HIILFLHQW XVH RI UHVRXUFHV % (IIHFWLYH DFKLHYHPHQW RI EXVLQHVV REMHFWLYHV & $WWHVWLQJ WR WKH IDLUQHVV RI WKH ILQDQFLDO VWDWHPHQWV ' &RPSOLDQFH ZLWK FRPSDQ\ SROLFLHV  ,Q RUGHU WR EH FRQVLGHUHG DV H[WHUQDO DXGLWRUV ZLWK UHVSHFW WR JRYHUQPHQW DJHQFLHV *$2 DXGLWRUV PXVW EH

$ 2UJDQL]DWLRQDOO\ LQGHSHQGHQW % (PSRZHUHG DV WKH DFFRXQWLQJ DQG DXGLWLQJ DJHQF\ E\ WKH 86 &RQJUHVV & )XQGHG E\ WKH IHGHUDO JRYHUQPHQW ' *XLGHG E\ VWDQGDUGV VLPLODU WR *$$6  :KLFK RI WKH IROORZLQJ LV WKH HVVHQWLDO SXUSRVH RI WKH DXGLW IXQFWLRQ"

$ 'HWHFWLRQ RI IUDXG % ([DPLQDWLRQ RI LQGLYLGXDO WUDQVDFWLRQV WR FHUWLI\ WKHLU YDOLGLW\ & 'HWHUPLQDWLRQ RI ZKHWKHU WKH FOLHQW V ILQDQFLDO VWDWHPHQW DVVHUWLRQV DUH IDLUO\ VWDWHG ' $VVXUDQFH RI WKH FRQVLVWHQW DSSOLFDWLRQ RI FRUUHFW DFFRXQWLQJ SURFHGXUHV

 7KH DXGLW REMHFWLYH WKDW DOO WKH WUDQVDFWLRQV DQG DFFRXQWV SUHVHQWHG LQ WKH ILQDQFLDO VWDWHPHQWV UHSUHVHQW UHDO DVVHWV OLDELOLWLHV UHYHQXHV DQG H[SHQVHV LV UHODWHG PRVW FORVHO\ WR ZKLFK RI WKH 3&$2% DVVHUWLRQV"

$ ([LVWHQFH RU RFFXUUHQFH % 5LJKWV DQG REOLJDWLRQV & &RPSOHWHQHVV ' 3UHVHQWDWLRQ DQG GLVFORVXUH  7KH DXGLW REMHFWLYH WKDW DOO WUDQVDFWLRQV DUH UHFRUGHG LQ WKH SURSHU SHULRG LV UHODWHG PRVW FORVHO\ WR ZKLFK RI WKH $XGLW 6WDQGDUGV %RDUG $6% WUDQVDFWLRQ DVVHUWLRQV"

$ 2FFXUUHQFH % &RPSOHWHQHVV & &XWRII ' $FFXUDF\  7KH DXGLW REMHFWLYH WKDW DOO WUDQVDFWLRQV DUH UHFRUGHG LQ WKH SURSHU DFFRXQW LV UHODWHG PRVW FORVHO\ WR ZKLFK RQH RI WKH $6% WUDQVDFWLRQ DVVHUWLRQV"

$ 2FFXUUHQFH % &RPSOHWHQHVV & $FFXUDF\ ' &ODVVLILFDWLRQ

 7KH DXGLW REMHFWLYH WKDW DOO EDODQFHV LQFOXGH LWHPV RZQHG E\ WKH FOLHQW LV UHODWHG PRVW FORVHO\ WR ZKLFK RQH RI WKH $6% EDODQFH DVVHUWLRQV"

$ ([LVWHQFH % 5LJKWV DQG REOLJDWLRQV & &RPSOHWHQHVV ' 9DOXDWLRQ  7KH DXGLW REMHFWLYH WKDW DOO EDODQFHV LQFOXGH DOO LWHPV WKDW VKRXOG EH UHFRUGHG LQ WKDW DFFRXQW LV UHODWHG PRVW FORVHO\ WR ZKLFK RQH RI WKH $6% EDODQFH DVVHUWLRQV"

$ ([LVWHQFH % 5LJKWV DQG REOLJDWLRQV & &RPSOHWHQHVV ' 9DOXDWLRQ

 7KH DXGLW REMHFWLYH WKDW IRRWQRWHV LQ WKH ILQDQFLDO VWDWHPHQWV VKRXOG EH FOHDU DQG H[SUHVVHG VR WKDW WKH LQIRUPDWLRQ LV HDVLO\ FRQYH\HG WR WKH UHDGHUV RI WKH ILQDQFLDO VWDWHPHQWV LV UHODWHG PRVW FORVHO\ ZLWK ZKLFK RI WKH $6% SUHVHQWDWLRQ DQG GLVFORVXUH DVVHUWLRQV"

$ 2FFXUUHQFH % 5LJKWV DQG REOLJDWLRQV & &RPSUHKHQVLELOLW\ ' 8QGHUVWDQGDELOLW\  7KH HQJLQHHULQJ GHSDUWPHQW DW 2PQL &RPSDQ\ EXLOW D SLHFH RI HTXLSPHQW LQ WKH FRPSDQ\ V RZQ VKRS IRU XVH LQ WKH FRPSDQ\ V RSHUDWLRQV 7KH DXGLWRU UHYLHZHG DOO ZRUN RUGHUV WKDW ZHUH FDSLWDOL]HG DV SDUW RI WKH HTXLSPHQW FRVWV :KLFK RI WKH IROORZLQJ LV WKH $6% WUDQVDFWLRQ DVVHUWLRQ PRVW FORVHO\ UHODWHG WR WKH DXGLWRU V WHVWLQJ"

$ 2FFXUUHQFH % &RPSOHWHQHVV & $FFXUDF\ ' &ODVVLILFDWLRQ

 7KH HQJLQHHULQJ GHSDUWPHQW DW 2PQL &RPSDQ\ EXLOW D SLHFH RI HTXLSPHQW LQ WKH FRPSDQ\ V RZQ VKRS IRU XVH LQ WKH FRPSDQ\ V RSHUDWLRQV :KHQ ORRNLQJ DW WKH HQGLQJ EDODQFH IRU WKH IL[HG DVVHW DFFRXQW WKH DXGLWRU H[DPLQHG DOO ZRUN RUGHUV SXUFKDVHG PDWHULDOV ODERU FRVW UHSRUWV DQG DSSOLHG RYHUKHDG WKDW ZHUH FDSLWDOL]HG DV SDUW RI WKH HTXLSPHQW FRVWV :KLFK RI WKH IROORZLQJ LV WKH $6% EDODQFH DVVHUWLRQ PRVW FORVHO\ UHODWHG WR WKH DXGLWRU V WHVWLQJ"

$ ([LVWHQFH % &RPSOHWHQHVV & 5LJKWV DQG REOLJDWLRQV ' 9DOXDWLRQ  :KLFK RI WKH IROORZLQJ EHVW GHVFULEHV WKH SULPDU\ UROH DQG UHVSRQVLELOLW\ RI WKH LQGHSHQGHQW H[WHUQDO DXGLWRU"

$ 3URGXFH D FRPSDQ\ V DQQXDO ILQDQFLDO VWDWHPHQWV DQG QRWHV % ([SUHVV DQ RSLQLRQ RQ WKH IDLUQHVV RI D FRPSDQ\ V DQQXDO ILQDQFLDO VWDWHPHQWV DQG IRRWQRWHV & 3URYLGH EXVLQHVV FRQVXOWLQJ DGYLFH WR DXGLW FOLHQWV ' 2EWDLQ DQ XQGHUVWDQGLQJ RI WKH FOLHQW V LQWHUQDO FRQWURO VWUXFWXUH DQG JLYH PDQDJHPHQW D UHSRUW DERXW FRQWURO SUREOHPV DQG GHILFLHQFLHV

 :KLFK RI WKH IROORZLQJ EHVW GHVFULEHV WKH PDLQ UHDVRQ WKDW LQGHSHQGHQW DXGLWRUV UHSRUW RQ PDQDJHPHQW V ILQDQFLDO VWDWHPHQWV"

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

$ 4XDOLW\ FRQWURO % *HQHUDOO\ DFFHSWHG DXGLWLQJ VWDQGDUGV ZKLFK LQFOXGH WKH FRQFHSW RI PDWHULDOLW\ & 7KH DXGLWRU V HYDOXDWLRQ RI WKH DXGLWHG FRPSDQ\ V LQWHUQDO FRQWURO ' 7KH DSSOLFDEOH ILQDQFLDO UHSRUWLQJ IUDPHZRUN LH *$$3 LQ WKH 8QLWHG 6WDWHV 

 $VVXUDQFH VHUYLFHV LQYROYH DOO RI WKH IROORZLQJ H[FHSW

$ 5HOHYDQFH DV ZHOO DV WKH UHOLDELOLW\ RI LQIRUPDWLRQ % 1RQILQDQFLDO LQIRUPDWLRQ DV ZHOO DV WUDGLWLRQDO ILQDQFLDO VWDWHPHQWV & 3URYLGLQJ DEVROXWH UDWKHU WKDQ UHDVRQDEOH DVVXUDQFH ' (OHFWURQLF GDWDEDVHV DV ZHOO DV SULQWHG UHSRUWV  %HFDXVH RI WKH ULVN RI PDWHULDO PLVVWDWHPHQW DQ DXGLW RI ILQDQFLDO VWDWHPHQWV LQ DFFRUGDQFH ZLWK JHQHUDOO\ DFFHSWHG DXGLWLQJ VWDQGDUGV VKRXOG EH SODQQHG DQG SHUIRUPHG ZLWK DQ DWWLWXGH RI

$ 2EMHFWLYH MXGJPHQW % ,QGHSHQGHQW LQWHJULW\ & 3URIHVVLRQDO VNHSWLFLVP ' ,PSDUWLDO FRQVHUYDWLVP  :KLFK RI WKH IROORZLQJ EHVW GHVFULEHV DVVXUDQFH VHUYLFHV"

$ ,QGHSHQGHQW SURIHVVLRQDO VHUYLFHV WKDW UHSRUW RQ WKH FOLHQW V ILQDQFLDO VWDWHPHQWV % ,QGHSHQGHQW SURIHVVLRQDO VHUYLFHV WKDW LPSURYH WKH TXDOLW\ RI LQIRUPDWLRQ IRU GHFLVLRQ PDNHUV & ,QGHSHQGHQW SURIHVVLRQDO VHUYLFHV WKDW UHSRUW RQ VSHFLILF ZULWWHQ PDQDJHPHQW DVVHUWLRQV ' ,QGHSHQGHQW SURIHVVLRQDO VHUYLFHV WKDW LPSURYH WKH FOLHQW V RSHUDWLRQV

 :KLFK RI WKH IROORZLQJ LV QRW D 3&$2% DVVHUWLRQ DERXW LQYHQWRU\ UHODWHG WR SUHVHQWDWLRQ DQG GLVFORVXUH"

$ ,QYHQWRU\ LV SURSHUO\ FODVVLILHG DV D FXUUHQW DVVHW RQ WKH EDODQFH VKHHW % ,QYHQWRU\ LV SURSHUO\ VWDWHG DW LWV FRVW RQ WKH EDODQFH VKHHW & 0DMRU LQYHQWRU\ FDWHJRULHV DQG WKHLU YDOXDWLRQ EDVHV DUH DGHTXDWHO\ GLVFORVHG LQ QRWHV ' $OO RI WKH DERYH DUH 3&$2% SUHVHQWDWLRQ DQG GLVFORVXUH DVVHUWLRQV DERXW LQYHQWRU\  :KLFK RI WKH IROORZLQJ LV QRW DQ $6% DVVHUWLRQ DERXW LQYHQWRU\ UHODWHG WR SUHVHQWDWLRQ DQG GLVFORVXUH"

$ ,QYHQWRU\ LV SURSHUO\ FODVVLILHG DV D FXUUHQW DVVHW RQ WKH EDODQFH VKHHW % ,QYHQWRU\ LV SURSHUO\ VWDWHG DW FRVW RQ WKH EDODQFH VKHHW & 0DMRU LQYHQWRU\ FDWHJRULHV DQG WKHLU YDOXDWLRQ EDVHV DUH DGHTXDWHO\ GLVFORVHG LQ QRWHV ' $OO RI WKH DERYH DUH $6% SUHVHQWDWLRQ DQG GLVFORVXUH DVVHUWLRQV DERXW LQYHQWRU\

 ,Q SHUIRUPLQJ DQ DWWHVWDWLRQ HQJDJHPHQW D &3$ W\SLFDOO\

$ 6XSSOLHV OLWLJDWLRQ VXSSRUW VHUYLFHV % $VVHVVHV FRQWURO ULVN DW D ORZ OHYHO & ([SUHVVHV D FRQFOXVLRQ RQ DQ DVVHUWLRQ DERXW VRPH W\SH RI VXEMHFW PDWWHU ' 3URYLGHV PDQDJHPHQW FRQVXOWLQJ DGYLFH  $Q DWWHVWDWLRQ HQJDJHPHQW LV RQH LQ ZKLFK D &3$ LV HQJDJHG WR

$ ,VVXH D UHSRUW RQ VXEMHFW PDWWHU RU DQ DVVHUWLRQ DERXW WKH VXEMHFW PDWWHU WKDW LV WKH UHVSRQVLELOLW\ RI DQRWKHU SDUW\ % 3URYLGH WD[ DGYLFH RU SUHSDUH D WD[ UHWXUQ EDVHG RQ ILQDQFLDO LQIRUPDWLRQ WKH &3$ KDV QRW DXGLWHG RU UHYLHZHG & 7HVWLI\ DV DQ H[SHUW ZLWQHVV LQ DFFRXQWLQJ DXGLWLQJ RU WD[ PDWWHUV JLYHQ FHUWDLQ VWLSXODWHG IDFWV ' $VVHPEOH SURVSHFWLYH ILQDQFLDO VWDWHPHQWV EDVHG RQ WKH DVVXPSWLRQV RI WKH HQWLW\ V PDQDJHPHQW ZLWKRXW H[SUHVVLQJ DQ\ DVVXUDQFH

 7KH XQGHUO\LQJ FRQGLWLRQV WKDW FUHDWH GHPDQG E\ XVHUV IRU UHOLDEOH LQIRUPDWLRQ LQFOXGH DOO RI WKH IROORZLQJ H[FHSW

$ 7UDQVDFWLRQV DUH QXPHURXV DQG FRPSOH[ % 8VHUV ODFN SURIHVVLRQDO VNHSWLFLVP & 8VHUV DUH VHSDUDWHG IURP DFFRXQWLQJ UHFRUGV E\ GLVWDQFH DQG WLPH ' )LQDQFLDO GHFLVLRQV DUH LPSRUWDQW WR LQYHVWRUV DQG XVHUV ( 'HFLVLRQV DUH WLPH VHQVLWLYH  &XWRII WHVWV GHVLJQHG WR GHWHFW FUHGLW VDOHV PDGH EHIRUH WKH HQG RI WKH \HDU WKDW KDYH EHHQ UHFRUGHG LQ WKH VXEVHTXHQW \HDU SURYLGH DVVXUDQFH DERXW WKH 3&$2% DVVHUWLRQ RI

$ 3UHVHQWDWLRQ % &RPSOHWHQHVV & 5LJKWV ' ([LVWHQFH

 ,QTXLULHV RI ZDUHKRXVH SHUVRQQHO FRQFHUQLQJ SRVVLEOH REVROHWH RU VORZPRYLQJ LQYHQWRU\ LWHPV SURYLGH DVVXUDQFH DERXW WKH 3&$2% DVVHUWLRQ RI

$ &RPSOHWHQHVV % ([LVWHQFH & 3UHVHQWDWLRQ ' 9DOXDWLRQ ( 5LJKWV DQG REOLJDWLRQV  ,QTXLULHV RI ZDUHKRXVH SHUVRQQHO FRQFHUQLQJ SRVVLEOH REVROHWH RU VORZPRYLQJ LQYHQWRU\ LWHPV SURYLGH DVVXUDQFH DERXW WKH $6% EDODQFH DVVHUWLRQ RI

$ &RPSOHWHQHVV % ([LVWHQFH & 3UHVHQWDWLRQ ' 9DOXDWLRQ ( 5LJKWV DQG REOLJDWLRQV

 7KH SUREDELOLW\ WKDW WKH LQIRUPDWLRQ FLUFXODWHG E\ D FRPSDQ\ ZLOO EH IDOVH RU PLVOHDGLQJ LV UHIHUUHG WR DV

$ %XVLQHVV ULVN % ,QIRUPDWLRQ ULVN & $VVXUDQFH ULVN ' $XGLW ULVN  7KH 6DUEDQHV2[OH\ $FW RI  UHTXLUHV WKDW WKH NH\ FRPSDQ\ RIILFLDOV FHUWLI\ WKH ILQDQFLDO VWDWHPHQWV &HUWLILFDWLRQ PHDQV WKDW WKH FRPSDQ\ &(2 DQG &)2 PXVW VLJQ D VWDWHPHQW LQGLFDWLQJ

$ 7KH\ KDYH UHDG WKH ILQDQFLDO VWDWHPHQWV % 7KH\ DUH QRW DZDUH RI DQ\ IDOVH RU PLVOHDGLQJ VWDWHPHQWV RU DQ\ NH\ RPLWWHG GLVFORVXUHV & 7KH\ EHOLHYH WKDW WKH ILQDQFLDO VWDWHPHQWV SUHVHQW DQ DFFXUDWH SLFWXUH RI WKH FRPSDQ\ V ILQDQFLDO FRQGLWLRQ ' $OO RI WKH DERYH

 7KH SURFHVV E\ ZKLFK D &3$ REWDLQV D FHUWLILFDWH DQG OLFHQVH LQ D VWDWH RWKHU WKDQ WKH VWDWH LQ ZKLFK WKH &3$ V FHUWLILFDWH ZDV RULJLQDOO\ REWDLQHG LV UHIHUUHG WR DV

$ 6XEVWDQWLDO HTXLYDOHQF\ % 4XLG SUR TXR & 5HOLFHQVLQJ ' 5HH[DPLQDWLRQ  7KH ULVN WKDW DQ HQWLW\ ZLOO IDLO WR PHHW LWV REMHFWLYHV LV UHIHUUHG WR DV

$ %XVLQHVV ULVN % ,QIRUPDWLRQ ULVN & $VVXUDQFH ULVN ' $XGLW ULVN  7KH IRXU EDVLF UHTXLUHPHQWV IRU EHFRPLQJ D &3$ LQ PRVW VWDWHV UHODWH WR

$ (GXFDWLRQ WKH &3$ ([DPLQDWLRQ H[SHULHQFH DQG VXEVWDQWLDO HTXLYDOHQF\ % 7KH &3$ ([DPLQDWLRQ H[SHULHQFH FRQWLQXLQJ SURIHVVLRQDO HGXFDWLRQ DQG D VWDWH FHUWLILFDWH & &RQWLQXLQJ SURIHVVLRQDO HGXFDWLRQ WKH &3$ ([DPLQDWLRQ H[SHULHQFH DQG DQ $,&3$ FHUWLILFDWH ' (GXFDWLRQ WKH &3$ ([DPLQDWLRQ H[SHULHQFH DQG D VWDWH FHUWLILFDWH

 7KH VWXG\ RI EXVLQHVV RSHUDWLRQV IRU WKH SXUSRVH RI PDNLQJ UHFRPPHQGDWLRQV DERXW WKH HIILFLHQW XVH RI UHVRXUFHV HIIHFWLYH DFKLHYHPHQW RI EXVLQHVV REMHFWLYHV DQG FRPSOLDQFH ZLWK FRPSDQ\ SROLFLHV LV UHIHUUHG WR DV

$ (QYLURQPHQWDO DXGLWLQJ % )LQDQFLDO DXGLWLQJ & &RPSOLDQFH DXGLWLQJ ' 2SHUDWLRQDO DXGLWLQJ  7KH DFFRXQWLQJ DXGLWLQJ DQG LQYHVWLJDWLQJ DJHQF\ RI WKH 86 &RQJUHVV WKDW LV KHDGHG E\ WKH 86 &RPSWUROOHU *HQHUDO LV NQRZQ DV

$ 7KH )HGHUDO %XUHDX RI ,QYHVWLJDWLRQ )%,  % 7KH 86 *HQHUDO $FFRXQWDELOLW\ 2IILFH *$2  & 7KH ,QWHUQDO 5HYHQXH 6HUYLFH ,56  ' 7KH 8QLWHG 6WDWHV /HJLVODWLYH $XGLWRUV 86/$ 

 :KLFK RI WKH IROORZLQJ ZRXOG EH FRQVLGHUHG DQ DVVXUDQFH HQJDJHPHQW"

$ *LYLQJ DQ RSLQLRQ RQ D SUL]H SURPRWHU V FODLPV DERXW WKH DPRXQW RI VZHHSVWDNHV SUL]HV DZDUGHG LQ WKH SDVW % *LYLQJ DQ RSLQLRQ RQ WKH FRQIRUPLW\ RI WKH ILQDQFLDO VWDWHPHQWV RI D XQLYHUVLW\ ZLWK JHQHUDOO\ DFFHSWHG DFFRXQWLQJ SULQFLSOHV & *LYLQJ DQ RSLQLRQ RQ WKH IDLU SUHVHQWDWLRQ RI D QHZVSDSHU V FLUFXODWLRQ GDWD ' *LYLQJ DVVXUDQFH DERXW WKH DYHUDJH GULYH OHQJWK DFKLHYHG E\ JROIHUV ZLWK D FOLHQW V JROI EDOOV ( $OO RI WKH DERYH  ,W LV DOZD\V D JRRG LGHD IRU DXGLWRUV WR EHJLQ DQ DXGLW ZLWK WKH SURIHVVLRQDO VNHSWLFLVP FKDUDFWHUL]HG E\ WKH DVVXPSWLRQ WKDW

$ $ SRWHQWLDO FRQIOLFW RI LQWHUHVW DOZD\V H[LVWV EHWZHHQ WKH DXGLWRU DQG WKH PDQDJHPHQW RI WKH HQWHUSULVH XQGHU DXGLW % ,Q DXGLWV RI ILQDQFLDO VWDWHPHQWV WKH DXGLWRU DFWV H[FOXVLYHO\ LQ WKH FDSDFLW\ RI DQ DXGLWRU & 7KH SURIHVVLRQDO VWDWXV RI WKH LQGHSHQGHQW DXGLWRU LPSRVHV FRPPHQVXUDWH SURIHVVLRQDO REOLJDWLRQV ' )LQDQFLDO VWDWHPHQWV DQG ILQDQFLDO GDWD DUH YHULILDEOH

 ,Q DQ DWWHVWDWLRQ HQJDJHPHQW D &3$ SUDFWLWLRQHU LV HQJDJHG WR

$ &RPSLOH D FRPSDQ\ V ILQDQFLDO IRUHFDVW EDVHG RQ PDQDJHPHQW V DVVXPSWLRQV ZLWKRXW H[SUHVVLQJ DQ\ IRUP RI DVVXUDQFH % 3UHSDUH D ZULWWHQ UHSRUW FRQWDLQLQJ D FRQFOXVLRQ DERXW WKH UHOLDELOLW\ RI D PDQDJHPHQW DVVHUWLRQ & 3UHSDUH D WD[ UHWXUQ XVLQJ LQIRUPDWLRQ WKH &3$ KDV QRW DXGLWHG RU UHYLHZHG ' *LYH H[SHUW WHVWLPRQ\ LQ FRXUW RQ SDUWLFXODU IDFWV LQ D FRUSRUDWH LQFRPH WD[ FRQWURYHUV\  $ GHWHUPLQDWLRQ RI FRVW VDYLQJV REWDLQHG E\ RXWVRXUFLQJ FDIHWHULD VHUYLFHV LV PRVW OLNHO\ WR EH DQ REMHFWLYH RI

$ (QYLURQPHQWDO DXGLWLQJ % )LQDQFLDO DXGLWLQJ & &RPSOLDQFH DXGLWLQJ ' 2SHUDWLRQDO DXGLWLQJ

 7KH SULPDU\ GLIIHUHQFH EHWZHHQ RSHUDWLRQDO DXGLWLQJ DQG ILQDQFLDO DXGLWLQJ LV WKDW LQ RSHUDWLRQDO DXGLWLQJ

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

 %DQNHUV ZKR DUH SURFHVVLQJ ORDQ DSSOLFDWLRQV IURP FRPSDQLHV VHHNLQJ ODUJH ORDQV ZLOO SUREDEO\ DVN IRU ILQDQFLDO VWDWHPHQWV DXGLWHG E\ DQ LQGHSHQGHQW &3$ EHFDXVH

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

$ %RRNNHHSLQJ VHUYLFHV % ,QWHUQDO DXGLW VHUYLFHV & 9DOXDWLRQ VHUYLFHV ' $OO RI WKH DERYH  ,QGHSHQGHQW DXGLWRUV RI ILQDQFLDO VWDWHPHQWV SHUIRUP DXGLWV WKDW UHGXFH

$ %XVLQHVV ULVNV IDFHG E\ LQYHVWRUV % ,QIRUPDWLRQ ULVN IDFHG E\ LQYHVWRUV & &RPSOH[LW\ RI ILQDQFLDO VWDWHPHQWV ' 7LPHOLQHVV RI ILQDQFLDO VWDWHPHQWV

 7KH SULPDU\ REMHFWLYH RI FRPSOLDQFH DXGLWLQJ LV WR

$ *LYH DQ RSLQLRQ RQ ILQDQFLDO VWDWHPHQWV % 'HYHORS D EDVLV IRU D UHSRUW RQ LQWHUQDO FRQWURO & 3HUIRUP D VWXG\ RI HIIHFWLYH DQG HIILFLHQW XVH RI UHVRXUFHV ' 'HWHUPLQH ZKHWKHU DXGLWHH SHUVRQQHO DUH IROORZLQJ ODZV UXOHV UHJXODWLRQV DQG SROLFLHV  :KDW UHTXLUHPHQWV DUH XVXDOO\ QHFHVVDU\ WR EHFRPH OLFHQVHG DV D FHUWLILHG SXEOLF DFFRXQWDQW"

$ 6XFFHVVIXO FRPSOHWLRQ RI WKH 8QLIRUP &3$ ([DPLQDWLRQ % ([SHULHQFH LQ WKH DFFRXQWLQJ ILHOG & (GXFDWLRQ ' $OO RI WKH DERYH  7KH RUJDQL]DWLRQ SULPDULO\ UHVSRQVLEOH IRU HQVXULQJ WKDW SXEOLF RIILFLDOV DUH XVLQJ SXEOLF IXQGV HIILFLHQWO\ HFRQRPLFDOO\ DQG HIIHFWLYHO\ LV WKH

$ *RYHUQPHQWDO ,QWHUQDO $XGLW $JHQF\ *,$$  % &HQWUDO LQWHUQDO DXGLWRUV &,$  & 6HFXULWLHV DQG ([FKDQJH &RPPLVVLRQ 6(&  ' *RYHUQPHQW $FFRXQWDELOLW\ 2IILFH *$2 

 3HUIRUPDQFH DXGLWV XVXDOO\ LQFOXGH

$ )LQDQFLDO DXGLWV % (FRQRP\ DQG HIILFLHQF\ DXGLWV & &RPSOLDQFH DXGLWV ' 3URJUDP DXGLWV  7KH REMHFWLYH LQ DQ DXGLWRU V UHYLHZ RI FUHGLW UDWLQJV RI D FOLHQW V FXVWRPHUV LV WR REWDLQ HYLGHQFH UHODWHG WR PDQDJHPHQW V ILQDQFLDO VWDWHPHQW DVVHUWLRQ DERXW

$ &RPSOHWHQHVV % ([LVWHQFH & 9DOXDWLRQ DQG DOORFDWLRQ ' 5LJKWV DQG REOLJDWLRQV ( 2FFXUUHQFH

 -RQHV &3$ LV SODQQLQJ WKH DXGLW RI 5KRQGD V &RPSDQ\ 5KRQGD YHUEDOO\ DVVHUWV WR -RQHV WKDW DOO H[SHQVHV IRU WKH \HDU KDYH EHHQ UHFRUGHG LQ WKH DFFRXQWV 5KRQGD V UHSUHVHQWDWLRQ LQ WKLV UHJDUG

$ ,V VXIILFLHQW HYLGHQFH IRU -RQHV WR FRQFOXGH WKDW WKH FRPSOHWHQHVV DVVHUWLRQ LV VXSSRUWHG IRU H[SHQVHV % &DQ HQDEOH -RQHV WR PLQLPL]H WKH ZRUN RQ WKH JDWKHULQJ RI HYLGHQFH WR VXSSRUW 5KRQGD V FRPSOHWHQHVV DVVHUWLRQ & 6KRXOG EH GLVUHJDUGHG EHFDXVH LW LV QRW LQ ZULWLQJ ' ,V QRW FRQVLGHUHG D VXIILFLHQW EDVLV IRU -RQHV WR FRQFOXGH WKDW DOO H[SHQVHV KDYH EHHQ UHFRUGHG  7KH ULVN WR LQYHVWRUV WKDW D FRPSDQ\ V ILQDQFLDO VWDWHPHQWV PD\ EH PDWHULDOO\ PLVOHDGLQJ LV FDOOHG

$ &OLHQW DFFHSWDQFH ULVN % ,QIRUPDWLRQ ULVN & 0RUDO KD]DUG ' %XVLQHVV ULVN

 :KHQ DXGLWLQJ PHUFKDQGLVH LQYHQWRU\ DW \HDUHQG WKH DXGLWRU SHUIRUPV DXGLW SURFHGXUHV WR HQVXUH WKDW DOO JRRGV SXUFKDVHG EHIRUH \HDUHQG DUH UHFHLYHG EHIRUH WKH SK\VLFDO LQYHQWRU\ FRXQW 7KLV DXGLW SURFHGXUH SURYLGHV DVVXUDQFH DERXW ZKLFK PDQDJHPHQW DVVHUWLRQ"

$ &XWRII % ([LVWHQFH & 9DOXDWLRQ DQG DOORFDWLRQ ' 5LJKWV DQG REOLJDWLRQV ( 2FFXUUHQFH  :KHQ DXGLWLQJ PHUFKDQGLVH LQYHQWRU\ DW \HDUHQG WKH DXGLWRU SHUIRUPV DXGLW SURFHGXUHV WR REWDLQ HYLGHQFH WKDW QR JRRGV KHOG RQ FRQVLJQPHQW DUH LQFOXGHG LQ WKH FOLHQW V HQGLQJ LQYHQWRU\ EDODQFH 7KLV DXGLW SURFHGXUH SURYLGHV DVVXUDQFH DERXW ZKLFK PDQDJHPHQW DVVHUWLRQ"

$ &RPSOHWHQHVV % ([LVWHQFH & 9DOXDWLRQ DQG DOORFDWLRQ ' 5LJKWV DQG REOLJDWLRQV ( 2FFXUUHQFH

 :KHQ DQ DXGLWRU UHYLHZV DGGLWLRQV WR WKH HTXLSPHQW IL[HG DVVHW DFFRXQW WR PDNH VXUH WKDW UHSDLU DQG PDLQWHQDQFH H[SHQVHV DUH QRW XQGHUVWDWHG VKH ZDQWV WR REWDLQ HYLGHQFH DV WR PDQDJHPHQW V DVVHUWLRQ UHJDUGLQJ

$ &RPSOHWHQHVV % ([LVWHQFH & 9DOXDWLRQ DQG DOORFDWLRQ ' 5LJKWV DQG REOLJDWLRQV ( 2FFXUUHQFH  7KH 6DUEDQHV2[OH\ $FW RI  JHQHUDOO\ SURKLELWV SURIHVVLRQDO VHUYLFH ILUPV IURP

$ $FWLQJ LQ D PDQDJHULDO GHFLVLRQPDNLQJ UROH IRU DQ DXGLW FOLHQW % $XGLWLQJ WKH ILUP V RZQ ZRUN RQ DQ DXGLW FOLHQW & 3URYLGLQJ WD[ FRQVXOWLQJ WR DQ DXGLW FOLHQW ZLWKRXW DXGLW FRPPLWWHH DSSURYDO ' $OO RI WKH DERYH

 6XEVWDQWLDO HTXLYDOHQF\ UHIHUV WR

$ $Q DXGLWRU V WHQGHQF\ QRW WR EHOLHYH PDQDJHPHQW V DVVHUWLRQV ZLWKRXW VXIILFLHQW FRUURERUDWLRQ % 3URYLGLQJ FRQVXOWLQJ ZRUN IRU DQRWKHU ILUP V DXGLW FOLHQW LQ H[FKDQJH IRU WKH RWKHU ILUP V SURYLGLQJ FRQVXOWLQJ VHUYLFHV WR RQH RI \RXU FOLHQWV & 7KH ZDLYLQJ RI FHUWLILFDWLRQ H[DP SDUWV IRU DQ LQGLYLGXDO KROGLQJ DQ HTXLYDOHQW FHUWLILFDWLRQ IURP DQRWKHU SURIHVVLRQDO RUJDQL]DWLRQ ' 3HUPLWWLQJ D &3$ WR SUDFWLFH LQ DQRWKHU VWDWH ZLWKRXW KDYLQJ WR REWDLQ D OLFHQVH LQ WKDW VWDWH  :KLFK RI WKH IROORZLQJ EHVW GHVFULEHV WKH UHODWLRQVKLS EHWZHHQ DXGLWLQJ DQG DWWHVWDWLRQ HQJDJHPHQWV"

$ $XGLWLQJ LV D VXEVHW RI DWWHVWDWLRQ HQJDJHPHQWV WKDW IRFXVHV RQ WKH FHUWLILFDWLRQ RI ILQDQFLDO VWDWHPHQWV % $WWHVWDWLRQ LV D VXEVHW RI DXGLWLQJ WKDW SURYLGHV ORZHU DVVXUDQFH WKDQ WKDW SURYLGHG E\ DQ DXGLW HQJDJHPHQW & $XGLWLQJ LV D VXEVHW RI DWWHVWDWLRQ HQJDJHPHQWV WKDW IRFXVHV RQ SURYLGLQJ FOLHQWV ZLWK DGYLFH DQG GHFLVLRQ VXSSRUW ' $WWHVWDWLRQ LV D VXEVHW RI DXGLWLQJ WKDW LPSURYHV WKH TXDOLW\ RI LQIRUPDWLRQ RU LWV FRQWH[W IRU GHFLVLRQ PDNHUV

 :KLFK RI WKH IROORZLQJ -089 GHVFULEHV WKH IRFXV RI WKH IROORZLQJ HQJDJHPHQWV"

$ 2SWLRQ $ % 2SWLRQ % & 2SWLRQ & ' 2SWLRQ '  :KLFK RI WKH IROORZLQJ LV D UHDVRQ WR REWDLQ SURIHVVLRQDO FHUWLILFDWLRQ"

$ &HUWLILFDWLRQ SURYLGHV FUHGLELOLW\ WKDW DQ LQGLYLGXDO LV WHFKQLFDOO\ FRPSHWHQW % &HUWLILFDWLRQ RIWHQ LV D QHFHVVDU\ FRQGLWLRQ IRU DGYDQFHPHQW DQG SURPRWLRQ ZLWKLQ D SURIHVVLRQDO VHUYLFHV ILUP & 2EWDLQLQJ FHUWLILFDWLRQ LV RIWHQ PRQHWDULO\ UHZDUGHG E\ DQ LQGLYLGXDO V HPSOR\HU ' $OO RI WKH DERYH

 :KLFK RI WKH IROORZLQJ LV QRW DQ XQGHUO\LQJ FRQGLWLRQ WKDW FUHDWHV GHPDQG E\ XVHUV IRU UHOLDEOH ILQDQFLDO LQIRUPDWLRQ"

$ 5HPRWHQHVV % 9DJXHQHVV & &RQVHTXHQFHV ' &RPSOH[LW\  $FFRUGLQJ WR WKH $PHULFDQ $FFRXQWLQJ $VVRFLDWLRQ $$$ WKH GHILQLWLRQ RI DXGLWLQJ LQFOXGHV WKH IROORZLQJ VWDWHPHQW

$ $Q LQGHSHQGHQW DSSUDLVDO IXQFWLRQ HVWDEOLVKHG ZLWKLQ DQ RUJDQL]DWLRQ WR H[DPLQH DQG HYDOXDWH LWV DFWLYLWLHV % $ SURFHVV RI UHGXFLQJ WR D VRFLDOO\ DFFHSWDEOH OHYHO WKH LQIRUPDWLRQ ULVN WR XVHUV RI ILQDQFLDO VWDWHPHQWV & $Q H[SUHVVLRQ RI RSLQLRQ RQ WKH IDLUQHVV RI ILQDQFLDO VWDWHPHQWV ' $ V\VWHPDWLF SURFHVV RI REMHFWLYHO\ REWDLQLQJ DQG HYDOXDWLQJ HYLGHQFH UHJDUGLQJ DVVHUWLRQV DERXW HFRQRPLF DFWLRQV DQG HYHQWV

 :KLFK RI WKH IROORZLQJ LV QRW D PDMRU HOHPHQW RI DVVXUDQFH VHUYLFHV"

$ ,QGHSHQGHQFH % ,PSURYLQJ WKH TXDOLW\ RI LQIRUPDWLRQ & ,PSURYLQJ SURILWDELOLW\ RI WKH FOLHQW ' ,PSURYLQJ WKH FRQWH[W RI LQIRUPDWLRQ  7KH JRDO RI RSHUDWLRQDO DXGLWLQJ LV WR

$ +HOS PDQDJHUV GLVFKDUJH WKHLU PDQDJHPHQW UHVSRQVLELOLWLHV DQG LPSURYH SURILWDELOLW\ % (YDOXDWH FRPSOLDQFH ZLWK VSHFLILF ODZV DQG UHJXODWLRQV & 5HGXFH WR D VRFLDOO\ DFFHSWDEOH OHYHO WKH LQIRUPDWLRQ ULVN WR XVHUV RI ILQDQFLDO VWDWHPHQWV ' ([SUHVV DQ RSLQLRQ RQ WKH IDLUQHVV RI ILQDQFLDO VWDWHPHQWV  7KH 3&$2% DVVHUWLRQV PDGH E\ PDQDJHPHQW LQ ILQDQFLDO VWDWHPHQWV GR QRW LQFOXGH

$ ([LVWHQFH % &RPSOLDQFH & &RPSOHWHQHVV ' 3UHVHQWDWLRQ

 :KLFK RI WKH IROORZLQJ LV QRW D UROH RI WKH $,&3$"

$ 5HILQH WKH ERG\ RI SURIHVVLRQDO NQRZOHGJH UHJXODWH PHPEHUVKLS DGPLVVLRQV DQG SROLFH FRQGXFW RI PHPEHUV % 3UHSDUH DQG JUDGH WKH XQLIRUP &3$ H[DPLQDWLRQ & /LFHQVH WKH SUDFWLFHV RI &3$V LQ WKH YDULRXV VWDWHV ' ,VVXH SXEOLF VWDWHPHQWV RQ SUDFWLFH VWDQGDUGV  7KH $6% WUDQVDFWLRQ REMHFWLYH WKDW UHTXLUHV WKH DXGLWRU WR HVWDEOLVK HYLGHQFH WKDW DOO WUDQVDFWLRQV DQG DFFRXQWV WKDW VKRXOG EH SUHVHQWHG LQ WKH ILQDQFLDO VWDWHPHQWV DUH LQFOXGHG LV"

$ &RPSOHWHQHVV % ([LVWHQFH RU RFFXUUHQFH & 5LJKWV DQG REOLJDWLRQV ' 9DOXDWLRQ RU DOORFDWLRQ  :KLFK RI WKH IROORZLQJ LV DQ H[DPSOH RI D UHJXODWRU\ DXGLWRU"

$ ,QWHUQDO DXGLWRUV % %LJ  DXGLWRUV & 86 ,QWHUQDO 5HYHQXH 6HUYLFH DXGLWRUV ' 2SHUDWLRQDO DXGLWRUV

 7KH GHILQLWLRQ RI SHUIRUPDQFH DXGLWV GRHV QRW LQFOXGH

$ (FRQRP\ DXGLWV % (IILFLHQF\ DXGLWV & )LQDQFLDO DXGLWV ' 3URJUDP DXGLWV  &3$ FHUWLILFDWHV DQG OLFHQVHV WR SUDFWLFH DUH LVVXHG E\ WKH

$ $,&3$ % 6WDWHV RU WHUULWRULHV & $,&3$ ([DPLQDWLRQV 'LYLVLRQ ' *$2

)LOO LQ WKH %ODQN 4XHVWLRQV

 7KH ULVN WKDW WKH LQIRUPDWLRQ GLVVHPLQDWHG E\ D FRPSDQ\ ZLOO EH PDWHULDOO\ IDOVH RU PLVOHDGLQJ LV FDOOHG BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB

 7KH DXGLW SURFHVV LQYROYHV REWDLQLQJ DQG HYDOXDWLQJ BBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB  7KH SXUSRVH RI REWDLQLQJ DQG HYDOXDWLQJ HYLGHQFH LV WR DVFHUWDLQ WKH GHJUHH RI FRUUHVSRQGHQFH EHWZHHQ WKH BBBBBBBBBBBBBBBBBBBBBBBBBBBBB DQG BBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB  7KH REMHFWLYH RI WKH RUGLQDU\ H[DPLQDWLRQ RI ILQDQFLDO VWDWHPHQWV E\ WKH LQGHSHQGHQW DXGLWRU LV WKH H[SUHVVLRQ RI D Q BBBBBBBBBBBBBBBBBBBBBBBBBBBBB RQ WKH BBBBBBBBBBBBBBBBBBBBBBBBBBBBB RI ILQDQFLDO VWDWHPHQWV BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB  BBBBBBBBBBBBBBBBBBBBBBBBBBBBB UHIHUV WR UHFRJQL]LQJ DVVHWV DQG OLDELOLWLHV DV RI SURSHU GDWH DQG DFFRXQWLQJ IRU UHYHQXH H[SHQVH DQG RWKHU WUDQVDFWLRQV LQ WKH SURSHU SHULRG BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB

 7KH $6% EDODQFH REMHFWLYH UHODWHG WR BBBBBBBBBBBBBBBBBBBBBBBBBBBBB LV WR HVWDEOLVK ZLWK HYLGHQFH WKDW DOO WUDQVDFWLRQV DQG DFFRXQWV WKDW VKRXOG EH SUHVHQWHG LQ WKH ILQDQFLDO VWDWHPHQWV DUH LQFOXGHG BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB  7KH $6% WUDQVDFWLRQ REMHFWLYH UHODWHG WR BBBBBBBBBBBBBBBBBBBBBBBBBBBBB LV WR GHWHUPLQH ZKHWKHU SURSHU YDOXHV KDYH EHHQ DVVLJQHG WR DOO ILQDQFLDO WUDQVDFWLRQV BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB  BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB LV WKH VWXG\ RI EXVLQHVV RSHUDWLRQV IRU WKH SXUSRVH RI PDNLQJ UHFRPPHQGDWLRQV WR PDQDJHUV RQ KRZ WR LPSURYH SURILWDELOLW\ BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 7KH BBBBBBBBBBBBBBBBBBBBBBBBBBBBB LV WKH DFFRXQWLQJ DXGLWLQJ DQG LQYHVWLJDWLQJ DJHQF\ RI WKH 86 &RQJUHVV BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBB JRYHUQPHQWDO DXGLWLQJ JRHV EH\RQG DQ DXGLW RI ILQDQFLDO UHSRUWV DQG FRPSOLDQFH ZLWK ODZV DQG UHJXODWLRQV WR LQFOXGH BBBBBBBBBBBBBBBBBBBBBBBBBBBBB DQG BBBBBBBBBBBBBBBBBBBBBBBBBBBBB DQG BBBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBB DXGLWV BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB

7KH IRXU EDVLF UHTXLUHPHQWV IRU EHFRPLQJ D &3$ DUH BBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBB DQG BBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB LV DQ DXGLWRU V WHQGHQF\ QRW WR EHOLHYH PDQDJHPHQW DVVHUWLRQV BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB $ BBBBBBBBBBBBBBBBBBBBBBBBBBBBB FRQVLVWV RI ZULWLQJ WKH ILQDQFLDO VWDWHPHQWV IURP D FOLHQW V ERRNV DQG UHFRUGV BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 7KURXJK WKH SURFHVV RI BBBBBBBBBBBBBBBBBBBBBBBBBBBB DIWHU EHFRPLQJ D &3$ OLFHQVHG LQ RQH VWDWH D SHUVRQ FDQ REWDLQ D &3$ FHUWLILFDWH DQG OLFHQVH LQ DQRWKHU VWDWH BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB ([DPSOHV RI BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB DUH  HFRQRP\ DQG HIILFLHQF\ DXGLWV DQG  SURJUDP DXGLWV BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB

6KRUW $QVZHU 4XHVWLRQV

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

(VVD\ 4XHVWLRQV

:KDW DUH WKH GLIIHUHQFHV EHWZHHQ WKH $PHULFDQ $FFRXQWLQJ $VVRFLDWLRQ DQG $,&3$ GHILQLWLRQV DQG REMHFWLYHV RI DXGLWLQJ"

:KDW LV RSHUDWLRQDO DXGLWLQJ DQG E\ ZKRP LV LW SHUIRUPHG"

:KDW LV LQIRUPDWLRQ ULVN" :KDW LV EXVLQHVV ULVN"

:KDW DUH WKH IRXU EDVLF UHTXLUHPHQWV IRU EHFRPLQJ D &3$"

'HILQH DVVXUDQFH DWWHVWDWLRQ DQG DXGLWLQJ LQ WKH FRQWH[W RI OHQGLQJ FUHGLELOLW\

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

"&"(  !2!E "( &! !'  9"D C 9&" "(  9 ( " " !@ % ! 2!!@ B$ @ !! "  9!@ !" 9 % !&! ( !@ A "@  98!  $ "&"(  !(! 6 576 5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      



7UXH  )DOVH 4XHVWLRQV

5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 758( DFFRXQWDQWV )LQDQFLDO GHFLVLRQ PDNHUV GHPDQG UHOLDEOH LQIRUPDWLRQ WKDW LV SURYLGHG E\

&KDSWHU  $XGLWLQJ DQG $VVXUDQFH 6HUYLFHV $QVZHU .H\

"&"(  !2!E "( &! !'  9"D C 9&" "(  9 ( " " !@ % ! 2!!@ B$ @ !! "  9!@ !" 9 % !&! ( !@ A "@  98!  $ "&"(  !(! 6 576 5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      

!4 ! !  F"! F %  9"D C!4 ! ! 9 !  B"! B % !&! (  "  !(! )576 5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      





5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 758( UHPRWHQHVV WLPHOLQHVV DQG FRQVHTXHQFHV )RXU FRQGLWLRQV WKDW FUHDWH GHPDQG IRU UHOLDEOH LQIRUPDWLRQ DUH FRPSOH[LW\ 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH )$/6( IXQGV )LQDQFLDO GHFLVLRQ PDNHUV REWDLQ WKHLU DFFRXQWLQJ LQIRUPDWLRQ IURP OHQGHUV RI

!4 ! !  F"! F %  9"D C!4 ! ! 9 !  B"! B % !&! (  "  !(! )576 5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      

!4 ! !  F"! F %  9"D C!4 ! ! 9 !  B"! B % !&! (  "  !(! )576 5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      





5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH )$/6( ,QGHSHQGHQW DXGLWRUV DUH HPSOR\HHV RI WKH FOLHQW 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 7KH OHQGLQJ RI FUHGLELOLW\ WR ILQDQFLDO LQIRUPDWLRQ LV NQRZQ DV FHUWLILFDWLRQ )$/6(

"! !&!  H !&! %#  9"D C !@ (" " 9 "( !@  &!@ ! " @A  98!  !&! ( !@ (" !"  B"!! 9 B!&!!& B" %"! !@  "2 !$& !&! %& @ "! !@ !( !  !2! G 576 5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      

!4 ! !  F"! F %  9"D C!4 ! ! 9 !  B"! B % !&! (  "  !(! )576 5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      





5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH (YLGHQFH FRQVLVWV RI DVVHUWLRQV DERXW HFRQRPLF DFWLRQV DQG HYHQWV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH )$/6( HYDOXDWLQJ HYLGHQFH $VVXUDQFH VHUYLFH LV WKH V\VWHPDWLF SURFHVV RI REMHFWLYHO\ REWDLQLQJ DQG )$/6(

!4 ! !   F"! F %  9"D C!4 ! ! 9 !  B"! B % !&! (  "  !(! )576 5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      

"! !&!  H !&! %#  9"D C !@ (" " 9 "( !@  &!@ ! " @A  98!  !&! ( !@ (" !"  B"!! 9 B!&!!& B" %"! !@  "2 !$& !&! %& @ "! !@ !( !  !2! G 576 5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      





758(

5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH )$/6( WKH $$$ GHILQLWLRQ RI DXGLWLQJ 7KH $,&3$ 6WDWHPHQW RQ $XGLWLQJ 6WDQGDUGV GHILQHV DXGLWLQJ PRUH EURDGO\ WKDQ 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH FRUUHVSRQGHQFH EHWZHHQ WKH DVVHUWLRQV DQG HVWDEOLVKHG FULWHULD 7KH SXUSRVH RI REWDLQLQJ DQG HYDOXDWLQJ HYLGHQFH LV WR DVFHUWDLQ WKH GHJUHH RI

"! !&!  H !&! %#  9"D C !@ (" " 9 "( !@  &!@ ! " @A  98!  !&! ( !@ (" !"  B"!! 9 B!&!!& B" %"! !@  "2 !$& !&! %& @ "! !@ !( !  !2! G 576 5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      

"! !&!  H !&! %#  9"D C !@ (" " 9 "( !@  &!@ ! " @A  98!  !&! ( !@ (" !"  B"!! 9 B!&!!& B" %"! !@  "2 !$& !&! %& @ "! !@ !( !  !2! G 576 5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      





)$/6(

5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 758( UHYHQXHV DQG H[SHQVHV ZKHWKHU SURSHU YDOXHV KDYH EHHQ DVVLJQHG WR DVVHWV OLDELOLWLHV HTXLWLHV 7KH $6% EDODQFH DXGLW REMHFWLYH UHODWHG WR YDOXDWLRQ RU DFFXUDF\ LV WR GHWHUPLQH 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH HYLGHQFH WKDW DVVHWV OLDELOLWLHV DQG HTXLWLHV DFWXDOO\ H[LVW 7KH 3&$2% DXGLW REMHFWLYH UHODWHG WR WKH FRPSOHWHQHVV DVVHUWLRQ LV WR HVWDEOLVK

"!( " "&"(    !&! % %Q (" P !@1  9"D C %  "! 9"  B! B!&!4 " %  "    !@ !2! I 576 5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      

"!( " "&"(    !&! % %Q (" P !@1  9"D C %  "! 9"  B! B!&!4 " %  "    !@ !2! I 576 5 !4 ! 321 %!0 & !# )  ((  !' &"" %$# "!      





5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH )$/6( ,QWHUQDO DXGLWRUV SHUIRUP RQO\ RSHUDWLRQDO DXGLWV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 758( HIIHFWLYHO\ SHUIRUP WKHLU REOLJDWLRQV 7KH REMHFWLYH RI LQWHUQDO DXGLWLQJ LV WR DVVLVW PHPEHUV RI DQ RUJDQL]DWLRQ WR

"!( " "&"(    !&! % %Q (" P !@1  9"D C %  "! 9"  B! B!&!4 " %  "    !@ !2! I 576 5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      

"!( " "&"(    !&! % %Q (" P !@1  9"D C %  "! 9"  B! B!&!4 " %  "    !@ !2! I 576 5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      





758(

5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 758( SURJUDP UHVXOWV DXGLWV ([SDQGHG VFRSH JRYHUQPHQWDO DXGLWLQJ LQFOXGHV HFRQRP\ DQG HIILFLHQF\ DQG 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH *RYHUQPHQW DXGLWRUV SHUIRUP ERWK ILQDQFLDO DQG SHUIRUPDQFH DXGLWV

& 9!$ "!("  9"D C!@ !$   98!  & 9!$ "!(" 9 !( ! V576 5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      

U!(! !T  "!(" !&"!  9"D C "!(" 9 "&"(  !(! %&"!2 "( !&! S! !@  98!  0 R 576 5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      





5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 3URIHVVLRQDO VNHSWLFLVP LV DQ DXGLWRU V WHQGHQF\ QRW WR EHOLHYH DQ\RQH 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH )$/6( 7KH $,&3$ OLFHQVHV &3$V WR SUDFWLFH LQ WKH 8QLWHG 6WDWHV )$/6(

& 9!$ "!("  9"D C!@ !$   98!  & 9!$ "!(" 9 !( ! V576 5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      

!4 ! !  F"! F %  9"D C!4 ! ! 9 !  B"! B % !&! (  "  !(! )576 5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      





5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH )$/6( PDQDJHPHQW LV GLVKRQHVW DQG VKRXOG QRW EH WUXVWHG 7KH FRQFHSW SURIHVVLRQDO VNHSWLFLVP UHTXLUHV WKDW DXGLWRUV DVVXPH 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 758( TXDOLW\ RI LQIRUPDWLRQ RU LWV FRQWH[W IRU GHFLVLRQ PDNHUV $VVXUDQFH VHUYLFHV DUH LQGHSHQGHQW SURIHVVLRQDO VHUYLFHV WKDW LPSURYH WKH



)RU LQGHSHQGHQW DXGLWRUV RI ILQDQFLDO VWDWHPHQWV LQ WKH 8QLWHG 6WDWHV HVWDEOLVKHG FULWHULD ODUJHO\ FRQVLVW RI WKH JHQHUDOO\ DFFHSWHG DFFRXQWLQJ SULQFLSOHV *$$3  758( 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

0XOWLSOH &KRLFH 4XHVWLRQV



7KH DXGLW REMHFWLYH RI SUHVHQWLQJ DOO WUDQVDFWLRQV DQG DFFRXQWV LQ WKH ILQDQFLDO VWDWHPHQWV DUH LQ IDFW LQFOXGHG LV UHODWHG WR ZKLFK RI WKH 3&$2% DVVHUWLRQV"

$ ([LVWHQFH % 5LJKWV DQG REOLJDWLRQV & &RPSOHWHQHVV ' 9DOXDWLRQ

%!0  

!4 ! !  F"! F %  9"D C!4 ! ! 9 !  B"! B % !&! (  "  !(! )576 5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      

"!  9"D  %1 ! " C !@ (" " 9 "( !@  &!@ ! " @A  98!  !&! ( !@ (" !"  B"!! 9 B!&!!& B" %"! !@  "2 !$& !&! %& @ "! !@ !( !  !2! G 576 5 !4 ! 321 %!0 W G (( !2&!&!E &"" @!!E   %!0  

"! 1   9"D  %1 ! " C !@ (" " 9 "( !@  &!@ ! " @A  98!  !&! ( !@ (" !"  B"!! 9 B!&!!& B" %"! !@  "2 !$& !&! %& @ "! !@ !( !  !2! G 576 5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E  



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

SULQFLSOHV DQG UHDOLW\ ZKHWKHU PDQDJHPHQW V DVVHUWLRQV FRQIRUP WR JHQHUDOO\ DFFHSWHG DFFRXQWLQJ



:KLFK RI WKH IROORZLQJ LV DQ XQGHUO\LQJ FRQGLWLRQ WKDW LQ SDUW FUHDWHV WKH GHPDQG E\ XVHUV IRU UHOLDEOH LQIRUPDWLRQ"

$ (FRQRPLF WUDQVDFWLRQV DUH QXPHURXV DQG FRPSOH[ % 'HFLVLRQV DUH WLPH VHQVLWLYH & 8VHUV DUH VHSDUDWHG IURP DFFRXQWLQJ UHFRUGV E\ GLVWDQFH DQG WLPH ' )LQDQFLDO GHFLVLRQV DUH LPSRUWDQW WR LQYHVWRUV DQG XVHUV ( $OO RI WKH DERYH
 %1 ! " C 9&" "(  9 ( " " !@ % ! 2!!@ B$ @ !! "  9!@ !" 9 % !&! ( !@ A "@  98!  $ "&"(  !(! 6 576 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E      



:KLFK RI WKH IROORZLQJ LV QRW LQFOXGHG LQ 7KH $PHULFDQ $FFRXQWLQJ $VVRFLDWLRQ $$$ GHILQLWLRQ RI DXGLWLQJ"

$ 3RWHQWLDO FRQIOLFW RI LQWHUHVW % 6\VWHPDWLF SURFHVV & $VVHUWLRQV DERXW HFRQRPLF DFWLRQV ' (VWDEOLVKHG FULWHULD
%!0  

"&"( !2!E  9"D

$E "&"(  9"D  %1 ! " C 9&" "(  9 ( " " !@ % ! 2!!@ B$ @ !! "  9!@ !" 9 % !&! ( !@ A "@  98!  $ "&"(  !(! 6 576 5 !4 ! 321 %!0 Q 6 (( !2&!&!E &""  $E    %!0  

% (" "( !  9"D  %1 ! " C!4 ! ! 9 !  B"! B % !&! (  "  !(! )576 5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E  



' 5LVN DVVHVVPHQW & &OLHQW ULVN % ,QIRUPDWLRQ ULVN $ %XVLQHVV ULVN EH PDWHULDOO\ IDOVH DQG PLVOHDGLQJ" :KDW LV WKH WHUP XVHG WR LGHQWLI\ WKH ULVN WKDW WKH FOLHQW V ILQDQFLDO VWDWHPHQWV PD\



:KLFK RI WKH IROORZLQJ LV QRW D UHFRPPHQGDWLRQ XVXDOO\ PDGH IROORZLQJ WKH FRPSOHWLRQ RI DQ RSHUDWLRQDO DXGLW"

$ (FRQRPLF DQG HIILFLHQW XVH RI UHVRXUFHV % (IIHFWLYH DFKLHYHPHQW RI EXVLQHVV REMHFWLYHV & $WWHVWLQJ WR WKH IDLUQHVV RI WKH ILQDQFLDO VWDWHPHQWV ' &RPSOLDQFH ZLWK FRPSDQ\ SROLFLHV
% " ! 91  9"D  %1 ! " C %  "! 9"  B! B!&!4 " %  "    !@ !2! I 576 5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" %" 9!E   %!0  "&&"



,Q RUGHU WR EH FRQVLGHUHG DV H[WHUQDO DXGLWRUV ZLWK UHVSHFW WR JRYHUQPHQW DJHQFLHV *$2 DXGLWRUV PXVW EH

$ 2UJDQL]DWLRQDOO\ LQGHSHQGHQW % (PSRZHUHG DV WKH DFFRXQWLQJ DQG DXGLWLQJ DJHQF\ E\ WKH 86 &RQJUHVV & )XQGHG E\ WKH IHGHUDO JRYHUQPHQW ' *XLGHG E\ VWDQGDUGV VLPLODU WR *$$6
& !# ) ((  !2&!&!E &"" @!!E   %!0  @Q

%  9"D  %1 ! " C!4 ! ! 9 !  B"! B % !&! (  "  !(! )576 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" %" 9!E   %!0  

% !&!4 "T  9"D  %1 ! " C %  "! 9"  B! B!&!4 " %  "   !@ !2! I 576 5 !4 ! 321 %!0



' $VVXUDQFH RI WKH FRQVLVWHQW DSSOLFDWLRQ RI FRUUHFW DFFRXQWLQJ SURFHGXUHV & 'HWHUPLQDWLRQ RI ZKHWKHU WKH FOLHQW V ILQDQFLDO VWDWHPHQW DVVHUWLRQV DUH IDLUO\ % ([DPLQDWLRQ RI LQGLYLGXDO WUDQVDFWLRQV WR FHUWLI\ WKHLU YDOLGLW\ $ 'HWHFWLRQ RI IUDXG :KLFK RI WKH IROORZLQJ LV WKH HVVHQWLDO SXUSRVH RI WKH DXGLW IXQFWLRQ" VWDWHG



7KH DXGLW REMHFWLYH WKDW DOO WKH WUDQVDFWLRQV DQG DFFRXQWV SUHVHQWHG LQ WKH ILQDQFLDO VWDWHPHQWV UHSUHVHQW UHDO DVVHWV OLDELOLWLHV UHYHQXHV DQG H[SHQVHV LV UHODWHG PRVW FORVHO\ WR ZKLFK RI WKH 3&$2% DVVHUWLRQV"

$ ([LVWHQFH RU RFFXUUHQFH % 5LJKWV DQG REOLJDWLRQV & &RPSOHWHQHVV ' 3UHVHQWDWLRQ DQG GLVFORVXUH
"!  9"D  %1 ! " C !@ (" " 9 "( !@  &!@ ! " @A  98!  !&! ( !@ (" !"  B"!! 9 B!&!!& B" %"! !@  "2 !$& !&! %& @ "! !@ !( !  !2! G 576 5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  



7KH DXGLW REMHFWLYH WKDW DOO WUDQVDFWLRQV DUH UHFRUGHG LQ WKH SURSHU SHULRG LV UHODWHG PRVW FORVHO\ WR ZKLFK RI WKH $XGLW 6WDQGDUGV %RDUG $6% WUDQVDFWLRQ DVVHUWLRQV"

$ 2FFXUUHQFH % &RPSOHWHQHVV & &XWRII ' $FFXUDF\



"!  9"D  %1 ! " C !@ (" " 9 "( !@  &!@ ! " @A  98!  !&! ( !@ (" !"  B"!! 9 B!&!!& B" %"! !@  "2 !$& !&! %& @ "! !@ !( !  !2! G 576 5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  

"!  9"D  %1 ! " C !@ (" " 9 "( !@  &!@ ! " @A  98!  !&! ( !@ (" !"  B"!! 9 B!&!!& B" %"! !@  "2 !$& !&! %& @ "! !@ !( !  !2! G 576 5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0 



' &ODVVLILFDWLRQ & $FFXUDF\ % &RPSOHWHQHVV $ 2FFXUUHQFH UHODWHG PRVW FORVHO\ WR ZKLFK RQH RI WKH $6% WUDQVDFWLRQ DVVHUWLRQV" 7KH DXGLW REMHFWLYH WKDW DOO WUDQVDFWLRQV DUH UHFRUGHG LQ WKH SURSHU DFFRXQW LV

!2&!&!E &"" @!!E   %!0  

"!  9"D  %1 ! " C !@ (" " 9 "( !@  &!@ ! " @A  98!  !&! ( !@ (" !"  B"!! 9 B!&!!& B" %"! !@  "2 !$& !&! %& @ "! !@ !( !  !2! G 576 5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  





' 9DOXDWLRQ & &RPSOHWHQHVV % 5LJKWV DQG REOLJDWLRQV $ ([LVWHQFH WKDW DFFRXQW LV UHODWHG PRVW FORVHO\ WR ZKLFK RQH RI WKH $6% EDODQFH DVVHUWLRQV" 7KH DXGLW REMHFWLYH WKDW DOO EDODQFHV LQFOXGH DOO LWHPV WKDW VKRXOG EH UHFRUGHG LQ ' 9DOXDWLRQ & &RPSOHWHQHVV % 5LJKWV DQG REOLJDWLRQV $ ([LVWHQFH PRVW FORVHO\ WR ZKLFK RQH RI WKH $6% EDODQFH DVVHUWLRQV" 7KH DXGLW REMHFWLYH WKDW DOO EDODQFHV LQFOXGH LWHPV RZQHG E\ WKH FOLHQW LV UHODWHG

"!  9"D  %1 ! " C !@ (" " 9 "( !@  &!@ ! " @A  98!  !&! ( !@ (" !"  B"!! 9 B!&!!& B" %"! !@  "2 !$& !&! %& @ "! !@ !( !  !2! G 576 5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  

"!  9"D  %1 ! " C !@ (" " 9 "( !@  &!@ ! " @A  98!  !&! ( !@ (" !"  B"!! 9 B!&!!& B" %"! !@  "2 !$& !&! %& @ "! !@ !( !  !2! G 576 5 !4 ! 321 %!0 Q 6 ((



' 8QGHUVWDQGDELOLW\ & &RPSUHKHQVLELOLW\ % 5LJKWV DQG REOLJDWLRQV $ 2FFXUUHQFH DQG GLVFORVXUH DVVHUWLRQV" ILQDQFLDO VWDWHPHQWV LV UHODWHG PRVW FORVHO\ ZLWK ZKLFK RI WKH $6% SUHVHQWDWLRQ H[SUHVVHG VR WKDW WKH LQIRUPDWLRQ LV HDVLO\ FRQYH\HG WR WKH UHDGHUV RI WKH 7KH DXGLW REMHFWLYH WKDW IRRWQRWHV LQ WKH ILQDQFLDO VWDWHPHQWV VKRXOG EH FOHDU DQG



7KH HQJLQHHULQJ GHSDUWPHQW DW 2PQL &RPSDQ\ EXLOW D SLHFH RI HTXLSPHQW LQ WKH FRPSDQ\ V RZQ VKRS IRU XVH LQ WKH FRPSDQ\ V RSHUDWLRQV 7KH DXGLWRU UHYLHZHG DOO ZRUN RUGHUV WKDW ZHUH FDSLWDOL]HG DV SDUW RI WKH HTXLSPHQW FRVWV :KLFK RI WKH IROORZLQJ LV WKH $6% WUDQVDFWLRQ DVVHUWLRQ PRVW FORVHO\ UHODWHG WR WKH DXGLWRU V WHVWLQJ"

$ 2FFXUUHQFH % &RPSOHWHQHVV & $FFXUDF\ ' &ODVVLILFDWLRQ

"!  9"D  %1 ! " C !@ (" " 9 "( !@  &!@ ! " @A  98!  !&! ( !@ (" !"  B"!! 9 B!&!!& B" %"! !@  "2 !$& !&! %& @ "! !@ !( !  !2! G 576 5 !4 ! 321 %!0 W G (( !' &"" @!!E   %!0  



7KH HQJLQHHULQJ GHSDUWPHQW DW 2PQL &RPSDQ\ EXLOW D SLHFH RI HTXLSPHQW LQ WKH FRPSDQ\ V RZQ VKRS IRU XVH LQ WKH FRPSDQ\ V RSHUDWLRQV :KHQ ORRNLQJ DW WKH HQGLQJ EDODQFH IRU WKH IL[HG DVVHW DFFRXQW WKH DXGLWRU H[DPLQHG DOO ZRUN RUGHUV SXUFKDVHG PDWHULDOV ODERU FRVW UHSRUWV DQG DSSOLHG RYHUKHDG WKDW ZHUH FDSLWDOL]HG DV SDUW RI WKH HTXLSPHQW FRVWV :KLFK RI WKH IROORZLQJ LV WKH $6% EDODQFH DVVHUWLRQ PRVW FORVHO\ UHODWHG WR WKH DXGLWRU V WHVWLQJ"

$ ([LVWHQFH % &RPSOHWHQHVV & 5LJKWV DQG REOLJDWLRQV ' 9DOXDWLRQ

"!  9"D  %1 ! " C !@ (" " 9 "( !@  &!@ ! " @A  98!  !&! ( !@ (" !"  B"!! 9 B!&!!& B" %"! !@  "2 !$& !&! %& @ "! !@ !( !  !2! G 576 5 !4 ! 321 %!0 W G (( !' &"" @!!E   %!0  



:KLFK RI WKH IROORZLQJ EHVW GHVFULEHV WKH SULPDU\ UROH DQG UHVSRQVLELOLW\ RI WKH LQGHSHQGHQW H[WHUQDO DXGLWRU"

$ 3URGXFH D FRPSDQ\ V DQQXDO ILQDQFLDO VWDWHPHQWV DQG QRWHV % ([SUHVV DQ RSLQLRQ RQ WKH IDLUQHVV RI D FRPSDQ\ V DQQXDO ILQDQFLDO VWDWHPHQWV DQG IRRWQRWHV & 3URYLGH EXVLQHVV FRQVXOWLQJ DGYLFH WR DXGLW FOLHQWV ' 2EWDLQ DQ XQGHUVWDQGLQJ RI WKH FOLHQW V LQWHUQDO FRQWURO VWUXFWXUH DQG JLYH PDQDJHPHQW D UHSRUW DERXW FRQWURO SUREOHPV DQG GHILFLHQFLHV
%  9"D  %1 ! " C!4 ! ! 9 !  B"! B % !&! (  "  !(! )576 5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  



:KLFK RI WKH IROORZLQJ EHVW GHVFULEHV WKH PDLQ UHDVRQ WKDW LQGHSHQGHQW DXGLWRUV UHSRUW RQ PDQDJHPHQW V ILQDQFLDO VWDWHPHQWV"

$ 0DQDJHPHQW IUDXG PD\ H[LVW DQG LW LV OLNHO\ WR EH GHWHFWHG E\ LQGHSHQGHQW DXGLWRUV % 7KH PDQDJHPHQW WKDW SUHSDUHV WKH VWDWHPHQWV DQG WKH SHUVRQV ZKR XVH WKH VWDWHPHQWV PD\ KDYH FRQIOLFWLQJ LQWHUHVWV & 0LVVWDWHG DFFRXQW EDODQFHV PD\ EH FRUUHFWHG DV WKH UHVXOW RI WKH LQGHSHQGHQW DXGLW ZRUN ' 7KH PDQDJHPHQW WKDW SUHSDUHV WKH VWDWHPHQWV PD\ KDYH D SRRUO\ GHVLJQHG V\VWHP RI LQWHUQDO FRQWURO
%  9"D  %1 ! " C!4 ! ! 9 !  B"! B % !&! (  "  !(! )576 5 !4 ! 321 %!0 & !# ) ((  !' &"" %" 9!E      



7KH DXGLWRU V MXGJPHQW FRQFHUQLQJ WKH RYHUDOO IDLUQHVV RI WKH SUHVHQWDWLRQ RI ILQDQFLDO SRVLWLRQ UHVXOWV RI RSHUDWLRQV DQG FDVK IORZV LV DSSOLHG ZLWKLQ WKH IUDPHZRUN RI

$ 4XDOLW\ FRQWURO % *HQHUDOO\ DFFHSWHG DXGLWLQJ VWDQGDUGV ZKLFK LQFOXGH WKH FRQFHSW RI PDWHULDOLW\ & 7KH DXGLWRU V HYDOXDWLRQ RI WKH DXGLWHG FRPSDQ\ V LQWHUQDO FRQWURO ' 7KH DSSOLFDEOH ILQDQFLDO UHSRUWLQJ IUDPHZRUN LH *$$3 LQ WKH 8QLWHG 6WDWHV 
$"A !& %" 9!E  9"D  %1 ! " C!4 ! ! 9 !  B"! B % !&! (  "  !(! )576 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  



$VVXUDQFH VHUYLFHV LQYROYH DOO RI WKH IROORZLQJ H[FHSW

$ 5HOHYDQFH DV ZHOO DV WKH UHOLDELOLW\ RI LQIRUPDWLRQ % 1RQILQDQFLDO LQIRUPDWLRQ DV ZHOO DV WUDGLWLRQDO ILQDQFLDO VWDWHPHQWV & 3URYLGLQJ DEVROXWH UDWKHU WKDQ UHDVRQDEOH DVVXUDQFH ' (OHFWURQLF GDWDEDVHV DV ZHOO DV SULQWHG UHSRUWV
!2&!&!E &"" @!!E      

& 9!$ "!("  9"D   ! " C!@ !$   98!  & 9!$ "!(" 9 !( ! V576 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &""  $E    %!0  

!4 ! !  9"D  %1 ! " C!4 ! ! 9 !  B"! B % !&! (  "  !(! )576 5 !4 ! 321 %!0 & !# ) (( 



' ,PSDUWLDO FRQVHUYDWLVP & 3URIHVVLRQDO VNHSWLFLVP % ,QGHSHQGHQW LQWHJULW\ $ 2EMHFWLYH MXGJPHQW SHUIRUPHG ZLWK DQ DWWLWXGH RI DFFRUGDQFH ZLWK JHQHUDOO\ DFFHSWHG DXGLWLQJ VWDQGDUGV VKRXOG EH SODQQHG DQG %HFDXVH RI WKH ULVN RI PDWHULDO PLVVWDWHPHQW DQ DXGLW RI ILQDQFLDO VWDWHPHQWV LQ



:KLFK RI WKH IROORZLQJ EHVW GHVFULEHV DVVXUDQFH VHUYLFHV"

$ ,QGHSHQGHQW SURIHVVLRQDO VHUYLFHV WKDW UHSRUW RQ WKH FOLHQW V ILQDQFLDO VWDWHPHQWV % ,QGHSHQGHQW SURIHVVLRQDO VHUYLFHV WKDW LPSURYH WKH TXDOLW\ RI LQIRUPDWLRQ IRU GHFLVLRQ PDNHUV & ,QGHSHQGHQW SURIHVVLRQDO VHUYLFHV WKDW UHSRUW RQ VSHFLILF ZULWWHQ PDQDJHPHQW DVVHUWLRQV ' ,QGHSHQGHQW SURIHVVLRQDO VHUYLFHV WKDW LPSURYH WKH FOLHQW V RSHUDWLRQV
!4 ! !  9"D  %1 ! " C!4 ! ! 9 !  B"! B % !&! (  "  !(! )576 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E      



:KLFK RI WKH IROORZLQJ LV QRW D 3&$2% DVVHUWLRQ DERXW LQYHQWRU\ UHODWHG WR SUHVHQWDWLRQ DQG GLVFORVXUH"

$ ,QYHQWRU\ LV SURSHUO\ FODVVLILHG DV D FXUUHQW DVVHW RQ WKH EDODQFH VKHHW % ,QYHQWRU\ LV SURSHUO\ VWDWHG DW LWV FRVW RQ WKH EDODQFH VKHHW & 0DMRU LQYHQWRU\ FDWHJRULHV DQG WKHLU YDOXDWLRQ EDVHV DUH DGHTXDWHO\ GLVFORVHG LQ QRWHV ' $OO RI WKH DERYH DUH 3&$2% SUHVHQWDWLRQ DQG GLVFORVXUH DVVHUWLRQV DERXW LQYHQWRU\
"!  9"D  %1 ! " C !@ (" " 9 "( !@  &!@ ! " @A  98!  !&! ( !@ (" !"  B"!! 9 B!&!!& B" %"! !@  "2 !$& !&! %& @ "! !@ !( !  !2! G 576 5 !4 ! 321 %!0 & !# ) ((  !' &"" @!!E   %!0  



:KLFK RI WKH IROORZLQJ LV QRW DQ $6% DVVHUWLRQ DERXW LQYHQWRU\ UHODWHG WR SUHVHQWDWLRQ DQG GLVFORVXUH"

$ ,QYHQWRU\ LV SURSHUO\ FODVVLILHG DV D FXUUHQW DVVHW RQ WKH EDODQFH VKHHW % ,QYHQWRU\ LV SURSHUO\ VWDWHG DW FRVW RQ WKH EDODQFH VKHHW & 0DMRU LQYHQWRU\ FDWHJRULHV DQG WKHLU YDOXDWLRQ EDVHV DUH DGHTXDWHO\ GLVFORVHG LQ QRWHV ' $OO RI WKH DERYH DUH $6% SUHVHQWDWLRQ DQG GLVFORVXUH DVVHUWLRQV DERXW LQYHQWRU\
"!  9"D  %1 ! " C !@ (" " 9 "( !@  &!@ ! " @A  98!  !&! ( !@ (" !"  B"!! 9 B!&!!& B" %"! !@  "2 !$& !&! %& @ "! !@ !( !  !2! G 576 5 !4 ! 321 %!0 & !# ) ((  !' &"" @!!E   %!0  



,Q SHUIRUPLQJ DQ DWWHVWDWLRQ HQJDJHPHQW D &3$ W\SLFDOO\

$ 6XSSOLHV OLWLJDWLRQ VXSSRUW VHUYLFHV % $VVHVVHV FRQWURO ULVN DW D ORZ OHYHO & ([SUHVVHV D FRQFOXVLRQ RQ DQ DVVHUWLRQ DERXW VRPH W\SH RI VXEMHFW PDWWHU ' 3URYLGHV PDQDJHPHQW FRQVXOWLQJ DGYLFH
@!!E   %!0  



$Q DWWHVWDWLRQ HQJDJHPHQW LV RQH LQ ZKLFK D &3$ LV HQJDJHG WR

$ ,VVXH D UHSRUW RQ VXEMHFW PDWWHU RU DQ DVVHUWLRQ DERXW WKH VXEMHFW PDWWHU WKDW LV WKH UHVSRQVLELOLW\ RI DQRWKHU SDUW\ % 3URYLGH WD[ DGYLFH RU SUHSDUH D WD[ UHWXUQ EDVHG RQ ILQDQFLDO LQIRUPDWLRQ WKH &3$ KDV QRW DXGLWHG RU UHYLHZHG & 7HVWLI\ DV DQ H[SHUW ZLWQHVV LQ DFFRXQWLQJ DXGLWLQJ RU WD[ PDWWHUV JLYHQ FHUWDLQ VWLSXODWHG IDFWV ' $VVHPEOH SURVSHFWLYH ILQDQFLDO VWDWHPHQWV EDVHG RQ WKH DVVXPSWLRQV RI WKH HQWLW\ V PDQDJHPHQW ZLWKRXW H[SUHVVLQJ DQ\ DVVXUDQFH
"!  9"D   ! " C!4 ! ! 9 !  B"! B % !&! (  "  !(! )576 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  

  ! " C!4 ! ! 9 !  B"! B %  !&! (  "  !(! )576 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" "!  9"D



7KH XQGHUO\LQJ FRQGLWLRQV WKDW FUHDWH GHPDQG E\ XVHUV IRU UHOLDEOH LQIRUPDWLRQ LQFOXGH DOO RI WKH IROORZLQJ H[FHSW

$ 7UDQVDFWLRQV DUH QXPHURXV DQG FRPSOH[ % 8VHUV ODFN SURIHVVLRQDO VNHSWLFLVP & 8VHUV DUH VHSDUDWHG IURP DFFRXQWLQJ UHFRUGV E\ GLVWDQFH DQG WLPH ' )LQDQFLDO GHFLVLRQV DUH LPSRUWDQW WR LQYHVWRUV DQG XVHUV ( 'HFLVLRQV DUH WLPH VHQVLWLYH
 %1 ! " C 9&" "(  9 ( " " !@ % ! 2!!@ B$ @ !! "  9!@ !" 9 % !&! ( !@ A "@  98!  $ "&"(  !(! 6 576 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E      



&XWRII WHVWV GHVLJQHG WR GHWHFW FUHGLW VDOHV PDGH EHIRUH WKH HQG RI WKH \HDU WKDW KDYH EHHQ UHFRUGHG LQ WKH VXEVHTXHQW \HDU SURYLGH DVVXUDQFH DERXW WKH 3&$2% DVVHUWLRQ RI

$ 3UHVHQWDWLRQ % &RPSOHWHQHVV & 5LJKWV ' ([LVWHQFH



"&"(  9"D

"!  9"D   ! " C !@ (" " 9 "( !@  &!@ ! " @A  98!  !&! ( !@ (" !"  B"!! 9 B!&!!& B" %"! !@  "2 !$& !&! %& @ "! !@ !( !  !2! G 576 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  

"!  9"D   ! " C !@ (" " 9 "( !@  &!@ ! " @A  98!  !&! ( !@ (" !"  B"!! 9 B!&!!& B" %"! !@  "2 !$& !&! %& @ "! !@ !( !  !2! G 576 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0 



( 5LJKWV DQG REOLJDWLRQV ' 9DOXDWLRQ & 3UHVHQWDWLRQ % ([LVWHQFH $ &RPSOHWHQHVV LQYHQWRU\ LWHPV SURYLGH DVVXUDQFH DERXW WKH 3&$2% DVVHUWLRQ RI ,QTXLULHV RI ZDUHKRXVH SHUVRQQHO FRQFHUQLQJ SRVVLEOH REVROHWH RU VORZPRYLQJ

 %!0  

"!  9"D   ! " C !@ (" " 9 "( !@  &!@ ! " @A  98!  !&! ( !@ (" !"  B"!! 9 B!&!!& B" %"! !@  "2 !$& !&! %& @ "! !@ !( !  !2! G 576 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  





' $XGLW ULVN & $VVXUDQFH ULVN % ,QIRUPDWLRQ ULVN $ %XVLQHVV ULVN PLVOHDGLQJ LV UHIHUUHG WR DV 7KH SUREDELOLW\ WKDW WKH LQIRUPDWLRQ FLUFXODWHG E\ D FRPSDQ\ ZLOO EH IDOVH RU ( 5LJKWV DQG REOLJDWLRQV ' 9DOXDWLRQ & 3UHVHQWDWLRQ % ([LVWHQFH $ &RPSOHWHQHVV LQYHQWRU\ LWHPV SURYLGH DVVXUDQFH DERXW WKH $6% EDODQFH DVVHUWLRQ RI ,QTXLULHV RI ZDUHKRXVH SHUVRQQHO FRQFHUQLQJ SRVVLEOH REVROHWH RU VORZPRYLQJ

! 817!2  9"D  %1 ! " C!((" !@ @ !4 !  "4 !@ ( !  &( % " 2 9 (" " Y %" !@ !2! X 576 5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  

$E "&"(  9"D  %1 ! " C 9&" "(  9 ( " " !@ % ! 2!!@ B$ @ !! "  9!@ !" 9 % !&! ( !@ A "@  98!  $ "&"(  !(! 6 576 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &""  $E   



WKH ILQDQFLDO VWDWHPHQWV &HUWLILFDWLRQ PHDQV WKDW WKH FRPSDQ\ &(2 DQG &)2

' $OO RI WKH DERYH & 7KH\ EHOLHYH WKDW WKH ILQDQFLDO VWDWHPHQWV SUHVHQW DQ DFFXUDWH SLFWXUH RI WKH % 7KH\ DUH QRW DZDUH RI DQ\ IDOVH RU PLVOHDGLQJ VWDWHPHQWV RU DQ\ NH\ RPLWWHG $ 7KH\ KDYH UHDG WKH ILQDQFLDO VWDWHPHQWV 7KH 6DUEDQHV2[OH\ $FW RI  UHTXLUHV WKDW WKH NH\ FRPSDQ\ RIILFLDOV FHUWLI\ PXVW VLJQ D VWDWHPHQW LQGLFDWLQJ GLVFORVXUHV FRPSDQ\ V ILQDQFLDO FRQGLWLRQ

C 9&" "(  9 ( " " !@ % ! 2!!@ B$ @ !! "  9!@ !" 9 % !&! ( !@ A "@  98!  $ "&"(  !(! 6 576 5 !4 ! 321 %!0 Q 6 (( !2&!&!E &""  $E    %!0  

!4 SQ 2  9"D  %1 ! " C "!(" 9 "&"(  !(! %&"!2 "( !&! S! !@  98!  0 R 576 5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  





' $XGLW ULVN & $VVXUDQFH ULVN % ,QIRUPDWLRQ ULVN $ %XVLQHVV ULVN 7KH ULVN WKDW DQ HQWLW\ ZLOO IDLO WR PHHW LWV REMHFWLYHV LV UHIHUUHG WR DV ' 5HH[DPLQDWLRQ & 5HOLFHQVLQJ % 4XLG SUR TXR $ 6XEVWDQWLDO HTXLYDOHQF\ WKH VWDWH LQ ZKLFK WKH &3$ V FHUWLILFDWH ZDV RULJLQDOO\ REWDLQHG LV UHIHUUHG WR DV 7KH SURFHVV E\ ZKLFK D &3$ REWDLQV D FHUWLILFDWH DQG OLFHQVH LQ D VWDWH RWKHU WKDQ



7KH IRXU EDVLF UHTXLUHPHQWV IRU EHFRPLQJ D &3$ LQ PRVW VWDWHV UHODWH WR

$ (GXFDWLRQ WKH &3$ ([DPLQDWLRQ H[SHULHQFH DQG VXEVWDQWLDO HTXLYDOHQF\ % 7KH &3$ ([DPLQDWLRQ H[SHULHQFH FRQWLQXLQJ SURIHVVLRQDO HGXFDWLRQ DQG D VWDWH FHUWLILFDWH & &RQWLQXLQJ SURIHVVLRQDO HGXFDWLRQ WKH &3$ ([DPLQDWLRQ H[SHULHQFH DQG DQ $,&3$ FHUWLILFDWH ' (GXFDWLRQ WKH &3$ ([DPLQDWLRQ H[SHULHQFH DQG D VWDWH FHUWLILFDWH
"(! "(  !&!S!E  9"D  %1 ! " C "!(" 9 "&"(  !(! %&"!2 "( !&! S! !@  98!  0 R 576 5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  

$E !  9"D  %1 ! "



7KH VWXG\ RI EXVLQHVV RSHUDWLRQV IRU WKH SXUSRVH RI PDNLQJ UHFRPPHQGDWLRQV DERXW WKH HIILFLHQW XVH RI UHVRXUFHV HIIHFWLYH DFKLHYHPHQW RI EXVLQHVV REMHFWLYHV DQG FRPSOLDQFH ZLWK FRPSDQ\ SROLFLHV LV UHIHUUHG WR DV

$ (QYLURQPHQWDO DXGLWLQJ % )LQDQFLDO DXGLWLQJ & &RPSOLDQFH DXGLWLQJ ' 2SHUDWLRQDO DXGLWLQJ
% " ! 91  9"D  %1 ! " C %  "! 9"  B! B!&!4 " %  "    !@ !2! I 576 5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  



7KH DFFRXQWLQJ DXGLWLQJ DQG LQYHVWLJDWLQJ DJHQF\ RI WKH 86 &RQJUHVV WKDW LV KHDGHG E\ WKH 86 &RPSWUROOHU *HQHUDO LV NQRZQ DV

$ 7KH )HGHUDO %XUHDX RI ,QYHVWLJDWLRQ )%,  % 7KH 86 *HQHUDO $FFRXQWDELOLW\ 2IILFH *$2  & 7KH ,QWHUQDO 5HYHQXH 6HUYLFH ,56  ' 7KH 8QLWHG 6WDWHV /HJLVODWLYH $XGLWRUV 86/$ 
!2&!&!E &"" @!!E   %!0  



:KLFK RI WKH IROORZLQJ ZRXOG EH FRQVLGHUHG DQ DVVXUDQFH HQJDJHPHQW"

$ *LYLQJ DQ RSLQLRQ RQ D SUL]H SURPRWHU V FODLPV DERXW WKH DPRXQW RI VZHHSVWDNHV SUL]HV DZDUGHG LQ WKH SDVW % *LYLQJ DQ RSLQLRQ RQ WKH FRQIRUPLW\ RI WKH ILQDQFLDO VWDWHPHQWV RI D XQLYHUVLW\ ZLWK JHQHUDOO\ DFFHSWHG DFFRXQWLQJ SULQFLSOHV & *LYLQJ DQ RSLQLRQ RQ WKH IDLU SUHVHQWDWLRQ RI D QHZVSDSHU V FLUFXODWLRQ GDWD ' *LYLQJ DVVXUDQFH DERXW WKH DYHUDJH GULYH OHQJWK DFKLHYHG E\ JROIHUV ZLWK D FOLHQW V JROI EDOOV ( $OO RI WKH DERYH 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

!4 ! !  9"D  %1 ! " C!4 ! ! 9 !  B"! B %  !&!  (  "  !(! )576 5 !4 ! 321 %!0 & !# ) ((  !' &"" @!!E   %!0  

% !&!4 "T  9"D  %1 ! " C %  "! 9"  B! B!&!4 " %  "    !@ !2! I 576 5 !4 ! 321 %!0 Q 6 ((



,W LV DOZD\V D JRRG LGHD IRU DXGLWRUV WR EHJLQ DQ DXGLW ZLWK WKH SURIHVVLRQDO VNHSWLFLVP FKDUDFWHUL]HG E\ WKH DVVXPSWLRQ WKDW

$ $ SRWHQWLDO FRQIOLFW RI LQWHUHVW DOZD\V H[LVWV EHWZHHQ WKH DXGLWRU DQG WKH PDQDJHPHQW RI WKH HQWHUSULVH XQGHU DXGLW % ,Q DXGLWV RI ILQDQFLDO VWDWHPHQWV WKH DXGLWRU DFWV H[FOXVLYHO\ LQ WKH FDSDFLW\ RI DQ DXGLWRU & 7KH SURIHVVLRQDO VWDWXV RI WKH LQGHSHQGHQW DXGLWRU LPSRVHV FRPPHQVXUDWH SURIHVVLRQDO REOLJDWLRQV ' )LQDQFLDO VWDWHPHQWV DQG ILQDQFLDO GDWD DUH YHULILDEOH 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

& 9!$ "!("  9"D  %1 ! " C!@ !$   98!  & 9!$ "!(" 9 !( ! V576 5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  



,Q DQ DWWHVWDWLRQ HQJDJHPHQW D &3$ SUDFWLWLRQHU LV HQJDJHG WR

$ &RPSLOH D FRPSDQ\ V ILQDQFLDO IRUHFDVW EDVHG RQ PDQDJHPHQW V DVVXPSWLRQV ZLWKRXW H[SUHVVLQJ DQ\ IRUP RI DVVXUDQFH % 3UHSDUH D ZULWWHQ UHSRUW FRQWDLQLQJ D FRQFOXVLRQ DERXW WKH UHOLDELOLW\ RI D PDQDJHPHQW DVVHUWLRQ & 3UHSDUH D WD[ UHWXUQ XVLQJ LQIRUPDWLRQ WKH &3$ KDV QRW DXGLWHG RU UHYLHZHG ' *LYH H[SHUW WHVWLPRQ\ LQ FRXUW RQ SDUWLFXODU IDFWV LQ D FRUSRUDWH LQFRPH WD[ FRQWURYHUV\ 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

!4 ! "!  9"D  %1 ! " C!4 ! ! 9 !  B"! B % !&! (  "  !(! )576 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" %" 9!E   %!0  

% " ! 91  9"D  %1 ! " C %  "! 9"  B! B!&!4 " %  "    !@ !2! I 576 5 !4 ! 321 %!0 & !# ) ((  !' &"" @!!E   %!0  



5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN ' 2SHUDWLRQDO DXGLWLQJ & &RPSOLDQFH DXGLWLQJ % )LQDQFLDO DXGLWLQJ $ (QYLURQPHQWDO DXGLWLQJ PRVW OLNHO\ WR EH DQ REMHFWLYH RI $ GHWHUPLQDWLRQ RI FRVW VDYLQJV REWDLQHG E\ RXWVRXUFLQJ FDIHWHULD VHUYLFHV LV



7KH SULPDU\ GLIIHUHQFH EHWZHHQ RSHUDWLRQDO DXGLWLQJ DQG ILQDQFLDO DXGLWLQJ LV WKDW LQ RSHUDWLRQDO DXGLWLQJ

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

% " ! 91  9"D  %1 ! " C %  "! 9"  B! B!&!4 " %  "   !@ !2! I 576 5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  



$FFRUGLQJ WR WKH $,&3$ WKH SXUSRVH RI DQ DXGLW RI ILQDQFLDO VWDWHPHQWV LV WR

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

%  9"D  %1 ! " C!4 ! ! 9 !  B"! B % !&! (  "  !(! )576 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  



%DQNHUV ZKR DUH SURFHVVLQJ ORDQ DSSOLFDWLRQV IURP FRPSDQLHV VHHNLQJ ODUJH ORDQV ZLOO SUREDEO\ DVN IRU ILQDQFLDO VWDWHPHQWV DXGLWHG E\ DQ LQGHSHQGHQW &3$ EHFDXVH

$ )LQDQFLDO VWDWHPHQWV DUH WRR FRPSOH[ WR DQDO\]H WKHPVHOYHV % 7KH\ DUH WRR IDU DZD\ IURP FRPSDQ\ KHDGTXDUWHUV WR SHUIRUP DFFRXQWLQJ DQG DXGLWLQJ WKHPVHOYHV & 7KH FRQVHTXHQFHV RI PDNLQJ D EDG ORDQ DUH YHU\ XQGHVLUDEOH ' 7KH\ JHQHUDOO\ VHH D SRWHQWLDO FRQIOLFW RI LQWHUHVW EHWZHHQ FRPSDQ\ PDQDJHUV ZKR ZDQW WR JHW ORDQV DQG WKH EDQN V QHHGV IRU UHOLDEOH ILQDQFLDO VWDWHPHQWV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

$E  9"D  %1 ! " C 9&" "(  9 ( " " !@ % ! 2!!@ B$ @ !! "  9!@ !" 9 % !&! ( !@ A "@  98!  $ "&"(  !(! 6 576 5 !4 ! 321 %!0 & !# ) ((  !' &"" @!!E      

! 817!2  9"D  %1 ! " C!((" !@ @ !4 !  "4 !@ (!  &( % " 2 9 (" " Y %" !@ !2! X 576 5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  



5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN ' $OO RI WKH DERYH & 9DOXDWLRQ VHUYLFHV % ,QWHUQDO DXGLW VHUYLFHV $ %RRNNHHSLQJ VHUYLFHV ZKLFK RI WKH IROORZLQJ VHUYLFHV WR DQ DXGLW FOLHQW" 7KH 6DUEDQHV2[OH\ $FW RI  SURKLELWV SXEOLF DFFRXQWLQJ ILUPV IURP SURYLGLQJ

$E "&"(  9"D  %1 ! " C 9&" "(  9 ( " " !@ % ! 2!!@ B$ @ !! "  9!@ !" 9 % !&! ( !@ A "@  98!  $ "&"(  !(! 6 576 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  



5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN ' 7LPHOLQHVV RI ILQDQFLDO VWDWHPHQWV & &RPSOH[LW\ RI ILQDQFLDO VWDWHPHQWV % ,QIRUPDWLRQ ULVN IDFHG E\ LQYHVWRUV $ %XVLQHVV ULVNV IDFHG E\ LQYHVWRUV ,QGHSHQGHQW DXGLWRUV RI ILQDQFLDO VWDWHPHQWV SHUIRUP DXGLWV WKDW UHGXFH



7KH SULPDU\ REMHFWLYH RI FRPSOLDQFH DXGLWLQJ LV WR

$ *LYH DQ RSLQLRQ RQ ILQDQFLDO VWDWHPHQWV % 'HYHORS D EDVLV IRU D UHSRUW RQ LQWHUQDO FRQWURO & 3HUIRUP D VWXG\ RI HIIHFWLYH DQG HIILFLHQW XVH RI UHVRXUFHV ' 'HWHUPLQH ZKHWKHU DXGLWHH SHUVRQQHO DUH IROORZLQJ ODZV UXOHV UHJXODWLRQV DQG SROLFLHV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

 ! 9&"  9"D  %1 ! " C %  "! 9"  B! B!&!4 " %  "    !@ !2! I 576 5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  

"(! "(  !&!S!E  9"D  %1 ! " C "!(" 9 "&"( !(! %&"!2 "( !&! S! !@  98!  0 R 576 5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  



5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN ' $OO RI WKH DERYH & (GXFDWLRQ % ([SHULHQFH LQ WKH DFFRXQWLQJ ILHOG $ 6XFFHVVIXO FRPSOHWLRQ RI WKH 8QLIRUP &3$ ([DPLQDWLRQ DFFRXQWDQW" :KDW UHTXLUHPHQWV DUH XVXDOO\ QHFHVVDU\ WR EHFRPH OLFHQVHG DV D FHUWLILHG SXEOLF



7KH RUJDQL]DWLRQ SULPDULO\ UHVSRQVLEOH IRU HQVXULQJ WKDW SXEOLF RIILFLDOV DUH XVLQJ SXEOLF IXQGV HIILFLHQWO\ HFRQRPLFDOO\ DQG HIIHFWLYHO\ LV WKH

$ *RYHUQPHQWDO ,QWHUQDO $XGLW $JHQF\ *,$$  % &HQWUDO LQWHUQDO DXGLWRUV &,$  & 6HFXULWLHV DQG ([FKDQJH &RPPLVVLRQ 6(&  ' *RYHUQPHQW $FFRXQWDELOLW\ 2IILFH *$2  5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

% !&!4 "T  9"D  %1 ! " C %  "! 9"  B! B!&!4 " %  "    !@ !2! I 576 5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  

 !&"(!  9"D  %1 ! " C %  "! 9"  B! B!&!4 " %  "    !@ !2! I 576 5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  



5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN ' 3URJUDP DXGLWV & &RPSOLDQFH DXGLWV % (FRQRP\ DQG HIILFLHQF\ DXGLWV $ )LQDQFLDO DXGLWV 3HUIRUPDQFH DXGLWV XVXDOO\ LQFOXGH

"!  9"D  %1 ! " C !@ (" " 9 "( !@  &!@ ! " @A  98!  !&! ( !@ (" !"  B"!! 9 B!&!!& B" %"! !@  "2 !$& !&! %& @ "! !@ !( !  !2! G 576 5 !4 ! 321 %!0 & !# ) ((  !' &"" @!!E   %!0  



4XHVWLRQ DOVR IRXQG LQ WH[WERRN ( 2FFXUUHQFH ' 5LJKWV DQG REOLJDWLRQV & 9DOXDWLRQ DQG DOORFDWLRQ % ([LVWHQFH $ &RPSOHWHQHVV REWDLQ HYLGHQFH UHODWHG WR PDQDJHPHQW V ILQDQFLDO VWDWHPHQW DVVHUWLRQ DERXW 7KH REMHFWLYH LQ DQ DXGLWRU V UHYLHZ RI FUHGLW UDWLQJV RI D FOLHQW V FXVWRPHUV LV WR



-RQHV &3$ LV SODQQLQJ WKH DXGLW RI 5KRQGD V &RPSDQ\ 5KRQGD YHUEDOO\ DVVHUWV WR -RQHV WKDW DOO H[SHQVHV IRU WKH \HDU KDYH EHHQ UHFRUGHG LQ WKH DFFRXQWV 5KRQGD V UHSUHVHQWDWLRQ LQ WKLV UHJDUG

$ ,V VXIILFLHQW HYLGHQFH IRU -RQHV WR FRQFOXGH WKDW WKH FRPSOHWHQHVV DVVHUWLRQ LV VXSSRUWHG IRU H[SHQVHV % &DQ HQDEOH -RQHV WR PLQLPL]H WKH ZRUN RQ WKH JDWKHULQJ RI HYLGHQFH WR VXSSRUW 5KRQGD V FRPSOHWHQHVV DVVHUWLRQ & 6KRXOG EH GLVUHJDUGHG EHFDXVH LW LV QRW LQ ZULWLQJ ' ,V QRW FRQVLGHUHG D VXIILFLHQW EDVLV IRU -RQHV WR FRQFOXGH WKDW DOO H[SHQVHV KDYH EHHQ UHFRUGHG 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

& 9!$ "!("  9"D  %1 ! " C!@ !$   98!  & 9!$ "!(" 9 !( ! V576 5 !4 ! 321 %!0 & !# ) ((  !' &"" @!!E   %!0  

$E "&"(  9"D  %1 ! " C 9&" "(  9 ( " " !@ % ! 2!!@ B$ @ !! "  9!@ !" 9 % !&! ( !@ A "@  98!  $ "&"(  !(! 6 576 5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  



5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN ' %XVLQHVV ULVN & 0RUDO KD]DUG % ,QIRUPDWLRQ ULVN $ &OLHQW DFFHSWDQFH ULVN PLVOHDGLQJ LV FDOOHG 7KH ULVN WR LQYHVWRUV WKDW D FRPSDQ\ V ILQDQFLDO VWDWHPHQWV PD\ EH PDWHULDOO\



:KHQ DXGLWLQJ PHUFKDQGLVH LQYHQWRU\ DW \HDUHQG WKH DXGLWRU SHUIRUPV DXGLW SURFHGXUHV WR HQVXUH WKDW DOO JRRGV SXUFKDVHG EHIRUH \HDUHQG DUH UHFHLYHG EHIRUH WKH SK\VLFDO LQYHQWRU\ FRXQW 7KLV DXGLW SURFHGXUH SURYLGHV DVVXUDQFH DERXW ZKLFK PDQDJHPHQW DVVHUWLRQ"

$ &XWRII % ([LVWHQFH & 9DOXDWLRQ DQG DOORFDWLRQ ' 5LJKWV DQG REOLJDWLRQV ( 2FFXUUHQFH 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

 %1 ! " C !@ (" " 9 "( !@  &!@ ! " @A  98!  !&! ( !@ (" !"  B"!! 9 B!&!!& B" %"! !@  "2 !$& !&! %& @ "! !@ !( !  !2! G 576 5 !4 ! 321 %!0 & !# ) ((  !' &"" @!!E   %!0   "!  9"D



:KHQ DXGLWLQJ PHUFKDQGLVH LQYHQWRU\ DW \HDUHQG WKH DXGLWRU SHUIRUPV DXGLW SURFHGXUHV WR REWDLQ HYLGHQFH WKDW QR JRRGV KHOG RQ FRQVLJQPHQW DUH LQFOXGHG LQ WKH FOLHQW V HQGLQJ LQYHQWRU\ EDODQFH 7KLV DXGLW SURFHGXUH SURYLGHV DVVXUDQFH DERXW ZKLFK PDQDJHPHQW DVVHUWLRQ"

$ &RPSOHWHQHVV % ([LVWHQFH & 9DOXDWLRQ DQG DOORFDWLRQ ' 5LJKWV DQG REOLJDWLRQV ( 2FFXUUHQFH 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

 %1 ! " C !@ (" " 9 "( !@  &!@ ! " @A  98!  !&! ( !@ (" !"  B"!! 9 B!&!!& B" %"! !@  "2 !$& !&! %& @ "! !@ !( !  !2! G 576 5 !4 ! 321 %!0 & !# ) ((  !' &"" @!!E   %!0   "!  9"D

"!  9"D  %1 ! " C !@ (" " 9 "( !@  &!@ ! " @A  98!  !&! ( !@ (" !"  B"!! 9 B!&!!& B" %"! !@  "2 !$& !&! %& @ "! !@ !( !  !2! G 576 5 !4 ! 321 %!0 & !# ) ((  !' &"" @!!E   %!0  



5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN ( 2FFXUUHQFH ' 5LJKWV DQG REOLJDWLRQV & 9DOXDWLRQ DQG DOORFDWLRQ % ([LVWHQFH $ &RPSOHWHQHVV WR REWDLQ HYLGHQFH DV WR PDQDJHPHQW V DVVHUWLRQ UHJDUGLQJ PDNH VXUH WKDW UHSDLU DQG PDLQWHQDQFH H[SHQVHV DUH QRW XQGHUVWDWHG VKH ZDQWV :KHQ DQ DXGLWRU UHYLHZV DGGLWLRQV WR WKH HTXLSPHQW IL[HG DVVHW DFFRXQW WR



7KH 6DUEDQHV2[OH\ $FW RI  JHQHUDOO\ SURKLELWV SURIHVVLRQDO VHUYLFH ILUPV IURP

$ $FWLQJ LQ D PDQDJHULDO GHFLVLRQPDNLQJ UROH IRU DQ DXGLW FOLHQW % $XGLWLQJ WKH ILUP V RZQ ZRUN RQ DQ DXGLW FOLHQW & 3URYLGLQJ WD[ FRQVXOWLQJ WR DQ DXGLW FOLHQW ZLWKRXW DXGLW FRPPLWWHH DSSURYDO ' $OO RI WKH DERYH 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

! 817!2  9"D  %1 ! " C!((" !@ @ !4 !  "4 !@ ( !  &( % " 2 9 (" " Y %" !@ !2! X 576 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  



6XEVWDQWLDO HTXLYDOHQF\ UHIHUV WR

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

!4 SQ 2  9"D  %1 ! " C "!(" 9 "&"(  !(! %&"!2 "( !&! S! !@  98!  0 R 576 5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  



:KLFK RI WKH IROORZLQJ EHVW GHVFULEHV WKH UHODWLRQVKLS EHWZHHQ DXGLWLQJ DQG DWWHVWDWLRQ HQJDJHPHQWV"

$ $XGLWLQJ LV D VXEVHW RI DWWHVWDWLRQ HQJDJHPHQWV WKDW IRFXVHV RQ WKH FHUWLILFDWLRQ RI ILQDQFLDO VWDWHPHQWV % $WWHVWDWLRQ LV D VXEVHW RI DXGLWLQJ WKDW SURYLGHV ORZHU DVVXUDQFH WKDQ WKDW SURYLGHG E\ DQ DXGLW HQJDJHPHQW & $XGLWLQJ LV D VXEVHW RI DWWHVWDWLRQ HQJDJHPHQWV WKDW IRFXVHV RQ SURYLGLQJ FOLHQWV ZLWK DGYLFH DQG GHFLVLRQ VXSSRUW ' $WWHVWDWLRQ LV D VXEVHW RI DXGLWLQJ WKDW LPSURYHV WKH TXDOLW\ RI LQIRUPDWLRQ RU LWV FRQWH[W IRU GHFLVLRQ PDNHUV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

"!  9"D  %1 ! " C!4 ! ! 9 !  B"! B % !&! (  "  !(! )576 5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  

aper ca y a df sp e d f bd e fecg sapc e aper ca a dq apdbc b db d eqbq aqqb fdeq e b qda aq bq bepdbdey q bcqd p db adeyax wtvu t sar eqpa ihg fdedcba ` cb s q peyyex cah a a s pcba a s b fa ` s p eq bd s



5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN  2SWLRQ ' & 2SWLRQ & % 2SWLRQ % $ 2SWLRQ $ :KLFK RI WKH IROORZLQJ -089 GHVFULEHV WKH IRFXV RI WKH IROORZLQJ HQJDJHPHQWV"



:KLFK RI WKH IROORZLQJ LV D UHDVRQ WR REWDLQ SURIHVVLRQDO FHUWLILFDWLRQ"

$ &HUWLILFDWLRQ SURYLGHV FUHGLELOLW\ WKDW DQ LQGLYLGXDO LV WHFKQLFDOO\ FRPSHWHQW % &HUWLILFDWLRQ RIWHQ LV D QHFHVVDU\ FRQGLWLRQ IRU DGYDQFHPHQW DQG SURPRWLRQ ZLWKLQ D SURIHVVLRQDO VHUYLFHV ILUP & 2EWDLQLQJ FHUWLILFDWLRQ LV RIWHQ PRQHWDULO\ UHZDUGHG E\ DQ LQGLYLGXDO V HPSOR\HU ' $OO RI WKH DERYH 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

"(!  9"D  %1 ! " C "!(" 9 "&"(  !(! %&"!2 "( !&! S! !@  98!  0 R 576 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E      

"&"( !2!E  9"D  %1 ! " C 9&" "(  9 ( " " !@ % ! 2!!@ B$ @ !! "  9!@ !" 9 % !&! ( !@ A "@  98!  $ "&"(  !(! 6 576 5 !4 ! 321 %!0 & !# ) ((  !' &"" @!!E      



5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH ' &RPSOH[LW\ & &RQVHTXHQFHV % 9DJXHQHVV $ 5HPRWHQHVV XVHUV IRU UHOLDEOH ILQDQFLDO LQIRUPDWLRQ" :KLFK RI WKH IROORZLQJ LV QRW DQ XQGHUO\LQJ FRQGLWLRQ WKDW FUHDWHV GHPDQG E\



$FFRUGLQJ WR WKH $PHULFDQ $FFRXQWLQJ $VVRFLDWLRQ $$$ WKH GHILQLWLRQ RI DXGLWLQJ LQFOXGHV WKH IROORZLQJ VWDWHPHQW

$ $Q LQGHSHQGHQW DSSUDLVDO IXQFWLRQ HVWDEOLVKHG ZLWKLQ DQ RUJDQL]DWLRQ WR H[DPLQH DQG HYDOXDWH LWV DFWLYLWLHV % $ SURFHVV RI UHGXFLQJ WR D VRFLDOO\ DFFHSWDEOH OHYHO WKH LQIRUPDWLRQ ULVN WR XVHUV RI ILQDQFLDO VWDWHPHQWV & $Q H[SUHVVLRQ RI RSLQLRQ RQ WKH IDLUQHVV RI ILQDQFLDO VWDWHPHQWV ' $ V\VWHPDWLF SURFHVV RI REMHFWLYHO\ REWDLQLQJ DQG HYDOXDWLQJ HYLGHQFH UHJDUGLQJ DVVHUWLRQV DERXW HFRQRPLF DFWLRQV DQG HYHQWV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

%  9"D  %1 ! " C!4 ! ! 9 !  B"! B % !&! (  "  !(! )576 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  

!4 ! !  9"D  %1 ! " C!4 ! ! 9 !  B"! B % !&! (  "  !(! )576 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E      



5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH ' ,PSURYLQJ WKH FRQWH[W RI LQIRUPDWLRQ & ,PSURYLQJ SURILWDELOLW\ RI WKH FOLHQW % ,PSURYLQJ WKH TXDOLW\ RI LQIRUPDWLRQ $ ,QGHSHQGHQFH :KLFK RI WKH IROORZLQJ LV QRW D PDMRU HOHPHQW RI DVVXUDQFH VHUYLFHV"



7KH JRDO RI RSHUDWLRQDO DXGLWLQJ LV WR

$ +HOS PDQDJHUV GLVFKDUJH WKHLU PDQDJHPHQW UHVSRQVLELOLWLHV DQG LPSURYH SURILWDELOLW\ % (YDOXDWH FRPSOLDQFH ZLWK VSHFLILF ODZV DQG UHJXODWLRQV & 5HGXFH WR D VRFLDOO\ DFFHSWDEOH OHYHO WKH LQIRUPDWLRQ ULVN WR XVHUV RI ILQDQFLDO VWDWHPHQWV ' ([SUHVV DQ RSLQLRQ RQ WKH IDLUQHVV RI ILQDQFLDO VWDWHPHQWV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

% " ! 91  9"D  %1 ! " C %  "! 9"  B! B!&!4 " %  "    !@ !2! I 576 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  

"!  9"D  %1 ! " C !@ (" " 9 "( !@  &!@ ! " @A  98!  !&! ( !@ (" !"  B"!! 9 B!&!!& B" %"! !@  "2 !$& !&! %& @ "! !@ !( !  !2! G 576 5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  



5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH ' 3UHVHQWDWLRQ & &RPSOHWHQHVV % &RPSOLDQFH $ ([LVWHQFH LQFOXGH 7KH 3&$2% DVVHUWLRQV PDGH E\ PDQDJHPHQW LQ ILQDQFLDO VWDWHPHQWV GR QRW



:KLFK RI WKH IROORZLQJ LV QRW D UROH RI WKH $,&3$"

$ 5HILQH WKH ERG\ RI SURIHVVLRQDO NQRZOHGJH UHJXODWH PHPEHUVKLS DGPLVVLRQV DQG SROLFH FRQGXFW RI PHPEHUV % 3UHSDUH DQG JUDGH WKH XQLIRUP &3$ H[DPLQDWLRQ & /LFHQVH WKH SUDFWLFHV RI &3$V LQ WKH YDULRXV VWDWHV ' ,VVXH SXEOLF VWDWHPHQWV RQ SUDFWLFH VWDQGDUGV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

"(!  9"D  %1 ! " C "!(" 9 "&"(  !(! %&"!2 "( !&! S! !@  98!  0 R 576 5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  

"!  9"D  %1 ! " C !@ (" " 9 "( !@  &!@ ! " @A  98!  !&! ( !@ (" !"  B"!! 9 B!&!!& B" %"! !@  "2 !$& !&! %& @ "! !@ !( !  !2! G 576 5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  



5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH ' 9DOXDWLRQ RU DOORFDWLRQ & 5LJKWV DQG REOLJDWLRQV % ([LVWHQFH RU RFFXUUHQFH $ &RPSOHWHQHVV DUH LQFOXGHG LV" DOO WUDQVDFWLRQV DQG DFFRXQWV WKDW VKRXOG EH SUHVHQWHG LQ WKH ILQDQFLDO VWDWHPHQWV 7KH $6% WUDQVDFWLRQ REMHFWLYH WKDW UHTXLUHV WKH DXGLWRU WR HVWDEOLVK HYLGHQFH WKDW



:KLFK RI WKH IROORZLQJ LV DQ H[DPSOH RI D UHJXODWRU\ DXGLWRU"

$ ,QWHUQDO DXGLWRUV % %LJ  DXGLWRUV & 86 ,QWHUQDO 5HYHQXH 6HUYLFH DXGLWRUV ' 2SHUDWLRQDO DXGLWRUV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH



7KH GHILQLWLRQ RI SHUIRUPDQFH DXGLWV GRHV QRW LQFOXGH

$ (FRQRP\ DXGLWV % (IILFLHQF\ DXGLWV & )LQDQFLDO DXGLWV ' 3URJUDP DXGLWV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

" "  %!E  9"D  %1 ! " C %  "! 9"  B! B!&!4 " %  "    !@ !2! I 576 5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0   

"(!  9"D  %1 ! " C "!(" 9 "&"( !(! %&"!2 "( !&! S! !@  98!  0 R 576 5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  

 !&"(!  9"D  %1 ! " C %  "! 9"  B! B!&!4 " %  "    !@ !2! I 576 5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0 

)LOO LQ WKH %ODQN 4XHVWLRQV

 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH ' *$2 & $,&3$ ([DPLQDWLRQV 'LYLVLRQ % 6WDWHV RU WHUULWRULHV $ $,&3$ &3$ FHUWLILFDWHV DQG OLFHQVHV WR SUDFWLFH DUH LVVXHG E\ WKH



7KH ULVN WKDW WKH LQIRUPDWLRQ GLVVHPLQDWHG E\ D FRPSDQ\ ZLOO EH PDWHULDOO\ IDOVH RU PLVOHDGLQJ LV FDOOHG BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB LQIRUPDWLRQ ULVN 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH



7KH DXGLW SURFHVV LQYROYHV REWDLQLQJ DQG HYDOXDWLQJ BBBBBBBBBBBBBBBBBBBBBBBBBBBB HYLGHQFH 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH



7KH SXUSRVH RI REWDLQLQJ DQG HYDOXDWLQJ HYLGHQFH LV WR DVFHUWDLQ WKH GHJUHH RI FRUUHVSRQGHQFH EHWZHHQ WKH BBBBBBBBBBBBBBBBBBBBBBBBBBBBB DQG BBBBBBBBBBBBBBBBBBBBBBBBBBBB DVVHUWLRQV HVWDEOLVKHG FULWHULD 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH



7KH REMHFWLYH RI WKH RUGLQDU\ H[DPLQDWLRQ RI ILQDQFLDO VWDWHPHQWV E\ WKH LQGHSHQGHQW DXGLWRU LV WKH H[SUHVVLRQ RI D Q BBBBBBBBBBBBBBBBBBBBBBBBBBBBB RQ WKH BBBBBBBBBBBBBBBBBBBBBBBBBBBBB RI ILQDQFLDO VWDWHPHQWV RSLQLRQ IDLUQHVV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH



BBBBBBBBBBBBBBBBBBBBBBBBBBBBB UHIHUV WR UHFRJQL]LQJ DVVHWV DQG OLDELOLWLHV DV RI SURSHU GDWH DQG DFFRXQWLQJ IRU UHYHQXH H[SHQVH DQG RWKHU WUDQVDFWLRQV LQ WKH SURSHU SHULRG &XWRII 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH



7KH $6% EDODQFH REMHFWLYH UHODWHG WR BBBBBBBBBBBBBBBBBBBBBBBBBBBBB LV WR HVWDEOLVK ZLWK HYLGHQFH WKDW DOO WUDQVDFWLRQV DQG DFFRXQWV WKDW VKRXOG EH SUHVHQWHG LQ WKH ILQDQFLDO VWDWHPHQWV DUH LQFOXGHG FRPSOHWHQHVV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH



7KH $6% WUDQVDFWLRQ REMHFWLYH UHODWHG WR BBBBBBBBBBBBBBBBBBBBBBBBBBBBB LV WR GHWHUPLQH ZKHWKHU SURSHU YDOXHV KDYH EHHQ DVVLJQHG WR DOO ILQDQFLDO WUDQVDFWLRQV DFFXUDF\ 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH



BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB LV WKH VWXG\ RI EXVLQHVV RSHUDWLRQV IRU WKH SXUSRVH RI PDNLQJ UHFRPPHQGDWLRQV WR PDQDJHUV RQ KRZ WR LPSURYH SURILWDELOLW\ 2SHUDWLRQDO DXGLWLQJ 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 7KH BBBBBBBBBBBBBBBBBBBBBBBBBBBBB LV WKH DFFRXQWLQJ DXGLWLQJ DQG LQYHVWLJDWLQJ DJHQF\ RI WKH 86 &RQJUHVV *$2 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 BBBBBBBBBBBBBBBBBBBBBBBBBBBBB JRYHUQPHQWDO DXGLWLQJ JRHV EH\RQG DQ DXGLW RI ILQDQFLDO UHSRUWV DQG FRPSOLDQFH ZLWK ODZV DQG UHJXODWLRQV WR LQFOXGH BBBBBBBBBBBBBBBBBBBBBBBBBBBBB DQG BBBBBBBBBBBBBBBBBBBBBBBBBBBBB DQG BBBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBB DXGLWV ([SDQGHGVFRSH HFRQRP\ HIILFLHQF\ SURJUDP UHVXOWV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 7KH IRXU EDVLF UHTXLUHPHQWV IRU EHFRPLQJ D &3$ DUH BBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBB DQG BBBBBBBBBBBBBBBBBBBBBBBBBBBB HGXFDWLRQ H[DPLQDWLRQ H[SHULHQFH VWDWH FHUWLILFDWH DQG OLFHQVH 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB LV DQ DXGLWRU V WHQGHQF\ QRW WR EHOLHYH PDQDJHPHQW DVVHUWLRQV 3URIHVVLRQDO VNHSWLFLVP 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 $ BBBBBBBBBBBBBBBBBBBBBBBBBBBBB FRQVLVWV RI ZULWLQJ WKH ILQDQFLDO VWDWHPHQWV IURP D FOLHQW V ERRNV DQG UHFRUGV FRPSLODWLRQ 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 7KURXJK WKH SURFHVV RI BBBBBBBBBBBBBBBBBBBBBBBBBBBB DIWHU EHFRPLQJ D &3$ OLFHQVHG LQ RQH VWDWH D SHUVRQ FDQ REWDLQ D &3$ FHUWLILFDWH DQG OLFHQVH LQ DQRWKHU VWDWH VXEVWDQWLDO HTXLYDOHQF\ 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 ([DPSOHV RI BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB DUH  HFRQRP\ DQG HIILFLHQF\ DXGLWV DQG  SURJUDP DXGLWV SHUIRUPDQFH DXGLWV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

6KRUW $QVZHU 4XHVWLRQV

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

 %  &  $  &

"!  9"D  %1 ! " C !@ (" " 9 "( !@  &!@ ! " @A  98!  !&! ( !@ (" !"  B"!! 9 B!&!!& B" %"! !@  "2 !$& !&! %& @ "! !@ !( !  !2! G 576 5 !4 ! 321 %!0 W G (( !' &"" @!!E   %!0  

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

 &  %  '

 %1 ! " C !@ (" " 9 "( !@  &!@ ! "  @A  98!  !&! ( !@ (" !"  B"!! 9 B!&!!& B" %"! !@  "2 !$& !&! %& @ "! !@ !( !  !2! G 576 5 !4 ! 321 %!0 W G (( !' &"" @!!E   %!0  

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

 (  '  %  (  &

@!!E   %!0  

"!  9"D

%  9"D  %1 ! " C!4 ! ! 9 !  B"! B % !&! (  "  !(! )576 5 !4 ! 321 %!0 & !# ) ((  !' &"" @!!E      

"!  9"D  %1 ! " C !@ (" " 9 "( !@  &!@ ! "  @A  98!  !&! ( !@ (" !"  B"!! 9 B!&!!& B" %"! !@  "2 !$& !&! %& @ "! !@ !( !  !2! G 576 5 !4 ! 321 %!0 W G (( !' &""

 :KDW DUH WKH GLIIHUHQFHV EHWZHHQ WKH $PHULFDQ $FFRXQWLQJ $VVRFLDWLRQ DQG

(VVD\ 4XHVWLRQV

UHSRUWV DOVR RIIHUV JXLGHV WR UHSRUW RQ LQWHUQDO FRQWURO OHWWHUV WR XQGHUZULWHUV DQG VSHFLDO DXGLW RI WKH WUDGLWLRQDO ILQDQFLDO VWDWHPHQWV DQG WKHLU IRRWQRWHV 7KH $,&3$ 6$6 VWDWHPHQW RQ REMHFWLYHV RI ILQDQFLDO DXGLWV UHVWULFWV DXGLWLQJ WR LQGHSHQGHQW &3$ V LQWHUQDO DQG JRYHUQPHQWDO DXGLWLQJ 7KH $,&3$ KDV QRW GHILQHG DXGLWLQJ EXW LWV 7KH $$$ GHILQLWLRQ LV EURDG DQG JHQHUDO HQRXJK WR HQFRPSDVV LQGHSHQGHQW $,&3$ GHILQLWLRQV DQG REMHFWLYHV RI DXGLWLQJ"

 :KDW LV RSHUDWLRQDO DXGLWLQJ DQG E\ ZKRP LV LW SHUIRUPHG"

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

 :KDW LV LQIRUPDWLRQ ULVN" :KDW LV EXVLQHVV ULVN"

,QIRUPDWLRQ ULVN LV WKH ULVN WKDW ILQDQFLDO VWDWHPHQWV ZLOO EH PDWHULDOO\ IDOVH RU PLVOHDGLQJ %XVLQHVV ULVN LV WKH ULVN DQ HQWLW\ ZLOO IDLO WR PHHW LWV REMHFWLYHV

% " ! 91  9"D  %1 ! " C %  "! 9"  B! B!&!4 " %  "    !@ !2! I 576 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E          

@!!E      

!&! S!E "(!  9"D  %1 ! " C "!(" 9 "&"(  !(! %&"!2 "( !&! S! !@  98!  0 R 576 5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E      

$E !  9"D  %1 ! " C 9&" "(  9 ( " " !@ % ! 2!!@ B$ @ !! "  9!@ !" 9 % !&! ( !@ A "@  98!  $ "&"(  !(! 6 576 5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E  

 'HILQH DVVXUDQFH DWWHVWDWLRQ DQG DXGLWLQJ LQ WKH FRQWH[W RI OHQGLQJ FUHGLELOLW\

 :KDW DUH WKH IRXU EDVLF UHTXLUHPHQWV IRU EHFRPLQJ D &3$"

FUHGLELOLW\ WR ILQDQFLDO VWDWHPHQWV RI FUHGLELOLW\ WR DVVHUWLRQV PDGH E\ D WKLUG SDUW\ $XGLWLQJ LV WKH OHQGLQJ RI $VVXUDQFH LV WKH OHQGLQJ RI FUHGLELOLW\ WR LQIRUPDWLRQ $WWHVWDWLRQ LV WKH OHQGLQJ (GXFDWLRQ WKH &3$ ([DPLQDWLRQ H[SHULHQFH DQG D VWDWH FHUWLILFDWH

2! %!0  9"D  %1 ! " C!4 ! ! 9 !  B"! B % !&! (  "  !(! )576 5 !4 ! 321 %!0 & !# ) ((  !' &""

 $XGLWV PD\ EH FKDUDFWHUL]HG DV D ILQDQFLDO VWDWHPHQW DXGLWV E FRPSOLDQFH DXGLWV RU F RSHUDWLRQDO DXGLWV 7KH ZRUN FDQ EH GRQH E\ D LQGHSHQGHQW H[WHUQDO DXGLWRUV E LQWHUQDO DXGLWRUV RU F JRYHUQPHQW DXGLWRUV %HORZ LV D OLVW

RI VHYHUDO DXGLW HQJDJHPHQWV )RU HDFK HQJDJHPHQW LQGLFDWH D WKH W\SH RI DXGLW DQG E ZKR ZRXOG W\SLFDOO\ GR WKH DXGLW

 5HQGHU DQ RSLQLRQ RQ WKH IDLUQHVV RI WKH SUHVHQWDWLRQ RI ILQDQFLDO VWDWHPHQWV RI D SXEOLF FRUSRUDWLRQ  &RPSDUH WKH FRVW RI PDLQWDLQLQJ D IOHHW RI GHOLYHU\ WUXFNV ZLWK WKH RSWLRQ RI XVLQJ DQ LQGHSHQGHQW GHOLYHU\ VHUYLFH  $XGLW UHSRUWHG LQFRPH RQ D FRUSRUDWLRQ V WD[ UHWXUQ

 5HYLHZ FRQWUDFW FRVW RI FRQVWUXFWLQJ DLUFUDIW HQJLQHV IRU WKH DUPHG VHUYLFHV UHGXFH GDWD SURFHVVLQJ FRVWV DQG LPSURYH ILQDQFLDO UHSRUWLQJ

 5HSRUW RQ KRZ WKH LQVWDOODWLRQ RI D QHZ FRPSXWHU V\VWHP ZRXOG KHOS D FOLHQW

)HHGEDFN 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

cb s q peyyex dbq ca dg s pcba a s cq d s p eq bd s

7UXH  )DOVH 4XHVWLRQV

 $XGLWRUV PD\ EH LQGHSHQGHQW LQ IDFW EXW QRW LQGHSHQGHQW LQ DSSHDUDQFH 7UXH )DOVH

 $XGLWLQJ 6WDQGDUGV LVVXHG E\ WKH 3&$2% DUH WKH VROH VRXUFH RI JXLGDQFH IRU DXGLWV RI SXEOLF HQWLWLHV 7UXH )DOVH

 $WWHVWDWLRQ VWDQGDUGV SURYLGH JXLGDQFH IRU D ZLGH YDULHW\ RI HQJDJHPHQWV GLIIHUHQW LQ VFRSH WKDQ DQ DXGLW 7UXH )DOVH

 !@1  9"D  %1 ! " C %  "! 9"  B! B!&!4 " %  "   !@ !2! I 576 5 !4 ! 321 %!0

&KDSWHU  3URIHVVLRQDO 6WDQGDUGV

 *HQHUDOO\ DFFHSWHG DXGLWLQJ VWDQGDUGV PXVW EH IROORZHG RQ DOO DXGLW HQJDJHPHQWV 7UXH )DOVH

 7KH UHSRUWLQJ SULQFLSOH UHODWHV WR D ILUP V V\VWHP RI TXDOLW\ FRQWURO FULWHULD IRU FRQGXFWLQJ DQ DXGLW 7UXH )DOVH

 $XGLWRUV FDQQRW HIIHFWLYHO\ VDWLVI\ WKH UHVSRQVLELOLWLHV SULQFLSOH UHTXLULQJ GXH FDUH LI WKH\ KDYH QRW DOVR VDWLVILHG WKH SHUIRUPDQFH SULQFLSOH 7UXH )DOVH

 6XEVWDQWLYH SURFHGXUHV SHUIRUPHG E\ WKH DXGLW WHDP DUH PRVW FORVHO\ UHODWHG WR WKH ULVN RI PDWHULDO PLVVWDWHPHQW 7UXH )DOVH

 $XGLWLQJ SURFHGXUHV DUH WKH VDPH DV DXGLWLQJ VWDQGDUGV 7UXH )DOVH

 7KH FRQFHSW RI GXH FDUH UHIOHFWV WKH QHHG WR SODQ DQG SHUIRUP WKH DXGLW ZLWK DQ DSSURSULDWH OHYHO RI SURIHVVLRQDO VNHSWLFLVP 7UXH )DOVH

 8QGHU WKH SHUIRUPDQFH SULQFLSOH DXGLWRUV DUH UHTXLUHG WR SURYLGH DEVROXWH DVVXUDQFH WKDW WKH FOLHQW V ILQDQFLDO VWDWHPHQWV GR QRW FRQWDLQ PDWHULDO PLVVWDWHPHQWV 7UXH )DOVH

 7KH SHUIRUPDQFH SULQFLSOH VHWV IRUWK WKH TXDOLW\ FULWHULD IRU FRQGXFWLQJ DQ DXGLW 7UXH )DOVH

 $XGLWRUV RI SXEOLF HQWLWLHV UHJLVWHUHG ZLWK WKH 6HFXULWLHV DQG ([FKDQJH &RPPLVVLRQ DUH UHTXLUHG WR UHJLVWHU ZLWK WKH 3XEOLF &RPSDQ\ $FFRXQWLQJ 2YHUVLJKW %RDUG 7UXH )DOVH

 &RQWURO ULVN LV WKH SUREDELOLW\ WKDW D PDWHULDO PLVVWDWHPHQW HUURU RU IUDXG FRXOG RFFXU DQG QRW EH SUHYHQWHG RU GHWHFWHG RQ D WLPHO\ EDVLV E\ WKH DXGLWRUV VXEVWDQWLYH SURFHGXUHV 7UXH )DOVH

 7KH ZRUG DSSURSULDWHQHVV UHIHUV WR WKH QXPEHU RI WUDQVDFWLRQV RU FRPSRQHQWV RI DQ DFFRXQW EDODQFH H[DPLQHG E\ DXGLWRUV 7UXH )DOVH

 7R EH FRQVLGHUHG PDWHULDO DQ LWHP PXVW EH RQH WKDW ZRXOG LQIOXHQFH WKH GHFLVLRQ RI ILQDQFLDO VWDWHPHQW XVHUV 7UXH )DOVH

 7KH FRQWHQWV RI WKH DXGLWRUV UHSRUW DUH JXLGHG E\ WKH SHUIRUPDQFH SULQFLSOH RI *$$6 7UXH )DOVH

 $Q XQTXDOLILHG RSLQLRQ LQGLFDWHV WKDW WKH ILQDQFLDO VWDWHPHQWV SUHVHQW WKH HQWLW\ V ILQDQFLDO FRQGLWLRQ UHVXOWV RI RSHUDWLRQV DQG FDVK IORZV LQ FRQIRUPLW\ ZLWK *$$3 7UXH )DOVH

 7KH DXGLWRUV UHSRUW VKRXOG HLWKHU FRQWDLQ DQ H[SUHVVLRQ RI RSLQLRQ RQ WKH ILQDQFLDO VWDWHPHQWV WDNHQ DV D ZKROH RU DQ DVVHUWLRQ WR WKH HIIHFW WKDW DQ RSLQLRQ FDQQRW EH H[SUHVVHG 7UXH )DOVH

 (YLGHQFH LV FRQVLGHUHG DSSURSULDWH ZKHQ LW LV ERWK YDOLG DQG UHOHYDQW 7UXH )DOVH

 7KH SXUSRVH RI D V\VWHP RI TXDOLW\ FRQWURO LV WR SURYLGH UHDVRQDEOH DVVXUDQFH WKDW WKH ILUP DQG LWV SHUVRQQHO LVVXH UHSRUWV WKDW DUH DSSURSULDWH XQGHU WKH FLUFXPVWDQFHV 7UXH )DOVH

0XOWLSOH &KRLFH 4XHVWLRQV

 $SSHQGL[ 7KH DWWHVWDWLRQ VWDQGDUGV GR QRW UHTXLUH WKH DWWHVWDWLRQ UHSRUW WR LQFOXGH D VWDWHPHQW WKDW

$ 3URYLGHV D FRQFOXVLRQ ZKHWKHU WKH VXEMHFW PDWWHU LV SUHVHQWHG LQ FRQIRUPLW\ ZLWK HVWDEOLVKHG RU VWDWHG FULWHULD % ,QGLFDWHV WKDW WKH SUDFWLWLRQHU KDV VLJQLILFDQW UHVHUYDWLRQV DERXW WKH HQJDJHPHQW & ,GHQWLILHV WKH VXEMHFW PDWWHU RU DVVHUWLRQ EHLQJ UHSRUWHG RQ ' ,QGLFDWHV WKDW WKH DFFRXQWDQW DVVXPHV QR UHVSRQVLELOLW\ WR XSGDWH WKH UHSRUW

 &RQWURO ULVN LV

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

$ &RPSHWHQFH DQG FDSDELOLWLHV % ,QGHSHQGHQW DWWLWXGH & 'XH FDUH ' 3ODQQLQJ DQG VXSHUYLVLRQ  :KLFK RI WKH IROORZLQJ W\SHV RI DXGLWRUV UHSRUWV GRHV QRW UHTXLUH DQ H[SODQDWRU\ SDUDJUDSK WR VXSSRUW WKH RSLQLRQ"

$ 8QTXDOLILHG RSLQLRQ % $GYHUVH RSLQLRQ & 4XDOLILHG RSLQLRQ ' 'LVFODLPHU RI RSLQLRQ

 :KLFK RI WKH IROORZLQJ LV DQ HOHPHQW RI D V\VWHP RI TXDOLW\ FRQWURO WKDW VKRXOG EH FRQVLGHUHG E\ D SXEOLF DFFRXQWLQJ ILUP LQ HVWDEOLVKLQJ LWV TXDOLW\ FRQWURO SROLFLHV DQG SURFHGXUHV"

$ /HQGLQJ FUHGLELOLW\ WR D FOLHQW V ILQDQFLDO VWDWHPHQWV % 8VLQJ VWDWLVWLFDO VDPSOLQJ WHFKQLTXHV & $FFHSWLQJ DQG FRQWLQXLQJ FOLHQW UHODWLRQVKLSV DQG VSHFLILF HQJDJHPHQWV ' 2EWDLQLQJ PHPEHUVKLS LQ WKH &HQWHU IRU 3XEOLF &RPSDQ\ $XGLW )LUPV  :KLFK RI WKH IROORZLQJ SUHVXPSWLRQV GRHV QRW UHODWH WR WKH UHOLDELOLW\ RI DXGLW HYLGHQFH"

$ 7KH PRUH HIIHFWLYH WKH FOLHQW V LQWHUQDO FRQWURO WKH PRUH DVVXUDQFH LW SURYLGHV DERXW WKH DFFRXQWLQJ GDWD DQG ILQDQFLDO VWDWHPHQWV % 7KH DXGLWRUV RSLQLRQ WR EH HFRQRPLFDOO\ XVHIXO LV IRUPHG ZLWKLQ D UHDVRQDEOH WLPH DQG EDVHG RQ HYLGHQFH REWDLQHG DW D UHDVRQDEOH FRVW & (YLGHQFH REWDLQHG IURP LQGHSHQGHQW VRXUFHV RXWVLGH WKH HQWLW\ LV PRUH UHOLDEOH WKDQ HYLGHQFH VHFXUHG VROHO\ ZLWKLQ WKH HQWLW\ ' 7KH LQGHSHQGHQW DXGLWRUV GLUHFW SHUVRQDO NQRZOHGJH REWDLQHG WKURXJK REVHUYDWLRQ DQG LQVSHFWLRQ LV PRUH SHUVXDVLYH WKDQ LQIRUPDWLRQ REWDLQHG LQGLUHFWO\

 $Q LPSRUWDQW UROH RI WKH 3XEOLF &RPSDQ\ $FFRXQWLQJ 2YHUVLJKW %RDUG LV WR RYHUVHH WKH

$ ,VVXDQFH RI VWDWHPHQWV E\ WKH )LQDQFLDO $FFRXQWLQJ 6WDQGDUGV %RDUG % 3UHSDUDWLRQ DQG JUDGLQJ RI WKH 8QLIRUP &3$ ([DPLQDWLRQ & 3HHU UHYLHZ RI PHPEHU ILUPV RI WKH 3ULYDWH &RPSDQLHV 3UDFWLFH 6HFWLRQ ' 5HJXODWLRQ RI ILUPV WKDW DXGLW SXEOLF HQWLWLHV  $XGLW HYLGHQFH LV XVXDOO\ FRQVLGHUHG VXIILFLHQW ZKHQ

$ ,W LV UHOLDEOH % 7KHUH LV HQRXJK TXDQWLW\ WR DIIRUG D UHDVRQDEOH EDVLV IRU DQ RSLQLRQ RQ ILQDQFLDO VWDWHPHQWV & ,W KDV WKH TXDOLWLHV RI EHLQJ UHOHYDQW REMHFWLYH DQG IUHH IURP XQNQRZQ ELDV ' ,W KDV EHHQ REWDLQHG WKURXJK UDQGRP VHOHFWLRQ PHWKRGV  :KLFK RI WKH IROORZLQJ LV QRW FRQVLGHUHG D W\SH RI DXGLW HYLGHQFH"

$ (QWLW\ V WULDO EDODQFH % $XGLWRUV FDOFXODWLRQV & 3K\VLFDO REVHUYDWLRQ ' 9HUEDO VWDWHPHQWV PDGH E\ FOLHQW SHUVRQQHO

 $SSHQGL[ 7KH $,&3$ DWWHVWDWLRQ VWDQGDUGV GLIIHU IURP WKH UHVSRQVLELOLWLHV SULQFLSOH SHUIRUPDQFH SULQFLSOH DQG UHSRUWLQJ SULQFLSOH LQ WKDW

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

$ &HUWLI\ WKH FRUUHFWQHVV RI &DPGHQ V ILQDQFLDO VWDWHPHQWV % 0DNH D FRPSOHWH H[DPLQDWLRQ RI &DPGHQ V UHFRUGV DQG YHULI\ DOO RI &DPGHQ V WUDQVDFWLRQV & *LYH DQ RSLQLRQ RQ WKH IDLU SUHVHQWDWLRQ RI &DPGHQ V ILQDQFLDO VWDWHPHQWV LQ FRQIRUPLW\ ZLWK WKH DSSOLFDEOH ILQDQFLDO UHSRUWLQJ IUDPHZRUN HJ *$$3 ,)56  ' *LYH DQ RSLQLRQ RQ WKH DWWUDFWLYHQHVV RI &DPGHQ IRU LQYHVWPHQW SXUSRVHV DQG FULWLTXH WKH ZLVGRP DQG OHJDOLW\ RI LWV EXVLQHVV GHFLVLRQV

 $XGLWRUV WU\ WR DFKLHYH LQGHSHQGHQFH LQ DSSHDUDQFH LQ RUGHU WR

$ 0DLQWDLQ SXEOLF FRQILGHQFH LQ WKH SURIHVVLRQ % %HFRPH LQGHSHQGHQW LQ IDFW & &RPSO\ ZLWK WKH UHVSRQVLELOLWLHV SULQFLSOH ' 0DLQWDLQ DQ XQELDVHG PHQWDO DWWLWXGH  7KH SUHSDUDWLRQ RI DQ DXGLW SODQ SULRU WR WKH EHJLQQLQJ RI ILHOGZRUN LV DSSURSULDWHO\ FRQVLGHUHG GRFXPHQWDWLRQ RI

$ 3ODQQLQJ % 6XSHUYLVLRQ & ,QIRUPDWLRQ HYDOXDWLRQ ' 4XDOLW\ DVVXUDQFH  :KLFK RI WKH IROORZLQJ SURFHGXUHV ZRXOG SURYLGH WKH PRVW UHOLDEOH DXGLW HYLGHQFH"

$ ,QTXLULHV RI WKH FOLHQW V DFFRXQWLQJ VWDII KHOG LQ SULYDWH % ,QVSHFWLRQ RI SUHQXPEHUHG FOLHQW VKLSSLQJ GRFXPHQWV & ,QVSHFWLRQ RI EDQN VWDWHPHQWV REWDLQHG GLUHFWO\ IURP WKH FOLHQW V ILQDQFLDO LQVWLWXWLRQ ' $QDO\WLFDO SURFHGXUHV SHUIRUPHG E\ DXGLWRUV RQ WKH FOLHQW V WULDO EDODQFH

 $SSHQGL[ :KLFK RI WKH IROORZLQJ LV QRW DQ DWWHVWDWLRQ VWDQGDUG"

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

$ $Q DXGLWRU RQ WKH HQJDJHPHQW KDV D GLVWDQW UHODWLYH ZKR LV HPSOR\HG E\ D YHQGRU WKDW GRHV D VLJQLILFDQW DPRXQW RI EXVLQHVV ZLWK FOLHQWV % 7KH FOLHQW V FKLHI H[HFXWLYH RIILFHU JUDGXDWHG IURP WKH VDPH XQLYHUVLW\ DV WKH SDUWQHU LQ FKDUJH RI WKH DFFRXQWLQJ ILUP & $Q DXGLWRU RQ WKH HQJDJHPHQW RZQV D ILQDQFLDO LQWHUHVW LQ WKH FOLHQW V VWRFN ' 7KH FOLHQW SURYLGHV ILQDQFLDO VXSSRUW WR D QXPEHU RI FKDULWDEOH FDXVHV WKDW DOVR UHFHLYH VXSSRUW IURP WKH DFFRXQWLQJ ILUP

 $ YHQGRU V LQYRLFH UHFHLYHG DQG KHOG E\ WKH FOLHQW ZRXOG EH FRQVLGHUHG ZKDW W\SH RI HYLGHQFH"

$ ([WHUQDO % ,QWHUQDO & ([WHUQDOLQWHUQDO ' :ULWWHQ UHSUHVHQWDWLRQ  :KLFK RI WKH IROORZLQJ VWDWHPHQWV LV JHQHUDOO\ FRUUHFW DERXW WKH DSSURSULDWHQHVV RI DXGLW HYLGHQFH"

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

 7KH VWDQGDUG DXGLWRUV UHSRUW UHIHUV WR VWDQGDUGV RI WKH 3&$2% DQG *$$3 LQ ZKLFK SDUDJUDSK"

$ 6WDQGDUGV RI WKH 3&$2% 6FRSH RQO\ *$$3 2SLQLRQ RQO\ % 6WDQGDUGV RI WKH 3&$2% ,QWURGXFWRU\ RQO\ *$$3 6FRSH DQG RSLQLRQ & 6WDQGDUGV RI WKH 3&$2% ,QWURGXFWRU\ DQG VFRSH *$$3 2SLQLRQ RQO\ ' 6WDQGDUGV RI WKH 3&$2% ,QWURGXFWRU\ RQO\ *$$3 $OO SDUDJUDSKV  :KLFK RI WKH IROORZLQJ LV QRW LQFOXGHG LQ WKH DXGLWRUV VWDQGDUG UHSRUW UHSUHVHQWLQJ DQ XQTXDOLILHG RSLQLRQ"

$ $ EULHI LQGLFDWLRQ RI WKH UHVSRQVLELOLW\ RI DXGLWRUV DQG PDQDJHPHQW IRU WKH ILQDQFLDO VWDWHPHQWV % $Q LQGLFDWLRQ WKDW DOO DSSURSULDWH GLVFORVXUHV KDYH EHHQ PDGH DQG LQFOXGHG LQ WKH ILQDQFLDO VWDWHPHQWV & $Q LQGLFDWLRQ WKDW WKH DXGLW ZDV FRQGXFWHG LQ DFFRUGDQFH ZLWK VWDQGDUGV HVWDEOLVKHG E\ WKH 3&$2% ' 7KH DXGLWRUV RSLQLRQ RQ WKH IDLUQHVV RI WKH ILQDQFLDO VWDWHPHQWV

 ,QWHUQDO HYLGHQFH

$ ,V REWDLQHG GLUHFWO\ IURP WKLUG SDUWLHV LQGHSHQGHQW RI WKH FOLHQW % 2ULJLQDWHV RXWVLGH WKH FOLHQW V V\VWHP EXW KDV EHHQ UHFHLYHG DQG SURFHVVHG E\ WKH FOLHQW & &RQVLVWV RI GRFXPHQWV WKDW DUH SURGXFHG XVHG DQG VWRUHG ZLWKLQ WKH FOLHQW V LQIRUPDWLRQ V\VWHP ' &RQVLVWV RI UHSUHVHQWDWLRQV PDGH E\ WKH FOLHQW V RIILFHUV GLUHFWRUV RZQHUV DQG HPSOR\HHV  :KLFK RI WKH IROORZLQJ SUHVXPSWLRQV LV FRUUHFW DERXW WKH UHOLDELOLW\ RI DXGLW HYLGHQFH"

$ ,QIRUPDWLRQ REWDLQHG LQGLUHFWO\ IURP RXWVLGH VRXUFHV LV WKH PRVW UHOLDEOH IRUP RI DXGLW HYLGHQFH % 7R EH UHOLDEOH DXGLW HYLGHQFH VKRXOG EH FRQYLQFLQJ UDWKHU WKDQ SHUVXDVLYH & 5HOLDELOLW\ RI DXGLW HYLGHQFH UHIHUV WR WKH DPRXQW RI FRUURERUDWLYH HYLGHQFH REWDLQHG ' $Q HIIHFWLYH V\VWHP RI LQWHUQDO FRQWURO SURYLGHV PRUH DVVXUDQFH DERXW WKH UHOLDELOLW\ RI DXGLW HYLGHQFH

 7KH DXGLWRUV UHVSRQVLELOLW\ WR H[SUHVV DQ RSLQLRQ RQ WKH ILQDQFLDO VWDWHPHQWV LV

$ ,PSOLFLWO\ UHSUHVHQWHG LQ WKH DXGLWRUV VWDQGDUG UHSRUW % ([SOLFLWO\ UHSUHVHQWHG LQ WKH LQWURGXFWRU\ SDUDJUDSK RI WKH DXGLWRUV VWDQGDUG UHSRUW & ([SOLFLWO\ UHSUHVHQWHG LQ WKH VFRSH SDUDJUDSK RI WKH DXGLWRUV VWDQGDUG UHSRUW ' ([SOLFLWO\ UHSUHVHQWHG LQ WKH RSLQLRQ SDUDJUDSK RI WKH DXGLWRUV VWDQGDUG UHSRUW  :KLFK RI WKH IROORZLQJ LV QRW D FRQFHSW IURP WKH SHUIRUPDQFH SULQFLSOH XQGHU JHQHUDOO\ DFFHSWHG DXGLWLQJ VWDQGDUGV"

$ 7KH DXGLWRU PXVW SODQ WKH ZRUN DQG SURSHUO\ VXSHUYLVH DQ\ DVVLVWDQWV % 7KH DXGLWRU PXVW H[SUHVV DQ RSLQLRQ LQ DFFRUGDQFH ZLWK WKH DXGLWRU V ILQGLQJV & 7KH DXGLWRU PXVW REWDLQ VXIILFLHQW DSSURSULDWH HYLGHQFH DERXW ZKHWKHU PDWHULDO PLVVWDWHPHQWV H[LVW ' 7KH DXGLWRU PXVW GHWHUPLQH DQG DSSO\ DQ DSSURSULDWH PDWHULDOLW\ OHYHO WKURXJKRXW WKH DXGLW

 8QGHU JHQHUDOO\ DFFHSWHG DXGLWLQJ VWDQGDUGV ZKLFK RI WKH IROORZLQJ UHODWHV WR WKH UHVSRQVLELOLWLHV SULQFLSOH"

$ 7KH LQLWLDO SODQQLQJ RI WKH DXGLW HQJDJHPHQW % 7KH FRQILUPDWLRQ RI DFFRXQWV UHFHLYDEOH & 7KH FRPSOHWLRQ RI DQ LQWHUQDO FRQWURO TXHVWLRQQDLUH ' 0DLQWDLQLQJ SURIHVVLRQDO VNHSWLFLVP DQG H[HUFLVLQJ SURIHVVLRQDO MXGJPHQW  :KLFK RI WKH IROORZLQJ UHSUHVHQW V DXGLW TXDOLW\ JXLGHV WKDW UHPDLQ VWDEOH RYHU WLPH DQG DUH DSSOLFDEOH IRU DOO DXGLWV"

$ $XGLWLQJ SURFHGXUHV % $XGLWLQJ VWDQGDUGV & 'XH FDUH ' 6\VWHP RI TXDOLW\ FRQWURO

 :KLFK RI WKH IROORZLQJ VLWXDWLRQV ZRXOG PRVW OLNHO\ EH LQ FRQIOLFW ZLWK WKH UHVSRQVLELOLWLHV SULQFLSOH"

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

$ $XGLWRUV ZRXOG EH UHTXLUHG WR UHO\ RQ H[WHUQDO UDWKHU WKDQ LQWHUQDO IRUPV RI HYLGHQFH % $XGLWRUV ZRXOG EH UHTXLUHG WR SHUIRUP SURFHGXUHV DW LQWHULP SHULRGV UDWKHU WKDQ DW \HDUHQG & $XGLWRUV ZRXOG EH UHTXLUHG WR FRQILUP D ODUJHU QXPEHU RI FXVWRPHU DFFRXQWV UHFHLYDEOH EDODQFHV ' $XGLWRUV ZRXOG EH UHTXLUHG WR REWDLQ PRUH HYLGHQFH WKURXJK GLUHFW SHUVRQDO REVHUYDWLRQ

 $V LW UHODWHV WR DXGLW HYLGHQFH DSSURSULDWHQHVV UHIHUV WR WKH

$ 2ULJLQDOLW\ RI HYLGHQFH JDWKHUHG % 4XDOLW\ RI HYLGHQFH JDWKHUHG & 4XDQWLW\ RI HYLGHQFH JDWKHUHG ' 7LPHOLQHVV RI HYLGHQFH JDWKHUHG  :KLFK RI WKH IROORZLQJ LQIRUPDWLRQ ZRXOG QRW EH LQFOXGHG LQ WKH DXGLWRUV VWDQGDUG UHSRUW"

$ 7KH QDPHV RI WKH ILQDQFLDO VWDWHPHQWV DXGLWHG % $ GHVFULSWLRQ RI WKH QDWXUH RI DQ DXGLW & $Q LQGLFDWLRQ WKDW DOO QHFHVVDU\ GLVFORVXUHV KDYH EHHQ SUHVHQWHG ' $Q RSLQLRQ RQ WKH HQWLW\ V ILQDQFLDO VWDWHPHQWV  7KH SULPDU\ SXUSRVH RI WKH DXGLWRUV VWXG\ RI LQWHUQDO FRQWURO IRU D QRQSXEOLF HQWLW\ LV

$ 7R SURYLGH FRQVWUXFWLYH VXJJHVWLRQV WR WKH FOLHQW IRU LPSURYLQJ LWV LQWHUQDO FRQWURO % 7R UHSRUW RQ LQWHUQDO FRQWURO DV UHTXLUHG E\ $XGLWLQJ 6WDQGDUG 1R  & 7R LGHQWLI\ DQG GHWHFW IUDXG DQG LUUHJXODULWLHV SHUSHWUDWHG E\ FOLHQW SHUVRQQHO ' 7R GHWHUPLQH WKH QDWXUH WLPLQJ DQG H[WHQW RI VXEVWDQWLYH SURFHGXUHV

 :KLFK UHSRUWLQJ RSWLRQV GR DXGLWRUV KDYH LI WKH FOLHQW V ILQDQFLDO VWDWHPHQWV DUH QRW SUHVHQWHG DFFRUGLQJ WR WKH DSSOLFDEOH ILQDQFLDO IUDPHZRUN HJ *$$3 ,)56 "

$ 8QTXDOLILHG RSLQLRQ RU GLVFODLPHU RI RSLQLRQ % 4XDOLILHG RSLQLRQ RU GLVFODLPHU RI RSLQLRQ & 8QTXDOLILHG RSLQLRQ RU DGYHUVH RSLQLRQ ' 4XDOLILHG RSLQLRQ RU DGYHUVH RSLQLRQ  :KLFK RI WKH IROORZLQJ VWDWHPHQWV LV WUXH ZLWK UHVSHFW WR WKH SHUVXDVLYHQHVV RI DXGLW HYLGHQFH"

$ 3HUVXDVLYHQHVV LV UHODWHG WR WKH UHOHYDQFH RI HYLGHQFH EXW QRW WKH UHOLDELOLW\ RI HYLGHQFH % (YLGHQFH LV FRQVLGHUHG PRUH SHUVXDVLYH ZKHQ JDWKHUHG SULRU WR \HDUHQG WKDQ IROORZLQJ \HDUHQG & (YLGHQFH REWDLQHG XQGHU HQYLURQPHQWV RI VWURQJHU LQWHUQDO FRQWURO LV PRUH SHUVXDVLYH WKDQ HYLGHQFH REWDLQHG XQGHU HQYLURQPHQWV RI ZHDNHU LQWHUQDO FRQWURO ' ,Q HYDOXDWLQJ SHUVXDVLYHQHVV VXIILFLHQF\ RI HYLGHQFH LV RI PRUH LPSRUWDQFH WKDQ DSSURSULDWHQHVV RI HYLGHQFH

 :KLFK RI WKH IROORZLQJ FRQFHSWV LV OHDVW UHODWHG WR WKH ULVN RI PDWHULDO PLVVWDWHPHQW"

$ &RQWURO ULVN % 'HWHFWLRQ ULVN & ,QKHUHQW ULVN ' 0DWHULDOLW\  :KLFK RI WKH IROORZLQJ VWDWHPHQWV GHVFULEHV DQ DSSURSULDWH UHODWLRQVKLS ZLWK UHVSHFW WR WKH UHOLDELOLW\ RI DXGLW HYLGHQFH"

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

 $ SHULRGLF UHYLHZ RI DQ DXGLW ILUP V V\VWHP RI TXDOLW\ FRQWURO E\ WKH 3&$2% LV UHIHUUHG WR DV D Q 

$ ,QVSHFWLRQ % 3HHU UHYLHZ & 3ULQFLSOHV UHYLHZ ' 4XDOLW\ UHYLHZ  7KH SHUIRUPDQFH SULQFLSOH ZRXOG LQFOXGH DOO RI WKH IROORZLQJ H[FHSW

$ 7KH DXGLWRUV GHWHUPLQDWLRQ RI PDWHULDOLW\ OHYHOV % 7KH DXGLWRUV HYDOXDWLRQ RI LQGHSHQGHQFH ZLWK UHVSHFW WR WKHLU FOLHQWV & 7KH DXGLWRUV HYDOXDWLRQ RI WKH ULVN RI PDWHULDO PLVVWDWHPHQW ' 7KH DXGLWRUV GHWHUPLQDWLRQ RI WKH QDWXUH WLPLQJ DQG H[WHQW RI VXEVWDQWLYH WHVWV  :KLFK RI WKH IROORZLQJ LV PRVW FORVHO\ DVVRFLDWHG ZLWK WKH UHVSRQVLELOLWLHV SULQFLSOH"

$ 'XH FDUH % 3ODQQLQJ & 4XDOLILHG DXGLW RSLQLRQ ' 5LVN RI PDWHULDO PLVVWDWHPHQW

 :KLFK RI WKH IROORZLQJ VWDWHPHQWV LV QRW WUXH ZLWK UHVSHFW WR WKH UHVSRQVLELOLW\ IRU HVWDEOLVKLQJ JHQHUDOO\ DFFHSWHG DXGLWLQJ VWDQGDUGV"

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

$ 'HWHUPLQDWLRQ RI PDWHULDOLW\ OHYHOV WR XVH GXULQJ WKH DXGLW % &RQVLGHUDWLRQ RI WKH DELOLW\ RI WKH HQWLW\ V LQWHUQDO FRQWURO WR SUHYHQW RU GHWHFW HUURUV & 3UHSDUDWLRQ RI D ZULWWHQ DXGLW SODQ ' (YDOXDWLRQ RI WKH W\SH RI DXGLW RSLQLRQ WR EH LVVXHG EDVHG RQ WKH DXGLWRU V ILQGLQJV

 7KH VWDWH RI PLQG WKDW FKDUDFWHUL]HV WKH DXGLWRUV DSSURSULDWH TXHVWLRQLQJ DQG FULWLFDO DVVHVVPHQW RI DXGLW HYLGHQFH LV UHIHUUHG WR DV

$ 'XH FDUH % ,QGHSHQGHQFH LQ DSSHDUDQFH & 3URIHVVLRQDO MXGJPHQW ' 3URIHVVLRQDO VNHSWLFLVP  :KLFK RI WKH IROORZLQJ LV OHDVW UHODWHG WR WKH FRQFHSW RI LQGHSHQGHQFH LQ DSSHDUDQFH"

$ 7KH DXGLWRUV REMHFWLYLW\ DQG DELOLW\ WR DFW LPSDUWLDOO\ WRZDUG WKH FOLHQW % 7KH SHUFHSWLRQV RI LQGLYLGXDOV ZKR UHO\ RQ WKH ILQDQFLDO VWDWHPHQWV DQG DXGLWRUV RSLQLRQ RQ WKH ILQDQFLDO VWDWHPHQWV & 7KH RZQHUVKLS RI D ILQDQFLDO LQWHUHVW LQ D FOLHQW E\ WKH DXGLWRU ' 7KH HPSOR\PHQW RI WKH DXGLWRU V IDPLO\ PHPEHU LQ DQ LPSRUWDQW SRVLWLRQ ZLWK WKH FOLHQW

 :KLFK FRQFHSW UHFRJQL]HV WKDW D *$$6 DXGLW PD\ IDLO WR GHWHFW DOO PDWHULDO PLVVWDWHPHQWV"

$ $EVROXWH DVVXUDQFH % 'XH FDUH & 5HDVRQDEOH DVVXUDQFH ' 5LVN RI PDWHULDO PLVVWDWHPHQW  :KLFK RI WKH IROORZLQJ FDWHJRULHV RI SULQFLSOHV LV PRVW FORVHO\ UHODWHG WR JDWKHULQJ DXGLW HYLGHQFH"

$ 3HUIRUPDQFH % 5HDVRQDEOH DVVXUDQFH & 5HSRUWLQJ ' 5HVSRQVLELOLWLHV  7R H[HUFLVH GXH FDUH DQ DFFRXQWDQW VKRXOG

$ 7DNH FRQWLQXLQJ SURIHVVLRQDO HGXFDWLRQ FODVVHV % 5HSRUW ZKHWKHU WKH ILQDQFLDO VWDWHPHQWV DUH LQ DFFRUGDQFH ZLWK *$$3 & *DWKHU HQRXJK DXGLW HYLGHQFH WR KDYH FRPSOHWH DVVXUDQFH WKDW WKHUH LV HQRXJK VXSSRUW IRU WKH RSLQLRQ RQ WKH ILQDQFLDO VWDWHPHQWV ' &RQGXFW WKH HQJDJHPHQW LQ DFFRUGDQFH ZLWK *$$6 DQG HQVXUH WKDW WKH HQJDJHPHQW LV FRPSOHWHG RQ D WLPHO\ EDVLV

 2QH RI DQ DFFRXQWLQJ ILUP V EDVLF REMHFWLYHV LV WR SURYLGH SURIHVVLRQDO VHUYLFHV WKDW FRQIRUP WR SURIHVVLRQDO VWDQGDUGV 5HDVRQDEOH DVVXUDQFH RI DFKLHYLQJ WKLV REMHFWLYH FDQ EH REWDLQHG E\ IROORZLQJ

$ *HQHUDOO\ DFFHSWHG DXGLWLQJ VWDQGDUGV *$$6  % 6WDQGDUGV ZLWKLQ D V\VWHP RI TXDOLW\ FRQWURO & *HQHUDOO\ DFFHSWHG DFFRXQWLQJ SUDFWLFHV *$$3  ' ,QWHUQDWLRQDO DXGLWLQJ VWDQGDUGV  :KLFK RI WKH IROORZLQJ EHVW GHPRQVWUDWHV WKH FRQFHSW RI SURIHVVLRQDO VNHSWLFLVP"

$ 5HO\LQJ PRUH H[WHQVLYHO\ RQ H[WHUQDO HYLGHQFH UDWKHU WKDQ LQWHUQDO HYLGHQFH % )RFXVLQJ RQ LWHPV WKDW KDYH D PRUH VLJQLILFDQW TXDQWLWDWLYH HIIHFW RQ WKH HQWLW\ V ILQDQFLDO VWDWHPHQWV & &ULWLFDOO\ DVVHVVLQJ YHUEDO HYLGHQFH UHFHLYHG IURP WKH HQWLW\ V PDQDJHPHQW ' (YDOXDWLQJ SRWHQWLDO ILQDQFLDO LQWHUHVWV KHOG E\ DXGLWRUV LQ WKH FOLHQW

 7KH SULPDU\ SXUSRVH IRU REWDLQLQJ DQ XQGHUVWDQGLQJ RI WKH HQWLW\ V HQYLURQPHQW LQFOXGLQJ LWV LQWHUQDO FRQWURO LQ D ILQDQFLDO VWDWHPHQW DXGLW LV

$ 7R GHWHUPLQH WKH QDWXUH WLPLQJ DQG H[WHQW RI VXEVWDQWLYH SURFHGXUHV WR EH SHUIRUPHG % 7R PDNH FRQVXOWLQJ VXJJHVWLRQV WR WKH PDQDJHPHQW & 7R REWDLQ GLUHFW VXIILFLHQW DSSURSULDWH DXGLW HYLGHQFH WR DIIRUG D UHDVRQDEOH EDVLV IRU DQ RSLQLRQ RQ WKH ILQDQFLDO VWDWHPHQWV ' 7R GHWHUPLQH ZKHWKHU WKH HQWLW\ KDV FKDQJHG DQ\ DFFRXQWLQJ SULQFLSOHV  2UGLQDULO\ ZKDW VRXUFH RI HYLGHQFH VKRXOG OHDVW DIIHFW DXGLW FRQFOXVLRQV"

$ ([WHUQDO GRFXPHQWDU\ HYLGHQFH % ,QTXLU\ RI PDQDJHPHQW & 'RFXPHQWDWLRQ SUHSDUHG E\ WKH DXGLW WHDP ' ,QTXLU\ RI HQWLW\ OHJDO FRXQVHO  7KH PRVW SHUVXDVLYH HYLGHQFH UHJDUGLQJ WKH H[LVWHQFH RI QHZO\ DFTXLUHG FRPSXWHU HTXLSPHQW LV

$ ,QTXLU\ RI PDQDJHPHQW % 'RFXPHQWDWLRQ SUHSDUHG H[WHUQDOO\ & 2EVHUYDWLRQ RI DXGLWHH V SURFHGXUHV ' 3K\VLFDO REVHUYDWLRQ

 :KLFK RI WKH IROORZLQJ SURFHGXUHV ZRXOG SURYLGH WKH PRVW UHOLDEOH DXGLW HYLGHQFH"

$ ,QTXLULHV RI WKH FOLHQW V LQWHUQDO DXGLW VWDII % ,QVSHFWLRQ RI SUHQXPEHUHG FOLHQW SXUFKDVH RUGHUV ILOHG LQ WKH YRXFKHUV SD\DEOH GHSDUWPHQW & ,QVSHFWLRQ RI YHQGRU VDOHV LQYRLFHV UHFHLYHG IURP FOLHQW SHUVRQQHO ' ,QVSHFWLRQ RI EDQN VWDWHPHQWV REWDLQHG GLUHFWO\ IURP WKH FOLHQW V ILQDQFLDO LQVWLWXWLRQ  %UHDX[ &R &3$V UHTXLUH WKDW DOO DXGLW GRFXPHQWDWLRQ LQGLFDWH WKH LGHQWLW\ RI WKH

SUHSDUHU DQG WKH UHYLHZHU 7KLV SURFHGXUH SURYLGHV HYLGHQFH UHODWLQJ WR ZKLFK RI WKH IROORZLQJ"

$ ,QGHSHQGHQFH % $GHTXDWH FRPSHWHQFH DQG FDSDELOLWLHV & $GHTXDWH SODQQLQJ DQG VXSHUYLVLRQ ' *DWKHULQJ VXIILFLHQW DSSURSULDWH HYLGHQFH  :KLFK RI WKH IROORZLQJ FRQFHSWV LV OHDVW UHODWHG WR WKH VWDQGDUG RI GXH FDUH"

$ ,QGHSHQGHQFH LQ IDFW % 3URIHVVLRQDO VNHSWLFLVP & 3UXGHQW DXGLWRU ' 5HDVRQDEOH DVVXUDQFH

 7KH HYLGHQFH FRQVLGHUHG PRVW DSSURSULDWH E\ DXGLWRUV LV EHVW GHVFULEHG DV

$ ,QWHUQDO GRFXPHQWV VXFK DV VDOHV LQYRLFH FRSLHV SURGXFHG XQGHU FRQGLWLRQV RI VWURQJ LQWHUQDO FRQWURO % :ULWWHQ UHSUHVHQWDWLRQV PDGH E\ WKH SUHVLGHQW RI WKH HQWLW\ & 'RFXPHQWDU\ HYLGHQFH REWDLQHG GLUHFWO\ IURP LQGHSHQGHQW H[WHUQDO VRXUFHV ' 'LUHFW SHUVRQDO NQRZOHGJH REWDLQHG WKURXJK SK\VLFDO REVHUYDWLRQ DQG PDWKHPDWLFDO UHFDOFXODWLRQ  $XGLWRUV XQGHUVWDQGLQJ RI WKH LQWHUQDO FRQWURO LQ DQ HQWLW\ FRQWULEXWHV LQIRUPDWLRQ IRU

$ 'HWHUPLQLQJ ZKHWKHU PHPEHUV RI WKH DXGLW WHDP KDYH WKH UHTXLUHG FRPSHWHQFH DQG FDSDELOLWLHV WR SHUIRUP WKH DXGLW % $VFHUWDLQLQJ WKH LQGHSHQGHQFH LQ PHQWDO DWWLWXGH RI PHPEHUV RI WKH DXGLW WHDP & 3ODQQLQJ WKH SURIHVVLRQDO GHYHORSPHQW FRXUVHV WKH DXGLW VWDII QHHGV WR NHHS XS WR GDWH ZLWK QHZ DXGLWLQJ VWDQGDUGV ' 3ODQQLQJ WKH QDWXUH WLPLQJ DQG H[WHQW RI VXEVWDQWLYH SURFHGXUHV RQ DQ DXGLW

 :KLFK RI WKH IROORZLQJ HOHPHQWV RI D V\VWHP RI TXDOLW\ FRQWURO LV UHODWHG WR ILUPV UHFHLYLQJ LQGHSHQGHQFH FRQILUPDWLRQV IURP LWV SURIHVVLRQDOV ZLWK UHVSHFW WR FOLHQWV"

$ $FFHSWDQFH DQG FRQWLQXDQFH RI FOLHQW UHODWLRQVKLSV DQG VSHFLILF HQJDJHPHQWV % (QJDJHPHQW SHUIRUPDQFH & 0RQLWRULQJ ' 5HOHYDQW HWKLFDO UHTXLUHPHQWV  :KLFK RI WKH IROORZLQJ LV PRVW FORVHO\ UHODWHG WR WKH UHVSRQVLELOLWLHV SULQFLSOH"

$ 7KH DXGLWRUV UHVSRQVLELOLW\ WR LVVXH D UHSRUW DV D UHVXOW RI WKHLU H[DPLQDWLRQ % 7KH UHTXLUHPHQW WKDW DXGLWRUV JDWKHU VXIILFLHQW DSSURSULDWH HYLGHQFH XSRQ ZKLFK WR EDVH DQ RSLQLRQ RQ WKH ILQDQFLDO VWDWHPHQWV & 7KH DXGLWRUV FRPSOLDQFH ZLWK UHOHYDQW HWKLFDO UHTXLUHPHQWV RI LQGHSHQGHQFH DQG GXH FDUH ' 7KH DXGLWRUV UHVSRQVLELOLW\ WR SODQ WKH DXGLW DQG SURSHUO\ VXSHUYLVH DVVLVWDQWV

 .UDPHU &3$ FRQVXOWHG DQ LQGHSHQGHQW DSSUDLVHU UHJDUGLQJ WKH YDOXDWLRQ RI ILQH DUW IRU D QRWIRUSURILW PXVHXP &RQVXOWDWLRQ ZLWK D VSHFLDOLVW LQ WKLV FDVH ZRXOG

$ %H FRQVLGHUHG DV H[HUFLVLQJ SURSHU GXH FDUH % %H FRQVLGHUHG D IDLOXUH WR IROORZ *$$6 EHFDXVH .UDPHU VKRXOG KDYH NQRZQ KRZ WR YDOXH ILQH DUW EHIRUH DFFHSWLQJ WKH HQJDJHPHQW & 1RW EH FRQVLGHUHG D YLRODWLRQ RI *$$6 EHFDXVH *$$6 GRHV QRW DSSO\ WR QRWIRU SURILW HQWLWLHV ' 1RQH RI WKH DERYH  :KLFK RI WKH IROORZLQJ WRSLFV LV QRW DGGUHVVHG LQ WKH DXGLWRUV UHSRUW IRU D SXEOLF HQWLW\"

$ 5HVSRQVLELOLWLHV RI WKH DXGLWRU DQG PDQDJHPHQW LQ WKH ILQDQFLDO UHSRUWLQJ SURFHVV % $EVROXWH DVVXUDQFH UHJDUGLQJ WKH IDLUQHVV RI WKH HQWLW\ V ILQDQFLDO VWDWHPHQWV LQ DFFRUGDQFH ZLWK *$$3 & $ GHVFULSWLRQ RI DQ DXGLW HQJDJHPHQW ' $ VXPPDU\ RI WKH DXGLWRUV RSLQLRQ RQ WKH HIIHFWLYHQHVV RI WKH HQWLW\ V LQWHUQDO FRQWURO RYHU ILQDQFLDO UHSRUWLQJ

 :KLFK RI WKH IROORZLQJ UHFRJQL]HV WKDW DQ DXGLW FRQGXFWHG XQGHU JHQHUDOO\ DFFHSWHG DXGLWLQJ VWDQGDUGV PD\ QRW GHWHFW DOO PDWHULDO PLVVWDWHPHQWV"

$ $EVROXWH DVVXUDQFH % 3URIHVVLRQDO MXGJPHQW & 3HUVXDVLYHQHVV RI DXGLW HYLGHQFH ' 5HDVRQDEOH DVVXUDQFH  :KLFK RI WKH IROORZLQJ FRPELQDWLRQV ZRXOG SURYLGH WKH DXGLWRU WKH PRVW SHUVXDVLYH HYLGHQFH"

$ 2SWLRQ $ % 2SWLRQ % & 2SWLRQ & ' 2SWLRQ '

 :KLFK RI WKH IROORZLQJ LV PRVW FORVHO\ UHODWHG WR WKH UHOHYDQFH RI DXGLW HYLGHQFH"

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

 :KLFK RI WKH IROORZLQJ VWDWHPHQWV LV QRW WUXH ZLWK UHVSHFW WR WKH SHUIRUPDQFH SULQFLSOH"

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

$ $OO ILUPV SHUIRUPLQJ DXGLWV RI SXEOLF FRPSDQLHV DUH UHTXLUHG WR KDYH DQQXDO LQVSHFWLRQV FRQGXFWHG E\ WKH 3&$2% % 3&$2% LQVSHFWLRQV UHYLHZ D VDPSOH RI DXGLWV FRQGXFWHG E\ ILUPV DV ZHOO DV WKH ILUP V V\VWHPV RI TXDOLW\ FRQWURO & $OO UHVXOWV RI 3&$2% LQVSHFWLRQV DUH PDGH DYDLODEOH WR WKH SXEOLF IROORZLQJ WKH LQVSHFWLRQ ' )LUPV SHUIRUPLQJ DXGLWV RI  RU IHZHU SXEOLF HQWLWLHV PD\ HOHFW WR KDYH D SHHU UHYLHZ FRQGXFWHG WKURXJK WKH $,&3$ LQ OLHX RI D 3&$2% LQVSHFWLRQ

 $SSHQGL[ :KLFK RI WKH IROORZLQJ LV D FRQFHSWXDO GLIIHUHQFH EHWZHHQ DWWHVWDWLRQ VWDQGDUGV DQG JHQHUDOO\ DFFHSWHG DXGLWLQJ VWDQGDUGV"

$ 7KH DWWHVWDWLRQ VWDQGDUGV SURYLGH D IUDPHZRUN IRU WKH DWWHVW IXQFWLRQ EH\RQG KLVWRULFDO ILQDQFLDO VWDWHPHQWV % 7KH UHTXLUHPHQW WKDW WKH SUDFWLWLRQHU EH LQGHSHQGHQW LV QRW UHTXLUHG XQGHU DWWHVWDWLRQ VWDQGDUGV & 7KH DWWHVWDWLRQ VWDQGDUGV GR QRW SHUPLW DQ DWWHVWDWLRQ HQJDJHPHQW WR H[DPLQH SURVSHFWLYH ZKDWLI ILQDQFLDO VWDWHPHQWV ' 5HTXLUHPHQWV UHODWHG WR HYLGHQFH DUH QRW LQFOXGHG LQ WKH DWWHVWDWLRQ VWDQGDUGV  $SSHQGL[ 7KH DWWHVWDWLRQ VWDQGDUGV GR QRW FRQWDLQ D UHTXLUHPHQW WKDW DXGLWRUV REWDLQ

$ $GHTXDWH NQRZOHGJH LQ WKH VXEMHFW PDWWHU RI WKH DVVHUWLRQV EHLQJ H[DPLQHG % $Q XQGHUVWDQGLQJ RI WKH DXGLWHH V LQWHUQDO FRQWUROV & 6XIILFLHQW HYLGHQFH IRU WKH FRQFOXVLRQV H[SUHVVHG LQ DQ DWWHVWDWLRQ UHSRUW ' ,QGHSHQGHQFH LQ PHQWDO DWWLWXGH

 :KLFK RI WKH IROORZLQJ EHVW GHVFULEHV WKH JHQHUDO FRQWHQWV RI WKH LQWURGXFWRU\ SDUDJUDSK RI WKH DXGLWRUV UHSRUW"

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

$ $GYHUVH RSLQLRQ % 'LVFODLPHU RI RSLQLRQ & 4XDOLILHG RSLQLRQ ' 8QTXDOLILHG RSLQLRQ

 :KLFK RI WKH IROORZLQJ SULQFLSOHV LV PRVW FORVHO\ DVVRFLDWHG ZLWK WKH DXGLWRUV FRQFOXVLRQ DV WR WKH IDLU SUHVHQWDWLRQ RI WKH HQWLW\ V ILQDQFLDO VWDWHPHQWV"

$ &RPPXQLFDWLRQ SULQFLSOH % 3HUIRUPDQFH SULQFLSOH & 5HSRUWLQJ SULQFLSOH ' 5HVSRQVLELOLWLHV SULQFLSOH  $SSHQGL[ 7KH DWWHVWDWLRQ VWDQGDUGV DUH D JHQHUDO VHW RI VWDQGDUGV LQWHQGHG WR JXLGH ZRUN LQ

$ $XGLWV RI ILQDQFLDO VWDWHPHQWV % )LQDQFLDO IRUHFDVWV DQG SURVSHFWLYH ILQDQFLDO LQIRUPDWLRQ & $UHDV RWKHU WKDQ DXGLWV RI ILQDQFLDO VWDWHPHQWV ' 8QGHUVWDQGLQJ LQWHUQDO FRQWURO  $XGLWLQJ VWDQGDUGV DUH FRQVLGHUHG WR EH

$ 6SHFLDOL]HG WR REWDLQ HYLGHQFH WR UHQGHU DQ RSLQLRQ % *XLGHV IRU WKH TXDOLW\ RI DXGLWV WKDW DSSO\ WR DOO DXGLWV & 6WDQGDUGV IRU SUHSDUDWLRQ RI ILQDQFLDO VWDWHPHQWV ' 6WDQGDUGV WR JRYHUQ WKH TXDOLW\ RI D VSHFLILF ILUP V DXGLW SUDFWLFH

 :KLFK RI WKH IROORZLQJ LV QRW UHODWHG WR WKH SHUIRUPDQFH SULQFLSOH RI *$$6"

$ 5LVN RI PDWHULDO PLVVWDWHPHQW % 3ODQQLQJ DQG VXSHUYLVLRQ & 6XIILFLHQW DSSURSULDWH HYLGHQFH ' 'XH FDUH  :KLFK RI WKH IROORZLQJ VWDWHPHQWV LV PRUH FORVHO\ UHODWHG WR LQGHSHQGHQFH LQ IDFW UDWKHU WKDQ LQGHSHQGHQFH LQ DSSHDUDQFH"

$ 7KH DXGLWRUV DFWXDO VWDWH RI PLQG DQG XQELDVHG PHQWDO DWWLWXGH % 2ZQHUVKLS RI D ILQDQFLDO LQWHUHVW LQ D FOLHQW E\ DQ DXGLWRUV VSRXVH & (PSOR\PHQW RI DQ DXGLWRUV FKLOG LQ D SRVLWLRQ RI LQIOXHQFH ZLWKLQ D FOLHQW ' 2ZQHUVKLS RI D ILQDQFLDO LQWHUHVW LQ D FOLHQW E\ DQ DXGLWRUV GLVWDQW UHODWLYH

 7KH KXPDQ UHVRXUFHV HOHPHQW RI TXDOLW\ FRQWURO LQ D SXEOLF DFFRXQWLQJ ILUP LQFOXGHV ZKLFK RI WKH IROORZLQJ"

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

$ $EVROXWH DVVXUDQFH % 3URIHVVLRQDO MXGJPHQW & 3URIHVVLRQDO VNHSWLFLVP ' 5HDVRQDEOH DVVXUDQFH

 :KLFK RI WKH IROORZLQJ VLWXDWLRQV ZRXOG SURYLGH DXGLWRUV ZLWK D ORZHU OHYHO RI GHWHFWLRQ ULVN"

$ ,QVSHFWLQJ DQ LWHP UDWKHU WKDQ GLUHFWO\ FRQILUPLQJ WKH H[LVWHQFH RI WKDW LWHP ZLWK WKLUG SDUWLHV % (YDOXDWLQJ D VPDOOHU QXPEHU RI WUDQVDFWLRQV RU FRPSRQHQWV RI DQ DFFRXQW EDODQFH & 5HO\LQJ H[WHQVLYHO\ RQ YHUEDO LQTXLU\ RI FOLHQW SHUVRQQHO LQ JDWKHULQJ HYLGHQFH ' ([DPLQLQJ DQ DFFRXQW WKDW LV PRUH VXVFHSWLEOH WR PLVVWDWHPHQW EHFDXVH RI FRPSOH[ FDOFXODWLRQV DQG DFFRXQWLQJ PHWKRGV  7KH RSLQLRQ SDUDJUDSK RI WKH DXGLWRUV UHSRUW LQFOXGHV D VWDWHPHQW WKDW

$ 7KH ILQDQFLDO VWDWHPHQWV DUH WKH UHVSRQVLELOLW\ RI PDQDJHPHQW % 7KH DXGLW ZDV FRQGXFWHG LQ DFFRUGDQFH ZLWK JHQHUDOO\ DFFHSWHG DXGLWLQJ VWDQGDUGV & 7KH DXGLW SURYLGHV D UHDVRQDEOH EDVLV IRU DQ RSLQLRQ ' 7KH ILQDQFLDO VWDWHPHQWV DUH SUHVHQWHG LQ FRQIRUPLW\ ZLWK D ILQDQFLDO UHSRUWLQJ IUDPHZRUN VXFK DV JHQHUDOO\ DFFHSWHG DFFRXQWLQJ SULQFLSOHV

 :KHQ ILQDQFLDO VWDWHPHQWV GR QRW SUHVHQW IDLUO\ WKH ILQDQFLDO FRQGLWLRQ UHVXOWV RI RSHUDWLRQV DQG FDVK IORZV RI DQ HQWLW\ DQ DXGLWRU ZRXOG PRVWO\ OLNHO\ LVVXH D Q 

$ $GYHUVH RSLQLRQ % 'LVFODLPHU RI RSLQLRQ & 4XDOLILHG RSLQLRQ ' 8QTXDOLILHG RSLQLRQ  7R HQVXUH WKDW D SXEOLF DFFRXQWLQJ ILUP LV SURYLGLQJ VHUYLFHV WKDW FRQIRUP WR SURIHVVLRQDO VWDQGDUGV WKH ILUP VKRXOG IROORZ

$ 7KH SHUIRUPDQFH SULQFLSOH RI *$$6 % ,WV V\VWHP RI TXDOLW\ FRQWURO & *HQHUDOO\ DFFHSWHG DFFRXQWLQJ SULQFLSOHV ' ,QWHUQDWLRQDO DXGLWLQJ VWDQGDUGV

)LOO LQ WKH %ODQN 4XHVWLRQV

BBBBBBBBBBBBBBBBBBBBBBBBBBBBB VWDQGDUGV DUH D JHQHUDO VHW RI VWDQGDUGV WR JXLGH HQJDJHPHQWV LQ DUHDV RWKHU WKDQ DXGLWV RI ILQDQFLDO VWDWHPHQWV BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB

$XGLWV RI KLVWRULFDO ILQDQFLDO VWDWHPHQWV DUH JXLGHG E\ D EURDG VHW RI SULQFLSOHV UHIHUUHG WR DV BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 7KH FRQFHSW RI BBBBBBBBBBBBBBB UHIHUV WR WKH QDWXUH RI LQIRUPDWLRQ SURYLGHG E\ HYLGHQFH DQG WKH PDQDJHPHQW DVVHUWLRQV UHODWHG WR WKDW HYLGHQFH BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 7KH $,&3$ V IXQGDPHQWDO SULQFLSOHV RI JHQHUDOO\ DFFHSWHG DXGLWLQJ VWDQGDUGV DUH FODVVLILHG LQ WKUHH FDWHJRULHV BBBBBBBBBBBBBBBBBBBBBBB SULQFLSOH BBBBBBBBBBBBBBBBBBBBBBB SULQFLSOH DQG WKH BBBBBBBBBBBBBBBBBBBBBBBBBBBBB SULQFLSOH BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB $ Q BBBBBBBBBBBBBBBBBBBBBBB LV D OLVW RI DXGLWLQJ SURFHGXUHV WKDW ZLOO EH SHUIRUPHG GXULQJ WKH HQJDJHPHQW WR JDWKHU VXIILFLHQW DSSURSULDWH HYLGHQFH BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 7KH BBBBBBBBBBBBBBBBBBBBBB SULQFLSOH RI *$$6 KLJKOLJKWV WKH LPSRUWDQFH RI FRPSO\LQJ ZLWK HWKLFDO UHTXLUHPHQWV LQFOXGLQJ WKRVH SHUWDLQLQJ WR LQGHSHQGHQFH DQG GXH FDUH RI DXGLWRUV BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB

BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB LV D VWDWH RI PLQG WKDW LV FKDUDFWHUL]HG E\ DSSURSULDWH TXHVWLRQLQJ DQG D FULWLFDO DVVHVVPHQW RI DXGLW HYLGHQFH BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 7KH FRQFHSW RI LQGHSHQGHQFH LQ BBBBBBBBBBBBBBBBBBBBBBBBBBBBB UHODWHV WR ILQDQFLDO VWDWHPHQW XVHUV SHUFHSWLRQV RI DXGLWRUV LQGHSHQGHQFH BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 7KH H[HUFLVH RI BBBBBBBBBBBBBBBBBBBBBBBB UHIOHFWV D OHYHO RI SHUIRUPDQFH WKDW ZRXOG EH H[HUFLVHG E\ UHDVRQDEOH DXGLWRUV LQ VLPLODU FLUFXPVWDQFHV BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB :ULWWHQ FRUURERUDWLRQ RI LQIRUPDWLRQ UHFHLYHG YHUEDOO\ IURP PDQDJHPHQW LV UHIHUUHG WR DV BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB ,Q WKH 8QLWHG 6WDWHV WKH DXGLWRUV UHSRUW PXVW VWDWH ZKHWKHU WKH ILQDQFLDO VWDWHPHQWV DUH SUHVHQWHG LQ DFFRUGDQFH ZLWK BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB

8QGHU WKH BBBBBBBBBBBBBBBBBBBBBBBBBBBB SULQFLSOH RI *$$6 WKH DXGLWRU H[SUHVVHV DQ RSLQLRQ LQ DFFRUGDQFH ZLWK WKH DXGLWRU V ILQGLQJV BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 8QGHU WKH UHSRUWLQJ SULQFLSOH RI *$$6 WKH UHSRUW ZLOO FRQWDLQ HLWKHU DQ H[SUHVVLRQ RI BBBBBBBBBBBBBBBBBBBBBB UHJDUGLQJ WKH ILQDQFLDO VWDWHPHQWV WDNHQ DV D ZKROH RU DQ DVVHUWLRQ WR WKH HIIHFW WKDW DQ RSLQLRQ FDQQRW EH H[SUHVVHG BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB $Q RYHUDOO RSLQLRQ WKDW WKH ILQDQFLDO VWDWHPHQWV SUHVHQW WKH ILQDQFLDO FRQGLWLRQ UHVXOWV RI RSHUDWLRQV DQG FDVK IORZV DFFRUGLQJ WR JHQHUDOO\ DFFHSWHG DFFRXQWLQJ SULQFLSOHV LV D Q BBBBBBBBBBBBBBBBBBBBBBBBBBBBB RSLQLRQ BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 7R SURSHUO\ SODQ WKH DXGLW DXGLWRUV VKRXOG EH HQJDJHG EHIRUH WKH FOLHQW V ILVFDO \HDUHQG RU GDWH RI WKH BBBBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 7KH FRQFHSW RI BBBBBBBBBBBBBBBBBBBBBBBBB UHFRJQL]HV WKDW DXGLWRUV VKRXOG IRFXV RQ PDWWHUV WKDW DUH LPSRUWDQW WR ILQDQFLDO VWDWHPHQW XVHUV BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB

7KH ULVN RI BBBBBBBBBBBBBBBBBBBBBBBBBBB LV D FRPELQDWLRQ RI WKH SUREDELOLW\ WKDW D PDWHULDO PLVVWDWHPHQW ZLOO RFFXU DQG QRW EH GHWHFWHG E\ WKH HQWLW\ V LQWHUQDO FRQWUROV BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 7R SHUIRUP LWV PRQLWRULQJ IXQFWLRQ WKH 3&$2% FRQGXFWV SHULRGLF BBBBBBBBBBBBBBBBBBBBBBBBBBBBB RI WKH TXDOLW\ RI ZRUN SHUIRUPHG E\ DFFRXQWLQJ ILUPV WKDW DXGLW SXEOLF HQWLWLHV BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 7KH BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB $FW RI  FUHDWHG WKH 3XEOLF &RPSDQ\ $FFRXQWLQJ 2YHUVLJKW %RDUG BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 7R HQVXUH WKDW WKHLU SHUVRQQHO FRPSO\ ZLWK SURIHVVLRQDO VWDQGDUGV DQG LVVXH UHSRUWV WKDW DUH DSSURSULDWH LQ WKH FLUFXPVWDQFHV ILUPV GHYHORS V\VWHPV RI BBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB

6KRUW $QVZHU 4XHVWLRQV

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

(VVD\ 4XHVWLRQV

 $SSHQGL[ 'LVWLQJXLVK EHWZHHQ DWWHVWDWLRQ VWDQGDUGV DQG WKH IXQGDPHQWDO SULQFLSOHV RI JHQHUDOO\ DFFHSWHG DXGLWLQJ VWDQGDUGV E\ LGHQWLI\LQJ DQG GHVFULELQJ PDMRU GLIIHUHQFHV EHWZHHQ WKH WZR VHWV RI VWDQGDUGV

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

GRFXPHQWDWLRQ DQG VXEPLWWHG WKH MRE IRU UHYLHZ E\ WKH PDQDJHU 5HTXLUHG  'HVFULEH WKH SHUIRUPDQFH SULQFLSOH RI *$$6  'R \RX EHOLHYH WKDW WKH 0HOORZ 0DUNHWV DXGLW FRPSOLHV ZLWK WKH SHUIRUPDQFH SULQFLSOH" ([SODLQ



!2" 9!E ! 9 !&  9"D C" (" "( S  !@ !@ " !! ! 9 9 @ A "@  !2" 9! ( " ! 9 9 !&( !@ !2! )57 )5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      





7UXH  )DOVH 4XHVWLRQV

758(

5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH $XGLWLQJ 6WDQGDUGV LVVXHG E\ WKH 3&$2% DUH WKH VROH VRXUFH RI JXLGDQFH IRU 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH $XGLWRUV PD\ EH LQGHSHQGHQW LQ IDFW EXW QRW LQGHSHQGHQW LQ DSSHDUDQFH )$/6( DXGLWV RI SXEOLF HQWLWLHV

&KDSWHU  3URIHVVLRQDO 6WDQGDUGV $QVZHU .H\

%$# "!      

 " ! i8! 99h  9"D C!&! % %! " !   !!@ ( " ! !@   "! "( !! !@ (! i8! 99h I 57 )5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      

 % ! 9! !!T  9"D C %  ! 9! !! % ( " !"  !& 9"!4 ! !@ !' 6 57 )5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!     





5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 758( HQJDJHPHQWV *HQHUDOO\ DFFHSWHG DXGLWLQJ VWDQGDUGV PXVW EH IROORZHG RQ DOO DXGLW 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 758( GLIIHUHQW LQ VFRSH WKDQ DQ DXGLW $WWHVWDWLRQ VWDQGDUGV SURYLGH JXLGDQFH IRU D ZLGH YDULHW\ RI HQJDJHPHQWV

!@ !@ " !! ! 9 9 @ A "@  !2" 9! ( " ! 9 9 !&( !@ !2! )57 )5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      

%" 9!E ! 9 !&  9"D C" 9! H " !@ (" !" 2 !@ ( !  %" 9! (" ! 9 9 !&( !@ !' V57 )5 !4 ! 321 %!0 & !# ) ((  !' &"" %" 9!E      "&&"

 % ! 9! !!T  9"D C %  ! 9! !! % ( " !"  !& 9"!4 ! !@ !' 6 57 )5 !4 ! 321 %!0 & !# ) ((  !' &""





758( LI WKH\ KDYH QRW DOVR VDWLVILHG WKH SHUIRUPDQFH SULQFLSOH $XGLWRUV FDQQRW HIIHFWLYHO\ VDWLVI\ WKH UHVSRQVLELOLWLHV SULQFLSOH UHTXLULQJ GXH FDUH 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH )$/6( FRQGXFWLQJ DQ DXGLW 7KH UHSRUWLQJ SULQFLSOH UHODWHV WR D ILUP V V\VWHP RI TXDOLW\ FRQWURO FULWHULD IRU

5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

!&"(! ! 9 !&  9"D C  !&"(! 9 !4  " 3& !@ (!  !&"(! 9 ( " ! 9 9 !&( !@ !2! G 57 )5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      

!&"(! ! 9 !&  9"D C  !&"(! 9 !4  " 3& !@ (!  !&"(! 9 ( " ! 9 9 !&( !@ !2! G 57 )5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      

!2" 9!E ! 9 !&  9"D C" (" "( S 





)$/6( $XGLWLQJ SURFHGXUHV DUH WKH VDPH DV DXGLWLQJ VWDQGDUGV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH )$/6( WKH ULVN RI PDWHULDO PLVVWDWHPHQW 6XEVWDQWLYH SURFHGXUHV SHUIRUPHG E\ WKH DXGLW WHDP DUH PRVW FORVHO\ UHODWHG WR

5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

!&"(! ! 9 !&  9"D C  !&"(! 9 !4  " 3& !@ (!  !&"(! 9 ( " ! 9 9 !&( !@ !2! G 57 )5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      

!2" 9!E ! 9 !&  9"D C" (" "( S  !@ !@ " !! ! 9 9 @ A "@  !2" 9! ( " ! 9 9 !&( !@ !2! )57 )5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      





5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH )$/6( PLVVWDWHPHQWV DVVXUDQFH WKDW WKH FOLHQW V ILQDQFLDO VWDWHPHQWV GR QRW FRQWDLQ PDWHULDO 8QGHU WKH SHUIRUPDQFH SULQFLSOH DXGLWRUV DUH UHTXLUHG WR SURYLGH DEVROXWH 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 758( DSSURSULDWH OHYHO RI SURIHVVLRQDO VNHSWLFLVP 7KH FRQFHSW RI GXH FDUH UHIOHFWV WKH QHHG WR SODQ DQG SHUIRUP WKH DXGLW ZLWK DQ

! H & %" 2 ( " j !@ % 4 Q  9"D C S "!( " 9 (" !4 ! ! 9" 99 !!& " &( %" 2 9 %2!  "((! %" "& 1     ""  S ( " &!  (" !" !@ !' X 57 )5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      

!&"(! ! 9 !&  9"D C  !&"(! 9 !4  " 3& !@ (!  !&"(! 9 ( " ! 9 9 !&( !@ !2! G 57 )5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      





5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 758( 2YHUVLJKW %RDUG &RPPLVVLRQ DUH UHTXLUHG WR UHJLVWHU ZLWK WKH 3XEOLF &RPSDQ\ $FFRXQWLQJ $XGLWRUV RI SXEOLF HQWLWLHV UHJLVWHUHG ZLWK WKH 6HFXULWLHV DQG ([FKDQJH 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 758( 7KH SHUIRUPDQFH SULQFLSOH VHWV IRUWK WKH TXDOLW\ FULWHULD IRU FRQGXFWLQJ DQ DXGLW

!&"(! ! 9 !&  9"D C  !&"(! 9 !4  " 3& !@ (!  !&"(! 9 ( " ! 9 9 !&( !@ !2! G 57 )5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      

!&"(! ! 9 !&  9"D C  !&"(! 9 !4  " 3& !@ (!  !&"(! 9 ( " ! 9 9 !&( !@ !2! G 57 )5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      





)$/6( DQ DFFRXQW EDODQFH H[DPLQHG E\ DXGLWRUV 7KH ZRUG DSSURSULDWHQHVV UHIHUV WR WKH QXPEHU RI WUDQVDFWLRQV RU FRPSRQHQWV RI 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH )$/6( VXEVWDQWLYH SURFHGXUHV RFFXU DQG QRW EH SUHYHQWHG RU GHWHFWHG RQ D WLPHO\ EDVLV E\ WKH DXGLWRUV &RQWURO ULVN LV WKH SUREDELOLW\ WKDW D PDWHULDO PLVVWDWHPHQW HUURU RU IUDXG FRXOG

5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

%" 9!E ! 9 !&  9"D C" 9! H " !@ (" !" 2 !@ ( !  %" 9! ( " ! 9 9 !&( !@ !' V57 )5 !4 ! 321 %!0 & !# ) ((  !' &"" %" 9!E      "&&"

!&"(! ! 9 !&  9"D C  !&"(! 9 !4  " 3& !@ (!  !&"(! 9 ( " ! 9 9 !&( !@ !2! G 57 )5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      





5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH )$/6( *$$6 7KH FRQWHQWV RI WKH DXGLWRUV UHSRUW DUH JXLGHG E\ WKH SHUIRUPDQFH SULQFLSOH RI 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 758( RI ILQDQFLDO VWDWHPHQW XVHUV 7R EH FRQVLGHUHG PDWHULDO DQ LWHP PXVW EH RQH WKDW ZRXOG LQIOXHQFH WKH GHFLVLRQ

%" 9!E ! 9 !&  9"D C" 9! H " !@ (" !" 2 !@ ( !  %" 9! (" ! 9 9 !&( !@ !' V57 )5 !4 ! 321 %!0 & !# ) ((  !' &"" %" 9!E      "&&"

%" 9!E ! 9 !&  9"D C" 9! H " !@ (" !" 2 !@ ( !  %" 9! ( " ! 9 9 !&( !@ !' V57 )5 !4 ! 321 %!0 & !# ) ((  !' &"" %" 9!E      "&&"





5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 758( EH H[SUHVVHG VWDWHPHQWV WDNHQ DV D ZKROH RU DQ DVVHUWLRQ WR WKH HIIHFW WKDW DQ RSLQLRQ FDQQRW 7KH DXGLWRUV UHSRUW VKRXOG HLWKHU FRQWDLQ DQ H[SUHVVLRQ RI RSLQLRQ RQ WKH ILQDQFLDO 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 758( *$$3 ILQDQFLDO FRQGLWLRQ UHVXOWV RI RSHUDWLRQV DQG FDVK IORZV LQ FRQIRUPLW\ ZLWK $Q XQTXDOLILHG RSLQLRQ LQGLFDWHV WKDW WKH ILQDQFLDO VWDWHPHQWV SUHVHQW WKH HQWLW\ V

! H & %" 2 (" j !@ % 4 Q  9"D C S "!( " 9 (" !4 ! ! 9" 99 !!& " &( %" 2 9 %2!  "((! %" "& 1     ""  S ( " &!  (" !" !@ !' X 57 )5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      

!&"(! ! 9 !&  9"D C  !&"(! 9 !4  " 3& !@ (!  !&"(! 9 ( " ! 9 9 !&( !@ !2! G 57 )5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      





758(

5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 758( FLUFXPVWDQFHV WKDW WKH ILUP DQG LWV SHUVRQQHO LVVXH UHSRUWV WKDW DUH DSSURSULDWH XQGHU WKH 7KH SXUSRVH RI D V\VWHP RI TXDOLW\ FRQWURO LV WR SURYLGH UHDVRQDEOH DVVXUDQFH 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH (YLGHQFH LV FRQVLGHUHG DSSURSULDWH ZKHQ LW LV ERWK YDOLG DQG UHOHYDQW

0XOWLSOH &KRLFH 4XHVWLRQV



$SSHQGL[ 7KH DWWHVWDWLRQ VWDQGDUGV GR QRW UHTXLUH WKH DWWHVWDWLRQ UHSRUW WR LQFOXGH D VWDWHPHQW WKDW

$ 3URYLGHV D FRQFOXVLRQ ZKHWKHU WKH VXEMHFW PDWWHU LV SUHVHQWHG LQ FRQIRUPLW\ ZLWK HVWDEOLVKHG RU VWDWHG FULWHULD % ,QGLFDWHV WKDW WKH SUDFWLWLRQHU KDV VLJQLILFDQW UHVHUYDWLRQV DERXW WKH HQJDJHPHQW & ,GHQWLILHV WKH VXEMHFW PDWWHU RU DVVHUWLRQ EHLQJ UHSRUWHG RQ ' ,QGLFDWHV WKDW WKH DFFRXQWDQW DVVXPHV QR UHVSRQVLELOLW\ WR XSGDWH WKH UHSRUW
 "!  9"D  %1 ! " C!&! % %! " !   !!@ ( " ! !@   "! "( !! !@ (! i8! 99h I 57 )5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  



&RQWURO ULVN LV

$ 7KH SUREDELOLW\ WKDW D PDWHULDO PLVVWDWHPHQW FRXOG QRW EH SUHYHQWHG RU GHWHFWHG E\ WKH HQWLW\ V LQWHUQDO FRQWURO SROLFLHV DQG SURFHGXUHV % 7KH SUREDELOLW\ WKDW D PDWHULDO PLVVWDWHPHQW FRXOG RFFXU DQG QRW EH GHWHFWHG E\ DXGLWRUV SURFHGXUHV & 7KH ULVN WKDW DXGLWRUV ZLOO QRW EH DEOH WR FRPSOHWH WKH DXGLW RQ D WLPHO\ EDVLV ' 7KH ULVN WKDW DXGLWRUV ZLOO QRW SURSHUO\ FRQWURO WKH VWDII RQ WKH DXGLW HQJDJHPHQW
$E " "  9"D  %1 ! " C  !&"(! 9 !4  " 3& !@ (!  !&"(! 9 ( " ! 9 9 !&( !@ !2! G 57 )5 !4 ! 321 %!0 Q 6 (( !2&!&!E &""  $E    %!0  



7KH UHVSRQVLELOLWLHV SULQFLSOH XQGHU JHQHUDOO\ DFFHSWHG DXGLWLQJ VWDQGDUGV GRHV QRW LQFOXGH ZKLFK RI WKH IROORZLQJ"

$ &RPSHWHQFH DQG FDSDELOLWLHV % ,QGHSHQGHQW DWWLWXGH & 'XH FDUH ' 3ODQQLQJ DQG VXSHUYLVLRQ
%!0  

" 9!E H "  9"D  %1 ! " C" 9! H " !@ (" !" 2 !@ ( !  %" 9! (" ! 9 9 !&( !@ !' V57 )5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" %" 9!E   %!0  "&&"

! 9 !2" 9!E  9"D  %1 ! " C" (" "( S  !@ !@ " !! ! 9 9 @ A "@  !2" 9! ( " ! 9 9 !&( !@ !2! )57 )5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E  



' 'LVFODLPHU RI RSLQLRQ & 4XDOLILHG RSLQLRQ % $GYHUVH RSLQLRQ $ 8QTXDOLILHG RSLQLRQ SDUDJUDSK WR VXSSRUW WKH RSLQLRQ" :KLFK RI WKH IROORZLQJ W\SHV RI DXGLWRUV UHSRUWV GRHV QRW UHTXLUH DQ H[SODQDWRU\



:KLFK RI WKH IROORZLQJ LV DQ HOHPHQW RI D V\VWHP RI TXDOLW\ FRQWURO WKDW VKRXOG EH FRQVLGHUHG E\ D SXEOLF DFFRXQWLQJ ILUP LQ HVWDEOLVKLQJ LWV TXDOLW\ FRQWURO SROLFLHV DQG SURFHGXUHV"

$ /HQGLQJ FUHGLELOLW\ WR D FOLHQW V ILQDQFLDO VWDWHPHQWV % 8VLQJ VWDWLVWLFDO VDPSOLQJ WHFKQLTXHV & $FFHSWLQJ DQG FRQWLQXLQJ FOLHQW UHODWLRQVKLSV DQG VSHFLILF HQJDJHPHQWV ' 2EWDLQLQJ PHPEHUVKLS LQ WKH &HQWHU IRU 3XEOLF &RPSDQ\ $XGLW )LUPV
" " j  9"D  %1 ! " C S "!( " 9 (" !4 ! ! 9" 99 !!& " &( %" 2 9 %2!  "((! %" "& 1     ""  S ( " &!  (" !" !@ !' X 57 )5 !4 ! 321 %!0 & !# ) ((  !' &"" @!!E   %!0  



:KLFK RI WKH IROORZLQJ SUHVXPSWLRQV GRHV QRW UHODWH WR WKH UHOLDELOLW\ RI DXGLW HYLGHQFH"

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
!!4 Q  9"D   ! " C  !&"(! 9 !4  " 3& !@ (!  !&"(! 9 ( " ! 9 9 !&( !@ !2! G 57 )5 !4 ! 321 %!0 W G (( !4 Q &"" @!!E   %!0  



$Q LPSRUWDQW UROH RI WKH 3XEOLF &RPSDQ\ $FFRXQWLQJ 2YHUVLJKW %RDUG LV WR RYHUVHH WKH

$ ,VVXDQFH RI VWDWHPHQWV E\ WKH )LQDQFLDO $FFRXQWLQJ 6WDQGDUGV %RDUG % 3UHSDUDWLRQ DQG JUDGLQJ RI WKH 8QLIRUP &3$ ([DPLQDWLRQ & 3HHU UHYLHZ RI PHPEHU ILUPV RI WKH 3ULYDWH &RPSDQLHV 3UDFWLFH 6HFWLRQ ' 5HJXODWLRQ RI ILUPV WKDW DXGLW SXEOLF HQWLWLHV
1   9"D  %1 ! " C %  ! 9! !! % ( " !"  !& 9"!4 ! !@ !' 6 57 )5 !4 ! 321 %!0 & !# ) ((  !' &"" @!!E   %!0  



$XGLW HYLGHQFH LV XVXDOO\ FRQVLGHUHG VXIILFLHQW ZKHQ

$ ,W LV UHOLDEOH % 7KHUH LV HQRXJK TXDQWLW\ WR DIIRUG D UHDVRQDEOH EDVLV IRU DQ RSLQLRQ RQ ILQDQFLDO VWDWHPHQWV & ,W KDV WKH TXDOLWLHV RI EHLQJ UHOHYDQW REMHFWLYH DQG IUHH IURP XQNQRZQ ELDV ' ,W KDV EHHQ REWDLQHG WKURXJK UDQGRP VHOHFWLRQ PHWKRGV
& !# ) ((  !' &"" @!!E   %!0  

!!4 Q  9"D  %1 ! " C  !&"(! 9 !4  " 3& !@ (!  !&"(! 9 ( " ! 9 9 !&( !@ !2! G 57 )5 !4 ! 321 %!0 & !# ) ((  !' &"" @!!E   %!0  

!!4 Q  9"D   ! " C  !&"(! 9 !4  " 3& !@ (!  !&"(! 9 ( " ! 9 9 !&( !@ !2! G 57 )5 !4 ! 321 %!0



' 9HUEDO VWDWHPHQWV PDGH E\ FOLHQW SHUVRQQHO & 3K\VLFDO REVHUYDWLRQ % $XGLWRUV FDOFXODWLRQV $ (QWLW\ V WULDO EDODQFH :KLFK RI WKH IROORZLQJ LV QRW FRQVLGHUHG D W\SH RI DXGLW HYLGHQFH"



$SSHQGL[ 7KH $,&3$ DWWHVWDWLRQ VWDQGDUGV GLIIHU IURP WKH UHVSRQVLELOLWLHV SULQFLSOH SHUIRUPDQFH SULQFLSOH DQG UHSRUWLQJ SULQFLSOH LQ WKDW

$ 7KH DWWHVWDWLRQ VWDQGDUGV FRQWDLQ QR UHTXLUHPHQW WR REWDLQ DQ XQGHUVWDQGLQJ RI WKH HQWLW\ DQG DVVHVV WKH ULVN RI PDWHULDO PLVVWDWHPHQW % 7KH DWWHVWDWLRQ VWDQGDUGV GR QRW UHTXLUH FRPSHWHQFH DQG FDSDELOLWLHV & 7KH DWWHVWDWLRQ VWDQGDUGV GR QRW UHTXLUH SODQQLQJ IRU DWWHVWDWLRQ HQJDJHPHQWV RU VXSHUYLVLRQ RI DFFRXQWDQWV DQG FRQVXOWDQWV ZKR SHUIRUP WKH ZRUN ' 7KH DWWHVWDWLRQ VWDQGDUGV GR QRW UHTXLUH D UHSRUW WKDW VWDWHV WKH FKDUDFWHU RI WKH HQJDJHPHQW
 "!  9"D  %1 ! " C!&! % %! " !   !!@ ( " ! !@   "! "( !! !@ (! i8! 99h I 57 )5 !4 ! 321 %!0 W G (( ! Y &"" @!!E   %!0  



$Q DXGLW RI WKH ILQDQFLDO VWDWHPHQWV RI &DPGHQ &RUSRUDWLRQ LV EHLQJ FRQGXFWHG E\ H[WHUQDO DXGLWRUV 7KH H[WHUQDO DXGLWRUV DUH H[SHFWHG WR

$ &HUWLI\ WKH FRUUHFWQHVV RI &DPGHQ V ILQDQFLDO VWDWHPHQWV % 0DNH D FRPSOHWH H[DPLQDWLRQ RI &DPGHQ V UHFRUGV DQG YHULI\ DOO RI &DPGHQ V WUDQVDFWLRQV & *LYH DQ RSLQLRQ RQ WKH IDLU SUHVHQWDWLRQ RI &DPGHQ V ILQDQFLDO VWDWHPHQWV LQ FRQIRUPLW\ ZLWK WKH DSSOLFDEOH ILQDQFLDO UHSRUWLQJ IUDPHZRUN HJ *$$3 ,)56  ' *LYH DQ RSLQLRQ RQ WKH DWWUDFWLYHQHVV RI &DPGHQ IRU LQYHVWPHQW SXUSRVHV DQG FULWLTXH WKH ZLVGRP DQG OHJDOLW\ RI LWV EXVLQHVV GHFLVLRQV
 %1 ! " C" 9! H " !@ (" !" 2 !@ ( !  %" 9! (" ! 9 9 !&( !@ !' V57 )5 !4 ! 321 %!0 & !# ) ((  !' &"" %" 9!E   %!0  "&&"



$XGLWRUV WU\ WR DFKLHYH LQGHSHQGHQFH LQ DSSHDUDQFH LQ RUGHU WR

$ 0DLQWDLQ SXEOLF FRQILGHQFH LQ WKH SURIHVVLRQ % %HFRPH LQGHSHQGHQW LQ IDFW & &RPSO\ ZLWK WKH UHVSRQVLELOLWLHV SULQFLSOH ' 0DLQWDLQ DQ XQELDVHG PHQWDO DWWLWXGH
@Q

! 9 %" 9!E  9"D

   9"D  %1 ! " C  !&"(! 9 !4  " 3& !@ (!  !&"(! 9 ( " ! 9 9 !&( !@ !2! G 57 )5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  

!!! 9!  9"D  %1 ! " C" (" "( S  !@ !@ " !! ! 9 9 @ A "@  !2" 9! ( " ! 9 9 !&( !@ !2! )57 )5 !4 ! 321 %!0 & !# ) ((  !' &"" @!!E   %!0 



' 4XDOLW\ DVVXUDQFH & ,QIRUPDWLRQ HYDOXDWLRQ % 6XSHUYLVLRQ $ 3ODQQLQJ FRQVLGHUHG GRFXPHQWDWLRQ RI 7KH SUHSDUDWLRQ RI DQ DXGLW SODQ SULRU WR WKH EHJLQQLQJ RI ILHOGZRUN LV DSSURSULDWHO\



:KLFK RI WKH IROORZLQJ SURFHGXUHV ZRXOG SURYLGH WKH PRVW UHOLDEOH DXGLW HYLGHQFH"

$ ,QTXLULHV RI WKH FOLHQW V DFFRXQWLQJ VWDII KHOG LQ SULYDWH % ,QVSHFWLRQ RI SUHQXPEHUHG FOLHQW VKLSSLQJ GRFXPHQWV & ,QVSHFWLRQ RI EDQN VWDWHPHQWV REWDLQHG GLUHFWO\ IURP WKH FOLHQW V ILQDQFLDO LQVWLWXWLRQ ' $QDO\WLFDO SURFHGXUHV SHUIRUPHG E\ DXGLWRUV RQ WKH FOLHQW V WULDO EDODQFH
!!4 Q  9"D   ! " C  !&"(! 9 !4  " 3& !@ (!  !&"(! 9 ( " ! 9 9 !&( !@ !2! G 57 )5 !4 ! 321 %!0 W G (( 99 &"" %$# "!   %!0  



$SSHQGL[ :KLFK RI WKH IROORZLQJ LV QRW DQ DWWHVWDWLRQ VWDQGDUG"

$ 7KH SUDFWLWLRQHU PXVW REWDLQ VXIILFLHQW HYLGHQFH WR SURYLGH D UHDVRQDEOH EDVLV IRU WKH FRQFOXVLRQ H[SUHVVHG LQ WKH UHSRUW % 7KH SUDFWLWLRQHU PXVW LGHQWLI\ WKH VXEMHFW PDWWHU RU WKH DVVHUWLRQ EHLQJ UHSRUWHG RQ DQG VWDWH WKH FKDUDFWHU RI WKH HQJDJHPHQW & 7KH SUDFWLWLRQHU PXVW DGHTXDWHO\ SODQ WKH ZRUN DQG PXVW SURSHUO\ VXSHUYLVH DQ\ DVVLVWDQWV ' $ VXIILFLHQW XQGHUVWDQGLQJ RI WKH FOLHQW V LQWHUQDO FRQWUROV VKDOO EH REWDLQHG WR SODQ WKH HQJDJHPHQW
 "!  9"D   ! " C!&! % %! " !   !!@ ( " ! !@   "! "( !! !@ (! i8! 99h I 57 )5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  



:KLFK RI WKH IROORZLQJ ZRXOG PRVW OLNHO\ EH D YLRODWLRQ RI WKH LQGHSHQGHQFH UHTXLUHPHQW IRXQG LQ WKH UHVSRQVLELOLWLHV SULQFLSOH XQGHU JHQHUDOO\ DFFHSWHG DXGLWLQJ VWDQGDUGV"

$ $Q DXGLWRU RQ WKH HQJDJHPHQW KDV D GLVWDQW UHODWLYH ZKR LV HPSOR\HG E\ D YHQGRU WKDW GRHV D VLJQLILFDQW DPRXQW RI EXVLQHVV ZLWK FOLHQWV % 7KH FOLHQW V FKLHI H[HFXWLYH RIILFHU JUDGXDWHG IURP WKH VDPH XQLYHUVLW\ DV WKH SDUWQHU LQ FKDUJH RI WKH DFFRXQWLQJ ILUP & $Q DXGLWRU RQ WKH HQJDJHPHQW RZQV D ILQDQFLDO LQWHUHVW LQ WKH FOLHQW V VWRFN ' 7KH FOLHQW SURYLGHV ILQDQFLDO VXSSRUW WR D QXPEHU RI FKDULWDEOH FDXVHV WKDW DOVR UHFHLYH VXSSRUW IURP WKH DFFRXQWLQJ ILUP
!!! 9!  9"D  %1 ! " C" (" "( S  !@ !@ " !! ! 9 9 @ A "@  !2" 9! ( " ! 9 9 !&( !@ !2! )57 )5 !4 ! 321 %!0 W G (( ! Y &"" @!!E   %!0  @Q

!!4 Q  9"D  %1 ! " C  !&"(! 9 !4  " 3& !@ (!  !&"(! 9 ( " ! 9 9 !&( !@ !2! G 57 )5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  



' :ULWWHQ UHSUHVHQWDWLRQ & ([WHUQDOLQWHUQDO % ,QWHUQDO $ ([WHUQDO RI HYLGHQFH" $ YHQGRU V LQYRLFH UHFHLYHG DQG KHOG E\ WKH FOLHQW ZRXOG EH FRQVLGHUHG ZKDW W\SH



:KLFK RI WKH IROORZLQJ VWDWHPHQWV LV JHQHUDOO\ FRUUHFW DERXW WKH DSSURSULDWHQHVV RI DXGLW HYLGHQFH"

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
!!4 Q  9"D   ! " C  !&"(! 9 !4  " 3& !@ (!  !&"(! 9 ( " ! 9 9 !&( !@ !2! G 57 )5 !4 ! 321 %!0 W G (( !4 Q &"" %$# "!   %!0  



7KH VWDQGDUG DXGLWRUV UHSRUW UHIHUV WR VWDQGDUGV RI WKH 3&$2% DQG *$$3 LQ ZKLFK SDUDJUDSK"

$ 6WDQGDUGV RI WKH 3&$2% 6FRSH RQO\ *$$3 2SLQLRQ RQO\ % 6WDQGDUGV RI WKH 3&$2% ,QWURGXFWRU\ RQO\ *$$3 6FRSH DQG RSLQLRQ & 6WDQGDUGV RI WKH 3&$2% ,QWURGXFWRU\ DQG VFRSH *$$3 2SLQLRQ RQO\ ' 6WDQGDUGV RI WKH 3&$2% ,QWURGXFWRU\ RQO\ *$$3 $OO SDUDJUDSKV
" 9!E H "  9"D   ! " C" 9! H " !@ (" !" 2 !@ ( !  %" 9! (" ! 9 9 !&( !@ !' V57 )5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" %" 9!E   %!0  "&&"



:KLFK RI WKH IROORZLQJ LV QRW LQFOXGHG LQ WKH DXGLWRUV VWDQGDUG UHSRUW UHSUHVHQWLQJ DQ XQTXDOLILHG RSLQLRQ"

$ $ EULHI LQGLFDWLRQ RI WKH UHVSRQVLELOLW\ RI DXGLWRUV DQG PDQDJHPHQW IRU WKH ILQDQFLDO VWDWHPHQWV % $Q LQGLFDWLRQ WKDW DOO DSSURSULDWH GLVFORVXUHV KDYH EHHQ PDGH DQG LQFOXGHG LQ WKH ILQDQFLDO VWDWHPHQWV & $Q LQGLFDWLRQ WKDW WKH DXGLW ZDV FRQGXFWHG LQ DFFRUGDQFH ZLWK VWDQGDUGV HVWDEOLVKHG E\ WKH 3&$2% ' 7KH DXGLWRUV RSLQLRQ RQ WKH IDLUQHVV RI WKH ILQDQFLDO VWDWHPHQWV
"&&"

!!4 Q  9"D  %1 ! " C  !&"(! 9 !4  " 3& !@ (!  !&"(! 9 (" ! 9 9 !&( !@ !2! G 57 )5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  

" 9!E H "  9"D  %1 ! " C" 9! H " !@ (" !" 2 !@ ( !  %" 9! (" ! 9 9 !&( !@ !' V57 )5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" %" 9!E   %!0 



' &RQVLVWV RI UHSUHVHQWDWLRQV PDGH E\ WKH FOLHQW V RIILFHUV GLUHFWRUV RZQHUV & &RQVLVWV RI GRFXPHQWV WKDW DUH SURGXFHG XVHG DQG VWRUHG ZLWKLQ WKH FOLHQW V % 2ULJLQDWHV RXWVLGH WKH FOLHQW V V\VWHP EXW KDV EHHQ UHFHLYHG DQG SURFHVVHG E\ $ ,V REWDLQHG GLUHFWO\ IURP WKLUG SDUWLHV LQGHSHQGHQW RI WKH FOLHQW ,QWHUQDO HYLGHQFH LQIRUPDWLRQ V\VWHP WKH FOLHQW

DQG HPSOR\HHV



:KLFK RI WKH IROORZLQJ SUHVXPSWLRQV LV FRUUHFW DERXW WKH UHOLDELOLW\ RI DXGLW HYLGHQFH"

$ ,QIRUPDWLRQ REWDLQHG LQGLUHFWO\ IURP RXWVLGH VRXUFHV LV WKH PRVW UHOLDEOH IRUP RI DXGLW HYLGHQFH % 7R EH UHOLDEOH DXGLW HYLGHQFH VKRXOG EH FRQYLQFLQJ UDWKHU WKDQ SHUVXDVLYH & 5HOLDELOLW\ RI DXGLW HYLGHQFH UHIHUV WR WKH DPRXQW RI FRUURERUDWLYH HYLGHQFH REWDLQHG ' $Q HIIHFWLYH V\VWHP RI LQWHUQDO FRQWURO SURYLGHV PRUH DVVXUDQFH DERXW WKH UHOLDELOLW\ RI DXGLW HYLGHQFH
!!4 Q  9"D   ! " C  !&"(! 9 !4  " 3& !@ (!  !&"(! 9 (" ! 9 9 !&( !@ !2! G 57 )5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!   %!0  



7KH DXGLWRUV UHVSRQVLELOLW\ WR H[SUHVV DQ RSLQLRQ RQ WKH ILQDQFLDO VWDWHPHQWV LV

$ ,PSOLFLWO\ UHSUHVHQWHG LQ WKH DXGLWRUV VWDQGDUG UHSRUW % ([SOLFLWO\ UHSUHVHQWHG LQ WKH LQWURGXFWRU\ SDUDJUDSK RI WKH DXGLWRUV VWDQGDUG UHSRUW & ([SOLFLWO\ UHSUHVHQWHG LQ WKH VFRSH SDUDJUDSK RI WKH DXGLWRUV VWDQGDUG UHSRUW ' ([SOLFLWO\ UHSUHVHQWHG LQ WKH RSLQLRQ SDUDJUDSK RI WKH DXGLWRUV VWDQGDUG UHSRUW
"&&"

! 9 !&"(!  9"D  %1 ! " C  !&"(! 9 !4  " 3& !@ (!  !&"(! 9 ( " ! 9 9 !&( !@ !2! G 57 )5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  

! 9 %" 9!E  9"D   ! " C" 9! H " !@ (" !" 2 !@ ( !  %" 9! (" ! 9 9 !&( !@ !' V57 )5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" %" 9!E   %!0 



' 7KH DXGLWRU PXVW GHWHUPLQH DQG DSSO\ DQ DSSURSULDWH PDWHULDOLW\ OHYHO & 7KH DXGLWRU PXVW REWDLQ VXIILFLHQW DSSURSULDWH HYLGHQFH DERXW ZKHWKHU PDWHULDO % 7KH DXGLWRU PXVW H[SUHVV DQ RSLQLRQ LQ DFFRUGDQFH ZLWK WKH DXGLWRU V ILQGLQJV $ 7KH DXGLWRU PXVW SODQ WKH ZRUN DQG SURSHUO\ VXSHUYLVH DQ\ DVVLVWDQWV :KLFK RI WKH IROORZLQJ LV QRW D FRQFHSW IURP WKH SHUIRUPDQFH SULQFLSOH XQGHU JHQHUDOO\ DFFHSWHG DXGLWLQJ VWDQGDUGV" PLVVWDWHPHQWV H[LVW

WKURXJKRXW WKH DXGLW



8QGHU JHQHUDOO\ DFFHSWHG DXGLWLQJ VWDQGDUGV ZKLFK RI WKH IROORZLQJ UHODWHV WR WKH UHVSRQVLELOLWLHV SULQFLSOH"

$ 7KH LQLWLDO SODQQLQJ RI WKH DXGLW HQJDJHPHQW % 7KH FRQILUPDWLRQ RI DFFRXQWV UHFHLYDEOH & 7KH FRPSOHWLRQ RI DQ LQWHUQDO FRQWURO TXHVWLRQQDLUH ' 0DLQWDLQLQJ SURIHVVLRQDO VNHSWLFLVP DQG H[HUFLVLQJ SURIHVVLRQDO MXGJPHQW
! 9 !2" 9!E  9"D  %1 ! " C" (" "( S  !@ !@ " !! ! 9 9 @ A "@  !2" 9! ( " ! 9 9 !&( !@ !2! )57 )5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  



:KLFK RI WKH IROORZLQJ UHSUHVHQW V DXGLW TXDOLW\ JXLGHV WKDW UHPDLQ VWDEOH RYHU WLPH DQG DUH DSSOLFDEOH IRU DOO DXGLWV"

$ $XGLWLQJ SURFHGXUHV % $XGLWLQJ VWDQGDUGV & 'XH FDUH ' 6\VWHP RI TXDOLW\ FRQWURO
!2&!&!E &"" @!!E   %!0  

!!! 9!  9"D  %1 ! " C" (" "( S  !@ !@ " !! ! 9 9 @ A "@  !2" 9! ( " ! 9 9 !&( !@ !2! )57 )5 !4 ! 321 %!0 W G (( 99 &"" @!!E   %!0  

" " j  9"D  %1 ! " C S "!( " 9 (" !4 ! ! 9" 99 !!& " &( %" 2 9 %2!  "((! %" "& 1     ""  S ( " &!  (" !" !@ !' X 57 )5 !4 ! 321 %!0 Q 6 ((



' $XGLWRUV IDLO WR GRFXPHQW WKHLU DVVHVVPHQW RI FRQWURO ULVN IROORZLQJ WKHLU VWXG\ & $XGLWRUV DUH GLUHFWO\ LQYROYHG ZLWK D FOLHQW PDQDJHU LQ D VWUDWHJLF GHFLVLRQ % $XGLWRUV REWDLQ H[SHUWLVH LQ WKHLU FOLHQW V LQGXVWU\ DV WKH\ DUH FRQGXFWLQJ WKH $ $XGLWRUV SHUIRUP WKH HQJDJHPHQW ZLWK WKH SHUIRUPDQFH OHYHO H[SHFWHG RI UHVSRQVLELOLWLHV SULQFLSOH" :KLFK RI WKH IROORZLQJ VLWXDWLRQV ZRXOG PRVW OLNHO\ EH LQ FRQIOLFW ZLWK WKH PDNLQJ FDSDFLW\ DXGLW H[DPLQDWLRQ SUXGHQW DXGLWRUV EXW QRW H[SHUW DXGLWRUV

RI LQWHUQDO FRQWURO



:KLFK RI WKH IROORZLQJ VWDWHPHQWV LV QRW WUXH ZLWK UHVSHFW WR WKH HYLGHQFH WKDW ZRXOG EH JDWKHUHG ZKHQ DVVHVVPHQWV RI FRQWURO ULVN DUH KLJK"

$ $XGLWRUV ZRXOG EH UHTXLUHG WR UHO\ RQ H[WHUQDO UDWKHU WKDQ LQWHUQDO IRUPV RI HYLGHQFH % $XGLWRUV ZRXOG EH UHTXLUHG WR SHUIRUP SURFHGXUHV DW LQWHULP SHULRGV UDWKHU WKDQ DW \HDUHQG & $XGLWRUV ZRXOG EH UHTXLUHG WR FRQILUP D ODUJHU QXPEHU RI FXVWRPHU DFFRXQWV UHFHLYDEOH EDODQFHV ' $XGLWRUV ZRXOG EH UHTXLUHG WR REWDLQ PRUH HYLGHQFH WKURXJK GLUHFW SHUVRQDO REVHUYDWLRQ
!!4 Q  9"D  %1 ! " C  !&"(! 9 !4  " 3& !@ (!  !&"(! 9 ( " ! 9 9 !&( !@ !2! G 57 )5 !4 ! 321 %!0 W G (( 99 &"" %$# "!   %$@D    



$V LW UHODWHV WR DXGLW HYLGHQFH DSSURSULDWHQHVV UHIHUV WR WKH

$ 2ULJLQDOLW\ RI HYLGHQFH JDWKHUHG % 4XDOLW\ RI HYLGHQFH JDWKHUHG & 4XDQWLW\ RI HYLGHQFH JDWKHUHG ' 7LPHOLQHVV RI HYLGHQFH JDWKHUHG


" 9!E H "  9"D  %1 ! " C" 9! H " !@ (" !" 2 !@ ( !  %" 9! (" ! 9 9 !&( !@ !' V57 )5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" %" 9!E   %!0  "&&"

!!4 Q  9"D  %1 ! " C  !&"(! 9 !4  " 3& !@ (!  !&"(! 9 (" ! 9 9 !&( !@ !2! G 57 )5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0 



' $Q RSLQLRQ RQ WKH HQWLW\ V ILQDQFLDO VWDWHPHQWV & $Q LQGLFDWLRQ WKDW DOO QHFHVVDU\ GLVFORVXUHV KDYH EHHQ SUHVHQWHG % $ GHVFULSWLRQ RI WKH QDWXUH RI DQ DXGLW $ 7KH QDPHV RI WKH ILQDQFLDO VWDWHPHQWV DXGLWHG :KLFK RI WKH IROORZLQJ LQIRUPDWLRQ ZRXOG QRW EH LQFOXGHG LQ WKH DXGLWRUV VWDQGDUG UHSRUW"



7KH SULPDU\ SXUSRVH RI WKH DXGLWRUV VWXG\ RI LQWHUQDO FRQWURO IRU D QRQSXEOLF HQWLW\ LV

$ 7R SURYLGH FRQVWUXFWLYH VXJJHVWLRQV WR WKH FOLHQW IRU LPSURYLQJ LWV LQWHUQDO FRQWURO % 7R UHSRUW RQ LQWHUQDO FRQWURO DV UHTXLUHG E\ $XGLWLQJ 6WDQGDUG 1R  & 7R LGHQWLI\ DQG GHWHFW IUDXG DQG LUUHJXODULWLHV SHUSHWUDWHG E\ FOLHQW SHUVRQQHO ' 7R GHWHUPLQH WKH QDWXUH WLPLQJ DQG H[WHQW RI VXEVWDQWLYH SURFHGXUHV
" " !  9"D  %1 ! " C  !&"(! 9 !4  " 3& !@ (!  !&"(! 9 ( " ! 9 9 !&( !@ !2! G 57 )5 !4 ! 321 %!0 & !# ) ((  !' &""  $E    %!0  



:KLFK UHSRUWLQJ RSWLRQV GR DXGLWRUV KDYH LI WKH FOLHQW V ILQDQFLDO VWDWHPHQWV DUH QRW SUHVHQWHG DFFRUGLQJ WR WKH DSSOLFDEOH ILQDQFLDO IUDPHZRUN HJ *$$3 ,)56 "

$ 8QTXDOLILHG RSLQLRQ RU GLVFODLPHU RI RSLQLRQ % 4XDOLILHG RSLQLRQ RU GLVFODLPHU RI RSLQLRQ & 8QTXDOLILHG RSLQLRQ RU DGYHUVH RSLQLRQ ' 4XDOLILHG RSLQLRQ RU DGYHUVH RSLQLRQ
%!0  "&&"



:KLFK RI WKH IROORZLQJ VWDWHPHQWV LV WUXH ZLWK UHVSHFW WR WKH SHUVXDVLYHQHVV RI DXGLW HYLGHQFH"

$ 3HUVXDVLYHQHVV LV UHODWHG WR WKH UHOHYDQFH RI HYLGHQFH EXW QRW WKH UHOLDELOLW\ RI HYLGHQFH % (YLGHQFH LV FRQVLGHUHG PRUH SHUVXDVLYH ZKHQ JDWKHUHG SULRU WR \HDUHQG WKDQ IROORZLQJ \HDUHQG & (YLGHQFH REWDLQHG XQGHU HQYLURQPHQWV RI VWURQJHU LQWHUQDO FRQWURO LV PRUH SHUVXDVLYH WKDQ HYLGHQFH REWDLQHG XQGHU HQYLURQPHQWV RI ZHDNHU LQWHUQDO FRQWURO ' ,Q HYDOXDWLQJ SHUVXDVLYHQHVV VXIILFLHQF\ RI HYLGHQFH LV RI PRUH LPSRUWDQFH WKDQ DSSURSULDWHQHVV RI HYLGHQFH
!!4 Q  9"D  %1 ! " C  !&"(! 9 !4  " 3& !@ (!  !&"(! 9 ( " ! 9 9 !&( !@ !2! G 57 )5 !4 ! 321 %!0 & !# ) ((  !' &"" @!!E   %$@D    %$@D !4 !(!E

" 9!E H "  9"D

 %1 ! " C" 9! H " !@ (" !" 2 !@ ( !  %" 9! (" ! 9 9 !&( !@ !' V57 )5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" %" 9!E  

!&!# !# (" $E  9"D  %1 ! " C  !&"(! 9 !4  " 3& !@ (!  !&"(! 9 ( " ! 9 9 !&( !@ !2! G 57 )5 !4 ! 321 %!0 & !# ) ((  !' &""  $E    %!0  



' 0DWHULDOLW\ & ,QKHUHQW ULVN % 'HWHFWLRQ ULVN $ &RQWURO ULVN PLVVWDWHPHQW" :KLFK RI WKH IROORZLQJ FRQFHSWV LV OHDVW UHODWHG WR WKH ULVN RI PDWHULDO



:KLFK RI WKH IROORZLQJ VWDWHPHQWV GHVFULEHV DQ DSSURSULDWH UHODWLRQVKLS ZLWK UHVSHFW WR WKH UHOLDELOLW\ RI DXGLW HYLGHQFH"

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
!!4 Q  9"D  %1 ! " C  !&"(! 9 !4  " 3& !@ (!  !&"(! 9 ( " ! 9 9 !&( !@ !2! G 57 )5 !4 ! 321 %!0 W G (( 99 &""  $E    %!0  



$ SHULRGLF UHYLHZ RI DQ DXGLW ILUP V V\VWHP RI TXDOLW\ FRQWURO E\ WKH 3&$2% LV UHIHUUHG WR DV D Q 

$ ,QVSHFWLRQ % 3HHU UHYLHZ & 3ULQFLSOHV UHYLHZ ' 4XDOLW\ UHYLHZ

"! 9 1   9"D  %1 ! " C S "!( " 9 (" !4 ! ! 9" 99 !!& " &( %" 2 9 %2!  "((! %" "& 1      ""  S ( " &!  (" !" !@ !' X 57 )5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  



7KH SHUIRUPDQFH SULQFLSOH ZRXOG LQFOXGH DOO RI WKH IROORZLQJ H[FHSW

$ 7KH DXGLWRUV GHWHUPLQDWLRQ RI PDWHULDOLW\ OHYHOV % 7KH DXGLWRUV HYDOXDWLRQ RI LQGHSHQGHQFH ZLWK UHVSHFW WR WKHLU FOLHQWV & 7KH DXGLWRUV HYDOXDWLRQ RI WKH ULVN RI PDWHULDO PLVVWDWHPHQW ' 7KH DXGLWRUV GHWHUPLQDWLRQ RI WKH QDWXUH WLPLQJ DQG H[WHQW RI VXEVWDQWLYH WHVWV
!2&!&!E &"" @!!E   %!0  

! 9 !2" 9!E  9"D  %1 ! " C" (" "( S  !@ !@ " !! ! 9 9 @ A "@  !2" 9! ( " ! 9 9 !&( !@ !2! )57 )5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  

! 9 !&"(!  9"D  %1 ! " C  !&"(! 9 !4  " 3& !@ (!  !&"(! 9 ( " ! 9 9 !&( !@ !2! G 57 )5 !4 ! 321 %!0 Q 6 ((



' 5LVN RI PDWHULDO PLVVWDWHPHQW & 4XDOLILHG DXGLW RSLQLRQ % 3ODQQLQJ $ 'XH FDUH SULQFLSOH" :KLFK RI WKH IROORZLQJ LV PRVW FORVHO\ DVVRFLDWHG ZLWK WKH UHVSRQVLELOLWLHV



:KLFK RI WKH IROORZLQJ VWDWHPHQWV LV QRW WUXH ZLWK UHVSHFW WR WKH UHVSRQVLELOLW\ IRU HVWDEOLVKLQJ JHQHUDOO\ DFFHSWHG DXGLWLQJ VWDQGDUGV"

$ 7KH 3&$2% LVVXHV DXGLWLQJ VWDQGDUGV IRU WKH DXGLW RI SXEOLF HQWLWLHV VXEMHFW WR 6(& DSSURYDO % 6WDQGDUGV LVVXHG E\ WKH $XGLWLQJ 6WDQGDUGV %RDUG DIWHU  DSSO\ WR WKH DXGLWV RI ERWK SXEOLF DQG SULYDWH HQWLWLHV & ,I QRW VXSHUVHGHG E\ WKH 3&$2% 6WDWHPHQWV RQ $XGLWLQJ 6WDQGDUGV LVVXHG SULRU WR  DUH DSSOLFDEOH WR WKH DXGLW RI SXEOLF HQWLWLHV ' 3ULRU WR WKH 6DUEDQHV2[OH\ $FW WKH $XGLWLQJ 6WDQGDUGV %RDUG LVVXHG DXGLWLQJ VWDQGDUGV IRU WKH DXGLWV RI ERWK SXEOLF DQG SULYDWH HQWLWLHV
 % ! 9! !!T  9"D  %1 ! " C %  ! 9! !! % ( " !"  !& 9"!4 ! !@ !' 6 57 )5 !4 ! 321 %!0 & !# ) ((  !' &""    %!0  



:KLFK RI WKH IROORZLQJ ZRXOG QRUPDOO\ EH FRQVLGHUHG HDUOLHVW LQ WKH DXGLW H[DPLQDWLRQ"

$ 'HWHUPLQDWLRQ RI PDWHULDOLW\ OHYHOV WR XVH GXULQJ WKH DXGLW % &RQVLGHUDWLRQ RI WKH DELOLW\ RI WKH HQWLW\ V LQWHUQDO FRQWURO WR SUHYHQW RU GHWHFW HUURUV & 3UHSDUDWLRQ RI D ZULWWHQ DXGLW SODQ ' (YDOXDWLRQ RI WKH W\SH RI DXGLW RSLQLRQ WR EH LVVXHG EDVHG RQ WKH DXGLWRU V ILQGLQJV
! 9 !&"(!  9"D  %1 ! " C  !&"(! 9 !4  " 3& !@ (!  !&"(! 9 ( " ! 9 9 !&( !@ !2! G 57 )5 !4 ! 321 %!0 W G (( 99 &"" @!!E   %$@D    



7KH VWDWH RI PLQG WKDW FKDUDFWHUL]HV WKH DXGLWRUV DSSURSULDWH TXHVWLRQLQJ DQG FULWLFDO DVVHVVPHQW RI DXGLW HYLGHQFH LV UHIHUUHG WR DV

$ 'XH FDUH % ,QGHSHQGHQFH LQ DSSHDUDQFH & 3URIHVVLRQDO MXGJPHQW ' 3URIHVVLRQDO VNHSWLFLVP
%!0  @Q

!!! 9!  9"D  %1 ! " C" (" "( S  !@ !@ " !! ! 9 9 @ A "@  !2" 9! ( " ! 9 9 !&( !@ !2! )57 )5 !4 ! 321 %!0 W G (( !4 Q &"" %$# "!   %!0  @Q

& 9!$ "!("  9"D  %1 ! " C" (" "( S  !@ !@ " !! ! 9 9 @ A "@  !2" 9! (" ! 9 9 !&( !@ !2! )57 )5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E  



' 7KH HPSOR\PHQW RI WKH DXGLWRU V IDPLO\ PHPEHU LQ DQ LPSRUWDQW SRVLWLRQ ZLWK & 7KH RZQHUVKLS RI D ILQDQFLDO LQWHUHVW LQ D FOLHQW E\ WKH DXGLWRU % 7KH SHUFHSWLRQV RI LQGLYLGXDOV ZKR UHO\ RQ WKH ILQDQFLDO VWDWHPHQWV DQG $ 7KH DXGLWRUV REMHFWLYLW\ DQG DELOLW\ WR DFW LPSDUWLDOO\ WRZDUG WKH FOLHQW :KLFK RI WKH IROORZLQJ LV OHDVW UHODWHG WR WKH FRQFHSW RI LQGHSHQGHQFH LQ DSSHDUDQFH" DXGLWRUV RSLQLRQ RQ WKH ILQDQFLDO VWDWHPHQWV

WKH FOLHQW



:KLFK FRQFHSW UHFRJQL]HV WKDW D *$$6 DXGLW PD\ IDLO WR GHWHFW DOO PDWHULDO PLVVWDWHPHQWV"

$ $EVROXWH DVVXUDQFH % 'XH FDUH & 5HDVRQDEOH DVVXUDQFH ' 5LVN RI PDWHULDO PLVVWDWHPHQW
! !2"!E  9"D  %1 ! " C  !&"(! 9 !4  " 3& !@ (!  !&"(! 9 ( " ! 9 9 !&( !@ !2! G 57 )5 !4 ! 321 %!0 Q 6 (( !2&!&!E &""  $E    %!0  



:KLFK RI WKH IROORZLQJ FDWHJRULHV RI SULQFLSOHV LV PRVW FORVHO\ UHODWHG WR JDWKHULQJ DXGLW HYLGHQFH"

$ 3HUIRUPDQFH % 5HDVRQDEOH DVVXUDQFH & 5HSRUWLQJ ' 5HVSRQVLELOLWLHV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

%!0  

! !  9"D  %1 ! " C" (" "( S  !@ !@ " !! ! 9 9 @ A "@  !2" 9! ( " ! 9 9 !&( !@ !2! )57 )5 !4 ! 321 %!0 & !# ) ((  !' &"" @!!E   %!0  

!!4 Q  9"D  %1 ! " C  !&"(! 9 !4  " 3& !@ (!  !&"(! 9 ( " ! 9 9 !&( !@ !2! G 57 )5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E  



5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN ' &RQGXFW WKH HQJDJHPHQW LQ DFFRUGDQFH ZLWK *$$6 DQG HQVXUH WKDW WKH & *DWKHU HQRXJK DXGLW HYLGHQFH WR KDYH FRPSOHWH DVVXUDQFH WKDW WKHUH LV % 5HSRUW ZKHWKHU WKH ILQDQFLDO VWDWHPHQWV DUH LQ DFFRUGDQFH ZLWK *$$3 $ 7DNH FRQWLQXLQJ SURIHVVLRQDO HGXFDWLRQ FODVVHV 7R H[HUFLVH GXH FDUH DQ DFFRXQWDQW VKRXOG HQRXJK VXSSRUW IRU WKH RSLQLRQ RQ WKH ILQDQFLDO VWDWHPHQWV HQJDJHPHQW LV FRPSOHWHG RQ D WLPHO\ EDVLV



2QH RI DQ DFFRXQWLQJ ILUP V EDVLF REMHFWLYHV LV WR SURYLGH SURIHVVLRQDO VHUYLFHV WKDW FRQIRUP WR SURIHVVLRQDO VWDQGDUGV 5HDVRQDEOH DVVXUDQFH RI DFKLHYLQJ WKLV REMHFWLYH FDQ EH REWDLQHG E\ IROORZLQJ

$ *HQHUDOO\ DFFHSWHG DXGLWLQJ VWDQGDUGV *$$6  % 6WDQGDUGV ZLWKLQ D V\VWHP RI TXDOLW\ FRQWURO & *HQHUDOO\ DFFHSWHG DFFRXQWLQJ SUDFWLFHV *$$3  ' ,QWHUQDWLRQDO DXGLWLQJ VWDQGDUGV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

" " j  9"D  %1 ! " C S "!( " 9 (" !4 ! ! 9" 99 !!& " &( %" 2 9 %2!  "((! %" "& 1     ""  S ( " &!  (" !" !@ !' X 57 )5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  



:KLFK RI WKH IROORZLQJ EHVW GHPRQVWUDWHV WKH FRQFHSW RI SURIHVVLRQDO VNHSWLFLVP"

$ 5HO\LQJ PRUH H[WHQVLYHO\ RQ H[WHUQDO HYLGHQFH UDWKHU WKDQ LQWHUQDO HYLGHQFH % )RFXVLQJ RQ LWHPV WKDW KDYH D PRUH VLJQLILFDQW TXDQWLWDWLYH HIIHFW RQ WKH HQWLW\ V ILQDQFLDO VWDWHPHQWV & &ULWLFDOO\ DVVHVVLQJ YHUEDO HYLGHQFH UHFHLYHG IURP WKH HQWLW\ V PDQDJHPHQW ' (YDOXDWLQJ SRWHQWLDO ILQDQFLDO LQWHUHVWV KHOG E\ DXGLWRUV LQ WKH FOLHQW 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

& 9!$ "!("  9"D  %1 ! " C" (" "( S  !@ !@ " !! ! 9 9 @ A "@  !2" 9! ( " ! 9 9 !&( !@ !2! )57 )5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" %$# "!   %$@D    



7KH SULPDU\ SXUSRVH IRU REWDLQLQJ DQ XQGHUVWDQGLQJ RI WKH HQWLW\ V HQYLURQPHQW LQFOXGLQJ LWV LQWHUQDO FRQWURO LQ D ILQDQFLDO VWDWHPHQW DXGLW LV

$ 7R GHWHUPLQH WKH QDWXUH WLPLQJ DQG H[WHQW RI VXEVWDQWLYH SURFHGXUHV WR EH SHUIRUPHG % 7R PDNH FRQVXOWLQJ VXJJHVWLRQV WR WKH PDQDJHPHQW & 7R REWDLQ GLUHFW VXIILFLHQW DSSURSULDWH DXGLW HYLGHQFH WR DIIRUG D UHDVRQDEOH EDVLV IRU DQ RSLQLRQ RQ WKH ILQDQFLDO VWDWHPHQWV ' 7R GHWHUPLQH ZKHWKHU WKH HQWLW\ KDV FKDQJHG DQ\ DFFRXQWLQJ SULQFLSOHV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

!&!# !# (" $E  9"D  %1 ! " C  !&"(! 9 !4  " 3& !@ (!  !&"(! 9 ( " ! 9 9 !&( !@ !2! G 57 )5 !4 ! 321 %!0 & !# ) ((  !' &"" @!!E   %!0  

!!4 Q  9"D  %1 ! " C  !&"(! 9 !4  " 3& !@ (!  !&"(! 9 ( " ! 9 9 !&( !@ !2! G 57 )5 !4 ! 321 %!0 W G (( !4 Q &"" %$# "!   %!0  



5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN ' ,QTXLU\ RI HQWLW\ OHJDO FRXQVHO & 'RFXPHQWDWLRQ SUHSDUHG E\ WKH DXGLW WHDP % ,QTXLU\ RI PDQDJHPHQW $ ([WHUQDO GRFXPHQWDU\ HYLGHQFH 2UGLQDULO\ ZKDW VRXUFH RI HYLGHQFH VKRXOG OHDVW DIIHFW DXGLW FRQFOXVLRQV"

!!4 Q  9"D  %1 ! " C  !&"(! 9 !4  " 3& !@ (!  !&"(! 9 ( " ! 9 9 !&( !@ !2! G 57 )5 !4 ! 321 %!0 W G (( !4 Q &"" @!!E   %!0  



5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN ' 3K\VLFDO REVHUYDWLRQ & 2EVHUYDWLRQ RI DXGLWHH V SURFHGXUHV % 'RFXPHQWDWLRQ SUHSDUHG H[WHUQDOO\ $ ,QTXLU\ RI PDQDJHPHQW FRPSXWHU HTXLSPHQW LV 7KH PRVW SHUVXDVLYH HYLGHQFH UHJDUGLQJ WKH H[LVWHQFH RI QHZO\ DFTXLUHG



:KLFK RI WKH IROORZLQJ SURFHGXUHV ZRXOG SURYLGH WKH PRVW UHOLDEOH DXGLW HYLGHQFH"

$ ,QTXLULHV RI WKH FOLHQW V LQWHUQDO DXGLW VWDII % ,QVSHFWLRQ RI SUHQXPEHUHG FOLHQW SXUFKDVH RUGHUV ILOHG LQ WKH YRXFKHUV SD\DEOH GHSDUWPHQW & ,QVSHFWLRQ RI YHQGRU VDOHV LQYRLFHV UHFHLYHG IURP FOLHQW SHUVRQQHO ' ,QVSHFWLRQ RI EDQN VWDWHPHQWV REWDLQHG GLUHFWO\ IURP WKH FOLHQW V ILQDQFLDO LQVWLWXWLRQ 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

!!4 Q  9"D  %1 ! " C  !&"(! 9 !4  " 3& !@ (!  !&"(! 9 (" ! 9 9 !&( !@ !2! G 57 )5 !4 ! 321 %!0 W G (( !4 Q &"" @!!E   %!0  



%UHDX[

&R &3$V UHTXLUH WKDW DOO DXGLW GRFXPHQWDWLRQ LQGLFDWH WKH LGHQWLW\ RI

WKH SUHSDUHU DQG WKH UHYLHZHU 7KLV SURFHGXUH SURYLGHV HYLGHQFH UHODWLQJ WR ZKLFK RI WKH IROORZLQJ"

$ ,QGHSHQGHQFH % $GHTXDWH FRPSHWHQFH DQG FDSDELOLWLHV & $GHTXDWH SODQQLQJ DQG VXSHUYLVLRQ ' *DWKHULQJ VXIILFLHQW DSSURSULDWH HYLGHQFH 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

"4 ! 9  %  9"D  %1 ! " C  !&"(! 9 !4  " 3& !@ (!  !&"(! 9 ( " ! 9 9 !&( !@ !2! G 57 )5 !4 ! 321 %!0 & !# ) ((  !' &"" @!!E   %!0  

! 9 !2" 9!E  9"D  %1 ! " C" (" "(  S  !@ !@ " !! ! 9 9 @ A "@  !2" 9! ( " ! 9 9 !&( !@ !2! )57 )5 !4 ! 321 %!0 & !# ) ((  !' &"" @!!E   %!0  



5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN ' 5HDVRQDEOH DVVXUDQFH & 3UXGHQW DXGLWRU % 3URIHVVLRQDO VNHSWLFLVP $ ,QGHSHQGHQFH LQ IDFW :KLFK RI WKH IROORZLQJ FRQFHSWV LV OHDVW UHODWHG WR WKH VWDQGDUG RI GXH FDUH"



7KH HYLGHQFH FRQVLGHUHG PRVW DSSURSULDWH E\ DXGLWRUV LV EHVW GHVFULEHG DV

$ ,QWHUQDO GRFXPHQWV VXFK DV VDOHV LQYRLFH FRSLHV SURGXFHG XQGHU FRQGLWLRQV RI VWURQJ LQWHUQDO FRQWURO % :ULWWHQ UHSUHVHQWDWLRQV PDGH E\ WKH SUHVLGHQW RI WKH HQWLW\ & 'RFXPHQWDU\ HYLGHQFH REWDLQHG GLUHFWO\ IURP LQGHSHQGHQW H[WHUQDO VRXUFHV ' 'LUHFW SHUVRQDO NQRZOHGJH REWDLQHG WKURXJK SK\VLFDO REVHUYDWLRQ DQG PDWKHPDWLFDO UHFDOFXODWLRQ 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

!!4 Q  9"D  %1 ! " C  !&"(! 9 !4  " 3& !@ (!  !&"(! 9 ( " ! 9 9 !&( !@ !2! G 57 )5 !4 ! 321 %!0 W G (( !4 Q &"" @!!E   %!0  



$XGLWRUV XQGHUVWDQGLQJ RI WKH LQWHUQDO FRQWURO LQ DQ HQWLW\ FRQWULEXWHV LQIRUPDWLRQ IRU

$ 'HWHUPLQLQJ ZKHWKHU PHPEHUV RI WKH DXGLW WHDP KDYH WKH UHTXLUHG FRPSHWHQFH DQG FDSDELOLWLHV WR SHUIRUP WKH DXGLW % $VFHUWDLQLQJ WKH LQGHSHQGHQFH LQ PHQWDO DWWLWXGH RI PHPEHUV RI WKH DXGLW WHDP & 3ODQQLQJ WKH SURIHVVLRQDO GHYHORSPHQW FRXUVHV WKH DXGLW VWDII QHHGV WR NHHS XS WR GDWH ZLWK QHZ DXGLWLQJ VWDQGDUGV ' 3ODQQLQJ WKH QDWXUH WLPLQJ DQG H[WHQW RI VXEVWDQWLYH SURFHGXUHV RQ DQ DXGLW 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

" " !  9"D  %1 ! " C  !&"(! 9 !4  " 3& !@ (!  !&"(! 9 (" ! 9 9 !&( !@ !2! G 57 )5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!   %!0  



:KLFK RI WKH IROORZLQJ HOHPHQWV RI D V\VWHP RI TXDOLW\ FRQWURO LV UHODWHG WR ILUPV UHFHLYLQJ LQGHSHQGHQFH FRQILUPDWLRQV IURP LWV SURIHVVLRQDOV ZLWK UHVSHFW WR FOLHQWV"

$ $FFHSWDQFH DQG FRQWLQXDQFH RI FOLHQW UHODWLRQVKLSV DQG VSHFLILF HQJDJHPHQWV % (QJDJHPHQW SHUIRUPDQFH & 0RQLWRULQJ ' 5HOHYDQW HWKLFDO UHTXLUHPHQWV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

!!! 9!  9"D  %1 ! " C S "!( " 9 (" !4 ! ! 9" 99 !!& " &( %" 2 9 %2!  "((! %" "& 1     ""  S ( " &!  (" !" !@ !' X 57 )5 !4 ! 321 %!0 & !# ) ((  !' &"" @!!E   %!0  



:KLFK RI WKH IROORZLQJ LV PRVW FORVHO\ UHODWHG WR WKH UHVSRQVLELOLWLHV SULQFLSOH"

$ 7KH DXGLWRUV UHVSRQVLELOLW\ WR LVVXH D UHSRUW DV D UHVXOW RI WKHLU H[DPLQDWLRQ % 7KH UHTXLUHPHQW WKDW DXGLWRUV JDWKHU VXIILFLHQW DSSURSULDWH HYLGHQFH XSRQ ZKLFK WR EDVH DQ RSLQLRQ RQ WKH ILQDQFLDO VWDWHPHQWV & 7KH DXGLWRUV FRPSOLDQFH ZLWK UHOHYDQW HWKLFDO UHTXLUHPHQWV RI LQGHSHQGHQFH DQG GXH FDUH ' 7KH DXGLWRUV UHVSRQVLELOLW\ WR SODQ WKH DXGLW DQG SURSHUO\ VXSHUYLVH DVVLVWDQWV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

!!! 9!  9"D  %1 ! " C" (" "( S  !@ !@ " !! ! 9 9 @ A "@  !2" 9! ( " ! 9 9 !&( !@ !2! )57 )5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  



.UDPHU &3$ FRQVXOWHG DQ LQGHSHQGHQW DSSUDLVHU UHJDUGLQJ WKH YDOXDWLRQ RI ILQH DUW IRU D QRWIRUSURILW PXVHXP &RQVXOWDWLRQ ZLWK D VSHFLDOLVW LQ WKLV FDVH ZRXOG

$ %H FRQVLGHUHG DV H[HUFLVLQJ SURSHU GXH FDUH % %H FRQVLGHUHG D IDLOXUH WR IROORZ *$$6 EHFDXVH .UDPHU VKRXOG KDYH NQRZQ KRZ WR YDOXH ILQH DUW EHIRUH DFFHSWLQJ WKH HQJDJHPHQW & 1RW EH FRQVLGHUHG D YLRODWLRQ RI *$$6 EHFDXVH *$$6 GRHV QRW DSSO\ WR QRW IRUSURILW HQWLWLHV ' 1RQH RI WKH DERYH 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

!2 9  !!! 9&"  9"D  %1 ! " C" (" "( S  !@ !@ " !! ! 9 9 @ A "@  !2" 9! ( " ! 9 9 !&( !@ !2! )57 )5 !4 ! 321 %!0 W G (( 99 &"" %$# "!   %$@D    



:KLFK RI WKH IROORZLQJ WRSLFV LV QRW DGGUHVVHG LQ WKH DXGLWRUV UHSRUW IRU D SXEOLF HQWLW\"

$ 5HVSRQVLELOLWLHV RI WKH DXGLWRU DQG PDQDJHPHQW LQ WKH ILQDQFLDO UHSRUWLQJ SURFHVV % $EVROXWH DVVXUDQFH UHJDUGLQJ WKH IDLUQHVV RI WKH HQWLW\ V ILQDQFLDO VWDWHPHQWV LQ DFFRUGDQFH ZLWK *$$3 & $ GHVFULSWLRQ RI DQ DXGLW HQJDJHPHQW ' $ VXPPDU\ RI WKH DXGLWRUV RSLQLRQ RQ WKH HIIHFWLYHQHVV RI WKH HQWLW\ V LQWHUQDO FRQWURO RYHU ILQDQFLDO UHSRUWLQJ 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

" 9!E H "  9"D

 %1 ! " C" 9! H " !@ (" !" 2 !@ ( !  %" 9! (" ! 9 9 !&( !@ !' V57 )5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" %" 9!E   %!0  "&&"



:KLFK RI WKH IROORZLQJ UHFRJQL]HV WKDW DQ DXGLW FRQGXFWHG XQGHU JHQHUDOO\ DFFHSWHG DXGLWLQJ VWDQGDUGV PD\ QRW GHWHFW DOO PDWHULDO PLVVWDWHPHQWV"

$ $EVROXWH DVVXUDQFH % 3URIHVVLRQDO MXGJPHQW & 3HUVXDVLYHQHVV RI DXGLW HYLGHQFH ' 5HDVRQDEOH DVVXUDQFH 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

! !2"!E  9"D  %1 ! " C  !&"(! 9 !4  " 3& !@ (!  !&"(! 9 (" ! 9 9 !&( !@ !2! G 57 )5 !4 ! 321 %!0 Q 6 (( !2&!&!E &""  $E    %!0  

apda er m spe d f bde fecg sapc eqe b db de a c yca d a eqer eqpb c ib a q y eq da e db ap db c yca d y a dep dec d bqda b d y a q ahecp ax tv wt sar eqpa hg fdedcba` i cb s q peyyex aq b br m s fdkbl d e epax s e fdkdef bpeqec s e p eq bd s



5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN ' 2SWLRQ '  2SWLRQ & % 2SWLRQ % $ 2SWLRQ $ SHUVXDVLYH HYLGHQFH" :KLFK RI WKH IROORZLQJ FRPELQDWLRQV ZRXOG SURYLGH WKH DXGLWRU WKH PRVW



:KLFK RI WKH IROORZLQJ LV PRVW FORVHO\ UHODWHG WR WKH UHOHYDQFH RI DXGLW HYLGHQFH"

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

!!4 Q  9"D  %1 ! " C  !&"(! 9 !4  " 3& !@ (!  !&"(! 9 ( " ! 9 9 !&( !@ !2! G 57 )5 !4 ! 321 %!0 & !# ) ((  !' &""  $E    %$@D    



:KLFK RI WKH IROORZLQJ VWDWHPHQWV LV QRW WUXH ZLWK UHVSHFW WR WKH SHUIRUPDQFH SULQFLSOH"

$ $XGLWRUV DUH UHTXLUHG WR SUHSDUH D ZULWWHQ DXGLW SODQ GXULQJ WKH SODQQLQJ VWDJHV RI LQLWLDO DXGLWV EXW DUH QRW UHTXLUHG WR GR VR LQ FRQWLQXLQJ DXGLWV % $XGLW WHDPV FRQVLGHU PDWHULDOLW\ LQ SODQQLQJ WKH DXGLW SHUIRUPLQJ WKH DXGLW DQG HYDOXDWLQJ WKH HIIHFW RI PLVVWDWHPHQWV RQ WKH HQWLW\ V ILQDQFLDO VWDWHPHQWV & ,Q DVVHVVLQJ WKH ULVN RI PDWHULDO PLVVWDWHPHQWV WKH DXGLW WHDP FRQVLGHUV WKH HIIHFWLYHQHVV RI WKH HQWLW\ V LQWHUQDO FRQWUROV LQ SUHYHQWLQJ DQG GHWHFWLQJ PLVVWDWHPHQWV ' $XGLWRUV DUH UHTXLUHG WR FRQVLGHU ERWK WKH UHOHYDQFH DQG UHOLDELOLW\ RI HYLGHQFH LQ HYDOXDWLQJ ZKHWKHU WKH HYLGHQFH WKH\ KDYH JDWKHUHG LV DSSURSULDWH 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

%   9"D  %1 ! " C  !&"(! 9 !4  " 3& !@ (!  !&"(! 9 ( " ! 9 9 !&( !@ !2! G 57 )5 !4 ! 321 %!0 W G (( 99 &"" @!!E   %$@D    



:KLFK RI WKH IROORZLQJ LV WUXH ZLWK UHVSHFW WR 3&$2% LQVSHFWLRQV RI DFFRXQWLQJ ILUPV"

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

"! 9 1   9"D  %1 ! " C S "!( " 9 (" !4 ! ! 9" 99 !!& " &( %" 2 9 %2!  "((! %" "& 1     "" S (" &!  (" !" !@ !' X 57 )5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  



$SSHQGL[ :KLFK RI WKH IROORZLQJ LV D FRQFHSWXDO GLIIHUHQFH EHWZHHQ DWWHVWDWLRQ VWDQGDUGV DQG JHQHUDOO\ DFFHSWHG DXGLWLQJ VWDQGDUGV"

$ 7KH DWWHVWDWLRQ VWDQGDUGV SURYLGH D IUDPHZRUN IRU WKH DWWHVW IXQFWLRQ EH\RQG KLVWRULFDO ILQDQFLDO VWDWHPHQWV % 7KH UHTXLUHPHQW WKDW WKH SUDFWLWLRQHU EH LQGHSHQGHQW LV QRW UHTXLUHG XQGHU DWWHVWDWLRQ VWDQGDUGV & 7KH DWWHVWDWLRQ VWDQGDUGV GR QRW SHUPLW DQ DWWHVWDWLRQ HQJDJHPHQW WR H[DPLQH SURVSHFWLYH ZKDWLI ILQDQFLDO VWDWHPHQWV ' 5HTXLUHPHQWV UHODWHG WR HYLGHQFH DUH QRW LQFOXGHG LQ WKH DWWHVWDWLRQ VWDQGDUGV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

 "!  9"D  %1 ! " C!&! % %! " !   !!@ ( " ! !@   "! "( !! !@ (! i8! 99h I 57 )5 !4 ! 321 %!0 & !# ) ((  !' &"" @!!E   %!0  



$SSHQGL[ 7KH DWWHVWDWLRQ VWDQGDUGV GR QRW FRQWDLQ D UHTXLUHPHQW WKDW DXGLWRUV REWDLQ

$ $GHTXDWH NQRZOHGJH LQ WKH VXEMHFW PDWWHU RI WKH DVVHUWLRQV EHLQJ H[DPLQHG % $Q XQGHUVWDQGLQJ RI WKH DXGLWHH V LQWHUQDO FRQWUROV & 6XIILFLHQW HYLGHQFH IRU WKH FRQFOXVLRQV H[SUHVVHG LQ DQ DWWHVWDWLRQ UHSRUW ' ,QGHSHQGHQFH LQ PHQWDO DWWLWXGH 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

 "!  9"D  %1 ! " C!&! % %! " !   !!@ ( " ! !@   "! "( !! !@ (! i8! 99h I 57 )5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  



:KLFK RI WKH IROORZLQJ EHVW GHVFULEHV WKH JHQHUDO FRQWHQWV RI WKH LQWURGXFWRU\ SDUDJUDSK RI WKH DXGLWRUV UHSRUW"

$ $ GHVFULSWLRQ RI DQ DXGLW H[DPLQDWLRQ LQFOXGLQJ WKH IDFW WKDW WKH DXGLW ZDV FRQGXFWHG XQGHU VWDQGDUGV HVWDEOLVKHG E\ WKH 3&$2% % 7KH DXGLWRUV FRQFOXVLRQ ZLWK UHVSHFW WR WKH IDLUQHVV RI WKH HQWLW\ V ILQDQFLDO VWDWHPHQWV & 6WDWHPHQWV LGHQWLI\LQJ WKH UHVSRQVLELOLW\ RI DXGLWRUV DQG PDQDJHPHQW LQ WKH ILQDQFLDO UHSRUWLQJ SURFHVV ' 7KH DXGLWRUV FRQFOXVLRQ ZLWK UHVSHFW WR WKH HIIHFWLYHQHVV RI WKH HQWLW\ V LQWHUQDO FRQWURO RYHU ILQDQFLDO UHSRUWLQJ 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

" 9!E H "  9"D  %1 ! " C" 9! H " !@ (" !" 2 !@ ( !  %" 9! (" ! 9 9 !&( !@ !' V57 )5 !4 ! 321 %!0 & !# ) ((  !' &"" %" 9!E   %!0  



:KLFK RI WKH IROORZLQJ RSLQLRQV ZRXOG EH LVVXHG LI DXGLWRUV EHOLHYHG WKDW WKH HQWLW\ V ILQDQFLDO VWDWHPHQWV ZHUH QRW SUHVHQWHG LQ FRQIRUPLW\ ZLWK *$$3"

$ $GYHUVH RSLQLRQ % 'LVFODLPHU RI RSLQLRQ & 4XDOLILHG RSLQLRQ ' 8QTXDOLILHG RSLQLRQ 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

" 9!E H "  9"D  %1 ! " C" 9! H " !@ (" !" 2 !@ ( !  %" 9! (" ! 9 9 !&( !@ !' V57 )5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" %" 9!E   %!0  



:KLFK RI WKH IROORZLQJ SULQFLSOHV LV PRVW FORVHO\ DVVRFLDWHG ZLWK WKH DXGLWRUV FRQFOXVLRQ DV WR WKH IDLU SUHVHQWDWLRQ RI WKH HQWLW\ V ILQDQFLDO VWDWHPHQWV"

$ &RPPXQLFDWLRQ SULQFLSOH % 3HUIRUPDQFH SULQFLSOH & 5HSRUWLQJ SULQFLSOH ' 5HVSRQVLELOLWLHV SULQFLSOH 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

! 9 %" 9!E  9"D  %1 ! " C" 9! H " !@ (" !" 2 !@ ( !  %" 9! (" ! 9 9 !&( !@ !' V57 )5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" %" 9!E   %!0  



$SSHQGL[ 7KH DWWHVWDWLRQ VWDQGDUGV DUH D JHQHUDO VHW RI VWDQGDUGV LQWHQGHG WR JXLGH ZRUN LQ

$ $XGLWV RI ILQDQFLDO VWDWHPHQWV % )LQDQFLDO IRUHFDVWV DQG SURVSHFWLYH ILQDQFLDO LQIRUPDWLRQ & $UHDV RWKHU WKDQ DXGLWV RI ILQDQFLDO VWDWHPHQWV ' 8QGHUVWDQGLQJ LQWHUQDO FRQWURO 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 "!  9"D  %1 ! " C!&! % %! " !   !!@ ( " ! !@   "! "( !! !@ (! i8! 99h I 57 )5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  



$XGLWLQJ VWDQGDUGV DUH FRQVLGHUHG WR EH

$ 6SHFLDOL]HG WR REWDLQ HYLGHQFH WR UHQGHU DQ RSLQLRQ % *XLGHV IRU WKH TXDOLW\ RI DXGLWV WKDW DSSO\ WR DOO DXGLWV & 6WDQGDUGV IRU SUHSDUDWLRQ RI ILQDQFLDO VWDWHPHQWV ' 6WDQGDUGV WR JRYHUQ WKH TXDOLW\ RI D VSHFLILF ILUP V DXGLW SUDFWLFH 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH



:KLFK RI WKH IROORZLQJ LV QRW UHODWHG WR WKH SHUIRUPDQFH SULQFLSOH RI *$$6"

$ 5LVN RI PDWHULDO PLVVWDWHPHQW % 3ODQQLQJ DQG VXSHUYLVLRQ & 6XIILFLHQW DSSURSULDWH HYLGHQFH ' 'XH FDUH 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 % ! 9! !!T  9"D  %1 ! " C %  ! 9! !! % ( " !"  !& 9"!4 ! !@ !' 6 57 )5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0   

!!! 9!  9"D  %1 ! " C" (" "( S  !@ !@ " !! ! 9 9 @ A "@  !2" 9! ( " ! 9 9 !&( !@ !2! )57 )5 !4 ! 321 %!0 & !# ) ((  !' &"" @!!E   %$@D    @Q

! 9 !&"(!  9"D  %1 ! " C  !&"(! 9 !4  " 3& !@ (!  !&"(! 9 ( " ! 9 9 !&( !@ !2! G 57 )5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0 



5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH ' 2ZQHUVKLS RI D ILQDQFLDO LQWHUHVW LQ D FOLHQW E\ DQ DXGLWRUV GLVWDQW UHODWLYH & (PSOR\PHQW RI DQ DXGLWRUV FKLOG LQ D SRVLWLRQ RI LQIOXHQFH ZLWKLQ D FOLHQW % 2ZQHUVKLS RI D ILQDQFLDO LQWHUHVW LQ D FOLHQW E\ DQ DXGLWRUV VSRXVH $ 7KH DXGLWRUV DFWXDO VWDWH RI PLQG DQG XQELDVHG PHQWDO DWWLWXGH UDWKHU WKDQ LQGHSHQGHQFH LQ DSSHDUDQFH" :KLFK RI WKH IROORZLQJ VWDWHPHQWV LV PRUH FORVHO\ UHODWHG WR LQGHSHQGHQFH LQ IDFW



7KH KXPDQ UHVRXUFHV HOHPHQW RI TXDOLW\ FRQWURO LQ D SXEOLF DFFRXQWLQJ ILUP LQFOXGHV ZKLFK RI WKH IROORZLQJ"

$ 6XSHUYLVLRQ DSSURSULDWH IRU WKH FRPSHWHQFLHV RI WKH SHUVRQQHO DVVLJQHG WR WKH ZRUN LV LPSRUWDQW % 3URIHVVLRQDO GHYHORSPHQW VKRXOG EH SURYLGHG VR WKDW SHUVRQQHO ZLOO KDYH WKH NQRZOHGJH UHTXLUHG WR HQDEOH WKHP WR IXOILOO WKHLU UHVSRQVLELOLWLHV & 3HRSOH DW DOO RUJDQL]DWLRQDO OHYHOV PXVW PDLQWDLQ LQGHSHQGHQFH LQ IDFW DQG DSSHDUDQFH ' :KHQ DFFHSWLQJ DQG FRQWLQXLQJ FOLHQW UHODWLRQVKLSV ILUPV VKRXOG FRQVLGHU WKHLU RZQ FRPSHWHQFH 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

" " j  9"D  %1 ! " C S "!( " 9 (" !4 ! ! 9" 99 !!& " &( %" 2 9 %2!  "((! %" "& 1     ""  S ( " &!  (" !" !@ !' X 57 )5 !4 ! 321 %!0 & !# ) ((  !' &"" @!!E   !&! %# !"!E  

!& %n "!("  9"D  %1 ! " C" (" "( S  !@ !@ " !! ! 9 9 @ A "@  !2" 9! ( " ! 9 9 !&( !@ !2! )57 )5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  



5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH ' 5HDVRQDEOH DVVXUDQFH & 3URIHVVLRQDO VNHSWLFLVP % 3URIHVVLRQDO MXGJPHQW $ $EVROXWH DVVXUDQFH DV LQIRUPHG GHFLVLRQV DERXW DSSURSULDWH FRXUVHV RI DFWLRQ GXULQJ DQ DXGLW LV NQRZQ 7KH DSSOLFDWLRQ RI UHOHYDQW WUDLQLQJ NQRZOHGJH DQG H[SHULHQFH LQ PDNLQJ



:KLFK RI WKH IROORZLQJ VLWXDWLRQV ZRXOG SURYLGH DXGLWRUV ZLWK D ORZHU OHYHO RI GHWHFWLRQ ULVN"

$ ,QVSHFWLQJ DQ LWHP UDWKHU WKDQ GLUHFWO\ FRQILUPLQJ WKH H[LVWHQFH RI WKDW LWHP ZLWK WKLUG SDUWLHV % (YDOXDWLQJ D VPDOOHU QXPEHU RI WUDQVDFWLRQV RU FRPSRQHQWV RI DQ DFFRXQW EDODQFH & 5HO\LQJ H[WHQVLYHO\ RQ YHUEDO LQTXLU\ RI FOLHQW SHUVRQQHO LQ JDWKHULQJ HYLGHQFH ' ([DPLQLQJ DQ DFFRXQW WKDW LV PRUH VXVFHSWLEOH WR PLVVWDWHPHQW EHFDXVH RI FRPSOH[ FDOFXODWLRQV DQG DFFRXQWLQJ PHWKRGV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

!!4 Q  9"D  %1 ! " C  !&"(! 9 !4  " 3& !@ (!  !&"(! 9 ( " ! 9 9 !&( !@ !2! G 57 )5 !4 ! 321 %!0 W G (( !4 Q &""  $E    %$@D    



7KH RSLQLRQ SDUDJUDSK RI WKH DXGLWRUV UHSRUW LQFOXGHV D VWDWHPHQW WKDW

$ 7KH ILQDQFLDO VWDWHPHQWV DUH WKH UHVSRQVLELOLW\ RI PDQDJHPHQW % 7KH DXGLW ZDV FRQGXFWHG LQ DFFRUGDQFH ZLWK JHQHUDOO\ DFFHSWHG DXGLWLQJ VWDQGDUGV & 7KH DXGLW SURYLGHV D UHDVRQDEOH EDVLV IRU DQ RSLQLRQ ' 7KH ILQDQFLDO VWDWHPHQWV DUH SUHVHQWHG LQ FRQIRUPLW\ ZLWK D ILQDQFLDO UHSRUWLQJ IUDPHZRUN VXFK DV JHQHUDOO\ DFFHSWHG DFFRXQWLQJ SULQFLSOHV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

" 9!E H "  9"D  %1 ! " C" 9! H " !@ (" !" 2 !@ ( !  %" 9! (" ! 9 9 !&( !@ !' V57 )5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" %" 9!E   %!0  



:KHQ ILQDQFLDO VWDWHPHQWV GR QRW SUHVHQW IDLUO\ WKH ILQDQFLDO FRQGLWLRQ UHVXOWV RI RSHUDWLRQV DQG FDVK IORZV RI DQ HQWLW\ DQ DXGLWRU ZRXOG PRVWO\ OLNHO\ LVVXH D Q 

$ $GYHUVH RSLQLRQ % 'LVFODLPHU RI RSLQLRQ & 4XDOLILHG RSLQLRQ ' 8QTXDOLILHG RSLQLRQ 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

" 9!E H "  9"D  %1 ! " C" 9! H " !@ (" !" 2 !@ ( !  %" 9! (" ! 9 9 !&( !@ !' V57 )5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" %" 9!E   %!0  

" " j  9"D  %1 ! " C S "!( " 9 (" !4 ! ! 9" 99 !!& " &( %" 2 9 %2!  "((! %" "& 1     "" S (" &!  (" !" !@ !' X 57 )5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  

)LOO LQ WKH %ODQN 4XHVWLRQV

 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH ' ,QWHUQDWLRQDO DXGLWLQJ VWDQGDUGV & *HQHUDOO\ DFFHSWHG DFFRXQWLQJ SULQFLSOHV % ,WV V\VWHP RI TXDOLW\ FRQWURO $ 7KH SHUIRUPDQFH SULQFLSOH RI *$$6 SURIHVVLRQDO VWDQGDUGV WKH ILUP VKRXOG IROORZ 7R HQVXUH WKDW D SXEOLF DFFRXQWLQJ ILUP LV SURYLGLQJ VHUYLFHV WKDW FRQIRUP WR

 BBBBBBBBBBBBBBBBBBBBBBBBBBBBB VWDQGDUGV DUH D JHQHUDO VHW RI VWDQGDUGV WR JXLGH HQJDJHPHQWV LQ DUHDV RWKHU WKDQ DXGLWV RI ILQDQFLDO VWDWHPHQWV $WWHVWDWLRQ 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 $XGLWV RI KLVWRULFDO ILQDQFLDO VWDWHPHQWV DUH JXLGHG E\ D EURDG VHW RI SULQFLSOHV UHIHUUHG WR DV BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB JHQHUDOO\ DFFHSWHG DXGLWLQJ VWDQGDUGV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 7KH FRQFHSW RI BBBBBBBBBBBBBBB UHIHUV WR WKH QDWXUH RI LQIRUPDWLRQ SURYLGHG E\ HYLGHQFH DQG WKH PDQDJHPHQW DVVHUWLRQV UHODWHG WR WKDW HYLGHQFH UHOHYDQFH 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 7KH $,&3$ V IXQGDPHQWDO SULQFLSOHV RI JHQHUDOO\ DFFHSWHG DXGLWLQJ VWDQGDUGV DUH FODVVLILHG LQ WKUHH FDWHJRULHV BBBBBBBBBBBBBBBBBBBBBBB SULQFLSOH BBBBBBBBBBBBBBBBBBBBBBB SULQFLSOH DQG WKH BBBBBBBBBBBBBBBBBBBBBBBBBBBBB SULQFLSOH UHVSRQVLELOLWLHV SHUIRUPDQFH UHSRUWLQJ 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 $ Q BBBBBBBBBBBBBBBBBBBBBBB LV D OLVW RI DXGLWLQJ SURFHGXUHV WKDW ZLOO EH SHUIRUPHG GXULQJ WKH HQJDJHPHQW WR JDWKHU VXIILFLHQW DSSURSULDWH HYLGHQFH DXGLW SODQ 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 7KH BBBBBBBBBBBBBBBBBBBBBB SULQFLSOH RI *$$6 KLJKOLJKWV WKH LPSRUWDQFH RI FRPSO\LQJ ZLWK HWKLFDO UHTXLUHPHQWV LQFOXGLQJ WKRVH SHUWDLQLQJ WR LQGHSHQGHQFH DQG GXH FDUH RI DXGLWRUV UHVSRQVLELOLWLHV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB LV D VWDWH RI PLQG WKDW LV FKDUDFWHUL]HG E\ DSSURSULDWH TXHVWLRQLQJ DQG D FULWLFDO DVVHVVPHQW RI DXGLW HYLGHQFH 3URIHVVLRQDO VNHSWLFLVP 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 7KH FRQFHSW RI LQGHSHQGHQFH LQ BBBBBBBBBBBBBBBBBBBBBBBBBBBBB UHODWHV WR ILQDQFLDO VWDWHPHQW XVHUV SHUFHSWLRQV RI DXGLWRUV LQGHSHQGHQFH DSSHDUDQFH 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 7KH H[HUFLVH RI BBBBBBBBBBBBBBBBBBBBBBBB UHIOHFWV D OHYHO RI SHUIRUPDQFH WKDW ZRXOG EH H[HUFLVHG E\ UHDVRQDEOH DXGLWRUV LQ VLPLODU FLUFXPVWDQFHV GXH FDUH 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 :ULWWHQ FRUURERUDWLRQ RI LQIRUPDWLRQ UHFHLYHG YHUEDOO\ IURP PDQDJHPHQW LV UHIHUUHG WR DV BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB ZULWWHQ UHSUHVHQWDWLRQV RU PDQDJHPHQW UHSUHVHQWDWLRQV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 ,Q WKH 8QLWHG 6WDWHV WKH DXGLWRUV UHSRUW PXVW VWDWH ZKHWKHU WKH ILQDQFLDO VWDWHPHQWV DUH SUHVHQWHG LQ DFFRUGDQFH ZLWK BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB JHQHUDOO\ DFFHSWHG DFFRXQWLQJ SULQFLSOHV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 8QGHU WKH BBBBBBBBBBBBBBBBBBBBBBBBBBBB SULQFLSOH RI *$$6 WKH DXGLWRU H[SUHVVHV DQ RSLQLRQ LQ DFFRUGDQFH ZLWK WKH DXGLWRU V ILQGLQJV UHSRUWLQJ 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 8QGHU WKH UHSRUWLQJ SULQFLSOH RI *$$6 WKH UHSRUW ZLOO FRQWDLQ HLWKHU DQ H[SUHVVLRQ RI BBBBBBBBBBBBBBBBBBBBBB UHJDUGLQJ WKH ILQDQFLDO VWDWHPHQWV WDNHQ DV D ZKROH RU DQ DVVHUWLRQ WR WKH HIIHFW WKDW DQ RSLQLRQ FDQQRW EH H[SUHVVHG RSLQLRQ 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 $Q RYHUDOO RSLQLRQ WKDW WKH ILQDQFLDO VWDWHPHQWV SUHVHQW WKH ILQDQFLDO FRQGLWLRQ UHVXOWV RI RSHUDWLRQV DQG FDVK IORZV DFFRUGLQJ WR JHQHUDOO\ DFFHSWHG DFFRXQWLQJ SULQFLSOHV LV D Q BBBBBBBBBBBBBBBBBBBBBBBBBBBBB RSLQLRQ XQTXDOLILHG 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 7R SURSHUO\ SODQ WKH DXGLW DXGLWRUV VKRXOG EH HQJDJHG EHIRUH WKH FOLHQW V ILVFDO \HDUHQG RU GDWH RI WKH BBBBBBBBBBBBBBBBBBBBBBBBBBBBBB ILQDQFLDO VWDWHPHQWV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 7KH FRQFHSW RI BBBBBBBBBBBBBBBBBBBBBBBBB UHFRJQL]HV WKDW DXGLWRUV VKRXOG IRFXV RQ PDWWHUV WKDW DUH LPSRUWDQW WR ILQDQFLDO VWDWHPHQW XVHUV PDWHULDOLW\ 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 7KH ULVN RI BBBBBBBBBBBBBBBBBBBBBBBBBBB LV D FRPELQDWLRQ RI WKH SUREDELOLW\ WKDW D PDWHULDO PLVVWDWHPHQW ZLOO RFFXU DQG QRW EH GHWHFWHG E\ WKH HQWLW\ V LQWHUQDO FRQWUROV PDWHULDO PLVVWDWHPHQW 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 7R SHUIRUP LWV PRQLWRULQJ IXQFWLRQ WKH 3&$2% FRQGXFWV SHULRGLF BBBBBBBBBBBBBBBBBBBBBBBBBBBBB RI WKH TXDOLW\ RI ZRUN SHUIRUPHG E\ DFFRXQWLQJ ILUPV WKDW DXGLW SXEOLF HQWLWLHV LQVSHFWLRQV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 7KH BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB $FW RI  FUHDWHG WKH 3XEOLF &RPSDQ\ $FFRXQWLQJ 2YHUVLJKW %RDUG 6DUEDQHV2[OH\ 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 7R HQVXUH WKDW WKHLU SHUVRQQHO FRPSO\ ZLWK SURIHVVLRQDO VWDQGDUGV DQG LVVXH UHSRUWV WKDW DUH DSSURSULDWH LQ WKH FLUFXPVWDQFHV ILUPV GHYHORS V\VWHPV RI BBBBBBBBBBBBBBBBBBBBB TXDOLW\ FRQWURO 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

6KRUW $QVZHU 4XHVWLRQV

 )RU HDFK RI WKH PDWWHUV EHORZ LQGLFDWH WKURXJK WKH DSSURSULDWH OHWWHU WKH IXQGDPHQWDO SULQFLSOH WR ZKLFK WKH PDWWHU LV PRVW FORVHO\ UHODWHG $ 5HVSRQVLELOLWLHV SULQFLSOH % 3HUIRUPDQFH SULQFLSOH & 5HSRUWLQJ SULQFLSOH BBBB  0DLQWDLQLQJ SURIHVVLRQDO VNHSWLFLVP BBBB  $Q DXGLWRU V RYHUDOO FRQFOXVLRQ RI WKH IDLUQHVV RI WKH FOLHQW V ILQDQFLDO VWDWHPHQWV BBBB  7KH XVH RI DQ DXGLW SODQ WR LGHQWLI\ DXGLW SURFHGXUHV WR EH SHUIRUPHG GXULQJ WKH HQJDJHPHQW BBBB  $XGLWRUV DVVHVVPHQW RI WKH ULVN RI PDWHULDO PLVVWDWHPHQW BBBB  $FFRXQWLQJ ILUP SROLFLHV ZLWK UHVSHFW WR WKH OHYHO RI H[SHFWHG FRQWLQXLQJ SURIHVVLRQDO HGXFDWLRQ BBBB  ([SUHVVLQJ DQ RSLQLRQ LQ DFFRUGDQFH ZLWK WKH DXGLWRU V ILQGLQJV BBBB  3URSHU VXSHUYLVLRQ RI DVVLVWDQWV RQ WKH DXGLW BBBB  $XGLWRUV UHTXHVWV WR REWDLQ EDQN VWDWHPHQWV GLUHFWO\ IURP ILQDQFLDO LQVWLWXWLRQV ZLWK ZKLFK WKH FOLHQW GRHV EXVLQHVV BBBB  $Q LQGLFDWLRQ WKDW DQ RSLQLRQ FDQQRW EH H[SUHVVHG BBBB  'HWHUPLQLQJ DQG DSSO\LQJ DQ DSSURSULDWH PDWHULDOLW\ OHYHO

 $  &  %  %  $  &  %  %  &  %

%!0  

 % ! 9! !!T  9"D  %1 ! " C" 9! H " !@ (" !" 2 !@ ( !  %" 9! ( " ! 9 9 !&( !@ !' V57 )5 !4 ! 321 %!0 C  !&"(! 9 !4  " 3& !@ (!  !&"(! 9 ( " ! 9 9 !&( !@ !2! G 57 )5 !4 ! 321 %!0 C" (" "( S  !@ !@ " !! ! 9 9 @ A "@  !2" 9! ( " ! 9 9 !&( !@ !2! )57 )5 !4 ! 321 %!0 W G (( ! Y &"" @!!E  

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

 ,  $  1  2  6  ,  6  2  $  1 )HHGEDFN 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

"&&"

" 9!E H "  9"D  %1 ! " C" 9! H " !@ (" !" 2 !@ ( !  %" 9! ( " ! 9 9 !&( !@ !' V57 )5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" %" 9!E   %!0 

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

 563  3  563  537  3  3  563  537  3  563 )HHGEDFN 5HIHUHQFH 4XHVWLRQ LV DOVR IRXQG LQ VWXG\ JXLGH

 % ! 9! !!T  9"D  %1 ! " C" 9! H " !@ (" !" 2 !@ ( !  %" 9! (" ! 9 9 !&( !@ !' V57 )5 !4 ! 321 %!0 C  !&"(! 9 !4  " 3& !@ (  !  !&"(! 9 ( " ! 9 9 !&( !@ !2! G 57 )5 !4 ! 321 %!0 C" (" "( S  !@ !@ " !! ! 9 9 @ A "@  !2" 9! ( " ! 9 9 !&( !@ !2! )57 )5 !4 ! 321 %!0 & !# ) ((  !' &"" @!!E   %!0  

(VVD\ 4XHVWLRQV



$SSHQGL[ 'LVWLQJXLVK EHWZHHQ DWWHVWDWLRQ VWDQGDUGV DQG WKH IXQGDPHQWDO SULQFLSOHV RI JHQHUDOO\ DFFHSWHG DXGLWLQJ VWDQGDUGV E\ LGHQWLI\LQJ DQG GHVFULELQJ PDMRU GLIIHUHQFHV EHWZHHQ WKH WZR VHWV RI VWDQGDUGV

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

 "!  9"D  %1 ! " C!&! % %! " !   !!@ (" ! !@   "! "( !! !@ (! i8! 99h I 57 )5 !4 ! 321 %!0 W G (( !4 Q &"" @!!E   %!0  

SDUW\  LQGLYLGXDOV WKH XVH RI DXGLWRUV UHSRUWV LV JHQHUDOO\ DYDLODEOH WR DQ\ LQWHUHVWHG LQIRUPDWLRQ WKH XVH RI WKH DWWHVWDWLRQ UHSRUW PD\ EH OLPLWHG WR VSHFLILHG

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

GRFXPHQWDWLRQ DQG VXEPLWWHG WKH MRE IRU UHYLHZ E\ WKH PDQDJHU 5HTXLUHG  'HVFULEH WKH SHUIRUPDQFH SULQFLSOH RI *$$6  'R \RX EHOLHYH WKDW WKH 0HOORZ 0DUNHWV DXGLW FRPSOLHV ZLWK WKH SHUIRUPDQFH SULQFLSOH" ([SODLQ

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

7UXH  )DOVH 4XHVWLRQV

 %1 ! " C  !&"(! 9 !4  " 3& !@ (!  !&"(! 9 ( " ! 9 9 !&( !@ !2! G 57 )5 !4 ! 321 %!0 W G (( 99 &"" %$# "!   %$@D    

(QJDJHPHQW 3ODQQLQJ

! 9 !&"(!  9"D

&KDSWHU 

 $Q LPSRUWDQW HOHPHQW RI D SXEOLF DFFRXQWLQJ ILUP V V\VWHP RI TXDOLW\ FRQWURO LV WKH GHFLVLRQ DERXW FOLHQW DFFHSWDQFH DQG UHWHQWLRQ 7UXH )DOVH

 7KH &RGH RI 3URIHVVLRQDO &RQGXFW SHUPLWV SUHGHFHVVRU DXGLWRUV WR JLYH LQIRUPDWLRQ WR WKH DXGLWRUV ZLWKRXW FOLHQW FRQVHQW 7UXH )DOVH

 (QJDJHPHQW OHWWHUV DUH QRW QHFHVVDU\ IRU FRQWLQXLQJ FOLHQWV 7UXH )DOVH

 $ VHFRQG DXGLW SDUWQHU LV UHTXLUHG IRU DXGLWV RI ILQDQFLDO VWDWHPHQWV ILOHG ZLWK WKH 6(& 7UXH )DOVH

 &$$7V VRIWZDUH UHTXLUHV DXGLWRUV WR GR WKH RULJLQDO SURJUDPPLQJ 7UXH )DOVH

 $ ILUVWWLPH DXGLW UHTXLUHV PRUH ZRUN WKDQ D UHSHDW HQJDJHPHQW 7UXH )DOVH

 $ PDMRU UHDVRQ IRU WKLQNLQJ DERXW RYHUDOO PDWHULDOLW\ DW WKH SODQQLQJ VWDJH LV WR WU\ WR ILQHWXQH WKH DXGLW IRU HIIHFWLYHQHVV DQG HIILFLHQF\ 7UXH )DOVH

 7KH XVH RI FRPSXWHUDVVLVWHG DXGLWLQJ WHFKQLTXHV KDV VLJQLILFDQWO\ FKDQJHG DXGLWLQJ REMHFWLYHV 7UXH )DOVH

 7KH FRPSXWHU KDV VLPSOLILHG DXGLWLQJ E\ SURYLGLQJ D EHWWHU DXGLW WUDLO 7UXH )DOVH

 7KH XVH RI FRPSXWHU V\VWHPV KDV LQFUHDVHG WKH SRWHQWLDO IRU PDQDJHPHQW VXSHUYLVLRQ RI WKH LQWHUQDO FRQWURO V\VWHP 7UXH )DOVH

 7KH GHJUHH RI FRPSXWHU FRPSOH[LW\ DQG XVH PD\ LQIOXHQFH WKH QDWXUH WLPLQJ DQG H[WHQW RI DXGLW SURFHGXUHV 7UXH )DOVH

 &RQWURO DFWLYLWLHV LQ FRPSXWHUL]HG DFFRXQWLQJ V\VWHPV PD\ KDYH FKDUDFWHULVWLFV WKDW GLIIHU IURP PDQXDO FRQWURO DFWLYLWLHV GHVLJQHG WR DFFRPSOLVK WKH VDPH FRQWURO REMHFWLYHV 7UXH )DOVH

 &$$7V VRIWZDUH PD\ EH XWLOL]HG WR UHDG FRPSXWH DQG RSHUDWH RQ PDFKLQH UHDGDEOH UHFRUGV 7UXH )DOVH

 7KH PRVW LPSRUWDQW IDFHW RI WKH FXUUHQW DXGLW HYLGHQFH ILOHV LV WKH UHTXLUHPHQW WKDW WKH\ VKRZ WKH DXGLWRU V GHFLVLRQPDNLQJ SURFHVV DQG FRQFOXVLRQV UHDFKHG 7UXH )DOVH

 7KH FRQFHSW RI PDWHULDOLW\ HPSKDVL]HV WKH DFFRXQWDQWV DQG PDQDJHUV SRLQW RI YLHZ QRW WKH XVHUV SRLQW RI YLHZ 7UXH )DOVH

 $XGLWRUV DUH JHQHUDOO\ OHIW ZLWKRXW GHILQLWLYH TXDQWLWDWLYH JXLGHOLQHV IRU GHWHUPLQLQJ PDWHULDOLW\ 7UXH )DOVH

 :KHQ PDQDJHPHQW FDQ H[HUFLVH GLVFUHWLRQ RYHU DQ DFFRXQWLQJ WUHDWPHQW DXGLWRUV WHQG WR H[HUFLVH PRUH FDUH DQG XVH D PRUH VWULQJHQW PDWHULDOLW\ FULWHULRQ 7UXH )DOVH

 $XGLWRUV XVXDOO\ FKRRVH VHSDUDWH PHDVXUHV RI PDWHULDOLW\ IRU HDFK RI WKH ILQDQFLDO VWDWHPHQWV 7UXH )DOVH

 $XGLWRUV XVXDOO\ SUHSDUH DQ DXGLW SODQ VXPPDUL]LQJ WKH SUHOLPLQDU\ DQDO\WLFDO UHYLHZ DQG WKH PDWHULDOLW\ DVVHVVPHQW 7UXH )DOVH

 $XGLWRUV XVH WZR NLQGV RI DXGLW SODQV RQH IRU REWDLQLQJ HYLGHQFH DERXW FRQWURO ULVN DQG WKH RWKHU IRU REWDLQLQJ HYLGHQFH DERXW GROODU DPRXQWV DQG GLVFORVXUHV 7UXH )DOVH

 $XGLW SURFHGXUHV DUH LQWHQGHG WR HQDEOH DXGLWRUV WR FRQGXFW ZRUN LQ DFFRUGDQFH ZLWK WKH WKUHH SHUIRUPDQFH SULQFLSOH 7UXH )DOVH

 6FDQQLQJ LV DQ H\HVRSHQ DSSURDFK RI ORRNLQJ IRU DQ\WKLQJ XQXVXDO LQ WKH DFFRXQWV 7UXH )DOVH

 $XGLW SODQV DUH XVHG DV DXGLW SODQQLQJ WRROV 7UXH )DOVH

0XOWLSOH &KRLFH 4XHVWLRQV

 :KLFK RI WKH IROORZLQJ DXGLWRU FRQFHUQV PRVW OLNHO\ FRXOG EH VR VHULRXV WKDW WKH DXGLWRU ZRXOG FRQFOXGH WKDW D ILQDQFLDO VWDWHPHQW DXGLW FDQQRW EH FRQGXFWHG"

$ 7KH HQWLW\ KDV QR IRUPDO ZULWWHQ FRGH RI FRQGXFW % 7KH LQWHJULW\ RI HQWLW\ V PDQDJHPHQW LV VXVSHFW & 3URFHGXUHV UHTXLULQJ VHSDUDWLRQ RI GXWLHV DUH VXEMHFW WR PDQDJHPHQW RYHUULGH ' 0DQDJHPHQW IDLOV WR PRGLI\ SUHVFULEHG FRQWUROV IRU FKDQJHV LQ FRQGLWLRQV

 %HIRUH DFFHSWLQJ DQ HQJDJHPHQW WR DXGLW D QHZ FOLHQW DQ DXGLWRU LV UHTXLUHG WR

$ 0DNH LQTXLULHV RI WKH SUHGHFHVVRU DXGLWRU DIWHU REWDLQLQJ WKH FRQVHQW RI WKH SURVSHFWLYH FOLHQW % 2EWDLQ WKH SURVSHFWLYH FOLHQW V VLJQDWXUH WR WKH HQJDJHPHQW OHWWHU & 3UHSDUH D PHPRUDQGXP VHWWLQJ IRUWK WKH VWDIILQJ UHTXLUHPHQWV DQG GRFXPHQWLQJ WKH SUHOLPLQDU\ DXGLW SODQ ' 'LVFXVV WKH PDQDJHPHQW UHSUHVHQWDWLRQ OHWWHU ZLWK WKH SURVSHFWLYH FOLHQW V DXGLW FRPPLWWHH  :KLFK RI WKH IROORZLQJ IDFWRUV PRVW OLNHO\ ZRXOG FDXVH DQ DXGLWRU QRW WR DFFHSW D QHZ DXGLW HQJDJHPHQW"

$ $Q LQDGHTXDWH XQGHUVWDQGLQJ RI WKH HQWLW\ V LQWHUQDO FRQWUROV % 7KH FORVH SUR[LPLW\ WR WKH HQG RI WKH HQWLW\ V ILVFDO \HDU & &RQFOXGLQJ WKDW WKH HQWLW\ V PDQDJHPHQW SUREDEO\ ODFNV LQWHJULW\ ' 7KH LQDELOLW\ WR SHUIRUP SUHOLPLQDU\ DQDO\WLFDO SURFHGXUHV EHIRUH DVVHVVLQJ FRQWURO ULVN

 7KH DXGLWRU LV QRW UHTXLUHG WR DVN WKH SUHGHFHVVRU DXGLWRU DERXW

$ )DFWV WKDW PLJKW EHDU RQ WKH LQWHJULW\ RI PDQDJHPHQW % 'LVDJUHHPHQWV WKH SUHGHFHVVRU PD\ KDYH KDG ZLWK PDQDJHPHQW DERXW DFFRXQWLQJ SULQFLSOHV DQG DXGLW SURFHGXUHV & 7KH IHHV FKDUJHG IRU WKH SUHYLRXV DXGLW ' 7KH SUHGHFHVVRU V XQGHUVWDQGLQJ DERXW WKH UHDVRQV IRU WKH FKDQJH RI DXGLWRUV  $XGLW GRFXPHQWDWLRQ GRHV QRW QRUPDOO\ LQFOXGH WKH

$ 6SHFLILF DVVHUWLRQV XQGHU DXGLW % ,QGXVWU\ DFFRXQWLQJ JXLGHV & 5HFRUG RI WKH SURFHGXUHV SHUIRUPHG ' 'HFLVLRQV PDGH LQ WKH FRXUVH RI WKH DXGLW  & +LOO &3$ KDV EHHQ UHWDLQHG WR DXGLW WKH ILQDQFLDO VWDWHPHQWV RI 0RQGD\ &R 0RQGD\ V SUHGHFHVVRU DXGLWRU ZDV . 3RVW &3$ ZKRP 0RQGD\ KDV QRWLILHG E\ WKDW LWV VHUYLFHV KDYH EHHQ WHUPLQDWHG 8QGHU WKHVH FLUFXPVWDQFHV ZKLFK SDUW\ VKRXOG LQLWLDWH WKH FRPPXQLFDWLRQV EHWZHHQ +LOO DQG 3RVW"

$ +LOO WKH DXGLWRU % 3RVW WKH SUHGHFHVVRU DXGLWRU & 0RQGD\ V FRQWUROOHU RU &)2 ' 7KH FKDLU RI 0RQGD\ V ERDUG RI GLUHFWRUV

 :KLFK RI WKH IROORZLQJ SURYLGHV WKH EHVW PHWKRG RI REWDLQLQJ DQ XQGHUVWDQGLQJ RI D FRQWLQXLQJ FOLHQW V EXVLQHVV IRU SODQQLQJ DQ DXGLW"

$ 3HUIRUPLQJ WHVWV RI GHWDLOV RI WUDQVDFWLRQV DQG EDODQFHV % 5HYLHZLQJ SULRU \HDU DXGLW GRFXPHQWDWLRQ DQG WKH SHUPDQHQW ILOH IRU WKH FOLHQW & 5HDGLQJ VSHFLDOL]HG LQGXVWU\ MRXUQDOV ' 5HHYDOXDWLQJ WKH FOLHQW V LQWHUQDO FRQWURO HQYLURQPHQW  7KH SUHHQJDJHPHQW DFWLYLWLHV RI DQ DXGLW HQJDJHPHQW IRU D SXEOLF DFFRXQWLQJ ILUP GR QRW LQFOXGH

$ (YDOXDWLQJ WKH SXEOLF DFFRXQWLQJ ILUP V LQGHSHQGHQFH ZLWK UHJDUG WR WKH DXGLW HQJDJHPHQW % 2EWDLQLQJ SUHGHFHVVRU DXGLW GRFXPHQWDWLRQ & 2EWDLQLQJ DQ HQJDJHPHQW OHWWHU ' (QVXULQJ WKDW WKHUH DUH VXIILFLHQW ILUP UHVRXUFHV WR FRPSOHWH WKH HQJDJHPHQW RQ D WLPHO\ EDVLV

 :KLFK RI WKH IROORZLQJ SURFHGXUHV ZRXOG DQ DXGLWRU PRVW OLNHO\ SHUIRUP LQ SODQQLQJ D ILQDQFLDO VWDWHPHQW DXGLW"

$ ,QTXLULQJ RI WKH FOLHQW V OHJDO FRXQVHO FRQFHUQLQJ SHQGLQJ OLWLJDWLRQ % &RPSDULQJ WKH ILQDQFLDO VWDWHPHQWV WR DQWLFLSDWHG UHVXOWV & ([DPLQLQJ FRPSXWHUJHQHUDWHG H[FHSWLRQ UHSRUWV WR YHULI\ WKH HIIHFWLYHQHVV RI LQWHUQDO FRQWUROV ' 6HDUFKLQJ IRU XQDXWKRUL]HG WUDQVDFWLRQV WKDW PD\ DLG LQ GHWHFWLQJ XQUHFRUGHG OLDELOLWLHV  7KLV \HDU %ODNHQH\ (QWHUSULVHV HQJDJHG D QHZ DXGLWRU ZKR PXVW

$ $WWHPSW WR FRPPXQLFDWH ZLWK WKH SUHGHFHVVRU DXGLWRU EHIRUH DFFHSWLQJ WKH HQJDJHPHQW % 5HYLHZ WKH SUHGHFHVVRU V DXGLW GRFXPHQWDWLRQ LI WKH DXGLW LV WR EH LQ DFFRUGDQFH ZLWK *$$6 & 6HHN WKH 6(& V SHUPLVVLRQ WR DFFHSW WKH HQJDJHPHQW LI %ODNHQH\ LV SXEOLFO\ RZQHG ' 5HMHFW WKH HQJDJHPHQW LI WKH FKDQJH LQ DXGLWRUV UHVXOWHG IURP D GLVSXWH ZLWK WKH SUHGHFHVVRU

 $Q HQJDJHPHQW OHWWHU LV XVHG SULPDULO\ WR

$ (QVXUH D FOHDU FRQWUDFWXDO XQGHUVWDQGLQJ RI WKH VHUYLFHV WR EH SURYLGHG E\ WKH &3$ % ([SUHVV DQ RSLQLRQ RQ WKH ILQDQFLDO VWDWHPHQWV & 3URYLGH PDQDJHPHQW UHSUHVHQWDWLRQV WR EH LQFOXGHG LQ WKH DXGLW HYLGHQFH ' 'LVFODLP OLDELOLW\  7KH ILUP RI %DQWD %URZQ DQG %XUJHVV &3$V UHTXLUHV WKDW DXGLW GRFXPHQWDWLRQ FRQWDLQ WKH LQLWLDOV RI WKH SUHSDUHU DQG WKH UHYLHZHU LQ WKH WRS ULJKWKDQG FRUQHU 7KLV SURFHGXUH SURYLGHV HYLGHQFH RI SURIHVVLRQDO FRQFHUQ UHJDUGLQJ ZKLFK JHQHUDOO\ DFFHSWHG DXGLWLQJ VWDQGDUG"

$ ,QGHSHQGHQFH % $GHTXDWH WHFKQLFDO FRPSHWHQFH DQG FDSDELOLWLHV & $GHTXDWH SODQQLQJ DQG VXSHUYLVLRQ ' *DWKHULQJ VXIILFLHQW FRPSHWHQW HYLGHQFH

 'XULQJ WKH LQLWLDO SODQQLQJ SKDVH RI DQ DXGLW D &3$ PRVW OLNHO\ ZRXOG

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

$ 5HGXFH DXGLW ULVN E\ ORZHULQJ WKH SUHOLPLQDU\ OHYHOV RI PDWHULDOLW\ % 'HVLJQ VSHFLDO VXEVWDQWLYH WHVWV WR FRPSHQVDWH IRU WKH ODFN RI LQGXVWU\ H[SHUWLVH & (QJDJH ILQDQFLDO H[SHUWV IDPLOLDU ZLWK WKH QDWXUH RI WKH LQGXVWU\ ' 2EWDLQ NQRZOHGJH RI PDWWHUV WKDW UHODWH WR WKH QDWXUH RI WKH HQWLW\ V EXVLQHVV  :KLFK RI WKH IROORZLQJ W\SHV RI WUDQVDFWLRQV ZRXOG EH URXWLQH DQG FRPSXWHUL]HG"

$ &DSLWDO VWRFN VDOHV DQG UHSXUFKDVHV % &UHGLW VDOHV DQG ELOOLQJV & ,QFRPH WD[ H[SHQVH DQG OLDELOLW\ ' %DQN ORDQ WUDQVDFWLRQV

 (UURUV LQ GDWD SURFHVVHG LQ D EDWFK FRPSXWHU V\VWHP PD\ QRW EH GHWHFWHG LPPHGLDWHO\ EHFDXVH

$ 7UDQVDFWLRQ WUDLOV LQ D EDWFK V\VWHP DUH DYDLODEOH IRU RQO\ D OLPLWHG SHULRG RI WLPH % 7KHUH DUH WLPH GHOD\V LQ SURFHVVLQJ WUDQVDFWLRQV LQ D EDWFK V\VWHP & (UURUV LQ VRPH WUDQVDFWLRQV FDXVH UHMHFWLRQ RI RWKHU WUDQVDFWLRQV LQ WKH EDWFK ' 5DQGRP HUURUV DUH PRUH OLNHO\ LQ D EDWFK V\VWHP WKDQ LQ DQ RQOLQH V\VWHP  0DQDJHPHQW V UHVSRQVLELOLW\ LQ D FRPSXWHU V\VWHP ZRXOG QRW LQFOXGH

$ (QVXULQJ WKDW WKH GRFXPHQWDWLRQ RI WKH V\VWHP LV FRPSOHWH DQG XS WR GDWH % 0DLQWDLQLQJ D V\VWHP RI WUDQVDFWLRQ SURFHVVLQJ WKDW LQFOXGHV DQ DXGLW WUDLO & $VVHVVLQJ WKH FRQWURO ULVN ' 0DNLQJ FRPSXWHU UHVRXUFHV DQG NQRZOHGJHDEOH SHUVRQQHO DYDLODEOH IRU TXHVWLRQV  7KH FKDUDFWHULVWLFV WKDW GLVWLQJXLVK FRPSXWHU SURFHVVLQJ IURP PDQXDO SURFHVVLQJ ZRXOG QRW LQFOXGH

$ $ GHFUHDVH RI PDQDJHPHQW VXSHUYLVLRQ RI RSHUDWLRQV % $XWRPDWLF LQLWLDWLRQ DQG H[HFXWLRQ RI WUDQVDFWLRQV & 7KH SRVVLEOH FRQFHQWUDWLRQ RI FRQWURO DFWLYLWLHV ' $ KLJK SRWHQWLDO IRU XQDXWKRUL]HG DFFHVV WR GDWD

 :KLFK RI WKH IROORZLQJ LV QRW D FDWHJRU\ RI DXGLW GRFXPHQWDWLRQ"

$ 7HPSRUDU\ ILOHV % 3HUPDQHQW ILOHV & $XGLW DGPLQLVWUDWLYH ILOHV ' &XUUHQW GRFXPHQWDWLRQ ILOHV  7KH HVVHQWLDO DGYDQWDJHV RI D FRPSXWHUDVVLVWHG DXGLW WHFKQLTXHV &$$7V SDFNDJH ZRXOG QRW LQFOXGH WKH IDFW WKDW

$ 7KH VDPH VRIWZDUH FDQ EH XVHG RQ GLIIHUHQW W\SHV RI FOLHQWV FRPSXWHU HQYLURQPHQWV % $ ODUJH QXPEHU RI &$$7V SDFNDJHV DUH FXUUHQWO\ DYDLODEOH & 6RIWZDUH SDFNDJHV DUH DOZD\V LQH[SHQVLYH ' 7KH DELOLW\ WR FRQWURO DQG PRGLI\ WKH SURJUDP WR PHHW DQ DXGLWRUV QHHG  &RPSXWHUDVVLVWHG DXGLW WHFKQLTXHV &$$7V FRXOG QRW EH XVHG IRU ZKLFK RI WKH IROORZLQJ DXGLW WDVNV"

$ 7HVWLQJ FDOFXODWLRQV DQG PDNLQJ FRPSXWDWLRQV % (YDOXDWLQJ FRQWURO ULVN DVVHVVPHQW & 6XPPDUL]LQJ UHVHTXHQFLQJ DQG UHIRUPDWWLQJ GDWD ' &RPSDULQJ DXGLW HYLGHQFH IURP PDQXDO DXGLW SURFHGXUHV WR FRPSDQ\ QHHGV

 &RPSDULQJ GDWD RQ VHSDUDWH ILOHV FDQ EH DFFRPSOLVKHG E\ XVLQJ FRPSXWHUDVVLVWHG DXGLW WHFKQLTXHV &$$7V WR GHWHUPLQH ZKHWKHU FRPSDUDEOH LQIRUPDWLRQ LV LQ DJUHHPHQW ([DPSOHV RI VXFK FRPSDULVRQV ZRXOG QRW LQFOXGH

$ 3D\UROO GHWDLOV ZLWK SHUVRQQHO UHFRUGV % &XUUHQW DQG SULRU LQYHQWRU\ WR GHWDLOV RI SXUFKDVHV DQG VDOHV & 3DLG YRXFKHUV WR GLVEXUVHPHQWV ' 2EVHUYDWLRQ RI LQYHQWRU\ DFFRXQWV  7KH EDVLF DXGLWLQJ DSSOLFDWLRQ RI WKH SHUVRQDO FRPSXWHU DV DQ DXGLW WRRO ZRXOG QRW LQFOXGH

$ 6SUHDGVKHHW DQDO\VLV % 6DPSOH SODQQLQJ VHOHFWLRQ DQG HYDOXDWLRQ & &RQWLQXRXV PRQLWRULQJ RI D FOLHQW V LQWHUQDO FRQWURO V\VWHP ' $QDO\WLFDO UHYLHZ  $Q DXGLWRU ZRXOG PRVW OLNHO\ EH XVH ZRUG SURFHVVLQJ VRIWZDUH IRU ZKDW SXUSRVH"

$ 3HUIRUPLQJ DQDO\WLFDO SURFHGXUHV % 3UHSDULQJ D WULDO EDODQFH & 3UHSDULQJ DQ DXGLW SODQ ' 2EWDLQLQJ D VDPSOH VHOHFWLRQ

 :KLFK RI WKH IROORZLQJ XVH RI FRPSXWHUDVVLVWHG DXGLW WHFKQLTXHV &$$7V ZRXOG PRVW OLNHO\ EH FRQVLGHUHG D VHDUFK IRU IUDXGXOHQW DFWLYLWLHV"

$ 6HOHFWLQJ FXVWRPHUV DFFRXQWV UHFHLYDEOH IRU FRQILUPDWLRQ % 5HFDOFXODWLQJ LQYHQWRU\ H[WHQVLRQV & 6FDQQLQJ DFFRXQWV UHFHLYDEOH EDODQFHV IRU DPRXQWV RYHU WKH FUHGLW OLPLW ' &RPSDULQJ D OLVW RI YHQGRU DGGUHVVHV WR HPSOR\HH DGGUHVV ILOHV  $Q DXGLWRU ZRXOG OHDVW OLNHO\ XVH FRPSXWHU VRIWZDUH WR

$ $FFHVV FOLHQW GDWD ILOHV % 3UHSDUH VSUHDGVKHHWV & $VVHVV LQIRUPDWLRQ V\VWHPV FRQWURO ULVN ' &RQVWUXFW SDUDOOHO VLPXODWLRQV WR WHVW WKH FOLHQW V FRPSXWLQJ V\VWHP

 $ SULPDU\ DGYDQWDJH RI XVLQJ FRPSXWHUDVVLVWHG DXGLW WHFKQLTXHV &$$7V SDFNDJHV WR DXGLW WKH ILQDQFLDO VWDWHPHQWV RI D FOLHQW WKDW XVHV FRPSXWHUL]HG LQIRUPDWLRQ V\VWHPV LV WKDW WKH DXGLWRU PD\

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

$ $VVHVVPHQW RI LQKHUHQW ULVN \HV DVVHVVPHQW RI FRQWURO ULVN \HV % $VVHVVPHQW RI LQKHUHQW ULVN \HV DVVHVVPHQW RI FRQWURO ULVN QR & $VVHVVPHQW RI LQKHUHQW ULVN QR DVVHVVPHQW RI FRQWURO ULVN \HV ' $VVHVVPHQW RI LQKHUHQW ULVN QR DVVHVVPHQW RI FRQWURO ULVN QR

 :KLFK RI WKH IROORZLQJ LV QRW FRQVLGHUHG DQ DFFRXQWLQJ HVWLPDWH"

$ $OORZDQFH IRU ORDQ ORVVHV % &UHGLW VDOHV & 1HW UHDOL]DEOH YDOXH RI LQYHQWRU\ ' 3HUFHQWDJHRIFRPSOHWLRQ UHYHQXH WR EH UHFRUGHG  :KLFK RI WKH IROORZLQJ ZRXOG EH D VWHS LQ DQ LQWHUQDO FRQWURO SURJUDP"

$ 2EWDLQ DQ DJHG WULDO EDODQFH RI WKH DFFRXQWV UHFHLYDEOH % 3UHSDUH DQG VHQG FRQILUPDWLRQV RQ D VDPSOH RI FXVWRPHUV DFFRXQWV UHFHLYDEOH & $VVHVV WKH FRQWURO ULVN IRU VDOHV DQG FROOHFWLRQV ' 5HDG VDOHV FRQWUDFWV IRU HYLGHQFH RI FXVWRPHUV ULJKWV RI UHWXUQ RU SULFH DOORZDQFH WHUPV  7KH LGHD RI WKH F\FOH DSSURDFK LV WR JURXS DFFRXQWV WRJHWKHU E\

$ 6SHFLILF IXQFWLRQ % )LQDQFLDO VWDWHPHQW DVVHUWLRQ & $XGLW REMHFWLYH ' 7UDQVDFWLRQV WKDW DIIHFW DOO DFFRXQWV LQ WKDW SDUWLFXODU JURXS

 :KLFK RI WKH IROORZLQJ LV QRW RQH RI WKH IRXU PDMRU F\FOHV"

$ 5HYHQXH DQG FDVK FROOHFWLRQ % $FTXLVLWLRQ DQG H[SHQGLWXUH & &DVK UHFHLSWV DQG GLVEXUVHPHQWV ' )LQDQFLQJ DQG LQYHVWLQJ  /RRNLQJ DW YHQGRUV LQYRLFHV IRU SDUWLFXODU LQIRUPDWLRQ LV DQ H[DPSOH RI

$ 3K\VLFDO REVHUYDWLRQ % &RQILUPDWLRQ & ,QVSHFWLRQ RI GRFXPHQWV ' 6FDQQLQJ  $Q DXGLWRU ZKR XVHV  SHUFHQW RI LQFRPH EHIRUH WD[HV DV D EDVLV IRU RYHUDOO PDWHULDOLW\ ZRXOG EH EDVLQJ MXGJPHQW RQ

$ $EVROXWH VL]H % 5HODWLYH VL]H & 1DWXUH RI WKH LWHP ' &XPXODWLYH HIIHFWV

 :KLFK RI WKH IROORZLQJ LV QRW D ZD\ LQ ZKLFK DXGLWRUV XVH WKH FRQFHSW RI RYHUDOO PDWHULDOLW\"

$ $V D JXLGH WR SODQQLQJ WKH DXGLW SODQ % $V D JXLGH WR WKH HYDOXDWLRQ RI HYLGHQFH & $V D JXLGH IRU PDNLQJ GHFLVLRQV DERXW WKH DXGLW UHSRUW ' $V D JXLGH IRU DVVHVVLQJ FRQWURO ULVN  7KH DXGLWRU ORRNHG DW D EDQN VWDWHPHQW UHFHLYHG DQG KHOG E\ WKH FOLHQW :KDW NLQG RI DXGLW SURFHGXUH ZRXOG WKLV EH FRQVLGHUHG"

$ 5HFDOFXODWLRQ % 3K\VLFDO REVHUYDWLRQ & &RQILUPDWLRQ ' ([DPLQDWLRQ RI GRFXPHQWV  ,Q WHVWLQJ WKH H[LVWHQFH DVVHUWLRQ IRU DQ DVVHW DQ DXGLWRU RUGLQDULO\ ZRUNV IURP WKH

$ )LQDQFLDO VWDWHPHQWV WR WKH SRWHQWLDOO\ XQUHFRUGHG LWHPV % 3RWHQWLDOO\ XQUHFRUGHG LWHPV WR WKH ILQDQFLDO VWDWHPHQW & $FFRXQWLQJ UHFRUGV WR WKH VXSSRUWLQJ HYLGHQFH ' 6XSSRUWLQJ HYLGHQFH WR WKH DFFRXQWLQJ UHFRUGV

 ,Q GHWHUPLQLQJ ZKHWKHU WUDQVDFWLRQV KDYH EHHQ UHFRUGHG WKH GLUHFWLRQ RI WKH DXGLW WHVWLQJ VKRXOG VWDUW IURP WKH

$ *HQHUDO OHGJHU EDODQFHV % $GMXVWHG WULDO EDODQFH & 2ULJLQDO VRXUFH GRFXPHQWV ' *HQHUDO MRXUQDO HQWULHV  $XGLWRUV VKRXOG GHVLJQ WKH ZULWWHQ DXGLW SODQ VR WKDW

$ $OO PDWHULDO WUDQVDFWLRQV ZLOO EH VHOHFWHG IRU VXEVWDQWLYH WHVWLQJ % 6XEVWDQWLYH WHVWV SULRU WR WKH EDODQFH VKHHW GDWH ZLOO EH PLQLPL]HG & 7KH DXGLW SURFHGXUHV VHOHFWHG ZLOO DFKLHYH VSHFLILF DXGLW REMHFWLYHV ' (DFK DFFRXQW EDODQFH ZLOO EH WHVWHG XQGHU HLWKHU WHVWV RI FRQWUROV RU WHVWV RI WUDQVDFWLRQV  ,Q GHVLJQLQJ ZULWWHQ DXGLW SODQV DQ DXGLWRU VKRXOG HVWDEOLVK VSHFLILF DXGLW REMHFWLYHV WKDW UHODWH SULPDULO\ WR WKH

$ 7LPLQJ RI DXGLW SURFHGXUHV % &RVWEHQHILW RI JDWKHULQJ WHFKQLTXHV & 6HOHFWHG DXGLW WHFKQLTXHV ' )LQDQFLDO VWDWHPHQW DVVHUWLRQV

 ,Q FRQVLGHULQJ RYHUDOO PDWHULDOLW\ IRU SODQQLQJ SXUSRVHV DQ DXGLWRU EHOLHYHV WKDW PLVVWDWHPHQWV DJJUHJDWLQJ   ZRXOG KDYH D PDWHULDO HIIHFW RQ DQ HQWLW\ V LQFRPH VWDWHPHQW EXW WKDW PLVVWDWHPHQWV ZRXOG KDYH WR DJJUHJDWH   WR PDWHULDOO\ DIIHFW WKH EDODQFH VKHHW 2UGLQDULO\ LW ZRXOG EH DSSURSULDWH WR GHVLJQ DXGLW SURFHGXUHV WKDW ZRXOG EH H[SHFWHG WR GHWHFW PLVVWDWHPHQWV DJJUHJDWLQJ

$   %   &   '    7KH LQGHSHQGHQW DXGLWRUV DXGLW GHVLJQ SUHSDUHG SULRU WR WKH VWDUW RI ILHOGZRUN LV DSSURSULDWHO\ FRQVLGHUHG GRFXPHQWDWLRQ RI

$ 3ODQQLQJ % 6XSHUYLVLRQ & ,QIRUPDWLRQ HYDOXDWLRQ ' 4XDOLW\ DVVXUDQFH

 ,Q WKH SUHSDUDWLRQ RI DQ DXGLW SODQ ZKLFK RI WKH IROORZLQJ LWHPV LV QRW HVVHQWLDO"

$ $ UHYLHZ RI PDWHULDO IURP SULRU DXGLWV % 7KH SUHSDUDWLRQ RI D EXGJHW LGHQWLI\LQJ WKH FRVWV RI UHVRXUFHV QHHGHG & $Q XQGHUVWDQGLQJ RI FRQWUROV HVWDEOLVKHG E\ PDQDJHPHQW ' $VVHVVPHQW RI LQKHUHQW ULVN  7R VDWLVI\ WKH YDOXDWLRQ DVVHUWLRQ ZKHQ DXGLWLQJ DQ LQYHVWPHQW LQ DQRWKHU FRPSDQ\ WKDW LV SXEOLFO\ DQG DFWLYHO\ WUDGHG DQ DXGLWRU PRVW OLNHO\ ZRXOG VHHN WR

$ ,QVSHFW WKH VWRFN FHUWLILFDWHV HYLGHQFLQJ WKH LQYHVWPHQW % ([DPLQH WKH DXGLWHG ILQDQFLDO VWDWHPHQWV RI WKH LQYHVWHH FRPSDQ\ & 5HYLHZ WKH EURNHU V DGYLFH RU FDQFHOHG FKHFN IRU WKH LQYHVWPHQW V DFTXLVLWLRQ ' 2EWDLQ PDUNHW TXRWDWLRQV IURP 7KH :DOO 6WUHHW -RXUQDO RU DQRWKHU LQGHSHQGHQW VRXUFH  &XWRII WHVWV GHVLJQHG WR GHWHFW FUHGLW VDOHV PDGH EHIRUH WKH HQG RI WKH \HDU WKDW KDYH EHHQ UHFRUGHG LQ WKH VXEVHTXHQW \HDU SURYLGH DVVXUDQFH DERXW PDQDJHPHQW V DVVHUWLRQ RI

$ 3UHVHQWDWLRQ DQG GLVFORVXUH % &RPSOHWHQHVV & 5LJKWV DQG REOLJDWLRQV ' ([LVWHQFH

 :KLFK RI WKH IROORZLQJ DXGLW SURFHGXUHV SUREDEO\ ZRXOG SURYLGH WKH PRVW UHOLDEOH HYLGHQFH FRQFHUQLQJ WKH HQWLW\ V DVVHUWLRQ RI ULJKWV DQG REOLJDWLRQV UHODWHG WR LQYHQWRULHV"

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

$ ([LVWHQFH RU RFFXUUHQFH % &RPSOHWHQHVV & 9DOXDWLRQ RU DOORFDWLRQ ' 3UHVHQWDWLRQ DQG GLVFORVXUH

 :KLFK RI WKH IROORZLQJ PRVW OLNHO\ ZRXOG JLYH WKH PRVW DVVXUDQFH FRQFHUQLQJ WKH YDOXDWLRQ DVVHUWLRQ RI DFFRXQWV UHFHLYDEOH"

$ 7UDFLQJ DPRXQWV LQ WKH VXEVLGLDU\ OHGJHU WR GHWDLOV RQ VKLSSLQJ GRFXPHQWV % &RPSDULQJ UHFHLYDEOH WXUQRYHU UDWHV WR LQGXVWU\ VWDWLVWLFV IRU UHDVRQDEOHQHVV & ,QTXLULQJ DERXW UHFHLYDEOHV SOHGJHG XQGHU ORDQ DJUHHPHQWV ' $VVHVVLQJ WKH DOORZDQFH IRU XQFROOHFWLEOH DFFRXQWV IRU UHDVRQDEOHQHVV  $Q DXGLWRU PRVW OLNHO\ ZRXOG LQVSHFW DGGLWLRQV WR WKH DXGLW FOLHQW V 3URSHUW\ 3ODQW DQG (TXLSPHQW DFFRXQW WR REWDLQ HYLGHQFH FRQFHUQLQJ PDQDJHPHQW V DVVHUWLRQV DERXW

$ ([LVWHQFH RU RFFXUUHQFH % 5LJKWV DQG REOLJDWLRQV & 3UHVHQWDWLRQ DQG GLVFORVXUH ' 9DOXDWLRQ RU DOORFDWLRQ

 :KLFK RI WKH IROORZLQJ LV D VXEVWDQWLYH WHVW WKDW DQ DXGLWRU PRVW OLNHO\ ZRXOG SHUIRUP WR YHULI\ WKH H[LVWHQFH DQG YDOXDWLRQ RI UHFRUGHG DFFRXQWV SD\DEOH"

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

$ 5LJKWV DQG REOLJDWLRQV % &RPSOHWHQHVV & 3UHVHQWDWLRQ DQG GLVFORVXUH ' ([LVWHQFH RU RFFXUUHQFH

 ,Q DXGLWLQJ DFFUXHG OLDELOLWLHV DQ DXGLWRU V SURFHGXUHV PRVW OLNHO\ ZRXOG IRFXV SULPDULO\ RQ PDQDJHPHQW V DVVHUWLRQ RI

$ ([LVWHQFH RU RFFXUUHQFH % &RPSOHWHQHVV & 3UHVHQWDWLRQ DQG GLVFORVXUH ' 9DOXDWLRQ RU DOORFDWLRQ  $Q DXGLWRU VHOHFWHG LWHPV IRU WHVW FRXQWV IURP D FOLHQW V LQYHQWRU\ OLVWLQJ EHIRUH REVHUYLQJ WKH FOLHQW V SK\VLFDO LQYHQWRU\ DW WKH ZDUHKRXVH 7KH DXGLWRU WKHQ IRXQG WKH LWHPV VHOHFWHG DW WKH ZDUHKRXVH DQG FRXQWHG WKHP 7KLV SURFHGXUH PRVW OLNHO\ REWDLQHG HYLGHQFH FRQFHUQLQJ PDQDJHPHQW V DVVHUWLRQ RI

$ 5LJKWV DQG REOLJDWLRQV % &RPSOHWHQHVV & ([LVWHQFH RU RFFXUUHQFH ' 9DOXDWLRQ

 $Q DXGLWRU WHVWV DQ HQWLW\ V FRQWURO WKDW PDWFKHV VKLSSLQJ GRFXPHQWV WR VDOHV LQYRLFHV EHIRUH WKH\ DUH UHFRUGHG LQ WKH ILQDQFLDO VWDWHPHQWV DV UHYHQXH LQ VXSSRUW RI PDQDJHPHQW V ILQDQFLDO VWDWHPHQW DVVHUWLRQ RI

$ 9DOXDWLRQ RU DOORFDWLRQ % 3UHVHQWDWLRQ DQG GLVFORVXUH & ([LVWHQFH RU RFFXUUHQFH ' 5LJKWV DQG REOLJDWLRQV  :KLFK RI WKH IROORZLQJ DXGLW SURFHGXUHV ZRXOG DQ DXGLWRU PRVW OLNHO\ SHUIRUP WR WHVW FRQWUROV UHODWLQJ WR PDQDJHPHQW V YDOXDWLRQ DVVHUWLRQ IRU DFFRXQWV UHFHLYDEOH"

$ 9HULI\ WKDW H[WHQVLRQV DQG IRRWLQJV RQ WKH HQWLW\ V VDOHV LQYRLFHV DQG PRQWKO\ FXVWRPHU VWDWHPHQWV KDYH EHHQ UHFRPSXWHG % ,QVSHFW WKH HQWLW\ V UHSRUWV RI SUHQXPEHUHG VKLSSLQJ GRFXPHQWV WKDW KDYH QRW EHHQ UHFRUGHG LQ WKH VDOHV MRXUQDO & &RPSDUH WKH LQYRLFHG SULFHV RQ SUHQXPEHUHG VDOHV LQYRLFHV WR WKH HQWLW\ V DXWKRUL]HG SULFH OLVW ' ,QTXLUH DERXW WKH HQWLW\ V FUHGLWJUDQWLQJ SROLFLHV DQG WHVW ZKHWKHU FUHGLW FKHFNV KDYH EHHQ FRQVLVWHQWO\ DSSOLHG WR QHZ FXVWRPHUV

 7KH FRQILUPDWLRQ RI D FDVK EDODQFH SURYLGHV SULPDU\ HYLGHQFH UHJDUGLQJ ZKLFK PDQDJHPHQW DVVHUWLRQ"

$ ([LVWHQFH % 9DOXDWLRQ & $OORFDWLRQ ' &RPSOHWHQHVV  7KH FRQILUPDWLRQ RI DQ DFFRXQWV UHFHLYDEOH EDODQFH SURYLGHV SULPDU\ HYLGHQFH UHJDUGLQJ ZKLFK PDQDJHPHQW DVVHUWLRQ"

$ &RPSOHWHQHVV % 9DOXDWLRQ & $OORFDWLRQ ' ([LVWHQFH  ,Q WHVWLQJ WKH FRPSOHWHQHVV DVVHUWLRQ IRU D OLDELOLW\ DFFRXQW DQ DXGLWRU RUGLQDULO\ ZRUNV IURP WKH

$ )LQDQFLDO VWDWHPHQWV WR WKH SRWHQWLDOO\ XQUHFRUGHG LWHPV % 3RWHQWLDOO\ XQUHFRUGHG LWHPV WR WKH ILQDQFLDO VWDWHPHQWV & $FFRXQWLQJ UHFRUGV WR WKH VXSSRUWLQJ HYLGHQFH ' 7ULDO EDODQFH WR WKH VXEVLGLDU\ OHGJHU

 $Q DXGLWRU V SXUSRVH LQ DXGLWLQJ WKH LQIRUPDWLRQ FRQWDLQHG LQ WKH SHQVLRQ IRRWQRWH PRVW OLNHO\ LV WR REWDLQ HYLGHQFH FRQFHUQLQJ PDQDJHPHQW V DVVHUWLRQ DERXW

$ 5LJKWV DQG REOLJDWLRQV % ([LVWHQFH & 3UHVHQWDWLRQ DQG GLVFORVXUH ' 9DOXDWLRQ  :KHQ LQLWLDWLQJ FRPPXQLFDWLRQV ZLWK SUHGHFHVVRU DXGLWRUV SURVSHFWLYH DXGLWRUV VKRXOG H[SHFW

$ 7R WDNH UHVSRQVLELOLW\ IRU REWDLQLQJ WKH FOLHQW V FRQVHQW IRU WKH SUHGHFHVVRU WR JLYH LQIRUPDWLRQ DERXW SULRU DXGLWV % 7R FRQGXFW LQWHUYLHZV ZLWK WKH SDUWQHU DQG PDQDJHU LQ FKDUJH RI WKH SUHGHFHVVRU SXEOLF DFFRXQWLQJ ILUP V HQJDJHPHQW & 7R REWDLQ FRSLHV RI VRPH RU DOO RI WKH SUHGHFHVVRU DXGLWRUV DXGLW GRFXPHQWDWLRQ ' $OO RI WKH DERYH

 :KHQ SODQQLQJ DQ DXGLW ZKLFK RI WKH IROORZLQJ LV QRW D IDFWRU WKDW DIIHFWV DXGLWRUV GHFLVLRQV DERXW WKH TXDQWLW\ W\SH DQG FRQWHQW RI DXGLW GRFXPHQWDWLRQ"

$ 7KH DXGLWRUV QHHG WR GRFXPHQW FRPSOLDQFH ZLWK JHQHUDOO\ DFFHSWHG DXGLWLQJ VWDQGDUGV % 7KH H[LVWHQFH RI QHZ VDOHV FRQWUDFWV LPSRUWDQW IRU WKH FOLHQW V EXVLQHVV & 7KH DXGLWRUV MXGJPHQW DERXW WKHLU LQGHSHQGHQFH ZLWK UHJDUG WR WKH FOLHQW ' 7KH DXGLWRUV MXGJPHQWV DERXW PDWHULDOLW\  $XGLW GRFXPHQWDWLRQ WKDW VKRZV WKH GHWDLOHG HYLGHQFH DQG SURFHGXUHV UHJDUGLQJ WKH EDODQFH LQ WKH DFFXPXODWHG GHSUHFLDWLRQ DFFRXQW IRU WKH \HDU XQGHU DXGLW ZLOO EH IRXQG LQ WKH

$ &XUUHQW ILOH HYLGHQFH DXGLW GRFXPHQWDWLRQ % 3HUPDQHQW ILOH DXGLW GRFXPHQWDWLRQ & $GPLQLVWUDWLYH DXGLW GRFXPHQWDWLRQ LQ WKH FXUUHQW ILOH ' 3ODQQLQJ PHPRUDQGXP LQ WKH FXUUHQW ILOH  $Q DXGLWRU V SHUPDQHQW ILOH DXGLW GRFXPHQWDWLRQ PRVW OLNHO\ ZLOO FRQWDLQ

$ ,QWHUQDO FRQWURO DQDO\VLV IRU WKH FXUUHQW \HDU % 7KH PRVW UHFHQW HQJDJHPHQW OHWWHU & 0HPRUDQGD RI FRQIHUHQFH ZLWK PDQDJHPHQW ' ([FHUSWV RI WKH FRUSRUDWH FKDUWHU DQG E\ODZV

 :KLFK RI WKH IROORZLQJ LV QRW D EHQHILW FODLPHG IRU WKH SUDFWLFH RI GHWHUPLQLQJ PDWHULDOLW\ LQ WKH LQLWLDO SODQQLQJ VWDJH RI DQ DXGLW"

$ %HLQJ DEOH WR ILQHWXQH WKH DXGLW ZRUN IRU HIIHFWLYHQHVV DQG HIILFLHQF\ % $YRLGLQJ WKH SUREOHP RI GRLQJ PRUH ZRUN WKDQ QHFHVVDU\ RYHUDXGLWLQJ  & %HLQJ DEOH WR GHFLGH HDUO\ ZKDW W\SH RI DXGLW RSLQLRQ WR LVVXH ' $YRLGLQJ WKH SUREOHP RI GRLQJ WRR OLWWOH ZRUN XQGHUDXGLWLQJ   6SUHDGVKHHW VRIWZDUH ZRXOG EH PRVW XVHIXO IRU ZKLFK RI WKH IROORZLQJ DXGLW DFWLYLWLHV"

$ 7HVWLQJ LQWHUQDO FRQWUROV RYHU FRPSXWHUL]HG DFFRXQWLQJ DSSOLFDWLRQV % 3UHSDULQJ DQ DXGLW SODQ & 3UHSDULQJ D FRPSDULVRQ RI FXUUHQW\HDU H[SHQVHV ZLWK WKRVH IURP WKH SUHYLRXV \HDU ' 'UDIWLQJ D SODQQLQJ PHPRUDQGXP

 :KLFK RI WKH IROORZLQJ LV DQ DGYDQWDJH RI FRPSXWHUDVVLVWHG DXGLW WHFKQLTXHV &$$7V "

$ 7KH &$$7V SURJUDPV DUH DOO ZULWWHQ LQ RQH FRPSXWHU ODQJXDJH % 7KH VRIWZDUH FDQ EH XVHG IRU DXGLWV RI FOLHQWV WKDW XVH GLIIHULQJ FRPSXWHU HTXLSPHQW DQG ILOH IRUPDWV & 7KH XVH RI &$$7V KDV UHGXFHG WKH QHHG IRU WKH DXGLWRU WR VWXG\ LQSXW FRQWUROV IRU FRPSXWHUUHODWHG SURFHGXUHV ' 7KH XVH RI &$$7V FDQ EH VXEVWLWXWHG IRU D UHODWLYHO\ ODUJH SDUW RI WKH UHTXLUHG WHVWLQJ  $ SULPDU\ DGYDQWDJH RI XVLQJ &$$7V LQ WKH DXGLW RI DQ DGYDQFHG FRPSXWHUL]HG V\VWHP LV WKDW LW HQDEOHV WKH DXGLWRU WR

$ 6XEVWDQWLDWH WKH DFFXUDF\ RI GDWD WKURXJK VHOIFKHFNLQJ GLJLWV DQG KDVK WRWDOV % 8WLOL]H WKH VSHHG DQG DFFXUDF\ RI WKH FRPSXWHU & 9HULI\ WKH SHUIRUPDQFH RI PDFKLQH RSHUDWLRQV WKDW OHDYH YLVLEOH HYLGHQFH RI RFFXUUHQFH ' *DWKHU DQG VWRUH ODUJH TXDQWLWLHV RI VXSSRUWLYH DXGLW HYLGHQFH LQ PDFKLQH UHDGDEOH IRUP

 $Q DXGLW HQJDJHPHQW OHWWHU VKRXOG QRUPDOO\ LQFOXGH ZKLFK RI WKH IROORZLQJ PDWWHUV RI DJUHHPHQW EHWZHHQ WKH DXGLWRU DQG WKH FOLHQW"

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

$ <HV WKH DXGLWRUV UHSRUW VKRXOG PHQWLRQ WKH IDFW WKDW D VSHFLDOLVW ZDV XVHG % 7KH DXGLWRUV UHSRUW VKRXOG PHQWLRQ WKH XVH RI WKH VSHFLDOLVW RQO\ ZKHQ WKH VSHFLDOLVW V ILQGLQJV DIIHFW WKH DXGLWRUV FRQFOXVLRQV & 7KH XVH RI D VSHFLDOLVW QHHG QRW EH PHQWLRQHG LI WKH DXGLWRUV GHFLGH QRW WR WDNH UHVSRQVLELOLW\ IRU WKH VSHFLDOLVW V ILQGLQJV ' 7KH DXGLWRUV UHSRUW VKRXOG PHQWLRQ WKH VSHFLDOLVW RQO\ LI 9DQGDOD\ DJUHHV ZLWK WKH VSHFLDOLVW V ILQGLQJV

 :KLFK RI WKH IROORZLQJ FRPPXQLFDWLRQV LV PRVW OLNHO\ WR EH ZULWWHQ EHIRUH WKH EDODQFHVKHHW GDWH"

$ $ UHSRUW WR WKH DXGLW FRPPLWWHH RQ WKH UHVXOWV RI WHVWLQJ RI LQWHUQDO FRQWURO RYHU FDVK UHFHLSWV % &RQILUPDWLRQ OHWWHUV WR YHQGRUV FRQILUPLQJ WKH DPRXQWV WKH\ RZH WR WKH FOLHQW & $Q DWWRUQH\ V OHWWHU UHJDUGLQJ FRQWLQJHQW OLDELOLWLHV ' $Q HQJDJHPHQW OHWWHU  :KLFK RI WKH IROORZLQJ SURFHGXUHV ZRXOG PRVW OLNHO\ EH SHUIRUPHG GXULQJ SODQQLQJ"

$ 6XUSULVH FRXQWV RI WKH FOLHQW V SHWW\ FDVK IXQG % 5HSRUWLQJ LQWHUQDO FRQWURO GHILFLHQFLHV WR WKH DXGLW FRPPLWWHH & 3HUIRUPLQJ D VHDUFK IRU XQUHFRUGHG OLDELOLWLHV ' ,GHQWLI\LQJ UHODWHG SDUWLHV  3ULRU WR DFFHSWLQJ D QHZ DXGLW HQJDJHPHQW D SXEOLF DFFRXQWLQJ ILUP VKRXOG

$ $WWHPSW WR FRQWDFW WKH SUHGHFHVVRU DXGLWRUV % (YDOXDWH WKH LQWHJULW\ RI PDQDJHPHQW & $VVHVV WKH ILUP V UHVRXUFHV WR HQVXUH WKDW WKH\ DUH VXIILFLHQW WR SHUPLW WKHP WR DFFHSW WKH HQJDJHPHQW ' $OO RI WKH DERYH

 $Q DXGLW SODQ FRQWDLQV

$ 6SHFLILFDWLRQV RI DXGLW VWDQGDUGV UHOHYDQW WR WKH ILQDQFLDO VWDWHPHQWV EHLQJ DXGLWHG % 6SHFLILFDWLRQV RI SURFHGXUHV WKH DXGLWRUV EHOLHYH DSSURSULDWH IRU WKH ILQDQFLDO VWDWHPHQWV XQGHU DXGLW & 'RFXPHQWDWLRQ RI WKH DVVHUWLRQV XQGHU DXGLW WKH HYLGHQFH REWDLQHG DQG WKH FRQFOXVLRQV UHDFKHG ' 5HFRQFLOLDWLRQ RI WKH DFFRXQW EDODQFHV LQ WKH ILQDQFLDO VWDWHPHQWV ZLWK WKH DFFRXQW EDODQFHV LQ WKH FOLHQW V JHQHUDO OHGJHU  7KH UHYHQXH F\FOH RI D FRPSDQ\ JHQHUDOO\ LQFOXGHV ZKLFK DFFRXQWV"

$ ,QYHQWRU\ DFFRXQWV SD\DEOH DQG JHQHUDO H[SHQVHV % ,QYHQWRU\ JHQHUDO H[SHQVHV DQG SD\UROO & &DVK DFFRXQWV UHFHLYDEOH DQG VDOHV ' &DVK QRWHV SD\DEOH DQG FDSLWDO VWRFN  :KHQ DXGLWLQJ WKH H[LVWHQFH DVVHUWLRQ IRU DQ DVVHW DXGLWRUV SURFHHG IURP WKH

$ )LQDQFLDO VWDWHPHQW DPRXQWV EDFN WR WKH SRWHQWLDOO\ XQUHFRUGHG LWHPV % 3RWHQWLDOO\ XQUHFRUGHG LWHPV IRUZDUG WR WKH ILQDQFLDO VWDWHPHQW DPRXQWV & *HQHUDO OHGJHU EDFN WR WKH VXSSRUWLQJ RULJLQDO WUDQVDFWLRQ GRFXPHQWV ' 6XSSRUWLQJ RULJLQDO WUDQVDFWLRQ GRFXPHQWV WR WKH JHQHUDO OHGJHU

 &RQILUPDWLRQV RI DFFRXQWV UHFHLYDEOH SURYLGH HYLGHQFH SULPDULO\ DERXW ZKLFK WZR DVVHUWLRQV"

$ &RPSOHWHQHVV DQG YDOXDWLRQ % 9DOXDWLRQ DQG ULJKWV DQG REOLJDWLRQV & ([LVWHQFH DQG ULJKWV DQG REOLJDWLRQV ' ([LVWHQFH DQG FRPSOHWHQHVV :LWK UHVSHFW WR WKH FRQFHSW RI PDWHULDOLW\ ZKLFK RQH RI WKH IROORZLQJ VWDWHPHQWV LV FRUUHFW"

$ 0DWHULDOLW\ GHSHQGV RQO\ RQ WKH GROODU DPRXQW RI DQ LWHP UHODWLYH WR RWKHU LWHPV LQ WKH ILQDQFLDO VWDWHPHQWV % 0DWHULDOLW\ GHSHQGV RQ WKH QDWXUH RI D WUDQVDFWLRQ UDWKHU WKDQ WKH GROODU DPRXQW RI WKH WUDQVDFWLRQ & 0DWHULDOLW\ LV GHWHUPLQHG E\ UHIHUHQFH WR $,&3$ JXLGHOLQHV ' 0DWHULDOLW\ LV D PDWWHU RI SURIHVVLRQDO MXGJPHQW

:KHQ HYDOXDWLQJ ZKHWKHU DFFRXQWLQJ HVWLPDWHV PDGH E\ PDQDJHPHQW DUH UHDVRQDEOH WKH DXGLW WHDP ZRXOG EH PRVW LQWHUHVWHG LQ ZKLFK RI WKH IROORZLQJ"

$ .H\ IDFWRUV WKDW DUH FRQVLVWHQW ZLWK SULRU SHULRGV % $VVXPSWLRQV WKDW DUH VLPLODU WR LQGXVWU\ JXLGHOLQHV & 0HDVXUHPHQWV WKDW DUH REMHFWLYH DQG QRW VXVFHSWLEOH WR ELDV ' (YLGHQFH RI D FRQVHUYDWLYH V\VWHPDWLF ELDV *HQHUDOO\ DFFHSWHG DXGLWLQJ VWDQGDUGV UHTXLUH WKDW DXGLWRUV DOZD\V SUHSDUH DQG XVH

$ $ ZULWWHQ SODQQLQJ PHPRUDQGXP H[SODLQLQJ WKH DXGLWRUV XQGHUVWDQGLQJ RI WKH FOLHQW V EXVLQHVV % $ ZULWWHQ FOLHQW FRQVHQW WR GLVFXVV DXGLW PDWWHUV ZLWK SURVSHFWLYH DXGLWRUV & $ ZULWWHQ DXGLW SODQ ' 7KH ZULWWHQ WLPH EXGJHWV DQG VFKHGXOHV IRU SHUIRUPLQJ HDFK DXGLW

:KLFK RI WKH IROORZLQJ HQJDJHPHQW SODQQLQJ SURFHGXUHV ZRXOG PRVW OLNHO\ DVVLVW WKH DXGLWRU LQ LGHQWLI\LQJ UHODWHGSDUW\ WUDQVDFWLRQV EHIRUH WKH EDODQFHVKHHW GDWH"

$ ,QWHUYLHZLQJ LQWHUQDO DXGLWRUV DERXW WKHLU UHSRUWLQJ UHVSRQVLELOLWLHV % 5HYLHZLQJ DFFRXQWLQJ UHFRUGV IRU UHFXUULQJ WUDQVDFWLRQV RFFXUULQJ QHDU \HDU HQG & ,QVSHFWLQJ FRPPXQLFDWLRQV ZLWK WKH FOLHQW V OHJDO FRXQVHO UHJDUGLQJ UHFRUGHG FRQWLQJHQW OLDELOLWLHV ' 6FDQQLQJ WKH PLQXWHV IRU VLJQLILFDQW WUDQVDFWLRQV ZLWK PHPEHUV RI WKH ERDUG RI GLUHFWRUV $Q DXGLW HQJDJHPHQW OHWWHU VKRXOG QRUPDOO\ H[FOXGH WKH IROORZLQJ PDWWHU RI DJUHHPHQW EHWZHHQ WKH SXEOLF DFFRXQWLQJ ILUP DQG WKH FOLHQW

$ )HHV WR EH FKDUJHG % 7HUPV RI WKH HQJDJHPHQW & 6FKHGXOHV WR EH SUHSDUHG E\ FOLHQW ' 7\SH RI RSLQLRQ WR EH SURGXFHG

7KH WLPH UHSRUWV DUH UHFRUGHG E\ EXGJHW FDWHJRULHV IRU DOO WKH IROORZLQJ SXUSRVHV H[FHSW IRU

$ 3URYLGLQJ HYLGHQFH WKDW WKH DXGLW SODQ ZDV VDWLVILHG % (YDOXDWLQJ WKH HIILFLHQF\ RI WKH DXGLW WHDP PHPEHUV & &RPSLOLQJ D UHFRUG IRU ELOOLQJ WKH FOLHQW ' &RPSLOLQJ D UHFRUG IRU SODQQLQJ WKH QH[W DXGLW )RU DOO DXGLWV RI ILQDQFLDO VWDWHPHQWV ILOHG ZLWK WKH 6HFXULWLHV DQG ([FKDQJH &RPPLVVLRQ ZKLFK RI WKH IROORZLQJ LV UHTXLUHG"

$ $ FRPSXWHU VSHFLDOLVW % $ VHFRQG DXGLW SDUWQHU & (OHFWURQLF GRFXPHQWDWLRQ ' &RPSXWHUDVVLVWHG DXGLW WHFKQLTXHV :KLFK RI WKH IROORZLQJ LV XVHG WR PDLQWDLQ FRQWURO RI WKH DXGLW DQG HQVXUH WKDW LW LV FRPSOHWHG RQ D WLPHO\ EDVLV"

$ (QJDJHPHQW OHWWHU % 7HUPLQDWLRQ OHWWHU & 7LPH EXGJHW ' $QDO\WLFDO SURFHGXUHV

:KLFK RI WKH IROORZLQJ LV QRW DQ H[DPSOH RI HDUO\ LQIRUPDWLRQJDWKHULQJ DFWLYLWLHV"

$ 5HYLHZ RI WKH FRUSRUDWH FKDUWHU DQG E\ODZV % 5HYLHZ RI FRQWUDFWV DJUHHPHQWV DQG OHJDO SURFHHGLQJV & 5HDGLQJ DQG VWXG\LQJ WKH PLQXWHV RI WKH PHHWLQJV RI GLUHFWRUV DQG FRPPLWWHHV RI WKH ERDUG RI GLUHFWRUV ' 3UHSDULQJ D WLPH EXGJHW ,Q D FRPSXWHUL]HG LQIRUPDWLRQ V\VWHP XQLIRUP SURFHVVLQJ RI WUDQVDFWLRQV

$ 0HDQV WKDW WUDQVDFWLRQV ZLOO QHYHU EH SURFHVVHG LQFRUUHFWO\ % 5HTXLUHV WKDW D FRPSDQ\ XVH WKH VDPH SURJUDP IRU DOO IXQFWLRQV & 6XEMHFWV VLPLODU WUDQVDFWLRQV WR WKH VDPH SURFHVVLQJ LQVWUXFWLRQV ' $OZD\V OHDYHV DQ DXGLW WUDLO $XGLWLQJ VWDQGDUGV GR QRW UHTXLUH WKDW GRFXPHQWDWLRQ VKRZ WKDW

$ ,W FRQIRUPV WR $,&3$ PRGHO SDSHUV % 7KH ZRUN ZDV DGHTXDWHO\ SODQQHG DQG VXSHUYLVHG & 7KH FOLHQW V DFFRXQWLQJ UHFRUGV DJUHH RU UHFRQFLOH ZLWK ILQDQFLDO VWDWHPHQWV ' 6XIILFLHQW DSSURSULDWH HYLGHQWLDO PDWWHU ZDV REWDLQHG

:KLFK RI WKH IROORZLQJ FDQ &$$7V QRW GR"

$ 6FDQ LQYHQWRU\ TXDQWLWLHV IRU QHJDWLYH EDODQFHV % 'HWHUPLQH WKH UHDVRQDEOHQHVV RI WKH DOORZDQFH IRU GRXEWIXO DFFRXQWV & 5HFDOFXODWH GHSUHFLDWLRQ ' 6HOHFW FXVWRPHUV DFFRXQWV UHFHLYDEOH IRU FRQILUPDWLRQ 7KH PDMRU F\FOHV WKDW DXGLWRUV W\SLFDOO\ JURXS DFFRXQWV E\ GR QRW LQFOXGH

$ 5HYHQXH DQG FROOHFWLRQ % 3URGXFWLRQ DQG FRQYHUVLRQ & )LQDQFH DQG LQYHVWPHQW ' $VVHWV DQG OLDELOLWLHV 3K\VLFDO REVHUYDWLRQ E\ DQ DXGLW WHDP ZRXOG LQFOXGH

$ ([DPLQDWLRQ RI D VDOHV LQYRLFH % 5HFDOFXODWLRQ RI GHSUHFLDWLRQ & ([DPLQDWLRQ RI VHFXULWLHV FHUWLILFDWHV ' 6FDQQLQJ RI WKH H[SHQVH DFFRXQWV IRU XQXVXDO WUDQVDFWLRQV

7KH FRQFHSW RI PDWHULDOLW\ LV QRW XVHG E\ DXGLWRUV DV D JXLGH WR

$ 3ODQQLQJ WKH DXGLW SODQ % (YDOXDWLQJ WKH HYLGHQFH & $SSO\LQJ WKH UHVSRQVLELOLWLHV SULQFLSOH ' 0DNLQJ GHFLVLRQV DERXW WKH DXGLW UHSRUW $Q LQWHUQDO FRQWURO SURJUDP IRU XQGHUVWDQGLQJ WKH FOLHQW V LQKHUHQW ULVN DQG FRQWURO ULVN ZRXOG QRW LQFOXGH ZKLFK RI WKH IROORZLQJ SURFHGXUHV"

$ &RPPXQLFDWH ZLWK SUHGHFHVVRU DXGLWRUV % 6WXG\ SUHYLRXV \HDU DXGLW GRFXPHQWDWLRQ & (YDOXDWH WKH FRPSHWHQFH DQG LQGHSHQGHQFH RI WKH LQWHUQDO DXGLWRUV ' 2EWDLQ ZULWWHQ UHSUHVHQWDWLRQ IURP WKH FOLHQW FRQFHUQLQJ FROOHFWDELOLW\ RI UHFHLYDEOHV

)LOO LQ WKH %ODQN 4XHVWLRQV

:KHQ FRPSDQLHV FKDQJH DXGLWRUV WKH IRUPHU DXGLWRUV DUH UHIHUUHG WR DV WKH BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB

$XGLWLQJ VWDQGDUGV UHTXLUH WKH DXGLWRUV WR DVN WKDW FOLHQW FRQVHQW EH JLYHQ WR SHUPLW WKH BBBBBBBBBBBBBBBBBBBBBBBBB DXGLWRUV WR VSHDN BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB $ Q BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB LV UHFRPPHQGHG DV D PHDQV RI UHGXFLQJ ULVN RI PLVXQGHUVWDQGLQJ EHWZHHQ D FOLHQW DQG DXGLWRU BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB LQFOXGH SURJUDPV WKDW PD\ EH XWLOL]HG WR UHDG FRPSXWH DQG RSHUDWH RQ PDFKLQHUHDGDEOH UHFRUGV BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB UHIHUV WR SURFHGXUHV SHUIRUPHG VKRUWO\ EHIRUH DQG DIWHU WKH EDODQFH VKHHW GDWH BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 7KH BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB LV WKH DPRXQW E\ ZKLFK D SDUWLFXODU DFFRXQW PD\ EH PLVVWDWHG DQG FDXVH WKH ILQDQFLDO VWDWHPHQWV WR EH PDWHULDOO\ PLVOHDGLQJ BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB

)RU FRQWLQXLQJ DXGLWV VSHFLILF LQIRUPDWLRQ DERXW WKH FOLHQW LV DYDLODEOH LQ BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB $XGLW BBBBBBBBBBBBBBBBBBBBBBBBBBBBB FDQ RIWHQ EH UHDOL]HG E\ ZRUNLQJ LQ WDQGHP ZLWK BBBBBBBBBBBBBBBBBBBBBBBBBBBBB DXGLWRUV BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBB DUH SHUVRQV VNLOOHG LQ ILHOGV RWKHU WKDQ DFFRXQWLQJ DQG DXGLWLQJ ZKR DUH QRW PHPEHUV RI WKH DXGLW WHDP BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB $ Q BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB LV D FKDLQ RI HYLGHQFH SURYLGHG WKURXJK FRGLQJ FURVVUHIHUHQFHV DQG GRFXPHQWDWLRQ FRQQHFWLQJ DFFRXQW EDODQFHV DQG RWKHU VXPPDU\ UHVXOWV ZLWK WKH RULJLQDO WUDQVDFWLRQ GRFXPHQWV FDOFXODWLRQV BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 7KH BBBBBBBBBBBBBBBBBBBBBBBBBBBBB RI WKH FOLHQW V FRPSXWHU RSHUDWLRQV VKRXOG EH FRQVLGHUHG LQ DXGLW BBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB

7KH BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB FRQWDLQV LQIRUPDWLRQ RI FRQWLQXLQJ DXGLW VLJQLILFDQFH RYHU PDQ\ \HDUV DXGLWV RI WKH VDPH FOLHQW BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBB LV WKH DXGLWRU V UHFRUG RI FRPSOLDQFH ZLWK JHQHUDOO\ DFFHSWHG DXGLWLQJ VWDQGDUGV BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 7KH BBBBBBBBBBBBBBBBBBBBBBBBBBBB DSSURDFK WR TXDQWLI\LQJ PDWHULDOO\ DVVLJQV DQ RYHUDOO PDWHULDO DPRXQW IRU WKH ILQDQFLDO VWDWHPHQWV DQG WKHQ DOORFDWHV LW WR WKH SDUWLFXODU DFFRXQWV BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB ,Q YRXFKLQJ DQ LWHP RI ILQDQFLDO LQIRUPDWLRQ LV VHOHFWHG IURP DQ DFFRXQW DQG WKHQ WKH DXGLW WHDP JRHV BBBBBBBBBBBBBBBBBBBBBBBBBBBBB WKURXJK WKH DFFRXQWLQJ DQG FRQWURO V\VWHP WR ILQG WKH BBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBB LV D SURFHGXUH WKDW JHQHUDOO\ LQYROYHV WKH FROOHFWLRQ RI RUDO HYLGHQFH IURP LQGHSHQGHQW SDUWLHV DQG FOLHQW RIILFLDOV BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB

0DQDJHPHQW LV UHVSRQVLEOH IRU PDNLQJ WKH DFFRXQWLQJ BBBBBBBBBBBBBBBBBBBBBBBBBBBB DQG DXGLWRUV DUH UHVSRQVLEOH IRU HYDOXDWLQJ WKHLU BBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB DUH FRPSRVHG RI LQGHSHQGHQW RXWVLGH PHPEHUV RI WKH ERDUG RI GLUHFWRUV WKRVH QRW LQYROYHG LQ WKH FRPSDQ\ V GD\WRGD\ RSHUDWLRQV ZKR FDQ SURYLGH D EXIIHU EHWZHHQ WKH SXEOLF DFFRXQWLQJ ILUP DQG PDQDJHPHQW BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 3URFHGXUHV XVHG WR GHWHFW PDWHULDO PLVVWDWHPHQWV LQ GROODU DPRXQWV DQG GLVFORVXUHV LQ ILQDQFLDO VWDWHPHQWV DUH NQRZQ DV BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 3ODQQLQJ EHFRPHV D EDVLV IRU SUHSDULQJ WKH BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB

$ BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB SURJUDP FRQWDLQV VSHFLILFDWLRQ RI DXGLW SURFHGXUHV IRU JDWKHULQJ GLUHFW HYLGHQFH RQ BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB DERXW BBBBBBBBBBBBBBBBBBBBBBBBBBBBB DQG BBBBBBBBBBBBBBBBBBBBBBBBBBBBB LQ ILQDQFLDO VWDWHPHQWV BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB $XGLWRUV FDQQRW SODFH FRPSOHWH UHOLDQFH RQ BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB WR WKH H[FOXVLRQ RI RWKHU DXGLW SURFHGXUHV BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB ,QIRUPDWLRQ LV BBBBBBBBBBBBBBBBBBBBBBBBBBBBB LI LW LV OLNHO\ WR LQIOXHQFH ILQDQFLDO VWDWHPHQW XVHUV GHFLVLRQV BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB

6KRUW $QVZHU 4XHVWLRQV

)RU HDFK RI WKH GHVFULSWLRQV LQ &ROXPQ $ PDWFK WKH FRUUHFW ZRUG RU ZRUGV IURP )RU &ROXPQ %

)RU HDFK RI WKH GHVFULSWLRQV   PDWFK WKH FRUUHFW ZRUG RU SKUDVH IURP $+ )RU 

(VVD\ 4XHVWLRQV

([SODLQ WKH ERWWRPXS DSSURDFK DQG WKH WRSGRZQ DSSURDFK WR TXDQWLI\LQJ RYHUDOO PDWHULDOLW\

'R WKH IROORZLQJ UHJDUGLQJ DXGLWRUV FRQFHSWV RI RYHUDOO PDWHULDOLW\ FRQVLGHUHG DW WKH SODQQLQJ VWDJH LH SODQQLQJ PDWHULDOLW\  D 'HILQH RU GHVFULEH LQGHSHQGHQW DXGLWRUV FRQFHSW RI SODQQLQJ PDWHULDOLW\ E 1DPH EXW GR QRW GHVFULEH RU H[SODLQ WKUHH FRPPRQ UHODWLRQVKLSV RU FRQVLGHUDWLRQV XVHG E\ DXGLWRUV ZKHQ DVVHVVLQJ WKH GROODU DPRXQW FRQVLGHUHG WR EH PDWHULDO

:KDW DUH WKH FKDUDFWHULVWLFV WKDW GLVWLQJXLVK FRPSXWHU SURFHVVLQJ IURP PDQXDO SURFHVVLQJ"

:KDW DUH WKH DGYDQWDJHV DQG OLPLWDWLRQV GHULYHG IURP XVLQJ FRPSXWHUDVVLVWHG DXGLW WHFKQLTXHV &$$7V SDFNDJHV"

' -DFNVRQ &3$ DXGLWHG :DVKLQJWRQ &RPSDQ\ V ILQDQFLDO VWDWHPHQWV IRU WKH \HDU HQGHG 'HFHPEHU   2Q 1RYHPEHU   :DVKLQJWRQ QRWLILHG -DFNVRQ WKDW LW ZDV FKDQJLQJ DXGLWRUV DQG WKDW -DFNVRQ V VHUYLFHV ZHUH EHLQJ WHUPLQDWHG 2Q 1RYHPEHU   :DVKLQJWRQ LQYLWHG /LQFROQ &3$ WR PDNH D SURSRVDO IRU DQ HQJDJHPHQW WR DXGLW LWV ILQDQFLDO VWDWHPHQWV IRU WKH \HDU HQGHG 'HFHPEHU   5HTXLUHG :KDW SURFHGXUHV FRQFHUQLQJ -DFNVRQ VKRXOG /LQFROQ SHUIRUP EHIRUH DFFHSWLQJ WKH HQJDJHPHQW"

,GHQWLI\ WKH WZR W\SHV RI DXGLW SODQV DQG LQGLFDWH WKH SXUSRVH RI HDFK

   9"D C "!( " 9 @A !"  ! "   @ " !&! % %!  !@ % 9 (" !" 9& !@ !' )57G 5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      



7UXH  )DOVH 4XHVWLRQV

5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 758( GHFLVLRQ DERXW FOLHQW DFFHSWDQFH DQG UHWHQWLRQ $Q LPSRUWDQW HOHPHQW RI D SXEOLF DFFRXQWLQJ ILUP V V\VWHP RI TXDOLW\ FRQWURO LV WKH

&KDSWHU  (QJDJHPHQW 3ODQQLQJ $QVZHU .H\

   9"D C "!( " 9 @A !"  ! "   @ " !&! % %!  !@ % 9 (" !" 9& !@ !' )57G 5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      

   9"D C "!( " 9 @A !"  ! "   @ " !&! % %!  !@ % 9 ( " !" 9& !@ !' )57G 5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      





)$/6( (QJDJHPHQW OHWWHUV DUH QRW QHFHVVDU\ IRU FRQWLQXLQJ FOLHQWV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH )$/6( LQIRUPDWLRQ WR WKH DXGLWRUV ZLWKRXW FOLHQW FRQVHQW 7KH &RGH RI 3URIHVVLRQDO &RQGXFW SHUPLWV SUHGHFHVVRU DXGLWRUV WR JLYH

5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 !&"4 Q ! Y! 9&"  %  9"D C!" 9  !@ (" !((! !@ !4 " 9& " ! !2  D A "@ !2!  !&"4 ! ! 9&" H ! !@ " ! ! !" "@ " @ % 9 ( " ! &   0 X 57G 5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      

"!&"   9"D C" !&"  ( " !"  &"( ! 9" 9 !@ 2 !&  @A !( ! I 57G 5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      





5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH &$$7V VRIWZDUH UHTXLUHV DXGLWRUV WR GR WKH RULJLQDO SURJUDPPLQJ 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 758( 6(& $ VHFRQG DXGLW SDUWQHU LV UHTXLUHG IRU DXGLWV RI ILQDQFLDO VWDWHPHQWV ILOHG ZLWK WKH )$/6(

!#  9"D C!" 9 % 9  !@  !" 9&   98!  ! & !( ! G 57G 5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      

   9"D C "!( " 9 @A !"  ! "   @ " !&! % %!  !@ % 9 (" !" 9& !@ !' )57G 5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      





758(

5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 758( WR ILQHWXQH WKH DXGLW IRU HIIHFWLYHQHVV DQG HIILFLHQF\ $ PDMRU UHDVRQ IRU WKLQNLQJ DERXW RYHUDOO PDWHULDOLW\ DW WKH SODQQLQJ VWDJH LV WR WU\ 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH $ ILUVWWLPH DXGLW UHTXLUHV PRUH ZRUN WKDQ D UHSHDW HQJDJHPHQW

 !&"4 Q ! Y! 9&"  %  9"D C!" 9  !@ (" !((! !@ !4 " 9& " ! !2  D A "@ !2!  !&"4 ! ! 9&" H ! !@ " ! ! !" "@ " @ % 9 (" ! &   0 X 57G 5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      

!&"4 Q ! Y! 9&"  %  9"D C!" 9  !@ (" !((! !@ !4 " 9& " ! !2  D A "@ !2!  !&"4 ! ! 9&" H ! !@ " ! ! !" "@ " @ % 9 (" ! &   0 X 57G 5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      





)$/6( 7KH FRPSXWHU KDV VLPSOLILHG DXGLWLQJ E\ SURYLGLQJ D EHWWHU DXGLW WUDLO 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH )$/6( DXGLWLQJ REMHFWLYHV 7KH XVH RI FRPSXWHUDVVLVWHG DXGLWLQJ WHFKQLTXHV KDV VLJQLILFDQWO\ FKDQJHG

5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 !&"4 Q ! Y! 9&"  %  9"D C!" 9  !@ (" !((! !@ !4 " 9& " ! !2  D A "@ !2!  !&"4 ! ! 9&" H ! !@ " ! ! !" "@ " @ % 9 ( " ! &   0 X 57G 5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      

!&"4 Q ! Y! 9&"  %  9"D C!" 9  !@ (" !((! !@ !4 " 9& " ! !2  D A "@ !2!  !&"4 ! ! 9&" H ! !@ " ! ! !" "@ " @ % 9 ( " ! &   0 X 57G 5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      





5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 758( H[WHQW RI DXGLW SURFHGXUHV 7KH GHJUHH RI FRPSXWHU FRPSOH[LW\ DQG XVH PD\ LQIOXHQFH WKH QDWXUH WLPLQJ DQG 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 758( VXSHUYLVLRQ RI WKH LQWHUQDO FRQWURO V\VWHP 7KH XVH RI FRPSXWHU V\VWHPV KDV LQFUHDVHG WKH SRWHQWLDO IRU PDQDJHPHQW

 !&"4 Q ! Y! 9&"  %  9"D C!" 9  !@ (" !((! !@ !4 " 9& " ! !2  D A "@ !2!  !&"4 ! ! 9&" H ! !@ " ! ! !" "@ " @ % 9 ( " ! &   0 X 57G 5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      

!&"4 Q ! Y! 9&"  %  9"D C!" 9  !@ (" !((! !@ !4 " 9& " ! !2  D A "@ !2!  !&"4 ! ! 9&" H ! !@ " ! ! !" "@ " @ % 9 ( " ! &   0 X 57G 5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      





5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 758( UHDGDEOH UHFRUGV &$$7V VRIWZDUH PD\ EH XWLOL]HG WR UHDG FRPSXWH DQG RSHUDWH RQ PDFKLQH 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 758( REMHFWLYHV WKDW GLIIHU IURP PDQXDO FRQWURO DFWLYLWLHV GHVLJQHG WR DFFRPSOLVK WKH VDPH FRQWURO &RQWURO DFWLYLWLHV LQ FRPSXWHUL]HG DFFRXQWLQJ V\VWHPV PD\ KDYH FKDUDFWHULVWLFV

!#  9"D C!" 9 % 9  !@  !" 9&   98!  ! & !( ! G 57G 5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      

"!&"   9"D C" !&"  ( " !"  &"( ! 9" 9 !@ 2 !&  @A !( ! I 57G 5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      





5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH )$/6( YLHZ QRW WKH XVHUV SRLQW RI YLHZ 7KH FRQFHSW RI PDWHULDOLW\ HPSKDVL]HV WKH DFFRXQWDQWV DQG PDQDJHUV SRLQW RI 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH WKH\ VKRZ WKH DXGLWRU V GHFLVLRQPDNLQJ SURFHVV DQG FRQFOXVLRQV UHDFKHG 7KH PRVW LPSRUWDQW IDFHW RI WKH FXUUHQW DXGLW HYLGHQFH ILOHV LV WKH UHTXLUHPHQW WKDW 758(

!#  9"D C!" 9 % 9  !@  !" 9&   98!  ! & !( ! G 57G 5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      

!#  9"D C!" 9 % 9  !@  !" 9&   98!  ! & !( ! G 57G 5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      





5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 758( DXGLWRUV WHQG WR H[HUFLVH PRUH FDUH DQG XVH D PRUH VWULQJHQW PDWHULDOLW\ FULWHULRQ :KHQ PDQDJHPHQW FDQ H[HUFLVH GLVFUHWLRQ RYHU DQ DFFRXQWLQJ WUHDWPHQW 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 758( GHWHUPLQLQJ PDWHULDOLW\ $XGLWRUV DUH JHQHUDOO\ OHIW ZLWKRXW GHILQLWLYH TXDQWLWDWLYH JXLGHOLQHV IRU

   9"D C "!( " 9 @A !"  ! "   @ " !&! % %!  !@ % 9 ( " !" 9& !@ !' )57G 5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      

!#  9"D C!" 9 % 9  !@  !" 9&   98!  ! & !( ! G 57G 5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      





5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH )$/6( UHYLHZ DQG WKH PDWHULDOLW\ DVVHVVPHQW $XGLWRUV XVXDOO\ SUHSDUH DQ DXGLW SODQ VXPPDUL]LQJ WKH SUHOLPLQDU\ DQDO\WLFDO 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH )$/6( VWDWHPHQWV $XGLWRUV XVXDOO\ FKRRVH VHSDUDWH PHDVXUHV RI PDWHULDOLW\ IRU HDFK RI WKH ILQDQFLDO

!!4 Q  %21 "( ! !"   9"D C !!4 ! %!@ % "( ! !" 9  (" ! 9 !! % @ %! !@ !2!  0 V 57G 5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      

   9"D C "!( " 9 @A !"  ! "   @ " !&! % %!  !@ % 9 ( " !" 9& !@ !' )57G 5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      





758(

5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 758( ZLWK WKH WKUHH SHUIRUPDQFH SULQFLSOH $XGLW SURFHGXUHV DUH LQWHQGHG WR HQDEOH DXGLWRUV WR FRQGXFW ZRUN LQ DFFRUGDQFH 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH ULVN DQG WKH RWKHU IRU REWDLQLQJ HYLGHQFH DERXW GROODU DPRXQWV DQG GLVFORVXUHV $XGLWRUV XVH WZR NLQGV RI DXGLW SODQV RQH IRU REWDLQLQJ HYLGHQFH DERXW FRQWURO

   9"D C "!( " 9 @A !"  ! "   @ " !&! % %!  !@ % 9 (" !" 9& !@ !' )57G 5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      

!!4 Q  %21 "( ! !"   9"D C !!4 ! %!@ % "( ! !" 9  (" ! 9 !! % @ %! !@ !2!  0 V 57G 5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      





5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH )$/6( $XGLW SODQV DUH XVHG DV DXGLW SODQQLQJ WRROV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 758( DFFRXQWV 6FDQQLQJ LV DQ H\HVRSHQ DSSURDFK RI ORRNLQJ IRU DQ\WKLQJ XQXVXDO LQ WKH

0XOWLSOH &KRLFH 4XHVWLRQV



:KLFK RI WKH IROORZLQJ DXGLWRU FRQFHUQV PRVW OLNHO\ FRXOG EH VR VHULRXV WKDW WKH DXGLWRU ZRXOG FRQFOXGH WKDW D ILQDQFLDO VWDWHPHQW DXGLW FDQQRW EH FRQGXFWHG"

$ 7KH HQWLW\ KDV QR IRUPDO ZULWWHQ FRGH RI FRQGXFW % 7KH LQWHJULW\ RI HQWLW\ V PDQDJHPHQW LV VXVSHFW & 3URFHGXUHV UHTXLULQJ VHSDUDWLRQ RI GXWLHV DUH VXEMHFW WR PDQDJHPHQW RYHUULGH ' 0DQDJHPHQW IDLOV WR PRGLI\ SUHVFULEHG FRQWUROV IRU FKDQJHV LQ FRQGLWLRQV
  ! " C!&! % %!  % %!2 !"( !2 !$! "  @ !4  !&! % %!! 9 ! S! !@ !2!  0 6 57G 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %$@D     !4  !&! % %Q7 !  9"D



%HIRUH DFFHSWLQJ DQ HQJDJHPHQW WR DXGLW D QHZ FOLHQW DQ DXGLWRU LV UHTXLUHG WR

$ 0DNH LQTXLULHV RI WKH SUHGHFHVVRU DXGLWRU DIWHU REWDLQLQJ WKH FRQVHQW RI WKH SURVSHFWLYH FOLHQW % 2EWDLQ WKH SURVSHFWLYH FOLHQW V VLJQDWXUH WR WKH HQJDJHPHQW OHWWHU & 3UHSDUH D PHPRUDQGXP VHWWLQJ IRUWK WKH VWDIILQJ UHTXLUHPHQWV DQG GRFXPHQWLQJ WKH SUHOLPLQDU\ DXGLW SODQ ' 'LVFXVV WKH PDQDJHPHQW UHSUHVHQWDWLRQ OHWWHU ZLWK WKH SURVSHFWLYH FOLHQW V DXGLW FRPPLWWHH
!4  !&! % %Q7 !  9"D   ! " C!&! % %!  % %!2 !"( !2 !$! " @ !4  !&! % %!! 9 ! S! !@ !2!  0 6 57G 5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  



:KLFK RI WKH IROORZLQJ IDFWRUV PRVW OLNHO\ ZRXOG FDXVH DQ DXGLWRU QRW WR DFFHSW D QHZ DXGLW HQJDJHPHQW"

$ $Q LQDGHTXDWH XQGHUVWDQGLQJ RI WKH HQWLW\ V LQWHUQDO FRQWUROV % 7KH FORVH SUR[LPLW\ WR WKH HQG RI WKH HQWLW\ V ILVFDO \HDU & &RQFOXGLQJ WKDW WKH HQWLW\ V PDQDJHPHQW SUREDEO\ ODFNV LQWHJULW\ ' 7KH LQDELOLW\ WR SHUIRUP SUHOLPLQDU\ DQDO\WLFDO SURFHGXUHV EHIRUH DVVHVVLQJ FRQWURO ULVN
!4  !&! % %Q7 !  9"D   ! " C!&! % %!  % %!2 !"( !2 !$! " @ !4  !&! % %!! 9 ! S! !@ !2!  0 6 57G 5 !4 ! 321 %!0 & !# ) ((  99 &"" @!!E   %!0  



7KH DXGLWRU LV QRW UHTXLUHG WR DVN WKH SUHGHFHVVRU DXGLWRU DERXW

$ )DFWV WKDW PLJKW EHDU RQ WKH LQWHJULW\ RI PDQDJHPHQW % 'LVDJUHHPHQWV WKH SUHGHFHVVRU PD\ KDYH KDG ZLWK PDQDJHPHQW DERXW DFFRXQWLQJ SULQFLSOHV DQG DXGLW SURFHGXUHV & 7KH IHHV FKDUJHG IRU WKH SUHYLRXV DXGLW ' 7KH SUHGHFHVVRU V XQGHUVWDQGLQJ DERXW WKH UHDVRQV IRU WKH FKDQJH RI DXGLWRUV


"!&"   9"D  %1 ! " C" !&"  ( " !"  &"( ! 9" 9 !@ 2 !&  @A !( ! I 57G 5 !4 ! 321 %!0 & !# ) ((  !' &"" @!!E   %!0  

!4  !&! % %Q7 !  9"D  %1 ! " C!&! % %!  % %!2 !"( !2 !$! " @ !4  !&! % %!! 9 ! S! !@ !2!  0 6 57G 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &""  $E    %$@D   



' 'HFLVLRQV PDGH LQ WKH FRXUVH RI WKH DXGLW & 5HFRUG RI WKH SURFHGXUHV SHUIRUPHG % ,QGXVWU\ DFFRXQWLQJ JXLGHV $ 6SHFLILF DVVHUWLRQV XQGHU DXGLW $XGLW GRFXPHQWDWLRQ GRHV QRW QRUPDOO\ LQFOXGH WKH



& +LOO &3$ KDV EHHQ UHWDLQHG WR DXGLW WKH ILQDQFLDO VWDWHPHQWV RI 0RQGD\ &R 0RQGD\ V SUHGHFHVVRU DXGLWRU ZDV . 3RVW &3$ ZKRP 0RQGD\ KDV QRWLILHG E\ WKDW LWV VHUYLFHV KDYH EHHQ WHUPLQDWHG 8QGHU WKHVH FLUFXPVWDQFHV ZKLFK SDUW\ VKRXOG LQLWLDWH WKH FRPPXQLFDWLRQV EHWZHHQ +LOO DQG 3RVW"

$ +LOO WKH DXGLWRU % 3RVW WKH SUHGHFHVVRU DXGLWRU & 0RQGD\ V FRQWUROOHU RU &)2 ' 7KH FKDLU RI 0RQGD\ V ERDUG RI GLUHFWRUV
!4  !&! % %Q7 !  9"D   ! " C!&! % %!  % %!2 !"( !2 !$! " @ !4  !&! % %!! 9 ! S! !@ !2!  0 6 57G 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  



:KLFK RI WKH IROORZLQJ SURYLGHV WKH EHVW PHWKRG RI REWDLQLQJ DQ XQGHUVWDQGLQJ RI D FRQWLQXLQJ FOLHQW V EXVLQHVV IRU SODQQLQJ DQ DXGLW"

$ 3HUIRUPLQJ WHVWV RI GHWDLOV RI WUDQVDFWLRQV DQG EDODQFHV % 5HYLHZLQJ SULRU \HDU DXGLW GRFXPHQWDWLRQ DQG WKH SHUPDQHQW ILOH IRU WKH FOLHQW & 5HDGLQJ VSHFLDOL]HG LQGXVWU\ MRXUQDOV ' 5HHYDOXDWLQJ WKH FOLHQW V LQWHUQDO FRQWURO HQYLURQPHQW


!4  !&! % %Q7 !  9"D  %1 ! " C!&! % %!  % %!2 !"( !2 !$! " @ !4  !&! % %!! 9 ! S! !@ !2!  0 6 57G 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  

%  9"D   ! " C "!( " 9 @A !"  ! "   @ " !&! % %!  !@ % 9 (" !" 9& !@ !' )57G 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0 



' (QVXULQJ WKDW WKHUH DUH VXIILFLHQW ILUP UHVRXUFHV WR FRPSOHWH WKH HQJDJHPHQW & 2EWDLQLQJ DQ HQJDJHPHQW OHWWHU % 2EWDLQLQJ SUHGHFHVVRU DXGLW GRFXPHQWDWLRQ $ (YDOXDWLQJ WKH SXEOLF DFFRXQWLQJ ILUP V LQGHSHQGHQFH ZLWK UHJDUG WR WKH DXGLW ILUP GR QRW LQFOXGH 7KH SUHHQJDJHPHQW DFWLYLWLHV RI DQ DXGLW HQJDJHPHQW IRU D SXEOLF DFFRXQWLQJ HQJDJHPHQW

RQ D WLPHO\ EDVLV



:KLFK RI WKH IROORZLQJ SURFHGXUHV ZRXOG DQ DXGLWRU PRVW OLNHO\ SHUIRUP LQ SODQQLQJ D ILQDQFLDO VWDWHPHQW DXGLW"

$ ,QTXLULQJ RI WKH FOLHQW V OHJDO FRXQVHO FRQFHUQLQJ SHQGLQJ OLWLJDWLRQ % &RPSDULQJ WKH ILQDQFLDO VWDWHPHQWV WR DQWLFLSDWHG UHVXOWV & ([DPLQLQJ FRPSXWHUJHQHUDWHG H[FHSWLRQ UHSRUWV WR YHULI\ WKH HIIHFWLYHQHVV RI LQWHUQDO FRQWUROV ' 6HDUFKLQJ IRU XQDXWKRUL]HG WUDQVDFWLRQV WKDW PD\ DLG LQ GHWHFWLQJ XQUHFRUGHG OLDELOLWLHV
%  9"D   ! " C "!( " 9 @A !"  ! "   @ " !&! % %!  !@ % 9 (" !" 9& !@ !' )57G 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  



7KLV \HDU %ODNHQH\ (QWHUSULVHV HQJDJHG D QHZ DXGLWRU ZKR PXVW

$ $WWHPSW WR FRPPXQLFDWH ZLWK WKH SUHGHFHVVRU DXGLWRU EHIRUH DFFHSWLQJ WKH HQJDJHPHQW % 5HYLHZ WKH SUHGHFHVVRU V DXGLW GRFXPHQWDWLRQ LI WKH DXGLW LV WR EH LQ DFFRUGDQFH ZLWK *$$6 & 6HHN WKH 6(& V SHUPLVVLRQ WR DFFHSW WKH HQJDJHPHQW LI %ODNHQH\ LV SXEOLFO\ RZQHG ' 5HMHFW WKH HQJDJHPHQW LI WKH FKDQJH LQ DXGLWRUV UHVXOWHG IURP D GLVSXWH ZLWK WKH SUHGHFHVVRU
!4  !&! % %Q7 !  9"D   ! " C!&! % %!  % %!2 !"( !2 !$! " @ !4  !&! % %!! 9 ! S! !@ !2!  0 6 57G 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  



$Q HQJDJHPHQW OHWWHU LV XVHG SULPDULO\ WR

$ (QVXUH D FOHDU FRQWUDFWXDO XQGHUVWDQGLQJ RI WKH VHUYLFHV WR EH SURYLGHG E\ WKH &3$ % ([SUHVV DQ RSLQLRQ RQ WKH ILQDQFLDO VWDWHPHQWV & 3URYLGH PDQDJHPHQW UHSUHVHQWDWLRQV WR EH LQFOXGHG LQ WKH DXGLW HYLGHQFH ' 'LVFODLP OLDELOLW\
!4  !&! % %Q7 !  9"D   ! " C!&! % %!  % %!2 !"( !2 !$! " @ !4  !&! % %!! 9 ! S! !@ !2!  0 6 57G 5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  



7KH ILUP RI %DQWD %URZQ DQG %XUJHVV &3$V UHTXLUHV WKDW DXGLW GRFXPHQWDWLRQ FRQWDLQ WKH LQLWLDOV RI WKH SUHSDUHU DQG WKH UHYLHZHU LQ WKH WRS ULJKWKDQG FRUQHU 7KLV SURFHGXUH SURYLGHV HYLGHQFH RI SURIHVVLRQDO FRQFHUQ UHJDUGLQJ ZKLFK JHQHUDOO\ DFFHSWHG DXGLWLQJ VWDQGDUG"

$ ,QGHSHQGHQFH % $GHTXDWH WHFKQLFDO FRPSHWHQFH DQG FDSDELOLWLHV & $GHTXDWH SODQQLQJ DQG VXSHUYLVLRQ ' *DWKHULQJ VXIILFLHQW FRPSHWHQW HYLGHQFH


%  9"D   ! " C "!( " 9 @A !"  ! "   @ " !&! % %!  !@ % 9 (" !" 9& !@ !' )57G 5 !4 ! 321 %!0 W G (( 99 &"" @!!E   %!0  

"!&"   9"D   ! " C" !&"  ( " !"  &"( ! 9" 9 !@ 2 !&  @A !( ! I 57G 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0 



' ,QTXLUH RI WKH FOLHQW V DWWRUQH\ DV WR ZKHWKHU DQ\ XQUHFRUGHG FODLPV DUH & 'LVFXVV WKH WLPLQJ RI WKH DXGLW SURFHGXUHV ZLWK WKH FOLHQW V PDQDJHPHQW % (YDOXDWH WKH UHDVRQDEOHQHVV RI WKH FOLHQW V DFFRXQWLQJ HVWLPDWHV RI LQYHQWRU\ $ 7HVW VSHFLILF LQWHUQDO FRQWURO DFWLYLWLHV WKDW DUH OLNHO\ WR SUHYHQW IUDXG 'XULQJ WKH LQLWLDO SODQQLQJ SKDVH RI DQ DXGLW D &3$ PRVW OLNHO\ ZRXOG REVROHVFHQFH

SUREDEOH RI DVVHUWLRQ



3ULRU WR EHJLQQLQJ WKH ILHOGZRUN RQ D QHZ DXGLW HQJDJHPHQW LQ ZKLFK WKH DXGLW WHDP GRHV QRW SRVVHVV H[SHUWLVH LQ WKH LQGXVWU\ LQ ZKLFK WKH FOLHQW RSHUDWHV WKH DXGLW WHDP VKRXOG

$ 5HGXFH DXGLW ULVN E\ ORZHULQJ WKH SUHOLPLQDU\ OHYHOV RI PDWHULDOLW\ % 'HVLJQ VSHFLDO VXEVWDQWLYH WHVWV WR FRPSHQVDWH IRU WKH ODFN RI LQGXVWU\ H[SHUWLVH & (QJDJH ILQDQFLDO H[SHUWV IDPLOLDU ZLWK WKH QDWXUH RI WKH LQGXVWU\ ' 2EWDLQ NQRZOHGJH RI PDWWHUV WKDW UHODWH WR WKH QDWXUH RI WKH HQWLW\ V EXVLQHVV
%  9"D   ! " C "!( " 9 @A !"  ! "   @ " !&! % %!  !@ % 9 (" !" 9& !@ !' )57G 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  



:KLFK RI WKH IROORZLQJ W\SHV RI WUDQVDFWLRQV ZRXOG EH URXWLQH DQG FRPSXWHUL]HG"

$ &DSLWDO VWRFN VDOHV DQG UHSXUFKDVHV % &UHGLW VDOHV DQG ELOOLQJV & ,QFRPH WD[ H[SHQVH DQG OLDELOLW\ ' %DQN ORDQ WUDQVDFWLRQV
%""@!D % %!4 !0    %""@!D % %!4 !0   %""@!D

%""@!D " &"(  9"D   ! " C!" 9  !@ (" !((! !@ !4 " 9& " ! !2  D A "@ !2!  !&"4 ! ! 9&" H ! !@ " ! ! !" "@ " @ % 9 ( " ! &   0 X 57G 5 !4 ! 321 %!0 Q 6 (( 99 &"" %""@!D % %!4 !0    %""@!D % %!4 !0   %""@!D

%""@!D " &"(  9"D  %1 ! " C!" 9  !@ (" !((! !@ !4 " 9& " ! !2  D A "@ !2!  !&"4 ! ! 9&" H ! !@ " ! ! !" "@ " @ % 9 ( " ! &   0 X 57G 5 !4 ! 321 %!0 Q 6 (( 99 &""



' 5DQGRP HUURUV DUH PRUH OLNHO\ LQ D EDWFK V\VWHP WKDQ LQ DQ RQOLQH V\VWHP & (UURUV LQ VRPH WUDQVDFWLRQV FDXVH UHMHFWLRQ RI RWKHU WUDQVDFWLRQV LQ WKH EDWFK % 7KHUH DUH WLPH GHOD\V LQ SURFHVVLQJ WUDQVDFWLRQV LQ D EDWFK V\VWHP $ 7UDQVDFWLRQ WUDLOV LQ D EDWFK V\VWHP DUH DYDLODEOH IRU RQO\ D OLPLWHG SHULRG RI LPPHGLDWHO\ EHFDXVH (UURUV LQ GDWD SURFHVVHG LQ D EDWFK FRPSXWHU V\VWHP PD\ QRW EH GHWHFWHG WLPH



0DQDJHPHQW V UHVSRQVLELOLW\ LQ D FRPSXWHU V\VWHP ZRXOG QRW LQFOXGH

$ (QVXULQJ WKDW WKH GRFXPHQWDWLRQ RI WKH V\VWHP LV FRPSOHWH DQG XS WR GDWH % 0DLQWDLQLQJ D V\VWHP RI WUDQVDFWLRQ SURFHVVLQJ WKDW LQFOXGHV DQ DXGLW WUDLO & $VVHVVLQJ WKH FRQWURO ULVN ' 0DNLQJ FRPSXWHU UHVRXUFHV DQG NQRZOHGJHDEOH SHUVRQQHO DYDLODEOH IRU TXHVWLRQV
%""@!D " &"(  9"D  %1 ! " C!" 9  !@ (" !((! !@ !4 " 9& " ! !2  D A "@ !2!  !&"4 ! ! 9&" H ! !@ " ! ! !" "@ " @ % 9 ( " ! &   0 X 57G 5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" %""@!D % %!4 !0    %""@!D % %!4 !0   %""@!D



7KH FKDUDFWHULVWLFV WKDW GLVWLQJXLVK FRPSXWHU SURFHVVLQJ IURP PDQXDO SURFHVVLQJ ZRXOG QRW LQFOXGH

$ $ GHFUHDVH RI PDQDJHPHQW VXSHUYLVLRQ RI RSHUDWLRQV % $XWRPDWLF LQLWLDWLRQ DQG H[HFXWLRQ RI WUDQVDFWLRQV & 7KH SRVVLEOH FRQFHQWUDWLRQ RI FRQWURO DFWLYLWLHV ' $ KLJK SRWHQWLDO IRU XQDXWKRUL]HG DFFHVV WR GDWD
!2&!&!E &"" %""@!D % %!4 !0    %""@!D % %!4 !0   %""@!D

"!&"   9"D  %1 ! " C" !&"  ( " !"  &"( ! 9" 9 !@ 2 !&  @A !( ! I 57G 5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  

%""@!D " &"(  9"D  %1 ! " C!" 9  !@ (" !((! !@ !4 " 9& " ! !2  D A "@ !2!  !&"4 ! ! 9&" H ! !@ " ! ! !" "@ " @ % 9 ( " ! &   0 X 57G 5 !4 ! 321 %!0 Q 6 ((



' &XUUHQW GRFXPHQWDWLRQ ILOHV & $XGLW DGPLQLVWUDWLYH ILOHV % 3HUPDQHQW ILOHV $ 7HPSRUDU\ ILOHV :KLFK RI WKH IROORZLQJ LV QRW D FDWHJRU\ RI DXGLW GRFXPHQWDWLRQ"



7KH HVVHQWLDO DGYDQWDJHV RI D FRPSXWHUDVVLVWHG DXGLW WHFKQLTXHV &$$7V SDFNDJH ZRXOG QRW LQFOXGH WKH IDFW WKDW

$ 7KH VDPH VRIWZDUH FDQ EH XVHG RQ GLIIHUHQW W\SHV RI FOLHQWV FRPSXWHU HQYLURQPHQWV % $ ODUJH QXPEHU RI &$$7V SDFNDJHV DUH FXUUHQWO\ DYDLODEOH & 6RIWZDUH SDFNDJHV DUH DOZD\V LQH[SHQVLYH ' 7KH DELOLW\ WR FRQWURO DQG PRGLI\ WKH SURJUDP WR PHHW DQ DXGLWRUV QHHG
%""@!D " &"(  9"D  %1 ! " C!" 9  !@ (" !((! !@ !4 " 9& " ! !2  D A "@ !2!  !&"4 ! ! 9&" H ! !@ " ! ! !" "@ " @ % 9 ( " ! &   0 X 57G 5 !4 ! 321 %!0 Q 6 (( !' &"" %""@!D % %!4 !0    %""@!D % %!4 !0   %""@!D



&RPSXWHUDVVLVWHG DXGLW WHFKQLTXHV &$$7V FRXOG QRW EH XVHG IRU ZKLFK RI WKH IROORZLQJ DXGLW WDVNV"

$ 7HVWLQJ FDOFXODWLRQV DQG PDNLQJ FRPSXWDWLRQV % (YDOXDWLQJ FRQWURO ULVN DVVHVVPHQW & 6XPPDUL]LQJ UHVHTXHQFLQJ DQG UHIRUPDWWLQJ GDWD ' &RPSDULQJ DXGLW HYLGHQFH IURP PDQXDO DXGLW SURFHGXUHV WR FRPSDQ\ QHHGV
%""@!D % %!4 !0    %""@!D % %!4 !0   %""@!D

%""@!D "&"(  9"D  %1 ! " C!" 9  !@ (" !((! !@ !4 " 9& " ! !2  D A "@ !2!  !&"4 ! ! 9&" H ! !@ " ! ! !" "@ " @ % 9 ( " ! &   0 X 57G 5 !4 ! 321 %!0 & !# ) ((  99 &"" %""@!D % %!4 !0    %""@!D % %!4 !0   %""@!D

%""@!D " &"(  9"D  %1 ! " C!" 9  !@ (" !((! !@ !4 " 9& " ! !2  D A "@ !2!  !&"4 ! ! 9&" H ! !@ " ! ! !" "@ " @ % 9 (" ! &   0 X 57G 5 !4 ! 321 %!0 & !# ) ((  99 &""



' 2EVHUYDWLRQ RI LQYHQWRU\ DFFRXQWV & 3DLG YRXFKHUV WR GLVEXUVHPHQWV % &XUUHQW DQG SULRU LQYHQWRU\ WR GHWDLOV RI SXUFKDVHV DQG VDOHV $ 3D\UROO GHWDLOV ZLWK SHUVRQQHO UHFRUGV LV LQ DJUHHPHQW ([DPSOHV RI VXFK FRPSDULVRQV ZRXOG QRW LQFOXGH DVVLVWHG DXGLW WHFKQLTXHV &$$7V WR GHWHUPLQH ZKHWKHU FRPSDUDEOH LQIRUPDWLRQ &RPSDULQJ GDWD RQ VHSDUDWH ILOHV FDQ EH DFFRPSOLVKHG E\ XVLQJ FRPSXWHU

! 9&" H ! !@ " ! ! !" "@ " @ % 9 ( " ! &   0 X 57G 5 !4 ! 321 %!0 Q 6 (( 99 &"" %""@!D % %!4 !0    %""@!D % %!4 !0   %""@!D

%""@!D " &"(  9"D  %1 ! " C!" 9  !@ (" !((! !@ !4 " 9& " ! !2  D A "@ !2!  !&"4 ! ! 9&" H ! !@ " ! ! !" "@ " @ % 9 ( " ! &   0 X 57G 5 !4 ! 321 %!0 Q 6 (( 99 &"" %""@!D % %!4 !0    %""@!D % %!4 !0   %""@!D





' 2EWDLQLQJ D VDPSOH VHOHFWLRQ & 3UHSDULQJ DQ DXGLW SODQ % 3UHSDULQJ D WULDO EDODQFH $ 3HUIRUPLQJ DQDO\WLFDO SURFHGXUHV $Q DXGLWRU ZRXOG PRVW OLNHO\ EH XVH ZRUG SURFHVVLQJ VRIWZDUH IRU ZKDW SXUSRVH" ' $QDO\WLFDO UHYLHZ & &RQWLQXRXV PRQLWRULQJ RI D FOLHQW V LQWHUQDO FRQWURO V\VWHP % 6DPSOH SODQQLQJ VHOHFWLRQ DQG HYDOXDWLRQ $ 6SUHDGVKHHW DQDO\VLV LQFOXGH 7KH EDVLF DXGLWLQJ DSSOLFDWLRQ RI WKH SHUVRQDO FRPSXWHU DV DQ DXGLW WRRO ZRXOG QRW

%""@!D % %!4 !0   %""@!D

%""@!D " &"(  9"D  %1 ! " C!" 9  !@ (" !((! !@ !4 " 9& " ! !2  D A "@ !2!  !&"4 ! ! 9&" H ! !@ " ! ! !" "@ " @ % 9 ( " ! &   0 X 57G 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" %""@!D % %!4 !0    %""@!D % %!4 !0   %""@!D

%""@!D " &"(  9"D  %1 ! " C!" 9  !@ (" !((! !@ !4 " 9& " ! !2  D A "@ !2!  !&"4 !





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

%""@!D " &"(  9"D   ! " C!" 9  !@ (" !((! !@ !4 " 9& " ! !2  D A "@ !2!  !&"4 ! ! 9&" H ! !@ " ! ! !" "@ " @ % 9 ( " ! &   0 X 57G 5 !4 ! 321 %!0 Q 6 (( 99 &"" %""@!D % %!4 !0    %""@!D % %!4 !0   %""@!D

%""@!D " &"(  9"D   ! " C!" 9  !@ (" !((! !@ !4 " 9& " ! !2  D A "@ !2!  !&"4 ! ! 9&" H ! !@ " ! ! !"  "@ "  @ % 9 ( " ! &   0 X 57G 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" %""@!D % %!4 !0   



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



)RU ZKLFK RI WKH IROORZLQJ MXGJPHQWV PD\ DQ LQGHSHQGHQW DXGLWRU VKDUH UHVSRQVLELOLW\ ZLWK DQ HQWLW\ V LQWHUQDO DXGLWRU ZKR LV DVVHVVHG WR EH ERWK FRPSHWHQW DQG REMHFWLYH"

$ $VVHVVPHQW RI LQKHUHQW ULVN \HV DVVHVVPHQW RI FRQWURO ULVN \HV % $VVHVVPHQW RI LQKHUHQW ULVN \HV DVVHVVPHQW RI FRQWURO ULVN QR & $VVHVVPHQW RI LQKHUHQW ULVN QR DVVHVVPHQW RI FRQWURO ULVN \HV ' $VVHVVPHQW RI LQKHUHQW ULVN QR DVVHVVPHQW RI FRQWURO ULVN QR
%  9"D   ! " C "!( " 9 @A !"  ! "   @ " !&! % %!  !@ % 9 ( " !" 9& !@ !' )57G 5 !4 ! 321 %!0 W G (( 99 &""  $E    %!0  



:KLFK RI WKH IROORZLQJ LV QRW FRQVLGHUHG DQ DFFRXQWLQJ HVWLPDWH"

$ $OORZDQFH IRU ORDQ ORVVHV % &UHGLW VDOHV & 1HW UHDOL]DEOH YDOXH RI LQYHQWRU\ ' 3HUFHQWDJHRIFRPSOHWLRQ UHYHQXH WR EH UHFRUGHG
!2&!&!E &"" @!!E   %!0  

%!D ""  9"D  %1 ! " C !!4 ! %!@ % "( ! !" 9  (" ! 9 !! % @ %! !@ !2!  0 V 57G 5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  

! &Q %  "  9"D  %1 ! " C "!( " 9 @A !"  ! "   @ " !&! % %!  !@ % 9 ( " !" 9& !@ !' )57G 5 !4 ! 321 %!0 & !# ) (( 



' 5HDG VDOHV FRQWUDFWV IRU HYLGHQFH RI FXVWRPHUV ULJKWV RI UHWXUQ RU SULFH & $VVHVV WKH FRQWURO ULVN IRU VDOHV DQG FROOHFWLRQV % 3UHSDUH DQG VHQG FRQILUPDWLRQV RQ D VDPSOH RI FXVWRPHUV DFFRXQWV $ 2EWDLQ DQ DJHG WULDO EDODQFH RI WKH DFFRXQWV UHFHLYDEOH :KLFK RI WKH IROORZLQJ ZRXOG EH D VWHS LQ DQ LQWHUQDO FRQWURO SURJUDP" UHFHLYDEOH

DOORZDQFH WHUPV

! %  "  9"D  %1 ! " C !!4 ! %!@ % "( ! !" 9  (" ! 9 !! % @ %! !@ !2!  0 V 57G 5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  

! %  "  9"D  %1 ! " C !!4 ! %!@ % "( ! !" 9  (" ! 9 !! % @ %! !@ !2!  0 V 57G 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  





' )LQDQFLQJ DQG LQYHVWLQJ & &DVK UHFHLSWV DQG GLVEXUVHPHQWV % $FTXLVLWLRQ DQG H[SHQGLWXUH $ 5HYHQXH DQG FDVK FROOHFWLRQ :KLFK RI WKH IROORZLQJ LV QRW RQH RI WKH IRXU PDMRU F\FOHV" ' 7UDQVDFWLRQV WKDW DIIHFW DOO DFFRXQWV LQ WKDW SDUWLFXODU JURXS & $XGLW REMHFWLYH % )LQDQFLDO VWDWHPHQW DVVHUWLRQ $ 6SHFLILF IXQFWLRQ 7KH LGHD RI WKH F\FOH DSSURDFK LV WR JURXS DFFRXQWV WRJHWKHU E\

C!" 9 % 9  !@  !" 9&   98!  ! & !( ! G 57G 5 !4 ! 321 %!0 & !# ) ((  !' &"" !&!!#   %!0  

!!"   9"D  %1 ! " C !!4 ! %!@ % "( ! !" 9  (" ! 9 !! % @ %! !@ !2!  0 V 57G 5 !4 ! 321 %!0 Q 6 (( 99 &"" @!!E   %!0  





' &XPXODWLYH HIIHFWV & 1DWXUH RI WKH LWHP % 5HODWLYH VL]H $ $EVROXWH VL]H PDWHULDOLW\ ZRXOG EH EDVLQJ MXGJPHQW RQ $Q DXGLWRU ZKR XVHV  SHUFHQW RI LQFRPH EHIRUH WD[HV DV D EDVLV IRU RYHUDOO ' 6FDQQLQJ & ,QVSHFWLRQ RI GRFXPHQWV % &RQILUPDWLRQ $ 3K\VLFDO REVHUYDWLRQ /RRNLQJ DW YHQGRUV LQYRLFHV IRU SDUWLFXODU LQIRUPDWLRQ LV DQ H[DPSOH RI



:KLFK RI WKH IROORZLQJ LV QRW D ZD\ LQ ZKLFK DXGLWRUV XVH WKH FRQFHSW RI RYHUDOO PDWHULDOLW\"

$ $V D JXLGH WR SODQQLQJ WKH DXGLW SODQ % $V D JXLGH WR WKH HYDOXDWLRQ RI HYLGHQFH & $V D JXLGH IRU PDNLQJ GHFLVLRQV DERXW WKH DXGLW UHSRUW ' $V D JXLGH IRU DVVHVVLQJ FRQWURO ULVN
!#  9"D  %1 ! " C!" 9 % 9  !@  !" 9&   98!  ! & !( ! G 57G 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &""  $E    %!0  



7KH DXGLWRU ORRNHG DW D EDQN VWDWHPHQW UHFHLYHG DQG KHOG E\ WKH FOLHQW :KDW NLQG RI DXGLW SURFHGXUH ZRXOG WKLV EH FRQVLGHUHG"

$ 5HFDOFXODWLRQ % 3K\VLFDO REVHUYDWLRQ & &RQILUPDWLRQ ' ([DPLQDWLRQ RI GRFXPHQWV

%!0  

!#  9"D  %1 ! "

"!  9"D   ! " C !!4 ! %!@ % "( ! !" 9  (" ! 9 !! % @ %! !@ !2!  0 V 57G 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  

!!"   9"D  %1 ! " C !!4 ! %!@ % "( ! !" 9  (" ! 9 !! % @ %! !@ !2!  0 V 57G 5 !4 ! 321 %!0 & !# ) ((  !' &"" @!!E  



' 6XSSRUWLQJ HYLGHQFH WR WKH DFFRXQWLQJ UHFRUGV & $FFRXQWLQJ UHFRUGV WR WKH VXSSRUWLQJ HYLGHQFH % 3RWHQWLDOO\ XQUHFRUGHG LWHPV WR WKH ILQDQFLDO VWDWHPHQW $ )LQDQFLDO VWDWHPHQWV WR WKH SRWHQWLDOO\ XQUHFRUGHG LWHPV WKH ,Q WHVWLQJ WKH H[LVWHQFH DVVHUWLRQ IRU DQ DVVHW DQ DXGLWRU RUGLQDULO\ ZRUNV IURP



,Q GHWHUPLQLQJ ZKHWKHU WUDQVDFWLRQV KDYH EHHQ UHFRUGHG WKH GLUHFWLRQ RI WKH DXGLW WHVWLQJ VKRXOG VWDUW IURP WKH

$ *HQHUDO OHGJHU EDODQFHV % $GMXVWHG WULDO EDODQFH & 2ULJLQDO VRXUFH GRFXPHQWV ' *HQHUDO MRXUQDO HQWULHV
!!"   9"D   ! " C !!4 ! %!@ % "( ! !" 9  (" ! 9 !! % @ %! !@ !2!  0 V 57G 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  



$XGLWRUV VKRXOG GHVLJQ WKH ZULWWHQ DXGLW SODQ VR WKDW

$ $OO PDWHULDO WUDQVDFWLRQV ZLOO EH VHOHFWHG IRU VXEVWDQWLYH WHVWLQJ % 6XEVWDQWLYH WHVWV SULRU WR WKH EDODQFH VKHHW GDWH ZLOO EH PLQLPL]HG & 7KH DXGLW SURFHGXUHV VHOHFWHG ZLOO DFKLHYH VSHFLILF DXGLW REMHFWLYHV ' (DFK DFFRXQW EDODQFH ZLOO EH WHVWHG XQGHU HLWKHU WHVWV RI FRQWUROV RU WHVWV RI WUDQVDFWLRQV
& !# ) ((  !' &"" @!!E   %!0  

%  9"D   ! " C "!( " 9 @A !"  ! "   @ " !&! % %!  !@ % 9 (" !" 9& !@ !' )57G 5 !4 ! 321 %!0 W G (( !2&!&!E &"" @!!E   %!0  

%  9"D   ! " C "!( " 9 @A !"  ! "   @ " !&! % %!  !@ % 9 (" !" 9& !@ !' )57G 5 !4 ! 321 %!0



' )LQDQFLDO VWDWHPHQW DVVHUWLRQV & 6HOHFWHG DXGLW WHFKQLTXHV % &RVWEHQHILW RI JDWKHULQJ WHFKQLTXHV $ 7LPLQJ RI DXGLW SURFHGXUHV REMHFWLYHV WKDW UHODWH SULPDULO\ WR WKH ,Q GHVLJQLQJ ZULWWHQ DXGLW SODQV DQ DXGLWRU VKRXOG HVWDEOLVK VSHFLILF DXGLW



,Q FRQVLGHULQJ RYHUDOO PDWHULDOLW\ IRU SODQQLQJ SXUSRVHV DQ DXGLWRU EHOLHYHV WKDW PLVVWDWHPHQWV DJJUHJDWLQJ   ZRXOG KDYH D PDWHULDO HIIHFW RQ DQ HQWLW\ V LQFRPH VWDWHPHQW EXW WKDW PLVVWDWHPHQWV ZRXOG KDYH WR DJJUHJDWH   WR PDWHULDOO\ DIIHFW WKH EDODQFH VKHHW 2UGLQDULO\ LW ZRXOG EH DSSURSULDWH WR GHVLJQ DXGLW SURFHGXUHV WKDW ZRXOG EH H[SHFWHG WR GHWHFW PLVVWDWHPHQWV DJJUHJDWLQJ

$   %   &   '  

!#  9"D   ! " C!" 9 % 9  !@  !" 9&   98!  ! & !( ! G 57G 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %!0  



7KH LQGHSHQGHQW DXGLWRUV DXGLW GHVLJQ SUHSDUHG SULRU WR WKH VWDUW RI ILHOGZRUN LV DSSURSULDWHO\ FRQVLGHUHG GRFXPHQWDWLRQ RI

$ 3ODQQLQJ % 6XSHUYLVLRQ & ,QIRUPDWLRQ HYDOXDWLRQ ' 4XDOLW\ DVVXUDQFH



%  9"D   ! " C "!( " 9 @A !"  ! "   @ " !&! % %!  !@ % 9 (" !" 9& !@ !' )57G 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  

%  9"D   ! " C "!( " 9 @A !"  ! "   @ " !&! % %!  !@ % 9 (" !" 9& !@ !' )57G 5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0 



' $VVHVVPHQW RI LQKHUHQW ULVN & $Q XQGHUVWDQGLQJ RI FRQWUROV HVWDEOLVKHG E\ PDQDJHPHQW % 7KH SUHSDUDWLRQ RI D EXGJHW LGHQWLI\LQJ WKH FRVWV RI UHVRXUFHV QHHGHG $ $ UHYLHZ RI PDWHULDO IURP SULRU DXGLWV ,Q WKH SUHSDUDWLRQ RI DQ DXGLW SODQ ZKLFK RI WKH IROORZLQJ LWHPV LV QRW HVVHQWLDO"



7R VDWLVI\ WKH YDOXDWLRQ DVVHUWLRQ ZKHQ DXGLWLQJ DQ LQYHVWPHQW LQ DQRWKHU FRPSDQ\ WKDW LV SXEOLFO\ DQG DFWLYHO\ WUDGHG DQ DXGLWRU PRVW OLNHO\ ZRXOG VHHN WR

$ ,QVSHFW WKH VWRFN FHUWLILFDWHV HYLGHQFLQJ WKH LQYHVWPHQW % ([DPLQH WKH DXGLWHG ILQDQFLDO VWDWHPHQWV RI WKH LQYHVWHH FRPSDQ\ & 5HYLHZ WKH EURNHU V DGYLFH RU FDQFHOHG FKHFN IRU WKH LQYHVWPHQW V DFTXLVLWLRQ ' 2EWDLQ PDUNHW TXRWDWLRQV IURP 7KH :DOO 6WUHHW -RXUQDO RU DQRWKHU LQGHSHQGHQW VRXUFH
!!"   9"D  %1 ! " C !!4 ! %!@ % "( ! !" 9  (" ! 9 !! % @ %! !@ !2!  0 V 57G 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  



&XWRII WHVWV GHVLJQHG WR GHWHFW FUHGLW VDOHV PDGH EHIRUH WKH HQG RI WKH \HDU WKDW KDYH EHHQ UHFRUGHG LQ WKH VXEVHTXHQW \HDU SURYLGH DVVXUDQFH DERXW PDQDJHPHQW V DVVHUWLRQ RI

$ 3UHVHQWDWLRQ DQG GLVFORVXUH % &RPSOHWHQHVV & 5LJKWV DQG REOLJDWLRQV ' ([LVWHQFH
%!0  



:KLFK RI WKH IROORZLQJ DXGLW SURFHGXUHV SUREDEO\ ZRXOG SURYLGH WKH PRVW UHOLDEOH HYLGHQFH FRQFHUQLQJ WKH HQWLW\ V DVVHUWLRQ RI ULJKWV DQG REOLJDWLRQV UHODWHG WR LQYHQWRULHV"

$ 7UDFH WHVW FRXQWV QRWHG GXULQJ WKH SK\VLFDO FRXQW RI LQYHQWRU\ WR WKH VXPPDUL]DWLRQ RI TXDQWLWLHV % ,QVSHFW DJUHHPHQWV IRU HYLGHQFH RI LQYHQWRU\ KHOG RQ FRQVLJQPHQW & 6HOHFW WKH ODVW IHZ VKLSSLQJ DGYLFHV XVHG EHIRUH WKH SK\VLFDO FRXQW DQG GHWHUPLQH ZKHWKHU WKH VKLSPHQWV ZHUH UHFRUGHG DV VDOHV ' ,QVSHFW WKH RSHQ SXUFKDVH RUGHU ILOH IRU VLJQLILFDQW FRPPLWPHQWV WR FRQVLGHU IRU GLVFORVXUH
!!"   9"D  %1 ! " C !!4 ! %!@ % "( ! !" 9  (" ! 9 !! % @ %! !@ !2!  0 V 57G 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  

 %1 ! " C !!4 ! %!@ % "( ! !" 9  (" ! 9 !! % @ %! !@ !2!  0 V 57G 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   "!  9"D



'XULQJ DQ DXGLW RI DQ HQWLW\ V VWRFNKROGHUV HTXLW\ DFFRXQWV WKH DXGLWRU GHWHUPLQHV ZKHWKHU WKHUH DUH UHVWULFWLRQV RQ UHWDLQHG HDUQLQJV UHVXOWLQJ IURP ORDQV DJUHHPHQWV RU VWDWH ODZ 7KLV DXGLW SURFHGXUH PRVW OLNHO\ LV LQWHQGHG WR YHULI\ PDQDJHPHQW V DVVHUWLRQ

$ ([LVWHQFH RU RFFXUUHQFH % &RPSOHWHQHVV & 9DOXDWLRQ RU DOORFDWLRQ ' 3UHVHQWDWLRQ DQG GLVFORVXUH
"!  9"D  %1 ! " C !!4 ! %!@ % "( ! !" 9  (" ! 9 !! % @ %! !@ !2!  0 V 57G 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  



:KLFK RI WKH IROORZLQJ PRVW OLNHO\ ZRXOG JLYH WKH PRVW DVVXUDQFH FRQFHUQLQJ WKH YDOXDWLRQ DVVHUWLRQ RI DFFRXQWV UHFHLYDEOH"

$ 7UDFLQJ DPRXQWV LQ WKH VXEVLGLDU\ OHGJHU WR GHWDLOV RQ VKLSSLQJ GRFXPHQWV % &RPSDULQJ UHFHLYDEOH WXUQRYHU UDWHV WR LQGXVWU\ VWDWLVWLFV IRU UHDVRQDEOHQHVV & ,QTXLULQJ DERXW UHFHLYDEOHV SOHGJHG XQGHU ORDQ DJUHHPHQWV ' $VVHVVLQJ WKH DOORZDQFH IRU XQFROOHFWLEOH DFFRXQWV IRU UHDVRQDEOHQHVV
%!0  

"!  9"D  %1 ! " C !!4 ! %!@ % "( ! !" 9  (" ! 9 !! % @ %! !@ !2!  0 V 57G 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  

!!"   9"D  %1 ! " C !!4 ! %!@ % "( ! !" 9  (" ! 9 !! % @ %! !@ !2!  0 V 57G 5 !4 ! 321 %!0 W G (( !2&!&!E &"" @!!E  



' 9DOXDWLRQ RU DOORFDWLRQ & 3UHVHQWDWLRQ DQG GLVFORVXUH % 5LJKWV DQG REOLJDWLRQV $ ([LVWHQFH RU RFFXUUHQFH DERXW DQG (TXLSPHQW DFFRXQW WR REWDLQ HYLGHQFH FRQFHUQLQJ PDQDJHPHQW V DVVHUWLRQV $Q DXGLWRU PRVW OLNHO\ ZRXOG LQVSHFW DGGLWLRQV WR WKH DXGLW FOLHQW V 3URSHUW\ 3ODQW



:KLFK RI WKH IROORZLQJ LV D VXEVWDQWLYH WHVW WKDW DQ DXGLWRU PRVW OLNHO\ ZRXOG SHUIRUP WR YHULI\ WKH H[LVWHQFH DQG YDOXDWLRQ RI UHFRUGHG DFFRXQWV SD\DEOH"

$ ,QYHVWLJDWLQJ WKH RSHQ SXUFKDVH RUGHU ILOH WR DVFHUWDLQ WKDW SUHQXPEHUHG SXUFKDVH RUGHUV DUH XVHG DQG DFFRXQWHG IRU % 5HFHLYLQJ WKH FOLHQW V XQRSHQHG PDLO IRU D UHDVRQDEOH SHULRG RI WLPH DIWHU \HDU HQG WR VHDUFK IRU XQUHFRUGHG YHQGRU V LQYRLFHV & 9RXFKLQJ VHOHFWHG HQWULHV LQ WKH DFFRXQWV SD\DEOH VXEVLGLDU\ OHGJHU WR SXUFKDVH RUGHUV DQG UHFHLYLQJ UHSRUWV ' &RQILUPLQJ DFFRXQWV SD\DEOH EDODQFHV ZLWK NQRZQ YHQGRUV DQG VXSSOLHUV ZKR KDYH ]HUR EDODQFHV DW \HDUHQG
!!"   9"D  %1 ! " C !!4 ! %!@ % "( ! !" 9  (" ! 9 !! % @ %! !@ !2!  0 V 57G 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  



$Q DXGLWRU PRVW OLNHO\ ZRXOG UHYLHZ DQ HQWLW\ V SHULRGLF DFFRXQWLQJ IRU WKH QXPHULFDO VHTXHQFH RI VKLSSLQJ GRFXPHQWV DQG LQYRLFHV WR VXSSRUW PDQDJHPHQW V ILQDQFLDO VWDWHPHQW DVVHUWLRQ RI

$ 5LJKWV DQG REOLJDWLRQV % &RPSOHWHQHVV & 3UHVHQWDWLRQ DQG GLVFORVXUH ' ([LVWHQFH RU RFFXUUHQFH
!!"   9"D  %1 ! " C !!4 ! %!@ % "( ! !" 9  (" ! 9 !! % @ %! !@ !2!  0 V 57G 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  



,Q DXGLWLQJ DFFUXHG OLDELOLWLHV DQ DXGLWRU V SURFHGXUHV PRVW OLNHO\ ZRXOG IRFXV SULPDULO\ RQ PDQDJHPHQW V DVVHUWLRQ RI

$ ([LVWHQFH RU RFFXUUHQFH % &RPSOHWHQHVV & 3UHVHQWDWLRQ DQG GLVFORVXUH ' 9DOXDWLRQ RU DOORFDWLRQ
!2&!&!E &"" @!!E   %!0  

"!  9"D  %1 ! " C !!4 ! %!@ % "( ! !" 9  (" ! 9 !! % @ %! !@ !2!  0 V 57G 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  

"!  9"D  %1 ! " C !!4 ! %!@ % "( ! !" 9  (" ! 9 !! % @ %! !@ !2!  0 V 57G 5 !4 ! 321 %!0 W G ((



' 9DOXDWLRQ & ([LVWHQFH RU RFFXUUHQFH % &RPSOHWHQHVV $ 5LJKWV DQG REOLJDWLRQV OLNHO\ REWDLQHG HYLGHQFH FRQFHUQLQJ PDQDJHPHQW V DVVHUWLRQ RI WKH LWHPV VHOHFWHG DW WKH ZDUHKRXVH DQG FRXQWHG WKHP 7KLV SURFHGXUH PRVW REVHUYLQJ WKH FOLHQW V SK\VLFDO LQYHQWRU\ DW WKH ZDUHKRXVH 7KH DXGLWRU WKHQ IRXQG $Q DXGLWRU VHOHFWHG LWHPV IRU WHVW FRXQWV IURP D FOLHQW V LQYHQWRU\ OLVWLQJ EHIRUH



$Q DXGLWRU WHVWV DQ HQWLW\ V FRQWURO WKDW PDWFKHV VKLSSLQJ GRFXPHQWV WR VDOHV LQYRLFHV EHIRUH WKH\ DUH UHFRUGHG LQ WKH ILQDQFLDO VWDWHPHQWV DV UHYHQXH LQ VXSSRUW RI PDQDJHPHQW V ILQDQFLDO VWDWHPHQW DVVHUWLRQ RI

$ 9DOXDWLRQ RU DOORFDWLRQ % 3UHVHQWDWLRQ DQG GLVFORVXUH & ([LVWHQFH RU RFFXUUHQFH ' 5LJKWV DQG REOLJDWLRQV
"!  9"D  %1 ! " C !!4 ! %!@ % "( ! !" 9  (" ! 9 !! % @ %! !@ !2!  0 V 57G 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  



:KLFK RI WKH IROORZLQJ DXGLW SURFHGXUHV ZRXOG DQ DXGLWRU PRVW OLNHO\ SHUIRUP WR WHVW FRQWUROV UHODWLQJ WR PDQDJHPHQW V YDOXDWLRQ DVVHUWLRQ IRU DFFRXQWV UHFHLYDEOH"

$ 9HULI\ WKDW H[WHQVLRQV DQG IRRWLQJV RQ WKH HQWLW\ V VDOHV LQYRLFHV DQG PRQWKO\ FXVWRPHU VWDWHPHQWV KDYH EHHQ UHFRPSXWHG % ,QVSHFW WKH HQWLW\ V UHSRUWV RI SUHQXPEHUHG VKLSSLQJ GRFXPHQWV WKDW KDYH QRW EHHQ UHFRUGHG LQ WKH VDOHV MRXUQDO & &RPSDUH WKH LQYRLFHG SULFHV RQ SUHQXPEHUHG VDOHV LQYRLFHV WR WKH HQWLW\ V DXWKRUL]HG SULFH OLVW ' ,QTXLUH DERXW WKH HQWLW\ V FUHGLWJUDQWLQJ SROLFLHV DQG WHVW ZKHWKHU FUHGLW FKHFNV KDYH EHHQ FRQVLVWHQWO\ DSSOLHG WR QHZ FXVWRPHUV
 %1 ! " C !!4 ! %!@ % "( ! !" 9  (" ! 9 !! % @ %! !@ !2!  0 V 57G 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0   !!"   9"D

Q 6 (( !2&!&!E &"" @!!E   %!0  

"!  9"D  %1 ! " C !!4 ! %!@ % "( ! !" 9  (" ! 9 !! % @ %! !@ !2!  0 V 57G 5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  





' ([LVWHQFH & $OORFDWLRQ % 9DOXDWLRQ $ &RPSOHWHQHVV UHJDUGLQJ ZKLFK PDQDJHPHQW DVVHUWLRQ" 7KH FRQILUPDWLRQ RI DQ DFFRXQWV UHFHLYDEOH EDODQFH SURYLGHV SULPDU\ HYLGHQFH ' &RPSOHWHQHVV & $OORFDWLRQ % 9DOXDWLRQ $ ([LVWHQFH PDQDJHPHQW DVVHUWLRQ" 7KH FRQILUPDWLRQ RI D FDVK EDODQFH SURYLGHV SULPDU\ HYLGHQFH UHJDUGLQJ ZKLFK



,Q WHVWLQJ WKH FRPSOHWHQHVV DVVHUWLRQ IRU D OLDELOLW\ DFFRXQW DQ DXGLWRU RUGLQDULO\ ZRUNV IURP WKH

$ )LQDQFLDO VWDWHPHQWV WR WKH SRWHQWLDOO\ XQUHFRUGHG LWHPV % 3RWHQWLDOO\ XQUHFRUGHG LWHPV WR WKH ILQDQFLDO VWDWHPHQWV & $FFRXQWLQJ UHFRUGV WR WKH VXSSRUWLQJ HYLGHQFH ' 7ULDO EDODQFH WR WKH VXEVLGLDU\ OHGJHU
!!"   9"D  %1 ! " C !!4 ! %!@ % "( ! !" 9  (" ! 9 !! % @ %! !@ !2!  0 V 57G 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  



$Q DXGLWRU V SXUSRVH LQ DXGLWLQJ WKH LQIRUPDWLRQ FRQWDLQHG LQ WKH SHQVLRQ IRRWQRWH PRVW OLNHO\ LV WR REWDLQ HYLGHQFH FRQFHUQLQJ PDQDJHPHQW V DVVHUWLRQ DERXW

$ 5LJKWV DQG REOLJDWLRQV % ([LVWHQFH & 3UHVHQWDWLRQ DQG GLVFORVXUH ' 9DOXDWLRQ


"!  9"D  %1 ! " C !!4 ! %!@ % "( ! !" 9  (" ! 9 !! % @ %! !@ !2!  0 V 57G 5 !4 ! 321 %!0

!4  !&! % %Q7 !  9"D   ! " C!&! % %!  % %!2 !"( !2 !$! " @ !4  !&! % %!! 9 ! S! !@ !2!  0 6 57G 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  

"!  9"D  %1 ! " C !!4 ! %!@ % "( ! !" 9  (" ! 9 !! % @ %! !@ !2!  0 V 57G 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0 



5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN ' $OO RI WKH DERYH & 7R REWDLQ FRSLHV RI VRPH RU DOO RI WKH SUHGHFHVVRU DXGLWRUV DXGLW % 7R FRQGXFW LQWHUYLHZV ZLWK WKH SDUWQHU DQG PDQDJHU LQ FKDUJH RI WKH $ 7R WDNH UHVSRQVLELOLW\ IRU REWDLQLQJ WKH FOLHQW V FRQVHQW IRU WKH SUHGHFHVVRU WR VKRXOG H[SHFW :KHQ LQLWLDWLQJ FRPPXQLFDWLRQV ZLWK SUHGHFHVVRU DXGLWRUV SURVSHFWLYH DXGLWRUV SUHGHFHVVRU SXEOLF DFFRXQWLQJ ILUP V HQJDJHPHQW JLYH LQIRUPDWLRQ DERXW SULRU DXGLWV GRFXPHQWDWLRQ



:KHQ SODQQLQJ DQ DXGLW ZKLFK RI WKH IROORZLQJ LV QRW D IDFWRU WKDW DIIHFWV DXGLWRUV GHFLVLRQV DERXW WKH TXDQWLW\ W\SH DQG FRQWHQW RI DXGLW GRFXPHQWDWLRQ"

$ 7KH DXGLWRUV QHHG WR GRFXPHQW FRPSOLDQFH ZLWK JHQHUDOO\ DFFHSWHG DXGLWLQJ VWDQGDUGV % 7KH H[LVWHQFH RI QHZ VDOHV FRQWUDFWV LPSRUWDQW IRU WKH FOLHQW V EXVLQHVV & 7KH DXGLWRUV MXGJPHQW DERXW WKHLU LQGHSHQGHQFH ZLWK UHJDUG WR WKH FOLHQW ' 7KH DXGLWRUV MXGJPHQWV DERXW PDWHULDOLW\ 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

%  9"D  %1 ! " C "!( " 9 @A !"  ! "   @ " !&! % %!  !@ % 9 (" !" 9& !@ !' )57G 5 !4 ! 321 %!0 & !# ) ((  99 &"" %$# "!   %$@D    



$XGLW GRFXPHQWDWLRQ WKDW VKRZV WKH GHWDLOHG HYLGHQFH DQG SURFHGXUHV UHJDUGLQJ WKH EDODQFH LQ WKH DFFXPXODWHG GHSUHFLDWLRQ DFFRXQW IRU WKH \HDU XQGHU DXGLW ZLOO EH IRXQG LQ WKH

$ &XUUHQW ILOH HYLGHQFH DXGLW GRFXPHQWDWLRQ % 3HUPDQHQW ILOH DXGLW GRFXPHQWDWLRQ & $GPLQLVWUDWLYH DXGLW GRFXPHQWDWLRQ LQ WKH FXUUHQW ILOH ' 3ODQQLQJ PHPRUDQGXP LQ WKH FXUUHQW ILOH 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

"!&"   9"D  %1 ! " C" !&"  ( " !"  &"( ! 9" 9 !@ 2 !&  @A !( ! I 57G 5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  



$Q DXGLWRU V SHUPDQHQW ILOH DXGLW GRFXPHQWDWLRQ PRVW OLNHO\ ZLOO FRQWDLQ

$ ,QWHUQDO FRQWURO DQDO\VLV IRU WKH FXUUHQW \HDU % 7KH PRVW UHFHQW HQJDJHPHQW OHWWHU & 0HPRUDQGD RI FRQIHUHQFH ZLWK PDQDJHPHQW ' ([FHUSWV RI WKH FRUSRUDWH FKDUWHU DQG E\ODZV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

"!&"   9"D  %1 ! " C" !&"  ( " !"  &"( ! 9" 9 !@ 2 !&  @A !( ! I 57G 5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  



:KLFK RI WKH IROORZLQJ LV QRW D EHQHILW FODLPHG IRU WKH SUDFWLFH RI GHWHUPLQLQJ PDWHULDOLW\ LQ WKH LQLWLDO SODQQLQJ VWDJH RI DQ DXGLW"

$ %HLQJ DEOH WR ILQHWXQH WKH DXGLW ZRUN IRU HIIHFWLYHQHVV DQG HIILFLHQF\ % $YRLGLQJ WKH SUREOHP RI GRLQJ PRUH ZRUN WKDQ QHFHVVDU\ RYHUDXGLWLQJ  & %HLQJ DEOH WR GHFLGH HDUO\ ZKDW W\SH RI DXGLW RSLQLRQ WR LVVXH ' $YRLGLQJ WKH SUREOHP RI GRLQJ WRR OLWWOH ZRUN XQGHUDXGLWLQJ  5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

!#  9"D  %1 ! " C!" 9 % 9  !@  !" 9&   98!  ! & !( ! G 57G 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &""  $E    %$@D    

%""@!D " &"(  9"D  %1 ! " C!" 9  !@ (" !((! !@ !4 " 9& " ! !2  D A "@ !2!  !&"4 ! ! 9&" H ! !@ " ! ! !"  "@ " @ % 9 ( " ! &   0 X 57G 5 !4 ! 321 %!0 Q 6 (( 99 &"" %""@!D % %!4 !0    %""@!D % %!4 !0   %""@!D



5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN ' 'UDIWLQJ D SODQQLQJ PHPRUDQGXP & 3UHSDULQJ D FRPSDULVRQ RI FXUUHQW\HDU H[SHQVHV ZLWK WKRVH IURP WKH SUHYLRXV % 3UHSDULQJ DQ DXGLW SODQ $ 7HVWLQJ LQWHUQDO FRQWUROV RYHU FRPSXWHUL]HG DFFRXQWLQJ DSSOLFDWLRQV DFWLYLWLHV" 6SUHDGVKHHW VRIWZDUH ZRXOG EH PRVW XVHIXO IRU ZKLFK RI WKH IROORZLQJ DXGLW \HDU



:KLFK RI WKH IROORZLQJ LV DQ DGYDQWDJH RI FRPSXWHUDVVLVWHG DXGLW WHFKQLTXHV &$$7V "

$ 7KH &$$7V SURJUDPV DUH DOO ZULWWHQ LQ RQH FRPSXWHU ODQJXDJH % 7KH VRIWZDUH FDQ EH XVHG IRU DXGLWV RI FOLHQWV WKDW XVH GLIIHULQJ FRPSXWHU HTXLSPHQW DQG ILOH IRUPDWV & 7KH XVH RI &$$7V KDV UHGXFHG WKH QHHG IRU WKH DXGLWRU WR VWXG\ LQSXW FRQWUROV IRU FRPSXWHUUHODWHG SURFHGXUHV ' 7KH XVH RI &$$7V FDQ EH VXEVWLWXWHG IRU D UHODWLYHO\ ODUJH SDUW RI WKH UHTXLUHG WHVWLQJ 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

D  9"D  %1 ! " C!" 9  !@ (" !((! !@ !4 " 9& " ! !2  D A "@ !2!  !&"4 ! ! 9&" H ! !@ " ! ! !" "@ " @ % 9 ( " ! &   0 X 57G 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" %""@!D % %!4 !0    %""@!D % %!4 !0   %""@!D



$ SULPDU\ DGYDQWDJH RI XVLQJ &$$7V LQ WKH DXGLW RI DQ DGYDQFHG FRPSXWHUL]HG V\VWHP LV WKDW LW HQDEOHV WKH DXGLWRU WR

$ 6XEVWDQWLDWH WKH DFFXUDF\ RI GDWD WKURXJK VHOIFKHFNLQJ GLJLWV DQG KDVK WRWDOV % 8WLOL]H WKH VSHHG DQG DFFXUDF\ RI WKH FRPSXWHU & 9HULI\ WKH SHUIRUPDQFH RI PDFKLQH RSHUDWLRQV WKDW OHDYH YLVLEOH HYLGHQFH RI RFFXUUHQFH ' *DWKHU DQG VWRUH ODUJH TXDQWLWLHV RI VXSSRUWLYH DXGLW HYLGHQFH LQ PDFKLQH UHDGDEOH IRUP 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

D  9"D  %1 ! " C!" 9  !@ (" !((! !@ !4 " 9& " ! !2  D A "@ !2!  !&"4 ! ! 9&" H ! !@ " ! ! !" "@ " @ % 9 ( " ! &   0 X 57G 5 !4 ! 321 %!0 & !# ) ((  99 &"" %""@!D % %!4 !0    %""@!D % %!4 !0   %""@!D



$Q DXGLW HQJDJHPHQW OHWWHU VKRXOG QRUPDOO\ LQFOXGH ZKLFK RI WKH IROORZLQJ PDWWHUV RI DJUHHPHQW EHWZHHQ WKH DXGLWRU DQG WKH FOLHQW"

$ 6FKHGXOHV DQG DQDO\VHV WR EH SUHSDUHG E\ WKH FOLHQW V HPSOR\HHV % 0HWKRGV RI VWDWLVWLFDO VDPSOLQJ WKH DXGLWRU ZLOO XVH & 6SHFLILFDWLRQ RI OLWLJDWLRQ LQ SURJUHVV DJDLQVW WKH FOLHQW ' &OLHQW UHSUHVHQWDWLRQV DERXW DYDLODELOLW\ RI DOO PLQXWHV RI PHHWLQJV RI WKH ERDUG RI GLUHFWRUV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

%  9"D  %1 ! " C "!( " 9 @A !"  ! "   @ " !&! % %!  !@ % 9 (" !" 9& !@ !' )57G 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  



:KHQ DXGLWLQJ 9DQGDOD\ -HZHOU\ &RVWDQ]D &3$ ZDV QRW IDPLOLDU ZLWK WKH TXDOLW\ DQG FXW RI WKH FRPSDQ\ V SUHFLRXV MHZHO LQYHQWRU\ 7R DGGUHVV WKLV VKRUWFRPLQJ &RVWDQ]D KLUHG %HQHV DQ H[SHUW LQ MHZHO YDOXDWLRQ WR DVVLVW LQ WKH LQYHQWRU\ YDOXDWLRQ 6KRXOG &RVWDQ]D UHIHU WR %HQHV V ZRUN LQ WKH DXGLW UHSRUW"

$ <HV WKH DXGLWRUV UHSRUW VKRXOG PHQWLRQ WKH IDFW WKDW D VSHFLDOLVW ZDV XVHG % 7KH DXGLWRUV UHSRUW VKRXOG PHQWLRQ WKH XVH RI WKH VSHFLDOLVW RQO\ ZKHQ WKH VSHFLDOLVW V ILQGLQJV DIIHFW WKH DXGLWRUV FRQFOXVLRQV & 7KH XVH RI D VSHFLDOLVW QHHG QRW EH PHQWLRQHG LI WKH DXGLWRUV GHFLGH QRW WR WDNH UHVSRQVLELOLW\ IRU WKH VSHFLDOLVW V ILQGLQJV ' 7KH DXGLWRUV UHSRUW VKRXOG PHQWLRQ WKH VSHFLDOLVW RQO\ LI 9DQGDOD\ DJUHHV ZLWK WKH VSHFLDOLVW V ILQGLQJV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

! 9  9"D  %1 ! " C "!( " 9 @A !"  ! "   @ " !&! % %!  !@ % 9 (" !" 9& !@ !' )57G 5 !4 ! 321 %!0 W G (( 99 &""  $E    !&! %# !"!E  



:KLFK RI WKH IROORZLQJ FRPPXQLFDWLRQV LV PRVW OLNHO\ WR EH ZULWWHQ EHIRUH WKH EDODQFHVKHHW GDWH"

$ $ UHSRUW WR WKH DXGLW FRPPLWWHH RQ WKH UHVXOWV RI WHVWLQJ RI LQWHUQDO FRQWURO RYHU FDVK UHFHLSWV % &RQILUPDWLRQ OHWWHUV WR YHQGRUV FRQILUPLQJ WKH DPRXQWV WKH\ RZH WR WKH FOLHQW & $Q DWWRUQH\ V OHWWHU UHJDUGLQJ FRQWLQJHQW OLDELOLWLHV ' $Q HQJDJHPHQW OHWWHU 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

%  9"D  %1 ! " C "!( " 9 @A !"  ! "   @ " !&! % %!  !@ % 9 (" !" 9& !@ !' )57G 5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  "&&"



:KLFK RI WKH IROORZLQJ SURFHGXUHV ZRXOG PRVW OLNHO\ EH SHUIRUPHG GXULQJ SODQQLQJ"

$ 6XUSULVH FRXQWV RI WKH FOLHQW V SHWW\ FDVK IXQG % 5HSRUWLQJ LQWHUQDO FRQWURO GHILFLHQFLHV WR WKH DXGLW FRPPLWWHH & 3HUIRUPLQJ D VHDUFK IRU XQUHFRUGHG OLDELOLWLHV ' ,GHQWLI\LQJ UHODWHG SDUWLHV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

%  9"D  %1 ! " C "!( " 9 @A !"  ! "   @ " !&! % %!  !@ % 9 (" !" 9& !@ !' )57G 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  



3ULRU WR DFFHSWLQJ D QHZ DXGLW HQJDJHPHQW D SXEOLF DFFRXQWLQJ ILUP VKRXOG

$ $WWHPSW WR FRQWDFW WKH SUHGHFHVVRU DXGLWRUV % (YDOXDWH WKH LQWHJULW\ RI PDQDJHPHQW & $VVHVV WKH ILUP V UHVRXUFHV WR HQVXUH WKDW WKH\ DUH VXIILFLHQW WR SHUPLW WKHP WR DFFHSW WKH HQJDJHPHQW ' $OO RI WKH DERYH 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

!4  !&! % %Q7 !  9"D  %1 ! " C!&! % %!  % %!2 !"( !2 !$! " @ !4  !&! % %!! 9 ! S! !@ !2!  0 6 57G 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  



$Q DXGLW SODQ FRQWDLQV

$ 6SHFLILFDWLRQV RI DXGLW VWDQGDUGV UHOHYDQW WR WKH ILQDQFLDO VWDWHPHQWV EHLQJ DXGLWHG % 6SHFLILFDWLRQV RI SURFHGXUHV WKH DXGLWRUV EHOLHYH DSSURSULDWH IRU WKH ILQDQFLDO VWDWHPHQWV XQGHU DXGLW & 'RFXPHQWDWLRQ RI WKH DVVHUWLRQV XQGHU DXGLW WKH HYLGHQFH REWDLQHG DQG WKH FRQFOXVLRQV UHDFKHG ' 5HFRQFLOLDWLRQ RI WKH DFFRXQW EDODQFHV LQ WKH ILQDQFLDO VWDWHPHQWV ZLWK WKH DFFRXQW EDODQFHV LQ WKH FOLHQW V JHQHUDO OHGJHU 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

!!"   9"D  %1 ! " C !!4 ! %!@ % "( ! !" 9  (" ! 9 !! % @ %! !@ !2!  0 V 57G 5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  



7KH UHYHQXH F\FOH RI D FRPSDQ\ JHQHUDOO\ LQFOXGHV ZKLFK DFFRXQWV"

$ ,QYHQWRU\ DFFRXQWV SD\DEOH DQG JHQHUDO H[SHQVHV % ,QYHQWRU\ JHQHUDO H[SHQVHV DQG SD\UROO & &DVK DFFRXQWV UHFHLYDEOH DQG VDOHV ' &DVK QRWHV SD\DEOH DQG FDSLWDO VWRFN 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN



:KHQ DXGLWLQJ WKH H[LVWHQFH DVVHUWLRQ IRU DQ DVVHW DXGLWRUV SURFHHG IURP WKH

$ )LQDQFLDO VWDWHPHQW DPRXQWV EDFN WR WKH SRWHQWLDOO\ XQUHFRUGHG LWHPV % 3RWHQWLDOO\ XQUHFRUGHG LWHPV IRUZDUG WR WKH ILQDQFLDO VWDWHPHQW DPRXQWV & *HQHUDO OHGJHU EDFN WR WKH VXSSRUWLQJ RULJLQDO WUDQVDFWLRQ GRFXPHQWV ' 6XSSRUWLQJ RULJLQDO WUDQVDFWLRQ GRFXPHQWV WR WKH JHQHUDO OHGJHU 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

! %  "  9"D  %1 ! " C !!4 ! %!@ % "( ! !" 9  (" ! 9 !! % @ %! !@ !2!  0 V 57G 5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0   

"!  9"D  %1 ! " C !!4 ! %!@ % "( ! !" 9  (" ! 9 !! % @ %! !@ !2!  0 V 57G 5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!   %!0  

!!"   9"D  %1 ! " C !!4 ! %!@ % "( ! !" 9  (" ! 9 !! % @ %! !@ !2!  0 V 57G 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0 



5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN ' ([LVWHQFH DQG FRPSOHWHQHVV & ([LVWHQFH DQG ULJKWV DQG REOLJDWLRQV % 9DOXDWLRQ DQG ULJKWV DQG REOLJDWLRQV $ &RPSOHWHQHVV DQG YDOXDWLRQ DVVHUWLRQV" &RQILUPDWLRQV RI DFFRXQWV UHFHLYDEOH SURYLGH HYLGHQFH SULPDULO\ DERXW ZKLFK WZR

 :LWK UHVSHFW WR WKH FRQFHSW RI PDWHULDOLW\ ZKLFK RQH RI WKH IROORZLQJ VWDWHPHQWV LV FRUUHFW"

$ 0DWHULDOLW\ GHSHQGV RQO\ RQ WKH GROODU DPRXQW RI DQ LWHP UHODWLYH WR RWKHU LWHPV LQ WKH ILQDQFLDO VWDWHPHQWV % 0DWHULDOLW\ GHSHQGV RQ WKH QDWXUH RI D WUDQVDFWLRQ UDWKHU WKDQ WKH GROODU DPRXQW RI WKH WUDQVDFWLRQ & 0DWHULDOLW\ LV GHWHUPLQHG E\ UHIHUHQFH WR $,&3$ JXLGHOLQHV ' 0DWHULDOLW\ LV D PDWWHU RI SURIHVVLRQDO MXGJPHQW 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

!#  9"D  %1 ! " C!" 9 % 9  !@  !" 9&   98!  ! & !( ! G 57G 5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!   %!0  

 :KHQ HYDOXDWLQJ ZKHWKHU DFFRXQWLQJ HVWLPDWHV PDGH E\ PDQDJHPHQW DUH UHDVRQDEOH WKH DXGLW WHDP ZRXOG EH PRVW LQWHUHVWHG LQ ZKLFK RI WKH IROORZLQJ"

$ .H\ IDFWRUV WKDW DUH FRQVLVWHQW ZLWK SULRU SHULRGV % $VVXPSWLRQV WKDW DUH VLPLODU WR LQGXVWU\ JXLGHOLQHV & 0HDVXUHPHQWV WKDW DUH REMHFWLYH DQG QRW VXVFHSWLEOH WR ELDV ' (YLGHQFH RI D FRQVHUYDWLYH V\VWHPDWLF ELDV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

!!"   9"D  %1 ! " C !!4 ! %!@ % "( ! !" 9  (" ! 9 !! % @ %! !@ !2!  0 V 57G 5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      

 *HQHUDOO\ DFFHSWHG DXGLWLQJ VWDQGDUGV UHTXLUH WKDW DXGLWRUV DOZD\V SUHSDUH DQG XVH

$ $ ZULWWHQ SODQQLQJ PHPRUDQGXP H[SODLQLQJ WKH DXGLWRUV XQGHUVWDQGLQJ RI WKH FOLHQW V EXVLQHVV % $ ZULWWHQ FOLHQW FRQVHQW WR GLVFXVV DXGLW PDWWHUV ZLWK SURVSHFWLYH DXGLWRUV & $ ZULWWHQ DXGLW SODQ ' 7KH ZULWWHQ WLPH EXGJHWV DQG VFKHGXOHV IRU SHUIRUPLQJ HDFK DXGLW 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

%  9"D  %1 ! " C "!( " 9 @A !"  ! "   @ " !&! % %!  !@ % 9 (" !" 9& !@ !' )57G 5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  

 :KLFK RI WKH IROORZLQJ HQJDJHPHQW SODQQLQJ SURFHGXUHV ZRXOG PRVW OLNHO\ DVVLVW WKH DXGLWRU LQ LGHQWLI\LQJ UHODWHGSDUW\ WUDQVDFWLRQV EHIRUH WKH EDODQFHVKHHW GDWH"

$ ,QWHUYLHZLQJ LQWHUQDO DXGLWRUV DERXW WKHLU UHSRUWLQJ UHVSRQVLELOLWLHV % 5HYLHZLQJ DFFRXQWLQJ UHFRUGV IRU UHFXUULQJ WUDQVDFWLRQV RFFXUULQJ QHDU \HDU HQG & ,QVSHFWLQJ FRPPXQLFDWLRQV ZLWK WKH FOLHQW V OHJDO FRXQVHO UHJDUGLQJ UHFRUGHG FRQWLQJHQW OLDELOLWLHV ' 6FDQQLQJ WKH PLQXWHV IRU VLJQLILFDQW WUDQVDFWLRQV ZLWK PHPEHUV RI WKH ERDUG RI GLUHFWRUV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

%  9"D  %1 ! " C "!( " 9 @A !"  ! "   @ " !&! % %!  !@ % 9 (" !" 9& !@ !' )57G 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  

!4  !&! % %Q7 !  9"D  %1 ! " C!&! % %!  % %!2 !"(!2 !$! " @ !4  !&! % %!! 9 ! S! !@ !2!  0 6 57G 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  

 $Q DXGLW HQJDJHPHQW OHWWHU VKRXOG QRUPDOO\ H[FOXGH WKH IROORZLQJ PDWWHU RI

5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH ' 7\SH RI RSLQLRQ WR EH SURGXFHG & 6FKHGXOHV WR EH SUHSDUHG E\ FOLHQW % 7HUPV RI WKH HQJDJHPHQW $ )HHV WR EH FKDUJHG DJUHHPHQW EHWZHHQ WKH SXEOLF DFFRXQWLQJ ILUP DQG WKH FOLHQW

 7KH WLPH UHSRUWV DUH UHFRUGHG E\ EXGJHW FDWHJRULHV IRU DOO WKH IROORZLQJ SXUSRVHV H[FHSW IRU

$ 3URYLGLQJ HYLGHQFH WKDW WKH DXGLW SODQ ZDV VDWLVILHG % (YDOXDWLQJ WKH HIILFLHQF\ RI WKH DXGLW WHDP PHPEHUV & &RPSLOLQJ D UHFRUG IRU ELOOLQJ WKH FOLHQW ' &RPSLOLQJ D UHFRUG IRU SODQQLQJ WKH QH[W DXGLW 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

%  9"D  %1 ! " C "!( " 9 @A !"  ! "   @ " !&! % %!  !@ % 9 (" !" 9& !@ !' )57G 5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" !&!!#   !&! %# !"!E  

%  9"D  %1 ! " C "!( " 9 @A !"  ! "   @ " !&! % %!  !@ % 9 (" !" 9& !@ !' )57G 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  

 )RU DOO DXGLWV RI ILQDQFLDO VWDWHPHQWV ILOHG ZLWK WKH 6HFXULWLHV DQG ([FKDQJH

5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH ' &RPSXWHUDVVLVWHG DXGLW WHFKQLTXHV & (OHFWURQLF GRFXPHQWDWLRQ % $ VHFRQG DXGLW SDUWQHU $ $ FRPSXWHU VSHFLDOLVW &RPPLVVLRQ ZKLFK RI WKH IROORZLQJ LV UHTXLUHG"

%  9"D  %1 ! " C "!( " 9 @A !"  ! "   @ " !&! % %!  !@ % 9 (" !" 9& !@ !' )57G 5 !4 ! 321 %!0 Q 6 (( 99 &"" !&!!#   !&! %# !"!E  

 :KLFK RI WKH IROORZLQJ LV XVHG WR PDLQWDLQ FRQWURO RI WKH DXGLW DQG HQVXUH WKDW LW LV

5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH ' $QDO\WLFDO SURFHGXUHV & 7LPH EXGJHW % 7HUPLQDWLRQ OHWWHU $ (QJDJHPHQW OHWWHU FRPSOHWHG RQ D WLPHO\ EDVLV"

 :KLFK RI WKH IROORZLQJ LV QRW DQ H[DPSOH RI HDUO\ LQIRUPDWLRQJDWKHULQJ DFWLYLWLHV"

$ 5HYLHZ RI WKH FRUSRUDWH FKDUWHU DQG E\ODZV % 5HYLHZ RI FRQWUDFWV DJUHHPHQWV DQG OHJDO SURFHHGLQJV & 5HDGLQJ DQG VWXG\LQJ WKH PLQXWHV RI WKH PHHWLQJV RI GLUHFWRUV DQG FRPPLWWHHV RI WKH ERDUG RI GLUHFWRUV ' 3UHSDULQJ D WLPH EXGJHW 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

!4  !&! % %Q7 !  9"D  %1 ! " C!&! % %!  % %!2 !"( !2 !$! " @ !4  !&! % %!! 9 ! S! !@ !2!  0 6 57G 5 !4 ! 321 %!0 Q 6 (( 99 &""  $E    %!0  

%""@!D " &"(  9"D  %1 ! " C!" 9  !@ (" !((! !@ !4 " 9& " ! !2  D A "@ !2!  !&"4 ! ! 9&" H ! !@ " ! ! !" "@ " @ % 9 ( " ! &   0 X 57G 5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" %""@!D % %!4 !0    %""@!D % %!4 !0   %""@!D

 ,Q D FRPSXWHUL]HG LQIRUPDWLRQ V\VWHP XQLIRUP SURFHVVLQJ RI WUDQVDFWLRQV

5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH ' $OZD\V OHDYHV DQ DXGLW WUDLO & 6XEMHFWV VLPLODU WUDQVDFWLRQV WR WKH VDPH SURFHVVLQJ LQVWUXFWLRQV % 5HTXLUHV WKDW D FRPSDQ\ XVH WKH VDPH SURJUDP IRU DOO IXQFWLRQV $ 0HDQV WKDW WUDQVDFWLRQV ZLOO QHYHU EH SURFHVVHG LQFRUUHFWO\

 $XGLWLQJ VWDQGDUGV GR QRW UHTXLUH WKDW GRFXPHQWDWLRQ VKRZ WKDW

$ ,W FRQIRUPV WR $,&3$ PRGHO SDSHUV % 7KH ZRUN ZDV DGHTXDWHO\ SODQQHG DQG VXSHUYLVHG & 7KH FOLHQW V DFFRXQWLQJ UHFRUGV DJUHH RU UHFRQFLOH ZLWK ILQDQFLDO VWDWHPHQWV ' 6XIILFLHQW DSSURSULDWH HYLGHQWLDO PDWWHU ZDV REWDLQHG 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 :KLFK RI WKH IROORZLQJ FDQ &$$7V QRW GR"

$ 6FDQ LQYHQWRU\ TXDQWLWLHV IRU QHJDWLYH EDODQFHV % 'HWHUPLQH WKH UHDVRQDEOHQHVV RI WKH DOORZDQFH IRU GRXEWIXO DFFRXQWV & 5HFDOFXODWH GHSUHFLDWLRQ ' 6HOHFW FXVWRPHUV DFFRXQWV UHFHLYDEOH IRU FRQILUPDWLRQ 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

"!&"   9"D  %1 ! " C" !&"  ( " !"  &"( ! 9" 9 !@ 2 !&  @A !( ! I 57G 5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0   %""@!D

! %  "  9"D  %1 ! " C !!4 ! %!@ % "( ! !" 9  (" ! 9 !! % @ %! !@ !2!  0 V 57G 5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  

D  9"D  %1 ! " C!" 9  !@ (" !((! !@ !4 " 9& " ! !2  D A "@ !2!  !&"4 ! ! 9&" H ! !@ " ! ! !" "@ " @ % 9 ( " ! &   0 X 57G 5 !4 ! 321 %!0 & !# ) ((  99 &"" %""@!D % %!4 !0    %""@!D % %!4 !0  

 7KH PDMRU F\FOHV WKDW DXGLWRUV W\SLFDOO\ JURXS DFFRXQWV E\ GR QRW LQFOXGH

5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH ' $VVHWV DQG OLDELOLWLHV & )LQDQFH DQG LQYHVWPHQW % 3URGXFWLRQ DQG FRQYHUVLRQ $ 5HYHQXH DQG FROOHFWLRQ

 3K\VLFDO REVHUYDWLRQ E\ DQ DXGLW WHDP ZRXOG LQFOXGH

$ ([DPLQDWLRQ RI D VDOHV LQYRLFH % 5HFDOFXODWLRQ RI GHSUHFLDWLRQ & ([DPLQDWLRQ RI VHFXULWLHV FHUWLILFDWHV ' 6FDQQLQJ RI WKH H[SHQVH DFFRXQWV IRU XQXVXDO WUDQVDFWLRQV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 7KH FRQFHSW RI PDWHULDOLW\ LV QRW XVHG E\ DXGLWRUV DV D JXLGH WR

$ 3ODQQLQJ WKH DXGLW SODQ % (YDOXDWLQJ WKH HYLGHQFH & $SSO\LQJ WKH UHVSRQVLELOLWLHV SULQFLSOH ' 0DNLQJ GHFLVLRQV DERXW WKH DXGLW UHSRUW 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

!!"   9"D  %1 ! " C !!4 ! %!@ % "( ! !" 9  (" ! 9 !! % @ %! !@ !2!  0 V 57G 5 !4 ! 321 %!0 Q 6 (( ! Y &"" %$# "!       

!!"   9"D  %1 ! " C !!4 ! %!@ % "( ! !" 9  (" ! 9 !! % @ %! !@ !2!  0 V 57G 5 !4 ! 321 %!0 Q 6 (( ! Y &"" %$# "!      

%  9"D  %1 ! " C!" 9 % 9  !@  !" 9&   98!  ! & !( ! G 57G 5 !4 ! 321 %!0 Q 6 (( ! Y &"" %$# "!     

 $Q LQWHUQDO FRQWURO SURJUDP IRU XQGHUVWDQGLQJ WKH FOLHQW V LQKHUHQW ULVN DQG FRQWURO

5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH ' 2EWDLQ ZULWWHQ UHSUHVHQWDWLRQ IURP WKH FOLHQW FRQFHUQLQJ FROOHFWDELOLW\ RI & (YDOXDWH WKH FRPSHWHQFH DQG LQGHSHQGHQFH RI WKH LQWHUQDO DXGLWRUV % 6WXG\ SUHYLRXV \HDU DXGLW GRFXPHQWDWLRQ $ &RPPXQLFDWH ZLWK SUHGHFHVVRU DXGLWRUV ULVN ZRXOG QRW LQFOXGH ZKLFK RI WKH IROORZLQJ SURFHGXUHV" UHFHLYDEOHV

)LOO LQ WKH %ODQN 4XHVWLRQV

 :KHQ FRPSDQLHV FKDQJH DXGLWRUV WKH IRUPHU DXGLWRUV DUH UHIHUUHG WR DV WKH BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB SUHGHFHVVRU DXGLWRUV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 $XGLWLQJ VWDQGDUGV UHTXLUH WKH DXGLWRUV WR DVN WKDW FOLHQW FRQVHQW EH JLYHQ WR SHUPLW WKH BBBBBBBBBBBBBBBBBBBBBBBBB DXGLWRUV WR VSHDN SUHGHFHVVRU 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 $ Q BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB LV UHFRPPHQGHG DV D PHDQV RI UHGXFLQJ ULVN RI PLVXQGHUVWDQGLQJ EHWZHHQ D FOLHQW DQG DXGLWRU HQJDJHPHQW OHWWHU 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB LQFOXGH SURJUDPV WKDW PD\ EH XWLOL]HG WR UHDG FRPSXWH DQG RSHUDWH RQ PDFKLQH UHDGDEOH UHFRUGV &RPSXWHUDVVLVWHG DXGLW WHFKQLTXHV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB UHIHUV WR SURFHGXUHV SHUIRUPHG VKRUWO\ EHIRUH DQG DIWHU WKH EDODQFH VKHHW GDWH <HDUHQG DXGLW ZRUN 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 7KH BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB LV WKH DPRXQW E\ ZKLFK D SDUWLFXODU DFFRXQW PD\ EH PLVVWDWHG DQG FDXVH WKH ILQDQFLDO VWDWHPHQWV WR EH PDWHULDOO\ PLVOHDGLQJ WROHUDEOH PLVVWDWHPHQW 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 )RU FRQWLQXLQJ DXGLWV VSHFLILF LQIRUPDWLRQ DERXW WKH FOLHQW LV DYDLODEOH LQ BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB SULRU DXGLW GRFXPHQWDWLRQ 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 $XGLW BBBBBBBBBBBBBBBBBBBBBBBBBBBBB FDQ RIWHQ EH UHDOL]HG E\ ZRUNLQJ LQ WDQGHP ZLWK BBBBBBBBBBBBBBBBBBBBBBBBBBBBB DXGLWRUV HIILFLHQF\ LQWHUQDO 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 BBBBBBBBBBBBBBBBBBBBBBBBBBBBB DUH SHUVRQV VNLOOHG LQ ILHOGV RWKHU WKDQ DFFRXQWLQJ DQG DXGLWLQJ ZKR DUH QRW PHPEHUV RI WKH DXGLW WHDP 6SHFLDOLVWV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 $ Q BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB LV D FKDLQ RI HYLGHQFH SURYLGHG WKURXJK FRGLQJ FURVVUHIHUHQFHV DQG GRFXPHQWDWLRQ FRQQHFWLQJ DFFRXQW EDODQFHV DQG RWKHU VXPPDU\ UHVXOWV ZLWK WKH RULJLQDO WUDQVDFWLRQ GRFXPHQWV FDOFXODWLRQV DXGLW WUDLO 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 7KH BBBBBBBBBBBBBBBBBBBBBBBBBBBBB RI WKH FOLHQW V FRPSXWHU RSHUDWLRQV VKRXOG EH FRQVLGHUHG LQ DXGLW BBBBBBBBBBBBBBBBBBBBBBBBBBBB FRPSOH[LW\ SODQQLQJ 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 7KH BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB FRQWDLQV LQIRUPDWLRQ RI FRQWLQXLQJ DXGLW VLJQLILFDQFH RYHU PDQ\ \HDUV DXGLWV RI WKH VDPH FOLHQW SHUPDQHQW ILOH 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 BBBBBBBBBBBBBBBBBBBBBBBBBBBBB LV WKH DXGLWRU V UHFRUG RI FRPSOLDQFH ZLWK JHQHUDOO\ DFFHSWHG DXGLWLQJ VWDQGDUGV 'RFXPHQWDWLRQ 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 7KH BBBBBBBBBBBBBBBBBBBBBBBBBBBB DSSURDFK WR TXDQWLI\LQJ PDWHULDOO\ DVVLJQV DQ RYHUDOO PDWHULDO DPRXQW IRU WKH ILQDQFLDO VWDWHPHQWV DQG WKHQ DOORFDWHV LW WR WKH SDUWLFXODU DFFRXQWV WRSGRZQ 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 ,Q YRXFKLQJ DQ LWHP RI ILQDQFLDO LQIRUPDWLRQ LV VHOHFWHG IURP DQ DFFRXQW DQG WKHQ WKH DXGLW WHDP JRHV BBBBBBBBBBBBBBBBBBBBBBBBBBBBB WKURXJK WKH DFFRXQWLQJ DQG FRQWURO V\VWHP WR ILQG WKH BBBBBBBBBBBBBBBBBBBBBBBBBBBB EDFNZDUG VRXUFH GRFXPHQWDWLRQ 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 BBBBBBBBBBBBBBBBBBBBBBBBBBBBB LV D SURFHGXUH WKDW JHQHUDOO\ LQYROYHV WKH FROOHFWLRQ RI RUDO HYLGHQFH IURP LQGHSHQGHQW SDUWLHV DQG FOLHQW RIILFLDOV ,QTXLU\ 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 0DQDJHPHQW LV UHVSRQVLEOH IRU PDNLQJ WKH DFFRXQWLQJ BBBBBBBBBBBBBBBBBBBBBBBBBBBB DQG DXGLWRUV DUH UHVSRQVLEOH IRU HYDOXDWLQJ WKHLU BBBBBBBBBBBBBBBBBBBBBBBBBBBB HVWLPDWHV UHDVRQDEOHQHVV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB DUH FRPSRVHG RI LQGHSHQGHQW RXWVLGH PHPEHUV RI WKH ERDUG RI GLUHFWRUV WKRVH QRW LQYROYHG LQ WKH FRPSDQ\ V GD\WR GD\ RSHUDWLRQV ZKR FDQ SURYLGH D EXIIHU EHWZHHQ WKH SXEOLF DFFRXQWLQJ ILUP DQG PDQDJHPHQW $XGLW FRPPLWWHHV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 3URFHGXUHV XVHG WR GHWHFW PDWHULDO PLVVWDWHPHQWV LQ GROODU DPRXQWV DQG GLVFORVXUHV LQ ILQDQFLDO VWDWHPHQWV DUH NQRZQ DV BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB VXEVWDQWLYH SURFHGXUHV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 3ODQQLQJ EHFRPHV D EDVLV IRU SUHSDULQJ WKH BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB DXGLW SODQ 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 $ BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB SURJUDP FRQWDLQV VSHFLILFDWLRQ RI DXGLW SURFHGXUHV IRU JDWKHULQJ GLUHFW HYLGHQFH RQ BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB DERXW BBBBBBBBBBBBBBBBBBBBBBBBBBBBB DQG BBBBBBBBBBBBBBBBBBBBBBBBBBBBB LQ ILQDQFLDO VWDWHPHQWV VXEVWDQWLYH DXGLW PDQDJHPHQW V DVVHUWLRQV DPRXQWV GLVFORVXUHV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 $XGLWRUV FDQQRW SODFH FRPSOHWH UHOLDQFH RQ BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB WR WKH H[FOXVLRQ RI RWKHU DXGLW SURFHGXUHV LQWHUQDO FRQWURO 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 ,QIRUPDWLRQ LV BBBBBBBBBBBBBBBBBBBBBBBBBBBBB LI LW LV OLNHO\ WR LQIOXHQFH ILQDQFLDO VWDWHPHQW XVHUV GHFLVLRQV PDWHULDO 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

6KRUW $QVZHU 4XHVWLRQV

fdeddb spe d f ac ap c qe spe d f f d eq bqda p x qe spe d f p bde fecg sapc e d eqbqda p q e b y qdaqd p db c y ca d c d a q h qdba e q b q a deyax p tv t sar eqqpa hg fdedcba` i v eap da er a fdecaqb f c y ac ap c d q e b y a dq bca da f q fea a q a hecp a db q e` otv t sar eqpa ihg fdedcba ` e cb dbq bd e ay c d q e q ap db c ppb de aqp d p e qe qbq qda a fb fda qe b aq fdeddb d y apdbqc d e aq dbq ca dg wtv t sar eqpa hg fdedcba` p i e al w s q peyyex cah a a s pcba a s b fa ` s p eq bd s

 )RU HDFK RI WKH GHVFULSWLRQV LQ &ROXPQ $ PDWFK WKH FRUUHFW ZRUG RU ZRUGV IURP

)HHGEDFN 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH  '  )  *  (  $ &ROXPQ %

fdeddb spe d f ac ap c qe spe d f d eq bqda p x qe spe d f bde fecg sapc e d eqbqda p q e b y qdaq d p db c y ca d c d a q h qdba e q b q a deyax p tv t sar eq pa hg fdedcba` i e ap da er a fdecaqb f c y ac ap c d q e b y a dq bca da f q fea a q a hecp a db q e` otv t sar eqpa ihg fdedcba ` e cb dbq bd e ay c d d q e q ap db c ppb de aqp d p e qe qbq qda a fb fda qe b aq fdeddb d y apdbqc d e aq dbq ca dg wtv t sar eqpa hg fdedcba` i e al w s q peyyex cah a a s pcba a s b fa ` s p eq bd s

 )RU HDFK RI WKH GHVFULSWLRQV   PDWFK WKH FRUUHFW ZRUG RU SKUDVH IURP $  $+

) & + $ % *

(VVD\ 4XHVWLRQV

 ([SODLQ WKH ERWWRPXS DSSURDFK DQG WKH WRSGRZQ DSSURDFK WR TXDQWLI\LQJ RYHUDOO PDWHULDOLW\

,Q WKH ERWWRPXS DSSURDFK WR MXGJLQJ PDWHULDOLW\ DPRXQWV LQ HDFK DFFRXQW DUH MXGJHG VHSDUDWHO\ DQG WKHQ FRPELQHG WR GHWHUPLQH WKH RYHUDOO HIIHFW ,Q WKH WRS GRZQ DSSURDFK WR MXGJLQJ PDWHULDOLW\ DQ RYHUDOO PDWHULDO DPRXQW LV GHWHUPLQHG IRU WKH ILQDQFLDO VWDWHPHQWV DQG WKHQ DOORFDWHG WR HDFK SDUWLFXODU DFFRXQW

!#  9"D  %1 ! " C!" 9 % 9  !@  !" 9&   98!  ! & !( ! G 57G 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  

 'R WKH IROORZLQJ UHJDUGLQJ DXGLWRUV FRQFHSWV RI RYHUDOO PDWHULDOLW\ FRQVLGHUHG DW WKH SODQQLQJ VWDJH LH SODQQLQJ PDWHULDOLW\  D 'HILQH RU GHVFULEH LQGHSHQGHQW DXGLWRUV FRQFHSW RI SODQQLQJ PDWHULDOLW\ E 1DPH EXW GR QRW GHVFULEH RU H[SODLQ WKUHH FRPPRQ UHODWLRQVKLSV RU FRQVLGHUDWLRQV XVHG E\ DXGLWRUV ZKHQ DVVHVVLQJ WKH GROODU DPRXQW FRQVLGHUHG WR EH PDWHULDO

D 3ODQQLQJ PDWHULDOLW\ LV WKH ODUJHVW DPRXQW RI XQFRUUHFWHG GROODU PLVVWDWHPHQW WKH DXGLWRUV EHOLHYH FRXOG H[LVW LQ SXEOLVKHG ILQDQFLDO VWDWHPHQWV ZLWKRXW FDXVLQJ WKHP WR EH FRQVLGHUHG PDWHULDOO\ PLVOHDGLQJ E $EVROXWH VL]H UHODWLYH VL]H QDWXUH RI WKH LWHP RU LVVXH FLUFXPVWDQFHV XQFHUWDLQW\ FXPXODWLYH HIIHFWV

!#  9"D  %1 ! " C!" 9 % 9  !@  !" 9&   98!  ! & !( ! G 57G 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  

 :KDW DUH WKH FKDUDFWHULVWLFV WKDW GLVWLQJXLVK FRPSXWHU SURFHVVLQJ IURP PDQXDO SURFHVVLQJ"

&KDUDFWHULVWLFV WKDW GLVWLQJXLVK FRPSXWHU SURFHVVLQJ IURP PDQXDO SURFHVVLQJ LQFOXGH D &RPSXWHU V\VWHP WUDQVDFWLRQ WUDLOV PD\ H[LVW IRU RQO\ D VKRUW WLPH E &RPSXWHUV SURFHVV VLPLODU WUDQVDFWLRQV XQLIRUPO\ F )XQFWLRQV DUH PRUH FRQFHQWUDWHG LQ D FRPSXWHU V\VWHP G ,QFUHDVHG SRWHQWLDO IRU HUURUV DQG LUUHJXODULWLHV H[LVW LQ FRPSXWHU V\VWHPV H &HUWDLQ WUDQVDFWLRQV FDQ EH LQLWLDWHG RU H[HFXWHG DXWRPDWLFDOO\ LQ D FRPSXWHU V\VWHP

%""@!D "&"(  9"D  %1 ! " C!" 9  !@ (" !((! !@ !4 " 9& " ! !2  D A "@ !2!  !&"4 ! ! 9&" H ! !@ " ! ! !" "@ " @ % 9 ( " ! &   0 X 57G 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" %""@!D % %!4 !0    %""@!D % %!4 !0   %""@!D

 :KDW DUH WKH DGYDQWDJHV DQG OLPLWDWLRQV GHULYHG IURP XVLQJ FRPSXWHUDVVLVWHG DXGLW WHFKQLTXHV &$$7V SDFNDJHV"

7KH DGYDQWDJHV RI FRPSXWHUDVVLVWHG DXGLW WHFKQLTXHV &$$7V SDFNDJHV D 2ULJLQDO SURJUDPPLQJ LV QRW UHTXLUHG E 7KH UHTXLUHG SURJUDPPLQJ LV HDV\ F 7UDLQLQJ WLPH WR XVH WKH SURJUDPPLQJ LV VKRUW 7KH OLPLWDWLRQV RI FRPSXWHUDVVLVWHG DXGLW WHFKQLTXHV &$$7V SDFNDJHV D 7KH FRPSXWHU FDQQRW REVHUYH DQG FRXQW SK\VLFDO WKLQJV E 7KH FRPSXWHU FDQQRW H[DPLQH H[WHUQDO DQG LQWHUQDO GRFXPHQWDWLRQ F 7KH FRPSXWHU FDQQRW FRQGXFW LQTXLU\ SURFHGXUHV

D  9"D  %1 ! " C!" 9  !@ (" !((! !@ !4 " 9& " ! !2  D A "@ !2!  !&"4 ! ! 9&" H ! !@ " ! ! !" "@ " @ % 9 (" ! &   0 X 57G 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" %""@!D % %!4 !0    %""@!D % %!4 !0   %""@!D

 ' -DFNVRQ &3$ DXGLWHG :DVKLQJWRQ &RPSDQ\ V ILQDQFLDO VWDWHPHQWV IRU WKH \HDU HQGHG 'HFHPEHU   2Q 1RYHPEHU   :DVKLQJWRQ QRWLILHG -DFNVRQ WKDW LW ZDV FKDQJLQJ DXGLWRUV DQG WKDW -DFNVRQ V VHUYLFHV ZHUH EHLQJ WHUPLQDWHG 2Q 1RYHPEHU   :DVKLQJWRQ LQYLWHG /LQFROQ &3$ WR PDNH D SURSRVDO IRU DQ HQJDJHPHQW WR DXGLW LWV ILQDQFLDO VWDWHPHQWV IRU WKH \HDU HQGHG 'HFHPEHU   5HTXLUHG :KDW SURFHGXUHV FRQFHUQLQJ -DFNVRQ VKRXOG /LQFROQ SHUIRUP EHIRUH DFFHSWLQJ WKH HQJDJHPHQW"

D /LQFROQ VKRXOG H[SODLQ WR :DVKLQJWRQ WKH QHHG WR PDNH DQ LQTXLU\ RI -DFNVRQ DQG VKRXOG UHTXHVW SHUPLVVLRQ WR GR VR E /LQFROQ VKRXOG DVN :DVKLQJWRQ WR DXWKRUL]H -DFNVRQ WR UHVSRQG IXOO\ WR /LQFROQ V LQTXLULHV F ,I :DVKLQJWRQ UHIXVHV WR SHUPLW -DFNVRQ WR UHVSRQG RU OLPLWV -DFNVRQ V UHVSRQVH /LQFROQ VKRXOG LQTXLUH DV WR WKH UHDVRQV DQG FRQVLGHU WKH LPSOLFDWLRQV LQ GHFLGLQJ ZKHWKHU WR DFFHSW WKH HQJDJHPHQW G /LQFROQ VKRXOG PDNH VSHFLILF DQG UHDVRQDEOH LQTXLULHV RI -DFNVRQ UHJDUGLQJ PDWWHUV /LQFROQ EHOLHYHV ZLOO DVVLVW LQ GHWHUPLQLQJ ZKHWKHU WR DFFHSW WKH HQJDJHPHQW LQFOXGLQJ VSHFLILF TXHVWLRQV UHJDUGLQJ  )DFWV WKDW PLJKW EHDU RQ WKH LQWHJULW\ RI PDQDJHPHQW

 'LVDJUHHPHQWV ZLWK PDQDJHPHQW DV WR DFFRXQWLQJ SULQFLSOHV DXGLW SURFHGXUHV RU RWKHU VLPLODUO\ VLJQLILFDQW PDWWHUV  &RPPXQLFDWLRQV -DFNVRQ PDGH WR PDQDJHPHQW DERXW IUDXG LOOHJDO DFWV RU LQWHUQDO FRQWURO UHFRPPHQGDWLRQV  -DFNVRQ V XQGHUVWDQGLQJ DV WR WKH UHDVRQV IRU WKH FKDQJH RI DXGLWRUV H ,I /LQFROQ UHFHLYHV D OLPLWHG UHVSRQVH /LQFROQ VKRXOG FRQVLGHU LWV LPSOLFDWLRQV LQ GHFLGLQJ ZKHWKHU WR DFFHSW WKH HQJDJHPHQW

! 9   !" C !!4 ! %!@ % "( ! !" 9  (" ! 9 !! % @ %! !@ !2!  0 V 57G 5 !4 ! 321 %!0 & !# ) ((  99 &"" %$# "!   %$@D     !!"   9"D

 ,GHQWLI\ WKH WZR W\SHV RI DXGLW SODQV DQG LQGLFDWH WKH SXUSRVH RI HDFK

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

%  9"D  %1 ! " C "!( " 9 @A !"  ! "   @ " !&! % %!  !@ % 9 (" !" 9& !@ !' )57G 5 !4 ! 321 %!0 Q 6 (( ! Y &"" %$# "!      

&KDSWHU  0DQDJHPHQW )UDXG DQG $XGLW 5LVN

7UXH  )DOVH 4XHVWLRQV

 )UDXGV DUH XQLQWHQWLRQDO PLVVWDWHPHQWV RU RPLVVLRQV RI DFFRXQWV RU GLVFORVXUHV LQ ILQDQFLDO VWDWHPHQWV 7UXH )DOVH

 7KH QDWXUH RI H[WHQGHG SURFHGXUHV IRU IUDXG GHWHFWLRQ LV OLPLWHG WR WKRVH OLVWHG LQ WKH 3URIHVVLRQDO 6WDQGDUGV DQG 3UDFWLFHV IRU &HUWLILHG )UDXG ([DPLQHUV 7UXH )DOVH

 )UDXG FRQVLVWV RI NQRZLQJO\ PDNLQJ PDWHULDO PLVUHSUHVHQWDWLRQ RI IDFW ZLWK WKH LQWHQW RI LQGXFLQJ VRPHRQH WR EHOLHYH WKH IDOVHKRRG DQG VXIIHU D ORVV 7UXH )DOVH

 $XGLW FDUH DQG DWWHQWLRQ VKRXOG EH JUHDWHU ZKHUH EXVLQHVV DQG LQKHUHQW ULVNV DUH MXGJHG WR EH ORZHU 7UXH )DOVH

 &RQWURO ULVN VKRXOG QRW EH DVVHVVHG VR ORZ WKDW DXGLWRUV SODFH FRPSOHWH UHOLDQFH RQ FRQWUROV DQG GR QRW SHUIRUP DQ\ RWKHU DXGLW ZRUN 7UXH )DOVH

 'HWHFWLRQ ULVN RFFXUV ZKHQ LQWHUQDO FRQWURO DFWLYLWLHV IDLO WR GHWHFW PDWHULDO PLVVWDWHPHQWV 7UXH )DOVH

 7KH DXGLWLQJ SURIHVVLRQ RIILFLDO VWDQGDUG IRU DQ DFFHSWDEOH OHYHO RI RYHUDOO DXGLW ULVN LV  DW WKH FXUUHQW OHYHO 7UXH )DOVH

 $XGLW ULVN $5 LV D TXDOLW\ FULWHULRQ EDVHG RQ SURIHVVLRQDO MXGJPHQW 7UXH )DOVH

 7KH DXGLW ULVN PRGHO DVVXPHV WKDW HOHPHQWV RI DXGLW ULVN DUH LQGHSHQGHQW DQG WKHUHIRUH PXOWLSOLFDWLYH 7UXH )DOVH

 *HQHUDOO\ IUDXGXOHQW ILQDQFLDO VWDWHPHQWV VKRZ ILQDQFLDO SHUIRUPDQFH DQG UDWLRV WKDW DUH EHWWHU WKDQ FXUUHQW LQGXVWU\ H[SHULHQFH 7UXH )DOVH

 7KH GHPRJUDSKLFV RI ZKLWHFROODU FULPLQDOV DUH VLPLODU WR WKRVH RI W\SLFDO EDQN UREEHUV 7UXH )DOVH

 .QRZOHGJH DQG XQGHUVWDQGLQJ RI D FOLHQW V EXVLQHVV LV DEVROXWHO\ HVVHQWLDO LQ FRPSOHWLQJ DQ DXGLW 7UXH )DOVH

 $XGLWLQJ VWDQGDUGV UHTXLUH WKDW DQDO\WLFDO SURFHGXUHV EH DSSOLHG LQ WKH EHJLQQLQJ VWDJHV RI HDFK DXGLW 7UXH )DOVH

 $XGLWRUV ORRN IRU UHODWLRQVKLSV WKDW GR QRW PDNH VHQVH DV LQGLFDWRUV RI SUREOHPV LQ WKH DFFRXQWV DQG XVH VXFK LQGLFDWRUV WR SODQ IXUWKHU DXGLW ZRUN 7UXH )DOVH

 $QDO\WLFDO SURFHGXUHV DUH FRQVLGHUHG WR EH VRIW HYLGHQFH DQG WKHUHIRUH FRQVLGHUHG LQHIIHFWLYH 7UXH )DOVH

 $XGLWV DUH QRW GHVLJQHG WR GHWHFW PDWHULDO HUURUV DQG IUDXG LQ ILQDQFLDO VWDWHPHQWV 7UXH )DOVH

 .QRZOHGJH RI WKH FOLHQW V EXVLQHVV IURP SUHOLPLQDU\ DQDO\WLFDO SURFHGXUHV FDQ KHOS DXGLWRUV LGHQWLI\ SUREOHP DUHDV DQG PDNH EURDG ULVN DVVHVVPHQWV 7UXH )DOVH

0XOWLSOH &KRLFH 4XHVWLRQV

 7KH PDMRU HPSKDVLV LQ *$$6 UHODWHG WR FRQVLGHUDWLRQ RI IUDXG LQ D ILQDQFLDO VWDWHPHQW DXGLW $8  LV RQ

$ (PSOR\HH PLVDSSURSULDWLRQ RI DVVHWV % 0DQDJHPHQW IUDXG & &OLHQW IUDXG RQ FXVWRPHUV ' (PSOR\HH HPEH]]OHPHQW

 0DQDJHPHQW IUDXG JHQHUDOO\ UHIHUV WR

$ 8QLQWHQWLRQDO PLVWDNHV % 1RQFRPSOLDQFH & ,QWHQWLRQDO GLVWRUWLRQV RI ILQDQFLDO VWDWHPHQWV ' 9LRODWLRQV RI *$$6  ([WHUQDO DXGLWRUV DUH UHVSRQVLEOH

$ )RU DXWKHQWLFDWLQJ GRFXPHQWV % )RU UHSRUWLQJ LPPDWHULDO IUDXGV WR D OHYHO RI PDQDJHPHQW DW OHDVW RQH OHYHO DERYH WKH SHRSOH LQYROYHG & )RU ILQGLQJ DOO LQWHQWLRQDO PLVVWDWHPHQWV FRQFHDOHG E\ FROOXVLRQ ' )RU UHSRUWLQJ DOO IUDXGV WR RXWVLGH DJHQFLHV RU SDUWLHV

 $FFRUGLQJ WR DXGLWLQJ VWDQGDUGV H[WHUQDO DXGLWRUV UHVSRQVLELOLWLHV IRU LQGLUHFW QRQFRPSOLDQFH GR QRW LQFOXGH

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

$ 8QIDYRUDEOH LQGXVWU\ FRQGLWLRQV % /DFN RI ZRUNLQJ FDSLWDO & +LJK OLTXLGLW\ ' 6ORZ FXVWRPHU FROOHFWLRQV

 ,QGHSHQGHQW DXGLWRUV ZKR FRQVLGHU IUDXG LQ WKH FRXUVH RI ILQDQFLDO VWDWHPHQW DXGLWV DUH ZHOODGYLVHG WR TXDQWLI\ PDWHULDOLW\ LQ WHUPV RI

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

$ ,V UHOHYDQW WR WKH DXGLWRU V XQGHUVWDQGLQJ RI WKH FRQWURO HQYLURQPHQW % 3URYLGHV DVVXUDQFH WKDW WKH DXGLWRU V RYHUDOO PDWHULDOLW\ OHYHOV DUH DSSURSULDWH & ,QGLFDWHV WR WKH DXGLWRU ZKHUH LQKHUHQW ULVN PD\ EH WKH JUHDWHVW ' $IIHFWV WKH OHYHO RI GHWHFWLRQ ULVN WKDW WKH DXGLWRU PD\ DFFHSW

 :KHQ IUDXG ULVN LV VLJQLILFDQW DQG PDQDJHPHQW FRRSHUDWLRQ LV XQVDWLVIDFWRU\ WKH DXGLWRUV ZLOO PRVW OLNHO\

$ 3HUIRUP H[WHQGHG DXGLW SURFHGXUHV % &RQVXOW ZLWK IUDXG H[DPLQHUV & 5HSRUW GLUHFWO\ WR WKH 6HFXULWLHV DQG ([FKDQJH &RPPLVVLRQ ZLWKLQ RQH GD\ ' :LWKGUDZ IURP WKH HQJDJHPHQW  :KLFK RI WKH IROORZLQJ VWDWHPHQWV FRQFHUQLQJ QRQFRPSOLDQFH E\ FOLHQWV LV FRUUHFW"

$ $Q DXGLWRU V UHVSRQVLELOLW\ WR GHWHFW QRQFRPSOLDQFH WKDW KDV D GLUHFW DQG PDWHULDO HIIHFW RQ WKH ILQDQFLDO VWDWHPHQWV LV WKH VDPH DV WKDW IRU HUURUV DQG IUDXGV % $Q DXGLW LQ DFFRUGDQFH ZLWK JHQHUDOO\ DFFHSWHG DXGLWLQJ VWDQGDUGV QRUPDOO\ LQFOXGHV DXGLW SURFHGXUHV VSHFLILFDOO\ GHVLJQHG WR GHWHFW QRQFRPSOLDQFH WKDW KDV DQ LQGLUHFW EXW PDWHULDO HIIHFW RQ WKH ILQDQFLDO VWDWHPHQWV & $Q DXGLWRU FRQVLGHUV QRQFRPSOLDQFH IURP WKH SHUVSHFWLYH RI WKH UHOLDELOLW\ RI PDQDJHPHQW V UHSUHVHQWDWLRQV UDWKHU WKDQ WKHLU UHODWLRQ WR DXGLW REMHFWLYHV GHULYHG IURP ILQDQFLDO VWDWHPHQW DVVHUWLRQV ' $Q DXGLWRU KDV QR UHVSRQVLELOLW\ IRU QRQFRPSOLDQFH WKDW KDV DQ LQGLUHFW HIIHFW RQ WKH ILQDQFLDO VWDWHPHQWV

 :KLFK RI WKH IROORZLQJ VWDWHPHQWV EHVW GHVFULEHV DXGLWRUV UHVSRQVLELOLW\ WR GHWHFW HUURUV DQG IUDXGV"

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

$ $XGLW ULVN % ,QKHUHQW ULVN & &RQWURO ULVN ' 'HWHFWLRQ ULVN

 ,QKHUHQW ULVN LV WKH

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

$ 'HWHFWLRQ ULVN ZLOO GHFUHDVH % ,QKHUHQW ULVN ZLOO LQFUHDVH & $XGLW ULVN ZLOO GHFUHDVH ' 'HWHFWLRQ ULVN ZLOO LQFUHDVH

 ,I ILFWLWLRXV FUHGLW VDOHV ZHUH UHFRUGHG DQG WKH ILFWLWLRXV DFFRXQWV UHFHLYDEOH ZHUH ODWHU GLUHFWO\ ZULWWHQ RII DV EDG GHEW H[SHQVH

$ ,QFRPH ZRXOG EH RYHUVWDWHG % ,QFRPH ZRXOG EH XQGHUVWDWHG & ,QFRPH ZRXOG QRW EH PLVVWDWHG ' $FFRXQWV UHFHLYDEOH ZRXOG EH XQGHUVWDWHG  $Q DXGLW WHDP XVHV WKH DVVHVVHG ULVN RI PDWHULDO PLVVWDWHPHQW WR

$ (YDOXDWH WKH HIIHFWLYHQHVV RI WKH HQWLW\ V LQWHUQDO FRQWURO SROLFLHV DQG DFWLYLWLHV % ,GHQWLI\ WUDQVDFWLRQV DQG DFFRXQW EDODQFHV ZKHUH LQKHUHQW ULVN LV DW WKH PD[LPXP & ,QGLFDWH ZKHWKHU PDWHULDOLW\ WKUHVKROGV IRU SODQQLQJ DQG HYDOXDWLRQ SXUSRVHV DUH VXIILFLHQWO\ KLJK ' 'HWHUPLQH WKH DFFHSWDEOH OHYHO RI GHWHFWLRQ ULVN IRU ILQDQFLDO VWDWHPHQW DVVHUWLRQV  7KH ULVN RI PDWHULDO PLVVWDWHPHQW GLIIHUV IURP GHWHFWLRQ ULVN LQ WKDW LW

$ $ULVHV IURP WKH PLVDSSOLFDWLRQ RI DXGLW SURFHGXUHV % 0D\ EH DVVHVVHG LQ HLWKHU TXDQWLWDWLYH RU QRQTXDQWLWDWLYH WHUPV & ([LVWV LQGHSHQGHQWO\ RI WKH ILQDQFLDO VWDWHPHQW DXGLW ' &DQ EH FKDQJHG DW WKH DXGLWRU V GLVFUHWLRQ

 7KH ULVN WKDW DQ DXGLWRU V SURFHGXUHV ZLOO OHDG WR WKH FRQFOXVLRQ WKDW D PDWHULDO PLVVWDWHPHQW GRHV QRW H[LVW LQ DQ DFFRXQW EDODQFH ZKHQ LQ IDFW VXFK PLVVWDWHPHQW DFWXDOO\ H[LVWV LV

$ $XGLW ULVN % ,QKHUHQW ULVN & &RQWURO ULVN ' 'HWHFWLRQ ULVN  %DVHG RQ DXGLW HYLGHQFH JDWKHUHG DQG HYDOXDWHG DQ DXGLWRU GHFLGHV WR LQFUHDVH WKH DVVHVVHG OHYHO RI FRQWURO ULVN IURP WKDW RULJLQDOO\ SODQQHG 7R DFKLHYH DQ RYHUDOO DXGLW ULVN OHYHO WKDW LV VXEVWDQWLDOO\ WKH VDPH DV WKH SODQQHG DXGLW ULVN OHYHO WKH DXGLWRU ZRXOG

$ 'HFUHDVH VXEVWDQWLYH WHVWLQJ % 'HFUHDVH GHWHFWLRQ ULVN & ,QFUHDVH LQKHUHQW ULVN ' ,QFUHDVH PDWHULDOLW\ OHYHOV

 7KH DFFHSWDEOH OHYHO RI GHWHFWLRQ ULVN LV LQYHUVHO\ UHODWHG WR WKH

$ $VVXUDQFH SURYLGHG E\ VXEVWDQWLYH WHVWV % 5LVN RI PLVDSSO\LQJ DXGLW SURFHGXUHV & 3UHOLPLQDU\ MXGJPHQW DERXW PDWHULDOLW\ OHYHOV ' 5LVN RI IDLOLQJ WR GLVFRYHU PDWHULDO PLVVWDWHPHQWV  7KH H[LVWHQFH RI DXGLW ULVN LV UHFRJQL]HG E\ WKH VWDWHPHQW LQ WKH DXGLWRU V VWDQGDUG UHSRUW WKDW WKH

$ $XGLWRU LV UHVSRQVLEOH IRU H[SUHVVLQJ DQ RSLQLRQ RQ WKH ILQDQFLDO VWDWHPHQWV ZKLFK DUH WKH UHVSRQVLELOLW\ RI PDQDJHPHQW % )LQDQFLDO VWDWHPHQWV DUH SUHVHQWHG IDLUO\ LQ DOO PDWHULDO UHVSHFWV LQ FRQIRUPLW\ ZLWK DSSOLFDEOH ILQDQFLDO UHSRUWLQJ IUDPHZRUN & $XGLW LQFOXGHV H[DPLQLQJ RQ D WHVW EDVLV HYLGHQFH VXSSRUWLQJ WKH DPRXQWV DQG GLVFORVXUHV LQ WKH ILQDQFLDO VWDWHPHQWV ' $XGLWRU REWDLQV UHDVRQDEOH DVVXUDQFH DERXW ZKHWKHU WKH ILQDQFLDO VWDWHPHQWV DUH IUHH RI PDWHULDO PLVVWDWHPHQW

 :KHQ GHWHUPLQLQJ WKH LQKHUHQW ULVN UHODWHG WR DQ DFFRXQW EDODQFH DQ DXGLWRU WKHRUHWLFDOO\ GRHV QRW H[SOLFLWO\ FRQVLGHU WKH

$ /LTXLGLW\ RI WKH DFFRXQW % 'HJUHH RI PDQDJHPHQW HVWLPDWLRQ LQYROYHG LQ GHWHUPLQLQJ WKH SURSHU DFFRXQW EDODQFH & 5HODWHG LQWHUQDO FRQWURO SROLFLHV DQG SURFHGXUHV ' &RPSOH[LW\ RI FDOFXODWLRQV LQYROYHG  $Q DXGLWRU ZKR GLVFRYHUV WKDW FOLHQW HPSOR\HHV KDYH FRPPLWWHG DQ LOOHJDO DFW WKDW KDV D PDWHULDO HIIHFW RQ WKH FOLHQW V ILQDQFLDO VWDWHPHQWV PRVW OLNHO\ ZRXOG ZLWKGUDZ IURP WKH HQJDJHPHQW LI

$ 7KH QRQFRPSOLDQFH LV D YLRODWLRQ RI JHQHUDOO\ DFFHSWHG DFFRXQWLQJ SULQFLSOHV % 7KH FOLHQW GRHV QRW WDNH WKH UHPHGLDO DFWLRQ WKDW WKH DXGLWRU FRQVLGHUV QHFHVVDU\ & 7KH LOOHJDO DFW ZDV FRPPLWWHG GXULQJ D SULRU \HDU WKDW ZDV QRW DXGLWHG ' 7KH DXGLWRU KDV DOUHDG\ DVVHVVHG FRQWURO ULVN DW WKH PD[LPXP OHYHO

 :KHQ DQ DXGLWRU EHFRPHV DZDUH RI SRVVLEOH QRQFRPSOLDQFH E\ D FOLHQW WKH DXGLWRU VKRXOG REWDLQ DQ XQGHUVWDQGLQJ RI WKH QDWXUH RI WKH DFW WR

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

$ 'LUHFW HIIHFW QRQFRPSOLDQFH 5HDVRQDEOH LQGLUHFW HIIHFW QRQFRPSOLDQFH QRQH % 'LUHFW HIIHFW QRQFRPSOLDQFH 5HDVRQDEOH LQGLUHFW HIIHFW QRQFRPSOLDQFH UHDVRQDEOH & 'LUHFW HIIHFW QRQFRPSOLDQFH /LPLWHG LQGLUHFW HIIHFW QRQFRPSOLDQFH QRQH ' 'LUHFW HIIHFW QRQFRPSOLDQFH /LPLWHG LQGLUHFW HIIHFW QRQFRPSOLDQFH UHDVRQDEOH

 *HQHUDOO\ DFFHSWHG DXGLWLQJ VWDQGDUGV VWDWH WKDW DQDO\WLFDO SURFHGXUHV

$ 6KRXOG EH DSSOLHG LQ WKH SODQQLQJ DQG ILQDO UHYLHZ VWDJHV RI WKH DXGLW DQG DV D VXEVWDQWLYH WHVW GXULQJ WKH DXGLW % 6KRXOG EH DSSOLHG LQ WKH SODQQLQJ DQG ILQDO UHYLHZ VWDJHV RI WKH DXGLW DQG FDQ EH XVHG DV D VXEVWDQWLYH WHVW GXULQJ WKH DXGLW & 6KRXOG EH DSSOLHG LQ WKH SODQQLQJ VWDJH DQG FDQ EH DSSOLHG DV D VXEVWDQWLYH WHVW LQ WKH ILQDO UHYLHZ VWDJH ' 6KRXOG EH DSSOLHG LQ WKH ILQDO UHYLHZ VWDJH DQG FDQ EH DSSOLHG DV D VXEVWDQWLYH WHVW LQ WKH SODQQLQJ VWDJH  ,Q WKH SODQQLQJ VWDJH DQDO\WLFDO SURFHGXUHV DUH XVHG WR

$ ,GHQWLI\ SRWHQWLDO SUREOHP DUHDV % 3URYLGH GLUHFW HYLGHQFH DERXW WKH EDODQFHV LQ DFFRXQWV & 'HWHUPLQH WKH PDWKHPDWLFDO FRUUHFWQHVV RI WKH ILQDQFLDO VWDWHPHQWV ' $OO RI WKH DERYH

 $VVXPH WKDW DSSOLFDWLRQ RI DQDO\WLFDO SURFHGXUHV UHYHDOHG VLJQLILFDQW XQH[SODLQHG GLIIHUHQFHV EHWZHHQ UHFRUGHG DPRXQWV DQG WKH H[SHFWDWLRQV HVWLPDWHV GHYHORSHG E\ WKH DXGLWRU ,I PDQDJHPHQW LV XQDEOH WR SURYLGH DQ DFFHSWDEOH H[SODQDWLRQ WKH DXGLWRU VKRXOG

$ &RQVLGHU WKH PDWWHU D VFRSH OLPLWDWLRQ % 3HUIRUP DGGLWLRQDO DXGLW SURFHGXUHV WR LQYHVWLJDWH WKH PDWWHU IXUWKHU & ,QWHQVLI\ WKH DXGLW ZLWK WKH H[SHFWDWLRQ RI GHWHFWLQJ PDQDJHPHQW IUDXG ' :LWKGUDZ IURP WKH HQJDJHPHQW  )RU DXGLWV RI ILQDQFLDO VWDWHPHQWV PDGH LQ DFFRUGDQFH ZLWK JHQHUDOO\ DFFHSWHG DXGLWLQJ VWDQGDUGV WKH XVH RI DQDO\WLFDO SURFHGXUHV LV UHTXLUHG WR VRPH H[WHQW

$ $V D VXEVWDQWLYH WHVW \HV LQ WKH ILQDO UHYLHZ VWDJH \HV % $V D VXEVWDQWLYH WHVW \HV LQ WKH ILQDO UHYLHZ VWDJH QR & $V D VXEVWDQWLYH WHVW QR LQ WKH ILQDO UHYLHZ VWDJH \HV ' $V D VXEVWDQWLYH WHVW QR LQ WKH ILQDO UHYLHZ VWDJH QR

 :KLFK RI WKH IROORZLQJ ZRXOG QRW OLNHO\ EH IRXQG LQ WKH PLQXWHV RI WKH ERDUG RI GLUHFWRUV"

$ $PRXQW RI GLYLGHQGV GHFODUHG % $SSURYDO WR SOHGJH DVVHWV DV VHFXULW\ IRU GHEWV & $XWKRUL]DWLRQ RI RIILFHUV VDODULHV ' $SSURYDO RI D QHZ GHVNWRS FRPSXWHU IRU WKH FRQWUROOHU  $Q DXGLWRU ZKR HQFRXQWHUV VLJQLILFDQW ULVNV DW WKH FOLHQW VKRXOG GR DOO RI WKH IROORZLQJ H[FHSW

$ ,QIRUP WKH 6(& % 3HUIRUP H[WHQGHG SURFHGXUHV & ,QFOXGH PRUH H[SHULHQFHG DXGLWRUV RQ WKH HQJDJHPHQW ' 3HUIRUP WHVWV FORVHU WR \HDUHQG  +RUL]RQWDO DQDO\VLV UHIHUV WR

$ 7KH WUHQG RI LQFRPH IURP \HDU WR \HDU RI SHUVRQV VXVSHFWHG RI IUDXG % &KDQJHV RI ILQDQFLDO VWDWHPHQW QXPEHUV DQG UDWLRV DFURVV VHYHUDO \HDUV & )LQDQFLDO VWDWHPHQW DPRXQWV H[SUHVVHG HDFK \HDU DV D SURSRUWLRQ RI D EDVH DPRXQW ' 7KH FKDQJH LQ D VXVSHFW V QHW ZRUWK IURP WKH EHJLQQLQJ WR WKH HQG RI D SHULRG

 $QDO\WLFDO SURFHGXUHV XVHG LQ SODQQLQJ DQ DXGLW VKRXOG IRFXV RQ

$ 5HGXFLQJ WKH VFRSH RI WHVWV RI FRQWUROV DQG VXEVWDQWLYH WHVWV % 3URYLGLQJ DVVXUDQFH WKDW SRWHQWLDO PDWHULDO PLVVWDWHPHQWV ZLOO EH LGHQWLILHG & (QKDQFLQJ WKH DXGLWRU V XQGHUVWDQGLQJ RI WKH FOLHQW V EXVLQHVV ' $VVHVVLQJ WKH DGHTXDF\ RI WKH DYDLODEOH HYLGHQWLDO PDWWHU  6RXUFHV RI ILQDQFLDO DQG QRQILQDQFLDO GDWD GR QRW LQFOXGH

$ )LQDQFLDO DFFRXQW LQIRUPDWLRQ IRU FRPSDUDEOH SULRU SHULRGV % 1RQILQDQFLDO LQIRUPDWLRQ VXFK DV SK\VLFDO SURGXFWLRQ VWDWLVWLFV & &RPSDQ\ EXGJHWV DQG IRUHFDVWV ' %XUHDX RI /DERU VWDWLVWLFV  7KH W\SH RI ILQDQFLDO DQDO\VLV WKDW H[SUHVVHV EDODQFH VKHHW DFFRXQWV DV SHUFHQWDJHV RI WRWDO DVVHWV LV NQRZQ DV

$ +RUL]RQWDO DQDO\VLV % 9HUWLFDO DQDO\VLV & 1HW ZRUWK DQDO\VLV ' ([SHQGLWXUH DQDO\VLV

 :KLFK RI WKH IROORZLQJ DFFRXQWV WHQGV WR EH PRVW SUHGLFWDEOH IRU SXUSRVHV RI DQDO\WLFDO SURFHGXUHV"

$ $FFRXQWV UHFHLYDEOH % 7UDYHO DQG HQWHUWDLQPHQW H[SHQVH & ,QWHUHVW H[SHQVH ' ,QFRPH WD[HV SD\DEOH  $QDO\WLFDO SURFHGXUHV DUH DXGLW PHWKRGV RI HYDOXDWLQJ ILQDQFLDO VWDWHPHQW DFFRXQWV E\ VWXG\LQJ DQG FRPSDULQJ UHODWLRQVKLSV DPRQJ ILQDQFLDO DQG QRQILQDQFLDO GDWD 7KH SULPDU\ SXUSRVH RI DQDO\WLFDO SURFHGXUHV FRQGXFWHG GXULQJ WKH SODQQLQJ VWDJHV LV WR

$ ,GHQWLI\ WKH DSSURSULDWH VFKHGXOHV WR EH SUHSDUHG E\ WKH FOLHQW % ,GHQWLI\ WKH W\SHV RI HUURUV RU IUDXGV WKDW FDQ RFFXU LQ WUDQVDFWLRQV & ,GHQWLI\ XQXVXDO FRQGLWLRQV WKDW GHVHUYH DGGLWLRQDO DXGLW HIIRUW ' 'HWHUPLQH WKH H[LVWHQFH RI XQUHFRUGHG OLDELOLWLHV RU RYHUVWDWHG DVVHWV

 :KLFK RI WKH IROORZLQJ LV QRW UHTXLUHG E\ $8  &RQVLGHUDWLRQ RI )UDXG LQ D )LQDQFLDO 6WDWHPHQW $XGLW "

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

$ ([WHQW RI VXEVWDQWLYH WHVWV RI GHWDLOV % /HYHO RI LQKHUHQW ULVN & ([WHQW RI WHVWV RI FRQWUROV ' /HYHO RI GHWHFWLRQ ULVN

 :KDW DVVXUDQFH GRHV WKH DXGLWRU SURYLGH WKDW HUURUV IUDXGV DQG GLUHFW HIIHFW QRQFRPSOLDQFH WKDW DUH PDWHULDO WR WKH ILQDQFLDO VWDWHPHQWV ZLOO EH GHWHFWHG"

$ (UURUV OLPLWHG IUDXGV QHJDWLYH GLUHFW HIIHFW QRQFRPSOLDQFH OLPLWHG % (UURUV OLPLWHG IUDXGV OLPLWHG GLUHFW HIIHFW QRQFRPSOLDQFH UHDVRQDEOH & (UURUV UHDVRQDEOH IUDXGV OLPLWHG GLUHFW HIIHFW QRQFRPSOLDQFH OLPLWHG ' (UURUV UHDVRQDEOH IUDXGV UHDVRQDEOH GLUHFW HIIHFW QRQFRPSOLDQFH UHDVRQDEOH  ([SHULHQFH KDV VKRZQ WKDW WKH PDQ\ ODUJH IUDXGXOHQW WUDQVDFWLRQV FDQ EH IRXQG LQ

$ 6\VWHPDWLF SURFHVVLQJ RI ODUJH YROXPHV RI GD\WRGD\ RUGLQDU\ WUDQVDFWLRQV % 3D\UROO IUDXGVWHUV PLVWDNHV LQ XVLQJ XQLVVXHG 6RFLDO 6HFXULW\ QXPEHUV & 3HWW\ FDVK HPEH]]OHPHQWV ' 1RQURXWLQH QRQV\VWHPDWLF MRXUQDO HQWULHV

 :KLFK RI WKH IROORZLQJ SLHFHV RI LQIRUPDWLRQ GLVFRYHUHG E\ DQ DXGLWRU ZKHQ SHUIRUPLQJ VXEVWDQWLYH WHVWV RI DFFRXQW EDODQFHV ZRXOG PRVW OLNHO\ UDLVH UHG IODJV DERXW WKH SRVVLEOH H[LVWHQFH RI PDWHULDO IUDXGXOHQW ILQDQFLDO UHSRUWLQJ"

$ 3DSHU FRSLHV RI SDLG LQYRLFHV DQG FDQFHOOHG FKHFNV ZHUH PLFURILFKHG DQG WKHQ GHVWUR\HG % 7KH FRQWUROOHU UHTXLUHV WKDW \RX VFKHGXOH DQ\ DXGLW LQTXLULHV GDLO\ DIWHU OXQFK QRW LQ WKH PRUQLQJ & 7KH SHWW\ FDVK IXQG FXVWRGLDQ QHYHU WDNHV D YDFDWLRQ ' 7KH FOLHQW V HVWLPDWH RI WKH DOORZDQFH IRU GRXEWIXO DFFRXQWV LV ORZHU WKDQ WKH DXGLWRU V LQGHSHQGHQW HYDOXDWLRQ RI WKH DOORZDQFH  ,QKHUHQW ULVN DQG FRQWURO ULVN GLIIHU IURP GHWHFWLRQ ULVN LQ WKDW LQKHUHQW ULVN DQG FRQWURO ULVN DUH

$ (OHPHQWV RI DXGLW ULVN ZKHUHDV GHWHFWLRQ ULVN LV QRW % &KDQJHG DW WKH DXGLWRU V GLVFUHWLRQ ZKHUHDV GHWHFWLRQ ULVN LV QRW & &RQVLGHUHG DW WKH LQGLYLGXDO DFFRXQW EDODQFH OHYHO ZKHUHDV GHWHFWLRQ ULVN LV QRW ' )XQFWLRQV RI WKH FOLHQW DQG LWV HQYLURQPHQW ZKHUHDV GHWHFWLRQ ULVN LV QRW

 7KH DXGLWRU XVHV WKH DVVHVVHG OHYHO RI ULVN RI PDWHULDO PLVVWDWHPHQW WR GHWHUPLQH WKH DFFHSWDEOH OHYHO RI GHWHFWLRQ ULVN IRU ILQDQFLDO VWDWHPHQW DVVHUWLRQV $V WKH DFFHSWDEOH OHYHO RI GHWHFWLRQ ULVN GHFUHDVHV WKH DXGLWRU PD\ GR RQH RU PRUH RI WKH IROORZLQJ H[FHSW FKDQJH WKH

$ 1DWXUH RI VXEVWDQWLYH WHVWV WR PRUH HIIHFWLYH SURFHGXUHV % 7LPLQJ RI VXEVWDQWLYH WHVWV VXFK DV SHUIRUPLQJ WKHP DW \HDUHQG UDWKHU WKDQ DW DQ LQWHULP GDWH & ([WHQW RI VXEVWDQWLYH WHVWV VXFK DV XVLQJ ODUJHU VDPSOH VL]HV ' $VVXUDQFHV SURYLGHG E\ VXEVWDQWLYH WHVWV WR D ORZHU OHYHO  :KLFK RI WKH IROORZLQJ LV DQ DFFHSWDEOH UHVSRQVH WR IUDXG ULVNV UHODWHG WR VDOHV WKDW ZHUH LGHQWLILHG LQ DQ DXGLW"

$ ([HUFLVH SURIHVVLRQDO VNHSWLFLVP ZKHQ SHUIRUPLQJ VDOHV WHVWLQJ % ,QFUHDVH WKH DVVHVVPHQW RI FRQWURO ULVN IRU VDOHV & ,QFUHDVH WKH DVVHVVPHQW RI GHWHFWLRQ ULVN IRU VDOHV ' 3HUIRUP DGGLWLRQDO VXEVWDQWLYH VDOHV SURFHGXUHV RQ D VXUSULVH EDVLV

 ,I WHVWV RI FRQWUROV LQGXFH WKH DXGLWRU WR FKDQJH WKH DVVHVVHG OHYHO RI FRQWURO ULVN IRU SURSHUW\ SODQW HTXLSPHQW IURP  SHUFHQW WR  SHUFHQW DQG DXGLW ULVN  SHUFHQW DQG LQKHUHQW ULVN UHPDLQ FRQVWDQW WKH DFFHSWDEOH OHYHO RI GHWHFWLRQ ULVN

$ :RXOG PRVW OLNHO\ FKDQJH IURP  SHUFHQW WR  SHUFHQW % :RXOG PRVW OLNHO\ FKDQJH IURP  SHUFHQW WR  SHUFHQW & :RXOG PRVW OLNHO\ FKDQJH IURP  SHUFHQW WR  SHUFHQW ' :RXOG EH XQFKDQJHG EHFDXVH WKH DXGLWRU KDV FRQWURO RYHU GHWHFWLRQ ULVN ( &DQQRW EH GHWHUPLQHG EHFDXVH LQKHUHQW ULVN LV QRW JLYHQ  0DQDJLQJ EXVLQHVV ULVN LV WKH UHVSRQVLELOLW\ RI

$ 7KH DXGLWRUV % 0DQDJHPHQW & 7KH 6(& ' 7KH 3&$2%  $XGLWRUV ZRXOG XVH WKH HQWHUSULVH ULVN PRGHO

$ 7R UHGXFH WKH FOLHQW V EXVLQHVV ULVN % 7R GHWHUPLQH GHWHFWLRQ ULVN & 7R HYDOXDWH PDQDJHPHQW V ULVN DVVHVVPHQW ' 7R PRQLWRU FOLHQW ULVN

 $XGLWRUV XVH EUDLQVWRUPLQJ

$ 7R KHLJKWHQ WKH DXGLW WHDP V DZDUHQHVV RI IUDXG SRWHQWLDO % 7R KHLJKWHQ PDQDJHPHQW V DZDUHQHVV RI IUDXG SRWHQWLDO & 7R GHWHUPLQH GHWHFWLRQ ULVN ' 7R VHW PDWHULDOLW\  7KH SXUSRVH RI DQ DXGLW VWUDWHJ\ LV

$ 7R SURYLGH D GHIHQVH DJDLQVW OLWLJDWLRQ % 7R JDLQ DQ XQGHUVWDQGLQJ RI WKH FOLHQW & 7R FRPSO\ ZLWK VHFXULWLHV ODZ ' 7R VHW WKH VFRSH WLPLQJ DQG GLUHFWLRQ IRU DXGLWLQJ HDFK UHOHYDQW DVVHUWLRQ  $XGLWRUV DUH UHVSRQVLEOH IRU WKH TXDOLW\ RI WKH ZRUN UHODWHG WR PDQDJHPHQW DQG FRQWURO RI

$ ,QKHUHQW ULVN % %XVLQHVV ULVN & &RQWURO ULVN ' 'HWHFWLRQ ULVN

 :KLFK RI WKH IROORZLQJ HQJDJHPHQW SODQQLQJ SURFHGXUHV ZRXOG PRVW OLNHO\ DVVLVW WKH DXGLWRU LQ LGHQWLI\LQJ UHODWHGSDUW\ WUDQVDFWLRQV EHIRUH WKH EDODQFHVKHHW GDWH"

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

$ ,QKHUHQW ULVN % &RQWURO ULVN & 'HWHFWLRQ ULVN ' 5LVN RI PDWHULDO PLVVWDWHPHQW  7KH ULVN RI PDWHULDO PLVVWDWHPHQWV LV FRPSRVHG RI ZKLFK DXGLW ULVN FRPSRQHQWV"

$ ,QKHUHQW ULVN DQG FRQWURO ULVN % &RQWURO ULVN DQG GHWHFWLRQ ULVN & ,QKHUHQW ULVN DQG GHWHFWLRQ ULVN ' ,QKHUHQW ULVN FRQWURO ULVN DQG GHWHFWLRQ ULVN

 $XGLWLQJ VWDQGDUGV GR QRW UHTXLUH DXGLWRUV RI ILQDQFLDO VWDWHPHQWV WR

$ 8QGHUVWDQG WKH QDWXUH RI HUURUV DQG IUDXGV % $VVHVV WKH ULVN RI RFFXUUHQFH RI HUURUV DQG IUDXGV & 'HVLJQ DXGLWV WR SURYLGH UHDVRQDEOH DVVXUDQFH RI GHWHFWLQJ HUURUV DQG IUDXGV ' 5HSRUW DOO HUURUV DQG IUDXGV IRXQG WR SROLFH DXWKRULWLHV  7KH ULVN WKDW WKH DXGLWRUV RZQ SURFHGXUHV ZLOO OHDG WR WKH GHFLVLRQ WKDW PDWHULDO PLVVWDWHPHQWV GR QRW H[LVW LQ WKH ILQDQFLDO VWDWHPHQWV ZKHQ LQ IDFW VXFK PLVVWDWHPHQWV GR H[LVW LV

$ $XGLW ULVN % ,QKHUHQW ULVN & &RQWURO ULVN ' 'HWHFWLRQ ULVN

 7KH DXGLWRUV DVVHVVHG ULVN RI PDWHULDO PLVVWDWHPHQW DW  DQG VDLG WKH\ ZDQWHG WR DFKLHYH D  ULVN RI IDLOLQJ WR H[SUHVV D FRUUHFW RSLQLRQ RQ ILQDQFLDO VWDWHPHQWV WKDW ZHUH PDWHULDOO\ PLVVWDWHG :KDW GHWHFWLRQ ULVN GR WKH DXGLWRUV SODQ WR XVH IRU SODQQLQJ WKH UHPDLQGHU RI WKH DXGLW ZRUN"

$  %  &  '   ,I WHVWV RI FRQWUROV LQGXFH WKH DXGLW WHDP WR FKDQJH WKH DVVHVVHG OHYHO RI FRQWURO ULVN IRU IL[HG DVVHWV IURP  WR  DQG DXGLW ULVN  DQG LQKHUHQW ULVN UHPDLQ FRQVWDQW WKH DFFHSWDEOH OHYHO RI GHWHFWLRQ ULVN LV PRVW OLNHO\ WR

$ &KDQJH IURP  WR  % &KDQJH IURP  WR  & &KDQJH IURP  WR  ' %H XQFKDQJHG

 :KLFK RI WKH IROORZLQJ LV D VSHFLILF SURFHGXUDO UHVSRQVH WR D SDUWLFXODU IUDXG ULVN LQ DQ DFFRXQW EDODQFH RU FODVV RI WUDQVDFWLRQV"

$ ([HUFLVLQJ PRUH SURIHVVLRQDO VNHSWLFLVP % &DUHIXOO\ DYRLGLQJ FRQGXFWLQJ LQWHUYLHZV ZLWK SHRSOH LQ WKH IUDXGULFK DUHDV & 3HUIRUPLQJ SURFHGXUHV VXFK DV LQYHQWRU\ REVHUYDWLRQ DQG FDVK FRXQWV RQ D VXUSULVH RU XQDQQRXQFHG EDVLV ' 6WXG\LQJ PDQDJHPHQW V VHOHFWLRQ DQG DSSOLFDWLRQ RI DFFRXQWLQJ SULQFLSOHV PRUH FDUHIXOO\  ,W LV DFFHSWDEOH XQGHU JHQHUDOO\ DFFHSWHG DXGLWLQJ VWDQGDUGV IRU DQ DXGLW WHDP WR

$ $VVHVV ULVN RI PDWHULDO PLVVWDWHPHQW DW KLJK DQG DFKLHYH DQ DFFHSWDEO\ ORZ DXGLW ULVN E\ SHUIRUPLQJ H[WHQVLYH GHWHFWLRQ ZRUN % $VVHVV FRQWURO ULVN DW ]HUR DQG SHUIRUP D PLQLPXP RI GHWHFWLRQ ZRUN & $VVHVV LQKHUHQW ULVN DW ]HUR DQG SHUIRUP D PLQLPXP RI GHWHFWLRQ ZRUN ' 'HFLGH WKDW DXGLW ULVN FDQ EH  SHUFHQW

 ,I VDOHV ZHUH RYHUVWDWHG E\ UHFRUGLQJ D IDOVH FUHGLW VDOH DW WKH HQG RI WKH \HDU ZKHUH FRXOG \RX ILQG WKH IDOVH GDQJOLQJ GHELW "

$ ,QYHQWRU\ % &RVW RI JRRGV VROG & %DG GHEW H[SHQVH ' $FFRXQWV UHFHLYDEOH  2QH RI WKH W\SLFDO FKDUDFWHULVWLFV RI PDQDJHPHQW IUDXG LV

$ )DOVLILFDWLRQ RI GRFXPHQWV LQ RUGHU WR PLVDSSURSULDWH IXQGV IURP DQ HPSOR\HU % 9LFWLPL]DWLRQ RI LQYHVWRUV WKURXJK WKH XVH RI PDWHULDOO\ PLVOHDGLQJ ILQDQFLDO VWDWHPHQWV & ,OOHJDO DFWV FRPPLWWHG E\ PDQDJHPHQW WR HYDGH ODZV DQG UHJXODWLRQV ' &RQYHUVLRQ RI VWROHQ LQYHQWRU\ WR FDVK GHSRVLWHG LQ D IDOVLILHG EDQN DFFRXQW

 8QGHU WKH 3ULYDWH 6HFXULWLHV /LWLJDWLRQ 5HIRUP $FW LQGHSHQGHQW DXGLWRUV DUH UHTXLUHG WR

$ 5HSRUW LQ ZULWLQJ DOO LQVWDQFHV RI QRQFRPSOLDQFH WR WKH FOLHQW V ERDUG RI GLUHFWRUV % 5HSRUW WR WKH 6(& DOO LQVWDQFHV RI QRQFRPSOLDQFH WKH\ EHOLHYH KDYH D PDWHULDO HIIHFW RQ ILQDQFLDO VWDWHPHQWV LI WKH ERDUG RI GLUHFWRUV GRHV QRW ILUVW UHSRUW WR WKH 6(& & 5HSRUW FOHDUO\ LQFRQVHTXHQWLDO QRQFRPSOLDQFH WR WKH DXGLW FRPPLWWHH RI WKH FOLHQW V ERDUG RI GLUHFWRUV ' 5HVLJQ IURP WKH DXGLW HQJDJHPHQW DQG UHSRUW WKH LQVWDQFHV RI QRQFRPSOLDQFH WR WKH 6(&  :KLFK RI WKH IROORZLQJ FLUFXPVWDQFHV ZRXOG PRVW OLNHO\ FDXVH DQ DXGLW WHDP WR SHUIRUP H[WHQGHG SURFHGXUHV"

$ 6XSSRUWLQJ GRFXPHQWV DUH SURGXFHG ZKHQ UHTXHVWHG % 7KH FOLHQW PDGH VHYHUDO ODUJH DGMXVWPHQWV DW RU QHDU \HDUHQG & 7KH FRPSDQ\ KDV UHFHQWO\ KLUHG D QHZ FKLHI ILQDQFLDO RIILFHU DIWHU WKH SUHYLRXV RQH UHWLUHG ' 7KH FRPSDQ\ PDLQWDLQV VHYHUDO GLIIHUHQW SHWW\ FDVK IXQGV

 :KHQ WKH DXGLWRUV EHFRPH DZDUH RI QRQFRPSOLDQFH ZLWK D ODZ RU UHJXODWLRQ FRPPLWWHG E\ FOLHQW SHUVRQQHO WKH SULPDU\ UHDVRQ WKDW WKH DXGLWRUV VKRXOG REWDLQ D EHWWHU XQGHUVWDQGLQJ RI WKH QDWXUH RI WKH DFW LV WR

$ 5HFRPPHQG UHPHGLDO DFWLRQV WR WKH DXGLW FRPPLWWHH % (YDOXDWH WKH HIIHFW RI WKH QRQFRPSOLDQFH RQ WKH ILQDQFLDO VWDWHPHQWV & 'HWHUPLQH ZKHWKHU WR FRQWDFW ODZ HQIRUFHPHQW RIILFLDOV ' 'HWHUPLQH ZKHWKHU RWKHU VLPLODU DFWV FRXOG KDYH RFFXUUHG  :KLFK RI WKH IROORZLQJ VWDWHPHQWV EHVW GHVFULEHV DXGLWRUV UHVSRQVLELOLW\ IRU GHWHFWLQJ D FOLHQW V QRQFRPSOLDQFH ZLWK D ODZ RU UHJXODWLRQ"

$ 7KH UHVSRQVLELOLW\ IRU GHWHFWLQJ QRQFRPSOLDQFH H[DFWO\ SDUDOOHOV WKH UHVSRQVLELOLW\ IRU HUURUV DQG IUDXG % $XGLWRUV PXVW GHVLJQ WHVWV WR GHWHFW DOO PDWHULDO QRQFRPSOLDQFH WKDW LQGLUHFWO\ DIIHFW WKH ILQDQFLDO VWDWHPHQWV & $XGLWRUV PXVW GHVLJQ WHVWV WR REWDLQ UHDVRQDEOH DVVXUDQFH WKDW DOO QRQFRPSOLDQFH ZLWK GLUHFW PDWHULDO VWDWHPHQW HIIHFWV DUH GHWHFWHG ' $XGLWRUV PXVW GHVLJQ WHVWV WR GHWHFW DOO QRQFRPSOLDQFH WKDW GLUHFWO\ DIIHFW WKH ILQDQFLDO VWDWHPHQWV

 $QDO\WLFDO SURFHGXUHV DUH JHQHUDOO\ XVHG WR SURGXFH HYLGHQFH IURP

$ &RQILUPDWLRQV PDLOHG GLUHFWO\ WR WKH DXGLWRUV E\ FOLHQW FXVWRPHUV % 3K\VLFDO REVHUYDWLRQ RI LQYHQWRULHV & 5HODWLRQVKLSV DPRQJ FXUUHQW ILQDQFLDO EDODQFHV DQG SULRU EDODQFHV IRUHFDVWV DQG QRQILQDQFLDO GDWD ' 'HWDLOHG H[DPLQDWLRQ RI H[WHUQDO H[WHUQDOLQWHUQDO DQG LQWHUQDO GRFXPHQWV  $XGLWRUV SHUIRUP DQDO\WLFDO SURFHGXUHV LQ WKH SODQQLQJ VWDJH RI DQ DXGLW IRU WKH SXUSRVH RI

$ 'HFLGLQJ WKH PDWWHUV WR FRYHU LQ DQ HQJDJHPHQW OHWWHU % ,GHQWLI\LQJ XQXVXDO FRQGLWLRQV WKDW GHVHUYH PRUH DXGLWLQJ HIIRUW & 'HWHUPLQLQJ ZKLFK RI WKH ILQDQFLDO VWDWHPHQW DVVHUWLRQV DUH WKH PRVW LPSRUWDQW IRU WKH FOLHQW V ILQDQFLDO VWDWHPHQWV ' 'HWHUPLQLQJ WKH QDWXUH WLPLQJ DQG H[WHQW RI DXGLW SURFHGXUHV IRU DXGLWLQJ WKH LQYHQWRU\

 :KLFK RI WKH IROORZLQJ UHODWLRQVKLSV EHWZHHQ W\SHV RI DQDO\WLFDO SURFHGXUHV DQG VRXUFHV RI LQIRUPDWLRQ DUH PRVW ORJLFDO"

$ 2SWLRQ $ % 2SWLRQ % & 2SWLRQ & ' 2SWLRQ '  $QDO\WLFDO SURFHGXUHV FDQ EH XVHG LQ ZKLFK RI WKH IROORZLQJ ZD\V"

$ $V D PHDQV RI RYHUDOO UHYLHZ DW WKH HQG RI DQ DXGLW % $V DWWHQWLRQGLUHFWLQJ PHWKRGV ZKHQ SODQQLQJ DQ DXGLW DW WKH EHJLQQLQJ GLUHFWLQJ & $V VXEVWDQWLYH DXGLW SURFHGXUHV WR REWDLQ HYLGHQFH GXULQJ DQ DXGLW ' $OO RI WKH DERYH

 $QDO\WLFDO SURFHGXUHV XVHG ZKHQ SODQQLQJ DQ DXGLW VKRXOG FRQFHQWUDWH RQ

$ :HDNQHVVHV LQ WKH FRPSDQ\ V LQWHUQDO FRQWURO DFWLYLWLHV % 3UHGLFWDELOLW\ RI DFFRXQW EDODQFHV EDVHG RQ LQGLYLGXDO WUDQVDFWLRQV & 0DQDJHPHQW DVVHUWLRQV LQ ILQDQFLDO VWDWHPHQWV ' $FFRXQWV DQG UHODWLRQVKLSV WKDW FDQ UHSUHVHQW VSHFLILF SRWHQWLDO SUREOHPV DQG ULVNV LQ WKH ILQDQFLDO VWDWHPHQWV  :KHQ D FRPSDQ\ WKDW VHOOV LWV SURGXFWV IRU D JURVV SURILW LQFUHDVHV LWV VDOHV E\  SHUFHQW DQG LWV FRVW RI JRRGV VROG E\  SHUFHQW WKH FRVW RI JRRGV VROG UDWLR ZLOO

$ ,QFUHDVH % 'HFUHDVH & 5HPDLQ XQFKDQJHG ' 1RW EH DEOH WR EH GHWHUPLQHG ZLWK WKH LQIRUPDWLRQ SURYLGHG  $QDO\WLFDO SURFHGXUHV DUH XVHG

$ 7R VHW PDWHULDOLW\ OLPLWV % 7R DVVHVV WKH UHDVRQDEOHQHVV RI ILQDQFLDO VWDWHPHQW DPRXQWV & 7R SURYLGH GLUHFW HYLGHQFH DERXW WKH QXPEHUV LQ WKH ILQDQFLDO VWDWHPHQWV ' 7R WHVW LQWHUQDO FRQWUROV

 7KH ULVN WKDW PDWHULDO PLVVWDWHPHQWV KDYH RFFXUUHG LQ WUDQVDFWLRQV HQWHULQJ WKH DFFRXQWLQJ V\VWHP LV

$ $XGLW ULVN % ,QKHUHQW ULVN & &RQWURO ULVN ' 'HWHFWLRQ ULVN  ,Q WKH DXGLW ULVN PRGHO LI DQ DXGLW WHDP ZDQWHG WR NHHS DXGLW ULVN DW D ORZ OHYHO EXW WKHUH ZDV D JUHDW LQKHUHQW ULVN RI PDWHULDO PLVVWDWHPHQW DQG WKH LQWHUQDO FRQWURO ZDV LQHIIHFWLYH WKHQ SURFHGXUHV ZRXOG QHHG WR EH GHVLJQHG VR WKDW

$ 'HWHFWLRQ ULVN ZDV DW D ORZ OHYHO % 'HWHFWLRQ ULVN ZDV DW D KLJK OHYHO & &RQWURO ULVN ZDV DW D ORZ OHYHO ' ,QKHUHQW ULVN ZDV DW D KLJK OHYHO  ,QKHUHQW ULVN LV QRW D FKDUDFWHULVWLF RI WKH

$ &OLHQW V EXVLQHVV % 6XEVWDQWLYH SURFHGXUHV & 0DMRU W\SHV RI WUDQVDFWLRQV ' (IIHFWLYHQHVV RI WKH FOLHQW V DFFRXQWDQWV

 :KLFK RI WKH IROORZLQJ ULVNV LV HQWLUHO\ D TXDOLW\ FULWHULRQ EDVHG RQ SURIHVVLRQDO MXGJPHQW"

$ $XGLW ULVN % ,QKHUHQW ULVN & &RQWURO ULVN ' 'HWHFWLRQ ULVN  ,Q JHQHUDO PRVW IUDXGXOHQW FRPSDQLHV ZLOO SUHSDUH ILQDQFLDO VWDWHPHQWV WKDW DUH PDWHULDOO\ PLVOHDGLQJ E\ GRLQJ DOO RI WKH IROORZLQJ H[FHSW

$ 8QGHUVWDWH UHYHQXHV DQG DVVHWV % 8QGHUVWDWH H[SHQVHV DQG OLDELOLWLHV & 6KRZ ILQDQFLDO SHUIRUPDQFH EHWWHU WKDQ LQGXVWU\ DYHUDJH ' +DYH SHUIRUPDQFH H[DFWO\ PHHW DQQRXQFHG WDUJHWV  ,Q WKH SODQQLQJ VWDJH DQDO\WLFDO SURFHGXUHV DUH QRW XVHG WR

$ ,GHQWLI\ XQXVXDO FRQGLWLRQV WKDW GHVHUYH PRUH DXGLW HIIRUW % 3RLQW RXW DFFRXQWV WKDW PD\ FRQWDLQ HUURUV DQG IUDXG & 5HYLHZ WKH RYHUDOO TXDOLW\ RI WKH DXGLW ' 5HGXFH WKH ULVN RI PLVVLQJ VRPHWKLQJ LPSRUWDQW

 7KH DQDO\WLFDO SURFHGXUHV FRPSOHWHG GXULQJ WKH SODQQLQJ VWDJHV W\SLFDOO\ ZRXOG QRW LQFOXGH FRPSDULVRQ RI FXUUHQW\HDU DFFRXQW EDODQFHV ZLWK

$ %DODQFHV IRU RQH RU PRUH FRPSDUDEOH SHULRGV % $QWLFLSDWHG UHVXOWV IRXQG LQ EXGJHWV & (YDOXDWLRQ RI UHODWLRQVKLSV WR RWKHU FXUUHQW\HDU EDODQFHV ' 2WKHU DFFRXQWV DV VXEVWDQWLYH SURFHGXUHV

)LOO LQ WKH %ODQN 4XHVWLRQV

 7KH HYDOXDWLRQ RI ILQDQFLDO VWDWHPHQW DFFRXQWV E\ VWXG\LQJ DQG FRPSDULQJ UHODWLRQVKLSV DPRQJ ILQDQFLDO DQG QRQILQDQFLDO GDWD LV NQRZQ DV D Q BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB  %\ ERWK IUDXG DQG DJJUHVVLYH BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB FRPSDQLHV KDYH FDXVHG ILQDQFLDO VWDWHPHQWV WR EH PLVOHDGLQJ BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB

 $XGLWLQJ VWDQGDUGV VSHFLILFDOO\ $8  UHTXLUH WKDW DXGLWRUV VSHFLILFDOO\ DVVHVV WKH ULVN RI BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB GXH WR IUDXG IRU HDFK HQJDJHPHQW BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB LV WKH SUREDELOLW\ WKDW PDWHULDO PLVVWDWHPHQWV KDYH RFFXUUHG LQ WUDQVDFWLRQV HQWHULQJ WKH DFFRXQWLQJ V\VWHP BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB %HFDXVH DXGLWRUV KDYH OLWWOH FRQWURO RYHU LQKHUHQW ULVN DQG FRQWURO ULVN WKH WZR ULVNV DUH RIWHQ FRPELQHG DQG UHIHUUHG WR DV WKH ULVN RI BBBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBB LQYROYLQJ VHQLRU PDQDJHPHQW DUH QHYHU BBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 7KH SUREDELOLW\ WKDW DXGLW SURFHGXUHV ZLOO IDLO WR SURGXFH HYLGHQFH RI PDWHULDO PLVVWDWHPHQWV LV UHIHUUHG WR DV BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB

$XGLW ULVN FDQ EH H[SUHVVHG LQ WKH IROORZLQJ PRGHO $XGLW ULVN BBBBBBBBBBBBBBBBBBBBBBBBBBBBB [ BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB $XGLWRUV BBBBBBBBBBB FKRRVH WR UHO\ DOPRVW H[FOXVLYHO\ RQ HYLGHQFH SURGXFHG E\ VXEVWDQWLYH SURFHGXUHV HVSHFLDOO\ ZKHQ BBBBBBBBBBBBBBBBBBBBBBBBBBBBB ULVN DQG BBBBBBBBBBBBBBBBBBBBBBBBBBBBB ULVN DUH KLJK BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB ,Q DQ RYHUDOO VHQVH BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB LV WKH SUREDELOLW\ WKDW D SXEOLF DFFRXQWLQJ ILUP ZLOO JLYH DQ LQDSSURSULDWH RSLQLRQ RQ ILQDQFLDO VWDWHPHQWV BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB LV WKH WHUP XVHG WR UHIHU WR YLRODWLRQV RI ODZV DQG UHJXODWLRQV WKDW DUH BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB IURP ILQDQFLDO VWDWHPHQW HIIHFWV BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB UHIHUV WR ILQDQFLDO VWDWHPHQW DPRXQWV H[SUHVVHG HDFK \HDU DV SURSRUWLRQV RI D EDVH BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB

,Q WKH BBBBBBBBBBBBBBBBBBBBBBBBBBBBB VWDJH BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB DUH XVHG WR LGHQWLI\ SRWHQWLDO SUREOHP DUHDV DQG WR UHGXFH ULVN BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB &RPSDULVRQ RI ILQDQFLDO VWDWHPHQW QXPEHUV DQG UDWLRV DFURVV WZR RU PRUH \HDUV LV UHIHUUHG WR DV BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB DUH WKRVH LQGLYLGXDOV RU RUJDQL]DWLRQV WKDW DUH FORVHO\ WLHG WR WKH DXGLWHH SRVVLEO\ E\ IDPLOLDO RU LQYHVWPHQW UHODWLRQVKLSV BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 5HDVRQDEOHQHVV WHVWV XVH WR JDLQ DQ XQGHUVWDQGLQJ RI ILQDQFLDO VWDWHPHQW DFFRXQWV DQG UHODWLRQVKLSV DUH NQRZQ DV BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 7KH SUHOLPLQDU\ DQDO\WLFDO ZRUN SHUIRUPHG LQ WKH SODQQLQJ VWDJH RI DQ DXGLW LV VRPHWLPHV FDOOHG BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB

6KRUW $QVZHU 4XHVWLRQV

)RU HDFK RI WKH GHVFULSWLRQV LQ &ROXPQ $ PDWFK WKH FRUUHFW ZRUG RU ZRUGV IURP )RU &ROXPQ %

)RU HDFK RI WKH GHVFULSWLRQV   PDWFK WKH FRUUHFW ZRUG RU ZRUGV IURP $ )RU  $/

$ $XGLW ULVNV IRU SDUWLFXODU DFFRXQWV FDQ EH H[SUHVVHG LQ WKH PRGHO $XGLW ULVN $5 ,QKHUHQW ULVN ,5 [ ,QWHUQDO FRQWURO ULVN &5 [ 'HWHFWLRQ ULVN '5  ,I DQ DXGLW ULVN LV VHW DW  SHUFHQW WKH LQKHUHQW ULVN DW  SHUFHQW DQG WKH LQWHUQDO FRQWURO ULVN DW  SHUFHQW ZKDW ZRXOG EH WKH GHWHFWLRQ ULVN" % ,I WKH DXGLW WHDP ZDQWHG WR UHGXFH WKH DXGLW ULVN WR  SHUFHQW ZKDW ZRXOG EH WKH GHWHFWLRQ ULVN" & :KDW ZRXOG WKH DXGLW WHDP KDYH WR GR WR UHGXFH WKH DXGLW ULVN"

(VVD\ 4XHVWLRQV

:KDW DUH WKH LQGHSHQGHQW DXGLWRU V UHVSRQVLELOLWLHV WR GHWHFW DQG UHSRUW HUURUV DQG IUDXGV"

&DQ DQ DXGLWRU SODFH FRPSOHWH UHOLDQFH RQ LQWHUQDO FRQWURO WR WKH H[FOXVLRQ RI RWKHU DXGLW SURFHGXUHV" ([SODLQ \RXU DQVZHU XVLQJ WKH DXGLW ULVN PRGHO

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

$QDO\WLFDO SURFHGXUHV DUH HYDOXDWLRQV RI ILQDQFLDO LQIRUPDWLRQ PDGH E\ D VWXG\ RI $QDO\WLFDO HYDOXDWLQJ VXFK UHODWLRQVKLSV DUH HVVHQWLDO WR WKH DXGLW SURFHVV

SODXVLEOH UHODWLRQVKLSV DPRQJ ILQDQFLDO DQG QRQILQDQFLDO GDWD 8QGHUVWDQGLQJ DQG V

7KH IROORZLQJ ILQDQFLDO VWDWHPHQWV ZHUH SUHSDUHG E\ $%& 0DQXIDFWXULQJ &R IRU WKH \HDU HQGHG 'HFHPEHU   $OVR SUHVHQWHG DUH YDULRXV ILQDQFLDO VWDWHPHQW UDWLRV IRU $%& DV FDOFXODWHG IURP WKH SULRU \HDU ILQDQFLDO VWDWHPHQWV 6DOHV SULRU\HDU UHSUHVHQW QHW FUHGLW VDOHV 7KH WRWDO DVVHWV DQG WKH UHFHLYDEOHV DQG LQYHQWRU\ EDODQFHV DW 'HFHPEHU   ZHUH WKH VDPH DV DW 'HFHPEHU  

5HTXLUHG

,WHPV  WKURXJK  EHORZ UHSUHVHQW ILQDQFLDO UDWLRV WKDW WKH DXGLWRU FDOFXODWHG GXULQJ WKH SULRU\HDU DXGLW )RU HDFK UDWLR FDOFXODWH WKH FXUUHQW \HDU UDWLR IURP WKH \HDU FXUUHQW\HDU ILQDQFLDO VWDWHPHQWV SUHVHQWHG DERYH

:K\ LV LW LPSRUWDQW IRU DXGLWRUV WR XQGHUVWDQG WKHLU FOLHQWV EXVLQHVV ULVNV"

0DWFKLQJ 4XHVWLRQV

7KH DXGLW ULVN PRGHO LQFOXGHV WKH IRXU ULVNV OLVWHG EHORZ 3ODFH WKH FRUUHFW W\SH RI ULVN ZLWK WKH UHODWHG GHILQLWLRQ EHORZ

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

)RU HDFK RI WKH IROORZLQJ VWDWHPHQWV RU SKUDVHV LQGLFDWH WKH SURIHVVLRQDO VWDQGDUG WR ZKLFK LW UHODWHV

 ,QYHVWLJDWH ODUJH DQG XQXVXDO WUDQVDFWLRQV SDUWLFXODUO\ WKRVH WKDW RFFXU DW RU QHDU \HDUHQG

$8  7KH $XGLWRU V &RPPXQLFDWLRQ ZLWK 7KRVH &KDUJHG ZLWK *RYHUQDQFH $8  &RQVLGHUDWLRQ RI )UDXG LQ BBBB

 (YDOXDWH WKH QHW UHDOL]DEOH YDOXH RI LQYHQWRU\  0DNH LQTXLULHV DERXW PDQDJHPHQW V SROLFLHV DQG SURFHGXUHV IRU FRPSOLDQFH ZLWK ODZV DQG UHJXODWLRQV  $GGUHVV GLVDJUHHPHQWV ZLWK PDQDJHPHQW RQ VLJQLILFDQW DFFRXQWLQJ DQG DXGLWLQJ PDWWHUV

D )LQDQFLDO 6WDWHPHQW $XGLW $8  &RQVLGHUDWLRQ RI /DZV DQG 5HJXODWLRQV BBBB BBBB

$8  $XGLWLQJ $FFRXQWLQJ (VWLPDWHV BBBB

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

!&! $E H "  9"D C" Y %"  " @ %& @ "!   ( (" ! 9 !4 ! %"& !!!((  !@  98!  !(!  B !&! $ "( 2" 9! H "   98Q )57V 5 !4 ! 321 %!0 & !# ) ((  !' &""  $E    %$@D    %$@D !4 !(!E



7UXH  )DOVH 4XHVWLRQV

5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH )$/6( LQ ILQDQFLDO VWDWHPHQWV )UDXGV DUH XQLQWHQWLRQDO PLVVWDWHPHQWV RU RPLVVLRQV RI DFFRXQWV RU GLVFORVXUHV

&KDSWHU  0DQDJHPHQW )UDXG DQG $XGLW 5LVN $QVZHU .H\

!&! $E H "  9"D C" Y %"  " @ %& @ "!   ( (" ! 9 !4 ! %"& !!!((  !@  98!  !(!  B !&! $ "( 2" 9! H "   98Q )57V 5 !4 ! 321 %!0 & !# ) ((  !' &""  $E    %$@D    %$@D !4 !(!E

!&! $E H "  9"D C" Y %"  " @ %& @ "!   ( (" ! 9 !4 ! %"& !!!((  !@  98!  !(!  B !&! $ "( 2" 9! H "   98Q )57V 5 !4 ! 321 %!0 & !# ) ((  !' &""  $E    %$@D    %$@D !4 !(!E





)$/6(

5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH LQWHQW RI LQGXFLQJ VRPHRQH WR EHOLHYH WKH IDOVHKRRG DQG VXIIHU D ORVV )UDXG FRQVLVWV RI NQRZLQJO\ PDNLQJ PDWHULDO PLVUHSUHVHQWDWLRQ RI IDFW ZLWK WKH 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH WKH 3URIHVVLRQDO 6WDQGDUGV DQG 3UDFWLFHV IRU &HUWLILHG )UDXG ([DPLQHUV 7KH QDWXUH RI H[WHQGHG SURFHGXUHV IRU IUDXG GHWHFWLRQ LV OLPLWHG WR WKRVH OLVWHG LQ 758(

!"# $E  !@D  9"D C % 9   !& % 3 "!( " 9 ( " &!  !" 9&"  (" !" 9&  %!& !@  98!  !"& $  !@ !2! G 57V 5 !4 ! 321 %!0 & !# ) ((  !' &""  $E    %$@D    %$@D !4 !(!E

$E !!@ %!  9"D C!&"4 !  !2 H ! !@ % "( $ !!@ (" ! " !' V57 V5 !4 ! 321 %!0 & !# ) ((  !' &""  $E    %$@D    %$@D !4 !(!E





)$/6(

5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 758( RQ FRQWUROV DQG GR QRW SHUIRUP DQ\ RWKHU DXGLW ZRUN &RQWURO ULVN VKRXOG QRW EH DVVHVVHG VR ORZ WKDW DXGLWRUV SODFH FRPSOHWH UHOLDQFH 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH MXGJHG WR EH ORZHU $XGLW FDUH DQG DWWHQWLRQ VKRXOG EH JUHDWHU ZKHUH EXVLQHVV DQG LQKHUHQW ULVNV DUH

!"# $E  !@D  9"D C % 9   !& % 3 "!( " 9 ( " &!  !" 9&"  (" !" 9&  %!& !@  98!  !"& $  !@ !2! G 57V 5 !4 ! 321 %!0 & !# ) ((  !' &""  $E    %$@D    %$@D !4 !(!E

!"# $E  !@D  9"D C % 9   !& % 3 "!( " 9 ( " &!  !" 9&"  (" !" 9&  %!& !@  98!  !"& $  !@ !2! G 57V 5 !4 ! 321 %!0 & !# ) ((  !' &""  $E    %$@D    %$@D !4 !(!E





5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH )$/6( ULVN LV  DW WKH FXUUHQW OHYHO 7KH DXGLWLQJ SURIHVVLRQ RIILFLDO VWDQGDUG IRU DQ DFFHSWDEOH OHYHO RI RYHUDOO DXGLW 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH )$/6( PLVVWDWHPHQWV 'HWHFWLRQ ULVN RFFXUV ZKHQ LQWHUQDO FRQWURO DFWLYLWLHV IDLO WR GHWHFW PDWHULDO

!"# $E  !@D  9"D C % 9   !& % 3 "!( " 9 ( " &!  !" 9&"  (" !" 9&  %!& !@  98!  !"& $  !@ !2! G 57V 5 !4 ! 321 %!0 & !# ) ((  !' &""  $E    %$@D    %$@D !4 !(!E

!"# $E  !@D  9"D C % 9   !& % 3 "!( " 9 ( " &!  !" 9&"  (" !" 9&  %!& !@  98!  !"& $  !@ !2! G 57V 5 !4 ! 321 %!0 & !# ) ((  !' &""  $E    %$@D    %$@D !4 !(!E





5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 758( WKHUHIRUH PXOWLSOLFDWLYH 7KH DXGLW ULVN PRGHO DVVXPHV WKDW HOHPHQWV RI DXGLW ULVN DUH LQGHSHQGHQW DQG 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH $XGLW ULVN $5 LV D TXDOLW\ FULWHULRQ EDVHG RQ SURIHVVLRQDO MXGJPHQW 758(

!&! $E H "  9"D C" Y %"  " @ %& @ "!   ( (" ! 9 !4 ! %"& !!!((  !@  98!  !(!  B!&! $ "( 2" 9! H "   98Q )57V 5 !4 ! 321 %!0 & !# ) ((  !' &""  $E    %$@D    %$@D !4 !(!E

!&! $E H "  9"D C" Y %"  " @ %& @ "!   ( (" ! 9 !4 ! %"& !!!((  !@  98!  !(!  B!&! $ "( 2" 9! H "   98Q )57V 5 !4 ! 321 %!0 & !# ) ((  !' &""  $E    %$@D    %$@D !4 !(!E





5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH )$/6( UREEHUV 7KH GHPRJUDSKLFV RI ZKLWHFROODU FULPLQDOV DUH VLPLODU WR WKRVH RI W\SLFDO EDQN 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 758( WKDW DUH EHWWHU WKDQ FXUUHQW LQGXVWU\ H[SHULHQFH *HQHUDOO\ IUDXGXOHQW ILQDQFLDO VWDWHPHQWV VKRZ ILQDQFLDO SHUIRUPDQFH DQG UDWLRV

$E " %" 9!E  %! F"&"( %!@ T  9"D C$ !! " " 9! " A "@  98Q C!S  B %&"2 B!!" 9  %  $ %! "( "&"( (" ! " !' X 57 V5 !4 ! 321 %!0 & !# ) ((  !' &""  $E    %$@D    %$@D !4 !(!E

$E !!@ %!  9"D C!&"4 !  !2 H ! !@ % "( $ !!@ (" ! " !' V57 V5 !4 ! 321 %!0 & !# ) ((  !' &""  $E    %$@D    %$@D !4 !(!E





5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 758( VWDJHV RI HDFK DXGLW $XGLWLQJ VWDQGDUGV UHTXLUH WKDW DQDO\WLFDO SURFHGXUHV EH DSSOLHG LQ WKH EHJLQQLQJ 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 758( FRPSOHWLQJ DQ DXGLW .QRZOHGJH DQG XQGHUVWDQGLQJ RI D FOLHQW V EXVLQHVV LV DEVROXWHO\ HVVHQWLDO LQ

$E " %" 9!E  %! F"&"( %!@ T  9"D C$ !! " " 9! " A "@  98Q C!S  B %&"2 B!!" 9  % $ %! "( "&"( (" ! " !' X 57 V5 !4 ! 321 %!0 & !# ) ((  !' &""  $E    %$@D    %$@D !4 !(!E

!"# $E  !@D  9"D C % 9   !& % 3 "!( " 9 ( " &!  !" 9&"  (" !" 9&  %!& !@  98!  !"& $  !@ !2! G 57V 5 !4 ! 321 %!0 & !# ) ((  !' &""  $E    %$@D    %$@D !4 !(!E





758(

5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH )$/6( FRQVLGHUHG LQHIIHFWLYH $QDO\WLFDO SURFHGXUHV DUH FRQVLGHUHG WR EH VRIW HYLGHQFH DQG WKHUHIRUH 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH WKH DFFRXQWV DQG XVH VXFK LQGLFDWRUV WR SODQ IXUWKHU DXGLW ZRUN $XGLWRUV ORRN IRU UHODWLRQVKLSV WKDW GR QRW PDNH VHQVH DV LQGLFDWRUV RI SUREOHPV LQ

$E " %" 9!E  %! F"&"( %!@ T  9"D C$ !! " " 9! " A "@  98Q C!S  B %&"2 B!!" 9  %  $ %! "( "&"( (" ! " !' X 57 V5 !4 ! 321 %!0 & !# ) ((  !' &""  $E    %$@D    %$@D !4 !(!E

!&! $E H "  9"D C" Y %"  " @ %& @ "!   ( (" ! 9 !4 ! %"& !!!((  !@  98!  !(!  B!&! $ "( 2" 9! H "   98Q )57V 5 !4 ! 321 %!0 & !# ) ((  !' &""  $E    %$@D    %$@D !4 !(!E





5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 758( KHOS DXGLWRUV LGHQWLI\ SUREOHP DUHDV DQG PDNH EURDG ULVN DVVHVVPHQWV .QRZOHGJH RI WKH FOLHQW V EXVLQHVV IURP SUHOLPLQDU\ DQDO\WLFDO SURFHGXUHV FDQ 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH )$/6( VWDWHPHQWV $XGLWV DUH QRW GHVLJQHG WR GHWHFW PDWHULDO HUURUV DQG IUDXG LQ ILQDQFLDO

0XOWLSOH &KRLFH 4XHVWLRQV



7KH PDMRU HPSKDVLV LQ *$$6 UHODWHG WR FRQVLGHUDWLRQ RI IUDXG LQ D ILQDQFLDO VWDWHPHQW DXGLW $8  LV RQ

$ (PSOR\HH PLVDSSURSULDWLRQ RI DVVHWV % 0DQDJHPHQW IUDXG & &OLHQW IUDXG RQ FXVWRPHUV ' (PSOR\HH HPEH]]OHPHQW
 %1 ! " C" Y %"  " @ %& @ "!   ( (" ! 9 !4 ! %"& !!!((  !@  98!  !(!  B !&! $ "( 2" 9! H "   98Q )57V 5 !4 ! 321 %!0 W G (( !2&!&!E &"" @!!E   %!0  



0DQDJHPHQW IUDXG JHQHUDOO\ UHIHUV WR

$ 8QLQWHQWLRQDO PLVWDNHV % 1RQFRPSOLDQFH & ,QWHQWLRQDO GLVWRUWLRQV RI ILQDQFLDO VWDWHPHQWV ' 9LRODWLRQV RI *$$6


$E   9"D

$E   9"D  %1 ! " C" Y %"  " @ %& @ "!   ( (" ! 9 !4 ! %"& !!!((  !@  98!  !(!  B !&! $ "( 2" 9! H "   98Q )57V 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  

$E   9"D  %1 ! " C" Y %"  " @ %& @ "!   ( (" ! 9 !4 ! %"& !!!((  !@  98!  !(!  B !&! $ "( 2" 9! H "   98Q )57V 5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0 



' )RU UHSRUWLQJ DOO IUDXGV WR RXWVLGH DJHQFLHV RU SDUWLHV & )RU ILQGLQJ DOO LQWHQWLRQDO PLVVWDWHPHQWV FRQFHDOHG E\ FROOXVLRQ % )RU UHSRUWLQJ LPPDWHULDO IUDXGV WR D OHYHO RI PDQDJHPHQW DW OHDVW RQH OHYHO $ )RU DXWKHQWLFDWLQJ GRFXPHQWV ([WHUQDO DXGLWRUV DUH UHVSRQVLEOH DERYH WKH SHRSOH LQYROYHG



$FFRUGLQJ WR DXGLWLQJ VWDQGDUGV H[WHUQDO DXGLWRUV UHVSRQVLELOLWLHV IRU LQGLUHFW QRQFRPSOLDQFH GR QRW LQFOXGH

$ 'HVLJQLQJ DXGLW SURFHGXUHV WR GHWHFW QRQFRPSOLDQFH LQ WKH DEVHQFH RI VSHFLILF LQIRUPDWLRQ EURXJKW WR WKH DXGLWRUV DWWHQWLRQ % 3HUIRUPLQJ DXGLW SURFHGXUHV ZKHQ VSHFLILF LQIRUPDWLRQ LQGLFDWHV WKDW SRVVLEOH QRQFRPSOLDQFH PD\ KDYH DQ LQGLUHFW PDWHULDO HIIHFW RQ ILQDQFLDO VWDWHPHQWV & &RQVLGHULQJ WKH TXDOLWDWLYH PDWHULDOLW\ RI NQRZQ DQG VXVSHFWHG QRQFRPSOLDQFH ' 2EWDLQLQJ ZULWWHQ PDQDJHPHQW UHSUHVHQWDWLRQV FRQFHUQLQJ WKH DEVHQFH RI YLRODWLRQV RI ODZV DQG UHJXODWLRQV
! 9&""  9"D  %1 ! " C"  %! " A @ A 9&" " !( H ! " ! 9! @ A !2" 9! H "  98Q I 57 V5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  



&HUWDLQ FRQGLWLRQV DQG FLUFXPVWDQFHV DUH RIWHQ SUHVHQW ZKHQ PDQDJHPHQW IUDXG RFFXUV :KLFK RI WKH IROORZLQJ LV QRW VXFK D FRQGLWLRQ RU FLUFXPVWDQFH"

$ 8QIDYRUDEOH LQGXVWU\ FRQGLWLRQV % /DFN RI ZRUNLQJ FDSLWDO & +LJK OLTXLGLW\ ' 6ORZ FXVWRPHU FROOHFWLRQV




 %1 ! " C" Y %"  " @ %& @ "!   ( (" ! 9 !4 ! %"& !!!((  !@  98!  !(!  B !&! $ "( 2" 9! H "   98Q )57V 5 !4 ! 321 %!0 & !# ) ((  !' &""  $E      

,QGHSHQGHQW DXGLWRUV ZKR FRQVLGHU IUDXG LQ WKH FRXUVH RI ILQDQFLDO VWDWHPHQW DXGLWV DUH ZHOODGYLVHG WR TXDQWLI\ PDWHULDOLW\ LQ WHUPV RI

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
$E   9"D  %1 ! " C" Y %"  " @ %& @ "!   ( (" ! 9 !4 ! %"& !!!((  !@  98!  !(!  B !&! $ "( 2" 9! H "   98Q )57V 5 !4 ! 321 %!0 W G (( !' &"" @!!E      

$E   9"D



$Q DXGLWRU DVVHVVHV WKH ULVN RI PDWHULDO PLVVWDWHPHQW EHFDXVH LW

$ ,V UHOHYDQW WR WKH DXGLWRU V XQGHUVWDQGLQJ RI WKH FRQWURO HQYLURQPHQW % 3URYLGHV DVVXUDQFH WKDW WKH DXGLWRU V RYHUDOO PDWHULDOLW\ OHYHOV DUH DSSURSULDWH & ,QGLFDWHV WR WKH DXGLWRU ZKHUH LQKHUHQW ULVN PD\ EH WKH JUHDWHVW ' $IIHFWV WKH OHYHO RI GHWHFWLRQ ULVN WKDW WKH DXGLWRU PD\ DFFHSW
!"# $E   9"D   ! " C % 9   !& % 3 "!( " 9 ( " &!  !" 9&"  (" !" 9&  %!& !@  98!  !"& $  !@ !2! G 57V 5 !4 ! 321 %!0 & !# ) ((  !' &""  $E    %!0  



:KHQ IUDXG ULVN LV VLJQLILFDQW DQG PDQDJHPHQW FRRSHUDWLRQ LV XQVDWLVIDFWRU\ WKH DXGLWRUV ZLOO PRVW OLNHO\

$ 3HUIRUP H[WHQGHG DXGLW SURFHGXUHV % &RQVXOW ZLWK IUDXG H[DPLQHUV & 5HSRUW GLUHFWO\ WR WKH 6HFXULWLHV DQG ([FKDQJH &RPPLVVLRQ ZLWKLQ RQH GD\ ' :LWKGUDZ IURP WKH HQJDJHPHQW
!4 ! %"& !!!((  !@  98!  !(!  B !&! $ "( 2" 9! H "   98Q )57V 5 !4 ! 321 %!0 & !# ) ((  !' &""  $E       



:KLFK RI WKH IROORZLQJ VWDWHPHQWV FRQFHUQLQJ QRQFRPSOLDQFH E\ FOLHQWV LV FRUUHFW"

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
! 9&""  9"D   ! " C"  %! " A @ A 9&" " !( H ! " ! 9! @A !2" 9! H "  98Q I 57 V5 !4 ! 321 %!0 W G (( !2&!&!E &"" @!!E   %!0  

$E   9"D  %1 ! " C" Y %"  " @ %& @ "!   ( (" ! 9



:KLFK RI WKH IROORZLQJ VWDWHPHQWV EHVW GHVFULEHV DXGLWRUV UHVSRQVLELOLW\ WR GHWHFW HUURUV DQG IUDXGV"

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
$E   9"D   ! " C$ !! " " 9! " A "@  98Q C!S  B %&"2 B!!" 9  %  $ %! "( "&"( (" ! " !' X 57 V5 !4 ! 321 %!0 C" Y %"  " @ %& @ "!   ( (" ! 9 !4 ! %"& !!!((  !@  98!  !(!  B !&! $ "( 2" 9! H "   98Q )57V 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  

!"# $E   9"D  %1 ! " C % 9   !& % 3 "!( " 9 ( " &!  !" 9&"  (" !" 9&  %!& !@  98!  !"& $  !@ !2! G 57V 5 !4 ! 321 %!0 Q 6 (( !2&!&!E &""  $E    %!0  



' 'HWHFWLRQ ULVN & &RQWURO ULVN % ,QKHUHQW ULVN $ $XGLW ULVN VWDWHPHQWV EHVW GHVFULEHV 7KH SUREDELOLW\ WKDW DQ DXGLW WHDP ZLOO JLYH DQ LQDSSURSULDWH RSLQLRQ RQ ILQDQFLDO



,QKHUHQW ULVN LV WKH

$ 3UREDELOLW\ WKDW VRPH DFFRXQWV DUH PRUH VXVFHSWLEOH WR PLVVWDWHPHQW WKDQ RWKHUV % 3UREDELOLW\ WKDW WKH FOLHQW V LQWHUQDO FRQWURO SROLFLHV DQG SURFHGXUHV ZLOO IDLO WR GHWHFW PDWHULDO PLVVWDWHPHQWV & 3UREDELOLW\ WKDW PDWHULDO PLVVWDWHPHQWV KDYH RFFXUUHG LQ WUDQVDFWLRQV HQWHULQJ WKH DFFRXQWLQJ V\VWHP XVHG WR GHYHORS ILQDQFLDO VWDWHPHQWV ' 3UREDELOLW\ WKDW WKH DXGLWRU PD\ QRW GHWHFW PDWHULDO PLVVWDWHPHQWV LQ WKH ILQDQFLDO VWDWHPHQWV
$E !!@  9"D  %1 ! " C % 9   !& % 3 "!( " 9 ( " &!  !" 9&"  (" !" 9&  %!& !@  98!  !"& $  !@ !2! G 57V 5 !4 ! 321 %!0 Q 6 (( !2&!&!E &""  $E    %!0  



,I FRQWURO ULVN LQFUHDVHV DQG DOO RWKHU ULVNV LQ WKH DXGLW ULVN PRGHO VWD\ FRQVWDQW H[FHSW WKH RQH UHIHUUHG WR EHORZ ZKLFK RI WKH IROORZLQJ VWDWHPHQWV LV FRUUHFW"

$ 'HWHFWLRQ ULVN ZLOO GHFUHDVH % ,QKHUHQW ULVN ZLOO LQFUHDVH & $XGLW ULVN ZLOO GHFUHDVH ' 'HWHFWLRQ ULVN ZLOO LQFUHDVH
!"# $E   9"D  %1 ! " C % 9   !& % 3 "!( " 9 ( " &!  !" 9&"  (" !" 9&  %!& !@  98!  !"& $  !@ !2! G 57V 5 !4 ! 321 %!0 W G (( !' &""  $E    %!0  



,I ILFWLWLRXV FUHGLW VDOHV ZHUH UHFRUGHG DQG WKH ILFWLWLRXV DFFRXQWV UHFHLYDEOH ZHUH ODWHU GLUHFWO\ ZULWWHQ RII DV EDG GHEW H[SHQVH

$ ,QFRPH ZRXOG EH RYHUVWDWHG % ,QFRPH ZRXOG EH XQGHUVWDWHG & ,QFRPH ZRXOG QRW EH PLVVWDWHG ' $FFRXQWV UHFHLYDEOH ZRXOG EH XQGHUVWDWHG
!' &"" !&!!#      

$E   9"D   ! " C % 9   !& % 3 "!( " 9 ( " &!  !" 9&"  (" !" 9&  %!& !@  98!  !"& $  !@ !2! G 57V 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &""  $E    %!0  

$E   9"D  %1 ! " C" Y %"  " @ %& @ "!   ( (" ! 9 !4 ! %"& !!!((  !@  98!  !(!  B !&! $ "( 2" 9! H "   98Q )57V 5 !4 ! 321 %!0 W G ((



' 'HWHUPLQH WKH DFFHSWDEOH OHYHO RI GHWHFWLRQ ULVN IRU ILQDQFLDO VWDWHPHQW & ,QGLFDWH ZKHWKHU PDWHULDOLW\ WKUHVKROGV IRU SODQQLQJ DQG HYDOXDWLRQ SXUSRVHV % ,GHQWLI\ WUDQVDFWLRQV DQG DFFRXQW EDODQFHV ZKHUH LQKHUHQW ULVN LV DW WKH $ (YDOXDWH WKH HIIHFWLYHQHVV RI WKH HQWLW\ V LQWHUQDO FRQWURO SROLFLHV DQG DFWLYLWLHV $Q DXGLW WHDP XVHV WKH DVVHVVHG ULVN RI PDWHULDO PLVVWDWHPHQW WR PD[LPXP DUH VXIILFLHQWO\ KLJK

DVVHUWLRQV



7KH ULVN RI PDWHULDO PLVVWDWHPHQW GLIIHUV IURP GHWHFWLRQ ULVN LQ WKDW LW

$ $ULVHV IURP WKH PLVDSSOLFDWLRQ RI DXGLW SURFHGXUHV % 0D\ EH DVVHVVHG LQ HLWKHU TXDQWLWDWLYH RU QRQTXDQWLWDWLYH WHUPV & ([LVWV LQGHSHQGHQWO\ RI WKH ILQDQFLDO VWDWHPHQW DXGLW ' &DQ EH FKDQJHG DW WKH DXGLWRU V GLVFUHWLRQ
$E "! !  9"D   ! " C % 9   !& % 3 "!( " 9 ( " &!  !" 9&"  (" !" 9&  %!& !@  98!  !"& $  !@ !2! G 57V 5 !4 ! 321 %!0 W G (( !' &""  $E    %!0  



7KH ULVN WKDW DQ DXGLWRU V SURFHGXUHV ZLOO OHDG WR WKH FRQFOXVLRQ WKDW D PDWHULDO PLVVWDWHPHQW GRHV QRW H[LVW LQ DQ DFFRXQW EDODQFH ZKHQ LQ IDFW VXFK PLVVWDWHPHQW DFWXDOO\ H[LVWV LV

$ $XGLW ULVN % ,QKHUHQW ULVN & &RQWURO ULVN ' 'HWHFWLRQ ULVN
!2&!&!E &""  $E    %!0  

!"# $E   9"D   ! " C % 9   !& % 3 "!( " 9 ( " &!  !" 9&"  (" !" 9&  %!& !@  98!  !"& $  !@ !2! G 57V 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %!0  

$E "! !  9"D  %1 ! " C % 9   !& % 3 "!( " 9 ( " &!  !" 9&"  (" !" 9&  %!& !@  98!  !"& $  !@ !2! G 57V 5 !4 ! 321 %!0 & !# ) (( 



' ,QFUHDVH PDWHULDOLW\ OHYHOV & ,QFUHDVH LQKHUHQW ULVN % 'HFUHDVH GHWHFWLRQ ULVN $ 'HFUHDVH VXEVWDQWLYH WHVWLQJ OHYHO WKH DXGLWRU ZRXOG RYHUDOO DXGLW ULVN OHYHO WKDW LV VXEVWDQWLDOO\ WKH VDPH DV WKH SODQQHG DXGLW ULVN WKH DVVHVVHG OHYHO RI FRQWURO ULVN IURP WKDW RULJLQDOO\ SODQQHG 7R DFKLHYH DQ %DVHG RQ DXGLW HYLGHQFH JDWKHUHG DQG HYDOXDWHG DQ DXGLWRU GHFLGHV WR LQFUHDVH

$E "! !  9"D   ! " C % 9   !& % 3 "!( " 9 ( " &!  !" 9&"  (" !" 9&  %!& !@  98!  !"& $  !@ !2! G 57V 5 !4 ! 321 %!0 W G (( !' &""  $E    %!0  



' 5LVN RI IDLOLQJ WR GLVFRYHU PDWHULDO PLVVWDWHPHQWV & 3UHOLPLQDU\ MXGJPHQW DERXW PDWHULDOLW\ OHYHOV % 5LVN RI PLVDSSO\LQJ DXGLW SURFHGXUHV $ $VVXUDQFH SURYLGHG E\ VXEVWDQWLYH WHVWV 7KH DFFHSWDEOH OHYHO RI GHWHFWLRQ ULVN LV LQYHUVHO\ UHODWHG WR WKH



7KH H[LVWHQFH RI DXGLW ULVN LV UHFRJQL]HG E\ WKH VWDWHPHQW LQ WKH DXGLWRU V VWDQGDUG UHSRUW WKDW WKH

$ $XGLWRU LV UHVSRQVLEOH IRU H[SUHVVLQJ DQ RSLQLRQ RQ WKH ILQDQFLDO VWDWHPHQWV ZKLFK DUH WKH UHVSRQVLELOLW\ RI PDQDJHPHQW % )LQDQFLDO VWDWHPHQWV DUH SUHVHQWHG IDLUO\ LQ DOO PDWHULDO UHVSHFWV LQ FRQIRUPLW\ ZLWK DSSOLFDEOH ILQDQFLDO UHSRUWLQJ IUDPHZRUN & $XGLW LQFOXGHV H[DPLQLQJ RQ D WHVW EDVLV HYLGHQFH VXSSRUWLQJ WKH DPRXQWV DQG GLVFORVXUHV LQ WKH ILQDQFLDO VWDWHPHQWV ' $XGLWRU REWDLQV UHDVRQDEOH DVVXUDQFH DERXW ZKHWKHU WKH ILQDQFLDO VWDWHPHQWV DUH IUHH RI PDWHULDO PLVVWDWHPHQW
$E   9"D   ! " C % 9   !& % 3 "!( " 9 ( " &!  !" 9&"  (" !" 9&  %!& !@  98!  !"& $  !@ !2! G 57V 5 !4 ! 321 %!0 W G (( !2&!&!E &""  $E    %!0  



:KHQ GHWHUPLQLQJ WKH LQKHUHQW ULVN UHODWHG WR DQ DFFRXQW EDODQFH DQ DXGLWRU WKHRUHWLFDOO\ GRHV QRW H[SOLFLWO\ FRQVLGHU WKH

$ /LTXLGLW\ RI WKH DFFRXQW % 'HJUHH RI PDQDJHPHQW HVWLPDWLRQ LQYROYHG LQ GHWHUPLQLQJ WKH SURSHU DFFRXQW EDODQFH & 5HODWHG LQWHUQDO FRQWURO SROLFLHV DQG SURFHGXUHV ' &RPSOH[LW\ RI FDOFXODWLRQV LQYROYHG
$E !!@  9"D  %1 ! " C % 9   !& % 3 "!( " 9 ( " &!  !" 9&"  (" !" 9&  %!& !@  98!  !"& $  !@ !2! G 57V 5 !4 ! 321 %!0 & !# ) ((  !' &""  $E    %!0  



$Q DXGLWRU ZKR GLVFRYHUV WKDW FOLHQW HPSOR\HHV KDYH FRPPLWWHG DQ LOOHJDO DFW WKDW KDV D PDWHULDO HIIHFW RQ WKH FOLHQW V ILQDQFLDO VWDWHPHQWV PRVW OLNHO\ ZRXOG ZLWKGUDZ IURP WKH HQJDJHPHQW LI

$ 7KH QRQFRPSOLDQFH LV D YLRODWLRQ RI JHQHUDOO\ DFFHSWHG DFFRXQWLQJ SULQFLSOHV % 7KH FOLHQW GRHV QRW WDNH WKH UHPHGLDO DFWLRQ WKDW WKH DXGLWRU FRQVLGHUV QHFHVVDU\ & 7KH LOOHJDO DFW ZDV FRPPLWWHG GXULQJ D SULRU \HDU WKDW ZDV QRW DXGLWHG ' 7KH DXGLWRU KDV DOUHDG\ DVVHVVHG FRQWURO ULVN DW WKH PD[LPXP OHYHO
! 9&""  9"D   ! " C"  %! " A @ A 9&" " ! ( H ! " ! 9! @ A !2" 9! H "  98Q I 57 V5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &""  $E    %!0  



:KHQ DQ DXGLWRU EHFRPHV DZDUH RI SRVVLEOH QRQFRPSOLDQFH E\ D FOLHQW WKH DXGLWRU VKRXOG REWDLQ DQ XQGHUVWDQGLQJ RI WKH QDWXUH RI WKH DFW WR

$ (YDOXDWH WKH HIIHFW RQ WKH ILQDQFLDO VWDWHPHQWV % 'HWHUPLQH WKH UHOLDELOLW\ RI PDQDJHPHQW V UHSUHVHQWDWLRQV & &RQVLGHU ZKHWKHU RWKHU VLPLODU DFWV PD\ KDYH RFFXUUHG ' 5HFRPPHQG UHPHGLDO DFWLRQV WR WKH DXGLW FRPPLWWHH
%!0  



  ! " C"  %! " A @ A 9&" " !( H ! " ! 9! @ A !2" 9! H "  98Q I 57 V5 !4 ! 321 %!0 Q 6 (( !2&!&!E &""  $E   

-RQHV &3$ LV DXGLWLQJ WKH ILQDQFLDO VWDWHPHQWV RI ;<= 5HWDLOLQJ ,QF :KDW DVVXUDQFH GRHV -RQHV SURYLGH WKDW GLUHFW HIIHFW QRQFRPSOLDQFH WKDW LV PDWHULDO WR ;<= V ILQDQFLDO VWDWHPHQWV DQG QRQFRPSOLDQFH WKDW KDV D PDWHULDO EXW LQGLUHFW HIIHFW RQ WKH ILQDQFLDO VWDWHPHQWV ZLOO EH GHWHFWHG"

$ 'LUHFW HIIHFW QRQFRPSOLDQFH 5HDVRQDEOH LQGLUHFW HIIHFW QRQFRPSOLDQFH QRQH % 'LUHFW HIIHFW QRQFRPSOLDQFH 5HDVRQDEOH LQGLUHFW HIIHFW QRQFRPSOLDQFH UHDVRQDEOH & 'LUHFW HIIHFW QRQFRPSOLDQFH /LPLWHG LQGLUHFW HIIHFW QRQFRPSOLDQFH QRQH ' 'LUHFW HIIHFW QRQFRPSOLDQFH /LPLWHG LQGLUHFW HIIHFW QRQFRPSOLDQFH UHDVRQDEOH
! 9&""  9"D   ! " C"  %! " A @ A 9&" " !( H ! " ! 9! @A !2" 9! H "  98Q I 57 V5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  

! 9&""  9"D



*HQHUDOO\ DFFHSWHG DXGLWLQJ VWDQGDUGV VWDWH WKDW DQDO\WLFDO SURFHGXUHV

$ 6KRXOG EH DSSOLHG LQ WKH SODQQLQJ DQG ILQDO UHYLHZ VWDJHV RI WKH DXGLW DQG DV D VXEVWDQWLYH WHVW GXULQJ WKH DXGLW % 6KRXOG EH DSSOLHG LQ WKH SODQQLQJ DQG ILQDO UHYLHZ VWDJHV RI WKH DXGLW DQG FDQ EH XVHG DV D VXEVWDQWLYH WHVW GXULQJ WKH DXGLW & 6KRXOG EH DSSOLHG LQ WKH SODQQLQJ VWDJH DQG FDQ EH DSSOLHG DV D VXEVWDQWLYH WHVW LQ WKH ILQDO UHYLHZ VWDJH ' 6KRXOG EH DSSOLHG LQ WKH ILQDO UHYLHZ VWDJH DQG FDQ EH DSSOLHG DV D VXEVWDQWLYH WHVW LQ WKH SODQQLQJ VWDJH
!!"   9"D  %1 ! " C$ !! " " 9! " A "@  98Q C!S  B %&"2 B!!" 9  %  $ %! "( "&"( (" ! " !' X 57 V5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  



,Q WKH SODQQLQJ VWDJH DQDO\WLFDO SURFHGXUHV DUH XVHG WR

$ ,GHQWLI\ SRWHQWLDO SUREOHP DUHDV % 3URYLGH GLUHFW HYLGHQFH DERXW WKH EDODQFHV LQ DFFRXQWV & 'HWHUPLQH WKH PDWKHPDWLFDO FRUUHFWQHVV RI WKH ILQDQFLDO VWDWHPHQWV ' $OO RI WKH DERYH


$E   9"D !!"   9"D  %1 ! " C$ !! " " 9! " A "@  98Q C!S  B %&"2 B!!" 9  %  $ %! "( "&"( (" ! " !' X 57 V5 !4 ! 321 %!0 C" Y %"  " @ %& @ "!   ( (" ! 9 !4 ! %"& !!!((  !@  98!  !(!  B!&! $ "( 2" 9! H "   98Q )57V 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %$@D    

!!"   9"D  %1 ! " C$ !! " " 9! "  A "@  98Q C!S  B %&"2 B!!" 9  %  $ %! "( "&"( (" ! " !' X 57 V5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0 



' :LWKGUDZ IURP WKH HQJDJHPHQW & ,QWHQVLI\ WKH DXGLW ZLWK WKH H[SHFWDWLRQ RI GHWHFWLQJ PDQDJHPHQW IUDXG % 3HUIRUP DGGLWLRQDO DXGLW SURFHGXUHV WR LQYHVWLJDWH WKH PDWWHU IXUWKHU $ &RQVLGHU WKH PDWWHU D VFRSH OLPLWDWLRQ H[SODQDWLRQ WKH DXGLWRU VKRXOG GHYHORSHG E\ WKH DXGLWRU ,I PDQDJHPHQW LV XQDEOH WR SURYLGH DQ DFFHSWDEOH GLIIHUHQFHV EHWZHHQ UHFRUGHG DPRXQWV DQG WKH H[SHFWDWLRQV HVWLPDWHV $VVXPH WKDW DSSOLFDWLRQ RI DQDO\WLFDO SURFHGXUHV UHYHDOHG VLJQLILFDQW XQH[SODLQHG



)RU DXGLWV RI ILQDQFLDO VWDWHPHQWV PDGH LQ DFFRUGDQFH ZLWK JHQHUDOO\ DFFHSWHG DXGLWLQJ VWDQGDUGV WKH XVH RI DQDO\WLFDO SURFHGXUHV LV UHTXLUHG WR VRPH H[WHQW

$ $V D VXEVWDQWLYH WHVW \HV LQ WKH ILQDO UHYLHZ VWDJH \HV % $V D VXEVWDQWLYH WHVW \HV LQ WKH ILQDO UHYLHZ VWDJH QR & $V D VXEVWDQWLYH WHVW QR LQ WKH ILQDO UHYLHZ VWDJH \HV ' $V D VXEVWDQWLYH WHVW QR LQ WKH ILQDO UHYLHZ VWDJH QR
!!"   9"D  %1 ! " C$ !! " " 9! " A "@  98Q C!S  B %&"2 B!!" 9  %  $ %! "( "&"( (" ! " !' X 57 V5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  



:KLFK RI WKH IROORZLQJ ZRXOG QRW OLNHO\ EH IRXQG LQ WKH PLQXWHV RI WKH ERDUG RI GLUHFWRUV"

$ $PRXQW RI GLYLGHQGV GHFODUHG % $SSURYDO WR SOHGJH DVVHWV DV VHFXULW\ IRU GHEWV & $XWKRUL]DWLRQ RI RIILFHUV VDODULHV ' $SSURYDO RI D QHZ GHVNWRS FRPSXWHU IRU WKH FRQWUROOHU
!2&!&!E &"" @!!E   %!0  

$E " %" 9!E  9"D  %1 ! " C$ !! " " 9! " A "@  98Q C!S  B %&"2 B!!" 9  %  $ %! "( "&"( (" ! " !' X 57 V5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  

$E %! "( "&"(  9"D  %1 ! " C$ !! " " 9! " A "@  98Q C!S  B %&"2 B!!" 9  %  $ %! "( "&"( (" ! " !' X 57 V5 !4 ! 321 %!0 Q 6 ((



' 3HUIRUP WHVWV FORVHU WR \HDUHQG & ,QFOXGH PRUH H[SHULHQFHG DXGLWRUV RQ WKH HQJDJHPHQW % 3HUIRUP H[WHQGHG SURFHGXUHV $ ,QIRUP WKH 6(& IROORZLQJ H[FHSW $Q DXGLWRU ZKR HQFRXQWHUV VLJQLILFDQW ULVNV DW WKH FOLHQW VKRXOG GR DOO RI WKH



+RUL]RQWDO DQDO\VLV UHIHUV WR

$ 7KH WUHQG RI LQFRPH IURP \HDU WR \HDU RI SHUVRQV VXVSHFWHG RI IUDXG % &KDQJHV RI ILQDQFLDO VWDWHPHQW QXPEHUV DQG UDWLRV DFURVV VHYHUDO \HDUV & )LQDQFLDO VWDWHPHQW DPRXQWV H[SUHVVHG HDFK \HDU DV D SURSRUWLRQ RI D EDVH DPRXQW ' 7KH FKDQJH LQ D VXVSHFW V QHW ZRUWK IURP WKH EHJLQQLQJ WR WKH HQG RI D SHULRG
$E   9"D  %1 ! " C" Y %"  " @ %& @ "!   ( (" ! 9 !4 ! %"& !!!((  !@  98!  !(!  B !&! $ "( 2" 9! H "   98Q )57V 5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  



$QDO\WLFDO SURFHGXUHV XVHG LQ SODQQLQJ DQ DXGLW VKRXOG IRFXV RQ

$ 5HGXFLQJ WKH VFRSH RI WHVWV RI FRQWUROV DQG VXEVWDQWLYH WHVWV % 3URYLGLQJ DVVXUDQFH WKDW SRWHQWLDO PDWHULDO PLVVWDWHPHQWV ZLOO EH LGHQWLILHG & (QKDQFLQJ WKH DXGLWRU V XQGHUVWDQGLQJ RI WKH FOLHQW V EXVLQHVV ' $VVHVVLQJ WKH DGHTXDF\ RI WKH DYDLODEOH HYLGHQWLDO PDWWHU
 B %&"2 B!!" 9  %  $ %! "( "&"( (" ! " !' X 57 V5 !4 ! 321 %!0 W G (( 99 &""  $E    %!0  

 %!0  

!!"   9"D  %1 ! " C$ !! " " 9! " A "@  98Q C!S  B %&"2 B!!" 9  %  $ %! "( "&"( (" ! " !' X 57 V5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  

!!"   9"D   ! " C$ !! " " 9! " A "@  98Q C!S





' ([SHQGLWXUH DQDO\VLV & 1HW ZRUWK DQDO\VLV % 9HUWLFDO DQDO\VLV $ +RUL]RQWDO DQDO\VLV SHUFHQWDJHV RI WRWDO DVVHWV LV NQRZQ DV 7KH W\SH RI ILQDQFLDO DQDO\VLV WKDW H[SUHVVHV EDODQFH VKHHW DFFRXQWV DV ' %XUHDX RI /DERU VWDWLVWLFV & &RPSDQ\ EXGJHWV DQG IRUHFDVWV % 1RQILQDQFLDO LQIRUPDWLRQ VXFK DV SK\VLFDO SURGXFWLRQ VWDWLVWLFV $ )LQDQFLDO DFFRXQW LQIRUPDWLRQ IRU FRPSDUDEOH SULRU SHULRGV 6RXUFHV RI ILQDQFLDO DQG QRQILQDQFLDO GDWD GR QRW LQFOXGH

!!"   9"D  %1 ! " C$ !! " " 9! " A "@  98Q C!S  B %&"2 B!!" 9  %  $ %! "( " &"( (" ! " !' X 57 V5 !4 ! 321 %!0 W G (( 99 &"" %$# "!   %$@D    

!!"   9"D  %1 ! " C$ !! " " 9! " A "@  98Q C!S  B %&"2 B!!" 9  %  $ %! "( "&"( (" ! " !' X 57 V5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E  



' ,QFRPH WD[HV SD\DEOH & ,QWHUHVW H[SHQVH % 7UDYHO DQG HQWHUWDLQPHQW H[SHQVH $ $FFRXQWV UHFHLYDEOH DQDO\WLFDO SURFHGXUHV" :KLFK RI WKH IROORZLQJ DFFRXQWV WHQGV WR EH PRVW SUHGLFWDEOH IRU SXUSRVHV RI

$E   9"D   ! " C$ !! " " 9! " A "@  98Q C!S  B %&"2 B!!" 9  %  $ %! "( "&"( (" ! " !' X 57 V5 !4 ! 321 %!0 C" Y %"  " @ %& @ "!   ( (" ! 9 !4 ! %"& !!!((  !@  98!  !(!  B !&! $ "( 2" 9! H "   98Q )57V 5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  



' 'HWHUPLQH WKH H[LVWHQFH RI XQUHFRUGHG OLDELOLWLHV RU RYHUVWDWHG DVVHWV & ,GHQWLI\ XQXVXDO FRQGLWLRQV WKDW GHVHUYH DGGLWLRQDO DXGLW HIIRUW % ,GHQWLI\ WKH W\SHV RI HUURUV RU IUDXGV WKDW FDQ RFFXU LQ WUDQVDFWLRQV $ ,GHQWLI\ WKH DSSURSULDWH VFKHGXOHV WR EH SUHSDUHG E\ WKH FOLHQW WKH SODQQLQJ VWDJHV LV WR QRQILQDQFLDO GDWD 7KH SULPDU\ SXUSRVH RI DQDO\WLFDO SURFHGXUHV FRQGXFWHG GXULQJ DFFRXQWV E\ VWXG\LQJ DQG FRPSDULQJ UHODWLRQVKLSV DPRQJ ILQDQFLDO DQG $QDO\WLFDO SURFHGXUHV DUH DXGLW PHWKRGV RI HYDOXDWLQJ ILQDQFLDO VWDWHPHQW



:KLFK RI WKH IROORZLQJ LV QRW UHTXLUHG E\ $8  &RQVLGHUDWLRQ RI )UDXG LQ D )LQDQFLDO 6WDWHPHQW $XGLW "

$ &RQGXFW D FRQWLQXLQJ DVVHVVPHQW RI WKH ULVNV RI PDWHULDO PLVVWDWHPHQW GXH WR IUDXG WKURXJKRXW WKH DXGLW % &RQGXFW D GLVFXVVLRQ E\ WKH DXGLW WHDP RI WKH ULVNV RI PDWHULDO PLVVWDWHPHQW GXH WR IUDXG & &RQGXFW WKH DXGLW ZLWK SURIHVVLRQDO VNHSWLFLVP ZKLFK LQFOXGHV DQ DWWLWXGH WKDW DVVXPHV EDODQFHV DUH LQFRUUHFW XQWLO YHULILHG E\ WKH DXGLWRU ' &RQGXFW LQTXLULHV RI VKDUHKROGHUV DV WR WKHLU YLHZV DERXW WKH ULVNV RI IUDXG DQG WKHLU NQRZOHGJH RI DQ\ IUDXG RU VXVSHFWHG IUDXG
$E   9"D   ! " C" Y %"  " @ %& @ "!   ( (" ! 9 !4 ! %"& !!!((  !@  98!  !(!  B!&! $ "( 2" 9! H "   98Q )57V 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  



$Q DXGLWRU ZKR LQFUHDVHV WKH SODQQHG DVVHVVHG OHYHO RI FRQWURO ULVN EHFDXVH FHUWDLQ FRQWURO DFWLYLWLHV ZHUH GHWHUPLQHG WR EH LQHIIHFWLYH ZRXOG PRVW OLNHO\ LQFUHDVH WKH

$ ([WHQW RI VXEVWDQWLYH WHVWV RI GHWDLOV % /HYHO RI LQKHUHQW ULVN & ([WHQW RI WHVWV RI FRQWUROV ' /HYHO RI GHWHFWLRQ ULVN
!"# $E   9"D   ! " C % 9   !& % 3 "!( " 9 ( " &!  !" 9&"  (" !" 9&  %!& !@  98!  !"& $  !@ !2! G 57V 5 !4 ! 321 %!0 & !# ) ((  !' &""  $E    %!0  



:KDW DVVXUDQFH GRHV WKH DXGLWRU SURYLGH WKDW HUURUV IUDXGV DQG GLUHFW HIIHFW QRQFRPSOLDQFH WKDW DUH PDWHULDO WR WKH ILQDQFLDO VWDWHPHQWV ZLOO EH GHWHFWHG"

$ (UURUV OLPLWHG IUDXGV QHJDWLYH GLUHFW HIIHFW QRQFRPSOLDQFH OLPLWHG % (UURUV OLPLWHG IUDXGV OLPLWHG GLUHFW HIIHFW QRQFRPSOLDQFH UHDVRQDEOH & (UURUV UHDVRQDEOH IUDXGV OLPLWHG GLUHFW HIIHFW QRQFRPSOLDQFH OLPLWHG ' (UURUV UHDVRQDEOH IUDXGV UHDVRQDEOH GLUHFW HIIHFW QRQFRPSOLDQFH UHDVRQDEOH


$E   9"D  %1 ! " C" Y %"  " @ %& @ "!   ( (" ! 9 !4 ! %"& !!!(( !@  98!  !(!  B !&! $ "( 2" 9! H "   98Q )57V 5 !4 ! 321 %!0 & !# ) ((  !' &"" @!!E   %$@D    

! 9&""  9"D   ! " C"  %! " A @ A 9&" " !( H ! " ! 9! @ A !2" 9! H "  98Q I 57 V5 !4 ! 321 %!0 C" Y %"  " @ %& @ "!   ( (" ! 9 !4 ! %"& !!!((  !@  98!  !(!  B !&! $ "( 2" 9! H "   98Q )57V 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0 



' 1RQURXWLQH QRQV\VWHPDWLF MRXUQDO HQWULHV & 3HWW\ FDVK HPEH]]OHPHQWV % 3D\UROO IUDXGVWHUV PLVWDNHV LQ XVLQJ XQLVVXHG 6RFLDO 6HFXULW\ QXPEHUV $ 6\VWHPDWLF SURFHVVLQJ RI ODUJH YROXPHV RI GD\WRGD\ RUGLQDU\ WUDQVDFWLRQV LQ ([SHULHQFH KDV VKRZQ WKDW WKH PDQ\ ODUJH IUDXGXOHQW WUDQVDFWLRQV FDQ EH IRXQG



:KLFK RI WKH IROORZLQJ SLHFHV RI LQIRUPDWLRQ GLVFRYHUHG E\ DQ DXGLWRU ZKHQ SHUIRUPLQJ VXEVWDQWLYH WHVWV RI DFFRXQW EDODQFHV ZRXOG PRVW OLNHO\ UDLVH UHG IODJV DERXW WKH SRVVLEOH H[LVWHQFH RI PDWHULDO IUDXGXOHQW ILQDQFLDO UHSRUWLQJ"

$ 3DSHU FRSLHV RI SDLG LQYRLFHV DQG FDQFHOOHG FKHFNV ZHUH PLFURILFKHG DQG WKHQ GHVWUR\HG % 7KH FRQWUROOHU UHTXLUHV WKDW \RX VFKHGXOH DQ\ DXGLW LQTXLULHV GDLO\ DIWHU OXQFK QRW LQ WKH PRUQLQJ & 7KH SHWW\ FDVK IXQG FXVWRGLDQ QHYHU WDNHV D YDFDWLRQ ' 7KH FOLHQW V HVWLPDWH RI WKH DOORZDQFH IRU GRXEWIXO DFFRXQWV LV ORZHU WKDQ WKH DXGLWRU V LQGHSHQGHQW HYDOXDWLRQ RI WKH DOORZDQFH
$E   9"D  %1 ! " C" Y %"  " @ %& @ "!   ( (" ! 9 !4 ! %"& !!!((  !@  98!  !(!  B !&! $ "( 2" 9! H "   98Q )57V 5 !4 ! 321 %!0 W G (( !' &""  $E    %$@D    



,QKHUHQW ULVN DQG FRQWURO ULVN GLIIHU IURP GHWHFWLRQ ULVN LQ WKDW LQKHUHQW ULVN DQG FRQWURO ULVN DUH

$ (OHPHQWV RI DXGLW ULVN ZKHUHDV GHWHFWLRQ ULVN LV QRW % &KDQJHG DW WKH DXGLWRU V GLVFUHWLRQ ZKHUHDV GHWHFWLRQ ULVN LV QRW & &RQVLGHUHG DW WKH LQGLYLGXDO DFFRXQW EDODQFH OHYHO ZKHUHDV GHWHFWLRQ ULVN LV QRW ' )XQFWLRQV RI WKH FOLHQW DQG LWV HQYLURQPHQW ZKHUHDV GHWHFWLRQ ULVN LV QRW
!"# $E   9"D   ! " C % 9   !& % 3 "!( " 9 ( " &!  !" 9&"  (" !" 9&  %!& !@  98!  !"& $  !@ !2! G 57V 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &""  $E    %!0  



7KH DXGLWRU XVHV WKH DVVHVVHG OHYHO RI ULVN RI PDWHULDO PLVVWDWHPHQW WR GHWHUPLQH WKH DFFHSWDEOH OHYHO RI GHWHFWLRQ ULVN IRU ILQDQFLDO VWDWHPHQW DVVHUWLRQV $V WKH DFFHSWDEOH OHYHO RI GHWHFWLRQ ULVN GHFUHDVHV WKH DXGLWRU PD\ GR RQH RU PRUH RI WKH IROORZLQJ H[FHSW FKDQJH WKH

$ 1DWXUH RI VXEVWDQWLYH WHVWV WR PRUH HIIHFWLYH SURFHGXUHV % 7LPLQJ RI VXEVWDQWLYH WHVWV VXFK DV SHUIRUPLQJ WKHP DW \HDUHQG UDWKHU WKDQ DW DQ LQWHULP GDWH & ([WHQW RI VXEVWDQWLYH WHVWV VXFK DV XVLQJ ODUJHU VDPSOH VL]HV ' $VVXUDQFHV SURYLGHG E\ VXEVWDQWLYH WHVWV WR D ORZHU OHYHO
!"# $E   9"D   ! " C % 9   !& % 3 "!( " 9 ( " &!  !" 9&"  (" !" 9&  %!& !@  98!  !"& $  !@ !2! G 57V 5 !4 ! 321 %!0 W G (( !' &""  $E    %!0  



:KLFK RI WKH IROORZLQJ LV DQ DFFHSWDEOH UHVSRQVH WR IUDXG ULVNV UHODWHG WR VDOHV WKDW ZHUH LGHQWLILHG LQ DQ DXGLW"

$ ([HUFLVH SURIHVVLRQDO VNHSWLFLVP ZKHQ SHUIRUPLQJ VDOHV WHVWLQJ % ,QFUHDVH WKH DVVHVVPHQW RI FRQWURO ULVN IRU VDOHV & ,QFUHDVH WKH DVVHVVPHQW RI GHWHFWLRQ ULVN IRU VDOHV ' 3HUIRUP DGGLWLRQDO VXEVWDQWLYH VDOHV SURFHGXUHV RQ D VXUSULVH EDVLV
$E   9"D  %1 ! " C" Y %"  " @ %& @ "!   ( (" ! 9 !4 ! %"& !!!(( !@  98!  !(!  B !&! $ "( 2" 9! H "   98Q )57V 5 !4 ! 321 %!0 & !# ) ((  !' &""  $E    %!0  



,I WHVWV RI FRQWUROV LQGXFH WKH DXGLWRU WR FKDQJH WKH DVVHVVHG OHYHO RI FRQWURO ULVN IRU SURSHUW\ SODQW HTXLSPHQW IURP  SHUFHQW WR  SHUFHQW DQG DXGLW ULVN  SHUFHQW DQG LQKHUHQW ULVN UHPDLQ FRQVWDQW WKH DFFHSWDEOH OHYHO RI GHWHFWLRQ ULVN

$ :RXOG PRVW OLNHO\ FKDQJH IURP  SHUFHQW WR  SHUFHQW % :RXOG PRVW OLNHO\ FKDQJH IURP  SHUFHQW WR  SHUFHQW & :RXOG PRVW OLNHO\ FKDQJH IURP  SHUFHQW WR  SHUFHQW ' :RXOG EH XQFKDQJHG EHFDXVH WKH DXGLWRU KDV FRQWURO RYHU GHWHFWLRQ ULVN ( &DQQRW EH GHWHUPLQHG EHFDXVH LQKHUHQW ULVN LV QRW JLYHQ


$E !  9"D  %1 ! " C !"& !&! %& $ ! 9! ! !@ @A $ !2 !! !&! %& A "@ !  $ !2 !(! 6 57V 5 !4 ! 321 %!0 Q 6 (( !2&!&!E &""  $E    %!0  

!"# $E   9"D  %1 ! " C % 9   !& % 3 "!( " 9 ( " &!  !" 9&"  (" !" 9&  %!& !@  98!  !"& $  !@ !2! G 57V 5 !4 ! 321 %!0 W G (( 99 &""  $E    %!0 



' 7KH 3&$2% & 7KH 6(& % 0DQDJHPHQW $ 7KH DXGLWRUV 0DQDJLQJ EXVLQHVV ULVN LV WKH UHVSRQVLELOLW\ RI

C$ !! " " 9! " A "@  98Q C!S  B %&"2 B!!" 9  %  $ %! "( " &"( (" ! " !' X 57 V5 !4 ! 321 %!0 W G (( !' &""  $E    %!0  

!&! %# $E ! 9!Q  9"D  %1 ! " C !"& !&! %& $ ! 9! ! !@ @A $ !2 !! !&! %& A "@ !  $ !2 !(! 6 57V 5 !4 ! 321 %!0 W G (( !4 Q &""  $E    %!0  





' 7R VHW PDWHULDOLW\ & 7R GHWHUPLQH GHWHFWLRQ ULVN % 7R KHLJKWHQ PDQDJHPHQW V DZDUHQHVV RI IUDXG SRWHQWLDO $ 7R KHLJKWHQ WKH DXGLW WHDP V DZDUHQHVV RI IUDXG SRWHQWLDO $XGLWRUV XVH EUDLQVWRUPLQJ ' 7R PRQLWRU FOLHQW ULVN & 7R HYDOXDWH PDQDJHPHQW V ULVN DVVHVVPHQW % 7R GHWHUPLQH GHWHFWLRQ ULVN $ 7R UHGXFH WKH FOLHQW V EXVLQHVV ULVN $XGLWRUV ZRXOG XVH WKH HQWHUSULVH ULVN PRGHO

%!   9"D  %1 ! " C"  %! " A @ A 9&" " !( H ! " ! 9! @ A !2" 9! H "  98Q I 57 V5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %!0  

%&"  9"D  %1 ! "



' 7R VHW WKH VFRSH WLPLQJ DQG GLUHFWLRQ IRU DXGLWLQJ HDFK UHOHYDQW DVVHUWLRQ & 7R FRPSO\ ZLWK VHFXULWLHV ODZ % 7R JDLQ DQ XQGHUVWDQGLQJ RI WKH FOLHQW $ 7R SURYLGH D GHIHQVH DJDLQVW OLWLJDWLRQ 7KH SXUSRVH RI DQ DXGLW VWUDWHJ\ LV

$E "! !  9"D  %1 ! " C % 9   !& % 3 "!( " 9 ( " &!  !" 9&"  (" !" 9&  %!& !@  98!  !"& $  !@ !2! G 57V 5 !4 ! 321 %!0 Q 6 (( !2&!&!E &""  $E    %!0  



5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN ' 'HWHFWLRQ ULVN & &RQWURO ULVN % %XVLQHVV ULVN $ ,QKHUHQW ULVN FRQWURO RI $XGLWRUV DUH UHVSRQVLEOH IRU WKH TXDOLW\ RI WKH ZRUN UHODWHG WR PDQDJHPHQW DQG



:KLFK RI WKH IROORZLQJ HQJDJHPHQW SODQQLQJ SURFHGXUHV ZRXOG PRVW OLNHO\ DVVLVW WKH DXGLWRU LQ LGHQWLI\LQJ UHODWHGSDUW\ WUDQVDFWLRQV EHIRUH WKH EDODQFHVKHHW GDWH"

$ ,QWHUYLHZLQJ LQWHUQDO DXGLWRUV DERXW WKHLU UHSRUWLQJ UHVSRQVLELOLWLHV % 5HYLHZLQJ DFFRXQWLQJ UHFRUGV IRU UHFXUULQJ WUDQVDFWLRQV RFFXUULQJ QHDU \HDU HQG & ,QVSHFWLQJ FRPPXQLFDWLRQV ZLWK WKH FOLHQW V OHJDO FRXQVHO UHJDUGLQJ UHFRUGHG FRQWLQJHQW OLDELOLWLHV ' 6FDQQLQJ WKH PLQXWHV IRU VLJQLILFDQW WUDQVDFWLRQV ZLWK PHPEHUV RI WKH ERDUG RI GLUHFWRUV
! !@ %!'  9"D  %1 ! " C!&"4 !  !2 H ! !@ % "( $ !!@ (" ! " !' V57 V5 !4 ! 321 %!0 & !# ) ((  99 &"" @!!E   %!0  

$E !!@  9"D  %1 ! " C % 9   !& % 3 "!( " 9 ( " &!  !" 9&"  (" !" 9&  %!& !@  98!  !"& $  !@ !2! G 57V 5 !4 ! 321 %!0 Q 6 (( !2&!&!E &""  $E    %!0  



5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN ' 5LVN RI PDWHULDO PLVVWDWHPHQW & 'HWHFWLRQ ULVN % &RQWURO ULVN $ ,QKHUHQW ULVN UHIHUUHG WR DV V\VWHP DQG QRW EHHQ GHWHFWHG DQG FRUUHFWHG E\ WKH FOLHQW V LQWHUQDO FRQWURO LV 7KH OLNHOLKRRG WKDW PDWHULDO PLVVWDWHPHQWV PD\ KDYH HQWHUHG WKH DFFRXQWLQJ

!"# $E   9"D  %1 ! " C % 9   !& % 3 "!( " 9 ( " &!  !" 9&"  (" !" 9&  %!& !@  98!  !"& $  !@ !2! G 57V 5 !4 ! 321 %!0 Q 6 (( !2&!&!E &""  $E    %!0  



5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN ' ,QKHUHQW ULVN FRQWURO ULVN DQG GHWHFWLRQ ULVN & ,QKHUHQW ULVN DQG GHWHFWLRQ ULVN % &RQWURO ULVN DQG GHWHFWLRQ ULVN $ ,QKHUHQW ULVN DQG FRQWURO ULVN 7KH ULVN RI PDWHULDO PLVVWDWHPHQWV LV FRPSRVHG RI ZKLFK DXGLW ULVN FRPSRQHQWV"



$XGLWLQJ VWDQGDUGV GR QRW UHTXLUH DXGLWRUV RI ILQDQFLDO VWDWHPHQWV WR

$ 8QGHUVWDQG WKH QDWXUH RI HUURUV DQG IUDXGV % $VVHVV WKH ULVN RI RFFXUUHQFH RI HUURUV DQG IUDXGV & 'HVLJQ DXGLWV WR SURYLGH UHDVRQDEOH DVVXUDQFH RI GHWHFWLQJ HUURUV DQG IUDXGV ' 5HSRUW DOO HUURUV DQG IUDXGV IRXQG WR SROLFH DXWKRULWLHV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

$E   9"D  %1 ! " C" Y %"  " @ %& @ "!   ( (" ! 9 !4 ! %"& !!!((  !@  98!  !(!  B!&! $ "( 2" 9! H "   98Q )57V 5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  

$E "! !  9"D  %1 ! " C % 9   !& % 3 "!( " 9 ( " &!  !" 9&"  (" !" 9&  %!& !@  98!  !"& $  !@ !2! G 57V 5 !4 ! 321 %!0 Q 6 (( !2&!&!E &""  $E    %!0  



5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN ' 'HWHFWLRQ ULVN & &RQWURO ULVN % ,QKHUHQW ULVN $ $XGLW ULVN PLVVWDWHPHQWV GR H[LVW LV PLVVWDWHPHQWV GR QRW H[LVW LQ WKH ILQDQFLDO VWDWHPHQWV ZKHQ LQ IDFW VXFK 7KH ULVN WKDW WKH DXGLWRUV RZQ SURFHGXUHV ZLOO OHDG WR WKH GHFLVLRQ WKDW PDWHULDO



7KH DXGLWRUV DVVHVVHG ULVN RI PDWHULDO PLVVWDWHPHQW DW  DQG VDLG WKH\ ZDQWHG WR DFKLHYH D  ULVN RI IDLOLQJ WR H[SUHVV D FRUUHFW RSLQLRQ RQ ILQDQFLDO VWDWHPHQWV WKDW ZHUH PDWHULDOO\ PLVVWDWHG :KDW GHWHFWLRQ ULVN GR WKH DXGLWRUV SODQ WR XVH IRU SODQQLQJ WKH UHPDLQGHU RI WKH DXGLW ZRUN"

$  %  &  '  5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

!"# $E   9"D  %1 ! " C % 9   !& % 3 "!( " 9 ( " &!  !" 9&"  (" !" 9&  %!& !@  98!  !"& $  !@ !2! G 57V 5 !4 ! 321 %!0 Q 6 (( 99 &""  $E    %!0  



,I WHVWV RI FRQWUROV LQGXFH WKH DXGLW WHDP WR FKDQJH WKH DVVHVVHG OHYHO RI FRQWURO ULVN IRU IL[HG DVVHWV IURP  WR  DQG DXGLW ULVN  DQG LQKHUHQW ULVN UHPDLQ FRQVWDQW WKH DFFHSWDEOH OHYHO RI GHWHFWLRQ ULVN LV PRVW OLNHO\ WR

$ &KDQJH IURP  WR  % &KDQJH IURP  WR  & &KDQJH IURP  WR  ' %H XQFKDQJHG 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

!"# $E   9"D  %1 ! " C % 9   !& % 3 "!( " 9 ( " &!  !" 9&"  (" !" 9&  %!& !@  98!  !"& $  !@ !2! G 57V 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %!0  



:KLFK RI WKH IROORZLQJ LV D VSHFLILF SURFHGXUDO UHVSRQVH WR D SDUWLFXODU IUDXG ULVN LQ DQ DFFRXQW EDODQFH RU FODVV RI WUDQVDFWLRQV"

$ ([HUFLVLQJ PRUH SURIHVVLRQDO VNHSWLFLVP % &DUHIXOO\ DYRLGLQJ FRQGXFWLQJ LQWHUYLHZV ZLWK SHRSOH LQ WKH IUDXGULFK DUHDV & 3HUIRUPLQJ SURFHGXUHV VXFK DV LQYHQWRU\ REVHUYDWLRQ DQG FDVK FRXQWV RQ D VXUSULVH RU XQDQQRXQFHG EDVLV ' 6WXG\LQJ PDQDJHPHQW V VHOHFWLRQ DQG DSSOLFDWLRQ RI DFFRXQWLQJ SULQFLSOHV PRUH FDUHIXOO\ 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

$E   9"D  %1 ! " C" Y %"  " @ %& @ "!   ( (" ! 9 !4 ! %"& !!!((  !@  98!  !(!  B !&! $ "( 2" 9! H "   98Q )57V 5 !4 ! 321 %!0 & !# ) ((  !' &""  $E    %!0  



,W LV DFFHSWDEOH XQGHU JHQHUDOO\ DFFHSWHG DXGLWLQJ VWDQGDUGV IRU DQ DXGLW WHDP WR

$ $VVHVV ULVN RI PDWHULDO PLVVWDWHPHQW DW KLJK DQG DFKLHYH DQ DFFHSWDEO\ ORZ DXGLW ULVN E\ SHUIRUPLQJ H[WHQVLYH GHWHFWLRQ ZRUN % $VVHVV FRQWURO ULVN DW ]HUR DQG SHUIRUP D PLQLPXP RI GHWHFWLRQ ZRUN & $VVHVV LQKHUHQW ULVN DW ]HUR DQG SHUIRUP D PLQLPXP RI GHWHFWLRQ ZRUN ' 'HFLGH WKDW DXGLW ULVN FDQ EH  SHUFHQW 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

!"# $E   9"D  %1 ! " C % 9   !& % 3 "!( " 9 ( " &!  !" 9&"  (" !" 9&  %!& !@  98!  !"& $  !@ !2! G 57V 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &""  $E    %!0  

$E   9"D  %1 ! " C" Y %"  " @ %& @ "!   ( (" ! 9 !4 ! %"& !!!((  !@  98!  !(!  B !&! $ "( 2" 9! H "   98Q )57V 5 !4 ! 321 %!0 Q 6 (( !' &"" @!!E   %!0  



5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN ' $FFRXQWV UHFHLYDEOH & %DG GHEW H[SHQVH % &RVW RI JRRGV VROG $ ,QYHQWRU\ ZKHUH FRXOG \RX ILQG WKH IDOVH GDQJOLQJ GHELW " ,I VDOHV ZHUH RYHUVWDWHG E\ UHFRUGLQJ D IDOVH FUHGLW VDOH DW WKH HQG RI WKH \HDU



2QH RI WKH W\SLFDO FKDUDFWHULVWLFV RI PDQDJHPHQW IUDXG LV

$ )DOVLILFDWLRQ RI GRFXPHQWV LQ RUGHU WR PLVDSSURSULDWH IXQGV IURP DQ HPSOR\HU % 9LFWLPL]DWLRQ RI LQYHVWRUV WKURXJK WKH XVH RI PDWHULDOO\ PLVOHDGLQJ ILQDQFLDO VWDWHPHQWV & ,OOHJDO DFWV FRPPLWWHG E\ PDQDJHPHQW WR HYDGH ODZV DQG UHJXODWLRQV ' &RQYHUVLRQ RI VWROHQ LQYHQWRU\ WR FDVK GHSRVLWHG LQ D IDOVLILHG EDQN DFFRXQW 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

$E   9"D  %1 ! " C" Y %"  " @ %& @ "!   ( (" ! 9 !4 ! %"& !!!((  !@  98!  !(!  B !&! $ "( 2" 9! H "   98Q )57V 5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  



8QGHU WKH 3ULYDWH 6HFXULWLHV /LWLJDWLRQ 5HIRUP $FW LQGHSHQGHQW DXGLWRUV DUH UHTXLUHG WR

$ 5HSRUW LQ ZULWLQJ DOO LQVWDQFHV RI QRQFRPSOLDQFH WR WKH FOLHQW V ERDUG RI GLUHFWRUV % 5HSRUW WR WKH 6(& DOO LQVWDQFHV RI QRQFRPSOLDQFH WKH\ EHOLHYH KDYH D PDWHULDO HIIHFW RQ ILQDQFLDO VWDWHPHQWV LI WKH ERDUG RI GLUHFWRUV GRHV QRW ILUVW UHSRUW WR WKH 6(& & 5HSRUW FOHDUO\ LQFRQVHTXHQWLDO QRQFRPSOLDQFH WR WKH DXGLW FRPPLWWHH RI WKH FOLHQW V ERDUG RI GLUHFWRUV ' 5HVLJQ IURP WKH DXGLW HQJDJHPHQW DQG UHSRUW WKH LQVWDQFHV RI QRQFRPSOLDQFH WR WKH 6(& 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

! 9&""  9"D  %1 ! " C"  %! " A @ A 9&" " !( H ! " ! 9! @ A !2" 9! H "  98Q I 57 V5 !4 ! 321 %!0 Q 6 (( ! Y &"" %$# "!   %!0  



:KLFK RI WKH IROORZLQJ FLUFXPVWDQFHV ZRXOG PRVW OLNHO\ FDXVH DQ DXGLW WHDP WR SHUIRUP H[WHQGHG SURFHGXUHV"

$ 6XSSRUWLQJ GRFXPHQWV DUH SURGXFHG ZKHQ UHTXHVWHG % 7KH FOLHQW PDGH VHYHUDO ODUJH DGMXVWPHQWV DW RU QHDU \HDUHQG & 7KH FRPSDQ\ KDV UHFHQWO\ KLUHG D QHZ FKLHI ILQDQFLDO RIILFHU DIWHU WKH SUHYLRXV RQH UHWLUHG ' 7KH FRPSDQ\ PDLQWDLQV VHYHUDO GLIIHUHQW SHWW\ FDVK IXQGV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

$E   9"D  %1 ! " C" Y %"  " @ %& @ "!   ( (" ! 9 !4 ! %"& !!!((  !@  98!  !(!  B !&! $ "( 2" 9! H "   98Q )57V 5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!   %!0  



:KHQ WKH DXGLWRUV EHFRPH DZDUH RI QRQFRPSOLDQFH ZLWK D ODZ RU UHJXODWLRQ FRPPLWWHG E\ FOLHQW SHUVRQQHO WKH SULPDU\ UHDVRQ WKDW WKH DXGLWRUV VKRXOG REWDLQ D EHWWHU XQGHUVWDQGLQJ RI WKH QDWXUH RI WKH DFW LV WR

$ 5HFRPPHQG UHPHGLDO DFWLRQV WR WKH DXGLW FRPPLWWHH % (YDOXDWH WKH HIIHFW RI WKH QRQFRPSOLDQFH RQ WKH ILQDQFLDO VWDWHPHQWV & 'HWHUPLQH ZKHWKHU WR FRQWDFW ODZ HQIRUFHPHQW RIILFLDOV ' 'HWHUPLQH ZKHWKHU RWKHU VLPLODU DFWV FRXOG KDYH RFFXUUHG 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

! 9&""  9"D  %1 ! " C"  %! " A @ A 9&" " !( H ! " ! 9! @ A !2" 9! H "  98Q I 57 V5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  



:KLFK RI WKH IROORZLQJ VWDWHPHQWV EHVW GHVFULEHV DXGLWRUV UHVSRQVLELOLW\ IRU GHWHFWLQJ D FOLHQW V QRQFRPSOLDQFH ZLWK D ODZ RU UHJXODWLRQ"

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

$E   9"D  %1 ! " C"  %! " A @ A 9&" " !( H ! " ! 9! @ A !2" 9! H "  98Q I 57 V5 !4 ! 321 %!0 C" Y %"  " @ %& @ "!   ( (" ! 9 !4 ! %"& !!!((  !@  98!  !(!  B !&! $ "( 2" 9! H "   98Q )57V 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  



$QDO\WLFDO SURFHGXUHV DUH JHQHUDOO\ XVHG WR SURGXFH HYLGHQFH IURP

$ &RQILUPDWLRQV PDLOHG GLUHFWO\ WR WKH DXGLWRUV E\ FOLHQW FXVWRPHUV % 3K\VLFDO REVHUYDWLRQ RI LQYHQWRULHV & 5HODWLRQVKLSV DPRQJ FXUUHQW ILQDQFLDO EDODQFHV DQG SULRU EDODQFHV IRUHFDVWV DQG QRQILQDQFLDO GDWD ' 'HWDLOHG H[DPLQDWLRQ RI H[WHUQDO H[WHUQDOLQWHUQDO DQG LQWHUQDO GRFXPHQWV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

!!"   9"D  %1 ! " C$ !! " " 9! " A "@  98Q C!S  B %&"2 B!!" 9  %  $ %! "( "&"( (" ! " !' X 57 V5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  



$XGLWRUV SHUIRUP DQDO\WLFDO SURFHGXUHV LQ WKH SODQQLQJ VWDJH RI DQ DXGLW IRU WKH SXUSRVH RI

$ 'HFLGLQJ WKH PDWWHUV WR FRYHU LQ DQ HQJDJHPHQW OHWWHU % ,GHQWLI\LQJ XQXVXDO FRQGLWLRQV WKDW GHVHUYH PRUH DXGLWLQJ HIIRUW & 'HWHUPLQLQJ ZKLFK RI WKH ILQDQFLDO VWDWHPHQW DVVHUWLRQV DUH WKH PRVW LPSRUWDQW IRU WKH FOLHQW V ILQDQFLDO VWDWHPHQWV ' 'HWHUPLQLQJ WKH QDWXUH WLPLQJ DQG H[WHQW RI DXGLW SURFHGXUHV IRU DXGLWLQJ WKH LQYHQWRU\ 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

!!"   9"D  %1 ! " C$ !! " " 9! " A "@  98Q C!S  B %&"2 B!!" 9  % $ %! "( "&"( (" ! " !' X 57 V5 !4 ! 321 %!0 Q 6 (( !2&!&!E &""  $E    %!0  

sus| u t|w} tv |w tvw xwuy s|u wu s s t } v su u} wt vwt swuwvw vtxvw u} vwtuz sus| u t|w} tvt xvw|vw wu xvwst u vw} t uvw s| u vt}us v s~ w}|s zy xvwvutsr { ws  }|ww  |uts s  t xs r  | w} tv 



5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN ' 2SWLRQ ' & 2SWLRQ & % 2SWLRQ % $ 2SWLRQ $ VRXUFHV RI LQIRUPDWLRQ DUH PRVW ORJLFDO" HV :KLFK RI WKH IROORZLQJ UHODWLRQVKLSV EHWZHHQ W\SHV RI DQDO\WLFDO SURFHGXUHV DQG

!!"   9"D  %1 ! " C$ !! " " 9! " A "@  98Q C!S  B %&"2 B!!" 9  %  $ %! "( "&"( (" ! " !' X 57 V5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  



5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN ' $OO RI WKH DERYH & $V VXEVWDQWLYH DXGLW SURFHGXUHV WR REWDLQ HYLGHQFH GXULQJ DQ DXGLW % $V DWWHQWLRQGLUHFWLQJ PHWKRGV ZKHQ SODQQLQJ DQ DXGLW DW WKH EHJLQQLQJ $ $V D PHDQV RI RYHUDOO UHYLHZ DW WKH HQG RI DQ DXGLW $QDO\WLFDO SURFHGXUHV FDQ EH XVHG LQ ZKLFK RI WKH IROORZLQJ ZD\V"



$QDO\WLFDO SURFHGXUHV XVHG ZKHQ SODQQLQJ DQ DXGLW VKRXOG FRQFHQWUDWH RQ

$ :HDNQHVVHV LQ WKH FRPSDQ\ V LQWHUQDO FRQWURO DFWLYLWLHV % 3UHGLFWDELOLW\ RI DFFRXQW EDODQFHV EDVHG RQ LQGLYLGXDO WUDQVDFWLRQV & 0DQDJHPHQW DVVHUWLRQV LQ ILQDQFLDO VWDWHPHQWV ' $FFRXQWV DQG UHODWLRQVKLSV WKDW FDQ UHSUHVHQW VSHFLILF SRWHQWLDO SUREOHPV DQG ULVNV LQ WKH ILQDQFLDO VWDWHPHQWV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

!!"   9"D  %1 ! " C$ !! " " 9! " A "@  98Q C!S  B %&"2 B!!" 9  %  $ %! "( "&"( (" ! " !' X 57 V5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %!0  

!!"   9"D  %1 ! " C$ !! " " 9! " A "@  98Q C!S  B %&"2 B!!" 9  %  $ %! "( "&"( (" ! " !' X 57 V5 !4 ! 321 %!0 W G (( 99 &"" !&!!#   %$@D    



5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN ' 1RW EH DEOH WR EH GHWHUPLQHG ZLWK WKH LQIRUPDWLRQ SURYLGHG & 5HPDLQ XQFKDQJHG % 'HFUHDVH $ ,QFUHDVH ZLOO  SHUFHQW DQG LWV FRVW RI JRRGV VROG E\  SHUFHQW WKH FRVW RI JRRGV VROG UDWLR :KHQ D FRPSDQ\ WKDW VHOOV LWV SURGXFWV IRU D JURVV SURILW LQFUHDVHV LWV VDOHV E\

!!"   9"D  %1 ! " C$ !! " " 9! " A "@  98Q C!S  B %&"2 B!!" 9  %  $ %! "( " &"( (" ! " !' X 57 V5 !4 ! 321 %!0 Q 6 (( ! Y &"" %$# "!      



5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH ' 7R WHVW LQWHUQDO FRQWUROV & 7R SURYLGH GLUHFW HYLGHQFH DERXW WKH QXPEHUV LQ WKH ILQDQFLDO VWDWHPHQWV % 7R DVVHVV WKH UHDVRQDEOHQHVV RI ILQDQFLDO VWDWHPHQW DPRXQWV $ 7R VHW PDWHULDOLW\ OLPLWV $QDO\WLFDO SURFHGXUHV DUH XVHG

$E !!@  9"D  %1 ! " C % 9   !& % 3 "!( " 9 ( " &!  !" 9&"  (" !" 9&  %!& !@  98!  !"& $  !@ !2! G 57V 5 !4 ! 321 %!0 Q 6 (( ! Y &"" %$# "!      



5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH ' 'HWHFWLRQ ULVN & &RQWURO ULVN % ,QKHUHQW ULVN $ $XGLW ULVN DFFRXQWLQJ V\VWHP LV 7KH ULVN WKDW PDWHULDO PLVVWDWHPHQWV KDYH RFFXUUHG LQ WUDQVDFWLRQV HQWHULQJ WKH



,Q WKH DXGLW ULVN PRGHO LI DQ DXGLW WHDP ZDQWHG WR NHHS DXGLW ULVN DW D ORZ OHYHO EXW WKHUH ZDV D JUHDW LQKHUHQW ULVN RI PDWHULDO PLVVWDWHPHQW DQG WKH LQWHUQDO FRQWURO ZDV LQHIIHFWLYH WKHQ SURFHGXUHV ZRXOG QHHG WR EH GHVLJQHG VR WKDW

$ 'HWHFWLRQ ULVN ZDV DW D ORZ OHYHO % 'HWHFWLRQ ULVN ZDV DW D KLJK OHYHO & &RQWURO ULVN ZDV DW D ORZ OHYHO ' ,QKHUHQW ULVN ZDV DW D KLJK OHYHO 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

!"# $E   9"D  %1 ! " C % 9   !& % 3 "!( " 9 ( " &!  !" 9&"  (" !" 9&  %!& !@  98!  !"& $  !@ !2! G 57V 5 !4 ! 321 %!0 Q 6 (( ! Y &"" %$# "!      

$E !!@  9"D  %1 ! " C % 9   !& % 3 "!( " 9 ( " &!  !" 9&"  (" !" 9&  %!& !@  98!  !"& $  !@ !2! G 57V 5 !4 ! 321 %!0 Q 6 (( ! Y &"" %$# "!      



5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH ' (IIHFWLYHQHVV RI WKH FOLHQW V DFFRXQWDQWV & 0DMRU W\SHV RI WUDQVDFWLRQV % 6XEVWDQWLYH SURFHGXUHV $ &OLHQW V EXVLQHVV ,QKHUHQW ULVN LV QRW D FKDUDFWHULVWLF RI WKH

$E   9"D  %1 ! " C % 9   !& % 3 "!( " 9 ( " &!  !" 9&"  (" !" 9&  %!& !@  98!  !"& $  !@ !2! G 57V 5 !4 ! 321 %!0 Q 6 (( ! Y &"" %$# "!      



5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH ' 'HWHFWLRQ ULVN & &RQWURO ULVN % ,QKHUHQW ULVN $ $XGLW ULVN MXGJPHQW" :KLFK RI WKH IROORZLQJ ULVNV LV HQWLUHO\ D TXDOLW\ FULWHULRQ EDVHG RQ SURIHVVLRQDO



,Q JHQHUDO PRVW IUDXGXOHQW FRPSDQLHV ZLOO SUHSDUH ILQDQFLDO VWDWHPHQWV WKDW DUH PDWHULDOO\ PLVOHDGLQJ E\ GRLQJ DOO RI WKH IROORZLQJ H[FHSW

$ 8QGHUVWDWH UHYHQXHV DQG DVVHWV % 8QGHUVWDWH H[SHQVHV DQG OLDELOLWLHV & 6KRZ ILQDQFLDO SHUIRUPDQFH EHWWHU WKDQ LQGXVWU\ DYHUDJH ' +DYH SHUIRUPDQFH H[DFWO\ PHHW DQQRXQFHG WDUJHWV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

$E   9"D  %1 ! " C" Y %"  " @ %& @ "!   ( (" ! 9 !4 ! %"& !!!((  !@  98!  !(!  B !&! $ "( 2" 9! H "   98Q )57V 5 !4 ! 321 %!0 Q 6 (( ! Y &"" %$# "!      

$E   9"D !!"   9"D  %1 ! " C$ !! " " 9! " A "@  98Q C!S  B %&"2 B!!" 9  %  $ %! "( "&"( (" ! " !' X 57 V5 !4 ! 321 %!0 C" Y %"  " @ %& @ "!   ( (" ! 9 !4 ! %"& !!!((  !@  98!  !(!  B!&! $ "( 2" 9! H "   98Q )57V 5 !4 ! 321 %!0 Q 6 (( !2&!&!E &""  $E    %!0  



5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH ' 5HGXFH WKH ULVN RI PLVVLQJ VRPHWKLQJ LPSRUWDQW & 5HYLHZ WKH RYHUDOO TXDOLW\ RI WKH DXGLW % 3RLQW RXW DFFRXQWV WKDW PD\ FRQWDLQ HUURUV DQG IUDXG $ ,GHQWLI\ XQXVXDO FRQGLWLRQV WKDW GHVHUYH PRUH DXGLW HIIRUW ,Q WKH SODQQLQJ VWDJH DQDO\WLFDO SURFHGXUHV DUH QRW XVHG WR



7KH DQDO\WLFDO SURFHGXUHV FRPSOHWHG GXULQJ WKH SODQQLQJ VWDJHV W\SLFDOO\ ZRXOG QRW LQFOXGH FRPSDULVRQ RI FXUUHQW\HDU DFFRXQW EDODQFHV ZLWK

$ %DODQFHV IRU RQH RU PRUH FRPSDUDEOH SHULRGV % $QWLFLSDWHG UHVXOWV IRXQG LQ EXGJHWV & (YDOXDWLRQ RI UHODWLRQVKLSV WR RWKHU FXUUHQW\HDU EDODQFHV ' 2WKHU DFFRXQWV DV VXEVWDQWLYH SURFHGXUHV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

)LOO LQ WKH %ODQN 4XHVWLRQV

!!"   9"D  %1 ! " C$ !! " " 9! " A "@  98Q C!S  B %&"2 B!!" 9  %  $ %! "( "&"( (" ! " !' X 57 V5 !4 ! 321 %!0 & !# ) ((  99 &"" @!!E   %!0  



7KH HYDOXDWLRQ RI ILQDQFLDO VWDWHPHQW DFFRXQWV E\ VWXG\LQJ DQG FRPSDULQJ UHODWLRQVKLSV DPRQJ ILQDQFLDO DQG QRQILQDQFLDO GDWD LV NQRZQ DV D Q BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB DQDO\WLFDO SURFHGXUH 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH



%\ ERWK IUDXG DQG DJJUHVVLYH BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB FRPSDQLHV KDYH FDXVHG ILQDQFLDO VWDWHPHQWV WR EH PLVOHDGLQJ ILQDQFLDO UHSRUWLQJ 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH



$XGLWLQJ VWDQGDUGV VSHFLILFDOO\ $8  UHTXLUH WKDW DXGLWRUV VSHFLILFDOO\ DVVHVV WKH ULVN RI BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB GXH WR IUDXG IRU HDFK HQJDJHPHQW PDWHULDO PLVVWDWHPHQW 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB LV WKH SUREDELOLW\ WKDW PDWHULDO PLVVWDWHPHQWV KDYH RFFXUUHG LQ WUDQVDFWLRQV HQWHULQJ WKH DFFRXQWLQJ V\VWHP ,QKHUHQW ULVN 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 %HFDXVH DXGLWRUV KDYH OLWWOH FRQWURO RYHU LQKHUHQW ULVN DQG FRQWURO ULVN WKH WZR ULVNV DUH RIWHQ FRPELQHG DQG UHIHUUHG WR DV WKH ULVN RI BBBBBBBBBBBBBBBBBBBBBBBBBBBBB PDWHULDO PLVVWDWHPHQW 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 BBBBBBBBBBBBBBBBBBBBBBBBBBBBB LQYROYLQJ VHQLRU PDQDJHPHQW DUH QHYHU BBBBBBBBBBBBBBBBBBBBBBBBBBBB )UDXGV LQFRQVHTXHQWLDO 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 7KH SUREDELOLW\ WKDW DXGLW SURFHGXUHV ZLOO IDLO WR SURGXFH HYLGHQFH RI PDWHULDO PLVVWDWHPHQWV LV UHIHUUHG WR DV BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB GHWHFWLRQ ULVN RU VXEVWDQWLYH SURFHGXUHV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 $XGLW ULVN FDQ EH H[SUHVVHG LQ WKH IROORZLQJ PRGHO $XGLW ULVN BBBBBBBBBBBBBBBBBBBBBBBBBBBBB [ BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB ULVN RI PDWHULDO PLVVWDWHPHQW GHWHFWLRQ ULVN 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 $XGLWRUV BBBBBBBBBBB FKRRVH WR UHO\ DOPRVW H[FOXVLYHO\ RQ HYLGHQFH SURGXFHG E\ VXEVWDQWLYH SURFHGXUHV HVSHFLDOO\ ZKHQ BBBBBBBBBBBBBBBBBBBBBBBBBBBBB ULVN DQG BBBBBBBBBBBBBBBBBBBBBBBBBBBBB ULVN DUH KLJK FDQ LQKHUHQW FRQWURO 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 ,Q DQ RYHUDOO VHQVH BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB LV WKH SUREDELOLW\ WKDW D SXEOLF DFFRXQWLQJ ILUP ZLOO JLYH DQ LQDSSURSULDWH RSLQLRQ RQ ILQDQFLDO VWDWHPHQWV DXGLW ULVN 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB LV WKH WHUP XVHG WR UHIHU WR YLRODWLRQV RI ODZV DQG UHJXODWLRQV WKDW DUH BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB IURP ILQDQFLDO VWDWHPHQW HIIHFWV ,QGLUHFWHIIHFW QRQFRPSOLDQFH IDU UHPRYHG 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB UHIHUV WR ILQDQFLDO VWDWHPHQW DPRXQWV H[SUHVVHG HDFK \HDU DV SURSRUWLRQV RI D EDVH 9HUWLFDO DQDO\VLV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 ,Q WKH BBBBBBBBBBBBBBBBBBBBBBBBBBBBB VWDJH BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB DUH XVHG WR LGHQWLI\ SRWHQWLDO SUREOHP DUHDV DQG WR UHGXFH ULVN SODQQLQJ DQDO\WLFDO SURFHGXUHV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 &RPSDULVRQ RI ILQDQFLDO VWDWHPHQW QXPEHUV DQG UDWLRV DFURVV WZR RU PRUH \HDUV LV UHIHUUHG WR DV BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB KRUL]RQWDO DQDO\VLV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB DUH WKRVH LQGLYLGXDOV RU RUJDQL]DWLRQV WKDW DUH FORVHO\ WLHG WR WKH DXGLWHH SRVVLEO\ E\ IDPLOLDO RU LQYHVWPHQW UHODWLRQVKLSV 5HODWHG SDUWLHV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 5HDVRQDEOHQHVV WHVWV XVH WR JDLQ DQ XQGHUVWDQGLQJ RI ILQDQFLDO VWDWHPHQW DFFRXQWV DQG UHODWLRQVKLSV DUH NQRZQ DV BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB DQDO\WLFDO SURFHGXUHV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 7KH SUHOLPLQDU\ DQDO\WLFDO ZRUN SHUIRUPHG LQ WKH SODQQLQJ VWDJH RI DQ DXGLW LV VRPHWLPHV FDOOHG BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB VSHFLILF ULVN DQDO\VLV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

6KRUW $QVZHU 4XHVWLRQV

sus| u t|w} tv |w | tvw xwuy s|u wu s s t } v su u} wt vwt swuwvw vtxvw u} vwtuz sus| u t|w} tvt xvw|vw wu xvwst u vw} t uvw s| u vt}us v s~ w}|s zy xvwvutsr u | { ws  }|ww usz s s  |uts s  t xs r  | w} tv 

 )RU HDFK RI WKH GHVFULSWLRQV LQ &ROXPQ $ PDWFK WKH FRUUHFW ZRUG RU ZRUGV IURP

 '  )  &  $  ( &ROXPQ %

s w }w |w tvw xwuy s|u xvwvvt }wt vt }vs x {tvwsu us} vw } vs v | }w s| vt}u w vt xvwvts s} vwt s vt s wu }wt s } szwu| s s~ w}|s {zy xvwvuts r s ws  }|ww usz s s  |uts s  t xs r  | w} tv 

 )RU HDFK RI WKH GHVFULSWLRQV   PDWFK WKH FRUUHFW ZRUG RU ZRUGV IURP $  $/

 &  )  $  '

 $ $XGLW ULVNV IRU SDUWLFXODU DFFRXQWV FDQ EH H[SUHVVHG LQ WKH PRGHO $XGLW ULVN $5 ,QKHUHQW ULVN ,5 [ ,QWHUQDO FRQWURO ULVN &5 [ 'HWHFWLRQ ULVN '5  ,I DQ DXGLW ULVN LV VHW DW  SHUFHQW WKH LQKHUHQW ULVN DW  SHUFHQW DQG WKH LQWHUQDO FRQWURO ULVN DW  SHUFHQW ZKDW ZRXOG EH WKH GHWHFWLRQ ULVN" % ,I WKH DXGLW WHDP ZDQWHG WR UHGXFH WKH DXGLW ULVN WR  SHUFHQW ZKDW ZRXOG EH WKH GHWHFWLRQ ULVN" & :KDW ZRXOG WKH DXGLW WHDP KDYH WR GR WR UHGXFH WKH DXGLW ULVN"

$ 'HWHFWLRQ ULVN   ;  %   ;  



& 7KH DXGLW WHDP ZRXOG KDYH WR LQFUHDVH WKH DPRXQW DQG HIIHFWLYHQHVV RI HYLGHQFH JDWKHUHG IURP VXEVWDQWLYH SURFHGXUHV )HHGEDFN 5HIHUHQFH 3UREOHP DOVR IRXQG LQ VWXG\ JXLGH

(VVD\ 4XHVWLRQV

!"# $E   9"D  %1 ! " C % 9   !& % 3 "!( " 9 ( " &!  !" 9&"  (" !" 9&  %!& !@  98!  !"& $  !@ !2! G 57V 5 !4 ! 321 %!0 & !# ) ((  99 &"" !&!!#   %!0  

 :KDW DUH WKH LQGHSHQGHQW DXGLWRU V UHVSRQVLELOLWLHV WR GHWHFW DQG UHSRUW HUURUV DQG IUDXGV"

,QGHSHQGHQW DXGLWRUV KDYH WKH UHVSRQVLELOLW\ WR D DVVHVV WKH ULVN WKDW HUURUV DQG IUDXGV PD\ FDXVH D FOLHQW V ILQDQFLDO VWDWHPHQWV WR EH PDWHULDOO\ PLVVWDWHG DQG E GHVLJQ WKH DXGLW WR SURYLGH UHDVRQDEOH DVVXUDQFH RI GHWHFWLQJ HUURUV DQG IUDXGV PDWHULDO WR WKH ILQDQFLDO VWDWHPHQWV ([WHQGHG SURFHGXUHV VKRXOG EH SHUIRUPHG LI HYLGHQFH LQGLFDWHV WKDW PDWHULDO HUURUV RU IUDXGV PLJKW H[LVW

 %1 ! " C" Y %"  " @ %& @ "!   ( (" ! 9 !4 ! %"& !!!((  !@  98!  !(!  B !&! $ "( 2" 9! H "   98Q )57V 5 !4 ! 321 %!0 Q 6 (( ! Y &"" %$# "!       $E   9"D

!"# $E   9"D  %1 ! " C % 9   !& % 3 "!( " 9 ( " &!  !" 9&"  (" !" 9&  %!& !@  98!  !"& $  !@ !2! G 57V 5 !4 ! 321 %!0 Q 6 (( ! Y &"" %$# "!      

 &DQ DQ DXGLWRU SODFH FRPSOHWH UHOLDQFH RQ LQWHUQDO FRQWURO WR WKH H[FOXVLRQ RI

$5

RWKHU DXGLW SURFHGXUHV <RX FDQQRW KDYH D FRQGLWLRQ ZKHUH $Q DXGLWRU FDQQRW SODFH FRPSOHWH UHOLDQFH RQ LQWHUQDO FRQWURO WR WKH H[FOXVLRQ RI RWKHU DXGLW SURFHGXUHV" ([SODLQ \RXU DQVZHU XVLQJ WKH DXGLW ULVN PRGHO

,5 [ &5

 [ '5

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

  ! " C" Y %"  " @ %& @ "!   ( (" ! 9 !4 ! %"& !!!((  !@  98!  !(!  B !&! $ "( 2" 9! H "   98Q )57V 5 !4 ! 321 %!0 W G (( ! Y &"" %$# "!       $E   9"D

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

LVVXHG GXULQJ WKH ODVW PRQWK RI WKH \HDU ZHUH QRW UHFRUGHG ) $ VPDOOHU SHUFHQWDJH RI VDOHV RFFXUUHG GXULQJ WKH ODVW PRQWK RI WKH \HDU DV FRPSDUHG WR WKH SULRU \HDU  /RQJWHUP GHEW LQFUHDVHG IURP WKH SULRU \HDU EXW LQWHUHVW H[SHQVH LQFUHDVHG D ODUJHUWKDQSURSRUWLRQDWH DPRXQW WKDQ ORQJWHUP GHEW 6HOHFW  H[SODQDWLRQ 3 6KRUWWHUP ERUURZLQJ ZDV UHILQDQFHG RQ D ORQJWHUP EDVLV DW KLJKHU LQWHUHVW UDWHV  2SHUDWLQJ LQFRPH LQFUHDVHG IURP WKH SULRU \HDU DOWKRXJK WKH HQWLW\ ZDV OHVV SURILWDEOH WKDQ LQ WKH SULRU \HDU 6HOHFW  H[SODQDWLRQV / 7KH HIIHFWLYH LQFRPH WD[ UDWH LQFUHDVHG DV FRPSDUHG WR WKH SULRU \HDU 3 6KRUWWHUP ERUURZLQJ ZDV UHILQDQFHG RQ D ORQJWHUP EDVLV DW KLJKHU LQWHUHVW UDWHV  *URVV PDUJLQ SHUFHQWDJH ZDV XQFKDQJHG IURP WKH SULRU \HDU DOWKRXJK JURVV PDUJLQ LQFUHDVHG IURP WKH SULRU \HDU 6HOHFW  H[SODQDWLRQ + 6DOHV LQFUHDVHG DW WKH VDPH SHUFHQWDJH DV FRVW RI JRRGV VROG DV FRPSDUHG WR WKH SULRU \HDU

  ! " C$ !! " " 9! " A "@  98Q C!S  B %&"2 B!!" 9  %  $ %! "( "&"( (" ! " !' X 57 V5 !4 ! 321 %!0 W G (( 99 &"" %$# "!   %$@D    %$@D !4 !(!E

!!"   9"D

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

!!"   9"D ! 9   !" C$ !! " " 9! " A "@  98Q C!S  B %&"2 B!!" 9  %  $ %! "( "&"( (" ! " !' X 57 V5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  

 5HODWLRQVKLSV RI ILQDQFLDO LQIRUPDWLRQ ZLWK UHOHYDQW QRQILQDQFLDO LQIRUPDWLRQ  ,QIRUPDWLRQ UHJDUGLQJ WKH LQGXVWU\ LQ ZKLFK WKH FOLHQW RSHUDWHV  5HODWLRQVKLSV DPRQJ HOHPHQWV RI ILQDQFLDO LQIRUPDWLRQ ZLWKLQ WKH SHULRG

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

 %1 ! " C$ !! " " 9! " A "@  98Q C!S  B %&"2 B!!" 9  %  $ %! "( "&"( (" ! " !' X 57 V5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0   !!"   9"D

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

D 7KH FROOHFWDELOLW\ RI DFFRXQWV UHFHLYDEOH LV RI FRQFHUQ 7KH DOORZDQFH IRU GRXEWIXO DFFRXQWV PD\ EH XQGHUVWDWHG 7KH EDG GHEW H[SHQVH PD\ EH XQGHUVWDWHG E 7KH H[LVWHQFH RI WKH LQYHQWRU\ DFFRXQW LV RI FRQFHUQ ,QYHQWRU\ PD\ EH RYHUVWDWHG &RVW RI JRRGV VROG PD\ EH XQGHUVWDWHG F 7KH DPRXQW RI DFFUXHG LQWHUHVW LV RI FRQFHUQ ,QWHUHVW H[SHQVH PD\ EH

!!"   9"D  %1 ! " C$ !! " " 9! " A "@  98Q C!S  B %&"2 B!!" 9  %  $ %! "( "&"( (" ! " !' X 57 V5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %$@D    

PD\ DOVR EH SRVVLEOH WKDW IL[HG DVVHWV DUH RYHUVWDWHG G 'HSUHFLDWLRQ H[SHQVH DQG DFFXPXODWHG GHSUHFLDWLRQ PD\ EH XQGHUVWDWHG ,W XQGHUVWDWHG /HVV OLNHO\ ORQJWHUP OLDELOLWLHV FRXOG EH RYHUVWDWHG

 $QDO\WLFDO SURFHGXUHV DUH HYDOXDWLRQV RI ILQDQFLDO LQIRUPDWLRQ PDGH E\ D VWXG\ RI HYDOXDWLQJ VXFK UHODWLRQVKLSV DUH HVVHQWLDO WR WKH DXGLW SURFHVV

SODXVLEOH UHODWLRQVKLSV DPRQJ ILQDQFLDO DQG QRQILQDQFLDO GDWD 8QGHUVWDQGLQJ DQG

7KH IROORZLQJ ILQDQFLDO VWDWHPHQWV ZHUH SUHSDUHG E\ $%& 0DQXIDFWXULQJ &R IRU WKH \HDU HQGHG 'HFHPEHU   $OVR SUHVHQWHG DUH YDULRXV ILQDQFLDO VWDWHPHQW UDWLRV IRU $%& DV FDOFXODWHG IURP WKH SULRU DU ILQDQFLDO VWDWHPHQWV SULRU\HDU 6DOHV UHSUHVHQW QHW FUHGLW VDOHV 7KH WRWDO DVVHWV DQG WKH UHFHLYDEOHV DQG  LQYHQWRU\ EDODQFHV DW 'HFHPEHU   ZHUH WKH VDPH DV DW 'HFHPEHU 

5HTXLUHG

,WHPV  WKURXJK  EHORZ UHSUHVHQW ILQDQFLDO UDWLRV WKDW WKH DXGLWRU FDOFXODWHG WKDW ILQDQFLDO VWDWHPHQWV SUHVHQWHG DERYH

GXULQJ WKH SULRU\HDU DXGLW )RU HDFK UDWLR FDOFXODWH WKH FXUUHQW \HDU UDWLR IURP WKH \HDU FXUUHQW\HDU

sus| u t|w} tv |w | tvw xwuy s|u wu s s t } v su u} wt vwt swuwvw vtxvw u} vwtuz sus| u t|w} tvt xvw|vw wu xvwst u vw} t uvw s| u vt}us v s~ w}|s zy xvwvutsr u | { ws  }|ww  }vs su ts  t xs r  | w} tv 

 :K\ LV LW LPSRUWDQW IRU DXGLWRUV WR XQGHUVWDQG WKHLU FOLHQWV EXVLQHVV ULVNV"

$XGLWLQJ VWDQGDUGV UHFRJQL]H WKDW PRVW EXVLQHVV ULVNV DUH HYHQWXDOO\ UHIOHFWHG LQ WKH ILQDQFLDO VWDWHPHQWV 7KXV DXGLW WHDPV QRZ GHYRWH D VLJQLILFDQW DPRXQW RI WKHLU HQJDJHPHQW SODQQLQJ WR WKHLU FOLHQWV EXVLQHVV ULVNV )LUPV EHOLHYH WKH\ PXVW OHDUQ PRUH DERXW WKHLU FOLHQWV EXVLQHVV VWUDWHJLHV DQG SURFHVVHV WR XQGHUVWDQG ZKHWKHU WKH ILQDQFLDO VWDWHPHQWV DUH IDLUO\ SUHVHQWHG

0DWFKLQJ 4XHVWLRQV

$E !  9"D  %1 ! " C !"& !&! %& $ ! 9! ! !@ @A $ !2 !! !&! %& A "@ !  $ !2 !(! 6 57V 5 !4 ! 321 %!0 W G (( 99 &"" !&!!#   %!0  

 7KH DXGLW ULVN PRGHO LQFOXGHV WKH IRXU ULVNV OLVWHG EHORZ 3ODFH WKH FRUUHFW W\SH RI ULVN ZLWK WKH UHODWHG GHILQLWLRQ EHORZ

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

!"# $E   9"D  %1 ! " C % 9   !& % 3 "!( " 9 ( " &!  !" 9&"  (" !" 9&  %!& !@  98!  !"& $  !@ !2! G 57V 5 !4 ! 321 %!0 Q 6 (( ! Y &"" %$# "!      

 )RU HDFK RI WKH IROORZLQJ VWDWHPHQWV RU SKUDVHV LQGLFDWH WKH SURIHVVLRQDO VWDQGDUG WR ZKLFK LW UHODWHV

 ,QYHVWLJDWH ODUJH DQG XQXVXDO WUDQVDFWLRQV SDUWLFXODUO\ WKRVH WKDW RFFXU DW RU QHDU \HDUHQG  (YDOXDWH WKH QHW UHDOL]DEOH YDOXH RI LQYHQWRU\  0DNH LQTXLULHV DERXW PDQDJHPHQW V SROLFLHV DQG SURFHGXUHV IRU FRPSOLDQFH ZLWK ODZV DQG UHJXODWLRQV  $GGUHVV GLVDJUHHPHQWV ZLWK PDQDJHPHQW RQ VLJQLILFDQW DFFRXQWLQJ DQG DXGLWLQJ PDWWHUV

$8  7KH $XGLWRU V &RPPXQLFDWLRQ ZLWK 7KRVH &KDUJHG ZLWK *RYHUQDQFH $8  &RQVLGHUDWLRQ RI )UDXG LQ D )LQDQFLDO 6WDWHPHQW $XGLW  

$8  &RQVLGHUDWLRQ RI /DZV DQG 5HJXODWLRQV 

$8  $XGLWLQJ $FFRXQWLQJ (VWLPDWHV 

! 9&""  9"D  %1 ! " C"  %! " A @ A 9&" " !( H ! " ! 9! @ A !2" 9! H "  98Q I 57 V5 !4 ! 321 %!0 C" Y %"  " @ %& @ "!   ( (" ! 9 !4 ! %"& !!!((  !@  98!  !(!  B !&! $ "( 2" 9! H "   98Q )57V 5 !4 ! 321 %!0 & !# ) ((  ! Y &"" %$# "!      

 )RU HDFK RI WKH IROORZLQJ VWDWHPHQWV LQGLFDWH WKH WHUP LW EHVW GHVFULEHV RU W\SLILHV

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
& !# ) ((  ! Y &"" %$# "!      

(UURUV 

/DUFHQ\  :KLWHFROODU FULPH 

(PEH]]OHPHQW RU GHIDOFDWLRQ 

7UXH  )DOVH 4XHVWLRQV

 7KH SULPDU\ UHDVRQ IRU HYDOXDWLQJ D FRPSDQ\ V LQWHUQDO FRQWURO LV WR SURYLGH D EDVLV IRU FRPPXQLFDWLQJ VLJQLILFDQW GHILFLHQFLHV 7UXH )DOVH

 7KH DXGLW WDVN RI FRQWURO ULVN DVVHVVPHQW LQYROYHV OHDUQLQJ ZKDW WKH FRPSDQ\ GRHV WR SUHYHQW GHWHFW DQG FRUUHFW HUURUV DQG IUDXG 7UXH )DOVH

 7KH DXGLW WHDP LV UHVSRQVLEOH IRU WKH FOLHQW V LQWHUQDO FRQWURO 7UXH )DOVH

$E   9"D  %1 ! " C" Y %"  " @ %& @ "!   ( (" ! 9 !4 ! %"& !!!((  !@  98!  !(!  B !&! $ "( 2" 9! H "   98Q )57V 5 !4 ! 321 %!0

&KDSWHU  5LVN $VVHVVPHQW ,QWHUQDO &RQWURO (YDOXDWLRQ

 7KH DWWLWXGHV RI PDQDJHUV DQG GLUHFWRUV DUH SUREDEO\ WKH PRVW SHUYDVLYH LQIOXHQFHV RQ WKH FRQWURO HQYLURQPHQW 7UXH )DOVH

 7KH PRVW LPSRUWDQW IHDWXUH RI DQ LQWHUQDO FRQWURO V\VWHP LV WKH SHRSOH ZKR PDNH WKH V\VWHP ZRUN 7UXH )DOVH

 $ FRQWURO DFWLYLW\ LV DQ DFWLRQ WDNHQ WR SUHYHQW GHWHFW DQG FRUUHFW HUURUV DQG IUDXGV LQ WUDQVDFWLRQV 7UXH )DOVH

 7KH &262 UHSRUW LQGLFDWHV WKDW LQWHUQDO FRQWURO VKRXOG EH FRQVLGHUHG D SURFHVV QRW DQ HQG LQ LWVHOI 7UXH )DOVH

 $XGLWRUV RI SXEOLF FRPSDQLHV GR QRW QHHG WR GHWHUPLQH WKH TXDOLW\ RI D FOLHQW V LQWHUQDO FRQWURO WKH\ QHHG WR NQRZ RQO\ HQRXJK WR SODQ WKH DXGLW ZRUN 7UXH )DOVH

 7KH SULPDU\ UHDVRQ WR HYDOXDWH LQWHUQDO FRQWURO LV WR IRUPXODWH FRQVWUXFWLYH VXJJHVWLRQV IRU LPSURYHPHQW 7UXH )DOVH

 7KH PRVW HIILFLHQW PHDQV RI JDWKHULQJ HYLGHQFH DERXW D FOLHQW V LQWHUQDO FRQWURO LV WR SUHSDUH D IORZFKDUW RI WKH V\VWHP 7UXH )DOVH

 7KH VWUHQJWKV DQG ZHDNQHVVHV RI D FRQWURO V\VWHP VKRXOG EH GRFXPHQWHG LQ EULGJH ZRUNSDSHUV FRQQHFWLQJ WKH FRQWURO HYDOXDWLRQ WR VXEVHTXHQW DXGLW SURFHGXUHV 7UXH )DOVH

 $XGLWRUV GR QRW QHHG WR SHUIRUP WHVWV RI FRQWUROV RQ LQWHUQDO FRQWURO DFWLYLWLHV WKDW DUH HYDOXDWHG DV ZHDN MXVW WR SURYH WKH ZHDNQHVVHV DFWXDOO\ H[LVW 7UXH )DOVH

 7R UHGXFH WKH ILQDO FRQWURO ULVN DVVHVVPHQW WR D ORZ OHYHO DXGLWRUV QHHG WR GHWHUPLQH RQO\ WKH UHTXLUHG GHJUHH RI FRPSOLDQFH ZLWK WKH FRQWURO SROLFLHV DQG SURFHGXUHV 7UXH )DOVH

 $XGLWRUV SHUIRUP WHVWV RI FRQWURO DFWLYLWLHV WR GHWHUPLQH KRZ WKH FRPSDQ\ V FRQWUROV DFWXDOO\ IXQFWLRQHG GXULQJ WKH SHULRG XQGHU DXGLW 7UXH )DOVH

 &RQWURO V\VWHPV JHQHUDOO\ SURYLGH DEVROXWH DVVXUDQFH WKDW WKH REMHFWLYHV RI LQWHUQDO FRQWURO DUH VDWLVILHG 7UXH )DOVH

 'XDOSXUSRVH DXGLW WHVWV DUH SURFHGXUHV WKDW SURGXFH ERWK FRQWURO DQG VXEVWDQWLYH HYLGHQFH 7UXH )DOVH

 7KH NH\ SHUVRQ LQ WKH LQWHUQDO FRQWURO V\VWHP RI D VPDOO EXVLQHVV LV WKH LQGHSHQGHQW DXGLWRU 7UXH )DOVH

 (YDOXDWLRQ RI LQWHUQDO FRQWURO V\VWHPV RQ D QRQSXEOLF HQWLW\ VKRXOG QRW EH VXEMHFW WR FRVWEHQHILW FRQVLGHUDWLRQV 7UXH )DOVH

 7HVWV RI FRQWUROV FRQVLVW RI SURFHGXUHV GHVLJQHG WR SURGXFH HYLGHQFH UHJDUGLQJ KRZ HIIHFWLYHO\ WKH FOLHQW V FRQWUROV ZRUN LQ SUDFWLFH 7UXH )DOVH

 $XGLWRUV FDQ VWRS WKH DVVHVVPHQW RI FRQWURO ULVN IRU QRQSXEOLF HQWLWLHV IRU HLWKHU HIIHFWLYHQHVV RU HIILFLHQF\ UHDVRQV 7UXH )DOVH

 3&$2% $XGLWLQJ 6WDQGDUG 1R  RQO\ DSSOLHV WR SXEOLF FRPSDQLHV 7UXH )DOVH

 7KH DXGLWRU V RSLQLRQ RQ LQWHUQDO FRQWURO XQGHU $6  UHODWHV RQO\ WR FRQWUROV H[LVWLQJ DW WKH HQG RI WKH \HDU 7UXH )DOVH

 $XGLWRUV VKRXOG EHJLQ WKHLU HYDOXDWLRQ RI LQWHUQDO FRQWUROV RYHU ILQDQFLDO UHSRUWLQJ RQ D ERWWRPXS EDVLV VWDUWLQJ ZLWK WKH DFFRXQW OHYHO DVVHUWLRQ DQG ZRUNLQJ XS WR HQWLW\ OHYHO FRQWUROV 7UXH )DOVH

0XOWLSOH &KRLFH 4XHVWLRQV

 $Q DXGLW WHDP V UHVSRQVLELOLW\ ZRXOG QRW LQFOXGH

$ 'HVLJQLQJ FOLHQW V LQWHUQDO FRQWUROV % 'RFXPHQWLQJ DQ XQGHUVWDQGLQJ RI D FOLHQW V LQWHUQDO FRQWUROV & &RPPXQLFDWLQJ LQWHUQDO FRQWURO GHILFLHQFLHV ' $VVHVVLQJ WKH HIIHFWLYHQHVV D FOLHQW V LQWHUQDO FRQWUROV  7KH DSSURSULDWH VHSDUDWLRQ RI GXWLHV GRHV QRW LQFOXGH

$ +DYLQJ DXWKRUL]DWLRQ WR H[HFXWH WUDQVDFWLRQV % 5HFRUGLQJ WUDQVDFWLRQV & +DYLQJ FXVWRG\ RI DVVHWV LQYROYHG LQ WKH WUDQVDFWLRQV ' 3UHSDULQJ GDWD  $ VHW RI FKDUDFWHULVWLFV WKDW KHOSV WR GHILQH D VHULRXVQHVV DERXW HPSOR\HHV DWWLWXGHV DERXW WKH FRQWURO DFWLYLWLHV LQ D FRPSDQ\ LV UHIHUUHG WR DV

$ 0DQDJHPHQW DVVHUWLRQV % &RQWURO HQYLURQPHQW & &RQWURO ULVN DVVHVVPHQW ' )XQFWLRQDO UHVSRQVLELOLWLHV

 &RQWURO DFWLYLWLHV LQWHQGHG WR HQVXUH WKDW WUDQVDFWLRQV DUH UHFRUGHG LQ WKH ULJKW SHULRG DUH GHVLJQHG WR DFKLHYH WKH $6% DVVHUWLRQ RI

$ 2FFXUUHQFH % $FFXUDF\ & 9DOXDWLRQ RU DOORFDWLRQ ' &XWRII  6RXQG LQWHUQDO FRQWURO FDQ EH GHVFULEHG DV VHSDUDWLQJ DOO RI WKH IROORZLQJ GXWLHV DQG UHVSRQVLELOLWLHV H[FHSW IRU

$ 7UDQVDFWLRQ DXWKRUL]DWLRQ % 5HFRUGNHHSLQJ & &XVWRG\ RI RU GLUHFW DFFHVV WR DVVHWV ' +LULQJ RI HPSOR\HHV

 $IWHU REWDLQLQJ DQ XQGHUVWDQGLQJ RI WKH HQWLW\ V LQWHUQDO FRQWURO DQG DVVHVVLQJ FRQWURO ULVN DQ DXGLWRU RI D QRQSXEOLF FRPSDQ\ GHFLGHG QRW WR SHUIRUP DGGLWLRQDO WHVWV RI FRQWUROV 7KH DXGLWRU PRVW OLNHO\ FRQFOXGHG WKDW WKH

$ $GGLWLRQDO HYLGHQFH WR VXSSRUW DQ DGGLWLRQDO UHGXFWLRQ LQ FRQWURO ULVN ZDV QRW FRVW EHQHILFLDO % $VVHVVHG OHYHO RI LQKHUHQW ULVN H[FHHGHG WKH DVVHVVHG OHYHO RI FRQWURO ULVN & ,QWHUQDO FRQWURO VWUXFWXUH ZDV SURSHUO\ GHVLJQHG DQG MXVWLILDEO\ PD\ EH UHOLHG RQ ' (YLGHQFH REWDLQDEOH WKURXJK WHVWV RI FRQWUROV ZRXOG QRW VXSSRUW DQ LQFUHDVHG OHYHO RI FRQWURO ULVN  5HJDUGOHVV RI WKH DVVHVVHG OHYHO RI FRQWURO ULVN DQ DXGLWRU RI D QRQSXEOLF FRPSDQ\ ZRXOG SHUIRUP VRPH

$ 7HVWV RI FRQWUROV WR GHWHUPLQH WKH HIIHFWLYHQHVV RI LQWHUQDO FRQWURO SROLFLHV % $QDO\WLFDO SURFHGXUHV WR YHULI\ WKH GHVLJQ RI LQWHUQDO FRQWURO DFWLYLWLHV & 6XEVWDQWLYH WHVWV WR UHVWULFW GHWHFWLRQ ULVN IRU VLJQLILFDQW WUDQVDFWLRQ FODVVHV ' 'XDOSXUSRVH WHVWV WR HYDOXDWH ERWK WKH ULVN RI PRQHWDU\ PLVVWDWHPHQW DQG SUHOLPLQDU\ FRQWURO ULVN

 7KH REWDLQLQJ DQ XQGHUVWDQGLQJ ZRUN SKDVH SKDVH  RI LQWHUQDO FRQWURO HYDOXDWLRQ ZRXOG QRW JLYH DXGLWRUV DQ RYHUDOO DFTXDLQWDQFH ZLWK WKH FOLHQW V

$ &RQWURO HQYLURQPHQW % ,QIRUPDWLRQ DQG FRPPXQLFDWLRQ V\VWHP & &RQWURO DFWLYLW\ HIIHFWLYHQHVV ' 0RQLWRULQJ DFWLYLWLHV  :KLFK RI WKH IROORZLQJ LV DQ LQIRUPDWLRQ WHFKQRORJ\ JHQHUDO FRQWURO"

$ &KHFN GLJLW % 5XQWRUXQ WRWDOV & 'LVWULEXWLRQ RI FRPSXWHUL]HG RXWSXW ' 6HSDUDWLRQ RI GXWLHV LQ WKH ,7 GHSDUWPHQW  &RQWURO VWUHQJWKV DQG ZHDNQHVVHV VKRXOG EH GRFXPHQWHG LQ DXGLW GRFXPHQWDWLRQ VRPHWLPHV FDOOHG

$ 4XHVWLRQQDLUHV QDUUDWLYHV DQG IORZFKDUWV % %ULGJH ZRUNLQJ SDSHUV & &RPPXQLFDWLRQV RI VLJQLILFDQW GHILFLHQFLHV ' ,QWHUQDO FRQWURO OHWWHUV

 7KH LQWHUQDO FRQWURO LQ VPDOO EXVLQHVV LV KLJKO\ GHSHQGHQW RQ WKH

$ 6HSDUDWLRQ RI IXQFWLRQDO UHVSRQVLELOLWLHV % &RPSOH[LW\ RI WKH FOLHQW V LQWHUQDO FRQWUROV & 2ZQHUPDQDJHU V FRPSHWHQFH DV ZHOO DV HWKLFV DQG LQWHJULW\ ' %RQGLQJ RI HPSOR\HHV  :KLFK RI WKH IROORZLQJ LV QRW DQ LQSXW FRQWURO DFWLYLW\"

$ 5HDVRQDEOHQHVV WHVWV % 5HFRUG FRXQWV & )LQDQFLDO WRWDOV ' +DVK WRWDOV  $ VDOHVFOHUN HQWHUV D FXVWRPHU V VL[QXPEHU FXVWRPHU DFFRXQW 7KH FRPSXWHU SURJUDP XVHV WKH ILUVW ILYH QXPEHUV WR FDOFXODWH D VL[WK QXPEHU 7KLV UHVXOWLQJ QXPEHU LV WKHQ FRPSDUHG WR WKH VL[WK QXPEHU HQWHUHG E\ WKH VDOHV FOHUN 7KLV LV DQ H[DPSOH RI D

$ 9DOLG FKDUDFWHU WHVW % 0LVVLQJ GDWD WHVW & 5HDVRQDEOHQHVV WHVW ' &KHFN GLJLW

 :KLFK RI WKH IROORZLQJ LV WKH OHDVW LPSRUWDQW DXGLW UHDVRQ IRU WKH DXGLWRU V REWDLQLQJ DQ XQGHUVWDQGLQJ RI D FRPSDQ\ V LQWHUQDO FRQWURO"

$ 7R VHUYH DV D EDVLV IRU FRQVWUXFWLYH VXJJHVWLRQV % 7R SODQ VXEVHTXHQW VXEVWDQWLYH WHVWV & 7R LGHQWLI\ W\SHV RI SRVVLEOH PLVVWDWHPHQWV WKDW PD\ RFFXU ' 7R FRQVLGHU IDFWRUV WKDW PD\ DIIHFW WKH ULVN RI PDWHULDO PLVVWDWHPHQW  7UDFLQJ ELOOV RI ODGLQJ WR VDOHV LQYRLFHV SURYLGHV HYLGHQFH WKDW

$ 6KLSPHQWV WR FXVWRPHUV ZHUH LQYRLFHG % 6KLSPHQWV WR FXVWRPHUV ZHUH UHFRUGHG DV VDOHV & 5HFRUGHG VDOHV ZHUH VKLSSHG ' ,QYRLFHG VDOHV ZHUH UHFRUGHG DV VDOHV  :KLFK RI WKH IROORZLQJ FOLHQW LQWHUQDO FRQWURO DFWLYLWLHV LV QRW XVXDOO\ SHUIRUPHG LQ WKH WUHDVXUHU V GHSDUWPHQW"

$ 9HULI\LQJ WKH DFFXUDF\ RI FKHFNV DQG YRXFKHUV % &RQWUROOLQJ WKH PDLOLQJ RI FKHFNV WR YHQGRUV & $SSURYLQJ YHQGRUV LQYRLFHV IRU SD\PHQW ' &DQFHOLQJ SD\PHQW YRXFKHUV ZKHQ SDLG

 :KLFK RI WKH IROORZLQJ DXGLW SURFHGXUHV PRVW OLNHO\ ZRXOG SURYLGH DQ DXGLWRU WKH PRVW DVVXUDQFH DERXW WKH HIIHFWLYHQHVV RI WKH RSHUDWLRQ RI DQ HQWLW\ V LQWHUQDO FRQWURO"

$ &RQILUPDWLRQ ZLWK RXWVLGH SDUWLHV % ,QTXLU\ RI FOLHQW SHUVRQQHO & 6XFFHVVIXO UHSHUIRUPDQFH RI WKH FRQWURO DFWLYLW\ ' 2EVHUYDWLRQ RI FOLHQW SHUVRQQHO  :KHQ REWDLQLQJ DQ XQGHUVWDQGLQJ RI DQ HQWLW\ V LQWHUQDO FRQWURO LQ D ILQDQFLDO VWDWHPHQW DXGLW RI D QRQSXEOLF FRPSDQ\ DQ DXGLWRU LV QRW REOLJDWHG WR

$ 'HWHUPLQH ZKHWKHU FRQWURO DFWLYLWLHV KDYH EHHQ SODFHG LQ RSHUDWLRQ % 3HUIRUP SURFHGXUHV WR XQGHUVWDQG WKH GHVLJQ RI WKH LQWHUQDO FRQWURO V\VWHP & 'RFXPHQW WKH XQGHUVWDQGLQJ RI WKH FRPSDQ\ V LQWHUQDO FRQWURO V\VWHP ' 6HDUFK IRU VLJQLILFDQW GHILFLHQFLHV LQ WKH RSHUDWLRQ RI WKH LQWHUQDO FRQWURO V\VWHP  $IWHU REWDLQLQJ DQ XQGHUVWDQGLQJ RI D FOLHQW V ILQDQFLDO UHSRUWLQJ FRQWURO DFWLYLWLHV WKH DXGLWRU ZRXOG QH[W

$ 7HVW WKH FOLHQW V FRQWURO DFWLYLWLHV % $VVHVV WKH ILQDO FRQWURO ULVN & 'RFXPHQW WKH XQGHUVWDQGLQJ REWDLQHG ' 3ODQ WKH UHPDLQGHU RI WKH DXGLW ZRUN

 ,I DXGLWRUV DVVHVV FRQWURO ULVN DW WKH PD[LPXP OHYHO WKH\ ZLOO WHQG WR

$ 3HUIRUP D JUHDW GHDO RI DGGLWLRQDO WHVWV RI FRQWUROV % 3HUIRUP D JUHDW GHDO RI VXEVWDQWLYH WHVWLQJ GXULQJ WKH DXGLW & 3HUIRUP VXEVWDQWLYH WHVWV DW DQ LQWHULP GDWH ' 3HUIRUP PRUH DXGLW SURFHGXUHV XVLQJ LQWHUQDO HYLGHQFH  7KH XOWLPDWH SXUSRVH RI DVVHVVLQJ FRQWURO ULVN LV WR FRQWULEXWH WR WKH DXGLWRU V HYDOXDWLRQ RI WKH

$ )DFWRUV WKDW UDLVH GRXEWV DERXW WKH DXGLWDELOLW\ RI WKH ILQDQFLDO VWDWHPHQWV % 2SHUDWLQJ HIIHFWLYHQHVV RI LQWHUQDO FRQWURO SROLFLHV DQG SURFHGXUHV & 5LVN WKDW PDWHULDO PLVVWDWHPHQWV H[LVW LQ WKH ILQDQFLDO VWDWHPHQWV ' 3RVVLELOLW\ WKDW WKH QDWXUH DQG H[WHQW RI VXEVWDQWLYH WHVWV PD\ EH UHGXFHG  :KHQ WKH DXGLW WHDP LQFUHDVHV WKH SODQQHG DVVHVVHG OHYHO RI FRQWURO ULVN EHFDXVH FHUWDLQ FRQWURO DFWLYLWLHV ZHUH GHWHUPLQHG WR EH LQHIIHFWLYH WKH DXGLW WHDP ZRXOG PRVW OLNHO\ LQFUHDVH WKH

$ ([WHQW RI VXEVWDQWLYH WHVWV RI GHWDLOV % /HYHO RI LQKHUHQW ULVN & ([WHQW RI WHVWV RI FRQWUROV ' /HYHO RI GHWHFWLRQ ULVN

 ,Q FRPSXWHU V\VWHPV WKH LQIRUPDWLRQ WHFKQRORJ\ JHQHUDO FRQWUROV ,7*& ZRXOG QRW LQFOXGH

$ 3URFHVVLQJ RI FRQWURO DFWLYLWLHV % 6HSDUDWLRQ RI YDULRXV FRPSXWHU V\VWHP IXQFWLRQV & $SSURSULDWH GRFXPHQWDWLRQ RI WKH GDWD SURFHVVLQJ V\VWHP ' &RQWURO RYHU SK\VLFDO DFFHVV WR FRPSXWHU KDUGZDUH  'XULQJ WKH DXGLW RI D SULYDWH FRPSDQ\ V ILQDQFLDO VWDWHPHQWV ZKLFK RI WKH IROORZLQJ VWDWHPHQWV EHVW GHVFULEHV WKH PLQLPXP ZRUN DQ DXGLWRU PXVW SHUIRUP LQ FRQQHFWLRQ ZLWK D FRPSDQ\ V LQWHUQDO FRQWURO"

$ 3HUIRUP H[KDXVWLYH WHVWV RI DFFRXQWLQJ FRQWUROV DQG HYDOXDWH WKH FRPSDQ\ V FRQWURO V\VWHP HIIHFWLYHQHVV % 'HWHUPLQH ZKHWKHU WKH FRPSDQ\ V FRQWURO SROLFLHV DUH GHVLJQHG ZHOO HQRXJK WR SUHYHQW PDWHULDO PLVVWDWHPHQWV & 3UHSDUH DXGLWLQJ ZRUNLQJ SDSHUV WKDW GRFXPHQW WKH DXGLWRU V XQGHUVWDQGLQJ RI WKH FRPSDQ\ V LQWHUQDO FRQWURO ' 'HVLJQ SURFHGXUHV WR VHDUFK IRU VLJQLILFDQW GHILFLHQFLHV LQ WKH DFWXDO RSHUDWLRQ RI WKH FRPSDQ\ V LQWHUQDO FRQWURO

 :KLFK RI WKH IROORZLQJ ZRXOG PRVW OLNHO\ EH FODVVLILHG DV D PDWHULDO ZHDNQHVV"

$ $EVHQFH RI DSSURSULDWH VHSDUDWLRQ RI GXWLHV % $EVHQFH RI DSSURSULDWH UHYLHZV DQG DSSURYDOV RI WUDQVDFWLRQV & (YLGHQFH RI IDLOXUH RI FRQWURO DFWLYLWLHV ' ,QHIIHFWLYH RYHUVLJKW RI WKH ILQDQFLDO UHSRUWLQJ SURFHVV E\ WKH FRPSDQ\ V DXGLW FRPPLWWHH  ,I D FRQWURO WRWDO ZHUH WR EH FRPSXWHG RQ HDFK RI WKH IROORZLQJ GDWD LWHPV ZKLFK ZRXOG EHVW EH LGHQWLILHG DV D KDVK WRWDO IRU D SD\UROO ,7 DSSOLFDWLRQ"

$ +RXUV ZRUNHG % 7RWDO GHELWV DQG WRWDO FUHGLWV & 1HW SD\ ' 'HSDUWPHQW QXPEHUV

 *HQHUDOO\ DFFHSWHG DXGLWLQJ VWDQGDUGV *$$6 JLYH DXGLWRUV FRQVLGHUDEOH GLVFUHWLRQ WR GHFLGH WKH DPRXQW RI ZRUN UHTXLUHG WR VDWLVI\ DXGLWLQJ VWDQGDUGV JXLGLQJ LQWHUQDO FRQWURO HYDOXDWLRQ DQG UHODWHG DXGLW SODQQLQJ :KLFK RI WKH IROORZLQJ GHVFULSWLRQV EHVW H[SUHVVHV WKH PLQLPXP DPRXQW RI ZRUN SHUPLWWHG E\ *$$6 IRU QRQSXEOLF FRPSDQLHV"

$ 'R QRW REWDLQ DQ XQGHUVWDQGLQJ RI FOLHQW HQYLURQPHQW DFFRXQWLQJ RU FRQWURO DFWLYLWLHV 'R QRW GRFXPHQW WKH GHFLVLRQ WR DVVHVV FRQWURO ULVN DW PD[LPXP 3HUIRUP  EDODQFHV % 2EWDLQ DQ XQGHUVWDQGLQJ RI FOLHQW HQYLURQPHQW DFFRXQWLQJ DQG FRQWURO DFWLYLWLHV 'RFXPHQW WKH GHFLVLRQ WR DVVHVV FRQWURO ULVN DW PD[LPXP 3HUIRUP DQ H[WHQVLYH EXW QRW  VXEVWDQWLYH DXGLW RQ ILQDQFLDO VWDWHPHQW WUDQVDFWLRQV DQG EDODQFHV & 2EWDLQ DQ XQGHUVWDQGLQJ RI FOLHQW HQYLURQPHQW DFFRXQWLQJ DQG FRQWURO DFWLYLWLHV DQG SHUIRUP GHWDLO WHVWV RI FRQWUROV 'RFXPHQW WKH GHFLVLRQ WR DVVHVV FRQWURO ULVN EHORZ WKH PD[LPXP 3HUIRUP UHVWULFWHG VXEVWDQWLYH DXGLW RQ ILQDQFLDO VWDWHPHQW WUDQVDFWLRQV DQG EDODQFHV FRQVLGHULQJ WKH FRQWURO ULVN DVVHVVPHQW ' 2EWDLQ DQ XQGHUVWDQGLQJ RI FOLHQW HQYLURQPHQW DFFRXQWLQJ DQG FRQWURO DFWLYLWLHV DQG SHUIRUP GHWDLO WHVWV RI FRQWUROV 'RFXPHQW WKH GHFLVLRQ WR DVVHVV FRQWURO ULVN DW ]HUR 3HUIRUP QR VXEVWDQWLYH DXGLW RQ ILQDQFLDO VWDWHPHQW WUDQVDFWLRQV DQG EDODQFHV EHFDXVH ]HUR FRQWURO ULVN PHDQV WKDW QR HUURUV RU IUDXG FDQ DIIHFW WKH DFFRXQWV VXEVWDQWLYH DXGLW RQ DOO ILQDQFLDO VWDWHPHQW WUDQVDFWLRQV DQG

 3URSHU VHSDUDWLRQ RI GXWLHV UHGXFHV WKH RSSRUWXQLW\ IRU SHUVRQV WR EH LQ SRVLWLRQV WR ERWK

$ -RXUQDOL]H HQWULHV DQG SUHSDUH ILQDQFLDO VWDWHPHQWV % 5HFRUG FDVK UHFHLSWV DQG FDVK GLVEXUVHPHQWV & (VWDEOLVK LQWHUQDO FRQWUROV DQG DXWKRUL]H WUDQVDFWLRQV ' 3HUSHWUDWH D IUDXG DQG WKHQ FRQFHDO LW LQ WKH ERRNV  ,Q DQ DXGLW RI ILQDQFLDO VWDWHPHQWV DQ DXGLWRU V SULPDU\ FRQVLGHUDWLRQ UHJDUGLQJ DQ LQWHUQDO FRQWURO SROLF\ RU DFWLYLW\ LV ZKHWKHU WKH SROLF\ RU DFWLYLW\

$ 5HIOHFWV PDQDJHPHQW V SKLORVRSK\ DQG RSHUDWLQJ VW\OH % $IIHFWV PDQDJHPHQW V ILQDQFLDO VWDWHPHQW DVVHUWLRQV & 3URYLGHV DGHTXDWH VDIHJXDUGV RYHU DFFHVV WR DVVHWV ' (QKDQFHV PDQDJHPHQW V GHFLVLRQ PDNLQJ SURFHVVHV

 :KLFK RI WKH IROORZLQJ LV D VWHS LQ DQ DXGLWRU V GHFLVLRQ WR DVVHVV FRQWURO ULVN DW EHORZ WKH PD[LPXP"

$ $SSO\ DQDO\WLFDO SURFHGXUHV WR ERWK ILQDQFLDO GDWD DQG QRQILQDQFLDO LQIRUPDWLRQ WR GHWHFW FRQGLWLRQV WKDW PD\ LQGLFDWH ZHDN FRQWUROV % 3HUIRUP WHVWV RI GHWDLOV RI WUDQVDFWLRQV DQG DFFRXQW EDODQFHV WR LGHQWLI\ SRWHQWLDO HUURUV DQG IUDXG & ,GHQWLI\ VSHFLILF LQWHUQDO FRQWURO SROLFLHV DQG DFWLYLWLHV WKDW DUH OLNHO\ WR GHWHFW RU SUHYHQW PDWHULDO PLVVWDWHPHQWV ' 'RFXPHQW WKH IDFW WKDW WKH DGGLWLRQDO DXGLW HIIRUW WR SHUIRUP WHVWV RI FRQWUROV H[FHHGV WKH SRWHQWLDO UHGXFWLRQ LQ VXEVWDQWLYH WHVWLQJ

 :KLFK RI WKH IROORZLQJ LV QRW DQ REMHFWLYH RI LQWHUQDO FRQWUROV RYHU ILQDQFLDO UHSRUWLQJ DV GHILQHG E\ WKH 6DUEDQHV2[OH\ $FW"

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

$ ,QFRPSDWLEOH GXWLHV % 0DQDJHPHQW RYHUULGH & 0LVWDNHV LQ MXGJPHQW ' &ROOXVLRQ DPRQJ HPSOR\HHV

 $V SDUW RI XQGHUVWDQGLQJ WKH LQWHUQDO FRQWURO DQ DXGLWRU LV QRW UHTXLUHG WR

$ &RQVLGHU IDFWRUV WKDW DIIHFW WKH ULVN RI PDWHULDO PLVVWDWHPHQW % $VFHUWDLQ ZKHWKHU LQWHUQDO FRQWURO SROLFLHV DQG DFWLYLWLHV KDYH EHHQ SODFHG LQ RSHUDWLRQ & ,GHQWLI\ WKH W\SHV RI SRWHQWLDO PLVVWDWHPHQWV WKDW FDQ RFFXU ' 2EWDLQ NQRZOHGJH DERXW WKH RSHUDWLQJ HIIHFWLYHQHVV RI WKH FOLHQW V LQWHUQDO FRQWURO DFWLYLWLHV  7KH SULPDU\ REMHFWLYH RI SURFHGXUHV SHUIRUPHG WR REWDLQ DQ XQGHUVWDQGLQJ RI WKH HQWLW\ V LQWHUQDO FRQWURO LV WR SURYLGH DQ DXGLWRU

$ 7KH NQRZOHGJH QHFHVVDU\ IRU DXGLW SODQQLQJ % 7KH HYLGHQWLDO PDWWHU WR XVH LQ DVVHVVLQJ LQKHUHQW ULVN & $ EDVLV IRU PRGLI\LQJ WHVWV RI FRQWUROV ' $Q HYDOXDWLRQ RI WKH FRQVLVWHQF\ RI DSSOLFDWLRQ RI PDQDJHPHQW V SROLFLHV  7KH RYHUDOO DWWLWXGH DQG DZDUHQHVV RI DQ HQWLW\ V ERDUG RI GLUHFWRUV FRQFHUQLQJ WKH LPSRUWDQFH RI WKH FOLHQW V LQWHUQDO FRQWURO XVXDOO\ LV UHIOHFWHG LQ LWV

$ &RPSXWHUEDVHG FRQWURO DFWLYLWLHV % 6\VWHP RI VHSDUDWLRQ RI GXWLHV & &RQWURO HQYLURQPHQW ' 6DIHJXDUGV RYHU DFFHVV WR DVVHWV

 $IWHU REWDLQLQJ DQ XQGHUVWDQGLQJ RI LQWHUQDO FRQWUROV DQG DVVHVVLQJ FRQWURO ULVN RQ WKH DXGLW RI D QRQSXEOLF FRPSDQ\ DQ DXGLWRU GHFLGHG WR SHUIRUP WHVWV RI FRQWUROV 7KH DXGLWRU PRVW OLNHO\ GHFLGHG WKDW

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

$ 'RFXPHQW KLV RU KHU XQGHUVWDQGLQJ RI WKH HQWLW\ V LQWHUQDO FRQWURO % 6HDUFK IRU VLJQLILFDQW GHILFLHQFLHV LQ WKH RSHUDWLRQ RI LQWHUQDO FRQWUROV & 3HUIRUP WHVWV RI FRQWUROV WR HYDOXDWH WKH HIIHFWLYHQHVV RI WKH HQWLW\ V DFFRXQWLQJ V\VWHP ' 'HWHUPLQH ZKHWKHU FRQWURO DFWLYLWLHV DUH RSHUDWLQJ HIIHFWLYHO\ WR SUHYHQW RU GHWHFW PDWHULDO PLVVWDWHPHQWV

 ,Q WHVWLQJ FRQWURO DFWLYLWLHV DQ DXGLWRU RUGLQDULO\ VHOHFWV IURP D YDULHW\ RI WHFKQLTXHV LQFOXGLQJ

$ ,QTXLU\ DQG DQDO\WLFDO SURFHGXUHV % 5HSHUIRUPDQFH DQG REVHUYDWLRQ & &RPSDULVRQ DQG FRQILUPDWLRQ ' ,QVSHFWLRQ DQG YHULILFDWLRQ  $VVHVVLQJ FRQWURO ULVN DW EHORZ WKH PD[LPXP OHYHO PRVW OLNHO\ ZRXOG LQYROYH

$ 3HUIRUPLQJ PRUH H[WHQVLYH VXEVWDQWLYH WHVWV ZLWK ODUJHU VDPSOH VL]HV WKDQ RULJLQDOO\ SODQQHG % 5HGXFLQJ LQKHUHQW ULVN IRU PRVW RI WKH DVVHUWLRQV UHOHYDQW WR VLJQLILFDQW DFFRXQW EDODQFHV & &KDQJLQJ WKH WLPLQJ RI VXEVWDQWLYH WHVWV E\ RPLWWLQJ LQWHULPGDWH WHVWLQJ DQG SHUIRUPLQJ WKH WHVWV DW \HDUHQG ' ,GHQWLI\LQJ VSHFLILF LQWHUQDO FRQWURO DFWLYLWLHV WKDW DUH UHOHYDQW WR VSHFLILF ILQDQFLDO VWDWHPHQW DVVHUWLRQV

 $ UHSRUW RQ LQWHUQDO FRQWURO HIIHFWLYHQHVV E\ WKH PDQDJHPHQW WHDP RI SXEOLF FRPSDQLHV LV UHTXLUHG E\

$ 7KH 6DUEDQHV2[OH\ $FW RI  % 7KH 3&$2% & 7KH $,&3$ ' 7KH $6%  0DQDJHPHQW V UHSRUW RQ LQWHUQDO FRQWUROV PXVW LQFOXGH HDFK RI WKH IROORZLQJ H[FHSW

$ $ VWDWHPHQW WKDW PDQDJHPHQW LV UHVSRQVLEOH IRU HVWDEOLVKLQJ DQG PDLQWDLQLQJ DGHTXDWH LQWHUQDO FRQWURO RYHU ILQDQFLDO UHSRUWLQJ % $ VWDWHPHQW LGHQWLI\LQJ WKH IUDPHZRUN PDQDJHPHQW XVHV WR HYDOXDWH WKH HIIHFWLYHQHVV RI WKH FRPSDQ\ V LQWHUQDO FRQWURO & $ VWDWHPHQW SURYLGLQJ PDQDJHPHQW V DVVHVVPHQW RI WKH HIIHFWLYHQHVV RI WKH FRPSDQ\ V LQWHUQDO FRQWURO ' $ VWDWHPHQW SURYLGLQJ PDQDJHPHQW V HYDOXDWLRQ RI WKH FRPSDQ\ V FRQWURO HQYLURQPHQW

 :KLFK RI WKH IROORZLQJ DUHDV FDQ H[WHUQDO DXGLWRUV UHO\ RQ LQWHUQDO DXGLWRUV ZRUN LQ DXGLWLQJ LQWHUQDO FRQWUROV"

$ (YDOXDWLRQ RI WKH DXGLWLQJ HQYLURQPHQW % 7HVWLQJ RI ORZULVN LQWHUQDO FRQWURO DFWLYLWLHV & $OO WHVWLQJ RI WKH RSHUDWLQJ HIIHFWLYHQHVV RI LQWHUQDO FRQWURO DFWLYLWLHV ' 3URYLGLQJ WKH SULQFLSDO HYLGHQFH IRU WKH H[WHUQDO DXGLWRUV RSLQLRQ  7KH PRVW LPSRUWDQW IXQGDPHQWDO FRPSRQHQW RI DQ HQWLW\ V LQWHUQDO FRQWURO LV

$ (IIHFWLYHQHVV DQG HIILFLHQF\ RI RSHUDWLRQV % 3HRSOH ZKR RSHUDWH WKH FRQWURO V\VWHP & 5HOLDELOLW\ RI ILQDQFLDO UHSRUWLQJ ' &RPSOLDQFH ZLWK DSSOLFDEOH ODZV DQG UHJXODWLRQV  7KH SULPDU\ SXUSRVH IRU REWDLQLQJ DQ XQGHUVWDQGLQJ RI D QRQSXEOLF DXGLW FOLHQW V LQWHUQDO FRQWURO LV WR

$ 3URYLGH D EDVLV IRU PDNLQJ FRQVWUXFWLYH VXJJHVWLRQV LQ D PDQDJHPHQW OHWWHU % 'HWHUPLQH WKH QDWXUH WLPLQJ DQG H[WHQW RI WHVWV WR EH SHUIRUPHG LQ WKH DXGLW & 3URYLGH WKH UDWLRQDOH IRU WKH LQKHUHQW ULVN DVVHVVPHQW DW WKH ILQDQFLDO VWDWHPHQW DVVHUWLRQ OHYHO ' 3URYLGH LQIRUPDWLRQ IRU D FRPPXQLFDWLRQ RI LQWHUQDO FRQWUROUHODWHG PDWWHUV WR PDQDJHPHQW

 (IIHFWLYHQHVV RI DXGLW SURFHGXUHV ZRXOG EH UHGXFHG E\

$ 6HOHFWLQJ ODUJHU VDPSOH VL]HV IRU DXGLW % 3HUIRUPLQJ DXGLW SURFHGXUHV DW WKH ILVFDO \HDUHQG GDWH DV RSSRVHG WR WKH LQWHULP SHULRG & 'HFLGLQJ WR REWDLQ H[WHUQDO HYLGHQFH LQVWHDG RI LQWHUQDO HYLGHQFH ' 3HUIRUPLQJ SURFHGXUHV GXULQJ WKH LQWHULP SHULRG DV RSSRVHG WR DW WKH ILVFDO \HDU HQG GDWH  $FFRUGLQJ WR WKH 3&$2% GXULQJ WKH DXGLW RI LQWHUQDO FRQWUROV IRU DQ LVVXHU WKH XOWLPDWH REMHFWLYH RI WHVWLQJ WKH GHVLJQ HIIHFWLYHQHVV RI LQWHUQDO FRQWUROV LV WR

$ 'HWHUPLQH ZKHWKHU WKH FRPSDQ\ V FRQWUROV DUH SURFHVVLQJ FRPSDQ\ GDWD HIIHFWLYHO\ % 'HWHUPLQH WKDW WKH FRPSDQ\ V FRQWUROV ZLOO VDWLVI\ WKH FRPSDQ\ V FRQWURO REMHFWLYHV DQG FDQ HIIHFWLYHO\ SUHYHQW RU GHWHFW HUURUV RU IUDXG WKDW FRXOG UHVXOW LQ PDWHULDO PLVVWDWHPHQWV LI WKH\ RSHUDWH DV SUHVFULEHG & 'HWHUPLQH WKDW WKH FRPSDQ\ V HPSOR\HHV DUH SURFHVVLQJ WKH FRQWUROV DFFRUGLQJ WR WKH SROLF\ DQG SURFHGXUH PDQXDOV DW WKH FRPSDQ\ ' 1RQH RI WKH DERYH

 7R WHVW WKH RSHUDWLQJ HIIHFWLYHQHVV RI D FRQWURO DQ DXGLW WHDP PLJKW XVH D FRPELQDWLRQ RI HDFK RI WKH IROORZLQJ WHVWV H[FHSW IRU

$ ,QTXLU\ RI FOLHQW SHUVRQQHO % 2EVHUYDWLRQ RI FRPSDQ\ RSHUDWLRQV & &RQILUPDWLRQ RI EDODQFHV ' ,QVSHFWLRQ RI GRFXPHQWDWLRQ  :KLFK RI WKH IROORZLQJ LV D SUHYHQWLYH FRQWURO"

$ 5HFRQFLOLDWLRQ RI D EDQN DFFRXQW % 5HFDOFXODWLRQ RI D VDPSOH RI SD\UROO HQWULHV E\ LQWHUQDO DXGLWRUV & 6HSDUDWLRQ RI GXWLHV EHWZHHQ WKH SD\UROO DQG SHUVRQQHO GHSDUWPHQWV ' 'HWDLOHG IOXFWXDWLRQ DQDO\VLV FRPSOHWHG E\ WKH &)2 IRU UHYHQXH

 ,Q PRVW DXGLWV RI ODUJH HQWLWLHV FRQWURO ULVN DVVHVVPHQW FRQWULEXWHV WR DXGLW HIILFLHQF\ ZKLFK PHDQV WKDW

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

$ $ QDUUDWLYH PHPRUDQGXP GHVFULELQJ WKH FRQWURO V\VWHP % $Q LQWHUQDO FRQWURO TXHVWLRQQDLUH & $ IORZFKDUW RI WKH GRFXPHQWV DQG SURFHGXUHV XVHG E\ WKH FRPSDQ\ ' $OO RI WKH DERYH

 $ EULGJH ZRUNSDSHU VKRZV WKH FRQQHFWLRQ EHWZHHQ

$ &RQWURO HYDOXDWLRQ ILQGLQJV DQG VXEVHTXHQW DXGLW SURFHGXUHV % 0DQDJHPHQW REMHFWLYHV DQG DFFRXQWLQJ V\VWHP SURFHGXUHV & 0DQDJHPHQW REMHFWLYHV DQG HQWLW\ FRQWURO DFWLYLWLHV ' )LQDQFLDO VWDWHPHQW DVVHUWLRQV DQG WHVWV RI FRQWUROV  7HVWV RI FRQWUROV LQ D *$$6 DXGLW DUH UHTXLUHG IRU

$ 2EWDLQLQJ HYLGHQFH DERXW WKH ILQDQFLDO VWDWHPHQW DVVHUWLRQV % $FFRPSOLVKLQJ FRQWURO RYHU WKH RFFXUUHQFH RI UHFRUGHG WUDQVDFWLRQV & $SSO\LQJ DQDO\WLFDO SURFHGXUHV WR ILQDQFLDO VWDWHPHQW EDODQFHV ' 2EWDLQLQJ HYLGHQFH DERXW WKH RSHUDWLQJ HIIHFWLYHQHVV RI FOLHQW FRQWURO DFWLYLWLHV  $ WUDQVDFWLRQOHYHO LQWHUQDO FRQWURO DFWLYLW\ LV EHVW GHVFULEHG DV

$ $Q DFWLRQ WDNHQ E\ DXGLWRUV WR REWDLQ HYLGHQFH % $Q DFWLRQ WDNHQ E\ FOLHQW SHUVRQQHO IRU WKH SXUSRVH RI SUHYHQWLQJ GHWHFWLQJ DQG FRUUHFWLQJ HUURUV DQG IUDXGV LQ WUDQVDFWLRQV WR HOLPLQDWH RU PLWLJDWH ULVNV LGHQWLILHG E\ WKH FRPSDQ\ & $ PHWKRG IRU UHFRUGLQJ VXPPDUL]LQJ DQG UHSRUWLQJ ILQDQFLDO LQIRUPDWLRQ ' 7KH IXQFWLRQLQJ RI WKH ERDUG RI GLUHFWRUV LQ VXSSRUW RI LWV DXGLW FRPPLWWHH

 :KHQ SODQQLQJ DQ DXGLW RI LQWHUQDO FRQWUROV IRU DQ LVVXHU WKH DXGLW WHDP VKRXOG

$ ,GHQWLI\ VLJQLILFDQW DFFRXQWV ORFDWLRQV DQG DVVHUWLRQV % &RQGXFW D ZDONWKURXJK RI WKH LQWHUQDO FRQWURO SURFHVV & 0DNH LQTXLULHV RI HPSOR\HHV UHJDUGLQJ WKH H[LVWHQFH RI FRQWURO DFWLYLWLHV ' 5HSHUIRUP FRQWURO DFWLYLWLHV SHUIRUPHG E\ FOLHQW HPSOR\HHV WR GHWHUPLQH WKHLU HIIHFWLYHQHVV  $ PDWHULDO ZHDNQHVV LV D VLWXDWLRQ LQ ZKLFK

$ ,W LV SUREDEOH WKDW DQ LPPDWHULDO ILQDQFLDO VWDWHPHQW PLVVWDWHPHQW ZRXOG QRW EH GHWHFWHG RQ D WLPHO\ EDVLV % 7KHUH LV D UHPRWH OLNHOLKRRG WKDW D PDWHULDO PLVVWDWHPHQW ZRXOG EH GHWHFWHG RQ D WLPHO\ EDVLV & ,W LV UHDVRQDEO\ SRVVLEOH WKDW D PDWHULDO PLVVWDWHPHQW ZRXOG QRW EH GHWHFWHG RQ D WLPHO\ EDVLV ' ,W LV UHDVRQDEO\ SRVVLEOH WKDW DQ LPPDWHULDO PLVVWDWHPHQW ZRXOG QRW EH GHWHFWHG RQ D WLPHO\ EDVLV

 :KHQ FRPSOHWLQJ WKH DXGLW RI LQWHUQDO FRQWUROV IRU DQ LVVXHU WKH VHYHULW\ RI DQ LQWHUQDO FRQWURO GHILFLHQF\ GHSHQGV RQ

$ :KHWKHU WKHUH LV D UHDVRQDEOH SRVVLELOLW\ WKDW WKH FRPSDQ\ V FRQWUROV ZLOO IDLO WR SUHYHQW RU GHWHFW D PLVVWDWHPHQW RI DQ DFFRXQW EDODQFH RU GLVFORVXUH EDODQFH % :KHWKHU WKH DFFRXQW KDV D KLVWRU\ RI HUURUV & 7KH PDJQLWXGH RI WKH SRWHQWLDO PLVVWDWHPHQW UHVXOWLQJ IURP WKH GHILFLHQF\ RU WKH GHILFLHQFLHV ' %RWK $ DQG & DUH FRUUHFW ( $OO RI WKH DERYH DUH FRUUHFW  :KLFK RI WKH IROORZLQJ GRHV 349 DFFXUDWHO\ VXPPDUL]H DXGLWRUV UHTXLUHPHQWV UHJDUGLQJ LQWHUQDO FRQWURO"

$ 2SWLRQ $ % 2SWLRQ % & 2SWLRQ & ' 2SWLRQ '

 :KHQ FRPSOHWLQJ WKH DXGLW RI LQWHUQDO FRQWUROV IRU DQ LVVXHU WKH 3&$2% UHTXLUHV DXGLWRUV RI SXEOLF FRPSDQLHV WR DXGLW LQWHUQDO FRQWUROV RYHU

$ 2SHUDWLRQV % &RPSOLDQFH ZLWK UHJXODWLRQV & )LQDQFLDO UHSRUWLQJ ' $OO RI WKH DERYH  :KHQ FRPSOHWLQJ WKH DXGLW RI LQWHUQDO FRQWUROV IRU DQ LVVXHU $  UHTXLUHV DXGLWRUV RI SXEOLF FRPSDQLHV WR UHSRUW RQ

$ 2SWLRQ $ % 2SWLRQ % & 2SWLRQ & ' 2SWLRQ '

 :KHQ FRPSOHWLQJ WKH DXGLW RI LQWHUQDO FRQWUROV IRU DQ LVVXHU $6  UHTXLUHV DXGLWRUV WR WHVW

$ 2SHUDWLQJ HIIHFWLYHQHVV RQO\ % 'HVLJQ HIIHFWLYHQHVV RQO\ & %RWK RSHUDWLQJ DQG GHVLJQ HIIHFWLYHQHVV ' 1HLWKHU RSHUDWLQJ QRU GHVLJQ HIIHFWLYHQHVV  :KLFK RI WKH IROORZLQJ ZRXOG SUREDEO\ QRW EH FRQVLGHUHG DQ LQGLFDWLRQ RI D PDWHULDO ZHDNQHVV"

$ (YLGHQFH RI D PDWHULDO PLVVWDWHPHQW % ,QHIIHFWLYH RYHUVLJKW E\ WKH DXGLW FRPPLWWHH & ,PPDWHULDO IUDXG FRPPLWWHG E\ VHQLRU PDQDJHPHQW ' 2YHUSURGXFWLRQ E\ WKH PDQXIDFWXULQJ SODQW  :KLFK UHSRUW ZRXOG QRW EH DSSURSULDWH IRU D SXEOLF DFFRXQWLQJ ILUP WR SURYLGH RQ ILQDQFLDO UHSRUWLQJ FRQWUROV"

$ 8QTXDOLILHG QR PDWHULDO ZHDNQHVVHV IRXQG % 'LVFODLPHU RI RSLQLRQ XQDEOH WR SHUIRUP DOO QHFHVVDU\ SURFHGXUHV & 'LVFODLPHU RI RSLQLRQ VLJQLILFDQW GHILFLHQFLHV H[LVW ' $GYHUVH PDWHULDO ZHDNQHVVHV H[LVW

 7KH SXUSRVH RI VHSDUDWLQJ WKH GXWLHV RI KLULQJ SHUVRQQHO DQG GLVWULEXWLQJ SD\UROO FKHFNV LV WR VHSDUDWH WKH

$ $XWKRUL]DWLRQ RI WUDQVDFWLRQV IURP WKH FXVWRG\ RI UHODWHG DVVHWV % 2SHUDWLRQDO UHVSRQVLELOLW\ IURP WKH UHFRUGNHHSLQJ UHVSRQVLELOLW\ & +XPDQ UHVRXUFHV IXQFWLRQ IURP WKH FRQWUROOHUVKLS IXQFWLRQ ' $GPLQLVWUDWLYH FRQWUROV IURP WKH LQWHUQDO DFFRXQWLQJ FRQWUROV  :KLFK RI WKH IROORZLQJ VWDWHPHQWV LV QRW WUXH ZLWK UHVSHFW WR WKH DXGLWRUV UHSRUW RQ LQWHUQDO FRQWURO RYHU ILQDQFLDO UHSRUWLQJ"

$ 7KH UHSRUW ZLOO EH GDWHG DV RI WKH GDWH RI WKH ILQDQFLDO VWDWHPHQWV % 7KH UHSRUW ZLOO H[SUHVV DQ RSLQLRQ RQ WKH HIIHFWLYHQHVV RI LQWHUQDO FRQWURO RYHU ILQDQFLDO UHSRUWLQJ & 7KH DXGLWRU ZLOO LVVXH DQ DGYHUVH RSLQLRQ LI RQH RU PRUH PDWHULDO ZHDNQHVVHV H[LVW ' 7KH UHSRUW PD\ EH SUHVHQWHG ZLWK WKH UHSRUW RQ WKH HQWLW\ V ILQDQFLDO VWDWHPHQWV DV D FRPELQHG UHSRUW

 ,I WKH DXGLWRUV HQFRXQWHU D VLJQLILFDQW VFRSH OLPLWDWLRQ LQ HYDOXDWLQJ D SXEOLF FRPSDQ\ V LQWHUQDO FRQWURO RYHU ILQDQFLDO UHSRUWLQJ ZKLFK RI WKH IROORZLQJ W\SHV RI RSLQLRQV RQ WKH HIIHFWLYHQHVV RI WKH FRPSDQ\ V LQWHUQDO FRQWURO RYHU ILQDQFLDO UHSRUWLQJ ZRXOG EH DSSURSULDWH"

$ 8QTXDOLILHG RSLQLRQ RU DGYHUVH RSLQLRQ % 4XDOLILHG RSLQLRQ RU DGYHUVH RSLQLRQ & 8QTXDOLILHG RSLQLRQ RU GLVFODLPHU RI RSLQLRQ ' 'LVFODLPHU RI RSLQLRQ  :KLFK RI WKH IROORZLQJ LQIRUPDWLRQ ZRXOG EH LQFOXGHG LQ WKH LQWURGXFWRU\ SDUDJUDSK RI WKH DXGLWRUV UHSRUW RQ LQWHUQDO FRQWURO RYHU ILQDQFLDO UHSRUWLQJ LI WKH UHSRUW LV SUHVHQWHG VHSDUDWHO\ IURP WKH DXGLWRUV UHSRUW RQ WKH HQWLW\ V ILQDQFLDO VWDWHPHQWV"

$ 7KH IDFW WKDW WKH DXGLWRUV FRQGXFWHG DQ DXGLW RI WKH HQWLW\ V ILQDQFLDO VWDWHPHQWV % 7KH GHILQLWLRQ RI D PDWHULDO ZHDNQHVV LQ LQWHUQDO FRQWURO RYHU ILQDQFLDO UHSRUWLQJ & 6WDWHPHQWV LGHQWLI\LQJ WKH UHVSRQVLELOLW\ RI WKH DXGLWRUV DQG PDQDJHPHQW IRU LQWHUQDO FRQWURO RYHU ILQDQFLDO UHSRUWLQJ ' $ UHIHUHQFH WR WKH DXGLWRUV UHSRUW DQG RSLQLRQ RQ WKH HQWLW\ V ILQDQFLDO VWDWHPHQWV

 :KLFK RI WKH IROORZLQJ LV QRW RQH RI &262 V REMHFWLYHV IRU LQWHUQDO FRQWUROV"

$ (IILFLHQF\ DQG HIIHFWLYHQHVV RI RSHUDWLRQV % 5HOLDELOLW\ RI ILQDQFLDO UHSRUWLQJ & 0D[LPL]DWLRQ RI SURILW ' &RPSOLDQFH ZLWK DSSOLFDEOH ODZV DQG UHJXODWLRQV  :KLFK RI WKH IROORZLQJ LV QRW RQH RI WKH HOHPHQWV RI WKH FRQWURO HQYLURQPHQW"

$ 3URFHVV IRU UHFRUGLQJ WUDQVDFWLRQV DQG SUHSDULQJ ILQDQFLDO VWDWHPHQWV % 3UHVHQFH RI DQ LQWHUQDO DXGLWLQJ IXQFWLRQ & $ FRPSDQ\ V RUJDQL]DWLRQDO VWUXFWXUH ' 0HWKRGV RI DVVLJQLQJ DXWKRULW\ DQG UHVSRQVLELOLW\  :KLFK RI WKH IROORZLQJ ZRXOG QRW EH FRQVLGHUHG D FRQWURO DFWLYLW\"

$ $VVHVVPHQW RI FRQWURO ULVN % 3HUIRUPDQFH UHYLHZV & 3K\VLFDO FRQWUROV ' ,QIRUPDWLRQ SURFHVVLQJ FRQWUROV

 $Q DFWLRQ WDNHQ WR SUHYHQW GHWHFW DQG FRUUHFW HUURUV DQG IUDXGV LQ WUDQVDFWLRQV LV UHIHUUHG WR DV D

$ &RQWURO REMHFWLYH % 5LVN DVVHVVPHQW & 'XDOSXUSRVH WHVW ' &RQWURO DFWLYLW\  $FFRXQWLQJ IRU WKH QXPHULFDO VHTXHQFH RI VKLSSLQJ GRFXPHQWV LV D FRQWURO SURFHGXUH GHVLJQHG WR DFKLHYH WKH LQWHUQDO FRQWURO REMHFWLYH RI

$ 9DOLGLW\ % &RPSOHWHQHVV & $FFRXQWLQJ ' $FFXUDF\  $XGLWRUV REWDLQ DQ XQGHUVWDQGLQJ RI WKH LQWHUQDO FRQWURO WKURXJK DOO RI WKH IROORZLQJ H[FHSW

$ 3UHYLRXV H[SHULHQFH ZLWK WKH FRPSDQ\ % 5HVSRQVHV WR LQTXLULHV GLUHFWHG WR FOLHQW SHUVRQQHO & $ VXEVWDQWLYH WHVWLQJ DXGLW SODQ ' $ ZDONWKURXJK RI RQH RU PRUH WUDQVDFWLRQV

 7KH PRVW HIILFLHQW PHDQV RI JDWKHULQJ HYLGHQFH DERXW WKH LQWHUQDO FRQWURO LV WR FRQGXFW D IRUPDO LQWHUYLHZ ZLWK NQRZOHGJHDEOH PDQDJHUV DQG

$ :ULWH D QDUUDWLYH GHVFULSWLRQ RI HDFK LPSRUWDQW FRQWURO % 3UHSDUH D IORZFKDUW LOOXVWUDWLQJ WKH LQWHUQDO FRQWURO & 3UHSDUH D ZHOOLQGH[HG ILOH RI DXGLW GRFXPHQWDWLRQ ' 8VH DQ LQWHUQDO FRQWURO TXHVWLRQQDLUH  7KH ILYH LQWHUQDO FRQWURO FRPSRQHQWV GR QRW LQFOXGH

$ &RQWURO DFWLYLWLHV % 5LVN DVVHVVPHQW & 0RQLWRULQJ ' &RQWURO ULVN

 6LJQLILFDQW GHILFLHQFLHV DUH GHILQHG DV FRQGLWLRQV WKDW

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

$ (YDOXDWH WKH VHYHULW\ RI HDFK FRQWURO GHILFLHQF\ WKDW FRPHV WR WKHLU DWWHQWLRQ % 'RFXPHQW WKH SURFHVV XVHG WR GHWHUPLQH VLJQLILFDQW DFFRXQWV DQG GLVFORVXUHV DQG PDMRU FODVVHV RI WUDQVDFWLRQV & 7HVW DOO LQWHUQDO FRQWUROV LQ WKH FRPSDQ\ ' $OO WKH DERYH

)LOO LQ WKH %ODQN 4XHVWLRQV

BBBBBBBBBBBBBBBBBBBBBBBBBB DUH WKH VHW RI SROLFLHV DQG SURFHGXUHV WKDW DUH GHVLJQHG WR HQVXUH WKDW WUDQVDFWLRQV DUH UHFRUGHG SURSHUO\ BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB LQ LQWHUQDO FRQWURO DUH PDWWHUV WKDW WKH DXGLWRUV EHOLHYH VKRXOG EH FRPPXQLFDWHG WR WKH FOLHQWV DXGLW FRPPLWWHH BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 7KH DXGLW WHDP LV UHVSRQVLEOH IRU GHVLJQLQJ DQ HYDOXDWLRQ RI BBBBBBBBBBBBBBBBBBBBBBBBB LQWHUQDO FRQWURO V\VWHPV DQG BBBBBBBBBBBBBBBBBBBBBBBBBBBBB WKH FRQWURO BBBBBBBBBBBBBBBBBBBBBBBBBBBBB RI WKDW V\VWHP BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 7KH &262 UHSRUW LGHQWLILHV WKH REMHFWLYHV WR EH DFKLHYHG E\ LQWHUQDO FRQWURO DV  HIIHFWLYHQHVV DQG HIILFLHQF\ RI BBBBBBBBBBBBBBBBBBBBBBBBBBBB  UHOLDELOLW\ RI BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB DQG  FRPSOLDQFH ZLWK BBBBBBBBBBBBBBBBBBBB DQG BBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB

BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB DUH VSHFLILF DFWLRQV WDNHQ E\ D FOLHQW V PDQDJHPHQW DQG HPSOR\HHV WR KHOS HQVXUH WKDW PDQDJHPHQW GLUHFWLYHV DUH FDUULHG RXW BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBB WR DVVHWV DQG LPSRUWDQW UHFRUGV GRFXPHQWV DQG EODQN IRUPV VKRXOG EH OLPLWHG WR DXWKRUL]HG SHUVRQQHO LQ D ZHOOFRQWUROOHG FRPSDQ\ BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB ,QWHUQDO FRQWURO V\VWHPV JHQHUDOO\ SURYLGH BBBBBBBBBBBBBBBBBBBBBBBBBBBBB DVVXUDQFH WKDW WKH REMHFWLYHV RI LQWHUQDO FRQWURO DUH VDWLVILHG BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 6LJQLILFDQW GHILFLHQFLHV LQ LQWHUQDO FRQWURO DOVR LQFOXGH WKH PRUH VHULRXV FRQGLWLRQ FDOOHG D BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 7R UHGXFH WKH FRQWURO ULVN WR D ORZ OHYHO DXGLWRUV PXVW GHWHUPLQH  WKH BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB RI FRPSDQ\ FRPSOLDQFH ZLWK FRQWURO SROLFLHV DQG  WKH BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB RI FRPSDQ\ FRPSOLDQFH BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB

$XGLWRUV SHUIRUP BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB WR GHWHUPLQH KRZ ZHOO WKH FRPSDQ\ V FRQWUROV DFWXDOO\ IXQFWLRQHG GXULQJ WKH SHULRG XQGHU DXGLW BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 7KH FRQFHSW RI BBBBBBBBBBBBBBBBBBBBBBBBBBBB UHFRJQL]HV WKDW WKH FRVW RI DQ HQWLW\ V LQWHUQDO FRQWURO VKRXOG QRW H[FHHG WKH EHQHILWV WKDW DUH H[SHFWHG WR EH GHULYHG BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB ,Q JDWKHULQJ HYLGHQFH DERXW WKH FOLHQW V LQWHUQDO FRQWURO DXGLWRUV PD\ XVH D Q BBBBBBBBBBBBBBBBBBBBBBBBBBBB ZKLFK LV D FKHFNOLVW RI LQWHUQDO FRQWUROUHODWHG TXHVWLRQV BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB UHGXFHV RSSRUWXQLWLHV IRU D SHUVRQ WR EH LQ D SRVLWLRQ WR SHUSHWUDWH DQG FRQFHDO HUURUV DQG IUDXGV ZKHQ SHUIRUPLQJ WKHLU QRUPDO GXWLHV BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB $ Q BBBBBBBBBBBBBBBBBBBBBBBBBBBB LV D VLQJOH SURFHGXUH WKDW SURGXFHV ERWK FRQWURO DQG VXEVWDQWLYH HYLGHQFH BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB

$ PDWHULDO ZHDNQHVV UHVXOWV LQ D BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB WKDW D BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB ZRXOG QRW EH SUHYHQWHG RU GHWHFWHG RQ D WLPHO\ EDVLV BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB

6KRUW $QVZHU 4XHVWLRQV

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

(DFK RI WKH IROORZLQJ ILYH FDVHV LOOXVWUDWHV VSHFLILF FRQWURO DFWLYLWLHV IURP D FOLHQW V (DFK

UHYHQXH F\FOH DFFRXQWV UHFHLYDEOHVDOHV  )RU HDFK RI WKH SURFHGXUHV D LGHQWLI\ ZKLFK PDQDJHPHQW DVVHUWLRQV DSSO\ DQG E ZKDW SRWHQWLDO FDWHJRU\ RI HUURUV DQG IUDXGV FDQ EH SUHYHQWHG

(VVD\ 4XHVWLRQV

'LVFXVV WKH GLIIHUHQFH EHWZHHQ DQ LQWHUQDO FRQWURO V GHVLJQ HIIHFWLYHQHVV DQG LWV RSHUDWLQJ HIIHFWLYHQHVV

/LVW VHYHUDO HOHPHQWV RI D FRPSDQ\ V FRQWURO HQYLURQPHQW

,GHQWLI\ DQG H[SODLQ EULHIO\ WKH SKDVHV RI DQ LQWHUQDO FRQWURO HYDOXDWLRQ

'LVFXVV VRPH RI WKH SUREOHPV LQ HVWDEOLVKLQJ DQ LQWHUQDO FRQWURO V\VWHP LQ D VPDOO EXVLQHVV

([SODLQ WKH GLIIHUHQW RSLQLRQV WKDW DXGLWRUV FDQ LVVXH IRU DQ HQWLW\ V LQWHUQDO FRQWURO RYHU ILQDQFLDO UHSRUWLQJ

$XGLWRUV DUH UHTXLUHG WR REWDLQ D VXIILFLHQW XQGHUVWDQGLQJ RI DQ HQWLW\ V LQWHUQDO FRQWURO 7KLV XQGHUVWDQGLQJ LV UHTXLUHG E\ WKH SHUIRUPDQFH SULQFLSOH RI *$$6 5HTXLUHG $ :KDW DUH VRPH RI WKH UHDVRQV SXUSRVHV IRU HYDOXDWLQJ DQ HQWLW\ V LQWHUQDO FRQWURO" % :KDW LV WKH LPSDFW RQ VXEVWDQWLYH WHVWLQJ SURFHGXUHV LI WKH DXGLWRU DVVHVVHV FRQWURO ULVN DW WKH PD[LPXP OHYHO" :KDW LV WKH LPSDFW RQ VXEVWDQWLYH WHVWLQJ SURFHGXUHV LI WKH DXGLWRU DVVHVVHV FRQWURO ULVN EHORZ WKH PD[LPXP OHYHO" & 6KRXOG DXGLWRUV DOZD\V WU\ WR REWDLQ HQRXJK HYLGHQFH WR DVVHVV FRQWURO ULVN EHORZ WKH PD[LPXP OHYHO" ([SODLQ

:KDW DUH WKH VL[ VWHSV DXGLWRUV RI SXEOLF FRPSDQLHV VKRXOG XVH WR DXGLW LQWHUQDO FRQWURO RYHU ILQDQFLDO UHSRUWLQJ ,&2)5 "

'LVFXVV ZKDW FRQVWLWXWHV D PDWHULDO ZHDNQHVV LQ LQWHUQDO FRQWURO

([SODLQ WKH GLIIHUHQFH EHWZHHQ D VLJQLILFDQW GHILFLHQF\ DQG D PDWHULDO ZHDNQHVV

"4 Q " " !  9"D C !@ " !&"(! 9 !2 " %! !4 2 ( " ! 8!  B %& B! !@ !((  A "@ A "$ " B !& B B!&! & ! & (" $ !@ "  9&  ! B$ " " ! " ! &!  !@ !" 9 !@  98Q V57X 5 !4 ! 321 %!0 & !# ) ((  !' &""  $E    %$@D    %$@D !4 !(!E



7UXH  )DOVH 4XHVWLRQV

&KDSWHU  5LVN $VVHVVPHQW ,QWHUQDO &RQWURO (YDOXDWLRQ $QVZHU .H\

5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH )$/6( EDVLV IRU FRPPXQLFDWLQJ VLJQLILFDQW GHILFLHQFLHV 7KH SULPDU\ UHDVRQ IRU HYDOXDWLQJ D FRPSDQ\ V LQWHUQDO FRQWURO LV WR SURYLGH D

"" !  ("  !" 9&"  9"D C!@ !@ (" !&" (! 9  "" ! (" !" 9&" 2 !4 ( !@ !2!  !( ! G 57X 5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      

"" !  ("  !" 9&"  9"D C!@ !@ (" !&" ( ! 9  "" ! (" !" 9&" 2 !4 ( !@ !2!  !( ! G 57X 5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      





)$/6( 7KH DXGLW WHDP LV UHVSRQVLEOH IRU WKH FOLHQW V LQWHUQDO FRQWURO 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 758( GRHV WR SUHYHQW GHWHFW DQG FRUUHFW HUURUV DQG IUDXG 7KH DXGLW WDVN RI FRQWURO ULVN DVVHVVPHQW LQYROYHV OHDUQLQJ ZKDW WKH FRPSDQ\

5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

!( ! " " !  9"D C&!  " " !  (" "& !@  98!  " " !  !2!  !( ! 6 57X 5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      

"" !  ("  !" 9&"  9"D C!@ !@ (" !&" ( ! 9  "" ! (" !" 9&" 2 !4 ( !@ !2!  !( ! G 57X 5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      





5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 758( WKH V\VWHP ZRUN 7KH PRVW LPSRUWDQW IHDWXUH RI DQ LQWHUQDO FRQWURO V\VWHP LV WKH SHRSOH ZKR PDNH 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 758( LQIOXHQFHV RQ WKH FRQWURO HQYLURQPHQW 7KH DWWLWXGHV RI PDQDJHUV DQG GLUHFWRUV DUH SUREDEO\ WKH PRVW SHUYDVLYH

"" !  ("  !" 9&"  9"D C!@ !@ (" !&" ( ! 9  "" ! (" !" 9&" 2 !4 ( !@ !2!  !( ! G 57X 5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      

"" !  ("  !" 9&"  9"D C!@ !@ (" !&" ( ! 9  "" ! ("  !" 9&" 2 !4 ( !@ !2!  !( ! G 57X 5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      





5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 758( QRW DQ HQG LQ LWVHOI 7KH &262 UHSRUW LQGLFDWHV WKDW LQWHUQDO FRQWURO VKRXOG EH FRQVLGHUHG D SURFHVV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 758( IUDXGV LQ WUDQVDFWLRQV $ FRQWURO DFWLYLW\ LV DQ DFWLRQ WDNHQ WR SUHYHQW GHWHFW DQG FRUUHFW HUURUV DQG

"4 Q " " !  9"D C !@ " !&"(! 9 !2 " %! !4 2 ( " ! 8!  B %& B! !@ !((  A "@ A "$ " B !& B B!&! & ! & (" $ !@ "  9&  ! B$ " " ! " ! &!  !@ !" 9 !@  98Q V57X 5 !4 ! 321 %!0 & !# ) ((  !' &""  $E    %$@D    %$@D !4 !(!E

1  2 ! S!E  9&" 2   !2" 9!E  9"D CX C"  %  ! 817!2 2 !S! ! 9&" 2 9 (" "  !&! %& "( !2" 9! "  !2! X 57X 5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!   %!0  





)$/6(

5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH )$/6( VXJJHVWLRQV IRU LPSURYHPHQW 7KH SULPDU\ UHDVRQ WR HYDOXDWH LQWHUQDO FRQWURO LV WR IRUPXODWH FRQVWUXFWLYH 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH LQWHUQDO FRQWURO WKH\ QHHG WR NQRZ RQO\ HQRXJK WR SODQ WKH DXGLW ZRUN $XGLWRUV RI SXEOLF FRPSDQLHV GR QRW QHHG WR GHWHUPLQH WKH TXDOLW\ RI D FOLHQW V

!&"(! 9 !2 " %! !4 2 ( " ! 8!  B %& B! !@ !((  A "@ A "$ " B !& B B!&! & ! & (" $ !@ "  9&  ! B$ " " ! " ! &!  !@ !" 9 !@  98Q V57X 5 !4 ! 321 %!0 & !# ) ((  !' &""  $E    %$@D    %$@D !4 !(!E

"4 Q " " !  9"D C !@ " !&"(! 9 !2 " %! !4 2 ( " ! 8!  B %& B! !@ !((  A "@ A "$ " B !& B B!&! & ! & (" $ !@ "  9&  ! B$ " " ! " ! &!  !@ !" 9 !@  98Q V57X 5 !4 ! 321 %!0 & !# ) ((  !' &""  $E    %$@D    %$@D !4 !(!E





5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 758( SURFHGXUHV EULGJH ZRUNSDSHUV FRQQHFWLQJ WKH FRQWURO HYDOXDWLRQ WR VXEVHTXHQW DXGLW 7KH VWUHQJWKV DQG ZHDNQHVVHV RI D FRQWURO V\VWHP VKRXOG EH GRFXPHQWHG LQ 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH )$/6( WR SUHSDUH D IORZFKDUW RI WKH V\VWHP 7KH PRVW HIILFLHQW PHDQV RI JDWKHULQJ HYLGHQFH DERXW D FOLHQW V LQWHUQDO FRQWURO LV

!' &""  $E    %$@D    %$@D !4 !(!E

"4 Q " " !  9"D C !@ " !&"(! 9 !2 " %! !4 2 ( " ! 8!  B %& B! !@ !((  A "@ A "$ " B !& B B!&! & ! & (" $ !@ "  9&  ! B$ " " ! " ! &!  !@ !" 9 !@  98Q V57X 5 !4 ! 321 %!0 & !# ) ((  !' &""  $E    %$@D    %$@D !4 !(!E

"4 Q " " !  9"D C !@ "





5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH )$/6( SURFHGXUHV GHWHUPLQH RQO\ WKH UHTXLUHG GHJUHH RI FRPSOLDQFH ZLWK WKH FRQWURO SROLFLHV DQG 7R UHGXFH WKH ILQDO FRQWURO ULVN DVVHVVPHQW WR D ORZ OHYHO DXGLWRUV QHHG WR 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH DUH HYDOXDWHG DV ZHDN MXVW WR SURYH WKH ZHDNQHVVHV DFWXDOO\ H[LVW $XGLWRUV GR QRW QHHG WR SHUIRUP WHVWV RI FRQWUROV RQ LQWHUQDO FRQWURO DFWLYLWLHV WKDW 758(

%$# "!      

"4 Q " " !  9"D C !@ " !&"(! 9 !2 " %! !4 2 ( " ! 8!  B %& B! !@ !((  A "@ A "$ " B !& B B!&! & ! & (" $ !@ "  9&  ! B$ " " ! " ! &!  !@ !" 9 !@  98Q V57X 5 !4 ! 321 %!0 & !# ) ((  !' &""  $E    %$@D    %$@D !4 !(!E

"4 Q " " !  9"D C !@ " !&"(! 9 !2 " %! !4 2 ( " ! 8!  B %& B! !@ !((  A "@ A "$ " B !& B B!&! & ! & (" $ !@ "  9&  ! B$ " " ! " ! &!  !@ !" 9 !@  98Q V57X 5 !4 ! 321 %!0 & !# ) (( 





758(

5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH )$/6( LQWHUQDO FRQWURO DUH VDWLVILHG &RQWURO V\VWHPV JHQHUDOO\ SURYLGH DEVROXWH DVVXUDQFH WKDW WKH REMHFWLYHV RI 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH FRQWUROV DFWXDOO\ IXQFWLRQHG GXULQJ WKH SHULRG XQGHU DXGLW $XGLWRUV SHUIRUP WHVWV RI FRQWURO DFWLYLWLHV WR GHWHUPLQH KRZ WKH FRPSDQ\ V

!' &"" %$# "!      

"4 Q " " !  9"D C !@ " !&"(! 9 !2 " %! !4 2 ( " ! 8!  B %& B! !@ !((  A "@ A "$ " B !& B B!&! & ! & (" $ !@ "  9&  ! B$ " " ! " ! &!  !@ !" 9 !@  98Q V57X 5 !4 ! 321 %!0 & !# ) ((  !' &""  $E    %$@D    %$@D !4 !(!E

!( ! " " !  9"D C&!  " " !  (" "& !@  98!  " " !  !2!  !( ! 6 57X 5 !4 ! 321 %!0 & !# ) ((  !' &""





5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH )$/6( LQGHSHQGHQW DXGLWRU 7KH NH\ SHUVRQ LQ WKH LQWHUQDO FRQWURO V\VWHP RI D VPDOO EXVLQHVV LV WKH 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 758( VXEVWDQWLYH HYLGHQFH 'XDOSXUSRVH DXGLW WHVWV DUH SURFHGXUHV WKDW SURGXFH ERWK FRQWURO DQG

!' &""  $E    %$@D    %$@D !4 !(!E

"4 Q " " !  9"D C !@ " !&"(! 9 !2 " %! !4 2 ( " ! 8!  B %& B! !@ !((  A "@ A "$ " B !& B B!&! & ! & (" $ !@ "  9&  ! B$ " " ! " ! &!  !@ !" 9 !@  98Q V57X 5 !4 ! 321 %!0 & !# ) ((  !' &""  $E    %$@D    %$@D !4 !(!E

"" !  ("  !" 9&"  9"D C!@ !@ (" !&" ( ! 9  "" ! ("  !" 9&" 2 !4 ( !@ !2!  !( ! G 57X 5 !4 ! 321 %!0 & !# ) (( 





5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 758( KRZ HIIHFWLYHO\ WKH FOLHQW V FRQWUROV ZRUN LQ SUDFWLFH 7HVWV RI FRQWUROV FRQVLVW RI SURFHGXUHV GHVLJQHG WR SURGXFH HYLGHQFH UHJDUGLQJ 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH )$/6( WR FRVWEHQHILW FRQVLGHUDWLRQV (YDOXDWLRQ RI LQWHUQDO FRQWURO V\VWHPV RQ D QRQSXEOLF HQWLW\ VKRXOG QRW EH VXEMHFW

!' &"" %$# "!   %!0  

"4 Q " " !  9"D C !@ " !&"(! 9 !2 " %! !4 2 ( " ! 8!  B %& B! !@ !((  A "@ A "$ " B !& B B!&! & ! & (" $ !@ "  9&  ! B$ " " ! " ! &!  !@ !" 9 !@  98Q V57X 5 !4 ! 321 %!0 & !# ) ((  !' &""  $E    %$@D    %$@D !4 !(!E

"4 Q " " !  9"D C !@ " !&"(! 9 !2 " %! !4 2 ( " ! 8!  B %& B! !@ !((  A "@ A "$ " B !& B B!&! & ! & (" $ !@ "  9&  ! B$ " " ! " ! &!  !@ !" 9 !@  98Q V57X 5 !4 ! 321 %!0 & !# ) (( 





5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 758( 3&$2% $XGLWLQJ 6WDQGDUG 1R  RQO\ DSSOLHV WR SXEOLF FRPSDQLHV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 758( HIIHFWLYHQHVV RU HIILFLHQF\ UHDVRQV $XGLWRUV FDQ VWRS WKH DVVHVVPHQW RI FRQWURO ULVN IRU QRQSXEOLF HQWLWLHV IRU HLWKHU

%$# "!   %!0  

1  2 ! S!E  9&" 2   !2" 9!E  9"D CX C"  %  ! 817!2 2 !S! ! 9&" 2 9 (" "  !&! %& "( !2" 9! "  !2! X 57X 5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!   %!0  

1  2 ! S!E  9&" 2   !2" 9!E  9"D CX C"  %  ! 817!2 2 !S! ! 9&" 2 9 (" "  !&! %& "( !2" 9! "  !2! X 57X 5 !4 ! 321 %!0 & !# ) (( 





758(

H[LVWLQJ DW WKH HQG RI WKH \HDU

5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH )$/6( HQWLW\OHYHO FRQWUROV RQ D ERWWRPXS EDVLV VWDUWLQJ ZLWK WKH DFFRXQW OHYHO DVVHUWLRQ DQG ZRUNLQJ XS WR $XGLWRUV VKRXOG EHJLQ WKHLU HYDOXDWLRQ RI LQWHUQDO FRQWUROV RYHU ILQDQFLDO UHSRUWLQJ 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 7KH DXGLWRU V RSLQLRQ RQ LQWHUQDO FRQWURO XQGHU $6  UHODWHV RQO\ WR FRQWUROV

"  9"D  %1 ! " C "" ! H ! % %! "   !&! %& ( " !2" 9! !@ !!A !2 @ % )57X 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  

CX C"  %  ! 817!2 2 !S! ! 9&" 2 9 (" "  !&! %& "( !2" 9! "  !2! X 57X 5 !4 ! 321 %!0 & !# ) ((  !' &""

1  2 ! S!E  9&" 2   !2" 9!E  9"D



0XOWLSOH &KRLFH 4XHVWLRQV

' $VVHVVLQJ WKH HIIHFWLYHQHVV D FOLHQW V LQWHUQDO FRQWUROV & &RPPXQLFDWLQJ LQWHUQDO FRQWURO GHILFLHQFLHV % 'RFXPHQWLQJ DQ XQGHUVWDQGLQJ RI D FOLHQW V LQWHUQDO FRQWUROV $ 'HVLJQLQJ FOLHQW V LQWHUQDO FRQWUROV $Q DXGLW WHDP V UHVSRQVLELOLW\ ZRXOG QRW LQFOXGH

!@ (" !&" ( ! 9  "" ! (" !" 9&" 2 !4 ( !@ !2!  !( ! G 57X 5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  

!" 9&" " " !  9"D  %1 ! " C!@ !@ (" !&" ( ! 9  "" ! (" !" 9&" 2 !4 ( !@ !2!  !( ! G 57X 5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  





' )XQFWLRQDO UHVSRQVLELOLWLHV & &RQWURO ULVN DVVHVVPHQW % &RQWURO HQYLURQPHQW $ 0DQDJHPHQW DVVHUWLRQV DWWLWXGHV DERXW WKH FRQWURO DFWLYLWLHV LQ D FRPSDQ\ LV UHIHUUHG WR DV $ VHW RI FKDUDFWHULVWLFV WKDW KHOSV WR GHILQH D VHULRXVQHVV DERXW HPSOR\HHV ' 3UHSDULQJ GDWD & +DYLQJ FXVWRG\ RI DVVHWV LQYROYHG LQ WKH WUDQVDFWLRQV % 5HFRUGLQJ WUDQVDFWLRQV $ +DYLQJ DXWKRUL]DWLRQ WR H[HFXWH WUDQVDFWLRQV 7KH DSSURSULDWH VHSDUDWLRQ RI GXWLHV GRHV QRW LQFOXGH

"!  9"D  %1 ! " C!@ !@ (" !&" ( ! 9  "" ! (" !" 9&" 2 !4 ( !@ !2!  !( ! G 57X 5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  

!" 9&" " " !  9"D  %1 ! " C!@



' &XWRII & 9DOXDWLRQ RU DOORFDWLRQ % $FFXUDF\ $ 2FFXUUHQFH SHULRG DUH GHVLJQHG WR DFKLHYH WKH $6% DVVHUWLRQ RI &RQWURO DFWLYLWLHV LQWHQGHG WR HQVXUH WKDW WUDQVDFWLRQV DUH UHFRUGHG LQ WKH ULJKW

!" 9&" " " !  9"D  %1 ! " C!@ !@ (" !&" ( ! 9  "" ! (" !" 9&" 2 !4 ( !@ !2!  !( ! G 57X 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  



' +LULQJ RI HPSOR\HHV & &XVWRG\ RI RU GLUHFW DFFHVV WR DVVHWV % 5HFRUGNHHSLQJ $ 7UDQVDFWLRQ DXWKRUL]DWLRQ DQG UHVSRQVLELOLWLHV H[FHSW IRU 6RXQG LQWHUQDO FRQWURO FDQ EH GHVFULEHG DV VHSDUDWLQJ DOO RI WKH IROORZLQJ GXWLHV



$IWHU REWDLQLQJ DQ XQGHUVWDQGLQJ RI WKH HQWLW\ V LQWHUQDO FRQWURO DQG DVVHVVLQJ FRQWURO ULVN DQ DXGLWRU RI D QRQSXEOLF FRPSDQ\ GHFLGHG QRW WR SHUIRUP DGGLWLRQDO WHVWV RI FRQWUROV 7KH DXGLWRU PRVW OLNHO\ FRQFOXGHG WKDW WKH

$ $GGLWLRQDO HYLGHQFH WR VXSSRUW DQ DGGLWLRQDO UHGXFWLRQ LQ FRQWURO ULVN ZDV QRW FRVW EHQHILFLDO % $VVHVVHG OHYHO RI LQKHUHQW ULVN H[FHHGHG WKH DVVHVVHG OHYHO RI FRQWURO ULVN & ,QWHUQDO FRQWURO VWUXFWXUH ZDV SURSHUO\ GHVLJQHG DQG MXVWLILDEO\ PD\ EH UHOLHG RQ ' (YLGHQFH REWDLQDEOH WKURXJK WHVWV RI FRQWUROV ZRXOG QRW VXSSRUW DQ LQFUHDVHG OHYHO RI FRQWURO ULVN
!&! $E " "  9"D   ! " C !@ " !&"(! 9 !2 " %! !4 2 ( " ! 8!  B %& B! !@ !((  A "@ A "$ " B !& B B!&! & ! & (" $ !@ "  9&  ! B$ " " ! " ! &!  !@ !" 9 !@  98Q V57X 5 !4 ! 321 %!0 W G (( 99 &""  $E    !&! %# !"!E  



5HJDUGOHVV RI WKH DVVHVVHG OHYHO RI FRQWURO ULVN DQ DXGLWRU RI D QRQSXEOLF FRPSDQ\ ZRXOG SHUIRUP VRPH

$ 7HVWV RI FRQWUROV WR GHWHUPLQH WKH HIIHFWLYHQHVV RI LQWHUQDO FRQWURO SROLFLHV % $QDO\WLFDO SURFHGXUHV WR YHULI\ WKH GHVLJQ RI LQWHUQDO FRQWURO DFWLYLWLHV & 6XEVWDQWLYH WHVWV WR UHVWULFW GHWHFWLRQ ULVN IRU VLJQLILFDQW WUDQVDFWLRQ FODVVHV ' 'XDOSXUSRVH WHVWV WR HYDOXDWH ERWK WKH ULVN RI PRQHWDU\ PLVVWDWHPHQW DQG SUHOLPLQDU\ FRQWURO ULVN
!&! $E " "  9"D   ! " C !@ " !&"(! 9 !2 " %! !4 2 ( " ! 8!  B %& B! !@ !((  A "@ A "$ " B !& B B!&! & ! & (" $ !@ "  9&  ! B$ " " ! " ! &!  !@ !" 9 !@  98Q V57X 5 !4 ! 321 %!0 W G (( !2&!&!E &""  $E    %!0  



7KH REWDLQLQJ DQ XQGHUVWDQGLQJ ZRUN SKDVH SKDVH  RI LQWHUQDO FRQWURO HYDOXDWLRQ ZRXOG QRW JLYH DXGLWRUV DQ RYHUDOO DFTXDLQWDQFH ZLWK WKH FOLHQW V

$ &RQWURO HQYLURQPHQW % ,QIRUPDWLRQ DQG FRPPXQLFDWLRQ V\VWHP & &RQWURO DFWLYLW\ HIIHFWLYHQHVV ' 0RQLWRULQJ DFWLYLWLHV
%!0  

!" 9&" " " !  9"D  %1 ! " C!@ !@ (" !&" ( ! 9  "" ! (" !" 9&" 2 !4 ( !@ !2!  !( ! G 57X 5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" %""@!D % %!4 !0    %""@!D % %!4 !0   %""@!D

!&! $E " "  9"D  %1 ! " C !@ " !&"(! 9 !2 " %! !4 2 ( " ! 8!  B %& B! !@ !((  A "@ A "$ " B !& B B!&! & ! & (" $ !@ "  9&  ! B$ " " ! " ! &!  !@ !" 9 !@  98Q V57X 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E  



' 6HSDUDWLRQ RI GXWLHV LQ WKH ,7 GHSDUWPHQW & 'LVWULEXWLRQ RI FRPSXWHUL]HG RXWSXW % 5XQWRUXQ WRWDOV $ &KHFN GLJLW :KLFK RI WKH IROORZLQJ LV DQ LQIRUPDWLRQ WHFKQRORJ\ JHQHUDO FRQWURO"

& !# ) ((  !2&!&!E &""  $E    %!0  

!&! $E " "  9"D  %1 ! " C !@ " !&"(! 9 !2 " %! !4 2 ( " ! 8!  B %& B! !@ !((  A "@ A "$ " B !& B B!&! & ! & (" $ !@ "  9&  ! B$ " " ! " ! &!  !@ !" 9 !@  98Q V57X 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  





' %RQGLQJ RI HPSOR\HHV & 2ZQHUPDQDJHU V FRPSHWHQFH DV ZHOO DV HWKLFV DQG LQWHJULW\ % &RPSOH[LW\ RI WKH FOLHQW V LQWHUQDO FRQWUROV $ 6HSDUDWLRQ RI IXQFWLRQDO UHVSRQVLELOLWLHV 7KH LQWHUQDO FRQWURO LQ VPDOO EXVLQHVV LV KLJKO\ GHSHQGHQW RQ WKH ' ,QWHUQDO FRQWURO OHWWHUV & &RPPXQLFDWLRQV RI VLJQLILFDQW GHILFLHQFLHV % %ULGJH ZRUNLQJ SDSHUV $ 4XHVWLRQQDLUHV QDUUDWLYHV DQG IORZFKDUWV GRFXPHQWDWLRQ VRPHWLPHV FDOOHG &RQWURO VWUHQJWKV DQG ZHDNQHVVHV VKRXOG EH GRFXPHQWHG LQ DXGLW

!" 9&" " " !  9"D  %1 ! " C!@ !@ (" !&" ( ! 9  "" ! (" !" 9&" 2 !4 ( !@ !2!  !( ! G 57X 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" %""@!D % %!4 !0    %""@!D % %!4 !0   %""@!D

!&! $E " "  9"D  %1 ! " C !@ " !&"(! 9 !2 " %! !4 2 ( " ! 8!  B %& B! !@ !((  A "@ A "$ " B !& B B!&! & ! & (" $ !@ "  9&  ! B$ " " ! " ! &!  !@ !" 9 !@  98Q V57X 5 !4 ! 321 %!0



' +DVK WRWDOV & )LQDQFLDO WRWDOV % 5HFRUG FRXQWV $ 5HDVRQDEOHQHVV WHVWV :KLFK RI WKH IROORZLQJ LV QRW DQ LQSXW FRQWURO DFWLYLW\"



$ VDOHVFOHUN HQWHUV D FXVWRPHU V VL[QXPEHU FXVWRPHU DFFRXQW 7KH FRPSXWHU SURJUDP XVHV WKH ILUVW ILYH QXPEHUV WR FDOFXODWH D VL[WK QXPEHU 7KLV UHVXOWLQJ QXPEHU LV WKHQ FRPSDUHG WR WKH VL[WK QXPEHU HQWHUHG E\ WKH VDOHV FOHUN 7KLV LV DQ H[DPSOH RI D

$ 9DOLG FKDUDFWHU WHVW % 0LVVLQJ GDWD WHVW & 5HDVRQDEOHQHVV WHVW ' &KHFN GLJLW
!" 9&" " " !  9"D  %1 ! " C!@ !@ (" !&" ( ! 9  "" ! (" !" 9&" 2 !4 ( !@ !2!  !( ! G 57X 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" %""@!D % %!4 !0    %""@!D % %!4 !0   %""@!D



:KLFK RI WKH IROORZLQJ LV WKH OHDVW LPSRUWDQW DXGLW UHDVRQ IRU WKH DXGLWRU V REWDLQLQJ DQ XQGHUVWDQGLQJ RI D FRPSDQ\ V LQWHUQDO FRQWURO"

$ 7R VHUYH DV D EDVLV IRU FRQVWUXFWLYH VXJJHVWLRQV % 7R SODQ VXEVHTXHQW VXEVWDQWLYH WHVWV & 7R LGHQWLI\ W\SHV RI SRVVLEOH PLVVWDWHPHQWV WKDW PD\ RFFXU ' 7R FRQVLGHU IDFWRUV WKDW PD\ DIIHFW WKH ULVN RI PDWHULDO PLVVWDWHPHQW


 !&! $E " "  9"D  %1 ! " C !@ " !&"(! 9 !2 " %! !4 2 ( " ! 8!  B %& B! !@ !((  A "@ A "$ " B !& B B!&! & ! & (" $ !@ "  9&  ! B$ "" ! " ! &!  !@ !" 9 !@  98Q V57X 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" %$# "!   %$@D    

!&! $E " "  9"D  %1 ! " C !@ " !&"(! 9 !2 " %! !4 2 ( " ! 8!  B %& B! !@ !((  A "@ A "$ " B !& B B!&! & ! & (" $ !@ "  9&  ! B$ " " ! " ! &!  !@ !" 9 !@  98Q V57X 5 !4 ! 321 %!0 & !# ) ((  !' &""  $E    %!0 



' ,QYRLFHG VDOHV ZHUH UHFRUGHG DV VDOHV & 5HFRUGHG VDOHV ZHUH VKLSSHG % 6KLSPHQWV WR FXVWRPHUV ZHUH UHFRUGHG DV VDOHV $ 6KLSPHQWV WR FXVWRPHUV ZHUH LQYRLFHG 7UDFLQJ ELOOV RI ODGLQJ WR VDOHV LQYRLFHV SURYLGHV HYLGHQFH WKDW



:KLFK RI WKH IROORZLQJ FOLHQW LQWHUQDO FRQWURO DFWLYLWLHV LV QRW XVXDOO\ SHUIRUPHG LQ WKH WUHDVXUHU V GHSDUWPHQW"

$ 9HULI\LQJ WKH DFFXUDF\ RI FKHFNV DQG YRXFKHUV % &RQWUROOLQJ WKH PDLOLQJ RI FKHFNV WR YHQGRUV & $SSURYLQJ YHQGRUV LQYRLFHV IRU SD\PHQW ' &DQFHOLQJ SD\PHQW YRXFKHUV ZKHQ SDLG
!&! $E " "  9"D  %1 ! " C !@ " !&"(! 9 !2 " %! !4 2 ( " ! 8!  B %& B! !@ !((  A "@ A "$ " B !& B B!&! & ! & (" $ !@ "  9&  ! B$ " " ! " ! &!  !@ !" 9 !@  98Q V57X 5 !4 ! 321 %!0 & !# ) ((  99 &"" @!!E   %!0  



:KLFK RI WKH IROORZLQJ DXGLW SURFHGXUHV PRVW OLNHO\ ZRXOG SURYLGH DQ DXGLWRU WKH PRVW DVVXUDQFH DERXW WKH HIIHFWLYHQHVV RI WKH RSHUDWLRQ RI DQ HQWLW\ V LQWHUQDO FRQWURO"

$ &RQILUPDWLRQ ZLWK RXWVLGH SDUWLHV % ,QTXLU\ RI FOLHQW SHUVRQQHO & 6XFFHVVIXO UHSHUIRUPDQFH RI WKH FRQWURO DFWLYLW\ ' 2EVHUYDWLRQ RI FOLHQW SHUVRQQHO
%!0  

 !&! $E " "  9"D  %1 ! " C !@ " !&"(! 9 !2 " %! !4 2 ( " ! 8!  B %& B! !@ !((  A "@ A "$ " B !& B B!&! & ! & (" $ !@ "  9&  ! B$ " " ! " ! &!  !@ !" 9 !@  98Q V57X 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  

!&! $E " "  9"D  %1 ! " C !@ " !&"(! 9 !2 " %! !4 2 ( " ! 8!  B %& B! !@ !((  A "@ A "$ " B !& B B!&! & ! & (" $ !@ "  9&  ! B$ " " ! " ! &!  !@ !" 9 !@  98Q V57X 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E  



' 6HDUFK IRU VLJQLILFDQW GHILFLHQFLHV LQ WKH RSHUDWLRQ RI WKH LQWHUQDO FRQWURO & 'RFXPHQW WKH XQGHUVWDQGLQJ RI WKH FRPSDQ\ V LQWHUQDO FRQWURO V\VWHP % 3HUIRUP SURFHGXUHV WR XQGHUVWDQG WKH GHVLJQ RI WKH LQWHUQDO FRQWURO V\VWHP $ 'HWHUPLQH ZKHWKHU FRQWURO DFWLYLWLHV KDYH EHHQ SODFHG LQ RSHUDWLRQ VWDWHPHQW DXGLW RI D QRQSXEOLF FRPSDQ\ DQ DXGLWRU LV QRW REOLJDWHG WR :KHQ REWDLQLQJ DQ XQGHUVWDQGLQJ RI DQ HQWLW\ V LQWHUQDO FRQWURO LQ D ILQDQFLDO

V\VWHP



$IWHU REWDLQLQJ DQ XQGHUVWDQGLQJ RI D FOLHQW V ILQDQFLDO UHSRUWLQJ FRQWURO DFWLYLWLHV WKH DXGLWRU ZRXOG QH[W

$ 7HVW WKH FOLHQW V FRQWURO DFWLYLWLHV % $VVHVV WKH ILQDO FRQWURO ULVN & 'RFXPHQW WKH XQGHUVWDQGLQJ REWDLQHG ' 3ODQ WKH UHPDLQGHU RI WKH DXGLW ZRUN
!&! $E " "  9"D  %1 ! " C !@ " !&"(! 9 !2 " %! !4 2 ( " ! 8!  B %& B! !@ !((  A "@ A "$ " B !& B B!&! & ! & (" $ !@ "  9&  ! B$ " " ! " ! &!  !@ !" 9 !@  98Q V57X 5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  



,I DXGLWRUV DVVHVV FRQWURO ULVN DW WKH PD[LPXP OHYHO WKH\ ZLOO WHQG WR

$ 3HUIRUP D JUHDW GHDO RI DGGLWLRQDO WHVWV RI FRQWUROV % 3HUIRUP D JUHDW GHDO RI VXEVWDQWLYH WHVWLQJ GXULQJ WKH DXGLW & 3HUIRUP VXEVWDQWLYH WHVWV DW DQ LQWHULP GDWH ' 3HUIRUP PRUH DXGLW SURFHGXUHV XVLQJ LQWHUQDO HYLGHQFH
Q 6 (( 99 &""  $E    %!0  

 !&! $E " "  9"D   ! " C !@ " !&"(! 9 !2 " %! !4 2 (" ! 8!  B %& B! !@ !((  A "@ A "$ " B !& B B!&! & ! & (" $ !@ "  9&  ! B$ " " ! " ! &!  !@ !" 9 !@  98Q V57X 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &""  $E    %!0  

!&! $E " "  9"D  %1 ! " C !@ " !&"(! 9 !2 " %! !4 2 ( " ! 8!  B %& B! !@ !((  A "@ A "$ " B !& B B!&! & ! & (" $ !@ "  9&  ! B$ " " ! " ! &!  !@ !" 9 !@  98Q V57X 5 !4 ! 321 %!0



' 3RVVLELOLW\ WKDW WKH QDWXUH DQG H[WHQW RI VXEVWDQWLYH WHVWV PD\ EH UHGXFHG & 5LVN WKDW PDWHULDO PLVVWDWHPHQWV H[LVW LQ WKH ILQDQFLDO VWDWHPHQWV % 2SHUDWLQJ HIIHFWLYHQHVV RI LQWHUQDO FRQWURO SROLFLHV DQG SURFHGXUHV $ )DFWRUV WKDW UDLVH GRXEWV DERXW WKH DXGLWDELOLW\ RI WKH ILQDQFLDO VWDWHPHQWV HYDOXDWLRQ RI WKH 7KH XOWLPDWH SXUSRVH RI DVVHVVLQJ FRQWURO ULVN LV WR FRQWULEXWH WR WKH DXGLWRU V



:KHQ WKH DXGLW WHDP LQFUHDVHV WKH SODQQHG DVVHVVHG OHYHO RI FRQWURO ULVN EHFDXVH FHUWDLQ FRQWURO DFWLYLWLHV ZHUH GHWHUPLQHG WR EH LQHIIHFWLYH WKH DXGLW WHDP ZRXOG PRVW OLNHO\ LQFUHDVH WKH

$ ([WHQW RI VXEVWDQWLYH WHVWV RI GHWDLOV % /HYHO RI LQKHUHQW ULVN & ([WHQW RI WHVWV RI FRQWUROV ' /HYHO RI GHWHFWLRQ ULVN
!&! $E " "  9"D   ! " C !@ " !&"(! 9 !2 " %! !4 2 (" ! 8!  B %& B! !@ !((  A "@ A "$ " B !& B B!&! & ! & (" $ !@ "  9&  ! B$ " " ! " ! &!  !@ !" 9 !@  98Q V57X 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %!0  



,Q FRPSXWHU V\VWHPV WKH LQIRUPDWLRQ WHFKQRORJ\ JHQHUDO FRQWUROV ,7*& ZRXOG QRW LQFOXGH

$ 3URFHVVLQJ RI FRQWURO DFWLYLWLHV % 6HSDUDWLRQ RI YDULRXV FRPSXWHU V\VWHP IXQFWLRQV & $SSURSULDWH GRFXPHQWDWLRQ RI WKH GDWD SURFHVVLQJ V\VWHP ' &RQWURO RYHU SK\VLFDO DFFHVV WR FRPSXWHU KDUGZDUH
%""@!D % %!4 !0   %""@!D

 !&! $E " "  9"D   ! " C !@ " !&"(! 9 !2 " %! !4 2 ( " ! 8!  B %& B! !@ !((  A "@ A "$ " B !& B B!&! & ! & (" $ !@ "  9&  ! B$ " " ! " ! &!  !@ !" 9 !@  98Q V57X 5 !4 ! 321 %!0 W G (( !2&!&!E &"" @!!E   %!0  

!" 9&" " " !  9"D  %1 ! " C!@ !@ (" !&" ( ! 9  "" ! (" !" 9&" 2 !4 ( !@ !2!  !( ! G 57X 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" %""@!D % %!4 !0   



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

RI WKH FRPSDQ\ V LQWHUQDO FRQWURO



:KLFK RI WKH IROORZLQJ ZRXOG PRVW OLNHO\ EH FODVVLILHG DV D PDWHULDO ZHDNQHVV"

$ $EVHQFH RI DSSURSULDWH VHSDUDWLRQ RI GXWLHV % $EVHQFH RI DSSURSULDWH UHYLHZV DQG DSSURYDOV RI WUDQVDFWLRQV & (YLGHQFH RI IDLOXUH RI FRQWURO DFWLYLWLHV ' ,QHIIHFWLYH RYHUVLJKW RI WKH ILQDQFLDO UHSRUWLQJ SURFHVV E\ WKH FRPSDQ\ V DXGLW FRPPLWWHH
 " " !  9"D  %1 ! " CX C"  %  ! 817!2 2 !S! ! 9&" 2 9 (" "  !&! %& "( ! 2" 9! "  !2! X 57X 5 !4 ! 321 %!0 W G (( 99 &""  $E    %!0  



,I D FRQWURO WRWDO ZHUH WR EH FRPSXWHG RQ HDFK RI WKH IROORZLQJ GDWD LWHPV ZKLFK ZRXOG EHVW EH LGHQWLILHG DV D KDVK WRWDO IRU D SD\UROO ,7 DSSOLFDWLRQ"

$ +RXUV ZRUNHG % 7RWDO GHELWV DQG WRWDO FUHGLWV & 1HW SD\ ' 'HSDUWPHQW QXPEHUV
!2&!&!E &"" %""@!D % %!4 !0    %""@!D % %!4 !0   %""@!D

!" 9&" " " !  9"D   ! " C!@ !@ (" !&" ( ! 9  "" ! (" !" 9&" 2 !4 ( !@ !2!  !( ! G 57X 5 !4 ! 321 %!0 & !# ) (( 



*HQHUDOO\ DFFHSWHG DXGLWLQJ VWDQGDUGV *$$6 JLYH DXGLWRUV FRQVLGHUDEOH GLVFUHWLRQ WR GHFLGH WKH DPRXQW RI ZRUN UHTXLUHG WR VDWLVI\ DXGLWLQJ VWDQGDUGV JXLGLQJ LQWHUQDO FRQWURO HYDOXDWLRQ DQG UHODWHG DXGLW SODQQLQJ :KLFK RI WKH IROORZLQJ GHVFULSWLRQV EHVW H[SUHVVHV WKH PLQLPXP DPRXQW RI ZRUN SHUPLWWHG E\ *$$6 IRU QRQSXEOLF FRPSDQLHV"

$ 'R QRW REWDLQ DQ XQGHUVWDQGLQJ RI FOLHQW HQYLURQPHQW DFFRXQWLQJ RU FRQWURO DFWLYLWLHV 'R QRW GRFXPHQW WKH GHFLVLRQ WR DVVHVV FRQWURO ULVN DW PD[LPXP 3HUIRUP  EDODQFHV % 2EWDLQ DQ XQGHUVWDQGLQJ RI FOLHQW HQYLURQPHQW DFFRXQWLQJ DQG FRQWURO DFWLYLWLHV 'RFXPHQW WKH GHFLVLRQ WR DVVHVV FRQWURO ULVN DW PD[LPXP 3HUIRUP DQ H[WHQVLYH EXW QRW  WUDQVDFWLRQV DQG EDODQFHV & 2EWDLQ DQ XQGHUVWDQGLQJ RI FOLHQW HQYLURQPHQW DFFRXQWLQJ DQG FRQWURO DFWLYLWLHV DQG SHUIRUP GHWDLO WHVWV RI FRQWUROV 'RFXPHQW WKH GHFLVLRQ WR DVVHVV FRQWURO ULVN EHORZ WKH PD[LPXP 3HUIRUP UHVWULFWHG VXEVWDQWLYH DXGLW RQ ILQDQFLDO VWDWHPHQW WUDQVDFWLRQV DQG EDODQFHV FRQVLGHULQJ WKH FRQWURO ULVN DVVHVVPHQW ' 2EWDLQ DQ XQGHUVWDQGLQJ RI FOLHQW HQYLURQPHQW DFFRXQWLQJ DQG FRQWURO DFWLYLWLHV DQG SHUIRUP GHWDLO WHVWV RI FRQWUROV 'RFXPHQW WKH GHFLVLRQ WR DVVHVV FRQWURO ULVN DW ]HUR 3HUIRUP QR VXEVWDQWLYH DXGLW RQ ILQDQFLDO VWDWHPHQW WUDQVDFWLRQV DQG EDODQFHV EHFDXVH ]HUR FRQWURO ULVN PHDQV WKDW QR HUURUV RU IUDXG FDQ DIIHFW WKH DFFRXQWV


VXEVWDQWLYH DXGLW RQ DOO ILQDQFLDO VWDWHPHQW WUDQVDFWLRQV DQG

VXEVWDQWLYH DXGLW RQ ILQDQFLDO VWDWHPHQW

!" 9&" " " !  9"D   ! " C!@ !@ (" !&" ( ! 9  "" ! (" !" 9&" 2 !4 ( !@ !2!  !( ! G 57X 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  

!&! $E " "  9"D  %1 ! " C !@ " !&"(! 9 !2 " %! !4 2 ( " ! 8!  B %& B! !@ !((  A "@ A "$ " B !& B B!&! & ! & (" $ !@ "  9&  ! B$ " " ! " ! &!  !@ !" 9 !@  98Q V57X 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %!0 



' 3HUSHWUDWH D IUDXG DQG WKHQ FRQFHDO LW LQ WKH ERRNV & (VWDEOLVK LQWHUQDO FRQWUROV DQG DXWKRUL]H WUDQVDFWLRQV % 5HFRUG FDVK UHFHLSWV DQG FDVK GLVEXUVHPHQWV $ -RXUQDOL]H HQWULHV DQG SUHSDUH ILQDQFLDO VWDWHPHQWV WR ERWK 3URSHU VHSDUDWLRQ RI GXWLHV UHGXFHV WKH RSSRUWXQLW\ IRU SHUVRQV WR EH LQ SRVLWLRQV



,Q DQ DXGLW RI ILQDQFLDO VWDWHPHQWV DQ DXGLWRU V SULPDU\ FRQVLGHUDWLRQ UHJDUGLQJ DQ LQWHUQDO FRQWURO SROLF\ RU DFWLYLW\ LV ZKHWKHU WKH SROLF\ RU DFWLYLW\

$ 5HIOHFWV PDQDJHPHQW V SKLORVRSK\ DQG RSHUDWLQJ VW\OH % $IIHFWV PDQDJHPHQW V ILQDQFLDO VWDWHPHQW DVVHUWLRQV & 3URYLGHV DGHTXDWH VDIHJXDUGV RYHU DFFHVV WR DVVHWV ' (QKDQFHV PDQDJHPHQW V GHFLVLRQ PDNLQJ SURFHVVHV
!" 9&" " " !  9"D   ! " C!@ !@ (" !&" ( ! 9  "" ! ("  !" 9&" 2 !4 ( !@ !2!  !( ! G 57X 5 !4 ! 321 %!0 W G (( !2&!&!E &"" @!!E   %!0  



:KLFK RI WKH IROORZLQJ LV D VWHS LQ DQ DXGLWRU V GHFLVLRQ WR DVVHVV FRQWURO ULVN DW EHORZ WKH PD[LPXP"

$ $SSO\ DQDO\WLFDO SURFHGXUHV WR ERWK ILQDQFLDO GDWD DQG QRQILQDQFLDO LQIRUPDWLRQ WR GHWHFW FRQGLWLRQV WKDW PD\ LQGLFDWH ZHDN FRQWUROV % 3HUIRUP WHVWV RI GHWDLOV RI WUDQVDFWLRQV DQG DFFRXQW EDODQFHV WR LGHQWLI\ SRWHQWLDO HUURUV DQG IUDXG & ,GHQWLI\ VSHFLILF LQWHUQDO FRQWURO SROLFLHV DQG DFWLYLWLHV WKDW DUH OLNHO\ WR GHWHFW RU SUHYHQW PDWHULDO PLVVWDWHPHQWV ' 'RFXPHQW WKH IDFW WKDW WKH DGGLWLRQDO DXGLW HIIRUW WR SHUIRUP WHVWV RI FRQWUROV H[FHHGV WKH SRWHQWLDO UHGXFWLRQ LQ VXEVWDQWLYH WHVWLQJ
!&! $E " "  9"D   ! " C !@ " !&"(! 9 !2 " %! !4 2 ( " ! 8!  B %& B! !@ !((  A "@ A "$ " B !& B B!&! & ! & (" $ !@ "  9&  ! B$ " " ! " ! &!  !@ !" 9 !@  98Q V57X 5 !4 ! 321 %!0 W G (( !2&!&!E &""  $E    %!0  



:KLFK RI WKH IROORZLQJ LV QRW DQ REMHFWLYH RI LQWHUQDO FRQWUROV RYHU ILQDQFLDO UHSRUWLQJ DV GHILQHG E\ WKH 6DUEDQHV2[OH\ $FW"

$ 3ROLFLHV DQG SURFHGXUHV WKDW SHUWDLQ WR WKH PDLQWHQDQFH RI UHFRUGV WKDW LQ UHDVRQDEOH GHWDLO DFFXUDWHO\ DQG IDLUO\ UHIOHFW WKH WUDQVDFWLRQV DQG GLVSRVLWLRQV RI WKH DVVHWV RI WKH UHJLVWUDQW % 3ROLFLHV DQG SURFHGXUHV WKDW SURYLGH UHDVRQDEOH DVVXUDQFH WKDW WUDQVDFWLRQV DUH UHFRUGHG DV QHFHVVDU\ WR SHUPLW SUHSDUDWLRQ RI ILQDQFLDO VWDWHPHQWV LQ DFFRUGDQFH ZLWK JHQHUDOO\ DFFHSWHG DFFRXQWLQJ SULQFLSOHV DQG WKDW UHFHLSWV DQG H[SHQGLWXUHV RI WKH UHJLVWUDQW DUH EHLQJ PDGH RQO\ LQ DFFRUGDQFH ZLWK DXWKRUL]DWLRQV RI PDQDJHPHQW DQG GLUHFWRUV RI WKH UHJLVWUDQW & 3ROLFLHV DQG SURFHGXUHV WKDW SURYLGH UHDVRQDEOH DVVXUDQFH UHJDUGLQJ WKH FRPSOLDQFH ZLWK DSSOLFDEOH ODZV DQG UHJXODWLRQV ' 3ROLFLHV DQG SURFHGXUHV WKDW SURYLGH UHDVRQDEOH DVVXUDQFH UHJDUGLQJ SUHYHQWLRQ RU WLPHO\ GHWHFWLRQ RI XQDXWKRUL]HG DFTXLVLWLRQ XVH RU GLVSRVLWLRQ RI WKH UHJLVWUDQW V DVVHWV WKDW FRXOG KDYH D PDWHULDO HIIHFW RQ WKH ILQDQFLDO VWDWHPHQWV
 " " !  9"D   ! " CX C"  %  ! 817!2 2 !S! ! 9&" 2 9 (" "  !&! %& "( !2" 9! "  !2! X 57X 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  



:KLFK RI WKH IROORZLQJ PRVW OLNHO\ ZRXOG QRW EH FRQVLGHUHG DQ LQKHUHQW OLPLWDWLRQ RI WKH SRWHQWLDO HIIHFWLYHQHVV RI DQ HQWLW\ V LQWHUQDO FRQWUROV"

$ ,QFRPSDWLEOH GXWLHV % 0DQDJHPHQW RYHUULGH & 0LVWDNHV LQ MXGJPHQW ' &ROOXVLRQ DPRQJ HPSOR\HHV
"( ! " " !  9"D   ! " C&!  " " !  (" "& !@  98!  " " !  !2!  !( ! 6 57X 5 !4 ! 321 %!0 W G (( !' &"" @!!E   %!0  



$V SDUW RI XQGHUVWDQGLQJ WKH LQWHUQDO FRQWURO DQ DXGLWRU LV QRW UHTXLUHG WR

$ &RQVLGHU IDFWRUV WKDW DIIHFW WKH ULVN RI PDWHULDO PLVVWDWHPHQW % $VFHUWDLQ ZKHWKHU LQWHUQDO FRQWURO SROLFLHV DQG DFWLYLWLHV KDYH EHHQ SODFHG LQ RSHUDWLRQ & ,GHQWLI\ WKH W\SHV RI SRWHQWLDO PLVVWDWHPHQWV WKDW FDQ RFFXU ' 2EWDLQ NQRZOHGJH DERXW WKH RSHUDWLQJ HIIHFWLYHQHVV RI WKH FOLHQW V LQWHUQDO FRQWURO DFWLYLWLHV
!2&!&!E &"" @!!E   %!0  

 !&! $E " "  9"D   ! " C !@ " !&"(! 9 !2 " %! !4 2 ( " ! 8!  B %& B! !@ !((  A "@ A "$ " B !& B B!&! & ! & (" $ !@ "  9&  ! B$ " " ! " ! &!  !@ !" 9 !@  98Q V57X 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  

!&! $E " "  9"D   ! " C !@ " !&"(! 9 !2 " %! !4 2 ( " ! 8!  B %& B! !@ !((  A "@ A "$ " B !& B B!&! & ! & (" $ !@ "  9&  ! B$ " " ! " ! &!  !@ !" 9 !@  98Q V57X 5 !4 ! 321 %!0 & !# ) (( 



' $Q HYDOXDWLRQ RI WKH FRQVLVWHQF\ RI DSSOLFDWLRQ RI PDQDJHPHQW V SROLFLHV & $ EDVLV IRU PRGLI\LQJ WHVWV RI FRQWUROV % 7KH HYLGHQWLDO PDWWHU WR XVH LQ DVVHVVLQJ LQKHUHQW ULVN $ 7KH NQRZOHGJH QHFHVVDU\ IRU DXGLW SODQQLQJ HQWLW\ V LQWHUQDO FRQWURO LV WR SURYLGH DQ DXGLWRU 7KH SULPDU\ REMHFWLYH RI SURFHGXUHV SHUIRUPHG WR REWDLQ DQ XQGHUVWDQGLQJ RI WKH



7KH RYHUDOO DWWLWXGH DQG DZDUHQHVV RI DQ HQWLW\ V ERDUG RI GLUHFWRUV FRQFHUQLQJ WKH LPSRUWDQFH RI WKH FOLHQW V LQWHUQDO FRQWURO XVXDOO\ LV UHIOHFWHG LQ LWV

$ &RPSXWHUEDVHG FRQWURO DFWLYLWLHV % 6\VWHP RI VHSDUDWLRQ RI GXWLHV & &RQWURO HQYLURQPHQW ' 6DIHJXDUGV RYHU DFFHVV WR DVVHWV
!" 9&" " " !  9"D   ! " C!@ !@ (" !&" ( ! 9  "" ! (" !" 9&" 2 !4 ( !@ !2!  !( ! G 57X 5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  



$IWHU REWDLQLQJ DQ XQGHUVWDQGLQJ RI LQWHUQDO FRQWUROV DQG DVVHVVLQJ FRQWURO ULVN RQ WKH DXGLW RI D QRQSXEOLF FRPSDQ\ DQ DXGLWRU GHFLGHG WR SHUIRUP WHVWV RI FRQWUROV 7KH DXGLWRU PRVW OLNHO\ GHFLGHG WKDW

$ ,W ZRXOG EH HIILFLHQW WR SHUIRUP WHVWV RI FRQWUROV WKDW ZRXOG UHVXOW LQ D UHGXFWLRQ LQ SODQQHG VXEVWDQWLYH WHVWV % $GGLWLRQDO HYLGHQFH WR VXSSRUW D IXUWKHU UHGXFWLRQ LQ FRQWURO ULVN LV QRW DYDLODEOH & $Q LQFUHDVH LQ WKH DVVHVVHG OHYHO RI FRQWURO ULVN LV MXVWLILHG IRU FHUWDLQ ILQDQFLDO VWDWHPHQW DVVHUWLRQV ' 7KHUH ZHUH PDQ\ LQWHUQDO FRQWURO ZHDNQHVVHV WKDW FRXOG DOORZ HUURUV WR HQWHU WKH DFFRXQWLQJ V\VWHP
!&! $E ""  9"D   ! " C !@ " !&"(! 9 !2 " %! !4 2 ( " ! 8!  B %& B! !@ !((  A "@ A "$ " B !& B B!&! & ! & (" $ !@ "  9&  ! B$ " " ! " ! &!  !@ !" 9 !@  98Q V57X 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %$@D    



,Q DQ DXGLW RI ILQDQFLDO VWDWHPHQWV RI D QRQSXEOLF FRPSDQ\ LQ DFFRUGDQFH ZLWK JHQHUDOO\ DFFHSWHG DXGLWLQJ VWDQGDUGV DQ DXGLWRU LV UHTXLUHG WR

$ 'RFXPHQW KLV RU KHU XQGHUVWDQGLQJ RI WKH HQWLW\ V LQWHUQDO FRQWURO % 6HDUFK IRU VLJQLILFDQW GHILFLHQFLHV LQ WKH RSHUDWLRQ RI LQWHUQDO FRQWUROV & 3HUIRUP WHVWV RI FRQWUROV WR HYDOXDWH WKH HIIHFWLYHQHVV RI WKH HQWLW\ V DFFRXQWLQJ V\VWHP ' 'HWHUPLQH ZKHWKHU FRQWURO DFWLYLWLHV DUH RSHUDWLQJ HIIHFWLYHO\ WR SUHYHQW RU GHWHFW PDWHULDO PLVVWDWHPHQWV
!&! $E " "  9"D   ! " C !@ " !&"(! 9 !2 " %! !4 2 ( " ! 8!  B %& B! !@ !((  A "@ A "$ " B !& B B!&! & ! & (" $ !@ "  9&  ! B$ " " ! " ! &!  !@ !" 9 !@  98Q V57X 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  

 !&! $E " "  9"D  %1 ! " C !@ " !&"(! 9 !2 " %! !4 2 (" ! 8!  B %& B! !@ !((  A "@ A "$ " B !& B B!&! & ! & (" $ !@ "  9&  ! B$ " " ! " ! &!  !@ !" 9 !@  98Q V57X 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  



' ,QVSHFWLRQ DQG YHULILFDWLRQ & &RPSDULVRQ DQG FRQILUPDWLRQ % 5HSHUIRUPDQFH DQG REVHUYDWLRQ $ ,QTXLU\ DQG DQDO\WLFDO SURFHGXUHV WHFKQLTXHV LQFOXGLQJ ,Q WHVWLQJ FRQWURO DFWLYLWLHV DQ DXGLWRU RUGLQDULO\ VHOHFWV IURP D YDULHW\ RI



$VVHVVLQJ FRQWURO ULVN DW EHORZ WKH PD[LPXP OHYHO PRVW OLNHO\ ZRXOG LQYROYH

$ 3HUIRUPLQJ PRUH H[WHQVLYH VXEVWDQWLYH WHVWV ZLWK ODUJHU VDPSOH VL]HV WKDQ RULJLQDOO\ SODQQHG % 5HGXFLQJ LQKHUHQW ULVN IRU PRVW RI WKH DVVHUWLRQV UHOHYDQW WR VLJQLILFDQW DFFRXQW EDODQFHV & &KDQJLQJ WKH WLPLQJ RI VXEVWDQWLYH WHVWV E\ RPLWWLQJ LQWHULPGDWH WHVWLQJ DQG SHUIRUPLQJ WKH WHVWV DW \HDUHQG ' ,GHQWLI\LQJ VSHFLILF LQWHUQDO FRQWURO DFWLYLWLHV WKDW DUH UHOHYDQW WR VSHFLILF ILQDQFLDO VWDWHPHQW DVVHUWLRQV
!&! $E " "  9"D   ! " C !@ " !&"(! 9 !2 " %! !4 2 ( " ! 8!  B %& B! !@ !((  A "@ A "$ " B !& B B!&! & ! & (" $ !@ "  9&  ! B$ " " ! " ! &!  !@ !" 9 !@  98Q V57X 5 !4 ! 321 %!0 W G (( !' &""  $E    %$@D    

 " " !  9"D  %1 ! " CX C"  %  ! 817!2 2 !S! ! 9&" 2 9 (" "  !&! %& "( !2" 9! "  !2! X 57X 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  



' 7KH $6% & 7KH $,&3$ % 7KH 3&$2% $ 7KH 6DUEDQHV2[OH\ $FW RI  FRPSDQLHV LV UHTXLUHG E\ $ UHSRUW RQ LQWHUQDO FRQWURO HIIHFWLYHQHVV E\ WKH PDQDJHPHQW WHDP RI SXEOLF



0DQDJHPHQW V UHSRUW RQ LQWHUQDO FRQWUROV PXVW LQFOXGH HDFK RI WKH IROORZLQJ H[FHSW

$ $ VWDWHPHQW WKDW PDQDJHPHQW LV UHVSRQVLEOH IRU HVWDEOLVKLQJ DQG PDLQWDLQLQJ DGHTXDWH LQWHUQDO FRQWURO RYHU ILQDQFLDO UHSRUWLQJ % $ VWDWHPHQW LGHQWLI\LQJ WKH IUDPHZRUN PDQDJHPHQW XVHV WR HYDOXDWH WKH HIIHFWLYHQHVV RI WKH FRPSDQ\ V LQWHUQDO FRQWURO & $ VWDWHPHQW SURYLGLQJ PDQDJHPHQW V DVVHVVPHQW RI WKH HIIHFWLYHQHVV RI WKH FRPSDQ\ V LQWHUQDO FRQWURO ' $ VWDWHPHQW SURYLGLQJ PDQDJHPHQW V HYDOXDWLRQ RI WKH FRPSDQ\ V FRQWURO HQYLURQPHQW
!2" 9!E !&! %#  9"D  %1 ! " C "" ! H ! % %! "   !&! %& ( " !2" 9! !@ !!A !2 @ % )57X 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  



:KLFK RI WKH IROORZLQJ DUHDV FDQ H[WHUQDO DXGLWRUV UHO\ RQ LQWHUQDO DXGLWRUV ZRUN LQ DXGLWLQJ LQWHUQDO FRQWUROV"

$ (YDOXDWLRQ RI WKH DXGLWLQJ HQYLURQPHQW % 7HVWLQJ RI ORZULVN LQWHUQDO FRQWURO DFWLYLWLHV & $OO WHVWLQJ RI WKH RSHUDWLQJ HIIHFWLYHQHVV RI LQWHUQDO FRQWURO DFWLYLWLHV ' 3URYLGLQJ WKH SULQFLSDO HYLGHQFH IRU WKH H[WHUQDO DXGLWRUV RSLQLRQ
!&! $E " "  9"D  %1 ! " C !@ " !&"(! 9 !2 " %! !4 2 ( " ! 8!  B %& B! !@ !((  A "@ A "$ " B !& B B!&! & ! & (" $ !@ "  9&  ! B$ " " ! " ! &!  !@ !" 9 !@  98Q V57X 5 !4 ! 321 %!0 & !# ) ((  99 &"" @!!E   %!0  



7KH PRVW LPSRUWDQW IXQGDPHQWDO FRPSRQHQW RI DQ HQWLW\ V LQWHUQDO FRQWURO LV

$ (IIHFWLYHQHVV DQG HIILFLHQF\ RI RSHUDWLRQV % 3HRSOH ZKR RSHUDWH WKH FRQWURO V\VWHP & 5HOLDELOLW\ RI ILQDQFLDO UHSRUWLQJ ' &RPSOLDQFH ZLWK DSSOLFDEOH ODZV DQG UHJXODWLRQV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN



 !&! $E " "  9"D  %1 ! " C !@ " !&"(! 9 !2 " %! !4 2 ( " ! 8!  B %& B! !@ !((  A "@ A "$ " B !& B B!&! & ! & (" $ !@ "  9&  ! B$ " " ! " ! &!  !@ !" 9 !@  98Q V57X 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  

!" 9&" " " !  9"D  %1 ! " C!@ !@ (" !&" ( ! 9  "" ! (" !" 9&" 2 !4 ( !@ !2!  !( ! G 57X 5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0 



5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN ' 3URYLGH LQIRUPDWLRQ IRU D FRPPXQLFDWLRQ RI LQWHUQDO FRQWUROUHODWHG PDWWHUV WR & 3URYLGH WKH UDWLRQDOH IRU WKH LQKHUHQW ULVN DVVHVVPHQW DW WKH ILQDQFLDO % 'HWHUPLQH WKH QDWXUH WLPLQJ DQG H[WHQW RI WHVWV WR EH SHUIRUPHG LQ WKH DXGLW $ 3URYLGH D EDVLV IRU PDNLQJ FRQVWUXFWLYH VXJJHVWLRQV LQ D PDQDJHPHQW OHWWHU LQWHUQDO FRQWURO LV WR 7KH SULPDU\ SXUSRVH IRU REWDLQLQJ DQ XQGHUVWDQGLQJ RI D QRQSXEOLF DXGLW FOLHQW V VWDWHPHQW DVVHUWLRQ OHYHO PDQDJHPHQW

 !&! $E " "  9"D  %1 ! " C !@ " !&"(! 9 !2 " %! !4 2 ( " ! 8!  B %& B! !@ !((  A "@ A "$ " B !& B B!&! & ! & (" $ !@ "  9&  ! B$ " " ! " ! &!  !@ !" 9 !@  98Q V57X 5 !4 ! 321 %!0 Q 6 (( 99 &"" @!!E   %!0  



5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN ' 3HUIRUPLQJ SURFHGXUHV GXULQJ WKH LQWHULP SHULRG DV RSSRVHG WR DW WKH ILVFDO & 'HFLGLQJ WR REWDLQ H[WHUQDO HYLGHQFH LQVWHDG RI LQWHUQDO HYLGHQFH % 3HUIRUPLQJ DXGLW SURFHGXUHV DW WKH ILVFDO \HDUHQG GDWH DV RSSRVHG WR WKH $ 6HOHFWLQJ ODUJHU VDPSOH VL]HV IRU DXGLW (IIHFWLYHQHVV RI DXGLW SURFHGXUHV ZRXOG EH UHGXFHG E\ LQWHULP SHULRG \HDUHQG GDWH



$FFRUGLQJ WR WKH 3&$2% GXULQJ WKH DXGLW RI LQWHUQDO FRQWUROV IRU DQ LVVXHU WKH XOWLPDWH REMHFWLYH RI WHVWLQJ WKH GHVLJQ HIIHFWLYHQHVV RI LQWHUQDO FRQWUROV LV WR

$ 'HWHUPLQH ZKHWKHU WKH FRPSDQ\ V FRQWUROV DUH SURFHVVLQJ FRPSDQ\ GDWD HIIHFWLYHO\ % 'HWHUPLQH WKDW WKH FRPSDQ\ V FRQWUROV ZLOO VDWLVI\ WKH FRPSDQ\ V FRQWURO REMHFWLYHV DQG FDQ HIIHFWLYHO\ SUHYHQW RU GHWHFW HUURUV RU IUDXG WKDW FRXOG UHVXOW LQ PDWHULDO PLVVWDWHPHQWV LI WKH\ RSHUDWH DV SUHVFULEHG & 'HWHUPLQH WKDW WKH FRPSDQ\ V HPSOR\HHV DUH SURFHVVLQJ WKH FRQWUROV DFFRUGLQJ WR WKH SROLF\ DQG SURFHGXUH PDQXDOV DW WKH FRPSDQ\ ' 1RQH RI WKH DERYH 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

 " " !  9"D  %1 ! " CX C"  %  ! 817!2 2 !S! ! 9&" 2 9 (" "  !&! %& "( ! 2" 9! "  !2! X 57X 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  

 !&! $E " "  9"D  %1 ! " C !@ " !&"(! 9 !2 " %! !4 2 ( " ! 8!  B %& B! !@ !((  A "@ A "$ " B !& B B!&! & ! & (" $ !@ "  9&  ! B$ " " ! " ! &!  !@ !" 9 !@  98Q V57X 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  



5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN ' ,QVSHFWLRQ RI GRFXPHQWDWLRQ & &RQILUPDWLRQ RI EDODQFHV % 2EVHUYDWLRQ RI FRPSDQ\ RSHUDWLRQV $ ,QTXLU\ RI FOLHQW SHUVRQQHO FRPELQDWLRQ RI HDFK RI WKH IROORZLQJ WHVWV H[FHSW IRU 7R WHVW WKH RSHUDWLQJ HIIHFWLYHQHVV RI D FRQWURO DQ DXGLW WHDP PLJKW XVH D

 !&! $E " "  9"D  %1 ! " C !@ " !&"(! 9 !2 " %! !4 2 ( " ! 8!  B %& B! !@ !((  A "@ A "$ " B !& B B!&! & ! & (" $ !@ "  9&  ! B$ " " ! " ! &!  !@ !" 9 !@  98Q V57X 5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  



5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN ' 'HWDLOHG IOXFWXDWLRQ DQDO\VLV FRPSOHWHG E\ WKH &)2 IRU UHYHQXH & 6HSDUDWLRQ RI GXWLHV EHWZHHQ WKH SD\UROO DQG SHUVRQQHO GHSDUWPHQWV % 5HFDOFXODWLRQ RI D VDPSOH RI SD\UROO HQWULHV E\ LQWHUQDO DXGLWRUV $ 5HFRQFLOLDWLRQ RI D EDQN DFFRXQW :KLFK RI WKH IROORZLQJ LV D SUHYHQWLYH FRQWURO"



,Q PRVW DXGLWV RI ODUJH HQWLWLHV FRQWURO ULVN DVVHVVPHQW FRQWULEXWHV WR DXGLW HIILFLHQF\ ZKLFK PHDQV WKDW

$ 7KH FRVW RI VXEVWDQWLYH SURFHGXUHV ZLOO H[FHHG WKH FRVW RI FRQWURO HYDOXDWLRQ ZRUN % $XGLWRUV ZLOO EH DEOH WR UHGXFH WKH FRVW RI VXEVWDQWLYH SURFHGXUHV E\ DQ DPRXQW PRUH WKDQ WKH FRQWURO HYDOXDWLRQ FRVWV & 7KH FRVW RI FRQWURO HYDOXDWLRQ ZRUN ZLOO H[FHHG WKH FRVW RI VXEVWDQWLYH SURFHGXUHV ' $XGLWRUV ZLOO EH DEOH WR UHGXFH WKH FRVW RI VXEVWDQWLYH SURFHGXUHV E\ DQ DPRXQW OHVV WKDQ WKH FRVW RI WHVWV RI FRQWUROV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

!&! $E " "  9"D  %1 ! " C !@ " !&"(! 9 !2 " %! !4 2 ( " ! 8!  B %& B! !@ !((  A "@ A "$ " B !& B B!&! & ! & (" $ !@ "  9&  ! B$ "" ! " ! &!  !@ !" 9 !@  98Q V57X 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    !&! %# !"!E  

 !&! $E " "  9"D  %1 ! " C !@ " !&"(! 9 !2 " %! !4 2 ( " ! 8!  B %& B! !@ !((  A "@ A "$ " B !& B B!&! & ! & (" $ !@ "  9&  ! B$ " " ! " ! &!  !@ !" 9 !@  98Q V57X 5 !4 ! 321 %!0 Q 6 (( !2&!&!E &""  $E    %!0  



5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN ' $OO RI WKH DERYH & $ IORZFKDUW RI WKH GRFXPHQWV DQG SURFHGXUHV XVHG E\ WKH FRPSDQ\ % $Q LQWHUQDO FRQWURO TXHVWLRQQDLUH $ $ QDUUDWLYH PHPRUDQGXP GHVFULELQJ WKH FRQWURO V\VWHP DERXW WKH DFFRXQWLQJ DQG FRQWURO DFWLYLWLHV RI DQ DXGLW FOLHQW" :KLFK RI WKH IROORZLQJ LV D GHYLFH GHVLJQHG WR KHOS WKH DXGLW WHDP REWDLQ HYLGHQFH

 !&! $E " "  9"D  %1 ! " C !@ " !&"(! 9 !2 " %! !4 2 ( " ! 8!  B %& B! !@ !((  A "@ A "$ " B !& B B!&! & ! & (" $ !@ "  9&  ! B$ " " ! " ! &!  !@ !" 9 !@  98Q V57X 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &""  $E    %!0  



5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN ' )LQDQFLDO VWDWHPHQW DVVHUWLRQV DQG WHVWV RI FRQWUROV & 0DQDJHPHQW REMHFWLYHV DQG HQWLW\ FRQWURO DFWLYLWLHV % 0DQDJHPHQW REMHFWLYHV DQG DFFRXQWLQJ V\VWHP SURFHGXUHV $ &RQWURO HYDOXDWLRQ ILQGLQJV DQG VXEVHTXHQW DXGLW SURFHGXUHV $ EULGJH ZRUNSDSHU VKRZV WKH FRQQHFWLRQ EHWZHHQ

 !&! $E " "  9"D  %1 ! " C !@ " !&"(! 9 !2 " %! !4 2 (" ! 8!  B %& B! !@ !((  A "@ A "$ " B !& B B!&! & ! & (" $ !@ "  9&  ! B$ " " ! " ! &!  !@ !" 9 !@  98Q V57X 5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  



5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN ' 2EWDLQLQJ HYLGHQFH DERXW WKH RSHUDWLQJ HIIHFWLYHQHVV RI FOLHQW FRQWURO DFWLYLWLHV & $SSO\LQJ DQDO\WLFDO SURFHGXUHV WR ILQDQFLDO VWDWHPHQW EDODQFHV % $FFRPSOLVKLQJ FRQWURO RYHU WKH RFFXUUHQFH RI UHFRUGHG WUDQVDFWLRQV $ 2EWDLQLQJ HYLGHQFH DERXW WKH ILQDQFLDO VWDWHPHQW DVVHUWLRQV 7HVWV RI FRQWUROV LQ D *$$6 DXGLW DUH UHTXLUHG IRU



$ WUDQVDFWLRQOHYHO LQWHUQDO FRQWURO DFWLYLW\ LV EHVW GHVFULEHG DV

$ $Q DFWLRQ WDNHQ E\ DXGLWRUV WR REWDLQ HYLGHQFH % $Q DFWLRQ WDNHQ E\ FOLHQW SHUVRQQHO IRU WKH SXUSRVH RI SUHYHQWLQJ GHWHFWLQJ DQG FRUUHFWLQJ HUURUV DQG IUDXGV LQ WUDQVDFWLRQV WR HOLPLQDWH RU PLWLJDWH ULVNV LGHQWLILHG E\ WKH FRPSDQ\ & $ PHWKRG IRU UHFRUGLQJ VXPPDUL]LQJ DQG UHSRUWLQJ ILQDQFLDO LQIRUPDWLRQ ' 7KH IXQFWLRQLQJ RI WKH ERDUG RI GLUHFWRUV LQ VXSSRUW RI LWV DXGLW FRPPLWWHH 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

!&! $E ""  9"D  %1 ! " C !@ " !&"(! 9 !2 " %! !4 2 ( " ! 8!  B %& B! !@ !((  A "@ A "$ " B !& B B!&! & ! & (" $ !@ "  9&  ! B$ " " ! " ! &!  !@ !" 9 !@  98Q V57X 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  



:KHQ SODQQLQJ DQ DXGLW RI LQWHUQDO FRQWUROV IRU DQ LVVXHU WKH DXGLW WHDP VKRXOG

$ ,GHQWLI\ VLJQLILFDQW DFFRXQWV ORFDWLRQV DQG DVVHUWLRQV % &RQGXFW D ZDONWKURXJK RI WKH LQWHUQDO FRQWURO SURFHVV & 0DNH LQTXLULHV RI HPSOR\HHV UHJDUGLQJ WKH H[LVWHQFH RI FRQWURO DFWLYLWLHV ' 5HSHUIRUP FRQWURO DFWLYLWLHV SHUIRUPHG E\ FOLHQW HPSOR\HHV WR GHWHUPLQH WKHLU HIIHFWLYHQHVV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

 " " !  9"D  %1 ! " CX C"  %  ! 817!2 2 !S! ! 9&" 2 9 (" "  !&! %& "( !2" 9! "  !2! X 57X 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  



$ PDWHULDO ZHDNQHVV LV D VLWXDWLRQ LQ ZKLFK

$ ,W LV SUREDEOH WKDW DQ LPPDWHULDO ILQDQFLDO VWDWHPHQW PLVVWDWHPHQW ZRXOG QRW EH GHWHFWHG RQ D WLPHO\ EDVLV % 7KHUH LV D UHPRWH OLNHOLKRRG WKDW D PDWHULDO PLVVWDWHPHQW ZRXOG EH GHWHFWHG RQ D WLPHO\ EDVLV & ,W LV UHDVRQDEO\ SRVVLEOH WKDW D PDWHULDO PLVVWDWHPHQW ZRXOG QRW EH GHWHFWHG RQ D WLPHO\ EDVLV ' ,W LV UHDVRQDEO\ SRVVLEOH WKDW DQ LPPDWHULDO PLVVWDWHPHQW ZRXOG QRW EH GHWHFWHG RQ D WLPHO\ EDVLV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

 " " !  9"D  %1 ! " CX C"  %  ! 817!2 2 !S! ! 9&" 2 9 (" "  !&! %& "( !2" 9! "  !2! X 57X 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &""  $E    %!0  



:KHQ FRPSOHWLQJ WKH DXGLW RI LQWHUQDO FRQWUROV IRU DQ LVVXHU WKH VHYHULW\ RI DQ LQWHUQDO FRQWURO GHILFLHQF\ GHSHQGV RQ

$ :KHWKHU WKHUH LV D UHDVRQDEOH SRVVLELOLW\ WKDW WKH FRPSDQ\ V FRQWUROV ZLOO IDLO WR SUHYHQW RU GHWHFW D PLVVWDWHPHQW RI DQ DFFRXQW EDODQFH RU GLVFORVXUH % :KHWKHU WKH DFFRXQW KDV D KLVWRU\ RI HUURUV & 7KH PDJQLWXGH RI WKH SRWHQWLDO PLVVWDWHPHQW UHVXOWLQJ IURP WKH GHILFLHQF\ RU WKH GHILFLHQFLHV ' %RWK $ DQG & DUH FRUUHFW ( $OO RI WKH DERYH DUH FRUUHFW 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

 %1 ! " CX C"  %  ! 817!2 2 !S! ! 9&" 2 9 (" "  !&! %& "( !2" 9! "  !2! X 57X 5 !4 ! 321 %!0 W G (( !2&!&!E &"" @!!E   %!0    " " !  9"D

}w u}v tvus}v | w tvw xwuy s|u utvt} xvw}w vt s y s vtzut z suwsu s wvt | |wz u}wt vt } vs s xtvt u sw} wwzwv su tvw}w t szwu|s s~ w}|s zy xvwvutsr { ut  }|ww usz s s  |uts s  t xs r  | w} tv 



5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN ' 2SWLRQ ' & 2SWLRQ & % 2SWLRQ % $ 2SWLRQ $ UHJDUGLQJ LQWHUQDO FRQWURO" :KLFK RI WKH IROORZLQJ GRHV 349 DFFXUDWHO\ VXPPDUL]H DXGLWRUV UHTXLUHPHQWV XGLWRUV

 " " !  9"D  %1 ! " CX C"  %  ! 817!2 2 !S! ! 9&" 2 9 (" "  !&! %& "( !2" 9! "  !2! X 57X 5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  



5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN ' $OO RI WKH DERYH & )LQDQFLDO UHSRUWLQJ % &RPSOLDQFH ZLWK UHJXODWLRQV $ 2SHUDWLRQV DXGLWRUV RI SXEOLF FRPSDQLHV WR DXGLW LQWHUQDO FRQWUROV RYHU :KHQ FRPSOHWLQJ WKH DXGLW RI LQWHUQDO FRQWUROV IRU DQ LVVXHU WKH 3&$2% UHTXLUHV

}w u}v tvus}v | w | tvw xwuy s|u utvt} xvw}w vt s y s vtzut z suwsu s wvt | |wz u}wt vt } vs s xtvt u sw} wwzwv su tvw}w t szwu|s s~ w}|s zy xvwvutsr t { ws  }|ww usz s s  |uts s  t xs r  vw}t| wv 



5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN ' 2SWLRQ ' & 2SWLRQ & % 2SWLRQ % $ 2SWLRQ $ DXGLWRUV RI SXEOLF FRPSDQLHV WR UHSRUW RQ :KHQ FRPSOHWLQJ WKH DXGLW RI LQWHUQDO FRQWUROV IRU DQ LVVXHU $  UHTXLUHV

 " " !  9"D  %1 ! " CX C"  %  ! 817!2 2 !S! ! 9&" 2 9 (" "  !&! %& "( !2" 9! "  !2! X 57X 5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  



5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN ' 1HLWKHU RSHUDWLQJ QRU GHVLJQ HIIHFWLYHQHVV & %RWK RSHUDWLQJ DQG GHVLJQ HIIHFWLYHQHVV % 'HVLJQ HIIHFWLYHQHVV RQO\ $ 2SHUDWLQJ HIIHFWLYHQHVV RQO\ :KHQ FRPSOHWLQJ WKH DXGLW RI LQWHUQDO FRQWUROV IRU DQ LVVXHU $6  UHTXLUHV DXGLWRUV WR WHVW

 " " !  9"D  %1 ! " CX C"  %  ! 817!2 2 !S! ! 9&" 2 9 (" "  !&! %& "( !2" 9! "  !2! X 57X 5 !4 ! 321 %!0 & !# ) ((  !' &""  $E    %!0  



5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN ' 2YHUSURGXFWLRQ E\ WKH PDQXIDFWXULQJ SODQW & ,PPDWHULDO IUDXG FRPPLWWHG E\ VHQLRU PDQDJHPHQW % ,QHIIHFWLYH RYHUVLJKW E\ WKH DXGLW FRPPLWWHH $ (YLGHQFH RI D PDWHULDO PLVVWDWHPHQW :KLFK RI WKH IROORZLQJ ZRXOG SUREDEO\ QRW EH FRQVLGHUHG DQ LQGLFDWLRQ RI D PDWHULDO ZHDNQHVV"



:KLFK UHSRUW ZRXOG QRW EH DSSURSULDWH IRU D SXEOLF DFFRXQWLQJ ILUP WR SURYLGH RQ ILQDQFLDO UHSRUWLQJ FRQWUROV"

$ 8QTXDOLILHG QR PDWHULDO ZHDNQHVVHV IRXQG % 'LVFODLPHU RI RSLQLRQ XQDEOH WR SHUIRUP DOO QHFHVVDU\ SURFHGXUHV & 'LVFODLPHU RI RSLQLRQ VLJQLILFDQW GHILFLHQFLHV H[LVW ' $GYHUVH PDWHULDO ZHDNQHVVHV H[LVW 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

 %1 ! " C !( "& !2  "A %" 9! ( !4 " "" !  " " 9! H "  !@ @@A  " !2! R 57X 5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  "&&" " 9!E "" !  " "("#  9"D

 !&! $E " "  9"D   ! " C !@ " !&"(! 9 !2 " %! !4 2 ( " ! 8!  B %& B! !@ !((  A "@ A "$ " B !& B B!&! & ! & (" $ !@ "  9&  ! B$ " " ! " ! &!  !@ !" 9 !@  98Q V57X 5 !4 ! 321 %!0 Q 6 (( 99 &""  $E    %!0  



5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN ' $GPLQLVWUDWLYH FRQWUROV IURP WKH LQWHUQDO DFFRXQWLQJ FRQWUROV & +XPDQ UHVRXUFHV IXQFWLRQ IURP WKH FRQWUROOHUVKLS IXQFWLRQ % 2SHUDWLRQDO UHVSRQVLELOLW\ IURP WKH UHFRUGNHHSLQJ UHVSRQVLELOLW\ $ $XWKRUL]DWLRQ RI WUDQVDFWLRQV IURP WKH FXVWRG\ RI UHODWHG DVVHWV FKHFNV LV WR VHSDUDWH WKH 7KH SXUSRVH RI VHSDUDWLQJ WKH GXWLHV RI KLULQJ SHUVRQQHO DQG GLVWULEXWLQJ SD\UROO



:KLFK RI WKH IROORZLQJ VWDWHPHQWV LV QRW WUXH ZLWK UHVSHFW WR WKH DXGLWRUV UHSRUW RQ LQWHUQDO FRQWURO RYHU ILQDQFLDO UHSRUWLQJ"

$ 7KH UHSRUW ZLOO EH GDWHG DV RI WKH GDWH RI WKH ILQDQFLDO VWDWHPHQWV % 7KH UHSRUW ZLOO H[SUHVV DQ RSLQLRQ RQ WKH HIIHFWLYHQHVV RI LQWHUQDO FRQWURO RYHU ILQDQFLDO UHSRUWLQJ & 7KH DXGLWRU ZLOO LVVXH DQ DGYHUVH RSLQLRQ LI RQH RU PRUH PDWHULDO ZHDNQHVVHV H[LVW ' 7KH UHSRUW PD\ EH SUHVHQWHG ZLWK WKH UHSRUW RQ WKH HQWLW\ V ILQDQFLDO VWDWHPHQWV DV D FRPELQHG UHSRUW 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

 %1 ! " C %" 9! ( !4 " "" !  " " 9! H "  !@ ( " !" 9&" " 3& !@ 0 I 57X 5 !4 ! 321 %!0 W G (( !2&!&!E &"" @!!E   %!0  "&&" %" 9!E " " !  9"D



,I WKH DXGLWRUV HQFRXQWHU D VLJQLILFDQW VFRSH OLPLWDWLRQ LQ HYDOXDWLQJ D SXEOLF FRPSDQ\ V LQWHUQDO FRQWURO RYHU ILQDQFLDO UHSRUWLQJ ZKLFK RI WKH IROORZLQJ W\SHV RI RSLQLRQV RQ WKH HIIHFWLYHQHVV RI WKH FRPSDQ\ V LQWHUQDO FRQWURO RYHU ILQDQFLDO UHSRUWLQJ ZRXOG EH DSSURSULDWH"

$ 8QTXDOLILHG RSLQLRQ RU DGYHUVH RSLQLRQ % 4XDOLILHG RSLQLRQ RU DGYHUVH RSLQLRQ & 8QTXDOLILHG RSLQLRQ RU GLVFODLPHU RI RSLQLRQ ' 'LVFODLPHU RI RSLQLRQ 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

 %1 ! " C !( "& !2  "A %" 9! ( !4 " "" !  " " 9! H "  !@ @@A  " !2! R 57X 5 !4 ! 321 %!0 & !# ) ((  99 &"" @!!E   %!0  "&&" " 9!E "" !  " "("#  9"D



:KLFK RI WKH IROORZLQJ LQIRUPDWLRQ ZRXOG EH LQFOXGHG LQ WKH LQWURGXFWRU\ SDUDJUDSK RI WKH DXGLWRUV UHSRUW RQ LQWHUQDO FRQWURO RYHU ILQDQFLDO UHSRUWLQJ LI WKH UHSRUW LV SUHVHQWHG VHSDUDWHO\ IURP WKH DXGLWRUV UHSRUW RQ WKH HQWLW\ V ILQDQFLDO VWDWHPHQWV"

$ 7KH IDFW WKDW WKH DXGLWRUV FRQGXFWHG DQ DXGLW RI WKH HQWLW\ V ILQDQFLDO VWDWHPHQWV % 7KH GHILQLWLRQ RI D PDWHULDO ZHDNQHVV LQ LQWHUQDO FRQWURO RYHU ILQDQFLDO UHSRUWLQJ & 6WDWHPHQWV LGHQWLI\LQJ WKH UHVSRQVLELOLW\ RI WKH DXGLWRUV DQG PDQDJHPHQW IRU LQWHUQDO FRQWURO RYHU ILQDQFLDO UHSRUWLQJ ' $ UHIHUHQFH WR WKH DXGLWRUV UHSRUW DQG RSLQLRQ RQ WKH HQWLW\ V ILQDQFLDO VWDWHPHQWV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

%" 9!E " " !  9"D  %1 ! " C %" 9! ( !4 " "" !  " " 9! H "  !@ ( " !" 9&" " 3& !@ 0 I 57X 5 !4 ! 321 %!0 W G (( !2&!&!E &"" @!!E   %!0  "&&"

!" 9&" " " !  9"D  %1 ! " C!@ !@ (" !&" ( ! 9  " " ! (" !" 9&" 2 !4 ( !@ !2!  !( ! G 57X 5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  



5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH ' &RPSOLDQFH ZLWK DSSOLFDEOH ODZV DQG UHJXODWLRQV & 0D[LPL]DWLRQ RI SURILW % 5HOLDELOLW\ RI ILQDQFLDO UHSRUWLQJ $ (IILFLHQF\ DQG HIIHFWLYHQHVV RI RSHUDWLRQV :KLFK RI WKH IROORZLQJ LV QRW RQH RI &262 V REMHFWLYHV IRU LQWHUQDO FRQWUROV"



:KLFK RI WKH IROORZLQJ LV QRW RQH RI WKH HOHPHQWV RI WKH FRQWURO HQYLURQPHQW"

$ 3URFHVV IRU UHFRUGLQJ WUDQVDFWLRQV DQG SUHSDULQJ ILQDQFLDO VWDWHPHQWV % 3UHVHQFH RI DQ LQWHUQDO DXGLWLQJ IXQFWLRQ & $ FRPSDQ\ V RUJDQL]DWLRQDO VWUXFWXUH ' 0HWKRGV RI DVVLJQLQJ DXWKRULW\ DQG UHVSRQVLELOLW\ 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

!" 9&" " " !  9"D  %1 ! " C!@ !@ (" !&" ( ! 9  "" ! (" !" 9&" 2 !4 ( !@ !2!  !( ! G 57X 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  

!" 9&" " " !  9"D  %1 ! " C!@ !@ (" !&" ( ! 9  "" ! (" !" 9&" 2 !4 ( !@ !2!  !( ! G 57X 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  



5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH ' ,QIRUPDWLRQ SURFHVVLQJ FRQWUROV & 3K\VLFDO FRQWUROV % 3HUIRUPDQFH UHYLHZV $ $VVHVVPHQW RI FRQWURO ULVN :KLFK RI WKH IROORZLQJ ZRXOG QRW EH FRQVLGHUHG D FRQWURO DFWLYLW\"

!" 9&" "" !  9"D  %1 ! " C!@ !@ (" !&" ( ! 9  "" ! (" !" 9&" 2 !4 ( !@ !2!  !( ! G 57X 5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  



5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH ' &RQWURO DFWLYLW\ & 'XDOSXUSRVH WHVW % 5LVN DVVHVVPHQW $ &RQWURO REMHFWLYH UHIHUUHG WR DV D $Q DFWLRQ WDNHQ WR SUHYHQW GHWHFW DQG FRUUHFW HUURUV DQG IUDXGV LQ WUDQVDFWLRQV LV

 !&! $E " "  9"D  %1 ! " C !@ " !&"(! 9 !2 " %! !4 2 ( " ! 8!  B %& B! !@ !((  A "@ A "$ " B !& B B!&! & ! & (" $ !@ "  9&  ! B$ " " ! " ! &!  !@ !" 9 !@  98Q V57X 5 !4 ! 321 %!0 Q 6 (( !' &"" @!!E   %!0  



5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH ' $FFXUDF\ & $FFRXQWLQJ % &RPSOHWHQHVV $ 9DOLGLW\ SURFHGXUH GHVLJQHG WR DFKLHYH WKH LQWHUQDO FRQWURO REMHFWLYH RI $FFRXQWLQJ IRU WKH QXPHULFDO VHTXHQFH RI VKLSSLQJ GRFXPHQWV LV D FRQWURO

 !&! $E " "  9"D  %1 ! " C !@ " !&"(! 9 !2 " %! !4 2 ( " ! 8!  B %& B! !@ !((  A "@ A "$ " B !& B B!&! & ! & (" $ !@ "  9&  ! B$ " " ! " ! &!  !@ !" 9 !@  98Q V57X 5 !4 ! 321 %!0 & !# ) ((  99 &"" @!!E   %!0  



5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH ' $ ZDONWKURXJK RI RQH RU PRUH WUDQVDFWLRQV & $ VXEVWDQWLYH WHVWLQJ DXGLW SODQ % 5HVSRQVHV WR LQTXLULHV GLUHFWHG WR FOLHQW SHUVRQQHO $ 3UHYLRXV H[SHULHQFH ZLWK WKH FRPSDQ\ H[FHSW $XGLWRUV REWDLQ DQ XQGHUVWDQGLQJ RI WKH LQWHUQDO FRQWURO WKURXJK DOO RI WKH IROORZLQJ

 !&! $E " "  9"D  %1 ! " C !@ " !&"(! 9 !2 " %! !4 2 ( " ! 8!  B %& B! !@ !((  A "@ A "$ " B !& B B!&! & ! & (" $ !@ "  9&  ! B$ "" ! " ! &!  !@ !" 9 !@  98Q V57X 5 !4 ! 321 %!0 & !# ) ((  99 &"" @!!E   %!0  



5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH ' 8VH DQ LQWHUQDO FRQWURO TXHVWLRQQDLUH & 3UHSDUH D ZHOOLQGH[HG ILOH RI DXGLW GRFXPHQWDWLRQ % 3UHSDUH D IORZFKDUW LOOXVWUDWLQJ WKH LQWHUQDO FRQWURO $ :ULWH D QDUUDWLYH GHVFULSWLRQ RI HDFK LPSRUWDQW FRQWURO FRQGXFW D IRUPDO LQWHUYLHZ ZLWK NQRZOHGJHDEOH PDQDJHUV DQG 7KH PRVW HIILFLHQW PHDQV RI JDWKHULQJ HYLGHQFH DERXW WKH LQWHUQDO FRQWURO LV WR

!" 9&" " " !  9"D  %1 ! " C!@ !@ (" !&" ( ! 9  "" ! (" !" 9&" 2 !4 ( !@ !2!  !( ! G 57X 5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  



5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH ' &RQWURO ULVN & 0RQLWRULQJ % 5LVN DVVHVVPHQW $ &RQWURO DFWLYLWLHV 7KH ILYH LQWHUQDO FRQWURO FRPSRQHQWV GR QRW LQFOXGH



6LJQLILFDQW GHILFLHQFLHV DUH GHILQHG DV FRQGLWLRQV WKDW

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

 " " !  9"D  %1 ! " CX C"  %  ! 817!2 2 !S! ! 9&" 2 9 (" "  !&! %& "( ! 2" 9! "  !2! X 57X 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  



$6  UHTXLUHV WKH DXGLW WHDP WR GR DOO WKH IROORZLQJ H[FHSW

$ (YDOXDWH WKH VHYHULW\ RI HDFK FRQWURO GHILFLHQF\ WKDW FRPHV WR WKHLU DWWHQWLRQ % 'RFXPHQW WKH SURFHVV XVHG WR GHWHUPLQH VLJQLILFDQW DFFRXQWV DQG GLVFORVXUHV DQG PDMRU FODVVHV RI WUDQVDFWLRQV & 7HVW DOO LQWHUQDO FRQWUROV LQ WKH FRPSDQ\ ' $OO WKH DERYH 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

)LOO LQ WKH %ODQN 4XHVWLRQV

 " " !  9"D  %1 ! " CX C"  %  ! 817!2 2 !S! ! 9&" 2 9 (" "  !&! %& "( !2" 9! "  !2! X 57X 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  

 BBBBBBBBBBBBBBBBBBBBBBBBBB DUH WKH VHW RI SROLFLHV DQG SURFHGXUHV WKDW DUH GHVLJQHG WR HQVXUH WKDW WUDQVDFWLRQV DUH UHFRUGHG SURSHUO\ &RQWURO DFWLYLWLHV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB LQ LQWHUQDO FRQWURO DUH PDWWHUV WKDW WKH DXGLWRUV EHOLHYH VKRXOG EH FRPPXQLFDWHG WR WKH FOLHQWV DXGLW FRPPLWWHH 6LJQLILFDQW GHILFLHQFLHV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 7KH DXGLW WHDP LV UHVSRQVLEOH IRU GHVLJQLQJ DQ HYDOXDWLRQ RI BBBBBBBBBBBBBBBBBBBBBBBBB LQWHUQDO FRQWURO V\VWHPV DQG BBBBBBBBBBBBBBBBBBBBBBBBBBBBB WKH FRQWURO BBBBBBBBBBBBBBBBBBBBBBBBBBBBB RI WKDW V\VWHP H[LVWLQJ DVVHVVLQJ ULVN 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 7KH &262 UHSRUW LGHQWLILHV WKH REMHFWLYHV WR EH DFKLHYHG E\ LQWHUQDO FRQWURO DV  HIIHFWLYHQHVV DQG HIILFLHQF\ RI BBBBBBBBBBBBBBBBBBBBBBBBBBBB  UHOLDELOLW\ RI BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB DQG  FRPSOLDQFH ZLWK BBBBBBBBBBBBBBBBBBBB DQG BBBBBBBBBBBBBBBBBBBBBBBBBBBB RSHUDWLRQV ILQDQFLDO UHSRUWLQJ ODZV UHJXODWLRQV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB DUH VSHFLILF DFWLRQV WDNHQ E\ D FOLHQW V PDQDJHPHQW DQG HPSOR\HHV WR KHOS HQVXUH WKDW PDQDJHPHQW GLUHFWLYHV DUH FDUULHG RXW &RQWURO DFWLYLWLHV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 BBBBBBBBBBBBBBBBBBBBBBBBBBBBB WR DVVHWV DQG LPSRUWDQW UHFRUGV GRFXPHQWV DQG EODQN IRUPV VKRXOG EH OLPLWHG WR DXWKRUL]HG SHUVRQQHO LQ D ZHOOFRQWUROOHG FRPSDQ\ 3K\VLFDO DFFHVV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 ,QWHUQDO FRQWURO V\VWHPV JHQHUDOO\ SURYLGH BBBBBBBBBBBBBBBBBBBBBBBBBBBBB DVVXUDQFH WKDW WKH REMHFWLYHV RI LQWHUQDO FRQWURO DUH VDWLVILHG UHDVRQDEOH 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 6LJQLILFDQW GHILFLHQFLHV LQ LQWHUQDO FRQWURO DOVR LQFOXGH WKH PRUH VHULRXV FRQGLWLRQ FDOOHG D BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB PDWHULDO ZHDNQHVV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 7R UHGXFH WKH FRQWURO ULVN WR D ORZ OHYHO DXGLWRUV PXVW GHWHUPLQH  WKH BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB RI FRPSDQ\ FRPSOLDQFH ZLWK FRQWURO SROLFLHV DQG  WKH BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB RI FRPSDQ\ FRPSOLDQFH UHTXLUHG GHJUHH DFWXDO GHJUHH 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 $XGLWRUV SHUIRUP BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB WR GHWHUPLQH KRZ ZHOO WKH FRPSDQ\ V FRQWUROV DFWXDOO\ IXQFWLRQHG GXULQJ WKH SHULRG XQGHU DXGLW WHVWV RI FRQWUROV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 7KH FRQFHSW RI BBBBBBBBBBBBBBBBBBBBBBBBBBBB UHFRJQL]HV WKDW WKH FRVW RI DQ HQWLW\ V LQWHUQDO FRQWURO VKRXOG QRW H[FHHG WKH EHQHILWV WKDW DUH H[SHFWHG WR EH GHULYHG UHDVRQDEOH DVVXUDQFH 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 ,Q JDWKHULQJ HYLGHQFH DERXW WKH FOLHQW V LQWHUQDO FRQWURO DXGLWRUV PD\ XVH D Q BBBBBBBBBBBBBBBBBBBBBBBBBBBB ZKLFK LV D FKHFNOLVW RI LQWHUQDO FRQWUROUHODWHG TXHVWLRQV LQWHUQDO FRQWURO TXHVWLRQQDLUH 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB UHGXFHV RSSRUWXQLWLHV IRU D SHUVRQ WR EH LQ D SRVLWLRQ WR SHUSHWUDWH DQG FRQFHDO HUURUV DQG IUDXGV ZKHQ SHUIRUPLQJ WKHLU QRUPDO GXWLHV 6HSDUDWLRQ RI GXWLHV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 $ Q BBBBBBBBBBBBBBBBBBBBBBBBBBBB LV D VLQJOH SURFHGXUH WKDW SURGXFHV ERWK FRQWURO DQG VXEVWDQWLYH HYLGHQFH GXDOSXUSRVH WHVW 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 $ PDWHULDO ZHDNQHVV UHVXOWV LQ D BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB WKDW D BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB ZRXOG QRW EH SUHYHQWHG RU GHWHFWHG RQ D WLPHO\ EDVLV UHDVRQDEOH SRVVLELOLW\ PDWHULDO PLVVWDWHPHQW 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

6KRUW $QVZHU 4XHVWLRQV

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

 !&! $E " "  9"D  %1 ! " C !@ " !&"(! 9 !2 " %! !4 2 ( " ! 8!  B %& B! !@ !((  A "@ A "$ " B !& B B!&! & ! & (" $ !@ "  9&  ! B$ " " ! " ! &!  !@ !" 9 !@  98Q V57X 5 !4 ! 321 %!0 W G (( 99 &""  $E    %$@D    

 $  (  '  +  %

 (DFK RI WKH IROORZLQJ ILYH FDVHV LOOXVWUDWHV VSHFLILF FRQWURO DFWLYLWLHV IURP D FOLHQW V UHYHQXH F\FOH DFFRXQWV UHFHLYDEOHVDOHV  )RU HDFK RI WKH SURFHGXU SURFHGXUHV D HUURUV DQG IUDXGV FDQ EH SUHYHQWHG LGHQWLI\ ZKLFK PDQDJHPHQW DVVHUWLRQV DSSO\ DQG E ZKDW SRWHQWLDO FDWHJRU\ RI

)HHGEDFN 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

(VVD\ 4XHVWLRQV

 'LVFXVV WKH GLIIHUHQFH EHWZHHQ DQ LQWHUQDO FRQWURO V GHVLJQ HIIHFWLYHQHVV DQG LWV RSHUDWLQJ HIIHFWLYHQHVV

'HVLJQ HIIHFWLYHQHVV GHWHUPLQHV ZKHWKHU WKH FRQWUROV RYHU ILQDQFLDO UHSRUWLQJ LI RSHUDWLQJ HIIHFWLYHO\ ZRXOG EH H[SHFWHG WR SUHYHQW RU GHWHFW HUURUV RU IUDXG WKDW FRXOG UHVXOW LQ D PDWHULDO ILQDQFLDO PLVVWDWHPHQW 2SHUDWLQJ HIIHFWLYHQHVV LV ZKHWKHU WKH FRQWURO LV RSHUDWLQJ DV GHVLJQHG DQG ZKHWKHU WKH SHUVRQ SHUIRUPLQJ WKH FRQWURO SRVVHVVHV WKH QHFHVVDU\ DXWKRULW\ DQG TXDOLILFDWLRQV WR SHUIRUP WKH FRQWURO HIIHFWLYHO\

!&! $E " "  9"D !2&!&!E &"" @!!E   %!0  

 %1 ! " C !@ " !&"(! 9 !2 " %! !4 2 (" ! 8!  B %& B! !@ !((  A "@ A "$ " B !& B B!&! & ! & (" $ !@ "  9&  ! B$ " " ! " ! &!  !@ !" 9 !@  98Q V57X 5 !4 ! 321 %!0 W G (( 99 &""  $E    %$@D    

!" 9&" " " !  9"D  %1 ! " C!@ !@ (" !&" ( ! 9  "" ! (" !" 9&" 2 !4 ( !@ !2!  !( ! G 57X 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  

 " " !  9"D  %1 ! " CX C"  %  ! 817!2 2 !S! ! 9&" 2 9 (" "  !&! %& "( !2" 9! "  !2! X 57X 5 !4 ! 321 %!0 & !# ) (( 

 /LVW VHYHUDO HOHPHQWV RI D FRPSDQ\ V FRQWURO HQYLURQPHQW

6RPH RI WKH HOHPHQWV RI D FRQWURO HQYLURQPHQW LQFOXGH

0DQDJHPHQW V PRQLWRULQJ PHWKRGV LQFOXGLQJ LQWHUQDO DXGLWLQJ 0HWKRGV RI DVVLJQLQJ DXWKRULW\ DQG UHVSRQVLELOLW\ )XQFWLRQLQJ RI WKH ERDUG RI GLUHFWRUV SDUWLFXODUO\ LWV DXGLW FRPPLWWHH &RPSDQ\ V RUJDQL]DWLRQ VWUXFWXUH 0DQDJHPHQW V SKLORVRSK\ DQG RSHUDWLQJ VW\OH

([WHUQDO LQIOXHQFHV 3HUVRQQHO SROLFLHV DQG SUDFWLFHV

 ,GHQWLI\ DQG H[SODLQ EULHIO\ WKH SKDVHV RI DQ LQWHUQDO FRQWURO HYDOXDWLRQ

3KDVH  8QGHUVWDQGLQJ DQG GRFXPHQWLQJ WKH FOLHQW V LQWHUQDO FRQWURO VWUXFWXUH 7KLV SKDVH LQFOXGHV REWDLQLQJ D JHQHUDO NQRZOHGJH RI WKH FRQWURO HQYLURQPHQW LQFOXGLQJ WKH LGHQWLILFDWLRQ RI HQWLW\OHYHO FRQWUROV ,Q DGGLWLRQ WKH DXGLWRU VKRXOG JDLQ DQ XQGHUVWDQGLQJ RI WKH IORZ RI WUDQVDFWLRQV WKURXJK WKH DFFRXQWLQJ V\VWHP DQG GRFXPHQW WKLV XQGHUVWDQGLQJ XVLQJ D TXHVWLRQQDLUH QDUUDWLYH GHVFULSWLRQV DQG SHUKDSV IORZFKDUWV 3KDVH  $VVHVVLQJ WKH FRQWURO ULVN RQ D SUHOLPLQDU\ EDVLV $W WKLV SRLQW RI WKH SURFHVV WKH VWUHQJWKV DQG ZHDNQHVVHV RI WKH V\VWHP DUH DQDO\]HG DQG VKRXOG EH GRFXPHQWHG LQ D EULGJH ZRUNSDSHU $ SUHOLPLQDU\ DVVHVVPHQW RI LQWHUQDO FRQWUROV LV FRPSOHWHG $W WKLV SRLQW D GHFLVLRQ LV PDGH DV WR ZKLFK FRQWUROV DUH JRLQJ WHVWHG DQG D UHTXLUHG GHJUHH RI FRPSOLDQFH LV GHWHUPLQHG 3KDVH  3HUIRUPLQJ WHVWV RI FRQWUROV DXGLW SURFHGXUHV DQG UHDVVHVV FRQWURO ULVN :KHQ GHWHUPLQLQJ WKDW D VSHFLILF FRQWURO DFWLYLW\ FRXOG KDYH D VLJQLILFDQW HIIHFW LQ UHGXFLQJ FRQWURO ULVN WR D ORZ OHYHO IRU D VSHFLILF DVVHUWLRQ WKH DXGLW WHDP VKRXOG WHVW WKDW FRQWURO DFWLYLW\ WR REWDLQ VSHFLILF DXGLW HYLGHQFH DERXW WKH HIIHFWLYHQHVV RI WKH GHVLJQ RU RSHUDWLRQ RI WKDW FRQWURO DFWLYLW\ $W WKLV SRLQW WKH DFWXDO GHJUHH RI FRPSOLDQFH LV FRPSDUHG ZLWK WKH UHTXLUHG GHJUHH 7KH DXGLW WHDP QH[W PXVW GHWHUPLQH WKH ILQDO DVVHVVPHQW RI FRQWURO ULVN DQG WKHQ GHWHUPLQH ZKHWKHU DQ\

& !# ) ((  99 &""  $E    %$@D    

!&! $E " "  9"D  %1 ! " C !@ " !&"(! 9 !2 " %! !4 2 ( " ! 8!  B %& B! !@ !((  A "@ A "$ " B !& B B!&! & ! & (" $ !@ "  9&  ! B$ " " ! " ! &!  !@ !" 9 !@  98Q V57X 5 !4 ! 321 %!0 & !# ) ((  !' &""  $E    %!0  

 'LVFXVV VRPH RI WKH SUREOHPV LQ HVWDEOLVKLQJ DQ LQWHUQDO FRQWURO V\VWHP LQ D VPDOO

LQWHJULW\ F 7KH RZQHUPDQDJHU PXVW EH GLOLJHQW FRPSHWHQW DQG KDYH D KLJK GHJUHH RI DXWKRUL]DWLRQ UHFRUG NHHSLQJ DQG FXVWRGLDO IXQFWLRQV E 7KH RZQHUPDQDJHU PXVW DVVXPH D ODUJHU UROH WR RYHUVHH DQG VXSHUYLVH QXPEHU RI HPSOR\HHV D 6HSDUDWLRQ RI IXQFWLRQDO UHVSRQVLELOLWLHV ZRXOG EH GLIILFXOW EHFDXVH RI WKH VPDOO ,QWHUQDO FRQWURO SUREOHPV LQ VPDOO EXVLQHVV ZRXOG LQFOXGH EXVLQHVV FKDQJHV WR WKH VXEVWDQWLYH WHVWLQJ SODQ PXVW EH PDGH

%" 9!E " " !  9"D  %1 ! " C %" 9! ( !4 " "" !  " " 9! H "  !@ ( " !" 9&" " 3& !@ 0 I 57X 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  "&&"

!" 9&" " " !  9"D  %1 ! " C!@ !@ (" !&" ( ! 9  "" ! (" !" 9&" 2 !4 ( !@ !2!  !( ! G 57X 5 !4 ! 321 %!0

 ([SODLQ WKH GLIIHUHQW RSLQLRQV WKDW DXGLWRUV FDQ LVVXH IRU DQ HQWLW\ V LQWHUQDO FRQWURO

DQG WKHUHIRUH FDQQRW LVVXH DQ RSLQLRQ RYHU ILQDQFLDO UHSRUWLQJ $XGLWRUV FDQ LVVXH WKH IROORZLQJ RSLQLRQV IRU DQ DXGLW RI DQ HQWLW\ V LQWHUQDO FRQWURO RYHU ILQDQFLDO UHSRUWLQJ 8QTXDOLILHG 1R PDWHULDO ZHDNQHVVHV H[LVW 'LVFODLPHU 7KH DXGLW WHDP FDQQRW SHUIRUP DOO SURFHGXUHV FRQVLGHUHG QHFHVVDU\

$GYHUVH RSLQLRQ 2QH RU PRUH PDWHULDO ZHDNQHVVHV H[LVW

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

!&! $E " "  9"D  %1 ! " C !@ " !&"(! 9 !2 " %! !4 2 ( " ! 8!  B %& B! !@ !((  A "@ A "$ " B !& B B!&! & ! & (" $ !@ "  9&  ! B$ " " ! " ! &!  !@ !" 9 !@  98Q V57X 5 !4 ! 321 %!0 W G (( 99 &""  $E    %$@D    

 :KDW DUH WKH VL[ VWHSV DXGLWRUV RI SXEOLF FRPSDQLHV VKRXOG XVH WR DXGLW LQWHUQDO FRQWURO RYHU ILQDQFLDO UHSRUWLQJ ,&2)5 "

 3ODQQLQJ WKH HQJDJHPHQW  8VLQJ D WRSGRZQ DSSURDFK WR JDLQ DQ XQGHUVWDQGLQJ  7HVWLQJ FRQWUROV  (YDOXDWLQJ FRQWURO GHILFLHQFLHV  :UDSSLQJ XS )RUPLQJ DQ RSLQLRQ RQ WKH HIIHFWLYHQHVV RI LQWHUQDO FRQWURO RYHU ILQDQFLDO UHSRUWLQJ  5HSRUWLQJ RQ LQWHUQDO FRQWURO

 " " !  9"D  %1 ! " CX C"  %  ! 817!2 2 !S! ! 9&" 2 9 (" "  !&! %& "( !2" 9! "  !2! X 57X 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  

 'LVFXVV ZKDW FRQVWLWXWHV D PDWHULDO ZHDNQHVV LQ LQWHUQDO FRQWURO

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

 " " !  9"D  %1 ! " CX C"  %  ! 817!2 2 !S! ! 9&" 2 9 (" "  !&! %& "( !2" 9! "  !2! X 57X 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  

 ([SODLQ WKH GLIIHUHQFH EHWZHHQ D VLJQLILFDQW GHILFLHQF\ DQG D PDWHULDO ZHDNQHVV

7KH GLIIHUHQFH EHWZHHQ D VLJQLILFDQW GHILFLHQF\ DQG D PDWHULDO ZHDNQHVV LV WKH  OLNHOLKRRG DQG  PDWHULDOLW\ WKDW D SRWHQWLDO RU DFWXDO PLVVWDWHPHQW ZRXOG QRW EH GHWHFWHG RQ D WLPHO\ EDVLV

7UXH  )DOVH 4XHVWLRQV

 " " !  9"D  %1 ! " CX C"  %  ! 817!2 2 !S! ! 9&" 2 9 (" "  !&! %& "( !2" 9! "  !2! X 57X 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  

&KDSWHU  (PSOR\HH )UDXG DQG WKH $XGLW RI &DVK

 ,QGHSHQGHQW DXGLWRUV RI ILQDQFLDO VWDWHPHQWV DQG IUDXG H[DPLQHUV DSSURDFK WKHLU ZRUN GLIIHUHQWO\ 7UXH )DOVH

 ,W LV DOZD\V JRRG FRQWURO WR KDYH WKH ERRNNHHSHU SUHSDUH D OLVW RI FDVK UHFHLSWV DQG WKHQ KDYH WKH ERRNNHHSHU UHFRUG LW LPPHGLDWHO\ LQ WKH DFFRXQWV 7UXH )DOVH

 )LGHOLW\ ERQGV DUH XVHG WR SUHYHQW HPEH]]OHPHQW 7UXH )DOVH

 7KH XVH RI FRQILUPDWLRQV IRU FDVK EDODQFHV LV VWLOO FRQVLGHUHG D JHQHUDOO\ DFFHSWHG DXGLW SURFHGXUH 7UXH )DOVH

 ,W LV QRW QHFHVVDU\ WR VHQG FRQILUPDWLRQV RQ DFFRXQWV WKDW D FRPSDQ\ UHSUHVHQWV DV FORVHG GXULQJ WKH \HDU WR JHW WKH EDQN WR FRQILUP ]HUR EDODQFHV 7UXH )DOVH

 7KH FOLHQW VKRXOG UHTXHVW WKH EDQN WR VHQG D FXWRII EDQN VWDWHPHQW GLUHFWO\ WR WKH DXGLWRU 7UXH )DOVH

 )UDXG FRQVLVWV RI XQLQWHQWLRQDO PLVVWDWHPHQWV RU RPLVVLRQV LQ ILQDQFLDO VWDWHPHQWV 7UXH )DOVH

 )UDXG H[DPLQHUV DUH PRUH LQWHUHVWHG LQ HYDOXDWLQJ LQWHUQDO FRQWURO ZHDNQHVVHV UDWKHU WKDQ VWUHQJWKV 7UXH )DOVH

 3V\FKRWLF PRWLYDWLRQ LV FKDUDFWHUL]HG E\ WKH KDELWXDO FULPLQDO ZKR VWHDOV IRU WKH VDNH RI VWHDOLQJ 7UXH )DOVH

 &RQWURO V\VWHPV HQKDQFH WUXVW DQG UHGXFH WKH EXUHDXFUDF\ RI EXVLQHVV 7UXH )DOVH

 7KH PRVW HIIHFWLYH ORQJUXQ SUHYHQWLRQ RI IUDXG OLHV LQ WKH SUDFWLFH RI WLJKW PDQDJHPHQW FRQWUROV RYHU SHRSOH 7UXH )DOVH

 7KH NH\ WR LQWHJULW\ LQ EXVLQHVV LV DFFRXQWDELOLW\ 7UXH )DOVH

 (PSOR\HH IUDXG JHQHUDOO\ LQYROYHV SHRSOH DW WKH WRS H[HFXWLYH OHYHO 7UXH )DOVH

 $Q RUJDQL]DWLRQ FDQ SUHYHQW DOO IUDXG LI LWV DXGLWRUV DUH DFTXDLQWHG ZLWK VRPH GHWHFWLRQ WHFKQLTXHV 7UXH )DOVH

 7KH FKDLQ RI FXVWRG\ LV WKH FUXFLDO OLQN RI HYLGHQFH WR WKH IUDXG VXVSHFW 7UXH )DOVH

 )UDXG DZDUHQHVV DXGLWLQJ LQFOXGHV WKLQNLQJ OLNH D FURRN WR LPDJLQH ZD\V DQG PHDQV RI VWHDOLQJ 7UXH )DOVH

 (PSOR\HH IUDXG LV DQ LQWHQWLRQDO DFW WKDW LQMXUHV LQYHVWRUV RU FUHGLWRUV E\ OHDGLQJ WR PDWHULDOO\ PLVOHDGLQJ ILQDQFLDO VWDWHPHQWV 7UXH )DOVH

 7KH FRPSDQ\ V EDQN UHFRQFLOLDWLRQ DXGLWHG E\ LQGHSHQGHQW DXGLWRUV LV WKH SULPDU\ PHDQV RI YDOXLQJ FDVK LQ WKH ILQDQFLDO VWDWHPHQWV 7UXH )DOVH

 2QH RI WKH PDLQ UHTXLUHPHQWV XQGHU *$$6 UHODWLQJ WR IUDXG LQ D ILQDQFLDO VWDWHPHQW DXGLW LV WKDW DXGLWRUV REWDLQ HYLGHQFH DERXW WKH LQWHQW RI WKH SHUVRQV UHVSRQVLEOH IRU WKH IUDXG 7UXH )DOVH

0XOWLSOH &KRLFH 4XHVWLRQV

 :KHQ DXGLWLQJ ILQDQFLDO VWDWHPHQWV DQG ILQGLQJ LQGLFDWLRQV RI D SRVVLEOH PLVDSSURSULDWLRQ RI DVVHWV LQGHSHQGHQW DXGLWRUV VKRXOG

$ ,QYHVWLJDWH IXOO\ WR GHWHUPLQH WKH WRWDO DPRXQW RI WKH PLVDSSURSULDWLRQ % 'HWHUPLQH ZKLFK DFFRXQWV DUH DIIHFWHG DQG WKH DPRXQW E\ ZKLFK WKH\ DUH RYHUVWDWHG RU XQGHUVWDWHG & 'HWHUPLQH WKH PHWKRGV E\ ZKLFK WKH PLVDSSURSULDWLRQ ZDV FDUULHG RXW ' ,GHQWLI\ D SHUVRQ V ZKR DUH OLNHO\ UHVSRQVLEOH IRU WKH PLVDSSURSULDWLRQ DQG REWDLQ HYLGHQFH DERXW VRPH RWKHU IUDXG LQGLFDWLRQV LQ WKHLU ZRUN ( $OO RI WKH DERYH

 :KHQ DQ HPSOR\HH HPEH]]OHV FRPSDQ\ IXQGV IURP DQ HOHFWULF XWLOLW\ FRPSDQ\ IRU WKH SXUSRVH RI SD\LQJ H[SHQVHV RI DQ DQWLQXFOHDU SURWHVW RUJDQL]DWLRQ WKH IUDXGVWHU V PRWLYH LV VDLG WR EH

$ 3V\FKRWLF % (JRFHQWULF & ,GHRORJLFDO ' (FRQRPLF  :KLFK RI WKH IROORZLQJ PDQDJHPHQW SROLFLHV ZRXOG LQFUHDVH WKH SUREDELOLW\ RI IUDXG LQ D FRPSDQ\"

$ 'LYHUVLI\LQJ DXWKRULW\ WKURXJKRXW GLYLVLRQV DQG VXEVLGLDULHV LQ WKH RUJDQL]DWLRQ % 0HDVXULQJ SHUIRUPDQFH DQG DZDUGLQJ ERQXVHV EDVHG RQ VKRUWWHUP RSHUDWLQJ UHVXOWV & *LYLQJ HPSOR\HHV SHUIRUPDQFH IHHGEDFN WKDW FRQVLGHUV SRVLWLYH DQG FRQVWUXFWLYH SUDLVH DORQJ ZLWK FULWLFDO DQG QHJDWLYH REVHUYDWLRQV RQ WKHLU ZRUN ' (VWDEOLVKLQJ ZRUN WHDPV WKDW VKDUH UHVSRQVLELOLWLHV SHUIRUPDQFH DQG ERQXVHV EDVHG RQ FROOHFWLYH HIIRUWV

 :KLFK RI WKH IROORZLQJ LV QRW FRQVLGHUHG RQH RI WKH WKUHH IDFWRUV LQFUHDVLQJ WKH SUREDELOLW\ RI IUDXG"

$ 0RWLYH % /DFN RI WUDLQLQJ & 2SSRUWXQLW\ ' 5DWLRQDOL]DWLRQ  :KLFK RI WKH IROORZLQJ LV RUGLQDULO\ FRQVLGHUHG DQ H[WHQGHG SURFHGXUH GXULQJ WKH LQGHSHQGHQW DXGLW RI ILQDQFLDO VWDWHPHQWV"

$ 6HQGLQJ SRVLWLYH FRQILUPDWLRQV RQ UHFRUGHG FXVWRPHU DFFRXQWV UHFHLYDEOH EDODQFHV % 3HUIRUPLQJ SK\VLFDO REVHUYDWLRQ DQG WHVW FRXQW GXULQJ WKH FOLHQW V LQYHQWRU\ WDNLQJ & 0HDVXULQJ WKH WLPH ODJ EHWZHHQ WKH GDWH RI UHFRUGLQJ FDVK UHFHLSWV LQ WKH ERRNV WR WKH GDWH RI WKH GHSRVLW FUHGLW LQ WKH EDQN ' &RQGXFWLQJ LQWHUYLHZV ZLWK WKH FOLHQW V VDOHV ELOOLQJ SHUVRQQHO WR OHDUQ DERXW VDOHV UHFRUGLQJ FRQWURO DFWLYLWLHV

 ,I DQ HPSOR\HH DOWHUHG WKH DPRXQW RI D FKHFN DIWHU LW KDV FOHDUHG WKH EDQN WKH FKDQJH FDQ EH GHWHFWHG E\

$ &RPSDULQJ WKH DPRXQW ZULWWHQ RQ WKH FKHFN IDFH WR WKH DPRXQW ZULWWHQ LQ WKH FDVK GLVEXUVHPHQWV MRXUQDO % &RPSDULQJ WKH PDJQHWLF LPSULQW RI WKH DPRXQW SDLG WR WKH DPRXQW ZULWWHQ RQ WKH FKHFN IDFH & ([DPLQLQJ WKH HQGRUVHPHQW RQ WKH EDFN RI WKH FKHFN ' &RPSDULQJ WKH FKHFN QXPEHU RQ WKH IDFH RI WKH FKHFN WR WKH FKHFN QXPEHU LQ WKH FDVK GLVEXUVHPHQWV MRXUQDO  :KLFK RI WKH IROORZLQJ ZRXOG EH FRQVLVWHQW ZLWK DQ HPSOR\HH WDNLQJ FDVK UHFHLSWV IURP FXVWRPHUV RQ DFFRXQW"

$ 7KH WRWDO RI WKH DFFRXQWV UHFHLYDEOH VXEVLGLDU\ OHGJHU EDODQFHV LV OHVV WKDQ WKH DFFRXQWV UHFHLYDEOH FRQWURO DFFRXQW % 7KH WRWDO RI WKH DFFRXQWV UHFHLYDEOH VXEVLGLDU\ OHGJHU EDODQFHV LV PRUH WKDQ WKH DFFRXQWV UHFHLYDEOH FRQWURO DFFRXQW & 7RWDO FDVK UHFHLSWV IURP FXVWRPHUV IRU WKH PRQWK DUH OHVV WKDQ FUHGLW VDOHV IRU WKH PRQWK ' 7RWDO FDVK UHFHLSWV IURP FXVWRPHUV IRU WKH PRQWK DUH PRUH WKDQ FUHGLW VDOHV IRU WKH PRQWK

 $Q DXGLW SODQ RI VXEVWDQWLYH SURFHGXUHV IRU FDVK ZRXOG QRW LQFOXGH

$ 5HTXHVWLQJ D FXWRII EDQN VWDWHPHQW EH PDLOHG WR WKH FOLHQW % 5HTXHVWLQJ WKH FOLHQW WR SUHSDUH EDQN UHFRQFLOLDWLRQV & 3UHSDULQJ D VFKHGXOH RI LQWHUEDQN WUDQVIHUV IRU D SHULRG RI  EXVLQHVV GD\V EHIRUH DQG DIWHU \HDUHQG GDWH ' 2EWDLQLQJ D ZULWWHQ FOLHQW UHSUHVHQWDWLRQ FRQFHUQLQJ FRPSHQVDWLQJ EDODQFH DJUHHPHQWV  ,Q WKH DXGLW RI FDVK WKH DXGLWRU REWDLQV D EDQN FXWRII VWDWHPHQW SULPDULO\ WR

$ ,GHQWLI\ ROG RXWVWDQGLQJ FKHFNV WKDW WKH FOLHQW PD\ H[FOXGH IURP WKH \HDUHQG EDQN UHFRQFLOLDWLRQ LQ RUGHU WR PLVDSSURSULDWH FDVK % 2EWDLQ VXIILFLHQW LQIRUPDWLRQ WR UHFRQFLOH WKH FOLHQW V EDQN DFFRXQW DV RI \HDUHQG & 2EWDLQ GLUHFW FRQILUPDWLRQ RI WKH FOLHQW V EDQN EDODQFHV DV RI \HDUHQG ' 7HVW WKH SURSULHW\ RI LWHPV DSSHDULQJ RQ WKH FOLHQW V \HDUHQG EDQN UHFRQFLOLDWLRQ

 $XGLWRUV RUGLQDULO\ VHQG D VWDQGDUG FRQILUPDWLRQ UHTXHVW WR DOO EDQNV ZLWK ZKLFK WKH FOLHQW KDV GRQH EXVLQHVV GXULQJ WKH \HDU XQGHU DXGLW UHJDUGOHVV RI WKH \HDUHQG EDODQFHV $ SXUSRVH RI WKLV SURFHGXUH LV WR

$ 3URYLGH WKH GDWD QHFHVVDU\ WR SUHSDUH D SURRI RI FDVK % 5HTXHVW WKDW D FXWRII EDQN VWDWHPHQW DQG UHODWHG FKHFNV EH VHQW WR WKH DXGLW & 'HWHFW TXHVWLRQDEOH EDQN DFWLYLWLHV WKDW PD\ RWKHUZLVH QRW EH GLVFRYHUHG ' 6HHN LQIRUPDWLRQ DERXW FRQWLQJHQW OLDELOLWLHV DQG VHFXULW\ DJUHHPHQWV  7R JDWKHU HYLGHQFH UHJDUGLQJ WKH EDODQFH LQ D EDQN UHFRQFLOLDWLRQ DQ DXGLWRU ZRXOG H[DPLQH DOO RI WKH IROORZLQJ H[FHSW WKH

$ &XWRII EDQN VWDWHPHQW % *HQHUDO OHGJHU & %DQN FRQILUPDWLRQ ' <HDUHQG EDQN VWDWHPHQW  $Q HQWLW\ ZLWK D ODUJH YROXPH RI FXVWRPHU UHPLWWDQFHV E\ PDLO FRXOG PRVW OLNHO\ UHGXFH WKH ULVN RI HPSOR\HH PLVDSSURSULDWLRQ RI FDVK E\ XVLQJ

$ (PSOR\HH ILGHOLW\ ERQGV % ,QGHSHQGHQWO\ SUHSDUHG PDLOURRP SUHOLVWV & 'DLO\ FKHFN VXPPDULHV ' $ EDQN ORFNER[ V\VWHP

 :KLFK RI WKH IROORZLQJ VHWV RI LQIRUPDWLRQ GRHV DQ DXGLWRU XVXDOO\ FRQILUP RQ RQH IRUP"

$ $FFRXQWV SD\DEOH DQG SXUFKDVH FRPPLWPHQWV % &DVK LQ EDQN DQG FROODWHUDO IRU ORDQV & ,QYHQWRU\ RQ FRQVLJQPHQW DQG FRQWLQJHQW OLDELOLWLHV ' $FFRXQWV UHFHLYDEOH DQG DFFUXHG LQWHUHVW UHFHLYDEOH  $Q XQUHFRUGHG FKHFN LVVXHG GXULQJ WKH ODVW ZHHN RI WKH \HDU ZRXOG PRVW OLNHO\ EH GLVFRYHUHG E\ WKH DXGLWRU ZKHQ WKH

$ &KHFN UHJLVWHU IRU WKH ODVW PRQWK LV UHYLHZHG % &XWRII EDQN VWDWHPHQW LV UHFRQFLOHG & %DQN FRQILUPDWLRQ LV UHYLHZHG ' 6HDUFK IRU XQUHFRUGHG OLDELOLWLHV LV SHUIRUPHG  $Q DXGLWRU ZLVKHV WR SHUIRUP WHVWV RI FRQWUROV RQ D FOLHQW V FDVK GLVEXUVHPHQWV SURFHGXUHV ,I WKH FRQWURO DFWLYLWLHV OHDYH QR DXGLW WUDLO RI GRFXPHQWDU\ HYLGHQFH WKH DXGLWRU PRVW OLNHO\ ZLOO WHVW WKH DFWLYLWLHV E\ XVLQJ

$ &RQILUPDWLRQ DQG REVHUYDWLRQ % 2EVHUYDWLRQ DQG LQTXLU\ & $QDO\WLFDO SURFHGXUHV DQG FRQILUPDWLRQ ' ,QTXLU\ DQG DQDO\WLFDO SURFHGXUHV

 7R SURYLGH DVVXUDQFH WKDW HDFK YRXFKHU LV VXEPLWWHG DQG SDLG RQO\ RQFH DQ DXGLWRU PRVW OLNHO\ ZRXOG H[DPLQH D VDPSOH RI SDLG YRXFKHUV DQG GHWHUPLQH ZKHWKHU HDFK YRXFKHU LV

$ 6XSSRUWHG E\ D YHQGRU V LQYRLFH % 6WDPSHG 3$,' E\ WKH FKHFN VLJQHU & 3UHQXPEHUHG DQG DFFRXQWHG IRU ' $SSURYHG IRU DXWKRUL]HG SXUFKDVHV  ,Q RUGHU IRU DXGLWRUV WR EH DEOH WR UHFRJQL]H SRWHQWLDO IUDXG WKH\ PXVW EH DZDUH RI WKH EDVLF FKDUDFWHULVWLFV RI IUDXG :KLFK RI WKH IROORZLQJ LV QRW D FKDUDFWHULVWLF RI IUDXG"

$ ,QWHQWLRQDO GHFHSWLRQ % 7DNLQJ XQIDLU RU GLVKRQHVW DGYDQWDJH RI RWKHU SHRSOH & 3HUSHWUDWLRQ IRU WKH EHQHILW RU GHWULPHQW RI WKH RUJDQL]DWLRQ ' 1HJOLJHQFH RQ WKH SDUW RI H[HFXWLYH PDQDJHPHQW

 $Q DXGLWRU ZKR GLVFRYHUV WKDW FOLHQW HPSOR\HHV KDYH FRPPLWWHG DQ LOOHJDO DFW WKDW KDV D PDWHULDO HIIHFW RQ WKH FOLHQW V ILQDQFLDO VWDWHPHQWV PRVW OLNHO\ ZRXOG ZLWKGUDZ IURP WKH HQJDJHPHQW LI

$ 7KH LOOHJDO DFW LV D YLRODWLRQ RI JHQHUDOO\ DFFHSWHG DFFRXQWLQJ SULQFLSOHV % 7KH FOLHQW GRHV QRW WDNH WKH UHPHGLDO DFWLRQ WKDW WKH DXGLWRU FRQVLGHUV QHFHVVDU\ & 7KH LOOHJDO DFW ZDV FRPPLWWHG GXULQJ D SULRU \HDU WKDW ZDV QRW DXGLWHG ' 7KH DXGLWRU KDV DOUHDG\ DVVHVVHG FRQWURO ULVN DW WKH PD[LPXP OHYHO  $Q DXGLWRU ZRXOG OHDVW OLNHO\ LQLWLDWH D GLVFXVVLRQ ZLWK D FOLHQW V DXGLW FRPPLWWHH FRQFHUQLQJ

$ 7KH PHWKRGV XVHG WR DFFRXQW IRU VLJQLILFDQW XQXVXDO WUDQVDFWLRQV % 7KH PD[LPXP GROODU DPRXQW RI PLVVWDWHPHQWV WKDW FRXOG H[LVW ZLWKRXW FDXVLQJ WKH ILQDQFLDO VWDWHPHQWV WR EH PDWHULDOO\ PLVVWDWHG & ,QGLFDWLRQV RI IUDXG DQG LOOHJDO DFWV FRPPLWWHG E\ D FRUSRUDWH RIILFHU WKDW ZHUH GLVFRYHUHG E\ WKH DXGLWRU ' 'LVDJUHHPHQWV ZLWK PDQDJHPHQW DV WR DFFRXQWLQJ SULQFLSOHV WKDW ZHUH UHVROYHG GXULQJ WKH FXUUHQW\HDU DXGLW

 :KLFK RI WKH IROORZLQJ VWDWHPHQWV LV FRUUHFW ZLWK UHVSHFW WR WKH HOHPHQWV RI WKH IUDXG WULDQJOH"

$ 0RWLYH LV D FDXVH WKDW SUHVVXUHV SHRSOH LQWR DFWLRQ % 2SSRUWXQLW\ UHIHUV WR D VLWXDWLRQ WKDW DOORZV VRPHRQH ZLWK PRWLYH WR FDUU\ RXW IUDXG & $ ODFN RI LQWHJULW\ GHVFULEHV D SHUVRQ ZKR GRHV QRW VWLFN WR WKH VRFLDO RU RUJDQL]DWLRQDO HWKLFDO FRGH ' )UDXG LV PRVW FRPPRQ ZKHQ WKHVH WKUHH IDFWRUV H[LVW WRJHWKHU ( $OO RI WKH DERYH VWDWHPHQWV DUH FRUUHFW  1DUERQD &3$ LV UHYLHZLQJ FRQWUROV RYHU FDVK UHFHLYHG WKURXJK D EDQN QLJKW GHSRVLWRU\ :KLFK FRQWUROV ZRXOG VKH ILQG PRVW LPSRUWDQW"

$ 5HVSRQVLELOLWLHV DUH URWDWHG IRU SURFHVVLQJ QLJKW GHSRVLWRU\ UHFHLSWV DPRQJ HPSOR\HHV RI WKH YDULRXV GHSDUWPHQWV % 'XDO FRQWURO MRLQW FXVWRG\ LV HVWDEOLVKHG RYHU WKH FRQWHQWV RI WKH QLJKW GHSRVLWRU\ ER[ IURP WKH WLPH RI UHPRYDO XQWLO LQLWLDO UHFRUGLQJ LV FRPSOHWHG & 9DFDWLRQV DUH UHTXLUHG IRU DOO HPSOR\HHV HQJDJHG LQ QLJKW GHSRVLWRU\ DFWLYLWLHV ' $OO GHSRVLW WLFNHWV UHODWHG WR QLJKW GHSRVLWV DUH QXPEHUHG

 <RXU FOLHQW LV LQ WKH SURFHVV RI DFTXLULQJ DQRWKHU FRPSDQ\ <RX KDYH EHHQ UHTXHVWHG WR YHULI\ WKDW FDVK IRU WKH FRPSDQ\ EHLQJ DFTXLUHG LV SURSHUO\ VWDWHG 7KH DXGLW WHFKQLTXH WKDW ZLOO \LHOG WKH PRVW SHUVXDVLYH HYLGHQFH LV

$ ([DPLQDWLRQ RI WKH FRPSDQ\ V HVFURZ DFFRXQW % ,QWHUYLHZ ZLWK WKH FRPSDQ\ V WUHDVXUHU DQG FDVK PDQDJHU & 3UHSDUDWLRQ DQG UHYLHZ RI VWDQGDUG EDQN FRQILUPDWLRQ LQTXLULHV ' $QDO\WLFDO FRPSXWDWLRQV FRPSDULQJ FXUUHQW FDVK LQ WKH EDQN ZLWK SUHYLRXV DFFRXQWLQJ SHULRGV  $ SURRI RI FDVK

$ ,V UHTXLUHG E\ *$$6 % &DQ EH XVHG WR WHVW WKH WUDQVDFWLRQV SURFHVV & ,V PRVW KHOSIXO ZKHQ FRQWURO ULVN IRU FDVK LV ORZ ' $OZD\V GHWHFWV ODSSLQJ  :KHQ FRXQWLQJ FDVK RQ KDQG WKH DXGLWRU PXVW H[HUFLVH VLPXOWDQHRXV FRQWURO RYHU DOO FDVK DQG RWKHU QHJRWLDEOH DVVHWV WR SUHYHQW

$ 7KHIW % ,UUHJXODU HQGRUVHPHQW & 5HSODFHPHQW RU VXEVWLWXWLRQ RI VWROHQ DVVHWV ' 'HSRVLWV LQ WUDQVLW

 $V SD\PHQWV DUH UHFHLYHG RQH PDLOURRP HPSOR\HH LV DVVLJQHG WKH UHVSRQVLELOLW\ RI SUHOLVWLQJ UHFHLSWV DQG SUHSDULQJ WKH GHSRVLW VOLS SULRU WR IRUZDUGLQJ WKH UHFHLSWV GHSRVLW VOLS DQG UHPLWWDQFH DGYLFHV WR DFFRXQWV UHFHLYDEOH IRU SRVWLQJ $FFRXQWV UHFHLYDEOH SHUVRQQHO UHIRRW WKH GHSRVLW VOLS VWDPS D UHVWULFWLYH HQGRUVHPHQW RQ WKH EDFN RI HDFK FKHFN DQG WKHQ IRUZDUG WKH UHFHLSWV DQG GHSRVLW VOLS WR WKH WUHDVXU\ GHSDUWPHQW (YDOXDWH WKH LQWHUQDO FRQWURO RI WKH GHVFULEHG SURFHVV :KLFK RI WKH IROORZLQJ LV D UHDVRQDEOH DVVHVVPHQW RI LQWHUQDO FRQWURO LQ WKLV SURFHVV"

$ $GHTXDWH LQWHUQDO FRQWURO % ,QDGHTXDWH LQWHUQDO FRQWURO EHFDXVH PDLOURRP HPSOR\HHV VKRXOG QRW KDYH DFFHVV WR FDVK & ,QDGHTXDWH LQWHUQDO FRQWURO EHFDXVH WUHDVXU\ HPSOR\HHV VKRXOG SUHSDUH WKH GHSRVLW VOLS ' ,QDGHTXDWH LQWHUQDO FRQWURO EHFDXVH RI D ODFN RI VHSDUDWLRQ RI GXWLHV  :KLFK RI WKH IROORZLQJ VKRXOG EH SHUIRUPHG E\ WKH SHUVRQV RSHQLQJ WKH PDLO DQG UHFRUGLQJ SD\PHQWV"

$ $GGLQJ D UHVWULFWLYH HQGRUVHPHQW RQ DOO FKHFNV % (QWHULQJ SD\PHQW LQIRUPDWLRQ LQWR FXVWRPHU DFFRXQWV & 3UHSDULQJ WKH GHSRVLW VOLS DQG WKH GHOLYHU\ RI WKH FKHFNV WR WKH EDQN ' 6HJUHJDWLQJ DOO SD\PHQWV PDGH RQ DFFRXQWV OLVWHG DV SDVW GXH

 $W WKH HQG RI HDFK EXVLQHVV GD\ 6DIH &RPSDQ\ VHQGV LWV EDQN D OLVW RI DOO FKHFNV ZULWWHQ GXULQJ WKH GD\ LQFOXGLQJ WKH FKHFN QXPEHU SD\HH DQG DPRXQW :KHQ D FKHFN LV VHQW WR WKH EDQN IRU SD\PHQW WKH EDQN FRPSDUHV WKH SD\HH DQG WKH DPRXQW ZLWK WKH OLVW SURYLGHG E\ 6DIH &RPSDQ\ 7KLV V\VWHP LV FDOOHG

$ 3D\FKH[ % 3D\DV\RXJR & 3RVLWLYH SD\ ' 3D\ PDVWHU  7ZR SHRSOH VKRXOG RSHQ PDLO WKDW LQFOXGHV SD\PHQWV 7KLV FRQWURO LV FDOOHG

$ 6HSDUDWLRQ RI GXWLHV % -RLQW FXVWRG\ & $QWLFROOXVLRQ ' /DSSLQJ

 0RVW IUDXG LQYHVWLJDWRUV XWLOL]H WKH IUDXG WULDQJOH WKHRU\ $ QHZ WKHRU\ FDOOHG WKH IUDXG GLDPRQG KDV EHHQ SURSRVHG :KLFK RI WKH IROORZLQJ LV DQ HOHPHQW RI WKH IUDXG GLDPRQG WKDW LV QRW DQ HOHPHQW RI WKH IUDXG WULDQJOH"

$ 0RWLYH % 2SSRUWXQLW\ & &DSDELOLW\ ' /LTXLGLW\  :KHQ DXGLWLQJ ZLWK IUDXG DZDUHQHVV DXGLWRUV VKRXOG HVSHFLDOO\ QRWLFH DQG IROORZ XS HPSOR\HH DFWLYLWLHV XQGHU ZKLFK RI WKHVH FRQGLWLRQV"

$ 7KH FRPSDQ\ DOZD\V HVWLPDWHV WKH LQYHQWRU\ EXW QHYHU WDNHV D FRPSOHWH SK\VLFDO FRXQW % 7KH SHWW\ FDVK ER[ LV DOZD\V ORFNHG LQ WKH GHVN RI WKH FXVWRGLDQ & 0DQDJHPHQW KDV SXEOLVKHG D FRPSDQ\ FRGH RI HWKLFV DQG VHQGV IUHTXHQW FRPPXQLFDWLRQ QHZVOHWWHUV DERXW LW ' 7KH ERDUG RI GLUHFWRUV UHYLHZV DQG DSSURYHV DOO LQYHVWPHQW WUDQVDFWLRQV

 7KH EHVW ZD\ WR HQDFW D EURDG IUDXGSUHYHQWLRQ SURJUDP LV WR

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

$ (VWDEOLVK HPSOR\HH DVVLVWDQFH SURJUDPV % 5HTXLUH D ILGHOLW\ ERQG RQ DOO HPSOR\HHV & 5HTXLUH UHFRQFLOLDWLRQV RI DOO DFFRXQWV WR EH UHYLHZHG E\ D VXSHUYLVRU ' (QVXUH WKDW DOO DFFRXQWV ZLWK KLJK LQKHUHQW ULVN RI IUDXG DUH DXGLWHG  $ FRGH RI HWKLFV LV DQ LPSRUWDQW HOHPHQW RI D IUDXG SUHYHQWLRQ SURJUDP :KLFK RI WKH IROORZLQJ ZRXOG GLPLQLVK WKH HIIHFWLYHQHVV RI D FRPSDQ\ V FRGH RI FRQGXFW"

$ 7KH HVWDEOLVKPHQW RI D FKLHI HWKLFV RIILFHU % 7KH HVWDEOLVKPHQW RI D KRW OLQH IRU UHSRUWLQJ XQHWKLFDO EHKDYLRU & 7KH YLRODWLRQ RI WKH FRGH RI HWKLFV E\ VHQLRU PDQDJHPHQW ' 7KH SRVWLQJ RI WKH FRGH RI HWKLFV LQ WKH FRPSDQ\ ZRUNSODFH

 :KLFK RI WKH IROORZLQJ LV OHDVW LQGLFDWLYH RI IUDXGXOHQW DFWLYLW\"

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

$ 2YHUVWDWLQJ VDOHV UHYHQXH DQG RYHUVWDWLQJ FXVWRPHU DFFRXQWV UHFHLYDEOH EDODQFHV % 2YHUVWDWLQJ VDOHV UHYHQXH DQG RYHUVWDWLQJ EDG GHEW H[SHQVH & 8QGHUVWDWLQJ LQWHUHVW H[SHQVH DQG XQGHUVWDWLQJ DFFUXHG LQWHUHVW SD\DEOH ' 2PLWWLQJ WKH GLVFORVXUH LQIRUPDWLRQ DERXW UHODWHGSDUW\ VDOHV WR WKH SUHVLGHQW V UHODWLYHV DW EHORZPDUNHW SULFHV

 $OOLVRQ (YHUKDUW DQ HPSOR\HH LQ DFFRXQWV SD\DEOH EHOLHYHV VKH FDQ UXQ D ILFWLWLRXV LQYRLFH WKURXJK WKH DFFRXQWV SD\DEOH V\VWHP DQG FROOHFW WKH PRQH\ 6KH NQRZV SD\PHQWV DUH VXEMHFW WR DQ DXGLW :KLFK DFFRXQW ZRXOG EH WKH EHVW SODFH WR KLGH WKH IUDXG"

$ ,QYHQWRU\ % :DJH H[SHQVH & &RQVXOWLQJ VHUYLFH H[SHQVH ' 3URSHUW\ WD[ H[SHQVH  :KLFK RI WKHVH DUUDQJHPHQWV RI GXWLHV FRXOG PRVW OLNHO\ OHDG WR DQ HPEH]]OHPHQW RU WKHIW"

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

 :KLFK RI WKH IROORZLQJ ZRXOG WKH DXGLWRU FRQVLGHU WR EH DQ LQFRPSDWLEOH RSHUDWLRQ LI WKH FDVKLHU UHFHLYHV UHPLWWDQFHV"

$ 7KH FDVKLHU SUHSDUHV WKH GDLO\ GHSRVLW % 7KH FDVKLHU PDNHV WKH GDLO\ GHSRVLW DW D ORFDO EDQN & 7KH FDVKLHU SRVWV WKH UHFHLSWV WR WKH DFFRXQWV UHFHLYDEOH VXEVLGLDU\ OHGJHU FDUGV ' 7KH FDVKLHU HQGRUVHV WKH FKHFNV  :KLFK RI WKH IROORZLQJ LV DQ HIIHFWLYH DXGLW SURFHGXUH WKDW DQ DXGLWRU PLJKW XVH WR GHWHFW NLWLQJ EHWZHHQ LQWHUFRPSDQ\ EDQNV"

$ 5HYLHZ WKH FRPSRVLWLRQ RI DXWKHQWLFDWHG GHSRVLW VOLSV % 5HYLHZ VXEVHTXHQW EDQN VWDWHPHQWV & 3UHSDUH D VFKHGXOH RI WKH EDQN WUDQVIHUV ' 3UHSDUH D \HDUHQG EDQN UHFRQFLOLDWLRQ  ,PPHGLDWHO\ XSRQ UHFHLSW RI FDVK D UHVSRQVLEOH HPSOR\HH VKRXOG

$ 5HFRUG WKH DPRXQW LQ WKH FDVK UHFHLSWV MRXUQDO % 3UHSDUH D UHPLWWDQFH OLVWLQJ & 8SGDWH WKH VXEVLGLDU\ DFFRXQWV UHFHLYDEOH UHFRUGV ' 3UHSDUH D GHSRVLW VOLS LQ WULSOLFDWH

 (DFK PRUQLQJ WKH FRQWUROOHU JHWV WKH SULRU GD\ V OLVWLQJ RI UHPLWWDQFHV D FRS\ RI WKH SD\PHQW UHSRUW DQG D FRS\ RI WKH GHSRVLW VOLS UHWXUQHG IURP WKH EDQN :KHQ FRPSDULQJ WKHVH LWHPV WKH FRQWUROOHU ZRXOG EH DEOH WR GHWHUPLQH WKDW

$ 1R FKHFNV ZHUH UHWXUQHG IRU LQVXIILFLHQW IXQGV % 7KH FDVK UHFHLYHG DQG UHPLWWDQFH DGYLFH UHFHLYHG ZHUH PDLQWDLQHG LQ D VLQJOH EDWFK & 7KH DFFRXQWV UHFHLYDEOH V\VWHP KDV FRQWUROV RYHU XQDXWKRUL]HG DFFHVV ' 7KH DVVLVWDQW FRQWUROOHU GRHV QRW DOVR UHFRQFLOH WKH VXEVLGLDU\ DFFRXQWV SD\DEOH  8SRQ UHFHLSW RI FXVWRPHUV FKHFNV LQ WKH PDLO URRP D UHVSRQVLEOH HPSOR\HH VKRXOG SUHSDUH D UHPLWWDQFH OLVW WKDW LV IRUZDUGHG WR WKH FDVKLHU $ FRS\ RI WKH OLVWLQJ VKRXOG EH VHQW WR WKH

$ ,QWHUQDO DXGLWRU WR LQYHVWLJDWH WKH OLVW IRU XQXVXDO WUDQVDFWLRQV % 7UHDVXUHU WR FRPSDUH WKH OLVW ZLWK WKH PRQWKO\ EDQN VWDWHPHQW & $FFRXQWV UHFHLYDEOH ERRNNHHSHU WR XSGDWH WKH VXEVLGLDU\ DFFRXQWV UHFHLYDEOH UHFRUGV ' (QWLW\ V EDQN WR FRPSDUH WKH OLVW ZLWK WKH FDVKLHU V GHSRVLW VOLS

 &DVK UHFHLSWV IURP VDOHV RQ DFFRXQW KDYH EHHQ PLVDSSURSULDWHG :KLFK RI WKH IROORZLQJ DFWV ZRXOG FRQFHDO WKLV GHIDOFDWLRQ DQG EH OHDVW OLNHO\ WR EH GHWHFWHG E\ DQ DXGLWRU"

$ 8QGHUVWDWLQJ WKH VDOHV MRXUQDO % 2YHUVWDWLQJ WKH DFFRXQWV UHFHLYDEOH FRQWURO DFFRXQW & 2YHUVWDWLQJ WKH DFFRXQWV UHFHLYDEOH VXEVLGLDU\ OHGJHU ' 2YHUVWDWLQJ WKH VDOHV MRXUQDO  (PEH]]OHPHQW LV D W\SH RI IUDXG WKDW LQYROYHV

$ $Q HPSOR\HH V PLVDSSURSULDWLQJ DQ HPSOR\HU V PRQH\ RU SURSHUW\ QRW HQWUXVWHG WR KLP RU KHU % $ PDQDJHU V IDOVLILFDWLRQ RI ILQDQFLDO VWDWHPHQWV IRU WKH SXUSRVH RI PLVOHDGLQJ LQYHVWRUV DQG FUHGLWRUV & $Q HPSOR\HH V PLVWDNHQ UHSUHVHQWDWLRQ RI RSLQLRQ WKDW FDXVHV LQFRUUHFW DFFRXQWLQJ HQWULHV ' $Q HPSOR\HH PLVDSSURSULDWLQJ DQ HPSOR\HU V PRQH\ RU SURSHUW\ HQWUXVWHG WR WKH HPSOR\HH V FRQWURO LQ WKH HPSOR\HH V QRUPDO MRE

 :KLFK RI WKH IROORZLQJ FRQWURO DFWLYLWLHV ZRXOG EHVW SURWHFW DJDLQVW WKH SUHSDUDWLRQ RI LPSURSHU RU LQDFFXUDWH FDVK GLVEXUVHPHQWV"

$ $OO FKHFNV PXVW EH VLJQHG E\ DQ RIILFHU GHVLJQDWHG E\ WKH ERDUG RI GLUHFWRUV % $OO VLJQHG FKHFNV PXVW EH UHYLHZHG DQG FRPSDUHG ZLWK VXSSRUWLQJ GRFXPHQWDWLRQ E\ WKH WUHDVXUHU EHIRUH PDLOLQJ & $OO FKHFNV PXVW EH VHTXHQWLDOO\ QXPEHUHG DQG DFFRXQWHG IRU E\ LQWHUQDO DXGLWRUV ' $OO FKHFNV PXVW EH SHUIRUDWHG RU RWKHUZLVH HIIHFWLYHO\ FDQFHOHG ZKHQ WKH\ DUH UHWXUQHG ZLWK WKH EDQN VWDWHPHQW  'XULQJ DQ DXGLW RI FDVK WKH DXGLWRU LV PRVW FRQFHUQHG ZLWK WKH PDQDJHPHQW DVVHUWLRQ RI

$ ([LVWHQFH % 5LJKWV DQG REOLJDWLRQV & 9DOXDWLRQ RU DOORFDWLRQ ' 2FFXUUHQFH

 ,Q SUHSDULQJ IRU WKH DXGLW RI FDVK WKH DXGLWRUV SHUIRUP DQDO\WLFDO SURFHGXUHV FRQFHUQLQJ FDVK EDODQFHV :KLFK RI WKH IROORZLQJ ZRXOG EH WKH EHVW VRXUFH RI LQIRUPDWLRQ IRU XVH LQ WKH HVWLPDWH RI FDVK"

$ 3ULRU\HDUV EDODQFHV % 0DQDJHPHQW LQTXLU\ & &DVK EXGJHWV ' $JHG DFFRXQWV UHFHLYDEOH UHSRUWV  :KLFK RI WKH IROORZLQJ FRQWURO DFWLYLWLHV FRXOG SUHYHQW D SDLG GLVEXUVHPHQW YRXFKHU IURP EHLQJ SUHVHQWHG IRU SD\PHQW D VHFRQG WLPH"

$ 9RXFKHUV VKRXOG EH SUHSDUHG E\ LQGLYLGXDOV ZKR DUH UHVSRQVLEOH IRU VLJQLQJ GLVEXUVHPHQW FKHFNV % 'LVEXUVHPHQW YRXFKHUV VKRXOG EH DSSURYHG E\ DW OHDVW WZR UHVSRQVLEOH PDQDJHPHQW RIILFLDOV & 7KH GDWH RQ D GLVEXUVHPHQW YRXFKHU VKRXOG EH ZLWKLQ D IHZ GD\V RI WKH GDWH WKH YRXFKHU LV SUHVHQWHG IRU SD\PHQW ' 7KH RIILFLDO VLJQLQJ WKH FKHFN VKRXOG FRPSDUH WKH FKHFN ZLWK WKH YRXFKHU DQG VKRXOG VWDPS SDLG RQ WKH YRXFKHU GRFXPHQWV

 7KH SKDVHV RI HPSOR\HH IUDXG GR QRW LQFOXGH WKH

$ &RQYHUVLRQ RI PRQH\ WR IUDXGVWHU V XVH % 3URVHFXWLRQ & )UDXGXOHQW DFW ' &RYHUXS  $Q LQWHUQDO FRQWURO TXHVWLRQQDLUH IRU HYDOXDWLQJ WKH FRPSOHWHQHVV REMHFWLYH RI FDVK UHFHLSWV ZRXOG QRW LQFOXGH ZKLFK RI WKH IROORZLQJ TXHVWLRQV"

$ 'RHV WKH SHUVRQ ZKR RSHQV WKH PDLO PDNH D OLVW RI FDVK UHFHLYHG" % $UH SUHQXPEHUHG VDOHV LQYRLFHV RU UHFHLSW ERRNV XVHG" & $UH FXUUHQW UHFHLSWV FRQWUROOHG E\ PHFKDQLFDO GHYLFHV" ' 'RHV D UHVSRQVLEOH SHUVRQ DSSURYH GLVFRXQWV WDNHQ E\ FXVWRPHUV ZLWK SD\PHQWV RQ DFFRXQW"  7KH FKDUDFWHULVWLFV RI SHRSOH ZKR FRPPLW WKH ODUJHVW IUDXGV ZRXOG QRW LQFOXGH

$ +ROG PLGGOH PDQDJHPHQW SRVLWLRQV % +DYH SRZHU WR RYHUULGH FRQWUROV & +DYH ORQJ WHQXUH ZLWK RUJDQL]DWLRQ ' +DYH DFFHVV WR ODUJH DPRXQWV RI PRQH\

 7KH DXGLWRUV LQIRUPDWLRQ VRXUFH IRU YRXFKLQJ WKH EDQN UHFRQFLOLDWLRQ LWHPV LV WKH

$ 6WDQGDUG EDQN FRQILUPDWLRQ % %DQN VWDWHPHQW DW DXGLW GDWH & &XWRII EDQN VWDWHPHQW ' $FFRXQWLQJ MRXUQDO DW \HDU HQG  7KH SUREDELOLW\ RI IUDXG LV QRW D IXQFWLRQ RI

$ 0RWLYH % 2SSRUWXQLW\ & /DFN RI LQWHJULW\ ' 3UHGLFDWLRQ  7KH DVVHUWLRQV E\ PDQDJHPHQW UHJDUGLQJ WKH FDVK DFFRXQWV LQ WKH ILQDQFLDO VWDWHPHQWV LQFOXGH DOO RI WKH IROORZLQJ H[FHSW

$ &DVK LQ DOO DFFRXQWV H[LVWV LQ WKH QDPH RI WKH FRPSDQ\ % 3URSHU LQWHUQDO FRQWURO DFWLYLWLHV H[LVW IRU DOO FDVK DFFRXQWV & &DVK EDODQFH SURSHUO\ UHIOHFWV DOO FDVK RQ KDQG LQ WUDQVLW RU RQ GHSRVLW ZLWK WKLUG SDUWLHV ' $OO UHVWULFWLRQV RQ WKH XVH RI FDVK DUH GLVFORVHG

 $ SUDFWLFH WKDW ZRXOG QRW HQFRXUDJH IUDXG ZRXOG LQFOXGH

$ &HQWUDOL]LQJ DXWKRULW\ LQ WRS PDQDJHPHQW % &RQVLGHULQJ SHRSOH SUHVVXUH LQ WKH ZRUN SODFH & 0DNLQJ SURILWV WKH RQO\ FULWHULRQ IRU VXFFHVV ' ,QVLVWLQJ WKDW HYHU\WKLQJ EH GRFXPHQWHG ZLWK D UXOH IRU HYHU\WKLQJ  :KLFK TXHVWLRQ ZRXOG QRW EH DSSURSULDWH ZKHQ DVNLQJ TXHVWLRQV RI SHUVRQQHO GXULQJ D UHJXODU DXGLW"

$ 'R \RX WKLQN IUDXG LV D SUREOHP IRU EXVLQHVV LQ JHQHUDO" % 'R \RX WKLQN WKLV FRPSDQ\ KDV DQ\ SDUWLFXODU SUREOHP ZLWK IUDXG" & ,Q \RXU GHSDUWPHQW ZKR KDV WKH SRWHQWLDO IRU FRPPLWWLQJ IUDXG" ' ,V WKHUH DQ\ LQIRUPDWLRQ \RX ZRXOG OLNH WR IXUQLVK UHJDUGLQJ SRVVLEOH IUDXG ZLWKLQ WKLV RUJDQL]DWLRQ"  7KH VWDQGDUG IRUPDW IRU WKH DXGLW DSSURDFK WR IUDXG FDVHV ZRXOG QRW LQFOXGH

$ $XGLW RI EDODQFH % 7HVW RI FRQWUROV & 3DSHU WUDLO ' 'LVFRYHU\ VXPPDU\

 ,QIRUPDWLRQ DERXW FULPLQDO UDFNHWV DQG FRQV DQG WKHLU RSHUDWLRQV DQG WKH UHSXWDWLRQV RI ORFDO EXVLQHVVHV FDQ EH IRXQG DW WKH

$ 3ROLFH DQG 'UXJ (QIRUFHPHQW $JHQF\ % 6WDQGDUG 3RRU 5HJLVWHUV & 6HFXULWLHV DQG ([FKDQJH &RPPLVVLRQ ' %HWWHU %XVLQHVV %XUHDX

)LOO LQ WKH %ODQN 4XHVWLRQV

 BBBBBBBBBBBBBBBBBBBBBBBBBBB LV WKH XVH RI IUDXGXOHQW PHDQV WR WDNH PRQH\ RU RWKHU SURSHUW\ IURP DQ HPSOR\HU BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB  $QRWKHU QDPH IRU HPSOR\HH IUDXG DQG HPEH]]OHPHQW LV BBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB

 7KH WKUHH FRPSRQHQWV RI WKH IUDXG WULDQJOH DUH BBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBB DQG BBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB  $ FRPPRQ IHDWXUH RI FDVK PDQDJHPHQW LV WR UHTXLUH WKDW SHUVRQV ZKR KDQGOH FDVK EH ERQGHG XQGHU D Q BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB  )UDXG H[DPLQDWLRQV VKRXOG EHJLQ RQO\ DIWHU VXIILFLHQW BBBBBBBBBBBBBBBBBBBBBBBBBBBBB OHDGV WR WKH EHOLHI WKDW D IUDXG KDV RFFXUUHG BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB  7KH WKUHH QHFHVVDU\ HOHPHQWV WR FRPPLW IUDXG DUH WKH BBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBB DQG BBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB  BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB LV D UHFRQFLOLDWLRQ LQ ZKLFK WKH EDQN EDODQFH WKH EDQN UHSRUW RI FDVK GHSRVLWHG DQG WKH EDQN UHSRUW RI FDVK SDLG DUH DOO UHFRQFLOHG WR WKH FOLHQW V JHQHUDO OHGJHU BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB

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

 $Q RUJDQL]DWLRQ ZKRVH RQO\ FRQWURO LV BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB UHDOO\ KDV QR FRQWURO BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB  2EVHUYDWLRQ RI SHUVRQV BBBBBBBBBBBBBBBBBBBBBBBBBBBBB LQ BBBBBBBBBBBBBBBBBBBBBBBBBBBBB DQG BBBBBBBBBBBBBBBBBBBBBBBBBBBBB PD\ EH UHG IODJV RI HPSOR\HH IUDXG BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB  7KH QDWXUH RI H[WHQGHG SURFHGXUHV LV OLPLWHG RQO\ E\ D Q BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB  $XGLWRUV BBBBBBBBBBBBBBBBBBBBBB SHUIRUP WKH FRPSDQ\ V FRQWURO IXQFWLRQ RI BBBBBBBBBBBBBBBBBBBBBBBBBBBBB WKH EDQN UHFRQFLOLDWLRQ BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB  $XGLWRUV XVH D Q BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB WR REWDLQ LQGHSHQGHQW HYLGHQFH RI WKH SURSHU OLVWLQJ RI RXWVWDQGLQJ FKHFNV DQG GHSRVLWV LQ WUDQVLW RQ D EDQN UHFRQFLOLDWLRQ BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB

 7KH WHUP BBBBBBBBBBBBBBBBBBBBBBBBBBBBB UHIHUV WR WKH DSSOLFDWLRQ RI DFFRXQWLQJ DQG DXGLWLQJ VNLOOV WR FLYLO DQG FULPLQDO SUREOHPV BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB

6KRUW $QVZHU 4XHVWLRQV

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

 )RU HDFK RI WKH GHVFULSWLRQV LQ &ROXPQ $ PDWFK WKH FRUUHFW ZRUG RU ZRUGV IURP &ROXPQ %

(VVD\ 4XHVWLRQV

 :KHQ \RX H[DPLQH FDQFHOHG FKHFNV UHWXUQHG LQ WKH EDQN VWDWHPHQW E\ D FOLHQW V EDQN KRZ FRXOG \RX WHOO ZKHWKHU WKH DPRXQW RQ D FKHFN KDG EHHQ VNLOOIXOO\ LQFUHDVHG SHUKDSV IURP  WR   LQ WKH DPRXQW ER[ DQG DOWHUHG LQ WKH ZULWWHQ OLQH IURP 6HYHQW\ILYH GROODUV WR 6HYHQW\ILYH KXQGUHG GROODUV DIWHU WKH FKHFN ZDV FOHDUHG E\ WKH EDQN" $Q HPSOR\HH PLJKW GR WKLV WR VXSSRUW D   FDVK GLVEXUVHPHQW MRXUQDO HQWU\

 $IWHU FKHFNV DUH VLJQHG IRU YHQGRU LQYRLFHV ZK\ VKRXOG YRXFKHUV EH PDUNHG 3$,' RU RWKHUZLVH PXWLODWHG"

/LVW DQG EULHIO\ GHVFULEH WKH WKUHH IDFWRUV WKDW LQFUHDVH WKH SUREDELOLW\ RI IUDXG

:KDW NLQG RI HUURU RU IUDXG FRXOG KDSSHQ LI WKH LQYHQWRU\ ZDUHKRXVH PDQDJHU DOVR KDG UHVSRQVLELOLW\ IRU PDNLQJ WKH SK\VLFDO LQYHQWRU\ FRXQW DQG UHFRQFLOLQJ GLVFUHSDQFLHV WR WKH SHUSHWXDO LQYHQWRU\ UHFRUGV"

'HVFULEH KRZ D ORFNER[ ZRUNV DQG LQGLFDWH WKH DGYDQWDJHV RI VXFK D V\VWHP

(G V ZLIH 'LDQH RZQV D SULQWLQJ EXVLQHVV LQ WRZQ (G ZRUNV LQ WKH DFFRXQWV SD\DEOH GHSDUWPHQW RI -LII\ $EV 9LWDPLQ &RPSDQ\ 'LDQH SULQWV LQYRLFHV IRU ZRUN VXSSRVHGO\ GRQH IRU -LII\ $EV QR DFWXDO ZRUN ZDV SHUIRUPHG DQG (G SODFHV WKH LQYRLFH LQ WKH LQYRLFH SLOH DSSURYHG IRU SD\PHQW -LII\ $EV SD\V WKHVH LQYRLFHV DQG VHQGV 'LDQH D FKHFN D 1DPH WZR LQWHUQDO FRQWUROV WKDW PLJKW SUHYHQW RU GHWHFW WKHVH IUDXGXOHQW SD\PHQWV E 1DPH WZR DXGLW SURFHGXUHV WKDW PLJKW GHWHFW WKLV IUDXG

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

 !! " 9&Q  9"D C !  " @ %& @ ( !! " 9&! (" $ !4 ! %"& !!!(( !@  98!  !( ! 6 57I 5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      



7UXH  )DOVH 4XHVWLRQV

5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 758( ZRUN GLIIHUHQWO\ ,QGHSHQGHQW DXGLWRUV RI ILQDQFLDO VWDWHPHQWV DQG IUDXG H[DPLQHUV DSSURDFK WKHLU

&KDSWHU  (PSOR\HH )UDXG DQG WKH $XGLW RI &DVK $QVZHU .H\

!4  ""7 @ ( "  !@D  9"D C @ (" !&!2  9!! !@ !4 " ! 4  " " !@ !2! V 57I 5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      

!4  ""7 @ ( "  !@D  9"D C @ (" !&!2  9!! !@ !4 " ! 4  " " !@ !2! V 57I 5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      





5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH )$/6( )LGHOLW\ ERQGV DUH XVHG WR SUHYHQW HPEH]]OHPHQW 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH DQG WKHQ KDYH WKH ERRNNHHSHU UHFRUG LW LPPHGLDWHO\ LQ WKH DFFRXQWV ,W LV DOZD\V JRRG FRQWURO WR KDYH WKH ERRNNHHSHU SUHSDUH D OLVW RI FDVK UHFHLSWV )$/6(

!!" !4 27 @ ( "  !@D  9"D C @ ( "  !@ %  !" ! @ !!" 9 !4 2 (" ! 9 !@ !2! X 57I 5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      

!!" !4 27 @ ( "  !@D  9"D C @ ( "  !@ %  !" ! @ !!" 9 !4 2 (" ! 9 !@ !2! X 57I 5 !4 ! 321 %!0 & !# )  ((  !' &"" %$# "!      





5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH DV FORVHG GXULQJ WKH \HDU WR JHW WKH EDQN WR FRQILUP ]HUR EDODQFHV ,W LV QRW QHFHVVDU\ WR VHQG FRQILUPDWLRQV RQ DFFRXQWV WKDW D FRPSDQ\ UHSUHVHQWV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 758( DFFHSWHG DXGLW SURFHGXUH 7KH XVH RI FRQILUPDWLRQV IRU FDVK EDODQFHV LV VWLOO FRQVLGHUHG D JHQHUDOO\ )$/6(

 !! " 9&Q  9"D C !  " @ %& @ ( !! " 9&! (" $ !4 ! %"& !!!(( !@  98!  !( ! 6 57I 5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      

!!" !4 27 @ ( "  !@D  9"D C @ ( "  !@ %  !" ! @ !!" 9 !4 2 (" ! 9 !@ !2! X 57I 5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      





5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH )$/6( VWDWHPHQWV )UDXG FRQVLVWV RI XQLQWHQWLRQDO PLVVWDWHPHQWV RU RPLVVLRQV LQ ILQDQFLDO 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 758( DXGLWRU 7KH FOLHQW VKRXOG UHTXHVW WKH EDQN WR VHQG D FXWRII EDQN VWDWHPHQW GLUHFWO\ WR WKH

! %D  !@D  9"D C" ( !@A  8! !( " @ i! % ( !@ BC !Ch "" !!@ !@  98!  ( ! )57I 5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      

!4  ""7 @ ( "  !@D  9"D C @ (" !&!2  9!! !@ !4 " !4  " " !@ !2! V 57I 5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      





5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 758( VDNH RI VWHDOLQJ 3V\FKRWLF PRWLYDWLRQ LV FKDUDFWHUL]HG E\ WKH KDELWXDO FULPLQDO ZKR VWHDOV IRU WKH 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 758( UDWKHU WKDQ VWUHQJWKV )UDXG H[DPLQHUV DUH PRUH LQWHUHVWHG LQ HYDOXDWLQJ LQWHUQDO FRQWURO ZHDNQHVVHV

"!4 !   9"D C  ( !! " 9&! !4 ! 9 " ! !2  @ !S@! !2! G 57I 5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      

!4  ""7 @ ( "  !@D  9"D C @ (" !&!2  9!! !@ !4 " ! 4  " " !@ !2! V 57I 5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      





5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH )$/6( PDQDJHPHQW FRQWUROV RYHU SHRSOH 7KH PRVW HIIHFWLYH ORQJUXQ SUHYHQWLRQ RI IUDXG OLHV LQ WKH SUDFWLFH RI WLJKW 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH &RQWURO V\VWHPV HQKDQFH WUXVW DQG UHGXFH WKH EXUHDXFUDF\ RI EXVLQHVV )$/6(

"!4 !   9"D C  ( !! " 9&! !4 ! 9 " ! !2  @ !S@! !2! G 57I 5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      

"!4 !   9"D C  ( !! " 9&! !4 ! 9 " ! !2  @ !S@! !2! G 57I 5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      





)$/6( (PSOR\HH IUDXG JHQHUDOO\ LQYROYHV SHRSOH DW WKH WRS H[HFXWLYH OHYHO 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 758( 7KH NH\ WR LQWHJULW\ LQ EXVLQHVV LV DFFRXQWDELOLW\

5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

"!4 !   9"D C  ( !! " 9&! !4 ! 9 " ! !2  @ !S@! !2! G 57I 5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      

"!4 !   9"D C  ( !! " 9&! !4 ! 9 " ! !2  @ !S@! !2! G 57I 5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      





5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 7KH FKDLQ RI FXVWRG\ LV WKH FUXFLDO OLQN RI HYLGHQFH WR WKH IUDXG VXVSHFW 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH )$/6( GHWHFWLRQ WHFKQLTXHV $Q RUJDQL]DWLRQ FDQ SUHYHQW DOO IUDXG LI LWV DXGLWRUV DUH DFTXDLQWHG ZLWK VRPH 758(

 !! " 9&Q  9"D C !  " @ %& @ ( !! " 9&! (" $ !4 ! %"& !!!(( !@  98!  !( ! 6 57I 5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      

"!4 !   9"D C  ( !! " 9&! !4 ! 9 " ! !2  @ !S@! !2! G 57I 5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      





5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH )$/6( WR PDWHULDOO\ PLVOHDGLQJ ILQDQFLDO VWDWHPHQWV (PSOR\HH IUDXG LV DQ LQWHQWLRQDO DFW WKDW LQMXUHV LQYHVWRUV RU FUHGLWRUV E\ OHDGLQJ 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 758( PHDQV RI VWHDOLQJ )UDXG DZDUHQHVV DXGLWLQJ LQFOXGHV WKLQNLQJ OLNH D FURRN WR LPDJLQH ZD\V DQG

!4  ""7 @ ( "  !@D  9"D C @ (" !&!2  9!! !@ !4 " ! 4  " " !@ !2! V 57I 5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      

!!" !4 27 @ ( "  !@D  9"D C @ ( "  !@ %  !" ! @ !!" 9 !4 2 (" ! 9 !@ !2! X 57I 5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      





5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH )$/6( UHVSRQVLEOH IRU WKH IUDXG VWDWHPHQW DXGLW LV WKDW DXGLWRUV REWDLQ HYLGHQFH DERXW WKH LQWHQW RI WKH SHUVRQV 2QH RI WKH PDLQ UHTXLUHPHQWV XQGHU *$$6 UHODWLQJ WR IUDXG LQ D ILQDQFLDO 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH SULPDU\ PHDQV RI YDOXLQJ FDVK LQ WKH ILQDQFLDO VWDWHPHQWV 7KH FRPSDQ\ V EDQN UHFRQFLOLDWLRQ DXGLWHG E\ LQGHSHQGHQW DXGLWRUV LV WKH 758(

0XOWLSOH &KRLFH 4XHVWLRQV



:KHQ DXGLWLQJ ILQDQFLDO VWDWHPHQWV DQG ILQGLQJ LQGLFDWLRQV RI D SRVVLEOH PLVDSSURSULDWLRQ RI DVVHWV LQGHSHQGHQW DXGLWRUV VKRXOG

$ ,QYHVWLJDWH IXOO\ WR GHWHUPLQH WKH WRWDO DPRXQW RI WKH PLVDSSURSULDWLRQ % 'HWHUPLQH ZKLFK DFFRXQWV DUH DIIHFWHG DQG WKH DPRXQW E\ ZKLFK WKH\ DUH RYHUVWDWHG RU XQGHUVWDWHG & 'HWHUPLQH WKH PHWKRGV E\ ZKLFK WKH PLVDSSURSULDWLRQ ZDV FDUULHG RXW ' ,GHQWLI\ D SHUVRQ V ZKR DUH OLNHO\ UHVSRQVLEOH IRU WKH PLVDSSURSULDWLRQ DQG REWDLQ HYLGHQFH DERXW VRPH RWKHU IUDXG LQGLFDWLRQV LQ WKHLU ZRUN ( $OO RI WKH DERYH
!!"  !! 8Q  9"D  %1 ! " C@ %4 "4  !&!@  ( !! " 9&! %!! "( !!" 9 !! 8! !&" !2! R 57I 5 !4 ! 321 %!0 & !# ) ((  !' &"" @!!E   %!0  

! %D   9"D  %1 ! " C" ( !@A  8! !( " @ i! % ( !@ BC !Ch "" !!@ !@  98!  ( ! )57I 5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  



' (FRQRPLF & ,GHRORJLFDO % (JRFHQWULF $ 3V\FKRWLF IUDXGVWHU V PRWLYH LV VDLG WR EH WKH SXUSRVH RI SD\LQJ H[SHQVHV RI DQ DQWLQXFOHDU SURWHVW RUJDQL]DWLRQ WKH :KHQ DQ HPSOR\HH HPEH]]OHV FRPSDQ\ IXQGV IURP DQ HOHFWULF XWLOLW\ FRPSDQ\ IRU



:KLFK RI WKH IROORZLQJ PDQDJHPHQW SROLFLHV ZRXOG LQFUHDVH WKH SUREDELOLW\ RI IUDXG LQ D FRPSDQ\"

$ 'LYHUVLI\LQJ DXWKRULW\ WKURXJKRXW GLYLVLRQV DQG VXEVLGLDULHV LQ WKH RUJDQL]DWLRQ % 0HDVXULQJ SHUIRUPDQFH DQG DZDUGLQJ ERQXVHV EDVHG RQ VKRUWWHUP RSHUDWLQJ UHVXOWV & *LYLQJ HPSOR\HHV SHUIRUPDQFH IHHGEDFN WKDW FRQVLGHUV SRVLWLYH DQG FRQVWUXFWLYH SUDLVH DORQJ ZLWK FULWLFDO DQG QHJDWLYH REVHUYDWLRQV RQ WKHLU ZRUN ' (VWDEOLVKLQJ ZRUN WHDPV WKDW VKDUH UHVSRQVLELOLWLHV SHUIRUPDQFH DQG ERQXVHV EDVHG RQ FROOHFWLYH HIIRUWV
"!4 !   9"D  %1 ! " C  ( !! " 9&! !4 ! 9 " ! !2  @ !S@! !2! G 57I 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %$@D    



:KLFK RI WKH IROORZLQJ LV QRW FRQVLGHUHG RQH RI WKH WKUHH IDFWRUV LQFUHDVLQJ WKH SUREDELOLW\ RI IUDXG"

$ 0RWLYH % /DFN RI WUDLQLQJ & 2SSRUWXQLW\ ' 5DWLRQDOL]DWLRQ



!!"  !! 8Q  9"D  %1 ! " C@ %4 "4  !&!@  ( !! " 9&! %!! "( ! !" 9 !! 8! !&" !2! R 57I 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    !&! %# !"!E  

! %D   9"D  %1 ! " C" ( !@A  8! !( " @ i! % ( !@ BC !Ch "" !!@ !@  98!  ( ! )57I 5 !4 ! 321 %!0 Q 6 (( !2&!&!E &""  $E    %!0 



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

VDOHV UHFRUGLQJ FRQWURO DFWLYLWLHV



,I DQ HPSOR\HH DOWHUHG WKH DPRXQW RI D FKHFN DIWHU LW KDV FOHDUHG WKH EDQN WKH FKDQJH FDQ EH GHWHFWHG E\

$ &RPSDULQJ WKH DPRXQW ZULWWHQ RQ WKH FKHFN IDFH WR WKH DPRXQW ZULWWHQ LQ WKH FDVK GLVEXUVHPHQWV MRXUQDO % &RPSDULQJ WKH PDJQHWLF LPSULQW RI WKH DPRXQW SDLG WR WKH DPRXQW ZULWWHQ RQ WKH FKHFN IDFH & ([DPLQLQJ WKH HQGRUVHPHQW RQ WKH EDFN RI WKH FKHFN ' &RPSDULQJ WKH FKHFN QXPEHU RQ WKH IDFH RI WKH FKHFN WR WKH FKHFN QXPEHU LQ WKH FDVK GLVEXUVHPHQWV MRXUQDO
!!"  !! 8Q  9"D  %1 ! " C@ %4 "4  !&!@  ( !! " 9&! %!! "( ! !" 9 !! 8! !&" !2! R 57I 5 !4 ! 321 %!0 & !# ) ((  !' &""  $E    %$@D    



:KLFK RI WKH IROORZLQJ ZRXOG EH FRQVLVWHQW ZLWK DQ HPSOR\HH WDNLQJ FDVK UHFHLSWV IURP FXVWRPHUV RQ DFFRXQW"

$ 7KH WRWDO RI WKH DFFRXQWV UHFHLYDEOH VXEVLGLDU\ OHGJHU EDODQFHV LV OHVV WKDQ WKH DFFRXQWV UHFHLYDEOH FRQWURO DFFRXQW % 7KH WRWDO RI WKH DFFRXQWV UHFHLYDEOH VXEVLGLDU\ OHGJHU EDODQFHV LV PRUH WKDQ WKH DFFRXQWV UHFHLYDEOH FRQWURO DFFRXQW & 7RWDO FDVK UHFHLSWV IURP FXVWRPHUV IRU WKH PRQWK DUH OHVV WKDQ FUHGLW VDOHV IRU WKH PRQWK ' 7RWDO FDVK UHFHLSWV IURP FXVWRPHUV IRU WKH PRQWK DUH PRUH WKDQ FUHGLW VDOHV IRU WKH PRQWK
! 9D  !! " 9&Q  9"D  %1 ! " C !  " @ %& @ ( !! " 9&! (" $ !4 ! %"& !!!(( !@  98!  !( ! 6 57I 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %$@D    



$Q DXGLW SODQ RI VXEVWDQWLYH SURFHGXUHV IRU FDVK ZRXOG QRW LQFOXGH

$ 5HTXHVWLQJ D FXWRII EDQN VWDWHPHQW EH PDLOHG WR WKH FOLHQW % 5HTXHVWLQJ WKH FOLHQW WR SUHSDUH EDQN UHFRQFLOLDWLRQV & 3UHSDULQJ D VFKHGXOH RI LQWHUEDQN WUDQVIHUV IRU D SHULRG RI  EXVLQHVV GD\V EHIRUH DQG DIWHU \HDUHQG GDWH ' 2EWDLQLQJ D ZULWWHQ FOLHQW UHSUHVHQWDWLRQ FRQFHUQLQJ FRPSHQVDWLQJ EDODQFH DJUHHPHQWV
!!" !4 2  9"D  %1 ! " C @ ( "  !@ %  !" ! @ !!" 9 !4 2 (" ! 9 !@ !2! X 57I 5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  



,Q WKH DXGLW RI FDVK WKH DXGLWRU REWDLQV D EDQN FXWRII VWDWHPHQW SULPDULO\ WR

$ ,GHQWLI\ ROG RXWVWDQGLQJ FKHFNV WKDW WKH FOLHQW PD\ H[FOXGH IURP WKH \HDUHQG EDQN UHFRQFLOLDWLRQ LQ RUGHU WR PLVDSSURSULDWH FDVK % 2EWDLQ VXIILFLHQW LQIRUPDWLRQ WR UHFRQFLOH WKH FOLHQW V EDQN DFFRXQW DV RI \HDU HQG & 2EWDLQ GLUHFW FRQILUPDWLRQ RI WKH FOLHQW V EDQN EDODQFHV DV RI \HDUHQG ' 7HVW WKH SURSULHW\ RI LWHPV DSSHDULQJ RQ WKH FOLHQW V \HDUHQG EDQN UHFRQFLOLDWLRQ


!!" !4 2  9"D  %1 ! " C @ ( "  !@ %  !" ! @ !!" 9 !4 2 (" ! 9 !@ !2! X 57I 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %!0  

!!" !4 2  9"D  %1 ! " C @ ( "  !@ %  !" ! @ !!" 9 !4 2 (" ! 9 !@ !2! X 57I 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %$@D   



' 6HHN LQIRUPDWLRQ DERXW FRQWLQJHQW OLDELOLWLHV DQG VHFXULW\ DJUHHPHQWV & 'HWHFW TXHVWLRQDEOH EDQN DFWLYLWLHV WKDW PD\ RWKHUZLVH QRW EH GLVFRYHUHG % 5HTXHVW WKDW D FXWRII EDQN VWDWHPHQW DQG UHODWHG FKHFNV EH VHQW WR WKH DXGLW $ 3URYLGH WKH GDWD QHFHVVDU\ WR SUHSDUH D SURRI RI FDVK HQG EDODQFHV $ SXUSRVH RI WKLV SURFHGXUH LV WR WKH FOLHQW KDV GRQH EXVLQHVV GXULQJ WKH \HDU XQGHU DXGLW UHJDUGOHVV RI WKH \HDU $XGLWRUV RUGLQDULO\ VHQG D VWDQGDUG FRQILUPDWLRQ UHTXHVW WR DOO EDQNV ZLWK ZKLFK



7R JDWKHU HYLGHQFH UHJDUGLQJ WKH EDODQFH LQ D EDQN UHFRQFLOLDWLRQ DQ DXGLWRU ZRXOG H[DPLQH DOO RI WKH IROORZLQJ H[FHSW WKH

$ &XWRII EDQN VWDWHPHQW % *HQHUDO OHGJHU & %DQN FRQILUPDWLRQ ' <HDUHQG EDQN VWDWHPHQW
!!" !4 2  9"D  %1 ! " C @ ( "  !@ %  !" ! @ !!" 9 !4 2 (" ! 9 !@ !2! X 57I 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %!0  



$Q HQWLW\ ZLWK D ODUJH YROXPH RI FXVWRPHU UHPLWWDQFHV E\ PDLO FRXOG PRVW OLNHO\ UHGXFH WKH ULVN RI HPSOR\HH PLVDSSURSULDWLRQ RI FDVK E\ XVLQJ

$ (PSOR\HH ILGHOLW\ ERQGV % ,QGHSHQGHQWO\ SUHSDUHG PDLOURRP SUHOLVWV & 'DLO\ FKHFN VXPPDULHV ' $ EDQN ORFNER[ V\VWHP
& !# ) ((  99 &""  $E    %$@D    



:KLFK RI WKH IROORZLQJ VHWV RI LQIRUPDWLRQ GRHV DQ DXGLWRU XVXDOO\ FRQILUP RQ RQH IRUP"

$ $FFRXQWV SD\DEOH DQG SXUFKDVH FRPPLWPHQWV % &DVK LQ EDQN DQG FROODWHUDO IRU ORDQV & ,QYHQWRU\ RQ FRQVLJQPHQW DQG FRQWLQJHQW OLDELOLWLHV ' $FFRXQWV UHFHLYDEOH DQG DFFUXHG LQWHUHVW UHFHLYDEOH
!!" !4 2  9"D   ! " C @ ( "  !@ %  !" ! @ !!" 9 !4 2 (" ! 9 !@ !2! X 57I 5 !4 ! 321 %!0 & !# ) ((  99 &"" @!!E   %!0  



$Q XQUHFRUGHG FKHFN LVVXHG GXULQJ WKH ODVW ZHHN RI WKH \HDU ZRXOG PRVW OLNHO\ EH GLVFRYHUHG E\ WKH DXGLWRU ZKHQ WKH

$ &KHFN UHJLVWHU IRU WKH ODVW PRQWK LV UHYLHZHG % &XWRII EDQN VWDWHPHQW LV UHFRQFLOHG & %DQN FRQILUPDWLRQ LV UHYLHZHG ' 6HDUFK IRU XQUHFRUGHG OLDELOLWLHV LV SHUIRUPHG


"" !  9"D   ! " C @ (" !&!2  9!! !@ !4 " ! 4  " " !@ !2! V 57I 5 !4 ! 321 %!0

"" !  9"D   ! " C @ (" !&!2  9!! !@ !4 " ! 4  " " !@ !2! V 57I 5 !4 ! 321 %!0 & !# ) ((  99 &"" @!!E   %!0  

!!" !4 2  9"D  %1 ! " C @ ( "  !@ %  !" ! @ !!" 9 !4 2 (" ! 9 !@ !2! X 57I 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %$@D   



' ,QTXLU\ DQG DQDO\WLFDO SURFHGXUHV & $QDO\WLFDO SURFHGXUHV DQG FRQILUPDWLRQ % 2EVHUYDWLRQ DQG LQTXLU\ $ &RQILUPDWLRQ DQG REVHUYDWLRQ WKH DXGLWRU PRVW OLNHO\ ZLOO WHVW WKH DFWLYLWLHV E\ XVLQJ SURFHGXUHV ,I WKH FRQWURO DFWLYLWLHV OHDYH QR DXGLW WUDLO RI GRFXPHQWDU\ HYLGHQFH $Q DXGLWRU ZLVKHV WR SHUIRUP WHVWV RI FRQWUROV RQ D FOLHQW V FDVK GLVEXUVHPHQWV



7R SURYLGH DVVXUDQFH WKDW HDFK YRXFKHU LV VXEPLWWHG DQG SDLG RQO\ RQFH DQ DXGLWRU PRVW OLNHO\ ZRXOG H[DPLQH D VDPSOH RI SDLG YRXFKHUV DQG GHWHUPLQH ZKHWKHU HDFK YRXFKHU LV

$ 6XSSRUWHG E\ D YHQGRU V LQYRLFH % 6WDPSHG 3$,' E\ WKH FKHFN VLJQHU & 3UHQXPEHUHG DQG DFFRXQWHG IRU ' $SSURYHG IRU DXWKRUL]HG SXUFKDVHV
"" !  9"D   ! " C @ (" !&!2  9!! !@ !4 " ! 4  " " !@ !2! V 57I 5 !4 ! 321 %!0 W G (( 99 &""  $E    %$@D    



,Q RUGHU IRU DXGLWRUV WR EH DEOH WR UHFRJQL]H SRWHQWLDO IUDXG WKH\ PXVW EH DZDUH RI WKH EDVLF FKDUDFWHULVWLFV RI IUDXG :KLFK RI WKH IROORZLQJ LV QRW D FKDUDFWHULVWLF RI IUDXG"

$ ,QWHQWLRQDO GHFHSWLRQ % 7DNLQJ XQIDLU RU GLVKRQHVW DGYDQWDJH RI RWKHU SHRSOH & 3HUSHWUDWLRQ IRU WKH EHQHILW RU GHWULPHQW RI WKH RUJDQL]DWLRQ ' 1HJOLJHQFH RQ WKH SDUW RI H[HFXWLYH PDQDJHPHQW
%!0  

! 9D  !! " 9&Q  9"D   ! " C !  " @ %& @ ( !! " 9&! (" $ !4 ! %"& !!!(( !@  98!  !( ! 6 57I 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %$@D    

! 9D  !! " 9&Q  9"D  %1 ! " C !  " @ %& @ ( !! " 9&! (" $ !4 ! %"& !!!(( !@  98!  !( ! 6 57I 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &""  $E   



' 7KH DXGLWRU KDV DOUHDG\ DVVHVVHG FRQWURO ULVN DW WKH PD[LPXP OHYHO & 7KH LOOHJDO DFW ZDV FRPPLWWHG GXULQJ D SULRU \HDU WKDW ZDV QRW DXGLWHG % 7KH FOLHQW GRHV QRW WDNH WKH UHPHGLDO DFWLRQ WKDW WKH DXGLWRU FRQVLGHUV $ 7KH LOOHJDO DFW LV D YLRODWLRQ RI JHQHUDOO\ DFFHSWHG DFFRXQWLQJ SULQFLSOHV ZLWKGUDZ IURP WKH HQJDJHPHQW LI KDV D PDWHULDO HIIHFW RQ WKH FOLHQW V ILQDQFLDO VWDWHPHQWV PRVW OLNHO\ ZRXOG $Q DXGLWRU ZKR GLVFRYHUV WKDW FOLHQW HPSOR\HHV KDYH FRPPLWWHG DQ LOOHJDO DFW WKDW QHFHVVDU\



$Q DXGLWRU ZRXOG OHDVW OLNHO\ LQLWLDWH D GLVFXVVLRQ ZLWK D FOLHQW V DXGLW FRPPLWWHH FRQFHUQLQJ

$ 7KH PHWKRGV XVHG WR DFFRXQW IRU VLJQLILFDQW XQXVXDO WUDQVDFWLRQV % 7KH PD[LPXP GROODU DPRXQW RI PLVVWDWHPHQWV WKDW FRXOG H[LVW ZLWKRXW FDXVLQJ WKH ILQDQFLDO VWDWHPHQWV WR EH PDWHULDOO\ PLVVWDWHG & ,QGLFDWLRQV RI IUDXG DQG LOOHJDO DFWV FRPPLWWHG E\ D FRUSRUDWH RIILFHU WKDW ZHUH GLVFRYHUHG E\ WKH DXGLWRU ' 'LVDJUHHPHQWV ZLWK PDQDJHPHQW DV WR DFFRXQWLQJ SULQFLSOHV WKDW ZHUH UHVROYHG GXULQJ WKH FXUUHQW\HDU DXGLW
  ! " C  ( !! " 9&! !4 ! 9 " ! !2  @ !S@! !2! G 57I 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" %" 9!E   %!0  "&&" "!4 !   9"D



:KLFK RI WKH IROORZLQJ VWDWHPHQWV LV FRUUHFW ZLWK UHVSHFW WR WKH HOHPHQWV RI WKH IUDXG WULDQJOH"

$ 0RWLYH LV D FDXVH WKDW SUHVVXUHV SHRSOH LQWR DFWLRQ % 2SSRUWXQLW\ UHIHUV WR D VLWXDWLRQ WKDW DOORZV VRPHRQH ZLWK PRWLYH WR FDUU\ RXW IUDXG & $ ODFN RI LQWHJULW\ GHVFULEHV D SHUVRQ ZKR GRHV QRW VWLFN WR WKH VRFLDO RU RUJDQL]DWLRQDO HWKLFDO FRGH ' )UDXG LV PRVW FRPPRQ ZKHQ WKHVH WKUHH IDFWRUV H[LVW WRJHWKHU ( $OO RI WKH DERYH VWDWHPHQWV DUH FRUUHFW
 %1 ! " C" ( !@A  8! !( " @ i! % ( !@ BC !Ch "" !!@ !@  98!  ( ! )57I 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &""  $E    %!0  @Q ! %D   9"D



1DUERQD &3$ LV UHYLHZLQJ FRQWUROV RYHU FDVK UHFHLYHG WKURXJK D EDQN QLJKW GHSRVLWRU\ :KLFK FRQWUROV ZRXOG VKH ILQG PRVW LPSRUWDQW"

$ 5HVSRQVLELOLWLHV DUH URWDWHG IRU SURFHVVLQJ QLJKW GHSRVLWRU\ UHFHLSWV DPRQJ HPSOR\HHV RI WKH YDULRXV GHSDUWPHQWV % 'XDO FRQWURO MRLQW FXVWRG\ LV HVWDEOLVKHG RYHU WKH FRQWHQWV RI WKH QLJKW GHSRVLWRU\ ER[ IURP WKH WLPH RI UHPRYDO XQWLO LQLWLDO UHFRUGLQJ LV FRPSOHWHG & 9DFDWLRQV DUH UHTXLUHG IRU DOO HPSOR\HHV HQJDJHG LQ QLJKW GHSRVLWRU\ DFWLYLWLHV ' $OO GHSRVLW WLFNHWV UHODWHG WR QLJKW GHSRVLWV DUH QXPEHUHG
"" !  9"D  %1 ! " C @ (" !&!2  9!! !@ !4 " ! 4  " " !@ !2! V 57I 5 !4 ! 321 %!0 W G (( 99 &""  $E    %!0  



<RXU FOLHQW LV LQ WKH SURFHVV RI DFTXLULQJ DQRWKHU FRPSDQ\ <RX KDYH EHHQ UHTXHVWHG WR YHULI\ WKDW FDVK IRU WKH FRPSDQ\ EHLQJ DFTXLUHG LV SURSHUO\ VWDWHG 7KH DXGLW WHFKQLTXH WKDW ZLOO \LHOG WKH PRVW SHUVXDVLYH HYLGHQFH LV

$ ([DPLQDWLRQ RI WKH FRPSDQ\ V HVFURZ DFFRXQW % ,QWHUYLHZ ZLWK WKH FRPSDQ\ V WUHDVXUHU DQG FDVK PDQDJHU & 3UHSDUDWLRQ DQG UHYLHZ RI VWDQGDUG EDQN FRQILUPDWLRQ LQTXLULHV ' $QDO\WLFDO FRPSXWDWLRQV FRPSDULQJ FXUUHQW FDVK LQ WKH EDQN ZLWK SUHYLRXV DFFRXQWLQJ SHULRGV
!!" !4 2  9"D  %1 ! " C @ ( "  !@ %  !" ! @ !!" 9 !4 2 (" ! 9 !@ !2! X 57I 5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!   %$@D    



$ SURRI RI FDVK

$ ,V UHTXLUHG E\ *$$6 % &DQ EH XVHG WR WHVW WKH WUDQVDFWLRQV SURFHVV & ,V PRVW KHOSIXO ZKHQ FRQWURO ULVN IRU FDVK LV ORZ ' $OZD\V GHWHFWV ODSSLQJ
!2&!&!E &"" @!!E   %!0  

!!" !4 2  9"D  %1 ! " C @ ( "  !@ %  !" ! @ !!" 9 !4 2 (" ! 9 !@ !2! X 57I 5 !4 ! 321 %!0 W G (( 99 &""  $E    %!0  

"" !  9"D   ! " C @ (" !&!2  9!! !@ !4 " ! 4  " " !@ !2! V 57I 5 !4 ! 321 %!0 W G ((



' 'HSRVLWV LQ WUDQVLW & 5HSODFHPHQW RU VXEVWLWXWLRQ RI VWROHQ DVVHWV % ,UUHJXODU HQGRUVHPHQW $ 7KHIW DOO FDVK DQG RWKHU QHJRWLDEOH DVVHWV WR SUHYHQW :KHQ FRXQWLQJ FDVK RQ KDQG WKH DXGLWRU PXVW H[HUFLVH VLPXOWDQHRXV FRQWURO RYHU



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

$ $GHTXDWH LQWHUQDO FRQWURO % ,QDGHTXDWH LQWHUQDO FRQWURO EHFDXVH PDLOURRP HPSOR\HHV VKRXOG QRW KDYH DFFHVV WR FDVK & ,QDGHTXDWH LQWHUQDO FRQWURO EHFDXVH WUHDVXU\ HPSOR\HHV VKRXOG SUHSDUH WKH GHSRVLW VOLS ' ,QDGHTXDWH LQWHUQDO FRQWURO EHFDXVH RI D ODFN RI VHSDUDWLRQ RI GXWLHV
"" !  9"D   ! " C @ (" !&!2  9!! !@ !4 " ! 4  " " !@ !2! V 57I 5 !4 ! 321 %!0 W G (( !' &""  $E    %!0  



:KLFK RI WKH IROORZLQJ VKRXOG EH SHUIRUPHG E\ WKH SHUVRQV RSHQLQJ WKH PDLO DQG UHFRUGLQJ SD\PHQWV"

$ $GGLQJ D UHVWULFWLYH HQGRUVHPHQW RQ DOO FKHFNV % (QWHULQJ SD\PHQW LQIRUPDWLRQ LQWR FXVWRPHU DFFRXQWV & 3UHSDULQJ WKH GHSRVLW VOLS DQG WKH GHOLYHU\ RI WKH FKHFNV WR WKH EDQN ' 6HJUHJDWLQJ DOO SD\PHQWV PDGH RQ DFFRXQWV OLVWHG DV SDVW GXH
"" !  9"D  %1 ! " C @ (" !&!2  9!! !@ !4 " ! 4  " " !@ !2! V 57I 5 !4 ! 321 %!0 & !# ) ((  !' &""  $E    %!0  



$W WKH HQG RI HDFK EXVLQHVV GD\ 6DIH &RPSDQ\ VHQGV LWV EDQN D OLVW RI DOO FKHFNV ZULWWHQ GXULQJ WKH GD\ LQFOXGLQJ WKH FKHFN QXPEHU SD\HH DQG DPRXQW :KHQ D FKHFN LV VHQW WR WKH EDQN IRU SD\PHQW WKH EDQN FRPSDUHV WKH SD\HH DQG WKH DPRXQW ZLWK WKH OLVW SURYLGHG E\ 6DIH &RPSDQ\ 7KLV V\VWHP LV FDOOHG

$ 3D\FKH[ % 3D\DV\RXJR & 3RVLWLYH SD\ ' 3D\ PDVWHU

%!0  

"" !  9"D  %1 ! " C @ (" !&!2  9!! !@ !4 " ! 4  " " !@ !2! V 57I 5 !4 ! 321 %!0 Q 6 (( !2&!&!E &""  $E    %!0  

"" !  9"D  %1 ! " C @ (" !&!2  9!! !@ !4 " ! 4  " " !@ !2! V 57I 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E  



' /DSSLQJ & $QWLFROOXVLRQ % -RLQW FXVWRG\ $ 6HSDUDWLRQ RI GXWLHV 7ZR SHRSOH VKRXOG RSHQ PDLO WKDW LQFOXGHV SD\PHQWV 7KLV FRQWURO LV FDOOHG

! %D   9"D  %1 ! " C" ( !@A  8! !( " @ i! % ( !@ BC !Ch "" !!@ !@  98!  ( ! )57I 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &""  $E    %!0  



IUDXG GLDPRQG WKDW LV QRW DQ HOHPHQW RI WKH IUDXG WULDQJOH"

' /LTXLGLW\ & &DSDELOLW\ % 2SSRUWXQLW\ $ 0RWLYH IUDXG GLDPRQG KDV EHHQ SURSRVHG :KLFK RI WKH IROORZLQJ LV DQ HOHPHQW RI WKH 0RVW IUDXG LQYHVWLJDWRUV XWLOL]H WKH IUDXG WULDQJOH WKHRU\ $ QHZ WKHRU\ FDOOHG WKH



:KHQ DXGLWLQJ ZLWK IUDXG DZDUHQHVV DXGLWRUV VKRXOG HVSHFLDOO\ QRWLFH DQG IROORZ XS HPSOR\HH DFWLYLWLHV XQGHU ZKLFK RI WKHVH FRQGLWLRQV"

$ 7KH FRPSDQ\ DOZD\V HVWLPDWHV WKH LQYHQWRU\ EXW QHYHU WDNHV D FRPSOHWH SK\VLFDO FRXQW % 7KH SHWW\ FDVK ER[ LV DOZD\V ORFNHG LQ WKH GHVN RI WKH FXVWRGLDQ & 0DQDJHPHQW KDV SXEOLVKHG D FRPSDQ\ FRGH RI HWKLFV DQG VHQGV IUHTXHQW FRPPXQLFDWLRQ QHZVOHWWHUV DERXW LW ' 7KH ERDUG RI GLUHFWRUV UHYLHZV DQG DSSURYHV DOO LQYHVWPHQW WUDQVDFWLRQV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

! %D   9"D  %1 ! " C" ( !@A  8! !( " @ i! % ( !@ BC !Ch "" !!@ !@  98!  ( ! )57I 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %!0  



7KH EHVW ZD\ WR HQDFW D EURDG IUDXGSUHYHQWLRQ SURJUDP LV WR

$ ,QVWDOO DLUWLJKW FRQWURO V\VWHPV RI FKHFNV DQG VXSHUYLVLRQ % 1DPH DQ HWKLFV RIILFHU ZKR LV UHVSRQVLEOH IRU UHFHLYLQJ DQG DFWLQJ RQ IUDXG WLSV & 3ODFH GHGLFDWHG KRW OLQH WHOHSKRQHV RQ ZDOOV DURXQG WKH ZRUNSODFH ZLWK GLUHFW FRPPXQLFDWLRQ WR WKH FRPSDQ\ HWKLFV RIILFHU ' 3UDFWLFH PDQDJHPHQW RI WKH SHRSOH DQG IRU WKH SHRSOH WR KHOS WKHP VKDUH SHUVRQDO DQG SURIHVVLRQDO SUREOHPV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

"!4 !   9"D  %1 ! " C  ( !! " 9&! !4 ! 9 " ! !2  @ !S@! !2! G 57I 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %$@D    



$ JRRG IUDXG SUHYHQWLRQ SURJUDP VKRXOG DGGUHVV HPSOR\HHV PRWLYDWLRQ WR VWHDO IURP WKH FRPSDQ\ 7KH EHVW PHWKRG IRU GRLQJ WKLV LV WR

$ (VWDEOLVK HPSOR\HH DVVLVWDQFH SURJUDPV % 5HTXLUH D ILGHOLW\ ERQG RQ DOO HPSOR\HHV & 5HTXLUH UHFRQFLOLDWLRQV RI DOO DFFRXQWV WR EH UHYLHZHG E\ D VXSHUYLVRU ' (QVXUH WKDW DOO DFFRXQWV ZLWK KLJK LQKHUHQW ULVN RI IUDXG DUH DXGLWHG 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

"!4 !   9"D  %1 ! " C  ( !! " 9&! !4 ! 9 " ! !2  @ !S@! !2! G 57I 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %$@D    



$ FRGH RI HWKLFV LV DQ LPSRUWDQW HOHPHQW RI D IUDXG SUHYHQWLRQ SURJUDP :KLFK RI WKH IROORZLQJ ZRXOG GLPLQLVK WKH HIIHFWLYHQHVV RI D FRPSDQ\ V FRGH RI FRQGXFW"

$ 7KH HVWDEOLVKPHQW RI D FKLHI HWKLFV RIILFHU % 7KH HVWDEOLVKPHQW RI D KRW OLQH IRU UHSRUWLQJ XQHWKLFDO EHKDYLRU & 7KH YLRODWLRQ RI WKH FRGH RI HWKLFV E\ VHQLRU PDQDJHPHQW ' 7KH SRVWLQJ RI WKH FRGH RI HWKLFV LQ WKH FRPSDQ\ ZRUNSODFH 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

"!4 !   9"D  %1 ! " C  ( !! " 9&! !4 ! 9 " ! !2  @ ! S@! !2! G 57I 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %!0  



:KLFK RI WKH IROORZLQJ LV OHDVW LQGLFDWLYH RI IUDXGXOHQW DFWLYLW\"

$ 1XPHURXV FDVK UHIXQGV KDYH EHHQ PDGH WR GLIIHUHQW SHRSOH DW WKH VDPH SRVW RIILFH ER[ DGGUHVV % ,QWHUQDO DXGLWRUV FDQQRW ORFDWH VHYHUDO FUHGLW PHPRV WR VXSSRUW UHGXFWLRQV RI FXVWRPHUV EDODQFHV & %DQN UHFRQFLOLDWLRQ KDV QR RXWVWDQGLQJ FKHFNV RU GHSRVLWV ROGHU WKDQ  GD\V ' 7KUHH SHRSOH ZHUH DEVHQW WKH GD\ WKH DXGLWRUV KDQGHG RXW WKH SD\FKHFNV DQG KDYH QRW SLFNHG WKHP XS IRXU ZHHNV ODWHU 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

!&!@    9"D  %1 ! " C!!4 " !!A !&!@ !@ A "@ !2!  ! ( @   I 57I 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %$@D    



:KLFK RI WKH IROORZLQJ FRPELQDWLRQV LV D JRRG PHDQV WR FRQFHDO HPSOR\HH IUDXG EXW DQ LQHIIHFWLYH PHDQV RI SHUSHWUDWLQJ PDQDJHPHQW ILQDQFLDO UHSRUWLQJ IUDXG"

$ 2YHUVWDWLQJ VDOHV UHYHQXH DQG RYHUVWDWLQJ FXVWRPHU DFFRXQWV UHFHLYDEOH EDODQFHV % 2YHUVWDWLQJ VDOHV UHYHQXH DQG RYHUVWDWLQJ EDG GHEW H[SHQVH & 8QGHUVWDWLQJ LQWHUHVW H[SHQVH DQG XQGHUVWDWLQJ DFFUXHG LQWHUHVW SD\DEOH ' 2PLWWLQJ WKH GLVFORVXUH LQIRUPDWLRQ DERXW UHODWHGSDUW\ VDOHV WR WKH SUHVLGHQW V UHODWLYHV DW EHORZPDUNHW SULFHV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

!&!@    9"D  %1 ! " C!!4 " !!A !&!@ !@ A "@ !2!  ! ( @   I 57I 5 !4 ! 321 %!0 W G (( 99 &""  $E    %$@D    



$OOLVRQ (YHUKDUW DQ HPSOR\HH LQ DFFRXQWV SD\DEOH EHOLHYHV VKH FDQ UXQ D ILFWLWLRXV LQYRLFH WKURXJK WKH DFFRXQWV SD\DEOH V\VWHP DQG FROOHFW WKH PRQH\ 6KH NQRZV SD\PHQWV DUH VXEMHFW WR DQ DXGLW :KLFK DFFRXQW ZRXOG EH WKH EHVW SODFH WR KLGH WKH IUDXG"

$ ,QYHQWRU\ % :DJH H[SHQVH & &RQVXOWLQJ VHUYLFH H[SHQVH ' 3URSHUW\ WD[ H[SHQVH 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

!!" !4 2  9"D  %1 ! " C @ ( "  !@ %  ! " ! @ !!" 9 !4 2 (" ! 9 !@ !2! X 57I 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %$@D    



:KLFK RI WKHVH DUUDQJHPHQWV RI GXWLHV FRXOG PRVW OLNHO\ OHDG WR DQ HPEH]]OHPHQW RU WKHIW"

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

! %D   9"D  %1 ! " C" ( !@A  8! !( " @ i! % ( !@ BC !Ch "" !!@ !@  98!  ( ! )57I 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %$@D    



:KLFK RI WKH IROORZLQJ ZRXOG WKH DXGLWRU FRQVLGHU WR EH DQ LQFRPSDWLEOH RSHUDWLRQ LI WKH FDVKLHU UHFHLYHV UHPLWWDQFHV"

$ 7KH FDVKLHU SUHSDUHV WKH GDLO\ GHSRVLW % 7KH FDVKLHU PDNHV WKH GDLO\ GHSRVLW DW D ORFDO EDQN & 7KH FDVKLHU SRVWV WKH UHFHLSWV WR WKH DFFRXQWV UHFHLYDEOH VXEVLGLDU\ OHGJHU FDUGV ' 7KH FDVKLHU HQGRUVHV WKH FKHFNV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

"" !  9"D  %1 ! " C @ (" !&!2  9!! !@ !4 " ! 4  " " !@ !2! V 57I 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &""  $E    %!0  



:KLFK RI WKH IROORZLQJ LV DQ HIIHFWLYH DXGLW SURFHGXUH WKDW DQ DXGLWRU PLJKW XVH WR GHWHFW NLWLQJ EHWZHHQ LQWHUFRPSDQ\ EDQNV"

$ 5HYLHZ WKH FRPSRVLWLRQ RI DXWKHQWLFDWHG GHSRVLW VOLSV % 5HYLHZ VXEVHTXHQW EDQN VWDWHPHQWV & 3UHSDUH D VFKHGXOH RI WKH EDQN WUDQVIHUV ' 3UHSDUH D \HDUHQG EDQN UHFRQFLOLDWLRQ 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

!!" !4 2  9"D  %1 ! " C @ ( "  !@ %  !" ! @ !!" 9 !4 2 (" ! 9 !@ !2! X 57I 5 !4 ! 321 %!0 Q 6 (( !2&!&!E &""  $E    %!0  



,PPHGLDWHO\ XSRQ UHFHLSW RI FDVK D UHVSRQVLEOH HPSOR\HH VKRXOG

$ 5HFRUG WKH DPRXQW LQ WKH FDVK UHFHLSWV MRXUQDO % 3UHSDUH D UHPLWWDQFH OLVWLQJ & 8SGDWH WKH VXEVLGLDU\ DFFRXQWV UHFHLYDEOH UHFRUGV ' 3UHSDUH D GHSRVLW VOLS LQ WULSOLFDWH 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

"" !  9"D   ! " C @ (" !&!2  9!! !@ !4 " ! 4  " " !@ !2! V 57I 5 !4 ! 321 %!0 Q 6 (( !2&!&!E &""  $E    %!0  



(DFK PRUQLQJ WKH FRQWUROOHU JHWV WKH SULRU GD\ V OLVWLQJ RI UHPLWWDQFHV D FRS\ RI WKH SD\PHQW UHSRUW DQG D FRS\ RI WKH GHSRVLW VOLS UHWXUQHG IURP WKH EDQN :KHQ FRPSDULQJ WKHVH LWHPV WKH FRQWUROOHU ZRXOG EH DEOH WR GHWHUPLQH WKDW

$ 1R FKHFNV ZHUH UHWXUQHG IRU LQVXIILFLHQW IXQGV % 7KH FDVK UHFHLYHG DQG UHPLWWDQFH DGYLFH UHFHLYHG ZHUH PDLQWDLQHG LQ D VLQJOH EDWFK & 7KH DFFRXQWV UHFHLYDEOH V\VWHP KDV FRQWUROV RYHU XQDXWKRUL]HG DFFHVV ' 7KH DVVLVWDQW FRQWUROOHU GRHV QRW DOVR UHFRQFLOH WKH VXEVLGLDU\ DFFRXQWV SD\DEOH 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

"" !  9"D  %1 ! " C @ (" !&!2  9!! !@ !4 " ! 4  " " !@ !2! V 57I 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  



8SRQ UHFHLSW RI FXVWRPHUV FKHFNV LQ WKH PDLO URRP D UHVSRQVLEOH HPSOR\HH VKRXOG SUHSDUH D UHPLWWDQFH OLVW WKDW LV IRUZDUGHG WR WKH FDVKLHU $ FRS\ RI WKH OLVWLQJ VKRXOG EH VHQW WR WKH

$ ,QWHUQDO DXGLWRU WR LQYHVWLJDWH WKH OLVW IRU XQXVXDO WUDQVDFWLRQV % 7UHDVXUHU WR FRPSDUH WKH OLVW ZLWK WKH PRQWKO\ EDQN VWDWHPHQW & $FFRXQWV UHFHLYDEOH ERRNNHHSHU WR XSGDWH WKH VXEVLGLDU\ DFFRXQWV UHFHLYDEOH UHFRUGV ' (QWLW\ V EDQN WR FRPSDUH WKH OLVW ZLWK WKH FDVKLHU V GHSRVLW VOLS 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

"" !  9"D   ! " C @ (" !&!2  9!! !@ !4 " ! 4  " " !@ !2! V 57I 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &""  $E    %!0  



&DVK UHFHLSWV IURP VDOHV RQ DFFRXQW KDYH EHHQ PLVDSSURSULDWHG :KLFK RI WKH IROORZLQJ DFWV ZRXOG FRQFHDO WKLV GHIDOFDWLRQ DQG EH OHDVW OLNHO\ WR EH GHWHFWHG E\ DQ DXGLWRU"

$ 8QGHUVWDWLQJ WKH VDOHV MRXUQDO % 2YHUVWDWLQJ WKH DFFRXQWV UHFHLYDEOH FRQWURO DFFRXQW & 2YHUVWDWLQJ WKH DFFRXQWV UHFHLYDEOH VXEVLGLDU\ OHGJHU ' 2YHUVWDWLQJ WKH VDOHV MRXUQDO 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

!&!@    9"D  %1 ! " C!!4 " !!A !&!@ !@ A "@ !2!  ! ( @   I 57I 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %!0  



(PEH]]OHPHQW LV D W\SH RI IUDXG WKDW LQYROYHV

$ $Q HPSOR\HH V PLVDSSURSULDWLQJ DQ HPSOR\HU V PRQH\ RU SURSHUW\ QRW HQWUXVWHG WR KLP RU KHU % $ PDQDJHU V IDOVLILFDWLRQ RI ILQDQFLDO VWDWHPHQWV IRU WKH SXUSRVH RI PLVOHDGLQJ LQYHVWRUV DQG FUHGLWRUV & $Q HPSOR\HH V PLVWDNHQ UHSUHVHQWDWLRQ RI RSLQLRQ WKDW FDXVHV LQFRUUHFW DFFRXQWLQJ HQWULHV ' $Q HPSOR\HH PLVDSSURSULDWLQJ DQ HPSOR\HU V PRQH\ RU SURSHUW\ HQWUXVWHG WR WKH HPSOR\HH V FRQWURO LQ WKH HPSOR\HH V QRUPDO MRE 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

! 9D  !! " 9&Q  9"D  %1 ! " C !  " @ %& @ ( !! " 9&! (" $ !4 ! %"& !!!(( !@  98!  !( ! 6 57I 5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  



:KLFK RI WKH IROORZLQJ FRQWURO DFWLYLWLHV ZRXOG EHVW SURWHFW DJDLQVW WKH SUHSDUDWLRQ RI LPSURSHU RU LQDFFXUDWH FDVK GLVEXUVHPHQWV"

$ $OO FKHFNV PXVW EH VLJQHG E\ DQ RIILFHU GHVLJQDWHG E\ WKH ERDUG RI GLUHFWRUV % $OO VLJQHG FKHFNV PXVW EH UHYLHZHG DQG FRPSDUHG ZLWK VXSSRUWLQJ GRFXPHQWDWLRQ E\ WKH WUHDVXUHU EHIRUH PDLOLQJ & $OO FKHFNV PXVW EH VHTXHQWLDOO\ QXPEHUHG DQG DFFRXQWHG IRU E\ LQWHUQDO DXGLWRUV ' $OO FKHFNV PXVW EH SHUIRUDWHG RU RWKHUZLVH HIIHFWLYHO\ FDQFHOHG ZKHQ WKH\ DUH UHWXUQHG ZLWK WKH EDQN VWDWHPHQW 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

"" !  9"D  %1 ! " C @ (" !&!2  9!! !@ !4 " ! 4  " " !@ !2! V 57I 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %$@D    

!!" !4 2  9"D  %1 ! " C @ ( "  !@ %  !" ! @ !!" 9 !4 2 (" ! 9 !@ !2! X 57I 5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  



5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN ' 2FFXUUHQFH & 9DOXDWLRQ RU DOORFDWLRQ % 5LJKWV DQG REOLJDWLRQV $ ([LVWHQFH DVVHUWLRQ RI 'XULQJ DQ DXGLW RI FDVK WKH DXGLWRU LV PRVW FRQFHUQHG ZLWK WKH PDQDJHPHQW



,Q SUHSDULQJ IRU WKH DXGLW RI FDVK WKH DXGLWRUV SHUIRUP DQDO\WLFDO SURFHGXUHV FRQFHUQLQJ FDVK EDODQFHV :KLFK RI WKH IROORZLQJ ZRXOG EH WKH EHVW VRXUFH RI LQIRUPDWLRQ IRU XVH LQ WKH HVWLPDWH RI FDVK"

$ 3ULRU\HDUV EDODQFHV % 0DQDJHPHQW LQTXLU\ & &DVK EXGJHWV ' $JHG DFFRXQWV UHFHLYDEOH UHSRUWV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

!!" !4 2  9"D  %1 ! " C @ ( "  !@ %  !" ! @ !!" 9 !4 2 (" ! 9 !@ !2! X 57I 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %$@D    



:KLFK RI WKH IROORZLQJ FRQWURO DFWLYLWLHV FRXOG SUHYHQW D SDLG GLVEXUVHPHQW YRXFKHU IURP EHLQJ SUHVHQWHG IRU SD\PHQW D VHFRQG WLPH"

$ 9RXFKHUV VKRXOG EH SUHSDUHG E\ LQGLYLGXDOV ZKR DUH UHVSRQVLEOH IRU VLJQLQJ GLVEXUVHPHQW FKHFNV % 'LVEXUVHPHQW YRXFKHUV VKRXOG EH DSSURYHG E\ DW OHDVW WZR UHVSRQVLEOH PDQDJHPHQW RIILFLDOV & 7KH GDWH RQ D GLVEXUVHPHQW YRXFKHU VKRXOG EH ZLWKLQ D IHZ GD\V RI WKH GDWH WKH YRXFKHU LV SUHVHQWHG IRU SD\PHQW ' 7KH RIILFLDO VLJQLQJ WKH FKHFN VKRXOG FRPSDUH WKH FKHFN ZLWK WKH YRXFKHU DQG VKRXOG VWDPS SDLG RQ WKH YRXFKHU GRFXPHQWV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

"" !  9"D  %1 ! " C @ (" !&!2  9!! !@ !4 " ! 4  " " !@ !2! V 57I 5 !4 ! 321 %!0 & !# ) ((  !' &""  $E    %$@D    

! 9D  !! " 9&Q  9"D  %1 ! " C !  " @ %& @ ( !! " 9&! (" $ !4 ! %"& !!!(( !@  98!  !( ! 6 57I 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &""  $E    %!0  



5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH ' &RYHUXS & )UDXGXOHQW DFW % 3URVHFXWLRQ $ &RQYHUVLRQ RI PRQH\ WR IUDXGVWHU V XVH 7KH SKDVHV RI HPSOR\HH IUDXG GR QRW LQFOXGH WKH



$Q LQWHUQDO FRQWURO TXHVWLRQQDLUH IRU HYDOXDWLQJ WKH FRPSOHWHQHVV REMHFWLYH RI FDVK UHFHLSWV ZRXOG QRW LQFOXGH ZKLFK RI WKH IROORZLQJ TXHVWLRQV"

$ 'RHV WKH SHUVRQ ZKR RSHQV WKH PDLO PDNH D OLVW RI FDVK UHFHLYHG" % $UH SUHQXPEHUHG VDOHV LQYRLFHV RU UHFHLSW ERRNV XVHG" & $UH FXUUHQW UHFHLSWV FRQWUROOHG E\ PHFKDQLFDO GHYLFHV" ' 'RHV D UHVSRQVLEOH SHUVRQ DSSURYH GLVFRXQWV WDNHQ E\ FXVWRPHUV ZLWK SD\PHQWV RQ DFFRXQW" 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

"" !  9"D  %1 ! " C @ (" !&!2  9!! !@ !4 " ! 4  " " !@ !2! V 57I 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %!0  

! 9D  !! " 9&Q  9"D  %1 ! " C !  " @ %& @ ( !! " 9&! (" $ !4 ! %"& !!!(( !@  98!  !( ! 6 57I 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %!0  



5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH ' +DYH DFFHVV WR ODUJH DPRXQWV RI PRQH\ & +DYH ORQJ WHQXUH ZLWK RUJDQL]DWLRQ % +DYH SRZHU WR RYHUULGH FRQWUROV $ +ROG PLGGOH PDQDJHPHQW SRVLWLRQV 7KH FKDUDFWHULVWLFV RI SHRSOH ZKR FRPPLW WKH ODUJHVW IUDXGV ZRXOG QRW LQFOXGH



7KH DXGLWRUV LQIRUPDWLRQ VRXUFH IRU YRXFKLQJ WKH EDQN UHFRQFLOLDWLRQ LWHPV LV WKH

$ 6WDQGDUG EDQN FRQILUPDWLRQ % %DQN VWDWHPHQW DW DXGLW GDWH & &XWRII EDQN VWDWHPHQW ' $FFRXQWLQJ MRXUQDO DW \HDU HQG 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH



7KH SUREDELOLW\ RI IUDXG LV QRW D IXQFWLRQ RI

$ 0RWLYH % 2SSRUWXQLW\ & /DFN RI LQWHJULW\ ' 3UHGLFDWLRQ 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

!!" !4 2  9"D  %1 ! " C @ ( "  !@ %  ! " ! @ !!" 9 !4 2 (" ! 9 !@ !2! X 57I 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %!0   

!!" !4 2  9"D  %1 ! " C @ ( "  !@ %  !" ! @ !!" 9 !4 2 (" ! 9 !@ !2! X 57I 5 !4 ! 321 %!0 & !# ) ((  99 &"" @!!E   %!0  

! %D   9"D  %1 ! " C" ( !@A  8! !( " @ i! % ( !@ BC !Ch "" !!@ !@  98!  ( ! )57I 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &""  $E    %!0 



5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH ' $OO UHVWULFWLRQV RQ WKH XVH RI FDVK DUH GLVFORVHG & &DVK EDODQFH SURSHUO\ UHIOHFWV DOO FDVK RQ KDQG LQ WUDQVLW RU RQ GHSRVLW ZLWK % 3URSHU LQWHUQDO FRQWURO DFWLYLWLHV H[LVW IRU DOO FDVK DFFRXQWV $ &DVK LQ DOO DFFRXQWV H[LVWV LQ WKH QDPH RI WKH FRPSDQ\ VWDWHPHQWV LQFOXGH DOO RI WKH IROORZLQJ H[FHSW 7KH DVVHUWLRQV E\ PDQDJHPHQW UHJDUGLQJ WKH FDVK DFFRXQWV LQ WKH ILQDQFLDO WKLUG SDUWLHV



$ SUDFWLFH WKDW ZRXOG QRW HQFRXUDJH IUDXG ZRXOG LQFOXGH

$ &HQWUDOL]LQJ DXWKRULW\ LQ WRS PDQDJHPHQW % &RQVLGHULQJ SHRSOH SUHVVXUH LQ WKH ZRUN SODFH & 0DNLQJ SURILWV WKH RQO\ FULWHULRQ IRU VXFFHVV ' ,QVLVWLQJ WKDW HYHU\WKLQJ EH GRFXPHQWHG ZLWK D UXOH IRU HYHU\WKLQJ 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

"!4 !   9"D  %1 ! " C  ( !! " 9&! !4 ! 9 " ! !2  @ !S@! !2! G 57I 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %$@D    



:KLFK TXHVWLRQ ZRXOG QRW EH DSSURSULDWH ZKHQ DVNLQJ TXHVWLRQV RI SHUVRQQHO GXULQJ D UHJXODU DXGLW"

$ 'R \RX WKLQN IUDXG LV D SUREOHP IRU EXVLQHVV LQ JHQHUDO" % 'R \RX WKLQN WKLV FRPSDQ\ KDV DQ\ SDUWLFXODU SUREOHP ZLWK IUDXG" & ,Q \RXU GHSDUWPHQW ZKR KDV WKH SRWHQWLDO IRU FRPPLWWLQJ IUDXG" ' ,V WKHUH DQ\ LQIRUPDWLRQ \RX ZRXOG OLNH WR IXUQLVK UHJDUGLQJ SRVVLEOH IUDXG ZLWKLQ WKLV RUJDQL]DWLRQ" 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

!!"  !! 8Q  9"D  %1 ! " C@ %4 "4  !&!@  ( !! " 9&! %!! "( !!" 9 !! 8! !&" !2! R 57I 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %!0  

!!"  !! 8Q  9"D  %1 ! " C@ %4 "4  !&!@  ( !! " 9&! %!! "( !!" 9 !! 8! !&" !2! R 57I 5 !4 ! 321 %!0 & !# ) ((  99 &"" @!!E   %!0  



5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH ' 'LVFRYHU\ VXPPDU\ & 3DSHU WUDLO % 7HVW RI FRQWUROV $ $XGLW RI EDODQFH 7KH VWDQGDUG IRUPDW IRU WKH DXGLW DSSURDFK WR IUDXG FDVHV ZRXOG QRW LQFOXGH



,QIRUPDWLRQ DERXW FULPLQDO UDFNHWV DQG FRQV DQG WKHLU RSHUDWLRQV DQG WKH UHSXWDWLRQV RI ORFDO EXVLQHVVHV FDQ EH IRXQG DW WKH

$ 3ROLFH DQG 'UXJ (QIRUFHPHQW $JHQF\ % 6WDQGDUG 3RRU 5HJLVWHUV & 6HFXULWLHV DQG ([FKDQJH &RPPLVVLRQ ' %HWWHU %XVLQHVV %XUHDX 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

)LOO LQ WKH %ODQN 4XHVWLRQV

! 9D  !! " 9&Q  9"D  %1 ! " C !  " @ %& @  ( !! " 9&! (" $ !4 ! %"& !!!(( !@  98!  !( ! 6 57I 5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  



BBBBBBBBBBBBBBBBBBBBBBBBBBB LV WKH XVH RI IUDXGXOHQW PHDQV WR WDNH PRQH\ RU RWKHU SURSHUW\ IURP DQ HPSOR\HU (PSOR\HH IUDXG 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH



$QRWKHU QDPH IRU HPSOR\HH IUDXG DQG HPEH]]OHPHQW LV BBBBBBBBBBBBBBBBBBBBBBBBB GHIDOFDWLRQ 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH



7KH WKUHH FRPSRQHQWV RI WKH IUDXG WULDQJOH DUH BBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBB DQG BBBBBBBBBBBBBBBBBBBBBBBBBBBB PRWLYH RSSRUWXQLW\ UDWLRQDOL]DWLRQ 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH



$ FRPPRQ IHDWXUH RI FDVK PDQDJHPHQW LV WR UHTXLUH WKDW SHUVRQV ZKR KDQGOH FDVK EH ERQGHG XQGHU D Q BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB ILGHOLW\ ERQG 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH



)UDXG H[DPLQDWLRQV VKRXOG EHJLQ RQO\ DIWHU VXIILFLHQW BBBBBBBBBBBBBBBBBBBBBBBBBBBBB OHDGV WR WKH EHOLHI WKDW D IUDXG KDV RFFXUUHG SUHGLFDWLRQ 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH



7KH WKUHH QHFHVVDU\ HOHPHQWV WR FRPPLW IUDXG DUH WKH BBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBB DQG BBBBBBBBBBBBBBBBBBBBBBBBBBBB IUDXG FRQYHUVLRQ FRYHUXS 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH



BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB LV D UHFRQFLOLDWLRQ LQ ZKLFK WKH EDQN EDODQFH WKH EDQN UHSRUW RI FDVK GHSRVLWHG DQG WKH EDQN UHSRUW RI FDVK SDLG DUH DOO UHFRQFLOHG WR WKH FOLHQW V JHQHUDO OHGJHU 3URRI RI FDVK 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH



'XDO GLUHFWLRQ WHVWLQJ LQYROYHV VDPSOHV VHOHFWHG WR REWDLQ HYLGHQFH DERXW FRQWURO RYHU BBBBBBBBBBBBBBBBBBBBBBBBBBBBB LQ RQH GLUHFWLRQ DQG FRQWURO RYHU BBBBBBBBBBBBBBBBBBBBBBBBBBBBB LQ WKH RWKHU GLUHFWLRQ FRPSOHWHQHVV YDOLGLW\ 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH



6RPHRQH ZKR VWHDOV IURP DQ RUJDQL]DWLRQ WR VXSSRUW D SROLWLFDO DJHQGD LV VDLG WR KDYH D Q BBBBBBBBBBBBBBBBBBBB PRWLYDWLRQ LGHRORJLFDO 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH



$ VHW RI WHOOWDOH VLJQV RI HUURQHRXV DFFRXQWLQJ PLVVLQJ RU DOWHUHG GRFXPHQWV RU D GDQJOLQJ GHEW LV UHIHUUHG WR DV D BBBBBBBBBBBBBBBBBBBBBBBBBBBBB SDSHU WUDLO 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH



6LPSOH WKHIW RI PRQH\ RU JRRGV QRW HQWUXVWHG WR DQ LQGLYLGXDO LV UHIHUUHG WR DV BBBBBBBBBBBBBBBBBBBBBBBBBBBB ODUFHQ\ 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH



$ BBBBBBBBBBBBBBBBBBBBBBBBBBBBB LV VRPH SUHVVXUH H[SHULHQFHG E\ D SHUVRQ ZKR EHOLHYHV WKDW LW FDQ W EH VKDUHG ZLWK IULHQGV DQG FRQILGDQWV PRWLYH 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH



$Q RUJDQL]DWLRQ ZKRVH RQO\ FRQWURO LV BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB UHDOO\ KDV QR FRQWURO WUXVWZRUWK\ HPSOR\HHV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH



2EVHUYDWLRQ RI SHUVRQV BBBBBBBBBBBBBBBBBBBBBBBBBBBBB LQ BBBBBBBBBBBBBBBBBBBBBBBBBBBBB DQG BBBBBBBBBBBBBBBBBBBBBBBBBBBBB PD\ EH UHG IODJV RI HPSOR\HH IUDXG FKDQJHV KDELWV OLIHVW\OHV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH



7KH QDWXUH RI H[WHQGHG SURFHGXUHV LV OLPLWHG RQO\ E\ D Q BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB DXGLWRU V LPDJLQDWLRQ 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH



$XGLWRUV BBBBBBBBBBBBBBBBBBBBBB SHUIRUP WKH FRPSDQ\ V FRQWURO IXQFWLRQ RI BBBBBBBBBBBBBBBBBBBBBBBBBBBBB WKH EDQN UHFRQFLOLDWLRQ VKRXOG QRW SUHSDULQJ 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH



$XGLWRUV XVH D Q BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB WR REWDLQ LQGHSHQGHQW HYLGHQFH RI WKH SURSHU OLVWLQJ RI RXWVWDQGLQJ FKHFNV DQG GHSRVLWV LQ WUDQVLW RQ D EDQN UHFRQFLOLDWLRQ FXWRII EDQN VWDWHPHQW 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH



7KH WHUP BBBBBBBBBBBBBBBBBBBBBBBBBBBBB UHIHUV WR WKH DSSOLFDWLRQ RI DFFRXQWLQJ DQG DXGLWLQJ VNLOOV WR FLYLO DQG FULPLQDO SUREOHPV IRUHQVLF DFFRXQWLQJ 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

6KRUW $QVZHU 4XHVWLRQV



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

 *  %  $  '  )



"" !  9"D  %1 ! " C @ (" !&!2  9!! !@ !4 " ! 4  " " !@ !2! V 57I 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %$@D   

u|| tu t vs } w s vs} }t} s xvtwu} tu s}s w vw}w v| ssu} s} vwt s vt w}vs s~ w}|s zy xvwvutsr { }vsw| }w t vt }t u|| } xw }t} tu ss s vw tus~ s xv t s|vsusw s } vwt s vt svws s~ w}|s zy xvwvutsr { ut  }|ww usz s s  |uts s  t xs r  | w} tv 



)HHGEDFN 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH  (  /  2  *  ,  1  +  -  .  ' &ROXPQ % )RU HDFK RI WKH GHVFULSWLRQV LQ &ROXPQ $ PDWFK WKH FRUUHFW ZRUG RU ZRUGV IURP

(VVD\ 4XHVWLRQV



:KHQ \RX H[DPLQH FDQFHOHG FKHFNV UHWXUQHG LQ WKH EDQN VWDWHPHQW E\ D FOLHQW V EDQN KRZ FRXOG \RX WHOO ZKHWKHU WKH DPRXQW RQ D FKHFN KDG EHHQ VNLOOIXOO\ LQFUHDVHG SHUKDSV IURP  WR   LQ WKH DPRXQW ER[ DQG DOWHUHG LQ WKH ZULWWHQ OLQH IURP 6HYHQW\ILYH GROODUV WR 6HYHQW\ILYH KXQGUHG GROODUV DIWHU WKH FKHFN ZDV FOHDUHG E\ WKH EDQN" $Q HPSOR\HH PLJKW GR WKLV WR VXSSRUW D   FDVK GLVEXUVHPHQW MRXUQDO HQWU\

7KH EDQN LPSULQWV WKH FKHFN ZLWK WKH DPRXQW SDLG E\ WKH EDQN PDJQHWLF SULQW LQ WKH ORZHU ULJKW FRUQHU  ,W ZLOO EH  PHDQLQJ 

%""&!D   9"D  %1 ! " C  ( !! " 9&! !4 ! 9 " ! !2  @ !S@! !2! G 57I 5 !4 ! 321 %!0 !!"  !! 8Q  9"D  %1 ! " C@ %4 "4  !&!@  ( !! " 9&! %!! "( !!" 9 !! 8! !&" !2! R 57I 5 !4 ! 321 %!0 W G (( 99 &"" @!!E   %!0  



$IWHU FKHFNV DUH VLJQHG IRU YHQGRU LQYRLFHV ZK\ VKRXOG YRXFKHUV EH PDUNHG 3$,' RU RWKHUZLVH PXWLODWHG"

7R VKRZ WKH\ KDYH EHHQ SURFHVVHG VR WKH\ FDQQRW EH SDLG DJDLQ

 /LVW DQG EULHIO\ GHVFULEH WKH WKUHH IDFWRUV WKDW LQFUHDVH WKH SUREDELOLW\ RI IUDXG

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

"" !  9"D  %1 ! " C @ (" !&!2  9!! !@ !4 " ! 4  " " !@ !2! V 57I 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %!0   %!0  

! %D   9"D  %1 ! " C" ( !@A  8! !( " @ i! % ( !@ BC !Ch "" !!@ !@  98!  ( ! )57I 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %$@D    

! %D   9"D  %1 ! " C" ( !@A  8! !( " @ i! % ( !@ BC !Ch "" !!@ !@  98!  ( ! )57I 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &""  $E   

 :KDW NLQG RI HUURU RU IUDXG FRXOG KDSSHQ LI WKH LQYHQWRU\ ZDUHKRXVH PDQDJHU DOVR

WKHIW E 6WHDO LQYHQWRU\ DQG DGMXVW WKH LQYHQWRU\ UHFRUGV SHUPDQHQWO\ WR FRYHU XS WKH DFFRXQWV DQG LQYHQWRU\ UHFRUGV D &RPPLW DQ LQDGYHUWHQW HUURU RI PLVFRXQWLQJ DQG DGMXVW WKH HUURU LQWR WKH 7KH LQYHQWRU\ PDQDJHU FRXOG GLVFUHSDQFLHV WR WKH SHUSHWXDO LQYHQWRU\ UHFRUGV" KDG UHVSRQVLELOLW\ IRU PDNLQJ WKH SK\VLFDO LQYHQWRU\ FRXQW DQG UHFRQFLOLQJ

 'HVFULEH KRZ D ORFNER[ ZRUNV DQG LQGLFDWH WKH DGYDQWDJHV RI VXFK D V\VWHP

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

"" !  9"D  %1 ! " C @ (" !&!2  9!! !@ !4 " ! 4  " " !@ !2! V 57I 5 !4 ! 321 %!0 & !# ) ((  99 &"" @!!E   %!0  

 (G V ZLIH 'LDQH RZQV D SULQWLQJ EXVLQHVV LQ WRZQ (G ZRUNV LQ WKH DFFRXQWV SD\DEOH GHSDUWPHQW RI -LII\ $EV 9LWDPLQ &RPSDQ\ 'LDQH SULQWV LQYRLFHV IRU ZRUN VXSSRVHGO\ GRQH IRU -LII\ $EV QR DFWXDO ZRUN ZDV SHUIRUPHG DQG (G SODFHV WKH LQYRLFH LQ WKH LQYRLFH SLOH DSSURYHG IRU SD\PHQW -LII\ $EV SD\V WKHVH LQYRLFHV DQG VHQGV 'LDQH D FKHFN D 1DPH WZR LQWHUQDO FRQWUROV WKDW PLJKW SUHYHQW RU GHWHFW WKHVH IUDXGXOHQW SD\PHQWV E 1DPH WZR DXGLW SURFHGXUHV WKDW PLJKW GHWHFW WKLV IUDXG

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

"!4 !   9"D  %1 ! " C  ( !! " 9&! !4 ! 9 " ! !2  @ !S@! !2! G 57I 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %$@D    

YHQGRUV

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

D &RQWUROV LQFOXGH +DYLQJ D GLIIHUHQW SHUVRQ HPSW\ WKH SRVW RIILFH ER[ UHFRUG KRZ PDQ\ HQYHORSHV ZHUH LQ WKH ER[ DQG GHOLYHU WKH XQRSHQHG PDLO WR &KULV &KULV ZRXOG EH UHTXLUHG WR DFFRXQW IRU HDFK HQYHORSH 7KH PDLO FRXOG EH SLFNHG XS XQGHU MRLQW FXVWRG\ 7KH PDLO FRXOG EH RSHQHG XQGHU MRLQW FXVWRG\ 6XUYHLOODQFH HTXLSPHQW FRXOG EH XVHG WR PRQLWRU WKH RSHQLQJ DQG UHFRUGLQJ RI

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

C  ( !! " 9&! !4 ! 9 " ! !2  @ !S@! !2! G 57I 5 !4 ! 321 %!0 W G (( 99 &""  $E    %$@D    

5HYHQXH DQG &ROOHFWLRQ &\FOH

7UXH  )DOVH 4XHVWLRQV

 $ SULFH OLVW PDVWHU ILOH FRQWDLQV WKH SURGXFW XQLW SULFHV WKDW DUH XVHG IRU ELOOLQJ FXVWRPHUV 7UXH )DOVH

 7KH DFFRXQWDQWV ZKR UHFRUG FDVK UHFHLSWV DQG FUHGLWV WR FXVWRPHU DFFRXQWV VKRXOG QRW KDQGOH WKH FDVK 7UXH )DOVH

 &UHGLW FKHFNV VKRXOG EH SHUIRUPHG E\ WKH VDOHV GHSDUWPHQW EHIRUH FUHGLW LV DSSURYHG 7UXH )DOVH

"!4 !   9"D  %1 ! "

&KDSWHU 

 7KH DJLQJ LQIRUPDWLRQ IRU DFFRXQWV UHFHLYDEOH LV W\SLFDOO\ XVHG LQ FRQQHFWLRQ ZLWK DVVHVVLQJ WKH DOORZDQFH IRU GRXEWIXO DFFRXQWV 7UXH )DOVH

 $ FRPSDULVRQ RI FKHFNV OLVWHG RQ D VDPSOH RI GHSRVLW VOLSV WR WKH GHWDLO RI FXVWRPHU FUHGLWV SRVWHG WR FXVWRPHU DFFRXQWV UHFHLYDEOH FDQ EH DQ DXGLW WHVW IRU ODSSLQJ 7UXH )DOVH

 ,I FRQWURO ULVN LV DVVHVVHG YHU\ ORZ WKH VXEVWDQWLYH DXGLW SURFHGXUHV RQ DFFRXQW EDODQFHV PXVW EH H[SDQGHG 7UXH )DOVH

 $ FRQILUPDWLRQ SURFHGXUH VFKHGXOHG RQ WKH \HDUHQG GDWH ZLWK D ODUJH VDPSOH RI FXVWRPHU DFFRXQW EDODQFHV LV QHFHVVDU\ LI WHVWV RI FRQWUROV UHYHDO FRQWURO ZHDNQHVVHV 7UXH )DOVH

 $XGLWRUV VKRXOG QRW SODFH WRWDO UHOLDQFH RQ FRQWUROV WR WKH H[FOXVLRQ RI RWKHU VXEVWDQWLYH WHVWLQJ SURFHGXUHV 7UXH )DOVH

 $Q REMHFWLYH IRU DQ DXGLW LV WR REWDLQ HYLGHQFH UHODWHG WR PDQDJHPHQW V ILQDQFLDO VWDWHPHQW DVVHUWLRQV 7UXH )DOVH

 :KHQ REWDLQLQJ HYLGHQFH DERXW DFFRXQWV UHFHLYDEOH DXGLWRUV PXVW SXW HPSKDVLV RQ WKH FRPSOHWHQHVV DQG REOLJDWLRQV DVVHUWLRQV 7UXH )DOVH

 ,QTXLULHV RI PDQDJHPHQW XVXDOO\ GR QRW SURYLGH YHU\ FRQYLQFLQJ HYLGHQFH DERXW WKH H[LVWHQFH DQG ULJKWV DVVHUWLRQV 7UXH )DOVH

 $ FRPSXWHU JHQHUDOO\ FDQQRW EH XVHG IRU VFDQQLQJ ODUJH ILOHV RI DFFRXQWV UHFHLYDEOH IRU XQXVXDO FUHGLW EDODQFHV 7UXH )DOVH

 7KH XVH RI FRQILUPDWLRQV WR WHVW DFFRXQWV UHFHLYDEOH LV FRQVLGHUHG D JHQHUDOO\ DFFHSWHG DXGLW SURFHGXUH 7UXH )DOVH

 &RQILUPDWLRQV \LHOG HYLGHQFH DERXW H[LVWHQFH DQG WKH JURVV YDOXDWLRQ RI D UHFHLYDEOH EDODQFH 7UXH )DOVH

0XOWLSOH &KRLFH 4XHVWLRQV

 7R EH UHFRJQL]HG UHYHQXHV PXVW DOVR EH UHDOL]HG RU UHDOL]DEOH DQG

$ )RUHVHHDEOH % &ROOHFWHG & (DUQHG ' 6KLSSHG  7KH 6(& UHTXLUHV DOO RI WKH IROORZLQJ IRU UHYHQXH WR EH UHFRJQL]HG H[FHSW

$ &DVK LV FROOHFWHG % 3HUVXDVLYH HYLGHQFH RI DQ DUUDQJHPHQW H[LVWV & 'HOLYHU\ KDV RFFXUUHG RU VHUYLFHV KDYH EHHQ UHQGHUHG ' 7KH VHOOHU V SULFH WR WKH EX\HU LV IL[HG RU GHWHUPLQDEOH

 %LOO DQG KROG UHIHUV WR DQ DUUDQJHPHQW ZKHUH

$ 6DOHV DUH UHFRUGHG EXW DUH QRW VKLSSHG % 6DOHV DUH VKLSSHG EXW DUH QRW UHFRUGHG & 6DOHV DUH ELOOHG EXW QRW FROOHFWHG ' ,QYHQWRU\ LV KHOG EXW QRW ELOOHG  &XVWRG\ RI LQYHQWRU\ LV WUDQVIHUUHG WR WKH VKLSSLQJ DUHD XSRQ DXWKRUL]DWLRQ RI

$ 7KH FXVWRPHU RUGHU % 7KH VKLSSLQJ RUGHU & 7KH LQYRLFH ' 7KH SXUFKDVH RUGHU  7KH GRFXPHQW WKDW JHQHUDWHV UHFRUGLQJ RI D VDOH LV WKH

$ 7KH FXVWRPHU RUGHU % 7KH VKLSSLQJ RUGHU & 7KH LQYRLFH ' 7KH SXUFKDVH RUGHU

 7KH VXP RI FXVWRPHUV XQSDLG EDODQFHV WKDW LV FRPSDUHG WR WKH JHQHUDO OHGJHU EDODQFH FRPHV IURP

$ $ WRWDO RI VDOHV LQYRLFHV % $ WRWDO RI VKLSSLQJ RUGHUV & 7KH VDOHV MRXUQDO ' 7KH DFFRXQWV UHFHLYDEOH WULDO EDODQFH  7KH ILOH WKDW FRQWDLQV VDOHV WUDQVDFWLRQV WKDW ZHUH LQLWLDWHG LQ WKH V\VWHP EXW DUH QRW \HW FRPSOHWHG LV WKH

$ &UHGLW FKHFN ILOH % 6DOHV GHWDLO & ,QYHQWRU\ PDVWHU ' 3HQGLQJ RUGHU PDVWHU  7KH DVVHUWLRQ WKDW DXGLWRUV ZLOO SUREDEO\ HPSKDVL]H LQ WKH UHYHQXH DQG FROOHFWLRQ F\FOH LV

$ 2FFXUUHQFH % &RPSOHWHQHVV & $FFXUDF\ ' &ODVVLILFDWLRQ

 $ VPDOO EXVLQHVV RZQHU FDQ EHVW RIIVHW WKH ODFN RI VHSDUDWLRQ RI GXWLHV E\

$ &UHDWLQJ DQ LQWHUQDO DXGLW GHSDUWPHQW % ,QVWDOOLQJ WKH ODWHVW FRPSXWHU HTXLSPHQW DQG VRIWZDUH & %HLQJ DFWLYHO\ LQYROYHG LQ WKH DFFRXQWLQJ SURFHVV ' 5HO\LQJ RQ WKH H[WHUQDO DXGLWRU WR GHWHFW HUURUV  $FFRXQWDQWV VKRXOG EH XQGHU RUGHUV WR UHFRUG VDOHV DQG DFFRXQWV UHFHLYDEOH ZKHQ

$ 7KH FXVWRPHU V RUGHU LV UHFHLYHG % $OO VXSSRUWLQJ GRFXPHQWDWLRQ RI VKLSSLQJ LV LQ RUGHU & 7KH LWHP KDV EHHQ SDLG IRU ' 7KH WHUPV DUH DJUHHG XSRQ  :KLFK RI WKH IROORZLQJ LV DQ H[DPSOH RI D FRQWURO DFWLYLW\ WKDW VDWLVILHV WKH DFFXUDF\ FRQWURO REMHFWLYH IRU VDOHV LQYRLFHV"

$ 5HFRUGHG VDOHV LQ WKH VDOHV MRXUQDO DUH VXSSRUWHG E\ LQYRLFHV % ,QYRLFHV VKLSSLQJ GRFXPHQWV DQG VDOHV RUGHUV DUH SUHQXPEHUHG DQG WKH QXPHULFDO VHTXHQFH LV FKHFNHG & 6DOHV DUH UHFRUGHG LQ WKH SURSHU DFFRXQW ' ,QYRLFH TXDQWLWLHV DUH FRPSDUHG WR VKLSPHQW DQG FXVWRPHU RUGHU TXDQWLWLHV

 6FDQQLQJ VDOHV LQYRLFHV IRU PLVVLQJ QXPEHUV LQ WKH VHTXHQFH ZRXOG EH DQ DFWLYLW\ LQWHQGHG WR VDWLVI\ ZKDW DVVHUWLRQ"

$ &RPSOHWHQHVV % $FFXUDF\ & 2FFXUUHQFH ' &ODVVLILFDWLRQ  9RXFKLQJ GHELWV IURP D VDPSOH VHOHFWLRQ RI FXVWRPHUV DFFRXQWV UHFHLYDEOH UHFRUGV WR VXSSRUWLQJ VDOHV LQYRLFHV LV DQ DXGLW SURFHGXUH GHVLJQHG WR REWDLQ HYLGHQFH DERXW WKH DVVHUWLRQ RI

$ 2FFXUUHQFH % &RPSOHWHQHVV & &ODVVLILFDWLRQ ' $FFXUDF\

 $OSKD %UHZHU\ &RUSRUDWLRQ UHFRUGHG VDOHV WKURXJK -DQXDU\   GDWLQJ WKHP 'HFHPEHU   7KLV VLWXDWLRQ LV DQ H[DPSOH RI D YLRODWLRQ RI ZKLFK RI WKH IROORZLQJ DVVHUWLRQV"

$ ([LVWHQFH RU RFFXUUHQFH % &RPSOHWHQHVV & &ODVVLILFDWLRQ ' $FFXUDF\  &RQILUPDWLRQV RI DFFRXQWV UHFHLYDEOH SURYLGH WKH PRVW HYLGHQFH IRU ZKLFK RI WKH IROORZLQJ DVVHUWLRQV"

$ ([LVWHQFH % 9DOXDWLRQ RU DOORFDWLRQ & 5LJKWV DQG REOLJDWLRQV ' &RPSOHWHQHVV  7KH DXGLWRU PDLQWDLQV FRQWURO RI WKH PDLOLQJ DQG UHFHLSW RI FRQILUPDWLRQV E\ W\SLFDOO\ SHUIRUPLQJ DOO RI WKH IROORZLQJ H[FHSW

$ 3UHSDULQJ WKH FRQILUPDWLRQ OHWWHUV % 0DLOLQJ WKH FRQILUPDWLRQ OHWWHUV & 5HFHLYLQJ WKH FRQILUPDWLRQ OHWWHUV ' 1RQH RI WKH DERYH

 ,I WKH DXGLWRU REWDLQV VXIILFLHQW FRPSHWHQW HYLGHQFH RQ WKH FOLHQW V DFFRXQWV UHFHLYDEOH EDODQFH E\ DOWHUQDWLYH SURFHGXUHV EHFDXVH LW LV LPSUDFWLFDO WR FRQILUP DFFRXQWV UHFHLYDEOH WKH DXGLWRU V RSLQLRQ VKRXOG EH XQTXDOLILHG DQG FRXOG EH H[SHFWHG WR

$ 'LVFORVH WKH IDFW WKDW DOWHUQDWLYH SURFHGXUHV ZHUH XVHG GXH WR FOLHQWLPSRVHG VFRSH OLPLWDWLRQ % 'LVFORVH LQ WKH RSLQLRQ SDUDJUDSK WKDW FRQILUPDWLRQ RI DFFRXQWV UHFHLYDEOH ZDV LPSUDFWLFDEOH & $YRLG PHQWLRQLQJ WKH DOWHUQDWLYH SURFHGXUHV ' ,QFOXGH DQ H[SODQDWRU\ SDUDJUDSK WKDW GLVFORVHV WKH SHUIRUPDQFH RI DOWHUQDWLYH SURFHGXUHV  :KLFK RI WKH IROORZLQJ LV QRW D YDOLG UHDVRQ IRU DQ DXGLWRU GHFLGLQJ QRW WR VHQG DFFRXQWV UHFHLYDEOH FRQILUPDWLRQV"

$ 7KH EDODQFH LV LPPDWHULDO % &RQILUPDWLRQV ZRXOG EH LQHIIHFWLYH & 7KH FOLHQW UHTXHVWV DOWHUQDWLYH SURFHGXUHV EH SHUIRUPHG LQVWHDG ' 2WKHU SURFHGXUHV SURYLGH VXIILFLHQW FRPSHWHQW HYLGHQFH

 :KHQ DQ DFFRXQW UHFHLYDEOH LV FRQVLGHUHG XQFROOHFWLEOH WKH SHUVRQ ZKR JHQHUDOO\ DXWKRUL]HV WKH ZULWHRII LV WKH FOLHQW V

$ &UHGLW PDQDJHU % 7UHDVXUHU & $FFRXQWDQW ' ,QWHUQDO DXGLWRU  :KLFK RI WKH IROORZLQJ DXGLW SURFHGXUHV LV WKH PRVW HIIHFWLYH LQ WHVWLQJ VDOHV IRU XQGHUVWDWHPHQW"

$ $QDO\]H WKH DJHG WULDO EDODQFH RI UHFRUGHG DFFRXQWV UHFHLYDEOH % &RQILUP UHFRUGHG DFFRXQWV UHFHLYDEOH & 7UDFH D VDPSOH RI VKLSSLQJ GRFXPHQWV WR VDOHV LQYRLFHV UHFRUGHG LQ WKH VDOHV MRXUQDO ' 9RXFK D VDPSOH RI UHFRUGHG VDOHV IURP WKH VDOHV MRXUQDO WR VKLSSLQJ GRFXPHQWV

 7R GHWHUPLQH ZKHWKHU VDOHV WUDQVDFWLRQV KDYH EHHQ UHFRUGHG LQ WKH SURSHU DFFRXQWLQJ SHULRG WKH DXGLWRU SHUIRUPV FXWRII WHVWV :KLFK RI WKH IROORZLQJ EHVW GHVFULEHV WKH RYHUDOO DSSURDFK XVHG ZKHQ SHUIRUPLQJ FXWRII WHVWV"

$ $VFHUWDLQ WKDW PDQDJHPHQW KDV LQFOXGHG LQ WKH UHSUHVHQWDWLRQ OHWWHU D VWDWHPHQW WKDW WUDQVDFWLRQV KDYH EHHQ DFFRXQWHG IRU LQ WKH SURSHU DFFRXQWLQJ SHULRG % $QDO\]H WUDQVDFWLRQV RFFXUULQJ ZLWKLQ D IHZ GD\V EHIRUH DQG DIWHU \HDUHQG & &RQILUP \HDUHQG WUDQVDFWLRQV ZLWK UHJXODU FXVWRPHUV ' ([DPLQH FDVK UHFHLSWV LQ WKH VXEVHTXHQW SHULRG  7KH PRVW HIIHFWLYH DXGLW SURFHGXUH IRU GHWHUPLQLQJ WKH FROOHFWDELOLW\ RI DQ DFFRXQW UHFHLYDEOH LV WKH

$ 5HYLHZ RI WKH VXEVHTXHQW FDVK FROOHFWLRQV % ([DPLQDWLRQ RI WKH UHODWHG VDOHV LQYRLFH V  & &RQILUPDWLRQ RI WKH DFFRXQW ' 5HYLHZ RI DXWKRUL]DWLRQ RI FUHGLW VDOHV WR WKH FXVWRPHU DQG WKH SUHYLRXV KLVWRU\ RI FROOHFWLRQV

 ,Q GHWHUPLQLQJ WKH DGHTXDF\ RI WKH DOORZDQFH IRU XQFROOHFWLEOH DFFRXQWV WKH OHDVW YDOXDEOH HYLGHQFH ZRXOG EH REWDLQHG IURP

$ $Q DJLQJ VFKHGXOH RI SDVW GXH DFFRXQWV WKDW WKH DXGLWRU KDV WHVWHG % &RUUHVSRQGHQFH ZLWK WKH FOLHQW V FROOHFWLRQ DJHQF\ & )LQDQFLDO VWDWHPHQWV RI LQGLYLGXDO FXVWRPHUV ' 1R UHSO\ WR QHJDWLYH FRQILUPDWLRQV  $Q DXGLWRU FRQILUPV D UHSUHVHQWDWLYH QXPEHU RI RSHQ DFFRXQWV UHFHLYDEOH DV RI 'HFHPEHU  DQG LQYHVWLJDWHV UHVSRQGHQWV H[FHSWLRQV DQG FRPPHQWV %\ WKLV SURFHGXUH WKH DXGLWRU ZRXOG EH PRVW OLNHO\ WR OHDUQ RI ZKLFK RI WKH IROORZLQJ"

$ 2QH RI WKH FDVKLHUV KDV EHHQ FRYHULQJ D SHUVRQDO HPEH]]OHPHQW E\ ODSSLQJ % 2QH RI WKH VDOHV FOHUNV KDV QRW EHHQ SUHSDULQJ FKDUJH VOLSV IRU FUHGLW VDOHV WR IDPLO\ DQG IULHQGV & 2QH RI WKH ,7 FRQWURO FOHUNV KDV EHHQ UHPRYLQJ DOO VDOHV LQYRLFHV DSSOLFDEOH WR KLV DFFRXQW IURP WKH GDWD ILOH ' 7KH FUHGLW PDQDJHU KDV PLVDSSURSULDWHG UHPLWWDQFHV IURP FXVWRPHUV ZKRVH DFFRXQWV KDYH EHHQ ZULWWHQ RII

 $Q DXGLWRU VKRXOG QRUPDOO\ SHUIRUP DOWHUQDWLYH SURFHGXUHV WR VXEVWDQWLDWH WKH H[LVWHQFH RI DFFRXQWV UHFHLYDEOH ZKHQ

$ 1R UHSO\ WR D SRVLWLYH FRQILUPDWLRQ UHTXHVW LV UHFHLYHG % 1R UHSO\ WR D QHJDWLYH FRQILUPDWLRQ UHTXHVW LV UHFHLYHG & &ROOHFWDELOLW\ RI WKH UHFHLYDEOHV LV LQ GRXEW ' 3OHGJLQJ RI WKH UHFHLYDEOHV LV SUREDEOH  $ FXVWRPHU UHSO\ RQ D SRVLWLYH FRQILUPDWLRQ VD\V :H GLVSXWH WKH  FKDUJH :H EHOLHYH LW LV H[FHVVLYH 7KLV FRQILUPDWLRQ

$ 3URYLGHV HYLGHQFH RI H[LVWHQFH % 'RHV QRW SURYLGH HYLGHQFH RI H[LVWHQFH EHFDXVH WKH FXVWRPHU PD\ UHIXVH WR SD\ WKH  FKDUJH & 3URYLGHV HYLGHQFH WKDW WKH DFFRXQW ZDV XQGHUVWDWHG ' 3URYLGHV HYLGHQFH WKDW WKH DFFRXQW VKRXOG EH ZULWWHQ RII  7KH SULPDU\ FRQVLGHUDWLRQ ZKHQ SODQQLQJ ZKHWKHU WR VHQG FRQILUPDWLRQV RI DFFRXQWV UHFHLYDEOH EHIRUH WKH EDODQFH VKHHW GDWH LV WKH

$ 7\SH RI FRQILUPDWLRQ WR EH XVHG % &OLHQW V LQWHUQDO FRQWURO RYHU WUDQVDFWLRQV DIIHFWLQJ UHFHLYDEOHV & $YDLODELOLW\ RI VWDII DXGLWRUV ' 1XPEHU RI FXVWRPHU DFFRXQWV

 ,Q WKH UHYHQXH DQG FROOHFWLRQ F\FOH WKH DXGLWRU FKHFNV WKH QXPHULFDO VHTXHQFH RI VKLSSLQJ GRFXPHQWV 7KLV SURFHGXUH LV UHODWHG WR ZKLFK RI WKH IROORZLQJ DVVHUWLRQV"

$ ([LVWHQFH % &RPSOHWHQHVV & 5LJKWV DQG REOLJDWLRQV ' 9DOXDWLRQ RU DOORFDWLRQ  7KH DXGLWRU VHOHFWV D VDPSOH RI UHFRUGHG VDOHV LQYRLFHV DQG YRXFKHV WKHP WR VKLSSLQJ GRFXPHQWV 7KLV SURFHGXUH LV UHODWHG WR ZKLFK RI WKH IROORZLQJ DVVHUWLRQV"

$ 2FFXUUHQFH % &RPSOHWHQHVV & $FFXUDF\ ' &XWRII

 ,Q ZKLFK RI WKH IROORZLQJ FLUFXPVWDQFHV ZRXOG WKH XVH RI WKH QHJDWLYH IRUP RI DFFRXQWV UHFHLYDEOH FRQILUPDWLRQ PRVW OLNHO\ EH MXVWLILHG"

$ $ VXEVWDQWLDO QXPEHU RI DFFRXQWV PD\ EH LQ GLVSXWH DQG WKH DFFRXQWV UHFHLYDEOH EDODQFH DULVHV IURP VDOHV WR D IHZ PDMRU FXVWRPHUV % $ VXEVWDQWLDO QXPEHU RI DFFRXQWV PD\ EH LQ GLVSXWH DQG WKH DFFRXQWV UHFHLYDEOH EDODQFH DULVHV IURP VDOHV WR PDQ\ FXVWRPHUV ZLWK VPDOO EDODQFHV & $ VPDOO QXPEHU RI DFFRXQWV PD\ EH LQ GLVSXWH DQG WKH DFFRXQWV UHFHLYDEOH EDODQFH DULVHV IURP VDOHV WR D IHZ PDMRU FXVWRPHUV ' $ VPDOO QXPEHU RI DFFRXQWV PD\ EH LQ GLVSXWH DQG WKH DFFRXQWV UHFHLYDEOH EDODQFH DULVHV IURP VDOHV WR PDQ\ FXVWRPHUV ZLWK VPDOO EDODQFHV  :KLFK RI WKH IROORZLQJ FRQWUROV PRVW OLNHO\ ZRXOG KHOS HQVXUH WKDW DOO FUHGLW VDOHV WUDQVDFWLRQV RI DQ HQWLW\ DUH UHFRUGHG"

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

 :KLFK RI WKH IROORZLQJ LQWHUQDO FRQWURO DFWLYLWLHV PRVW OLNHO\ ZRXOG HQVXUH WKDW DOO ELOOHG VDOHV DUH FRUUHFWO\ SRVWHG WR WKH DFFRXQWV UHFHLYDEOH OHGJHU"

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

$ ([LVWHQFH % 9DOXDWLRQ RU DOORFDWLRQ & &RPSOHWHQHVV ' 5LJKWV DQG REOLJDWLRQV

 :KLFK RI WKH IROORZLQJ SURFHGXUHV ZRXOG DQ DXGLWRU PRVW OLNHO\ SHUIRUP IRU \HDUHQG DFFRXQWV UHFHLYDEOH FRQILUPDWLRQV ZKHQ WKH DXGLWRU GLG QRW UHFHLYH UHSOLHV WR VHFRQG UHTXHVWV"

$ 5HYLHZ WKH FDVK UHFHLSWV MRXUQDO IRU WKH PRQWK SULRU WR WKH \HDUHQG % ,QWHQVLI\ WKH VWXG\ RI WKH LQWHUQDO FRQWURO VWUXFWXUH FRQFHUQLQJ WKH UHYHQXH F\FOH & ,QFUHDVH WKH DVVHVVHG OHYHO RI GHWHFWLRQ ULVN IRU WKH H[LVWHQFH DVVHUWLRQ ' ,QVSHFW WKH VKLSSLQJ UHFRUGV GRFXPHQWLQJ WKH PHUFKDQGLVH VROG WR WKH GHEWRUV  :KLFK RI WKH IROORZLQJ PRVW OLNHO\ ZRXOG EH GHWHFWHG E\ DQ DXGLWRU V UHYLHZ RI D FOLHQW V VDOHV FXWRII"

$ 6KLSPHQWV ODFNLQJ VDOHV LQYRLFHV DQG VKLSSLQJ GRFXPHQWV % ([FHVVLYH ZULWHRIIV RI DFFRXQWV UHFHLYDEOH & 8QUHFRUGHG VDOHV DW \HDUHQG ' /DSSLQJ RI \HDUHQG DFFRXQWV UHFHLYDEOH  7UDFLQJ VKLSSLQJ GRFXPHQWV WR SUHQXPEHUHG VDOHV LQYRLFHV SURYLGHV HYLGHQFH WKDW

$ 1R GXSOLFDWH VKLSPHQWV RU ELOOLQJV RFFXUUHG % 6KLSPHQWV WR FXVWRPHUV ZHUH SURSHUO\ LQYRLFHG & $OO JRRGV RUGHUHG E\ FXVWRPHUV ZHUH DFFRXQWHG IRU ' $OO SUHQXPEHUHG VDOHV LQYRLFHV ZHUH DFFRXQWHG IRU

 :KLFK RI WKH IROORZLQJ VWDWHPHQWV LV FRUUHFW FRQFHUQLQJ WKH XVH RI QHJDWLYH FRQILUPDWLRQ UHTXHVWV"

$ 8QUHWXUQHG QHJDWLYH FRQILUPDWLRQ UHTXHVWV UDUHO\ SURYLGH VLJQLILFDQW H[SOLFLW HYLGHQFH % 1HJDWLYH FRQILUPDWLRQ UHTXHVWV DUH HIIHFWLYH ZKHQ GHWHFWLRQ ULVN LV ORZ & 8QUHWXUQHG QHJDWLYH FRQILUPDWLRQ UHTXHVWV LQGLFDWH WKDW DOWHUQDWLYH SURFHGXUHV DUH QHFHVVDU\ ' 1HJDWLYH FRQILUPDWLRQ UHTXHVWV DUH HIIHFWLYH ZKHQ XQGHUVWDWHPHQWV RI DFFRXQW EDODQFHV DUH VXVSHFWHG  7KH FRQILUPDWLRQ RI FXVWRPHUV DFFRXQWV UHFHLYDEOH UDUHO\ SURYLGHV UHOLDEOH HYLGHQFH DERXW WKH FRPSOHWHQHVV DVVHUWLRQ EHFDXVH

$ 0DQ\ FXVWRPHUV PHUHO\ VLJQ DQG UHWXUQ WKH FRQILUPDWLRQ ZLWKRXW YHULI\LQJ LWV GHWDLOV % 5HFLSLHQWV XVXDOO\ UHVSRQG RQO\ LI WKH\ GLVDJUHH ZLWK WKH LQIRUPDWLRQ RQ WKH UHTXHVW & &XVWRPHUV PD\ QRW EH LQFOLQHG WR UHSRUW XQGHUVWDWHPHQW HUURUV LQ WKHLU DFFRXQWV ' $XGLWRUV W\SLFDOO\ VHOHFW PDQ\ DFFRXQWV ZLWK ORZ UHFRUGHG EDODQFHV WR EH FRQILUPHG

 1HJDWLYH FRQILUPDWLRQ RI DFFRXQWV UHFHLYDEOH LV OHVV HIIHFWLYH WKDQ SRVLWLYH FRQILUPDWLRQ RI DFFRXQWV UHFHLYDEOH EHFDXVH

$ $ PDMRULW\ RI UHFLSLHQWV XVXDOO\ ODFNV WKH ZLOOLQJQHVV WR UHVSRQG REMHFWLYHO\ % 6RPH UHFLSLHQWV PD\ UHSRUW LQFRUUHFW EDODQFHV WKDW UHTXLUH H[WHQVLYH IROORZ XS & 7KH DXGLWRU FDQQRW LQIHU WKDW DOO QRQUHVSRQGHQWV KDYH YHULILHG WKHLU DFFRXQW LQIRUPDWLRQ ' 1HJDWLYH FRQILUPDWLRQV GR QRW SURGXFH HYLGHQWLDO PDWWHU WKDW LV VWDWLVWLFDOO\ TXDQWLILDEOH  :KLFK RI WKH IROORZLQJ UHVSRQVHV WR D FRQILUPDWLRQ RI EDODQFHV DW 'HFHPEHU  ZRXOG EH PRVW WURXEOLQJ WR DQ DXGLWRU"

$ :H SDLG WKLV DPRXQW RQ 'HFHPEHU  % :H UHFHLYHG WKHVH JRRGV RQ -DQXDU\  & :H UHWXUQHG WKLV DPRXQW RQ 'HFHPEHU  XQGHU RXU VWDQGLQJ DJUHHPHQW ZLWK WKH FRPSDQ\ ' 7KLV DPRXQW LV QRW GXH XQWLO -DQXDU\ 

 5HYHQXHV DUH QRUPDOO\ FRQVLGHUHG WR KDYH EHHQ HDUQHG ZKHQ

$ $OO SRVVLELOLW\ RI UHWXUQ KDV H[SLUHG % 7KH FRPSDQ\ KDV VXEVWDQWLDOO\ DFFRPSOLVKHG ZKDW LW PXVW WR EH HQWLWOHG WR WKH EHQHILWV & 7KH FDVK LV FROOHFWHG ' *RRGV KDYH EHHQ VKLSSHG  6DOHV DUH QRUPDOO\ UHFRUGHG RQ WKH GDWH RI WKH

$ &XVWRPHU SXUFKDVH RUGHU % %LOO RI ODGLQJ & 6DOHV LQYRLFH ' 3D\PHQW FKHFN  :KHQ DXGLWLQJ WKH UHYHQXH DQG FROOHFWLRQ F\FOH DXGLWRUV QRUPDOO\ VHOHFW EDODQFHV WR FRQILUP IURP WKH

$ 6DOHV MRXUQDO % $FFRXQWV UHFHLYDEOH OLVWLQJ & *HQHUDO OHGJHU ' &DVK UHFHLSWV OLVWLQJ

 :KLFK RI WKH IROORZLQJ DFFRXQWV LV QRW QRUPDOO\ SDUW RI WKH UHYHQXH DQG FROOHFWLRQ F\FOH"

$ 6DOHV % $FFRXQWV 5HFHLYDEOH & &DVK ' 3XUFKDVHV 5HWXUQV DQG $OORZDQFHV  7KH FRQWURO DFWLYLW\ FUHGLW VDOHV DSSURYHG E\ FUHGLW GHSDUWPHQW LV GLUHFWHG WRZDUG ZKLFK WUDQVDFWLRQ DVVHUWLRQ"

$ 2FFXUUHQFH % &RPSOHWHQHVV & $FFXUDF\ ' &XWRII

 :KLFK RI WKH IROORZLQJ ZRXOG EH WKH EHVW SURWHFWLRQ IRU D FRPSDQ\ WKDW ZLVKHV WR SUHYHQW WKH ODSSLQJ RI WUDGH DFFRXQWV UHFHLYDEOH"

$ 6HSDUDWH GXWLHV VR WKDW WKH ERRNNHHSHU LQ FKDUJH RI WKH JHQHUDO OHGJHU KDV QR DFFHVV WR LQFRPLQJ PDLO % 6HSDUDWH GXWLHV VR WKDW QR HPSOR\HH KDV DFFHVV WR ERWK FKHFNV IURP FXVWRPHUV DQG FXUUHQF\ IURP GDLO\ FDVK UHFHLSWV & +DYH FXVWRPHUV VHQG SD\PHQWV GLUHFWO\ WR WKH FRPSDQ\ V GHSRVLWRU\ EDQN ' 5HTXHVW WKDW FXVWRPHU V SD\PHQW FKHFNV EH PDGH SD\DEOH WR WKH FRPSDQ\ DQG DGGUHVVHG WR WKH WUHDVXUHU  :KLFK RI WKH IROORZLQJ LQWHUQDO FRQWURO DFWLYLWLHV ZLOO PRVW OLNHO\ SUHYHQW WKH FRQFHDOPHQW RI D FDVK VKRUWDJH E\ LPSURSHUO\ ZULWLQJ RII D WUDGH DFFRXQW UHFHLYDEOH"

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

 $XGLWRUV VRPHWLPHV XVH FRPSDULVRQV RI UDWLRV DV DXGLW HYLGHQFH $Q XQH[SODLQHG GHFUHDVH LQ WKH UDWLR RI JURVV SURILW WR VDOHV PD\ VXJJHVW ZKLFK RI WKH IROORZLQJ SRVVLELOLWLHV"

$ 8QUHFRUGHG SXUFKDVHV % 8QUHFRUGHG VDOHV & 0HUFKDQGLVH SXUFKDVHV EHLQJ FKDUJHG WR VHOOLQJ DQG JHQHUDO H[SHQVH ' )LFWLWLRXV VDOHV  $Q DXGLW WHDP LV DXGLWLQJ VDOHV WUDQVDFWLRQV 2QH VWHS LV WR YRXFK D VDPSOH RI GHELW HQWULHV IURP WKH DFFRXQWV UHFHLYDEOH VXEVLGLDU\ OHGJHU EDFN WR WKH VXSSRUWLQJ VDOHV LQYRLFHV 7KH SXUSRVH RI WKLV DXGLW SURFHGXUH LV WR HVWDEOLVK WKDW

$ 6DOHV LQYRLFHV UHSUHVHQW ERQD ILGH VDOHV % $OO VDOHV KDYH EHHQ UHFRUGHG & $OO VDOHV LQYRLFHV KDYH EHHQ SURSHUO\ SRVWHG WR FXVWRPHU DFFRXQWV ' (QWULHV LQ WKH DFFRXQWV UHFHLYDEOH VXEVLGLDU\ OHGJHU ZHUH SURSHUO\ LQYRLFHG

 $Q DXGLWRU QRWHG WKDW FOLHQW VDOHV KDG LQFUHDVHG  SHUFHQW IRU WKH \HDU $W WKH VDPH WLPH FRVW RI JRRGV VROG DV D SHUFHQWDJH RI VDOHV KDG GHFUHDVHG IURP  SHUFHQW WR  SHUFHQW DQG \HDUHQG DFFRXQWV UHFHLYDEOH KDG LQFUHDVHG E\  SHUFHQW 7KH DXGLWRU LV PRVW OLNHO\ FRQFHUQHG DERXW

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

$ 3HUIRUP DGGLWLRQDO LQTXLULHV ZLWK VDOHV SHUVRQQHO % 2EWDLQ FRSLHV RI DOO SULFH OLVWV LQ XVH GXULQJ WKH \HDU DQG YRXFK WKH SULFHV WR VDOHV LQYRLFHV & 6HQG FRQILUPDWLRQV DVNLQJ FXVWRPHUV DERXW XQLW SULFHV SDLG IRU SURGXFW ' 9RXFK YHQGHU LQYRLFHV WR SD\PHQWV PDGH DIWHU \HDUHQG

 7R FRQFHDO GHIDOFDWLRQV LQYROYLQJ UHFHLYDEOHV D GLVKRQHVW ERRNNHHSHU PLJKW FKDUJH ZKLFK RI WKH IROORZLQJ DFFRXQWV"

$ 0LVFHOODQHRXV LQFRPH % 3HWW\ FDVK & 0LVFHOODQHRXV H[SHQVH ' 6DOHV UHWXUQV  :KLFK RI WKH IROORZLQJ UHVSRQVHV WR DQ DFFRXQWV UHFHLYDEOH FRQILUPDWLRQ DW 'HFHPEHU  ZRXOG FDXVH DQ DXGLW WHDP WKH PRVW FRQFHUQ"

$ 7KLV DPRXQW ZDV SDLG RQ 'HFHPEHU   % :H UHFHLYHG WKLV VKLSPHQW RQ -DQXDU\   & 7KHVH JRRGV ZHUH UHWXUQHG IRU FUHGLW RQ 1RYHPEHU   ' 7KH EDODQFH GRHV QRW UHIOHFW RXU VDOHV GLVFRXQW IRU SD\LQJ E\ -DQXDU\  

 $ FOLHQW KDV D VHSDUDWH VDOHV JURXS IRU LWV ODUJHVW SUHIHUUHG FXVWRPHUV 7KLV LV D VHOHFW JURXS RI FXVWRPHUV WKDW QRUPDOO\ PDNH SXUFKDVHV LQ H[FHVV RI   DQG RIWHQ KDYH DFFRXQWV UHFHLYDEOH EDODQFHV LQ H[FHVV RI  PLOOLRQ :KLFK RI WKH IROORZLQJ DXGLW SURFHGXUHV ZRXOG WKH DXGLWRU PRVW OLNHO\ SHUIRUP"

$ 3UHSDUH D VFKHGXOH RI SXUFKDVHV DQG SD\PHQWV IRU WKHVH FXVWRPHUV % 6HQG RXW QHJDWLYH FRQILUPDWLRQV RQ D ODUJH VDPSOH RI WKHVH FXVWRPHUV & ,QTXLUH RI WKH VDOHV PDQDJHU UHJDUGLQJ WKH DFFRXQWV UHFHLYDEOH WHUPV ' 6HQG RXW SRVLWLYH FRQILUPDWLRQV RQ D ODUJH VDPSOH RI WKHVH FXVWRPHUV  $XGLW GRFXPHQWDWLRQ RIWHQ LQFOXGHV D FOLHQWSUHSDUHG DJHG WULDO EDODQFH RI DFFRXQWV UHFHLYDEOH DV RI WKH EDODQFH VKHHW GDWH 7KH DXGLW WHDP XVHV WKLV DJLQJ SULPDULO\ WR

$ (YDOXDWH LQWHUQDO FRQWURO RYHU FUHGLW VDOHV % 7HVW WKH DFFXUDF\ RI UHFRUGHG FKDUJH VDOHV & (VWLPDWH FUHGLW ORVVHV ' 9HULI\ WKH H[LVWHQFH RI WKH UHFRUGHG UHFHLYDEOHV

 :KLFK RI WKH IROORZLQJ PLJKW EH GHWHFWHG E\ DXGLWRUV FXWRII UHYLHZ DQG H[DPLQDWLRQ RI VDOHV MRXUQDO HQWULHV IRU VHYHUDO GD\V SULRU WR WKH EDODQFH VKHHW GDWH"

$ /DSSLQJ \HDUHQG DFFRXQWV UHFHLYDEOH % ,QIODWLQJ VDOHV IRU WKH \HDU & .LWLQJ EDQN EDODQFHV ' 0LVDSSURSULDWLQJ PHUFKDQGLVH  &RQILUPDWLRQ RI LQGLYLGXDO DFFRXQWV UHFHLYDEOH EDODQFHV GLUHFWO\ ZLWK GHEWRUV ZLOO RI LWVHOI QRUPDOO\ SURYLGH WKH VWURQJHVW HYLGHQFH FRQFHUQLQJ WKH

$ &ROOHFWDELOLW\ RI WKH EDODQFHV FRQILUPHG % 2ZQHUVKLS RI WKH EDODQFHV FRQILUPHG & ([LVWHQFH RI WKH EDODQFHV FRQILUPHG ' ,QWHUQDO FRQWURO RYHU EDODQFHV FRQILUPHG

 :KLFK RI WKH IROORZLQJ LV WKH EHVW UHDVRQ IRU SUHQXPEHULQJ LQ VHTXHQFH VXFK GRFXPHQWV DV VDOHV RUGHUV VKLSSLQJ GRFXPHQWV DQG VDOHV LQYRLFHV"

$ (QDEOHV FRPSDQ\ SHUVRQQHO WR GHWHUPLQH WKH DFFXUDF\ RI HDFK GRFXPHQW % (QDEOHV SHUVRQQHO WR GHWHUPLQH WKH SURSHU SHULRG IRU UHFRUGLQJ RI VDOHV UHYHQXH DQG UHFHLYDEOHV & (QDEOHV SHUVRQQHO WR FKHFN WKH QXPHULFDO VHTXHQFH IRU PLVVLQJ GRFXPHQWV DQG XQUHFRUGHG WUDQVDFWLRQV ' (QDEOHV SHUVRQQHO WR GHWHUPLQH WKH YDOLGLW\ RI UHFRUGHG WUDQVDFWLRQV  :KHQ D VDPSOH RI FXVWRPHU DFFRXQWV UHFHLYDEOH LV VHOHFWHG IRU YRXFKLQJ GHELWV DXGLWRUV ZLOO YRXFK WKHP WR

$ 6DOHV LQYRLFHV ZLWK VKLSSLQJ GRFXPHQWV % 5HFRUGV RI DFFRXQWV UHFHLYDEOH ZULWHRIIV & &DVK UHPLWWDQFH OLVWV DQG EDQN GHSRVLW VOLSV ' &UHGLW ILOHV DQG UHSRUWV  ,Q WKH DXGLW RI DFFRXQWV UHFHLYDEOH WKH PRVW LPSRUWDQW HPSKDVLV VKRXOG EH RQ WKH

$ &RPSOHWHQHVV DVVHUWLRQ % ([LVWHQFH DVVHUWLRQ & 5LJKWV DQG REOLJDWLRQV DVVHUWLRQ ' 3UHVHQWDWLRQ DQG GLVFORVXUH DVVHUWLRQ

 :KHQ DFFRXQWV UHFHLYDEOH DUH FRQILUPHG DW DQ LQWHULP GDWH DXGLWRUV QHHG QRW EH FRQFHUQHG ZLWK

$ 2EWDLQLQJ D VXPPDU\ RI UHFHLYDEOHV WUDQVDFWLRQV IURP WKH LQWHULP GDWH WR WKH \HDUHQG GDWH % 2EWDLQLQJ D \HDUHQG WULDO EDODQFH RI UHFHLYDEOHV FRPSDULQJ LW WR WKH LQWHULP WULDO HQG EDODQFH DQG REWDLQLQJ HYLGHQFH DQG H[SODQDWLRQV IRU ODUJH YDULDWLRQV YDULDWLRQV & 6HQGLQJ QHJDWLYH FRQILUPDWLRQV WR DOO WKH FXVWRPHUV DV RI WKH \HDUHQG GDWH \HDU ' &RQVLGHULQJ WKH QHFHVVLW\ IRU VRPH DGGLWLRQDO FRQILUPDWLRQV DV RI WKH EDODQFH VKHHW GDWH LI EDODQFHV KDYH LQFUHDVHG PDWHULDOO\

 7KH QHJDWLYH UHTXHVW IRUP RI DFFRXQWV UHFHLYDEOH FRQILUPDWLRQ LV XVHIXO SDUWLFXODUO\ ZKHQ WKH

$ 2SWLRQ $ % 2SWLRQ % & 2SWLRQ & ' 2SWLRQ '

 :KHQ DQ DXGLW WHDP WUDFHV D VDPSOH RI VKLSSLQJ GRFXPHQWV WR WKH UHODWHG VDOHV LQYRLFH FRSLHV WKH\ DUH WU\LQJ WR ILQG UHOHYDQW HYLGHQFH WKDW

$ 6KLSPHQWV WR FXVWRPHUV ZHUH LQYRLFHG % 6KLSPHQWV WR FXVWRPHUV ZHUH UHFRUGHG DV VDOHV & 5HFRUGHG VDOHV ZHUH VKLSSHG ' ,QYRLFHG VDOHV ZHUH VKLSSHG  :ULWHRIIV RI GRXEWIXO DFFRXQWV VKRXOG EH DSSURYHG E\

$ 7KH VDOHVSHUVRQ % 7KH FUHGLW PDQDJHU & 7KH WUHDVXUHU ' 7KH FDVKLHU  :KHQ DQ DXGLW WHDP GRHV QRW UHFHLYH D UHVSRQVH RQ D SRVLWLYH DFFRXQWV UHFHLYDEOH FRQILUPDWLRQ DXGLWRUV VKRXOG GR DOO RI WKH IROORZLQJ H[FHSW

$ 6HQG D VHFRQG UHTXHVW % 'R QRWKLQJ IRU LPPDWHULDO EDODQFHV & ([DPLQH VKLSSLQJ GRFXPHQWV ' ([DPLQH FOLHQW FRUUHVSRQGHQFH ILOHV

 &DVK UHFHLSWV IURP VDOHV RQ DFFRXQW KDYH EHHQ PLVDSSURSULDWHG :KLFK RI WKH IROORZLQJ DFWV ZRXOG FRQFHDO WKLV GHIDOFDWLRQ DQG EH OHDVW OLNHO\ WR EH GHWHFWHG E\ DQ DXGLWRU"

$ 8QGHUVWDWLQJ WKH VDOHV MRXUQDO % 2YHUVWDWLQJ WKH DFFRXQWV UHFHLYDEOH FRQWURO DFFRXQW & 2YHUVWDWLQJ WKH DFFRXQWV UHFHLYDEOH VXEVLGLDU\ OHGJHU ' 8QGHUVWDWLQJ WKH FDVK UHFHLSWV MRXUQDO  :KLFK RI WKH IROORZLQJ LQWHUQDO FRQWURO DFWLYLWLHV PRVW OLNHO\ ZRXOG GHWHU ODSSLQJ RI FROOHFWLRQV IURP FXVWRPHUV"

$ ,QGHSHQGHQW LQWHUQDO YHULILFDWLRQ RI GDWHV RI HQWU\ LQ WKH FDVK UHFHLSWV MRXUQDO ZLWK GDWHV RI GDLO\ FDVK VXPPDULHV % $XWKRUL]DWLRQ RI ZULWHRIIV RI XQFROOHFWLEOH DFFRXQWV E\ D VXSHUYLVRU LQGHSHQGHQW RI FUHGLW DSSURYDO & 6HSDUDWLRQ RI GXWLHV EHWZHHQ UHFHLYLQJ FDVK DQG SRVWLQJ WKH DFFRXQWV UHFHLYDEOH OHGJHU ' 6XSHUYLVRU\ FRPSDULVRQ RI WKH GDLO\ FDVK VXPPDU\ ZLWK WKH VXP RI WKH FDVK UHFHLSWV MRXUQDO HQWULHV

 7KH ILQDQFLDO UHFRUGV RI WKH 0RYLW] &RPSDQ\ VKRZ WKDW 0U 'HQQLV RZHV   RQ DQ DFFRXQW UHFHLYDEOH $Q LQGHSHQGHQW DXGLW LV EHLQJ FDUULHG RXW DQG WKH DXGLWRUV VHQG D SRVLWLYH FRQILUPDWLRQ WR 0U 'HQQLV :KDW LV WKH PRVW OLNHO\ UHDVRQ DV WR ZK\ D SRVLWLYH FRQILUPDWLRQ UDWKHU WKDQ D QHJDWLYH FRQILUPDWLRQ ZDV XVHG KHUH"

$ &RQWURO ULVN ZDV SDUWLFXODUO\ ORZ IRU DFFRXQWV UHFHLYDEOH % ,QKHUHQW ULVN ZDV SDUWLFXODUO\ KLJK IRU DFFRXQWV UHFHLYDEOH & 0U 'HQQLV V DFFRXQW ZDV QRW \HW GXH ' 0U 'HQQLV V DFFRXQW ZDV QRW ZLWK D UHODWHG SDUW\  ,Q WKH UHYHQXH DQG FROOHFWLRQ F\FOH WKH RUGHU RI WKH DFWLYLWLHV LQ WKH F\FOH LV EHVW LOOXVWUDWHG E\

$ 'HOLYHULQJ JRRGV ELOOLQJ FXVWRPHU JUDQWLQJ FUHGLW DQG SHUIRUPLQJ FROOHFWLRQ DFWLYLWLHV % &XVWRPHU RUGHULQJ GHOLYHULQJ JRRGV JUDQWLQJ FUHGLW DQG ELOOLQJ FXVWRPHUV & 3URFHVVLQJ FXVWRPHU RUGHUV JUDQWLQJ FUHGLW GHOLYHULQJ JRRGV DQG ELOOLQJ FXVWRPHUV ' *UDQWLQJ FUHGLW ELOOLQJ FXVWRPHUV GHOLYHULQJ JRRGV DQG SURFHVVLQJ FDVK UHFHLSWV

 3UHQXPEHULQJ LQYRLFHV VKLSSLQJ GRFXPHQWV DQG VDOHV RUGHUV LV D SUDFWLFH WR DFKLHYH ZKLFK RI WKH IROORZLQJ DVVHUWLRQV"

$ &RPSOHWHQHVV % 2FFXUUHQFH & $FFXUDF\ ' 3UHVHQWDWLRQ RU GLVFORVXUH  $Q LQWHUQDO FRQWURO TXHVWLRQQDLUH IRU HYDOXDWLQJ WKH RFFXUUHQFH REMHFWLYH RI UHYHQXHV ZRXOG QRW LQFOXGH ZKLFK RI WKH IROORZLQJ TXHVWLRQV"

$ ,V FXVWRPHU FUHGLW DSSURYHG EHIRUH RUGHUV DUH VKLSSHG" % $UH FXVWRPHU VWDWHPHQWV PDLOHG PRQWKO\ E\ WKH DFFRXQWV UHFHLYDEOH GHSDUWPHQW" & $UH GLUHFW FRQILUPDWLRQV RI UHFHLYDEOHV REWDLQHG SHULRGLFDOO\ E\ WKH LQWHUQDO DXGLWRU" ' $UH UHWXUQHG JRRGV FKHFNHG DJDLQVW QHFHVVDU\ UHSRUWV"  7KH SRVLWLYH IRUP RI FRQILUPDWLRQ LV EHVW XVHG ZKHQ

$ $FFRXQW EDODQFHV DUH UHODWLYHO\ ODUJH % $FFRXQW EDODQFHV DUH VPDOO LQ DPRXQW EXW QXPHURXV & $FFRXQWV DUH QRW LQ GLVSXWH ' ,QWHUQDO FRQWURO LV FRQVLGHUHG HIIHFWLYH

 :KLFK RI WKH IROORZLQJ LV QRW DQ DOWHUQDWLYH SURFHGXUH ZKHQ D FRQILUPDWLRQ LV QRW UHFHLYHG"

$ ([DPLQH VDOHV LQYRLFHV DQG YRXFK WKHP WR XQGHUO\LQJ VKLSSLQJ GRFXPHQWV % ([DPLQH SD\PHQWV UHFHLYHG EHIRUH WKH HQG RI WKH SHULRG & ([DPLQH FXVWRPHU SXUFKDVH RUGHUV ' ([DPLQH FOLHQW FRUUHVSRQGHQFH ZLWK WKH FXVWRPHU  $ SHUVRQ ZKR KDV DFFHVV WR ERWK FDVK DQG DFFRXQWV UHFHLYDEOH UHFRUGV PD\ EH DEOH WR WDNH FDVK UHFHLSWV E\

$ .LWLQJ % /DSSLQJ & 2YHUVWDWLQJ FDVK UHFHLSWV ' 8QGHUIRRWLQJ WKH EDQN UHFRQFLOLDWLRQ

)LOO LQ WKH %ODQN 4XHVWLRQV

 BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB RI DFFRXQWV UHFHLYDEOH UHFRUGV LPSOLHV WKH SRZHU WR DOWHU WKHP GLUHFWO\ RU HQWHU WUDQVDFWLRQV WR DOWHU WKHP BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB

 7KH SHQGLQJ VDOHV RUGHUV FDQ EH UHYLHZHG IRU HYLGHQFH RI WKH BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB RI UHFRUGHG BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB DQG BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB  ,QWHUQDO FRQWURO DVVHVVPHQW LV LPSRUWDQW EHFDXVH LW JRYHUQV WKH BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB DQG BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB RI VXEVWDQWLYH SURFHGXUHV BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB  ,QIRUPDWLRQ DERXW WKH LQWHUQDO FRQWURO V\VWHP FDQ EH JDWKHUHG E\ FRPSOHWLQJ DQ BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB  $QRWKHU ZD\ WR REWDLQ LQIRUPDWLRQ DERXW WKH LQWHUQDO FRQWURO V\VWHP LV WR WDNH D VLQJOH H[DPSOH RI D WUDQVDFWLRQ DQG BBBBBBBBBBBBBBBBBBBBBBBBBB WKH SURFHVV IURP LWV LQLWLDWLRQ WR LWV UHFRUGLQJ LQ WKH DFFRXQWLQJ UHFRUGV BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB

 7KH DFWLRQV LQ WHVWV RI FRQWUROV LQYROYH BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB DQG BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB  'XDO GLUHFWLRQ WHVWLQJ LQYROYHV VDPSOHV RI WUDQVDFWLRQV VHOHFWHG WR REWDLQ HYLGHQFH DERXW FRQWURO RYHU BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB LQ RQH GLUHFWLRQ DQG FRQWURO RYHU BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB LQ WKH RWKHU GLUHFWLRQ BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB  $ SURFHGXUH WR JDWKHU HYLGHQFH RQ ERWK DFFRXQW EDODQFHV DQG FRQWUROV LV FDOOHG D BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB SURFHGXUH BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB  $VVHUWLRQV UHODWHG WR DFFRXQW EDODQFHV DUH BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB DQG BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB

 &RQILUPDWLRQV SURYLGH HYLGHQFH RI BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB DQG WR D OLPLWHG H[WHQW BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB RI DFFRXQWV DQG QRWHV UHFHLYDEOH BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB  BBBBBBBBBBBBBBBBBBBBBBBBBBB PD\ EH XVHG WR DFFHVV FRPSXWHUL]HG UHFHLYDEOH ILOHV WR VHOHFW DQG SULQW FRQILUPDWLRQV BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 7ZR ZLGHO\ XVHG FRQILUPDWLRQ IRUPV WR WHVW DFFRXQWV UHFHLYDEOH DUH BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB DQG BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB FRQILUPDWLRQV BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 7KH BBBBBBBBBBBBBBBBBBBBBBBBBBBB FRQILUPDWLRQ IRUP LV XVHG ZKHQ LQGLYLGXDO EDODQFHV DUH BBBBBBBBBBBBBBBBBBBBBBBBBBBB RU DFFRXQWV DUH LQ BBBBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB

$XGLWLQJ WKH GHWDLOV RI FXVWRPHU SD\PHQWV OLVWHG LQ EDQN GHSRVLWV LQ FRPSDULVRQ WR GHWDLOV RI FXVWRPHU SD\PHQW SRVWLQJV FDQ GHWHFW BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB

BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB

6KRUW $QVZHU 4XHVWLRQV

)RU HDFK RI WKH WHVWV RI FRQWUROV IRU VDOHV DQG UHFHLYDEOHV LQGLFDWH WKH DVVHUWLRQ )RU WKDW LV VXSSRUWHG E\ SODFLQJ WKH FRUUHFW OHWWHU LQ WKH EODQN

(VVD\ 4XHVWLRQV

:KDW LV GXDO GLUHFWLRQ WHVWLQJ"

,V WKH FRQILUPDWLRQ RI FDVK DQG DFFRXQWV UHFHLYDEOH UHTXLUHG DFFRUGLQJ WR DXGLWLQJ VWDQGDUGV" ([SODLQ

,Q WHVWV RI FRQWUROV DXGLWLQJ DXGLWRUV QHHG WR GHILQH GHYLDWLRQV LQ DGYDQFH *LYH VHYHQ H[DPSOHV RI FRQWURO FRPSOLDQFH GHYLDWLRQV UHODWHG WR D FOLHQW V SURFHVVLQJ RI FUHGLW VDOHV WUDQVDFWLRQV DQG WKH UHODWHG DVVHUWLRQ WKDW ZDV YLRODWHG

<RX DUH WKH DXGLWRU IRU :LOVRQ :KROHVDOH 3URGXFWV ,QF $V SDUW RI WKH DXGLW RI DFFRXQWV UHFHLYDEOH :LOVRQ KDV SURYLGHG \RX DQ HOHFWURQLF ILOH UHSUHVHQWLQJ LWV DFFRXQWV UHFHLYDEOH DV RI LWV ILVFDO \HDUHQG 7KH ILOH LQFOXGHV WKH FXVWRPHU QDPH FXVWRPHU DGGUHVV FXVWRPHU QXPEHU VDOHV LQYRLFH QXPEHU VDOHV LQYRLFH GDWH DQG DPRXQW 5HTXLUHG 'HVFULEH WKUHH RU PRUH VXEVWDQWLYH DXGLW SURFHGXUHV \RX PLJKW SHUIRUP XVLQJ FRPSXWHUDVVLVWHG DXGLW WRROV DQG WHFKQLTXHV &$$7V ZLWK WKLV FRPSXWHU ILOH

:KDW SURFHGXUHV VKRXOG DQ DXGLWRU SHUIRUP IRU D SRVLWLYH FRQILUPDWLRQ WKDW LV QRW UHWXUQHG E\ WKH FOLHQW V FXVWRPHU"

7KH IROORZLQJ TXHVWLRQ DSSHDUHG RQ DQ LQWHUQDO FRQWURO TXHVWLRQQDLUH IRU VDOHV 1H[W WR HDFK RI WKH TXHVWLRQ LQGLFDWH WKH UHODWHG DVVHUWLRQ

&KDSWHU  5HYHQXH DQG &ROOHFWLRQ &\FOH $QVZHU .H\

7UXH  )DOVH 4XHVWLRQV



$ SULFH OLVW PDVWHU ILOH FRQWDLQV WKH SURGXFW XQLW SULFHV WKDW DUH XVHG IRU ELOOLQJ FXVWRPHUV 758( 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH



!4   9D ! "!"  ! !4 !E  9"D C!!" 9 " "   !&" ! "  9 % B!  "!"  !!4 ! !@ !2! )57R 5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      

7KH DFFRXQWDQWV ZKR UHFRUG FDVK UHFHLSWV DQG FUHGLWV WR FXVWRPHU DFFRXQWV VKRXOG QRW KDQGOH WKH FDVK 758( 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH



!' &"" %$# "!      

!4   9D ! "!"  ! !4 !E  9"D C!!" 9 " "   !&" ! "  9 % B!  "!"  !!4 ! !@ !2! )57R 5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      

!4   9D ! "!"  ! !4 !E  9"D C!!" 9 " "   !&" !"  9 % B!  "!"  !!4 ! !@ !2! )57R 5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!     





5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 758( DVVHVVLQJ WKH DOORZDQFH IRU GRXEWIXO DFFRXQWV 7KH DJLQJ LQIRUPDWLRQ IRU DFFRXQWV UHFHLYDEOH LV W\SLFDOO\ XVHG LQ FRQQHFWLRQ ZLWK 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH )$/6( DSSURYHG &UHGLW FKHFNV VKRXOG EH SHUIRUPHG E\ WKH VDOHV GHSDUWPHQW EHIRUH FUHGLW LV

!' &""  $E    %$@D    %$@D !4 !(!E

!&! $E " "  9"D C!24 !!   " ( " %"!  B !4 ! B4 " 99 ! !&" !4 " "" ( " ! ( " ! 9&8! !4 T G 57R 5 !4 ! 321 %!0 & !# ) ((  !' &""  $E    %$@D    %$@D !4 !(!E

!4   9D ! "!"  ! !4 !E  9"D C!!" 9 " "   !&" ! "  9 % B!  "!"  !!4 ! !@ !2! )57R 5 !4 ! 321 %!0 & !# ) (( 





5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH )$/6( EDODQFHV PXVW EH H[SDQGHG ,I FRQWURO ULVN LV DVVHVVHG YHU\ ORZ WKH VXEVWDQWLYH DXGLW SURFHGXUHV RQ DFFRXQW 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 758( ODSSLQJ FXVWRPHU FUHGLWV SRVWHG WR FXVWRPHU DFFRXQWV UHFHLYDEOH FDQ EH DQ DXGLW WHVW IRU $ FRPSDULVRQ RI FKHFNV OLVWHG RQ D VDPSOH RI GHSRVLW VOLSV WR WKH GHWDLO RI

 $E    %$@D    %$@D !4 !(!E

! "!"  ! !4 !E !@  ! !" !4 2  9"D C "! 9 !@ (" ! !@ !2 "  "2 "! " &!@ ! !  !  "!"  ! !4 ! !@  ! !" 9 !4 2 ( " ! 9&8! !4 T V 57R 5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      

!&! $E " "  9"D C!24 !!   " ( " %"!  B !4 ! B4 " 99 ! !&" !4 " "" ( " ! ( " ! 9&8! !4 T G 57R 5 !4 ! 321 %!0 & !# ) (( 





5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH $XGLWRUV VKRXOG QRW SODFH WRWDO UHOLDQFH RQ FRQWUROV WR WKH H[FOXVLRQ RI RWKHU 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 758( ZHDNQHVVHV FXVWRPHU DFFRXQW EDODQFHV LV QHFHVVDU\ LI WHVWV RI FRQWUROV UHYHDO FRQWURO $ FRQILUPDWLRQ SURFHGXUH VFKHGXOHG RQ WKH \HDUHQG GDWH ZLWK D ODUJH VDPSOH RI )$/6( VXEVWDQWLYH WHVWLQJ SURFHGXUHV

& !# ) ((  !' &"" %$# "!      

!4   9D ! "!"  ! !4 !E  9"D C!!" 9 " "   !&" ! "  9 % B!  "!"  !!4 ! !@ !2! )57R 5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      

!&! $E " "  9"D C!24 !!   " ( " %"!  B !4 ! B4 " 99 ! !&" !4 " "" ( " ! ( " ! 9&8! !4 T G 57R 5 !4 ! 321 %!0 & !# ) ((  !' &""





5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH )$/6( RQ WKH FRPSOHWHQHVV DQG REOLJDWLRQV DVVHUWLRQV :KHQ REWDLQLQJ HYLGHQFH DERXW DFFRXQWV UHFHLYDEOH DXGLWRUV PXVW SXW HPSKDVLV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 758( VWDWHPHQW DVVHUWLRQV $Q REMHFWLYH IRU DQ DXGLW LV WR REWDLQ HYLGHQFH UHODWHG WR PDQDJHPHQW V ILQDQFLDO

!4   9D ! "!"  ! !4 !E  9"D C!!" 9 " "   !&" ! "  9 %  B!  "!"  !!4 ! !@ !2! )57R 5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      

!4   9D ! "!"  ! !4 !E  9"D C!!" 9 " "   !&" ! "  9 % B!  "!"  !!4 ! !@ !2! )57R 5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      

! "!"  ! !4 !E !@  ! !" !4 2  9"D C "! 9 !@ (" ! !@ !2 "  "2 "! " &!@ ! !  !  "!"  ! !4 ! !@  !!" 9 !4 2 ( " ! 9&8! !4 T V 57R 5 !4 ! 321 %!0





5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH )$/6( UHFHLYDEOH IRU XQXVXDO FUHGLW EDODQFHV $ FRPSXWHU JHQHUDOO\ FDQQRW EH XVHG IRU VFDQQLQJ ODUJH ILOHV RI DFFRXQWV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH ,QTXLULHV RI PDQDJHPHQW XVXDOO\ GR QRW SURYLGH YHU\ FRQYLQFLQJ HYLGHQFH DERXW 758( WKH H[LVWHQFH DQG ULJKWV DVVHUWLRQV

! "!"  ! !4 !E !@  ! !" !4 2  9"D C "! 9 !@ (" ! !@ !2 "  "2 "! " &!@ ! !  !  "!"  ! !4 ! !@  ! !" 9 !4 2 ( " ! 9&8! !4 T V 57R 5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      

! "!"  ! !4 !E !@  ! !" !4 2  9"D C "! 9 !@ (" ! !@ !2 "  "2 "! " &!@ ! !  !  "!"  ! !4 ! !@  ! !" 9 !4 2 ( " ! 9&8! !4 T V 57R 5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      





5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 758( UHFHLYDEOH EDODQFH &RQILUPDWLRQV \LHOG HYLGHQFH DERXW H[LVWHQFH DQG WKH JURVV YDOXDWLRQ RI D 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 758( DFFHSWHG DXGLW SURFHGXUH 7KH XVH RI FRQILUPDWLRQV WR WHVW DFFRXQWV UHFHLYDEOH LV FRQVLGHUHG D JHQHUDOO\

0XOWLSOH &KRLFH 4XHVWLRQV



7R EH UHFRJQL]HG UHYHQXHV PXVW DOVR EH UHDOL]HG RU UHDOL]DEOH DQG

$ )RUHVHHDEOH % &ROOHFWHG & (DUQHG ' 6KLSSHG

" %"!E ! !4 !E  9"D  %1 ! " C "  %"! ! !4 ! ! 9" 9& " "( @A !  "!"  !!4 ! !@ " !! $ !!@  6 57R 5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  



7KH 6(& UHTXLUHV DOO RI WKH IROORZLQJ IRU UHYHQXH WR EH UHFRJQL]HG H[FHSW

$ &DVK LV FROOHFWHG % 3HUVXDVLYH HYLGHQFH RI DQ DUUDQJHPHQW H[LVWV & 'HOLYHU\ KDV RFFXUUHG RU VHUYLFHV KDYH EHHQ UHQGHUHG ' 7KH VHOOHU V SULFH WR WKH EX\HU LV IL[HG RU GHWHUPLQDEOH


" %"!E ! !4 !E  9"D  %1 ! " C&!@ %!! "( !!" 9 " %!4    !&" %!  !  "!"  !!4 ! !@  (  "! "&&" !&" !2! X 57R 5 !4 ! 321 %!0 W G (( !2&!&!E &"" @!!E   %!0  

" %"!E ! !4 !E  9"D  %1 ! " C "  %"! ! !4 ! ! 9" 9& " "( @A !  "!"  !!4 ! !@ " !! $ !!@  6 57R 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0 



' ,QYHQWRU\ LV KHOG EXW QRW ELOOHG & 6DOHV DUH ELOOHG EXW QRW FROOHFWHG % 6DOHV DUH VKLSSHG EXW DUH QRW UHFRUGHG $ 6DOHV DUH UHFRUGHG EXW DUH QRW VKLSSHG %LOO DQG KROG UHIHUV WR DQ DUUDQJHPHQW ZKHUH

! ! !4 !E  9"D  %1 ! " C!!" 9 " "   !&" ! "  9 % B!  "!"  !!4 ! !@ !2! )57R 5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  

! ! !4 !E  9"D  %1 ! " C!!" 9 " "   !&" !"  9 % B!  "!"  !!4 ! !@ !2! )57R 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  





' 7KH SXUFKDVH RUGHU & 7KH LQYRLFH % 7KH VKLSSLQJ RUGHU $ 7KH FXVWRPHU RUGHU 7KH GRFXPHQW WKDW JHQHUDWHV UHFRUGLQJ RI D VDOH LV WKH ' 7KH SXUFKDVH RUGHU & 7KH LQYRLFH % 7KH VKLSSLQJ RUGHU $ 7KH FXVWRPHU RUGHU &XVWRG\ RI LQYHQWRU\ LV WUDQVIHUUHG WR WKH VKLSSLQJ DUHD XSRQ DXWKRUL]DWLRQ RI



7KH VXP RI FXVWRPHUV XQSDLG EDODQFHV WKDW LV FRPSDUHG WR WKH JHQHUDO OHGJHU EDODQFH FRPHV IURP

$ $ WRWDO RI VDOHV LQYRLFHV % $ WRWDO RI VKLSSLQJ RUGHUV & 7KH VDOHV MRXUQDO ' 7KH DFFRXQWV UHFHLYDEOH WULDO EDODQFH
! ! !4 !E  9"D  %1 ! " C "! 9 !@ (" ! !@ !2 "  "2 "! " &!@ ! !  !  "!"  ! !4 ! !@  ! !" 9 !4 2 ( " ! 9&8! !4 T V 57R 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  



7KH ILOH WKDW FRQWDLQV VDOHV WUDQVDFWLRQV WKDW ZHUH LQLWLDWHG LQ WKH V\VWHP EXW DUH QRW \HW FRPSOHWHG LV WKH

$ &UHGLW FKHFN ILOH % 6DOHV GHWDLO & ,QYHQWRU\ PDVWHU ' 3HQGLQJ RUGHU PDVWHU
@!!E   %!0  

! ! !4 !E  9"D  %1 ! " C "  %"! ! !4 ! ! 9" 9& " "( @A !  "!"  !!4 ! !@ " !! $ !!@  6 57R 5 !4 ! 321 %!0 & !# ) ((  !' &"" @!!E   %!0  

! ! !4 !E  9"D  %1 ! " C!!" 9 " "   !&" ! "  9 % B!  "!"  !!4 ! !@ !2! )57R 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &""



' &ODVVLILFDWLRQ & $FFXUDF\ % &RPSOHWHQHVV $ 2FFXUUHQFH F\FOH LV 7KH DVVHUWLRQ WKDW DXGLWRUV ZLOO SUREDEO\ HPSKDVL]H LQ WKH UHYHQXH DQG FROOHFWLRQ

C!!" 9 " "   !&" ! "  9 % B!  "!"  !!4 ! !@ !2! )57R 5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  

" " ! !4 !E  9"D  %1 ! " C!24 !!   " ( " %"!  B !4 ! B4 " 99 ! !&" !4 " "" ( " ! ( " ! 9&8! !4 T G 57R 5 !4 ! 321 %!0 & !# ) ((  !4 Q &""  $E    %$@D    %$@D !4 !(!E





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



:KLFK RI WKH IROORZLQJ LV DQ H[DPSOH RI D FRQWURO DFWLYLW\ WKDW VDWLVILHV WKH DFFXUDF\ FRQWURO REMHFWLYH IRU VDOHV LQYRLFHV"

$ 5HFRUGHG VDOHV LQ WKH VDOHV MRXUQDO DUH VXSSRUWHG E\ LQYRLFHV % ,QYRLFHV VKLSSLQJ GRFXPHQWV DQG VDOHV RUGHUV DUH SUHQXPEHUHG DQG WKH QXPHULFDO VHTXHQFH LV FKHFNHG & 6DOHV DUH UHFRUGHG LQ WKH SURSHU DFFRXQW ' ,QYRLFH TXDQWLWLHV DUH FRPSDUHG WR VKLSPHQW DQG FXVWRPHU RUGHU TXDQWLWLHV
" " ! !4 !E  9"D  %1 ! " C!24 !!   " ( " %"!  B !4 ! B4 " 99 ! !&" !4 " "" ( " ! ( " ! 9&8! !4 T G 57R 5 !4 ! 321 %!0 & !# ) ((  99 &"" @!!E   %!0  

! ! !4 !E  9"D  %1 ! "



6FDQQLQJ VDOHV LQYRLFHV IRU PLVVLQJ QXPEHUV LQ WKH VHTXHQFH ZRXOG EH DQ DFWLYLW\ LQWHQGHG WR VDWLVI\ ZKDW DVVHUWLRQ"

$ &RPSOHWHQHVV % $FFXUDF\ & 2FFXUUHQFH ' &ODVVLILFDWLRQ

%!D !4  2 !!4 !E  9"D  %1 ! " C "! 9 !@ (" ! !@ !2 "  "2 "! " &!@ ! !  !  "!"  ! !4 ! !@  ! !" 9 !4 2 ( " ! 9&8! !4 T V 57R 5 !4 ! 321 %!0 Q 6 (( 99 &""  $E    %!0  



9RXFKLQJ GHELWV IURP D VDPSOH VHOHFWLRQ RI FXVWRPHUV DFFRXQWV UHFHLYDEOH UHFRUGV WR VXSSRUWLQJ VDOHV LQYRLFHV LV DQ DXGLW SURFHGXUH GHVLJQHG WR REWDLQ HYLGHQFH DERXW WKH DVVHUWLRQ RI

$ 2FFXUUHQFH % &RPSOHWHQHVV & &ODVVLILFDWLRQ ' $FFXUDF\

 $E    %!0  

%!D !4  2 !!4 !E  9"D  %1 ! " C "! 9 !@ (" ! !@ !2 "  "2 "! " &!@ ! !  !  "!"  ! !4 ! !@  ! !" 9 !4 2 ( " ! 9&8! !4 T V 57R 5 !4 ! 321 %!0 Q 6 (( 99 &""  $E    %$@D    

%!D !4  2 !!4 !E  9"D  %1 ! " C "! 9 !@ (" ! !@ !2 "  "2 "! " &!@ ! !  !  "!"  ! !4 ! !@  ! !" 9 !4 2 ( " ! 9&8! !4 T V 57R 5 !4 ! 321 %!0 & !# ) ((  99 &""



' $FFXUDF\ & &ODVVLILFDWLRQ % &RPSOHWHQHVV $ ([LVWHQFH RU RFFXUUHQFH IROORZLQJ DVVHUWLRQV" 'HFHPEHU   7KLV VLWXDWLRQ LV DQ H[DPSOH RI D YLRODWLRQ RI ZKLFK RI WKH $OSKD %UHZHU\ &RUSRUDWLRQ UHFRUGHG VDOHV WKURXJK -DQXDU\   GDWLQJ WKHP



&RQILUPDWLRQV RI DFFRXQWV UHFHLYDEOH SURYLGH WKH PRVW HYLGHQFH IRU ZKLFK RI WKH IROORZLQJ DVVHUWLRQV"

$ ([LVWHQFH % 9DOXDWLRQ RU DOORFDWLRQ & 5LJKWV DQG REOLJDWLRQV ' &RPSOHWHQHVV

%!D !4  2 !!4 !E  9"D  %1 ! " C "! 9 !@ (" ! !@ !2 "  "2 "! " &!@ ! !  !  "!"  ! !4 ! !@  ! !" 9 !4 2 ( " ! 9&8! !4 T V 57R 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %$@D    



7KH DXGLWRU PDLQWDLQV FRQWURO RI WKH PDLOLQJ DQG UHFHLSW RI FRQILUPDWLRQV E\ W\SLFDOO\ SHUIRUPLQJ DOO RI WKH IROORZLQJ H[FHSW

$ 3UHSDULQJ WKH FRQILUPDWLRQ OHWWHUV % 0DLOLQJ WKH FRQILUPDWLRQ OHWWHUV & 5HFHLYLQJ WKH FRQILUPDWLRQ OHWWHUV ' 1RQH RI WKH DERYH
!2&!&!E &"" @!!E   %!0  

%!D !4  2 !!4 !E  9"D  %1 ! " C "! 9 !@ (" ! !@ !2 "  "2 "! " &!@ ! !  !  "!"  ! !4 ! !@  ! !" 9 !4 2 ( " ! 9&8! !4 T V 57R 5 !4 ! 321 %!0 W G (( 99 &"" %" 9!E   %!0  "&&"

%!D !4  2 !!4 !E  9"D  %1 ! " C "! 9 !@ (" ! !@ !2 "  "2 "! " &!@ ! !  !  "!"  ! !4 ! !@  ! !" 9 !4 2 ( " ! 9&8! !4 T V 57R 5 !4 ! 321 %!0 & !# ) (( 



' ,QFOXGH DQ H[SODQDWRU\ SDUDJUDSK WKDW GLVFORVHV WKH SHUIRUPDQFH RI DOWHUQDWLYH & $YRLG PHQWLRQLQJ WKH DOWHUQDWLYH SURFHGXUHV % 'LVFORVH LQ WKH RSLQLRQ SDUDJUDSK WKDW FRQILUPDWLRQ RI DFFRXQWV UHFHLYDEOH ZDV $ 'LVFORVH WKH IDFW WKDW DOWHUQDWLYH SURFHGXUHV ZHUH XVHG GXH WR FOLHQWLPSRVHG H[SHFWHG WR DFFRXQWV UHFHLYDEOH WKH DXGLWRU V RSLQLRQ VKRXOG EH XQTXDOLILHG DQG FRXOG EH UHFHLYDEOH EDODQFH E\ DOWHUQDWLYH SURFHGXUHV EHFDXVH LW LV LPSUDFWLFDO WR FRQILUP ,I WKH DXGLWRU REWDLQV VXIILFLHQW FRPSHWHQW HYLGHQFH RQ WKH FOLHQW V DFFRXQWV LPSUDFWLFDEOH VFRSH OLPLWDWLRQ

SURFHGXUHV



:KLFK RI WKH IROORZLQJ LV QRW D YDOLG UHDVRQ IRU DQ DXGLWRU GHFLGLQJ QRW WR VHQG DFFRXQWV UHFHLYDEOH FRQILUPDWLRQV"

$ 7KH EDODQFH LV LPPDWHULDO % &RQILUPDWLRQV ZRXOG EH LQHIIHFWLYH & 7KH FOLHQW UHTXHVWV DOWHUQDWLYH SURFHGXUHV EH SHUIRUPHG LQVWHDG ' 2WKHU SURFHGXUHV SURYLGH VXIILFLHQW FRPSHWHQW HYLGHQFH
%!D !4  2 !!4 !E  9"D  %1 ! " C "! 9 !@ (" ! !@ !2 "  "2 "! " &!@ ! !  !  "!"  ! !4 ! !@  ! !" 9 !4 2 ( " ! 9&8! !4 T V 57R 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  



:KHQ DQ DFFRXQW UHFHLYDEOH LV FRQVLGHUHG XQFROOHFWLEOH WKH SHUVRQ ZKR JHQHUDOO\ DXWKRUL]HV WKH ZULWHRII LV WKH FOLHQW V

$ &UHGLW PDQDJHU % 7UHDVXUHU & $FFRXQWDQW ' ,QWHUQDO DXGLWRU

!2&!&!E &"" @!!E   %!0  

%!D !4  2 !!4 !E  9"D  %1 ! " C "! 9 !@ (" ! !@ !2 "  "2 "! " &!@ ! !  !  "!"  ! !4 ! !@  !!" 9 !4 2 ( " ! 9&8! !4 T V 57R 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %$@D    

" " ! !4 !E  9"D  %1 ! " C!24 !!   " ( " %"!  B !4 ! B4 " 99 ! !&" !4 " "" ( " ! ( " ! 9&8! !4 T G 57R 5 !4 ! 321 %!0 & !# ) (( 



' 9RXFK D VDPSOH RI UHFRUGHG VDOHV IURP WKH VDOHV MRXUQDO WR VKLSSLQJ & 7UDFH D VDPSOH RI VKLSSLQJ GRFXPHQWV WR VDOHV LQYRLFHV UHFRUGHG LQ WKH VDOHV % &RQILUP UHFRUGHG DFFRXQWV UHFHLYDEOH $ $QDO\]H WKH DJHG WULDO EDODQFH RI UHFRUGHG DFFRXQWV UHFHLYDEOH XQGHUVWDWHPHQW" :KLFK RI WKH IROORZLQJ DXGLW SURFHGXUHV LV WKH PRVW HIIHFWLYH LQ WHVWLQJ VDOHV IRU MRXUQDO

GRFXPHQWV



7R GHWHUPLQH ZKHWKHU VDOHV WUDQVDFWLRQV KDYH EHHQ UHFRUGHG LQ WKH SURSHU DFFRXQWLQJ SHULRG WKH DXGLWRU SHUIRUPV FXWRII WHVWV :KLFK RI WKH IROORZLQJ EHVW GHVFULEHV WKH RYHUDOO DSSURDFK XVHG ZKHQ SHUIRUPLQJ FXWRII WHVWV"

$ $VFHUWDLQ WKDW PDQDJHPHQW KDV LQFOXGHG LQ WKH UHSUHVHQWDWLRQ OHWWHU D VWDWHPHQW WKDW WUDQVDFWLRQV KDYH EHHQ DFFRXQWHG IRU LQ WKH SURSHU DFFRXQWLQJ SHULRG % $QDO\]H WUDQVDFWLRQV RFFXUULQJ ZLWKLQ D IHZ GD\V EHIRUH DQG DIWHU \HDUHQG & &RQILUP \HDUHQG WUDQVDFWLRQV ZLWK UHJXODU FXVWRPHUV ' ([DPLQH FDVK UHFHLSWV LQ WKH VXEVHTXHQW SHULRG
%!D !4  2 !!4 !E  9"D  %1 ! " C "! 9 !@ (" ! !@ !2 "  "2 "! " &!@ ! !  !  "!"  ! !4 ! !@  ! !" 9 !4 2 ( " ! 9&8! !4 T V 57R 5 !4 ! 321 %!0 W G (( 99 &"" @!!E   %!0  



7KH PRVW HIIHFWLYH DXGLW SURFHGXUH IRU GHWHUPLQLQJ WKH FROOHFWDELOLW\ RI DQ DFFRXQW UHFHLYDEOH LV WKH

$ 5HYLHZ RI WKH VXEVHTXHQW FDVK FROOHFWLRQV % ([DPLQDWLRQ RI WKH UHODWHG VDOHV LQYRLFH V  & &RQILUPDWLRQ RI WKH DFFRXQW ' 5HYLHZ RI DXWKRUL]DWLRQ RI FUHGLW VDOHV WR WKH FXVWRPHU DQG WKH SUHYLRXV KLVWRU\ RI FROOHFWLRQV
%!D !4  2 !!4 !E  9"D  %1 ! " C "! 9 !@ (" ! !@ !2 "  "2 "! " &!@ ! !  !  "!"  ! !4 ! !@  ! !" 9 !4 2 ( " ! 9&8! !4 T V 57R 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %!0  



,Q GHWHUPLQLQJ WKH DGHTXDF\ RI WKH DOORZDQFH IRU XQFROOHFWLEOH DFFRXQWV WKH OHDVW YDOXDEOH HYLGHQFH ZRXOG EH REWDLQHG IURP

$ $Q DJLQJ VFKHGXOH RI SDVW GXH DFFRXQWV WKDW WKH DXGLWRU KDV WHVWHG % &RUUHVSRQGHQFH ZLWK WKH FOLHQW V FROOHFWLRQ DJHQF\ & )LQDQFLDO VWDWHPHQWV RI LQGLYLGXDO FXVWRPHUV ' 1R UHSO\ WR QHJDWLYH FRQILUPDWLRQV
 $E    %$@D    

%!D !4  2 !!4 !E  9"D  %1 ! " C "! 9 !@ (" ! !@ !2 "  "2 "! " &!@ ! !  !  "!"  !!4 ! !@  ! !" 9 !4 2 ( " ! 9&8! !4 T V 57R 5 !4 ! 321 %!0 W G (( 99 &""  $E    %$@D    

%!D !4  2 !!4 !E  9"D  %1 ! " C "! 9 !@ (" ! !@ !2 "  "2 "! " &!@ ! !  !  "!"  ! !4 ! !@  !!" 9 !4 2 ( " ! 9&8! !4 T V 57R 5 !4 ! 321 %!0 & !# ) ((  99 &""



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

DFFRXQWV KDYH EHHQ ZULWWHQ RII



$Q DXGLWRU VKRXOG QRUPDOO\ SHUIRUP DOWHUQDWLYH SURFHGXUHV WR VXEVWDQWLDWH WKH H[LVWHQFH RI DFFRXQWV UHFHLYDEOH ZKHQ

$ 1R UHSO\ WR D SRVLWLYH FRQILUPDWLRQ UHTXHVW LV UHFHLYHG % 1R UHSO\ WR D QHJDWLYH FRQILUPDWLRQ UHTXHVW LV UHFHLYHG & &ROOHFWDELOLW\ RI WKH UHFHLYDEOHV LV LQ GRXEW ' 3OHGJLQJ RI WKH UHFHLYDEOHV LV SUREDEOH
%!D !4  2 !!4 !E  9"D  %1 ! " C "! 9 !@ (" ! !@ !2 "  "2 "! " &!@ ! !  !  "!"  ! !4 ! !@  ! !" 9 !4 2 ( " ! 9&8! !4 T V 57R 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  



$ FXVWRPHU UHSO\ RQ D SRVLWLYH FRQILUPDWLRQ VD\V :H GLVSXWH WKH  FKDUJH :H EHOLHYH LW LV H[FHVVLYH 7KLV FRQILUPDWLRQ

$ 3URYLGHV HYLGHQFH RI H[LVWHQFH % 'RHV QRW SURYLGH HYLGHQFH RI H[LVWHQFH EHFDXVH WKH FXVWRPHU PD\ UHIXVH WR SD\ WKH  FKDUJH & 3URYLGHV HYLGHQFH WKDW WKH DFFRXQW ZDV XQGHUVWDWHG ' 3URYLGHV HYLGHQFH WKDW WKH DFFRXQW VKRXOG EH ZULWWHQ RII
 $E    %$@D    

%!D !4  2 !!4 !E  9"D  %1 ! " C "! 9 !@ (" ! !@ !2 "  "2 "! " &!@ ! !  !  "!"  ! !4 ! !@  ! !" 9 !4 2 ( " ! 9&8! !4 T V 57R 5 !4 ! 321 %!0 & !# ) ((  !' &"" @!!E   %!0  

%!D !4  2 !!4 !E  9"D  %1 ! " C "! 9 !@ (" ! !@ !2 "  "2 "! " &!@ ! !  !  "!"  ! !4 ! !@  ! !" 9 !4 2 ( " ! 9&8! !4 T V 57R 5 !4 ! 321 %!0 W G (( 99 &""



' 1XPEHU RI FXVWRPHU DFFRXQWV & $YDLODELOLW\ RI VWDII DXGLWRUV % &OLHQW V LQWHUQDO FRQWURO RYHU WUDQVDFWLRQV DIIHFWLQJ UHFHLYDEOHV $ 7\SH RI FRQILUPDWLRQ WR EH XVHG DFFRXQWV UHFHLYDEOH EHIRUH WKH EDODQFH VKHHW GDWH LV WKH 7KH SULPDU\ FRQVLGHUDWLRQ ZKHQ SODQQLQJ ZKHWKHU WR VHQG FRQILUPDWLRQV RI



,Q WKH UHYHQXH DQG FROOHFWLRQ F\FOH WKH DXGLWRU FKHFNV WKH QXPHULFDO VHTXHQFH RI VKLSSLQJ GRFXPHQWV 7KLV SURFHGXUH LV UHODWHG WR ZKLFK RI WKH IROORZLQJ DVVHUWLRQV"

$ ([LVWHQFH % &RPSOHWHQHVV & 5LJKWV DQG REOLJDWLRQV ' 9DOXDWLRQ RU DOORFDWLRQ

" " ! !4 !E  9"D  %1 ! " C!24 !!   " ( " %"!  B !4 ! B4 " 99 ! !&" !4 " "" ( " ! ( " ! 9&8! !4 T G 57R 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %!0  



7KH DXGLWRU VHOHFWV D VDPSOH RI UHFRUGHG VDOHV LQYRLFHV DQG YRXFKHV WKHP WR VKLSSLQJ GRFXPHQWV 7KLV SURFHGXUH LV UHODWHG WR ZKLFK RI WKH IROORZLQJ DVVHUWLRQV"

$ 2FFXUUHQFH % &RPSOHWHQHVV & $FFXUDF\ ' &XWRII



%!D !4  2 !!4 !E  9"D   ! " C "! 9 !@ (" ! !@ !2 "  "2 "! " &!@ ! !  !  "!"  ! !4 ! !@  ! !" 9 !4 2 ( " ! 9&8! !4 T V 57R 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %$@D    

%!D !4  2 !!4 !E  9"D  %1 ! " C "! 9 !@ (" ! !@ !2 "  "2 "! " &!@ ! !  !  "!"  ! !4 ! !@  ! !" 9 !4 2 ( " ! 9&8! !4 T V 57R 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %!0 



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

EDODQFH DULVHV IURP VDOHV WR PDQ\ FXVWRPHUV ZLWK VPDOO EDODQFHV



:KLFK RI WKH IROORZLQJ FRQWUROV PRVW OLNHO\ ZRXOG KHOS HQVXUH WKDW DOO FUHGLW VDOHV WUDQVDFWLRQV RI DQ HQWLW\ DUH UHFRUGHG"

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
" " ! !4 !E  9"D   ! " C!24 !!   " ( " %"!  B !4 ! B4 " 99 ! !&" !4 " "" ( " ! ( " ! 9&8! !4 T G 57R 5 !4 ! 321 %!0 W G (( 99 &""  $E    %$@D    



:KLFK RI WKH IROORZLQJ LQWHUQDO FRQWURO DFWLYLWLHV PRVW OLNHO\ ZRXOG HQVXUH WKDW DOO ELOOHG VDOHV DUH FRUUHFWO\ SRVWHG WR WKH DFFRXQWV UHFHLYDEOH OHGJHU"

$ 'DLO\ VDOHV VXPPDULHV DUH FRPSDUHG WR GDLO\ SRVWLQJV WR WKH DFFRXQWV UHFHLYDEOH OHGJHU % (DFK VDOHV LQYRLFH LV VXSSRUWHG E\ D SUHQXPEHUHG VKLSSLQJ GRFXPHQW & 7KH DFFRXQWV UHFHLYDEOH OHGJHU LV UHFRQFLOHG GDLO\ WR WKH FRQWURO DFFRXQW LQ WKH JHQHUDO OHGJHU ' (DFK VKLSPHQW RQ FUHGLW LV VXSSRUWHG E\ D SUHQXPEHUHG VDOHV LQYRLFH
" " ! !4 !E  9"D   ! " C!24 !!   " ( " %"!  B !4 ! B4 " 99 ! !&" !4 " " " ( " ! ( " ! 9&8! !4 T G 57R 5 !4 ! 321 %!0 & !# ) ((  !' &""  $E    %$@D    

%!D !4  2 !!4 !E  9"D   ! " C "! 9 !@ (" ! !@ !2 "  "2 "! " &!@ ! !  !  "!"  ! !4 ! !@  ! !" 9 !4 2 ( " ! 9&8! !4 T V 57R 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %!0  



' 5LJKWV DQG REOLJDWLRQV & &RPSOHWHQHVV % 9DOXDWLRQ RU DOORFDWLRQ $ ([LVWHQFH ILQDQFLDO VWDWHPHQW DVVHUWLRQ RI PRVW OLNHO\ UHYLHZV WKH HQWLW\ V DJLQJ RI UHFHLYDEOHV WR VXSSRUW PDQDJHPHQW V ,Q HYDOXDWLQJ WKH DGHTXDF\ RI WKH DOORZDQFH IRU GRXEWIXO DFFRXQWV DQ DXGLWRU



:KLFK RI WKH IROORZLQJ SURFHGXUHV ZRXOG DQ DXGLWRU PRVW OLNHO\ SHUIRUP IRU \HDU HQG DFFRXQWV UHFHLYDEOH FRQILUPDWLRQV ZKHQ WKH DXGLWRU GLG QRW UHFHLYH UHSOLHV WR VHFRQG UHTXHVWV"

$ 5HYLHZ WKH FDVK UHFHLSWV MRXUQDO IRU WKH PRQWK SULRU WR WKH \HDUHQG % ,QWHQVLI\ WKH VWXG\ RI WKH LQWHUQDO FRQWURO VWUXFWXUH FRQFHUQLQJ WKH UHYHQXH F\FOH & ,QFUHDVH WKH DVVHVVHG OHYHO RI GHWHFWLRQ ULVN IRU WKH H[LVWHQFH DVVHUWLRQ ' ,QVSHFW WKH VKLSSLQJ UHFRUGV GRFXPHQWLQJ WKH PHUFKDQGLVH VROG WR WKH GHEWRUV
%!D !4  2 !!4 !E  9"D   ! " C "! 9 !@ (" ! !@ !2 "  "2 "! " &!@ ! !  !  "!"  ! !4 ! !@  ! !" 9 !4 2 ( " ! 9&8! !4 T V 57R 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %$@D    



:KLFK RI WKH IROORZLQJ PRVW OLNHO\ ZRXOG EH GHWHFWHG E\ DQ DXGLWRU V UHYLHZ RI D FOLHQW V VDOHV FXWRII"

$ 6KLSPHQWV ODFNLQJ VDOHV LQYRLFHV DQG VKLSSLQJ GRFXPHQWV % ([FHVVLYH ZULWHRIIV RI DFFRXQWV UHFHLYDEOH & 8QUHFRUGHG VDOHV DW \HDUHQG ' /DSSLQJ RI \HDUHQG DFFRXQWV UHFHLYDEOH


%!D !4  2 !!4 !E  9"D   ! " C "! 9 !@ (" ! !@ !2  "  "2 "! " &!@ ! !  !  "!"  ! !4 ! !@  ! !" 9 !4 2 ( " ! 9&8! !4 T V 57R 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %!0  

%!D !4  2 !!4 !E  9"D   ! " C "! 9 !@ (" ! !@ !2 "  "2 "! " &!@ ! !  !  "!"  ! !4 ! !@  ! !" 9 !4 2 ( " ! 9&8! !4 T V 57R 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %$@D   



' $OO SUHQXPEHUHG VDOHV LQYRLFHV ZHUH DFFRXQWHG IRU & $OO JRRGV RUGHUHG E\ FXVWRPHUV ZHUH DFFRXQWHG IRU % 6KLSPHQWV WR FXVWRPHUV ZHUH SURSHUO\ LQYRLFHG $ 1R GXSOLFDWH VKLSPHQWV RU ELOOLQJV RFFXUUHG WKDW 7UDFLQJ VKLSSLQJ GRFXPHQWV WR SUHQXPEHUHG VDOHV LQYRLFHV SURYLGHV HYLGHQFH



:KLFK RI WKH IROORZLQJ VWDWHPHQWV LV FRUUHFW FRQFHUQLQJ WKH XVH RI QHJDWLYH FRQILUPDWLRQ UHTXHVWV"

$ 8QUHWXUQHG QHJDWLYH FRQILUPDWLRQ UHTXHVWV UDUHO\ SURYLGH VLJQLILFDQW H[SOLFLW HYLGHQFH % 1HJDWLYH FRQILUPDWLRQ UHTXHVWV DUH HIIHFWLYH ZKHQ GHWHFWLRQ ULVN LV ORZ & 8QUHWXUQHG QHJDWLYH FRQILUPDWLRQ UHTXHVWV LQGLFDWH WKDW DOWHUQDWLYH SURFHGXUHV DUH QHFHVVDU\ ' 1HJDWLYH FRQILUPDWLRQ UHTXHVWV DUH HIIHFWLYH ZKHQ XQGHUVWDWHPHQWV RI DFFRXQW EDODQFHV DUH VXVSHFWHG
%!D !4  2 !!4 !E  9"D   ! " C "! 9 !@ (" ! !@ !2 "  "2 "! " &!@ ! !  !  "!"  !!4 ! !@  ! !" 9 !4 2 ( " ! 9&8! !4 T V 57R 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %$@D    



7KH FRQILUPDWLRQ RI FXVWRPHUV DFFRXQWV UHFHLYDEOH UDUHO\ SURYLGHV UHOLDEOH HYLGHQFH DERXW WKH FRPSOHWHQHVV DVVHUWLRQ EHFDXVH

$ 0DQ\ FXVWRPHUV PHUHO\ VLJQ DQG UHWXUQ WKH FRQILUPDWLRQ ZLWKRXW YHULI\LQJ LWV GHWDLOV % 5HFLSLHQWV XVXDOO\ UHVSRQG RQO\ LI WKH\ GLVDJUHH ZLWK WKH LQIRUPDWLRQ RQ WKH UHTXHVW & &XVWRPHUV PD\ QRW EH LQFOLQHG WR UHSRUW XQGHUVWDWHPHQW HUURUV LQ WKHLU DFFRXQWV ' $XGLWRUV W\SLFDOO\ VHOHFW PDQ\ DFFRXQWV ZLWK ORZ UHFRUGHG EDODQFHV WR EH FRQILUPHG
%!D !4  2 !!4 !E  9"D   ! " C "! 9 !@ (" ! !@ !2 "  "2 "! " &!@ ! !  !  "!"  ! !4 ! !@  ! !" 9 !4 2 ( " ! 9&8! !4 T V 57R 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %$@D    



1HJDWLYH FRQILUPDWLRQ RI DFFRXQWV UHFHLYDEOH LV OHVV HIIHFWLYH WKDQ SRVLWLYH FRQILUPDWLRQ RI DFFRXQWV UHFHLYDEOH EHFDXVH

$ $ PDMRULW\ RI UHFLSLHQWV XVXDOO\ ODFNV WKH ZLOOLQJQHVV WR UHVSRQG REMHFWLYHO\ % 6RPH UHFLSLHQWV PD\ UHSRUW LQFRUUHFW EDODQFHV WKDW UHTXLUH H[WHQVLYH IROORZ XS & 7KH DXGLWRU FDQQRW LQIHU WKDW DOO QRQUHVSRQGHQWV KDYH YHULILHG WKHLU DFFRXQW LQIRUPDWLRQ ' 1HJDWLYH FRQILUPDWLRQV GR QRW SURGXFH HYLGHQWLDO PDWWHU WKDW LV VWDWLVWLFDOO\ TXDQWLILDEOH
%!D !4  2 !!4 !E  9"D  %1 ! " C "! 9 !@ (" ! !@ !2 "  "2 "! " &!@ ! !  !  "!"  ! !4 ! !@  ! !" 9 !4 2 ( " ! 9&8! !4 T V 57R 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %$@D    



:KLFK RI WKH IROORZLQJ UHVSRQVHV WR D FRQILUPDWLRQ RI EDODQFHV DW 'HFHPEHU  ZRXOG EH PRVW WURXEOLQJ WR DQ DXGLWRU"

$ :H SDLG WKLV DPRXQW RQ 'HFHPEHU  % :H UHFHLYHG WKHVH JRRGV RQ -DQXDU\  & :H UHWXUQHG WKLV DPRXQW RQ 'HFHPEHU  XQGHU RXU VWDQGLQJ DJUHHPHQW ZLWK WKH FRPSDQ\ ' 7KLV DPRXQW LV QRW GXH XQWLO -DQXDU\  5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

%!D !4  2 !!4 !E  9"D  %1 ! " C "! 9 !@ (" ! !@ !2 "  "2 "! " &!@ ! !  !  "!"  ! !4 ! !@  ! !" 9 !4 2 ( " ! 9&8! !4 T V 57R 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %$@D    

 %1 ! " C!!" 9 " "   !&" ! "  9 % B!  "!"  !!4 ! !@ !2! )57R 5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  

" %"!E ! !4 !E  9"D  %1 ! " C!!" 9 " "   !&" ! "  9 % B!  "!"  !!4 ! !@ !2! )57R 5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  





' 3D\PHQW FKHFN & 6DOHV LQYRLFH % %LOO RI ODGLQJ $ &XVWRPHU SXUFKDVH RUGHU 6DOHV DUH QRUPDOO\ UHFRUGHG RQ WKH GDWH RI WKH ' *RRGV KDYH EHHQ VKLSSHG & 7KH FDVK LV FROOHFWHG % 7KH FRPSDQ\ KDV VXEVWDQWLDOO\ DFFRPSOLVKHG ZKDW LW PXVW WR EH HQWLWOHG WR WKH $ $OO SRVVLELOLW\ RI UHWXUQ KDV H[SLUHG 5HYHQXHV DUH QRUPDOO\ FRQVLGHUHG WR KDYH EHHQ HDUQHG ZKHQ EHQHILWV

 %!0  

%!D !4  2 !!4 !E  9"D  %1 ! " C "! 9 !@ (" ! !@ !2 "  "2 "! " &!@ ! !  !  "!"  ! !4 ! !@  ! !" 9 !4 2 ( " ! 9&8! !4 T V 57R 5 !4 ! 321 %!0 Q 6 (( 99 &""  $E    %$@D    

! ! !4 !E  9"D





' 3XUFKDVHV 5HWXUQV DQG $OORZDQFHV & &DVK % $FFRXQWV 5HFHLYDEOH $ 6DOHV F\FOH" :KLFK RI WKH IROORZLQJ DFFRXQWV LV QRW QRUPDOO\ SDUW RI WKH UHYHQXH DQG FROOHFWLRQ ' &DVK UHFHLSWV OLVWLQJ & *HQHUDO OHGJHU % $FFRXQWV UHFHLYDEOH OLVWLQJ $ 6DOHV MRXUQDO WR FRQILUP IURP WKH :KHQ DXGLWLQJ WKH UHYHQXH DQG FROOHFWLRQ F\FOH DXGLWRUV QRUPDOO\ VHOHFW EDODQFHV

" " ! !4 !E  9"D  %1 ! " C!24 !!   " ( " %"!  B !4 ! B4 " 99 ! !&" !4 " "" ( " ! ( " ! 9&8! !4 T G 57R 5 !4 ! 321 %!0 Q 6 (( 99 &""  $E    %$@D    

! ! !4 !E  9"D  %1 ! " C!!" 9 " "   !&" ! "  9 % B!  "!"  !!4 ! !@ !2! )57R 5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E  



' &XWRII & $FFXUDF\ % &RPSOHWHQHVV $ 2FFXUUHQFH WRZDUG ZKLFK WUDQVDFWLRQ DVVHUWLRQ" 7KH FRQWURO DFWLYLW\ FUHGLW VDOHV DSSURYHG E\ FUHGLW GHSDUWPHQW LV GLUHFWHG



:KLFK RI WKH IROORZLQJ ZRXOG EH WKH EHVW SURWHFWLRQ IRU D FRPSDQ\ WKDW ZLVKHV WR SUHYHQW WKH ODSSLQJ RI WUDGH DFFRXQWV UHFHLYDEOH"

$ 6HSDUDWH GXWLHV VR WKDW WKH ERRNNHHSHU LQ FKDUJH RI WKH JHQHUDO OHGJHU KDV QR DFFHVV WR LQFRPLQJ PDLO % 6HSDUDWH GXWLHV VR WKDW QR HPSOR\HH KDV DFFHVV WR ERWK FKHFNV IURP FXVWRPHUV DQG FXUUHQF\ IURP GDLO\ FDVK UHFHLSWV & +DYH FXVWRPHUV VHQG SD\PHQWV GLUHFWO\ WR WKH FRPSDQ\ V GHSRVLWRU\ EDQN ' 5HTXHVW WKDW FXVWRPHU V SD\PHQW FKHFNV EH PDGH SD\DEOH WR WKH FRPSDQ\ DQG DGGUHVVHG WR WKH WUHDVXUHU
" " ! !4 !E  9"D  %1 ! " C!24 !!   " ( " %"!  B !4 ! B4 " 99 ! !&" !4 " "" ( " ! ( " ! 9&8! !4 T G 57R 5 !4 ! 321 %!0 W G (( 99 &""  $E    %$@D    



:KLFK RI WKH IROORZLQJ LQWHUQDO FRQWURO DFWLYLWLHV ZLOO PRVW OLNHO\ SUHYHQW WKH FRQFHDOPHQW RI D FDVK VKRUWDJH E\ LPSURSHUO\ ZULWLQJ RII D WUDGH DFFRXQW UHFHLYDEOH"

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
" " ! !4 !E  9"D  %1 ! " C!24 !!   " ( " %"!  B !4 ! B4 " 99 ! !&" !4 " "" ( " ! ( " ! 9&8! !4 T G 57R 5 !4 ! 321 %!0 W G (( 99 &""  $E    %$@D    



$XGLWRUV VRPHWLPHV XVH FRPSDULVRQV RI UDWLRV DV DXGLW HYLGHQFH $Q XQH[SODLQHG GHFUHDVH LQ WKH UDWLR RI JURVV SURILW WR VDOHV PD\ VXJJHVW ZKLFK RI WKH IROORZLQJ SRVVLELOLWLHV"

$ 8QUHFRUGHG SXUFKDVHV % 8QUHFRUGHG VDOHV & 0HUFKDQGLVH SXUFKDVHV EHLQJ FKDUJHG WR VHOOLQJ DQG JHQHUDO H[SHQVH ' )LFWLWLRXV VDOHV
%!D !4  2 !!4 !E  9"D  %1 ! " C "! 9 !@ (" ! !@ !2 "  "2 "! " &!@ ! !  !  "!"  ! !4 ! !@  ! !" 9 !4 2 ( " ! 9&8! !4 T V 57R 5 !4 ! 321 %!0 W G (( 99 &""  $E    %$@D    



$Q DXGLW WHDP LV DXGLWLQJ VDOHV WUDQVDFWLRQV 2QH VWHS LV WR YRXFK D VDPSOH RI GHELW HQWULHV IURP WKH DFFRXQWV UHFHLYDEOH VXEVLGLDU\ OHGJHU EDFN WR WKH VXSSRUWLQJ VDOHV LQYRLFHV 7KH SXUSRVH RI WKLV DXGLW SURFHGXUH LV WR HVWDEOLVK WKDW

$ 6DOHV LQYRLFHV UHSUHVHQW ERQD ILGH VDOHV % $OO VDOHV KDYH EHHQ UHFRUGHG & $OO VDOHV LQYRLFHV KDYH EHHQ SURSHUO\ SRVWHG WR FXVWRPHU DFFRXQWV ' (QWULHV LQ WKH DFFRXQWV UHFHLYDEOH VXEVLGLDU\ OHGJHU ZHUH SURSHUO\ LQYRLFHG


  ! !4 !E  9"D  %1 ! " C&!@ %!! "( !!" 9 " %!4    !&" %!  !  "!"  ! !4 ! !@   (  "! "&&" !&" !2! X 57R 5 !4 ! 321 %!0 W G (( 99 &""  $E    %$@D    

%!D !4  2 !!4 !E  9"D  %1 ! " C "! 9 !@ (" ! !@ !2 "  "2 "! " &!@ ! !  !  "!"  ! !4 ! !@  ! !" 9 !4 2 ( " ! 9&8! !4 T V 57R 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %$@D   



' )LFWLWLRXV VDOHV & ,PSURSHU VDOHV FXWRII % ,PSURSHU FUHGLW DSSURYDOV $ 8QUHFRUGHG FRVWV SHUFHQW 7KH DXGLWRU LV PRVW OLNHO\ FRQFHUQHG DERXW SHUFHQW WR  SHUFHQW DQG \HDUHQG DFFRXQWV UHFHLYDEOH KDG LQFUHDVHG E\  VDPH WLPH FRVW RI JRRGV VROG DV D SHUFHQWDJH RI VDOHV KDG GHFUHDVHG IURP  $Q DXGLWRU QRWHG WKDW FOLHQW VDOHV KDG LQFUHDVHG  SHUFHQW IRU WKH \HDU $W WKH



$Q DXGLWRU QRWHG WKDW FOLHQW VDOHV KDG LQFUHDVHG  SHUFHQW IRU WKH \HDU $W WKH VDPH WLPH FRVW RI JRRGV VROG DV D SHUFHQWDJH RI VDOHV KDG GHFUHDVHG IURP  SHUFHQW WR  SHUFHQW DQG \HDUHQG DFFRXQWV UHFHLYDEOH KDG LQFUHDVHG E\  SHUFHQW 7KH DXGLWRU LQWHUYLHZHG WKH VDOHV PDQDJHU ZKR VWDWHG WKDW WKH LQFUHDVH LQ VDOHV ZLWKRXW D FRUUHVSRQGLQJ LQFUHDVH LQ FRVW RI JRRGV VROG ZDV GXH WR D SULFH LQFUHDVH HQDFWHG E\ WKH FRPSDQ\ GXULQJ WKH \HDU +RZ ZRXOG WKH DXGLWRU EHVW WHVW WKH VDOHV PDQDJHU V UHSUHVHQWDWLRQ"

$ 3HUIRUP DGGLWLRQDO LQTXLULHV ZLWK VDOHV SHUVRQQHO % 2EWDLQ FRSLHV RI DOO SULFH OLVWV LQ XVH GXULQJ WKH \HDU DQG YRXFK WKH SULFHV WR VDOHV LQYRLFHV & 6HQG FRQILUPDWLRQV DVNLQJ FXVWRPHUV DERXW XQLW SULFHV SDLG IRU SURGXFW ' 9RXFK YHQGHU LQYRLFHV WR SD\PHQWV PDGH DIWHU \HDUHQG
%!D !4  2 !!4 !E  9"D  %1 ! " C "! 9 !@ (" ! !@ !2 "  "2 "! " &!@ ! !  !  "!"  ! !4 ! !@  ! !" 9 !4 2 ( " ! 9&8! !4 T V 57R 5 !4 ! 321 %!0 W G (( 99 &""  $E    %$@D    



7R FRQFHDO GHIDOFDWLRQV LQYROYLQJ UHFHLYDEOHV D GLVKRQHVW ERRNNHHSHU PLJKW FKDUJH ZKLFK RI WKH IROORZLQJ DFFRXQWV"

$ 0LVFHOODQHRXV LQFRPH % 3HWW\ FDVK & 0LVFHOODQHRXV H[SHQVH ' 6DOHV UHWXUQV
  ! !4 !E  9"D  %1 ! " C&!@ %!! "( !!" 9 " %!4    !&" %!  !  "!"  ! !4 ! !@  (  "! "&&" !&" !2! X 57R 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %$@D    



:KLFK RI WKH IROORZLQJ UHVSRQVHV WR DQ DFFRXQWV UHFHLYDEOH FRQILUPDWLRQ DW 'HFHPEHU  ZRXOG FDXVH DQ DXGLW WHDP WKH PRVW FRQFHUQ"

$ 7KLV DPRXQW ZDV SDLG RQ 'HFHPEHU   % :H UHFHLYHG WKLV VKLSPHQW RQ -DQXDU\   & 7KHVH JRRGV ZHUH UHWXUQHG IRU FUHGLW RQ 1RYHPEHU   ' 7KH EDODQFH GRHV QRW UHIOHFW RXU VDOHV GLVFRXQW IRU SD\LQJ E\ -DQXDU\  
99 &""  $E    %$@D    

%!D !4  2 !!4 !E  9"D  %1 ! " C "! 9 !@ (" ! !@ !2 "  "2 "! " &!@ ! !  !  "!"  ! !4 ! !@  ! !" 9 !4 2 ( " ! 9&8! !4 T V 57R 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %$@D    

%!D !4  2 !!4 !E  9"D  %1 ! " C "! 9 !@ (" ! !@ !2 "  "2 "! " &!@ ! !  !  "!"  ! !4 ! !@  ! !" 9 !4 2 ( " ! 9&8! !4 T V 57R 5 !4 ! 321 %!0 & !# ) (( 



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



$XGLW GRFXPHQWDWLRQ RIWHQ LQFOXGHV D FOLHQWSUHSDUHG DJHG WULDO EDODQFH RI DFFRXQWV UHFHLYDEOH DV RI WKH EDODQFH VKHHW GDWH 7KH DXGLW WHDP XVHV WKLV DJLQJ SULPDULO\ WR

$ (YDOXDWH LQWHUQDO FRQWURO RYHU FUHGLW VDOHV % 7HVW WKH DFFXUDF\ RI UHFRUGHG FKDUJH VDOHV & (VWLPDWH FUHGLW ORVVHV ' 9HULI\ WKH H[LVWHQFH RI WKH UHFRUGHG UHFHLYDEOHV
%!D !4  2 !!4 !E  9"D  %1 ! " C "! 9 !@ (" ! !@ !2 "  "2 "! " &!@ ! !  !  "!"  ! !4 ! !@  !!" 9 !4 2 ( " ! 9&8! !4 T V 57R 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %$@D    



:KLFK RI WKH IROORZLQJ PLJKW EH GHWHFWHG E\ DXGLWRUV FXWRII UHYLHZ DQG H[DPLQDWLRQ RI VDOHV MRXUQDO HQWULHV IRU VHYHUDO GD\V SULRU WR WKH EDODQFH VKHHW GDWH"

$ /DSSLQJ \HDUHQG DFFRXQWV UHFHLYDEOH % ,QIODWLQJ VDOHV IRU WKH \HDU & .LWLQJ EDQN EDODQFHV ' 0LVDSSURSULDWLQJ PHUFKDQGLVH


%!D !4  2 !!4 !E  9"D  %1 ! " C "! 9 !@ (" ! !@ !2 "  "2 "! " &!@ ! !  !  "!"  ! !4 ! !@  ! !" 9 !4 2 ( " ! 9&8! !4 T V 57R 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %!0  

%!D !4  2 !!4 !E  9"D  %1 ! " C "! 9 !@ (" ! !@ !2 "  "2 "! " &!@ ! !  !  "!"  ! !4 ! !@  ! !" 9 !4 2 ( " ! 9&8! !4 T V 57R 5 !4 ! 321 %!0 W G (( 99 &""  $E    %$@D   



' ,QWHUQDO FRQWURO RYHU EDODQFHV FRQILUPHG & ([LVWHQFH RI WKH EDODQFHV FRQILUPHG % 2ZQHUVKLS RI WKH EDODQFHV FRQILUPHG $ &ROOHFWDELOLW\ RI WKH EDODQFHV FRQILUPHG RI LWVHOI QRUPDOO\ SURYLGH WKH VWURQJHVW HYLGHQFH FRQFHUQLQJ WKH &RQILUPDWLRQ RI LQGLYLGXDO DFFRXQWV UHFHLYDEOH EDODQFHV GLUHFWO\ ZLWK GHEWRUV ZLOO



:KLFK RI WKH IROORZLQJ LV WKH EHVW UHDVRQ IRU SUHQXPEHULQJ LQ VHTXHQFH VXFK GRFXPHQWV DV VDOHV RUGHUV VKLSSLQJ GRFXPHQWV DQG VDOHV LQYRLFHV"

$ (QDEOHV FRPSDQ\ SHUVRQQHO WR GHWHUPLQH WKH DFFXUDF\ RI HDFK GRFXPHQW % (QDEOHV SHUVRQQHO WR GHWHUPLQH WKH SURSHU SHULRG IRU UHFRUGLQJ RI VDOHV UHYHQXH DQG UHFHLYDEOHV & (QDEOHV SHUVRQQHO WR FKHFN WKH QXPHULFDO VHTXHQFH IRU PLVVLQJ GRFXPHQWV DQG XQUHFRUGHG WUDQVDFWLRQV ' (QDEOHV SHUVRQQHO WR GHWHUPLQH WKH YDOLGLW\ RI UHFRUGHG WUDQVDFWLRQV
" " ! !4 !E  9"D  %1 ! " C!24 !!   " ( " %"!  B !4 ! B4 " 99 ! !&" !4 " "" ( " ! ( " ! 9&8! !4 T G 57R 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %$@D    



:KHQ D VDPSOH RI FXVWRPHU DFFRXQWV UHFHLYDEOH LV VHOHFWHG IRU YRXFKLQJ GHELWV DXGLWRUV ZLOO YRXFK WKHP WR

$ 6DOHV LQYRLFHV ZLWK VKLSSLQJ GRFXPHQWV % 5HFRUGV RI DFFRXQWV UHFHLYDEOH ZULWHRIIV & &DVK UHPLWWDQFH OLVWV DQG EDQN GHSRVLW VOLSV ' &UHGLW ILOHV DQG UHSRUWV


%!D !4  2 !!4 !E  9"D  %1 ! " C "! 9 !@ (" ! !@ !2 "  "2 "! " &!@ ! !  !  "!"  ! !4 ! !@  ! !" 9 !4 2 ( " ! 9&8! !4 T V 57R 5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  

%!D !4  2 !!4 !E  9"D  %1 ! " C "! 9 !@ (" ! !@ !2 "  "2 "! " &!@ ! !  !  "!"  !!4 ! !@  ! !" 9 !4 2 ( " ! 9&8! !4 T V 57R 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %$@D   



' 3UHVHQWDWLRQ DQG GLVFORVXUH DVVHUWLRQ & 5LJKWV DQG REOLJDWLRQV DVVHUWLRQ % ([LVWHQFH DVVHUWLRQ $ &RPSOHWHQHVV DVVHUWLRQ WKH ,Q WKH DXGLW RI DFFRXQWV UHFHLYDEOH WKH PRVW LPSRUWDQW HPSKDVLV VKRXOG EH RQ



:KHQ DFFRXQWV UHFHLYDEOH DUH FRQILUPHG DW DQ LQWHULP GDWH DXGLWRUV QHHG QRW EH FRQFHUQHG ZLWK

$ 2EWDLQLQJ D VXPPDU\ RI UHFHLYDEOHV WUDQVDFWLRQV IURP WKH LQWHULP GDWH WR WKH \HDUHQG GDWH % 2EWDLQLQJ D \HDUHQG WULDO EDODQFH RI UHFHLYDEOHV FRPSDULQJ LW WR WKH LQWHULP WULDO EDODQFH DQG REWDLQLQJ HYLGHQFH DQG H[SODQDWLRQV IRU ODUJH YDULDWLRQV & 6HQGLQJ QHJDWLYH FRQILUPDWLRQV WR DOO WKH FXVWRPHUV DV RI WKH \HDUHQG GDWH ' &RQVLGHULQJ WKH QHFHVVLW\ IRU VRPH DGGLWLRQDO FRQILUPDWLRQV DV RI WKH EDODQFH VKHHW GDWH LI EDODQFHV KDYH LQFUHDVHG PDWHULDOO\
%!D !4  2 !!4 !E  9"D  %1 ! " C "! 9 !@ (" ! !@ !2 "  "2 "! " &!@ ! !  !  "!"  ! !4 ! !@  ! !" 9 !4 2 ( " ! 9&8! !4 T V 57R 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %$@D    



' 2SWLRQ ' & 2SWLRQ & % 2SWLRQ %  2SWLRQ $ SDUWLFXODUO\ ZKHQ WKH 7KH QHJDWLYH UHTXHVW IRUP RI DFFRXQWV UHFHLYDEOH FRQILUPDWLRQ LV XVHIXO

  " ( " %"!  B !4 ! B4 " 99 ! !&" !4 " "" ( " ! ( " ! 9&8! !4 T G 57R 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  

%!D !4  2 !!4 !E  9"D   ! " C "! 9 !@ (" ! !@ !2 "  "2 "! " &!@ ! !  !  "!"  ! !4 ! !@  ! !" 9 !4 2 ( " ! 9&8! !4 T V 57R 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %$@D    





' 7KH FDVKLHU & 7KH WUHDVXUHU % 7KH FUHGLW PDQDJHU $ 7KH VDOHVSHUVRQ :ULWHRIIV RI GRXEWIXO DFFRXQWV VKRXOG EH DSSURYHG E\ ' ,QYRLFHG VDOHV ZHUH VKLSSHG & 5HFRUGHG VDOHV ZHUH VKLSSHG % 6KLSPHQWV WR FXVWRPHUV ZHUH UHFRUGHG DV VDOHV $ 6KLSPHQWV WR FXVWRPHUV ZHUH LQYRLFHG LQYRLFH FRSLHV WKH\ DUH WU\LQJ WR ILQG UHOHYDQW HYLGHQFH WKDW :KHQ DQ DXGLW WHDP WUDFHV D VDPSOH RI VKLSSLQJ GRFXPHQWV WR WKH UHODWHG VDOHV

%!D !4  2 !!4 !E  9"D  %1 ! " C "! 9 !@ (" ! !@ !2 "  "2 "! " &!@ ! !  !  "!"  ! !4 ! !@  ! !" 9 !4 2 ( " ! 9&8! !4 T V 57R 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %$@D    

" " ! !4 !E  9"D  %1 ! " C!24 !!



' ([DPLQH FOLHQW FRUUHVSRQGHQFH ILOHV & ([DPLQH VKLSSLQJ GRFXPHQWV % 'R QRWKLQJ IRU LPPDWHULDO EDODQFHV $ 6HQG D VHFRQG UHTXHVW UHFHLYDEOH FRQILUPDWLRQ DXGLWRUV VKRXOG GR DOO RI WKH IROORZLQJ H[FHSW :KHQ DQ DXGLW WHDP GRHV QRW UHFHLYH D UHVSRQVH RQ D SRVLWLYH DFFRXQWV



&DVK UHFHLSWV IURP VDOHV RQ DFFRXQW KDYH EHHQ PLVDSSURSULDWHG :KLFK RI WKH IROORZLQJ DFWV ZRXOG FRQFHDO WKLV GHIDOFDWLRQ DQG EH OHDVW OLNHO\ WR EH GHWHFWHG E\ DQ DXGLWRU"

$ 8QGHUVWDWLQJ WKH VDOHV MRXUQDO % 2YHUVWDWLQJ WKH DFFRXQWV UHFHLYDEOH FRQWURO DFFRXQW & 2YHUVWDWLQJ WKH DFFRXQWV UHFHLYDEOH VXEVLGLDU\ OHGJHU ' 8QGHUVWDWLQJ WKH FDVK UHFHLSWV MRXUQDO
  ! !4 !E  9"D   ! " C&!@ %!! "( !!" 9 " %!4    !&" %!  !  "!"  ! !4 ! !@  (  "! "&&" !&" !2! X 57R 5 !4 ! 321 %!0 W G (( 99 &""  $E    %$@D    



:KLFK RI WKH IROORZLQJ LQWHUQDO FRQWURO DFWLYLWLHV PRVW OLNHO\ ZRXOG GHWHU ODSSLQJ RI FROOHFWLRQV IURP FXVWRPHUV"

$ ,QGHSHQGHQW LQWHUQDO YHULILFDWLRQ RI GDWHV RI HQWU\ LQ WKH FDVK UHFHLSWV MRXUQDO ZLWK GDWHV RI GDLO\ FDVK VXPPDULHV % $XWKRUL]DWLRQ RI ZULWHRIIV RI XQFROOHFWLEOH DFFRXQWV E\ D VXSHUYLVRU LQGHSHQGHQW RI FUHGLW DSSURYDO & 6HSDUDWLRQ RI GXWLHV EHWZHHQ UHFHLYLQJ FDVK DQG SRVWLQJ WKH DFFRXQWV UHFHLYDEOH OHGJHU ' 6XSHUYLVRU\ FRPSDULVRQ RI WKH GDLO\ FDVK VXPPDU\ ZLWK WKH VXP RI WKH FDVK UHFHLSWV MRXUQDO HQWULHV
" " ! !4 !E  9"D   ! " C!24 !!   " ( " %"!  B !4 ! B4 " 99 ! !&" !4 " "" ( " ! ( " ! 9&8! !4 T G 57R 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %$@D    



7KH ILQDQFLDO UHFRUGV RI WKH 0RYLW] &RPSDQ\ VKRZ WKDW 0U 'HQQLV RZHV   RQ DQ DFFRXQW UHFHLYDEOH $Q LQGHSHQGHQW DXGLW LV EHLQJ FDUULHG RXW DQG WKH DXGLWRUV VHQG D SRVLWLYH FRQILUPDWLRQ WR 0U 'HQQLV :KDW LV WKH PRVW OLNHO\ UHDVRQ DV WR ZK\ D SRVLWLYH FRQILUPDWLRQ UDWKHU WKDQ D QHJDWLYH FRQILUPDWLRQ ZDV XVHG KHUH"

$ &RQWURO ULVN ZDV SDUWLFXODUO\ ORZ IRU DFFRXQWV UHFHLYDEOH % ,QKHUHQW ULVN ZDV SDUWLFXODUO\ KLJK IRU DFFRXQWV UHFHLYDEOH & 0U 'HQQLV V DFFRXQW ZDV QRW \HW GXH ' 0U 'HQQLV V DFFRXQW ZDV QRW ZLWK D UHODWHG SDUW\
%!D !4  2 !!4 !E  9"D  %1 ! " C "! 9 !@ (" ! !@ !2 "  "2 "! " &!@ ! !  !  "!"  ! !4 ! !@  ! !" 9 !4 2 ( " ! 9&8! !4 T V 57R 5 !4 ! 321 %!0 W G (( 99 &""  $E    %$@D    



,Q WKH UHYHQXH DQG FROOHFWLRQ F\FOH WKH RUGHU RI WKH DFWLYLWLHV LQ WKH F\FOH LV EHVW LOOXVWUDWHG E\

$ 'HOLYHULQJ JRRGV ELOOLQJ FXVWRPHU JUDQWLQJ FUHGLW DQG SHUIRUPLQJ FROOHFWLRQ DFWLYLWLHV % &XVWRPHU RUGHULQJ GHOLYHULQJ JRRGV JUDQWLQJ FUHGLW DQG ELOOLQJ FXVWRPHUV & 3URFHVVLQJ FXVWRPHU RUGHUV JUDQWLQJ FUHGLW GHOLYHULQJ JRRGV DQG ELOOLQJ FXVWRPHUV ' *UDQWLQJ FUHGLW ELOOLQJ FXVWRPHUV GHOLYHULQJ JRRGV DQG SURFHVVLQJ FDVK UHFHLSWV
! ! !4 !E  9"D  %1 ! " C!!" 9 " "   !&" ! "  9 % B!  "!"  !!4 ! !@ !2! )57R 5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  

" " ! !4 !E  9"D  %1 ! " C!24 !!   " ( " %"!  B !4 ! B4 " 99 ! !&" !4 " "" ( " ! ( " ! 9&8! !4 T G 57R 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %!0  



5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH ' 3UHVHQWDWLRQ RU GLVFORVXUH & $FFXUDF\ % 2FFXUUHQFH $ &RPSOHWHQHVV DFKLHYH ZKLFK RI WKH IROORZLQJ DVVHUWLRQV" 3UHQXPEHULQJ LQYRLFHV VKLSSLQJ GRFXPHQWV DQG VDOHV RUGHUV LV D SUDFWLFH WR



$Q LQWHUQDO FRQWURO TXHVWLRQQDLUH IRU HYDOXDWLQJ WKH RFFXUUHQFH REMHFWLYH RI UHYHQXHV ZRXOG QRW LQFOXGH ZKLFK RI WKH IROORZLQJ TXHVWLRQV"

$ ,V FXVWRPHU FUHGLW DSSURYHG EHIRUH RUGHUV DUH VKLSSHG" % $UH FXVWRPHU VWDWHPHQWV PDLOHG PRQWKO\ E\ WKH DFFRXQWV UHFHLYDEOH GHSDUWPHQW" & $UH GLUHFW FRQILUPDWLRQV RI UHFHLYDEOHV REWDLQHG SHULRGLFDOO\ E\ WKH LQWHUQDO DXGLWRU" ' $UH UHWXUQHG JRRGV FKHFNHG DJDLQVW QHFHVVDU\ UHSRUWV" 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

" " ! !4 !E  9"D  %1 ! " C!24 !!   " ( " %"!  B !4 ! B4 " 99 ! !&" !4 " "" ( " ! ( " ! 9&8! !4 T G 57R 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %$@D    

%!D !4  2 !!4 !E  9"D  %1 ! " C "! 9 !@ (" ! !@ !2 "  "2 "! " &!@ ! !  !  "!"  ! !4 ! !@  ! !" 9 !4 2 ( " ! 9&8! !4 T V 57R 5 !4 ! 321 %!0 Q 6 (( 99 &""  $E    %$@D    



5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH ' ,QWHUQDO FRQWURO LV FRQVLGHUHG HIIHFWLYH & $FFRXQWV DUH QRW LQ GLVSXWH % $FFRXQW EDODQFHV DUH VPDOO LQ DPRXQW EXW QXPHURXV $ $FFRXQW EDODQFHV DUH UHODWLYHO\ ODUJH 7KH SRVLWLYH IRUP RI FRQILUPDWLRQ LV EHVW XVHG ZKHQ

%!D !4  2 !!4 !E  9"D  %1 ! " C "! 9 !@ (" ! !@ !2 "  "2 "! " &!@ ! !  !  "!"  ! !4 ! !@  ! !" 9 !4 2 ( " ! 9&8! !4 T V 57R 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %$@D    



5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH ' ([DPLQH FOLHQW FRUUHVSRQGHQFH ZLWK WKH FXVWRPHU & ([DPLQH FXVWRPHU SXUFKDVH RUGHUV % ([DPLQH SD\PHQWV UHFHLYHG EHIRUH WKH HQG RI WKH SHULRG $ ([DPLQH VDOHV LQYRLFHV DQG YRXFK WKHP WR XQGHUO\LQJ VKLSSLQJ GRFXPHQWV :KLFK RI WKH IROORZLQJ LV QRW DQ DOWHUQDWLYH SURFHGXUH ZKHQ D FRQILUPDWLRQ LV QRW UHFHLYHG"

  ! !4 !E  9"D  %1 ! " C&!@ %!! "( !!" 9 " %!4    !&" %!  !  "!"  !!4 ! !@  (  "! "&&" !&" !2! X 57R 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %$@D    

)LOO LQ WKH %ODQN 4XHVWLRQV

 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH ' 8QGHUIRRWLQJ WKH EDQN UHFRQFLOLDWLRQ & 2YHUVWDWLQJ FDVK UHFHLSWV % /DSSLQJ $ .LWLQJ DEOH WR WDNH FDVK UHFHLSWV E\ $ SHUVRQ ZKR KDV DFFHVV WR ERWK FDVK DQG DFFRXQWV UHFHLYDEOH UHFRUGV PD\ EH



BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB RI DFFRXQWV UHFHLYDEOH UHFRUGV LPSOLHV WKH SRZHU WR DOWHU WKHP GLUHFWO\ RU HQWHU WUDQVDFWLRQV WR DOWHU WKHP &XVWRG\ 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH



7KH SHQGLQJ VDOHV RUGHUV FDQ EH UHYLHZHG IRU HYLGHQFH RI WKH BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB RI UHFRUGHG BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB DQG BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB FRPSOHWHQHVV VDOHV DFFRXQWV UHFHLYDEOH 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH



,QWHUQDO FRQWURO DVVHVVPHQW LV LPSRUWDQW EHFDXVH LW JRYHUQV WKH BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB DQG BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB RI VXEVWDQWLYH SURFHGXUHV QDWXUH WLPLQJ H[WHQW 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH



,QIRUPDWLRQ DERXW WKH LQWHUQDO FRQWURO V\VWHP FDQ EH JDWKHUHG E\ FRPSOHWLQJ DQ BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB LQWHUQDO FRQWURO TXHVWLRQQDLUH 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH



$QRWKHU ZD\ WR REWDLQ LQIRUPDWLRQ DERXW WKH LQWHUQDO FRQWURO V\VWHP LV WR WDNH D VLQJOH H[DPSOH RI D WUDQVDFWLRQ DQG BBBBBBBBBBBBBBBBBBBBBBBBBB WKH SURFHVV IURP LWV LQLWLDWLRQ WR LWV UHFRUGLQJ LQ WKH DFFRXQWLQJ UHFRUGV ZDONWKURXJK 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH



7KH DFWLRQV LQ WHVWV RI FRQWUROV LQYROYH BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB DQG BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB YRXFKLQJ WUDFLQJ REVHUYLQJ VFDQQLQJ UHFDOFXODWLQJ 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH



'XDO GLUHFWLRQ WHVWLQJ LQYROYHV VDPSOHV RI WUDQVDFWLRQV VHOHFWHG WR REWDLQ HYLGHQFH DERXW FRQWURO RYHU BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB LQ RQH GLUHFWLRQ DQG FRQWURO RYHU BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB LQ WKH RWKHU GLUHFWLRQ FRPSOHWHQHVV RFFXUUHQFH 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH



$ SURFHGXUH WR JDWKHU HYLGHQFH RQ ERWK DFFRXQW EDODQFHV DQG FRQWUROV LV FDOOHG D BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB SURFHGXUH GXDO SXUSRVH 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH



$VVHUWLRQV UHODWHG WR DFFRXQW EDODQFHV DUH BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB DQG BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB H[LVWHQFH FRPSOHWHQHVV ULJKWV REOLJDWLRQV YDOXDWLRQ DOORFDWLRQ 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH



&RQILUPDWLRQV SURYLGH HYLGHQFH RI BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB DQG WR D OLPLWHG H[WHQW BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB RI DFFRXQWV DQG QRWHV UHFHLYDEOH H[LVWHQFH YDOXDWLRQ 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH



BBBBBBBBBBBBBBBBBBBBBBBBBBB PD\ EH XVHG WR DFFHVV FRPSXWHUL]HG UHFHLYDEOH ILOHV WR VHOHFW DQG SULQW FRQILUPDWLRQV &$$7V 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 7ZR ZLGHO\ XVHG FRQILUPDWLRQ IRUPV WR WHVW DFFRXQWV UHFHLYDEOH DUH BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB DQG BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB FRQILUPDWLRQV SRVLWLYH QHJDWLYH 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 7KH BBBBBBBBBBBBBBBBBBBBBBBBBBBB FRQILUPDWLRQ IRUP LV XVHG ZKHQ LQGLYLGXDO EDODQFHV DUH BBBBBBBBBBBBBBBBBBBBBBBBBBBB RU DFFRXQWV DUH LQ BBBBBBBBBBBBBBBBBBBBBBBBBBBBBB SRVLWLYH ODUJH GLVSXWH 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 $XGLWLQJ WKH GHWDLOV RI FXVWRPHU SD\PHQWV OLVWHG LQ EDQN GHSRVLWV LQ FRPSDULVRQ WR GHWDLOV RI FXVWRPHU SD\PHQW SRVWLQJV FDQ GHWHFW BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB ODSSLQJ 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

6KRUW $QVZHU 4XHVWLRQV

(VVD\ 4XHVWLRQV
 )RU HDFK RI WKH WHVWV RI FRQWUROV IRU VDOHV DQG UHFHLYDEOHV LQGLFDWH WKH DVVHUWLRQ $  %  &  '  ( WKDW LV VXSSRUWHG E\ SODFLQJ WKH FRUUHFW OHWWHU LQ WKH EODQN

 :KDW LV GXDO GLUHFWLRQ WHVWLQJ"

'XDO GLUHFWLRQ WHVWLQJ LQYROYHV VDPSOHV VHOHFWHG WR REWDLQ HYLGHQFH DERXW FRQWURO RYHU FRPSOHWHQHVV LQ RQH GLUHFWLRQ DQG FRQWURO RYHU RFFXUUHQFH LQ WKH RWKHU GLUHFWLRQ 7KH FRPSOHWHQHVV GLUHFWLRQ GHWHUPLQHV ZKHWKHU DOO WUDQVDFWLRQV WKDW RFFXUUHG ZHUH UHFRUGHG 7KH RFFXUUHQFH GLUHFWLRQ GHWHUPLQHV ZKHWKHU UHFRUGHG WUDQVDFWLRQV DFWXDOO\ RFFXUUHG

 %1 ! " C!24 !!   " ( " %"!  B !4 ! B4 " 99 ! !&" !4 " "" ( " ! ( " ! 9&8! !4 T G 57R 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %!0   " " ! !4 !E  9"D

 ,V WKH FRQILUPDWLRQ RI FDVK DQG DFFRXQWV UHFHLYDEOH UHTXLUHG DFFRUGLQJ WR DXGLWLQJ VWDQGDUGV" ([SODLQ

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

%!D !4  2 !!4 !E  9"D  %1 ! " C "! 9 !@ (" ! !@ !2 "  "2 "! " &!@ ! !  !  "!"  ! !4 ! !@  ! !" 9 !4 2 ( " ! 9&8! !4 T V 57R 5 !4 ! 321 %!0 & !# ) ((  !' &"" @!!E   %!0  

 ,Q WHVWV RI FRQWUROV DXGLWLQJ DXGLWRUV QHHG WR GHILQH GHYLDWLRQV LQ DGYDQFH *LYH VHYHQ H[DPSOHV RI FRQWURO FRPSOLDQFH GHYLDWLRQV UHODWHG WR D FOLHQW V SURFHVVLQJ RI FUHGLW VDOHV WUDQVDFWLRQV DQG WKH UHODWHG DVVHUWLRQ WKDW ZDV YLRODWHG

D 2FFXUUHQFH )LFWLWLRXV VDOHV DUH UHFRUGHG E &RPSOHWHQHVV 6KLSPHQWV WR FXVWRPHUV DUH QRW UHFRUGHG F $FFXUDF\ &XVWRPHU FUHGLW LV QRW DSSURYHG G $FFXUDF\ 6DOHV DUH UHFRUGHG LQ WKH ZURQJ DPRXQW TXDQWLW\ DQGRU SULFH LV ZURQJ  H &ODVVLILFDWLRQ 6DOHV DUH UHFRUGHG LQ WKH ZURQJ UHYHQXH DFFRXQW I &RPSOHWHQHVV 6RPH VDOHV DUH QRW SRVWHG WR WKH FXVWRPHU DFFRXQWV J &XWRII 6DOHV DUH UHFRUGHG IRU WKH ZURQJ GDWH

" " ! !4 !E  9"D  %1 ! " C!24 !!   " ( " %"!  B !4 ! B4 " 99 ! !&" !4 " "" ( " ! ( " ! 9&8! !4 T G 57R 5 !4 ! 321 %!0 W G (( 99 &""  $E    %$@D    

 <RX DUH WKH DXGLWRU IRU :LOVRQ :KROHVDOH 3URGXFWV ,QF $V SDUW RI WKH DXGLW RI DFFRXQWV UHFHLYDEOH :LOVRQ KDV SURYLGHG \RX DQ HOHFWURQLF ILOH UHSUHVHQWLQJ LWV DFFRXQWV UHFHLYDEOH DV RI LWV ILVFDO \HDUHQG 7KH ILOH LQFOXGHV WKH FXVWRPHU QDPH FXVWRPHU DGGUHVV FXVWRPHU QXPEHU VDOHV LQYRLFH QXPEHU VDOHV LQYRLFH GDWH DQG DPRXQW 5HTXLUHG 'HVFULEH WKUHH RU PRUH VXEVWDQWLYH DXGLW SURFHGXUHV \RX PLJKW SHUIRUP XVLQJ FRPSXWHUDVVLVWHG DXGLW WRROV DQG WHFKQLTXHV &$$7V ZLWK WKLV FRPSXWHU ILOH

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

" &!@ ! !  !  "!"  ! !4 ! !@  ! !" 9 !4 2 ( " ! 9&8! !4 T V 57R 5 !4 ! 321 %!0 W G (( 99 &""  $E    %$@D    

 :KDW SURFHGXUHV VKRXOG DQ DXGLWRU SHUIRUP IRU D SRVLWLYH FRQILUPDWLRQ WKDW LV QRW UHWXUQHG E\ WKH FOLHQW V FXVWRPHU"

$XGLWRUV KDYH WR SHUIRUP DOWHUQDWLYH SURFHGXUHV WR HQVXUH H[LVWHQFH 7KHVH LQFOXGH H[DPLQLQJ D VXEVHTXHQW FDVK UHFHLSWV E VDOHV RUGHUV LQYRLFHV DQG VKLSSLQJ GRFXPHQWV DQG F FRUUHVSRQGHQFH ILOHV IRU SDVW GXH DFFRXQWV ([DPLQLQJ VXEVHTXHQW FDVK UHFHLSWV LV D SDUWLFXODUO\ HIIHFWLYH WHVW EHFDXVH D FXVWRPHU V SD\PHQW RI WKH DFFRXQW LV VWURQJ HYLGHQFH WKDW WKH UHFHLYDEOH H[LVWHG 7KH FDVK UHFHLSW VKRXOG EH WUDFHG WR WKH UHPLWWDQFH DGYLFH DQG WKH GHSRVLW LQWR FDVK

%!D !4  2 !!4 !E  9"D  %1 ! " C "! 9 !@ (" ! !@ !2 "  "2 "! %!D !4  2 !!4 !E  9"D  %1 ! " C "! 9 !@ (" ! !@ !2 "  "2 "! " &!@ ! !  !  "!"  ! !4 ! !@  ! !" 9 !4 2 ( " ! 9&8! !4 T V 57R 5 !4 ! 321 %!0 W G (( 99 &""  $E    %$@D    

 7KH IROORZLQJ TXHVWLRQ DSSHDUHG RQ DQ LQWHUQDO FRQWURO TXHVWLRQQDLUH IRU VDOHV 1H[W WR HDFK RI WKH TXHVWLRQ LQGLFDWH WKH UHODWHG DVVHUWLRQ

D &RPSOHWHQHVV E $FFXUDF\ F $FFXUDF\ G $FFXUDF\ H $FFXUDF\ I 2FFXUUHQFH J &XWRII K 2FFXUUHQFH L &RPSOHWHQHVV M $FFXUDF\

7UXH  )DOVH 4XHVWLRQV

 7KH EDVLF DFTXLVLWLRQ DQG H[SHQGLWXUH DFWLYLWLHV DUH  SXUFKDVLQJ JRRGV DQG VHUYLFHV  UHFHLYLQJ WKH JRRGV RU VHUYLFHV  UHFRUGLQJ WKH DVVHW RU H[SHQVH DQG UHODWHG OLDELOLW\ DQG  SD\LQJ WKH YHQGRUV 7UXH )DOVH

 3XUFKDVHV DUH RUGHUHG E\ D SXUFKDVLQJ GHSDUWPHQW WKDW VHHNV WKH EHVW SULFHV DQG TXDOLW\ 7UXH )DOVH

 %1 ! " C!24 !!   " ( " %"!  B !4 ! B4 " 99 ! !&" !4 " "" ( " ! ( " ! 9&8! !4 T G 57R 5 !4 ! 321 %!0 W G (( 99 &""

$FTXLVLWLRQ DQG ([SHQGLWXUH &\FOH

" " ! !4 !E  9"D

&KDSWHU 

 &KHFNV DUH VLJQHG E\ WKH DFFRXQWV SD\DEOH GHSDUWPHQW DIWHU DVVHPEOLQJ WKH LQYRLFH SXUFKDVH RUGHU DQG UHFHLYLQJ UHSRUW 7UXH )DOVH

 3XUFKDVH RUGHUV DUH RSHQ IURP WKH WLPH WKH\ DUH LVVXHG XQWLO WKH JRRGV DUH UHFHLYHG 7UXH )DOVH

 1RUPDOO\ OLDELOLWLHV VKRXOG EH UHFRUGHG RQ WKH GDWH WKH JRRGV DUH UHFHLYHG DQG DFFHSWHG 7UXH )DOVH

 $XGLWRUV VHDUFK IRU XQUHFRUGHG OLDELOLWLHV VKRXOG HPSKDVL]H WKH ODUJH EDODQFHV HVSHFLDOO\ IRU UHJXODU YHQGRUV 7UXH )DOVH

 $XGLWRUV FDQ LQVSHFW WKH XQPDWFKHG LQYRLFH ILOH DQG FRPSDUH LW WR WKH XQPDWFKHG UHFHLYLQJ UHSRUW ILOH WR GHWHUPLQH ZKHWKHU OLDELOLWLHV DUH XQUHFRUGHG 7UXH )DOVH

 3URSHU VHSDUDWLRQ RI GXWLHV LQYROYHV DXWKRUL]DWLRQ RI SXUFKDVHV E\ SHUVRQV ZKR GR QRW KDYH FXVWRG\ UHFRUGLQJ RU UHFRQFLOLDWLRQ GXWLHV 7UXH )DOVH

 ,I SHUVRQQHO LQ WKH RUJDQL]DWLRQ DUH QRW SHUIRUPLQJ WKHLU FRQWURO DFWLYLWLHV YHU\ ZHOO DXGLWRUV ZLOO QHHG WR GHVLJQ VXEVWDQWLYH SURFHGXUHV WR WU\ WR GHWHFW ZKHWKHU FRQWURO IDLOXUHV KDYH SURGXFHG PLVOHDGLQJ ILQDQFLDO VWDWHPHQW DFFRXQW EDODQFHV 7UXH )DOVH

 ,I WKH ULVN RI PDWHULDO PLVVWDWHPHQW LV DVVHVVHG DV YHU\ ORZ LW LV OLNHO\ WKDW DGGLWLRQDO VXEVWDQWLYH SURFHGXUHV ZLOO EH UHTXLUHG 7UXH )DOVH

 7KH HPSKDVLV LV RQ WKH H[LVWHQFH DVVHUWLRQ EHFDXVH ILQDQFLDO VWDWHPHQW XVHUV WHQG WR EH PRUH FRQFHUQHG DERXW XQGHUVWDWHG H[SHQVHV DQG OLDELOLWLHV WKDQ RYHUVWDWHG 7UXH )DOVH

 (YLGHQFH LV PXFK HDVLHU WR REWDLQ WR YHULI\ WKH FRPSOHWHQHVV DVVHUWLRQ IRU OLDELOLWLHV WKDQ WKH H[LVWHQFH DVVHUWLRQ IRU DVVHWV 7UXH )DOVH

 7KH VHDUFK IRU XQUHFRUGHG OLDELOLWLHV VKRXOG QRUPDOO\ EH SHUIRUPHG XS WR WKH ODVW GD\ RI ILHOGZRUN LQ WKH SHULRG IROORZLQJ WKH DXGLW FOLHQW V EDODQFH VKHHW GDWH 7UXH )DOVH

 7KH SULQFLSDO JRDO RI WKH SK\VLFDO LQVSHFWLRQ RI SURSHUW\ SODQW DQG HTXLSPHQW LV WR GHWHUPLQH DFWXDO H[LVWHQFH DQG FRQGLWLRQ RI SURSHUW\ 7UXH )DOVH

 $OO SD\ EDVH GDWD KRXUV MRE QXPEHU DEVHQFHV HWF VKRXOG EH DSSURYHG E\ DQ HPSOR\HH V LPPHGLDWH VXSHUYLVRU 7UXH )DOVH

 7KH PDLQ IHDWXUH RI FXVWRG\ LQ WKH SD\UROO F\FOH LV WKH SRVVHVVLRQ RI WKH SD\UROO FKHFNV 7UXH )DOVH

 3HUVRQV LQ FKDUJH RI DXWKRUL]DWLRQ DQG FXVWRG\ SD\UROO IXQFWLRQV VKRXOG QRW SUHSDUH WKH SD\UROO 7UXH )DOVH

 7KH SD\UROO EDQN DFFRXQW FDQQRW EH UHFRQFLOHG OLNH WKH RWKHU EDQN DFFRXQWV 7UXH )DOVH

 5HFRUG NHHSLQJ LV SHUIRUPHG E\ SD\UROO DQG FRVW DFFRXQWLQJ SHUVRQQHO ZKR GR QRW PDNH DXWKRUL]DWLRQV RU GLVWULEXWH SD\ 7UXH )DOVH

0XOWLSOH &KRLFH 4XHVWLRQV

 :KHQ FRQILUPLQJ DFFRXQWV SD\DEOH HPSKDVLV VKRXOG EH SXW RQ ZKDW NLQG RI DFFRXQWV"

$ $FFRXQWV ZLWK VPDOO RU ]HUR EDODQFHV % $OO DFFRXQWV VKRXOG EH HTXDOO\ HPSKDVL]HG & $FFRXQWV ZLWK ODUJH EDODQFHV ' $FFRXQWV OLVWHG LQ WKH DFFRXQWV SD\DEOH VXEVLGLDU\

 5HFRUGHG YRXFKHUV DFFRXQWV SD\DEOH HQWULHV LQ WKH YRXFKHU UHJLVWHU HJ SXUFKDVHV MRXUQDO VXSSRUWHG E\ FRPSOHWHG YRXFKHU GRFXPHQWDWLRQ LV D VSHFLILF H[DPSOH RI ZKLFK PDQDJHPHQW DVVHUWLRQ"

$ &ODVVLILFDWLRQ % 2FFXUUHQFH & &RPSOHWHQHVV ' &XWRII  $OO SXUFKDVH RUGHUV DUH VXSSRUWHG E\ UHTXLVLWLRQV IURP SURSHU SHUVRQV LV D VSHFLILF H[DPSOH RI ZKLFK PDQDJHPHQW DVVHUWLRQ"

$ 2FFXUUHQFH % &RPSOHWHQHVV & &XWRII ' &ODVVLILFDWLRQ  &DVK GLVEXUVHPHQWV DUH DXWKRUL]HG E\

$ 3XUFKDVH RUGHUV % ,QYRLFHV & 5HFHLYLQJ UHSRUWV ' $ FRPSOHWH YRXFKHU SDFNDJH

 )RU WKH FRS\ RI WKH SXUFKDVH RUGHU WKDW JRHV WR WKH UHFHLYLQJ GHSDUWPHQW LW LV EHVW WR

$ /HDYH RII WKH GHVFULSWLRQ RI WKH JRRGV RUGHUHG % /HDYH RII WKH TXDQWLW\ RI WKH JRRGV RUGHUHG & /HDYH RII WKH QDPH RI WKH YHQGRU ' +DYH WKH UHFHLYLQJ GHSDUWPHQW IRUZDUG DOO FRSLHV RI WKH SXUFKDVH RUGHU WR DFFRXQWV SD\DEOH  9RXFKHUV VKRXOG EH VWDPSHG 3$,' WR

$ 3UHYHQW GXSOLFDWH SD\PHQW % *HQHUDWH D QHZ SXUFKDVH RUGHU & ,QGLFDWH SRVWLQJ LQ WKH YRXFKHU UHJLVWHU ' )DFLOLWDWH SUHSDUDWLRQ RI WKH EDQN UHFRQFLOLDWLRQ  $ YRXFKHU SDFNDJH LV XVHG WR

$ 'RFXPHQW UHFHLSW RI LQYHQWRU\ % 'RFXPHQW FRPSOHWLRQ RI VHUYLFHV & 'RFXPHQW D SXUFKDVH FRQWUDFW ' 3URYLGH D VRXUFH GRFXPHQW IRU UHFRUGLQJ WKH SXUFKDVH RI D JRRG RU VHUYLFH

 $Q DXGLWRU WUDFHG D VDPSOH RI SXUFKDVH RUGHUV DQG WKH UHODWHG UHFHLYLQJ UHSRUWV WR WKH SXUFKDVHV MRXUQDO 7KH SXUSRVH RI WKLV VXEVWDQWLYH DXGLW SURFHGXUH PRVW OLNHO\ ZDV WR

$ ,GHQWLI\ XVXDOO\ ODUJH SXUFKDVHV WKDW VKRXOG EH LQYHVWLJDWHG IXUWKHU % 9HULI\ WKDW FDVK GLVEXUVHPHQWV ZHUH IRU JRRGV DFWXDOO\ UHFHLYHG & 'HWHUPLQH WKDW SXUFKDVHV ZHUH SURSHUO\ UHFRUGHG ' 7HVW ZKHWKHU SD\PHQWV ZHUH IRU JRRGV DFWXDOO\ RUGHUHG  7KH XVXDO VRXUFH IRU MRXUQDO HQWULHV SRVWHG WR WKH JHQHUDO OHGJHU WR UHFRUG WKH SXUFKDVH RI LQYHQWRU\ LV

$ 6DOHV LQYRLFHV XSGDWHG ZLWK FRVW GDWD IURP WKH LQYHQWRU\ UHFRUGV GHSDUWPHQW % 3XUFKDVH LQYRLFHV XSGDWHG ZLWK FRVW GDWD IURP WKH LQYHQWRU\ UHFRUGV GHSDUWPHQW & 5HFHLYLQJ UHSRUWV XSGDWHG ZLWK FRVW GDWD IURP WKH DFFRXQWV SD\DEOH GHSDUWPHQW ' 9RXFKHUV SD\DEOH MRXUQDO IURP WKH DFFRXQWV SD\DEOH GHSDUWPHQW  :KLFK RI WKH IROORZLQJ ZRXOG GHWHFW WKH XQGHUVWDWHPHQW RI D SXUFKDVH GLVFRXQW"

$ 9HULI\ WKH DULWKPHWLF DFFXUDF\ RI WKH SXUFKDVHV MRXUQDO % &RPSDUH SXUFKDVH GLVEXUVHPHQW UHFRUGV DQG FKHFNV ZLWK LQYRLFH WHUPV & &RPSDUH DSSURYHG SXUFKDVH RUGHUV WR UHFHLYLQJ UHSRUWV ' 9HULI\ WKH UHFHLSW RI LWHPV RUGHUHG DQG LQYRLFHG

 :KLFK RI WKH IROORZLQJ VLWXDWLRQV LQGLFDWHV D SRWHQWLDO PDWHULDO ZHDNQHVV LQ LQWHUQDO FRQWURO RYHU DFTXLVLWLRQ DQG H[SHQGLWXUH"

$ 3XUFKDVH RUGHUV DUH QRW SUHSDUHG IRU VHUYLFHV DFTXLUHG GLUHFWO\ XQGHU DXWKRUL]DWLRQ RI GHSDUWPHQW KHDGV % 7KH VDPH SHUVRQ DXWKRUL]HV YRXFKHU SDFNDJHV DQG VLJQV FKHFNV & 8QDFFHSWDEOH JRRGV DUH QRW VFKHGXOHG RQ UHFHLYLQJ UHSRUWV ' 7KH VDPH SHUVRQ VLJQV FKHFNV DQG VWDPSV YRXFKHUV 3$,'  :KLFK RI WKH IROORZLQJ FOLHQW FRQWURO DFWLYLWLHV LV QRW XVXDOO\ SHUIRUPHG LQ WKH YRXFKHUV SD\DEOH DFFRXQWV SD\DEOH GHSDUWPHQW"

$ 'HWHUPLQLQJ WKH PDWKHPDWLFDO DFFXUDF\ RI WKH YHQGRUV LQYRLFHV % :ULWLQJ FKHFNV IRU WKH WUHDVXUHU V VLJQDWXUH WR WDNH DGYDQWDJH RI SXUFKDVH GLVFRXQWV & &RQWUROOLQJ WKH PDLOLQJ RI WKH FKHFN DQG UHPLWWDQFH DGYLFH ' &KHFNLQJ WKH SULFHV RQ WKH YHQGRU V LQYRLFH

 :KHQ DXGLWLQJ PHUFKDQGLVH LQYHQWRU\ DW \HDUHQG WKH DXGLWRU SHUIRUPV D SXUFKDVH FXWRII WHVW WR REWDLQ HYLGHQFH WKDW

$ $OO JRRGV SXUFKDVHG EHIRUH \HDUHQG DUH UHFHLYHG EHIRUH WKH SK\VLFDO LQYHQWRU\ FRXQW % 1R JRRGV KHOG RQ FRQVLJQPHQW IRU FXVWRPHUV DUH LQFOXGHG LQ WKH LQYHQWRU\ EDODQFH & 1R JRRGV REVHUYHG GXULQJ WKH SK\VLFDO FRXQW DUH SOHGJHG RU VROG ' $OO JRRGV RZQHG DW \HDUHQG DUH LQFOXGHG LQ WKH LQYHQWRU\ EDODQFH  $XGLWRUV PD\ FRQFOXGH WKDW GHSUHFLDWLRQ FKDUJHV DUH WRR VPDOO E\ QRWLQJ

$ ,QVXUHG YDOXHV PXFK ODUJHU WKDQ ERRN YDOXHV % /DUJH QXPEHUV RI IXOO\ GHSUHFLDWHG DVVHWV & )UHTXHQW WUDGHLQV RI UHODWLYHO\ QHZ DVVHWV ' /DUJH DQG IUHTXHQW ORVVHV RQ DVVHWV UHWLUHG

 7KH DXGLWRU GHFLGHG WR WHVW DFFRXQWV SD\DEOH E\ VHQGLQJ RSHQHQGHG EODQN FRQILUPDWLRQV WR VHOHFWHG YHQGRUV 7KH DXGLWRU V EHVW DSSURDFK LQ VHOHFWLQJ WKH YHQGRU DFFRXQWV WR FRQILUP LV WR

$ 6HOHFW YHQGRU DFFRXQWV ZLWK ODUJH EDODQFHV % 6HOHFW YHQGRU DFFRXQWV DW UDQGRP LQ RUGHU WR DSSO\ D VWDWLVWLFDO VDPSOLQJ SURFHGXUH & 6HOHFW YHQGRU DFFRXQWV EDVHG RQ WKH QXPEHU RI SXUFKDVHV IURP YHQGRUV GXULQJ WKH \HDU ' 6HOHFW YHQGRU DFFRXQWV WKDW DUH SDVW GXH  :KDW HYLGHQFH LV DSSURSULDWH WR GHWHUPLQH ZKHWKHU UHFRUGHG SXUFKDVH WUDQVDFWLRQV DUH YDOLG DQG WKH YHQGRUV FKDUJHG WKH FRUUHFW SULFHV"

$ 3XUFKDVH UHTXLVLWLRQV DQG DFFRXQWV SD\DEOH HQWULHV % 5HFHLYLQJ UHSRUWV DQG SXUFKDVH RUGHUV & 3XUFKDVH UHTXLVLWLRQV DQG SXUFKDVHV RUGHUV ' 3XUFKDVH RUGHUV DQG ELG TXRWHV

 3XUFKDVH FXWRII SURFHGXUHV VKRXOG EH GHVLJQHG WR SURGXFH HYLGHQFH RI ZKHWKHU PHUFKDQGLVH LV LQFOXGHG LQ WKH LQYHQWRU\ RI WKH FOLHQW FRPSDQ\ LI WKH FRPSDQ\

$ +DV SDLG IRU WKH PHUFKDQGLVH % +DV SK\VLFDO SRVVHVVLRQ RI WKH PHUFKDQGLVH & +ROGV OHJDO WLWOH WR WKH PHUFKDQGLVH ' +ROGV WKH VKLSSLQJ GRFXPHQWV IRU WKH PHUFKDQGLVH LVVXHG LQ WKH FRPSDQ\ V QDPH  :KLFK RI WKH IROORZLQJ DFFRXQWV ZRXOG PRVW OLNHO\ EH UHYLHZHG E\ WKH DXGLWRU WR JDLQ UHDVRQDEOH DVVXUDQFH WKDW DGGLWLRQV WR WKH HTXLSPHQW DFFRXQW DUH QRW XQGHUVWDWHG"

$ 'HSUHFLDWLRQ H[SHQVH % *DLQ RQ GLVSRVDO RI HTXLSPHQW & $FFRXQWV SD\DEOH ' 5HSDLUV DQG PDLQWHQDQFH H[SHQVH  :KLFK RI WKH IROORZLQJ ZRXOG QRW EH LQFOXGHG LQ WKH VXSSRUWLQJ GRFXPHQWV IRU D YRXFKHU"

$ 3XUFKDVH RUGHU % 9HQGRU LQYRLFH & 5HFHLYLQJ UHSRUW ' %ODQN FKHFN

 $ YRXFKHU ZRXOG W\SLFDOO\ FRQWDLQ

$ $ SXUFKDVH UHTXLVLWLRQ SXUFKDVH RUGHU YHQGRU LQYRLFH UHFHLYLQJ UHSRUW DQG FKHFN FRS\ % $ SXUFKDVH UHTXLVLWLRQ SXUFKDVH RUGHU VDOHV LQYRLFH UHFHLYLQJ UHSRUW DQG FKHFN FRS\ & $ SXUFKDVH UHTXLVLWLRQ VDOHV RUGHU VDOHV LQYRLFH UHFHLYLQJ UHSRUW DQG FKHFN FRS\ ' $ SXUFKDVH UHTXLVLWLRQ VDOHV RUGHU YHQGRU LQYRLFH UHFHLYLQJ UHSRUW DQG FKHFN FRS\  :KHQ XVLQJ FRQILUPDWLRQV WR SURYLGH HYLGHQFH DERXW WKH FRPSOHWHQHVV DVVHUWLRQ IRU DFFRXQWV SD\DEOH WKH DSSURSULDWH SRSXODWLRQ PRVW OLNHO\ ZRXOG EH

$ 9HQGRUV ZLWK ZKRP WKH HQWLW\ KDV SUHYLRXVO\ GRQH EXVLQHVV % $PRXQWV UHFRUGHG LQ WKH DFFRXQWV SD\DEOH VXEVLGLDU\ OHGJHU & 3D\HHV RI FKHFNV GUDZQ LQ WKH PRQWK DIWHU WKH \HDUHQG ' ,QYRLFHV ILOHG LQ WKH HQWLW\ V RSHQ LQYRLFH ILOH

 :KLFK RI WKH IROORZLQJ SURFHGXUHV ZRXOG DQ DXGLWRU PRVW OLNHO\ SHUIRUP LQ VHDUFKLQJ IRU XQUHFRUGHG SD\DEOHV"

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

$ 3XUFKDVH RUGHUV % &DQFHOHG FKHFNV & 5HFHLYLQJ UHSRUWV ' $SSURYHG YRXFKHUV

 $Q DXGLWRU ZLVKHV WR SHUIRUP WHVWV RI FRQWUROV RQ D FOLHQW V SXUFKDVLQJ SURFHGXUHV ,I WKH FRQWURO DFWLYLWLHV OHDYH QR DXGLW WUDLO RI GRFXPHQWDU\ HYLGHQFH WKH DXGLWRU PRVW OLNHO\ ZLOO WHVW WKH SURFHGXUHV E\

$ &RQILUPDWLRQ DQG REVHUYDWLRQ % 2EVHUYDWLRQ DQG LQTXLU\ & $QDO\WLFDO SURFHGXUHV DQG FRQILUPDWLRQ ' ,QTXLU\ DQG DQDO\WLFDO SURFHGXUHV  :KLFK RI WKH IROORZLQJ DXGLW SURFHGXUHV LV EHVW IRU LGHQWLI\LQJ XQUHFRUGHG DFFRXQWV SD\DEOH"

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

 7R SURYLGH DVVXUDQFH WKDW HDFK YRXFKHU LV VXEPLWWHG DQG SDLG RQO\ RQFH DQ DXGLWRU PRVW OLNHO\ ZRXOG H[DPLQH D VDPSOH RI SDLG YRXFKHUV DQG GHWHUPLQH ZKHWKHU HDFK YRXFKHU LV

$ 6XSSRUWHG E\ D YHQGRU V LQYRLFH % 6WDPSHG SDLG E\ WKH FKHFN VLJQHU & 3UHQXPEHUHG DQG DFFRXQWHG IRU ' $SSURYHG IRU DXWKRUL]HG SXUFKDVHV  &XWRII WHVWV GHVLJQHG WR GHWHFW SXUFKDVHV PDGH EHIRUH WKH HQG RI WKH \HDU WKDW KDYH EHHQ UHFRUGHG LQ WKH VXEVHTXHQW \HDU PRVW OLNHO\ ZRXOG SURYLGH DVVXUDQFH DERXW PDQDJHPHQW V DVVHUWLRQ RI

$ 9DOXDWLRQ RU DOORFDWLRQ % ([LVWHQFH RU RFFXUUHQFH & &RPSOHWHQHVV ' 5LJKWV DQG REOLJDWLRQV  :KHQ DXGLWLQJ 33 ( WKH DXGLWRU V DSSURDFK LV JHQHUDOO\ WR

$ ([DPLQH HYLGHQFH VXSSRUWLQJ WKH DPRXQWV LQ WKH HQGLQJ EDODQFH % ([DPLQH HYLGHQFH VXSSRUWLQJ DGGLWLRQV GXULQJ WKH \HDU & )ROORZ D UHOLDQFH VWUDWHJ\ WHVWLQJ LQWHUQDO FRQWUROV DQG DQDO\WLFDO SURFHGXUHV ' &RQFHQWUDWH RQ ILQGLQJ XQUHFRUGHG DVVHWV

 :KLFK RI WKH IROORZLQJ SURFHGXUHV ZRXOG DQ DXGLWRU PRVW OLNHO\ SHUIRUP LQ VHDUFKLQJ IRU XQUHFRUGHG OLDELOLWLHV"

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

$ ,QVSHFW WKH SURSHUW\ OHGJHU DQG WKH LQVXUDQFH DQG WD[ UHFRUGV DQG WKHQ WRXU WKH FOLHQW V IDFLOLWLHV % 7RXU WKH FOLHQW V IDFLOLWLHV DQG WKHQ LQVSHFW WKH SURSHUW\ OHGJHU DQG WKH LQVXUDQFH DQG WD[ UHFRUGV & $QDO\]H WKH UHSDLU DQG PDLQWHQDQFH DFFRXQW DQG WKHQ WRXU WKH FOLHQW V IDFLOLWLHV ' 7RXU WKH FOLHQW V IDFLOLWLHV DQG WKHQ DQDO\]H WKH UHSDLU DQG PDLQWHQDQFH DFFRXQW

 $ ZHDNQHVV LQ LQWHUQDO FRQWURO RYHU UHFRUGLQJ UHWLUHPHQWV RI HTXLSPHQW PD\ FDXVH DQ DXGLWRU WR

$ ,QVSHFW FHUWDLQ LWHPV RI HTXLSPHQW LQ WKH SODQW DQG WUDFH WKRVH LWHPV WR WKH DFFRXQWLQJ UHFRUGV % 5HYLHZ WKH VXEVLGLDU\ OHGJHU WR DVFHUWDLQ ZKHWKHU GHSUHFLDWLRQ ZDV WDNHQ RQ HDFK LWHP RI HTXLSPHQW GXULQJ WKH \HDU & 7UDFH DGGLWLRQV WR WKH RWKHU DVVHWV DFFRXQW WR VHDUFK IRU HTXLSPHQW WKDW LV VWLOO RQ KDQG EXW QR ORQJHU EHLQJ XVHG ' 6HOHFW FHUWDLQ LWHPV RI HTXLSPHQW IURP WKH DFFRXQWLQJ UHFRUGV DQG ORFDWH WKHP LQ WKH SODQW  )DLOXUH WR UHFRUG D OLDELOLW\ JHQHUDOO\ UHVXOWV LQ

$ $Q XQGHUVWDWHPHQW RI SURILW % $Q XQGHUVWDWHPHQW RI FXUUHQW UDWLR & $Q RYHUVWDWHPHQW RI SURILW ' $Q RYHUVWDWHPHQW RI DVVHWV

 ,PSURSHUO\ FDSLWDOL]LQJ DQ H[SHQVH LWHP UHVXOWV LQ

$ 8QGHUVWDWHPHQW RI SURILW LQ WKH FXUUHQW \HDU DQG RYHUVWDWHPHQW LQ IXWXUH \HDUV % 8QGHUVWDWHPHQW RI SURILW LQ WKH FXUUHQW \HDU DQG LQ IXWXUH \HDUV & 2YHUVWDWHPHQW RI SURILW LQ WKH FXUUHQW \HDU DQG XQGHUVWDWHPHQW LQ IXWXUH \HDUV ' 2YHUVWDWHPHQW RI SURILW LQ WKH FXUUHQW \HDU DQG LQ IXWXUH \HDUV  $ OLDELOLW\ IRU D ORQJWHUP SXUFKDVH FRQWUDFW VKRXOG JHQHUDOO\ EH UHFRJQL]HG ZKHQ

$ 7KH FRQWUDFW LV VLJQHG % 7KH JRRGV DUH VKLSSHG & 7KH JRRGV DUH UHFHLYHG ' 7KH JRRGV DUH VROG WR PDWFK WKH FRVW  :KLFK RI WKH IROORZLQJ H[SHQVH DFFRXQWV ZRXOG QRW QRUPDOO\ EH WHVWHG E\ OLVWLQJ DOO GHELWV DQG H[DPLQLQJ DQ\ VLJQLILFDQW LWHPV"

$ /HJDO H[SHQVH % 0LVFHOODQHRXV H[SHQVH & 5HSDLUV DQG 0DLQWHQDQFH ' 3D\UROO H[SHQVH

 :KLFK RI WKH IROORZLQJ ZRXOG EH DQ LQGLFDWRU RI SRWHQWLDO IUDXG"

$ 3KRWRFRSLHV RI LQYRLFHV LQ WKH YRXFKHU ILOH % 9HQGRU LQYRLFHV LQ QXPHULFDO RUGHU & 9HQGRUV ZLWK RQO\ SRVW RIILFH ER[ DGGUHVVHV ' $OO RI WKH DERYH LQGLFDWH SRWHQWLDO IUDXG  :KLFK RI WKH IROORZLQJ IUDXG GHWHFWLRQ VWHSV FRXOG QRW EH SHUIRUPHG E\ &$$7V"

$ /RRN IRU SKRWRFRSLHV LQ LQYRLFH ILOHV % /RRN IRU YHQGRU LQYRLFHV LQ QXPHULFDO RUGHU & /RRN IRU YHQGRU LQYRLFHV VOLJKWO\ EHORZ WKH DSSURYDO WKUHVKROG ' /RRN IRU GXSOLFDWH YHQGRU QXPEHUV  7UDFLQJ D VDPSOH RI WLPH FORFN FDUGV WR SD\UROO UHJLVWHUV MRXUQDOV LV D SURFHGXUH GHVLJQHG WR REWDLQ HYLGHQFH DERXW WKH WUDQVDFWLRQ DVVHUWLRQ V RI

$ 2FFXUUHQFH RQO\ % 2FFXUUHQFH DQG DFFXUDF\ RQO\ & &RPSOHWHQHVV RQO\ ' $FFXUDF\ RQO\

 7KH SHUPDQHQW UHIHUHQFH ILOHV PDVWHU ILOHV LQ D SHUVRQQHO DQG SD\UROO GDWDEDVH RUGLQDULO\ GR QRW LQFOXGH ZKLFK RI WKH IROORZLQJ"

$ 'HGXFWLRQ WDEOH % 3D\UROO PDVWHU & &RPSHQVDWLRQ WDEOH ' (PSOR\HH HDUQLQJ UHFRUG  :KLFK RI WKH IROORZLQJ VLWXDWLRQV UHSUHVHQWV DQ LQWHUQDO FRQWURO ZHDNQHVV LQ WKH SD\UROO GHSDUWPHQW"

$ 3D\UROO GHSDUWPHQW SHUVRQQHO DUH URWDWHG LQ WKHLU GXWLHV % 3D\FKHFNV DUH GLVWULEXWHG E\ WKH HPSOR\HHV LPPHGLDWH VXSHUYLVRU & 3D\UROO UHFRUGV DUH UHFRQFLOHG ZLWK TXDUWHUO\ WD[ UHSRUWV ' 7KH WLPHNHHSLQJ IXQFWLRQ LV LQGHSHQGHQW RI WKH SD\UROO GHSDUWPHQW  :KLFK RI WKH IROORZLQJ SHUVRQQHO GHSDUWPHQW SURFHGXUHV UHGXFHV WKH ULVN RI SD\UROO IUDXG DQG UHSUHVHQWV DQ DSSURSULDWH UHVSRQVLELOLW\ IRU WKH GHSDUWPHQW"

$ 'LVWULEXWLQJ SD\FKHFNV % $XWKRUL]LQJ RYHUWLPH KRXUV & $XWKRUL]LQJ WKH DGGLWLRQ RU GHOHWLRQ RI HPSOR\HHV IURP WKH SD\UROO ' &ROOHFWLQJ DQG UHWDLQLQJ XQFODLPHG SD\FKHFNV

 7R WHVW WKH WUDQVDFWLRQ DVVHUWLRQ RI RFFXUUHQFH LQ WKH DUHD RI SD\UROO WKH DXGLWRU PRVW OLNHO\ ZRXOG

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

$ 0RUH ODERU FRVW KDG EHHQ DVVLJQHG WR WKH H[SHQVH DFFRXQWV WKDQ KDG EHHQ SDLG % 6RPH ODERU FRVW KDG QRW EHHQ SURSHUO\ FODVVLILHG LQ WKH H[SHQVH DFFRXQWV & 6RPH HPSOR\HHV KDG QRW \HW FDVKHG WKHLU FKHFNV ' 1RW HQRXJK FDVK KDG EHHQ WUDQVIHUUHG WR WKH EDQN DFFRXQW

 :KLFK RI WKH IROORZLQJ LV QRW D PDMRU FRQWURO ULVN LQ WKH SD\UROO F\FOH"

$ 3D\LQJ ILFWLWLRXV HPSOR\HHV % 2YHUSD\LQJ IRU WLPH RU SURGXFWLRQ & /RVLQJ HPSOR\HHV WR FRPSHWLWRUV ' ,QFRUUHFW DFFRXQWLQJ IRU FRVWV RU H[SHQVHV  7KH VDPSOLQJ XQLW LQ D WHVW RI FRQWUROV SHUWDLQLQJ WR WKH H[LVWHQFH RU RFFXUUHQFH RI SD\UROO WUDQVDFWLRQV RUGLQDULO\ LV D DQ

$ &ORFN FDUG RU WLPH WLFNHW % (PSOR\HH )RUP : & (PSOR\HH SHUVRQQHO UHFRUG ' 3D\UROO UHJLVWHU MRXUQDO HQWU\  7KH SXUSRVH RI VHJUHJDWLQJ WKH GXWLHV RI KLULQJ SHUVRQQHO DQG GLVWULEXWLQJ SD\UROO FKHFNV LV WR VHSDUDWH WKH

$ +XPDQ UHVRXUFHV IXQFWLRQ IURP WKH FRQWUROOHUVKLS IXQFWLRQ % $GPLQLVWUDWLYH FRQWUROV IURP WKH LQWHUQDO DFFRXQWLQJ FRQWUROV & $XWKRUL]DWLRQ RI WUDQVDFWLRQV IURP WKH FXVWRG\ RI UHODWHG DVVHWV ' 2SHUDWLRQDO UHVSRQVLELOLW\ IURP WKH UHFRUG NHHSLQJ UHVSRQVLELOLW\

 $Q DXGLWRU PRVW OLNHO\ ZRXOG DVVHVV FRQWURO ULVN DW WKH PD[LPXP LI WKH SD\UROO GHSDUWPHQW VXSHUYLVRU LV UHVSRQVLEOH IRU

$ ([DPLQLQJ DXWKRUL]DWLRQ IRUPV IRU QHZ HPSOR\HHV % &RPSDULQJ SD\UROO UHJLVWHUV ZLWK RULJLQDO EDWFK WUDQVPLWWDO GDWD & 'LVWULEXWH SD\UROO FKHFNV WR DOO HPSOR\HHV ' +LULQJ DOO VXERUGLQDWH SD\UROO GHSDUWPHQW HPSOR\HHV  $Q DXGLWRU PRVW OLNHO\ ZRXOG H[WHQG VXEVWDQWLYH WHVWV RI SD\UROO ZKHQ

$ 3D\UROO LV H[WHQVLYHO\ DXGLWHG E\ WKH VWDWH JRYHUQPHQW % 3D\UROO H[SHQVH LV VXEVWDQWLDOO\ KLJKHU WKDQ LQ WKH SULRU \HDU & 2YHUSD\PHQWV DUH GLVFRYHUHG LQ SHUIRUPLQJ WHVWV RI FRQWUROV ' (PSOR\HHV FRPSODLQ WR PDQDJHPHQW DERXW WRR PXFK RYHUWLPH  $Q DXGLWRU PRVW OLNHO\ ZRXOG SHUIRUP VXEVWDQWLYH SURFHGXUHV RQ SD\UROO WUDQVDFWLRQV DQG EDODQFHV ZKHQ

$ &XWRII WHVWV LQGLFDWH D VXEVWDQWLDO DPRXQW RI DFFUXHG SD\UROO H[SHQVH % 7KH DVVHVVHG OHYHO RI FRQWURO ULVN UHODWLYH WR SD\UROO WUDQVDFWLRQV LV ORZ & $QDO\WLFDO SURFHGXUHV LQGLFDWH XQXVXDO IOXFWXDWLRQV LQ UHFXUULQJ SD\UROO HQWULHV ' $FFUXHG SD\UROO H[SHQVH FRQVLVWV SULPDULO\ RI XQSDLG FRPPLVVLRQV

 $Q DXGLWRU YRXFKHG GDWD IRU D VDPSOH RI HPSOR\HHV LQ D SD\UROO UHJLVWHU WR DSSURYHG FORFN FDUG GDWD WR SURYLGH DVVXUDQFH WKDW

$ 3D\PHQWV WR HPSOR\HHV DUH FRPSXWHG DW DXWKRUL]HG UDWHV % (PSOR\HHV ZRUN WKH QXPEHU RI KRXUV IRU ZKLFK WKH\ DUH SDLG & 6HSDUDWLRQ RI GXWLHV H[LVWV EHWZHHQ WKH SUHSDUDWLRQ DQG GLVWULEXWLRQ RI WKH SD\UROO ' ,QWHUQDO FRQWUROV UHODWLQJ WR XQFODLPHG SD\UROO FKHFNV DUH RSHUDWLQJ HIIHFWLYHO\  6XEVWDQWLYH WHVWV RI DFFRXQW EDODQFHV LQ WKH SD\UROO F\FOH DUH OLNHO\ WR LQFOXGH WKH IROORZLQJ SURFHGXUHV H[FHSW

$ $QDO\WLFDO UHYLHZ SURFHGXUHV % 5HFDOFXODWLRQ RI DFFUXDOV & &RPSDULVRQ RI DFFUXDOV WR VXEVHTXHQW SD\PHQWV ' 'HWDLO YRXFKLQJ RI SD\UROO H[SHQVH HQWULHV  :KLFK RI WKH IROORZLQJ DFFRXQWV GRHV QRW DSSHDU LQ WKH DFTXLVLWLRQ DQG H[SHQGLWXUH F\FOH"

$ &DVK % 3XUFKDVHV 5HWXUQV & 6DOHV 5HWXUQV ' 3UHSDLG ,QVXUDQFH

 )RU ZKLFK RI WKH IROORZLQJ DFFRXQWV ZRXOG WKH PDWFKLQJ FRQFHSW EH WKH PRVW DSSURSULDWH"

$ &RVW RI *RRGV 6ROG % 5HVHDUFK DQG 'HYHORSPHQW & 'HSUHFLDWLRQ ([SHQVH ' 6DOHV  :KLFK RI WKH IROORZLQJ ZRXOG QRW RYHUVWDWH FXUUHQWSHULRG QHW LQFRPH"

$ &DSLWDOL]LQJ DQ H[SHQGLWXUH WKDW VKRXOG EH H[SHQVHG % )DLOLQJ WR UHFRUG D OLDELOLW\ IRU DQ H[SHQGLWXUH & )DLOLQJ WR UHFRUG D FKHFN SD\LQJ DQ LWHP LQ YRXFKHUV SD\DEOH ' $OO RI WKH DERYH ZRXOG RYHUVWDWH QHW LQFRPH  $ FOLHQW V SXUFKDVLQJ V\VWHP HQGV ZLWK WKH UHFRUGLQJ RI D OLDELOLW\ DQG LWV HYHQWXDO SD\PHQW :KLFK RI WKH IROORZLQJ EHVW GHVFULEHV DXGLWRUV SULPDU\ FRQFHUQ ZLWK UHVSHFW WR OLDELOLWLHV UHVXOWLQJ IURP WKH SXUFKDVLQJ V\VWHP"

$ $FFRXQWV SD\DEOH DUH QRW PDWHULDOO\ XQGHUVWDWHG % $XWKRULW\ WR LQFXU OLDELOLWLHV LV UHVWULFWHG WR RQH GHVLJQDWHG SHUVRQ & $FTXLVLWLRQ RI PDWHULDOV LV QRW PDGH IURP RQH YHQGRU RU RQH JURXS RI YHQGRUV ' &RPPLWPHQWV IRU DOO SXUFKDVHV DUH PDGH RQO\ DIWHU HVWDEOLVKHG FRPSHWLWLYH ELGGLQJ SURFHGXUHV DUH IROORZHG

 :KLFK RI WKH IROORZLQJ LV DQ LQWHUQDO FRQWURO DFWLYLW\ WKDW FRXOG SUHYHQW D SDLG GLVEXUVHPHQW YRXFKHU IURP EHLQJ SUHVHQWHG IRU SD\PHQW D VHFRQG WLPH"

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

$ 3XUFKDVH UHTXLVLWLRQV % &DVK UHFHLSWV & 3HUSHWXDO LQYHQWRU\ UHFRUGV ' 3XUFKDVH RUGHUV

 :KLFK RI WKH IROORZLQJ LV WKH EHVW DXGLW SURFHGXUH IRU GHWHUPLQLQJ WKH H[LVWHQFH RI XQUHFRUGHG OLDELOLWLHV"

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

$ 2EVHUYDWLRQ RI LQYHQWRU\ % 5HYLHZ RI LQWHUQDO FRQWURO RYHU FDVK GLVEXUVHPHQWV & 6HDUFK IRU XQUHFRUGHG OLDELOLWLHV ' &RQILUPDWLRQ RI UHFHLYDEOHV

 7R GHWHUPLQH ZKHWKHU DFFRXQWV SD\DEOH DUH FRPSOHWH DXGLWRUV SHUIRUP D WHVW WR YHULI\ WKDW DOO PHUFKDQGLVH UHFHLYHG KDV EHHQ UHFRUGHG 7KH SRSXODWLRQ IRU WKLV WHVW FRQVLVWV RI DOO

$ 9HQGRUV LQYRLFHV % 3XUFKDVH RUGHUV & 5HFHLYLQJ UHSRUWV ' &DQFHOHG FKHFNV  :KHQ YHULI\LQJ GHELWV WR WKH SHUSHWXDO LQYHQWRU\ UHFRUGV RI D QRQPDQXIDFWXULQJ FRPSDQ\ DXGLWRUV ZRXOG EH PRVW LQWHUHVWHG LQ H[DPLQLQJ D VDPSOH RI SXUFKDVH

$ $SSURYDOV % 5HTXLVLWLRQV & ,QYRLFHV ' 2UGHUV

 $ IXUQLWXUH FRPSDQ\ RUGHUHG  WDEOHV IURP D VXSSOLHU 7KH VXSSOLHU DFFLGHQWDOO\ VHQW RQO\  WDEOHV EXW WKH UHFHLYLQJ GHSDUWPHQW DW WKH IXUQLWXUH FRPSDQ\ DFFHSWHG WKH WDEOHV 7KH LQYRLFH ZDV HYHQWXDOO\ UHFHLYHG EXW ZDV IRU WKH  WDEOHV RUGHUHG 7KH IXUQLWXUH FRPSDQ\ SDLG WKH HQWLUH DPRXQW :KLFK RI WKH IROORZLQJ FRQWUROV ZRXOG KDYH EHHQ OHDVW OLNHO\ WR KDYH SUHYHQWHG WKLV HUURQHRXV SD\PHQW"

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

 / &XUWLV D PDLQWHQDQFH VXSHUYLVRU VXEPLWWHG PDLQWHQDQFH LQYRLFHV IURP D SKRQ\ UHSDLU FRPSDQ\ DQG UHFHLYHG WKH FKHFNV DW D SRVW RIILFH ER[ 7KLV VKRXOG KDYH EHHQ SUHYHQWHG E\

$ &RPSDULVRQ RI WKH FRPSDQ\ QDPH WR WKH DSSURYHG YHQGRU OLVW E\ WKH FKHFN VLJQHU % 5HFRJQLWLRQ RI WKH H[FHVV PDLQWHQDQFH FRVWV E\ &XUWLV V VXSHUYLVRU & 5HIXVDO E\ WKH SXUFKDVLQJ GHSDUWPHQW WR DSSURYH WKH YHQGRU ' $OO RI WKH DERYH  $Q DXGLW WHDP ZRXOG PRVW OLNHO\ H[DPLQH WKH GHWDLO VXSSRUW IRU ZKLFK RI WKH IROORZLQJ FKDUJHV"

$ 3D\UROO H[SHQVH % &RVW RI JRRGV VROG & 6XSSOLHV H[SHQVH ' /HJDO H[SHQVH

 :KLFK RI WKH IROORZLQJ DFFRXQWV ZRXOG PRVW OLNHO\ EH DXGLWHG LQ FRQQHFWLRQ ZLWK D UHODWHG EDODQFH VKHHW DFFRXQW"

$ 3URSHUW\ 7D[ ([SHQVH % 3D\UROO ([SHQVH & 5HVHDUFK DQG 'HYHORSPHQW ' /HJDO ([SHQVH  :KHQ DXGLWLQJ OLDELOLWLHV DFFRXQW EDODQFHV DXGLWRUV DUH PRVW FRQFHUQHG ZLWK PDQDJHPHQW DVVHUWLRQ DERXW

$ ([LVWHQFH % 5LJKWV DQG REOLJDWLRQV & &RPSOHWHQHVV ' 9DOXDWLRQ DQG DOORFDWLRQ  ,Q D WHVW RI FRQWUROV DXGLWRUV PD\ WUDFH UHFHLYLQJ UHSRUWV WR YRXFKHUV UHFRUGHG LQ WKH YRXFKHU UHJLVWHU 7KLV LV D WHVW IRU

$ 2FFXUUHQFH % &RPSOHWHQHVV & &ODVVLILFDWLRQ ' &XWRII

 $Q DXGLW WHDP PRVW OLNHO\ ZRXOG DVVHVV FRQWURO ULVN DW WKH PD[LPXP LI WKH SD\UROO GHSDUWPHQW VXSHUYLVRU LV UHVSRQVLEOH IRU

$ ([DPLQLQJ DXWKRUL]DWLRQ IRUPV IRU QHZ HPSOR\HHV % &RPSDULQJ SD\UROO UHJLVWHUV ZLWK RULJLQDO EDWFK WUDQVPLWWDO GDWD & $XWKRUL]LQJ SD\UROO UDWH FKDQJHV IRU DOO HPSOR\HHV ' +LULQJ DOO VXERUGLQDWH SD\UROO GHSDUWPHQW HPSOR\HHV  :KLFK RI WKH IROORZLQJ GHSDUWPHQWV PRVW OLNHO\ ZRXOG DSSURYH FKDQJHV LQ SD\ UDWHV DQG GHGXFWLRQV IURP HPSOR\HH VDODULHV"

$ 3HUVRQQHO % 7UHDVXUHU & &RQWUROOHU ' 3D\UROO

 0DWWKHZ &RUS KDV FKDQJHG IURP D V\VWHP RI UHFRUGLQJ WLPH ZRUNHG RQ FORFN FDUGV WR D FRPSXWHUL]HG SD\UROO V\VWHP LQ ZKLFK HPSOR\HHV UHFRUG WLPH LQ DQG RXW ZLWK PDJQHWLF FDUGV 7KH FRPSXWHUL]HG V\VWHP DXWRPDWLFDOO\ XSGDWHV DOO SD\UROO UHFRUGV %HFDXVH RI WKLV FKDQJH

$ $ JHQHUDOL]HG FRPSXWHU DXGLW SODQ PXVW EH XVHG % 3DUW RI WKH DXGLW WUDLO LV DOWHUHG & 7KH SRWHQWLDO IRU SD\UROOUHODWHG IUDXG LV GLPLQLVKHG ' 7UDQVDFWLRQV PXVW EH SURFHVVHG LQ EDWFKHV  (IIHFWLYH FRQWURO RYHU WKH FDVK SD\UROO IXQFWLRQ ZRXOG PDQGDWH ZKLFK RI WKH IROORZLQJ"

$ 7KH SD\UROO FOHUN VKRXOG ILOO WKH HQYHORSHV ZLWK FDVK DQG LQFOXGH D FRPSXWDWLRQ RI WKH QHW ZDJHV % 7KH SD\PDVWHU VKRXOG EH UHWDLQ XQFODLPHG SD\UROO HQYHORSHV & (DFK HPSOR\HH VKRXOG EH DVNHG WR VLJQ D UHFHLSW IRU ZDJHV UHFHLYHG ' $ VHSDUDWH FKHFNLQJ DFFRXQW IRU SD\UROO VKRXOG EH PDLQWDLQHG

 $ ODUJH UHWDLO HQWHUSULVH KDV HVWDEOLVKHG D SROLF\ WKDW UHTXLUHV WKH SD\PDVWHU WR GHOLYHU DOO XQFODLPHG SD\UROO FKHFNV WR WKH LQWHUQDO DXGLW GHSDUWPHQW DW WKH HQG RI HDFK SD\UROO GLVWULEXWLRQ GD\ 7KLV SROLF\ ZDV PRVW OLNHO\ DGRSWHG WR

$ (QVXUH WKDW HPSOR\HHV ZKR ZHUH DEVHQW RQ D SD\UROO GLVWULEXWLRQ GD\ DUH QRW SDLG IRU WKDW GD\ % 3UHYHQW WKH SD\PDVWHU IURP FDVKLQJ FKHFNV WKDW DUH XQFODLPHG IRU VHYHUDO ZHHNV & 3UHYHQW D ERQD ILGH HPSOR\HH V FKHFN IURP EHLQJ FODLPHG E\ DQRWKHU HPSOR\HH ' 'HWHFW DQ\ ILFWLWLRXV HPSOR\HH ZKR PD\ KDYH EHHQ SODFHG RQ WKH SD\UROO  $XGLWRUV RUGLQDULO\ DVFHUWDLQ ZKHWKHU SD\UROO FKHFNV DUH SURSHUO\ HQGRUVHG GXULQJ WKH DXGLW RI

$ &ORFN FDUGV % 7KH YRXFKHU V\VWHP & &DVK LQ EDQN ' $FFUXHG SD\UROO

 ,Q GHWHUPLQLQJ WKH HIIHFWLYHQHVV RI DQ HQWLW\ V SROLFLHV DQG SURFHGXUHV UHODWLQJ WR WKH RFFXUUHQFH DVVHUWLRQ IRU SD\UROO WUDQVDFWLRQV DXGLWRUV PRVW OLNHO\ ZRXOG LQTXLUH DERXW DQG

$ 2EVHUYH WKH VHSDUDWLRQ RI GXWLHV FRQFHUQLQJ SHUVRQQHO UHVSRQVLELOLWLHV DQG SD\UROO GLVEXUVHPHQW % ,QVSHFW HYLGHQFH RI DFFRXQWLQJ IRU SUHQXPEHUHG SD\UROO FKHFNV & 5HFRPSXWH WKH SD\UROO GHGXFWLRQV IRU HPSOR\HH IULQJH EHQHILWV ' 9HULI\ WKH SUHSDUDWLRQ RI WKH PRQWKO\ SD\UROO DFFRXQW EDQN UHFRQFLOLDWLRQ  :KLFK RI WKH IROORZLQJ DFWLYLWLHV PRVW OLNHO\ ZRXOG EH FRQVLGHUHG D ZHDNQHVV LQ DQ HQWLW\ V LQWHUQDO FRQWURO RYHU SD\UROO"

$ $ YRXFKHU IRU WKH DPRXQW RI WKH SD\UROO LV SUHSDUHG LQ WKH JHQHUDO DFFRXQWLQJ GHSDUWPHQW EDVHG RQ WKH SD\UROO GHSDUWPHQW V SD\UROO VXPPDU\ % 3D\UROO FKHFNV DUH SUHSDUHG E\ WKH DFFRXQWV SD\DEOH GHSDUWPHQW DQG VLJQHG E\ WKH WUHDVXUHU & 7KH HPSOR\HH ZKR GLVWULEXWHV SD\UROO FKHFNV UHWXUQV XQFODLPHG SD\UROO FKHFNV WR WKH SD\UROO GHSDUWPHQW ' 7KH SHUVRQQHO GHSDUWPHQW VHQGV HPSOR\HHV WHUPLQDWLRQ QRWLFHV WR WKH SD\UROO GHSDUWPHQW

 7KH WUDQVDFWLRQV W\SLFDOO\ FODVVLILHG LQ WKH DFTXLVLWLRQ DQG H[SHQGLWXUH F\FOH IORZ GR QRW LQFOXGH

$ 5HTXHVWLQJ JRRGV VHUYLFHV RU DVVHWV % 3ODFLQJ WKH VDOHV RUGHU & 5HFHLYLQJ LQVSHFWLQJ DQG DFFHSWLQJ WKH DVVHWV ' $FFRXQWLQJ IRU DFFRXQWV SD\DEOH  7KH UHYLHZ SKDVH RI WKH WUDQVDFWLRQ IORZ LQ WKH DFTXLVLWLRQ DQG H[SHQGLWXUH F\FOH GRHV QRW LQFOXGH

$ ,QWHUYLHZV % 2EVHUYDWLRQV & &ROOHFWLQJ VDPSOH GRFXPHQWV ' 6XEVWDQWLYH SURFHGXUHV

 7KH LQWHUQDO FRQWURO TXHVWLRQQDLUH IRU UHFHLSW RI SXUFKDVHV FRPSOHWHQHVV REMHFWLYH ZRXOG QRW LQFOXGH ZKLFK RI WKH IROORZLQJ TXHVWLRQV"

$ $UH WKH SXUFKDVH RUGHU IRUPV SUHQXPEHUHG DQG WKH QXPHULFDO VHTXHQFH FKHFNHG IRU PLVVLQJ GRFXPHQWV" % $UH UHFHLYLQJ UHSRUW IRUPV SUHQXPEHUHG DQG WKH QXPHULFDO VHTXHQFH FKHFNHG IRU PLVVLQJ GRFXPHQWV" & $UH FRPSHWLWLYH ELGV UHFHLYHG DQG UHYLHZHG IRU FHUWDLQ LWHPV" ' ,V WKH DFFRXQWV SD\DEOH GHSDUWPHQW QRWLILHG RI JRRGV UHWXUQHG WR YHQGRUV"  $ YRXFKHU W\SLFDOO\ GRHV QRW KDYH DWWDFKHG WR LW D FRS\ RI ZKLFK RI WKH IROORZLQJ GRFXPHQWV"

$ 5HTXLVLWLRQ % 3XUFKDVH RUGHU & 9HQGRU V LQYRLFH ' &KHFN UHJLVWHU

 &RPSXWHU FRQWUROV WKDW PLJKW EH IRXQG LQ DQ DGYDQFHG RQOLQH DFTXLVLWLRQ DQG H[SHQGLWXUH V\VWHP ZRXOG QRW LQFOXGH

$ $OO YHQGRU LQYRLFHV DUH SUHQXPEHUHG DQG WKH QXPEHUV DFFRXQWHG IRU % (DFK WHUPLQDO SHUIRUPV RQO\ GHVLJQDWHG IXQFWLRQV & $Q LGHQWLILFDWLRQ QXPEHU DQG SDVVZRUG DUH UHTXLUHG WR HQWHU WKH QRQDXWRPDWLF SXUFKDVH RUGHUV ' 7KH FKHFN VLJQDWXUH LV SULQWHG XVLQJ D VLJQDWXUH SODWH WKDW LV LQVWDOOHG RQ WKH FRPSXWHU SULQWHU RQO\ ZKHQ FKHFNV DUH SULQWHG 6SHFLILF EDODQFH DVVHUWLRQV W\SLFDO RI DFFRXQWV SD\DEOH ZRXOG QRW LQFOXGH

$ 5HFRUGHG OLDELOLWLHV DUH REOLJDWLRQV RI WKH HQWLW\ % (VWLPDWHG OLDELOLWLHV DUH SURSHUO\ YDOXHG & $FFRXQWV SD\DEOH DUH QRW SOHGJHG DV FROODWHUDO ' 3D\DEOHV DUH UHFRUGHG LQ WKH SURSHU SHULRG 7KH LQKHUHQW ULVN WKDW DFFRXQWV SD\DEOH PD\ EH RPLWWHG RU RWKHUZLVH XQGHUVWDWHG W\SLFDOO\ LV

$ /RZ % +LJK & 0RGHUDWH ' ,QGHWHUPLQDWH

$Q DXGLW SODQ IRU DFFRXQWV SD\DEOH ZRXOG QRW LQFOXGH ZKLFK RI WKH IROORZLQJ SURFHGXUHV"

$ 2EWDLQLQJ D WULDO EDODQFH RI UHFRUGHG DFFRXQWV SD\DEOH % 6HQGLQJ FRQILUPDWLRQ WR DFFRXQWV ZLWK ]HUR EDODQFHV & 5HYLHZLQJ FDVK UHFHLSWV IRU WKH SHULRG DIWHU \HDUHQG ' 2EWDLQLQJ ZULWWHQ FOLHQW UHSUHVHQWDWLRQV DERXW UHODWHGSDUW\ SD\DEOHV DQG SOHGJHV RI DVVHWV DV FROODWHUDO IRU OLDELOLWLHV :KLFK RI WKH IROORZLQJ ZRXOG QRW W\SLFDOO\ EH D VSHFLILF UHOHYDQW DVVHUWLRQ DERXW IL[HG DVVHW DFFRXQWV"

$ )L[HG DVVHWV LQ WKH DFFRXQWV H[LVW DQG DUH LQ SURGXFWLYH XVH % 1HW FDUU\LQJ ERRN YDOXHV LQ WKH DFFRXQWV DUH UHIOHFWHG DW FXUUHQW PDUNHW YDOXHV & 'HSUHFLDWLRQ KDV EHHQ FDOFXODWHG SURSHUO\ XVLQJ DFFHSWHG PHWKRGV DQG UHDVRQDEOH HVWLPDWHV RI XVHIXO OLIH DQG RWKHU IDFWRUV ' )L[HG DVVHWV DUH SURSHUO\ FODVVLILHG LQ WKH EDODQFH VKHHW XQGHU DSSURSULDWH GHVFULSWLYH FDSWLRQV

7KH W\SLFDO IXQFWLRQV RI WKH SHUVRQQHO DQG SD\UROO F\FOH ZRXOG QRW LQFOXGH

$ /DERU UHODWLRQV % 5HSRUW RI DWWHQGDQFH DQG ZRUN SHUIRUPHG & $OORFDWLRQ WR FRVW RI JRRGV VROG ' 3D\UROO DFFRXQWLQJ $Q LQWHUQDO FRQWURO TXHVWLRQQDLUH IRU SD\UROO SURFHVVLQJ RFFXUUHQFH DVVHUWLRQ ZRXOG QRW LQFOXGH ZKLFK RI WKH IROORZLQJ TXHVWLRQV"

$ $UH QDPHV RI WHUPLQDWHG HPSOR\HHV UHSRUWHG LQ ZULWLQJ WR WKH SD\UROO GHSDUWPHQW" % ,V WKH SD\UROO FRPSDUHG WR SHUVRQQHO ILOHV SHULRGLFDOO\" & $UH FKHFNV GLVWULEXWHG E\ WKH HPSOR\HH V LPPHGLDWH VXSHUYLVRU" ' $UH DOO ZDJH UDWHV GHWHUPLQHG E\ FRQWUDFW RU DSSURYHG E\ D SHUVRQQHO RIILFHU" :KLFK RI WKH IROORZLQJ IXQFWLRQDO UHVSRQVLELOLWLHV ZRXOG QRW W\SLFDOO\ UHODWH WR VDODULHG HPSOR\HHV"

$ &ROOHFWLQJ WLPHNHHSLQJ GDWD % 6XSHUYLVLRQ & 3HUVRQQHO RU ODERU UHODWLRQV ' 3D\UROO GLVWULEXWLRQ

)LOO LQ WKH %ODQN 4XHVWLRQV

7KH BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB LQVSHFWV WKH JRRGV UHFHLYHG IRU BBBBBBBBBBBBBBBBBBBBBBBBBBBBB DQG BBBBBBBBBBBBBBBBBBBBBBBBBBBBB DQG WKHQ SXWV WKHP LQ WKH KDQGV RI RWKHU UHVSRQVLEOH SHUVRQV BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB :KHQ WKH BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBB DQG BBBBBBBBBBBBBBBBBBBBBBBBB DUH LQ KDQG WKH DFFRXQWDQWV FDQ UHFRUG WKH DFFRXQWV SD\DEOH BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB $XGLWRUV FDQ FRPSDUH WKH BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB ILOH WR WKH BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB WR GHWHUPLQH ZKHWKHU WKH FRPSDQ\ KDV PDWHULDO XQUHFRUGHG OLDELOLWLHV RQ WKH ILQDQFLDO VWDWHPHQW GDWH BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB DQG BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB FDQ FDXVH XQPDWFKHG LQYRLFHV DQG UHODWHG XQPDWFKHG UHFHLYLQJ UHSRUWV WR EH XQQRWLFHG BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB

$ BBBBBBBBBBBBBBBBBBBBBBBBBBBBB LV D FRYHU VKHHW FRQWDLQLQJ DOO VXSSRUWLQJ GRFXPHQWDWLRQ IRU DQ DFTXLVLWLRQ BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB $ OLVW RI DOO SXUFKDVHV PLJKW H[LVW RQO\ LQ D BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB ILOH UDWKHU WKDQ D BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB $VVHVVPHQW RI BBBBBBBBBBBBBBBBBBBBBBBBBBBBB RI BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB LV LPSRUWDQW EHFDXVH LW JRYHUQV WKH QDWXUH WLPLQJ DQG H[WHQW RI VXEVWDQWLYH SURFHGXUHV WKDW ZLOO EH DSSOLHG LQ WKH DXGLW RI DFFRXQW EDODQFHV LQ WKH DFTXLVLWLRQ F\FOH BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 9HQGRU LQYRLFHV VKRXOG EH FRPSDUHG WR BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB DQG BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB WR GHWHUPLQH WKDW WKH YHQGRU LV FKDUJLQJ WKH DSSURYHG SULFH DQG IRU TXDQWLW\ UHFHLYHG BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB

BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB FRQVLVW RI  LGHQWLILFDWLRQ RI GDWD SRSXODWLRQ IRU DXGLW DQG  DQ H[SUHVVLRQ RI WKH DFWLRQ WR EH WDNHQ WR SURGXFH UHOHYDQW DXGLW HYLGHQFH BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB :KHQ FRQVLGHULQJ DVVHUWLRQV DQG REWDLQLQJ HYLGHQFH DERXW DFFRXQWV SD\DEOH DXGLWRUV PXVW SXW HPSKDVLV RQ WKH BBBBBBBBBBBBBBBBBBBBBBBBBBBBB DVVHUWLRQ BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 7KH BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB LV D VHW RI SURFHGXUHV GHVLJQHG WR \LHOG DXGLW HYLGHQFH RI OLDELOLWLHV WKDW ZHUH QRW UHFRUGHG LQ WKH UHSRUWLQJ SHULRG BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 7KH ILYH IXQFWLRQDO UHVSRQVLELOLWLHV RI D SD\UROO F\FOH DUH BBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBB DQG BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 7KH BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB KDV WUDQVDFWLRQ LQLWLDWLRQ DXWKRULW\ WR DGG QHZ HPSOR\HHV DQG GHOHWH WHUPLQDWHG HPSOR\HHV BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB

$ SHUVRQQHO ILOH VKRXOG HVWDEOLVK WKH UHDOLW\ RI D SHUVRQ V BBBBBBBBBBBBBBBBBBBBBBB DQG BBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 7KH BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB LV WKH SULPDU\ RULJLQDO UHFRUG IRU SD\UROO DFFRXQWLQJ BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB

6KRUW $QVZHU 4XHVWLRQV

7KH LQWHUQDO FRQWURO TXHVWLRQQDLUH IRU SXUFKDVHV DQG DFFRXQWV SD\DEOH LQFOXGHV WKH 7KH IROORZLQJ TXHVWLRQV 1H[W WR HDFK RI WKH TXHVWLRQV LQGLFDWH WKH OHWWHU RI WKH UHODWHG WUDQVDFWLRQ DVVHUWLRQ $ 2FFXUUHQFH & $FFXUDF\ ( &XWRII

% &RPSOHWHQHVV ' &ODVVLILFDWLRQ

(VVD\ 4XHVWLRQV

([SODLQ ZK\ DXGLWRUV PXVW SXW PRUH HPSKDVLV RQ WKH FRPSOHWHQHVV DQG REOLJDWLRQ DVVHUWLRQ ZKHQ DXGLWLQJ SD\DEOHV DQG FRQWUDVW WKLV ZLWK WKH DXGLW RI DVVHW DFFRXQWV

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

$IWHU FKHFNV DUH VLJQHG IRU YHQGRU LQYRLFHV ZK\ VKRXOG YRXFKHUV EH PDUNHG 3$,' RU RWKHUZLVH PXWLODWHG"

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

+LQWV >@ )RU HDFK RI WKH WKUHH EDODQFH DVVHUWLRQV WKLQN DERXW D VSHFLILF DVVHUWLRQ EHIRUH \RX ZULWH D SURFHGXUH WR JDWKHU HYLGHQFH >@ :ULWH VSHFLILF SURFHGXUHV DV DGDSWDWLRQV RI WKH JHQHUDO DXGLW SURFHGXUHV UHFDOFXODWLRQ REVHUYDWLRQ FRQILUPDWLRQ GRFXPHQW H[DPLQDWLRQ LQTXLU\ VFDQQLQJ DQDO\WLFDO SURFHGXUHV >@ 0RVW SURFHGXUHV DUH WZRSDUW VWDWHPHQWV 6HOHFW D VDPSOH RI >LGHQWLI\ WKH SRSXODWLRQ@DQG GR VRPHWKLQJ  >VSHFLI\ DQ DFWLRQ@

:KHQ SHUIRUPLQJ SURFHGXUHV LQ D VHDUFK RI XQUHFRUGHG OLDELOLWLHV DXGLWRUV FDQ XWLOL]H YDULRXV VRXUFHV RI HYLGHQFHLQIRUPDWLRQ HJ GRFXPHQWV ILOHV PDQDJHPHQW DQG FOHULFDO SHUVRQQHO  5HTXLUHG /LVW DW OHDVW ILYH EXW QRW PRUH WKDQ VHYHQ VRXUFHV RI HYLGHQFHLQIRUPDWLRQ IRU WKH VHDUFK IRU XQUHFRUGHG OLDELOLWLHV 'R QRW ZULWH SURFHGXUHV 'R QRW WDNH WLPH WR ZULWH DERXW SDUWLFXODU HYLGHQFH WKDW FDQ EH REWDLQHG RU UHDVRQV IRU XVLQJ WKH VRXUFHV

7KH WHVW RI FRQWUROV IRU SXUFKDVHV FDVK GLVEXUVHPHQWV DQG DFFRXQWV SD\DEOH 7KH UHODWHG WUDQVDFWLRQ DVVHUWLRQ

LQFOXGH WKH IROORZLQJ DXGLW SURFHGXUHV 1H[W WR HDFK RI WKH SURFHGXUHV LQGLFDWH WKH

7KH WHVW RI FRQWUROV IRU SD\UROO LQFOXGHV WKH IROORZLQJ DXGLW SURFHGXUHV 1H[W WR HDFK 7KH RI WKH SURFHGXUHV LQGLFDWH WKH UHODWHG PDQDJHPHQW DVVHUWLRQ DERXW WUDQVDFWLRQV GLFDWH

&KDSWHU  $FTXLVLWLRQ DQG ([SHQGLWXUH &\FOH $QVZHU .H\

7UXH  )DOVH 4XHVWLRQV



7KH EDVLF DFTXLVLWLRQ DQG H[SHQGLWXUH DFWLYLWLHV DUH  SXUFKDVLQJ JRRGV DQG VHUYLFHV  UHFHLYLQJ WKH JRRGV RU VHUYLFHV  UHFRUGLQJ WKH DVVHW RU H[SHQVH DQG UHODWHG OLDELOLW\ DQG  SD\LQJ WKH YHQGRUV 758( 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

!4   9D ! !! 98Q  "S  9"D C" "   !&" ! "  9 % B!  !! 98!  "  S !@ !2! )57 5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      

!4   9D ! !! 98Q  "S  9"D C" "   !&" !"  9 % B!  !! 98!  "  S !@ !2! )57 5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      

!4   9D ! !! 98Q  "S  9"D C" "   !&" ! "  9 % B!  !! 98!  "  S !@ !2! )57 5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      





5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH )$/6( LQYRLFH SXUFKDVH RUGHU DQG UHFHLYLQJ UHSRUW &KHFNV DUH VLJQHG E\ WKH DFFRXQWV SD\DEOH GHSDUWPHQW DIWHU DVVHPEOLQJ WKH 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 758( DQG TXDOLW\ 3XUFKDVHV DUH RUGHUHG E\ D SXUFKDVLQJ GHSDUWPHQW WKDW VHHNV WKH EHVW SULFHV

!4   9D ! !! 98Q  "S  9"D C" "   !&" ! "  9 % B!  !! 98!  "  S !@ !2! )57 5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      

!4   9D ! !! 98Q  "S  9"D C" "   !&" ! "  9 % B!  !! 98!  "  S !@ !2! )57 5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      





5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 758( DFFHSWHG 1RUPDOO\ OLDELOLWLHV VKRXOG EH UHFRUGHG RQ WKH GDWH WKH JRRGV DUH UHFHLYHG DQG 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 758( UHFHLYHG 3XUFKDVH RUGHUV DUH RSHQ IURP WKH WLPH WKH\ DUH LVVXHG XQWLO WKH JRRGV DUH

!4   9D ! !! 98Q  "S  9"D C" "   !&" ! "  9 % B!  !! 98!  "  S !@ !2! )57 5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      

! !! 98Q  " S !@  ! !" !4 2  9"D C!2 !"! "( @! "( ! !" 9 !&"   !2 9 " ("  !@ "( "! !!! 9&" !@ (" !" 9& !@  98Q V 57 5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      





5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH )$/6( $XGLWRUV FDQ LQVSHFW WKH XQPDWFKHG LQYRLFH ILOH DQG FRPSDUH LW WR WKH 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH )$/6( HVSHFLDOO\ IRU UHJXODU YHQGRUV $XGLWRUV VHDUFK IRU XQUHFRUGHG OLDELOLWLHV VKRXOG HPSKDVL]H WKH ODUJH EDODQFHV XQPDWFKHG UHFHLYLQJ UHSRUW ILOH WR GHWHUPLQH ZKHWKHU OLDELOLWLHV DUH XQUHFRUGHG

 !&! $E " "  9"D C!4 !  " !4  ( " !@ 9 !4 " " " ( " ! (" ! 9& 8! !4 T G 57 5 !4 ! 321 %!0 & !# ) ((  !' &""  $E    %$@D    %$@D !4 !(!E

!&! $E " "  9"D C!4 !  " !4  ( " !@ 9 !4 " " " ( " ! (" ! 9& 8! !4 T G 57 5 !4 ! 321 %!0 & !# ) ((  !' &""  $E    %$@D    %$@D !4 !(!E





5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 758( FRQWURO IDLOXUHV KDYH SURGXFHG PLVOHDGLQJ ILQDQFLDO VWDWHPHQW DFFRXQW EDODQFHV DXGLWRUV ZLOO QHHG WR GHVLJQ VXEVWDQWLYH SURFHGXUHV WR WU\ WR GHWHFW ZKHWKHU ,I SHUVRQQHO LQ WKH RUJDQL]DWLRQ DUH QRW SHUIRUPLQJ WKHLU FRQWURO DFWLYLWLHV YHU\ ZHOO 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 758( GR QRW KDYH FXVWRG\ UHFRUGLQJ RU UHFRQFLOLDWLRQ GXWLHV 3URSHU VHSDUDWLRQ RI GXWLHV LQYROYHV DXWKRUL]DWLRQ RI SXUFKDVHV E\ SHUVRQV ZKR

! !! 98Q  " S !@  ! !" !4 2  9"D C!2 !"! "( @! "( ! !" 9 !&"   !2 9 " ("  !@ "( "! !!! 9&" !@ (" !" 9& !@  98Q V 57 5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      

!&! $E " "  9"D C!4 !  " !4  ( " !@ 9 !4 " " " ( " ! (" ! 9& 8! !4 T G 57 5 !4 ! 321 %!0 & !# ) ((  !' &""  $E    %$@D    %$@D !4 !(!E





5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH )$/6( RYHUVWDWHG WHQG WR EH PRUH FRQFHUQHG DERXW XQGHUVWDWHG H[SHQVHV DQG OLDELOLWLHV WKDQ 7KH HPSKDVLV LV RQ WKH H[LVWHQFH DVVHUWLRQ EHFDXVH ILQDQFLDO VWDWHPHQW XVHUV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH )$/6( DGGLWLRQDO VXEVWDQWLYH SURFHGXUHV ZLOO EH UHTXLUHG ,I WKH ULVN RI PDWHULDO PLVVWDWHPHQW LV DVVHVVHG DV YHU\ ORZ LW LV OLNHO\ WKDW

! !! 98Q  " S !@  ! !" !4 2  9"D C!2 !"! "( @! "( ! !" 9 !&"   !2 9 " ("  !@ "( "! !!! 9&" !@ (" !" 9& !@  98Q V 57 5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      

! !! 98Q  " S !@  ! !" !4 2  9"D C!2 !"! "( @! "( ! !" 9 !&"   !2 9 " ("  !@ "( "! !!! 9&" !@ (" !" 9& !@  98Q V 57 5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      





5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH GD\ RI ILHOGZRUN LQ WKH SHULRG IROORZLQJ WKH DXGLW FOLHQW V EDODQFH VKHHW GDWH 7KH VHDUFK IRU XQUHFRUGHG OLDELOLWLHV VKRXOG QRUPDOO\ EH SHUIRUPHG XS WR WKH ODVW 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH )$/6( OLDELOLWLHV WKDQ WKH H[LVWHQFH DVVHUWLRQ IRU DVVHWV (YLGHQFH LV PXFK HDVLHU WR REWDLQ WR YHULI\ WKH FRPSOHWHQHVV DVVHUWLRQ IRU 758(

! "  S  !! 98Q !@  !   9"D 8! 99 C""   !&" ! "  9 % B!  " 9 !@ !2! 57 5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      

! !! 98Q  " S !@  ! !" !4 2  9"D C!  !! 98!  " S !@ 2 !!(( " !@" "( ! !" 9   X 57 5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      





5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 758( HPSOR\HH V LPPHGLDWH VXSHUYLVRU $OO SD\ EDVH GDWD KRXUV MRE QXPEHU DEVHQFHV HWF VKRXOG EH DSSURYHG E\ DQ 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 758( WR GHWHUPLQH DFWXDO H[LVWHQFH DQG FRQGLWLRQ RI SURSHUW\ 7KH SULQFLSDO JRDO RI WKH SK\VLFDO LQVSHFWLRQ RI SURSHUW\ SODQW DQG HTXLSPHQW LV

! "  S  !! 98Q !@  !   9"D 8! 99 C""   !&" ! "  9 % B!  " 9 !@ !2! 57 5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      

! "  S  !! 98Q !@  !   9"D 8! 99 C""   !&" ! "  9 % B!  " 9 !@ !2! 57 5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      





758( SUHSDUH WKH SD\UROO 3HUVRQV LQ FKDUJH RI DXWKRUL]DWLRQ DQG FXVWRG\ SD\UROO IXQFWLRQV VKRXOG QRW 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 758( FKHFNV 7KH PDLQ IHDWXUH RI FXVWRG\ LQ WKH SD\UROO F\FOH LV WKH SRVVHVVLRQ RI WKH SD\UROO

5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

! "  S  !! 98Q !@  !   9"D 8! 99 C""   !&" ! "  9 % B!  " 9 !@ !2! 57 5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      

! "  S  !! 98Q !@  !   9"D 8! 99 C""   !&" ! "  9 % B!  " 9 !@ !2! 57 5 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      





5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 758( QRW PDNH DXWKRUL]DWLRQV RU GLVWULEXWH SD\ 5HFRUG NHHSLQJ LV SHUIRUPHG E\ SD\UROO DQG FRVW DFFRXQWLQJ SHUVRQQHO ZKR GR 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 7KH SD\UROO EDQN DFFRXQW FDQQRW EH UHFRQFLOHG OLNH WKH RWKHU EDQN DFFRXQWV )$/6(

"! ! ! 98Q  9"D  %1 ! " C!2 !"! "( @! "( ! !" 9 !&"   !2 9 " ("  !@ "( "! !!! 9&" !@ (" !" 9& !@  98Q V 57 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %$@D    



0XOWLSOH &KRLFH 4XHVWLRQV

' $FFRXQWV OLVWHG LQ WKH DFFRXQWV SD\DEOH VXEVLGLDU\ & $FFRXQWV ZLWK ODUJH EDODQFHV % $OO DFFRXQWV VKRXOG EH HTXDOO\ HPSKDVL]HG $ $FFRXQWV ZLWK VPDOO RU ]HUR EDODQFHV DFFRXQWV" :KHQ FRQILUPLQJ DFFRXQWV SD\DEOH HPSKDVLV VKRXOG EH SXW RQ ZKDW NLQG RI



5HFRUGHG YRXFKHUV DFFRXQWV SD\DEOH HQWULHV LQ WKH YRXFKHU UHJLVWHU HJ SXUFKDVHV MRXUQDO VXSSRUWHG E\ FRPSOHWHG YRXFKHU GRFXPHQWDWLRQ LV D VSHFLILF H[DPSOH RI ZKLFK PDQDJHPHQW DVVHUWLRQ"

$ &ODVVLILFDWLRQ % 2FFXUUHQFH & &RPSOHWHQHVV ' &XWRII

" " !! 98Q  9"D  %1 ! " C!4 !  " !4  ( " !@ 9 !4 " " " ( " ! (" ! 9& 8! !4 T G 57 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %!0  



$OO SXUFKDVH RUGHUV DUH VXSSRUWHG E\ UHTXLVLWLRQV IURP SURSHU SHUVRQV LV D VSHFLILF H[DPSOH RI ZKLFK PDQDJHPHQW DVVHUWLRQ"

$ 2FFXUUHQFH % &RPSOHWHQHVV & &XWRII ' &ODVVLILFDWLRQ

99 &""  $E    %!0  

" " !! 98Q  9"D  %1 ! " C!4 !  " !4  ( " !@ 9 !4 " " " ( " ! (" ! 9& 8! !4 T G 57 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  

! !! 98Q  9"D  %1 ! " C" "   !&" ! "  9 % B!  !! 98!  "  S !@ !2! )57 5 !4 ! 321 %!0 & !# ) (( 



' $ FRPSOHWH YRXFKHU SDFNDJH & 5HFHLYLQJ UHSRUWV % ,QYRLFHV $ 3XUFKDVH RUGHUV &DVK GLVEXUVHPHQWV DUH DXWKRUL]HG E\



)RU WKH FRS\ RI WKH SXUFKDVH RUGHU WKDW JRHV WR WKH UHFHLYLQJ GHSDUWPHQW LW LV EHVW WR

$ /HDYH RII WKH GHVFULSWLRQ RI WKH JRRGV RUGHUHG % /HDYH RII WKH TXDQWLW\ RI WKH JRRGV RUGHUHG & /HDYH RII WKH QDPH RI WKH YHQGRU ' +DYH WKH UHFHLYLQJ GHSDUWPHQW IRUZDUG DOO FRSLHV RI WKH SXUFKDVH RUGHU WR DFFRXQWV SD\DEOH
" " !! 98Q  9"D  %1 ! " C!4 !  " !4  ( " !@ 9 !4 " "" (" ! (" ! 9& 8! !4 T G 57 5 !4 ! 321 %!0 W G (( 99 &""  $E    %$@D    



9RXFKHUV VKRXOG EH VWDPSHG 3$,' WR

$ 3UHYHQW GXSOLFDWH SD\PHQW % *HQHUDWH D QHZ SXUFKDVH RUGHU & ,QGLFDWH SRVWLQJ LQ WKH YRXFKHU UHJLVWHU ' )DFLOLWDWH SUHSDUDWLRQ RI WKH EDQN UHFRQFLOLDWLRQ
& !# ) ((  99 &""  $E    %$@D    



$ YRXFKHU SDFNDJH LV XVHG WR

$ 'RFXPHQW UHFHLSW RI LQYHQWRU\ % 'RFXPHQW FRPSOHWLRQ RI VHUYLFHV & 'RFXPHQW D SXUFKDVH FRQWUDFW ' 3URYLGH D VRXUFH GRFXPHQW IRU UHFRUGLQJ WKH SXUFKDVH RI D JRRG RU VHUYLFH
! !! 98Q  9"D  %1 ! " C" "   !&" ! "  9 % B!  !! 98!  "  S !@ !2! )57 5 !4 ! 321 %!0 & !# ) ((  !' &"" @!!E   %!0  



$Q DXGLWRU WUDFHG D VDPSOH RI SXUFKDVH RUGHUV DQG WKH UHODWHG UHFHLYLQJ UHSRUWV WR WKH SXUFKDVHV MRXUQDO 7KH SXUSRVH RI WKLV VXEVWDQWLYH DXGLW SURFHGXUH PRVW OLNHO\ ZDV WR

$ ,GHQWLI\ XVXDOO\ ODUJH SXUFKDVHV WKDW VKRXOG EH LQYHVWLJDWHG IXUWKHU % 9HULI\ WKDW FDVK GLVEXUVHPHQWV ZHUH IRU JRRGV DFWXDOO\ UHFHLYHG & 'HWHUPLQH WKDW SXUFKDVHV ZHUH SURSHUO\ UHFRUGHG ' 7HVW ZKHWKHU SD\PHQWV ZHUH IRU JRRGV DFWXDOO\ RUGHUHG


" " !! 98Q  9"D  %1 ! " C!4 !  " !4  ( " !@ 9 !4 " " " ( " ! (" ! 9& 8! !4 T G 57 5 !4 ! 321 %!0

" " !! 98Q  9"D  %1 ! " C!4 !  " !4  ( " !@ 9 !4 " " " ( " ! (" ! 9& 8! !4 T G 57 5 !4 ! 321 %!0 & !# ) ((  !' &"" @!!E   %!0  

" " !! 98Q  9"D   ! " C!4 !  " !4  ( " !@ 9 !4 " " " ( " ! (" ! 9& 8! !4 T G 57 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %$@D   



' 9RXFKHUV SD\DEOH MRXUQDO IURP WKH DFFRXQWV SD\DEOH GHSDUWPHQW & 5HFHLYLQJ UHSRUWV XSGDWHG ZLWK FRVW GDWD IURP WKH DFFRXQWV SD\DEOH % 3XUFKDVH LQYRLFHV XSGDWHG ZLWK FRVW GDWD IURP WKH LQYHQWRU\ UHFRUGV $ 6DOHV LQYRLFHV XSGDWHG ZLWK FRVW GDWD IURP WKH LQYHQWRU\ UHFRUGV GHSDUWPHQW SXUFKDVH RI LQYHQWRU\ LV 7KH XVXDO VRXUFH IRU MRXUQDO HQWULHV SRVWHG WR WKH JHQHUDO OHGJHU WR UHFRUG WKH GHSDUWPHQW GHSDUWPHQW



:KLFK RI WKH IROORZLQJ ZRXOG GHWHFW WKH XQGHUVWDWHPHQW RI D SXUFKDVH GLVFRXQW"

$ 9HULI\ WKH DULWKPHWLF DFFXUDF\ RI WKH SXUFKDVHV MRXUQDO % &RPSDUH SXUFKDVH GLVEXUVHPHQW UHFRUGV DQG FKHFNV ZLWK LQYRLFH WHUPV & &RPSDUH DSSURYHG SXUFKDVH RUGHUV WR UHFHLYLQJ UHSRUWV ' 9HULI\ WKH UHFHLSW RI LWHPV RUGHUHG DQG LQYRLFHG
%!D !4  2 ! ! 98Q  9"D  %1 ! " C!  !! 98!  " S !@ 2 !!(( " !@" "( ! !" 9   X 57 5 !4 ! 321 %!0 W G (( 99 &""  $E    %$@D    



:KLFK RI WKH IROORZLQJ VLWXDWLRQV LQGLFDWHV D SRWHQWLDO PDWHULDO ZHDNQHVV LQ LQWHUQDO FRQWURO RYHU DFTXLVLWLRQ DQG H[SHQGLWXUH"

$ 3XUFKDVH RUGHUV DUH QRW SUHSDUHG IRU VHUYLFHV DFTXLUHG GLUHFWO\ XQGHU DXWKRUL]DWLRQ RI GHSDUWPHQW KHDGV % 7KH VDPH SHUVRQ DXWKRUL]HV YRXFKHU SDFNDJHV DQG VLJQV FKHFNV & 8QDFFHSWDEOH JRRGV DUH QRW VFKHGXOHG RQ UHFHLYLQJ UHSRUWV ' 7KH VDPH SHUVRQ VLJQV FKHFNV DQG VWDPSV YRXFKHUV 3$,'
& !# ) ((  99 &""  $E    %$@D    

! !! 98Q  9"D  %1 ! " C" "   !&" ! "  9 % B!  !! 98!  "  S !@ !2! )57 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %$@D    

" " !! 98Q  9"D  %1 ! " C!4 !  " !4  ( " !@ 9 !4 " " " ( " ! (" ! 9& 8! !4 T G 57 5 !4 ! 321 %!0



YRXFKHUV SD\DEOH DFFRXQWV SD\DEOH GHSDUWPHQW"

' &KHFNLQJ WKH SULFHV RQ WKH YHQGRU V LQYRLFH & &RQWUROOLQJ WKH PDLOLQJ RI WKH FKHFN DQG UHPLWWDQFH DGYLFH % :ULWLQJ FKHFNV IRU WKH WUHDVXUHU V VLJQDWXUH WR WDNH DGYDQWDJH RI SXUFKDVH $ 'HWHUPLQLQJ WKH PDWKHPDWLFDO DFFXUDF\ RI WKH YHQGRUV LQYRLFHV :KLFK RI WKH IROORZLQJ FOLHQW FRQWURO DFWLYLWLHV LV QRW XVXDOO\ SHUIRUPHG LQ WKH GLVFRXQWV



:KHQ DXGLWLQJ PHUFKDQGLVH LQYHQWRU\ DW \HDUHQG WKH DXGLWRU SHUIRUPV D SXUFKDVH FXWRII WHVW WR REWDLQ HYLGHQFH WKDW

$ $OO JRRGV SXUFKDVHG EHIRUH \HDUHQG DUH UHFHLYHG EHIRUH WKH SK\VLFDO LQYHQWRU\ FRXQW % 1R JRRGV KHOG RQ FRQVLJQPHQW IRU FXVWRPHUV DUH LQFOXGHG LQ WKH LQYHQWRU\ EDODQFH & 1R JRRGV REVHUYHG GXULQJ WKH SK\VLFDO FRXQW DUH SOHGJHG RU VROG ' $OO JRRGV RZQHG DW \HDUHQG DUH LQFOXGHG LQ WKH LQYHQWRU\ EDODQFH
" " !! 98Q  9"D  %1 ! " C!4 !  " !4  ( " !@ 9 !4 " "" (" ! (" ! 9& 8! !4 T G 57 5 !4 ! 321 %!0 W G (( 99 &""  $E    %$@D    



$XGLWRUV PD\ FRQFOXGH WKDW GHSUHFLDWLRQ FKDUJHV DUH WRR VPDOO E\ QRWLQJ

$ ,QVXUHG YDOXHV PXFK ODUJHU WKDQ ERRN YDOXHV % /DUJH QXPEHUV RI IXOO\ GHSUHFLDWHG DVVHWV & )UHTXHQW WUDGHLQV RI UHODWLYHO\ QHZ DVVHWV ' /DUJH DQG IUHTXHQW ORVVHV RQ DVVHWV UHWLUHG
99 &""  $E    %$@D    

" " !! 98Q  9"D  %1 ! " C!4 !  " !4  ( " !@ 9 !4 " " " ( " ! (" ! 9& 8! !4 T G 57 5 !4 ! 321 %!0 W G (( 99 &""  $E    %$@D    

"! !   "Q !! 98Q  9"D  %1 ! " C&!@ %! ! "( !!" 9 " %!4    !&" %!  !  ! ! 98!  "S !@  (  "! "&&" !&" !2! R 57 5 !4 ! 321 %!0 & !# ) (( 



' 6HOHFW YHQGRU DFFRXQWV WKDW DUH SDVW GXH & 6HOHFW YHQGRU DFFRXQWV EDVHG RQ WKH QXPEHU RI SXUFKDVHV IURP YHQGRUV % 6HOHFW YHQGRU DFFRXQWV DW UDQGRP LQ RUGHU WR DSSO\ D VWDWLVWLFDO VDPSOLQJ $ 6HOHFW YHQGRU DFFRXQWV ZLWK ODUJH EDODQFHV YHQGRU DFFRXQWV WR FRQILUP LV WR FRQILUPDWLRQV WR VHOHFWHG YHQGRUV 7KH DXGLWRU V EHVW DSSURDFK LQ VHOHFWLQJ WKH 7KH DXGLWRU GHFLGHG WR WHVW DFFRXQWV SD\DEOH E\ VHQGLQJ RSHQHQGHG EODQN SURFHGXUH GXULQJ WKH \HDU



:KDW HYLGHQFH LV DSSURSULDWH WR GHWHUPLQH ZKHWKHU UHFRUGHG SXUFKDVH WUDQVDFWLRQV DUH YDOLG DQG WKH YHQGRUV FKDUJHG WKH FRUUHFW SULFHV"

$ 3XUFKDVH UHTXLVLWLRQV DQG DFFRXQWV SD\DEOH HQWULHV % 5HFHLYLQJ UHSRUWV DQG SXUFKDVH RUGHUV & 3XUFKDVH UHTXLVLWLRQV DQG SXUFKDVHV RUGHUV ' 3XUFKDVH RUGHUV DQG ELG TXRWHV
! !! 98Q  9"D  %1 ! " C" "   !&" ! "  9 % B!  !! 98!  "  S !@ !2! )57 5 !4 ! 321 %!0 W G (( 99 &""  $E    %$@D    



3XUFKDVH FXWRII SURFHGXUHV VKRXOG EH GHVLJQHG WR SURGXFH HYLGHQFH RI ZKHWKHU PHUFKDQGLVH LV LQFOXGHG LQ WKH LQYHQWRU\ RI WKH FOLHQW FRPSDQ\ LI WKH FRPSDQ\

$ +DV SDLG IRU WKH PHUFKDQGLVH % +DV SK\VLFDO SRVVHVVLRQ RI WKH PHUFKDQGLVH & +ROGV OHJDO WLWOH WR WKH PHUFKDQGLVH ' +ROGV WKH VKLSSLQJ GRFXPHQWV IRU WKH PHUFKDQGLVH LVVXHG LQ WKH FRPSDQ\ V QDPH
99 &""  $E    %$@D    

! !"  !! 98Q  9"D  %1 ! " C!  !! 98!  "S !@ 2 !!(( " !@" "( ! !" 9   X 57 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %$@D    

%!D !4  2 ! ! 98Q  9"D  %1 ! " C!2 !"! "( @! "( ! !" 9 !&"   !2 9 " ("  !@ "( "! !!! 9&" !@ (" !" 9& !@  98Q V 57 5 !4 ! 321 %!0 W G ((



' 5HSDLUV DQG PDLQWHQDQFH H[SHQVH & $FFRXQWV SD\DEOH % *DLQ RQ GLVSRVDO RI HTXLSPHQW $ 'HSUHFLDWLRQ H[SHQVH XQGHUVWDWHG" JDLQ UHDVRQDEOH DVVXUDQFH WKDW DGGLWLRQV WR WKH HTXLSPHQW DFFRXQW DUH QRW :KLFK RI WKH IROORZLQJ DFFRXQWV ZRXOG PRVW OLNHO\ EH UHYLHZHG E\ WKH DXGLWRU WR



:KLFK RI WKH IROORZLQJ ZRXOG QRW EH LQFOXGHG LQ WKH VXSSRUWLQJ GRFXPHQWV IRU D YRXFKHU"

$ 3XUFKDVH RUGHU % 9HQGRU LQYRLFH & 5HFHLYLQJ UHSRUW ' %ODQN FKHFN
! !! 98Q  9"D  %1 ! " C" "   !&" ! "  9 % B!  !! 98!  "  S !@ !2! )57 5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  



$ YRXFKHU ZRXOG W\SLFDOO\ FRQWDLQ

$ $ SXUFKDVH UHTXLVLWLRQ SXUFKDVH RUGHU YHQGRU LQYRLFH UHFHLYLQJ UHSRUW DQG FKHFN FRS\ % $ SXUFKDVH UHTXLVLWLRQ SXUFKDVH RUGHU VDOHV LQYRLFH UHFHLYLQJ UHSRUW DQG FKHFN FRS\ & $ SXUFKDVH UHTXLVLWLRQ VDOHV RUGHU VDOHV LQYRLFH UHFHLYLQJ UHSRUW DQG FKHFN FRS\ ' $ SXUFKDVH UHTXLVLWLRQ VDOHV RUGHU YHQGRU LQYRLFH UHFHLYLQJ UHSRUW DQG FKHFN FRS\


%!D !4  2 ! ! 98Q  9"D   ! " C!2 !"! "( @! "( ! !" 9 !&"   !2 9 " ("  !@ "( "! !!! 9&" !@ (" !" 9& !@  98Q V 57 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %$@D    

! !! 98Q  9"D  %1 ! " C" "   !&" ! "  9 % B!  !! 98!  "  S !@ !2! )57 5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0 



' ,QYRLFHV ILOHG LQ WKH HQWLW\ V RSHQ LQYRLFH ILOH & 3D\HHV RI FKHFNV GUDZQ LQ WKH PRQWK DIWHU WKH \HDUHQG % $PRXQWV UHFRUGHG LQ WKH DFFRXQWV SD\DEOH VXEVLGLDU\ OHGJHU $ 9HQGRUV ZLWK ZKRP WKH HQWLW\ KDV SUHYLRXVO\ GRQH EXVLQHVV IRU DFFRXQWV SD\DEOH WKH DSSURSULDWH SRSXODWLRQ PRVW OLNHO\ ZRXOG EH :KHQ XVLQJ FRQILUPDWLRQV WR SURYLGH HYLGHQFH DERXW WKH FRPSOHWHQHVV DVVHUWLRQ



:KLFK RI WKH IROORZLQJ SURFHGXUHV ZRXOG DQ DXGLWRU PRVW OLNHO\ SHUIRUP LQ VHDUFKLQJ IRU XQUHFRUGHG SD\DEOHV"

$ 5HFRQFLOH UHFHLYLQJ UHSRUWV ZLWK UHODWHG FDVK SD\PHQWV PDGH MXVW SULRU WR \HDUHQG % &RQWUDVW WKH UDWLR RI DFFRXQWV SD\DEOH WR SXUFKDVHV ZLWK WKH SULRU \HDU V UDWLR & 9RXFK D VDPSOH RI FUHGLWRU EDODQFHV WR VXSSRUWLQJ LQYRLFHV UHFHLYLQJ UHSRUWV DQG SXUFKDVH RUGHUV ' &RPSDUH FDVK SD\PHQWV RFFXUULQJ DIWHU WKH EDODQFH VKHHW GDWH ZLWK WKH DFFRXQWV SD\DEOH WULDO EDODQFH
%!D !4  2 ! ! 98Q  9"D   ! " C!2 !"! "( @! "( ! !" 9 !&"   !2 9 " ("  !@ "( "! !!! 9&" !@ (" !" 9& !@  98Q V 57 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %$@D    



$Q HQWLW\ V LQWHUQDO FRQWURO VWUXFWXUH UHTXLUHV IRU HYHU\ FKHFN UHTXHVW WKDW WKHUH EH DQ DSSURYHG YRXFKHU VXSSRUWHG E\ D SUHQXPEHUHG SXUFKDVH RUGHU DQG D SUHQXPEHUHG UHFHLYLQJ UHSRUW 7R GHWHUPLQH ZKHWKHU FKHFNV DUH EHLQJ LVVXHG IRU XQDXWKRUL]HG H[SHQGLWXUHV DQ DXGLWRU PRVW OLNHO\ ZRXOG VHOHFW LWHPV IRU WHVWLQJ IURP WKH SRSXODWLRQ RI DOO

$ 3XUFKDVH RUGHUV % &DQFHOHG FKHFNV & 5HFHLYLQJ UHSRUWV ' $SSURYHG YRXFKHUV
" " !! 98Q  9"D   ! " C!4 !  " !4  ( " !@ 9 !4 " " " ( " ! (" ! 9& 8! !4 T G 57 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %$@D    



$Q DXGLWRU ZLVKHV WR SHUIRUP WHVWV RI FRQWUROV RQ D FOLHQW V SXUFKDVLQJ SURFHGXUHV ,I WKH FRQWURO DFWLYLWLHV OHDYH QR DXGLW WUDLO RI GRFXPHQWDU\ HYLGHQFH WKH DXGLWRU PRVW OLNHO\ ZLOO WHVW WKH SURFHGXUHV E\

$ &RQILUPDWLRQ DQG REVHUYDWLRQ % 2EVHUYDWLRQ DQG LQTXLU\ & $QDO\WLFDO SURFHGXUHV DQG FRQILUPDWLRQ ' ,QTXLU\ DQG DQDO\WLFDO SURFHGXUHV
" " !! 98Q  9"D   ! " C!4 !  " !4  ( " !@ 9 !4 " " " ( " ! (" ! 9& 8! !4 T G 57 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %$@D    



:KLFK RI WKH IROORZLQJ DXGLW SURFHGXUHV LV EHVW IRU LGHQWLI\LQJ XQUHFRUGHG DFFRXQWV SD\DEOH"

$ 5HYLHZLQJ FDVK GLVEXUVHPHQWV UHFRUGHG VXEVHTXHQW WR WKH EDODQFH VKHHW GDWH WR GHWHUPLQH ZKHWKHU WKH UHODWHG SD\DEOHV DSSO\ WR WKH SULRU SHULRG % ,QYHVWLJDWLQJ SD\DEOHV UHFRUGHG MXVW SULRU WR DQG MXVW VXEVHTXHQW WR WKH EDODQFH VKHHW GDWH WR GHWHUPLQH ZKHWKHU WKH\ DUH VXSSRUWHG E\ UHFHLYLQJ UHSRUWV & ([DPLQLQJ XQXVXDO UHODWLRQVKLSV EHWZHHQ PRQWKO\ DFFRXQWV SD\DEOH EDODQFHV DQG UHFRUGHG FDVK SD\PHQWV ' 5HFRQFLOLQJ YHQGRUV VWDWHPHQWV WR WKH ILOH RI UHFHLYLQJ UHSRUWV WR LGHQWLI\ LWHPV UHFHLYHG MXVW SULRU WR WKH EDODQFH VKHHW GDWH
%!D !4  2 !! 98Q  9"D   ! " C!2 !"! "( @! "( ! !" 9 !&"   !2 9 " ("  !@ "( "! !!! 9&" !@ (" !" 9& !@  98Q V 57 5 !4 ! 321 %!0 W G (( 99 &""  $E    %$@D    



7R SURYLGH DVVXUDQFH WKDW HDFK YRXFKHU LV VXEPLWWHG DQG SDLG RQO\ RQFH DQ DXGLWRU PRVW OLNHO\ ZRXOG H[DPLQH D VDPSOH RI SDLG YRXFKHUV DQG GHWHUPLQH ZKHWKHU HDFK YRXFKHU LV

$ 6XSSRUWHG E\ D YHQGRU V LQYRLFH % 6WDPSHG SDLG E\ WKH FKHFN VLJQHU & 3UHQXPEHUHG DQG DFFRXQWHG IRU ' $SSURYHG IRU DXWKRUL]HG SXUFKDVHV
" " !! 98Q  9"D   ! " C!4 !  " !4  ( " !@ 9 !4 " " " (" ! (" ! 9& 8! !4 T G 57 5 !4 ! 321 %!0 W G (( 99 &""  $E    %$@D    



&XWRII WHVWV GHVLJQHG WR GHWHFW SXUFKDVHV PDGH EHIRUH WKH HQG RI WKH \HDU WKDW KDYH EHHQ UHFRUGHG LQ WKH VXEVHTXHQW \HDU PRVW OLNHO\ ZRXOG SURYLGH DVVXUDQFH DERXW PDQDJHPHQW V DVVHUWLRQ RI

$ 9DOXDWLRQ RU DOORFDWLRQ % ([LVWHQFH RU RFFXUUHQFH & &RPSOHWHQHVV ' 5LJKWV DQG REOLJDWLRQV
%$@D    

( ! ! 98Q  9"D  %1 ! " C!  !! 98!  " S !@ 2 !!(( " !@" "( ! !" 9   X 57 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %$@D    

%!D !4  2 ! ! 98Q  9"D   ! " C!2 !"! "( @! "( ! !" 9 !&"   !2 9 " ("  !@ "( "! !!! 9&" !@ (" !" 9& !@  98Q V 57 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E   



' &RQFHQWUDWH RQ ILQGLQJ XQUHFRUGHG DVVHWV & )ROORZ D UHOLDQFH VWUDWHJ\ WHVWLQJ LQWHUQDO FRQWUROV DQG DQDO\WLFDO SURFHGXUHV % ([DPLQH HYLGHQFH VXSSRUWLQJ DGGLWLRQV GXULQJ WKH \HDU $ ([DPLQH HYLGHQFH VXSSRUWLQJ WKH DPRXQWV LQ WKH HQGLQJ EDODQFH :KHQ DXGLWLQJ 33 ( WKH DXGLWRU V DSSURDFK LV JHQHUDOO\ WR



:KLFK RI WKH IROORZLQJ SURFHGXUHV ZRXOG DQ DXGLWRU PRVW OLNHO\ SHUIRUP LQ VHDUFKLQJ IRU XQUHFRUGHG OLDELOLWLHV"

$ 7UDFH D VDPSOH RI DFFRXQWV SD\DEOH HQWULHV UHFRUGHG MXVW EHIRUH \HDUHQG WR WKH XQPDWFKHG UHFHLYLQJ UHSRUW ILOH % &RPSDUH D VDPSOH RI SXUFKDVH RUGHUV LVVXHG MXVW DIWHU \HDUHQG ZLWK WKH \HDU HQG DFFRXQWV SD\DEOH WULDO EDODQFH & 9RXFK D VDPSOH RI FDVK GLVEXUVHPHQWV UHFRUGHG MXVW DIWHU \HDUHQG WR UHFHLYLQJ UHSRUWV DQG YHQGRU LQYRLFHV ' 6FDQ WKH FDVK GLVEXUVHPHQWV HQWULHV UHFRUGHG MXVW EHIRUH \HDUHQG IRU LQGLFDWLRQV RI XQXVXDO WUDQVDFWLRQV
%!D !4  2 ! ! 98Q  9"D   ! " C!2 !"! "( @! "( ! !" 9 !&"   !2 9 " ("  !@ "( "! !!! 9&" !@ (" !" 9& !@  98Q V 57 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %$@D    



,Q SHUIRUPLQJ D VHDUFK IRU XQUHFRUGHG UHWLUHPHQWV RI IL[HG DVVHWV DQ DXGLWRU PRVW OLNHO\ ZRXOG

$ ,QVSHFW WKH SURSHUW\ OHGJHU DQG WKH LQVXUDQFH DQG WD[ UHFRUGV DQG WKHQ WRXU WKH FOLHQW V IDFLOLWLHV % 7RXU WKH FOLHQW V IDFLOLWLHV DQG WKHQ LQVSHFW WKH SURSHUW\ OHGJHU DQG WKH LQVXUDQFH DQG WD[ UHFRUGV & $QDO\]H WKH UHSDLU DQG PDLQWHQDQFH DFFRXQW DQG WKHQ WRXU WKH FOLHQW V IDFLOLWLHV ' 7RXU WKH FOLHQW V IDFLOLWLHV DQG WKHQ DQDO\]H WKH UHSDLU DQG PDLQWHQDQFH DFFRXQW
( ! ! 98Q  9"D   ! " C!  !! 98!  " S !@ 2 !!(( " !@" "( ! !" 9   X 57 5 !4 ! 321 %!0 W G (( 99 &""  $E    %$@D    



$ ZHDNQHVV LQ LQWHUQDO FRQWURO RYHU UHFRUGLQJ UHWLUHPHQWV RI HTXLSPHQW PD\ FDXVH DQ DXGLWRU WR

$ ,QVSHFW FHUWDLQ LWHPV RI HTXLSPHQW LQ WKH SODQW DQG WUDFH WKRVH LWHPV WR WKH DFFRXQWLQJ UHFRUGV % 5HYLHZ WKH VXEVLGLDU\ OHGJHU WR DVFHUWDLQ ZKHWKHU GHSUHFLDWLRQ ZDV WDNHQ RQ HDFK LWHP RI HTXLSPHQW GXULQJ WKH \HDU & 7UDFH DGGLWLRQV WR WKH RWKHU DVVHWV DFFRXQW WR VHDUFK IRU HTXLSPHQW WKDW LV VWLOO RQ KDQG EXW QR ORQJHU EHLQJ XVHG ' 6HOHFW FHUWDLQ LWHPV RI HTXLSPHQW IURP WKH DFFRXQWLQJ UHFRUGV DQG ORFDWH WKHP LQ WKH SODQW
( ! ! 98Q  9"D   ! " C!  !! 98!  " S !@ 2 !!(( " !@" "( ! !" 9   X 57 5 !4 ! 321 %!0 W G (( 99 &""  $E    %$@D    



)DLOXUH WR UHFRUG D OLDELOLW\ JHQHUDOO\ UHVXOWV LQ

$ $Q XQGHUVWDWHPHQW RI SURILW % $Q XQGHUVWDWHPHQW RI FXUUHQW UDWLR & $Q RYHUVWDWHPHQW RI SURILW ' $Q RYHUVWDWHPHQW RI DVVHWV


$ !! 98Q  9"D  %1 ! " C" "   !&" ! "  9 % B!  !! 98!  "  S !@ !2! )57 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %$@D    

$ !! 98Q  9"D  %1 ! " C!  !! 98!  " S !@  $ !!@ ( % (! 6 57 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %$@D   



' 2YHUVWDWHPHQW RI SURILW LQ WKH FXUUHQW \HDU DQG LQ IXWXUH \HDUV & 2YHUVWDWHPHQW RI SURILW LQ WKH FXUUHQW \HDU DQG XQGHUVWDWHPHQW LQ IXWXUH \HDUV % 8QGHUVWDWHPHQW RI SURILW LQ WKH FXUUHQW \HDU DQG LQ IXWXUH \HDUV $ 8QGHUVWDWHPHQW RI SURILW LQ WKH FXUUHQW \HDU DQG RYHUVWDWHPHQW LQ IXWXUH \HDUV ,PSURSHUO\ FDSLWDOL]LQJ DQ H[SHQVH LWHP UHVXOWV LQ

 %1 ! " C!  !! 98!  " S !@ 2 !!(( " !@" "( ! !" 9   X 57 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %$@D    

! !! 98Q  9"D  %1 ! " C" "   !&" ! "  9 % B!  !! 98!  "  S !@ !2! )57 5 !4 ! 321 %!0 & !# ) ((  !' &"" @!!E   %!0  





DOO GHELWV DQG H[DPLQLQJ DQ\ VLJQLILFDQW LWHPV"

' 3D\UROO H[SHQVH & 5HSDLUV DQG 0DLQWHQDQFH % 0LVFHOODQHRXV H[SHQVH $ /HJDO H[SHQVH :KLFK RI WKH IROORZLQJ H[SHQVH DFFRXQWV ZRXOG QRW QRUPDOO\ EH WHVWHG E\ OLVWLQJ ' 7KH JRRGV DUH VROG WR PDWFK WKH FRVW & 7KH JRRGV DUH UHFHLYHG % 7KH JRRGV DUH VKLSSHG $ 7KH FRQWUDFW LV VLJQHG $ OLDELOLW\ IRU D ORQJWHUP SXUFKDVH FRQWUDFW VKRXOG JHQHUDOO\ EH UHFRJQL]HG ZKHQ



:KLFK RI WKH IROORZLQJ ZRXOG EH DQ LQGLFDWRU RI SRWHQWLDO IUDXG"

$ 3KRWRFRSLHV RI LQYRLFHV LQ WKH YRXFKHU ILOH % 9HQGRU LQYRLFHV LQ QXPHULFDO RUGHU & 9HQGRUV ZLWK RQO\ SRVW RIILFH ER[ DGGUHVVHV ' $OO RI WKH DERYH LQGLFDWH SRWHQWLDO IUDXG
"! !   "Q !! 98Q  9"D  %1 ! " C&!@ %! ! "( !!" 9 " %!4    !&" %!  !  ! ! 98!  "S !@  (  "! "&&" !&" !2! R 57 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %$@D    



:KLFK RI WKH IROORZLQJ IUDXG GHWHFWLRQ VWHSV FRXOG QRW EH SHUIRUPHG E\ &$$7V"

$ /RRN IRU SKRWRFRSLHV LQ LQYRLFH ILOHV % /RRN IRU YHQGRU LQYRLFHV LQ QXPHULFDO RUGHU & /RRN IRU YHQGRU LQYRLFHV VOLJKWO\ EHORZ WKH DSSURYDO WKUHVKROG ' /RRN IRU GXSOLFDWH YHQGRU QXPEHUV
Q 6 (( !' &"" %""@!D % %!4 !0    %""@!D % %!4 !0   %""@!D

( ! ! 98Q  9"D



7UDFLQJ D VDPSOH RI WLPH FORFN FDUGV WR SD\UROO UHJLVWHUV MRXUQDOV LV D SURFHGXUH GHVLJQHG WR REWDLQ HYLGHQFH DERXW WKH WUDQVDFWLRQ DVVHUWLRQ V RI

$ 2FFXUUHQFH RQO\ % 2FFXUUHQFH DQG DFFXUDF\ RQO\ & &RPSOHWHQHVV RQO\ ' $FFXUDF\ RQO\
"   9"D  %1 ! " 8! 99 C""   !&" ! "  9 % B!  " 9 !@ !2! 57 5 !4 ! 321 %!0 W G (( 99 &""  $E    %$@D    



7KH SHUPDQHQW UHIHUHQFH ILOHV PDVWHU ILOHV LQ D SHUVRQQHO DQG SD\UROO GDWDEDVH RUGLQDULO\ GR QRW LQFOXGH ZKLFK RI WKH IROORZLQJ"

$ 'HGXFWLRQ WDEOH % 3D\UROO PDVWHU & &RPSHQVDWLRQ WDEOH ' (PSOR\HH HDUQLQJ UHFRUG
%""@!D

( ! ! 98Q  9"D  %1 ! " C!&! 2 @  !2 9   "  "( !2  (  A !&" (! 9 I 57 5 !4 ! 321 %!0

"   9"D  %1 ! " 8! 99 C""   !&" ! "  9 % B!  " 9 !@ !2! 57 5 !4 ! 321 %!0 W G (( 99 &""  $E    %$@D    

"   9"D  %1 ! " 8! 99 C""   !&" ! "  9 % B!  " 9 !@ !2! 57 5 !4 ! 321 %!0 W G (( 99 &"" %""@!D % %!4 !0    %""@!D % %!4 !0  



' 7KH WLPHNHHSLQJ IXQFWLRQ LV LQGHSHQGHQW RI WKH SD\UROO GHSDUWPHQW & 3D\UROO UHFRUGV DUH UHFRQFLOHG ZLWK TXDUWHUO\ WD[ UHSRUWV % 3D\FKHFNV DUH GLVWULEXWHG E\ WKH HPSOR\HHV LPPHGLDWH VXSHUYLVRU $ 3D\UROO GHSDUWPHQW SHUVRQQHO DUH URWDWHG LQ WKHLU GXWLHV SD\UROO GHSDUWPHQW" :KLFK RI WKH IROORZLQJ VLWXDWLRQV UHSUHVHQWV DQ LQWHUQDO FRQWURO ZHDNQHVV LQ WKH



:KLFK RI WKH IROORZLQJ SHUVRQQHO GHSDUWPHQW SURFHGXUHV UHGXFHV WKH ULVN RI SD\UROO IUDXG DQG UHSUHVHQWV DQ DSSURSULDWH UHVSRQVLELOLW\ IRU WKH GHSDUWPHQW"

$ 'LVWULEXWLQJ SD\FKHFNV % $XWKRUL]LQJ RYHUWLPH KRXUV & $XWKRUL]LQJ WKH DGGLWLRQ RU GHOHWLRQ RI HPSOR\HHV IURP WKH SD\UROO ' &ROOHFWLQJ DQG UHWDLQLQJ XQFODLPHG SD\FKHFNV
"   9"D  %1 ! " 8! 99 C""   !&" ! "  9 % B!  " 9 !@ !2! 57 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %$@D    



7R WHVW WKH WUDQVDFWLRQ DVVHUWLRQ RI RFFXUUHQFH LQ WKH DUHD RI SD\UROO WKH DXGLWRU PRVW OLNHO\ ZRXOG

$ 6HOHFW D VDPSOH RI SHUVRQQHO ILOHV DQG WUDFH WKH SD\ UDWH WR XQLRQ FRQWUDFWV RU RWKHU UDWH ULJKWV DQG REOLJDWLRQV % 6HOHFW D VDPSOH RI SHUVRQQHO ILOHV DQG WUDFH WKH SD\ UDWH WR SD\UROO GHSDUWPHQW ILOHV XVHG LQ SD\UROO SUHSDUDWLRQ & 6HOHFW D VDPSOH RI SD\UROO UHJLVWHU HQWULHV DQG UHFDOFXODWH JURVV SD\ GHGXFWLRQV DQG QHW SD\ ' 6HOHFW D VDPSOH RI SD\UROO UHJLVWHU HQWULHV DQG YRXFK KRXUV ZRUNHG WR FORFN WLPH FDUGV
"   9"D  %1 ! " 8! 99 C""   !&" ! "  9 % B!  " 9 !@ !2! 57 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %$@D    



6PDOO &RUSRUDWLRQ XVHV D :DJHV &OHDULQJ $FFRXQW IRU LWV SD\UROO GLVEXUVHPHQWV $W WKH HQG RI )HEUXDU\ D UHDVRQDEO\ ODUJH GHELW EDODQFH UHPDLQHG LQ WKLV DFFRXQW 7KH PRVW OLNHO\ UHDVRQ IRU WKLV LV WKDW

$ 0RUH ODERU FRVW KDG EHHQ DVVLJQHG WR WKH H[SHQVH DFFRXQWV WKDQ KDG EHHQ SDLG % 6RPH ODERU FRVW KDG QRW EHHQ SURSHUO\ FODVVLILHG LQ WKH H[SHQVH DFFRXQWV & 6RPH HPSOR\HHV KDG QRW \HW FDVKHG WKHLU FKHFNV ' 1RW HQRXJK FDVK KDG EHHQ WUDQVIHUUHG WR WKH EDQN DFFRXQW
"   9"D  %1 ! " 8! 99 C""   !&" ! "  9 % B!  " 9 !@ !2! 57 5 !4 ! 321 %!0 W G (( 99 &""  $E    %$@D    



:KLFK RI WKH IROORZLQJ LV QRW D PDMRU FRQWURO ULVN LQ WKH SD\UROO F\FOH"

$ 3D\LQJ ILFWLWLRXV HPSOR\HHV % 2YHUSD\LQJ IRU WLPH RU SURGXFWLRQ & /RVLQJ HPSOR\HHV WR FRPSHWLWRUV ' ,QFRUUHFW DFFRXQWLQJ IRU FRVWV RU H[SHQVHV
99 &""  $E    %$@D    

"   9"D   ! " 8! 99 C""   !&" ! "  9 % B!  " 9 !@ !2! 57 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %$@D    

"   9"D  %1 ! " 8! 99 C""   !&" ! "  9 % B!  " 9 !@ !2! 57 5 !4 ! 321 %!0 Q 6 ((



' 3D\UROO UHJLVWHU MRXUQDO HQWU\ & (PSOR\HH SHUVRQQHO UHFRUG % (PSOR\HH )RUP : $ &ORFN FDUG RU WLPH WLFNHW SD\UROO WUDQVDFWLRQV RUGLQDULO\ LV D DQ 7KH VDPSOLQJ XQLW LQ D WHVW RI FRQWUROV SHUWDLQLQJ WR WKH H[LVWHQFH RU RFFXUUHQFH RI



7KH SXUSRVH RI VHJUHJDWLQJ WKH GXWLHV RI KLULQJ SHUVRQQHO DQG GLVWULEXWLQJ SD\UROO FKHFNV LV WR VHSDUDWH WKH

$ +XPDQ UHVRXUFHV IXQFWLRQ IURP WKH FRQWUROOHUVKLS IXQFWLRQ % $GPLQLVWUDWLYH FRQWUROV IURP WKH LQWHUQDO DFFRXQWLQJ FRQWUROV & $XWKRUL]DWLRQ RI WUDQVDFWLRQV IURP WKH FXVWRG\ RI UHODWHG DVVHWV ' 2SHUDWLRQDO UHVSRQVLELOLW\ IURP WKH UHFRUG NHHSLQJ UHVSRQVLELOLW\
"   9"D   ! " 8! 99 C""  !&" ! "  9 % B!  " 9 !@ !2! 57 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %$@D    



$Q DXGLWRU PRVW OLNHO\ ZRXOG DVVHVV FRQWURO ULVN DW WKH PD[LPXP LI WKH SD\UROO GHSDUWPHQW VXSHUYLVRU LV UHVSRQVLEOH IRU

$ ([DPLQLQJ DXWKRUL]DWLRQ IRUPV IRU QHZ HPSOR\HHV % &RPSDULQJ SD\UROO UHJLVWHUV ZLWK RULJLQDO EDWFK WUDQVPLWWDO GDWD & 'LVWULEXWH SD\UROO FKHFNV WR DOO HPSOR\HHV ' +LULQJ DOO VXERUGLQDWH SD\UROO GHSDUWPHQW HPSOR\HHV
& !# ) ((  99 &""  $E    %$@D    



$Q DXGLWRU PRVW OLNHO\ ZRXOG H[WHQG VXEVWDQWLYH WHVWV RI SD\UROO ZKHQ

$ 3D\UROO LV H[WHQVLYHO\ DXGLWHG E\ WKH VWDWH JRYHUQPHQW % 3D\UROO H[SHQVH LV VXEVWDQWLDOO\ KLJKHU WKDQ LQ WKH SULRU \HDU & 2YHUSD\PHQWV DUH GLVFRYHUHG LQ SHUIRUPLQJ WHVWV RI FRQWUROV ' (PSOR\HHV FRPSODLQ WR PDQDJHPHQW DERXW WRR PXFK RYHUWLPH
"   9"D   ! " 8! 99 C""   !&" ! "  9 % B!  " 9 !@ !2! 57 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %$@D    



$Q DXGLWRU PRVW OLNHO\ ZRXOG SHUIRUP VXEVWDQWLYH SURFHGXUHV RQ SD\UROO WUDQVDFWLRQV DQG EDODQFHV ZKHQ

$ &XWRII WHVWV LQGLFDWH D VXEVWDQWLDO DPRXQW RI DFFUXHG SD\UROO H[SHQVH % 7KH DVVHVVHG OHYHO RI FRQWURO ULVN UHODWLYH WR SD\UROO WUDQVDFWLRQV LV ORZ & $QDO\WLFDO SURFHGXUHV LQGLFDWH XQXVXDO IOXFWXDWLRQV LQ UHFXUULQJ SD\UROO HQWULHV ' $FFUXHG SD\UROO H[SHQVH FRQVLVWV SULPDULO\ RI XQSDLG FRPPLVVLRQV
 $E    %$@D    

"   9"D   ! " 8! 99 C""   !&" ! "  9 % B!  " 9 !@ !2! 57 5 !4 ! 321 %!0

"   9"D   ! " 8! 99 C""   !&" ! "  9 % B!  " 9 !@ !2! 57 5 !4 ! 321 %!0 W G (( 99 &""  $E    %$@D    

"   9"D   ! " 8! 99 C""   !&" ! "  9 % B!  " 9 !@ !2! 57 5 !4 ! 321 %!0 & !# ) ((  99 &""



' ,QWHUQDO FRQWUROV UHODWLQJ WR XQFODLPHG SD\UROO FKHFNV DUH RSHUDWLQJ HIIHFWLYHO\ & 6HSDUDWLRQ RI GXWLHV H[LVWV EHWZHHQ WKH SUHSDUDWLRQ DQG GLVWULEXWLRQ RI WKH % (PSOR\HHV ZRUN WKH QXPEHU RI KRXUV IRU ZKLFK WKH\ DUH SDLG $ 3D\PHQWV WR HPSOR\HHV DUH FRPSXWHG DW DXWKRUL]HG UDWHV DSSURYHG FORFN FDUG GDWD WR SURYLGH DVVXUDQFH WKDW $Q DXGLWRU YRXFKHG GDWD IRU D VDPSOH RI HPSOR\HHV LQ D SD\UROO UHJLVWHU WR SD\UROO



6XEVWDQWLYH WHVWV RI DFFRXQW EDODQFHV LQ WKH SD\UROO F\FOH DUH OLNHO\ WR LQFOXGH WKH IROORZLQJ SURFHGXUHV H[FHSW

$ $QDO\WLFDO UHYLHZ SURFHGXUHV % 5HFDOFXODWLRQ RI DFFUXDOV & &RPSDULVRQ RI DFFUXDOV WR VXEVHTXHQW SD\PHQWV ' 'HWDLO YRXFKLQJ RI SD\UROO H[SHQVH HQWULHV
"   9"D  %1 ! " 8! 99 C""   !&" ! "  9 % B!  " 9 !@ !2! 57 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %$@D    



:KLFK RI WKH IROORZLQJ DFFRXQWV GRHV QRW DSSHDU LQ WKH DFTXLVLWLRQ DQG H[SHQGLWXUH F\FOH"

$ &DVK % 3XUFKDVHV 5HWXUQV & 6DOHV 5HWXUQV ' 3UHSDLG ,QVXUDQFH

Q 6 (( !2&!&!E &"" @!!E   %!0  

 $E    %$@D    

" " !! 98Q  9"D  %1 ! " C!4 !  " !4  ( " !@ 9 !4 " " " ( " ! (" ! 9& 8! !4 T G 57 5 !4 ! 321 %!0 Q 6 (( !' &"" @!!E   %!0  

! !! 98Q  9"D  %1 ! " C" "   !&" ! "  9 % B!  !! 98!  "  S !@ !2! )57 5 !4 ! 321 %!0





' $OO RI WKH DERYH ZRXOG RYHUVWDWH QHW LQFRPH & )DLOLQJ WR UHFRUG D FKHFN SD\LQJ DQ LWHP LQ YRXFKHUV SD\DEOH % )DLOLQJ WR UHFRUG D OLDELOLW\ IRU DQ H[SHQGLWXUH $ &DSLWDOL]LQJ DQ H[SHQGLWXUH WKDW VKRXOG EH H[SHQVHG :KLFK RI WKH IROORZLQJ ZRXOG QRW RYHUVWDWH FXUUHQWSHULRG QHW LQFRPH" ' 6DOHV & 'HSUHFLDWLRQ ([SHQVH % 5HVHDUFK DQG 'HYHORSPHQW $ &RVW RI *RRGV 6ROG DSSURSULDWH" )RU ZKLFK RI WKH IROORZLQJ DFFRXQWV ZRXOG WKH PDWFKLQJ FRQFHSW EH WKH PRVW

%!D !4  2 ! ! 98Q  9"D  %1 ! " C!2 !"! "( @! "( ! !" 9 !&"   !2 9 " ("  !@ "( "! !!! 9&" !@ (" !" 9& !@  98Q V 57 5 !4 ! 321 %!0 W G (( 99 &""  $E    %$@D    

$ !! 98Q  9"D  %1 ! " C!  !! 98!  " S !@  $ !!@ ( % (! 6 57 5 !4 ! 321 %!0 & !# ) ((  !2&!&!E &""



' &RPPLWPHQWV IRU DOO SXUFKDVHV DUH PDGH RQO\ DIWHU HVWDEOLVKHG FRPSHWLWLYH & $FTXLVLWLRQ RI PDWHULDOV LV QRW PDGH IURP RQH YHQGRU RU RQH JURXS RI YHQGRUV % $XWKRULW\ WR LQFXU OLDELOLWLHV LV UHVWULFWHG WR RQH GHVLJQDWHG SHUVRQ $ $FFRXQWV SD\DEOH DUH QRW PDWHULDOO\ XQGHUVWDWHG UHVSHFW WR OLDELOLWLHV UHVXOWLQJ IURP WKH SXUFKDVLQJ V\VWHP" SD\PHQW :KLFK RI WKH IROORZLQJ EHVW GHVFULEHV DXGLWRUV SULPDU\ FRQFHUQ ZLWK $ FOLHQW V SXUFKDVLQJ V\VWHP HQGV ZLWK WKH UHFRUGLQJ RI D OLDELOLW\ DQG LWV HYHQWXDO

ELGGLQJ SURFHGXUHV DUH IROORZHG



:KLFK RI WKH IROORZLQJ LV DQ LQWHUQDO FRQWURO DFWLYLW\ WKDW FRXOG SUHYHQW D SDLG GLVEXUVHPHQW YRXFKHU IURP EHLQJ SUHVHQWHG IRU SD\PHQW D VHFRQG WLPH"

$ 9RXFKHUV VKRXOG EH SUHSDUHG E\ LQGLYLGXDOV ZKR DUH UHVSRQVLEOH IRU VLJQLQJ GLVEXUVHPHQW FKHFNV % 'LVEXUVHPHQW YRXFKHUV VKRXOG EH DSSURYHG E\ DW OHDVW WZR UHVSRQVLEOH PDQDJHPHQW RIILFLDOV & 7KH GDWH RQ D GLVEXUVHPHQW YRXFKHU VKRXOG EH ZLWKLQ D IHZ GD\V RI WKH GDWH WKH YRXFKHU LV SUHVHQWHG IRU SD\PHQW ' 7KH RIILFLDO ZKR VLJQV WKH FKHFN VKRXOG FRPSDUH WKH FKHFN ZLWK WKH YRXFKHU DQG VKRXOG VWDPS 3$,' RQ WKH YRXFKHU GRFXPHQWV
" " !! 98Q  9"D  %1 ! " C!4 !  " !4  ( " !@ 9 !4 " " " ( " ! (" ! 9& 8! !4 T G 57 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %$@D    



5 %XGG WKH SXUFKDVLQJ DJHQW RI /DNH +DUGZDUH :KROHVDOHUV KDV D UHODWLYH ZKR RZQV D UHWDLO KDUGZDUH VWRUH %XGG DUUDQJHG IRU KDUGZDUH WR EH GHOLYHUHG E\ PDQXIDFWXUHUV WR WKH UHWDLO VWRUH RQ D FDVKRQGHOLYHU\ &2' EDVLV WKHUHE\ HQDEOLQJ KLV UHODWLYH WR EX\ DW /DNH V ZKROHVDOH SULFHV %XGG ZDV SUREDEO\ DEOH WR DFFRPSOLVK WKLV EHFDXVH RI /DNH V SRRU LQWHUQDO FRQWURO RYHU

$ 3XUFKDVH UHTXLVLWLRQV % &DVK UHFHLSWV & 3HUSHWXDO LQYHQWRU\ UHFRUGV ' 3XUFKDVH RUGHUV
" " !! 98Q  9"D  %1 ! " C!4 !  " !4  ( " !@ 9 !4 " "" (" ! (" ! 9& 8! !4 T G 57 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %$@D    



:KLFK RI WKH IROORZLQJ LV WKH EHVW DXGLW SURFHGXUH IRU GHWHUPLQLQJ WKH H[LVWHQFH RI XQUHFRUGHG OLDELOLWLHV"

$ ([DPLQH FRQILUPDWLRQ UHTXHVWV UHWXUQHG E\ FUHGLWRUV ZKRVH DFFRXQWV DUH RQ D VXEVLGLDU\ WULDO EDODQFH RI DFFRXQWV SD\DEOH % ([DPLQH D VDPSOH RI FDVK GLVEXUVHPHQWV LQ WKH SHULRG VXEVHTXHQW WR \HDU HQG & ([DPLQH D VDPSOH RI LQYRLFHV D IHZ GD\V SULRU WR DQG VXEVHTXHQW WR \HDUHQG WR DVFHUWDLQ ZKHWKHU WKH\ KDYH EHHQ SURSHUO\ UHFRUGHG ' ([DPLQH XQXVXDO UHODWLRQVKLSV EHWZHHQ PRQWKO\ DFFRXQWV SD\DEOH DQG UHFRUGHG SXUFKDVHV
%!D !4  2 ! ! 98Q  9"D  %1 ! " C!2 !"! "( @! "( ! !" 9 !&"   !2 9 " ("  !@ "( "! !!! 9&" !@ (" !" 9& !@  98Q V 57 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %$@D    



:KLFK RI WKH IROORZLQJ SURFHGXUHV LV OHDVW OLNHO\ WR EH SHUIRUPHG EHIRUH WKH EDODQFHVKHHW GDWH"

$ 2EVHUYDWLRQ RI LQYHQWRU\ % 5HYLHZ RI LQWHUQDO FRQWURO RYHU FDVK GLVEXUVHPHQWV & 6HDUFK IRU XQUHFRUGHG OLDELOLWLHV ' &RQILUPDWLRQ RI UHFHLYDEOHV
%!D !4  2 ! ! 98Q  9"D  %1 ! " C!2 !"! "( @! "( ! !" 9 !&"   !2 9 " ("  !@ "( "! !!! 9&" !@ (" !" 9& !@  98Q V 57 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %$@D    



7R GHWHUPLQH ZKHWKHU DFFRXQWV SD\DEOH DUH FRPSOHWH DXGLWRUV SHUIRUP D WHVW WR YHULI\ WKDW DOO PHUFKDQGLVH UHFHLYHG KDV EHHQ UHFRUGHG 7KH SRSXODWLRQ IRU WKLV WHVW FRQVLVWV RI DOO

$ 9HQGRUV LQYRLFHV % 3XUFKDVH RUGHUV & 5HFHLYLQJ UHSRUWV ' &DQFHOHG FKHFNV
 $E    %$@D    

" " !! 98Q  9"D  %1 ! " C!4 !  " !4  ( " !@ 9 !4 " " " ( " ! (" ! 9& 8! !4 T G 57 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %$@D    

%!D !4  2 ! ! 98Q  9"D   ! " C!2 !"! "( @! "( ! !" 9 !&"   !2 9 " ("  !@ "( "! !!! 9&" !@ (" !" 9& !@  98Q V 57 5 !4 ! 321 %!0 & !# ) ((  99 &""



' 2UGHUV & ,QYRLFHV % 5HTXLVLWLRQV $ $SSURYDOV FRPSDQ\ DXGLWRUV ZRXOG EH PRVW LQWHUHVWHG LQ H[DPLQLQJ D VDPSOH RI SXUFKDVH :KHQ YHULI\LQJ GHELWV WR WKH SHUSHWXDO LQYHQWRU\ UHFRUGV RI D QRQPDQXIDFWXULQJ



$ IXUQLWXUH FRPSDQ\ RUGHUHG  WDEOHV IURP D VXSSOLHU 7KH VXSSOLHU DFFLGHQWDOO\ VHQW RQO\  WDEOHV EXW WKH UHFHLYLQJ GHSDUWPHQW DW WKH IXUQLWXUH FRPSDQ\ DFFHSWHG WKH WDEOHV 7KH LQYRLFH ZDV HYHQWXDOO\ UHFHLYHG EXW ZDV IRU WKH  WDEOHV RUGHUHG 7KH IXUQLWXUH FRPSDQ\ SDLG WKH HQWLUH DPRXQW :KLFK RI WKH IROORZLQJ FRQWUROV ZRXOG KDYH EHHQ OHDVW OLNHO\ WR KDYH SUHYHQWHG WKLV HUURQHRXV SD\PHQW"

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
" " !! 98Q  9"D  %1 ! " C!4 !  " !4  ( " !@ 9 !4 " " " ( " ! (" ! 9& 8! !4 T G 57 5 !4 ! 321 %!0 W G (( 99 &""  $E    %$@D    



/ &XUWLV D PDLQWHQDQFH VXSHUYLVRU VXEPLWWHG PDLQWHQDQFH LQYRLFHV IURP D SKRQ\ UHSDLU FRPSDQ\ DQG UHFHLYHG WKH FKHFNV DW D SRVW RIILFH ER[ 7KLV VKRXOG KDYH EHHQ SUHYHQWHG E\

$ &RPSDULVRQ RI WKH FRPSDQ\ QDPH WR WKH DSSURYHG YHQGRU OLVW E\ WKH FKHFN VLJQHU % 5HFRJQLWLRQ RI WKH H[FHVV PDLQWHQDQFH FRVWV E\ &XUWLV V VXSHUYLVRU & 5HIXVDO E\ WKH SXUFKDVLQJ GHSDUWPHQW WR DSSURYH WKH YHQGRU ' $OO RI WKH DERYH
! !! 98Q  9"D  %1 ! " C" "   !&" ! "  9 % B!  !! 98!  "  S !@ !2! )57 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %$@D    



$Q DXGLW WHDP ZRXOG PRVW OLNHO\ H[DPLQH WKH GHWDLO VXSSRUW IRU ZKLFK RI WKH IROORZLQJ FKDUJHV"

$ 3D\UROO H[SHQVH % &RVW RI JRRGV VROG & 6XSSOLHV H[SHQVH ' /HJDO H[SHQVH
%$@D    

! !"  !! 98Q  9"D  %1 ! " C!  !! 98!  " S !@ 2 !!(( " !@ " "( ! !" 9   X 57 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %$@D    

! !"  !! 98Q  9"D  %1 ! " C!  !! 98!  " S !@ 2 !!(( " !@ " "( ! !" 9   X 57 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E   



' /HJDO ([SHQVH & 5HVHDUFK DQG 'HYHORSPHQW % 3D\UROO ([SHQVH $ 3URSHUW\ 7D[ ([SHQVH UHODWHG EDODQFH VKHHW DFFRXQW" :KLFK RI WKH IROORZLQJ DFFRXQWV ZRXOG PRVW OLNHO\ EH DXGLWHG LQ FRQQHFWLRQ ZLWK D

 99 &""  $E    %$@D    

%!D !4  2 ! ! 98Q  9"D  %1 ! " C!2 !"! "( @! "( ! !" 9 !&"   !2 9 " ("  !@ "( "! !!! 9&" !@ (" !" 9& !@  98Q V 57 5 !4 ! 321 %!0 Q 6 (( 99 &""  $E    %$@D    





' &XWRII & &ODVVLILFDWLRQ % &RPSOHWHQHVV $ 2FFXUUHQFH WKH YRXFKHU UHJLVWHU 7KLV LV D WHVW IRU ,Q D WHVW RI FRQWUROV DXGLWRUV PD\ WUDFH UHFHLYLQJ UHSRUWV WR YRXFKHUV UHFRUGHG LQ ' 9DOXDWLRQ DQG DOORFDWLRQ & &RPSOHWHQHVV % 5LJKWV DQG REOLJDWLRQV $ ([LVWHQFH PDQDJHPHQW DVVHUWLRQ DERXW :KHQ DXGLWLQJ OLDELOLWLHV DFFRXQW EDODQFHV DXGLWRUV DUH PRVW FRQFHUQHG ZLWK

"   9"D   ! " 8! 99 C""   !&" ! "  9 % B!  " 9 !@ !2! 57 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %$@D    

" " !! 98Q  9"D  %1 ! " C!4 !  " !4  ( " !@ 9 !4 " " " ( " ! (" ! 9& 8! !4 T G 57 5 !4 ! 321 %!0 & !# ) (( 



' +LULQJ DOO VXERUGLQDWH SD\UROO GHSDUWPHQW HPSOR\HHV & $XWKRUL]LQJ SD\UROO UDWH FKDQJHV IRU DOO HPSOR\HHV % &RPSDULQJ SD\UROO UHJLVWHUV ZLWK RULJLQDO EDWFK WUDQVPLWWDO GDWD $ ([DPLQLQJ DXWKRUL]DWLRQ IRUPV IRU QHZ HPSOR\HHV GHSDUWPHQW VXSHUYLVRU LV UHVSRQVLEOH IRU $Q DXGLW WHDP PRVW OLNHO\ ZRXOG DVVHVV FRQWURO ULVN DW WKH PD[LPXP LI WKH SD\UROO



:KLFK RI WKH IROORZLQJ GHSDUWPHQWV PRVW OLNHO\ ZRXOG DSSURYH FKDQJHV LQ SD\ UDWHV DQG GHGXFWLRQV IURP HPSOR\HH VDODULHV"

$ 3HUVRQQHO % 7UHDVXUHU & &RQWUROOHU ' 3D\UROO

"   9"D   ! " 8! 99 C""   !&" ! "  9 % B!  " 9 !@ !2! 57 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %$@D    



0DWWKHZ &RUS KDV FKDQJHG IURP D V\VWHP RI UHFRUGLQJ WLPH ZRUNHG RQ FORFN FDUGV WR D FRPSXWHUL]HG SD\UROO V\VWHP LQ ZKLFK HPSOR\HHV UHFRUG WLPH LQ DQG RXW ZLWK PDJQHWLF FDUGV 7KH FRPSXWHUL]HG V\VWHP DXWRPDWLFDOO\ XSGDWHV DOO SD\UROO UHFRUGV %HFDXVH RI WKLV FKDQJH

$ $ JHQHUDOL]HG FRPSXWHU DXGLW SODQ PXVW EH XVHG % 3DUW RI WKH DXGLW WUDLO LV DOWHUHG & 7KH SRWHQWLDO IRU SD\UROOUHODWHG IUDXG LV GLPLQLVKHG ' 7UDQVDFWLRQV PXVW EH SURFHVVHG LQ EDWFKHV
%""@!D % %!4 !0   %""@!D

"   9"D   ! " 8! 99 C""   !&" ! "  9 %  B!  " 9 !@ !2! 57 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %$@D    

"   9"D   ! " 8! 99 C""   !&" ! "  9 % B!  " 9 !@ !2! 57 5 !4 ! 321 %!0 W G (( 99 &"" %""@!D % %!4 !0   



' $ VHSDUDWH FKHFNLQJ DFFRXQW IRU SD\UROO VKRXOG EH PDLQWDLQHG & (DFK HPSOR\HH VKRXOG EH DVNHG WR VLJQ D UHFHLSW IRU ZDJHV UHFHLYHG % 7KH SD\PDVWHU VKRXOG EH UHWDLQ XQFODLPHG SD\UROO HQYHORSHV $ 7KH SD\UROO FOHUN VKRXOG ILOO WKH HQYHORSHV ZLWK FDVK DQG LQFOXGH D FRPSXWDWLRQ IROORZLQJ" (IIHFWLYH FRQWURO RYHU WKH FDVK SD\UROO IXQFWLRQ ZRXOG PDQGDWH ZKLFK RI WKH RI WKH QHW ZDJHV



$ ODUJH UHWDLO HQWHUSULVH KDV HVWDEOLVKHG D SROLF\ WKDW UHTXLUHV WKH SD\PDVWHU WR GHOLYHU DOO XQFODLPHG SD\UROO FKHFNV WR WKH LQWHUQDO DXGLW GHSDUWPHQW DW WKH HQG RI HDFK SD\UROO GLVWULEXWLRQ GD\ 7KLV SROLF\ ZDV PRVW OLNHO\ DGRSWHG WR

$ (QVXUH WKDW HPSOR\HHV ZKR ZHUH DEVHQW RQ D SD\UROO GLVWULEXWLRQ GD\ DUH QRW SDLG IRU WKDW GD\ % 3UHYHQW WKH SD\PDVWHU IURP FDVKLQJ FKHFNV WKDW DUH XQFODLPHG IRU VHYHUDO ZHHNV & 3UHYHQW D ERQD ILGH HPSOR\HH V FKHFN IURP EHLQJ FODLPHG E\ DQRWKHU HPSOR\HH ' 'HWHFW DQ\ ILFWLWLRXV HPSOR\HH ZKR PD\ KDYH EHHQ SODFHG RQ WKH SD\UROO
"   9"D  %1 ! " 8! 99 C""   !&" ! "  9 % B!  " 9 !@ !2! 57 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %$@D    



$XGLWRUV RUGLQDULO\ DVFHUWDLQ ZKHWKHU SD\UROO FKHFNV DUH SURSHUO\ HQGRUVHG GXULQJ WKH DXGLW RI

$ &ORFN FDUGV % 7KH YRXFKHU V\VWHP & &DVK LQ EDQN ' $FFUXHG SD\UROO
"   9"D   ! " 8! 99 C""   !&" ! "  9 % B!  " 9 !@ !2! 57 5 !4 ! 321 %!0 W G (( 99 &""  $E    %$@D    



,Q GHWHUPLQLQJ WKH HIIHFWLYHQHVV RI DQ HQWLW\ V SROLFLHV DQG SURFHGXUHV UHODWLQJ WR WKH RFFXUUHQFH DVVHUWLRQ IRU SD\UROO WUDQVDFWLRQV DXGLWRUV PRVW OLNHO\ ZRXOG LQTXLUH DERXW DQG

$ 2EVHUYH WKH VHSDUDWLRQ RI GXWLHV FRQFHUQLQJ SHUVRQQHO UHVSRQVLELOLWLHV DQG SD\UROO GLVEXUVHPHQW % ,QVSHFW HYLGHQFH RI DFFRXQWLQJ IRU SUHQXPEHUHG SD\UROO FKHFNV & 5HFRPSXWH WKH SD\UROO GHGXFWLRQV IRU HPSOR\HH IULQJH EHQHILWV ' 9HULI\ WKH SUHSDUDWLRQ RI WKH PRQWKO\ SD\UROO DFFRXQW EDQN UHFRQFLOLDWLRQ
%$@D    



:KLFK RI WKH IROORZLQJ DFWLYLWLHV PRVW OLNHO\ ZRXOG EH FRQVLGHUHG D ZHDNQHVV LQ DQ HQWLW\ V LQWHUQDO FRQWURO RYHU SD\UROO"

$ $ YRXFKHU IRU WKH DPRXQW RI WKH SD\UROO LV SUHSDUHG LQ WKH JHQHUDO DFFRXQWLQJ GHSDUWPHQW EDVHG RQ WKH SD\UROO GHSDUWPHQW V SD\UROO VXPPDU\ % 3D\UROO FKHFNV DUH SUHSDUHG E\ WKH DFFRXQWV SD\DEOH GHSDUWPHQW DQG VLJQHG E\ WKH WUHDVXUHU & 7KH HPSOR\HH ZKR GLVWULEXWHV SD\UROO FKHFNV UHWXUQV XQFODLPHG SD\UROO FKHFNV WR WKH SD\UROO GHSDUWPHQW ' 7KH SHUVRQQHO GHSDUWPHQW VHQGV HPSOR\HHV WHUPLQDWLRQ QRWLFHV WR WKH SD\UROO GHSDUWPHQW 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

  ! " 8! 99 C""   !&" ! "  9 % B!  " 9 !@ !2! 57 5 !4 ! 321 %!0 W G (( 99 &""  $E    "   9"D "   9"D   ! " 8! 99 C""   !&" ! "  9 % B!  " 9 !@ !2! 57 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %$@D    



7KH WUDQVDFWLRQV W\SLFDOO\ FODVVLILHG LQ WKH DFTXLVLWLRQ DQG H[SHQGLWXUH F\FOH IORZ GR QRW LQFOXGH

$ 5HTXHVWLQJ JRRGV VHUYLFHV RU DVVHWV % 3ODFLQJ WKH VDOHV RUGHU & 5HFHLYLQJ LQVSHFWLQJ DQG DFFHSWLQJ WKH DVVHWV ' $FFRXQWLQJ IRU DFFRXQWV SD\DEOH 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

! !! 98Q  9"D  %1 ! " C" "   !&" ! "  9 % B!  !! 98!  "  S !@ !2! )57 5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  

"! !   "Q !! 98Q  9"D  %1 ! " C&!@ %! ! "( !!" 9 " %!4    !&" %!  !  !! 98!  "S !@  (  "! "&&" !&" !2! R 57 5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  



5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH ' 6XEVWDQWLYH SURFHGXUHV & &ROOHFWLQJ VDPSOH GRFXPHQWV % 2EVHUYDWLRQV $ ,QWHUYLHZV GRHV QRW LQFOXGH 7KH UHYLHZ SKDVH RI WKH WUDQVDFWLRQ IORZ LQ WKH DFTXLVLWLRQ DQG H[SHQGLWXUH F\FOH



7KH LQWHUQDO FRQWURO TXHVWLRQQDLUH IRU UHFHLSW RI SXUFKDVHV FRPSOHWHQHVV REMHFWLYH ZRXOG QRW LQFOXGH ZKLFK RI WKH IROORZLQJ TXHVWLRQV"

$ $UH WKH SXUFKDVH RUGHU IRUPV SUHQXPEHUHG DQG WKH QXPHULFDO VHTXHQFH FKHFNHG IRU PLVVLQJ GRFXPHQWV" % $UH UHFHLYLQJ UHSRUW IRUPV SUHQXPEHUHG DQG WKH QXPHULFDO VHTXHQFH FKHFNHG IRU PLVVLQJ GRFXPHQWV" & $UH FRPSHWLWLYH ELGV UHFHLYHG DQG UHYLHZHG IRU FHUWDLQ LWHPV" ' ,V WKH DFFRXQWV SD\DEOH GHSDUWPHQW QRWLILHG RI JRRGV UHWXUQHG WR YHQGRUV" 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

" " !! 98Q  9"D  %1 ! " C!4 !  " !4  ( " !@ 9 !4 " " " ( " ! (" ! 9& 8! !4 T G 57 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %$@D    

! !! 98Q  9"D  %1 ! " C" "   !&" ! "  9 % B!  !! 98!  "  S !@ !2! )57 5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  



5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH ' &KHFN UHJLVWHU & 9HQGRU V LQYRLFH % 3XUFKDVH RUGHU $ 5HTXLVLWLRQ $ YRXFKHU W\SLFDOO\ GRHV QRW KDYH DWWDFKHG WR LW D FRS\ RI ZKLFK RI WKH IROORZLQJ GRFXPHQWV"



&RPSXWHU FRQWUROV WKDW PLJKW EH IRXQG LQ DQ DGYDQFHG RQOLQH DFTXLVLWLRQ DQG H[SHQGLWXUH V\VWHP ZRXOG QRW LQFOXGH

$ $OO YHQGRU LQYRLFHV DUH SUHQXPEHUHG DQG WKH QXPEHUV DFFRXQWHG IRU % (DFK WHUPLQDO SHUIRUPV RQO\ GHVLJQDWHG IXQFWLRQV & $Q LGHQWLILFDWLRQ QXPEHU DQG SDVVZRUG DUH UHTXLUHG WR HQWHU WKH QRQDXWRPDWLF SXUFKDVH RUGHUV ' 7KH FKHFN VLJQDWXUH LV SULQWHG XVLQJ D VLJQDWXUH SODWH WKDW LV LQVWDOOHG RQ WKH FRPSXWHU SULQWHU RQO\ ZKHQ FKHFNV DUH SULQWHG
" " !! 98Q  9"D  %1 ! " C!4 !  " !4  ( " !@ 9 !4 " " " ( " ! (" ! 9& 8! !4 T G 57 5 !4 ! 321 %!0 W G (( 99 &"" %""@!D % %!4 !0    %""@!D % %!4 !0   %""@!D

 6SHFLILF EDODQFH DVVHUWLRQV W\SLFDO RI DFFRXQWV SD\DEOH ZRXOG QRW LQFOXGH

$ 5HFRUGHG OLDELOLWLHV DUH REOLJDWLRQV RI WKH HQWLW\ % (VWLPDWHG OLDELOLWLHV DUH SURSHUO\ YDOXHG & $FFRXQWV SD\DEOH DUH QRW SOHGJHG DV FROODWHUDO ' 3D\DEOHV DUH UHFRUGHG LQ WKH SURSHU SHULRG
99 &""  $E    %$@D    

$ !! 98Q  9"D  %1 ! " C!  !! 98!  " S !@  $ !!@ ( % (! 6 57 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %$@D    

$ !! 98Q  9"D  %1 ! " C!  !! 98!  " S !@  $ !!@ ( % (! 6 57 5 !4 ! 321 %!0 & !# ) (( 

 7KH LQKHUHQW ULVN WKDW DFFRXQWV SD\DEOH PD\ EH RPLWWHG RU RWKHUZLVH XQGHUVWDWHG

' ,QGHWHUPLQDWH & 0RGHUDWH % +LJK $ /RZ W\SLFDOO\ LV

 $Q DXGLW SODQ IRU DFFRXQWV SD\DEOH ZRXOG QRW LQFOXGH ZKLFK RI WKH IROORZLQJ SURFHGXUHV"

$ 2EWDLQLQJ D WULDO EDODQFH RI UHFRUGHG DFFRXQWV SD\DEOH % 6HQGLQJ FRQILUPDWLRQ WR DFFRXQWV ZLWK ]HUR EDODQFHV & 5HYLHZLQJ FDVK UHFHLSWV IRU WKH SHULRG DIWHU \HDUHQG ' 2EWDLQLQJ ZULWWHQ FOLHQW UHSUHVHQWDWLRQV DERXW UHODWHGSDUW\ SD\DEOHV DQG SOHGJHV RI DVVHWV DV FROODWHUDO IRU OLDELOLWLHV
%!D !4  2 ! ! 98Q  9"D  %1 ! " C!2 !"! "( @! "( ! !" 9 !&"   !2 9  " ("  !@ "( "! !!! 9&" !@ (" !" 9& !@  98Q V 57 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %$@D    

 :KLFK RI WKH IROORZLQJ ZRXOG QRW W\SLFDOO\ EH D VSHFLILF UHOHYDQW DVVHUWLRQ DERXW IL[HG DVVHW DFFRXQWV"

$ )L[HG DVVHWV LQ WKH DFFRXQWV H[LVW DQG DUH LQ SURGXFWLYH XVH % 1HW FDUU\LQJ ERRN YDOXHV LQ WKH DFFRXQWV DUH UHIOHFWHG DW FXUUHQW PDUNHW YDOXHV & 'HSUHFLDWLRQ KDV EHHQ FDOFXODWHG SURSHUO\ XVLQJ DFFHSWHG PHWKRGV DQG UHDVRQDEOH HVWLPDWHV RI XVHIXO OLIH DQG RWKHU IDFWRUV ' )L[HG DVVHWV DUH SURSHUO\ FODVVLILHG LQ WKH EDODQFH VKHHW XQGHU DSSURSULDWH GHVFULSWLYH FDSWLRQV
! !"  !! 98Q  9"D  %1 ! " C!  !! 98!  " S !@ 2 !!(( " !@" "( ! !" 9   X 57 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %$@D    

 7KH W\SLFDO IXQFWLRQV RI WKH SHUVRQQHO DQG SD\UROO F\FOH ZRXOG QRW LQFOXGH

$ /DERU UHODWLRQV % 5HSRUW RI DWWHQGDQFH DQG ZRUN SHUIRUPHG & $OORFDWLRQ WR FRVW RI JRRGV VROG ' 3D\UROO DFFRXQWLQJ
%!0  

"   9"D  %1 ! " 8! 99 C""   !&" ! "  9 %  B!  " 9 !@ !2! 57 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %$@D    

"   9"D  %1 ! " 8! 99 C""   !&" ! "  9 % B!  " 9 !@ !2! 57 5 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E  

 $Q LQWHUQDO FRQWURO TXHVWLRQQDLUH IRU SD\UROO SURFHVVLQJ RFFXUUHQFH DVVHUWLRQ

' $UH DOO ZDJH UDWHV GHWHUPLQHG E\ FRQWUDFW RU DSSURYHG E\ D SHUVRQQHO RIILFHU" & $UH FKHFNV GLVWULEXWHG E\ WKH HPSOR\HH V LPPHGLDWH VXSHUYLVRU" % ,V WKH SD\UROO FRPSDUHG WR SHUVRQQHO ILOHV SHULRGLFDOO\" $ $UH QDPHV RI WHUPLQDWHG HPSOR\HHV UHSRUWHG LQ ZULWLQJ WR WKH SD\UROO ZRXOG QRW LQFOXGH ZKLFK RI WKH IROORZLQJ TXHVWLRQV" GHSDUWPHQW"

"   9"D  %1 ! " 8! 99 C""   !&" !"  9 % B!  " 9 !@ !2! 57 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %$@D    

)LOO LQ WKH %ODQN 4XHVWLRQV

 :KLFK RI WKH IROORZLQJ IXQFWLRQDO UHVSRQVLELOLWLHV ZRXOG QRW W\SLFDOO\ UHODWH WR ' 3D\UROO GLVWULEXWLRQ & 3HUVRQQHO RU ODERU UHODWLRQV % 6XSHUYLVLRQ $ &ROOHFWLQJ WLPHNHHSLQJ GDWD VDODULHG HPSOR\HHV"

 7KH BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB LQVSHFWV WKH JRRGV UHFHLYHG IRU BBBBBBBBBBBBBBBBBBBBBBBBBBBBB DQG BBBBBBBBBBBBBBBBBBBBBBBBBBBBB DQG WKHQ SXWV WKHP LQ WKH KDQGV RI RWKHU UHVSRQVLEOH SHUVRQV UHFHLYLQJ GHSDUWPHQW TXDQWLW\ TXDOLW\ 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 :KHQ WKH BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBB DQG BBBBBBBBBBBBBBBBBBBBBBBBB DUH LQ KDQG WKH DFFRXQWDQWV FDQ UHFRUG WKH DFFRXQWV SD\DEOH SXUFKDVH RUGHU YHQGRU V LQYRLFH UHFHLYLQJ UHSRUW 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 $XGLWRUV FDQ FRPSDUH WKH BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB ILOH WR WKH BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB WR GHWHUPLQH ZKHWKHU WKH FRPSDQ\ KDV PDWHULDO XQUHFRUGHG OLDELOLWLHV RQ WKH ILQDQFLDO VWDWHPHQW GDWH XQPDWFKHG UHFHLYLQJ UHSRUWV SD\DEOHV OLVWLQJ 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB DQG BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB FDQ FDXVH XQPDWFKHG LQYRLFHV DQG UHODWHG XQPDWFKHG UHFHLYLQJ UHSRUWV WR EH XQQRWLFHG 6\VWHP IDLOXUHV KXPDQ FRGLQJ HUURUV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 $ BBBBBBBBBBBBBBBBBBBBBBBBBBBBB LV D FRYHU VKHHW FRQWDLQLQJ DOO VXSSRUWLQJ GRFXPHQWDWLRQ IRU DQ DFTXLVLWLRQ YRXFKHU 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 $ OLVW RI DOO SXUFKDVHV PLJKW H[LVW RQO\ LQ D BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB ILOH UDWKHU WKDQ D BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB FRPSXWHU WUDQVDFWLRQ SXUFKDVH MRXUQDO 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 $VVHVVPHQW RI BBBBBBBBBBBBBBBBBBBBBBBBBBBBB RI BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB LV LPSRUWDQW EHFDXVH LW JRYHUQV WKH QDWXUH WLPLQJ DQG H[WHQW RI VXEVWDQWLYH SURFHGXUHV WKDW ZLOO EH DSSOLHG LQ WKH DXGLW RI DFFRXQW EDODQFHV LQ WKH DFTXLVLWLRQ F\FOH ULVN PDWHULDO PLVVWDWHPHQW 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 9HQGRU LQYRLFHV VKRXOG EH FRPSDUHG WR BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB DQG BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB WR GHWHUPLQH WKDW WKH YHQGRU LV FKDUJLQJ WKH DSSURYHG SULFH DQG IRU TXDQWLW\ UHFHLYHG SXUFKDVH RUGHUV UHFHLYLQJ UHSRUWV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB FRQVLVW RI  LGHQWLILFDWLRQ RI GDWD SRSXODWLRQ IRU DXGLW DQG  DQ H[SUHVVLRQ RI WKH DFWLRQ WR EH WDNHQ WR SURGXFH UHOHYDQW DXGLW HYLGHQFH 7HVWV RI FRQWUROV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 :KHQ FRQVLGHULQJ DVVHUWLRQV DQG REWDLQLQJ HYLGHQFH DERXW DFFRXQWV SD\DEOH DXGLWRUV PXVW SXW HPSKDVLV RQ WKH BBBBBBBBBBBBBBBBBBBBBBBBBBBBB DVVHUWLRQ FRPSOHWHQHVV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 7KH BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB LV D VHW RI SURFHGXUHV GHVLJQHG WR \LHOG DXGLW HYLGHQFH RI OLDELOLWLHV WKDW ZHUH QRW UHFRUGHG LQ WKH UHSRUWLQJ SHULRG VHDUFK IRU XQUHFRUGHG OLDELOLWLHV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 7KH ILYH IXQFWLRQDO UHVSRQVLELOLWLHV RI D SD\UROO F\FOH DUH BBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBB DQG BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB SHUVRQQHO VXSHUYLVLRQ WLPHNHHSLQJ UHFRUG NHHSLQJ SD\UROO GLVWULEXWLRQ 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 7KH BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB KDV WUDQVDFWLRQ LQLWLDWLRQ DXWKRULW\ WR DGG QHZ HPSOR\HHV DQG GHOHWH WHUPLQDWHG HPSOR\HHV SHUVRQQHO GHSDUWPHQW 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 $ SHUVRQQHO ILOH VKRXOG HVWDEOLVK WKH UHDOLW\ RI D SHUVRQ V BBBBBBBBBBBBBBBBBBBBBBB DQG BBBBBBBBBBBBBBBBBBBBBBBBBBBB H[LVWHQFH HPSOR\PHQW 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 7KH BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB LV WKH SULPDU\ RULJLQDO UHFRUG IRU SD\UROO DFFRXQWLQJ SD\UROO UHJLVWHU 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

6KRUW $QVZHU 4XHVWLRQV

 7KH LQWHUQDO FRQWURO TXHVWLRQQDLUH IRU SXUFKDVHV DQG DFFRXQWV SD\DEOH LQFOXGHV WKH IROORZLQJ TXHVWLRQV 1H[W WR HDFK RI WKH TXHVWLRQV LQGLFDWH WKH OHWWHU RI WKH UHODWHG WUDQVDFWLRQ DVVHUWLRQ $ 2FFXUUHQFH & $FFXUDF\ ( &XWRII

% &RPSOHWHQHVV ' &ODVVLILFDWLRQ

 &  $  %  $  &  (  $  %

(VVD\ 4XHVWLRQV

 ([SODLQ ZK\ DXGLWRUV PXVW SXW PRUH HPSKDVLV RQ WKH FRPSOHWHQHVV DQG REOLJDWLRQ DVVHUWLRQ ZKHQ DXGLWLQJ SD\DEOHV DQG FRQWUDVW WKLV ZLWK WKH DXGLW RI DVVHW DFFRXQWV

7KH HPSKDVLV RQ FRPSOHWHQHVV LV ULJKWO\ SODFHG EHFDXVH FRPSDQLHV W\SLFDOO\ DUH OHVV FRQFHUQHG DERXW WLPHO\ UHFRUGLQJ RI H[SHQVHV DQG OLDELOLWLHV *HQHUDOO\ WKH\ DUH PRUH FRQFHUQHG ZLWK WKH WLPHO\ UHFRUGLQJ RI UHYHQXHV DQG DVVHWV )RU DVVHW DFFRXQWV WKH HPSKDVLV WKHUHIRUH LV RQ WKH H[LVWHQFH DQG ULJKWV DVVHUWLRQV $PSOH HYLGHQFH LV XVXDOO\ DYDLODEOH WR YHULI\ WKDW DQ DVVHW H[LVWV +RZHYHU OHVV HYLGHQFH XVXDOO\ H[LVWV IRU XQUHFRUGHG OLDELOLWLHV

 %1 ! " C!  !! 98!  " S !@  $ !!@ ( % (! 6 57 5 !4 ! 321 %!0 W G (( 99 &""  $E    %$@D     & !# ) ((  99 &""  $E    %$@D     $ !! 98Q  9"D

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

%HFDXVH RI WKH FRQFHUQ IRU XQGHUVWDWHPHQW RI OLDELOLWLHV DXGLWRUV DUH PRUH FRQFHUQHG ZLWK WKH FRPSOHWHQHVV DQG YDOXDWLRQ DVVHUWLRQV IRU DFFRXQWV SD\DEOH $XGLWRUV HPSKDVL]H DFFRXQWV SD\DEOH WKDW DUH PRUH OLNHO\ XQGHUVWDWHG 7KHUHIRUH VPDOO DQG ]HUR EDODQFHV VKRXOG EH LQFOXGHG LQ WKH VDPSOH GHVLJQ $OVR YHQGRUV ZLWK KLJK DFWLYLW\ GXULQJ WKH \HDU PLJKW EH VHOHFWHG

$ !! 98Q  9"D  %1 ! " C!  !! 98!  " S !@  $ !!@ ( % (! 6 57 5 !4 ! 321 %!0 !&"   !2 9 " ("  !@ "( "! !!! 9&" !@ (" !" 9& !@  98Q V 57 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %$@D    

" " !! 98Q  9"D  %1 ! " C!4 !  " !4  ( " !@ 9 !4 " " " ( " ! (" ! 9& 8! !4 T G 57 5 !4 ! 321 %!0 Q 6 (( 99 &""  $E    %$@D    

%!D !4  2 ! ! 98Q  9"D  %1 ! " C!2 !"! "( @! "( ! !" 9

 $IWHU FKHFNV DUH VLJQHG IRU YHQGRU LQYRLFHV ZK\ VKRXOG YRXFKHUV EH PDUNHG

7R VKRZ WKH\ KDYH EHHQ SURFHVVHG VR WKH\ FDQQRW EH SDLG DJDLQ 3$,' RU RWKHUZLVH PXWLODWHG"

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

+LQWV >@ )RU HDFK RI WKH WKUHH EDODQFH DVVHUWLRQV WKLQN DERXW D VSHFLILF DVVHUWLRQ EHIRUH \RX ZULWH D SURFHGXUH WR JDWKHU HYLGHQFH >@ :ULWH VSHFLILF SURFHGXUHV DV DGDSWDWLRQV RI WKH JHQHUDO DXGLW SURFHGXUHV UHFDOFXODWLRQ REVHUYDWLRQ FRQILUPDWLRQ GRFXPHQW H[DPLQDWLRQ LQTXLU\ VFDQQLQJ DQDO\WLFDO SURFHGXUHV >@ 0RVW SURFHGXUHV DUH WZRSDUW VWDWHPHQWV 6HOHFW D VDPSOH RI >LGHQWLI\ WKH SRSXODWLRQ@DQG GR VRPHWKLQJ  >VSHFLI\ DQ DFWLRQ@

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

%!D !4  2 !! 98Q  9"D  %1 ! " C!2 !"! "( @! "( ! !" 9 !&"   !2 9 " ("  !@ "( "! !!! 9&" !@ (" !" 9& !@  98Q V 57 5 !4 ! 321 %!0 W G (( 99 &""  $E    %$@D    

 :KHQ SHUIRUPLQJ SURFHGXUHV LQ D VHDUFK RI XQUHFRUGHG OLDELOLWLHV DXGLWRUV FDQ XWLOL]H YDULRXV VRXUFHV RI HYLGHQFHLQIRUPDWLRQ HJ GRFXPHQWV ILOHV PDQDJHPHQW DQG FOHULFDO SHUVRQQHO  5HTXLUHG /LVW DW OHDVW ILYH EXW QRW PRUH WKDQ VHYHQ VRXUFHV RI HYLGHQFHLQIRUPDWLRQ IRU WKH VHDUFK IRU XQUHFRUGHG OLDELOLWLHV 'R QRW ZULWH SURFHGXUHV 'R QRW WDNH WLPH WR ZULWH DERXW SDUWLFXODU HYLGHQFH WKDW FDQ EH REWDLQHG RU UHDVRQV IRU XVLQJ WKH VRXUFHV

,QTXLU\ RI FOLHQW SHUVRQQHO RSHQ SXUFKDVH RUGHU ILOH XQPDWFKHG YHQGRU LQYRLFHV OLVWLQJ WKH XQPDWFKHG UHFHLYLQJ UHSRUWV DQG FDVK GLVEXUVHPHQWV IURP WKH DFFRXQWLQJ SHULRG IROORZLQJ WKH EDODQFHVKHHW GDWH 2WKHU SRVVLEOH VRXUFHV DUH YHQGRU VWDWHPHQWV RU FRQILUPDWLRQV

! !"  !! 98Q  9"D  %1 ! " C!  !! 98!  " S !@ 2 !!(( " !@" "( ! !" 9   X 57 5 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %$@D    

 7KH WHVW RI FRQWUROV IRU SXUFKDVHV FDVK GLVEXUVHPHQWV DQG DFFRXQWV SD\DEOH WKH UHODWHG WUDQVDFWLRQ DVVHUWLRQ

LQFOXGH WKH IROORZLQJ DXGLW SURFHGXUHV 1H[W WR HDFK RI WKH SURFHGXUHV LQGLFDWH

 FRPSOHWHQHVV  RFFXUUHQFH  DFFXUDF\  FRPSOHWHQHVV  RFFXUUHQFH  FODVVLILFDWLRQ  DFFXUDF\

" " !! 98Q  9"D  %1 ! " C!4 !  " !4  ( " !@ 9 !4 " " " ( " ! (" ! 9& 8! !4 T G 57 5 !4 ! 321 %!0 W G (( 99 &""  $E    %$@D    

)HHGEDFN 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 7KH WHVW RI FRQWUROV IRU SD\UROO LQFOXGHV WKH IROORZLQJ DXGLW SURFHGXUHV 1H[W WR HDFK RI WKH SURFHGXUHV LQGLFDWH WKH UHODWHG PDQDJHPHQW DVVHUWLRQ DERXW WUDQVDFWLRQV

 FODVVLILFDWLRQ  RFFXUUHQFH  DFFXUDF\  FODVVLILFDWLRQ  DFFXUDF\  RFFXUUHQFH  FRPSOHWHQHVV  DFFXUDF\ )HHGEDFN 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

7UXH  )DOVH 4XHVWLRQV

 $ FRGH RI HWKLFV VHUYHV DV D UHIHUHQFH DQG EHQFKPDUN IRU DFFHSWDEOH SURIHVVLRQDO EHKDYLRU 7UXH )DOVH

 %1 ! " 8! 99 C""   !&" ! "  9 % B!  " 9 !@ !2! 57 5 !4 ! 321 %!0 W G (( 99 &""  $E    %$@D    

0RGXOH % 3URIHVVLRQDO (WKLFV

"   9"D

 ,Q FRQVLGHULQJ JHQHUDO HWKLFV WKH SULPDU\ JRDO LV WR DUULYH DW D VHW RI DFFHSWDEOH PHWKRGV IRU PDNLQJ HWKLFDO GHFLVLRQV 7UXH )DOVH

 (WKLFV LQ WKH LPSHUDWLYH VHQVH LV D IXQFWLRQ RI PRUDO UXOHV DQG SULQFLSOHV QRW D VLWXDWLRQ VSHFLILF FDOFXODWLRQ RI WKH FRQVHTXHQFHV 7UXH )DOVH

 7KH 6(& LQGHSHQGHQFH UXOHV SURKLELW DXGLWRUV IURP SURYLGLQJ DFWXDULDO VHUYLFHV WR SXEOLF FRPSDQ\ DXGLW FOLHQWV 7UXH )DOVH

 7KH 6DUEDQHV2[OH\ $FW RI  OLPLWV WKH HQJDJHPHQW RI DQG FRQFXUULQJ DXGLW SDUWQHUV RQ DQ HQJDJHPHQW WR IRXU\HDU WHUPV 7UXH )DOVH

 0HPEHUV RI WKH $,&3$ DUH KHOG UHVSRQVLEOH IRU FRPSOLDQFH ZLWK WKH 5XOHV RI &RQGXFW E\ DOO SHUVRQV DVVRFLDWHG ZLWK WKHP LQ SXEOLF SUDFWLFH LQFOXGLQJ HPSOR\HHV DQG SDUWQHUV 7UXH )DOVH

 7KH $,&3$ &RGH RI 3URIHVVLRQDO &RQGXFW GHULYHV LWV DXWKRULW\ IURP VSHFLILF IHGHUDO OHJLVODWLRQ 7UXH )DOVH

 )LQDQFLDO VWDWHPHQW DXGLW VHUYLFHV DUH WKH RQO\ HQJDJHPHQWV WKDW UHTXLUH LQGHSHQGHQFH 7UXH )DOVH

 ,QWHJULW\ DQG REMHFWLYLW\ DUH UHTXLUHG LQ FRQQHFWLRQ ZLWK DOO SURIHVVLRQDO VHUYLFHV 7UXH )DOVH

 *HQHUDO VWDQGDUGV 5XOH  SURKLELWV WKH DFFHSWDQFH RI DQ\ HQJDJHPHQW WKDW WKH &3$ NQRZLQJO\ FDQQRW KDQGOH 7UXH )DOVH

 &RPSOLDQFH ZLWK VWDQGDUGV 5XOH  UHTXLUHV DGKHUHQFH WR GXO\ SURPXOJDWHG WHFKQLFDO VWDQGDUGV LQ DOO DUHDV RI SURIHVVLRQDO VHUYLFH 7UXH )DOVH

 &RQILGHQWLDO LQIRUPDWLRQ LV LQIRUPDWLRQ WKDW VKRXOG QRW EH GLVFORVHG WR RXWVLGH SDUWLHV HYHQ LI GHPDQGHG E\ D FRXUW 7UXH )DOVH

 $ &3$ FDQ DFFHSW D FRQWLQJHQW IHH IRU D FRPSLODWLRQ UHSRUW WR EH XVHG E\ D EDQN IRU SXUSRVHV RI JUDQWLQJ D ORDQ WR WKH FOLHQW DV ORQJ DV WKH &3$ GLVFORVHV D ODFN RI LQGHSHQGHQFH LQ WKH UHSRUW 7UXH )DOVH

 &3$V DUH QRW SHUPLWWHG WR DGYHUWLVH H[FHSW LQ D IHZ LQVWDQFHV 7UXH )DOVH

 5XOH  SHUPLWV FRPPLVVLRQ W\SH IHHV IRU DOO W\SHV RI VHUYLFHV 7UXH )DOVH

 $OO &3$V DUH VXEMHFW WR WKH UXOHV RI FRQGXFW RI WKH $,&3$ DQG VWDWH &3$ VRFLHWLHV 7UXH )DOVH

 /LFHQVHV WR SUDFWLFH DFFRXQWLQJ DUH LVVXHG E\ WKH $,&3$ 7UXH )DOVH

 ,QGLYLGXDO SHUVRQV QRW SXEOLF DFFRXQWLQJ ILUPV DUH VXEMHFW WR WKH UXOHV RI FRQGXFW RI VWDWH &3$ VRFLHWLHV DQG WKH $,&3$ RQO\ LI WKH\ FKRRVH WR MRLQ WKHVH RUJDQL]DWLRQV 7UXH )DOVH

 'LVFLSOLQH RI WKH PHPEHUV RI D SURIHVVLRQDO DVVRFLDWLRQ LV FDUULHG RXW E\ SHHUV 7UXH )DOVH

 $ WULDO ERDUG FDQ DGPRQLVK VXVSHQG H[SHO RU ILQH D &3$ ZKR KDV YLRODWHG WKH &RGH RI &RQGXFW 7UXH )DOVH

0XOWLSOH &KRLFH 4XHVWLRQV

 :KLFK RI WKH IROORZLQJ LV QRW D NH\ HOHPHQW RI WKH GHILQLWLRQ RI HWKLFV"

$ 5HIOHFWLYH FKRLFH % 0RUDO SULQFLSOHV & 'HILQLWLYH FRQFOXVLRQV ' &RQVHTXHQFHV RI GHFLVLRQV

 :KLFK RI WKH IROORZLQJ GHILQHV WKH LPSHUDWLYH SULQFLSOH RI HWKLFV"

$ (WKLF GHFLVLRQV FDQQRW EH UHVROYHG ZLWKRXW HYDOXDWLQJ DOO SRVVLEOH RXWFRPHV RI DOO FKRLFHV % (WKLFV DUH D IXQFWLRQ RI PRUDO UXOHV DQG SULQFLSOHV & $OO HWKLFDO GHFLVLRQV ZLOO KDYH SRVLWLYH DQG QHJDWLYH FRQVHTXHQFHV ' ,W LV HVVHQWLDO WKDW HWKLFDO GHFLVLRQV EH PDGH IRU WKH JUHDWHU JRRG RI VRFLHW\  :KLFK RI WKH IROORZLQJ SKLORVRSKLFDO SULQFLSOHV LQ HWKLFV HPSKDVL]HV WKH FRQVHTXHQFHV RI DFWLRQ UDWKHU WKDQ RQ IROORZLQJ WKH UXOHV"

$ ,PSHUDWLYH SULQFLSOH % 8WLOLWDULDQLVP SULQFLSOH & *HQHUDOL]DWLRQ SULQFLSOH ' 0RUDO SULQFLSOH  :KDW DJHQF\ KDV WKH XOWLPDWH DXWKRULW\ IRU GHILQLQJ LQGHSHQGHQFH IRU SXEOLF FRPSDQLHV"

$ $,&3$ % 6(& & 'HSDUWPHQW RI -XVWLFH ' &RQJUHVV

 :KLFK RI WKH IROORZLQJ LV WKH UHVSRQVLELOLW\ RI WKH 3URIHVVLRQDO (WKLFV ([HFXWLYH &RPPLWWHH"

$ 7R HQIRUFH 6(& HWKLFDO VWDQGDUGV % 7R DFW DV DQ LQYHVWLJDWLYH ERG\ RI WKH $,&3$ ZKHQ HWKLFDO YLRODWLRQV DUH VXVSHFWHG & 7R PDNH DQG HQIRUFH DOO UXOHV RI FRQGXFW IRU &3$V ZKR DUH $,&3$ PHPEHUV ' 7R HVWDEOLVK PLQLPDO HWKLFDO VWDQGDUGV IRU ILQDQFLDO UHSRUWLQJ  :KLFK RI WKH IROORZLQJ LV QRW RQH RI WKH $,&3$ 3ULQFLSOHV RI 3URIHVVLRQDO &RQGXFW"

$ 5HVSRQVLELOLW\ % 5HOLDELOLW\ & 2EMHFWLYLW\ ' 'XH FDUH

 'DUD

&R DXGLWV +LOO &RUSRUDWLRQ (OOLH LV WKH HQJDJHPHQW SDUWQHU RQ WKH DXGLW ZLWK

DQ RIILFH LQ %XIIDOR *URYH :KLFK RI WKH IROORZLQJ ZRXOG QRW EH FRQVLGHUHG D FRYHUHG PHPEHU"

$ -DVRQ ZKR LV D PHPEHU RI WKH DWWHVW HQJDJHPHQW WHDP ZLWK DQ RIILFH LQ (OPKXUVW % $GDP ZKR LV D WD[ SDUWQHU DQG SURYLGHG  KRXUV RI WD[ VHUYLFH WR +LOO &RPSDQ\ GXULQJ WKH \HDU RI WKH DXGLW ZLWK DQ RIILFH LQ (OPKXUVW & %HQ D SDUWQHU LQ 'DUD ' -XOLH D SDUWQHU LQ 'DUD &RPSDQ\ ZLWK DQ RIILFH LQ %XIIDOR *URYH &RPSDQ\ ZLWK DQ RIILFH LQ (OPKXUVW

 :KLFK RI WKH IROORZLQJ LV QRW LQFOXGHG LQ 5XOH RI &RQGXFW  ,QWHJULW\ DQG 2EMHFWLYLW\"

$ %H SUXGHQW LQ DVVHVVPHQW RI IDFWV % %H IUHH IURP FRQIOLFW RI LQWHUHVWV & 'R QRW NQRZLQJO\ PLVUHSUHVHQW IDFWV ' 'R QRW VXERUGLQDWH MXGJPHQW WR RWKHUV

 %DVHG RQ 6DUEDQHV2[OH\ ZKR LV XOWLPDWHO\ UHVSRQVLEOH IRU WKH LQGHSHQGHQFH RI WKH H[WHUQDO DXGLWRU"

$ 7KH &3$ ILUP V HQJDJHPHQW SDUWQHU % 7KH &3$ ILUP V TXDOLW\ FRQWURO SDUWQHU & 7KH FOLHQW V VHQLRU PDQDJHPHQW ' 7KH DXGLW FRPPLWWHH  $FFRUGLQJ WR 6DUEDQHV2[OH\ WKH DXGLW FRPPLWWHH PXVW SUHDSSURYH DOO DXGLW DQG QRQDXGLW VHUYLFHV 7KLV FDQ EH GRQH

$ 2Q D FDVHE\FDVH EDVLV \HV WKURXJK HVWDEOLVKHG SROLFLHV QR E\ GHOHJDWLQJ WKH UHVSRQVLELOLW\ \HV % 2Q D FDVHE\FDVH EDVLV \HV WKURXJK HVWDEOLVKHG SROLFLHV \HV E\ GHOHJDWLQJ WKH UHVSRQVLELOLW\ QR & 2Q D FDVHE\FDVH EDVLV QR WKURXJK HVWDEOLVKHG SROLFLHV \HV E\ GHOHJDWLQJ WKH UHVSRQVLELOLW\ QR ' 2Q D FDVHE\FDVH EDVLV QR WKURXJK HVWDEOLVKHG SROLFLHV QR E\ GHOHJDWLQJ WKH UHVSRQVLELOLW\ \HV

 :KLFK RI WKH IROORZLQJ LV QRW D UHVWULFWLRQ SODFHG RQ DXGLW SDUWQHUV E\ 6DUEDQHV 2[OH\"

$ ,W OLPLWV HQJDJHPHQW SDUWQHUV WR D ILYH\HDU WHUP DV WKH HQJDJHPHQW SDUWQHU % ,W OLPLWV RWKHU SDUWQHUV DVVRFLDWHG ZLWK WKH HQJDJHPHQW WR D VHYHQ\HDU WHUP & (QJDJHPHQW SDUWQHUV PXVW UHYLHZ QRQDXGLW ZRUN WR HQVXUH WKDW LQGHSHQGHQFH KDV QRW EHHQ FRPSURPLVHG ' 3DUWQHUV ZKR HQJDJH LQ VHOOLQJ VHUYLFHV RWKHU WKDQ DXGLW UHYLHZ DQG DWWHVWDWLRQ WR DQ DXGLW FOLHQW DUH QRW LQGHSHQGHQW ZLWK UHVSHFW WR WKDW FOLHQW  :KLFK RI WKH IROORZLQJ LV WUXH DFFRUGLQJ WR *RYHUQPHQW $XGLWLQJ 6WDQGDUGV"

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

 :KLFK RI WKH IROORZLQJ LV DOORZHG XQGHU WKH *RYHUQPHQW $XGLWLQJ 6WDQGDUGV"

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

$ ,QGHSHQGHQFH % 'XH SURIHVVLRQDO FDUH & 3ODQQLQJ DQG VXSHUYLVLRQ ' 6XIILFLHQW UHOHYDQW GDWD

 0DUDOHH KDV EHHQ DSSURDFKHG E\ - )R[ (QWHUWDLQPHQW WR SHUIRUP DQ DXGLW RI KHU WKHDWUH FRPSDQ\ 0DUDOHH KDV QHYHU DXGLWHG D WKHDWUH FRPSDQ\ EHIRUH 0DUDOHH FDQ

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

$ 7KH QHZ FRQWUROOHU VHYHU DOO UHODWLRQV ZLWK WKH &3$ ILUP LQFOXGLQJ DQ\ UHWLUHPHQW IXQGV % 7KH QHZ FRQWUROOHU QRW WDNH SDUW LQ DQ\ GLVFXVVLRQV UHJDUGLQJ WKH UHWHQWLRQ RI WKH DXGLW IRUP & 7KH FOLHQW ILQG D QHZ DXGLW ILUP ' 7KH FOLHQW GLVFORVH WKH FRQWUROOHU V UHODWLRQVKLS LQ WKH QRWHV WR WKH ILQDQFLDO VWDWHPHQWV

 7KH 6(& UHTXLUHV FRPSDQLHV WR GLVFORVH IHHV SDLG WR LQGHSHQGHQW SXEOLF DFFRXQWLQJ ILUPV IRU DXGLW DQG FRQVXOWLQJ VHUYLFHV LQ WKH EHOLHI WKDW

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

$ .URJVWDG RZQV 'RGJHU FRPPRQ VWRFN % .URJVWDG V EURWKHU RZQV  VKDUHV RI 'RGJHU FRPPRQ VWRFN & :DUG V VLVWHULQODZ LV D VDOHV UHSUHVHQWDWLYH ZLWK D WHUULWRU\ LQ &DOLIRUQLD ' :DUG V IHOORZ SDUWQHU &3$ )HOL[ LQ WKH 2PDKD RIILFH KDV D ZLIH ZKR RZQV 'RGJHU VWRFN WKURXJK D PXWXDO IXQG KHOG LQ KHU RZQ HPSOR\HU V HPSOR\HH EHQHILW SODQ

 :KLFK RI WKH IROORZLQJ SKLORVRSKLFDO SULQFLSOHV LQ HWKLFV HPSKDVL]HV WKH IROORZLQJ UXOHV UDWKHU WKDQ RQ WKH FRQVHTXHQFHV RI WKH GHFLVLRQ"

$ ,PSHUDWLYH SULQFLSOH % 8WLOLWDULDQLVP SULQFLSOH & *HQHUDOL]DWLRQ SULQFLSOH ' 0RUDO SULQFLSOH  -XOLH DQG /LVD DUH VLVWHUV -XOLH LV D &3$ DXGLWLQJ WKH FRPSDQ\ ZKHUH /LVD ZRUNV -XOLH V LQGHSHQGHQFH LV LPSDLUHG LI

$ /LVD RZQV  SHUFHQW RI WKH FRPSDQ\ % /LVD LV WKH FRQWUROOHU & /LVD LV WKH PDUNHWLQJ PDQDJHU ' ,QGHSHQGHQFH LV LPSDLUHG LQ DOO RI WKHVH VLWXDWLRQV  :KLFK RI WKH IROORZLQJ VHFWLRQV LV QRW LQFOXGHG LQ WKH $,&3$ 5XOHV RI &RQGXFW"

$ 5HVSRQVLELOLWLHV WR &OLHQWV % ,QGHSHQGHQFH ,QWHJULW\ DQG 2EMHFWLYLW\ & 5HVSRQVLELOLWLHV WR &ROOHDJXHV ' *HQHUDO DQG 7HFKQLFDO 6WDQGDUGV

 7KH LQWHUSUHWDWLRQ RI 5XOH  ,QGHSHQGHQFH DOORZV PHPEHUV WR

$ +ROG D PDWHULDO LQGLUHFW LQWHUHVW LQ D FOLHQW % +DYH ORDQV IURP D FOLHQW WKDW DUH FROODWHUDOL]HG E\ FDVK GHSRVLWV KHOG E\ WKH FOLHQW & +DYH KRPH PRUWJDJHV ZLWK D FOLHQW HYHQ LI WKH\ SDUWLFLSDWH LQ WKH HQJDJHPHQW ' %H D WUXVWHH RI D FOLHQW SHQVLRQ RU SURILW VKDULQJ WUXVW  7KH $,&3$ &RXQFLO KDV GHVLJQDWHG WKH IROORZLQJ ERGLHV WR SURQRXQFH DFFRXQWLQJ SULQFLSOHV XQGHU 5XOH  H[FHSW WKH

$ )LQDQFLDO $FFRXQWLQJ 6WDQGDUGV %RDUG % $XGLWLQJ 3URFHGXUHV %RDUG & $FFRXQWLQJ 3ULQFLSOHV %RDUG ' *RYHUQPHQWDO $FFRXQWLQJ 6WDQGDUGV %RDUG  7KH LQWHUSUHWDWLRQ RI 5XOH  $FWV 'LVFUHGLWDEOH WR WKH 3URIHVVLRQ ZRXOG QRW LQFOXGH

$ 0HPEHUVKLS LQ DQ DFWLYLVW SROLWLFDO SDUW\ % :LWKKROGLQJ RI D FOLHQW V ERRNV XQWLO D SURIHVVLRQDO IHH LV SDLG & )DLOXUH WR IROORZ JRYHUQPHQW DXGLW VWDQGDUGV LQ JRYHUQPHQW DXGLWV ' $XWKRUL]DWLRQ IRU RWKHUV WR PDNH PLVOHDGLQJ HQWULHV LQ UHFRUGV

 $FFRUGLQJ WR 5XOH  $FFRXQWLQJ 3ULQFLSOHV UHTXLUHV WKH DXGLWRU WR DGKHUH WR RIILFLDO SURQRXQFHPHQWV H[FHSW ZKHQ

$ &RPSO\LQJ ZRXOG YLRODWH FOLHQW FRQILGHQWLDOLW\ % 3HQGLQJ OHJLVODWLRQ PD\ FKDQJH WKH UHSRUWLQJ UHTXLUHPHQWV RI WKH FOLHQW & $GKHUHQFH WR D SURQRXQFHPHQW ZRXOG EH PLVOHDGLQJ ' ,W KDV EHHQ HVWDEOLVKHG WKDW ILQDQFLDO VWDWHPHQW XVHUV SUHIHU DQ DOWHUQDWLYH SUHVHQWDWLRQ RI LQIRUPDWLRQ  7KH $,&3$ KDV LQWHUSUHWHG 5XOH  &RQILGHQWLDO &OLHQW ,QIRUPDWLRQ WR H[SOLFLWO\ DOORZ D &3$ WR GLYXOJH FRQILGHQWLDO FOLHQW LQIRUPDWLRQ WR

$ 7KH 6(& % 7KH 86 'HSDUWPHQW RI -XVWLFH & 7KH $,&3$ 3URIHVVLRQDO (WKLFV 'LYLVLRQ ' 7KH )HGHUDO 7UDGH &RPPLVVLRQ

 3HUU\ 3LQNQH\ &3$ LV RQH RI WKH JHQHUDO SDUWQHUV LQ D SDUWQHUVKLS ZKLFK LQ WXUQ LQYHVWHG  SHUFHQW RI LWV DVVHWV LQ WKH FRPPRQ VWRFN RI 3LQNQH\ V DXGLW FOLHQW 'DUE\ &RUSRUDWLRQ  $FFRUGLQJ WR WKH $,&3$ &RGH RI 3URIHVVLRQDO &RQGXFW 3LQNQH\ LV FRQVLGHUHG WR KDYH

$ $Q LQGLUHFW ILQDQFLDO LQWHUHVW LQ 'DUE\ % $ GLUHFW ILQDQFLDO LQWHUHVW LQ 'DUE\ & 1R ILQDQFLDO LQWHUHVW LQ 'DUE\ ' $ SDUWLDO ILQDQFLDO LQWHUHVW LQ 'DUE\  $ FOLHQW KDV RPLWWHG D VLJQLILFDQW GLVFORVXUH IURP WKH ILQDQFLDO VWDWHPHQWV 7KH DXGLWRU KDV DVNHG WKH FOLHQW WR LQFOXGH WKH LQIRUPDWLRQ EXW WKH FOLHQW UHIXVHV DQG FODLPV WKH LQIRUPDWLRQ LV FRQILGHQWLDO 7KH SRVLWLRQ RI WKH &3$ VKRXOG EH WKDW WKH LQIRUPDWLRQ

$ &DQQRW EH FRQVLGHUHG FRQILGHQWLDO LI LW LV QHFHVVDU\ WR WKH FRPSOHWHQHVV RI WKH ILQDQFLDO VWDWHPHQWV % &DQQRW EH FRQVLGHUHG FRQILGHQWLDO XQOHVV LW FDQ EH FRYHUHG E\ WKH DWWRUQH\FOLHQW SULYLOHJH & ,V FRQILGHQWLDO DQG ZLOO EH GLVFORVHG RQO\ XQGHU VXESRHQD RU IRU D UHJXODWRU\ LQYHVWLJDWLRQ ' 6KRXOG EH GLVFXVVHG ZLWK WKH DXGLW FRPPLWWHH WR GHWHUPLQH ZKHWKHU WKH LQIRUPDWLRQ VKRXOG EH GLVFORVHG

 :KLFK RI WKH IROORZLQJ SKLORVRSKLFDO SULQFLSOHV LQ HWKLFV HPSKDVL]HV WKH FRQVLGHUDWLRQ RI SURMHFWLQJ WKH FRQVHTXHQFHV RI D FKRLFH LQ WHUPV RI WKLV TXHVWLRQ :KDW PD\ EH WKH FRQVHTXHQFHV RI VLPLODU SHUVRQV PDNLQJ WKLV FKRLFH LQ VLPLODU FLUFXPVWDQFHV"

$ ,PSHUDWLYH SULQFLSOH % 8WLOLWDULDQ SULQFLSOH & *HQHUDOL]DWLRQ SULQFLSOH ' 0RUDO SULQFLSOH  :KLFK RI WKH IROORZLQJ IRUPV RI RUJDQL]DWLRQ ZRXOG QRW EH DOORZHG XQGHU 5XOH  5HVROXWLRQ &RQFHUQLQJ )RUP RI 2UJDQL]DWLRQ DQG 1DPH RI WKH 3URIHVVLRQDO &RGH RI &RQGXFW"

$ /LPLWHG OLDELOLW\ SDUWQHUVKLS DOO SDUWQHUV DUH &3$V % /LPLWHG OLDELOLW\ SDUWQHUVKLS  SHUFHQW RI SDUWQHUV DUH &3$V & /LPLWHG OLDELOLW\ FRUSRUDWLRQ DOO VKDUHKROGHUV DUH &3$V ' 3DUWQHUVKLS  SHUFHQW RI SDUWQHUV DUH &3$V

 5HG DQG *UHHQ &3$V DUH WKH H[WHUQDO DXGLWRUV IRU %OXH &RUSRUDWLRQ D SXEOLFO\ KHOG FRPSDQ\ %OXH &RUSRUDWLRQ KDV RXWVRXUFHG LWV LQWHUQDO DXGLW IXQFWLRQ WR 5HG DQG *UHHQ :KLFK RI WKH IROORZLQJ VWDWHPHQWV LV WUXH"

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

$ $ KRPH ORDQ ZLWK WKH YDOXH RI WKH KRXVH H[FHHGLQJ WKH PRUWJDJH EDODQFH % $ FDU ORDQ FROODWHUDOL]HG E\ WKH FDU & $ SHUVRQDO ORDQ FROODWHUDOL]HG E\ FDVK GHSRVLWV DW %LJ %DQN ' $ 9LVD FUHGLW FDUG LVVXHG E\ %LJ %DQN ZLWK D EDODQFH RI  

 $FFRUGLQJ WR WKH SURIHVVLRQ V HWKLFDO VWDQGDUGV DQ DXGLWRU ZRXOG EH FRQVLGHUHG LQGHSHQGHQW LQ ZKLFK RI WKH IROORZLQJ LQVWDQFHV"

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

$ $OO RZQHUV PXVW EH PHPEHUV % 7KH RZQHUV ZKRVH QDPHV DSSHDU LQ WKH ILUP QDPH PXVW EH PHPEHUV & $W OHDVW RQH RI WKH RZQHUV PXVW EH D PHPEHU ' 7KH ILUP PXVW EH D GXHVSD\LQJ PHPEHU

 ,Q ZKLFK RI WKH IROORZLQJ FLUFXPVWDQFHV ZRXOG D &3$ ZKR DXGLWV ;= &RUSRUDWLRQ ODFN LQGHSHQGHQFH"

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

$ 3XUFKDVLQJ D SURGXFW IURP D WKLUG SDUW\ DQG UHVHOOLQJ LW WR D FOLHQW % :ULWLQJ D ILQDQFLDO PDQDJHPHQW QHZVOHWWHU SURPRWHG DQG VROG E\ D SXEOLVKLQJ FRPSDQ\ & $FFHSWLQJ D FRPPLVVLRQ IRU UHFRPPHQGLQJ D SURGXFW WR DQ DXGLW FOLHQW ' $FFHSWLQJ HQJDJHPHQWV REWDLQHG WKURXJK WKH HIIRUWV RI WKLUG SDUWLHV

 $FFRUGLQJ WR WKH HWKLFDO VWDQGDUGV RI WKH SURIHVVLRQ ZKLFK RI WKH IROORZLQJ DFWV LV JHQHUDOO\ SURKLELWHG"

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

$ %RE %XOOHW &(2 RI $2QH &RUS VWDWHV WKDW ZH DUH WKH EHVW DXGLWRUV KLV FRPSDQ\ KDV HYHU XVHG % :H SURYLGH WKH EHVW DXGLW FRYHUDJH RI DQ\ ILUP LQ WKH VWDWH & :H DXGLW WKH ILYH ODUJHVW PDQXIDFWXULQJ FRPSDQLHV LQ WKH VWDWH ' :H KDYH VHYHUDO WD[ SDUWQHUV ZKR ZRUN FORVHO\ ZLWK MXGJHV DQG ,56 DWWRUQH\V RQ KLJKSURILOH OHJDO LVVXHV

 7R ZKLFK JURXS FDQ D &3$ SURYLGH DXGLW GRFXPHQWDWLRQ ZLWKRXW EHLQJ VXESRHQDHG DQG ZLWKRXW WKH FOLHQW V FRQVHQW"

$ 7KH ,56 % 7KH )$6% & $QRWKHU &3$ ILUP SHUIRUPLQJ D SHHU UHYLHZ ' $QRWKHU &3$ ILUP FRQVLGHULQJ WKH SXUFKDVH RI WKH DXGLWLQJ ILUP  $XGLWRUV DUH LQWHUHVWHG LQ KDYLQJ LQGHSHQGHQFH LQ DSSHDUDQFH EHFDXVH

$ 7KH\ ZDQW WR LPSUHVV WKH SXEOLF ZLWK WKHLU LQGHSHQGHQFH LQ IDFW % 7KH\ ZDQW WKH SXEOLF DW ODUJH WR KDYH FRQILGHQFH LQ WKH SURIHVVLRQ & 7KH\ QHHG WR FRPSO\ ZLWK WKH 3HUIRUPDQFH 3ULQFLSOH RI *$$6 ' $XGLWV VKRXOG EH SODQQHG DQG SURSHUO\ VXSHUYLVHG  (QVXULQJ WKDW WKH DXGLWRU LV LQGHSHQGHQW LQ DSSHDUDQFH LV WKH UHVSRQVLELOLW\ RI

$ 7KH SXEOLF DFFRXQWLQJ ILUP % 6HQLRU PDQDJHPHQW & 7KH DXGLW FRPPLWWHH ' 7KH 3&$2%

 ,I D SXEOLF DFFRXQWLQJ ILUP VD\V LW DOZD\V IROORZV WKH UXOH WKDW UHTXLUHV DGKHUHQFH WR )$6% SURQRXQFHPHQWV LQ RUGHU WR JLYH D VWDQGDUG XQTXDOLILHG DXGLWRUV UHSRUW LW LV IROORZLQJ D SKLORVRSK\ FKDUDFWHUL]HG E\

$ 7KH LPSHUDWLYH SULQFLSOH LQ PRUDO SKLORVRSK\ % 7KH XWLOLWDULDQ SULQFLSOH LQ PRUDO SKLORVRSK\ & 7KH JHQHUDOL]DWLRQ SULQFLSOH LQ PRUDO SKLORVRSK\ ' 5HOLDQFH RQ PHPEHUV FROOHFWLYH FRQVFLHQFH  :KLFK RI WKH IROORZLQJ DJHQFLHV LVVXHV LQGHSHQGHQFH UXOHV IRU WKH DXGLWRUV RI SXEOLF FRPSDQLHV"

$ )LQDQFLDO $FFRXQWLQJ 6WDQGDUGV %RDUG )$6%  % *RYHUQPHQW $FFRXQWDELOLW\ 2IILFH *$2  & 3XEOLF &RPSDQ\ $FFRXQWLQJ 2YHUVLJKW %RDUG 3&$2%  ' $,&3$ $FFRXQWLQJ DQG 5HYLHZ 6HUYLFHV &RPPLWWHH $56& 

 $XGLW LQGHSHQGHQFH LQ IDFW LV PRVW FOHDUO\ ORVW ZKHQ

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

$ (QVXULQJ WKDW SDUWQHUV RI WKH SXEOLF DFFRXQWLQJ ILUP DUH QRW VWRFNKROGHUV LQ WKH FRPSDQ\ % (QVXULQJ WKDW QRQDXGLW VHUYLFHV SURYLGHG E\ WKH DXGLWRU GR QRW LPSDLU LQGHSHQGHQFH & 5HSRUWLQJ RQ DXGLWRU LQGHSHQGHQFH WR WKH 3&$2% ' (QVXULQJ WKDW DOO QRQDXGLW VHUYLFHV DUH SURYLGHG E\ DXGLWRUV ZKR GR QRW SHUIRUP WKH ILQDQFLDO VWDWHPHQW DXGLW

 $,&3$ PHPEHUV ZKR ZRUN LQ LQGXVWU\ DQG JRYHUQPHQW PXVW DOZD\V XSKROG ZKLFK RI WKH IROORZLQJ $,&3$ UXOHV RI FRQGXFW"

$ 5XOH  ,QGHSHQGHQFH % 5XOH  ,QWHJULW\ DQG 2EMHFWLYLW\ & 5XOH  &RQILGHQWLDO &OLHQW ,QIRUPDWLRQ ' 5XOH  &RQWLQJHQW )HHV  $ SXEOLF DFFRXQWLQJ ILUP V LQGHSHQGHQFH LV LPSDLUHG ZKHQ PHPEHUV RI WKH DXGLW HQJDJHPHQW WHDP GRHV ZKLFK RI WKH IROORZLQJ IRU D SXEOLF FRPSDQ\ DXGLW FOLHQW"

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

 :KHQ WKH SXEOLF DFFRXQWLQJ ILUP DXGLWV )81'$ LQ D PXWXDO IXQG FRPSOH[ WKDW KDV VLVWHU IXQGV )81'% DQG )81'& LQGHSHQGHQFH IRU WKH DXGLW RI )81'$ LV QRW LPSDLUHG ZKHQ

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

$ 6SRXVH % 6SRXVDO HTXLYDOHQW & 3DUHQW ' 8QFOH

 :KLFK RI WKH IROORZLQJ LV WUXH LI DQ DXGLWRU SHUIRUPV QRQDXGLW VHUYLFHV IRU D JRYHUQPHQW HQWLW\"

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

 :KLFK RI WKH IROORZLQJ LV WUXH"

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

$ $,&3$ 'LYLVLRQ RI 3URIHVVLRQDO (WKLFV % )LQDQFLDO $FFRXQWLQJ 6WDQGDUGV %RDUG & *RYHUQPHQW $FFRXQWLQJ 6WDQGDUGV %RDUG ' $FFRXQWLQJ DQG 5HYLHZ 6HUYLFHV &RPPLWWHH

 :KLFK RI WKH IROORZLQJ ERGLHV GHVLJQDWHG E\ &RXQFLO KDYH EHHQ DXWKRUL]HG WR SURPXOJDWH DFFRXQWLQJ SULQFLSOHV HQIRUFHDEOH XQGHU 5XOH  RI WKH $,&3$ &RGH RI 3URIHVVLRQDO &RQGXFW"

$ $XGLWLQJ 6WDQGDUGV %RDUG % )HGHUDO $FFRXQWLQJ 6WDQGDUGV $GYLVRU\ %RDUG & &RQVXOWLQJ 6HUYLFHV ([HFXWLYH &RPPLWWHH ' $FFRXQWLQJ DQG 5HYLHZ 6HUYLFHV &RPPLWWHH  3KLO *UHE KDV D WKULYLQJ SUDFWLFH LQ ZKLFK KH DVVLVWV DWWRUQH\V LQ SUHSDULQJ OLWLJDWLRQ GHDOLQJ ZLWK DFFRXQWLQJ DQG DXGLWLQJ PDWWHUV 3KLO LV SUDFWLFLQJ SXEOLF DFFRXQWLQJ LI KH

$ 8VHV KLV &3$ GHVLJQDWLRQ RQ KLV OHWWHUKHDG DQG EXVLQHVV FDUG % ,V LQ SDUWQHUVKLS ZLWK DQRWKHU &3$ & 3UDFWLFHV LQ D SURIHVVLRQDO FRUSRUDWLRQ ZLWK RWKHU &3$V ' 1HYHU OHWV KLV FOLHQWV NQRZ WKDW KH LV D &3$

 7KH $,&3$ UHPRYHG LWV JHQHUDO SURKLELWLRQ RI &3$V WDNLQJ FRPPLVVLRQV DQG FRQWLQJHQW IHHV EHFDXVH

$ &3$V SUHIHU PRUH SULFH FRPSHWLWLRQ WR OHVV % &RPPLVVLRQV DQG FRQWLQJHQW IHHV HQKDQFH DXGLW LQGHSHQGHQFH & 1RWKLQJ LV LQKHUHQWO\ ZURQJ DERXW WKH IRUP RI IHHV FKDUJHG WR QRQDXGLW FOLHQWV ' 2EMHFWLYLW\ LV QRW DOZD\V QHFHVVDU\ LQ DFFRXQWLQJ DQG DXGLWLQJ VHUYLFHV  &3$ .DUD 5DPER LV WKH DXGLWRU RI $MD[ &RUSRUDWLRQ +HU DXGLW LQGHSHQGHQFH ZLOO QRW EH FRQVLGHUHG LPSDLUHG LI VKH

$ 2ZQV   ZRUWK RI $MD[ VWRFN % +DV D KXVEDQG ZKR RZQV   ZRUWK RI $MD[ VWRFN & +DV D VLVWHU ZKR LV WKH ILQDQFLDO YLFH SUHVLGHQW RI $MD[ ' 2ZQV   ZRUWK RI WKH VWRFN RI 3HULFOHV &RUSRUDWLRQ ZKLFK LV FRQWUROOHG E\ $MD[ DV D UHVXOW RI $MD[ V RZQHUVKLS RI  SHUFHQW RI 3HULFOHV VWRFN DQG 3HULFOHV FRQWULEXWHV  SHUFHQW RI WKH WRWDO DVVHWV DQG LQFRPH LQ $MD[ V ILQDQFLDO VWDWHPHQWV

 :KHQ D FOLHQW V ILQDQFLDO VWDWHPHQWV FRQWDLQ D PDWHULDO GHSDUWXUH IURP DQ )$6% 6WDWHPHQW RQ $FFRXQWLQJ 6WDQGDUGV DQG WKH SXEOLF DFFRXQWLQJ ILUP EHOLHYHV WKH GHSDUWXUH LV QHFHVVDU\ WR HQVXUH WKDW WKH VWDWHPHQWV DUH QRW PLVOHDGLQJ

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

$ ,QIRUPDWLRQ DERXW ZKHWKHU D FRQVXOWLQJ FOLHQW KDV SDLG WKH &3$ V IHHV RQ WLPH % 7KH DFWXDULDO DVVXPSWLRQV XVHG E\ D WD[ FOLHQW LQ FDOFXODWLQJ SHQVLRQ H[SHQVH & 0DQDJHPHQW V VWUDWHJLF SODQ IRU QH[W \HDU V ODERU QHJRWLDWLRQV ' ,QIRUPDWLRQ DERXW PDWHULDO FRQWLQJHQW OLDELOLWLHV UHOHYDQW IRU DXGLWHG ILQDQFLDO VWDWHPHQWV

 :KLFK RI WKH IROORZLQJ ZRXOG SUREDEO\ QRW EH FRQVLGHUHG DQ DFW GLVFUHGLWDEOH WR WKH SURIHVVLRQ "

$ 1XPHURXV PRYLQJ WUDIILF YLRODWLRQV % )DLOLQJ WR ILOH WKH &3$ V RZQ WD[ UHWXUQ & )LOLQJ D IUDXGXOHQW WD[ UHWXUQ IRU D FOLHQW LQ D VHYHUH ILQDQFLDO GLIILFXOW\ ' 5HIXVLQJ WR KLUH $VLDQ $PHULFDQV LQ DQ DFFRXQWLQJ SUDFWLFH  $FFRUGLQJ WR WKH $,&3$ &RGH RI &RQGXFW ZKLFK RI WKH IROORZLQJ DFWV LV JHQHUDOO\ IRUELGGHQ WR &3$V LQ SXEOLF SUDFWLFH"

$ 3XUFKDVLQJ ERRNNHHSLQJ VRIWZDUH IURP D KLWHFK GHYHORSPHQW FRPSDQ\ DQG UHVHOOLQJ LW WR WD[ FOLHQWV % %HLQJ WKH DXWKRU RI D 7D[$LG QHZVOHWWHU SURPRWHG DQG VROG E\ D SXEOLVKLQJ FRPSDQ\ & +DYLQJ D FRPPLVVLRQ DUUDQJHPHQW ZLWK DQ DFFRXQWLQJ VRIWZDUH GHYHORSHU WR UHFHLYH  SHUFHQW RI WKH SULFH RI SURJUDPV UHFRPPHQGHG DQG VROG WR DXGLW FOLHQWV ' (QJDJLQJ D PDUNHWLQJ ILUP WR REWDLQ QHZ ILQDQFLDO SODQQLQJ FOLHQWV IRU D IL[HG IHH RI   IRU HDFK VXFFHVVIXO FRQWDFW

 $ &3$ V OHJDO OLFHQVH WR SUDFWLFH SXEOLF DFFRXQWLQJ FDQ EH UHYRNHG E\ WKH

$ $PHULFDQ ,QVWLWXWH RI &HUWLILHG 3XEOLF $FFRXQWDQWV % 6WDWH VRFLHW\ RI &3$V & $XGLWLQJ 6WDQGDUG %RDUG ' 6WDWH ERDUG RI DFFRXQWDQF\  $FFRUGLQJ WR 5XOH  ZKLFK RI WKH IROORZLQJ LV QRW D GLVFUHGLWDEOH DFW "

$ :LWKKROGLQJ D FOLHQW V VDOHV UHFRUGV % )DLOLQJ WR ILOH RU UHPLW WD[ SD\PHQWV & )DLOLQJ WR IROORZ UHTXLUHPHQWV RI WKH 3&$2% GXULQJ WKH DXGLW RI DQ 6(& FOLHQW ' $GYHUWLVLQJ WKDW LQGLFDWHG WKH ILUP FDQ UHGXFH ,56 SHQDOWLHV

 $Q DXGLWRU V LQGHSHQGHQFH ZRXOG QRW EH FRQVLGHUHG LPSDLUHG LI VKH RU KH KDG

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

$ 5XOH  &RQILGHQWLDO &OLHQW ,QIRUPDWLRQ % 5XOH  ,QWHJULW\ DQG 2EMHFWLYLW\ & 5XOH  ,QGHSHQGHQFH ' 5XOH  $FFRXQWLQJ 3ULQFLSOHV

 $Q DXGLWRU UHFRPPHQGV D ORFDO FRPSXWHU FRPSDQ\ WR D FOLHQW WKDW LV WU\LQJ WR XSJUDGH LWV FRPSXWHUL]HG VDOHV UHFRUGV 7KH FOLHQW SXUFKDVHV   ZRUWK RI HTXLSPHQW DQG VHQGV D FKHFN WR WKH DXGLWRU IRU  SHUFHQW RI WKH WRWDO VDOHV 7KLV LV DQ H[DPSOH RI D

$ &RPPLVVLRQ % &RQWLQJHQW IHH & 5HIHUUDO IHH ' 1RQDXGLW IHH  ,I D &3$ UHIXVHV D FOLHQW EHFDXVH WKHUH ZRXOG EH D SRWHQWLDO YLRODWLRQ RI WKH $,&3$ &RGH RI 3URIHVVLRQDO &RQGXFW WKH &3$ LV IROORZLQJ WKH HWKLFDO SKLORVRSK\ RI WKH

$ ,PSHUDWLYH SULQFLSOH % 8WLOLWDULDQLVP SULQFLSOH & *HQHUDOL]DWLRQ SULQFLSOH ' 0RUDO SULQFLSOH

 :KLFK RI WKH IROORZLQJ LV QRW RQH RI WKH LGHDOV H[SUHVVHG LQ WKH 3ULQFLSOHV RI 3URIHVVLRQDO &RQGXFW"

$ 3XEOLF LQWHUHVW % 'XH FDUH & 6HOIUHJXODWLRQ ' 5HVSRQVLELOLWLHV  $ &3$ ILUP V LQGHSHQGHQFH ZLOO EH LPSDLUHG LI D UHWLUHG SDUWQHU LV D GLUHFWRU RI D QRQ 6(& FOLHQW DQG

$ +DV IL[HG UHWLUHPHQW EHQHILWV % 5HWDLQV RQO\ RIILFH SULYLOHJHV ZLWK WKH ILUP & ,V QR ORQJHU DFWLYH LQ WKH ILUP ' ,V QR ORQJHU DVVRFLDWHG ZLWK WKH ILUP  5XOH  RI WKH 5XOHV RI &RQGXFW FRQWDLQV QR UHTXLUHPHQW WKDW PHPEHUV RI WKH $,&3$ FRPSO\ ZLWK ZKLFK RI WKH IROORZLQJ VWDQGDUGV DQG LQWHUSUHWDWLRQV GHVLJQDWHG E\ WKH $,&3$ &RXQFLO"

$ ,QGHSHQGHQFH % 'XH SURIHVVLRQDO FDUH & 3ODQQLQJ DQG VXSHUYLVLRQ ' 3URIHVVLRQDO FRPSHWHQFH

 :KLFK RI WKH IROORZLQJ ZRXOG EH SHUPLWWHG E\ WKH $,&3$"

$ -RKQ 6PLWK &3$ RZQV  SHUFHQW RI WKH ILUP DQG -RDQ -RQHV QRQ&3$ RZQV  SHUFHQW % 1RQ&3$V RZQ  SHUFHQW RI WKH ILUP 7KH QRQ&3$V GR QRW KDYH D FROOHJH GHJUHH & 1RQ&3$V RZQ  SHUFHQW RI WKH ILUP DQG IROORZ DOO $,&3$ UHTXLUHPHQWV ' )UHG 6PLWK D QRQ&3$ RZQV  SHUFHQW RI WKH ILUP DQG KDV D IXOOWLPH MRE VHSDUDWH IURP WKH ILUP DQG YLHZV WKH RZQHUVKLS SXUHO\ DV DQ LQYHVWPHQW  7KH EDVLF UDWLRQDOH IRU SHUPLWWLQJ &3$V WR DFFHSW FRPPLVVLRQV LV WKDW

$ ,W GRHV QRW DIIHFW LQGHSHQGHQFH LQ DWWHVW IXQFWLRQV % 3URIHVVLRQDO OLDELOLW\ LQVXUDQFH SROLFLHV SHUPLW FRPPLVVLRQ ZRUN & 6WDWH ERDUGV RI DFFRXQWLQJ SHUPLW FRPPLVVLRQV DQG FRQWLQJHQW IHHV ' 2WKHU SURIHVVLRQDOV FKDUJH FRPPLVVLRQV LQ SHUVRQDO ILQDQFLDO SODQQLQJ HQJDJHPHQWV

 :KLFK RI WKH IROORZLQJ LV QRW RQH RI WKH JXLGHOLQHV IRU DGYHUWLVLQJ IRU &3$V SUDFWLFLQJ SXEOLF DFFRXQWLQJ"

$ $GYHUWLVLQJ VKRXOG EH LQIRUPDWLYH DQG REMHFWLYH % $GYHUWLVLQJ VKRXOG EH UHVWULFWHG LQ IUHTXHQF\ VL]H VW\OH DQG VR RQ & $GYHUWLVLQJ VKRXOG QRW FUHDWH H[SHFWDWLRQV RI IDYRUDEOH UHVXOWV ' $GYHUWLVLQJ PD\ QRW FRQWDLQ IHH HVWLPDWHV ZKHQ D &3$ NQRZV WKH\ DUH QRW UHSUHVHQWDWLYH  ,I D &3$ KDV YLRODWHG D UXOH RI &RQGXFW WKH $,&3$ WULDO ERDUG SDQHO GRHV QRW KDYH WKH SRZHU WR

$ 5HYRNH WKH SHUVRQ V &3$ FHUWLILFDWH % 6XVSHQG WKH SHUVRQ V PHPEHUVKLS LQ $,&3$ DQG VWDWH VRFLHW\ & $GPRQLVK WKH &3$ ' $FTXLW WKH &3$  $ PHPEHU LQ SXEOLF SUDFWLFH FDQ UHFHLYH D FRQWLQJHQW IHH IRU

$ $Q DXGLW RU UHYLHZ RI D ILQDQFLDO VWDWHPHQW % $ FRPSLODWLRQ RI D ILQDQFLDO VWDWHPHQW & $Q H[DPLQDWLRQ RI SURVSHFWLYH ILQDQFLDO VWDWHPHQWV ' 5HSUHVHQWLQJ D FOLHQW LQ DQ ,56 WD[ DXGLW

 0RVW VWDWH ERDUGV RI DFFRXQWDQF\ GR QRW

$ ,VVXH OLFHQVHV WR SUDFWLFH DFFRXQWLQJ % 5HJXODWH WD[ SUDFWLFH & /LPLW WKH DWWHVW IXQFWLRQ WR OLFHQVH KROGHUV ' $GPLQLVWHU DQ HWKLFV H[DPLQDWLRQ

)LOO LQ WKH %ODQN 4XHVWLRQV

 7ZR DVSHFWV RI HWKLFV RSHUDWH LQ WKH SURIHVVLRQDO HQYLURQPHQW BBBBBBBBBBBBBBBBBBBB HWKLFV DQG BBBBBBBBBBBBBBBBBBBB HWKLFV BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB  7KH :KHHOZULJKW GHILQLWLRQ RI HWKLFV KDV WKUHH NH\ HOHPHQWV  TXHVWLRQ UHTXLULQJ BBBBBBBBBBBBBBBBBBBB FKRLFH  JXLGHV RI BBBBBBBBBBBBBBBBBBBBBB DQG  FRQFHUQV ZLWK WKH BBBBBBBBBBBBBBBBBBBB RI GHFLVLRQV BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB

 7KH BBBBBBBBBBBBBBBBBBBB SULQFLSOH GLUHFWV D GHFLVLRQ PDNHU WR DFW DFFRUGLQJ WR WKH UHTXLUHPHQWV RI DQ HWKLFDO UXOH BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB  7KH $,&3$ &RGH RI 3URIHVVLRQDO &RQGXFW FRQWDLQV WZR EDVLF VHFWLRQV BBBBBBBBBBBBBBBBBBBBBBB DQG BBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 7KH GHWDLOHG H[SODQDWLRQV RI VSHFLILF UXOHV WR KHOS PHPEHUV XQGHUVWDQG SDUWLFXODU DSSOLFDWLRQV DUH UHIHUUHG WR DV BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 7KH FRUQHUVWRQH RI WKH SXEOLF DFFRXQWLQJ SURIHVVLRQ LV WKH FRQFHSW RI BBBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 7KH VSLULW RI 5XOH  LV WKDW LQWHJULW\ DQG REMHFWLYLW\ DUH UHTXLUHG LQ FRQQHFWLRQ ZLWK BBBBBBBBBBBBBBBBBBBB SURIHVVLRQDO VHUYLFHV BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB

0HPEHUV RI WKH $,&3$ VKDOO FRPSO\ ZLWK VWDQGDUGV DQG LQWHUSUHWDWLRQV GHVLJQDWHG E\ WKH BBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB LV LQIRUPDWLRQ WKDW VKRXOG QRW EH GLVFORVHG WR RXWVLGH SDUWLHV XQOHVV GHPDQGHG E\ D FRXUW BBBBBBBBBBBBBBBBBBBBBBBBBBBBB FDQQRW EH GHPDQGHG HYHQ E\ D FRXUW BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB )HHV EDVHG RQ WKH QXPEHU RI KRXUV RU GD\V ZRUNHG DUH BBBBBBBBBBBBBBBBBBBB FRQVLGHUHG BBBBBBBBBBBBBBBBBBBB RQ WKH ILQGLQJV RI DXGLW VHUYLFHV BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 5XOH  RQ $FWV 'LVFUHGLWDEOH WR WKH 3URIHVVLRQ LV RIWHQ UHIHUUHG WR DV WKH BBBBBBBBBBBBBBBBBBBBBBBBBBB RI WKH &RGH BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBB RU BBBBBBBBBBBBBBBBBBBB DGYHUWLVLQJ LV QRW LQ WKH SXEOLF LQWHUHVW DQG LV SURKLELWHG BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB

BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB DUH IHHV D &3$ UHFHLYHV IRU UHFRPPHQGLQJ DQRWKHU &3$ V VHUYLFHV BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBB UHIHUV WR TXDOLW\ FRQWURO UHYLHZV DQG GLVFLSOLQDU\ DFWLRQV E\ IHOORZ &3$V BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 8QGHU $,&3$ UXOHV LQGHSHQGHQFH ZLOO EH FRQVLGHUHG LPSDLUHG LI D PHPEHU KDG RU ZDV FRPPLWWHG WR DFTXLUH DQ\ BBBBBBBBBBBB RU BBBBBBBBBBBBBBBBBBBBBBBB ILQDQFLDO LQWHUHVW LQ WKH HQWHUSULVH BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 8QGHU $,&3$ UXOHV LW ZRXOG EH D FRQIOLFW RI LQWHUHVW LI D &3$ LV HQJDJHG WR SHUIRUP BBBBBBBBBBBBBBBBBBBBBBBBBBB VHUYLFHV IRU D SODLQWLII LQ D ODZVXLW ILOHG DJDLQVW D FOLHQW BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 5XOH  LV DSSOLFDEOH WR PHPEHUV HPSOR\HG LQ BBBBBBBBBBBBBBBBBBB DQG BBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB

6KRUW $QVZHU 4XHVWLRQV

 )RU HDFK VLWXDWLRQ  LGHQWLI\ WKH PRVW DSSOLFDEOH $,&3$ UXOH RI FRQGXFW DQG LQGLFDWH ZKHWKHU WKHUH LV D YLRODWLRQ RU QR YLRODWLRQ RI WKH UXOH $)  2QH RU PRUH OHWWHUV PD\ QRW EH XVHG $ 5XOH  ,QGHSHQGHQFH QR YLRODWLRQ % 5XOH  ,QGHSHQGHQFH YLRODWLRQ & 5XOH  ,QWHJULW\ DQG 2EMHFWLYLW\ QR YLRODWLRQ ' 5XOH  ,QWHJULW\ DQG 2EMHFWLYLW\ YLRODWLRQ ( 5XOH  $FFRXQWLQJ 3ULQFLSOHV QR YLRODWLRQ ) 5XOH  $FFRXQWLQJ 3ULQFLSOHV YLRODWLRQ BBBB  6WHUOLQJ 6WHYHQV &3$ ZDV DXGLWLQJ *OREDO 6HUYLFHV &RPSDQ\ *OREDO 6HUYLFHV XVHG DQ DFFRXQWLQJ SULQFLSOH WKDW ZDV QRW LQ FRQIRUPLW\ ZLWK *$$3 1HYHUWKHOHVV 6WHYHQV UHQGHUHG D VWDQGDUG XQTXDOLILHG DXGLW UHSRUW BBBB  &KULVWLQD +DOO &3$ SURYLGHG H[SHUW WHVWLPRQ\ IRU D SODLQWLII 7KH GHIHQGDQW LQ WKH FDVH ZDV D FOLHQW RI +DOO V BBBB  6DP 0LOOHU &3$ RZQHG  VKDUHV RI -RKQVRQ 'ULOOLQJ ,QF KLV DXGLW FOLHQW BBBB  'HZH\ :LVH &3$ REWDLQHG D ORDQ IURP DQ LQVXUDQFH FRPSDQ\ XVLQJ WKH FDVK YDOXH RI WKH LQVXUDQFH SROLF\ DV FROODWHUDO 7KH ORDQ LV IRU OHVV PRQH\ WKDQ WKH FDVK YDOXH RI WKH SROLF\ BBBB  6WHOOD 6WHLQEHFN &3$ ZDV DXGLWLQJ *RRG 6HUYLFHV &RPSDQ\ ZKLFK XVHG DQ DFFRXQWLQJ SULQFLSOH WKDW ZDV QRW LQ FRQIRUPLW\ ZLWK *$$3 *RRG 6HUYLFHV EHOLHYHG DQG 6WHLQEHFN FRQFXUUHG WKDW XVLQJ D JHQHUDOO\ DFFHSWHG PHWKRG ZRXOG FDXVH WKH ILQDQFLDO VWDWHPHQWV WR EH PLVOHDGLQJ 7KHUHIRUH 6WHLQEHFN UHQGHUHG D VWDQGDUG XQTXDOLILHG DXGLW UHSRUW

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

)RU HDFK VLWXDWLRQ  LGHQWLI\ WKH PRVW DSSOLFDEOH $,&3$ UXOH RI FRQGXFW DQG LQGLFDWH ZKHWKHU WKHUH LV D YLRODWLRQ RU QR YLRODWLRQ RI WKH UXOH $)  2QH RU PRUH OHWWHUV PD\ QRW EH XVHG $ 5XOH  ,QGHSHQGHQFH QR YLRODWLRQ % 5XOH  ,QGHSHQGHQFH YLRODWLRQ & 5XOH  &RQILGHQWLDO &OLHQW ,QIRUPDWLRQ QR YLRODWLRQ ' 5XOH  &RQILGHQWLDO &OLHQW ,QIRUPDWLRQ YLRODWLRQ ( 5XOH  &RPPLVVLRQV DQG 5HIHUUDOV QR YLRODWLRQ ) 5XOH  &RPPLVVLRQV DQG 5HIHUUDOV YLRODWLRQ BBBB  %UDQGRQ )ULVE\ &3$ IRXQG RXW WKDW KLV FOLHQW 8SWRQRJRRG ,QF KDG IDLOHG WR SURSHUO\ DFFRXQW IRU VHYHUDO OHDVHV )ULVE\ LQIRUPHG 8SWRQRJRRG V PDQDJHPHQW WKDW KH PXVW LVVXH D TXDOLILHG DXGLW UHSRUW DQG GLVFORVH WKH OHDVH SUREOHP LQ WKH UHSRUW 8SWRQRJRRG V PDQDJHPHQW LQGLFDWHG WKDW VXFK D GLVFORVXUH ZRXOG FRQVWLWXWH D GLVFORVXUH RI FRQILGHQWLDO LQIRUPDWLRQ 1HYHUWKHOHVV )ULVE\ UHQGHUHG WKH TXDOLILHG DXGLW UHSRUW LQFOXGLQJ DQ H[SODQDWRU\ SDUDJUDSK DERXW WKH LQDGHTXDWH OHDVH DFFRXQWLQJ BBBB  3ULVFLOOD +XGVRQ &3$ D SDUWQHU LQ +XGVRQ DQG 'DQKRIIHU &3$V KROGV WKH SRVLWLRQ RI KRQRUDU\ GLUHFWRU IRU WKH )ULHQGV RI WKH 6\PSKRQ\ 2UFKHVWUD D ILUP DXGLW FOLHQW BBBB  7KH ZLIH RI *HUDOG 6NRFK &3$ LV WKH FRQWUROOHU RI )LQH &RUSRUDWLRQ 6NRFK LV DQ DXGLW SDUWQHU IRU WKH /RQJ ,VODQG RIILFH RI %DUQHV DQG %XFNQHOO &3$V 7KH /RQJ ,VODQG RIILFH RI %DUQHV DQG %XFNQHOO DXGLWV )LQH &RUSRUDWLRQ EXW 6NRFK LV QRW SDUW RI WKH DXGLW WHDP DQG SURYLGHV QR RWKHU VHUYLFHV WR )LQH &RUSRUDWLRQ BBBB  -RKQQ\ %HDFRQ &3$ LV WKH DXGLWRU RI 1RYDN :KROHVDOH ,QF %HDFRQ UHFHLYHG D  SHUFHQW FRPPLVVLRQ IURP &RPSXWHU 6\VWHPV ,QF IRU KDUGZDUH VROG

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

)RU HDFK RI WKH IROORZLQJ FDVHV LQGLFDWH ZKHUH WKH DFWLRQ RU VLWXDWLRQ LV D YLRODWLRQ )RU RI WKH $,&3$ &RGH RI 3URIHVVLRQDO &RQGXFW DQG FLWH WKH UHOHYDQW UXOH RU LQWHUSUHWDWLRQ WKDW ZRXOG DSSO\ WR LW

(VVD\ 4XHVWLRQV

)RU HDFK RI WKH IROORZLQJ FDVHV LQGLFDWH LI WKH DFWLRQ E\ D PHPEHU &3$ LV D )RU

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

)RU HDFK RI WKH IROORZLQJ FDVHV LQGLFDWH ZKHWKHU WKH DFWLRQ E\ D PHPEHU &3$ LV D )RU YLRODWLRQ RI WKH $,&3$ &RGH RI 3URIHVVLRQDO &RQGXFW DQG FLWH WKH UHOHYDQW UXOH $ :DV D WUXVWHH RI FOLHQW V SURILW SURILWVKDULQJ WUXVW NQRZOHGJH

% $FFHSWHG UHIHUUDO IHHV IURP ORFDO DWWRUQH\V IRU QRQDWWHVW FOLHQWV ZLWK WKH FOLHQWV & 3HUIRUPHG DQ DXGLW LQ DFFRUGDQFH ZLWK *$6% VWDQGDUGV ZKLFK WKH &3$ KDV D PDWHULDO ILQDQFLDO LQWHUHVW WHULDO

' $GYLVHV D FOLHQW WR KDYH DQ LQVXUDQFH UHYLHZ IURP D ORFDO LQVXUDQFH FRPSDQ\ LQ ( 3URPRWHG WKH &3$ V WD[ VHUYLFH RQ ORFDO 79 VWDWLRQ

:KDW DUH D WKH $,&3$ 3ULQFLSOHV RI 3URIHVVLRQDO &RQGXFW E 5XOHV RI &RQGXFW DQG F ,QWHUSUHWDWLRQ RI 5XOHV RI &RQGXFW"

:KDW DUH WKH SRZHUV RI WKH $,&3$ WULDO ERDUG LQ HWKLFV YLRODWLRQV"

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

7KH &RGH RI 3URIHVVLRQDO &RQGXFW LV YHU\ LPSRUWDQW IRU WKH DXGLWLQJ SURIHVVLRQ 7KH $,&3$ VWDWH &3$ ERDUGV DQG RWKHU SURIHVVLRQDO RUJDQL]DWLRQV VSHQG D JUHDW GHDO RI WLPH DQG HIIRUW LPSOHPHQWLQJ DQG UHLQIRUFLQJ WKH HWKLFDO VWDQGDUGV DV ZHOO DV SHQDOL]LQJ WKRVH ZKR YLRODWH WKH HWKLFDO VWDQGDUGV 5HTXLUHG $ :K\ LV WKH &RGH RI 3URIHVVLRQDO &RQGXFW LPSRUWDQW WR WKH SURIHVVLRQ" % 0DQ\ SURIHVVLRQDOV EHOLHYH WKDW LQ WRGD\ V EXVLQHVV HQYLURQPHQW LW LV PRUH GLIILFXOW WR DGKHUH WR WKH &RGH RI 3URIHVVLRQDO &RQGXFW WKDQ HYHU EHIRUH :K\ PLJKW WKLV EH WUXH"

0RGXOH % 3URIHVVLRQDO (WKLFV $QVZHU .H\

7UXH  )DOVH 4XHVWLRQV



$ FRGH RI HWKLFV VHUYHV DV D UHIHUHQFH DQG EHQFKPDUN IRU DFFHSWDEOH SURIHVVLRQDO EHKDYLRU 758( 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH



,Q FRQVLGHULQJ JHQHUDO HWKLFV WKH SULPDU\ JRDO LV WR DUULYH DW D VHW RI DFFHSWDEOH PHWKRGV IRU PDNLQJ HWKLFDO GHFLVLRQV 758( 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

@ Q !!T  9"D C"! @ ! %$& "(  9! ( " !!  @! !! % !' 6 57 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      @Q @Q

 %!0     

!" "! @Q  9"D C @ 9""@ 9 "& (" ! 9 9 " Y!! %  B B!4 ! 9& !@ % &!2" 9 "! @ ! @ % "@ "!E )57 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      @Q

@ Q !!T  9"D C"! @ ! %$& "(  9! ( " !!  @! !! % !' 6 57 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!     





5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 758( SXEOLF FRPSDQ\ DXGLW FOLHQWV 7KH 6(& LQGHSHQGHQFH UXOHV SURKLELW DXGLWRUV IURP SURYLGLQJ DFWXDULDO VHUYLFHV WR 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 758( VLWXDWLRQ VSHFLILF FDOFXODWLRQ RI WKH FRQVHTXHQFHV (WKLFV LQ WKH LPSHUDWLYH VHQVH LV D IXQFWLRQ RI PRUDO UXOHV DQG SULQFLSOHV QRW D

!!! 9! " @ 9&Q  9"D C !!! 9!  9& " !" " !"  " H  " !@ !@A !!  "  ( ! Y B! i Qh "&&" ! %@ 8Q  ! !  B i1 h " @ %!4 1 %" 9&" 2  B i1 Th !((1 2 " !&!4 "T B i  h %  " 2  !(! (" ! !& " !!!( ! @ V57 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!   %!0     

!!! 9! " @ 9&Q  9"D C !!! 9!  9& " !" " !"  " H " !@ !@A !!  "  ( ! Y B! i Qh "&&" ! %@ 8Q  ! !  B i1 h " @ %!4 1 %" 9&" 2  B i1 Th !((1 2 " !&!4 "T B i  h %  " 2  !(! (" ! !& " !!!( ! @ V57 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!  



5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH )$/6( SDUWQHUV RQ DQ HQJDJHPHQW WR IRXU\HDU WHUPV 7KH 6DUEDQHV2[OH\ $FW RI  OLPLWV WKH HQJDJHPHQW RI DQG FRQFXUULQJ DXGLW

& !# ) ((  !' &"" %$# "!   %!0     

!!! 9! " @ 9&Q  9"D C !!! 9!  9& " !" " !"  " H  " !@ !@A !!  "  ( ! Y B! i Qh "&&" ! %@ 8Q  ! !  B i1 h " @ %!4 1 %" 9&" 2  B i1 Th !((1 2 " !&!4 "T B i  h %  " 2  !(! (" ! !& " !!!( ! @ V57 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!   %!0     





5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH )$/6( IHGHUDO OHJLVODWLRQ 7KH $,&3$ &RGH RI 3URIHVVLRQDO &RQGXFW GHULYHV LWV DXWKRULW\ IURP VSHFLILF 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 758( HPSOR\HHV DQG SDUWQHUV &RQGXFW E\ DOO SHUVRQV DVVRFLDWHG ZLWK WKHP LQ SXEOLF SUDFWLFH LQFOXGLQJ 0HPEHUV RI WKH $,&3$ DUH KHOG UHVSRQVLEOH IRU FRPSOLDQFH ZLWK WKH 5XOHV RI

%$# "!   %!0     

!!! 9! " @ 9&Q  9"D C !!! 9!  9& " !" " !"  " H  " !@ !@A !!  "  ( ! Y B! i Qh "&&" ! %@ 8Q  ! !  B i1 h " @ %!4 1 %" 9&" 2  B i1 Th !((1 2 " !&!4 "T B i  h %  " 2 !( ! (" ! !& " !!!( ! @ V57 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!   %!0     

!!! 9! " @ 9&Q  9"D C !!! 9!  9& " !" " !"  " H  " !@ !@A !!  "  ( ! Y B! i Qh "&&" ! %@ 8Q  ! !  B i1 h " @ %!4 1 %" 9&" 2  B i1 Th !((1 2 " !&!4 "T B i  h %  " 2  !(! (" ! !& " !!!( ! @ V57 !4 ! 321 %!0





5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH ,QWHJULW\ DQG REMHFWLYLW\ DUH UHTXLUHG LQ FRQQHFWLRQ ZLWK DOO SURIHVVLRQDO VHUYLFHV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH )$/6( LQGHSHQGHQFH )LQDQFLDO VWDWHPHQW DXGLW VHUYLFHV DUH WKH RQO\ HQJDJHPHQWV WKDW UHTXLUH 758(

 %!0     

!2" 9!E !@1  F ! " !2" 9!E F 4 ! 321   %! " (" !E   9"D C" (" !E  !@ " &"(" " !" " !" " H " !@!@A !!  "  ( ! Y B!!! 9! @ !@"  9" " !  " !!!(! @  X 57 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!   %!0     

!2" 9!E !@1  F ! " !2" 9!E F 4 ! 321   %! " (" !E   9"D C" (" !E  !@ " &"(" " !" " !" " H " !@!@A !!  "  ( ! Y B!!! 9! @ !@"  9" " !  " !!!(! @  X 57 !4 ! 321 %!0 & !# ) ((  !' &""





5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 758( WHFKQLFDO VWDQGDUGV LQ DOO DUHDV RI SURIHVVLRQDO VHUYLFH &RPSOLDQFH ZLWK VWDQGDUGV 5XOH  UHTXLUHV DGKHUHQFH WR GXO\ SURPXOJDWHG 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 758( &3$ NQRZLQJO\ FDQQRW KDQGOH *HQHUDO VWDQGDUGV 5XOH  SURKLELWV WKH DFFHSWDQFH RI DQ\ HQJDJHPHQW WKDW WKH

!2" 9!E !@1  F ! " !2" 9!E F 4 ! 321   %! " (" !E   9"D C" (" !E  !@ " &"(" " !" " !" " H " !@!@A !!  "  ( ! Y B!!! 9! @ !@ "  9" " !  " !!!(! @  X 57 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!   %!0     

!2" 9!E !@1  F ! " !2" 9!E F 4 ! 321   %! " (" !E   9"D C" (" !E  !@ " &"(" " !" " !" " H " !@!@A !!  "  ( ! Y B!!! 9! @ !@"  9" " !  " !!!(! @  X 57 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!  



5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH )$/6( SDUWLHV HYHQ LI GHPDQGHG E\ D FRXUW &RQILGHQWLDO LQIRUPDWLRQ LV LQIRUPDWLRQ WKDW VKRXOG QRW EH GLVFORVHG WR RXWVLGH

C !!! 9!  9& " !" " !" " H  " !@ !@A !!  "  ( ! Y B! i Qh "&&" ! %@ 8Q  ! !  B i1 h " @ %!4 1 %" 9&" 2  B i1 Th !((1 2 " !&!4 "T B i  h %  " 2  !( ! (" ! !& " !!!( ! @ V57 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!   %!0     

!2" 9!E !@1  F ! " !2" 9!E F 4 ! 321   %! " (" !E   9"D C" (" !E  !@ " &"(" " !" " !" " H " !@!@A !!  "  ( ! Y B!!! 9! @ !@"  9" " !  " !!!(! @  X 57 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!   %!0     





)$/6( &3$V DUH QRW SHUPLWWHG WR DGYHUWLVH H[FHSW LQ D IHZ LQVWDQFHV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 758( LQGHSHQGHQFH LQ WKH UHSRUW IRU SXUSRVHV RI JUDQWLQJ D ORDQ WR WKH FOLHQW DV ORQJ DV WKH &3$ GLVFORVHV D ODFN RI $ &3$ FDQ DFFHSW D FRQWLQJHQW IHH IRU D FRPSLODWLRQ UHSRUW WR EH XVHG E\ D EDQN

5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

B! i Qh "&&" ! %@ 8Q  ! !  B i1 h " @ %!4 1 %" 9&" 2  B i1 Th !((1 2 " !&!4 "T B i  h %  " 2  !(! (" ! !& " !!!( ! @ V57 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!   %!0     

!2" 9!E !@1  F ! " !2" 9!E F 4 ! 321   %! " (" !E   9"D C" (" !E  !@ " &"(" " !" " !" " H " !@!@A !!  "  ( ! Y B!!! 9! @ !@"  9" " !  " !!!(! @  X 57 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!   %!0     

!!! 9! " @ 9&Q  9"D





5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH )$/6( VRFLHWLHV $OO &3$V DUH VXEMHFW WR WKH UXOHV RI FRQGXFW RI WKH $,&3$ DQG VWDWH &3$ 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 5XOH  SHUPLWV FRPPLVVLRQ W\SH IHHV IRU DOO W\SHV RI VHUYLFHV )$/6(

 " ( " !" @Q  9"D C&( %" 2 9    "( ! @ ! !$& @ !! !!(( !@ ( ! G 57 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      @Q

 " ( " !" @Q  9"D C&( %" 2 9    "( ! @ ! !$& @ ! ! !!(( !@ ( ! G 57 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      @Q

!!! 9! " @ 9&Q  9"D C !!! 9!  9& " !" " !"  " H  " !@ !@A !!  "  ( ! Y





5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH )$/6( RUJDQL]DWLRQV RI VWDWH &3$ VRFLHWLHV DQG WKH $,&3$ RQO\ LI WKH\ FKRRVH WR MRLQ WKHVH ,QGLYLGXDO SHUVRQV QRW SXEOLF DFFRXQWLQJ ILUPV DUH VXEMHFW WR WKH UXOHV RI FRQGXFW 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH )$/6( /LFHQVHV WR SUDFWLFH DFFRXQWLQJ DUH LVVXHG E\ WKH $,&3$

 " "!(" ( " !" !@ %" " !!S!"  9"D C  " " !" 9& !2  @ !! 9 (" ! 9 !@  98Q I 57 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!   %!0     

 " "!(" ( " !" !@ %" " !!S!"  9"D C  " " !" 9& !2  @ !! 9 (" ! 9 !@  98Q I 57 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!   %!0     





5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH )$/6( &RGH RI &RQGXFW $ WULDO ERDUG FDQ DGPRQLVK VXVSHQG H[SHO RU ILQH D &3$ ZKR KDV YLRODWHG WKH 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 'LVFLSOLQH RI WKH PHPEHUV RI D SURIHVVLRQDO DVVRFLDWLRQ LV FDUULHG RXW E\ SHHUV 758(

0XOWLSOH &KRLFH 4XHVWLRQV



:KLFK RI WKH IROORZLQJ LV QRW D NH\ HOHPHQW RI WKH GHILQLWLRQ RI HWKLFV"

$ 5HIOHFWLYH FKRLFH % 0RUDO SULQFLSOHV & 'HILQLWLYH FRQFOXVLRQV ' &RQVHTXHQFHV RI GHFLVLRQV
 %1 ! " C"! @ ! %$& "(  9! ( " !!  @! !! % !' 6 57 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  @Q



:KLFK RI WKH IROORZLQJ GHILQHV WKH LPSHUDWLYH SULQFLSOH RI HWKLFV"

$ (WKLF GHFLVLRQV FDQQRW EH UHVROYHG ZLWKRXW HYDOXDWLQJ DOO SRVVLEOH RXWFRPHV RI DOO FKRLFHV % (WKLFV DUH D IXQFWLRQ RI PRUDO UXOHV DQG SULQFLSOHV & $OO HWKLFDO GHFLVLRQV ZLOO KDYH SRVLWLYH DQG QHJDWLYH FRQVHTXHQFHV ' ,W LV HVVHQWLDO WKDW HWKLFDO GHFLVLRQV EH PDGH IRU WKH JUHDWHU JRRG RI VRFLHW\
%!0  @Q

@Q  9"D

! 9 @ 9""@  9"D  %1 ! " C @ 9""@ 9 "& (" ! 9 9 " Y!! %  B B!4 ! 9& !@ % &!2" 9 "! @ ! @ % "@ "!E )57 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  @Q

! 9 @ 9""@  9"D  %1 ! " C @ 9""@ 9 "& (" ! 9 9 " Y!! %  B B!4 ! 9& !@ % &!2" 9 "! @ ! @ % "@ "!E )57 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E  



' 0RUDO SULQFLSOH & *HQHUDOL]DWLRQ SULQFLSOH % 8WLOLWDULDQLVP SULQFLSOH $ ,PSHUDWLYH SULQFLSOH FRQVHTXHQFHV RI DFWLRQ UDWKHU WKDQ RQ IROORZLQJ WKH UXOHV" :KLFK RI WKH IROORZLQJ SKLORVRSKLFDO SULQFLSOHV LQ HWKLFV HPSKDVL]HV WKH



:KDW DJHQF\ KDV WKH XOWLPDWH DXWKRULW\ IRU GHILQLQJ LQGHSHQGHQFH IRU SXEOLF FRPSDQLHV"

$ $,&3$ % 6(& & 'HSDUWPHQW RI -XVWLFH ' &RQJUHVV

!" %!4 "T  9"D  %1 ! " C&( %" 2 9    "( ! @ ! !$& @ ! ! !!(( !@ ( ! G 57 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  @Q



:KLFK RI WKH IROORZLQJ LV WKH UHVSRQVLELOLW\ RI WKH 3URIHVVLRQDO (WKLFV ([HFXWLYH &RPPLWWHH"

$ 7R HQIRUFH 6(& HWKLFDO VWDQGDUGV % 7R DFW DV DQ LQYHVWLJDWLYH ERG\ RI WKH $,&3$ ZKHQ HWKLFDO YLRODWLRQV DUH VXVSHFWHG & 7R PDNH DQG HQIRUFH DOO UXOHV RI FRQGXFW IRU &3$V ZKR DUH $,&3$ PHPEHUV ' 7R HVWDEOLVK PLQLPDO HWKLFDO VWDQGDUGV IRU ILQDQFLDO UHSRUWLQJ
!2&!&!E &"" @!!E   %!0  @Q

" (" !E  9"D  %1 ! " C" (" !E  !@ " &"(" " !" " !" " H " !@!@A !!  "  ( ! Y B!!! 9! @ !@"  9" " !  " !!!(! @  X 57 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  @Q

!" %!4 "T  9"D  %1 ! " C&( %" 2 9    "( ! @ ! !$& @ ! ! !!(( !@ ( ! G 57 !4 ! 321 %!0 Q 6 ((



' 'XH FDUH & 2EMHFWLYLW\ % 5HOLDELOLW\ $ 5HVSRQVLELOLW\ :KLFK RI WKH IROORZLQJ LV QRW RQH RI WKH $,&3$ 3ULQFLSOHV RI 3URIHVVLRQDO &RQGXFW"



'DUD

&R DXGLWV +LOO &RUSRUDWLRQ (OOLH LV WKH HQJDJHPHQW SDUWQHU RQ WKH DXGLW

ZLWK DQ RIILFH LQ %XIIDOR *URYH :KLFK RI WKH IROORZLQJ ZRXOG QRW EH FRQVLGHUHG D FRYHUHG PHPEHU"

$ -DVRQ ZKR LV D PHPEHU RI WKH DWWHVW HQJDJHPHQW WHDP ZLWK DQ RIILFH LQ (OPKXUVW % $GDP ZKR LV D WD[ SDUWQHU DQG SURYLGHG  KRXUV RI WD[ VHUYLFH WR +LOO &RPSDQ\ GXULQJ WKH \HDU RI WKH DXGLW ZLWK DQ RIILFH LQ (OPKXUVW & %HQ D SDUWQHU LQ 'DUD ' -XOLH D SDUWQHU LQ 'DUD &RPSDQ\ ZLWK DQ RIILFH LQ %XIIDOR *URYH &RPSDQ\ ZLWK DQ RIILFH LQ (OPKXUVW

!!! 9!  9"D  %1 ! " C !!! 9!  9& " !" " !"  " H  " !@ !@A !!  "  ( ! Y B! i Qh "&&" ! %@ 8Q  ! !  B i1 h " @ %!4 1 %" 9&" 2  B i1 Th !((1 2 " !&!4 "T B i  h %  " 2  !(! (" ! !& " !!!( ! @ V57 !4 ! 321 %!0 & !# ) ((  99 &"" @!!E   %!0  @Q



:KLFK RI WKH IROORZLQJ LV QRW LQFOXGHG LQ 5XOH RI &RQGXFW  ,QWHJULW\ DQG 2EMHFWLYLW\"

$ %H SUXGHQW LQ DVVHVVPHQW RI IDFWV % %H IUHH IURP FRQIOLFW RI LQWHUHVWV & 'R QRW NQRZLQJO\ PLVUHSUHVHQW IDFWV ' 'R QRW VXERUGLQDWH MXGJPHQW WR RWKHUV
" (" !E  9"D  %1 ! " C" (" !E  !@ " &"(" " !" " !"  " H " !@!@A !!  "  ( ! Y B!!! 9! @ !@"  9" " !  " !!!(! @  X 57 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  @Q



%DVHG RQ 6DUEDQHV2[OH\ ZKR LV XOWLPDWHO\ UHVSRQVLEOH IRU WKH LQGHSHQGHQFH RI WKH H[WHUQDO DXGLWRU"

$ 7KH &3$ ILUP V HQJDJHPHQW SDUWQHU % 7KH &3$ ILUP V TXDOLW\ FRQWURO SDUWQHU & 7KH FOLHQW V VHQLRU PDQDJHPHQW ' 7KH DXGLW FRPPLWWHH
!2&!&!E &"" @!!E   %!0  @Q

!!! 9!  9"D  %1 ! " C !!! 9!  9& " !" " !"  " H  " !@!@A !!  "  ( ! Y B! i Qh "&&" ! %@ 8Q  ! !  B i1 h " @ %!4 1 %" 9&" 2  B i1 Th !((1 2 " !&!4 "T B i  h %  " 2  !(! (" ! !& " !!!( ! @ V57 !4 ! 321 %!0 W G (( !2&!&!E &"" @!!E   %!0  @Q

!!! 9!  9"D  %1 ! " C !!! 9!  9& " !" " !"  " H " !@ !@A !!  "  ( ! Y B! i Qh "&&" ! %@ 8Q  ! !  B i1 h " @ %!4 1 %" 9&" 2  B i1 Th !((1 2 " !&!4 "T B i  h %  " 2  !(! (" ! !& " !!!( ! @ V57 !4 ! 321 %!0 & !# ) (( 



' 2Q D FDVHE\FDVH EDVLV QR WKURXJK HVWDEOLVKHG SROLFLHV QR E\ GHOHJDWLQJ & 2Q D FDVHE\FDVH EDVLV QR WKURXJK HVWDEOLVKHG SROLFLHV \HV E\ GHOHJDWLQJ % 2Q D FDVHE\FDVH EDVLV \HV WKURXJK HVWDEOLVKHG SROLFLHV \HV E\ GHOHJDWLQJ $ 2Q D FDVHE\FDVH EDVLV \HV WKURXJK HVWDEOLVKHG SROLFLHV QR E\ GHOHJDWLQJ QRQDXGLW VHUYLFHV 7KLV FDQ EH GRQH $FFRUGLQJ WR 6DUEDQHV2[OH\ WKH DXGLW FRPPLWWHH PXVW SUHDSSURYH DOO DXGLW DQG WKH UHVSRQVLELOLW\ QR WKH UHVSRQVLELOLW\ QR WKH UHVSRQVLELOLW\ \HV

WKH UHVSRQVLELOLW\ \HV

!!! 9!  9"D  %1 ! " C !!! 9!  9& " !" " !"  " H  " !@!@A !!  "  ( ! Y B! i Qh "&&" ! %@ 8Q  ! !  B i1 h " @ %!4 1 %" 9&" 2  B i1 Th !((1 2 " !&!4 "T B i  h %  " 2  !(! (" ! !& " !!!( ! @ V57 !4 ! 321 %!0 W G (( !2&!&!E &"" @!!E   %!0  @Q



' 3DUWQHUV ZKR HQJDJH LQ VHOOLQJ VHUYLFHV RWKHU WKDQ DXGLW UHYLHZ DQG & (QJDJHPHQW SDUWQHUV PXVW UHYLHZ QRQDXGLW ZRUN WR HQVXUH WKDW LQGHSHQGHQFH % ,W OLPLWV RWKHU SDUWQHUV DVVRFLDWHG ZLWK WKH HQJDJHPHQW WR D VHYHQ\HDU WHUP $ ,W OLPLWV HQJDJHPHQW SDUWQHUV WR D ILYH\HDU WHUP DV WKH HQJDJHPHQW SDUWQHU :KLFK RI WKH IROORZLQJ LV QRW D UHVWULFWLRQ SODFHG RQ DXGLW SDUWQHUV E\ 6DUEDQHV 2[OH\" KDV QRW EHHQ FRPSURPLVHG

DWWHVWDWLRQ WR DQ DXGLW FOLHQW DUH QRW LQGHSHQGHQW ZLWK UHVSHFW WR WKDW FOLHQW



:KLFK RI WKH IROORZLQJ LV WUXH DFFRUGLQJ WR *RYHUQPHQW $XGLWLQJ 6WDQGDUGV"

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
!!! 9!  9"D  %1 ! " C !!! 9!  9& " !" " !"  " H  " !@ !@A !!  "  ( ! Y B! i Qh "&&" ! %@ 8Q  !!  B i1 h " @ %!4 1 %" 9&" 2  B i1 Th !((1 2 " !&!4 "T B i  h %  " 2  !(! (" ! !& " !!!( ! @ V57 !4 ! 321 %!0 W G (( !2&!&!E &"" @!!E   %!0  @Q



:KLFK RI WKH IROORZLQJ LV DOORZHG XQGHU WKH *RYHUQPHQW $XGLWLQJ 6WDQGDUGV"

$ 3HUVRQQHO ZKR SURYLGH QRQDXGLW VHUYLFHV DUH SURKLELWHG IURP SODQQLQJ FRQGXFWLQJ RU UHYLHZLQJ DXGLW ZRUN UHODWHG WR WKH QRQDXGLW VHUYLFH % 7KH DXGLW RUJDQL]DWLRQ PXVW QHYHU UHGXFH WKH VFRSH RI WKH DXGLW EHFDXVH RI QRQDXGLW VHUYLFHV LW SHUIRUPHG & 7KH JRYHUQPHQW HQWLW\ PXVW KDYH HVWDEOLVKHG SROLFLHV WR HQVXUH WKDW WKH QRQDXGLW VHUYLFHV ZLOO QRW DIIHFW WKH DXGLW ILUP V DELOLW\ WR SHUIRUP WKH DXGLW ' &3$V ZKR SHUIRUP QRQDXGLW VHUYLFHV DUH SURKLELWHG IURP EHLQJ D PHPEHU RI WKH DXGLW WHDP
!!! 9!  9"D  %1 ! " C !!! 9!  9& " !" " !"  " H  " !@ !@A !!  "  ( ! Y B! i Qh "&&" ! %@ 8Q  ! !  B i1 h " @ %!4 1 %" 9&" 2  B i1 Th !((1 2 " !&!4 "T B i  h %  " 2  !(! (" ! !& " !!!( ! @ V57 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  @Q

" (" !E  9"D  %1 ! " C" (" !E  !@ " &"(" " !" " !"  " H " !@!@A !!  "  ( ! Y B!!! 9! @ !@"  9" " !  " !!!(! @  X 57 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  @Q



' 6XIILFLHQW UHOHYDQW GDWD & 3ODQQLQJ DQG VXSHUYLVLRQ % 'XH SURIHVVLRQDO FDUH $ ,QGHSHQGHQFH LQWHUSUHWDWLRQV :KLFK RI WKH IROORZLQJ LV QRW D VWDQGDUG FRYHUHG E\ 5XOH " 5XOH  *HQHUDO 6WDQGDUGV UHTXLUHV D PHPEHU WR FRPSO\ ZLWK VWDQGDUGV DQG



0DUDOHH KDV EHHQ DSSURDFKHG E\ - )R[ (QWHUWDLQPHQW WR SHUIRUP DQ DXGLW RI KHU WKHDWUH FRPSDQ\ 0DUDOHH KDV QHYHU DXGLWHG D WKHDWUH FRPSDQ\ EHIRUH 0DUDOHH FDQ

$ 'HFOLQH WKH HQJDJHPHQW EHFDXVH VKH GRHV QRW KDYH WKH VSHFLDOL]HG LQGXVWU\ NQRZOHGJH % 5HFRPPHQG DQRWKHU DXGLWRU DQG UHFHLYH D IHH IRU WKH UHIHUUDO & $FFHSW WKH HQJDJHPHQW LI VKH FDQ REWDLQ WKH UHTXLUHG NQRZOHGJH EHIRUH WKH HQG RI WKH HQJDJHPHQW ' $FFHSW WKH HQJDJHPHQW ZLWK WKH XQGHUVWDQGLQJ WKDW DGGLWLRQDO KRXUV ZLOO EH UHTXLUHG WR OHDUQ DQG XQGHUVWDQG WKH QDWXUH RI WKH EXVLQHVV
" (" !E  9"D  %1 ! " C" (" !E  !@ " &"(" " !" " !" " H " !@!@A !!  "  ( ! Y B!!! 9! @ !@"  9" " !  " !!!(! @  X 57 !4 ! 321 %!0 & !# ) ((  99 &"" @!!E   %!0  @Q

!!! 9!  9"D  %1 ! " C !!! 9!  9& " !" " !"  " H  " !@ !@A !!  "  ( ! Y B! i Qh "&&" ! %@ 8Q  !!  B i1 h " @ %!4 1 %" 9&" 2  B i1 Th !((1 2 " !&!4 "T B i  h %  " 2  !(! (" ! !& " !!!( ! @ V57 !4 ! 321 %!0 & !# ) ((  99 &"" @!!E   %!0  @Q



' 7KH FOLHQW GLVFORVH WKH FRQWUROOHU V UHODWLRQVKLS LQ WKH QRWHV WR WKH ILQDQFLDO & 7KH FOLHQW ILQG D QHZ DXGLW ILUP % 7KH QHZ FRQWUROOHU QRW WDNH SDUW LQ DQ\ GLVFXVVLRQV UHJDUGLQJ WKH UHWHQWLRQ RI $ 7KH QHZ FRQWUROOHU VHYHU DOO UHODWLRQV ZLWK WKH &3$ ILUP LQFOXGLQJ DQ\ FRQWUROOHU 6DUEDQHV2[OH\ UXOHV UHTXLUH WKDW $Q DXGLW FOLHQW KLUHV D PHPEHU RI WKH DXGLW HQJDJHPHQW WHDP WR EH LWV QHZ WKH DXGLW IRUP UHWLUHPHQW IXQGV

VWDWHPHQWV



7KH 6(& UHTXLUHV FRPSDQLHV WR GLVFORVH IHHV SDLG WR LQGHSHQGHQW SXEOLF DFFRXQWLQJ ILUPV IRU DXGLW DQG FRQVXOWLQJ VHUYLFHV LQ WKH EHOLHI WKDW

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
!!! 9!  9"D  %1 ! " C !!! 9!  9& " !" " !"  " H  " !@ !@A !!  "  ( ! Y B! i Qh "&&" ! %@ 8Q  ! !  B i1 h " @ %!4 1 %" 9&" 2  B i1 Th !((1 2 " !&!4 "T B i  h %  " 2  !(! (" ! !& " !!!( ! @ V57 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %$@D    @Q



&3$ .URJVWDG LV WKH H[HFXWLYH LQ FKDUJH RI WKH 2PDKD RIILFH RI WKH DXGLW ILUP +H LV UHVSRQVLEOH IRU WKH SUDFWLFH LQ DOO DUHDV RI DXGLW WD[ DQG FRQVXOWLQJ EXW KH GRHV QRW VHUYH DV D ILHOG DXGLW SDUWQHU RU D UHYLHZHU &3$ :DUG LV WKH SDUWQHU LQ FKDUJH RI WKH 'RGJHU ,QF DXGLW DQ 6(& ILOLQJ  7KH DXGLW ILUP V LQGHSHQGHQFH LV LPSDLUHG LI

$ .URJVWDG RZQV 'RGJHU FRPPRQ VWRFN % .URJVWDG V EURWKHU RZQV  VKDUHV RI 'RGJHU FRPPRQ VWRFN & :DUG V VLVWHULQODZ LV D VDOHV UHSUHVHQWDWLYH ZLWK D WHUULWRU\ LQ &DOLIRUQLD ' :DUG V IHOORZ SDUWQHU &3$ )HOL[ LQ WKH 2PDKD RIILFH KDV D ZLIH ZKR RZQV 'RGJHU VWRFN WKURXJK D PXWXDO IXQG KHOG LQ KHU RZQ HPSOR\HU V HPSOR\HH EHQHILW SODQ
!!! 9!  9"D  %1 ! " C !!! 9!  9& " !" " !"  " H  " !@ !@A !!  "  ( ! Y B! i Qh "&&" ! %@ 8Q  ! !  B i1 h " @ %!4 1 %" 9&" 2  B i1 Th !((1 2 " !&!4 "T B i h %  " 2  !(! (" ! !& " !!!( ! @ V57 !4 ! 321 %!0 & !# ) ((  99 &"" @!!E   %!0  @Q



:KLFK RI WKH IROORZLQJ SKLORVRSKLFDO SULQFLSOHV LQ HWKLFV HPSKDVL]HV WKH IROORZLQJ UXOHV UDWKHU WKDQ RQ WKH FRQVHTXHQFHV RI WKH GHFLVLRQ"

$ ,PSHUDWLYH SULQFLSOH % 8WLOLWDULDQLVP SULQFLSOH & *HQHUDOL]DWLRQ SULQFLSOH ' 0RUDO SULQFLSOH
! 9 @ 9""@  9"D  %1 ! " C @ 9""@ 9 "& (" ! 9 9 " Y!! %  B B!4 ! 9& !@ % &!2" 9 "! @ ! @ % "@ "!E )57 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  @Q



-XOLH DQG /LVD DUH VLVWHUV -XOLH LV D &3$ DXGLWLQJ WKH FRPSDQ\ ZKHUH /LVD ZRUNV -XOLH V LQGHSHQGHQFH LV LPSDLUHG LI

$ /LVD RZQV  SHUFHQW RI WKH FRPSDQ\ % /LVD LV WKH FRQWUROOHU & /LVD LV WKH PDUNHWLQJ PDQDJHU ' ,QGHSHQGHQFH LV LPSDLUHG LQ DOO RI WKHVH VLWXDWLRQV
99 &"" @!!E   %!0  @Q

" (" !E  9"D  %1 ! " C" (" !E  !@ " &"(" " !" " !" " H " !@!@A !!  "  ( ! Y B!!! 9! @ !@ "  9" " !  " !!!(! @  X 57 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  @Q

!!! 9!  9"D  %1 ! " C !!! 9!  9& " !" " !"  " H " !@!@A !!  "  ( ! Y B! i Qh "&&" ! %@ 8Q  ! !  B i1 h " @ %!4 1 %" 9&" 2  B i1 Th !((1 2 " !&!4 "T B i  h %  " 2  !(! (" ! !& " !!!( ! @ V57 !4 ! 321 %!0 & !# ) (( 



' *HQHUDO DQG 7HFKQLFDO 6WDQGDUGV & 5HVSRQVLELOLWLHV WR &ROOHDJXHV % ,QGHSHQGHQFH ,QWHJULW\ DQG 2EMHFWLYLW\ $ 5HVSRQVLELOLWLHV WR &OLHQWV :KLFK RI WKH IROORZLQJ VHFWLRQV LV QRW LQFOXGHG LQ WKH $,&3$ 5XOHV RI &RQGXFW"



7KH LQWHUSUHWDWLRQ RI 5XOH  ,QGHSHQGHQFH DOORZV PHPEHUV WR

$ +ROG D PDWHULDO LQGLUHFW LQWHUHVW LQ D FOLHQW % +DYH ORDQV IURP D FOLHQW WKDW DUH FROODWHUDOL]HG E\ FDVK GHSRVLWV KHOG E\ WKH FOLHQW & +DYH KRPH PRUWJDJHV ZLWK D FOLHQW HYHQ LI WKH\ SDUWLFLSDWH LQ WKH HQJDJHPHQW ' %H D WUXVWHH RI D FOLHQW SHQVLRQ RU SURILW VKDULQJ WUXVW
!!! 9!  9"D  %1 ! " C !!! 9!  9& " !" " !"  " H  " !@ !@A !!  "  ( ! Y B! i Qh "&&" ! %@ 8Q  ! !  B i1 h " @ %!4 1 %" 9&" 2  B i1 Th !((1 2 " !&!4 "T B i  h %  " 2  !(! (" ! !& " !!!( ! @ V57 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  @Q



7KH $,&3$ &RXQFLO KDV GHVLJQDWHG WKH IROORZLQJ ERGLHV WR SURQRXQFH DFFRXQWLQJ SULQFLSOHV XQGHU 5XOH  H[FHSW WKH

$ )LQDQFLDO $FFRXQWLQJ 6WDQGDUGV %RDUG % $XGLWLQJ 3URFHGXUHV %RDUG & $FFRXQWLQJ 3ULQFLSOHV %RDUG ' *RYHUQPHQWDO $FFRXQWLQJ 6WDQGDUGV %RDUG
@!!E   %!0  @Q

" (" !E  9"D  %1 ! " C" (" !E  !@ " &"(" " !" " !"  " H " !@!@A !!  "  ( ! Y B!!! 9! @ !@"  9" " !  " !!!(! @  X 57 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  @Q

" (" !E  9"D  %1 ! " C" (" !E  !@ " &"(" " !" " !" " H " !@!@A !!  " ( ! Y B!!! 9! @ !@"  9" " !  " !!!(! @  X 57 !4 ! 321 %!0 Q 6 (( !2&!&!E &""



' $XWKRUL]DWLRQ IRU RWKHUV WR PDNH PLVOHDGLQJ HQWULHV LQ UHFRUGV & )DLOXUH WR IROORZ JRYHUQPHQW DXGLW VWDQGDUGV LQ JRYHUQPHQW DXGLWV % :LWKKROGLQJ RI D FOLHQW V ERRNV XQWLO D SURIHVVLRQDO IHH LV SDLG $ 0HPEHUVKLS LQ DQ DFWLYLVW SROLWLFDO SDUW\ 7KH LQWHUSUHWDWLRQ RI 5XOH  $FWV 'LVFUHGLWDEOH WR WKH 3URIHVVLRQ ZRXOG QRW LQFOXGH



$FFRUGLQJ WR 5XOH  $FFRXQWLQJ 3ULQFLSOHV UHTXLUHV WKH DXGLWRU WR DGKHUH WR RIILFLDO SURQRXQFHPHQWV H[FHSW ZKHQ

$ &RPSO\LQJ ZRXOG YLRODWH FOLHQW FRQILGHQWLDOLW\ % 3HQGLQJ OHJLVODWLRQ PD\ FKDQJH WKH UHSRUWLQJ UHTXLUHPHQWV RI WKH FOLHQW & $GKHUHQFH WR D SURQRXQFHPHQW ZRXOG EH PLVOHDGLQJ ' ,W KDV EHHQ HVWDEOLVKHG WKDW ILQDQFLDO VWDWHPHQW XVHUV SUHIHU DQ DOWHUQDWLYH SUHVHQWDWLRQ RI LQIRUPDWLRQ
" (" !E  9"D  %1 ! " C" (" !E  !@ " &"(" " !" " !"  " H " !@!@A !!  "  ( ! Y B!!! 9! @ !@"  9" " !  " !!!(! @  X 57 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  @Q



7KH $,&3$ KDV LQWHUSUHWHG 5XOH  &RQILGHQWLDO &OLHQW ,QIRUPDWLRQ WR H[SOLFLWO\ DOORZ D &3$ WR GLYXOJH FRQILGHQWLDO FOLHQW LQIRUPDWLRQ WR

$ 7KH 6(& % 7KH 86 'HSDUWPHQW RI -XVWLFH & 7KH $,&3$ 3URIHVVLRQDO (WKLFV 'LYLVLRQ ' 7KH )HGHUDO 7UDGH &RPPLVVLRQ
@!!E   %!0  @Q

!!! 9!  9"D  %1 ! " C !!! 9!  9& " !" " !"  " H  " !@ !@A !!  "  ( ! Y B! i Qh "&&" ! %@ 8Q  ! !  B i1 h " @ %!4 1 %" 9&" 2  B i1 Th !((1 2 " !&!4 "T B i  h %  " 2  !(! (" ! !& " !!!( ! @ V57 !4 ! 321 %!0 & !# ) ((  99 &"" @!!E   %!0  @Q

" (" !E  9"D  %1 ! " C" (" !E  !@ " &"(" " !" " !" " H " !@!@A !!  "  ( ! Y B!!! 9! @ !@"  9" " !  " !!!(! @  X 57 !4 ! 321 %!0 W G (( 99 &""



' $ SDUWLDO ILQDQFLDO LQWHUHVW LQ 'DUE\ & 1R ILQDQFLDO LQWHUHVW LQ 'DUE\ % $ GLUHFW ILQDQFLDO LQWHUHVW LQ 'DUE\ $ $Q LQGLUHFW ILQDQFLDO LQWHUHVW LQ 'DUE\ 3LQNQH\ LV FRQVLGHUHG WR KDYH LQYHVWHG  SHUFHQW RI LWV DVVHWV LQ WKH FRPPRQ VWRFN RI 3LQNQH\ V DXGLW FOLHQW 3HUU\ 3LQNQH\ &3$ LV RQH RI WKH JHQHUDO SDUWQHUV LQ D SDUWQHUVKLS ZKLFK LQ WXUQ 'DUE\ &RUSRUDWLRQ  $FFRUGLQJ WR WKH $,&3$ &RGH RI 3URIHVVLRQDO &RQGXFW



$ FOLHQW KDV RPLWWHG D VLJQLILFDQW GLVFORVXUH IURP WKH ILQDQFLDO VWDWHPHQWV 7KH DXGLWRU KDV DVNHG WKH FOLHQW WR LQFOXGH WKH LQIRUPDWLRQ EXW WKH FOLHQW UHIXVHV DQG FODLPV WKH LQIRUPDWLRQ LV FRQILGHQWLDO 7KH SRVLWLRQ RI WKH &3$ VKRXOG EH WKDW WKH LQIRUPDWLRQ

$ &DQQRW EH FRQVLGHUHG FRQILGHQWLDO LI LW LV QHFHVVDU\ WR WKH FRPSOHWHQHVV RI WKH ILQDQFLDO VWDWHPHQWV % &DQQRW EH FRQVLGHUHG FRQILGHQWLDO XQOHVV LW FDQ EH FRYHUHG E\ WKH DWWRUQH\ FOLHQW SULYLOHJH & ,V FRQILGHQWLDO DQG ZLOO EH GLVFORVHG RQO\ XQGHU VXESRHQD RU IRU D UHJXODWRU\ LQYHVWLJDWLRQ ' 6KRXOG EH GLVFXVVHG ZLWK WKH DXGLW FRPPLWWHH WR GHWHUPLQH ZKHWKHU WKH LQIRUPDWLRQ VKRXOG EH GLVFORVHG
" (" !E  9"D  %1 ! " C" (" !E  !@ " &"(" " !" " !" " H " !@!@A !!  "  ( ! Y B!!! 9! @ !@"  9" " !  " !!!(! @  X 57 !4 ! 321 %!0 & !# ) ((  99 &"" @!!E   %!0  @Q



:KLFK RI WKH IROORZLQJ SKLORVRSKLFDO SULQFLSOHV LQ HWKLFV HPSKDVL]HV WKH FRQVLGHUDWLRQ RI SURMHFWLQJ WKH FRQVHTXHQFHV RI D FKRLFH LQ WHUPV RI WKLV TXHVWLRQ :KDW PD\ EH WKH FRQVHTXHQFHV RI VLPLODU SHUVRQV PDNLQJ WKLV FKRLFH LQ VLPLODU FLUFXPVWDQFHV"

$ ,PSHUDWLYH SULQFLSOH % 8WLOLWDULDQ SULQFLSOH & *HQHUDOL]DWLRQ SULQFLSOH ' 0RUDO SULQFLSOH
! 9 @ 9""@  9"D  %1 ! " C @ 9""@ 9 "& (" ! 9 9 " Y!! %  B B!4 ! 9& !@ % &!2" 9 "! @ ! @ % "@ "!E )57 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  @Q



:KLFK RI WKH IROORZLQJ IRUPV RI RUJDQL]DWLRQ ZRXOG QRW EH DOORZHG XQGHU 5XOH  5HVROXWLRQ &RQFHUQLQJ )RUP RI 2UJDQL]DWLRQ DQG 1DPH RI WKH 3URIHVVLRQDO &RGH RI &RQGXFW"

$ /LPLWHG OLDELOLW\ SDUWQHUVKLS DOO SDUWQHUV DUH &3$V % /LPLWHG OLDELOLW\ SDUWQHUVKLS  SHUFHQW RI SDUWQHUV DUH &3$V & /LPLWHG OLDELOLW\ FRUSRUDWLRQ DOO VKDUHKROGHUV DUH &3$V ' 3DUWQHUVKLS  SHUFHQW RI SDUWQHUV DUH &3$V
" (" !E  9"D  %1 ! " C" (" !E  !@ " &"(" " !" " !"  " H " !@!@A !!  "  ( ! Y B!!! 9! @ !@"  9" " !  " !!!(! @  X 57 !4 ! 321 %!0 Q 6 (( 99 &"" @!!E   %!0  @Q



5HG DQG *UHHQ &3$V DUH WKH H[WHUQDO DXGLWRUV IRU %OXH &RUSRUDWLRQ D SXEOLFO\ KHOG FRPSDQ\ %OXH &RUSRUDWLRQ KDV RXWVRXUFHG LWV LQWHUQDO DXGLW IXQFWLRQ WR 5HG DQG *UHHQ :KLFK RI WKH IROORZLQJ VWDWHPHQWV LV WUXH"

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
!!! 9!  9"D  %1 ! " C !!! 9!  9& " !" " !"  " H " !@!@A !!  "  ( ! Y B! i Qh "&&" ! %@ 8Q  ! !  B i1 h " @ %!4 1 %" 9&" 2  B i1 Th !((1 2 " !&!4 "T B i  h %  " 2  !(! (" ! !& " !!!( ! @ V57 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %$@D    @Q

!!! 9!  9"D  %1 ! " C !!! 9!  9& " !" " !"  " H  " !@ !@A !!  "  ( ! Y B! i Qh "&&" ! %@ 8Q  ! !  B i1 h " @ %!4 1 %" 9&" 2  B i1 Th !((1 2 " !&!4 "T B i  h %  " 2  !(! (" ! !& " !!!( ! @ V57 !4 ! 321 %!0 & !# ) ((  99 &"" @!!E   %!0  @Q



' $ 9LVD FUHGLW FDUG LVVXHG E\ %LJ %DQN ZLWK D EDODQFH RI   & $ SHUVRQDO ORDQ FROODWHUDOL]HG E\ FDVK GHSRVLWV DW %LJ %DQN % $ FDU ORDQ FROODWHUDOL]HG E\ WKH FDU $ $ KRPH ORDQ ZLWK WKH YDOXH RI WKH KRXVH H[FHHGLQJ WKH PRUWJDJH EDODQFH ZRXOG PRVW OLNHO\ LPSDLU 9LROHW V LQGHSHQGHQFH ZLWK UHJDUG WR %LJ %DQN" 9LROHW &3$ DXGLWV %LJ %DQN D ORFDO ILQDQFLDO LQVWLWXWLRQ :KLFK RI WKH IROORZLQJ

!!! 9!  9"D   ! " C !!! 9!  9& " !" " !"  " H  " !@ !@A !!  "  ( ! Y B! i Qh "&&" ! %@ 8Q  ! !  B i1 h " @ %!4 1 %" 9&" 2  B i1 Th !((1 2 " !&!4 "T B i  h %  " 2  !(! (" ! !& " !!!( ! @ V57 !4 ! 321 %!0 & !# ) ((  99 &"" @!!E   %!0  @Q



' 7KH FOLHQW LV WKH RQO\ WHQDQW LQ D FRPPHUFLDO EXLOGLQJ RZQHG E\ WKH DXGLWRU & 7KH FOLHQW RZHV WKH DXGLWRU IHHV IRU PRUH WKDQ WZR \HDUV SULRU WR WKH LVVXDQFH % 7KH DXGLWRU V FKHFNLQJ DFFRXQW WKDW LV IXOO\ LQVXUHG E\ D IHGHUDO DJHQF\ LV KHOG $ 7KH DXGLWRU LV WKH RIILFLDOO\ DSSRLQWHG VWRFN WUDQVIHU DJHQW RI D FOLHQW LQGHSHQGHQW LQ ZKLFK RI WKH IROORZLQJ LQVWDQFHV" $FFRUGLQJ WR WKH SURIHVVLRQ V HWKLFDO VWDQGDUGV DQ DXGLWRU ZRXOG EH FRQVLGHUHG DW D FOLHQW ILQDQFLDO LQVWLWXWLRQ RI WKH DXGLW UHSRUW

" (" !E  9"D   ! " C" (" !E  !@ " &"(" " !" " !" " H " !@!@A !!  "  ( ! Y B!!! 9! @ !@"  9" " !  " !!!(! @  X 57 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  @Q



' 7KH ILUP PXVW EH D GXHVSD\LQJ PHPEHU & $W OHDVW RQH RI WKH RZQHUV PXVW EH D PHPEHU % 7KH RZQHUV ZKRVH QDPHV DSSHDU LQ WKH ILUP QDPH PXVW EH PHPEHUV $ $OO RZQHUV PXVW EH PHPEHUV RI WKH $PHULFDQ ,QVWLWXWH RI &HUWLILHG 3XEOLF $FFRXQWDQWV RQ LWV OHWWHUKHDG" :KLFK RI WKH IROORZLQJ LV UHTXLUHG IRU D &3$ ILUP WR GHVLJQDWH LWVHOI DV 0HPEHUV

!!! 9!  9"D   ! " C !!! 9!  9& " !" " !"  " H  " !@ !@A !!  "  ( ! Y B! i Qh "&&" ! %@ 8Q  ! !  B i1 h " @ %!4 1 %" 9&" 2  B i1 Th !((1 2 " !&!4 "T B i  h %  " 2  !(! (" ! !& " !!!( ! @ V57 !4 ! 321 %!0 & !# ) ((  99 &"" @!!E   %!0  @Q



' 7KH &3$ UHGXFHG ;= V XVXDO DXGLW IHH E\  SHUFHQW SULRU WR WKH DXGLW EHFDXVH & 7KH &3$ KDV DQ DXWRPRELOH ORDQ IURP ;= D ILQDQFLDO LQVWLWXWLRQ 7KH ORDQ LV % %RWK WKH &3$ DQG ;= V SUHVLGHQW RZQ  SHUFHQW RI )2% &RUSRUDWLRQ D $ 7KH &3$ DQG ;= V SUHVLGHQW DUH ERWK RQ WKH ERDUG RI GLUHFWRUV RI &2' ODFN LQGHSHQGHQFH" ,Q ZKLFK RI WKH IROORZLQJ FLUFXPVWDQFHV ZRXOG D &3$ ZKR DXGLWV ;= &RUSRUDWLRQ FROODWHUDOL]HG E\ WKH DXWRPRELOH FORVHO\ KHOG FRPSDQ\ &RUSRUDWLRQ

;= V ILQDQFLDO FRQGLWLRQ ZDV XQIDYRUDEOH



$FFRUGLQJ WR WKH HWKLFDO VWDQGDUGV RI WKH SURIHVVLRQ ZKLFK RI WKH IROORZLQJ DFWV LV JHQHUDOO\ SURKLELWHG"

$ 3XUFKDVLQJ D SURGXFW IURP D WKLUG SDUW\ DQG UHVHOOLQJ LW WR D FOLHQW % :ULWLQJ D ILQDQFLDO PDQDJHPHQW QHZVOHWWHU SURPRWHG DQG VROG E\ D SXEOLVKLQJ FRPSDQ\ & $FFHSWLQJ D FRPPLVVLRQ IRU UHFRPPHQGLQJ D SURGXFW WR DQ DXGLW FOLHQW ' $FFHSWLQJ HQJDJHPHQWV REWDLQHG WKURXJK WKH HIIRUWV RI WKLUG SDUWLHV
" (" !E  9"D   ! " C" (" !E  !@ " &"(" " !" " !" " H " !@!@A !!  "  ( ! Y B!!! 9! @ !@ "  9" " !  " !!!(! @  X 57 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  @Q



$FFRUGLQJ WR WKH HWKLFDO VWDQGDUGV RI WKH SURIHVVLRQ ZKLFK RI WKH IROORZLQJ DFWV LV JHQHUDOO\ SURKLELWHG"

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
" (" !E  9"D   ! " C" (" !E  !@ " &"(" " !" " !" " H " !@!@A !!  "  ( ! Y B!!! 9! @ !@ "  9" " !  " !!!(! @  X 57 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  @Q



:KLFK RI WKH IROORZLQJ VWDWHPHQWV LQFOXGHG LQ WKH DGYHUWLVLQJ RI D &3$ ILUP LV SHUPLVVLEOH DFFRUGLQJ WR 5XOH  $GYHUWLVLQJ DQG 2WKHU )RUPV RI 6ROLFLWDWLRQ"

$ %RE %XOOHW &(2 RI $2QH &RUS VWDWHV WKDW ZH DUH WKH EHVW DXGLWRUV KLV FRPSDQ\ KDV HYHU XVHG % :H SURYLGH WKH EHVW DXGLW FRYHUDJH RI DQ\ ILUP LQ WKH VWDWH & :H DXGLW WKH ILYH ODUJHVW PDQXIDFWXULQJ FRPSDQLHV LQ WKH VWDWH ' :H KDYH VHYHUDO WD[ SDUWQHUV ZKR ZRUN FORVHO\ ZLWK MXGJHV DQG ,56 DWWRUQH\V RQ KLJKSURILOH OHJDO LVVXHV
" (" !E  9"D  %1 ! " C" (" !E  !@ " &"(" " !" " !" " H " !@!@A !!  "  ( ! Y B!!! 9! @ !@"  9" " !  " !!!(! @  X 57 !4 ! 321 %!0 & !# ) ((  99 &"" @!!E   %!0  @Q



7R ZKLFK JURXS FDQ D &3$ SURYLGH DXGLW GRFXPHQWDWLRQ ZLWKRXW EHLQJ VXESRHQDHG DQG ZLWKRXW WKH FOLHQW V FRQVHQW"

$ 7KH ,56 % 7KH )$6% & $QRWKHU &3$ ILUP SHUIRUPLQJ D SHHU UHYLHZ ' $QRWKHU &3$ ILUP FRQVLGHULQJ WKH SXUFKDVH RI WKH DXGLWLQJ ILUP
@Q

!!! 9!  9"D  %1 ! " C !!! 9!  9& " !" " !"  " H  " !@ !@A !!  "  ( ! Y B! i Qh "&&" ! %@ 8Q  ! !  B i1 h " @ %!4 1 %" 9&" 2  B i1 Th !((1 2 " !&!4 "T B i  h %  " 2  !(! (" ! !& " !!!( ! @ V57 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  @Q

" (" !E  9"D  %1 ! " C" (" !E  !@ " &"(" " !" " !" " H " !@!@A !!  "  ( ! Y B!!! 9! @ !@"  9" " !  " !!!(! @  X 57 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0 



5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN ' $XGLWV VKRXOG EH SODQQHG DQG SURSHUO\ VXSHUYLVHG & 7KH\ QHHG WR FRPSO\ ZLWK WKH 3HUIRUPDQFH 3ULQFLSOH RI *$$6 % 7KH\ ZDQW WKH SXEOLF DW ODUJH WR KDYH FRQILGHQFH LQ WKH SURIHVVLRQ $ 7KH\ ZDQW WR LPSUHVV WKH SXEOLF ZLWK WKHLU LQGHSHQGHQFH LQ IDFW $XGLWRUV DUH LQWHUHVWHG LQ KDYLQJ LQGHSHQGHQFH LQ DSSHDUDQFH EHFDXVH

!!! 9!  9"D  %1 ! " C !!! 9!  9& " !" " !"  " H  " !@ !@A !!  "  ( ! Y B! i Qh "&&" ! %@ 8Q  ! !  B i1 h " @ %!4 1 %" 9&" 2  B i1 Th !((1 2 " !&!4 "T B i  h %  " 2  !(! (" ! !& " !!!( ! @ V57 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  @Q



5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN ' 7KH 3&$2% & 7KH DXGLW FRPPLWWHH % 6HQLRU PDQDJHPHQW $ 7KH SXEOLF DFFRXQWLQJ ILUP (QVXULQJ WKDW WKH DXGLWRU LV LQGHSHQGHQW LQ DSSHDUDQFH LV WKH UHVSRQVLELOLW\ RI



,I D SXEOLF DFFRXQWLQJ ILUP VD\V LW DOZD\V IROORZV WKH UXOH WKDW UHTXLUHV DGKHUHQFH WR )$6% SURQRXQFHPHQWV LQ RUGHU WR JLYH D VWDQGDUG XQTXDOLILHG DXGLWRUV UHSRUW LW LV IROORZLQJ D SKLORVRSK\ FKDUDFWHUL]HG E\

$ 7KH LPSHUDWLYH SULQFLSOH LQ PRUDO SKLORVRSK\ % 7KH XWLOLWDULDQ SULQFLSOH LQ PRUDO SKLORVRSK\ & 7KH JHQHUDOL]DWLRQ SULQFLSOH LQ PRUDO SKLORVRSK\ ' 5HOLDQFH RQ PHPEHUV FROOHFWLYH FRQVFLHQFH 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

! 9 @ 9""@  9"D  %1 ! " C @ 9""@ 9 "& (" ! 9 9 " Y!! %  B B!4 ! 9& !@ % &!2" 9 "! @ ! @ % "@ "!E )57 !4 ! 321 %!0 & !# ) ((  99 &"" @!!E   %!0  @Q



:KLFK RI WKH IROORZLQJ DJHQFLHV LVVXHV LQGHSHQGHQFH UXOHV IRU WKH DXGLWRUV RI SXEOLF FRPSDQLHV"

$ )LQDQFLDO $FFRXQWLQJ 6WDQGDUGV %RDUG )$6%  % *RYHUQPHQW $FFRXQWDELOLW\ 2IILFH *$2  & 3XEOLF &RPSDQ\ $FFRXQWLQJ 2YHUVLJKW %RDUG 3&$2%  ' $,&3$ $FFRXQWLQJ DQG 5HYLHZ 6HUYLFHV &RPPLWWHH $56&  5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

!" %!4 "T  9"D  %1 ! " C&( %" 2 9    "( ! @ ! !$& @ ! ! !!(( !@ ( ! G 57 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  @Q



$XGLW LQGHSHQGHQFH LQ IDFW LV PRVW FOHDUO\ ORVW ZKHQ

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

 %1 ! " C !!! 9!  9& " !" " !"  " H  " !@ !@A !!  "  ( ! Y B! i Qh "&&" ! %@ 8Q  ! !  B i1 h " @ %!4 1 %" 9&" 2  B i1 Th !((1 2 " !&!4 "T B i  h %  " 2  !(! (" ! !& " !!!( ! @ V57 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %!0  @Q !!! 9!  9"D

!!! 9!  9"D  %1 ! " C !!! 9!  9& " !" " !"  " H  " !@ !@A !!  "  ( ! Y B! i Qh "&&" ! %@ 8Q  ! !  B i1 h " @ %!4 1 %" 9&" 2  B i1 Th !((1 2 " !&!4 "T B i  h %  " 2  !(! (" ! !& " !!!( ! @ V57 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  @Q



5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN ' (QVXULQJ WKDW DOO QRQDXGLW VHUYLFHV DUH SURYLGHG E\ DXGLWRUV ZKR GR QRW & 5HSRUWLQJ RQ DXGLWRU LQGHSHQGHQFH WR WKH 3&$2% % (QVXULQJ WKDW QRQDXGLW VHUYLFHV SURYLGHG E\ WKH DXGLWRU GR QRW LPSDLU $ (QVXULQJ WKDW SDUWQHUV RI WKH SXEOLF DFFRXQWLQJ ILUP DUH QRW VWRFNKROGHUV LQ WKH 7KH DXGLW FRPPLWWHH V UHVSRQVLELOLW\ IRU DXGLWRU LQGHSHQGHQFH FRQFHUQV LQGHSHQGHQFH FRPSDQ\ SHUIRUP WKH ILQDQFLDO VWDWHPHQW DXGLW

" (" !E  9"D  %1 ! " C" (" !E  !@ " &"(" " !" " !" " H " !@!@A !!  "  ( ! Y B!!! 9! @ !@"  9" " !  " !!!(! @  X 57 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  @Q



5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN ' 5XOH  &RQWLQJHQW )HHV & 5XOH  &RQILGHQWLDO &OLHQW ,QIRUPDWLRQ % 5XOH  ,QWHJULW\ DQG 2EMHFWLYLW\ $ 5XOH  ,QGHSHQGHQFH RI WKH IROORZLQJ $,&3$ UXOHV RI FRQGXFW" $,&3$ PHPEHUV ZKR ZRUN LQ LQGXVWU\ DQG JRYHUQPHQW PXVW DOZD\V XSKROG ZKLFK



$ SXEOLF DFFRXQWLQJ ILUP V LQGHSHQGHQFH LV LPSDLUHG ZKHQ PHPEHUV RI WKH DXGLW HQJDJHPHQW WHDP GRHV ZKLFK RI WKH IROORZLQJ IRU D SXEOLF FRPSDQ\ DXGLW FOLHQW"

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

 %1 ! " C !!! 9!  9& " !" " !"  " H  " !@ !@A !!  "  ( ! Y B! i Qh "&&" ! %@ 8Q  ! !  B i1 h " @ %!4 1 %" 9&" 2  B i1 Th !((1 2 " !&!4 "T B i h %  " 2  !(! (" ! !& " !!!( ! @ V57 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %!0  @Q !!! 9!  9"D



:KHQ WKH SXEOLF DFFRXQWLQJ ILUP DXGLWV )81'$ LQ D PXWXDO IXQG FRPSOH[ WKDW KDV VLVWHU IXQGV )81'% DQG )81'& LQGHSHQGHQFH IRU WKH DXGLW RI )81'$ LV QRW LPSDLUHG ZKHQ

$ 0DQDJHULDOOHYHO SURIHVVLRQDOV ORFDWHG LQ WKH RIILFH ZKHUH WKH HQJDJHPHQW DXGLW SDUWQHU LV ORFDWHG EXW ZKR DUH QRW RQ WKH HQJDJHPHQW WHDP RZQ VKDUHV LQ )81'% ZKLFK LV QRW DQ DXGLW FOLHQW % 7KH ZLIH RI WKH )81'$ DXGLW HQJDJHPHQW SDUWQHU RZQV VKDUHV LQ )81'& DQ DXGLW FOLHQW RI DQRWKHU RI WKH ILUP V RIILFHV DQG WKHVH VKDUHV DUH KHOG WKURXJK WKH ZLIH V HPSOR\HH EHQHILW SODQ IXQGHG E\ KHU HPSOR\HU WKH $OO6WHHO)HQFH &RPSDQ\ & %RWK D DQG E  ' 1HLWKHU D QRU E  5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

 %1 ! " C !!! 9!  9& " !" " !"  " H  " !@ !@A !!  "  ( ! Y B! i Qh "&&" ! %@ 8Q  ! !  B i1 h " @ %!4 1 %" 9&" 2  B i1 Th !((1 2 " !&!4 "T B i  h %  " 2  !(! (" ! !& " !!!( ! @ V57 !4 ! 321 %!0 W G (( 99 &""  $E    %!0  @Q !!! 9!  9"D

!!! 9!  9"D  %1 ! " C !!! 9!  9& " !" " !"  " H  " !@ !@A !!  "  ( ! Y B! i Qh "&&" ! %@ 8Q  ! !  B i1 h " @ %!4 1 %" 9&" 2  B i1 Th !((1 2 " !&!4 "T B i  h %  " 2  !(! (" ! !& " !!!( ! @ V57 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  @Q



5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN ' 8QFOH & 3DUHQW % 6SRXVDO HTXLYDOHQW $ 6SRXVH PHPEHU DV GHILQHG E\ WKH $,&3$" :KLFK RI WKH IROORZLQJ LV FRQVLGHUHG D FORVH UHODWLYH EXW QRW DQ LPPHGLDWH IDPLO\



:KLFK RI WKH IROORZLQJ LV WUXH LI DQ DXGLWRU SHUIRUPV QRQDXGLW VHUYLFHV IRU D JRYHUQPHQW HQWLW\"

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

" (" !E  9"D

 %1 ! " C" (" !E  !@ " &"(" " !" " !" " H " !@!@A !!  "  ( ! Y B!!! 9! @ !@ "  9" " !  " !!!(! @  X 57 !4 ! 321 %!0 W G (( 99 &"" @!!E   %!0  @Q



:KLFK RI WKH IROORZLQJ LV WUXH"

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

 %1 ! " C !!! 9!  9& " !" " !"  " H  " !@ !@A !!  "  ( ! Y B! i Qh "&&" ! %@ 8Q  ! !  B i1 h " @ %!4 1 %" 9&" 2  B i1 Th !((1 2 " !&!4 "T B i  h %" 2  !(! (" ! !& " !!!( ! @ V57 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %$@D    @Q !!! 9!  9"D



:KLFK RI WKH IROORZLQJ ERGLHV GHVLJQDWHG E\ &RXQFLO KDYH EHHQ DXWKRUL]HG WR SURPXOJDWH JHQHUDO VWDQGDUGV HQIRUFHDEOH XQGHU 5XOH  RI WKH $,&3$ &RGH RI 3URIHVVLRQDO &RQGXFW"

$ $,&3$ 'LYLVLRQ RI 3URIHVVLRQDO (WKLFV % )LQDQFLDO $FFRXQWLQJ 6WDQGDUGV %RDUG & *RYHUQPHQW $FFRXQWLQJ 6WDQGDUGV %RDUG ' $FFRXQWLQJ DQG 5HYLHZ 6HUYLFHV &RPPLWWHH 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

!" %!4 "T  9"D  %1 ! " C&( %" 2 9    "( ! @ ! !$& @ ! ! !!(( !@ ( ! G 57 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  @Q



:KLFK RI WKH IROORZLQJ ERGLHV GHVLJQDWHG E\ &RXQFLO KDYH EHHQ DXWKRUL]HG WR SURPXOJDWH DFFRXQWLQJ SULQFLSOHV HQIRUFHDEOH XQGHU 5XOH  RI WKH $,&3$ &RGH RI 3URIHVVLRQDO &RQGXFW"

$ $XGLWLQJ 6WDQGDUGV %RDUG % )HGHUDO $FFRXQWLQJ 6WDQGDUGV $GYLVRU\ %RDUG & &RQVXOWLQJ 6HUYLFHV ([HFXWLYH &RPPLWWHH ' $FFRXQWLQJ DQG 5HYLHZ 6HUYLFHV &RPPLWWHH 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

" (" !E  9"D  %1 ! " C" (" !E  !@ " &"(" " !" " !" " H " !@!@A !!  "  ( ! Y B!!! 9! @ !@ "  9" " !  " !!!(! @  X 57 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  @Q



3KLO *UHE KDV D WKULYLQJ SUDFWLFH LQ ZKLFK KH DVVLVWV DWWRUQH\V LQ SUHSDULQJ OLWLJDWLRQ GHDOLQJ ZLWK DFFRXQWLQJ DQG DXGLWLQJ PDWWHUV 3KLO LV SUDFWLFLQJ SXEOLF DFFRXQWLQJ LI KH

$ 8VHV KLV &3$ GHVLJQDWLRQ RQ KLV OHWWHUKHDG DQG EXVLQHVV FDUG % ,V LQ SDUWQHUVKLS ZLWK DQRWKHU &3$ & 3UDFWLFHV LQ D SURIHVVLRQDO FRUSRUDWLRQ ZLWK RWKHU &3$V ' 1HYHU OHWV KLV FOLHQWV NQRZ WKDW KH LV D &3$ 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

" (" !E  9"D  %1 ! " C" (" !E  !@ " &"(" " !" " !" " H " !@!@A !!  "  ( ! Y B!!! 9! @ !@"  9" " !  " !!!(! @  X 57 !4 ! 321 %!0 & !# ) ((  99 &"" @!!E   %!0  @Q



7KH $,&3$ UHPRYHG LWV JHQHUDO SURKLELWLRQ RI &3$V WDNLQJ FRPPLVVLRQV DQG FRQWLQJHQW IHHV EHFDXVH

$ &3$V SUHIHU PRUH SULFH FRPSHWLWLRQ WR OHVV % &RPPLVVLRQV DQG FRQWLQJHQW IHHV HQKDQFH DXGLW LQGHSHQGHQFH & 1RWKLQJ LV LQKHUHQWO\ ZURQJ DERXW WKH IRUP RI IHHV FKDUJHG WR QRQDXGLW FOLHQWV ' 2EMHFWLYLW\ LV QRW DOZD\V QHFHVVDU\ LQ DFFRXQWLQJ DQG DXGLWLQJ VHUYLFHV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

" (" !E  9"D  %1 ! " C" (" !E  !@ " &"(" " !" " !" " H " !@!@A !!  "  ( ! Y B!!! 9! @ !@"  9" " !  " !!!(! @  X 57 !4 ! 321 %!0 & !# ) ((  99 &"" @!!E   %$@D    @Q



&3$ .DUD 5DPER LV WKH DXGLWRU RI $MD[ &RUSRUDWLRQ +HU DXGLW LQGHSHQGHQFH ZLOO QRW EH FRQVLGHUHG LPSDLUHG LI VKH

$ 2ZQV   ZRUWK RI $MD[ VWRFN % +DV D KXVEDQG ZKR RZQV   ZRUWK RI $MD[ VWRFN & +DV D VLVWHU ZKR LV WKH ILQDQFLDO YLFH SUHVLGHQW RI $MD[ ' 2ZQV   ZRUWK RI WKH VWRFN RI 3HULFOHV &RUSRUDWLRQ ZKLFK LV FRQWUROOHG E\ $MD[ DV D UHVXOW RI $MD[ V RZQHUVKLS RI  SHUFHQW RI 3HULFOHV VWRFN DQG 3HULFOHV FRQWULEXWHV  SHUFHQW RI WKH WRWDO DVVHWV DQG LQFRPH LQ $MD[ V ILQDQFLDO VWDWHPHQWV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

!!! 9!  9"D  %1 ! " C !!! 9!  9& " !" " !"  " H  " !@ !@A !!  "  ( ! Y B! i Qh "&&" ! %@ 8Q  ! !  B i1 h " @ %!4 1 %" 9&" 2  B i1 Th !((1 2 " !&!4 "T B i  h %" 2 !(! (" ! !& " !!!( ! @ V57 !4 ! 321 %!0 & !# ) ((  99 &"" @!!E   %!0  @Q



:KHQ D FOLHQW V ILQDQFLDO VWDWHPHQWV FRQWDLQ D PDWHULDO GHSDUWXUH IURP DQ )$6% 6WDWHPHQW RQ $FFRXQWLQJ 6WDQGDUGV DQG WKH SXEOLF DFFRXQWLQJ ILUP EHOLHYHV WKH GHSDUWXUH LV QHFHVVDU\ WR HQVXUH WKDW WKH VWDWHPHQWV DUH QRW PLVOHDGLQJ

$ 7KH SXEOLF DFFRXQWLQJ ILUP PXVW TXDOLI\ WKH DXGLWRUV UHSRUW IRU D GHSDUWXUH IURP *$$3 % 7KH SXEOLF DFFRXQWLQJ ILUP FDQ H[SODLQ ZK\ WKH GHSDUWXUH LV QHFHVVDU\ DQG WKHQ JLYH DQ XQTXDOLILHG RSLQLRQ SDUDJUDSK LQ WKH DXGLWRUV UHSRUW & 7KH SXEOLF DFFRXQWLQJ ILUP PXVW JLYH DQ DGYHUVH DXGLWRUV UHSRUW ' 7KH SXEOLF DFFRXQWLQJ ILUP FDQ JLYH WKH VWDQGDUG XQTXDOLILHG DXGLWRUV UHSRUW ZLWK DQ XQTXDOLILHG RSLQLRQ SDUDJUDSK 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

" (" !E  9"D  %1 ! " C" (" !E  !@ " &"(" " !" " !"  " H " !@!@A !!  "  ( ! Y B!!! 9! @ !@"  9" " !  " !!!(! @  X 57 !4 ! 321 %!0 W G (( 99 &"" %" 9!E   %!0  @Q



:KLFK RI WKH IROORZLQJ ZRXOG QRW EH FRQVLGHUHG FRQILGHQWLDO LQIRUPDWLRQ REWDLQHG LQ WKH FRXUVH RI DQ HQJDJHPHQW IRU ZKLFK WKH FOLHQW V FRQVHQW ZRXOG EH QHHGHG IRU GLVFORVXUH"

$ ,QIRUPDWLRQ DERXW ZKHWKHU D FRQVXOWLQJ FOLHQW KDV SDLG WKH &3$ V IHHV RQ WLPH % 7KH DFWXDULDO DVVXPSWLRQV XVHG E\ D WD[ FOLHQW LQ FDOFXODWLQJ SHQVLRQ H[SHQVH & 0DQDJHPHQW V VWUDWHJLF SODQ IRU QH[W \HDU V ODERU QHJRWLDWLRQV ' ,QIRUPDWLRQ DERXW PDWHULDO FRQWLQJHQW OLDELOLWLHV UHOHYDQW IRU DXGLWHG ILQDQFLDO VWDWHPHQWV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

" (" !E  9"D  %1 ! " C" (" !E  !@ " &"(" " !" " !"  " H " !@!@A !!  "  ( ! Y B!!! 9! @ !@"  9" " !  " !!!(! @  X 57 !4 ! 321 %!0 W G (( 99 &"" @!!E   %!0  @Q



:KLFK RI WKH IROORZLQJ ZRXOG SUREDEO\ QRW EH FRQVLGHUHG DQ DFW GLVFUHGLWDEOH WR WKH SURIHVVLRQ "

$ 1XPHURXV PRYLQJ WUDIILF YLRODWLRQV % )DLOLQJ WR ILOH WKH &3$ V RZQ WD[ UHWXUQ & )LOLQJ D IUDXGXOHQW WD[ UHWXUQ IRU D FOLHQW LQ D VHYHUH ILQDQFLDO GLIILFXOW\ ' 5HIXVLQJ WR KLUH $VLDQ $PHULFDQV LQ DQ DFFRXQWLQJ SUDFWLFH 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

" (" !E  9"D  %1 ! " C" (" !E  !@ " &"(" " !" " !" " H " !@!@A !!  "  ( ! Y B!!! 9! @ !@"  9" " !  " !!!(! @  X 57 !4 ! 321 %!0 & !# ) ((  99 &"" @!!E   %!0  @Q



$FFRUGLQJ WR WKH $,&3$ &RGH RI &RQGXFW ZKLFK RI WKH IROORZLQJ DFWV LV JHQHUDOO\ IRUELGGHQ WR &3$V LQ SXEOLF SUDFWLFH"

$ 3XUFKDVLQJ ERRNNHHSLQJ VRIWZDUH IURP D KLWHFK GHYHORSPHQW FRPSDQ\ DQG UHVHOOLQJ LW WR WD[ FOLHQWV % %HLQJ WKH DXWKRU RI D 7D[$LG QHZVOHWWHU SURPRWHG DQG VROG E\ D SXEOLVKLQJ FRPSDQ\ & +DYLQJ D FRPPLVVLRQ DUUDQJHPHQW ZLWK DQ DFFRXQWLQJ VRIWZDUH GHYHORSHU WR UHFHLYH  SHUFHQW RI WKH SULFH RI SURJUDPV UHFRPPHQGHG DQG VROG WR DXGLW FOLHQWV ' (QJDJLQJ D PDUNHWLQJ ILUP WR REWDLQ QHZ ILQDQFLDO SODQQLQJ FOLHQWV IRU D IL[HG IHH RI   IRU HDFK VXFFHVVIXO FRQWDFW 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

" (" !E  9"D

 %1 ! " C" (" !E  !@ " &"(" " !" " !" " H " !@!@A !!  "  ( ! Y B!!! 9! @ !@"  9" " !  " !!!(! @  X 57 !4 ! 321 %!0 & !# ) ((  99 &"" @!!E   %!0  @Q



$ &3$ V OHJDO OLFHQVH WR SUDFWLFH SXEOLF DFFRXQWLQJ FDQ EH UHYRNHG E\ WKH

$ $PHULFDQ ,QVWLWXWH RI &HUWLILHG 3XEOLF $FFRXQWDQWV % 6WDWH VRFLHW\ RI &3$V & $XGLWLQJ 6WDQGDUG %RDUG ' 6WDWH ERDUG RI DFFRXQWDQF\ 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN



$FFRUGLQJ WR 5XOH  ZKLFK RI WKH IROORZLQJ LV QRW D GLVFUHGLWDEOH DFW "

$ :LWKKROGLQJ D FOLHQW V VDOHV UHFRUGV % )DLOLQJ WR ILOH RU UHPLW WD[ SD\PHQWV & )DLOLQJ WR IROORZ UHTXLUHPHQWV RI WKH 3&$2% GXULQJ WKH DXGLW RI DQ 6(& FOLHQW ' $GYHUWLVLQJ WKDW LQGLFDWHG WKH ILUP FDQ UHGXFH ,56 SHQDOWLHV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

!! " " @Q  9"D  %1 ! " C  " " !" 9& !2  @ !! 9 (" ! 9 !@  98Q I 57 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  @Q @Q

C !!! 9!  9& " !" " !"  " H  " !@!@A !!  "  ( ! Y B! i Qh "&&" ! %@ 8Q  ! !  B i1 h " @ %!4 1 %" 9&" 2  B i1 Th !((1 2 " !&!4 "T B i  h %  " 2  !(! (" ! !& " !!!( ! @ V57 !4 ! 321 %!0 Q 6 (( 99 &"" @!!E   %!0  @Q

" (" !E  9"D  %1 ! " C" (" !E  !@ " &"(" " !" " !" " H " !@!@A !!  "  ( ! Y B!!! 9! @ !@"  9" " !  " !!!(! @  X 57 !4 ! 321 %!0 & !# ) ((  99 &"" @!!E   %!0 



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



:KHQ D &3$ NQRZV WKDW D WD[ FOLHQW KDV VNLPPHG FDVK UHFHLSWV DQG QRW UHSRUWHG WKH LQFRPH LQ WKH IHGHUDO LQFRPH WD[ UHWXUQ EXW VLJQV WKH UHWXUQ DV D &3$ ZKR SUHSDUHG WKH UHWXUQ WKH &3$ KDV YLRODWHG ZKLFK RI WKH IROORZLQJ $,&3$ 5XOHV RI &RQGXFW"

$ 5XOH  &RQILGHQWLDO &OLHQW ,QIRUPDWLRQ % 5XOH  ,QWHJULW\ DQG 2EMHFWLYLW\ & 5XOH  ,QGHSHQGHQFH ' 5XOH  $FFRXQWLQJ 3ULQFLSOHV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

" (" !E  9"D  %1 ! " C" (" !E  !@ " &"(" " !" " !" " H " !@!@A !!  "  ( ! Y B!!! 9! @ !@"  9" " !  " !!!(! @  X 57 !4 ! 321 %!0 & !# ) ((  99 &"" @!!E   %!0  @Q

!!! 9!  9"D  %1 ! "



$Q DXGLWRU UHFRPPHQGV D ORFDO FRPSXWHU FRPSDQ\ WR D FOLHQW WKDW LV WU\LQJ WR XSJUDGH LWV FRPSXWHUL]HG VDOHV UHFRUGV 7KH FOLHQW SXUFKDVHV   ZRUWK RI HTXLSPHQW DQG VHQGV D FKHFN WR WKH DXGLWRU IRU  SHUFHQW RI WKH WRWDO VDOHV 7KLV LV DQ H[DPSOH RI D

$ &RPPLVVLRQ % &RQWLQJHQW IHH & 5HIHUUDO IHH ' 1RQDXGLW IHH 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

" (" !E  9"D  %1 ! " C" (" !E  !@ " &"(" " !" " !" " H " !@!@A !!  "  ( ! Y B!!! 9! @ !@"  9" " !  " !!!(! @  X 57 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  @Q

! 9 @ 9""@  9"D  %1 ! " C @ 9""@ 9 "& (" ! 9 9 " Y!! %  B B!4 ! 9& !@ % &!2" 9 "! @ ! @ % "@ "!E )57 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  @Q



5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH ' 0RUDO SULQFLSOH & *HQHUDOL]DWLRQ SULQFLSOH % 8WLOLWDULDQLVP SULQFLSOH $ ,PSHUDWLYH SULQFLSOH RI WKH $,&3$ &RGH RI 3URIHVVLRQDO &RQGXFW WKH &3$ LV IROORZLQJ WKH HWKLFDO SKLORVRSK\ ,I D &3$ UHIXVHV D FOLHQW EHFDXVH WKHUH ZRXOG EH D SRWHQWLDO YLRODWLRQ RI WKH

" (" !E  9"D  %1 ! " C" (" !E  !@ " &"(" " !" " !" " H " !@!@A !!  "  ( ! Y B!!! 9! @ !@"  9" " !  " !!!(! @  X 57 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  @Q



5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH ' 5HVSRQVLELOLWLHV & 6HOIUHJXODWLRQ % 'XH FDUH $ 3XEOLF LQWHUHVW :KLFK RI WKH IROORZLQJ LV QRW RQH RI WKH LGHDOV H[SUHVVHG LQ WKH 3ULQFLSOHV RI 3URIHVVLRQDO &RQGXFW"

!!! 9!  9"D  %1 ! " C !!! 9!  9& " !" " !"  " H  " !@!@A !!  "  ( ! Y B! i Qh "&&" ! %@ 8Q  ! !  B i1 h " @ %!4 1 %" 9&" 2  B i1 Th !((1 2 " !&!4 "T B i  h %  " 2  !(! (" ! !& " !!!( ! @ V57 !4 ! 321 %!0 & !# ) ((  99 &"" @!!E   %!0  @Q



5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH ' ,V QR ORQJHU DVVRFLDWHG ZLWK WKH ILUP & ,V QR ORQJHU DFWLYH LQ WKH ILUP % 5HWDLQV RQO\ RIILFH SULYLOHJHV ZLWK WKH ILUP $ +DV IL[HG UHWLUHPHQW EHQHILWV QRQ6(& FOLHQW DQG $ &3$ ILUP V LQGHSHQGHQFH ZLOO EH LPSDLUHG LI D UHWLUHG SDUWQHU LV D GLUHFWRU RI D

" (" !E  9"D  %1 ! " C" (" !E  !@ " &"(" " !" " !" " H " !@!@A !!  "  ( ! Y B!!! 9! @ !@"  9" " !  " !!!(! @  X 57 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  @Q



5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH ' 3URIHVVLRQDO FRPSHWHQFH & 3ODQQLQJ DQG VXSHUYLVLRQ % 'XH SURIHVVLRQDO FDUH $ ,QGHSHQGHQFH 5XOH  RI WKH 5XOHV RI &RQGXFW FRQWDLQV QR UHTXLUHPHQW WKDW PHPEHUV RI WKH GHVLJQDWHG E\ WKH $,&3$ &RXQFLO" $,&3$ FRPSO\ ZLWK ZKLFK RI WKH IROORZLQJ VWDQGDUGV DQG LQWHUSUHWDWLRQV

!!! 9!  9"D  %1 ! " C !!! 9!  9& " !" " !"  " H " !@!@A !!  "  ( ! Y B! i Qh "&&" ! %@ 8Q  ! !  B i1 h " @ %!4 1 %" 9&" 2  B i1 Th !((1 2 " !&!4 "T B i  h %  " 2  !(! (" ! !& " !!!( ! @ V57 !4 ! 321 %!0 & !# ) ((  99 &"" @!!E   %!0  @Q



5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH ' )UHG 6PLWK D QRQ&3$ RZQV  SHUFHQW RI WKH ILUP DQG KDV D IXOOWLPH MRE & 1RQ&3$V RZQ  SHUFHQW RI WKH ILUP DQG IROORZ DOO $,&3$ UHTXLUHPHQWV % 1RQ&3$V RZQ  SHUFHQW RI WKH ILUP 7KH QRQ&3$V GR QRW KDYH D FROOHJH $ -RKQ 6PLWK &3$ RZQV  SHUFHQW RI WKH ILUP DQG -RDQ -RQHV QRQ&3$ RZQV :KLFK RI WKH IROORZLQJ ZRXOG EH SHUPLWWHG E\ WKH $,&3$" GHJUHH  SHUFHQW VHSDUDWH IURP WKH ILUP DQG YLHZV WKH RZQHUVKLS SXUHO\ DV DQ LQYHVWPHQW



7KH EDVLF UDWLRQDOH IRU SHUPLWWLQJ &3$V WR DFFHSW FRPPLVVLRQV LV WKDW

$ ,W GRHV QRW DIIHFW LQGHSHQGHQFH LQ DWWHVW IXQFWLRQV % 3URIHVVLRQDO OLDELOLW\ LQVXUDQFH SROLFLHV SHUPLW FRPPLVVLRQ ZRUN & 6WDWH ERDUGV RI DFFRXQWLQJ SHUPLW FRPPLVVLRQV DQG FRQWLQJHQW IHHV ' 2WKHU SURIHVVLRQDOV FKDUJH FRPPLVVLRQV LQ SHUVRQDO ILQDQFLDO SODQQLQJ HQJDJHPHQWV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

" (" !E  9"D  %1 ! " C" (" !E  !@ " &"(" " !" " !"  " H " !@!@A !!  "  ( ! Y B!!! 9! @ !@"  9" " !  " !!!(! @  X 57 !4 ! 321 %!0 & !# ) ((  99 &"" @!!E   %!0  @Q



:KLFK RI WKH IROORZLQJ LV QRW RQH RI WKH JXLGHOLQHV IRU DGYHUWLVLQJ IRU &3$V SUDFWLFLQJ SXEOLF DFFRXQWLQJ"

$ $GYHUWLVLQJ VKRXOG EH LQIRUPDWLYH DQG REMHFWLYH % $GYHUWLVLQJ VKRXOG EH UHVWULFWHG LQ IUHTXHQF\ VL]H VW\OH DQG VR RQ & $GYHUWLVLQJ VKRXOG QRW FUHDWH H[SHFWDWLRQV RI IDYRUDEOH UHVXOWV ' $GYHUWLVLQJ PD\ QRW FRQWDLQ IHH HVWLPDWHV ZKHQ D &3$ NQRZV WKH\ DUH QRW UHSUHVHQWDWLYH 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

" (" !E  9"D  %1 ! " C" (" !E  !@ " &"(" " !" " !" " H " !@!@A !!  " ( ! Y B!!! 9! @ !@"  9" " !  " !!!(! @  X 57 !4 ! 321 %!0 & !# ) ((  99 &"" @!!E   %!0  @Q



,I D &3$ KDV YLRODWHG D UXOH RI &RQGXFW WKH $,&3$ WULDO ERDUG SDQHO GRHV QRW KDYH WKH SRZHU WR

$ 5HYRNH WKH SHUVRQ V &3$ FHUWLILFDWH % 6XVSHQG WKH SHUVRQ V PHPEHUVKLS LQ $,&3$ DQG VWDWH VRFLHW\ & $GPRQLVK WKH &3$ ' $FTXLW WKH &3$ 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

!! " " @Q  9"D  %1 ! " C  " " !" 9& !2  @ !! 9 (" ! 9 !@  98Q I 57 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  @Q

" (" !E  9"D  %1 ! " C" (" !E  !@ " &"(" " !" " !" " H " !@!@A !!  "  ( ! Y B!!! 9! @ !@"  9" " !  " !!!(! @  X 57 !4 ! 321 %!0 & !# ) ((  99 &"" @!!E   %!0  @Q



5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH ' 5HSUHVHQWLQJ D FOLHQW LQ DQ ,56 WD[ DXGLW & $Q H[DPLQDWLRQ RI SURVSHFWLYH ILQDQFLDO VWDWHPHQWV % $ FRPSLODWLRQ RI D ILQDQFLDO VWDWHPHQW $ $Q DXGLW RU UHYLHZ RI D ILQDQFLDO VWDWHPHQW $ PHPEHU LQ SXEOLF SUDFWLFH FDQ UHFHLYH D FRQWLQJHQW IHH IRU



0RVW VWDWH ERDUGV RI DFFRXQWDQF\ GR QRW

$ ,VVXH OLFHQVHV WR SUDFWLFH DFFRXQWLQJ % 5HJXODWH WD[ SUDFWLFH & /LPLW WKH DWWHVW IXQFWLRQ WR OLFHQVH KROGHUV ' $GPLQLVWHU DQ HWKLFV H[DPLQDWLRQ 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

)LOO LQ WKH %ODQN 4XHVWLRQV

!" %!4 "T  9"D  %1 ! " C&( %" 2 9    "( ! @ ! !$& @ ! ! !!(( !@ ( ! G 57 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  @Q



7ZR DVSHFWV RI HWKLFV RSHUDWH LQ WKH SURIHVVLRQDO HQYLURQPHQW BBBBBBBBBBBBBBBBBBBB HWKLFV DQG BBBBBBBBBBBBBBBBBBBB HWKLFV JHQHUDO VSLULW  SURIHVVLRQDO UXOHV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH



7KH :KHHOZULJKW GHILQLWLRQ RI HWKLFV KDV WKUHH NH\ HOHPHQWV  TXHVWLRQ UHTXLULQJ BBBBBBBBBBBBBBBBBBBB FKRLFH  JXLGHV RI BBBBBBBBBBBBBBBBBBBBBB DQG  FRQFHUQV ZLWK WKH BBBBBBBBBBBBBBBBBBBB RI GHFLVLRQV UHIOHFWLYH ULJKW DQG ZURQJ FRQVHTXHQFHV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH



7KH BBBBBBBBBBBBBBBBBBBB SULQFLSOH GLUHFWV D GHFLVLRQ PDNHU WR DFW DFFRUGLQJ WR WKH UHTXLUHPHQWV RI DQ HWKLFDO UXOH LPSHUDWLYH 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH



7KH $,&3$ &RGH RI 3URIHVVLRQDO &RQGXFW FRQWDLQV WZR EDVLF VHFWLRQV BBBBBBBBBBBBBBBBBBBBBBB DQG BBBBBBBBBBBBBBBBBBBBBBBB 3ULQFLSOHV RI 3URIHVVLRQDO &RQGXFW 5XOHV RI &RQGXFW 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 7KH GHWDLOHG H[SODQDWLRQV RI VSHFLILF UXOHV WR KHOS PHPEHUV XQGHUVWDQG SDUWLFXODU DSSOLFDWLRQV DUH UHIHUUHG WR DV BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB ,QWHUSUHWDWLRQV RI 5XOHV RI &RQGXFW 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 7KH FRUQHUVWRQH RI WKH SXEOLF DFFRXQWLQJ SURIHVVLRQ LV WKH FRQFHSW RI BBBBBBBBBBBBBBBBBBBBBBBBBBBBB LQGHSHQGHQFH 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 7KH VSLULW RI 5XOH  LV WKDW LQWHJULW\ DQG REMHFWLYLW\ DUH UHTXLUHG LQ FRQQHFWLRQ ZLWK BBBBBBBBBBBBBBBBBBBB SURIHVVLRQDO VHUYLFHV DOO 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 0HPEHUV RI WKH $,&3$ VKDOO FRPSO\ ZLWK VWDQGDUGV DQG LQWHUSUHWDWLRQV GHVLJQDWHG E\ WKH BBBBBBBBBBBBBBBBBBBBBBBBB $,&3$ &RXQFLO 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB LV LQIRUPDWLRQ WKDW VKRXOG QRW EH GLVFORVHG WR RXWVLGH SDUWLHV XQOHVV GHPDQGHG E\ D FRXUW BBBBBBBBBBBBBBBBBBBBBBBBBBBBB FDQQRW EH GHPDQGHG HYHQ E\ D FRXUW &RQILGHQWLDO LQIRUPDWLRQ 3ULYLOHJHG LQIRUPDWLRQ 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 )HHV EDVHG RQ WKH QXPEHU RI KRXUV RU GD\V ZRUNHG DUH BBBBBBBBBBBBBBBBBBBB FRQVLGHUHG BBBBBBBBBBBBBBBBBBBB RQ WKH ILQGLQJV RI DXGLW VHUYLFHV QRW FRQWLQJHQW 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 5XOH  RQ $FWV 'LVFUHGLWDEOH WR WKH 3URIHVVLRQ LV RIWHQ UHIHUUHG WR DV WKH BBBBBBBBBBBBBBBBBBBBBBBBBBB RI WKH &RGH PRUDOV FODXVH 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 BBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBB RU BBBBBBBBBBBBBBBBBBBB DGYHUWLVLQJ LV QRW LQ WKH SXEOLF LQWHUHVW DQG LV SURKLELWHG )DOVH PLVOHDGLQJ GHFHSWLYH 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB DUH IHHV D &3$ UHFHLYHV IRU UHFRPPHQGLQJ DQRWKHU &3$ V VHUYLFHV 5HIHUUDO IHHV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 BBBBBBBBBBBBBBBBBBBBBBBBBBB UHIHUV WR TXDOLW\ FRQWURO UHYLHZV DQG GLVFLSOLQDU\ DFWLRQV E\ IHOORZ &3$V 6HOIUHJXODWLRQ 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 8QGHU $,&3$ UXOHV LQGHSHQGHQFH ZLOO EH FRQVLGHUHG LPSDLUHG LI D PHPEHU KDG RU ZDV FRPPLWWHG WR DFTXLUH DQ\ BBBBBBBBBBBB RU BBBBBBBBBBBBBBBBBBBBBBBB ILQDQFLDO LQWHUHVW LQ WKH HQWHUSULVH GLUHFW PDWHULDO LQGLUHFW 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 8QGHU $,&3$ UXOHV LW ZRXOG EH D FRQIOLFW RI LQWHUHVW LI D &3$ LV HQJDJHG WR SHUIRUP BBBBBBBBBBBBBBBBBBBBBBBBBBB VHUYLFHV IRU D SODLQWLII LQ D ODZVXLW ILOHG DJDLQVW D FOLHQW OLWLJDWLRQ VXSSRUW 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 5XOH  LV DSSOLFDEOH WR PHPEHUV HPSOR\HG LQ BBBBBBBBBBBBBBBBBBB DQG BBBBBBBBBBBBBBBB JRYHUQPHQW LQGXVWU\ 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

6KRUW $QVZHU 4XHVWLRQV

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

" (" !E  9"D !!! 9!  9"D  %1 ! " C" (" !E  !@ " &"(" " !" " !" " H " !@!@A !!  "  ( ! Y B!!! 9! @ !@"  9" " !  " !!!(! @  X 57 !4 ! 321 %!0 C !!! 9!  9& " !" " !"  " H  " !@ !@A !!  "  ( ! Y B! i Qh "&&" ! %@ 8Q  ! !  B i1 h " @ %!4 1 %" 9&" 2  B i1 Th !((1 2 " !&!4 "T B i  h %  " 2  !(! (" ! !& " !!!( ! @ V57 !4 ! 321 %!0 & !# ) ((  99 &"" @!!E   %!0  @Q

 )  &  %  %  (

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

" (" !E  9"D !!! 9!  9"D  %1 ! " C" (" !E  !@ " &"(" " !" " !" " H " !@!@A !!  "  ( ! Y B!!! 9! @ !@ "  9" " !  " !!!(! @  X 57 !4 ! 321 %!0 C !!! 9!  9& " !" " !"  " H  " !@ !@A !!  "  ( ! Y B! i Qh "&&" ! %@ 8Q  ! !  B i1 h " @ %!4 1 %" 9&" 2  B i1 Th !((1 2 " !&!4 "T B i  h %  " 2  !(! (" ! !& " !!!( ! @ V57 !4 ! 321 %!0 & !# ) ((  99 &"" @!!E   %!0  @Q

 %  &  %  $  )

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

" (" !E  9"D !!! 9!  9"D  %1 ! " C" (" !E  !@ " &"(" " !" " !" " H " !@!@A !!  " ( ! Y B!!! 9! @ !@"  9" " !  " !!!(! @  X 57 !4 ! 321 %!0 C !!! 9!  9& " !" " !"  " H  " !@ !@A !!  "  ( ! Y B! i Qh "&&" ! %@ 8Q  ! !  B i1 h " @ %!4 1 %" 9&" 2  B i1 Th !((1 2 " !&!4 "T B i  h %  " 2  !(! (" ! !& " !!!( ! @ V57 !4 ! 321 %!0 & !# ) ((  99 &"" @!!E   %!0  @Q

 &  $  %  )  ( GLVFORVHG WKH FRPPLVVLRQ WR 0\HUV PDQDJHPHQW &RPSDQ\ WKDW WKH FRPSDQ\ QHHGHG D QHZ DFFRXQWLQJ LQIRUPDWLRQ V\VWHP +DUW 0\HUV &RPSDQ\ 7KH VDOH ZDV PDGH EDVHG RQ +DUW V UHFRPPHQGDWLRQ WR 0\HUV D  SHUFHQW FRPPLVVLRQ IURP &RPSXWHU 6\VWHPV ,QF IRU KDUGZDUH VROG WR BBBB  &HFLOLD +DUW &3$ SURYLGHV WD[ VHUYLFHV WR 0\HUV &RPSDQ\ +DUW UHFHLYHG %HDFRQ DOVR SHUIRUPV DQ DQQXDO DXGLW IRU 1RYDN LQIRUPDWLRQ V\VWHP %HDFRQ GLVFORVHG WKH FRPPLVVLRQ WR 1RYDN V PDQDJHPHQW UHFRPPHQGDWLRQ WR 1RYDN :KROHVDOH WKDW WKH FRPSDQ\ QHHGHG D QHZ DFFRXQWLQJ VROG WR 1RYDN :KROHVDOH ,QF 7KH VDOH ZDV PDGH EDVHG RQ %HDFRQ V

 )RU HDFK RI WKH IROORZLQJ FDVHV LQGLFDWH ZKHUH WKH DFWLRQ RU VLWXDWLRQ LV D LQWHUSUHWDWLRQ WKDW ZRXOG DSSO\ WR LW

YLRODWLRQ RI WKH $,&3$ &RGH RI 3URIHVVLRQDO &RQGXFW DQG FLWH WKH UHOHYDQW UXOH RU

 5XOH  1R YLRODWLRQ LI LW LV DQ KRQRUDU\ SRVLWLRQ DQG KH LV QRW LQYROYHG LQ

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

" (" !E  9"D !!! 9!  9"D  %1 ! " C" (" !E  !@ " &"(" " !" " !" " H " !@!@A !!  "  ( ! Y B!!! 9! @ !@"  9" " !  " !!!(! @  X 57 !4 ! 321 %!0 C !!! 9!  9& " !" " !" " H  " !@ !@A !!  "  ( ! Y B! i Qh "&&" ! %@ 8Q  ! !  B i1 h " @ %!4 1 %" 9&" 2  B i1 Th !((1 2 " !&!4 "T B i  h %  " 2  !( ! (" ! !& " !!!( ! @ V57 !4 ! 321 %!0 & !# ) ((  99 &"" @!!E   %!0  @Q

(VVD\ 4XHVWLRQV
 )RU HDFK RI WKH IROORZLQJ FDVHV LQGLFDWH LI WKH DFWLRQ E\ D PHPEHU &3$ LV D

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

" (" !E  9"D !!! 9!  9"D  %1 ! " C" (" !E  !@ " &"(" " !" " !" " H " !@!@A !!  "  ( ! Y B!!! 9! @ !@"  9" " !  " !!!(! @  X 57 !4 ! 321 %!0 C !!! 9!  9& " !" " !"  " H  " !@ !@A !!  "  ( ! Y B! i Qh "&&" ! %@ 8Q  !!  B i1 h " @ %!4 1 %" 9&" 2  B i1 Th !((1 2 " !&!4 "T B i  h %  " 2  !(! (" ! !& " !!!( ! @ V57 !4 ! 321 %!0 & !# ) ((  99 &"" @!!E   %!0 

 )RU HDFK RI WKH IROORZLQJ FDVHV LQGLFDWH ZKHWKHU WKH DFWLRQ E\ D PHPEHU &3$ LV D YLRODWLRQ RI WKH $,&3$ &RGH RI 3URIHVVLRQDO &RQGXFW DQG FLWH WKH UHOHYDQW UXOH $ :DV D WUXVWHH RI FOLHQW V SURILW SURILWVKDULQJ WUXVW NQRZOHGJH

% $FFHSWHG UHIHUUDO IHHV IURP ORFDO DWWRUQH\V IRU QRQDWWHVW FOLHQWV ZLWK WKH FOLHQWV PHG & 3HUIRUPHG DQ DXGLW LQ DFFRUGDQFH ZLWK *$6% VWDQGDUGV LQ ZKLFK WKH &3$ KDV D PDWHULDO ILQDQFLDO LQWHUHVW

' $GYLVHV D FOLHQW WR KDYH DQ LQVXUDQFH UHYLHZ IURP D ORFDO LQVXUDQFH FRPSDQ\ ( 3URPRWHG WKH &3$ V WD[ VHUYLFH RQ ORFDO 79 VWDWLRQ

@!!E   %!0  @Q

" (" !E  9"D !!! 9!  9"D  %1 ! " C" (" !E  !@ " &"(" " !" " !" " H " !@!@A !!  "  ( ! Y B!!! 9! @ !@"  9" " !  " !!!(! @  X 57 !4 ! 321 %!0 C !!! 9!  9& " !" " !"  " H  " !@ !@A !!  "  ( ! Y B! i Qh "&&" ! %@ 8Q  ! !  B i1 h " @ %!4 1 %" 9&" 2  B i1 Th !((1 2 " !&!4 "T B i  h %  " 2  !(! (" ! !& " !!!( ! @ V57 !4 ! 321 %!0 & !# ) ((  99 &"" @!!E   %!0 

 :KDW DUH D WKH $,&3$ 3ULQFLSOHV RI 3URIHVVLRQDO &RQGXFW E 5XOHV RI &RQGXFW

UXOHV QHFHVVDU\ WR KHOS PHPEHUV XQGHUVWDQG SDUWLFXODU DSSOLFDWLRQV F 7KH ,QWHUSUHWDWLRQV RI 5XOHV RI &RQGXFW DUH GHWDLOHG H[SODQDWLRQV RI VSHFLILF FRQGXFW $,&3$ LQ SXEOLF DQG SULYDWH SUDFWLFH $W SUHVHQW WKH\ FRQVLVW RI  UXOHV RI E 7KH 5XOHV RI &RQGXFW DSSO\ WR WKH VHUYLFHV SHUIRUPHG E\ PHPEHUV RI WKH VHUYLFHV LQWHJULW\ REMHFWLYLW\ DQG LQGHSHQGHQFH GXH FDUH DQG VFRSH DQG QDWXUH RI HWKLFDO FRQGXFW 7KH\ LQFOXGH HVVD\V RQ UHVSRQVLELOLWLHV WKH SXEOLF LQWHUHVW D 7KH 3ULQFLSOHV RI 3URIHVVLRQDO &RQGXFW H[SUHVV WKH SURIHVVLRQ V KLJK LGHDOV RQ DQG F ,QWHUSUHWDWLRQ RI 5XOHV RI &RQGXFW"

!! " " @Q  9"D  %1 ! " C  " " !" 9& !2  @ !! 9 (" ! 9 !@  98Q I 57 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  @Q

" (" !E  9"D  %1 ! " C" (" !E  !@ " &"(" " !" " !" " H " !@!@A !!  "  ( ! Y B!!! 9! @ !@"  9" " !  " !!!(! @  X 57 !4 ! 321 %!0 & !# ) ((  !2&!&!E &""

 :KDW DUH WKH SRZHUV RI WKH $,&3$ WULDO ERDUG LQ HWKLFV YLRODWLRQV"

\HDUV RU G H[SHO WKH &3$ IURP WKH VWDWH VRFLHW\ DQG WKH $,&3$ VXVSHQG WKH &3$ V PHPEHUVKLS LQ WKH VWDWH VRFLHW\ DQG WKH $,&3$ IRU XS WR WZR 7KH WULDO ERDUG KDV WKH SRZHU WR D DFTXLW WKH &3$ E DGPRQLVK WKH &3$ F

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

7KH UXOH LQ TXHVWLRQ LV 5XOH  &RPPLVVLRQV 6XVDQ 6PDOO KDV YLRODWHG WKLV UXOH EHFDXVH VKH KDV DFFHSWHG D FRPPLVVLRQ IURP DQ DWWHVWDWLRQ FOLHQW

" (" !E  9"D  %1 ! " C" (" !E  !@ " &"(" " !" " !" " H " !@!@A !!  "  ( ! Y B!!! 9! @ !@"  9" " !  " !!!(! @  X 57 !4 ! 321 %!0 & !# ) ((  99 &"" @!!E   %!0  @Q

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

7KH UXOH LQ TXHVWLRQ LV 5XOH  ,QGHSHQGHQFH :DOO\ :LGH KDV YLRODWHG WKLV UXOH LQ WKH ILQDQFLQJ RI WKH KRXVH 8QGHU ,QWHUSUHWDWLRQ $ PHPEHUV DUH QR ORQJHU DOORZHG WR REWDLQ KRPH PRUWJDJHV IURP FOLHQWV +RZHYHU EHFDXVH WKH DXWR ORDQ LV FROODWHUDOL]HG E\ WKH DXWRPRELOH :DOO\ KDV QRW YLRODWHG WKH LQGHSHQGHQFH UXOH RQ WKH ILQDQFLQJ RI WKH FDU

%!0  @Q

!!! 9!  9"D  %1 ! " C !!! 9!  9& " !" " !"  " H  " !@ !@A !!  "  ( ! Y B! i Qh "&&" ! %@ 8Q  ! !  B i1 h " @ %!4 1 %" 9&" 2  B i1 Th !((1 2 " !&!4 "T B i  h %  " 2  !(! (" ! !& " !!!( ! @ V57 !4 ! 321 %!0 & !# ) ((  99 &"" @!!E  

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

7KH UXOH LQ TXHVWLRQ LV 5XOH  ,QGHSHQGHQFH %HQ %LJ KDV QRW YLRODWHG WKLV UXOH EHFDXVH KH LV QRW FRQVLGHUHG D FRYHUHG PHPEHU 3DUWQHUV DUH FRYHUHG PHPEHUV RQO\ LI WKH\ DUH LQ WKH RIILFH LQ ZKLFK WKH OHDG DWWHVW HQJDJHPHQW SDUWQHU SULPDULO\ SUDFWLFHV LQ FRQQHFWLRQ ZLWK WKH DWWHVW HQJDJHPHQW 2QO\ FRYHUHG PHPEHUV DQG WKHLU LPPHGLDWH IDPLOLHV DUH SURKLELWHG IURP KDYLQJ D GLUHFW ILQDQFLDO LQWHUHVW LQ WKH FOLHQW

B! i Qh "&&" ! %@ 8Q  ! !  B i1 h " @ %!4 1 %" 9&" 2  B i1 Th !((1 2 " !&!4 "T B i  h %  " 2  !(! (" ! !& " !!!( ! @ V57 !4 ! 321 %!0 & !# ) ((  99 &"" @!!E   %!0  @Q

!!! 9!  9"D  %1 ! " C !!! 9!  9& " !" " !"  " H " !@ !@A !!  "  ( ! Y

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

DV EXVLQHVV PRYHV PRUH TXLFNO\ DQG FRUSRUDWLRQV DWWHPSW WR PHHW PDUNHW H[SHFWDWLRQV WKH SUHVVXUHV SODFHG RQ DXGLWRUV WR SHUIRUP DXGLWV IDVWHU DQG DFKLHYH UHVXOWV LQ OLQH ZLWK PDQDJHPHQW H[SHFWDWLRQV EHFRPH JUHDWHU

/HJDO /LDELOLW\

7UXH  )DOVH 4XHVWLRQV

 $XGLWRUV DUH SRWHQWLDOO\ OLDEOH IRU PRQHWDU\ GDPDJHV DQG VXEMHFW WR FULPLQDO SHQDOWLHV IRU IDLOXUH WR SHUIRUP SURIHVVLRQDO VHUYLFHV SURSHUO\ 7UXH )DOVH

" (" !E  9"D

 %1 ! " C" (" !E  !@ " &"(" " !" " !" " H " !@!@A !!  "  ( ! Y B!!! 9! @ !@"  9" " !  " !!!(! @  X 57 !4 ! 321 %!0 W G (( 99 &"" @!!E   %!0  @Q

0RGXOH &

 $XGLWRUV FDQQRW EH KHOG OLDEOH WR WKHLU FOLHQWV IRU IDLOXUH WR GHWHFW PDWHULDO PDQDJHPHQW IUDXG 7UXH )DOVH

 -RLQW DQG VHYHUDO OLDELOLW\ LV D GRFWULQH WKDW DOORZV D VXFFHVVIXO SODLQWLII WR UHFRYHU WKH IXOO DPRXQW RI D GDPDJH DZDUG IURP DQ\ GHIHQGDQW UHJDUGOHVV RI WKH GHIHQGDQW V OHYHO RI FXOSDELOLW\ 7UXH )DOVH

 6WULFW SULYLW\ LV WKH UHODWLRQVKLS RI SDUWLHV ZKR HQWHU LQWR D FRQWUDFW WRJHWKHU 7UXH )DOVH

 7KH UHVWDWHPHQW RI WRUWV H[WHQGV OLDELOLW\ IRU RUGLQDU\ QHJOLJHQFH WR IRUHVHHQ WKLUG SDUWLHV ZKR PD\ QRW EH H[SOLFLWO\ NQRZQ WR DXGLWRUV 7UXH )DOVH

 7KH 3ULYDWH 6HFXULWLHV /LWLJDWLRQ 5HIRUP $FW GHDOV ZLWK ODZVXLWV LQ ERWK IHGHUDO DQG VWDWH FRXUWV 7UXH )DOVH

 /HJDO OLDELOLWLHV RI DXGLWRUV PD\ DULVH IURP ODZVXLWV EURXJKW RQ WKH EDVLV RI WKH ODZ RI FRQWUDFWV RU DV WRUW DFWLRQV 7UXH )DOVH

 7RUW DFWLRQV FRYHU FLYLO FRPSODLQWV RWKHU WKDQ EUHDFK RI FRQWUDFW VXFK DV IDLOXUH WR H[HUFLVH WKH DSSURSULDWH OHYHO RI SURIHVVLRQDO FDUH  7UXH )DOVH

 $FWLRQV EURXJKW XQGHU FRPPRQ ODZ SODFH PRVW RI WKH EXUGHQ RI SURRI RQ WKH GHIHQGDQW XVXDOO\ DXGLWRUV 7UXH )DOVH

 $XGLWRUV SULPDU\ GHIHQVH DJDLQVW D FODLP IRU RUGLQDU\ QHJOLJHQFH LV WR RIIHU HYLGHQFH WKDW WKH DXGLW KDG EHHQ FRQGXFWHG LQ DFFRUGDQFH ZLWK JHQHUDOO\ DFFHSWHG DXGLWLQJ VWDQGDUGV 7UXH )DOVH

 7KH 8OWUDPDUHV FDVH KROGV DXGLWRUV WR D KLJKHU OHYHO RI UHVSRQVLELOLW\ WKDQ WKH 5RVHQEOXP Y $GOHU FDVH LQ WHUPV RI FRPPRQ ODZ OLDELOLW\ WR WKLUG SDUWLHV 7UXH )DOVH

 *URVV QHJOLJHQFH UHSUHVHQWV D PRUH VLJQLILFDQW GHSDUWXUH IURP DSSURSULDWH SURIHVVLRQDO FDUH WKDQ RUGLQDU\ QHJOLJHQFH 7UXH )DOVH

 7KH 6HFXULWLHV $FW RI  UHJXODWHV VXEVHTXHQW WUDGLQJ RI VHFXULWLHV DQG WKH 6HFXULWLHV ([FKDQJH $FW RI  UHJXODWHV WKH LQLWLDO LVVXDQFH RI VHFXULWLHV 7UXH )DOVH

 7KH JHQHUDO UHJLVWUDWLRQ IRUP IRU QHZ LVVXHV RI VHFXULWLHV LV )RUP . 7UXH )DOVH

 6HFWLRQ  RI WKH 6HFXULWLHV $FW RI  FRQWDLQV WKH SULQFLSDO FULWHULD GHILQLQJ FLYLO OLDELOLWLHV XQGHU WKH VWDWXWH 7UXH )DOVH

 7KH HIIHFW RI VHFWLRQ  RI WKH 6HFXULWLHV $FW RI  LV WR VKLIW WKH PDMRU EXUGHQ RI SURRI IURP DXGLWRUV WR WKH SODLQWLII 7UXH )DOVH

 ,I DXGLWRUV FDQ SURYH WKDW D UHDVRQDEOH H[DPLQDWLRQ ZDV SHUIRUPHG WKHQ DXGLWRUV DUH QRW OLDEOH IRU GDPDJHV XQGHU VHFWLRQ  RI WKH 6HFXULWLHV $FW RI  7UXH )DOVH

 5XOH E UHTXLUHV WKDW WKH SODLQWLII PXVW SURYH WKDW DXGLWRUV DFWHG ZLWK LQWHQW WR GHFHLYH LQ RUGHU WR LPSRVH OLDELOLW\ 7UXH )DOVH

 $V D GHIHQVH XQGHU 5XOH E DXGLWRUV PXVW SURYH WKDW WKH\ DFWHG LQ JRRG IDLWK DQG KDG QR NQRZOHGJH RI WKH PDWHULDO PLVVWDWHPHQWV LQ WKH ILQDQFLDO VWDWHPHQWV 7UXH )DOVH

 /LDELOLW\ WR IRUHVHHQ WKLUG SDUWLHV ZRXOG H[SRVH DXGLWRUV WR D JUHDWHU SRWHQWLDO REOLJDWLRQ WKDQ OLDELOLW\ WR IRUHVHHDEOH WKLUG SDUWLHV 7UXH )DOVH

0XOWLSOH &KRLFH 4XHVWLRQV

 $XGLWRUV VKRXOG QRW EH OLDEOH WR DQ\ SDUW\ LI WKH\ SHUIRUP VHUYLFHV WKDW PHHW WKH VWDQGDUGV RI

$ 2UGLQDU\ QHJOLJHQFH % 5HJXODWRU\ SURYLGHQFH & 'XH FDUH ' *RRG IDLWK  $ SULQFLSOH WKDW PD\ UHGXFH RU HOLPLQDWHV DXGLWRUV OLDELOLW\ WR FOLHQWV LV

$ &OLHQW V FRQVWUXFWLYH QHJOLJHQFH % &OLHQW V FRQWULEXWRU\ QHJOLJHQFH & $XGLWRUV RUGLQDU\ QHJOLJHQFH ' $XGLWRUV JURVV QHJOLJHQFH

 (OOLRW &RUS LV LQWHUHVWHG LQ SXUFKDVLQJ 5RJHU &RUS 3ULRU WR WKH SXUFKDVH (OOLRW KLUHG $GDP &R WR DXGLW 5RJHU V ILQDQFLDO VWDWHPHQWV 'XULQJ WKH DXGLW $GDP IDLOHG WR GLVFRYHU D IUDXG WKDW UHVXOWHG LQ PDWHULDO PLVVWDWHPHQWV LQ 5RJHU V ILQDQFLDO VWDWHPHQWV $IWHU WKH DFTXLVLWLRQ WKH IUDXG ZDV GLVFRYHUHG DQG (OOLRW &RUS VXIIHUHG VXEVWDQWLDO ORVVHV 7R VXH $GDP &R (OOLRW PXVW SURYH WKDW $GDP

$ $FWHG UHFNOHVVO\ RU ZLWK ODFN RI UHDVRQDEOH JURXQGV IRU EHOLHI % .QHZ RI WKH LQVWDQFHV RI IUDXG & )DLOHG WR H[HUFLVH WKH DSSURSULDWH OHYHO RI SURIHVVLRQDO FDUH ' 'HPRQVWUDWHG JURVV QHJOLJHQFH  :KLFK RI WKH IROORZLQJ VWDWHPHQWV LV WUXH FRQFHUQLQJ DXGLWRUV UHVSRQVLELOLWLHV GXULQJ WKH DXGLW"

$ $XGLWRUV PXVW H[HUFLVH WKH OHYHO RI FDUH VNLOO DQG MXGJPHQW H[SHFWHG RI D UHDVRQDEO\ SUXGHQW DXGLWRU XQGHU WKH FLUFXPVWDQFHV % $XGLWRUV PXVW SODQ WKH DXGLW WR JDWKHU VXIILFLHQW FRPSHWHQW HYLGHQFH WR JXDUDQWHH WKH DFFXUDF\ RI WKH ILQDQFLDO VWDWHPHQWV & $XGLWRUV DUH VWULFWO\ OLDEOH IRU IDLOXUHV WR GLVFRYHU FOLHQW IUDXG ' $XGLWRUV DUH QRW OLDEOH XQOHVV WKH\ FRPPLW JURVV QHJOLJHQFH RU LQWHQWLRQDOO\ GLVUHJDUG JHQHUDOO\ DFFHSWHG DXGLWLQJ VWDQGDUGV

 .HUU\ &3$ LV WKH DXGLWRU IRU 6DPP\ &RUS 'XULQJ WKH DXGLW .HUU\ GLVFRYHUV D PDWHULDO PLVVWDWHPHQW LQ 6DPP\ V ILQDQFLDO VWDWHPHQWV 6DPP\ V PDQDJHPHQW WHOOV .HUU\ WKDW LI WKH PLVVWDWHPHQW LV FRUUHFWHG RU LI .HUU\ LVVXHV DQ RSLQLRQ WKDW LQGLFDWHV WKHUH LV D PDWHULDO PLVVWDWHPHQW 6DPP\ &RUS ZLOO OLNHO\ KDYH WR GHFODUH EDQNUXSWF\ DQG WKRXVDQGV RI HPSOR\HHV ZLOO ORVH WKHLU MREV :KLFK RI WKH IROORZLQJ VWDWHPHQWV LV WUXH LI 6DPP\ GRHV QRW FRUUHFW WKH PLVVWDWHPHQW DQG .HUU\ LVVXHV DQ XQTXDOLILHG RSLQLRQ RQ 6DPP\ V ILQDQFLDO VWDWHPHQWV"

$ .HUU\ LV OLDEOH RQO\ WR WKLUG SDUWLHV LQ SULYLW\ RI FRQWUDFW % .HUU\ LV OLDEOH RQO\ WR NQRZQ XVHUV RI WKH ILQDQFLDO VWDWHPHQWV & .HUU\ LV OLNHO\ OLDEOH WR DQ\ SHUVRQ ZKR VXIIHUHG D ORVV DV D UHVXOW RI WKH PDWHULDO PLVVWDWHPHQW ' .HUU\ LV OLNHO\ OLDEOH WR WKLUG SDUWLHV RQO\ LI WKH WKLUG SDUWLHV ZHUH DZDUH RI WKH PDWHULDO PLVVWDWHPHQWV DQG UHOLHG RQ WKH ILQDQFLDO VWDWHPHQWV

 0D\V ERXJKW 0F&RYH\ &RUS FRPPRQ VWRFN LQ DQ RIIHULQJ UHJLVWHUHG XQGHU WKH 6HFXULWLHV $FW RI  +DUW &R &3$V JDYH DQ XQTXDOLILHG RSLQLRQ RQ 0F&RYH\ V ILQDQFLDO VWDWHPHQWV WKDW ZHUH LQFOXGHG LQ WKH UHJLVWUDWLRQ VWDWHPHQW ILOHG ZLWK WKH 6HFXULWLHV DQG ([FKDQJH &RPPLVVLRQ 0D\V VXHG +DUW XQGHU WKH SURYLVLRQV RI WKH  $FW WKDW GHDO ZLWK RPLVVLRQ RI IDFWV UHTXLUHG WR EH LQ WKH UHJLVWUDWLRQ VWDWHPHQW 0D\V PXVW SURYH WKDW

$ 7KHUH ZDV IUDXGXOHQW DFWLYLW\ E\ +DUW % 7KH ILQDQFLDO VWDWHPHQWV FRQWDLQHG D PDWHULDO PLVVWDWHPHQW & 0D\V UHOLHG RQ +DUW V RSLQLRQ ' 0D\V ZDV LQ SULYLW\ ZLWK +DUW  7R SUHYDLO LQ DQ DFWLRQ EURXJKW XQGHU FRPPRQ ODZ WKH SODLQWLII PXVW VKRZ DOO RI WKH IROORZLQJ H[FHSW

$ +H RU VKH ZDV GDPDJHG RU VXIIHUHG D ORVV % 7KH ILQDQFLDO VWDWHPHQWV FRQWDLQHG D PDWHULDO PLVVWDWHPHQW & $XGLWRUV NQHZ WKH ILQDQFLDO VWDWHPHQWV FRQWDLQHG D PDWHULDO PLVVWDWHPHQW ' +H RU VKH UHOLHG RQ WKH ILQDQFLDO VWDWHPHQWV

 )DLOXUH WR SURYLGH DQ\ OHYHO FDUH LQ IXOILOOLQJ D GXW\ RZHG WR DQRWKHU SDUW\ LQFOXGLQJ UHFNOHVV GLVUHJDUG IRU WKH WUXWK LV FDOOHG

$ %UHDFK RI FRQWUDFW % 2UGLQDU\ QHJOLJHQFH & 3ULYLW\ ' &RQVWUXFWLYH IUDXG  1 /DXUHQ KLUHV ' +XPSKUH\ &3$ WR DXGLW KHU ILQDQFLDO VWDWHPHQWV 7KH HQJDJHPHQW OHWWHU LQFOXGHV D VWDWHPHQW DFNQRZOHGJLQJ WKDW DXGLWHG ILQDQFLDO VWDWHPHQWV DUH UHTXLUHG WR EH ILOHG ZLWK D UHJXODWRU\ ERG\ E\ 2FWREHU  +XPSKUH\ GRHV QRW FRPSOHWH WKH DXGLW XQWLO 2FWREHU  /DXUHQ LV ODWH ILOLQJ WKH ILQDQFLDO VWDWHPHQWV DQG LV ILQHG   E\ WKH UHJXODWRU\ ERG\ /DXUHQ ZRXOG PRVW OLNHO\ VXH +XPSKUH\ FODLPLQJ

$ %UHDFK RI FRQWUDFW % 2UGLQDU\ QHJOLJHQFH & *URVV QHJOLJHQFH ' &RQVWUXFWLYH IUDXG

 1 /DXUHQ KLUHV ' +XPSKUH\ &3$ WR DXGLW KHU ILQDQFLDO VWDWHPHQWV 7KH HQJDJHPHQW OHWWHU LQFOXGHV D VWDWHPHQW DFNQRZOHGJLQJ WKDW DXGLWHG ILQDQFLDO VWDWHPHQWV ZLOO EH SURYLGHG WR .H\ /DUJR %DQN IRU D ORDQ +XPSKUH\ FRPSOHWHV WKH DXGLW DQG LVVXHV DQ XQTXDOLILHG RSLQLRQ %DVHG RQ WKH DXGLWHG ILQDQFLDO VWDWHPHQWV .H\ /DUJR %DQN DSSURYHV WKH ORDQ WR /DXUHQ )RXU PRQWKV ODWHU /DXUHQ ILOHV IRU EDQNUXSWF\ .H\ /DUJR %DQN ZRXOG PRVW OLNHO\ VXH +XPSKUH\ FODLPLQJ WKDW

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

$ ,W ZDV LQ SULYLW\ RI WKH FRQWUDFW % ,W ZDV D SULPDU\ EHQHILFLDU\ & ,W ZDV D IRUHVHHQ SDUW\ ' ,W ZDV D IRUHVHHDEOH SDUW\

 1 /DXUHQ KLUHV ' +XPSKUH\ &3$ WR DXGLW KHU ILQDQFLDO VWDWHPHQWV 7KH HQJDJHPHQW OHWWHU LQFOXGHV D VWDWHPHQW DFNQRZOHGJLQJ WKDW DXGLWHG ILQDQFLDO VWDWHPHQWV DUH QHHGHG IRU D ILOLQJ ZLWK D UHJXODWRU\ ERG\ +XPSKUH\ FRPSOHWHV WKH DXGLW DQG LVVXHV DQ XQTXDOLILHG RSLQLRQ %DVHG RQ WKH DXGLWHG ILQDQFLDO VWDWHPHQWV .H\ /DUJR %DQN DSSURYHV D ORDQ WR /DXUHQ )RXU PRQWKV ODWHU /DXUHQ ILOHV IRU EDQNUXSWF\ .H\ /DUJR %DQN ZRXOG PRVW OLNHO\ VXH +XPSKUH\ FODLPLQJ WKDW

$ ,W ZDV LQ SULYLW\ RI WKH FRQWUDFW % ,W ZDV D SULPDU\ EHQHILFLDU\ & ,W ZDV D IRUHVHHQ SDUW\ ' ,W ZDV D IRUHVHHDEOH SDUW\  ,I DQ DXGLW LV SHUIRUPHG IRU WKH EHQHILW RI D VSHFLILF SHUVRQ RU RUJDQL]DWLRQ WKDW SHUVRQ RU RUJDQL]DWLRQ LV NQRZQ DV D Q

$ 3DUW\ WR WKH FRQWUDFW % 3ULPDU\ EHQHILFLDU\ & )RUHVHHDEOH WKLUG SDUW\ ' 3ULPH EHQHIDFWRU

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

$ 7KH VKDUHKROGHUV GLG QRW VXIIHU D ORVV % 7KH VKDUHKROGHUV ZHUH QRW SULPDU\ EHQHILFLDULHV RI WKH DXGLW HQJDJHPHQW DQG WKH\ KDYH QR VWDQGLQJ WR VXH & 7KH VKDUHKROGHUV IDLOHG WR SURYH ODFN RI DSSURSULDWH SURIHVVLRQDO FDUH RQ WKH SDUW RI DXGLWRUV ' 7KH VKDUHKROGHUV GLG QRW UHO\ SURSHUO\ RQ WKH ILQDQFLDO VWDWHPHQWV

 :KLFK RI WKH IROORZLQJ FODLPV FRQFHUQLQJ WKH TXDOLW\ RI DXGLWRUV ZRUN ZRXOG OHDVW OLNHO\ UHVXOW LQ FLYLO OLDELOLW\ IRU GDPDJHV"

$ *URVV QHJOLJHQFH DPRXQWLQJ WR FRQVWUXFWLYH IUDXG % )DLOXUH WR LQYHVWLJDWH SRVVLEOH IUDXG ZKHQ RWKHU HQWLWLHV LQ WKH LQGXVWU\ KDYH H[SHULHQFHG IUDXGV & 5HFNOHVV GLVUHJDUG RI HYLGHQFH WKDW WKH ILQDQFLDO VWDWHPHQWV GR QRW FRQIRUP WR JHQHUDOO\ DFFHSWHG DFFRXQWLQJ SULQFLSOHV ' ,VVXLQJ DQ XQTXDOLILHG DXGLWRUV RSLQLRQ ZKHQ HYLGHQFH VXJJHVWV WKDW WKH ILQDQFLDO VWDWHPHQWV ZHUH QRW SUHSDUHG DFFRUGLQJ WR JHQHUDOO\ DFFHSWHG DFFRXQWLQJ SULQFLSOHV

 /DQFDVWHU

&RPSDQ\ &3$V LV DXGLWLQJ WKH ILQDQFLDO VWDWHPHQWV RI &RRSHU

&RUSRUDWLRQ 'XULQJ WKH FRXUVH RI WKH DXGLW &RRSHU VHQW WKH IROORZLQJ PHPR WR WKH HQJDJHPHQW SDUWQHU :H KDYH UHTXHVWHG  PLOOLRQ ZRUWK RI SURGXFWV IURP /DGG &RUSRUDWLRQ ZLWK FUHGLW WHUPV RI QHW  GD\V /DGG KDV UHTXHVWHG DXGLWHG ILQDQFLDO VWDWHPHQWV IRU LWV FUHGLW GHFLVLRQ :H QRWLILHG /DGG WKDW RXU DQQXDO DXGLW ZDV LQ SURFHVV DQG ZH ZRXOG SURYLGH WKH DXGLWHG ILQDQFLDO VWDWHPHQWV WR WKHP DV VRRQ DV WKH\ ZHUH FRPSOHWHG :KLFK RI WKH IROORZLQJ VWDWHPHQWV LV WUXH ZLWK UHJDUG WR WKLV PHPR"

$ ,W LV DQ DPHQGPHQW WR WKH HQJDJHPHQW OHWWHU DQG PDNHV /DGG D SULPDU\ EHQHILFLDU\ RI WKH DXGLWHG ILQDQFLDO VWDWHPHQWV % ,W PD\ PRYH /DGG FORVHU WR D SULPDU\ EHQHILFLDU\ DQG UHSRVLWLRQ LW DV D WKLUG SDUW\ ZLWK D VWDQGLQJ WR VXH GHSHQGLQJ RQ WKH MXULVGLFWLRQ RI DQ\ IXWXUH ODZVXLWV & ,W LV RQO\ D FRXUWHV\ DQG GRHV QRW DOWHU WKH WHUPV RI WKH HQJDJHPHQW OHWWHU RU FKDQJH WKH QDWXUH RI /DGG V VWDQGLQJ WR VXH ' ,W LV DQ DGGLWLRQDO FRQWUDFW SODFLQJ /DGG LQ SULYLW\ RI FRQWUDFW

 :KHQ EULQJLQJ VXLW DJDLQVW DXGLWRUV XQGHU VHFWLRQ  E RI WKH 6HFXULWLHV ([FKDQJH $FW RI  SODLQWLIIV PXVW DOOHJH DQG SURYH WKDW

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

$ 7KLUG SDUWLHV WKDW DXGLWRUV VKRXOG KDYH IRUHVHHQ FRXOG UHO\ RQ WKH FOLHQW V ILQDQFLDO VWDWHPHQWV % 7KH DXGLWRUV FOLHQW & 3XUFKDVHUV DQG VHOOHUV RI VHFXULWLHV XQGHU WKH 6HFXULWLHV ([FKDQJH $FW RI  ' 7KLUG SDUWLHV ZKRVH UHOLDQFH RQ WKH FOLHQW V ILQDQFLDO VWDWHPHQWV ZDV UHDVRQDEO\ IRUHVHHDEOH

 $Q DXGLW IDLOXUH RFFXUV ZKHQ

$ $ FOLHQW JRHV EDQNUXSW RU KDV VHULRXV ILQDQFLDO GLIILFXOW\ % $XGLWRUV IDLO WR FRQGXFW WKH H[DPLQDWLRQ LQ DFFRUGDQFH ZLWK JHQHUDOO\ DFFHSWHG DXGLWLQJ VWDQGDUGV ZKLFK UHVXOWV LQ WKH IDLOXUH WR LGHQWLI\ PDWHULDO PLVVWDWHPHQWV LQ WKH ILQDQFLDO VWDWHPHQWV & $XGLWRUV FDQQRW FROOHFW DXGLW IHHV RZHG WR WKHP E\ WKH FOLHQW ' $XGLWRUV DUH VXHG E\ D WKLUG SDUW\  7KLUGSDUW\ SODLQWLIIV EULQJLQJ DFWLRQ XQGHU FRPPRQ ODZ QHHG QRW SURYH WKDW

$ 7KH\ ZHUH GDPDJHG RU VXIIHUHG DQ HFRQRPLF ORVV % 7KH\ UHOLHG RQ WKH ILQDQFLDO VWDWHPHQWV & 7KH ILQDQFLDO VWDWHPHQWV ZHUH WKH GLUHFW FDXVH RI ORVV ' %UHDFK RI FRQWUDFW RFFXUUHG  7\SLFDO GHIHQVHV IRU DXGLWRUV LQ FRPPRQ ODZ DFWLRQV LQFOXGH DOO RI WKH IROORZLQJ H[FHSW

$ 7KH SODLQWLII ZDV IRUHVHHQ % 7KH SODLQWLII FRQWULEXWHG WR WKH IDLOXUH WR GHWHFW PDWHULDO PLVVWDWHPHQWV & 7KH ILQDQFLDO VWDWHPHQWV ZHUH QRW PDWHULDOO\ PLVVWDWHG ' 7KH DXGLW ZDV FRQGXFWHG LQ DFFRUGDQFH ZLWK JHQHUDOO\ DFFHSWHG DXGLWLQJ VWDQGDUGV

 7KH 6HFXULWLHV $FW RI 

$ 5HJXODWHV WUDGLQJ LQ VHFXULWLHV % $SSURYHV DQG JXDUDQWHHV LQYHVWPHQWV & 5HJXODWHV WKH LQLWLDO LVVXDQFH RI VHFXULWLHV ' 5HJXODWHV WKH DFFRXQWLQJ SURIHVVLRQ  :KLFK RI WKH IROORZLQJ ZRXOG WKLUG SDUWLHV QRW QHHG WR GHPRQVWUDWH ZKHQ EULQJLQJ VXLW DJDLQVW DXGLWRUV IRU ORVVHV VXVWDLQHG XQGHU WKH 6HFXULWLHV $FW RI "

$ $XGLWRUV ZHUH DZDUH RI WKH PDWHULDOO\ PLVVWDWHG ILQDQFLDO VWDWHPHQWV % 7KLUGSDUW\ SXUFKDVHUV VXIIHUHG D ORVV & 7KH FOLHQW V ILQDQFLDO VWDWHPHQWV FRQWDLQHG D PDWHULDO PLVVWDWHPHQW ' 3XUFKDVHUV ZRXOG QHHG WR GHPRQVWUDWH DOO RI WKH DERYH  7KH 6(& 5XOH E GHDOV ZLWK

$ )UDXG LQ WKH SXUFKDVH RU VDOH RI VHFXULWLHV % 3HQDOWLHV IRU ZLOOIXOO\ DQG NQRZLQJO\ YLRODWLQJ WKH 6HFXULWLHV ([FKDQJH $FW RI  & 7KH XVH RI WKH GXH GLOLJHQFH GHIHQVH WR DYRLG OLDELOLW\ ' ,QWHJUDWHG GLVFORVXUH V\VWHP IRU DQQXDO UHSRUWV

 7KH ILUVW VLJQLILFDQW FDVH XQGHU VHFWLRQ  RI WKH 6HFXULWLHV $FW RI  FKDUJLQJ DXGLWRUV ZLWK QRW FRQGXFWLQJ D UHDVRQDEOH LQYHVWLJDWLRQ ZDV

$ 5XVFK )DFWRUV Y /HYLQ % 8QLWHG 6WDWHV Y %HQMDPLQ & (VFRWW Y %DU&KULV &RQVWUXFWLRQ &RUS ' (UQVW (UQVW Y +RFKIHOGHU

 )RUHVHHDEOH WKLUG SDUWLHV DUH EHVW GHVFULEHG DV

$ 0DQDJHPHQW RI WKH HQWLW\ % 7KRVH WKLUG SDUWLHV WKDW KDYH D GLUHFW UHODWLRQVKLS ZLWK DXGLWRUV WKURXJK SUHYLRXV FRQWUDFW UHODWHG WR WKH DXGLW HQJDJHPHQW & 7KRVH WKLUG SDUWLHV ZKR ZLOO UHO\ RQ WKH DXGLW DQG DUH VSHFLILFDOO\ NQRZQ E\ DXGLWRUV ' 7KRVH WKLUG SDUWLHV ZKRVH GHFLVLRQV QRUPDOO\ UHO\ RQ DXGLWHG ILQDQFLDO VWDWHPHQWV DQG RSLQLRQV RQ WKRVH ILQDQFLDO VWDWHPHQWV

 :KLFK RI WKH IROORZLQJ VWDWHPHQWV DERXW WKH 6HFXULWLHV $FW RI  LV QRW WUXH"

$ 7KH SODLQWLII PXVW SURYH GDPDJHV RU DQ HFRQRPLF ORVV % 7KH SODLQWLIIV PXVW SURYH WKH\ UHDG DQG UHOLHG XSRQ WKH ILQDQFLDO VWDWHPHQWV & $Q\ SXUFKDVHU RI VHFXULWLHV PD\ VXH DXGLWRUV ' 7KH SODLQWLIIV QHHG QRW SURYH WKDW WKH PDWHULDOO\ PLVVWDWHG ILQDQFLDO VWDWHPHQWV DUH WKH GLUHFW FDXVH RI WKH ORVV  7KH UHVWDWHPHQW RI WRUWV LV D JHQHUDO OHJDO GRFWULQH WKDW H[WHQGV OLDELOLW\ IRU RUGLQDU\ QHJOLJHQFH WR

$ )RUHVHHDEOH WKLUG SDUWLHV % )RUHVHHQ WKLUG SDUWLHV & 3ULPDU\ EHQHILFLDULHV ' $OO XVHUV RI ILQDQFLDO VWDWHPHQWV

 :KLFK RI WKH IROORZLQJ LV QRW SDUW RI WKH GHILQLWLRQ RI SURSRUWLRQDWH OLDELOLW\ DGRSWHG E\ WKH 3ULYDWH 6HFXULWLHV /LWLJDWLRQ 5HIRUP $FW"

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

$ $EGXO &RPSDQ\ % 3XUFKDVHUV RI $EGXO V VHFXULWLHV LQ DQ LQLWLDO SXEOLF RIIHULQJ & )LUVW 6WDWH %DQN D EDQN ZLWK ZKLFK $EGXO KDV QRW SUHYLRXVO\ GRQH EXVLQHVV ' 6LPRQ :KLWDNHU D SULYDWH LQYHVWRU ZKR LV FRQVLGHULQJ DFTXLULQJ $EGXO

 :KLFK RI WKH IROORZLQJ IDFWRUVZRXOG QRW LQIOXHQFH WKLUG SDUWLHV DELOLWLHV WR EULQJ VXLW DJDLQVW DXGLWRUV IRU RUGLQDU\ QHJOLJHQFH XQGHU FRPPRQ ODZ"

$ 7KH H[WHQW WR ZKLFK WKH WKLUG SDUW\ UHOLHG XSRQ WKH PLVVWDWHG ILQDQFLDO VWDWHPHQWV DQG WKLV UHOLDQFH UHVXOWHG LQ WKHLU ORVV % 7KH QDWXUH RI WKH DFWLYLW\ E\ WKH DXGLWRUV WKDW UHVXOWHG LQ WKHLU IDLOXUH WR H[HUFLVH DSSURSULDWH OHYHOV RI SURIHVVLRQDO FDUH & 7KH UHODWLRQVKLS EHWZHHQ WKH DXGLWRUV DQG D WKLUG SDUW\ ' 7KH MXULVGLFWLRQ LQ ZKLFK WKH DFWLRQ RFFXUUHG  $FFRUGLQJ WR 6DUEDQHV2[OH\ DFFRXQWDQWV SHUIRUPLQJ DQ DXGLW RU UHYLHZ PXVW PDLQWDLQ DOO HQJDJHPHQW GRFXPHQWDWLRQ IRU D SHULRG RI

$  \HDUV %  \HDUV &  \HDUV '  \HDUV

 :KLFK RI WKH IROORZLQJ VWDWHPHQWV FRQFHUQLQJ WKH 8OWUDPDUHV &RUS Y 7RXFKH FDVH LV QRW WUXH"

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

$ ,V WKH FOLHQW V FUHGLWRU ZKR VXHV DXGLWRUV IRU RUGLQDU\ QHJOLJHQFH % &DQ SURYH DXGLWRUV JURVV QHJOLJHQFH WKDW DPRXQWV WR D UHFNOHVV GLVUHJDUG IRU WKH WUXWK & ,V WKH DXGLWRUV FOLHQW ' %DVHV WKH DFWLRQ XSRQ IUDXG

 8QGHU WKH OLDELOLW\ SURYLVLRQV RI VHFWLRQ  RI WKH 6HFXULWLHV $FW RI  DXGLWRUV PD\ EH OLDEOH WR DQ\ SXUFKDVHU RI D VHFXULW\ IRU FHUWLI\LQJ PDWHULDOO\ PLVVWDWHG ILQDQFLDO VWDWHPHQWV WKDW DUH LQFOXGHG LQ WKH UHJLVWUDWLRQ VWDWHPHQW 8QGHU VHFWLRQ  DXGLWRUV XVXDOO\ DUH QRW OLDEOH WR WKH SXUFKDVHU

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

$ 5HOLDQFH RQ ILQDQFLDO VWDWHPHQWV \HV IUDXG E\ DXGLWRUV \HV % 5HOLDQFH RQ ILQDQFLDO VWDWHPHQWV \HV IUDXG E\ DXGLWRUV QR & 5HOLDQFH RQ ILQDQFLDO VWDWHPHQWV QR IUDXG E\ DXGLWRUV \HV ' 5HOLDQFH RQ ILQDQFLDO VWDWHPHQWV QR IUDXG E\ DXGLWRUV QR

 %HFNOHU

$VVRFLDWHV &3$V H[DPLQHG DQG LVVXHG DQ XQTXDOLILHG RSLQLRQ RQ WKH

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

$ , RQO\ % ,, RQO\ & %RWK , DQG ,, ' 1HLWKHU , QRU ,,

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

$ 7KH SXUFKDVHU PXVW SURYH WKDW /DUVRQ IDLOHG WR FRQGXFW WKH DXGLW LQ DFFRUGDQFH ZLWK JHQHUDOO\ DFFHSWHG DXGLWLQJ VWDQGDUGV % 7KH SXUFKDVHU PXVW SURYH WKDW /DUVRQ NQHZ RI WKH PDWHULDO PLVVWDWHPHQWV & /DUVRQ ZLOO QRW EH OLDEOH LI LW KDG UHDVRQDEOH JURXQGV WR EHOLHYH WKH ILQDQFLDO VWDWHPHQWV ZHUH DFFXUDWH ' /DUVRQ ZLOO QRW EH OLDEOH LI WKH SXUFKDVHU GLG QRW UHO\ RQ WKH ILQDQFLDO VWDWHPHQWV

 :KLOH FRQGXFWLQJ DQ DXGLW /DUVRQ $VVRFLDWHV &3$V IDLOHG WR GHWHFW PDWHULDO PLVVWDWHPHQWV LQFOXGHG LQ LWV FOLHQW V ILQDQFLDO VWDWHPHQWV /DUVRQ V XQTXDOLILHG RSLQLRQ ZDV LQFOXGHG ZLWK WKH ILQDQFLDO VWDWHPHQWV LQ D UHJLVWUDWLRQ VWDWHPHQW DQG SURVSHFWXV IRU D SXEOLF RIIHULQJ RI VHFXULWLHV PDGH E\ WKH FOLHQW /DUVRQ NQHZ WKDW LWV RSLQLRQ DQG WKH ILQDQFLDO VWDWHPHQWV ZRXOG EH XVHG IRU WKLV SXUSRVH ,Q D VXLW E\ D SXUFKDVHU DJDLQVW /DUVRQ LWV EHVW GHIHQVH ZRXOG EH WKDW WKH

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

$ :DOODFH ZDV LQ SULYLW\ ZLWK WKH VKDUHKROGHUV % 7KH VKDUHKROGHUV UHOLHG XSRQ WKH PDWHULDOO\ PLVVWDWHG ILQDQFLDO VWDWHPHQWV & :DOODFH DFWHG ZLWK JURVV QHJOLJHQFH LQ WKH DXGLW ' 7KH UHOLDQFH RQ WKH PDWHULDOO\ PLVVWDWHG ILQDQFLDO VWDWHPHQWV FDXVHG WKH VKDUHKROGHUV ORVVHV

 6XQ &RUS DSSURYHG D PHUJHU SODQ ZLWK &RUG &RUS $PRQJ WKH GHWHUPLQLQJ IDFWRUV LQ DSSURYLQJ WKH PHUJHU ZDV &RUG V ILQDQFLDO VWDWHPHQWV DXGLWHG E\ )UDQN &3$V 6XQ KDG HQJDJHG )UDQN WR DXGLW &RUG V ILQDQFLDO VWDWHPHQWV :KLOH SHUIRUPLQJ WKH DXGLW )UDQN IDLOHG WR GLVFRYHU FHUWDLQ LUUHJXODULWLHV WKDW ODWHU FDXVHG 6XQ WR VXIIHU VXEVWDQWLDO ORVVHV )RU )UDQN WR EH OLDEOH XQGHU FRPPRQ ODZ OLDELOLW\ 6XQ DW D PLQLPXP PXVW SURYH WKDW )UDQN &R

$ .QHZ RI WKH LUUHJXODULWLHV % )DLOHG WR H[HUFLVH WKH DSSURSULDWH OHYHO RI SURIHVVLRQDO FDUH & 'HPRQVWUDWHG JURVV QHJOLJHQFH ' $FWHG ZLWK VFLHQWHU  :KLFK RI WKH IROORZLQJ HOHPHQWV LI SUHVHQW ZRXOG VXSSRUW D ILQGLQJ RI FRQVWUXFWLYH IUDXG RQ WKH SDUW RI DXGLWRUV"

$ *URVV QHJOLJHQFH LQ FRQGXFWLQJ WKH HQJDJHPHQW % 2UGLQDU\ QHJOLJHQFH LQ FRQGXFWLQJ WKH HQJDJHPHQW & )DLOXUH WR SHUIRUP WKH HQJDJHPHQW LQ DFFRUGDQFH ZLWK WKH WHUPV LQ WKH HQJDJHPHQW OHWWHU ' $FWLRQV WKDW GHPRQVWUDWHG VFLHQWHU

 7R EH VXFFHVVIXO LQ D FLYLO DFWLRQ XQGHU VHFWLRQ  RI WKH 6HFXULWLHV $FW RI  DJDLQVW DXGLWRUV IRU OLDELOLW\ IRU D PDWHULDOO\ PLVVWDWHG UHJLVWUDWLRQ VWDWHPHQW WKH SODLQWLII PXVW SURYH WKH

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

$ &RQWULEXWRU\ QHJOLJHQFH RQ WKH SDUW RI WKH FOLHQW % $ GLVFODLPHU FRQWDLQHG LQ WKH HQJDJHPHQW OHWWHU & /DFN RI SULYLW\ ' /DFN RI VFLHQWHU

 8QGHU WKH DQWLIUDXG SURYLVLRQV RI VHFWLRQ  E RI WKH 6HFXULWLHV ([FKDQJH $FW RI  DXGLWRUV PD\ EH OLDEOH LI WKH\ DFWHG

$ :LWK RUGLQDU\ QHJOLJHQFH % :LWK LQGHSHQGHQFH & :LWKRXW GXH GLOLJHQFH ' :LWKRXW JRRG IDLWK  +RZ GRHV WKH 6HFXULWLHV $FW RI  ZKLFK LPSRVHV FLYLO OLDELOLW\ RQ DXGLWRUV IRU PLVUHSUHVHQWDWLRQV RU RPLVVLRQV RI PDWHULDO IDFWV LQ D UHJLVWUDWLRQ VWDWHPHQW H[SDQG DXGLWRUV OLDELOLW\ WR SXUFKDVHUV RI VHFXULWLHV EH\RQG WKDW RI FRPPRQ ODZ"

$ 3XUFKDVHUV KDYH WR SURYH RQO\ ORVV FDXVHG E\ UHOLDQFH RQ DXGLWHG ILQDQFLDO VWDWHPHQWV % 3ULYLW\ ZLWK SXUFKDVHUV LV QRW D QHFHVVDU\ HOHPHQW RI SURRI & 3XUFKDVHUV KDYH WR SURYH HLWKHU IUDXG RU JURVV QHJOLJHQFH DV D EDVLV IRU UHFRYHU\ ' $XGLWRUV DUH KHOG WR D VWDQGDUG RI FDUH GHVFULEHG DV SURIHVVLRQDO VNHSWLFLVP

 :KLFK RI WKH IROORZLQJ LV QRW D UHDVRQ WKDW WKH &ODVV $FWLRQ )DLUQHVV $FW RI  ZLOO EHQHILW DXGLWRUV LQ FODVV DFWLRQ ODZVXLWV"

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

$ &DXVDWLRQ % &RQWULEXWRU\ QHJOLJHQFH & 'XH GLOLJHQFH ' 3UXGHQW DXGLWRU

 :KLFK RI WKH IROORZLQJ LV QRW D YDOLG GHIHQVH IRU DXGLWRUV OLDELOLW\ WR WKLUG SDUWLHV IRU RUGLQDU\ QHJOLJHQFH XQGHU FRPPRQ ODZ"

$ 7KH ORVV ZDV FDXVHG E\ IDFWRUV RWKHU WKDQ WKH PDWHULDOO\ PLVVWDWHG ILQDQFLDO VWDWHPHQWV % 7KH WKLUG SDUWLHV ODFN WKH SURSHU VWDQGLQJ UHODWLRQVKLS WR EULQJ VXLW LQ WKDW MXULVGLFWLRQ & 7KH WKLUG SDUWLHV ODFN D SULYLW\ UHODWLRQVKLS ZLWK DXGLWRUV ' 7KH WKLUG SDUWLHV GLG QRW UHO\ XSRQ WKH ILQDQFLDO VWDWHPHQWV  $ ODFN RI UHDVRQDEOH FDUH WKDW PD\ EH FKDUDFWHUL]HG E\ WKH IDLOXUH RI DXGLWRUV WR IROORZ *$$6 LQ WKH FRQGXFW RI WKH DXGLW LV NQRZQ DV

$ &RQVWUXFWLYH IUDXG % )UDXG & *URVV QHJOLJHQFH ' 2UGLQDU\ QHJOLJHQFH

 )URP WKH DXGLWRUV SRLQW RI YLHZ ZKLFK RI WKH IROORZLQJ LV D SUHIHUDEOH SURYLVLRQ IRU LPSRVLWLRQ RI FLYLO OLDELOLW\ LQ D ODZVXLW IRU ILQDQFLDO GDPDJHV"

$ -RLQW DQG VHYHUDO OLDELOLW\ % 5HDVRQDEO\ IRUHVHHDEOH XVHUV DSSURDFK WR SULYLW\ & )RUHVHHQ WKLUG SDUWLHV DSSURDFK WR SULYLW\ ' 3URSRUWLRQDWH OLDELOLW\  8VHUV RI ILQDQFLDO VWDWHPHQWV KDYH D GLIIHUHQW SHUFHSWLRQ FRQFHUQLQJ WKH QDWXUH RI DXGLWRUV VHUYLFHV WKDQ WKH DFWXDO REMHFWLYHV RI DQ DXGLW 7KLV GLIIHUHQFH LV NQRZQ DV

$ 'LYHUVH OLDELOLW\ SHUFHSWLRQ % 5HDVRQDEOH IRUHVHHDEOH WKLUG SDUWLHV & ,QVXUDQFH K\SRWKHVLV ' ([SHFWDWLRQV JDS  ,QGLYLGXDOV ZKR EHOLHYH WKH\ UHOLHG RQ PLVVWDWHG ILQDQFLDO VWDWHPHQWV WR PDNH D GHFLVLRQ DQG KDYH VXIIHUHG ORVVHV DV D UHVXOW ZLOO LVVXH DQ DFWLRQ NQRZQ DV D

$ %UHDFK RI FRQWUDFW % 7RUW & 6HFXULWLHV OLWLJDWLRQ ' &RQVWUXFWLYH IUDXG

 $VVXPH WKDW DXGLWRUV ORVW D FLYLO ODZVXLW IRU GDPDJHV DQG WKH FRXUW IRXQG WRWDO ORVVHV RI  PLOOLRQ ,I WKH DXGLWRUV ZHUH GHWHUPLQHG WR EH  SHUFHQW DW IDXOW DQG ZHUH WKH RQO\ VROYHQW GHIHQGDQW ZKDW LV WKH DXGLWRUV OLNHO\ REOLJDWLRQ XQGHU SURSRUWLRQDWH OLDELOLW\"

$

  

% =HUR &    '     6XSSRVH WKDW WKH DXGLWRUV LQ WKH SUHFHGLQJ TXHVWLRQ SDUWLFLSDWHG NQRZLQJO\ LQ FRPPLVVLRQ RI YLRODWLRQV RI VHFXULWLHV ODZV ZLWK PDQDJHUV DQG GLUHFWRUV RI WKH DXGLW FOLHQW  :KDW LV WKH DXGLWRUV OLNHO\ REOLJDWLRQ"

$    % =HUR &    '   

 :KHQ D FOLHQW VXHV DQ DFFRXQWDQW IRU IDLOXUH WR SHUIRUP FRQVXOWLQJ ZRUN SURSHUO\ WKH DFFRXQWDQWV EHVW GHIHQVH LV SUREDEO\ EDVHG RQ WKH GRFWULQH RI

$ /DFN RI SULYLW\ RI FRQWUDFW % &RQWULEXWRU\ QHJOLJHQFH RQ WKH SDUW RI WKH FOLHQW & /DFN RI DQ\ PHDVXUDEOH GROODU DPRXQW RI GDPDJHV ' 1R QHJOLJHQFH RQ WKH SDUW RI WKH FRQVXOWDQW  :KHQ FUHGLWRUV ZKR UHOLHG RQ DQ HQWLW\ V DXGLWHG ILQDQFLDO VWDWHPHQWV VXIIHU PRQHWDU\ ORVVHV DIWHU D FXVWRPHU WKH DXGLWRUV FOLHQW JRHV EDQNUXSW ZKDW PXVW WKH SODLQWLII FUHGLWRUV LQ D ODZVXLW IRU GDPDJHV VKRZ LQ D FRXUW WKDW IROORZV WKH GRFWULQH LQ &UHGLW $OOLDQFH"

$ 7KH DXGLWRUV NQHZ DQG VSHFLILFDOO\ DFNQRZOHGJHG LGHQWLILFDWLRQ RI WKH FUHGLWRUV % 7KH DXGLWRUV FRXOG UHDVRQDEO\ IRUHVHH WKHP DV EHQHILFLDULHV RI WKH DXGLW EHFDXVH HQWLWLHV VXFK DV WKLV FOLHQW XVH ILQDQFLDO VWDWHPHQWV WR REWDLQ FUHGLW IURP YHQGRUV & 7KH SODLQWLIIV ZHUH IRUHVHHQ XVHUV RI WKH DXGLWHG ILQDQFLDO VWDWHPHQWV EHFDXVH WKH\ ZHUH YHQGRUV RI ORQJ VWDQGLQJ ' $OO RI WKH DERYH

 :KHQ DFFRXQWDQWV DJUHH WR SHUIRUP D FRPSLODWLRQ RU UHYLHZ RI XQDXGLWHG ILQDQFLDO VWDWHPHQWV WKH EHVW ZD\ WR DYRLG FOLHQWV PLVXQGHUVWDQGLQJ WKH QDWXUH RI WKH ZRUN LV WR GHVFULEH LW FRPSOHWHO\ LQ

$ $Q HQJDJHPHQW OHWWHU % 7KH DXGLWRUV RSLQLRQ & $ UHSRUW WR WKH FOLHQWV ERDUG RI GLUHFWRUV DW WKH FORVH RI WKH HQJDJHPHQW ' $ PDQDJHPHQW OHWWHU WR WKH ERDUG RI GLUHFWRUV DXGLW FRPPLWWHH  (QWLWLHV GHVLULQJ WR LVVXH HTXLW\ RU GHEW PXVW SURYLGH D VHW RI ILQDQFLDO VWDWHPHQWV WR DQ\ SURVSHFWLYH SXUFKDVHU 7KLV VHW RI ILQDQFLDO VWDWHPHQWV DQG RWKHU LQIRUPDWLRQ IRU SURVSHFWLYH SXUFKDVHUV LV NQRZQ DV D

$ 3URVSHFWXV % 5HYLHZ & 3DWURQ V DFTXLVLWLRQ VWDWHPHQW ' 3URMHFWHG DXGLWHG ILQDQFLDO LQIRUPDWLRQ  7KH 6HFXULWLHV $FW RI  DQG 6HFXULWLHV ([FKDQJH $FW RI  FRQWDLQ

$ &LYLO OLDELOLW\ SURYLVLRQV DSSOLFDEOH WR DXGLWRUV % &ULPLQDO OLDELOLW\ SURYLVLRQV DSSOLFDEOH WR DXGLWRUV & 1HLWKHU D QRU E ' %RWK D DQG E

 :KLFK RI WKH IROORZLQJ WKLUG SDUWLHV LV NQRZQ E\ QDPH WR DXGLWRUV DV WKH DXGLW LV FRQGXFWHG"

$ )RUHVHHDEOH WKLUG SDUW\ % )RUHVHHQ WKLUG SDUW\ & *HQHUDO WKLUG SDUW\ ' 3ULPDU\ EHQHILFLDU\  :KLFK RI WKH IROORZLQJ ZRXOG EH DXGLWRUV PRVW OLNHO\ GHIHQVH LQ DQ DFWLRQ EURXJKW XQGHU WKH 6HFXULWLHV ([FKDQJH $FW RI "

$ 7KH LQYHVWRU GLG QRW KDYH SULYLW\ ZLWK DXGLWRUV % 7KH LQYHVWRU GLG QRW VXIIHU D ORVV EDVHG RQ WKH PDWHULDOO\ PLVVWDWHG ILQDQFLDO VWDWHPHQWV & 7KH DXGLWRUV DFWHG LQ JRRG IDLWK DQG ZHUH QRW DZDUH RI WKH PDWHULDOO\ PLVVWDWHG ILQDQFLDO VWDWHPHQWV ' 7KH ILQDQFLDO VWDWHPHQWV ZHUH QRW ILOHG ZLWK WKH 6HFXULWLHV DQG ([FKDQJH &RPPLVVLRQ

 :KLFK RI WKH IROORZLQJ VWDWHPHQWV UHJDUGLQJ DXGLWRUV OLDELOLW\ XQGHU WKH 6HFXULWLHV $FW RI  LV QRW WUXH"

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

$ )RUP . % )RUP 6 & )RUP 4 ' )RUP .

 6HFWLRQ  E RI WKH 6HFXULWLHV $FW RI  SURYLGHV WKDW LQGLYLGXDOV FDQ EH VXHG DQG PD\ EH OLDEOH IRU LQYHVWRUV ORVVHV LQ FRQQHFWLRQ ZLWK D SXEOLF VHFXULWLHV RIIHULQJ XQGHU ZKLFK RI WKHVH FLUFXPVWDQFHV"

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

 ,Q FRPSDULVRQ WR WKH EXUGHQ RI SURRI UHTXLUHG RI SODLQWLIIV LQ FLYLO ODZVXLWV DJDLQVW LQGHSHQGHQW DXGLWRUV XQGHU FRPPRQ ODZ VHFWLRQ  E RI WKH 6HFXULWLHV ([FKDQJH $FW RI 

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

$ &UHGLW $OOLDQFH Y $UWKXU $QGHUVHQ % )OHHW 1DWLRQDO %DQN Y *ORXFHVWHU &R & 5RVHQEOXP ,QF Y $GOHU ' 8OWUDPDUHV

 :KLFK RI WKH IROORZLQJ LV D PDMRU GLIIHUHQFH LQ DXGLWRUV OLDELOLW\ XQGHU WKH 6HFXULWLHV $FW RI  DQG WKH 6HFXULWLHV ([FKDQJH $FW RI "

$ 7KH EXUGHQ RI SURYLQJ UHOLDQFH RQ PLVVWDWHG ILQDQFLDO VWDWHPHQWV DQG WKH UHODWLRQVKLS EHWZHHQ WKHVH ILQDQFLDO VWDWHPHQWV DQG WKH HFRQRPLF ORVV % 7KH DXGLWRUV UHTXLUHG GHJUHH RI SURIHVVLRQDO FDUH OHYHO RI VXEVWDQGDUG SHUIRUPDQFH  & %RWK RI WKH DERYH ' 1RQH RI WKH DERYH  :KHQ DQ HQWLW\ UHJLVWHUV D VHFXULW\ RIIHULQJ XQGHU WKH 6HFXULWLHV $FW RI  WKH ODZ SURYLGHV DQ LQYHVWRU

$ $Q 6(& JXDUDQWHH WKDW WKH LQIRUPDWLRQ LQ WKH UHJLVWUDWLRQ VWDWHPHQW LV WUXH % ,QVXUDQFH DJDLQVW ORVV IURP WKH LQYHVWPHQW & )LQDQFLDO LQIRUPDWLRQ H[DPLQHG E\ LQGHSHQGHQW DXGLWRUV ' ,QVLGH LQIRUPDWLRQ DERXW WKH HQWLW\ V WUDGH VHFUHWV

 $ JURXS RI LQYHVWRUV VXHG $QGHUVRQ 2OGV DQG :DWHUVKHG &3$V $2: IRU DOOHJHG GDPDJHV VXIIHUHG ZKHQ WKH HQWLW\ LQ ZKLFK WKH\ KHOG FRPPRQ VWRFN ZHQW EDQNUXSW 7R DYRLG OLDELOLW\ XQGHU WKH FRPPRQ ODZ $2: PXVW SURYH ZKLFK RI WKH IROORZLQJ"

$ 7KH LQYHVWRUV DFWXDOO\ VXIIHUHG D ORVV % 7KH LQYHVWRUV UHOLHG RQ WKH ILQDQFLDO VWDWHPHQWV DXGLWHG E\ $2: & 7KH LQYHVWRUV ORVV ZDV D GLUHFW UHVXOW RI WKHLU UHOLDQFH RQ WKH DXGLWHG ILQDQFLDO VWDWHPHQWV ' 7KH DXGLW ZDV FRQGXFWHG LQ DFFRUGDQFH ZLWK JHQHUDOO\ DFFHSWHG DXGLWLQJ VWDQGDUGV DQG ZLWK GXH FDUH  7KH 6HFXULWLHV DQG ([FKDQJH &RPPLVVLRQ GRFXPHQW WKDW JRYHUQV DFFRXQWLQJ LQ ILQDQFLDO VWDWHPHQWV ILOHG ZLWK WKH 6(& LV

$ 5HJXODWLRQ ' % )RUP . & )RUP 6%O ' 5HJXODWLRQ 6;

 :KLFK RI WKH IROORZLQJ FDVHV XSKHOG WKH UHTXLUHPHQW WKDW SODLQWLIIV GHPRQVWUDWH VFLHQWHU ZKHQ EULQJLQJ DFWLRQ XQGHU WKH 6HFXULWLHV ([FKDQJH $FW RI "

$ (UQVW

(UQVW Y +RFKIHOGHU

% (VFRWW Y %DU&KULV &RQVWUXFWLRQ &RUS & 6PLWK Y /RQGRQ $VVXUDQFH &RUS ' 8OWUDPDUHV  $ SXEOLF HQWLW\ VXEMHFW WR WKH SHULRGLF UHSRUWLQJ UHTXLUHPHQWV RI WKH 6HFXULWLHV ([FKDQJH $FW RI  PXVW ILOH DQ DQQXDO UHSRUW ZLWK WKH 6(& NQRZQ DV WKH

$ )RUP . % )RUP 4 & )RUP . ' 5HJXODWLRQ 6;  :KHQ LQYHVWRUV VXH IRU GDPDJHV XQGHU VHFWLRQ  RI WKH 6HFXULWLHV $FW RI  WKH\ PXVW DOOHJH DQG SURYH

$ 6FLHQWHU RQ WKH SDUW RI DXGLWRUV % 7KH DXGLWHG ILQDQFLDO VWDWHPHQWV FRQWDLQHG D PDWHULDO PLVVWDWHPHQW & 7KH\ UHOLHG RQ WKH PDWHULDOO\ PLVVWDWHG ILQDQFLDO VWDWHPHQWV ' 7KHLU UHOLDQFH RQ WKH PDWHULDOO\ PLVVWDWHG ILQDQFLDO VWDWHPHQWV ZDV WKH GLUHFW FDXVH RI WKHLU ORVV

 :KLFK RI WKH IROORZLQJ LV QRW SDUW RI 6DUEDQHV2[OH\"

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

$ /DFN RI SULYLW\ % /DFN RI UHOLDQFH & $ GLVFODLPHU FRQWDLQHG LQ WKH HQJDJHPHQW OHWWHU ' &RQWULEXWRU\ QHJOLJHQFH RQ WKH SDUW RI WKH FOLHQW

 /RFNH &3$ ZDV HQJDJHG E\ +DOO ,QF WR DXGLW :LOORZ &RPSDQ\ +DOO SXUFKDVHG

:LOORZ DIWHU UHFHLYLQJ :LOORZ V DXGLWHG ILQDQFLDO VWDWHPHQWV ZKLFK LQFOXGHG /RFNH V XQTXDOLILHG DXGLWRUV RSLQLRQ /RFNH ZDV QHJOLJHQW LQ WKH SHUIRUPDQFH RI WKH :LOORZ DXGLW HQJDJHPHQW WKLV QHJOLJHQFH ZDV FDXVHG E\ IDLOXUH WR SHUIRUP WKH ZDV HQJDJHPHQW LQ DFFRUGDQFH ZLWK WKH WHUPV RI WKH HQJDJHPHQW OHWWHU $V D UHVXOW RI /RFNH V QHJOLJHQFH +DOO VXIIHUHG GDPDJHV RI   +DOO DSSHDUV WR KDYH JURXQGV WR VXH /RFNH IRU

$ 2SWLRQ $ % 2SWLRQ % & 2SWLRQ & ' 2SWLRQ '

 $Q LQYHVWRU VHHNLQJ WR UHFRYHU VWRFN PDUNHW ORVVHV IURP D &3$ ILUP DVVRFLDWHG ZLWK DQ LQLWLDO RIIHULQJ RI VHFXULWLHV EDVHG RQ DQ XQTXDOLILHG RSLQLRQ RQ ILQDQFLDO VWDWHPHQWV WKDW DFFRPSDQLHG D UHJLVWUDWLRQ VWDWHPHQW PXVW HVWDEOLVK WKDW

$ 7KH DXGLWHG ILQDQFLDO VWDWHPHQWV FRQWDLQ D IDOVH VWDWHPHQW RU RPLVVLRQ RI PDWHULDO IDFW % 7KH LQYHVWRU UHOLHG RQ WKH ILQDQFLDO VWDWHPHQWV & 7KH &3$ ILUP GLG QRW DFW LQ JRRG IDLWK ' 7KH &3$ ILUP ZRXOG KDYH GLVFRYHUHG WKH IDOVH VWDWHPHQW RU RPLVVLRQ LI LW KDG H[HUFLVHG GXH FDUH LQ LWV H[DPLQDWLRQ  'RQDOGV &RPSDQ\ &3$V DXGLWHG WKH ILQDQFLDO VWDWHPHQWV LQFOXGHG LQ WKH DQQXDO

UHSRUW VXEPLWWHG E\ 0DUNXP 6HFXULWLHV ,QF WR WKH 6HFXULWLHV DQG ([FKDQJH &RPPLVVLRQ 7KH DXGLW ZDV LPSURSHU LQ VHYHUDO UHVSHFWV 0DUNXP LV QRZ LQVROYHQW DQG XQDEOH WR VDWLVI\ WKH FODLPV RI LWV FXVWRPHUV &XVWRPHUV KDYH LQVWLWXWHG OHJDO DFWLRQ DJDLQVW 'RQDOGV EDVHG RQ 6HFWLRQ  E DQG 5XOH  E  RI WKH 6HFXULWLHV ([FKDQJH $FW RI  :KLFK RI WKH IROORZLQJ LV OLNHO\ WR EH 'RQDOGV EHVW GHIHQVH"

$ 7KH ILUP GLG QRW LQWHQWLRQDOO\ FHUWLI\ WKH IDOVH ILQDQFLDO VWDWHPHQWV % 6HFWLRQ  E GRHV QRW DSSO\ WR WKH FDVH & 7KH ILUP ZDV QRW LQ SULYLW\ RI FRQWUDFW ZLWK WKH FUHGLWRUV ' 7KH HQJDJHPHQW OHWWHU VSHFLILFDOO\ GLVFODLPHG DQ\ OLDELOLW\ WR DQ\ SDUW\ WKDW UHVXOWHG IURP 0DUNXP V IUDXGXOHQW FRQGXFW

:HVW

&R &3$V UHQGHUHG DQ XQTXDOLILHG RSLQLRQ RQ WKH ILQDQFLDO VWDWHPHQWV RI

3ULGH &RUS ZKLFK ZHUH LQFOXGHG LQ 3ULGH V UHJLVWUDWLRQ VWDWHPHQW ILOHG ZLWK WKH 6(& 6XEVHTXHQWO\ +H[ SXUFKDVHG  VKDUHV RI 3ULGH V SUHIHUUHG VWRFN DV SDUW RI D SXEOLF RIIHULQJ VXEMHFW WR WKH 6HFXULWLHV $FW RI  +H[ KDV FRPPHQFHG DQ DFWLRQ DJDLQVW :HVW EDVHG RQ WKH 6HFXULWLHV $FW RI  IRU ORVVHV UHVXOWLQJ IURP PLVVWDWHPHQWV RI IDFWV LQ WKH ILQDQFLDO VWDWHPHQWV LQFOXGHG LQ WKH UHJLVWUDWLRQ VWDWHPHQW :KLFK RI WKH IROORZLQJ HOHPHQWV PXVW +H[ SURYH WR KROG :HVW OLDEOH"

$ :HVW UHQGHUHG LWV RSLQLRQ ZLWK NQRZOHGJH RI PDWHULDO PLVVWDWHPHQWV % :HVW SHUIRUPHG WKH DXGLW QHJOLJHQWO\ & +H[ UHOLHG RQ WKH ILQDQFLDO VWDWHPHQWV LQFOXGHG LQ WKH UHJLVWUDWLRQ VWDWHPHQW ' 7KH PLVVWDWHPHQWV ZHUH PDWHULDO

:HVW

&R &3$V UHQGHUHG DQ XQTXDOLILHG RSLQLRQ RQ WKH ILQDQFLDO VWDWHPHQWV RI

3ULGH &RUS ZKLFK ZHUH LQFOXGHG LQ 3ULGH V UHJLVWUDWLRQ VWDWHPHQW ILOHG ZLWK WKH 6(& 6XEVHTXHQWO\ +H[ SXUFKDVHG  VKDUHV RI 3ULGH V SUHIHUUHG VWRFN DV SDUW RI D SXEOLF RIIHULQJ VXEMHFW WR WKH 6HFXULWLHV $FW RI  +H[ KDV FRPPHQFHG DQ DFWLRQ DJDLQVW :HVW EDVHG RQ WKH 6HFXULWLHV $FW RI  IRU ORVVHV UHVXOWLQJ IURP PLVVWDWHPHQWV RI IDFWV LQ WKH ILQDQFLDO VWDWHPHQWV LQFOXGHG LQ WKH UHJLVWUDWLRQ VWDWHPHQW :KLFK RI WKH IROORZLQJ GHIHQVHV ZRXOG EH OHDVW KHOSIXO WR :HVW LQ DYRLGLQJ OLDELOLW\ WR +H["

$ :HVW ZDV QRW LQ SULYLW\ RI FRQWUDFW ZLWK +H[ % :HVW FRQGXFWHG WKH DXGLW LQ DFFRUGDQFH ZLWK *$$6 & +H[ V ORVVHV ZHUH FDXVHG E\ IDFWRUV RWKHU WKDQ WKH PLVVWDWHPHQWV ' +H[ NQHZ RI WKH PLVVWDWHPHQWV ZKHQ +H[ DFTXLUHG WKH SUHIHUUHG VWRFN ,Q JHQHUDO ZKLFK RI WKH IROORZLQJ SDUWLHV ZRXOG KDYH WKH ORZHVW EXUGHQ RI SURRI LQ EULQJLQJ VXLW DJDLQVW DQ DXGLWRU"

$ &OLHQWV % $ OHQGHU ZKR PHHWV WKH GHILQLWLRQ RI D SULPDU\ EHQHILFLDU\ & $ WKLUGSDUW\ LQYHVWRU XQGHU WKH 6HFXULWLHV $FW ' $ OHQGHU ZKR PHHWV WKH GHILQLWLRQ RI D IRUHVHHQ WKLUG SDUW\

8QGHU JHQHUDOO\ DFFHSWHG DXGLWLQJ VWDQGDUGV DXGLWRUV DUH UHVSRQVLEOH IRU GHWHFWLQJ

$ $OO PDQQHUV RI IUDXG % 7KHIW DQG LOOHJDO DFWV & 9LRODWLRQV RI DXGLWLQJ VWDQGDUGV ' 0DWHULDO PLVVWDWHPHQWV RI ILQDQFLDO VWDWHPHQWV 7KH 3ULYDWH 6HFXULWLHV /LWLJDWLRQ 5HIRUP $FW DGRSWHG WKH GRFWULQH RI

$ )RUHVHHDEOH WKLUG SDUWLHV % -RLQW DQG VHYHUDO OLDELOLW\ & 3URSRUWLRQDWH OLDELOLW\ ' )RUHVHHQ WKLUG SDUWLHV 7KH SULPDU\ GHIHQVH IRU DXGLWRUV DJDLQVW D FODLP RI RUGLQDU\ QHJOLJHQFH LV WR RIIHU HYLGHQFH WKDW WKH

$ $XGLW ZDV FRQGXFWHG LQ DFFRUGDQFH ZLWK *$$6 % 3ODLQWLII ZDV QRW LQ SULYLW\ RU QRW IRUHVHHQ & )LQDQFLDO VWDWHPHQWV GLG QRW FRQWDLQ D PDWHULDO PLVVWDWHPHQW ' 3ODLQWLII FRQWULEXWHG WR WKH QHJOLJHQFH

3ODLQWLIIV EULQJLQJ DFWLRQ XQGHU FRPPRQ ODZ QHHG QRW SURYH

$ 7KH\ KDYH D UHOLDQFH OHWWHU IURP DXGLWRUV % 7KH\ ZHUH GDPDJHG RU VXIIHUHG D ORVV & 7KH ILQDQFLDO VWDWHPHQWV FRQWDLQHG D PDWHULDO PLVVWDWHPHQW ' $XGLWRUV IDLOHG WR H[HUFLVH WKH DSSURSULDWH OHYHO RI SURIHVVLRQDO FDUH DQG ZHUH UHVSRQVLEOH IRU WKH GDPDJHV 7KH ODQGPDUN FDVH WKDW VWDWHG FULWHULD IRU DXGLWRUV OLDELOLW\ WR WKLUG SDUWLHV IRU JURVV QHJOLJHQFH RU IUDXG EXW QRW RUGLQDU\ QHJOLJHQFH ZDV

$ 6PLWK Y /RQGRQ $VVXUDQFH &RUS % 8OWUDPDUHV &RUS Y 7RXFKH &  7HQDQWV &RUS Y 0D[ 5RWKHQEHUJ ' 0F.HVVRQ 5REELQV ,QF &R

7KH 6HFXULWLHV DQG ([FKDQJH &RPPLVVLRQ GRFXPHQW WKDW JRYHUQV WKH UHSRUWLQJ RI DOO EXVLQHVV DQDO\WLFDO DQG VXSSOHPHQWDU\ GLVFORVXUHV LQ UHSRUWV UHTXLUHG WR EH ILOHG ZLWK WKH 6(& LV

$ )RUP . % )LQDQFLDO 5HSRUWLQJ 5HOHDVHV & 5HJXODWLRQ 6. ' 5HJXODWLRQ 6;

8QGHU VHFWLRQ  RI WKH 6HFXULWLHV $FW RI  D SODLQWLII VXLQJ IRU GDPDJHV PXVW SURYH

$ $ SULYLW\ UHODWLRQVKLS ZLWK DXGLWRUV % 5HOLDQFH RQ WKH ILQDQFLDO VWDWHPHQWV LQ UHJLVWUDWLRQ VWDWHPHQW & 0DWHULDOO\ PLVVWDWHG ILQDQFLDO VWDWHPHQWV FDXVHG WKH GDPDJHV RU ORVV ' 'DPDJHV RU ORVV IURP WKH SXUFKDVH RI VHFXULWLHV 6LQFH WKH (UQVW (UQVW Y +RFKIHOGHU FRXUW GHFLVLRQ SODLQWLIIV VXLQJ IRU GDPDJHV

XQGHU 5XOH E PXVW SURYH

$ 7KH ILQDQFLDO VWDWHPHQWV FRQWDLQHG D PDWHULDO PLVVWDWHPHQW % 7KH UHOLDQFH RQ WKH PDWHULDOO\ PLVVWDWHG ILQDQFLDO VWDWHPHQWV FDXVHG WKH GDPDJHV DQG ORVV & 2UGLQDU\ QHJOLJHQFH RQ WKH SDUW RI DXGLWRUV ' 6FLHQWHU RQ WKH SDUW RI DXGLWRUV :KLFK RI WKH IROORZLQJ LV D WKLUG SDUW\ ZKRVH QDPH WKH DXGLWRU NQRZV DQG IRU ZKRVH SXUSRVH WKH DXGLW LV FRQGXFWHG"

$ )RUHVHHQ WKLUG SDUW\ % )RUHVHHDEOH WKLUG SDUW\ & 3ULPDU\ EHQHILFLDU\ ' 6XEURJHH

)LOO LQ WKH %ODQN 4XHVWLRQV

,Q D Q BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB D VPDOO QXPEHU RI SODLQWLIIV ZLWK VPDOO LQGLYLGXDO FODLPV FDQ EULQJ VXLW IRU ODUJH GDPDJHV LQ WKH QDPH RI DQ H[WHQGHG FODVV BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 7KH 5RVHQEOXP ,QF Y $GOHU GHFLVLRQ DOORZV SRWHQWLDO DXGLWRU OLDELOLW\ IRU RUGLQDU\ QHJOLJHQFH WR WKLUG SDUWLHV ZKR DUH UHDVRQDEO\ BBBBBBBBBBBBBBBBBBBBBBBBBBBBB XVHUV RI DXGLWRUV RSLQLRQV DQG ILQDQFLDO VWDWHPHQWV BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB $ WKLUG SDUW\ ZKR LV NQRZQ E\ QDPH WR DXGLWRUV LV UHIHUUHG WR DV D Q BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 7KH 3ULYDWH /LWLJDWLRQ 6HFXULWLHV 5HIRUP $FW DGRSWHG WKH GRFWULQH RI BBBBBBBBBBBBBBBBBBBBBBBBBBBBB OLDELOLW\ ZKLFK EDVHV GDPDJHV RQ WKH H[WHQW RI IDXOW H[KLELWHG E\ D FRQYLFWHG GHIHQGDQW BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB

7KH 86 6XSUHPH &RXUW UXOHG WKDW DXGLWRUV DUH QRW VXEMHFW WR FLYLO BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB FRPSODLQWV XQOHVV WKH\ DFWXDOO\ SDUWLFLSDWHG LQ WKH PDQDJHPHQW RU RSHUDWLRQ RI D FRUUXSW EXVLQHVV BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBB OLDELOLW\ UHIHUV WR DXGLWRUV OLDELOLW\ EDVHG RQ SULRU OHJDO MXGJPHQWV DQG SUHFHGHQWV BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB LV D FODLP E\ SODLQWLIIV WKDW DXGLWRUV GLG QRW SHUIRUP VHUYLFHV LQ WKH PDQQHU VWDWHG LQ WKH HQJDJHPHQW OHWWHU BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 7KH FRQWUDFWXDO UHODWLRQVKLS EHWZHHQ SDUWLHV LV NQRZQ DV BBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB LV WKH ODFN RI UHDVRQDEOH FDUH LQ WKH SHUIRUPDQFH RI SURIHVVLRQDO VHUYLFHV BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB

7KH BBBBBBBBBBBBBBBBBBBBBBBBBBBBB Y 7RXFKH FDVH SURYLGHG WKH SUHFHGHQW WR DOORZ WKLUG SDUWLHV QRW LQ SULYLW\ ZLWK DXGLWRUV WR EULQJ VXLW IRU IDLOXUH WR H[HUFLVH WKH DSSURSULDWH OHYHO RI SURIHVVLRQDO FDUH BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB $XGLWRUV KDYH KLJK H[SRVXUH WR OLDELOLW\ XQGHU WKH 6HFXULWLHV $FW RI  VHFWLRQ  SULPDULO\ EHFDXVH WKH BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB KDV EHHQ SODFHG RQ DXGLWRUV BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 5HJXODWLRQ BBBBBBBBBBBBBBBBBBBBBBBBBBBBB FRQWDLQV DFFRXQWLQJ UHTXLUHPHQWV IRU DQQXDO DQG LQWHULP ILQDQFLDO VWDWHPHQWV ILOHG XQGHU WKH 6HFXULWLHV $FW RI  DQG 6HFXULWLHV ([FKDQJH $FW RI  BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 7KH 6(& V BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB H[SUHVV QHZ UXOHV DQG SROLFLHV DERXW DFFRXQWLQJ DQG GLVFORVXUHV BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB $ Q BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB PXVW EH ILOHG DQG PXVW EH HIIHFWLYH EHIRUH D VDOH RI VHFXULWLHV WR WKH SXEOLF LV ODZIXO BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB

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

7KH GHIHQVH IRU DXGLWRUV XQGHU WKH 6HFXULWLHV ([FKDQJH $FW RI  LV WR SURYH WKH\ DFWHG LQ BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB DQG KDG QR NQRZOHGJH RI WKH PDWHULDO PLVVWDWHPHQWV BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 7KH (UQVW (UQVW Y BBBBBBBBBBBBBBBBBBB FDVH FRQFOXGHG WKDW DXGLWRUV PLJKW EH

OLDEOH IRU JURVV QHJOLJHQFH XQGHU WKH 6HFXULWLHV ([FKDQJH $FW RI  HYHQ LQ WKH DEVHQFH RI VFLHQWHU BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB

6KRUW $QVZHU 4XHVWLRQV

,Q HDFK RI WKH LQGLYLGXDO FDVHV LQGLFDWH WKH SRWHQWLDO OLDELOLW\ DQG LGHQWLI\ WKH ,Q DSSURSULDWH EDVLV XQGHU FRPPRQ RU VWDWXWRU\ ODZ

(VVD\ 4XHVWLRQV

'LVWLQJXLVK EHWZHHQ WKH GXH GLOLJHQFH DQG WKH FDXVDWLRQ GHIHQVHV DYDLODEOH WR DXGLWRUV XQGHU VHFWLRQ  RI WKH 6HFXULWLHV $FW RI 

:KDW DUH WKH OHJDO OLDELOLWLHV RI DXGLWRUV XQGHU FRPPRQ ODZ"

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

%ULHIO\ H[SODLQ WKH FRQFHSW RI SURSRUWLRQDWH OLDELOLW\ :K\ LV WKH DGRSWLRQ RI SURSRUWLRQDWH OLDELOLW\ LPSRUWDQW WR WKH DFFRXQWLQJ SURIHVVLRQ"

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

0DWFKLQJ 4XHVWLRQV

8VLQJ WKH IROORZLQJ OHWWHUV LGHQWLI\ WKH FDVH WR ZKLFK HDFK VWDWHPHQW LV PRVW FORVHO\ UHODWHG

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

SULYLW\ ZLWK WKHP  (VWDEOLVKHG SUHFHGHQW IRU WKH SODLQWLII WR SURYH VFLHQWHU WR UHFRYHU GDPDJHV XQGHU VHFWLRQ  E RI WKH 6HFXULWLHV ([FKDQJH $FW RI  (VFRWW Y %DU&KULV &RQVWUXFWLRQ &RUS BBBB

8VLQJ WKH IROORZLQJ OHWWHUV LGHQWLI\ WKH FDVH WR ZKLFK HDFK VWDWHPHQW LV PRVW FORVHO\ UHODWHG

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

E\ PDNLQJ IDOVH DQG PLVOHDGLQJ VWDWHPHQWV LQ D SUR[\ VWDWHPHQW  &RQYLFWLRQ RI DXGLWRUV IRU ZLOOLQJO\ FRQVSLULQJ WR GHIUDXG LQ DQ HQJDJHPHQW UHODWHG WR D SUR IRUPD ILQDQFLDO VWDWHPHQW 8QLWHG 6WDWHV Y 1DWHOOL 1DWLRQDO 6WXGHQW 0DUNHWLQJ BBBB

!&"4 Q %!0 !@D  9"D C!& % 3 "  A " !" 98! H " !2!  ( ! 6 57 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!   %!0     



7UXH  )DOVH 4XHVWLRQV

758( SHQDOWLHV IRU IDLOXUH WR SHUIRUP SURIHVVLRQDO VHUYLFHV SURSHUO\ $XGLWRUV DUH SRWHQWLDOO\ OLDEOH IRU PRQHWDU\ GDPDJHV DQG VXEMHFW WR FULPLQDO

5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

0RGXOH & /HJDO /LDELOLW\ $QVZHU .H\

20 H "  (" ! 90 % %@ !@D  9"D C! 9 @  ! " 2 H "  !(( @ !& 9"!4 ! !! !' I 57 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!   %!0     

!&"4 Q %!0 !@D  9"D C!& % 3 "  A " !" 98! H " !2!  ( ! 6 57 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!   %!0     





5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 758( GHIHQGDQW V OHYHO RI FXOSDELOLW\ WKH IXOO DPRXQW RI D GDPDJH DZDUG IURP DQ\ GHIHQGDQW UHJDUGOHVV RI WKH -RLQW DQG VHYHUDO OLDELOLW\ LV D GRFWULQH WKDW DOORZV D VXFFHVVIXO SODLQWLII WR UHFRYHU 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH )$/6( PDQDJHPHQW IUDXG $XGLWRUV FDQQRW EH KHOG OLDEOH WR WKHLU FOLHQWV IRU IDLOXUH WR GHWHFW PDWHULDO

A 0 "&&" !' 20  9"D C !!! 9 ! ( ! 9 !  A "&&" ! 2 H "  (" !@ !@ (! 9 )57 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!   %!0     

A 0 "&&" !' 20  9"D C !!! 9 ! ( ! 9 !  A "&&" ! 2 H " ( " !@ !@ (! 9 )57 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!   %!0     





5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 7KH UHVWDWHPHQW RI WRUWV H[WHQGV OLDELOLW\ IRU RUGLQDU\ QHJOLJHQFH WR IRUHVHHQ 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 758( 6WULFW SULYLW\ LV WKH UHODWLRQVKLS RI SDUWLHV ZKR HQWHU LQWR D FRQWUDFW WRJHWKHU 758( WKLUG SDUWLHV ZKR PD\ QRW EH H[SOLFLWO\ NQRZQ WR DXGLWRUV

A 0 "&&" !' 20  9"D C !!! 9 ! ( ! 9 !  A "&&" ! 2 H "  (" !@ !@ (! 9 )57 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!   %!0     

20 H "  (" ! 90 % %@ !@D  9"D C! 9 @  ! " 2 H "  !(( @ !& 9"!4 ! !! !' I 57 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!   %!0     





5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 758( RI FRQWUDFWV RU DV WRUW DFWLRQV /HJDO OLDELOLWLHV RI DXGLWRUV PD\ DULVH IURP ODZVXLWV EURXJKW RQ WKH EDVLV RI WKH ODZ 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH )$/6( DQG VWDWH FRXUWV 7KH 3ULYDWH 6HFXULWLHV /LWLJDWLRQ 5HIRUP $FW GHDOV ZLWK ODZVXLWV LQ ERWK IHGHUDO

A 0 "&&" !' 20  9"D C !!! 9 ! ( ! 9 !  A "&&" ! 2 H "  (" !@ !@ (! 9 )57 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!   %!0     

A 0 "&&" !' 20  9"D C !!! 9 ! ( ! 9 !  A "&&" ! 2 H "  (" !@ !@ (! 9 )57 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!   %!0     





5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH )$/6( GHIHQGDQW XVXDOO\ DXGLWRUV $FWLRQV EURXJKW XQGHU FRPPRQ ODZ SODFH PRVW RI WKH EXUGHQ RI SURRI RQ WKH 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 758( H[HUFLVH WKH DSSURSULDWH OHYHO RI SURIHVVLRQDO FDUH  7RUW DFWLRQV FRYHU FLYLO FRPSODLQWV RWKHU WKDQ EUHDFK RI FRQWUDFW VXFK DV IDLOXUH WR

A 0 "&&" !' 20  9"D C !!! 9 ! ( ! 9 !  A "&&" ! 2 H "  (" !@ !@ (! 9 )57 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!   %!0     

A 0 "&&" !' 20  9"D C !!! 9 ! ( ! 9 !  A "&&" ! 2 H "  (" !@ !@ (! 9 )57 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!   %!0     





5RVHQEOXP Y $GOHU FDVH LQ WHUPV RI FRPPRQ ODZ OLDELOLW\ WR WKLUG SDUWLHV

5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 7KH 8OWUDPDUHV FDVH KROGV DXGLWRUV WR D KLJKHU OHYHO RI UHVSRQVLELOLW\ WKDQ WKH 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 758( DFFHSWHG DXGLWLQJ VWDQGDUGV HYLGHQFH WKDW WKH DXGLW KDG EHHQ FRQGXFWHG LQ DFFRUGDQFH ZLWK JHQHUDOO\ $XGLWRUV SULPDU\ GHIHQVH DJDLQVW D FODLP IRU RUGLQDU\ QHJOLJHQFH LV WR RIIHU )$/6(

i ! !h GG6 ("  ! ! !@D  9"D CGG6 ("  !! !@ ( " "4 " 9 2 &  4  !@ (! 9 V 57 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!   %!0     

A 0 "&&" !' 20  9"D C !!! 9 ! ( ! 9 !  A "&&" ! 2 H " (" !@ !@ (! 9 )57 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!   %!0     





5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 6HFXULWLHV ([FKDQJH $FW RI  UHJXODWHV WKH LQLWLDO LVVXDQFH RI VHFXULWLHV 7KH 6HFXULWLHV $FW RI  UHJXODWHV VXEVHTXHQW WUDGLQJ RI VHFXULWLHV DQG WKH 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 758( SURIHVVLRQDO FDUH WKDQ RUGLQDU\ QHJOLJHQFH *URVV QHJOLJHQFH UHSUHVHQWV D PRUH VLJQLILFDQW GHSDUWXUH IURP DSSURSULDWH )$/6(

i ! !h GG6 ("  ! ! !@D  9"D CGG6 ("  !! !@ ( " "4 " 9 2 &  4  !@ (! 9 V 57 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!   %!0     

i ! !h GG6 ("  ! ! !@D  9"D CGG6 ("  !! !@ ( " "4 " 9 2 &  4  !@ (! 9 V 57 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!   %!0     





5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 758( OLDELOLWLHV XQGHU WKH VWDWXWH 6HFWLRQ  RI WKH 6HFXULWLHV $FW RI  FRQWDLQV WKH SULQFLSDO FULWHULD GHILQLQJ FLYLO 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 7KH JHQHUDO UHJLVWUDWLRQ IRUP IRU QHZ LVVXHV RI VHFXULWLHV LV )RUP . )$/6(

i ! !h GG6 ("  ! ! !@D  9"D CGG6 ("  !! !@ ( " "4 " 9 2 &  4  !@ (! 9 V 57 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!   %!0     

i ! !h GG6 ("  ! ! !@D  9"D CGG6 ("  !! !@ ( " "4 " 9 2 &  4  !@ (! 9 V 57 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!   %!0     





5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 758( DUH QRW OLDEOH IRU GDPDJHV XQGHU VHFWLRQ  RI WKH 6HFXULWLHV $FW RI  ,I DXGLWRUV FDQ SURYH WKDW D UHDVRQDEOH H[DPLQDWLRQ ZDV SHUIRUPHG WKHQ DXGLWRUV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH )$/6( RI SURRI IURP DXGLWRUV WR WKH SODLQWLII 7KH HIIHFW RI VHFWLRQ  RI WKH 6HFXULWLHV $FW RI  LV WR VKLIW WKH PDMRU EXUGHQ

i ! %@8Q !!h VG6 ( "  ! %@8Q ! ! !@D  9"D C VG6 ("  ! %@ 8Q ! ! !@ (" "4 " 9 2 &  4  !@ (! 9 X 57 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!   %!0     

i ! %@8Q !!h VG6 ( "  ! %@8Q ! ! !@D  9"D C VG6 ("  ! %@ 8Q ! ! !@ (" "4 " 9 2 &  4  !@ (! 9 X 57 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!   %!0     





758(

GHFHLYH LQ RUGHU WR LPSRVH OLDELOLW\

5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 758( $V D GHIHQVH XQGHU 5XOH E DXGLWRUV PXVW SURYH WKDW WKH\ DFWHG LQ JRRG IDLWK 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 5XOH E UHTXLUHV WKDW WKH SODLQWLII PXVW SURYH WKDW DXGLWRUV DFWHG ZLWK LQWHQW WR DQG KDG QR NQRZOHGJH RI WKH PDWHULDO PLVVWDWHPHQWV LQ WKH ILQDQFLDO VWDWHPHQWV



/LDELOLW\ WR IRUHVHHQ WKLUG SDUWLHV ZRXOG H[SRVH DXGLWRUV WR D JUHDWHU SRWHQWLDO REOLJDWLRQ WKDQ OLDELOLW\ WR IRUHVHHDEOH WKLUG SDUWLHV )$/6( 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

0XOWLSOH &KRLFH 4XHVWLRQV



A 0 "&&" !' 20  9"D C !!! 9 ! ( ! 9 !  A "&&" ! 2 H " ( " !@ !@ (! 9 )57 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!   %!0     

$XGLWRUV VKRXOG QRW EH OLDEOH WR DQ\ SDUW\ LI WKH\ SHUIRUP VHUYLFHV WKDW PHHW WKH VWDQGDUGV RI

$ 2UGLQDU\ QHJOLJHQFH % 5HJXODWRU\ SURYLGHQFH & 'XH FDUH ' *RRG IDLWK
@Q

! " 20  9"D  %1 ! " C !!! 9 ! ( ! 9 !  A "&&" ! 2 H "  (" !@ !@ (! 9 )57 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  @Q

A 0 "&&" ! !!( ! "  9"D  %1 ! " C !!! 9 ! ( ! 9 !  A "&&" ! 2 H "  (" !@ !@ (! 9 )57 !4 ! 321 %!0 & !# ) ((  !' &"" @!!E   %!0 



' $XGLWRUV JURVV QHJOLJHQFH & $XGLWRUV RUGLQDU\ QHJOLJHQFH % &OLHQW V FRQWULEXWRU\ QHJOLJHQFH $ &OLHQW V FRQVWUXFWLYH QHJOLJHQFH $ SULQFLSOH WKDW PD\ UHGXFH RU HOLPLQDWHV DXGLWRUV OLDELOLW\ WR FOLHQWV LV



(OOLRW &RUS LV LQWHUHVWHG LQ SXUFKDVLQJ 5RJHU &RUS 3ULRU WR WKH SXUFKDVH (OOLRW KLUHG $GDP &R WR DXGLW 5RJHU V ILQDQFLDO VWDWHPHQWV 'XULQJ WKH DXGLW $GDP IDLOHG WR GLVFRYHU D IUDXG WKDW UHVXOWHG LQ PDWHULDO PLVVWDWHPHQWV LQ 5RJHU V ILQDQFLDO VWDWHPHQWV $IWHU WKH DFTXLVLWLRQ WKH IUDXG ZDV GLVFRYHUHG DQG (OOLRW &RUS VXIIHUHG VXEVWDQWLDO ORVVHV 7R VXH $GDP $GDP &R (OOLRW PXVW SURYH WKDW

$ $FWHG UHFNOHVVO\ RU ZLWK ODFN RI UHDVRQDEOH JURXQGV IRU EHOLHI % .QHZ RI WKH LQVWDQFHV RI IUDXG & )DLOHG WR H[HUFLVH WKH DSSURSULDWH OHYHO RI SURIHVVLRQDO FDUH ' 'HPRQVWUDWHG JURVV QHJOLJHQFH
! @D " 20  9"D  %1 ! " C !!! 9 ! ( ! 9 !  A "&&" ! 2 H "  (" !@ !@ (! 9 )57 !4 ! 321 %!0 W G (( !4 Q &"" @!!E   %!0  @Q



:KLFK RI WKH IROORZLQJ VWDWHPHQWV LV WUXH FRQFHUQLQJ DXGLWRUV UHVSRQVLELOLWLHV GXULQJ WKH DXGLW"

$ $XGLWRUV PXVW H[HUFLVH WKH OHYHO RI FDUH VNLOO DQG MXGJPHQW H[SHFWHG RI D UHDVRQDEO\ SUXGHQW DXGLWRU XQGHU WKH FLUFXPVWDQFHV % $XGLWRUV PXVW SODQ WKH DXGLW WR JDWKHU VXIILFLHQW FRPSHWHQW HYLGHQFH WR JXDUDQWHH WKH DFFXUDF\ RI WKH ILQDQFLDO VWDWHPHQWV & $XGLWRUV DUH VWULFWO\ OLDEOH IRU IDLOXUHV WR GLVFRYHU FOLHQW IUDXG ' $XGLWRUV DUH QRW OLDEOH XQOHVV WKH\ FRPPLW JURVV QHJOLJHQFH RU LQWHQWLRQDOO\ GLVUHJDUG JHQHUDOO\ DFFHSWHG DXGLWLQJ VWDQGDUGV
20 A 0 "&&"  9"D  %1 ! " C !!! 9 ! ( ! 9 !  A "&&" ! 2 H "  (" !@ !@ (! 9 )57 !4 ! 321 %!0 & !# ) ((  !' &"" @!!E   %!0  @Q



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

$ .HUU\ LV OLDEOH RQO\ WR WKLUG SDUWLHV LQ SULYLW\ RI FRQWUDFW % .HUU\ LV OLDEOH RQO\ WR NQRZQ XVHUV RI WKH ILQDQFLDO VWDWHPHQWV & .HUU\ LV OLNHO\ OLDEOH WR DQ\ SHUVRQ ZKR VXIIHUHG D ORVV DV D UHVXOW RI WKH PDWHULDO PLVVWDWHPHQW ' .HUU\ LV OLNHO\ OLDEOH WR WKLUG SDUWLHV RQO\ LI WKH WKLUG SDUWLHV ZHUH DZDUH RI WKH PDWHULDO PLVVWDWHPHQWV DQG UHOLHG RQ WKH ILQDQFLDO VWDWHPHQWV
! " 20  9"D  %1 ! " C !!! 9 ! ( ! 9 !  A "&&" ! 2 H "  (" !@ !@ (! 9 )57 !4 ! 321 %!0 W G (( 99 &"" @!!E   %!0  @Q



0D\V ERXJKW 0F&RYH\ &RUS FRPPRQ VWRFN LQ DQ RIIHULQJ UHJLVWHUHG XQGHU WKH 6HFXULWLHV $FW RI  +DUW &R &3$V JDYH DQ XQTXDOLILHG RSLQLRQ RQ 0F&RYH\ V ILQDQFLDO VWDWHPHQWV WKDW ZHUH LQFOXGHG LQ WKH UHJLVWUDWLRQ VWDWHPHQW ILOHG ZLWK WKH 6HFXULWLHV DQG ([FKDQJH &RPPLVVLRQ 0D\V VXHG +DUW XQGHU WKH SURYLVLRQV RI WKH  $FW WKDW GHDO ZLWK RPLVVLRQ RI IDFWV UHTXLUHG WR EH LQ WKH UHJLVWUDWLRQ VWDWHPHQW 0D\V PXVW SURYH WKDW

$ 7KHUH ZDV IUDXGXOHQW DFWLYLW\ E\ +DUW % 7KH ILQDQFLDO VWDWHPHQWV FRQWDLQHG D PDWHULDO PLVVWDWHPHQW & 0D\V UHOLHG RQ +DUW V RSLQLRQ ' 0D\V ZDV LQ SULYLW\ ZLWK +DUW
( "" (" !  9"D  %1 ! " CGG6 ("  !! !@ ( " "4 " 9 2 &  4  !@ (! 9 V 57 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  @Q



7R SUHYDLO LQ DQ DFWLRQ EURXJKW XQGHU FRPPRQ ODZ WKH SODLQWLII PXVW VKRZ DOO RI WKH IROORZLQJ H[FHSW

$ +H RU VKH ZDV GDPDJHG RU VXIIHUHG D ORVV % 7KH ILQDQFLDO VWDWHPHQWV FRQWDLQHG D PDWHULDO PLVVWDWHPHQW & $XGLWRUV NQHZ WKH ILQDQFLDO VWDWHPHQWV FRQWDLQHG D PDWHULDO PLVVWDWHPHQW ' +H RU VKH UHOLHG RQ WKH ILQDQFLDO VWDWHPHQWV
20 A 0 "&&"  9"D  %1 ! " C !!! 9 ! ( ! 9 !  A "&&" ! 2 H "  (" !@ !@ (! 9 )57 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  @Q



)DLOXUH WR SURYLGH DQ\ OHYHO FDUH LQ IXOILOOLQJ D GXW\ RZHG WR DQRWKHU SDUW\ LQFOXGLQJ UHFNOHVV GLVUHJDUG IRU WKH WUXWK LV FDOOHG

$ %UHDFK RI FRQWUDFW % 2UGLQDU\ QHJOLJHQFH & 3ULYLW\ ' &RQVWUXFWLYH IUDXG

Q 6 (( !2&!&!E &"" @!!E   %!0  @Q



20 "D  9"D  %1 ! " C !!! 9 ! ( ! 9 !  A "&&" ! 2 H "  (" !@ !@ (! 9 )57 !4 ! 321 %!0

1 /DXUHQ KLUHV ' +XPSKUH\ &3$ WR DXGLW KHU ILQDQFLDO VWDWHPHQWV 7KH HQJDJHPHQW OHWWHU LQFOXGHV D VWDWHPHQW DFNQRZOHGJLQJ WKDW DXGLWHG ILQDQFLDO VWDWHPHQWV DUH UHTXLUHG WR EH ILOHG ZLWK D UHJXODWRU\ ERG\ E\ 2FWREHU  +XPSKUH\ GRHV QRW FRPSOHWH WKH DXGLW XQWLO 2FWREHU  /DXUHQ LV ODWH ILOLQJ WKH ILQDQFLDO VWDWHPHQWV DQG LV ILQHG   E\ WKH UHJXODWRU\ ERG\ /DXUHQ ZRXOG PRVW OLNHO\ VXH +XPSKUH\ FODLPLQJ

$ %UHDFK RI FRQWUDFW % 2UGLQDU\ QHJOLJHQFH & *URVV QHJOLJHQFH ' &RQVWUXFWLYH IUDXG
 %1 ! " C !!! 9 ! ( ! 9 !  A "&&" ! 2 H "  (" !@ !@ (! 9 )57 !4 ! 321 %!0 & !# ) ((  !' &"" @!!E   %!0  @Q ! " 20  9"D



1 /DXUHQ KLUHV ' +XPSKUH\ &3$ WR DXGLW KHU ILQDQFLDO VWDWHPHQWV 7KH HQJDJHPHQW OHWWHU LQFOXGHV D VWDWHPHQW DFNQRZOHGJLQJ WKDW DXGLWHG ILQDQFLDO VWDWHPHQWV ZLOO EH SURYLGHG WR .H\ /DUJR %DQN IRU D ORDQ +XPSKUH\ FRPSOHWHV WKH DXGLW DQG LVVXHV DQ XQTXDOLILHG RSLQLRQ %DVHG RQ WKH DXGLWHG ILQDQFLDO VWDWHPHQWV .H\ /DUJR %DQN DSSURYHV WKH ORDQ WR /DXUHQ )RXU PRQWKV ODWHU /DXUHQ ILOHV IRU EDQNUXSWF\ .H\ /DUJR %DQN ZRXOG PRVW OLNHO\ VXH +XPSKUH\ FODLPLQJ WKDW

$ ,W ZDV LQ SULYLW\ RI WKH FRQWUDFW % ,W ZDV D SULPDU\ EHQHILFLDU\ & ,W ZDV D IRUHVHHQ SDUW\ ' ,W ZDV D IRUHVHHDEOH SDUW\
! @D " 20  9"D  %1 ! " C !!! 9 ! ( ! 9 !  A "&&" ! 2 H "  (" !@ !@ (! 9 )57 !4 ! 321 %!0 & !# ) ((  !' &"" @!!E   %!0  @Q



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

$ ,W ZDV LQ SULYLW\ RI WKH FRQWUDFW % ,W ZDV D SULPDU\ EHQHILFLDU\ & ,W ZDV D IRUHVHHQ SDUW\ ' ,W ZDV D IRUHVHHDEOH SDUW\
! @D " 20  9"D  %1 ! " C !!! 9 ! ( ! 9 !  A "&&" ! 2 H "  (" !@ !@ (! 9 )57 !4 ! 321 %!0 & !# ) ((  !' &"" @!!E   %!0  @Q



1 /DXUHQ KLUHV ' +XPSKUH\ &3$ WR DXGLW KHU ILQDQFLDO VWDWHPHQWV 7KH HQJDJHPHQW OHWWHU LQFOXGHV D VWDWHPHQW DFNQRZOHGJLQJ WKDW DXGLWHG ILQDQFLDO VWDWHPHQWV DUH QHHGHG IRU D ILOLQJ ZLWK D UHJXODWRU\ ERG\ +XPSKUH\ FRPSOHWHV WKH DXGLW DQG LVVXHV DQ XQTXDOLILHG RSLQLRQ %DVHG RQ WKH DXGLWHG ILQDQFLDO VWDWHPHQWV .H\ /DUJR %DQN DSSURYHV D ORDQ WR /DXUHQ )RXU PRQWKV ODWHU /DXUHQ ILOHV IRU EDQNUXSWF\ .H\ /DUJR %DQN ZRXOG PRVW OLNHO\ VXH +XPSKUH\ FODLPLQJ WKDW

$ ,W ZDV LQ SULYLW\ RI WKH FRQWUDFW % ,W ZDV D SULPDU\ EHQHILFLDU\ & ,W ZDV D IRUHVHHQ SDUW\ ' ,W ZDV D IRUHVHHDEOH SDUW\
! @D " 20  9"D  %1 ! " C !!! 9 ! ( ! 9 !  A "&&" ! 2 H "  (" !@ !@ (! 9 )57 !4 ! 321 %!0 & !# ) ((  !' &"" @!!E   %!0  @Q

! @D " 20  9"D  %1 ! " C !!! 9 ! ( ! 9 !  A "&&" ! 2 H "  (" !@ !@ (! 9 )57 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  @Q



' 3ULPH EHQHIDFWRU & )RUHVHHDEOH WKLUG SDUW\ % 3ULPDU\ EHQHILFLDU\ $ 3DUW\ WR WKH FRQWUDFW SHUVRQ RU RUJDQL]DWLRQ LV NQRZQ DV D Q ,I DQ DXGLW LV SHUIRUPHG IRU WKH EHQHILW RI D VSHFLILF SHUVRQ RU RUJDQL]DWLRQ WKDW



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

$ 7KH VKDUHKROGHUV GLG QRW VXIIHU D ORVV % 7KH VKDUHKROGHUV ZHUH QRW SULPDU\ EHQHILFLDULHV RI WKH DXGLW HQJDJHPHQW DQG WKH\ KDYH QR VWDQGLQJ WR VXH & 7KH VKDUHKROGHUV IDLOHG WR SURYH ODFN RI DSSURSULDWH SURIHVVLRQDO FDUH RQ WKH SDUW RI DXGLWRUV ' 7KH VKDUHKROGHUV GLG QRW UHO\ SURSHUO\ RQ WKH ILQDQFLDO VWDWHPHQWV
! @D " 20  9"D  %1 ! " C !!! 9 ! ( ! 9 !  A "&&" ! 2 H "  (" !@ !@ (! 9 )57 !4 ! 321 %!0 W G (( !4 Q &"" @!!E   %!0  @Q



:KLFK RI WKH IROORZLQJ FODLPV FRQFHUQLQJ WKH TXDOLW\ RI DXGLWRUV ZRUN ZRXOG OHDVW OLNHO\ UHVXOW LQ FLYLO OLDELOLW\ IRU GDPDJHV"

$ *URVV QHJOLJHQFH DPRXQWLQJ WR FRQVWUXFWLYH IUDXG % )DLOXUH WR LQYHVWLJDWH SRVVLEOH IUDXG ZKHQ RWKHU HQWLWLHV LQ WKH LQGXVWU\ KDYH H[SHULHQFHG IUDXGV & 5HFNOHVV GLVUHJDUG RI HYLGHQFH WKDW WKH ILQDQFLDO VWDWHPHQWV GR QRW FRQIRUP WR JHQHUDOO\ DFFHSWHG DFFRXQWLQJ SULQFLSOHV ' ,VVXLQJ DQ XQTXDOLILHG DXGLWRUV RSLQLRQ ZKHQ HYLGHQFH VXJJHVWV WKDW WKH ILQDQFLDO VWDWHPHQWV ZHUH QRW SUHSDUHG DFFRUGLQJ WR JHQHUDOO\ DFFHSWHG DFFRXQWLQJ SULQFLSOHV
20 "D  9"D  %1 ! " C !!! 9 ! ( ! 9 !  A "&&" ! 2 H "  (" !@ !@ (! 9 )57 !4 ! 321 %!0 & !# ) ((  !' &"" @!!E   %!0  @Q



/DQFDVWHU

&RPSDQ\ &3$V LV DXGLWLQJ WKH ILQDQFLDO VWDWHPHQWV RI &RRSHU

&RUSRUDWLRQ 'XULQJ WKH FRXUVH RI WKH DXGLW &RRSHU VHQW WKH IROORZLQJ PHPR WR WKH HQJDJHPHQW SDUWQHU :H KDYH UHTXHVWHG  PLOOLRQ ZRUWK RI SURGXFWV IURP /DGG &RUSRUDWLRQ ZLWK FUHGLW WHUPV RI QHW  GD\V /DGG KDV UHTXHVWHG DXGLWHG ILQDQFLDO VWDWHPHQWV IRU LWV FUHGLW GHFLVLRQ :H QRWLILHG /DGG WKDW RXU DQQXDO DXGLW ZDV LQ SURFHVV DQG ZH ZRXOG SURYLGH WKH DXGLWHG ILQDQFLDO VWDWHPHQWV WR WKHP DV VRRQ DV WKH\ ZHUH FRPSOHWHG :KLFK RI WKH IROORZLQJ VWDWHPHQWV LV WUXH ZLWK UHJDUG WR WKLV PHPR"

$ ,W LV DQ DPHQGPHQW WR WKH HQJDJHPHQW OHWWHU DQG PDNHV /DGG D SULPDU\ EHQHILFLDU\ RI WKH DXGLWHG ILQDQFLDO VWDWHPHQWV % ,W PD\ PRYH /DGG FORVHU WR D SULPDU\ EHQHILFLDU\ DQG UHSRVLWLRQ LW DV D WKLUG SDUW\ ZLWK D VWDQGLQJ WR VXH GHSHQGLQJ RQ WKH MXULVGLFWLRQ RI DQ\ IXWXUH ODZVXLWV & ,W LV RQO\ D FRXUWHV\ DQG GRHV QRW DOWHU WKH WHUPV RI WKH HQJDJHPHQW OHWWHU RU FKDQJH WKH QDWXUH RI /DGG V VWDQGLQJ WR VXH ' ,W LV DQ DGGLWLRQDO FRQWUDFW SODFLQJ /DGG LQ SULYLW\ RI FRQWUDFW
! @D " 20  9"D  %1 ! " C !!! 9 ! ( ! 9 !  A "&&" ! 2 H "  (" !@ !@ (! 9 )57 !4 ! 321 %!0 W G (( 99 &"" @!!E   %!0  @Q



:KHQ EULQJLQJ VXLW DJDLQVW DXGLWRUV XQGHU VHFWLRQ  E RI WKH 6HFXULWLHV ([FKDQJH $FW RI  SODLQWLIIV PXVW DOOHJH DQG SURYH WKDW

$ 7KH ILQDQFLDO VWDWHPHQWV LQ WKH RIIHULQJ UHJLVWUDWLRQ ILOLQJ FRQWDLQHG D PDWHULDO PLVVWDWHPHQW % 7KH DXGLWRUV ZHUH DZDUH RI PDWHULDO PLVVWDWHPHQWV LQ WKH ILQDQFLDO VWDWHPHQWV & 7KH DXGLWRUV ZHUH JXLOW\ RI RUGLQDU\ QHJOLJHQFH DQG IDLOHG WR GLVFRYHU PDWHULDO PLVVWDWHPHQWV LQ WKH ILQDQFLDO VWDWHPHQWV ' 7KH SODLQWLIIV SXUFKDVHG WKH VSHFLILF VHFXULWLHV WKURXJK D SXEOLF RIIHULQJ DQG WKXV KDYH D ULJKW WR VXH
( "" (" !  9"D  %1 ! " C VG6 ("  ! %@ 8Q ! ! !@ (" "4 " 9 2 &  4  !@ (! 9 X 57 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  @Q



:KLFK RI WKH IROORZLQJ SDUWLHV LV PRVW OLNHO\ WR UHFRYHU ORVVHV UHVXOWLQJ IURP DFWV RI RUGLQDU\ QHJOLJHQFH IURP DXGLWRUV"

$ 7KLUG SDUWLHV WKDW DXGLWRUV VKRXOG KDYH IRUHVHHQ FRXOG UHO\ RQ WKH FOLHQW V ILQDQFLDO VWDWHPHQWV % 7KH DXGLWRUV FOLHQW & 3XUFKDVHUV DQG VHOOHUV RI VHFXULWLHV XQGHU WKH 6HFXULWLHV ([FKDQJH $FW RI  ' 7KLUG SDUWLHV ZKRVH UHOLDQFH RQ WKH FOLHQW V ILQDQFLDO VWDWHPHQWV ZDV UHDVRQDEO\ IRUHVHHDEOH
20 "D  9"D  %1 ! " C !!! 9 ! ( ! 9 !  A "&&" ! 2 H "  (" !@ !@ (! 9 )57 !4 ! 321 %!0 & !# ) ((  !' &"" @!!E   %!0  @Q



$Q DXGLW IDLOXUH RFFXUV ZKHQ

$ $ FOLHQW JRHV EDQNUXSW RU KDV VHULRXV ILQDQFLDO GLIILFXOW\ % $XGLWRUV IDLO WR FRQGXFW WKH H[DPLQDWLRQ LQ DFFRUGDQFH ZLWK JHQHUDOO\ DFFHSWHG DXGLWLQJ VWDQGDUGV ZKLFK UHVXOWV LQ WKH IDLOXUH WR LGHQWLI\ PDWHULDO PLVVWDWHPHQWV LQ WKH ILQDQFLDO VWDWHPHQWV & $XGLWRUV FDQQRW FROOHFW DXGLW IHHV RZHG WR WKHP E\ WKH FOLHQW ' $XGLWRUV DUH VXHG E\ D WKLUG SDUW\
20 A 0 "&&"  9"D  %1 ! " C !!! 9 ! ( ! 9 !  A "&&" ! 2 H "  ( " !@ !@ (! 9 )57 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  @Q



7KLUGSDUW\ SODLQWLIIV EULQJLQJ DFWLRQ XQGHU FRPPRQ ODZ QHHG QRW SURYH WKDW

$ 7KH\ ZHUH GDPDJHG RU VXIIHUHG DQ HFRQRPLF ORVV % 7KH\ UHOLHG RQ WKH ILQDQFLDO VWDWHPHQWV & 7KH ILQDQFLDO VWDWHPHQWV ZHUH WKH GLUHFW FDXVH RI ORVV ' %UHDFK RI FRQWUDFW RFFXUUHG
Q 6 (( !2&!&!E &"" @!!E   %!0  @Q





A 0 "&&" ! !!( ! "  9"D  %1 ! " C !!! 9 ! ( ! 9 !  A "&&" ! 2 H "  (" !@ !@ (! 9 )57 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  @Q

! @D " 20  9"D  %1 ! " C !!! 9 ! ( ! 9 !  A "&&" ! 2 H "  (" !@ !@ (! 9 )57 !4 ! 321 %!0

7\SLFDO GHIHQVHV IRU DXGLWRUV LQ FRPPRQ ODZ DFWLRQV LQFOXGH DOO RI WKH IROORZLQJ H[FHSW

$ 7KH SODLQWLII ZDV IRUHVHHQ % 7KH SODLQWLII FRQWULEXWHG WR WKH IDLOXUH WR GHWHFW PDWHULDO PLVVWDWHPHQWV & 7KH ILQDQFLDO VWDWHPHQWV ZHUH QRW PDWHULDOO\ PLVVWDWHG ' 7KH DXGLW ZDV FRQGXFWHG LQ DFFRUGDQFH ZLWK JHQHUDOO\ DFFHSWHG DXGLWLQJ VWDQGDUGV

7KH 6HFXULWLHV $FW RI 

$ 5HJXODWHV WUDGLQJ LQ VHFXULWLHV % $SSURYHV DQG JXDUDQWHHV LQYHVWPHQWV & 5HJXODWHV WKH LQLWLDO LVVXDQFH RI VHFXULWLHV ' 5HJXODWHV WKH DFFRXQWLQJ SURIHVVLRQ
@Q

( "" (" !  9"D  %1 ! " CGG6 ("  !! !@ ( " "4 " 9 2 &  4  !@ (! 9 V 57 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  @Q

20 "  9"D  %1 ! " CGG6 ("  !! !@ ( " "4 " 9 2 &  4  !@ (! 9 V 57 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0 



' 3XUFKDVHUV ZRXOG QHHG WR GHPRQVWUDWH DOO RI WKH DERYH & 7KH FOLHQW V ILQDQFLDO VWDWHPHQWV FRQWDLQHG D PDWHULDO PLVVWDWHPHQW % 7KLUGSDUW\ SXUFKDVHUV VXIIHUHG D ORVV $ $XGLWRUV ZHUH DZDUH RI WKH PDWHULDOO\ PLVVWDWHG ILQDQFLDO VWDWHPHQWV :KLFK RI WKH IROORZLQJ ZRXOG WKLUG SDUWLHV QRW QHHG WR GHPRQVWUDWH ZKHQ EULQJLQJ VXLW DJDLQVW DXGLWRUV IRU ORVVHV VXVWDLQHG XQGHU WKH 6HFXULWLHV $FW RI "



7KH 6(& 5XOH E GHDOV ZLWK

$ )UDXG LQ WKH SXUFKDVH RU VDOH RI VHFXULWLHV % 3HQDOWLHV IRU ZLOOIXOO\ DQG NQRZLQJO\ YLRODWLQJ WKH 6HFXULWLHV ([FKDQJH $FW RI  & 7KH XVH RI WKH GXH GLOLJHQFH GHIHQVH WR DYRLG OLDELOLW\ ' ,QWHJUDWHG GLVFORVXUH V\VWHP IRU DQQXDO UHSRUWV
20 "  9"D  %1 ! " C VG6 ("  ! %@ 8Q ! ! !@ (" "4 " 9 2 &  4  !@ (! 9 X 57 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  @Q



7KH ILUVW VLJQLILFDQW FDVH XQGHU VHFWLRQ  RI WKH 6HFXULWLHV $FW RI  FKDUJLQJ DXGLWRUV ZLWK QRW FRQGXFWLQJ D UHDVRQDEOH LQYHVWLJDWLRQ ZDV

$ 5XVFK )DFWRUV Y /HYLQ % 8QLWHG 6WDWHV Y %HQMDPLQ & (VFRWW Y %DU&KULV &RQVWUXFWLRQ &RUS ' (UQVW (UQVW Y +RFKIHOGHU
Q 6 (( !2&!&!E &"" @!!E   %!0  @Q

! @D " 20  9"D  %1 ! " C !!! 9 ! ( ! 9 !  A "&&" ! 2 H "  (" !@ !@ (! 9 )57 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  @Q

! %!0  9"D  %1 ! " CGG6 ("  !! !@ ( " "4 " 9 2 &  4  !@ (! 9 V 57 !4 ! 321 %!0



' 7KRVH WKLUG SDUWLHV ZKRVH GHFLVLRQV QRUPDOO\ UHO\ RQ DXGLWHG ILQDQFLDO & 7KRVH WKLUG SDUWLHV ZKR ZLOO UHO\ RQ WKH DXGLW DQG DUH VSHFLILFDOO\ NQRZQ E\ % 7KRVH WKLUG SDUWLHV WKDW KDYH D GLUHFW UHODWLRQVKLS ZLWK DXGLWRUV WKURXJK $ 0DQDJHPHQW RI WKH HQWLW\ )RUHVHHDEOH WKLUG SDUWLHV DUH EHVW GHVFULEHG DV SUHYLRXV FRQWUDFW UHODWHG WR WKH DXGLW HQJDJHPHQW DXGLWRUV

VWDWHPHQWV DQG RSLQLRQV RQ WKRVH ILQDQFLDO VWDWHPHQWV



:KLFK RI WKH IROORZLQJ VWDWHPHQWV DERXW WKH 6HFXULWLHV $FW RI  LV QRW WUXH"

$ 7KH SODLQWLII PXVW SURYH GDPDJHV RU DQ HFRQRPLF ORVV % 7KH SODLQWLIIV PXVW SURYH WKH\ UHDG DQG UHOLHG XSRQ WKH ILQDQFLDO VWDWHPHQWV & $Q\ SXUFKDVHU RI VHFXULWLHV PD\ VXH DXGLWRUV ' 7KH SODLQWLIIV QHHG QRW SURYH WKDW WKH PDWHULDOO\ PLVVWDWHG ILQDQFLDO VWDWHPHQWV DUH WKH GLUHFW FDXVH RI WKH ORVV
( "" (" !  9"D  %1 ! " CGG6 ("  !! !@ ( " "4 " 9 2 &  4  !@ (! 9 V 57 !4 ! 321 %!0 & !# ) ((  !' &"" @!!E   %!0  @Q



7KH UHVWDWHPHQW RI WRUWV LV D JHQHUDO OHJDO GRFWULQH WKDW H[WHQGV OLDELOLW\ IRU RUGLQDU\ QHJOLJHQFH WR

$ )RUHVHHDEOH WKLUG SDUWLHV % )RUHVHHQ WKLUG SDUWLHV & 3ULPDU\ EHQHILFLDULHV ' $OO XVHUV RI ILQDQFLDO VWDWHPHQWV
Q 6 (( !2&!&!E &"" @!!E   %!0  @Q



! @D " 20  9"D  %1 ! " C !!! 9 ! ( ! 9 !  A "&&" ! 2 H "  (" !@ !@ (! 9 )57 !4 ! 321 %!0

:KLFK RI WKH IROORZLQJ LV QRW SDUW RI WKH GHILQLWLRQ RI SURSRUWLRQDWH OLDELOLW\ DGRSWHG E\ WKH 3ULYDWH 6HFXULWLHV /LWLJDWLRQ 5HIRUP $FW"

$ 7KH WRWDO UHVSRQVLELOLW\ IRU ORVV LV GLYLGHG DPRQJ DOO SDUWLHV UHVSRQVLEOH IRU WKH ORVV % 'HIHQGDQWV ZKR NQRZLQJO\ FRPPLWWHG D YLRODWLRQ RI VHFXULWLHV ODZV UHPDLQ MRLQWO\ DQG VHYHUDOO\ OLDEOH & 7KH IXOO DPRXQW RI GDPDJHV PD\ EH UHFRYHUHG IURP DQ\ GHIHQGDQWV LQYROYHG LQ WKH DFWLRQ ' $ VROYHQW GHIHQGDQW V OLDELOLW\ PD\ EH LQFUHDVHG E\  SHUFHQW LI RWKHU GHIHQGDQWV DUH LQVROYHQW
 &"( !E " % 0 ! ! !4   9"D  %1 ! " C! 9 @  ! " 2 H "  !(( @ !& 9"!4 ! !! !' I 57 !4 ! 321 %!0 & !# ) ((  !' &"" @!!E   %!0  @Q



$ 3DXOD SHUIRUPHG WKH DXGLW RI WKH ILQDQFLDO VWDWHPHQWV RI $EGXO &RPSDQ\ D QRQSXEOLF HQWLW\ FXUUHQWO\ QRW VXEMHFW WR ILOLQJ UHTXLUHPHQWV XQGHU WKH 6HFXULWLHV $FW RI  RU 6HFXULWLHV ([FKDQJH $FW RI   $EGXO LV FXUUHQWO\ FRQVLGHULQJ VHYHUDO DOWHUQDWLYHV IRU UDLVLQJ FDSLWDO LQFOXGLQJ VHHNLQJ ILQDQFLQJ IURP DUHD EDQNV RU DQ LQLWLDO SXEOLF RIIHULQJ RI LWV VHFXULWLHV :KLFK RI WKH IROORZLQJ SDUWLHV ZRXOG KDYH WKH ORZHVW OLNHOLKRRG RI VXFFHVVIXOO\ EULQJLQJ VXLW IRU RUGLQDU\ QHJOLJHQFH DJDLQVW 3DXOD"

$ $EGXO &RPSDQ\ % 3XUFKDVHUV RI $EGXO V VHFXULWLHV LQ DQ LQLWLDO SXEOLF RIIHULQJ & )LUVW 6WDWH %DQN D EDQN ZLWK ZKLFK $EGXO KDV QRW SUHYLRXVO\ GRQH EXVLQHVV ' 6LPRQ :KLWDNHU D SULYDWH LQYHVWRU ZKR LV FRQVLGHULQJ DFTXLULQJ $EGXO
! @D " 20  9"D  %1 ! " C !!! 9 ! ( ! 9 !  A "&&" ! 2 H " ( " !@ !@ (! 9 )57 !4 ! 321 %!0 W G (( 99 &"" @!!E   %!0  @Q



:KLFK RI WKH IROORZLQJ IDFWRUVZRXOG QRW LQIOXHQFH WKLUG SDUWLHV DELOLWLHV WR EULQJ VXLW DJDLQVW DXGLWRUV IRU RUGLQDU\ QHJOLJHQFH XQGHU FRPPRQ ODZ"

$ 7KH H[WHQW WR ZKLFK WKH WKLUG SDUW\ UHOLHG XSRQ WKH PLVVWDWHG ILQDQFLDO VWDWHPHQWV DQG WKLV UHOLDQFH UHVXOWHG LQ WKHLU ORVV % 7KH QDWXUH RI WKH DFWLYLW\ E\ WKH DXGLWRUV WKDW UHVXOWHG LQ WKHLU IDLOXUH WR H[HUFLVH DSSURSULDWH OHYHOV RI SURIHVVLRQDO FDUH & 7KH UHODWLRQVKLS EHWZHHQ WKH DXGLWRUV DQG D WKLUG SDUW\ ' 7KH MXULVGLFWLRQ LQ ZKLFK WKH DFWLRQ RFFXUUHG
! @D " 20  9"D  %1 ! " C !!! 9 ! ( ! 9 !  A "&&" ! 2 H "  (" !@ !@ (! 9 )57 !4 ! 321 %!0 & !# ) ((  !' &"" @!!E   %!0  @Q



$FFRUGLQJ WR 6DUEDQHV2[OH\ DFFRXQWDQWV SHUIRUPLQJ DQ DXGLW RU UHYLHZ PXVW PDLQWDLQ DOO HQJDJHPHQW GRFXPHQWDWLRQ IRU D SHULRG RI

$  \HDUV %  \HDUV &  \HDUV '  \HDUV

%!0  @Q



:KLFK RI WKH IROORZLQJ VWDWHPHQWV FRQFHUQLQJ WKH 8OWUDPDUHV &RUS Y 7RXFKH FDVH LV QRW WUXH"

$ 7KLV FDVH ZDV EURXJKW XQGHU FRPPRQ ODZ OLDELOLW\ % 7KLV FDVH SURYLGHG D WHVW WR GHWHUPLQH ZKHWKHU D WKLUG SDUW\ TXDOLILHG DV D SULPDU\ EHQHILFLDU\ DQG FRXOG EULQJ VXLW IRU RUGLQDU\ QHJOLJHQFH & 7KLV FDVH HVWDEOLVKHG WKH ULJKWV RI WKLUG SDUWLHV WR EULQJ VXLWV DJDLQVW DXGLWRUV XQGHU FRPPRQ ODZ OLDELOLW\ ' 7KLV FDVH FRQFOXGHG WKDW DXGLWRUV OLDELOLW\ WR WKLUG SDUWLHV ZRXOG EH JHQHUDOO\ OLPLWHG WR JURVV QHJOLJHQFH RU IUDXG
! @D " 20  9"D  %1 ! " C !!! 9 ! ( ! 9 !  A "&&" ! 2 H "  (" !@ !@ (! 9 )57 !4 ! 321 %!0 & !# ) ((  !' &"" @!!E   %!0  @Q

! 817!2  9"D  %1 ! " C! 9 @  ! " 2 H "  !(( @ !& 9"!4 ! !! !' I 57 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E  



,Q D FRPPRQ ODZ DFWLRQ DJDLQVW DXGLWRUV ODFN RI SULYLW\ LV D YLDEOH GHIHQVH LI WKH SODLQWLII

$ ,V WKH FOLHQW V FUHGLWRU ZKR VXHV DXGLWRUV IRU RUGLQDU\ QHJOLJHQFH % &DQ SURYH DXGLWRUV JURVV QHJOLJHQFH WKDW DPRXQWV WR D UHFNOHVV GLVUHJDUG IRU WKH WUXWK & ,V WKH DXGLWRUV FOLHQW ' %DVHV WKH DFWLRQ XSRQ IUDXG
! @D " 20  9"D   ! " C !!! 9 ! ( ! 9 !  A "&&" ! 2 H "  (" !@ !@ (! 9 )57 !4 ! 321 %!0 & !# ) ((  !' &"" @!!E   %!0  @Q



8QGHU WKH OLDELOLW\ SURYLVLRQV RI VHFWLRQ  RI WKH 6HFXULWLHV $FW RI  DXGLWRUV PD\ EH OLDEOH WR DQ\ SXUFKDVHU RI D VHFXULW\ IRU FHUWLI\LQJ PDWHULDOO\ PLVVWDWHG ILQDQFLDO VWDWHPHQWV WKDW DUH LQFOXGHG LQ WKH UHJLVWUDWLRQ VWDWHPHQW 8QGHU VHFWLRQ  DXGLWRUV XVXDOO\ DUH QRW OLDEOH WR WKH SXUFKDVHU

$ ,I WKH\ FDQ VKRZ FRQWULEXWRU\ QHJOLJHQFH RQ WKH SDUW RI WKH SXUFKDVHU % ,I WKH\ FDQ GHPRQVWUDWH GXH GLOLJHQFH & 8QOHVV WKH SXUFKDVHU FDQ SURYH SULYLW\ ZLWK WKH DXGLWRUV ' 8QOHVV WKH SXUFKDVHU FDQ SURYH VFLHQWHU RQ WKH SDUW RI WKH DXGLWRUV
@Q



8QGHU WKH OLDELOLW\ SURYLVLRQV RI VHFWLRQ  RI WKH 6HFXULWLHV $FW RI  DXGLWRUV PD\ EH OLDEOH WR DQ\ SXUFKDVHU RI VHFXULWLHV IRU FHUWLI\LQJ PDWHULDOO\ PLVVWDWHG ILQDQFLDO VWDWHPHQWV WKDW DUH LQFOXGHG LQ WKH UHJLVWUDWLRQ VWDWHPHQW 8QGHU VHFWLRQ  ZKLFK RI WKH IROORZLQJ PXVW D SXUFKDVHU RI WKH VHFXULW\ SURYH"

$ 5HOLDQFH RQ ILQDQFLDO VWDWHPHQWV \HV IUDXG E\ DXGLWRUV \HV % 5HOLDQFH RQ ILQDQFLDO VWDWHPHQWV \HV IUDXG E\ DXGLWRUV QR & 5HOLDQFH RQ ILQDQFLDO VWDWHPHQWV QR IUDXG E\ DXGLWRUV \HV ' 5HOLDQFH RQ ILQDQFLDO VWDWHPHQWV QR IUDXG E\ DXGLWRUV QR
  ! " CGG6 ("  !! !@ ( " "4 " 9 2 &  4  !@ (! 9 V 57 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  @Q

 GG6 ! !!( ! "  9"D   ! " CGG6 ("  !! !@ ( " "4 " 9 2 &  4  !@ (! 9 V 57 !4 ! 321 %!0 & !# ) ((  !' &"" @!!E   %!0  ( "" (" !  9"D



%HFNOHU

$VVRFLDWHV &3$V H[DPLQHG DQG LVVXHG DQ XQTXDOLILHG RSLQLRQ RQ WKH

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

$ , RQO\ % ,, RQO\ & %RWK , DQG ,, ' 1HLWKHU , QRU ,,
  ! " C !!! 9 ! ( ! 9 !  A "&&" ! 2 H "  (" !@ !@ (! 9 )57 !4 ! 321 %!0 & !# ) ((  !' &"" @!!E   %!0  @Q ! @D " 20  9"D



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

$ 7KH SXUFKDVHU PXVW SURYH WKDW /DUVRQ IDLOHG WR FRQGXFW WKH DXGLW LQ DFFRUGDQFH ZLWK JHQHUDOO\ DFFHSWHG DXGLWLQJ VWDQGDUGV % 7KH SXUFKDVHU PXVW SURYH WKDW /DUVRQ NQHZ RI WKH PDWHULDO PLVVWDWHPHQWV & /DUVRQ ZLOO QRW EH OLDEOH LI LW KDG UHDVRQDEOH JURXQGV WR EHOLHYH WKH ILQDQFLDO VWDWHPHQWV ZHUH DFFXUDWH ' /DUVRQ ZLOO QRW EH OLDEOH LI WKH SXUFKDVHU GLG QRW UHO\ RQ WKH ILQDQFLDO VWDWHPHQWV
( "" (" !  9"D   ! " CGG6 ("  !! !@ ( " "4 " 9 2 &  4  !@ (! 9 V 57 !4 ! 321 %!0 W G (( !4 Q &"" @!!E   %!0  @Q



:KLOH FRQGXFWLQJ DQ DXGLW /DUVRQ $VVRFLDWHV &3$V IDLOHG WR GHWHFW PDWHULDO PLVVWDWHPHQWV LQFOXGHG LQ LWV FOLHQW V ILQDQFLDO VWDWHPHQWV /DUVRQ V XQTXDOLILHG RSLQLRQ ZDV LQFOXGHG ZLWK WKH ILQDQFLDO VWDWHPHQWV LQ D UHJLVWUDWLRQ VWDWHPHQW DQG SURVSHFWXV IRU D SXEOLF RIIHULQJ RI VHFXULWLHV PDGH E\ WKH FOLHQW /DUVRQ NQHZ WKDW LWV RSLQLRQ DQG WKH ILQDQFLDO VWDWHPHQWV ZRXOG EH XVHG IRU WKLV SXUSRVH ,Q D VXLW E\ D SXUFKDVHU DJDLQVW /DUVRQ LWV EHVW GHIHQVH ZRXOG EH WKDW WKH

$ $XGLW ZDV FRQGXFWHG LQ DFFRUGDQFH ZLWK JHQHUDOO\ DFFHSWHG DXGLWLQJ VWDQGDUGV % &OLHQW ZDV DZDUH RI WKH PLVVWDWHPHQWV & 3XUFKDVHU ZDV QRW LQ SULYLW\ RI FRQWUDFW ZLWK /DUVRQ ' /DUVRQ GLG QRW NQRZ WKH LGHQWLW\ RI WKH SXUFKDVHU DW WKH WLPH RI WKH DXGLW
 GG6 ! !!( ! "  9"D   ! " CGG6 ("  !! !@ ( " "4 " 9 2 &  4  !@ (! 9 V 57 !4 ! 321 %!0 W G (( !4 Q &"" @!!E   %!0  @Q



:KLOH FRQGXFWLQJ DQ DXGLW RI D SXEOLF HQWLW\ :DOODFH IDLOHG WR LGHQWLI\ PDWHULDO PLVVWDWHPHQWV LQ LWV FOLHQW V ILQDQFLDO VWDWHPHQWV ,QYHVWRUV WKHQ VXHG :DOODFH LQ FRQQHFWLRQ ZLWK WKLV DXGLW :KLFK RI WKH IROORZLQJ ZRXOG QRW QHHG WR EH GHPRQVWUDWHG LQ RUGHU IRU WKH VKDUHKROGHUV WR VXFFHVVIXOO\ EULQJ VXLW DJDLQVW :DOODFH"

$ :DOODFH ZDV LQ SULYLW\ ZLWK WKH VKDUHKROGHUV % 7KH VKDUHKROGHUV UHOLHG XSRQ WKH PDWHULDOO\ PLVVWDWHG ILQDQFLDO VWDWHPHQWV & :DOODFH DFWHG ZLWK JURVV QHJOLJHQFH LQ WKH DXGLW ' 7KH UHOLDQFH RQ WKH PDWHULDOO\ PLVVWDWHG ILQDQFLDO VWDWHPHQWV FDXVHG WKH VKDUHKROGHUV ORVVHV
( "" (" !  9"D  %1 ! " C VG6 ("  ! %@ 8Q ! ! !@ (" "4 " 9 2 &  4  !@ (! 9 X 57 !4 ! 321 %!0 & !# ) ((  !' &"" @!!E   %!0  @Q



6XQ &RUS DSSURYHG D PHUJHU SODQ ZLWK &RUG &RUS $PRQJ WKH GHWHUPLQLQJ IDFWRUV LQ DSSURYLQJ WKH PHUJHU ZDV &RUG V ILQDQFLDO VWDWHPHQWV DXGLWHG E\ )UDQN &R &3$V 6XQ KDG HQJDJHG )UDQN WR DXGLW &RUG V ILQDQFLDO VWDWHPHQWV :KLOH SHUIRUPLQJ WKH DXGLW )UDQN IDLOHG WR GLVFRYHU FHUWDLQ LUUHJXODULWLHV WKDW ODWHU FDXVHG 6XQ WR VXIIHU VXEVWDQWLDO ORVVHV )RU )UDQN WR EH OLDEOH XQGHU FRPPRQ ODZ OLDELOLW\ 6XQ DW D PLQLPXP PXVW SURYH WKDW )UDQN

$ .QHZ RI WKH LUUHJXODULWLHV % )DLOHG WR H[HUFLVH WKH DSSURSULDWH OHYHO RI SURIHVVLRQDO FDUH & 'HPRQVWUDWHG JURVV QHJOLJHQFH ' $FWHG ZLWK VFLHQWHU
! @D " 20  9"D   ! " C !!! 9 ! ( ! 9 !  A "&&" ! 2 H "  (" !@ !@ (! 9 )57 !4 ! 321 %!0 W G (( !4 Q &"" @!!E   %!0  @Q



:KLFK RI WKH IROORZLQJ HOHPHQWV LI SUHVHQW ZRXOG VXSSRUW D ILQGLQJ RI FRQVWUXFWLYH IUDXG RQ WKH SDUW RI DXGLWRUV"

$ *URVV QHJOLJHQFH LQ FRQGXFWLQJ WKH HQJDJHPHQW % 2UGLQDU\ QHJOLJHQFH LQ FRQGXFWLQJ WKH HQJDJHPHQW & )DLOXUH WR SHUIRUP WKH HQJDJHPHQW LQ DFFRUGDQFH ZLWK WKH WHUPV LQ WKH HQJDJHPHQW OHWWHU ' $FWLRQV WKDW GHPRQVWUDWHG VFLHQWHU
20 "D  9"D   ! " C !!! 9 ! ( ! 9 !  A "&&" ! 2 H "  (" !@ !@ (! 9 )57 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  @Q



7R EH VXFFHVVIXO LQ D FLYLO DFWLRQ XQGHU VHFWLRQ  RI WKH 6HFXULWLHV $FW RI  DJDLQVW DXGLWRUV IRU OLDELOLW\ IRU D PDWHULDOO\ PLVVWDWHG UHJLVWUDWLRQ VWDWHPHQW WKH SODLQWLII PXVW SURYH WKH

$ $XGLWRUV LQWHQW WR GHFHLYH \HV SODLQWLII V UHOLDQFH RQ WKH UHJLVWUDWLRQ VWDWHPHQW \HV % $XGLWRUV LQWHQW WR GHFHLYH \HV SODLQWLII V UHOLDQFH RQ WKH UHJLVWUDWLRQ VWDWHPHQW QR & $XGLWRUV LQWHQW WR GHFHLYH QR SODLQWLII V UHOLDQFH RQ WKH UHJLVWUDWLRQ VWDWHPHQW \HV ' $XGLWRUV LQWHQW WR GHFHLYH QR SODLQWLII V UHOLDQFH RQ WKH UHJLVWUDWLRQ VWDWHPHQW QR
( "" (" !  9"D   ! " CGG6 ("  !! !@ ( " "4 " 9 2 &  4  !@ (! 9 V 57 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  @Q



:KLFK RI WKH IROORZLQJ LV WKH EHVW GHIHQVH WKDW DXGLWRUV FDQ DVVHUW LQ D VXLW IRU FRPPRQ ODZ IUDXG EDVHG RQ WKHLU XQTXDOLILHG RSLQLRQ RQ PDWHULDOO\ PLVVWDWHG ILQDQFLDO VWDWHPHQWV"

$ &RQWULEXWRU\ QHJOLJHQFH RQ WKH SDUW RI WKH FOLHQW % $ GLVFODLPHU FRQWDLQHG LQ WKH HQJDJHPHQW OHWWHU & /DFN RI SULYLW\ ' /DFN RI VFLHQWHU
A 0 "&&" ! !!( ! "  9"D   ! " C !!! 9 ! ( ! 9 !  A "&&" ! 2 H " ( " !@ !@ (! 9 )57 !4 ! 321 %!0 & !# ) ((  !' &"" @!!E   %!0  @Q



8QGHU WKH DQWLIUDXG SURYLVLRQV RI VHFWLRQ  E RI WKH 6HFXULWLHV ([FKDQJH $FW RI  DXGLWRUV PD\ EH OLDEOH LI WKH\ DFWHG

$ :LWK RUGLQDU\ QHJOLJHQFH % :LWK LQGHSHQGHQFH & :LWKRXW GXH GLOLJHQFH ' :LWKRXW JRRG IDLWK
!2&!&!E &"" @!!E   %!0  @Q



+RZ GRHV WKH 6HFXULWLHV $FW RI  ZKLFK LPSRVHV FLYLO OLDELOLW\ RQ DXGLWRUV IRU PLVUHSUHVHQWDWLRQV RU RPLVVLRQV RI PDWHULDO IDFWV LQ D UHJLVWUDWLRQ VWDWHPHQW H[SDQG DXGLWRUV OLDELOLW\ WR SXUFKDVHUV RI VHFXULWLHV EH\RQG WKDW RI FRPPRQ ODZ"

$ 3XUFKDVHUV KDYH WR SURYH RQO\ ORVV FDXVHG E\ UHOLDQFH RQ DXGLWHG ILQDQFLDO VWDWHPHQWV % 3ULYLW\ ZLWK SXUFKDVHUV LV QRW D QHFHVVDU\ HOHPHQW RI SURRI & 3XUFKDVHUV KDYH WR SURYH HLWKHU IUDXG RU JURVV QHJOLJHQFH DV D EDVLV IRU UHFRYHU\ ' $XGLWRUV DUH KHOG WR D VWDQGDUG RI FDUH GHVFULEHG DV SURIHVVLRQDO VNHSWLFLVP
  ! " CGG6 ("  !! !@ ( " "4 " 9 2 &  4  !@ (! 9 V 57 !4 ! 321 %!0 & !# ) ((  !' &"" @!!E   %!0  @Q

20 "  9"D   ! " C VG6 ("  ! %@ 8Q ! ! !@ (" "4 " 9 2 &  4  !@ (! 9 X 57 !4 ! 321 %!0 Q 6 (( ( "" (" !  9"D



:KLFK RI WKH IROORZLQJ LV QRW D UHDVRQ WKDW WKH &ODVV $FWLRQ )DLUQHVV $FW RI  ZLOO EHQHILW DXGLWRUV LQ FODVV DFWLRQ ODZVXLWV"

$ )HGHUDO FRXUWV SURYLGH D KLJKHU OHYHO RI VFUXWLQ\ IRU FODVV DFWLRQ ODZVXLWV WKDQ VWDWH FRXUWV % )HGHUDO FRXUWV KDYH PRUH UHVRXUFHV DW WKHLU GLVSRVDO IRU PDQDJLQJ FODVV DFWLRQ ODZVXLWV & 6WDWH FRXUWV PD\ GLVFULPLQDWH DJDLQVW GHIHQGDQWV IURP RWKHU MXULVGLFWLRQV ' 9HUGLFWV LQ VWDWH FRXUWV DUH QRUPDOO\ PRUH DSSURSULDWH WR DSSO\ WR PXOWLSOH MXULVGLFWLRQV WKDQ YHUGLFWV LQ IHGHUDO FRXUWV
 ! "   9"D  %1 ! " C! 9 @  ! " 2 H "  !(( @ !& 9"!4 ! !! !' I 57 !4 ! 321 %!0 & !# ) ((  !' &"" @!!E   %!0  @Q



8QGHU WKH 6HFXULWLHV $FW RI  ZKLFK RI WKH IROORZLQJ GHIHQVHV LV UHODWHG WR DXGLWRUV SHUIRUPLQJ D UHDVRQDEOH LQYHVWLJDWLRQ RI WKH ILQDQFLDO VWDWHPHQWV"

$ &DXVDWLRQ % &RQWULEXWRU\ QHJOLJHQFH & 'XH GLOLJHQFH ' 3UXGHQW DXGLWRU

@Q

A 0 "&&" ! !!( ! "  9"D  %1 ! " C !!! 9 ! ( ! 9 !  A "&&" ! 2 H "  (" !@ !@ (! 9 )57 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  @Q

 GG6 ! !!( ! "  9"D  %1 ! " CGG6 ("  !! !@ ( " "4 " 9 2 &  4  !@ (! 9 V 57 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0 



' 7KH WKLUG SDUWLHV GLG QRW UHO\ XSRQ WKH ILQDQFLDO VWDWHPHQWV & 7KH WKLUG SDUWLHV ODFN D SULYLW\ UHODWLRQVKLS ZLWK DXGLWRUV % 7KH WKLUG SDUWLHV ODFN WKH SURSHU VWDQGLQJ UHODWLRQVKLS WR EULQJ VXLW LQ WKDW $ 7KH ORVV ZDV FDXVHG E\ IDFWRUV RWKHU WKDQ WKH PDWHULDOO\ PLVVWDWHG ILQDQFLDO RUGLQDU\ QHJOLJHQFH XQGHU FRPPRQ ODZ" :KLFK RI WKH IROORZLQJ LV QRW D YDOLG GHIHQVH IRU DXGLWRUV OLDELOLW\ WR WKLUG SDUWLHV IRU VWDWHPHQWV MXULVGLFWLRQ

20 "D  9"D  %1 ! " C !!! 9 ! ( ! 9 !  A "&&" ! 2 H "  (" !@ !@ (! 9 )57 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  @Q



5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN ' 2UGLQDU\ QHJOLJHQFH & *URVV QHJOLJHQFH % )UDXG $ &RQVWUXFWLYH IUDXG IROORZ *$$6 LQ WKH FRQGXFW RI WKH DXGLW LV NQRZQ DV $ ODFN RI UHDVRQDEOH FDUH WKDW PD\ EH FKDUDFWHUL]HG E\ WKH IDLOXUH RI DXGLWRUV WR



)URP WKH DXGLWRUV SRLQW RI YLHZ ZKLFK RI WKH IROORZLQJ LV D SUHIHUDEOH SURYLVLRQ IRU LPSRVLWLRQ RI FLYLO OLDELOLW\ LQ D ODZVXLW IRU ILQDQFLDO GDPDJHV"

$ -RLQW DQG VHYHUDO OLDELOLW\ % 5HDVRQDEO\ IRUHVHHDEOH XVHUV DSSURDFK WR SULYLW\ & )RUHVHHQ WKLUG SDUWLHV DSSURDFK WR SULYLW\ ' 3URSRUWLRQDWH OLDELOLW\ 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

20 !"" 9"  9"D  %1 ! " C! 9 @  ! " 2 H "  !(( @ !& 9"!4 ! !! !' I 57 !4 ! 321 %!0 & !# ) ((  !' &"" @!!E   %!0  @Q



8VHUV RI ILQDQFLDO VWDWHPHQWV KDYH D GLIIHUHQW SHUFHSWLRQ FRQFHUQLQJ WKH QDWXUH RI DXGLWRUV VHUYLFHV WKDQ WKH DFWXDO REMHFWLYHV RI DQ DXGLW 7KLV GLIIHUHQFH LV NQRZQ DV

$ 'LYHUVH OLDELOLW\ SHUFHSWLRQ % 5HDVRQDEOH IRUHVHHDEOH WKLUG SDUWLHV & ,QVXUDQFH K\SRWKHVLV ' ([SHFWDWLRQV JDS 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

9T " ! 98Q  9"D  %1 ! " C!& % 3 "  A " !" 98! H " !2!  ( ! 6 57 !4 ! 321 %!0 Q 6 (( !2&!&!E &""  $E    %$@D    



,QGLYLGXDOV ZKR EHOLHYH WKH\ UHOLHG RQ PLVVWDWHG ILQDQFLDO VWDWHPHQWV WR PDNH D GHFLVLRQ DQG KDYH VXIIHUHG ORVVHV DV D UHVXOW ZLOO LVVXH DQ DFWLRQ NQRZQ DV D

$ %UHDFK RI FRQWUDFW % 7RUW & 6HFXULWLHV OLWLJDWLRQ ' &RQVWUXFWLYH IUDXG 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

20 "D  9"D  %1 ! " C !!! 9 ! ( ! 9 !  A "&&" ! 2 H "  (" !@ !@ (! 9 )57 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  @Q



$VVXPH WKDW DXGLWRUV ORVW D FLYLO ODZVXLW IRU GDPDJHV DQG WKH FRXUW IRXQG WRWDO ORVVHV RI  PLOOLRQ ,I WKH DXGLWRUV ZHUH GHWHUPLQHG WR EH  SHUFHQW DW IDXOW DQG ZHUH WKH RQO\ VROYHQW GHIHQGDQW ZKDW LV WKH DXGLWRUV OLNHO\ REOLJDWLRQ XQGHU SURSRUWLRQDWH OLDELOLW\"

$

  

% =HUR &    '    5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

20 !"" 9"  9"D  %1 ! " C! 9 @  ! " 2 H "  !(( @ !& 9"!4 ! !! !' I 57 !4 ! 321 %!0 W G (( 99 &"" @!!E   %!0  @Q



6XSSRVH WKDW WKH DXGLWRUV LQ WKH SUHFHGLQJ TXHVWLRQ SDUWLFLSDWHG NQRZLQJO\ LQ FRPPLVVLRQ RI YLRODWLRQV RI VHFXULWLHV ODZV ZLWK PDQDJHUV DQG GLUHFWRUV RI WKH DXGLW FOLHQW  :KDW LV WKH DXGLWRUV OLNHO\ REOLJDWLRQ"

$    % =HUR &    '    5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

20 !"" 9"  9"D  %1 ! " C! 9 @  ! " 2 H "  !(( @ !& 9"!4 ! !! !' I 57 !4 ! 321 %!0 W G (( 99 &"" @!!E   %!0  @Q



:KHQ D FOLHQW VXHV DQ DFFRXQWDQW IRU IDLOXUH WR SHUIRUP FRQVXOWLQJ ZRUN SURSHUO\ WKH DFFRXQWDQWV EHVW GHIHQVH LV SUREDEO\ EDVHG RQ WKH GRFWULQH RI

$ /DFN RI SULYLW\ RI FRQWUDFW % &RQWULEXWRU\ QHJOLJHQFH RQ WKH SDUW RI WKH FOLHQW & /DFN RI DQ\ PHDVXUDEOH GROODU DPRXQW RI GDPDJHV ' 1R QHJOLJHQFH RQ WKH SDUW RI WKH FRQVXOWDQW 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

A 0 "&&" ! !!( ! "  9"D  %1 ! " C !!! 9 ! ( ! 9 !  A "&&" ! 2 H "  (" !@ !@ (! 9 )57 !4 ! 321 %!0 & !# ) ((  !' &"" @!!E   %!0  @Q



:KHQ FUHGLWRUV ZKR UHOLHG RQ DQ HQWLW\ V DXGLWHG ILQDQFLDO VWDWHPHQWV VXIIHU PRQHWDU\ ORVVHV DIWHU D FXVWRPHU WKH DXGLWRUV FOLHQW JRHV EDQNUXSW ZKDW PXVW WKH SODLQWLII FUHGLWRUV LQ D ODZVXLW IRU GDPDJHV VKRZ LQ D FRXUW WKDW IROORZV WKH GRFWULQH LQ &UHGLW $OOLDQFH"

$ 7KH DXGLWRUV NQHZ DQG VSHFLILFDOO\ DFNQRZOHGJHG LGHQWLILFDWLRQ RI WKH FUHGLWRUV % 7KH DXGLWRUV FRXOG UHDVRQDEO\ IRUHVHH WKHP DV EHQHILFLDULHV RI WKH DXGLW EHFDXVH HQWLWLHV VXFK DV WKLV FOLHQW XVH ILQDQFLDO VWDWHPHQWV WR REWDLQ FUHGLW IURP YHQGRUV & 7KH SODLQWLIIV ZHUH IRUHVHHQ XVHUV RI WKH DXGLWHG ILQDQFLDO VWDWHPHQWV EHFDXVH WKH\ ZHUH YHQGRUV RI ORQJ VWDQGLQJ ' $OO RI WKH DERYH 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

! @D " 20  9"D  %1 ! " C !!! 9 ! ( ! 9 !  A "&&" ! 2 H "  (" !@ !@ (! 9 )57 !4 ! 321 %!0 & !# ) ((  !' &"" @!!E   %!0  @Q



:KHQ DFFRXQWDQWV DJUHH WR SHUIRUP D FRPSLODWLRQ RU UHYLHZ RI XQDXGLWHG ILQDQFLDO VWDWHPHQWV WKH EHVW ZD\ WR DYRLG FOLHQWV PLVXQGHUVWDQGLQJ WKH QDWXUH RI WKH ZRUN LV WR GHVFULEH LW FRPSOHWHO\ LQ

$ $Q HQJDJHPHQW OHWWHU % 7KH DXGLWRUV RSLQLRQ & $ UHSRUW WR WKH FOLHQWV ERDUG RI GLUHFWRUV DW WKH FORVH RI WKH HQJDJHPHQW ' $ PDQDJHPHQW OHWWHU WR WKH ERDUG RI GLUHFWRUV DXGLW FRPPLWWHH 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

 %1 ! " C !!! 9 ! ( ! 9 !  A "&&" ! 2 H "  (" !@ !@ (! 9 )57 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" %" 9!E   %!$#   "&&" !&! % %Q " 9&"  9"D



(QWLWLHV GHVLULQJ WR LVVXH HTXLW\ RU GHEW PXVW SURYLGH D VHW RI ILQDQFLDO VWDWHPHQWV WR DQ\ SURVSHFWLYH SXUFKDVHU 7KLV VHW RI ILQDQFLDO VWDWHPHQWV DQG RWKHU LQIRUPDWLRQ IRU SURVSHFWLYH SXUFKDVHUV LV NQRZQ DV D

$ 3URVSHFWXV % 5HYLHZ & 3DWURQ V DFTXLVLWLRQ VWDWHPHQW ' 3URMHFWHG DXGLWHG ILQDQFLDO LQIRUPDWLRQ 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

20 "  9"D  %1 ! " CGG6 ("  !! !@ ( " "4 " 9 2 &  4  !@ (! 9 V 57 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  



7KH 6HFXULWLHV $FW RI  DQG 6HFXULWLHV ([FKDQJH $FW RI  FRQWDLQ

$ &LYLO OLDELOLW\ SURYLVLRQV DSSOLFDEOH WR DXGLWRUV % &ULPLQDO OLDELOLW\ SURYLVLRQV DSSOLFDEOH WR DXGLWRUV & 1HLWKHU D QRU E ' %RWK D DQG E 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

20 "  9"D  %1 ! " CA " ! ! 9 @ " 2 H " !2! G 57 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  @Q

! @D " 20  9"D  %1 ! " C !!! 9 ! ( ! 9 !  A "&&" ! 2 H "  (" !@ !@ (! 9 )57 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  @Q



5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN ' 3ULPDU\ EHQHILFLDU\ & *HQHUDO WKLUG SDUW\ % )RUHVHHQ WKLUG SDUW\ $ )RUHVHHDEOH WKLUG SDUW\ FRQGXFWHG" :KLFK RI WKH IROORZLQJ WKLUG SDUWLHV LV NQRZQ E\ QDPH WR DXGLWRUV DV WKH DXGLW LV



:KLFK RI WKH IROORZLQJ ZRXOG EH DXGLWRUV PRVW OLNHO\ GHIHQVH LQ DQ DFWLRQ EURXJKW XQGHU WKH 6HFXULWLHV ([FKDQJH $FW RI "

$ 7KH LQYHVWRU GLG QRW KDYH SULYLW\ ZLWK DXGLWRUV % 7KH LQYHVWRU GLG QRW VXIIHU D ORVV EDVHG RQ WKH PDWHULDOO\ PLVVWDWHG ILQDQFLDO VWDWHPHQWV & 7KH DXGLWRUV DFWHG LQ JRRG IDLWK DQG ZHUH QRW DZDUH RI WKH PDWHULDOO\ PLVVWDWHG ILQDQFLDO VWDWHPHQWV ' 7KH ILQDQFLDO VWDWHPHQWV ZHUH QRW ILOHG ZLWK WKH 6HFXULWLHV DQG ([FKDQJH &RPPLVVLRQ 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

 VG6 ! !!( ! "  9"D  %1 ! " C VG6 ("  ! %@ 8Q ! ! !@ (" "4 " 9 2 &  4  !@ (! 9 X 57 !4 ! 321 %!0 & !# ) ((  !' &"" @!!E   %!0  @Q



:KLFK RI WKH IROORZLQJ VWDWHPHQWV UHJDUGLQJ DXGLWRUV OLDELOLW\ XQGHU WKH 6HFXULWLHV $FW RI  LV QRW WUXH"

$ 7KH DFW UHODWHV WR WKH LQLWLDO LVVXDQFH RI VHFXULWLHV WR WKH SXEOLF QRUPDOO\ WKURXJK DQ LQLWLDO SXEOLF RIIHULQJ % $XGLWRUV OLDELOLW\ DULVHV EHFDXVH RI DXGLWHG ILQDQFLDO LQIRUPDWLRQ ILOHG ZLWK WKH 6(& & 7KLUG SDUWLHV PXVW GHPRQVWUDWH WKDW WKH\ UHOLHG RQ PLVVWDWHG ILQDQFLDO VWDWHPHQWV WKDW ZHUH H[DPLQHG E\ DXGLWRUV ' $XGLWRUV PD\ EH OLDEOH LI WKH\ DUH IRXQG WR KDYH HQJDJHG LQ RUGLQDU\ QHJOLJHQFH 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

( "" (" !  9"D  %1 ! " CGG6 ("  !! !@ ( " "4 " 9 2 &  4  !@ (! 9 V 57 !4 ! 321 %!0 & !# ) ((  !' &"" @!!E   %!0  @Q

20 "  9"D  %1 ! " C VG6 ("  ! %@ 8Q ! ! !@ (" "4 " 9 2 &  4  !@ (! 9 X 57 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  @Q



5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN ' )RUP . & )RUP 4 % )RUP 6 $ )RUP . SXEOLF DERXW FKDQJLQJ DXGLWRUV RQ 8QGHU WKH 6HFXULWLHV ([FKDQJH $FW RI  HQWLWLHV DUH UHTXLUHG WR UHSRUW WR WKH



6HFWLRQ  E RI WKH 6HFXULWLHV $FW RI  SURYLGHV WKDW LQGLYLGXDOV FDQ EH VXHG DQG PD\ EH OLDEOH IRU LQYHVWRUV ORVVHV LQ FRQQHFWLRQ ZLWK D SXEOLF VHFXULWLHV RIIHULQJ XQGHU ZKLFK RI WKHVH FLUFXPVWDQFHV"

$ 7KH FKDLUPDQ RI WKH ERDUG RI GLUHFWRUV SHUIRUPHG D UHDVRQDEOH LQYHVWLJDWLRQ RI IDFWV LQ FRQQHFWLRQ ZLWK SUHSDULQJ WKH VHFWLRQ LQ WKH UHJLVWUDWLRQ VWDWHPHQW FRQFHUQLQJ WKH VSHFLILFDWLRQ RI WKH XVH RI WKH SURFHHGV RI WKH RIIHULQJ % $ FRQVXOWLQJ HQJLQHHU SHUIRUPHG D UHDVRQDEOH LQYHVWLJDWLRQ DQG UHSRUWHG LQ WKH UHJLVWUDWLRQ VWDWHPHQW RQ WKH IHDVLELOLW\ RI FRQVWUXFWLRQ RI D URDGZD\ WR EH ILQDQFHG ZLWK WKH RIIHULQJ SURFHHGV & 7KH SUHVLGHQW RI WKH LVVXLQJ HQWLW\ KDG QR UHDVRQ WR GRXEW WKH UHSRUW RI WKH FRQVXOWLQJ HQJLQHHU DOWKRXJK WKH SUHVLGHQW GLG QRW SHUIRUP D VHSDUDWH UHDVRQDEOH LQYHVWLJDWLRQ RI KHU RZQ ' 7KH RIILFHUV RI WKH LVVXLQJ HQWLW\ ZHUH UHOLHYHG WKDW WKH LQGHSHQGHQW DXGLWRUV GLG QRW PDNH DQ LVVXH DERXW WKH H[FHVVLYH YDOXDWLRQ RI LQYHQWRU\ KHOG WR VXSSRUW FRQVWUXFWLRQ LQ SURJUHVV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

 %1 ! " CGG6 ("  !! !@ ( " "4 " 9 2 &  4  !@ (! 9 V 57 !4 ! 321 %!0 W G (( 99 &"" @!!E   %!0  @Q 20 "  9"D



,Q FRPSDULVRQ WR WKH EXUGHQ RI SURRI UHTXLUHG RI SODLQWLIIV LQ FLYLO ODZVXLWV DJDLQVW LQGHSHQGHQW DXGLWRUV XQGHU FRPPRQ ODZ VHFWLRQ  E RI WKH 6HFXULWLHV ([FKDQJH $FW RI 

$ ,V WKH VDPH UHJDUGLQJ SODLQWLIIV QHHG WR SURYH GDPDJHV RU ORVVHV % ,V WKH VDPH UHJDUGLQJ SODLQWLIIV QHHG WR HVWDEOLVK SULYLW\ RU D EHQHILFLDU\ UHODWLRQVKLS ZLWK DXGLWRUV & 'RHV QRW UHTXLUH WKDW SODLQWLIIV SURYH WKHLU UHOLDQFH RQ PDWHULDOO\ PLVVWDWHG ILQDQFLDO VWDWHPHQWV ' 'RHV QRW UHTXLUH WKDW SODLQWLIIV SURYH WKDW UHO\LQJ RQ WKH PDWHULDOO\ PLVVWDWHG ILQDQFLDO VWDWHPHQWV FDXVHG WKHLU ORVVHV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

( "" (" !  9"D  %1 ! " C VG6 ("  ! %@ 8Q !! !@ (" "4 " 9 2 &  4  !@ (! 9 X 57 !4 ! 321 %!0 & !# ) ((  !' &"" @!!E   %!0  @Q



:KLFK RI WKH IROORZLQJ FDVHV SURYLGHV DXGLWRUV WKH EURDGHVW H[SRVXUH IRU OLDELOLW\ WR WKLUG SDUWLHV IRU RUGLQDU\ QHJOLJHQFH XQGHU FRPPRQ ODZ"

$ &UHGLW $OOLDQFH Y $UWKXU $QGHUVHQ % )OHHW 1DWLRQDO %DQN Y *ORXFHVWHU &R & 5RVHQEOXP ,QF Y $GOHU ' 8OWUDPDUHV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

! @D " 20  9"D  %1 ! " C !!! 9 ! ( ! 9 !  A "&&" ! 2 H "  (" !@ !@ (! 9 )57 !4 ! 321 %!0 W G (( 99 &"" @!!E   %!0  @Q



:KLFK RI WKH IROORZLQJ LV D PDMRU GLIIHUHQFH LQ DXGLWRUV OLDELOLW\ XQGHU WKH 6HFXULWLHV $FW RI  DQG WKH 6HFXULWLHV ([FKDQJH $FW RI "

$ 7KH EXUGHQ RI SURYLQJ UHOLDQFH RQ PLVVWDWHG ILQDQFLDO VWDWHPHQWV DQG WKH UHODWLRQVKLS EHWZHHQ WKHVH ILQDQFLDO VWDWHPHQWV DQG WKH HFRQRPLF ORVV % 7KH DXGLWRUV UHTXLUHG GHJUHH RI SURIHVVLRQDO FDUH OHYHO RI VXEVWDQGDUG SHUIRUPDQFH  & %RWK RI WKH DERYH ' 1RQH RI WKH DERYH 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

( "" (" !  9"D  %1 ! " C VG6 ("  ! %@ 8Q ! ! !@ (" "4 " 9 2 &  4  !@ (! 9 X 57 !4 ! 321 %!0 CGG6 ("  !! !@ ( " "4 " 9 2 &  4  !@ (! 9 V 57 !4 ! 321 %!0 & !# ) ((  !' &"" @!!E   %!0  @Q



:KHQ DQ HQWLW\ UHJLVWHUV D VHFXULW\ RIIHULQJ XQGHU WKH 6HFXULWLHV $FW RI  WKH ODZ SURYLGHV DQ LQYHVWRU

$ $Q 6(& JXDUDQWHH WKDW WKH LQIRUPDWLRQ LQ WKH UHJLVWUDWLRQ VWDWHPHQW LV WUXH % ,QVXUDQFH DJDLQVW ORVV IURP WKH LQYHVWPHQW & )LQDQFLDO LQIRUPDWLRQ H[DPLQHG E\ LQGHSHQGHQW DXGLWRUV ' ,QVLGH LQIRUPDWLRQ DERXW WKH HQWLW\ V WUDGH VHFUHWV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

20 "  9"D  %1 ! " CGG6 ("  !! !@ ( " "4 " 9 2 &  4  !@ (! 9 V 57 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  @Q



$ JURXS RI LQYHVWRUV VXHG $QGHUVRQ 2OGV DQG :DWHUVKHG &3$V $2: IRU DOOHJHG GDPDJHV VXIIHUHG ZKHQ WKH HQWLW\ LQ ZKLFK WKH\ KHOG FRPPRQ VWRFN ZHQW EDQNUXSW 7R DYRLG OLDELOLW\ XQGHU WKH FRPPRQ ODZ $2: PXVW SURYH ZKLFK RI WKH IROORZLQJ"

$ 7KH LQYHVWRUV DFWXDOO\ VXIIHUHG D ORVV % 7KH LQYHVWRUV UHOLHG RQ WKH ILQDQFLDO VWDWHPHQWV DXGLWHG E\ $2: & 7KH LQYHVWRUV ORVV ZDV D GLUHFW UHVXOW RI WKHLU UHOLDQFH RQ WKH DXGLWHG ILQDQFLDO VWDWHPHQWV ' 7KH DXGLW ZDV FRQGXFWHG LQ DFFRUGDQFH ZLWK JHQHUDOO\ DFFHSWHG DXGLWLQJ VWDQGDUGV DQG ZLWK GXH FDUH 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

A 0 "&&" ! !!( ! "  9"D  %1 ! " C !!! 9 ! ( ! 9 !  A "&&" ! 2 H "  (" !@ !@ (! 9 )57 !4 ! 321 %!0 & !# ) ((  !' &"" @!!E   %!0  @Q

20 "  9"D  %1 ! " C VG6 ("  ! %@ 8Q ! ! !@ (" "4 " 9 2 &  4  !@ (! 9 X 57 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  @Q



5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN ' 5HJXODWLRQ 6; & )RUP 6%O % )RUP . $ 5HJXODWLRQ ' ILQDQFLDO VWDWHPHQWV ILOHG ZLWK WKH 6(& LV 7KH 6HFXULWLHV DQG ([FKDQJH &RPPLVVLRQ GRFXPHQW WKDW JRYHUQV DFFRXQWLQJ LQ



:KLFK RI WKH IROORZLQJ FDVHV XSKHOG WKH UHTXLUHPHQW WKDW SODLQWLIIV GHPRQVWUDWH VFLHQWHU ZKHQ EULQJLQJ DFWLRQ XQGHU WKH 6HFXULWLHV ([FKDQJH $FW RI "

$ (UQVW

(UQVW Y +RFKIHOGHU

% (VFRWW Y %DU&KULV &RQVWUXFWLRQ &RUS & 6PLWK Y /RQGRQ $VVXUDQFH &RUS ' 8OWUDPDUHV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

! %!0  9"D  %1 ! " C VG6 ("  ! %@ 8Q ! ! !@ (" "4 " 9 2 &  4  !@ (! 9 X 57 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  @Q

20 "  9"D  %1 ! " C VG6 ("  ! %@ 8Q ! ! !@ (" "4 " 9 2 &  4  !@ (! 9 X 57 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  @Q



5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN ' 5HJXODWLRQ 6; & )RUP . % )RUP 4 $ )RUP . ([FKDQJH $FW RI  PXVW ILOH DQ DQQXDO UHSRUW ZLWK WKH 6(& NQRZQ DV WKH $ SXEOLF HQWLW\ VXEMHFW WR WKH SHULRGLF UHSRUWLQJ UHTXLUHPHQWV RI WKH 6HFXULWLHV



:KHQ LQYHVWRUV VXH IRU GDPDJHV XQGHU VHFWLRQ  RI WKH 6HFXULWLHV $FW RI  WKH\ PXVW DOOHJH DQG SURYH

$ 6FLHQWHU RQ WKH SDUW RI DXGLWRUV % 7KH DXGLWHG ILQDQFLDO VWDWHPHQWV FRQWDLQHG D PDWHULDO PLVVWDWHPHQW & 7KH\ UHOLHG RQ WKH PDWHULDOO\ PLVVWDWHG ILQDQFLDO VWDWHPHQWV ' 7KHLU UHOLDQFH RQ WKH PDWHULDOO\ PLVVWDWHG ILQDQFLDO VWDWHPHQWV ZDV WKH GLUHFW FDXVH RI WKHLU ORVV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

( "" (" !  9"D  %1 ! " CGG6 ("  !! !@ ( " "4 " 9 2 &  4  !@ (! 9 V 57 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  @Q



:KLFK RI WKH IROORZLQJ LV QRW SDUW RI 6DUEDQHV2[OH\"

$ $Q LQFUHDVHG GXW\ RQ WKH SDUW RI DXGLWRUV WR LGHQWLI\ ILQDQFLDO VWDWHPHQW IUDXG % $ UHTXLUHPHQW WKDW WKH &(2 DQG &)2 FHUWLI\ WKH ILQDQFLDO VWDWHPHQWV & ,QFUHDVHG SHQDOWLHV IRU GHVWUXFWLRQ RI UHFRUGV LQ IHGHUDO LQYHVWLJDWLRQV ' ,QFUHDVHG SHQDOWLHV IRU PDLO IUDXG DQG FULPLQDO YLRODWLRQV RI WKH 6HFXULWLHV ([FKDQJH $FW RI  5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

! 817!2  9"D  %1 ! " C! 9 @  ! " 2 H "  !(( @ !& 9"!4 ! !! !' I 57 !4 ! 321 %!0 & !# ) ((  !' &"" @!!E   %!0  @Q



,I D &3$ ILUP LV EHLQJ VXHG IRU FRPPRQ ODZ IUDXG E\ D WKLUG SDUW\ EDVHG XSRQ PDWHULDOO\ IDOVH ILQDQFLDO VWDWHPHQWV ZKLFK RI WKH IROORZLQJ LV WKH EHVW GHIHQVH WKH DXGLWRUV FRXOG DVVHUW"

$ /DFN RI SULYLW\ % /DFN RI UHOLDQFH & $ GLVFODLPHU FRQWDLQHG LQ WKH HQJDJHPHQW OHWWHU ' &RQWULEXWRU\ QHJOLJHQFH RQ WKH SDUW RI WKH FOLHQW 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

A 0 "&&" ! !!( ! "  9"D   ! " C !!! 9 ! ( ! 9 !  A "&&" ! 2 H "  (" !@ !@ (! 9 )57 !4 ! 321 %!0 & !# ) ((  !' &"" @!!E   %!0  @Q



/RFNH &3$ ZDV HQJDJHG E\ +DOO ,QF WR DXGLW :LOORZ &RPSDQ\ +DOO SXUFKDVHG :LOORZ DIWHU UHFHLYLQJ :LOORZ V DXGLWHG ILQDQFLDO VWDWHPHQWV ZKLFK LQFOXGHG VWDWHPHQWV /RFNH V XQTXDOLILHG DXGLWRUV RSLQLRQ /RFNH ZDV QHJOLJHQW LQ WKH SHUIRUPDQFH RI WKH :LOORZ DXGLW HQJDJHPHQW WKLV QHJOLJHQFH ZDV FDXVHG E\ IDLOXUH WR SHUIRUP WKH HQJDJHPHQW LQ DFFRUGDQFH ZLWK WKH WHUPV RI WKH HQJDJHPHQW OHWWHU $V D KDYH JURXQGV WR VXH /RFNH IRU

UHVXOW RI /RFNH V QHJOLJHQFH +DOO VXIIHUHG GDPDJHV RI   +DOO DSSHDUV WR

 2SWLRQ $ % 2SWLRQ % & 2SWLRQ & ' 2SWLRQ ' 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN



$Q LQYHVWRU VHHNLQJ WR UHFRYHU VWRFN PDUNHW ORVVHV IURP D &3$ ILUP DVVRFLDWHG ZLWK DQ LQLWLDO RIIHULQJ RI VHFXULWLHV EDVHG RQ DQ XQTXDOLILHG RSLQLRQ RQ ILQDQFLDO VWDWHPHQWV WKDW DFFRPSDQLHG D UHJLVWUDWLRQ VWDWHPHQW PXVW HVWDEOLVK WKDW

$ 7KH DXGLWHG ILQDQFLDO VWDWHPHQWV FRQWDLQ D IDOVH VWDWHPHQW RU RPLVVLRQ RI PDWHULDO IDFW % 7KH LQYHVWRU UHOLHG RQ WKH ILQDQFLDO VWDWHPHQWV & 7KH &3$ ILUP GLG QRW DFW LQ JRRG IDLWK ' 7KH &3$ ILUP ZRXOG KDYH GLVFRYHUHG WKH IDOVH VWDWHPHQW RU RPLVVLRQ LI LW KDG H[HUFLVHG GXH FDUH LQ LWV H[DPLQDWLRQ 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

( "" (" !  9"D   ! " CGG6 ("  !! !@ ( " "4 " 9 2 &  4  !@ (! 9 V 57 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  @Q



'RQDOGV

&RPSDQ\ &3$V DXGLWHG WKH ILQDQFLDO VWDWHPHQWV LQFOXGHG LQ WKH

DQQXDO UHSRUW VXEPLWWHG E\ 0DUNXP 6HFXULWLHV ,QF WR WKH 6HFXULWLHV DQG ([FKDQJH &RPPLVVLRQ 7KH DXGLW ZDV LPSURSHU LQ VHYHUDO UHVSHFWV 0DUNXP LV QRZ LQVROYHQW DQG XQDEOH WR VDWLVI\ WKH FODLPV RI LWV FXVWRPHUV &XVWRPHUV KDYH LQVWLWXWHG OHJDO DFWLRQ DJDLQVW 'RQDOGV EDVHG RQ 6HFWLRQ  E DQG 5XOH  E  RI WKH 6HFXULWLHV ([FKDQJH $FW RI  :KLFK RI WKH IROORZLQJ LV OLNHO\ WR EH 'RQDOGV EHVW GHIHQVH"

$ 7KH ILUP GLG QRW LQWHQWLRQDOO\ FHUWLI\ WKH IDOVH ILQDQFLDO VWDWHPHQWV % 6HFWLRQ  E GRHV QRW DSSO\ WR WKH FDVH & 7KH ILUP ZDV QRW LQ SULYLW\ RI FRQWUDFW ZLWK WKH FUHGLWRUV ' 7KH HQJDJHPHQW OHWWHU VSHFLILFDOO\ GLVFODLPHG DQ\ OLDELOLW\ WR DQ\ SDUW\ WKDW UHVXOWHG IURP 0DUNXP V IUDXGXOHQW FRQGXFW 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

 VG6 ! !!( ! "  9"D   ! " C VG6 ("  ! %@ 8Q ! ! !@ (" "4 " 9 2 &  4  !@ (! 9 X 57 !4 ! 321 %!0 W G (( !4 Q &"" @!!E   %!0  @Q

 :HVW

&R &3$V UHQGHUHG DQ XQTXDOLILHG RSLQLRQ RQ WKH ILQDQFLDO VWDWHPHQWV RI

3ULGH &RUS ZKLFK ZHUH LQFOXGHG LQ 3ULGH V UHJLVWUDWLRQ VWDWHPHQW ILOHG ZLWK WKH 6(& 6XEVHTXHQWO\ +H[ SXUFKDVHG  VKDUHV RI 3ULGH V SUHIHUUHG VWRFN DV SDUW RI D SXEOLF RIIHULQJ VXEMHFW WR WKH 6HFXULWLHV $FW RI  +H[ KDV FRPPHQFHG DQ DFWLRQ DJDLQVW :HVW EDVHG RQ WKH 6HFXULWLHV $FW RI  IRU ORVVHV UHVXOWLQJ IURP PLVVWDWHPHQWV RI IDFWV LQ WKH ILQDQFLDO VWDWHPHQWV LQFOXGHG LQ WKH UHJLVWUDWLRQ VWDWHPHQW :KLFK RI WKH IROORZLQJ HOHPHQWV PXVW +H[ SURYH WR KROG :HVW OLDEOH"

$ :HVW UHQGHUHG LWV RSLQLRQ ZLWK NQRZOHGJH RI PDWHULDO PLVVWDWHPHQWV % :HVW SHUIRUPHG WKH DXGLW QHJOLJHQWO\ & +H[ UHOLHG RQ WKH ILQDQFLDO VWDWHPHQWV LQFOXGHG LQ WKH UHJLVWUDWLRQ VWDWHPHQW ' 7KH PLVVWDWHPHQWV ZHUH PDWHULDO 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

( "" (" !  9"D   ! " CGG6 ("  !! !@ ( " "4 " 9 2 &  4  !@ (! 9 V 57 !4 ! 321 %!0 W G (( !4 Q &"" @!!E   %!0  @Q

 :HVW

&R &3$V UHQGHUHG DQ XQTXDOLILHG RSLQLRQ RQ WKH ILQDQFLDO VWDWHPHQWV RI

3ULGH &RUS ZKLFK ZHUH LQFOXGHG LQ 3ULGH V UHJLVWUDWLRQ VWDWHPHQW ILOHG ZLWK WKH 6(& 6XEVHTXHQWO\ +H[ SXUFKDVHG  VKDUHV RI 3ULGH V SUHIHUUHG VWRFN DV SDUW RI D SXEOLF RIIHULQJ VXEMHFW WR WKH 6HFXULWLHV $FW RI  +H[ KDV FRPPHQFHG DQ DFWLRQ DJDLQVW :HVW EDVHG RQ WKH 6HFXULWLHV $FW RI  IRU ORVVHV UHVXOWLQJ IURP PLVVWDWHPHQWV RI IDFWV LQ WKH ILQDQFLDO VWDWHPHQWV LQFOXGHG LQ WKH UHJLVWUDWLRQ VWDWHPHQW :KLFK RI WKH IROORZLQJ GHIHQVHV ZRXOG EH OHDVW KHOSIXO WR :HVW LQ DYRLGLQJ OLDELOLW\ WR +H["

$ :HVW ZDV QRW LQ SULYLW\ RI FRQWUDFW ZLWK +H[ % :HVW FRQGXFWHG WKH DXGLW LQ DFFRUGDQFH ZLWK *$$6 & +H[ V ORVVHV ZHUH FDXVHG E\ IDFWRUV RWKHU WKDQ WKH PLVVWDWHPHQWV ' +H[ NQHZ RI WKH PLVVWDWHPHQWV ZKHQ +H[ DFTXLUHG WKH SUHIHUUHG VWRFN 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

 GG6 ! !!( ! "  9"D   ! " CGG6 ("  !! !@ ( " "4 " 9 2 &  4  !@ (! 9 V 57 !4 ! 321 %!0 W G (( !4 Q &"" @!!E   %!0  @Q

 ,Q JHQHUDO ZKLFK RI WKH IROORZLQJ SDUWLHV ZRXOG KDYH WKH ORZHVW EXUGHQ RI SURRI LQ EULQJLQJ VXLW DJDLQVW DQ DXGLWRU"

$ &OLHQWV % $ OHQGHU ZKR PHHWV WKH GHILQLWLRQ RI D SULPDU\ EHQHILFLDU\ & $ WKLUGSDUW\ LQYHVWRU XQGHU WKH 6HFXULWLHV $FW ' $ OHQGHU ZKR PHHWV WKH GHILQLWLRQ RI D IRUHVHHQ WKLUG SDUW\ 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

( "" (" !  9"D  %1 ! " CGG6 ("  !! !@ ( " "4 " 9 2 &  4  !@ (! 9 V 57 !4 ! 321 %!0 & !# ) ((  !' &"" @!!E   %!0  @Q

 8QGHU JHQHUDOO\ DFFHSWHG DXGLWLQJ VWDQGDUGV DXGLWRUV DUH UHVSRQVLEOH IRU GHWHFWLQJ

$ $OO PDQQHUV RI IUDXG % 7KHIW DQG LOOHJDO DFWV & 9LRODWLRQV RI DXGLWLQJ VWDQGDUGV ' 0DWHULDO PLVVWDWHPHQWV RI ILQDQFLDO VWDWHPHQWV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

!2" 9!E H "  9"D  %1 ! " C!& % 3 "  A " !" 98! H " !2!  ( ! 6 57 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  @Q

 &"( !E " % 0 ! ! !4   9"D  %1 ! " C! 9 @  ! " 2 H "  !(( @ !& 9"!4 ! !! !' I 57 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  @Q

 7KH 3ULYDWH 6HFXULWLHV /LWLJDWLRQ 5HIRUP $FW DGRSWHG WKH GRFWULQH RI

5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN ' )RUHVHHQ WKLUG SDUWLHV & 3URSRUWLRQDWH OLDELOLW\ % -RLQW DQG VHYHUDO OLDELOLW\ $ )RUHVHHDEOH WKLUG SDUWLHV

 7KH SULPDU\ GHIHQVH IRU DXGLWRUV DJDLQVW D FODLP RI RUGLQDU\ QHJOLJHQFH LV WR RIIHU HYLGHQFH WKDW WKH

$ $XGLW ZDV FRQGXFWHG LQ DFFRUGDQFH ZLWK *$$6 % 3ODLQWLII ZDV QRW LQ SULYLW\ RU QRW IRUHVHHQ & )LQDQFLDO VWDWHPHQWV GLG QRW FRQWDLQ D PDWHULDO PLVVWDWHPHQW ' 3ODLQWLII FRQWULEXWHG WR WKH QHJOLJHQFH 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

A 0 "&&" ! !!( ! "  9"D  %1 ! " C !!! 9 ! ( ! 9 !  A "&&" ! 2 H " (" !@ !@ (! 9 )57 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  @Q

 3ODLQWLIIV EULQJLQJ DFWLRQ XQGHU FRPPRQ ODZ QHHG QRW SURYH

$ 7KH\ KDYH D UHOLDQFH OHWWHU IURP DXGLWRUV % 7KH\ ZHUH GDPDJHG RU VXIIHUHG D ORVV & 7KH ILQDQFLDO VWDWHPHQWV FRQWDLQHG D PDWHULDO PLVVWDWHPHQW ' $XGLWRUV IDLOHG WR H[HUFLVH WKH DSSURSULDWH OHYHO RI SURIHVVLRQDO FDUH DQG ZHUH UHVSRQVLEOH IRU WKH GDPDJHV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

( "" (" !  9"D  %1 ! " C !!! 9 ! ( ! 9 !  A "&&" ! 2 H "  (" !@ !@ (! 9 )57 !4 ! 321 %!0 & !# ) ((  !' &"" @!!E   %!0  @Q

 7KH ODQGPDUN FDVH WKDW VWDWHG FULWHULD IRU DXGLWRUV OLDELOLW\ WR WKLUG SDUWLHV IRU JURVV QHJOLJHQFH RU IUDXG EXW QRW RUGLQDU\ QHJOLJHQFH ZDV

$ 6PLWK Y /RQGRQ $VVXUDQFH &RUS % 8OWUDPDUHV &RUS Y 7RXFKH &  7HQDQWV &RUS Y 0D[ 5RWKHQEHUJ ' 0F.HVVRQ 5REELQV ,QF &R

5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

! @D " 20  9"D  %1 ! " C !!! 9 ! ( ! 9 !  A "&&" ! 2 H " (" !@ !@ (! 9 )57 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  @Q

 7KH 6HFXULWLHV DQG ([FKDQJH &RPPLVVLRQ GRFXPHQW WKDW JRYHUQV WKH UHSRUWLQJ RI DOO EXVLQHVV DQDO\WLFDO DQG VXSSOHPHQWDU\ GLVFORVXUHV LQ UHSRUWV UHTXLUHG WR EH ILOHG ZLWK WKH 6(& LV

$ )RUP . % )LQDQFLDO 5HSRUWLQJ 5HOHDVHV & 5HJXODWLRQ 6. ' 5HJXODWLRQ 6; 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

20 "  9"D  %1 ! " C VG6 ("  ! %@ 8Q ! ! !@ (" "4 " 9 2 &  4  !@ (! 9 X 57 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  @Q

 8QGHU VHFWLRQ  RI WKH 6HFXULWLHV $FW RI  D SODLQWLII VXLQJ IRU GDPDJHV PXVW SURYH

$ $ SULYLW\ UHODWLRQVKLS ZLWK DXGLWRUV % 5HOLDQFH RQ WKH ILQDQFLDO VWDWHPHQWV LQ UHJLVWUDWLRQ VWDWHPHQW & 0DWHULDOO\ PLVVWDWHG ILQDQFLDO VWDWHPHQWV FDXVHG WKH GDPDJHV RU ORVV ' 'DPDJHV RU ORVV IURP WKH SXUFKDVH RI VHFXULWLHV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

( "" (" !  9"D  %1 ! " CGG6 ("  !! !@ ( " "4 " 9 2 &  4  !@ (! 9 V 57 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  @Q

 6LQFH WKH (UQVW

(UQVW Y +RFKIHOGHU FRXUW GHFLVLRQ SODLQWLIIV VXLQJ IRU GDPDJHV

XQGHU 5XOH E PXVW SURYH

$ 7KH ILQDQFLDO VWDWHPHQWV FRQWDLQHG D PDWHULDO PLVVWDWHPHQW % 7KH UHOLDQFH RQ WKH PDWHULDOO\ PLVVWDWHG ILQDQFLDO VWDWHPHQWV FDXVHG WKH GDPDJHV DQG ORVV & 2UGLQDU\ QHJOLJHQFH RQ WKH SDUW RI DXGLWRUV ' 6FLHQWHU RQ WKH SDUW RI DXGLWRUV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

( "" (" !  9"D  %1 ! " C VG6 ("  ! %@ 8Q ! ! !@ (" "4 " 9 2 &  4  !@ (! 9 X 57 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  @Q

A 0 "&&" ! !!( ! "  9"D  %1 ! " C !!! 9 ! ( ! 9 !  A "&&" ! 2 H "  (" !@ !@ (! 9 )57 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  @Q

)LOO LQ WKH %ODQN 4XHVWLRQV

 :KLFK RI WKH IROORZLQJ LV D WKLUG SDUW\ ZKRVH QDPH WKH DXGLWRU NQRZV DQG IRU 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN ' 6XEURJHH & 3ULPDU\ EHQHILFLDU\ % )RUHVHHDEOH WKLUG SDUW\ $ )RUHVHHQ WKLUG SDUW\ ZKRVH SXUSRVH WKH DXGLW LV FRQGXFWHG"

 ,Q D Q BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB D VPDOO QXPEHU RI SODLQWLIIV ZLWK VPDOO LQGLYLGXDO FODLPV FDQ EULQJ VXLW IRU ODUJH GDPDJHV LQ WKH QDPH RI DQ H[WHQGHG FODVV FODVV DFWLRQ VXLW 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 7KH 5RVHQEOXP ,QF Y $GOHU GHFLVLRQ DOORZV SRWHQWLDO DXGLWRU OLDELOLW\ IRU RUGLQDU\ QHJOLJHQFH WR WKLUG SDUWLHV ZKR DUH UHDVRQDEO\ BBBBBBBBBBBBBBBBBBBBBBBBBBBBB XVHUV RI DXGLWRUV RSLQLRQV DQG ILQDQFLDO VWDWHPHQWV IRUHVHHDEOH 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 $ WKLUG SDUW\ ZKR LV NQRZQ E\ QDPH WR DXGLWRUV LV UHIHUUHG WR DV D Q BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB SULPDU\ EHQHILFLDU\ 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 7KH 3ULYDWH /LWLJDWLRQ 6HFXULWLHV 5HIRUP $FW DGRSWHG WKH GRFWULQH RI BBBBBBBBBBBBBBBBBBBBBBBBBBBBB OLDELOLW\ ZKLFK EDVHV GDPDJHV RQ WKH H[WHQW RI IDXOW H[KLELWHG E\ D FRQYLFWHG GHIHQGDQW SURSRUWLRQDWH 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 7KH 86 6XSUHPH &RXUW UXOHG WKDW DXGLWRUV DUH QRW VXEMHFW WR FLYLO BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB FRPSODLQWV XQOHVV WKH\ DFWXDOO\ SDUWLFLSDWHG LQ WKH PDQDJHPHQW RU RSHUDWLRQ RI D FRUUXSW EXVLQHVV 5,&2 5DFNHWHHU ,QIOXHQFHG DQG &RUUXSW 2UJDQL]DWLRQ $FW 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 BBBBBBBBBBBBBBBBBBBBBBBBBBBBBB OLDELOLW\ UHIHUV WR DXGLWRUV OLDELOLW\ EDVHG RQ SULRU OHJDO MXGJPHQWV DQG SUHFHGHQWV &RPPRQ ODZ 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB LV D FODLP E\ SODLQWLIIV WKDW DXGLWRUV GLG QRW SHUIRUP VHUYLFHV LQ WKH PDQQHU VWDWHG LQ WKH HQJDJHPHQW OHWWHU %UHDFK RI FRQWUDFW 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 7KH FRQWUDFWXDO UHODWLRQVKLS EHWZHHQ SDUWLHV LV NQRZQ DV BBBBBBBBBBBBBBBBBBBBBBBB SULYLW\ 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB LV WKH ODFN RI UHDVRQDEOH FDUH LQ WKH SHUIRUPDQFH RI SURIHVVLRQDO VHUYLFHV 2UGLQDU\ QHJOLJHQFH 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 7KH BBBBBBBBBBBBBBBBBBBBBBBBBBBBB Y 7RXFKH FDVH SURYLGHG WKH SUHFHGHQW WR DOORZ WKLUG SDUWLHV QRW LQ SULYLW\ ZLWK DXGLWRUV WR EULQJ VXLW IRU IDLOXUH WR H[HUFLVH WKH DSSURSULDWH OHYHO RI SURIHVVLRQDO FDUH 8OWUDPDUHV &RUS 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 $XGLWRUV KDYH KLJK H[SRVXUH WR OLDELOLW\ XQGHU WKH 6HFXULWLHV $FW RI  VHFWLRQ  SULPDULO\ EHFDXVH WKH BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB KDV EHHQ SODFHG RQ DXGLWRUV EXUGHQ RI SURRI 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 5HJXODWLRQ BBBBBBBBBBBBBBBBBBBBBBBBBBBBB FRQWDLQV DFFRXQWLQJ UHTXLUHPHQWV IRU DQQXDO DQG LQWHULP ILQDQFLDO VWDWHPHQWV ILOHG XQGHU WKH 6HFXULWLHV $FW RI  DQG 6HFXULWLHV ([FKDQJH $FW RI  6; 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 7KH 6(& V BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB H[SUHVV QHZ UXOHV DQG SROLFLHV DERXW DFFRXQWLQJ DQG GLVFORVXUHV )LQDQFLDO 5HSRUWLQJ 5HOHDVHV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 $ Q BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB PXVW EH ILOHG DQG PXVW EH HIIHFWLYH EHIRUH D VDOH RI VHFXULWLHV WR WKH SXEOLF LV ODZIXO UHJLVWUDWLRQ VWDWHPHQW 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 7KH BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB GRFWULQH KROGV WKDW DXGLWRUV PD\ EH OLDEOH IRU RUGLQDU\ QHJOLJHQFH WR IRUHVHHQ WKLUG SDUWLHV UHVWDWHPHQW RI WRUWV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB LQYROYHV FDVHV LQ ZKLFK DXGLWRUV DUH VXHG IRU YLRODWLQJ D ZULWWHQ ODZ RU VWDWXWH 6WDWXWRU\ OLDELOLW\ 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 8QGHU VHFWLRQ  E RI WKH 6HFXULWLHV $FW RI  LI DXGLWRUV FDQ SURYH WKDW D UHDVRQDEOH LQYHVWLJDWLRQ ZDV SHUIRUPHG HJ DQ DXGLW FRQGXFWHG LQ DFFRUGDQFH ZLWK BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB WKH\ DUH QRW OLDEOH IRU GDPDJHV JHQHUDOO\ DFFHSWHG DXGLWLQJ VWDQGDUGV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 8QGHU 6(& 5XOH E WKH SODLQWLII PXVW SURYH BBBBBBBBBBBBBBBBBBBBBBBBBBBBB RU PHQWDO VWDWH HPEUDFLQJ WKH LQWHQW WR GHFHLYH LQ RUGHU WR LPSRVH OLDELOLW\ RQ DXGLWRUV VFLHQWHU 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 7KH GHIHQVH IRU DXGLWRUV XQGHU WKH 6HFXULWLHV ([FKDQJH $FW RI  LV WR SURYH WKH\ DFWHG LQ BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB DQG KDG QR NQRZOHGJH RI WKH PDWHULDO PLVVWDWHPHQWV JRRG IDLWK 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 7KH (UQVW

(UQVW Y BBBBBBBBBBBBBBBBBBB FDVH FRQFOXGHG WKDW DXGLWRUV PLJKW EH

OLDEOH IRU JURVV QHJOLJHQFH XQGHU WKH 6HFXULWLHV ([FKDQJH $FW RI  HYHQ LQ WKH DEVHQFH RI VFLHQWHU +RFKIHOGHU 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

6KRUW $QVZHU 4XHVWLRQV

 ,Q HDFK RI WKH LQGLYLGXDO FDVHV LQGLFDWH WKH SRWHQWLDO OLDELOLW\ DQG LGHQWLI\ WKH DSSURSULDWH EDVLV XQGHU FRPPRQ RU VWDWXWRU\ ODZ

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

(VVD\ 4XHVWLRQV

 %1 ! " C VG6 ("  ! %@ 8Q ! ! !@ (" "4 " 9 2 &  4  !@ (! 9 X 57 !4 ! 321 %!0 CGG6 ("  !! !@ ( " "4 " 9 2 &  4  !@ (! 9 V 57 !4 ! 321 %!0 CA " ! ! 9 @ " 2 H " !2! G 57 !4 ! 321 %!0 W G (( !4 Q &"" @!!E   %!0  @Q 20 "  9"D

 'LVWLQJXLVK EHWZHHQ WKH GXH GLOLJHQFH DQG WKH FDXVDWLRQ GHIHQVHV DYDLODEOH WR DXGLWRUV XQGHU VHFWLRQ  RI WKH 6HFXULWLHV $FW RI 

6HFWLRQ  E GHVFULEHV WKH GXH GLOLJHQFH GHIHQVH ,I DXGLWRUV FDQ SURYH WKDW D UHDVRQDEOH H[DPLQDWLRQ ZDV SHUIRUPHG WKH\ DUH QRW OLDEOH IRU GDPDJHV 6HFWLRQ  H GHILQHV WKH FDXVDWLRQ GHIHQVH ,I DXGLWRUV FDQ SURYH WKDW WKH SODLQWLII V GDPDJHV ZHUH FDXVHG E\ VRPHWKLQJ RWKHU WKDQ WKH PDWHULDOO\ PLVVWDWHG ILQDQFLDO VWDWHPHQWV WKHQ DXGLWRUV DUH QRW OLDEOH

 %1 ! " CGG6 ("  !! !@ ( " "4 " 9 2 &  4  !@ (! 9 V 57 !4 ! 321 %!0 & !# ) ((  !' &"" @!!E   %!0  @Q !!( ! "  9"D

 :KDW DUH WKH OHJDO OLDELOLWLHV RI DXGLWRUV XQGHU FRPPRQ ODZ"

/HJDO OLDELOLWLHV RI DXGLWRUV PD\ DULVH IURP ODZVXLWV EURXJKW RQ WKH EDVLV RI WKH ODZ RI FRQWUDFWV RU DV WRUW DFWLRQV IRU IDLOXUH WR H[HUFLVH WKH DSSURSULDWH OHYHO RI SURIHVVLRQDO FDUH %UHDFK RI FRQWUDFW LV D FODLP WKDW DFFRXQWLQJ RU DXGLWLQJ VHUYLFHV ZHUH QRW SHUIRUPHG LQ WKH PDQQHU DJUHHG 7RUW DFWLRQV FRYHU FRPSODLQWV RWKHU WKDQ EUHDFK RI FRQWUDFW DQG QRUPDOO\ LQYROYH DFFXVDWLRQV WKDW DXGLWRUV IDLOHG WR GHWHFW PDWHULDO PLVVWDWHPHQWV 8VHUV RI ILQDQFLDO VWDWHPHQWV QRUPDOO\ LQLWLDWH VXFK DFWLRQV

20 A 0 "&&"  9"D  %1 ! " CA " ! ! 9 @ " 2 H " !2! G 57 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  @Q

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

D .QR[ ZRXOG UHFRYHU IURP *DUVRQ IRU IUDXG %HFDXVH .QR[ VXIIHUHG D ORVV EHFDXVH RI UHOLDQFH RQ PDWHULDOO\ PLVVWDWHG ILQDQFLDO VWDWHPHQWV LW ZRXOG QHHG WR GHPRQVWUDWH WKDW *DUVRQ ZDV DZDUH RI WKH HPEH]]OHPHQW DQG LQVLGHU WUDQVDFWLRQV *DUVRQ ZDV DZDUH RI WKH HPEH]]OHPHQW DQG LQVLGHU WUDQVDFWLRQV DQG DV VXFK FRPPLWWHG IUDXG ,W LV LPSRUWDQW WR QRWH WKDW DXGLWRUV RZH DOO SDUWLHV UHVSRQVLELOLW\ IRU IUDXG E

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

20 "  9"D   ! " C VG6 ("  ! %@ 8Q ! ! !@ (" "4 " 9 2 &  4  !@ (! 9 X 57 !4 ! 321 %!0 CGG6 ("  !! !@ ( " "4 " 9 2 &  4  !@ (! 9 V 57 !4 ! 321 %!0 W G (( !4 Q &"" @!!E   %!0  @Q

 %ULHIO\ H[SODLQ WKH FRQFHSW RI SURSRUWLRQDWH OLDELOLW\ :K\ LV WKH DGRSWLRQ RI SURSRUWLRQDWH OLDELOLW\ LPSRUWDQW WR WKH DFFRXQWLQJ SURIHVVLRQ"

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

20 !"" 9"  9"D  %1 ! " C! 9 @  ! " 2 H " !(( @ !& 9"!4 ! !! !' I 57 !4 ! 321 %!0 & !# ) ((  !' &"" @!!E   %!0  @Q

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

$ 7KLUG SDUWLHV KDYH GLIIHUHQW VWDQGLQJ WR VXH LQ GLIIHUHQW MXULVGLFWLRQV ,Q :LVFRQVLQ %RE PD\ EH DEOH WR EULQJ VXLW DJDLQVW DXGLWRUV IRU RUGLQDU\ QHJOLJHQFH DV D IRUHVHHDEOH SDUW\ EXW LQ ,OOLQRLV %RE PD\ KDYH WR SURYH KH LV D IRUHVHHQ SDUW\ RU DOOHJH JURVV QHJOLJHQFH RU IUDXG RQ WKH SDUW RI DXGLWRUV LQ RUGHU WR KDYH D ULJKW WR EULQJ VXLW

% 7KH EHVW GHIHQVH LV D ODFN RI FDXVDWLRQ EHWZHHQ WKH PDWHULDOO\ PLVVWDWHG ILQDQFLDO VWDWHPHQWV DQG %RE V ORVV %RE QHYHU HYDOXDWHG WKH ILQDQFLDO VWDWHPHQWV EXW SXUFKDVHG WKH VWRFN WKURXJK D WLS IURP KLV ERVV $XGLWRUV PD\ DOVR FODLP WKDW WKH\ SHUIRUPHG WKH DXGLW ZLWK GXH FDUH DQG DFFRUGLQJ WR JHQHUDOO\ DFFHSWHG DXGLWLQJ VWDQGDUGV

0DWFKLQJ 4XHVWLRQV

 %1 ! " CA " ! ! 9 @ " 2 H " !2! G 57 !4 ! 321 %!0 W G (( 99 &"" @!!E   %!0  @Q ! @D " 20 "  9"D

 8VLQJ WKH IROORZLQJ OHWWHUV LGHQWLI\ WKH FDVH WR ZKLFK HDFK VWDWHPHQW LV PRVW FORVHO\ UHODWHG

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

! %!0  9"D  %1 ! " C VG6 ("  ! %@ 8Q ! ! !@ (" "4 " 9 2 &  4  !@ (! 9 X 57 !4 ! 321 %!0 CGG6 ("  !! !@ ( " "4 " 9 2 &  4  !@ (! 9 V 57 !4 ! 321 %!0 CA " ! ! 9 @ " 2 H " !2! G 57 !4 ! 321 %!0 & !# ) ((  !' &"" @!!E   %!0  @Q

6HFXULWLHV ([FKDQJH $FW RI  GDPDJHV XQGHU VHFWLRQ  E RI WKH SODLQWLII WR SURYH VFLHQWHU WR UHFRYHU  (VWDEOLVKHG SUHFHGHQW IRU WKH

&RQVWUXFWLRQ %DU&KULV (VFRWW Y

&RUS 

 8VLQJ WKH IROORZLQJ OHWWHUV LGHQWLI\ WKH FDVH WR ZKLFK HDFK VWDWHPHQW LV PRVW FORVHO\ UHODWHG

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

! %!0  9"D  %1 ! " C VG6 ("  ! %@ 8Q ! ! !@ (" "4 " 9 2 &  4  !@ (! 9 X 57 !4 ! 321 %!0 CGG6 ("  !! !@ ( " "4 " 9 2 &  4  !@ (! 9 V 57 !4 ! 321 %!0 CA " ! ! 9 @ " 2 H " !2! G 57 !4 ! 321 %!0 & !# ) ((  !' &"" @!!E   %!0  @Q

7UXH  )DOVH 4XHVWLRQV

ILQDQFLDO VWDWHPHQW HQJDJHPHQW UHODWHG WR D SUR IRUPD ZLOOLQJO\ FRQVSLULQJ WR GHIUDXG LQ DQ  &RQYLFWLRQ RI DXGLWRUV IRU VWDWHPHQWV LQ D SUR[\ VWDWHPHQW

,QWHUQDO *RYHUQPHQWDO DQG )UDXG $XGLWV

6WXGHQW 0DUNHWLQJ 1DWHOOL 1DWLRQDO 8QLWHG 6WDWHV Y 

0RGXOH '

 ,QWHUQDO DXGLWRUV DUH DOZD\V HPSOR\HG E\ WKH RUJDQL]DWLRQ WKDW WKH\ DXGLW VXFK DV D EDQN KRVSLWDO RU LQGXVWULDO FRPSDQ\ 7UXH )DOVH

 7KH *RYHUQPHQW $FFRXQWDELOLW\ 2IILFH *$2 LV KHDGHG E\ WKH 86 &RQJUHVV 7UXH )DOVH

 ,QWHUQDO DXGLWRUV SHUIRUP RSHUDWLRQDO DXGLWV EXW GR QRW SHUIRUP ILQDQFLDO DXGLWV 7UXH )DOVH

 7KH JRDO RI RSHUDWLRQDO DXGLWLQJ LV WR KHOS PDQDJHUV GLVFKDUJH WKHLU PDQDJHPHQW UHVSRQVLELOLWLHV DQG LPSURYH SURILWDELOLW\ 7UXH )DOVH

 ,QWHUQDO DXGLWRUV VKRXOG EH LQGHSHQGHQW ZKHQ REWDLQLQJ HYLGHQFH LQ WKH VHQVH RI EHLQJ IUHH IURP GLUHFWLRQ RU FRQVWUDLQW E\ WKH PDQDJHU RI WKH EXVLQHVV XQLW XQGHU DXGLW 7UXH )DOVH

 +DYLQJ WKH DXWKRULW\ DQG UHVSRQVLELOLW\ WR UHSRUW WR WKH YLFH SUHVLGHQW IRU ILQDQFH RU WKH WUHDVXUHU HQKDQFHV DQ LQWHUQDO DXGLWRU V LQGHSHQGHQFH 7UXH )DOVH

 7KH VWDWHG REMHFWLYH RI LQWHUQDO DXGLWLQJ LV SKUDVHG LQ WHUPV RI VHUYLFH WR WKH RUJDQL]DWLRQ QRW MXVW WR PDQDJHPHQW 7UXH )DOVH

 7KH *$2 HPSKDVL]HV WKH DFFRXQWDELOLW\ RI SXEOLF RIILFLDOV IRU WKH HIILFLHQW HFRQRPLFDO DQG HIIHFWLYH XVH RI SXEOLF IXQGV DQG UHVRXUFHV 7UXH )DOVH

 3HUIRUPDQFH DXGLWV GHWHUPLQH ZKHWKHU DQ HQWLW\ KDV FRPSOLHG ZLWK ODZV DQG UHJXODWLRQV IRU WKRVH WUDQVDFWLRQV DQG HYHQWV WKDW PD\ KDYH D PDWHULDO HIIHFW RQ WKH ILQDQFLDO VWDWHPHQWV 7UXH )DOVH

 ,QWHUQDO DXGLWLQJ LV DQ LQGHSHQGHQW REMHFWLYH DVVXUDQFH DQG FRQVXOWLQJ DFWLYLW\ GHVLJQHG WR DGG YDOXH DQG LPSURYH DQ RUJDQL]DWLRQ V RSHUDWLRQV 7UXH )DOVH

 7KH DXGLWLQJ VWDQGDUGV RI WKH ,QVWLWXWH RI ,QWHUQDO $XGLWRUV UHTXLUHG RI LQWHUQDO DXGLWRUV DUH VLPLODU WR WKH UHTXLUHPHQW RI *$$6 IRU SUDFWLFLQJ &3$V 7UXH )DOVH

 7KH *$2 VWDQGDUGV JR EH\RQG WKH $,&3$ V *$$6 LQ D QXPEHU RI UHVSHFWV 7UXH )DOVH

 ([WHUQDO DXGLWRUV DFFHSWLQJ HQJDJHPHQWV WR DXGLW IHGHUDO JUDQWV DQG SURJUDPV PXVW IROORZ ERWK *$$6 DQG WKH *$2 VWDQGDUGV 7UXH )DOVH

 7KH 6LQJOH $XGLW $FW RI  UHSODFHG GXSOLFDWLYH JUDQWE\JUDQW DXGLWV ZLWK D VLQJOH DXGLW UHSRUW RQ ZKLFK DOO DJHQFLHV FDQ UHO\ 7UXH )DOVH

 8QGHU WKH 6LQJOH $XGLW $FW RI  RQO\ &3$V DQG *$2 DXGLWRUV FDQ FRQGXFW VLQJOH DXGLWV 7UXH )DOVH

 (IILFLHQF\ HFRQRP\ DQG SURJUDP RXWSXWV PD\ EH PHDVXUHG RQO\ LQ WHUPV RI PRQHWDU\ H[SHQGLWXUHV 7UXH )DOVH

 *RYHUQPHQWDO DQG LQWHUQDO DXGLWRUV DUH PRUH FRQFHUQHG ZLWK PDQDJHPHQW FRQWUROV EHFDXVH WKH\ GLUHFWO\ DIIHFW HFRQRP\ HIILFLHQF\ DQG SURJUDP UHVXOWV 7UXH )DOVH

 $Q H[SHUW LQ GHWHFWLQJ DQG LQYHVWLJDWLQJ IUDXG LV D FHUWLILHG IUDXG LQYHVWLJDWRU 7UXH )DOVH

 $XGLWRUV DUH FRQFHUQHG DERXW LQWHUQDO FRQWURO VWUHQJWKV DQG ZHDNQHVVHV IUDXG LQYHVWLJDWRUV DUH PRVWO\ FRQFHUQHG DERXW IUDXG ZHDNQHVVHV 7UXH )DOVH

 )RUHQVLF DFFRXQWLQJ LV D WHUP XVHG WR GHVFULEH ZRUN WKDW LV SHUIRUPHG RQ FRPSDQLHV WKDW DUH QR ORQJHU LQ EXVLQHVV 7UXH )DOVH

0XOWLSOH &KRLFH 4XHVWLRQV

 7KH GHILQLWLRQ RI LQWHUQDO DXGLW LQFOXGHV DOO RI WKH IROORZLQJ H[FHSW

$ ,QGHSHQGHQFH DQG REMHFWLYLW\ % 3URYLVLRQ RI DVVXUDQFH DQG FRQVXOWLQJ DFWLYLW\ & 'HWHUPLQDWLRQ RI HIILFLHQW DQG HIIHFWLYH SHUIRUPDQFH ' $GGLWLRQDO YDOXH DQG LPSURYHG RSHUDWLRQV  7KH UHDVRQV IRU RXWVRXUFLQJ DQ LQWHUQDO DXGLW LQFOXGH

$ 0RUH H[SHUWLVH RQO\ % 0RUH H[SHUWLVH DQG LPSURYHG FRQWURO RYHU DXGLW FRVWV & ,PSURYHG FRQWURO RYHU DXGLW FRVWV DQG LPSURYHG DOLJQPHQW ZLWK FRPSDQ\ JRDOV ' $OO RI WKH DERYH  7KH SULPDU\ GLIIHUHQFH EHWZHHQ RSHUDWLRQDO DXGLWLQJ DQG ILQDQFLDO DXGLWLQJ LV WKDW LQ RSHUDWLRQDO DXGLWLQJ WKH DXGLWRU

$ ,V FRQFHUQHG RQO\ ZLWK WKH DXGLWHG DFWLYLW\ V DGKHUHQFH WR FRPSDQ\ SROLF\ DQG SURFHGXUHV % ,V VHHNLQJ WR KHOS PDQDJHPHQW XVH UHVRXUFHV LQ WKH PRVW HIIHFWLYH PDQQHU SRVVLEOH & 6WDUWV WKH SURFHVV ZLWK WKH ILQDQFLDO VWDWHPHQWV RI DQ DFWLYLW\ EHLQJ DXGLWHG DQG ZRUNV EDFNZDUG WR WKH EDVLF SURFHVVHV LQYROYHG LQ SURGXFLQJ WKHP ' &DQ XVH DQDO\WLFDO VNLOOV DQG WRROV WKDW DUH QRW QHFHVVDU\ LQ ILQDQFLDO DXGLWLQJ

 ,QGHSHQGHQFH SHUPLWV LQWHUQDO DXGLWRUV WR UHQGHU LPSDUWLDO DQG XQELDVHG MXGJPHQWV 7KH EHVW ZD\ IRU LQWHUQDO DXGLW GHSDUWPHQWV WR DFKLHYH LQGHSHQGHQFH LV WKURXJK

$ ,QGLYLGXDO NQRZOHGJH DQG VNLOOV % 2UJDQL]DWLRQDO NQRZOHGJH DQG VNLOOV & 6XSHUYLVLRQ ZLWKLQ WKH RUJDQL]DWLRQ ' 2UJDQL]DWLRQDO VWDWXV DQG LQGLYLGXDO REMHFWLYLW\  7KH SURSHU RUJDQL]DWLRQDO UROH RI LQWHUQDO DXGLWLQJ LV WR

$ $VVLVW H[WHUQDO DXGLWRUV LQ UHGXFLQJ H[WHUQDO DXGLW IHHV % 3HUIRUP VWXGLHV WR DVVLVW LQ DWWDLQLQJ PRUH HIILFLHQW RSHUDWLRQV & 6HUYH DV DQ LQYHVWLJDWLYH DUP RI VHQLRU PDQDJHPHQW DQG WKH ERDUG RI GLUHFWRUV ' 6HUYH DV DQ LQGHSHQGHQW REMHFWLYH DVVXUDQFH DQG FRQVXOWLQJ DFWLYLW\ WKDW DGGV YDOXH WR WKH RUJDQL]DWLRQ

 'XULQJ WKH DXGLW RI WKH TXDOLW\ FRQWURO DUHD DQ DXGLWRU LGHQWLILHG WKDW D VSHFLILF SURGXFW KDV D  SHUFHQW IDLOXUH UDWH ZKHQ WHVWHG 7KH VSHFLILFDWLRQ FDOOV IRU D IDLOXUH UDWH RI OHVV WKDQ  SHUFHQW 3URGXFW IDLOXUH PLJKW OHDG WR FXVWRPHU LQMXU\ DQG LQ WXUQ ODZVXLWV DJDLQVW WKH FRPSDQ\ 7KH DXGLWRU KDV FRPPXQLFDWHG WKLV WR PDQDJHPHQW :KLFK RI WKH IROORZLQJ LV QRW DQ DFFHSWDEOH UHVSRQVH IURP PDQDJHPHQW ZLWK UHJDUG WR WKLV ULVN"

$ 0DQDJHPHQW LV DZDUH RI WKH ULVN DQG KDV GHFLGHG WKDW LW LV DFFHSWDEOH % 0DQDJHPHQW KDV GHFLGHG QRW WR FRQWLQXH PDQXIDFWXULQJ WKLV SURGXFW & 0DQDJHPHQW KDV GHFLGHG WR LQFUHDVH WKH TXDOLW\ FRQWURO DFWLYLW\ WR UHGXFH WKH PDQXIDFWXUH RI XQDFFHSWDEOH SURGXFW WR DQ DFFHSWDEO\ ORZ OHYHO ' 0DQDJHPHQW KDV GHFLGHG WKDW WKH WHVW GDWD DUH XQUHOLDEOH DQG KDV GHFLGHG QRW WR UHVSRQG WR WKH DXGLW ILQGLQJV  +DYLQJ DQ DXGLW FKDUWHU LV LPSRUWDQW IRU LQWHUQDO DXGLW GHSDUWPHQWV :KLFK RI WKH IROORZLQJ LWHPV LV JHQHUDOO\ QRW D UHDVRQ WR KDYH DQ DXGLW FKDUWHU"

$ ,W SURYLGHV D FRPPLWPHQW IURP PDQDJHPHQW WR VXSSRUW WKH LQWHUQDO DXGLW GHSDUWPHQW V DFWLYLWLHV % ,W GHILQHV WKH VNLOOV DQG FRPSHWHQFLHV UHTXLUHG E\ WKH LQWHUQDO DXGLW GHSDUWPHQW & ,W GHILQHV WKH GHSDUWPHQW V DXWKRULW\ DQG UHVSRQVLELOLW\ ' ,W GHILQHV WKH UHSRUWLQJ UHTXLUHPHQWV IRU LQWHUQDO DXGLW GHSDUWPHQWV

 <RXU RUJDQL]DWLRQ KDV VHOHFWHG \RX WR GHYHORS DQ LQWHUQDO DXGLW DFWLYLW\ <RXU DSSURDFK ZLOO PRVW OLNHO\ EH WR KLUH

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

$ 0DQDJHPHQW KDV SODQQHG DQG GHVLJQHG WKH SURFHVV WR SURYLGH UHDVRQDEOH DVVXUDQFH RI DFKLHYLQJ REMHFWLYHV DQG JRDOV % 0DQDJHPHQW GLUHFWV SURFHVVHV WR SURYLGH UHDVRQDEOH DVVXUDQFH RI DFKLHYLQJ REMHFWLYHV DQG JRDOV & 7KH RUJDQL]DWLRQ V REMHFWLYHV DQG JRDOV ZLOO EH DFKLHYHG HIILFLHQWO\ DQG HFRQRPLFDOO\ ' 7KH RUJDQL]DWLRQ V REMHFWLYHV DQG JRDOV ZLOO EH DFKLHYHG LQ DQ DFFXUDWH DQG WLPHO\ PDQQHU DQG ZLWK PLQLPDO XVH RI UHVRXUFHV

 6HQLRU PDQDJHPHQW KDV RUGHUHG D FRPSOLDQFH DXGLW RI WKH RUJDQL]DWLRQ V HPSOR\HH EHQHILWV SDFNDJH :KLFK RI WKH IROORZLQJ GR ERWK WKH FKLHI DXGLW H[HFXWLYH DQG VHQLRU PDQDJHPHQW FRQVLGHU D SULPDU\ HQJDJHPHQW REMHFWLYH"

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

$ $WWULEXWH VWDQGDUGV % 3HUIRUPDQFH VWDQGDUGV & *RYHUQDQFH VWDQGDUGV ' ,PSOHPHQWDWLRQ VWDQGDUGV

 :KLFK RI WKH IROORZLQJ LV D UHTXLUHPHQW RI WKH 6WDQGDUGV IRU WKH 3URIHVVLRQDO 3UDFWLFH RI ,QWHUQDO $XGLW LI WKH ,QVWLWXWH RI ,QWHUQDO $XGLWRUV ,,$ WKDW LV QRW D UHTXLUHPHQW RI DQ H[WHUQDO DXGLWRU SHUIRUPLQJ D ILQDQFLDO VWDWHPHQW DXGLW"

$ 'XH FDUH % ,QWHUQDO FRQWURO HYDOXDWLRQ & 5HSRUWLQJ WR WKH DXGLW FRPPLWWHH ' 3HUIRUPLQJ D IROORZXS RQ DXGLW ILQGLQJV  :KHQ SUHSDULQJ DQ DXGLW UHSRUW DQ LQWHUQDO DXGLWRU PXVW FRQYLQFH PDQDJHPHQW WR WDNH DFWLRQ FRQFHUQLQJ WKH UHSRUW V ILQGLQJV :KHQ UHSRUWLQJ RQ DQ DXGLW ILQGLQJ DQ DXGLWRU PXVW LQFOXGH VRPH NH\ HOHPHQWV DERXW WKDW ILQGLQJ LQ WKH UHSRUW 7KHVH NH\ HOHPHQWV DUH

$ &RQGLWLRQ FULWHULD FDXVH HIIHFW DQG UHFRPPHQGDWLRQ % &RQGLWLRQ FULWHULD FDXVH HIIHFW DQG UHTXLUHPHQW & &RQGLWLRQ VRXUFH FDXVH HIIHFW DQG UHFRPPHQGDWLRQ ' /RFDWLRQ FULWHULD FDXVH HIIHFW DQG UHFRPPHQGDWLRQ

 3URJUDP DXGLWV LQFOXGH GHWHUPLQLQJ

$ 7KH GHJUHH WR ZKLFK DQ HQWLW\ LV DFTXLULQJ SURWHFWLQJ DQG XVLQJ LWV UHVRXUFHV HIIHFWLYHO\ % 7KH HIIHFWLYHQHVV RI DQ RUJDQL]DWLRQ V SURJUDPV DFWLYLWLHV RU IXQFWLRQV & 7KH FDXVHV RI DQ RUJDQL]DWLRQ V LQHIILFLHQFLHV RU XQHFRQRPLFDO SUDFWLFHV ' 7KH HQWLW\ V FRPSOLDQFH ZLWK ODZV DQG UHJXODWLRQV FRQFHUQLQJ PDWWHUV RI HIILFLHQF\  7KH 6WDQGDUGV IRU WKH 3URIHVVLRQDO 3UDFWLFH RI ,QWHUQDO $XGLWLQJ RI WKH ,QVWLWXWH RI ,QWHUQDO $XGLWRUV ,,$ GRHV QRW LQFOXGH WKH EURDG FDWHJRU\ RI

$ 3URILFLHQF\ DQG GXH FDUH % 1DWXUH RI ZRUN & 3HUIRUPDQFH RI WKH HQJDJHPHQW ' 4XDOLW\ FRQWURO  :KLFK RI WKH IROORZLQJ LQWHUQDO DXGLWV LV JHQHUDOO\ QRW D W\SH RI JRYHUQPHQW DXGLW"

$ 5HYLHZ RI FRPSOLDQFH ZLWK SROLFLHV SODQV SURFHGXUHV ODZV DQG UHJXODWLRQV % 5HYLHZ RI WKH HFRQRP\ DQG HIILFLHQF\ LQ WKH XVH RI UHVRXUFHV & 5HYLHZ RI WKH PHDQV RI VDIHJXDUGLQJ DVVHWV ' 5HYLHZ RI WKH UHVXOWV RI SURJUDPV

 7KH 86 *RYHUQPHQW $FFRXQWDELOLW\ 2IILFH *$2 VWDQGDUGV GR QRW VSHFLILFDOO\ UHTXLUH D ZULWWHQ UHSRUW LQ ILQDQFLDO VWDWHPHQW DXGLWV IRU

$ 5HFRPPHQGDWLRQV IRU DFWLRQV WR LPSURYH RSHUDWLRQV % $OO LQVWDQFHV RI LOOHJDO DFWV WKDW FRXOG UHVXOW LQ FULPLQDO SURVHFXWLRQ & &RPSOLDQFH ZLWK DSSOLFDEOH ODZV DQG UHJXODWLRQV ' ,QWHUQDO FRQWURO VWUXFWXUH DQG WKH FRQWURO ULVN DVVHVVPHQW  7KH IHGHUDO ODZ WKDW HVWDEOLVKHG XQLIRUP UHTXLUHPHQWV IRU DXGLWV RI IHGHUDO DVVLVWDQFH SURYLGHG WR VWDWH DQG ORFDO JRYHUQPHQWV LV FDOOHG

$ 7KH 6LQJOH $XGLW $FW RI  % 7KH 8QLIRUP 5HTXLUHPHQWV $FW RI  & 7KH 6DUEDQHV2[OH\ $FW RU  ' 7KH $XGLW 5HGXFWLRQ $FW RI   7KH GHILQLWLRQ RI DGPLQLVWUDWLYH FRQWURO GRHV QRW LQFOXGH UHIHUHQFH WR

$ 2SHUDWLRQDO HIILFLHQF\ % $FFRXQWLQJ HUURUV & $GKHUHQFH WR PDQDJHULDO SROLFLHV ' 3ODQ RI RUJDQL]DWLRQ

 :KHQ GHDOLQJ ZLWK VWDQGDUGV PHDVXUHPHQWV DQG FRPSDULVRQV LQSXW PHDVXUHPHQWV DUH PRVW LPSRUWDQW IRU DXGLWV RI

$ (FRQRP\ % (IILFLHQF\ & 3URJUDP UHVXOWV ' )LQDQFLDO VWDWHPHQWV  :KLFK RI WKH IROORZLQJ LV QRW UHTXLUHG WR EHFRPH D FHUWLILHG LQWHUQDO DXGLWRU &,$ "

$ +ROG D FROOHJH GHJUHH % 3DVV D WZRGD\ H[DPLQDWLRQ & +DYH D IXOOWLPH SRVLWLRQ DV DQ LQWHUQDO DXGLWRU ' 0HHW DQ H[SHULHQFH UHTXLUHPHQW  :KHQ FRQVLGHULQJ WKH FRPSHWHQFH RI LQWHUQDO DXGLWRUV H[WHUQDO DXGLWRUV VKRXOG REWDLQ HYLGHQFH DERXW WKH

$ (GXFDWLRQDO DQG H[SHULHQFH TXDOLILFDWLRQV RI WKH LQWHUQDO DXGLWRUV % 2UJDQL]DWLRQDO VWDWXV RI WKH LQWHUQDO DXGLWRUV & /LQHV RI FRPPXQLFDWLRQ ZLWKLQ WKH HQWLW\ RI WKH LQWHUQDO DXGLWRUV ' 7KH VL]H RI WKH LQWHUQDO DXGLW GHSDUWPHQW

 :KHQ LQGHSHQGHQW &3$V LQ SXEOLF SUDFWLFH WDNH HQJDJHPHQWV WR DXGLW JRYHUQPHQW XQLWV RU ILQDQFLDO DVVLVWDQFH UHFLSLHQWV WKH\ PXVW IROORZ

$ *$$6 RQO\ % *$$6 DQG *$*$6 & *$*$6 RQO\ ' ,QWHUQDO DXGLWLQJ VWDQGDUGV  :KLFK RI WKH IROORZLQJ VWDWHPHQWV LV WUXH"

$ ([WHUQDO DXGLWRUV PXVW FRQVLGHU WKH LQWHUQDO DXGLW IXQFWLRQ DV SDUW RI REWDLQLQJ DQ XQGHUVWDQGLQJ RI D FRPSDQ\ V LQWHUQDO FRQWURO VWUXFWXUH % ([WHUQDO DXGLWRUV PXVW UHYLHZ DOO ZRUN SHUIRUPHG E\ LQWHUQDO DXGLWRUV & ([WHUQDO DXGLWRUV PXVW LQYHVWLJDWH WKH FRPSHWHQFH DQG REMHFWLYLW\ RI LQWHUQDO DXGLWRUV ' ([WHUQDO DXGLWRUV PXVW VKDUH UHVSRQVLELOLW\ IRU WKH ZRUN RI LQWHUQDO DXGLWRUV LI LW LV XVHG IRU HYLGHQFH IRU WKH ILQDQFLDO VWDWHPHQW DXGLW

 :KLFK RI WKH IROORZLQJ LV D GLIIHUHQFH EHWZHHQ SHUIRUPLQJ DQ DXGLW DQG SHUIRUPLQJ D IUDXG H[DPLQDWLRQ"

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

$ 'HWHUPLQH ZKHWKHU D IUDXG H[LVWV % 'HWHUPLQH ZKR ZDV LQYROYHG LQ WKH IUDXG & 'HWHUPLQH KRZ WKH IUDXG RFFXUUHG ' 'HWHUPLQH WKH HIIHFW RQ ILQDQFLDO VWDWHPHQW XVHUV

 ,Q SHUIRUPLQJ D ILQDQFLDO VWDWHPHQW DXGLW LQ DFFRUGDQFH ZLWK JRYHUQPHQW DXGLWLQJ VWDQGDUGV DQ DXGLWRU LV UHTXLUHG WR UHSRUW RQ WKH HQWLW\ V FRPSOLDQFH ZLWK ODZV DQG UHJXODWLRQV 7KLV UHSRUW VKRXOG

$ 6WDWH WKDW FRPSOLDQFH ZLWK ODZV DQG UHJXODWLRQV LV WKH UHVSRQVLELOLW\ RI WKH HQWLW\ V PDQDJHPHQW % 'HVFULEH WKH ODZV DQG UHJXODWLRQV ZLWK ZKLFK WKH HQWLW\ PXVW FRPSO\ & 3URYLGH DQ RSLQLRQ RQ RYHUDOO FRPSOLDQFH ZLWK ODZV DQG UHJXODWLRQV ' ,QGLFDWH WKDW WKH DXGLWRU GRHV QRW SRVVHVV OHJDO VNLOOV DQG FDQQRW PDNH OHJDO MXGJPHQWV  :KLFK RI WKH IROORZLQJ VWDWHPHQWV LV D VWDQGDUG DSSOLFDEOH WR ILQDQFLDO VWDWHPHQW DXGLWV LQ DFFRUGDQFH ZLWK JRYHUQPHQW DXGLWLQJ VWDQGDUGV"

$ $VVHVV ZKHWKHU WKH HQWLW\ KDV UHSRUWDEOH PHDVXUHV RI HFRQRP\ DQG HIILFLHQF\ WKDW DUH YDOLG DQG UHOLDEOH % 5HSRUW RQ WKH VFRSH RI WKH DXGLWRU V WHVWLQJ RI LQWHUQDO FRQWUROV & %ULHIO\ GHVFULEH LQ WKH DXGLWRU V UHSRUW WKH PHWKRG RI VWDWLVWLFDO VDPSOLQJ XVHG LQ SHUIRUPLQJ WHVWV RI FRQWUROV DQG VXEVWDQWLYH WHVWV ' 'HWHUPLQH WKH H[WHQW WR ZKLFK WKH HQWLW\ V SURJUDPV DFKLHYH WKH GHVLUHG OHYHO RI UHVXOWV

 7KH 86 *RYHUQPHQW $FFRXQWDELOLW\ 2IILFH LV DQ DJHQF\ RI

$ 7KH 86 &RQJUHVV % 7KH ([HFXWLYH 2IILFH RI 0DQDJHPHQW DQG %XGJHW & 7KH 86 6XSUHPH &RXUW ' 7KH )HGHUDO $FFRXQWLQJ 6WDQGDUGV %RDUG  7KH GHPDQG IRU FRPSOLDQFH DXGLWLQJ LQ JHQHUDOO\ DFFHSWHG JRYHUQPHQW DXGLWLQJ VWDQGDUGV *$*$6 WHUPV LV JHQHUDWHG E\

$ $FWV GLVFUHGLWDEOH WR WKH SURIHVVLRQ % )LQDQFLDO VWDWHPHQW DXGLWV SHUIRUPHG LQ DFFRUGDQFH ZLWK JHQHUDOO\ DFFHSWHG DXGLWLQJ VWDQGDUGV & *RYHUQPHQWDO PDQDJHUV REOLJDWLRQV WR IROORZ ODZV DQG UHJXODWLRQV ' 3XEOLF UHSRUWV RQ JRYHUQPHQW PDQDJHUV IROORZLQJ ODZV DQG UHJXODWLRQV

 $IWHU SHUIRUPLQJ ZRUN LQ D FRPSOLDQFH DWWHVWDWLRQ HQJDJHPHQW DQG ILQGLQJ WKDW D JRYHUQPHQWDO DJHQF\ V PDQDJHUV IDLOHG WR LQVWDOO DQG SHUIRUP HYHQ WKH PRVW HOHPHQWDU\ FRQWUROV WR HQVXUH FRPSOLDQFH ZLWK ODZV DQG UHJXODWLRQV DQG LQ IDFW FRPPLWWHG QXPHURXV YLRODWLRQV DQ DXGLWRU PRVW OLNHO\ ZRXOG

$ :ULWH DQ DGYHUVH UHSRUW RQ DFWXDO FRPSOLDQFH % :ULWH DQ XQTXDOLILHG UHSRUW RQ DFWXDO FRPSOLDQFH & :ULWH D UHSRUW PRGLILHG WR GLVFORVH SDUWLFXODU QRQFRPSOLDQFH HYHQWV VSHFLILF YLRODWLRQV RI ODZV DQG UHJXODWLRQV  ' :ULWH D GLVFODLPHU RI RSLQLRQ UHODWHG WR NQRZOHGJH RI QRQFRPSOLDQFH  $ *$2 DXGLW UHSRUW HQWLWOHG $YLDWLRQ 6DIHW\ 6DIHU 6NLHV ,QLWLDWLYH +DV 7DNHQ ,QLWLDO 6WHSV WR 5HGXFH $FFLGHQW 5DWHV E\  LV PRVW OLNHO\ D UHSRUW EDVHG RQ ZRUN WKH DXGLWRUV SHUIRUPHG GXULQJ D

$ )LQDQFLDO VWDWHPHQW DXGLW % &RPSOLDQFH DXGLW RI DLU VDIHW\ UHJXODWLRQV & 3HUIRUPDQFH DXGLW RI SURJUDP JRDO DFKLHYHPHQW ' 3HUIRUPDQFH DXGLW RI DLU FRQWURO UHJXODWLRQ HIIHFWLYHQHVV

 7KH 6LQJOH $XGLW $FW RI  UHTXLUHV DQ DQQXDO DXGLW RI DOO JRYHUQPHQWV DJHQFLHV DQG QRQSURILW RUJDQL]DWLRQV WKDW

$ 5HFHLYH   RU PRUH IHGHUDO IXQGV % 5HFHLYH   RU PRUH IHGHUDO IXQGV & 6SHQG   RU PRUH IHGHUDO IXQGV ' 6SHQG   RU PRUH IHGHUDO IXQGV  :KHQ DXGLWRUV UHSRUW RQ D ILQDQFLDO DXGLW HQJDJHPHQW LQ DFFRUGDQFH ZLWK JHQHUDOO\ DFFHSWHG JRYHUQPHQW DXGLWLQJ VWDQGDUGV *$*$6 WKH EDVLF UHSRUW V LQFOXGH D

$ 'LVFODLPHU RI RSLQLRQ RQ ILQDQFLDO VWDWHPHQWV UHSRUW RQ LQWHUQDO FRQWURO DQG UHSRUW RQ FRPSOLDQFH DXGLW UHJDUGLQJ ODZV DQG UHJXODWLRQV % 5HSRUW RSLQLRQ RQ ILQDQFLDO VWDWHPHQWV UHSRUW RQ LQWHUQDO FRQWURO DQG UHSRUW RQ FRPSOLDQFH DXGLW UHJDUGLQJ ODZV DQG UHJXODWLRQV & 5HSRUW RQ LQWHUQDO FRQWURO DQG UHSRUW V RQ HIILFLHQF\ DQG HIIHFWLYHQHVV RI RSHUDWLRQV ' 5HSRUW RQ FRPSOLDQFH UHJDUGLQJ ODZV DQG UHJXODWLRQV DQG UHSRUW V RQ DFKLHYHPHQW RI SURJUDP JRDO V 

 *HQHUDOO\ DFFHSWHG JRYHUQPHQW DXGLWLQJ VWDQGDUGV *$*$6 UHJDUGLQJ SHUIRUPDQFH UHSRUWLQJ VWDQGDUGV UHTXLUHV WKH UHSRUWV WR WHOO DERXW ZKLFK RI WKH IROORZLQJ

$ 3UHVHQWDWLRQ RI ILQDQFLDO VWDWHPHQWV LQ DFFRUGDQFH ZLWK *$$3 DQG DEXVH RI SXEOLF PRQH\ DQG SURSHUW\ % 3UHVHQWDWLRQ RI ILQDQFLDO VWDWHPHQWV LQ DFFRUGDQFH ZLWK *$$3 DQG LQWHUQDO FRQWURO GHVLJQ DQG VWUHQJWK RI RSHUDWLRQ & $EXVH RI SXEOLF PRQH\ DQG SURSHUW\ DQG PDQDJHPHQW V QRWHZRUWK\ SRVLWLYH DFFRPSOLVKPHQWV ' $EXVH RI SXEOLF PRQH\ DQG SURSHUW\ DQG LQWHUQDO FRQWURO GHVLJQ DQG VWUHQJWK RI RSHUDWLRQ  ,Q DVVHVVLQJ WKH REMHFWLYLW\ RI LQWHUQDO DXGLWRUV DQ LQGHSHQGHQW DXGLWRU VKRXOG

$ (YDOXDWH WKH TXDOLW\ FRQWURO SURJUDP LQ HIIHFW IRU WKH LQWHUQDO DXGLWRUV % ([DPLQH GRFXPHQWDU\ HYLGHQFH RI WKH ZRUN SHUIRUPHG E\ WKH LQWHUQDO DXGLWRUV & 7HVW D VDPSOH RI WKH WUDQVDFWLRQV DQG EDODQFHV WKDW WKH LQWHUQDO DXGLWRUV H[DPLQHG ' 'HWHUPLQH WKH RUJDQL]DWLRQDO OHYHO WR ZKLFK WKH LQWHUQDO DXGLWRUV UHSRUW

 7KH ZRUN RI LQWHUQDO DXGLWRUV PD\ DIIHFW WKH LQGHSHQGHQW DXGLWRU V

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

$ 3UHVHUYLQJ WKH FKDLQ RI FXVWRG\ RI WKH HYLGHQFH % (VWDEOLVKLQJ HYLGHQWLDO SURFHGXUH & 0DUNLQJ DQ HYLGHQWLDO H[KLELW ' )RUHQVLF DXGLWLQJ

 :KLFK RI WKH IROORZLQJ ZRXOG EH FRQVLGHUHG LQ GHWHUPLQLQJ ZKHWKHU DQ LQWHUQDO DXGLW GHSDUWPHQW LV LQGHSHQGHQW"

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

$ 7KH FRQWUROOHU ZRXOG DPHQG WKH DXGLW VFKHGXOH VR PRUH DXGLW WLPH ZDV VSHQW RQ DFFRXQWLQJ LVVXHV % 7KH FRQWUROOHU PD\ KDYH QR WUDLQLQJ DV DQ LQWHUQDO DXGLWRU & 'XULQJ WLPHV ZKHQ WKH EXGJHW QHHGV WR EH FXW LQWHUQDO DXGLW ZRXOG OLNHO\ EH WKH ILUVW WR ORVH IXQGLQJ ' 7KH FRQWUROOHU FDQ FRQWURO WKH VFRSH RI DXGLWV DQG FHQVRU DXGLW UHSRUWV EHIRUH EHLQJ VHQW WR PDQDJHPHQW DQG WKH DXGLW FRPPLWWHH

 :KLFK RI WKH IROORZLQJ LV QRW DQ LQWHUQDO DXGLW REMHFWLYH GHVLJQHG WR DGG YDOXH WR D SXUFKDVLQJ GHSDUWPHQW"

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

$ 7KH HIIHFW RI WKH DXGLW ILQGLQJ RQ WKH DXGLWHH RU WKH FRPSDQ\ % 7KH FDXVH RI WKH DXGLW ILQGLQJ & 7KH UHOHYDQFH RI WKH DXGLW ILQGLQJ RQ WKH DXGLW ' 7KH UHFRPPHQGDWLRQ WR FRUUHFW WKH DXGLW ILQGLQJ

 *RYHUQPHQWDO DXGLWRUV LQGHSHQGHQFH DQG REMHFWLYLW\ DUH HQKDQFHG ZKHQ WKH\ UHSRUW WKH UHVXOWV RI DQ DXGLW DVVLJQPHQW GLUHFWO\ WR

$ 0DQDJHUV RI WKH JRYHUQPHQW DJHQF\ XQGHU DXGLW DQG LQ ZKLFK WKH DXGLWRUV DUH HPSOR\HG % 7KH DXGLW FRPPLWWHH RI GLUHFWRUV RI WKH DJHQF\ XQGHU DXGLW & 3ROLWLFDO DFWLRQ FRPPLWWHHV RI ZKLFK WKH\ DUH PHPEHUV ' 7KH FRQJUHVVLRQDO FRPPLWWHH WKDW RUGHUHG WKH DXGLW  ,Q DOO DXGLWV RI JRYHUQPHQWDO XQLWV SHUIRUPHG DFFRUGLQJ WR *$*$6 WKH PRVW LPSRUWDQW ZRUN LV

$ &RPSOLDQFH DXGLWLQJ % 2EWDLQLQJ D VXIILFLHQW XQGHUVWDQGLQJ RI LQWHUQDO FRQWURO & 'RFXPHQWDWLRQ RI WKH DXGLW ' ([LW LQWHUYLHZV ZLWK PDQDJHUV LQ WKH JRYHUQPHQWDO XQLW  :KLFK RI WKH IROORZLQJ LV FRQVLGHUHG GLIIHUHQW DQG PRUH OLPLWHG LQ REMHFWLYHV WKDQ WKH RWKHUV"

$ 2SHUDWLRQDO DXGLWLQJ % 3HUIRUPDQFH DXGLWLQJ & 0DQDJHPHQW DXGLWLQJ ' )LQDQFLDO VWDWHPHQW DXGLWLQJ

 $ W\SLFDO REMHFWLYH RI DQ RSHUDWLRQDO DXGLW LV IRU WKH DXGLWRU WR

$ 'HWHUPLQH ZKHWKHU WKH ILQDQFLDO VWDWHPHQWV IDLUO\ SUHVHQW WKH FRPSDQ\ V RSHUDWLRQV % (YDOXDWH WKH IHDVLELOLW\ RI DWWDLQLQJ WKH FRPSDQ\ V RSHUDWLRQDO REMHFWLYHV & 0DNH UHFRPPHQGDWLRQV IRU DFKLHYLQJ FRPSDQ\ REMHFWLYHV ' 5HSRUW RQ WKH FRPSDQ\ V UHODWLYH VXFFHVV LQ DWWDLQLQJ SURILW PD[LPL]DWLRQ  $ JRYHUQPHQWDO DXGLWRU DVVLJQHG WR DXGLW WKH ILQDQFLDO VWDWHPHQWV RI WKH VWDWH KLJKZD\ GHSDUWPHQW ZRXOG QRW EH FRQVLGHUHG LQGHSHQGHQW LI WKH DXGLWRU

$ $OVR KHOG D SRVLWLRQ DV D SURMHFW PDQDJHU LQ WKH KLJKZD\ GHSDUWPHQW % :DV WKH VWDWH DXGLW RIILFLDO HOHFWHG LQ D JHQHUDO VWDWHZLGH HOHFWLRQ ZLWK UHVSRQVLELOLW\ WR UHSRUW WR WKH OHJLVODWXUH & 1RUPDOO\ ZRUNV DV D VWDWH DXGLWRU HPSOR\HG LQ WKH GHSDUWPHQW RI KXPDQ VHUYLFHV ' :DV DSSRLQWHG E\ WKH VWDWH JRYHUQRU ZLWK UHVSRQVLELOLW\ WR UHSRUW WR WKH OHJLVODWXUH

 *RYHUQPHQWDO DXGLWLQJ FDQ H[WHQG EH\RQG DXGLWV RI ILQDQFLDO VWDWHPHQWV WR LQFOXGH DXGLWV RI DQ DJHQF\ V HIILFLHQW DQG HFRQRPLFDO XVH RI UHVRXUFHV DQG

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

 :KLFK RI WKH IROORZLQJ LV XVXDOO\ QRW SDUW RI DQ LQWHUQDO DXGLW GHSDUWPHQW V DXGLW FKDUWHU"

$ $ FRPPLWPHQW IURP PDQDJHPHQW WR HQVXUH WKH LQGHSHQGHQFH RI WKH LQWHUQDO DXGLW GHSDUWPHQW % $ GHILQLWLRQ RI WKH VFRSH RI WKH DXGLW GHSDUWPHQW V DFWLYLWLHV & 7KH RUJDQL]DWLRQDO VWUXFWXUH RI WKH LQWHUQDO DXGLW GHSDUWPHQW ' 7KH UHSRUWLQJ UHTXLUHPHQWV RI WKH LQWHUQDO DXGLW GHSDUWPHQW  :KLFK RI WKH IROORZLQJ ZRXOG \RX QRW H[SHFW WR VHH LQ DQ DXGLWRU V UHSRUW V RQ WKH ILQDQFLDO VWDWHPHQWV RI DQ LQGHSHQGHQW JRYHUQPHQW DJHQF\"

$ $ VWDWHPHQW WKDW WKH DXGLW ZDV FRQGXFWHG LQ DFFRUGDQFH ZLWK JHQHUDOO\ DFFHSWHG JRYHUQPHQW DXGLW VWDQGDUGV % $ UHSRUW RQ WKH DJHQF\ V FRPSOLDQFH ZLWK DSSOLFDEOH ODZV DQG UHJXODWLRQV & &RPPHQWDU\ E\ WKH DJHQF\ V PDQDJHUV RQ WKH DXGLW ILQGLQJV DQG UHFRPPHQGDWLRQV ' $ UHSRUW RQ WKH DJHQF\ V LQWHUQDO FRQWUROV

 7KH IHGHUDO 6LQJOH $XGLW $FW RI  UHTXLUHV DXGLWRUV WR GHWHUPLQH DQG UHSRUW VHYHUDO WKLQJV DERXW VWDWH DQG ORFDO JRYHUQPHQWV WKDW UHFHLYH IHGHUDO IXQGV :KLFK RI WKH IROORZLQJ LV QRW QRUPDOO\ UHTXLUHG WR EH UHSRUWHG"

$ $Q RSLQLRQ RQ WKH IDLU SUHVHQWDWLRQ RI WKH ILQDQFLDO VWDWHPHQWV LQ DFFRUGDQFH ZLWK JHQHUDOO\ DFFHSWHG DFFRXQWLQJ SULQFLSOHV % $ UHSRUW RQ WKH JRYHUQPHQW V LQWHUQDO FRQWURO UHODWHG WR IHGHUDO IXQGV & 7KH JRYHUQPHQW V SHUIRUPDQFH LQ PHHWLQJ JRDOV VHW LQ HQDEOLQJ OHJLVODWLRQ ' $ UHSRUW RQ WKH JRYHUQPHQW V FRPSOLDQFH ZLWK DSSOLFDEOH ODZV DQG UHJXODWLRQV  7KH *RYHUQPHQW $FFRXQWDELOLW\ 2IILFH *$2 GHVFULEHV H[SDQGHGVFRSH JRYHUQPHQWDO DXGLWLQJ WR LQFOXGH DOO RI WKH IROORZLQJ H[FHSW

$ )LQDQFLDO VWDWHPHQW DXGLWV % $WWHVWDWLRQ HQJDJHPHQWV & &RPSOLDQFH DXGLWV ' 3HUIRUPDQFH DXGLWV

 ,Q JRYHUQPHQW DQG LQWHUQDO SHUIRUPDQFH DXGLWLQJ ZKLFK RI WKH IROORZLQJ LV WKH OHDVW LPSRUWDQW FRQVLGHUDWLRQ ZKHQ SHUIRUPLQJ WKH ILHOGZRUN"

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

$ 0HDVXUH WKH DFWXDO RXWSXW UHVXOWV RI DJHQF\ DFWLYLWLHV % &RPSDUH WKH DJHQF\ V DFWXDO RXWSXW UHVXOWV WR TXDQWLWDWLYH JRDO VWDQGDUGV & 3HUIRUP D FRPSUHKHQVLYH UHYLHZ RI PDQDJHPHQW FRQWUROV ' 'HWHUPLQH TXDQWLWDWLYH VWDQGDUGV WKDW GHVFULEH JRDOV WKH DJHQF\ ZDV VXSSRVHG WR DFKLHYH

 &RPSOLDQFH DXGLWLQJ LQ DXGLWV SHUIRUPHG XQGHU WKH 6LQJOH $XGLW $FW RI  LQ DFFRUGDQFH ZLWK *$*$6 LV QHFHVVDU\ IRU DQ DXGLWRU V

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

$ , % ,, & , ' ,

,, ,9 ,,, ,9

 :KHQ DXGLWLQJ ZLWK IUDXG DZDUHQHVV DXGLWRUV VKRXOG HVSHFLDOO\ QRWLFH DQG UHYLHZ HPSOR\HH DFWLYLWLHV XQGHU ZKLFK RI WKHVH FRQGLWLRQV"

$ 7KH FRPSDQ\ DOZD\V HVWLPDWHV WKH LQYHQWRU\ EXW QHYHU WDNHV D FRPSOHWH SK\VLFDO FRXQW % 7KH SHWW\ FDVK ER[ LV DOZD\V ORFNHG LQ WKH GHVN RI WKH FXVWRGLDQ & 0DQDJHPHQW KDV SXEOLVKHG D FRPSDQ\ FRGH RI HWKLFV DQG VHQGV IUHTXHQW FRPPXQLFDWLRQ QHZVOHWWHUV DERXW LW ' 7KH ERDUG RI GLUHFWRUV UHYLHZV DQG DSSURYHV DOO LQYHVWPHQW WUDQVDFWLRQV  7KH EHVW ZD\ WR HQDFW D EURDG IUDXGSUHYHQWLRQ SURJUDP LV WR

$ ,QVWDOO DLUWLJKW FRQWURO V\VWHPV RI FKHFNV DQG VXSHUYLVLRQ % 1DPH DQ HWKLFV RIILFHU ZKR LV UHVSRQVLEOH IRU UHFHLYLQJ DQG DFWLQJ XSRQ IUDXG WLSV & 3ODFH GHGLFDWHG KRWOLQH WHOHSKRQHV RQ ZDOOV DURXQG WKH ZRUNSODFH ZLWK GLUHFW FRPPXQLFDWLRQ WR WKH FRPSDQ\ HWKLFV RIILFHU ' (VWDEOLVK D FRUSRUDWH FXOWXUH FRQGXFLYH WR HWKLFDO EHKDYLRU LQ WKH ZRUNSODFH

 $ UHDVRQ WR EHOLHYH WKDW D IUDXG KDV RFFXUUHG LV FDOOHG

$ 'HOLEHUDWLRQ % )RUHQVLFV & 3UHGLFDWLRQ ' 5HVWLWXWLRQ  ,Q D IUDXG DXGLW RULJLQDO GRFXPHQWV PXVW EH SURWHFWHG IURP GDPDJH DQG WDPSHULQJ WR

$ (VWDEOLVK PRWLYH % 'HYHORS GRFXPHQWDWLRQ IRU HPSOR\HH GLVPLVVDO & 3URWHFW WKH FKDLQ RI FXVWRG\ ' (QVXUH WKDW VXVSHFWV DUH XQDZDUH RI DQ LQYHVWLJDWLRQ LQ SURJUHVV  $Q HQYLURQPHQWDO DXGLW PLJKW LQFOXGH DOO RI IROORZLQJ H[FHSW

$ 'HWHUPLQLQJ WKDW SURSHU WUDFNLQJ RI ZDVWH PDWHULDO LV EHLQJ PDLQWDLQHG E\ WKH RUJDQL]DWLRQ % 5HYLHZLQJ WKH OLDELOLW\ DFFRXQW HVWDEOLVKHG IRU SHQGLQJ HQYLURQPHQWDO FODLPV DJDLQVW WKH FRPSDQ\ & 5HYLHZLQJ WKH HQYLURQPHQWDO KLVWRU\ RI DQRWKHU FRPSDQ\ WKDW WKH LQWHUQDO DXGLWRU V RUJDQL]DWLRQ LV LQWHUHVWHG LQ SXUFKDVLQJ ' $OO RI WKH DERYH DUH DSSURSULDWH LVVXHV IRU DQ HQYLURQPHQWDO DXGLW

 $XGLWRUV RI JRYHUQPHQWDO XQLWV ZRXOG QRW EH SUHVXPHG WR EH LQGHSHQGHQW LI WKH\ DUH

$ )UHH IURP VRXUFHV RI SHUVRQDO LPSDLUPHQW % ,QGHSHQGHQW XQGHU $,&3$ &RGH RI 3URIHVVLRQDO &RQGXFW UXOHV & $XGLWLQJ WKH EUDQFK RI JRYHUQPHQW WR ZKLFK WKH\ DUH DVVLJQHG ' (OHFWHG RU DSSRLQWHG DQG UHSRUWLQJ WR D OHJLVODWLYH ERG\ RI JRYHUQPHQW  7KH VHUYLFHV SURYLGHG E\ LQWHUQDO DXGLWRUV GR QRW LQFOXGH

$ $XGLWV RI ILQDQFLDO VWDWHPHQWV IRU VHFXULW\ UHJLVWUDWLRQ VWDWHPHQWV % 5HYLHZ RI FRQWURO V\VWHPV WKDW HQVXUH FRPSOLDQFH ZLWK FRPSDQ\ SROLFLHV ODZV DQG UHJXODWLRQV & 5HYLHZ RI HIIHFWLYHQHVV LQ DFKLHYLQJ SURJUDP UHVXOWV LQ FRPSDULVRQ WR SUH HVWDEOLVKHG REMHFWLYHV DQG JRDOV ' $SSUDLVDOV RI WKH HFRQRP\ DQG HIILFLHQF\ RI RSHUDWLRQV  2SHUDWLRQDO DXGLWV GR QRW LQFOXGH GHWHUPLQLQJ

$ :KHWKHU WKH HQWLW\ LV DFTXLULQJ SUDFWLFLQJ DQG XVLQJ UHVRXUFHV HFRQRPLFDOO\ DQG HIILFLHQWO\ % 5HYLHZ RI FRQWURO V\VWHPV WR HQVXUH FRPSOLDQFH ZLWK FRPSDQ\ SROLFLHV & 7KH FDXVHV RI LQHIILFLHQFLHV RU XQHFRQRPLFDO SUDFWLFHV ' :KHWKHU WKH GHSDUWPHQW V JRDOV DUH DOLJQHG ZLWK WKH RUJDQL]DWLRQ V JRDOV

 3URJUDP DXGLWV GR QRW LQFOXGH GHWHUPLQLQJ

$ 7KH H[WHQW WR ZKLFK WKH GHVLUHG UHVXOWV RU EHQHILWV HVWDEOLVKHG E\ WKH OHJLVODWXUH DUH EHLQJ DFKLHYHG % 7KH HIIHFWLYHQHVV RI RUJDQL]DWLRQV SURJUDPV DFWLYLWLHV RU IXQFWLRQV & :KHWKHU WKH DJHQF\ KDV FRPSOLHG ZLWK ODZV DQG UHJXODWLRQV DSSOLFDEOH WR WKH SURJUDP ' :KHWKHU WKH ILQDQFLDO VWDWHPHQWV RI DQ DXGLWHG HQWLW\ IDLUO\ SUHVHQW WKH ILQDQFLDO SRVLWLRQ LQ DFFRUGDQFH ZLWK *$$3  7KH ,,$ 3HUIRUPDQFH 6WDQGDUGV GR QRW LQFOXGH WKH VWDQGDUG IRU

$ 0DQDJLQJ WKH LQWHUQDO DXGLW DFWLYLW\ % 1DWXUH RI ZRUN & &RPSOLDQFH ZLWK SROLFLHV SODQV SURFHGXUHV ODZV DQG UHJXODWLRQV ' (QJDJHPHQW SODQQLQJ

 7KH *$2 *RYHUQPHQW $XGLWLQJ 6WDQGDUGV UHTXLUHPHQWV IRU ZULWWHQ UHSRUWV LQ ILQDQFLDO VWDWHPHQW DXGLWV GR QRW LQFOXGH

$ $XGLW UHSRUW RQ ILQDQFLDO VWDWHPHQWV % $ UHSRUW RI DQ\ VLJQLILFDQW DFFRPSOLVKPHQWV DQG PDQDJHPHQW LPSURYHPHQWV & $ UHSRUW RQ WKH DXGLWHH V LQWHUQDO FRQWURO VWUXFWXUH DQG WKH FRQWURO ULVN DVVHVVPHQW ' $ UHSRUW RQ WKH DXGLWHH V FRPSOLDQFH ZLWK DSSOLFDEOH ODZV DQG UHJXODWLRQV  ,Q D VLQJOH DXGLW RI IHGHUDO ILQDQFLDO DVVLVWDQFH SURJUDPV ZKLFK RI WKH IROORZLQJ GRHV WKH DXGLWRU QRW QHHG WR GHWHUPLQH DQG UHSRUW IRU HDFK RUJDQL]DWLRQ"

$ $Q H[SDQGHG VFRSH DXGLW RI HFRQRP\ HIILFLHQF\ DQG SURJUDP UHVXOWV % 7KDW WKH ILQDQFLDO VWDWHPHQWV DUH SUHVHQWHG IDLUO\ LQ DFFRUGDQFH ZLWK *$$3 & 7KDW DQ DGHTXDWH LQWHUQDO FRQWURO V\VWHP LV LQ SODFH ' 7KDW WKH ODZV DQG UHJXODWLRQV KDYH EHHQ FRPSOLHG ZLWK  :KLFK RI WKH IROORZLQJ DXGLWRUV LV UHVSRQVLEOH IRU GHVLJQLQJ DQG SODQQLQJ DQ DXGLW WR GHWHFW PDWHULDO LOOHJDO DFWV DQG IUDXGV"

$ ([WHUQDO DXGLWRUV % ,QWHUQDO DXGLWRUV & *RYHUQPHQWDO DXGLWRUV ' $OO RI WKH DERYH

 *HQHUDOO\ IUDXG H[DPLQHUV DUH FDOOHG ZKHQ D IUDXG LV DOUHDG\ NQRZQ RU VXVSHFWHG 7KH WHUP WKDW PHDQV D UHDVRQ WR EHOLHYH D IUDXG KDV RFFXUUHG LV

$ 3UHGLFWLRQ % 6XVSLFLRQ & 3UHGLFDWLRQ ' $GPRQLWLRQ  )UDXG H[DPLQHUV PXVW EH FRQFHUQHG ZLWK WKH LQWHJULW\ RI WKH HYLGHQFH WKDW WKH\ ILQG 3UHVHUYLQJ WKH HYLGHQFH LV FDOOHG

$ ([SHUW LGHQWLILFDWLRQ % &KDLQ RI FXVWRG\ & (YLGHQFH FRQVHUYDWLRQ ' $GPLVVLELOLW\ RI WHVWLPRQ\

)LOO LQ WKH %ODQN 4XHVWLRQV

 BBBBBBBBBBBBBBBBBBBB DXGLWLQJ UHIHUV WR WKH VWXG\ RI EXVLQHVV RSHUDWLRQV IRU WKH SXUSRVH RI PDNLQJ UHFRPPHQGDWLRQV DERXW BBBBBBBBBBBBBBBBBBBB DQG BBBBBBBBBBBBBBBBBBBB XVH RI UHVRXUFHV BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB  &RPSOLDQFH DXGLWLQJ UHIHUV WR WKH SURFHVV RI HQVXULQJ WKDW D FRPSDQ\ LV RSHUDWLQJ ZLWKLQ BBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBB DQG BBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB  $OWKRXJK LQWHUQDO DXGLWRUV DUH DVVRFLDWHG ZLWK WKHLU HPSOR\HUV LQ WKH H\HV RI WKH SXEOLF WKH\ VHHN BBBBBBBBBBBBBBBBBBBB DQG BBBBBBBBBBBBBBBBBBBB LQGHSHQGHQFH BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB  ,QWHUQDO DXGLW ILQGLQJV VKRXOG DOZD\V LQFOXGH BBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBB DQG BBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB  *$2 SHUIRUPV WKUHH W\SHV RI JRYHUQPHQW DXGLWV BBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBB DQG BBBBBBBBBBBBBBBBBBBB DXGLWV BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB

 7KH ,,$ DXGLWLQJ VWDQGDUGV DUH FODVVLILHG LQWR WKUHH PDMRU FDWHJRULHV BBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBB DQG BBBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB  7KH BBBBBBBBBBBBBBBBBBB LV WKH IHGHUDO ODZ WKDW HVWDEOLVKHG XQLIRUP UHTXLUHPHQWV IRU DXGLWV RI IHGHUDO ILQDQFLDO DVVLVWDQFH SURYLGHG WR BBBBBBBBB DQG BBBBBBBBB JRYHUQPHQWV BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB *RYHUQPHQW SHUIRUPDQFH DXGLWV GHWHUPLQH LI BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB DQG BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 7KH 6LQJOH $XGLW $FW HVWDEOLVKHG DQ DQQXDO DXGLW IRU DOO BBBBBBBBBBBBBBBBBBBB DQG BBBBBBBBBBBBBBBBBBBB XQLWV WKDW VSHQG BBBBBBBBBBBBBBBBBBBBB RU PRUH RI BBBBBBBBBBBBBBBBBBBB IXQGV BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 7KH 6LQJOH $XGLW $FW UHTXLUHV WKH DXGLWRU WR UHSRUW RQ BBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBB DQG BBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB

&3$V LQ SXEOLF SUDFWLFH PRVW RIWHQ DUH LQYROYHG LQ JRYHUQPHQWDO DXGLWV DV D UHVXOW RI UHVSRQGLQJ WR DQ DJHQF\ V BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB ,QWHUQDO DXGLW UHSRUWV DUH XVXDOO\ FRQVLGHUHG BBBBBBBBBBBBBBBBBBBB XQWLO D BBBBBBBBBBBBBBBBBBBBBBBBB LV SHUIRUPHG BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB )HZ IUDXG DXGLWRUV EHOLHYH LQ WKH FRQFHSW RI DQ LPPDWHULDO IUDXG EHFDXVH BBBBBBBBBBBBBBBBBBBBBBBB DQG BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 2QFH D IUDXG LV GLVFRYHUHG WKH IRFXV RI WKH DXGLW FKDQJHV WR DQ LQYHVWLJDWLRQ ZLWK WKH SULPDU\ REMHFWLYH RI BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB )UDXG H[DPLQDWLRQ UHTXLUHV WKH LQGLYLGXDO WR KDYH H[SHUWLVH LQ BBBBBBBBBBBBBBBBBBBB DQG BBBBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB

$ IUDXG H[DPLQDWLRQ KDV IRXU PDLQ REMHFWLYHV  GHWHUPLQLQJ ZKHWKHU D IUDXG H[LVWV  GHWHUPLQLQJ BBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB DQG BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB $ SHUVRQ WHVWLI\LQJ DERXW ILQGLQJV GXULQJ OLWLJDWLRQ VXSSRUW DSSOLFDWLRQ RI DFFRXQWLQJ SULQFLSOHV RU DSSOLFDWLRQ RI DXGLWLQJ VWDQGDUGV LV FDOOHG D Q BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 3URVHFXWLRQ RI IUDXG SHUSHWUDWRUV LV DGYLVDEOH EHFDXVH LI QRW SURVHFXWHG WKH\ BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB DQG IDLOXUH WR GR VR BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB

6KRUW $QVZHU 4XHVWLRQV

)ROORZLQJ DUH ILYH FDVHV   LOOXVWUDWLQJ GLIIHUHQW W\SHV RI DXGLW HQJDJHPHQWV ,Q  WKH VSDFH SURYLGHG E\ HDFK FDVH LQGLFDWH WKH W\SH RI DXGLW WKDW ZRXOG EH FRQGXFWHG +0 WKH VSHFLILF W\SH RI DXGLWRU ZKR PLJKW SHUIRUP WKH HQJDJHPHQW 0 36 DQG WKH DXGLWLQJ VWDQGDUGV WKDW ZRXOG SUREDEO\ DSSO\ IRU WKH HQJDJHPHQW 6 VWDQGDUGV := 

&DVH  $ &3$ ILUP V UHYLHZ RI WKH HIIHFWLYHQHVV RI D IHGHUDOO\ VXSSRUWHG XQHPSOR\PHQW WUDLQLQJ SURJUDP 6HFXULWLHV $FW RI  RSHUDWLQJ HIIHFWLYHO\ &DVH  $Q DXGLW RI ILQDQFLDO VWDWHPHQWV DV SDUW RI D UHJLVWUDWLRQ XQGHU WKH &DVH  $ UHYLHZ RI WKH FRPSDQ\ V SODQW VHFXULW\ WR GHWHUPLQH ZKHWKHU LW LV &DVH  $ UHYLHZ RI WKH +XPDQ 5HVRXUFH 'HSDUWPHQW V KLULQJ SUDFWLFHV FRPSHWLWLYH ELG SURJUDP

&DVH  $ VWXG\ RI KRZ WKH 'HSDUWPHQW RI 'HIHQVH FRXOG UHGXFH FRVWV IURP D

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

)ROORZLQJ DUH ILYH FDVHV   WKDW LOOXVWUDWH GLIIHUHQW W\SHV RI DXGLW HQJDJHPHQWV ,Q  WKH VSDFH SURYLGHG LQGLFDWH WKH W\SH RI DXGLW WKDW ZRXOG EH FRQGXFWHG WKH VSHFLILF DXGLWRU ZKR PLJKW XQGHUWDNH WKH HQJDJHPHQW DQG WKH DXGLWLQJ VWDQGDUGV WKDW ZRXOG SUREDEO\ DSSO\ IRU WKH HQJ HQJDJHPHQW

(VVD\ 4XHVWLRQV

([SODLQ EULHIO\ WKH SXUSRVH DQG UHTXLUHPHQWV XQGHU WKH 6LQJOH $XGLW $FW

:KDW DUH WKH GLIIHUHQW W\SHV RI JRYHUQPHQW DXGLWV"

:KDW DUH WKH GLIIHUHQW W\SHV RI LQWHUQDO DXGLWV"

+RZ GR JRYHUQPHQW DXGLWRUV DFKLHYH REMHFWLYLW\"

7KH VWDQGDUGV RI WKH ,QVWLWXWH RI ,QWHUQDO $XGLWRUV ,,$ DUH JURXSHG XQGHU WZR EURDG FDWHJRULHV ,GHQWLI\ DQG EULHIO\ H[SODLQ HDFK RI WKH FDWHJRULHV (DFK FDWHJRU\ KDV VSHFLDO VWDQGDUGV ZULWWHQ IRU VSHFLILF W\SHV RI DXGLWV ,GHQWLI\ WKH WZR W\SHV RI VSHFLDO VWDQGDUGV IRU HDFK FDWHJRU\

0DWFKLQJ 4XHVWLRQV

7KH VWDWH 'HSDUWPHQW RI (GXFDWLRQ QHHGV WR KDYH DXGLWV IRU YDULRXV UHDVRQV )RU HDFK UHDVRQ LQGLFDWH WKH UHODWHG W\SH RI HQJDJHPHQW RU SUDFWLFH WKDW ZRXOG PRVW OLNHO\ EH SHUIRUPHG

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



 !  9"D C" 9!  ! (" !!(   B&!2" 9 !!! 9! H " !  98! B" !! 9! @ A ! " !  A "@ !2! B i BC %C!h "  ! !2! B % ! !( ! 6 57 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      





7UXH  )DOVH 4XHVWLRQV

5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 7KH *RYHUQPHQW $FFRXQWDELOLW\ 2IILFH *$2 LV KHDGHG E\ WKH 86 &RQJUHVV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH )$/6( D EDQN KRVSLWDO RU LQGXVWULDO FRPSDQ\ ,QWHUQDO DXGLWRUV DUH DOZD\V HPSOR\HG E\ WKH RUJDQL]DWLRQ WKDW WKH\ DXGLW VXFK DV )$/6(

0RGXOH ' ,QWHUQDO *RYHUQPHQWDO DQG )UDXG $XGLWV $QVZHU .H\

   

 !  9"D C" 9!  ! (" !!(   B&!2" 9 !!! 9! H " !  98! B" !! 9! @ A ! " !  A "@ !2! B i BC %C!h "  ! !2! B % ! !( ! 6 57 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      

 !&!4 "T  9"D C" 9!  !&!4 " % ( " ! !(   B&!2" 9 !!! 9! H "  !&!4 " %  98! B"  !! 9! @A ! " !&!4 " % A "@ !2! B i1 T BC %C!h "  !&!4 " % !2! B %  !&!4 " % !( ! )57 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!     





5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 758( UHVSRQVLELOLWLHV DQG LPSURYH SURILWDELOLW\ 7KH JRDO RI RSHUDWLRQDO DXGLWLQJ LV WR KHOS PDQDJHUV GLVFKDUJH WKHLU PDQDJHPHQW 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH ,QWHUQDO DXGLWRUV SHUIRUP RSHUDWLRQDO DXGLWV EXW GR QRW SHUIRUP ILQDQFLDO DXGLWV )$/6(

   

 !  9"D C" 9!  ! (" !!(   B&!2" 9 !!! 9! H " !  98! B" !! 9! @ A ! " !  A "@ !2! B i BC %C!h "  ! !2! B % ! !( ! 6 57 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      

 !&"(!  9"D C   ! & %" 9  B !((! B &""!  !&!!&   (" "( !@  98Q G 57 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!  





)$/6( WKH WUHDVXUHU HQKDQFHV DQ LQWHUQDO DXGLWRU V LQGHSHQGHQFH +DYLQJ WKH DXWKRULW\ DQG UHVSRQVLELOLW\ WR UHSRUW WR WKH YLFH SUHVLGHQW IRU ILQDQFH RU 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 758( DXGLW EHLQJ IUHH IURP GLUHFWLRQ RU FRQVWUDLQW E\ WKH PDQDJHU RI WKH EXVLQHVV XQLW XQGHU ,QWHUQDO DXGLWRUV VKRXOG EH LQGHSHQGHQW ZKHQ REWDLQLQJ HYLGHQFH LQ WKH VHQVH RI

5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

%$# "!      

 !  9"D C" 9!  ! (" !!(   B&!2" 9 !!! 9! H " !  98! B" !! 9! @ A ! " !  A "@ !2! B i BC %C!h "  !  !2! B % ! !( ! 6 57 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      

 !  9"D C" 9!  ! (" !!(   B&!2" 9 !!! 9! H " !  98! B" !! 9! @ A ! " !  A "@ !2! B i BC %C!h "  ! !2! B % ! !( ! 6 57 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!  





5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 758( HFRQRPLFDO DQG HIIHFWLYH XVH RI SXEOLF IXQGV DQG UHVRXUFHV 7KH *$2 HPSKDVL]HV WKH DFFRXQWDELOLW\ RI SXEOLF RIILFLDOV IRU WKH HIILFLHQW 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 758( RUJDQL]DWLRQ QRW MXVW WR PDQDJHPHQW 7KH VWDWHG REMHFWLYH RI LQWHUQDO DXGLWLQJ LV SKUDVHG LQ WHUPV RI VHUYLFH WR WKH

   

 !&"(!  9"D C   ! & %" 9  B !(( ! B &""!  !&!!&   (" "( !@  98Q G 57 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      

 !&!4 "T  9"D C" 9!  !&!4 " % ( " ! !(   B&!2" 9 !!! 9! H "  !&!4 " %  98! B"  !! 9! @A ! " !&!4 " % A "@ !2! B i1 T BC %C!h "  !&!4 " % !2! B %  !&!4 " % !( ! )57 !4 ! 321 %!0 & !# ) ((  !' &""





758( GHVLJQHG WR DGG YDOXH DQG LPSURYH DQ RUJDQL]DWLRQ V RSHUDWLRQV ,QWHUQDO DXGLWLQJ LV DQ LQGHSHQGHQW REMHFWLYH DVVXUDQFH DQG FRQVXOWLQJ DFWLYLW\ 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH )$/6( WKH ILQDQFLDO VWDWHPHQWV UHJXODWLRQV IRU WKRVH WUDQVDFWLRQV DQG HYHQWV WKDW PD\ KDYH D PDWHULDO HIIHFW RQ 3HUIRUPDQFH DXGLWV GHWHUPLQH ZKHWKHU DQ HQWLW\ KDV FRPSOLHG ZLWK ODZV DQG

5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

!' &"" %$# "!      

 !  9"D C" 9!  ! (" !!(   B&!2" 9 !!! 9! H " !  98! B" !! 9! @ A ! " !  A "@ !2! B i BC %C!h "  !  !2! B % ! !( ! 6 57 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      

 !  9"D C" 9!  ! (" !!(   B&!2" 9 !!! 9! H " !  98! B" !! 9! @ A ! " !  A "@ !2! B i BC %C!h "  ! !2! B % ! !( ! 6 57 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!  





5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 7KH *$2 VWDQGDUGV JR EH\RQG WKH $,&3$ V *$$6 LQ D QXPEHU RI UHVSHFWV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH DXGLWRUV DUH VLPLODU WR WKH UHTXLUHPHQW RI *$$6 IRU SUDFWLFLQJ &3$V 7KH DXGLWLQJ VWDQGDUGV RI WKH ,QVWLWXWH RI ,QWHUQDO $XGLWRUV UHTXLUHG RI LQWHUQDO )$/6( )$/6(

%$# "!      

 !&!4 "T  9"D C" 9!  !&!4 " % ( " ! !(   B&!2" 9 !!! 9! H " !&!4 " %  98! B"  !! 9! @A ! " !&!4 " % A "@ !2! B i1 T BC %C!h "  !&!4 " % !2! B %  !&!4 " % !( ! )57 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      

 !&!4 "T  9"D C" 9!  !&!4 " % ( " ! !(   B&!2" 9 !!! 9! H "  !&!4 " %  98! B"  !! 9! @A ! " !&!4 " % A "@ !2! B i1 T BC %C!h "  !&!4 " % !2! B %  !&!4 " % !( ! )57 !4 ! 321 %!0 & !# ) (( 





5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 758( VLQJOH DXGLW UHSRUW RQ ZKLFK DOO DJHQFLHV FDQ UHO\ 7KH 6LQJOH $XGLW $FW RI  UHSODFHG GXSOLFDWLYH JUDQWE\JUDQW DXGLWV ZLWK D 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 758( PXVW IROORZ ERWK *$$6 DQG WKH *$2 VWDQGDUGV ([WHUQDO DXGLWRUV DFFHSWLQJ HQJDJHPHQWV WR DXGLW IHGHUDO JUDQWV DQG SURJUDPV

!' &"" %" 9!E   %$# "!   %!0     "&&"

I 6 ("  !&!&  V6 ("   ! % !@D  9"D C! 9! ( !&!4 " % ("   " "!  V6 ("   ! % !@ !2! V57 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      

I 6 ("  !&!&  V6 ("   ! % !@D  9"D C! 9! ( !&!4 " % ("   " "!  V6 ("   ! % !@ !2! V57 !4 ! 321 %!0 & !# ) ((  !' &""





5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH )$/6( PRQHWDU\ H[SHQGLWXUHV (IILFLHQF\ HFRQRP\ DQG SURJUDP RXWSXWV PD\ EH PHDVXUHG RQO\ LQ WHUPV RI 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH )$/6( 8QGHU WKH 6LQJOH $XGLW $FW RI  RQO\ &3$V DQG *$2 DXGLWRUV FDQ FRQGXFW VLQJOH DXGLWV

%$# "!      

 !  9"D  !&!4 "T  9"D C" 9!  !&!4 " % ( " ! !(   B&!2" 9 !!! 9! H "  !&!4 " %  98! B"  !! 9! @A ! " !&!4 " % A "@ !2! B i1 T BC %C!h "  !&!4 " % !2! B %  !&!4 " % !( ! )57 !4 ! 321 %!0 C" 9!  ! (" !!(   B&!2" 9 !!! 9! H " !  98! B" !! 9! @ A ! " !  A "@ !2! B i BC %C!h "  ! !2! B % ! !( ! 6 57 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      

 !&"(!  9"D C   ! & %" 9  B !((! B &""!  !&!!&   (" "( !@  98Q G 57 !4 ! 321 %!0 & !# ) (( 





5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH $Q H[SHUW LQ GHWHFWLQJ DQG LQYHVWLJDWLQJ IUDXG LV D FHUWLILHG IUDXG LQYHVWLJDWRU 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH FRQWUROV EHFDXVH WKH\ GLUHFWO\ DIIHFW HFRQRP\ HIILFLHQF\ DQG SURJUDP UHVXOWV *RYHUQPHQWDO DQG LQWHUQDO DXGLWRUV DUH PRUH FRQFHUQHG ZLWK PDQDJHPHQW 758( )$/6(

C"   ( 2 !&"(! 9  !&! % %! "4 !2!  %  ( !(! X 57 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      

   9"D C"   ( 2 !&"(! 9  !&! % %! "4 !2!  %  ( !(! X 57 !4 ! 321 %!0 & !# ) ((  !' &"" %$# "!      

   9"D C"   ( 2 !&"(! 9  !&! % %! "4 !2!  %  ( !(! X 57 !4 ! 321 %!0 & !# ) ((  !' &""





)$/6( FRPSDQLHV WKDW DUH QR ORQJHU LQ EXVLQHVV )RUHQVLF DFFRXQWLQJ LV D WHUP XVHG WR GHVFULEH ZRUN WKDW LV SHUIRUPHG RQ 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 758( LQYHVWLJDWRUV DUH PRVWO\ FRQFHUQHG DERXW IUDXG ZHDNQHVVHV $XGLWRUV DUH FRQFHUQHG DERXW LQWHUQDO FRQWURO VWUHQJWKV DQG ZHDNQHVVHV IUDXG

5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

  !  9"D  %1 ! " C" 9!  ! (" !!(   B&!2" 9 !!! 9! H " !  98! B" !! 9! @ A ! " !  A "@ !2! B i BC %C!h "  ! !2! B % ! !( ! 6 57 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  

   9"D



0XOWLSOH &KRLFH 4XHVWLRQV

' $GGLWLRQDO YDOXH DQG LPSURYHG RSHUDWLRQV & 'HWHUPLQDWLRQ RI HIILFLHQW DQG HIIHFWLYH SHUIRUPDQFH % 3URYLVLRQ RI DVVXUDQFH DQG FRQVXOWLQJ DFWLYLW\ $ ,QGHSHQGHQFH DQG REMHFWLYLW\ 7KH GHILQLWLRQ RI LQWHUQDO DXGLW LQFOXGHV DOO RI WKH IROORZLQJ H[FHSW

  !  9"D  %1 ! " C" 9!  ! (" !!(   B&!2" 9 !!! 9! H " !   98! B" !! 9! @ A ! " !  A "@ !2! B i BC %C!h "  ! !2! B % ! !( ! 6 57 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %$@D    



' $OO RI WKH DERYH & ,PSURYHG FRQWURO RYHU DXGLW FRVWV DQG LPSURYHG DOLJQPHQW ZLWK FRPSDQ\ % 0RUH H[SHUWLVH DQG LPSURYHG FRQWURO RYHU DXGLW FRVWV $ 0RUH H[SHUWLVH RQO\ 7KH UHDVRQV IRU RXWVRXUFLQJ DQ LQWHUQDO DXGLW LQFOXGH JRDOV



7KH SULPDU\ GLIIHUHQFH EHWZHHQ RSHUDWLRQDO DXGLWLQJ DQG ILQDQFLDO DXGLWLQJ LV WKDW LQ RSHUDWLRQDO DXGLWLQJ WKH DXGLWRU

$ ,V FRQFHUQHG RQO\ ZLWK WKH DXGLWHG DFWLYLW\ V DGKHUHQFH WR FRPSDQ\ SROLF\ DQG SURFHGXUHV % ,V VHHNLQJ WR KHOS PDQDJHPHQW XVH UHVRXUFHV LQ WKH PRVW HIIHFWLYH PDQQHU SRVVLEOH & 6WDUWV WKH SURFHVV ZLWK WKH ILQDQFLDO VWDWHPHQWV RI DQ DFWLYLW\ EHLQJ DXGLWHG DQG ZRUNV EDFNZDUG WR WKH EDVLF SURFHVVHV LQYROYHG LQ SURGXFLQJ WKHP ' &DQ XVH DQDO\WLFDO VNLOOV DQG WRROV WKDW DUH QRW QHFHVVDU\ LQ ILQDQFLDO DXGLWLQJ
 !  9"D  %1 ! " C" 9!  ! ( " !!(   B&!2" 9 !!! 9! H " !  98! B" !! 9! @ A ! " !  A "@ !2! B i BC %C!h "  ! !2! B % ! !( ! 6 57 !4 ! 321 %!0 & !# ) ((  !' &"" @!!E   %!0  



,QGHSHQGHQFH SHUPLWV LQWHUQDO DXGLWRUV WR UHQGHU LPSDUWLDO DQG XQELDVHG MXGJPHQWV 7KH EHVW ZD\ IRU LQWHUQDO DXGLW GHSDUWPHQWV WR DFKLHYH LQGHSHQGHQFH LV WKURXJK

$ ,QGLYLGXDO NQRZOHGJH DQG VNLOOV % 2UJDQL]DWLRQDO NQRZOHGJH DQG VNLOOV & 6XSHUYLVLRQ ZLWKLQ WKH RUJDQL]DWLRQ ' 2UJDQL]DWLRQDO VWDWXV DQG LQGLYLGXDO REMHFWLYLW\
 !  9"D  %1 ! " C" 9!  ! (" !!(   B&!2" 9 !!! 9! H " !  98! B" !! 9! @ A ! " !  A "@ !2! B i BC %C!h "  ! !2! B % ! !( ! 6 57 !4 ! 321 %!0 Q 6 (( !' &"" @!!E   %!0  



7KH SURSHU RUJDQL]DWLRQDO UROH RI LQWHUQDO DXGLWLQJ LV WR

$ $VVLVW H[WHUQDO DXGLWRUV LQ UHGXFLQJ H[WHUQDO DXGLW IHHV % 3HUIRUP VWXGLHV WR DVVLVW LQ DWWDLQLQJ PRUH HIILFLHQW RSHUDWLRQV & 6HUYH DV DQ LQYHVWLJDWLYH DUP RI VHQLRU PDQDJHPHQW DQG WKH ERDUG RI GLUHFWRUV ' 6HUYH DV DQ LQGHSHQGHQW REMHFWLYH DVVXUDQFH DQG FRQVXOWLQJ DFWLYLW\ WKDW DGGV YDOXH WR WKH RUJDQL]DWLRQ


  !  9"D  %1 ! " C" 9!  ! (" !!(   B&!2" 9 !!! 9! H " !  98! B" !! 9! @ A ! " !  A "@ !2! B i BC %C!h "  ! !2! B % ! !( ! 6 57 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %$@D    

 !  9"D  %1 ! " C" 9!  ! (" !!(   B&!2" 9 !!! 9! H " !  98! B" !! 9! @ A ! " !  A "@ !2! B i BC %C!h "  ! !2! B % ! !( ! 6 57 !4 ! 321 %!0 & !# ) ((  !' &"" @!!E   %!0 



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

WR UHVSRQG WR WKH DXGLW ILQGLQJV



+DYLQJ DQ DXGLW FKDUWHU LV LPSRUWDQW IRU LQWHUQDO DXGLW GHSDUWPHQWV :KLFK RI WKH IROORZLQJ LWHPV LV JHQHUDOO\ QRW D UHDVRQ WR KDYH DQ DXGLW FKDUWHU"

$ ,W SURYLGHV D FRPPLWPHQW IURP PDQDJHPHQW WR VXSSRUW WKH LQWHUQDO DXGLW GHSDUWPHQW V DFWLYLWLHV % ,W GHILQHV WKH VNLOOV DQG FRPSHWHQFLHV UHTXLUHG E\ WKH LQWHUQDO DXGLW GHSDUWPHQW & ,W GHILQHV WKH GHSDUWPHQW V DXWKRULW\ DQG UHVSRQVLELOLW\ ' ,W GHILQHV WKH UHSRUWLQJ UHTXLUHPHQWV IRU LQWHUQDO DXGLW GHSDUWPHQWV
 !  9"D  %1 ! " C" 9!  ! (" !!(   B&!2" 9 !!! 9! H " !  98! B" !! 9! @ A ! " !  A "@ !2! B i BC %C!h "  ! !2! B % ! !( ! 6 57 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  



<RXU RUJDQL]DWLRQ KDV VHOHFWHG \RX WR GHYHORS DQ LQWHUQDO DXGLW DFWLYLW\ <RXU DSSURDFK ZLOO PRVW OLNHO\ EH WR KLUH

$ ,QWHUQDO DXGLWRUV HDFK RI ZKRP SRVVHVV WKH VNLOOV UHTXLUHG WR KDQGOH DOO HQJDJHPHQWV % ,QH[SHULHQFHG SHUVRQQHO DQG WUDLQ WKHP WKH ZD\ WKH RUJDQL]DWLRQ ZDQWV WKHP WUDLQHG & 'HJUHHG DFFRXQWDQWV EHFDXVH PRVW LQWHUQDO DXGLW ZRUN LV DFFRXQWLQJ UHODWHG ' ,QWHUQDO DXGLWRUV ZKR FROOHFWLYHO\ KDYH WKH NQRZOHGJH DQG VNLOOV QHHGHG WR SHUIRUP WKH UHVSRQVLELOLWLHV RI WKH LQWHUQDO DXGLW DFWLYLWLHV
 !  9"D  %1 ! " C" 9!  ! (" !!(   B&!2" 9 !!! 9! H " !   98! B" !! 9! @ A ! " !  A "@ !2! B i BC %C!h "  ! !2! B % ! !( ! 6 57 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %$@D    



7KH SXUSRVH RI WKH LQWHUQDO DXGLW V HYDOXDWLRQ RI WKH HIIHFWLYHQHVV RI H[LVWLQJ ULVN PDQDJHPHQW SURFHVVHV LV WR GHWHUPLQH WKDW

$ 0DQDJHPHQW KDV SODQQHG DQG GHVLJQHG WKH SURFHVV WR SURYLGH UHDVRQDEOH DVVXUDQFH RI DFKLHYLQJ REMHFWLYHV DQG JRDOV % 0DQDJHPHQW GLUHFWV SURFHVVHV WR SURYLGH UHDVRQDEOH DVVXUDQFH RI DFKLHYLQJ REMHFWLYHV DQG JRDOV & 7KH RUJDQL]DWLRQ V REMHFWLYHV DQG JRDOV ZLOO EH DFKLHYHG HIILFLHQWO\ DQG HFRQRPLFDOO\ ' 7KH RUJDQL]DWLRQ V REMHFWLYHV DQG JRDOV ZLOO EH DFKLHYHG LQ DQ DFFXUDWH DQG WLPHO\ PDQQHU DQG ZLWK PLQLPDO XVH RI UHVRXUFHV
 !  9"D  %1 ! " C" 9!  ! (" !!(   B&!2" 9 !!! 9! H " !  98! B" !! 9! @ A ! " !  A "@ !2! B i BC %C!h "  ! !2! B % ! !( ! 6 57 !4 ! 321 %!0 W G (( 99 &"" @!!E   %!0  



6HQLRU PDQDJHPHQW KDV RUGHUHG D FRPSOLDQFH DXGLW RI WKH RUJDQL]DWLRQ V HPSOR\HH EHQHILWV SDFNDJH :KLFK RI WKH IROORZLQJ GR ERWK WKH FKLHI DXGLW H[HFXWLYH DQG VHQLRU PDQDJHPHQW FRQVLGHU D SULPDU\ HQJDJHPHQW REMHFWLYH"

$ 7KH OHYHO RI WKH RUJDQL]DWLRQDO FRQWULEXWLRQV LV DGHTXDWH WR PHHW WKH SURJUDP V GHPDQGV % ,QGLYLGXDO SURJUDPV DUH RSHUDWLQJ LQ DFFRUGDQFH ZLWK FRQWUDFWXDO UHTXLUHPHQWV DQG JRYHUQPHQW UHJXODWLRQV & 3DUWLFLSDWLRQ OHYHOV VXSSRUW FRQWLQXDWLRQ RI LQGLYLGXDO SURJUDPV ' %HQHILWV SD\PHQWV ZKHQ DSSURSULDWH DUH DFFXUDWH DQG WLPHO\
 !  9"D  %1 ! " C" 9!  ! ( " !!(   B&!2" 9 !!! 9! H " !  98! B" !! 9! @ A ! " !  A "@ !2! B i BC %C!h "  ! !2! B % ! !( ! 6 57 !4 ! 321 %!0 & !# ) ((  !' &""  $E    %$@D    



7KH 6WDQGDUGV IRU WKH 3URIHVVLRQDO 3UDFWLFH RI ,QWHUQDO $XGLW RI WKH ,QVWLWXWH RI ,QWHUQDO $XGLWRUV ,,$ LV FODVVLILHG LQ WKUHH PDMRU FDWHJRULHV :KLFK RI WKH IROORZLQJ LV QRW RQH RI WKHVH FDWHJRULHV"

$ $WWULEXWH VWDQGDUGV % 3HUIRUPDQFH VWDQGDUGV & *RYHUQDQFH VWDQGDUGV ' ,PSOHPHQWDWLRQ VWDQGDUGV
 !  9"D  %1 ! " C" 9!  ! (" !!(   B&!2" 9 !!! 9! H " !  98! B" !! 9! @ A ! " !  A "@ !2! B i BC %C!h "  ! !2! B % ! !( ! 6 57 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  



:KLFK RI WKH IROORZLQJ LV D UHTXLUHPHQW RI WKH 6WDQGDUGV IRU WKH 3URIHVVLRQDO 3UDFWLFH RI ,QWHUQDO $XGLW LI WKH ,QVWLWXWH RI ,QWHUQDO $XGLWRUV ,,$ WKDW LV QRW D UHTXLUHPHQW RI DQ H[WHUQDO DXGLWRU SHUIRUPLQJ D ILQDQFLDO VWDWHPHQW DXGLW"

$ 'XH FDUH % ,QWHUQDO FRQWURO HYDOXDWLRQ & 5HSRUWLQJ WR WKH DXGLW FRPPLWWHH ' 3HUIRUPLQJ D IROORZXS RQ DXGLW ILQGLQJV


  !  9"D  %1 ! " C" 9!  ! (" !!(   B&!2" 9 !!! 9! H " !  98! B" !! 9! @ A ! " !  A "@ !2! B i BC %C!h "  ! !2! B % ! !( ! 6 57 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  

 !  9"D  %1 ! " C" 9!  ! (" !!(   B&!2" 9 !!! 9! H " !  98! B" !! 9! @ A ! " !  A "@ !2! B i BC %C!h "  ! !2! B % ! !( ! 6 57 !4 ! 321 %!0 Q 6 (( !' &"" @!!E   %!0 



' /RFDWLRQ FULWHULD FDXVH HIIHFW DQG UHFRPPHQGDWLRQ & &RQGLWLRQ VRXUFH FDXVH HIIHFW DQG UHFRPPHQGDWLRQ % &RQGLWLRQ FULWHULD FDXVH HIIHFW DQG UHTXLUHPHQW $ &RQGLWLRQ FULWHULD FDXVH HIIHFW DQG UHFRPPHQGDWLRQ NH\ HOHPHQWV DUH DQ DXGLWRU PXVW LQFOXGH VRPH NH\ HOHPHQWV DERXW WKDW ILQGLQJ LQ WKH UHSRUW 7KHVH WR WDNH DFWLRQ FRQFHUQLQJ WKH UHSRUW V ILQGLQJV :KHQ UHSRUWLQJ RQ DQ DXGLW ILQGLQJ :KHQ SUHSDULQJ DQ DXGLW UHSRUW DQ LQWHUQDO DXGLWRU PXVW FRQYLQFH PDQDJHPHQW



3URJUDP DXGLWV LQFOXGH GHWHUPLQLQJ

$ 7KH GHJUHH WR ZKLFK DQ HQWLW\ LV DFTXLULQJ SURWHFWLQJ DQG XVLQJ LWV UHVRXUFHV HIIHFWLYHO\ % 7KH HIIHFWLYHQHVV RI DQ RUJDQL]DWLRQ V SURJUDPV DFWLYLWLHV RU IXQFWLRQV & 7KH FDXVHV RI DQ RUJDQL]DWLRQ V LQHIILFLHQFLHV RU XQHFRQRPLFDO SUDFWLFHV ' 7KH HQWLW\ V FRPSOLDQFH ZLWK ODZV DQG UHJXODWLRQV FRQFHUQLQJ PDWWHUV RI HIILFLHQF\
 & %"  F !((Q F &""Q  9"D  %1 ! " C   ! & %" 9  B !((! B &""!  !&!!&   (" "( !@  98Q G 57 !4 ! 321 %!0 & !# ) ((  !' &"" @!!E   %!0  



7KH 6WDQGDUGV IRU WKH 3URIHVVLRQDO 3UDFWLFH RI ,QWHUQDO $XGLWLQJ RI WKH ,QVWLWXWH RI ,QWHUQDO $XGLWRUV ,,$ GRHV QRW LQFOXGH WKH EURDG FDWHJRU\ RI

$ 3URILFLHQF\ DQG GXH FDUH % 1DWXUH RI ZRUN & 3HUIRUPDQFH RI WKH HQJDJHPHQW ' 4XDOLW\ FRQWURO
!2&!&!E &"" @!!E   %!0  

 !&!4 "T  9"D  %1 ! " C" 9!  !&!4 " % ( " ! !(   B&!2" 9 !!! 9! H "  !&!4 " %  98! B"  !! 9! @A ! " !&!4 " % A "@ !2! B i1 T BC %C!h "  !&!4 " % !2! B %  !&!4 " % !( ! )57 !4 ! 321 %!0 W G (( !2&!&!E &"" @!!E   %!0  

 !  9"D  %1 ! " C" 9!  ! (" !!(   B&!2" 9 !!! 9! H " !  98! B" !! 9! @ A ! " !  A "@ !2! B i BC %C!h "  ! !2! B % ! !( ! 6 57 !4 ! 321 %!0 & !# ) (( 



' 5HYLHZ RI WKH UHVXOWV RI SURJUDPV & 5HYLHZ RI WKH PHDQV RI VDIHJXDUGLQJ DVVHWV % 5HYLHZ RI WKH HFRQRP\ DQG HIILFLHQF\ LQ WKH XVH RI UHVRXUFHV $ 5HYLHZ RI FRPSOLDQFH ZLWK SROLFLHV SODQV SURFHGXUHV ODZV DQG UHJXODWLRQV :KLFK RI WKH IROORZLQJ LQWHUQDO DXGLWV LV JHQHUDOO\ QRW D W\SH RI JRYHUQPHQW DXGLW"



7KH 86 *RYHUQPHQW $FFRXQWDELOLW\ 2IILFH *$2 VWDQGDUGV GR QRW VSHFLILFDOO\ UHTXLUH D ZULWWHQ UHSRUW LQ ILQDQFLDO VWDWHPHQW DXGLWV IRU

$ 5HFRPPHQGDWLRQV IRU DFWLRQV WR LPSURYH RSHUDWLRQV % $OO LQVWDQFHV RI LOOHJDO DFWV WKDW FRXOG UHVXOW LQ FULPLQDO SURVHFXWLRQ & &RPSOLDQFH ZLWK DSSOLFDEOH ODZV DQG UHJXODWLRQV ' ,QWHUQDO FRQWURO VWUXFWXUH DQG WKH FRQWURO ULVN DVVHVVPHQW
 !&!4 "T  9"D  %1 ! " C" 9!  !&!4 " % ( " ! !(   B&!2" 9 !!! 9! H "  !&!4 " %  98! B"  !! 9! @A ! " !&!4 " % A "@ !2! B i1 T BC %C!h "  !&!4 " % !2! B %  !&!4 " % !( ! )57 !4 ! 321 %!0 W G (( !2&!&!E &"" @!!E   %!0  



7KH IHGHUDO ODZ WKDW HVWDEOLVKHG XQLIRUP UHTXLUHPHQWV IRU DXGLWV RI IHGHUDO DVVLVWDQFH SURYLGHG WR VWDWH DQG ORFDO JRYHUQPHQWV LV FDOOHG

$ 7KH 6LQJOH $XGLW $FW RI  % 7KH 8QLIRUP 5HTXLUHPHQWV $FW RI  & 7KH 6DUEDQHV2[OH\ $FW RU  ' 7KH $XGLW 5HGXFWLRQ $FW RI 
@!!E   %!0  

  !  9"D  %1 ! " C" 9!  ! (" !!(   B&!2" 9 !!! 9! H " !  98! B" !! 9! @ A ! " !  A "@ !2! B i BC %C!h "  !  !2! B % ! !( ! 6 57 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  

  ! %  9"D  %1 ! " C! 9! ( !&!4 " % ("   " "!  V6 ("   ! % !@ !2! V57 !4 ! 321 %!0 Q 6 (( !2&!&!E &""



' 3ODQ RI RUJDQL]DWLRQ & $GKHUHQFH WR PDQDJHULDO SROLFLHV % $FFRXQWLQJ HUURUV $ 2SHUDWLRQDO HIILFLHQF\ 7KH GHILQLWLRQ RI DGPLQLVWUDWLYH FRQWURO GRHV QRW LQFOXGH UHIHUHQFH WR

C" 9!  ! (" !!(   B&!2" 9 !!! 9! H " !   98! B" !! 9! @ A ! " !  A "@ !2! B i BC %C!h "  ! !2! B % ! !( ! 6 57 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  

 & %"  F !((Q F &""Q  9"D  %1 ! " C   ! & %" 9  B !((! B &""!  !&!!&   (" "( !@  98Q G 57 !4 ! 321 %!0 W G (( 99 &""  $E    %$@D    





' 0HHW DQ H[SHULHQFH UHTXLUHPHQW & +DYH D IXOOWLPH SRVLWLRQ DV DQ LQWHUQDO DXGLWRU % 3DVV D WZRGD\ H[DPLQDWLRQ $ +ROG D FROOHJH GHJUHH :KLFK RI WKH IROORZLQJ LV QRW UHTXLUHG WR EHFRPH D FHUWLILHG LQWHUQDO DXGLWRU &,$ " ' )LQDQFLDO VWDWHPHQWV & 3URJUDP UHVXOWV % (IILFLHQF\ $ (FRQRP\ PHDVXUHPHQWV DUH PRVW LPSRUWDQW IRU DXGLWV RI :KHQ GHDOLQJ ZLWK VWDQGDUGV PHDVXUHPHQWV DQG FRPSDULVRQV LQSXW



:KHQ FRQVLGHULQJ WKH FRPSHWHQFH RI LQWHUQDO DXGLWRUV H[WHUQDO DXGLWRUV VKRXOG REWDLQ HYLGHQFH DERXW WKH

$ (GXFDWLRQDO DQG H[SHULHQFH TXDOLILFDWLRQV RI WKH LQWHUQDO DXGLWRUV % 2UJDQL]DWLRQDO VWDWXV RI WKH LQWHUQDO DXGLWRUV & /LQHV RI FRPPXQLFDWLRQ ZLWKLQ WKH HQWLW\ RI WKH LQWHUQDO DXGLWRUV ' 7KH VL]H RI WKH LQWHUQDO DXGLW GHSDUWPHQW
 !  9"D  %1 ! " C" 9!  ! (" !!(   B&!2" 9 !!! 9! H " !  98! B" !! 9! @ A ! " !  A "@ !2! B i BC %C!h "  ! !2! B % ! !( ! 6 57 !4 ! 321 %!0 & !# ) ((  !' &"" @!!E   %!0  



:KHQ LQGHSHQGHQW &3$V LQ SXEOLF SUDFWLFH WDNH HQJDJHPHQWV WR DXGLW JRYHUQPHQW XQLWV RU ILQDQFLDO DVVLVWDQFH UHFLSLHQWV WKH\ PXVW IROORZ

$ *$$6 RQO\ % *$$6 DQG *$*$6 & *$*$6 RQO\ ' ,QWHUQDO DXGLWLQJ VWDQGDUGV


 !  9"D  %1 ! "

  !  9"D  %1 ! " C" 9!  ! (" !!(   B&!2" 9 !!! 9! H " !  98! B" !! 9! @ A ! " !  A "@ !2! B i BC %C!h "  ! !2! B % ! !( ! 6 57 !4 ! 321 %!0 & !# ) ((  99 &"" @!!E   %$@D    

 !&!4 "T  9"D  %1 ! " C" 9!  !&!4 " % ( " ! !(   B&!2" 9 !!! 9! H "  !&!4 " %  98! B"  !! 9! @A ! " !&!4 " % A "@ !2! B i1 T BC %C!h "  !&!4 " % !2! B %  !&!4 " % !( ! )57 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0 



' ([WHUQDO DXGLWRUV PXVW VKDUH UHVSRQVLELOLW\ IRU WKH ZRUN RI LQWHUQDO DXGLWRUV LI LW & ([WHUQDO DXGLWRUV PXVW LQYHVWLJDWH WKH FRPSHWHQFH DQG REMHFWLYLW\ RI LQWHUQDO % ([WHUQDO DXGLWRUV PXVW UHYLHZ DOO ZRUN SHUIRUPHG E\ LQWHUQDO DXGLWRUV $ ([WHUQDO DXGLWRUV PXVW FRQVLGHU WKH LQWHUQDO DXGLW IXQFWLRQ DV SDUW RI REWDLQLQJ :KLFK RI WKH IROORZLQJ VWDWHPHQWV LV WUXH" DQ XQGHUVWDQGLQJ RI D FRPSDQ\ V LQWHUQDO FRQWURO VWUXFWXUH DXGLWRUV

LV XVHG IRU HYLGHQFH IRU WKH ILQDQFLDO VWDWHPHQW DXGLW



:KLFK RI WKH IROORZLQJ LV D GLIIHUHQFH EHWZHHQ SHUIRUPLQJ DQ DXGLW DQG SHUIRUPLQJ D IUDXG H[DPLQDWLRQ"

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
"& 8Q   9"D  %1 ! " C !!4 ! !@ "  ! 8!  !& 8!  ( A !@  !!!((  !@  98!  "& 8! ( (! "( !! !&!! !@ !2! I 57 !4 ! 321 %!0 & !# ) ((  !' &"" @!!E   %$@D    

"& 8Q   9"D  %1 ! " C !!4 ! !@ "  ! 8!  !& 8!  ( A !@  !!!((  !@  98!  "& 8!  ( (! "( !! !&!! !@ !2! I 57 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  



' 'HWHUPLQH WKH HIIHFW RQ ILQDQFLDO VWDWHPHQW XVHUV & 'HWHUPLQH KRZ WKH IUDXG RFFXUUHG % 'HWHUPLQH ZKR ZDV LQYROYHG LQ WKH IUDXG $ 'HWHUPLQH ZKHWKHU D IUDXG H[LVWV RI WKH IROORZLQJ LV QRW RQH RI WKRVH REMHFWLYHV" )UDXG H[DPLQHUV KDYH IRXU PDLQ REMHFWLYHV LQ SHUIRUPLQJ DQ LQYHVWLJDWLRQ :KLFK



,Q SHUIRUPLQJ D ILQDQFLDO VWDWHPHQW DXGLW LQ DFFRUGDQFH ZLWK JRYHUQPHQW DXGLWLQJ VWDQGDUGV DQ DXGLWRU LV UHTXLUHG WR UHSRUW RQ WKH HQWLW\ V FRPSOLDQFH ZLWK ODZV DQG UHJXODWLRQV 7KLV UHSRUW VKRXOG

$ 6WDWH WKDW FRPSOLDQFH ZLWK ODZV DQG UHJXODWLRQV LV WKH UHVSRQVLELOLW\ RI WKH HQWLW\ V PDQDJHPHQW % 'HVFULEH WKH ODZV DQG UHJXODWLRQV ZLWK ZKLFK WKH HQWLW\ PXVW FRPSO\ & 3URYLGH DQ RSLQLRQ RQ RYHUDOO FRPSOLDQFH ZLWK ODZV DQG UHJXODWLRQV ' ,QGLFDWH WKDW WKH DXGLWRU GRHV QRW SRVVHVV OHJDO VNLOOV DQG FDQQRW PDNH OHJDO MXGJPHQWV
 !&!4 "T  9"D  %1 ! " C" 9!  !&!4 " % ( " ! !(   B&!2" 9 !!! 9! H " !&!4 " %  98! B"  !! 9! @A ! " !&!4 " % A "@ !2! B i1 T BC %C!h "  !&!4 " % !2! B %  !&!4 " % !( ! )57 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" %" 9!E   %!0  "&&"



:KLFK RI WKH IROORZLQJ VWDWHPHQWV LV D VWDQGDUG DSSOLFDEOH WR ILQDQFLDO VWDWHPHQW DXGLWV LQ DFFRUGDQFH ZLWK JRYHUQPHQW DXGLWLQJ VWDQGDUGV"

$ $VVHVV ZKHWKHU WKH HQWLW\ KDV UHSRUWDEOH PHDVXUHV RI HFRQRP\ DQG HIILFLHQF\ WKDW DUH YDOLG DQG UHOLDEOH % 5HSRUW RQ WKH VFRSH RI WKH DXGLWRU V WHVWLQJ RI LQWHUQDO FRQWUROV & %ULHIO\ GHVFULEH LQ WKH DXGLWRU V UHSRUW WKH PHWKRG RI VWDWLVWLFDO VDPSOLQJ XVHG LQ SHUIRUPLQJ WHVWV RI FRQWUROV DQG VXEVWDQWLYH WHVWV ' 'HWHUPLQH WKH H[WHQW WR ZKLFK WKH HQWLW\ V SURJUDPV DFKLHYH WKH GHVLUHG OHYHO RI UHVXOWV
 !&!4 "T  9"D   ! " C" 9!  !&!4 " % ( " ! !(   B&!2" 9 !!! 9! H "  !&!4 " %  98! B"  !! 9! @A ! " !&!4 " % A "@ !2! B i1 T BC %C!h "  !&!4 " % !2! B %  !&!4 " % !( ! )57 !4 ! 321 %!0 W G (( !2&!&!E &"" @!!E   %!0  



7KH 86 *RYHUQPHQW $FFRXQWDELOLW\ 2IILFH LV DQ DJHQF\ RI

$ 7KH 86 &RQJUHVV % 7KH ([HFXWLYH 2IILFH RI 0DQDJHPHQW DQG %XGJHW & 7KH 86 6XSUHPH &RXUW ' 7KH )HGHUDO $FFRXQWLQJ 6WDQGDUGV %RDUG
 !&!4 "T  9"D  %1 ! " C" 9!  !&!4 " % ( " ! !(   B&!2" 9 !!! 9! H "  !&!4 " %  98! B"  !! 9! @A ! " !&!4 " % A "@ !2! B i1 T BC %C!h "   !&!4 " % !2! B %  !&!4 " % !( ! )57 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" %" 9!E   %!0  



7KH GHPDQG IRU FRPSOLDQFH DXGLWLQJ LQ JHQHUDOO\ DFFHSWHG JRYHUQPHQW DXGLWLQJ VWDQGDUGV *$*$6 WHUPV LV JHQHUDWHG E\

$ $FWV GLVFUHGLWDEOH WR WKH SURIHVVLRQ % )LQDQFLDO VWDWHPHQW DXGLWV SHUIRUPHG LQ DFFRUGDQFH ZLWK JHQHUDOO\ DFFHSWHG DXGLWLQJ VWDQGDUGV & *RYHUQPHQWDO PDQDJHUV REOLJDWLRQV WR IROORZ ODZV DQG UHJXODWLRQV ' 3XEOLF UHSRUWV RQ JRYHUQPHQW PDQDJHUV IROORZLQJ ODZV DQG UHJXODWLRQV
@!!E   %!0  

 !&!4 "T  9"D  %1 ! " C" 9!  !&!4 " % ( " ! !(   B&!2" 9 !!! 9! H "  !&!4 " %  98! B"  !! 9! @A ! " !&!4 " % A "@ !2! B i1 T BC %C!h "  !&!4 " % !2! B %  !&!4 " % !( ! )57 !4 ! 321 %!0 & !# ) ((  99 &"" %" 9!E   %!0  "&&"

 !&!4 "T  9"D  %1 ! " C" 9!  !&!4 " % ( " ! !(   B&!2" 9 !!! 9! H "  !&!4 " %  98! B"  !! 9! @A ! " !&!4 " % A "@ !2! B i1 T BC %C!h "  !&!4 " % !2! B %  !&!4 " % !( ! )57 !4 ! 321 %!0 Q 6 (( !2&!&!E &""



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



$ *$2 DXGLW UHSRUW HQWLWOHG $YLDWLRQ 6DIHW\ 6DIHU 6NLHV ,QLWLDWLYH +DV 7DNHQ ,QLWLDO 6WHSV WR 5HGXFH $FFLGHQW 5DWHV E\  LV PRVW OLNHO\ D UHSRUW EDVHG RQ ZRUN WKH DXGLWRUV SHUIRUPHG GXULQJ D

$ )LQDQFLDO VWDWHPHQW DXGLW % &RPSOLDQFH DXGLW RI DLU VDIHW\ UHJXODWLRQV & 3HUIRUPDQFH DXGLW RI SURJUDP JRDO DFKLHYHPHQW ' 3HUIRUPDQFH DXGLW RI DLU FRQWURO UHJXODWLRQ HIIHFWLYHQHVV
 !&!4 "T  9"D  %1 ! " C" 9!  !&!4 " % ( " ! !(   B&!2" 9 !!! 9! H "  !&!4 " %  98! B" !! 9! @A ! " !&!4 " % A "@ !2! B i1 T BC %C!h "  !&!4 " % !2! B %  !&!4 " % !( ! )57 !4 ! 321 %!0 Q 6 (( 99 &"" %" 9!E   %!0  



7KH 6LQJOH $XGLW $FW RI  UHTXLUHV DQ DQQXDO DXGLW RI DOO JRYHUQPHQWV DJHQFLHV DQG QRQSURILW RUJDQL]DWLRQV WKDW

$ 5HFHLYH   RU PRUH IHGHUDO IXQGV % 5HFHLYH   RU PRUH IHGHUDO IXQGV & 6SHQG   RU PRUH IHGHUDO IXQGV ' 6SHQG   RU PRUH IHGHUDO IXQGV
%!0  

 !&!4 "T  9"D  %1 ! " C" 9!  !&!4 " % ( " ! !(   B&!2" 9 !!! 9! H "  !&!4 " %  98! B"  !! 9! @A ! " !&!4 " % A "@ !2! B i1 T BC %C!h "  !&!4 " % !2! B %  !&!4 " % !( ! )57 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" %" 9!E   %!0  "&&"

  ! %  9"D  %1 ! " C! 9! ( !&!4 " % ("   " "!  V6 ("   ! % !@ !2! V57 !4 ! 321 %!0 W G (( !2&!&!E &"" @!!E  



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

DFKLHYHPHQW RI SURJUDP JRDO V 



*HQHUDOO\ DFFHSWHG JRYHUQPHQW DXGLWLQJ VWDQGDUGV *$*$6 UHJDUGLQJ SHUIRUPDQFH UHSRUWLQJ VWDQGDUGV UHTXLUHV WKH UHSRUWV WR WHOO DERXW ZKLFK RI WKH IROORZLQJ

$ 3UHVHQWDWLRQ RI ILQDQFLDO VWDWHPHQWV LQ DFFRUGDQFH ZLWK *$$3 DQG DEXVH RI SXEOLF PRQH\ DQG SURSHUW\ % 3UHVHQWDWLRQ RI ILQDQFLDO VWDWHPHQWV LQ DFFRUGDQFH ZLWK *$$3 DQG LQWHUQDO FRQWURO GHVLJQ DQG VWUHQJWK RI RSHUDWLRQ & $EXVH RI SXEOLF PRQH\ DQG SURSHUW\ DQG PDQDJHPHQW V QRWHZRUWK\ SRVLWLYH DFFRPSOLVKPHQWV ' $EXVH RI SXEOLF PRQH\ DQG SURSHUW\ DQG LQWHUQDO FRQWURO GHVLJQ DQG VWUHQJWK RI RSHUDWLRQ
 !&!4 "T  9"D  %1 ! " C" 9!  !&!4 " % ( " ! !(   B&!2" 9 !!! 9! H "  !&!4 " %  98! B"  !! 9! @A ! " !&!4 " % A "@ !2! B i1 T BC %C!h "  !&!4 " % !2! B %  !&!4 " % !( ! )57 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" %" 9!E   %!0  "&&"

  !  9"D   ! " C" 9!  ! (" !!(   B&!2" 9 !!! 9! H " !  98! B" !! 9! @ A ! " !  A "@ !2! B i BC %C!h "  ! !2! B % ! !( ! 6 57 !4 ! 321 %!0 & !# ) ((  99 &"" @!!E   %!0  



' 'HWHUPLQH WKH RUJDQL]DWLRQDO OHYHO WR ZKLFK WKH LQWHUQDO DXGLWRUV UHSRUW & 7HVW D VDPSOH RI WKH WUDQVDFWLRQV DQG EDODQFHV WKDW WKH LQWHUQDO DXGLWRUV % ([DPLQH GRFXPHQWDU\ HYLGHQFH RI WKH ZRUN SHUIRUPHG E\ WKH LQWHUQDO DXGLWRUV $ (YDOXDWH WKH TXDOLW\ FRQWURO SURJUDP LQ HIIHFW IRU WKH LQWHUQDO DXGLWRUV ,Q DVVHVVLQJ WKH REMHFWLYLW\ RI LQWHUQDO DXGLWRUV DQ LQGHSHQGHQW DXGLWRU VKRXOG H[DPLQHG



7KH ZRUN RI LQWHUQDO DXGLWRUV PD\ DIIHFW WKH LQGHSHQGHQW DXGLWRU V

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
 !  9"D   ! " C" 9!  ! (" !!(   B&!2" 9 !!! 9! H " !  98! B" !! 9! @ A ! " !  A "@ !2! B i BC %C!h "  ! !2! B % ! !( ! 6 57 !4 ! 321 %!0 & !# ) ((  !' &""  $E    %$@D    



:KHQ SHUIRUPLQJ D IUDXG H[DPLQDWLRQ WKH IUDXG H[DPLQHU WDNHV JUHDW FDUH WR SUHVHUYH DQG LGHQWLI\ DQ\ GRFXPHQWV WKDW PD\ LQGLFDWH IUDXG ZKLFK LV FDOOHG

$ 3UHVHUYLQJ WKH FKDLQ RI FXVWRG\ RI WKH HYLGHQFH % (VWDEOLVKLQJ HYLGHQWLDO SURFHGXUH & 0DUNLQJ DQ HYLGHQWLDO H[KLELW ' )RUHQVLF DXGLWLQJ
"!"    9"D  %1 ! " C"! 9! 9  ( %!" 9       A !@ !2! R 57 !4 ! 321 %!0 & !# ) ((  99 &"" @!!E   %!0  



:KLFK RI WKH IROORZLQJ ZRXOG EH FRQVLGHUHG LQ GHWHUPLQLQJ ZKHWKHU DQ LQWHUQDO DXGLW GHSDUWPHQW LV LQGHSHQGHQW"

$ 7KH RUJDQL]DWLRQDO OHYHO RI WKH FKLHI DXGLW RIILFHU DQG WKH REMHFWLYLW\ RI WKH DXGLW VWDII % $ UHTXLUHPHQW IRU WKH DXGLWRUV WR UHSRUW WR WKH DXGLW FRPPLWWHH DQG WKH FRPSRVLWLRQ RI WKH DXGLW FRPPLWWHH & 7KH RUJDQL]DWLRQDO VWDWXV RI WKH DXGLW FRPPLWWHH DQG WKH LQGLYLGXDO LQGHSHQGHQFH RI LQWHUQDO DXGLWRUV LQ WKH GHSDUWPHQW ' 7KH QDWXUH RI WKH DXGLW FKDUWHU DQG WKH REMHFWLYLW\ RI WKH DXGLW VWDII 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

 !  9"D  %1 ! " C" 9!  ! (" !!(   B&!2" 9 !!! 9! H " !  98! B" !! 9! @ A ! " !  A "@ !2! B i BC %C!h "  ! !2! B % ! !( ! 6 57 !4 ! 321 %!0 & !# ) ((  99 &"" @!!E   %!0  



:KLFK RI WKH IROORZLQJ ZRXOG EH FRQVLGHUHG WKH PRVW VLJQLILFDQW SUREOHP IRU LQWHUQDO DXGLW LI WKH FKLHI DXGLW H[HFXWLYH UHSRUWHG WR WKH FRQWUROOHU"

$ 7KH FRQWUROOHU ZRXOG DPHQG WKH DXGLW VFKHGXOH VR PRUH DXGLW WLPH ZDV VSHQW RQ DFFRXQWLQJ LVVXHV % 7KH FRQWUROOHU PD\ KDYH QR WUDLQLQJ DV DQ LQWHUQDO DXGLWRU & 'XULQJ WLPHV ZKHQ WKH EXGJHW QHHGV WR EH FXW LQWHUQDO DXGLW ZRXOG OLNHO\ EH WKH ILUVW WR ORVH IXQGLQJ ' 7KH FRQWUROOHU FDQ FRQWURO WKH VFRSH RI DXGLWV DQG FHQVRU DXGLW UHSRUWV EHIRUH EHLQJ VHQW WR PDQDJHPHQW DQG WKH DXGLW FRPPLWWHH 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

 !  9"D  %1 ! " C" 9!  ! (" !!(   B&!2" 9 !!! 9! H " !  98! B" !! 9! @ A ! " !  A "@ !2! B i BC %C!h "  ! !2! B % ! !( ! 6 57 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %$@D    



:KLFK RI WKH IROORZLQJ LV QRW DQ LQWHUQDO DXGLW REMHFWLYH GHVLJQHG WR DGG YDOXH WR D SXUFKDVLQJ GHSDUWPHQW"

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

 !  9"D  %1 ! " C" 9!  ! ( " !!(   B&!2" 9 !!! 9! H " !  98! B" !! 9! @ A ! " !  A "@ !2! B i BC %C!h "  ! !2! B % ! !( ! 6 57 !4 ! 321 %!0 & !# ) ((  99 &"" !&!!#   !&! %# !"!E  

  !  9"D  %1 ! " C" 9!  ! (" !!(   B&!2" 9 !!! 9! H " !  98! B" !! 9! @ A ! " !  A "@ !2! B i BC %C!h "  ! !2! B % ! !( ! 6 57 !4 ! 321 %!0 Q 6 (( 99 &"" %" 9!E   %$@D    "&&"



5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN ' 7KH UHFRPPHQGDWLRQ WR FRUUHFW WKH DXGLW ILQGLQJ & 7KH UHOHYDQFH RI WKH DXGLW ILQGLQJ RQ WKH DXGLW % 7KH FDXVH RI WKH DXGLW ILQGLQJ $ 7KH HIIHFW RI WKH DXGLW ILQGLQJ RQ WKH DXGLWHH RU WKH FRPSDQ\ H[FHSW ,Q DQ LQWHUQDO DXGLWRU V UHSRUW DXGLW ILQGLQJV ZRXOG LQFOXGH DOO RI WKH IROORZLQJ



*RYHUQPHQWDO DXGLWRUV LQGHSHQGHQFH DQG REMHFWLYLW\ DUH HQKDQFHG ZKHQ WKH\ UHSRUW WKH UHVXOWV RI DQ DXGLW DVVLJQPHQW GLUHFWO\ WR

$ 0DQDJHUV RI WKH JRYHUQPHQW DJHQF\ XQGHU DXGLW DQG LQ ZKLFK WKH DXGLWRUV DUH HPSOR\HG % 7KH DXGLW FRPPLWWHH RI GLUHFWRUV RI WKH DJHQF\ XQGHU DXGLW & 3ROLWLFDO DFWLRQ FRPPLWWHHV RI ZKLFK WKH\ DUH PHPEHUV ' 7KH FRQJUHVVLRQDO FRPPLWWHH WKDW RUGHUHG WKH DXGLW 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

 !  9"D  %1 ! " C" 9!  ! (" !!(   B&!2" 9 !!! 9! H " !  98! B" !! 9! @ A ! " !  A "@ !2! B i BC %C!h "  ! !2! B % ! !( ! 6 57 !4 ! 321 %!0 & !# ) ((  !' &"" @!!E   %!0  "&&"

 !&!4 "T  9"D  %1 ! " C" 9!  !&!4 " % ( " ! !(   B&!2" 9 !!! 9! H "  !&!4 " %  98! B" !! 9! @A ! " !&!4 " % A "@ !2! B i1 T BC %C!h "  !&!4 " % !2! B %  !&!4 " % !( ! )57 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %$@D    



5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN ' ([LW LQWHUYLHZV ZLWK PDQDJHUV LQ WKH JRYHUQPHQWDO XQLW & 'RFXPHQWDWLRQ RI WKH DXGLW % 2EWDLQLQJ D VXIILFLHQW XQGHUVWDQGLQJ RI LQWHUQDO FRQWURO $ &RPSOLDQFH DXGLWLQJ LPSRUWDQW ZRUN LV ,Q DOO DXGLWV RI JRYHUQPHQWDO XQLWV SHUIRUPHG DFFRUGLQJ WR *$*$6 WKH PRVW

  !  9"D  %1 ! " C" 9!  ! (" !!(   B&!2" 9 !!! 9! H " !  98! B" !! 9! @ A ! " !  A "@ !2! B i BC %C!h "  ! !2! B % ! !( ! 6 57 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %$@D    



5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN ' )LQDQFLDO VWDWHPHQW DXGLWLQJ & 0DQDJHPHQW DXGLWLQJ % 3HUIRUPDQFH DXGLWLQJ $ 2SHUDWLRQDO DXGLWLQJ WKH RWKHUV" :KLFK RI WKH IROORZLQJ LV FRQVLGHUHG GLIIHUHQW DQG PRUH OLPLWHG LQ REMHFWLYHV WKDQ

  !  9"D  %1 ! " C" 9!  ! (" !!(   B&!2" 9 !!! 9! H " !  98! B" !! 9! @ A ! " !  A "@ !2! B i BC %C!h "  ! !2! B % ! !( ! 6 57 !4 ! 321 %!0 Q 6 (( !' &"" @!!E   %!0  



5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN ' 5HSRUW RQ WKH FRPSDQ\ V UHODWLYH VXFFHVV LQ DWWDLQLQJ SURILW PD[LPL]DWLRQ & 0DNH UHFRPPHQGDWLRQV IRU DFKLHYLQJ FRPSDQ\ REMHFWLYHV % (YDOXDWH WKH IHDVLELOLW\ RI DWWDLQLQJ WKH FRPSDQ\ V RSHUDWLRQDO REMHFWLYHV $ 'HWHUPLQH ZKHWKHU WKH ILQDQFLDO VWDWHPHQWV IDLUO\ SUHVHQW WKH FRPSDQ\ V $ W\SLFDO REMHFWLYH RI DQ RSHUDWLRQDO DXGLW LV IRU WKH DXGLWRU WR RSHUDWLRQV



$ JRYHUQPHQWDO DXGLWRU DVVLJQHG WR DXGLW WKH ILQDQFLDO VWDWHPHQWV RI WKH VWDWH KLJKZD\ GHSDUWPHQW ZRXOG QRW EH FRQVLGHUHG LQGHSHQGHQW LI WKH DXGLWRU

$ $OVR KHOG D SRVLWLRQ DV D SURMHFW PDQDJHU LQ WKH KLJKZD\ GHSDUWPHQW % :DV WKH VWDWH DXGLW RIILFLDO HOHFWHG LQ D JHQHUDO VWDWHZLGH HOHFWLRQ ZLWK UHVSRQVLELOLW\ WR UHSRUW WR WKH OHJLVODWXUH & 1RUPDOO\ ZRUNV DV D VWDWH DXGLWRU HPSOR\HG LQ WKH GHSDUWPHQW RI KXPDQ VHUYLFHV ' :DV DSSRLQWHG E\ WKH VWDWH JRYHUQRU ZLWK UHVSRQVLELOLW\ WR UHSRUW WR WKH OHJLVODWXUH 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

 !&!4 "T  9"D  %1 ! " C" 9!  !&!4 " % ( " ! !(   B&!2" 9 !!! 9! H "  !&!4 " %  98! B" !! 9! @A ! " !&!4 " % A "@ !2! B i1 T BC %C!h "  !&!4 " % !2! B %  !&!4 " % !( ! )57 !4 ! 321 %!0 Q 6 (( 99 &""  $E    %$@D    @Q



*RYHUQPHQWDO DXGLWLQJ FDQ H[WHQG EH\RQG DXGLWV RI ILQDQFLDO VWDWHPHQWV WR LQFOXGH DXGLWV RI DQ DJHQF\ V HIILFLHQW DQG HFRQRPLFDO XVH RI UHVRXUFHV DQG

$ &RQVWLWXWLRQDOLW\ RI ODZV DQG UHJXODWLRQV JRYHUQLQJ WKH DJHQF\ % (YDOXDWLRQ RI WKH SHUVRQDO PDQDJHULDO VNLOOV VKRZQ E\ WKH DJHQF\ V OHDGHUV & &RUUHVSRQGHQFH RI WKH DJHQF\ V SHUIRUPDQFH ZLWK SXEOLF RSLQLRQ UHJDUGLQJ WKH VRFLDO ZRUWK RI LWV PLVVLRQ ' (YDOXDWLRQV FRQFHUQLQJ WKH DJHQF\ V DFKLHYHPHQWV RI WKH JRDOV VHW E\ WKH OHJLVODWXUH IRU WKH DJHQF\ V DFWLYLWLHV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

 !&!4 "T  9"D  %1 ! " C" 9!  !&!4 " % ( " ! !(   B&!2" 9 !!! 9! H "  !&!4 " %  98! B"  !! 9! @A ! " !&!4 " % A "@ !2! B i1 T BC %C!h "  !&!4 " % !2! B %  !&!4 " % !( ! )57 !4 ! 321 %!0 & !# ) ((  99 &"" @!!E   %!0  



:KLFK RI WKH IROORZLQJ EHVW GHVFULEHV KRZ WKH GHWDLOHG DXGLW SODQ RI D ILQDQFLDO VWDWHPHQW DXGLWRU FRPSDUHV ZLWK WKH DXGLW FOLHQW V FRPSUHKHQVLYH LQWHUQDO DXGLW SODQ"

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

 %1 ! " C" 9!  ! (" !!(   B&!2" 9 !!! 9! H " !  98! B" !! 9! @ A ! " !  A "@ !2! B i BC %C!h "  ! !2! B % ! !( ! 6 57 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %$@D      !  9"D



:KLFK RI WKH IROORZLQJ LV XVXDOO\ QRW SDUW RI DQ LQWHUQDO DXGLW GHSDUWPHQW V DXGLW FKDUWHU"

$ $ FRPPLWPHQW IURP PDQDJHPHQW WR HQVXUH WKH LQGHSHQGHQFH RI WKH LQWHUQDO DXGLW GHSDUWPHQW % $ GHILQLWLRQ RI WKH VFRSH RI WKH DXGLW GHSDUWPHQW V DFWLYLWLHV & 7KH RUJDQL]DWLRQDO VWUXFWXUH RI WKH LQWHUQDO DXGLW GHSDUWPHQW ' 7KH UHSRUWLQJ UHTXLUHPHQWV RI WKH LQWHUQDO DXGLW GHSDUWPHQW 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

 !  9"D  %1 ! " C" 9!  ! (" !!(   B&!2" 9 !!! 9! H " !   98! B" !! 9! @ A ! " !  A "@ !2! B i BC %C!h "  ! !2! B % ! !( ! 6 57 !4 ! 321 %!0 Q 6 (( !2&!&!E &"" @!!E   %!0  



:KLFK RI WKH IROORZLQJ ZRXOG \RX QRW H[SHFW WR VHH LQ DQ DXGLWRU V UHSRUW V RQ WKH ILQDQFLDO VWDWHPHQWV RI DQ LQGHSHQGHQW JRYHUQPHQW DJHQF\"

$ $ VWDWHPHQW WKDW WKH DXGLW ZDV FRQGXFWHG LQ DFFRUGDQFH ZLWK JHQHUDOO\ DFFHSWHG JRYHUQPHQW DXGLW VWDQGDUGV % $ UHSRUW RQ WKH DJHQF\ V FRPSOLDQFH ZLWK DSSOLFDEOH ODZV DQG UHJXODWLRQV & &RPPHQWDU\ E\ WKH DJHQF\ V PDQDJHUV RQ WKH DXGLW ILQGLQJV DQG UHFRPPHQGDWLRQV ' $ UHSRUW RQ WKH DJHQF\ V LQWHUQDO FRQWUROV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

 !&!4 "T  9"D  %1 ! " C" 9!  !&!4 " % ( " ! !(   B&!2" 9 !!! 9! H "  !&!4 " %  98! B"  !! 9! @A ! " !&!4 " % A "@ !2! B i1 T BC %C!h "  !&!4 " % !2! B %  !&!4 " % !( ! )57 !4 ! 321 %!0 & !# ) ((  99 &"" @!!E   %$@D    



7KH IHGHUDO 6LQJOH $XGLW $FW RI  UHTXLUHV DXGLWRUV WR GHWHUPLQH DQG UHSRUW VHYHUDO WKLQJV DERXW VWDWH DQG ORFDO JRYHUQPHQWV WKDW UHFHLYH IHGHUDO IXQGV :KLFK RI WKH IROORZLQJ LV QRW QRUPDOO\ UHTXLUHG WR EH UHSRUWHG"

$ $Q RSLQLRQ RQ WKH IDLU SUHVHQWDWLRQ RI WKH ILQDQFLDO VWDWHPHQWV LQ DFFRUGDQFH ZLWK JHQHUDOO\ DFFHSWHG DFFRXQWLQJ SULQFLSOHV % $ UHSRUW RQ WKH JRYHUQPHQW V LQWHUQDO FRQWURO UHODWHG WR IHGHUDO IXQGV & 7KH JRYHUQPHQW V SHUIRUPDQFH LQ PHHWLQJ JRDOV VHW LQ HQDEOLQJ OHJLVODWLRQ ' $ UHSRUW RQ WKH JRYHUQPHQW V FRPSOLDQFH ZLWK DSSOLFDEOH ODZV DQG UHJXODWLRQV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

  ! %  9"D  %1 ! " C! 9! ( !&!4 " % ("   " "!  V6 ("   ! % !@ !2! V57 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  

 !&!4 "T  9"D  %1 ! " C" 9!  !&!4 " % ( " ! !(   B&!2" 9 !!! 9! H "  !&!4 " %  98! B"  !! 9! @A ! " !&!4 " % A "@ !2! B i1 T BC %C!h "  !&!4 " % !2! B %  !&!4 " % !( ! )57 !4 ! 321 %!0 & !# ) ((  99 &"" @!!E   %!0  



5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN ' 3HUIRUPDQFH DXGLWV & &RPSOLDQFH DXGLWV % $WWHVWDWLRQ HQJDJHPHQWV $ )LQDQFLDO VWDWHPHQW DXGLWV JRYHUQPHQWDO DXGLWLQJ WR LQFOXGH DOO RI WKH IROORZLQJ H[FHSW 7KH *RYHUQPHQW $FFRXQWDELOLW\ 2IILFH *$2 GHVFULEHV H[SDQGHGVFRSH



,Q JRYHUQPHQW DQG LQWHUQDO SHUIRUPDQFH DXGLWLQJ ZKLFK RI WKH IROORZLQJ LV WKH OHDVW LPSRUWDQW FRQVLGHUDWLRQ ZKHQ SHUIRUPLQJ WKH ILHOGZRUN"

$ 'HWHUPLQLQJ WKH DSSOLFDEOH JHQHUDOO\ DFFHSWHG JRYHUQPHQW DFFRXQWLQJ SULQFLSOHV SURQRXQFHG E\ WKH *$6% % 'HILQLQJ SUREOHP DUHDV RU RSSRUWXQLWLHV IRU LPSURYHPHQW DQG GHILQLQJ SURJUDP JRDOV & 6HOHFWLQJ DQG SHUIRUPLQJ SURFHGXUHV GHVLJQHG WR REWDLQ HYLGHQFH DERXW RSHUDWLRQDO SUREOHPV DQG SURGXFWLRQ RXWSXW ' (YDOXDWLQJ HYLGHQFH LQ WHUPV RI HFRQRP\ HIILFLHQF\ DQG DFKLHYHPHQW RI SURJUDP JRDOV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

 !&"(!  F !((Q F &""Q  9"D  %1 ! " C" 9!  ! (" !!(   B&!2" 9 !!! 9! H " !  98! B" !! 9! @ A ! " !  A "@ !2! B i BC %C!h "  !  !2! B % ! !( ! 6 57 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %$@D    



:KLFK RI WKH IROORZLQJ LV WKH OHDVW LPSRUWDQW FRQVLGHUDWLRQ IRU D JRYHUQPHQWDO DXGLWRU ZKR QHHGV WR EH REMHFWLYH ZKHQ DXGLWLQJ DQG UHSRUWLQJ RQ DQ DJHQF\ V DFKLHYHPHQW RI SURJUDP JRDOV"

$ 0HDVXUH WKH DFWXDO RXWSXW UHVXOWV RI DJHQF\ DFWLYLWLHV % &RPSDUH WKH DJHQF\ V DFWXDO RXWSXW UHVXOWV WR TXDQWLWDWLYH JRDO VWDQGDUGV & 3HUIRUP D FRPSUHKHQVLYH UHYLHZ RI PDQDJHPHQW FRQWUROV ' 'HWHUPLQH TXDQWLWDWLYH VWDQGDUGV WKDW GHVFULEH JRDOV WKH DJHQF\ ZDV VXSSRVHG WR DFKLHYH 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

 !&!4 "T  9"D  %1 ! " C" 9!  !&!4 " % ( " ! !(   B&!2" 9 !!! 9! H "  !&!4 " %  98! B"  !! 9! @A ! " !&!4 " % A "@ !2! B i1 T BC %C!h "  !&!4 " % !2! B %  !&!4 " % !( ! )57 !4 ! 321 %!0 & !# ) ((  99 &"" @!!E   %$@D    



&RPSOLDQFH DXGLWLQJ LQ DXGLWV SHUIRUPHG XQGHU WKH 6LQJOH $XGLW $FW RI  LQ DFFRUGDQFH ZLWK *$*$6 LV QHFHVVDU\ IRU DQ DXGLWRU V

$ 5HSRUW RQ WKH DXGLWHH V LQWHUQDO FRQWURO LQFOXGLQJ UHSRUWDEOH FRQGLWLRQV DQG PDWHULDO ZHDNQHVVHV % 2SLQLRQ RQ WKH DXGLWHH V REVHUYDQFH RU ODFN WKHUHRI RI DSSOLFDEOH ODZV DQG UHJXODWLRQV & 2SLQLRQ RQ WKH DXGLWHH V ILQDQFLDO VWDWHPHQWV ' 5HSRUW RI D VXSSOHPHQWDU\ VFKHGXOH RI IHGHUDO DVVLVWDQFH SURJUDPV DQG DPRXQWV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

  ! %  9"D  %1 ! " C! 9! ( !&!4 " % ("   " "!  V6 ("   ! % !@ !2! V57 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  



:KLFK WZR RI WKH IROORZLQJ FKDUDFWHUL]H WKH ZRUN RI IUDXG H[DPLQHUV" , $QDO\VLV RI FRQWURO ZHDNQHVVHV IRU GHWHUPLQDWLRQ RI DFFHSWDEOH IUDXG ULVN ,, $QDO\VLV RI FRQWURO VWUHQJWKV DV D EDVLV IRU SODQQLQJ RWKHU DXGLW SURFHGXUHV ,,, 'HWHUPLQDWLRQ RI D PDWHULDOLW\ DPRXQW WKDW UHSUHVHQWV D VLJQLILFDQW PLVVWDWHPHQW RI WKH ILQDQFLDO VWDWHPHQWV ,9 7KLQNLQJ RI D PDWHULDOLW\ DPRXQW LQ FXPXODWLYH WHUPV RYHU D QXPEHU RI \HDUV WKDW LV EHFRPLQJ ODUJH

$ , % ,, & , ' ,

,, ,9 ,,, ,9

5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

"& 8Q   9"D  %1 ! " C !!4 ! !@ "  ! 8!  !& 8!  ( A !@  !!!((  !@  98!  "& 8! ( (! "( !! !&!! !@ !2! I 57 !4 ! 321 %!0 & !# ) ((  !' &"" @!!E   %!0  



:KHQ DXGLWLQJ ZLWK IUDXG DZDUHQHVV DXGLWRUV VKRXOG HVSHFLDOO\ QRWLFH DQG UHYLHZ HPSOR\HH DFWLYLWLHV XQGHU ZKLFK RI WKHVH FRQGLWLRQV"

$ 7KH FRPSDQ\ DOZD\V HVWLPDWHV WKH LQYHQWRU\ EXW QHYHU WDNHV D FRPSOHWH SK\VLFDO FRXQW % 7KH SHWW\ FDVK ER[ LV DOZD\V ORFNHG LQ WKH GHVN RI WKH FXVWRGLDQ & 0DQDJHPHQW KDV SXEOLVKHG D FRPSDQ\ FRGH RI HWKLFV DQG VHQGV IUHTXHQW FRPPXQLFDWLRQ QHZVOHWWHUV DERXW LW ' 7KH ERDUG RI GLUHFWRUV UHYLHZV DQG DSSURYHV DOO LQYHVWPHQW WUDQVDFWLRQV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

"& 8Q   9"D  %1 ! " C !!4 ! !@ "  ! 8!  !& 8!  ( A !@  !!!((  !@  98!  "& 8! ( (! "( !! !&!! !@ !2! I 57 !4 ! 321 %!0 & !# ) ((  99 &"" @!!E   %$@D    



7KH EHVW ZD\ WR HQDFW D EURDG IUDXGSUHYHQWLRQ SURJUDP LV WR

$ ,QVWDOO DLUWLJKW FRQWURO V\VWHPV RI FKHFNV DQG VXSHUYLVLRQ % 1DPH DQ HWKLFV RIILFHU ZKR LV UHVSRQVLEOH IRU UHFHLYLQJ DQG DFWLQJ XSRQ IUDXG WLSV & 3ODFH GHGLFDWHG KRWOLQH WHOHSKRQHV RQ ZDOOV DURXQG WKH ZRUNSODFH ZLWK GLUHFW FRPPXQLFDWLRQ WR WKH FRPSDQ\ HWKLFV RIILFHU ' (VWDEOLVK D FRUSRUDWH FXOWXUH FRQGXFLYH WR HWKLFDO EHKDYLRU LQ WKH ZRUNSODFH 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

"& 8Q   9"D  %1 ! " C !!4 ! !@ "  ! 8!  !& 8!  ( A !@  !!!((  !@  98!  "& 8! ( (! "( !! !&!! !@ !2! I 57 !4 ! 321 %!0 & !# ) ((  99 &"" @!!E   %$@D    

"& 8Q   9"D  %1 ! " C !!4 ! !@ "  ! 8!  !& 8!  ( A !@  !!!((  !@  98!  "& 8! ( (! "( !! !&!! !@ !2! I 57 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  



5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN ' 5HVWLWXWLRQ & 3UHGLFDWLRQ % )RUHQVLFV $ 'HOLEHUDWLRQ $ UHDVRQ WR EHOLHYH WKDW D IUDXG KDV RFFXUUHG LV FDOOHG



,Q D IUDXG DXGLW RULJLQDO GRFXPHQWV PXVW EH SURWHFWHG IURP GDPDJH DQG WDPSHULQJ WR

$ (VWDEOLVK PRWLYH % 'HYHORS GRFXPHQWDWLRQ IRU HPSOR\HH GLVPLVVDO & 3URWHFW WKH FKDLQ RI FXVWRG\ ' (QVXUH WKDW VXVSHFWV DUH XQDZDUH RI DQ LQYHVWLJDWLRQ LQ SURJUHVV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

"!"    9"D  %1 ! " C"! 9! 9  ( %!" 9       A !@ !2! R 57 !4 ! 321 %!0 & !# ) ((  !' &"" @!!E   %!0  



$Q HQYLURQPHQWDO DXGLW PLJKW LQFOXGH DOO RI IROORZLQJ H[FHSW

$ 'HWHUPLQLQJ WKDW SURSHU WUDFNLQJ RI ZDVWH PDWHULDO LV EHLQJ PDLQWDLQHG E\ WKH RUJDQL]DWLRQ % 5HYLHZLQJ WKH OLDELOLW\ DFFRXQW HVWDEOLVKHG IRU SHQGLQJ HQYLURQPHQWDO FODLPV DJDLQVW WKH FRPSDQ\ & 5HYLHZLQJ WKH HQYLURQPHQWDO KLVWRU\ RI DQRWKHU FRPSDQ\ WKDW WKH LQWHUQDO DXGLWRU V RUJDQL]DWLRQ LV LQWHUHVWHG LQ SXUFKDVLQJ ' $OO RI WKH DERYH DUH DSSURSULDWH LVVXHV IRU DQ HQYLURQPHQWDO DXGLW 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH DQG LQ WH[WERRN

 !  9"D  %1 ! " C" 9!  ! (" !!(   B&!2" 9 !!! 9! H " !  98! B" !! 9! @ A ! " !  A "@ !2! B i BC %C!h "  ! !2! B % ! !( ! 6 57 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  



$XGLWRUV RI JRYHUQPHQWDO XQLWV ZRXOG QRW EH SUHVXPHG WR EH LQGHSHQGHQW LI WKH\ DUH

$ )UHH IURP VRXUFHV RI SHUVRQDO LPSDLUPHQW % ,QGHSHQGHQW XQGHU $,&3$ &RGH RI 3URIHVVLRQDO &RQGXFW UXOHV & $XGLWLQJ WKH EUDQFK RI JRYHUQPHQW WR ZKLFK WKH\ DUH DVVLJQHG ' (OHFWHG RU DSSRLQWHG DQG UHSRUWLQJ WR D OHJLVODWLYH ERG\ RI JRYHUQPHQW
 !&!4 "T  9"D  %1 ! " C" 9!  !&!4 " % ( " ! !(   B&!2" 9 !!! 9! H "  !&!4 " %  98! B"  !! 9! @A ! " !&!4 " % A "@ !2! B i1 T BC %C!h "  !&!4 " % !2! B %  !&!4 " % !( ! )57 !4 ! 321 %!0 & !# ) ((  99 &""  $E    %$@D    @Q



7KH VHUYLFHV SURYLGHG E\ LQWHUQDO DXGLWRUV GR QRW LQFOXGH

$ $XGLWV RI ILQDQFLDO VWDWHPHQWV IRU VHFXULW\ UHJLVWUDWLRQ VWDWHPHQWV % 5HYLHZ RI FRQWURO V\VWHPV WKDW HQVXUH FRPSOLDQFH ZLWK FRPSDQ\ SROLFLHV ODZV DQG UHJXODWLRQV & 5HYLHZ RI HIIHFWLYHQHVV LQ DFKLHYLQJ SURJUDP UHVXOWV LQ FRPSDULVRQ WR SUH HVWDEOLVKHG REMHFWLYHV DQG JRDOV ' $SSUDLVDOV RI WKH HFRQRP\ DQG HIILFLHQF\ RI RSHUDWLRQV
%!0  

  !  9"D  %1 ! " C" 9!  ! ( " !!(   B&!2" 9 !!! 9! H " !  98! B" !! 9! @ A ! " !  A "@ !2! B i BC %C!h "  ! !2! B % ! !( ! 6 57 !4 ! 321 %!0 & !# ) ((  99 &"" @!!E   %!0  

 !  9"D  %1 ! " C" 9!  ! ( " !!(   B&!2" 9 !!! 9! H " !  98! B" !! 9! @ A ! " !  A "@ !2! B i BC %C!h "  ! !2! B % ! !( ! 6 57 !4 ! 321 %!0 & !# ) ((  99 &"" @!!E  



' :KHWKHU WKH GHSDUWPHQW V JRDOV DUH DOLJQHG ZLWK WKH RUJDQL]DWLRQ V JRDOV & 7KH FDXVHV RI LQHIILFLHQFLHV RU XQHFRQRPLFDO SUDFWLFHV % 5HYLHZ RI FRQWURO V\VWHPV WR HQVXUH FRPSOLDQFH ZLWK FRPSDQ\ SROLFLHV $ :KHWKHU WKH HQWLW\ LV DFTXLULQJ SUDFWLFLQJ DQG XVLQJ UHVRXUFHV HFRQRPLFDOO\ 2SHUDWLRQDO DXGLWV GR QRW LQFOXGH GHWHUPLQLQJ DQG HIILFLHQWO\



3URJUDP DXGLWV GR QRW LQFOXGH GHWHUPLQLQJ

$ 7KH H[WHQW WR ZKLFK WKH GHVLUHG UHVXOWV RU EHQHILWV HVWDEOLVKHG E\ WKH OHJLVODWXUH DUH EHLQJ DFKLHYHG % 7KH HIIHFWLYHQHVV RI RUJDQL]DWLRQV SURJUDPV DFWLYLWLHV RU IXQFWLRQV & :KHWKHU WKH DJHQF\ KDV FRPSOLHG ZLWK ODZV DQG UHJXODWLRQV DSSOLFDEOH WR WKH SURJUDP ' :KHWKHU WKH ILQDQFLDO VWDWHPHQWV RI DQ DXGLWHG HQWLW\ IDLUO\ SUHVHQW WKH ILQDQFLDO SRVLWLRQ LQ DFFRUGDQFH ZLWK *$$3
 !&!4 "T  9"D  %1 ! " C" 9!  !&!4 " % ( " ! !(   B&!2" 9 !!! 9! H "  !&!4 " %  98! B" !! 9! @A ! " !&!4 " % A "@ !2! B i1 T BC %C!h "  !&!4 " % !2! B %  !&!4 " % !( ! )57 !4 ! 321 %!0 & !# ) ((  99 &"" @!!E   %!0  



7KH ,,$ 3HUIRUPDQFH 6WDQGDUGV GR QRW LQFOXGH WKH VWDQGDUG IRU

$ 0DQDJLQJ WKH LQWHUQDO DXGLW DFWLYLW\ % 1DWXUH RI ZRUN & &RPSOLDQFH ZLWK SROLFLHV SODQV SURFHGXUHV ODZV DQG UHJXODWLRQV ' (QJDJHPHQW SODQQLQJ
%!0  

 !&!4 "T  9"D  %1 ! " C" 9!  !&!4 " % ( " ! !(   B&!2" 9 !!! 9! H " !&!4 " %  98! B"  !! 9! @A ! " !&!4 " % A "@ !2! B i1 T BC %C!h "  !&!4 " % !2! B %  !&!4 " % !( ! )57 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  

 !  9"D  %1 ! " C" 9!  ! (" !!(   B&!2" 9 !!! 9! H " !  98! B" !! 9! @ A ! " !  A "@ !2! B i BC %C!h "  ! !2! B % ! !( ! 6 57 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E  



' $ UHSRUW RQ WKH DXGLWHH V FRPSOLDQFH ZLWK DSSOLFDEOH ODZV DQG UHJXODWLRQV & $ UHSRUW RQ WKH DXGLWHH V LQWHUQDO FRQWURO VWUXFWXUH DQG WKH FRQWURO ULVN % $ UHSRUW RI DQ\ VLJQLILFDQW DFFRPSOLVKPHQWV DQG PDQDJHPHQW LPSURYHPHQWV $ $XGLW UHSRUW RQ ILQDQFLDO VWDWHPHQWV ILQDQFLDO VWDWHPHQW DXGLWV GR QRW LQFOXGH 7KH *$2 *RYHUQPHQW $XGLWLQJ 6WDQGDUGV UHTXLUHPHQWV IRU ZULWWHQ UHSRUWV LQ DVVHVVPHQW



,Q D VLQJOH DXGLW RI IHGHUDO ILQDQFLDO DVVLVWDQFH SURJUDPV ZKLFK RI WKH IROORZLQJ GRHV WKH DXGLWRU QRW QHHG WR GHWHUPLQH DQG UHSRUW IRU HDFK RUJDQL]DWLRQ"

$ $Q H[SDQGHG VFRSH DXGLW RI HFRQRP\ HIILFLHQF\ DQG SURJUDP UHVXOWV % 7KDW WKH ILQDQFLDO VWDWHPHQWV DUH SUHVHQWHG IDLUO\ LQ DFFRUGDQFH ZLWK *$$3 & 7KDW DQ DGHTXDWH LQWHUQDO FRQWURO V\VWHP LV LQ SODFH ' 7KDW WKH ODZV DQG UHJXODWLRQV KDYH EHHQ FRPSOLHG ZLWK
  ! %  9"D  %1 ! " C! 9! ( !&!4 " % ("  " "!  V6 ("   ! % !@ !2! V57 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  



:KLFK RI WKH IROORZLQJ DXGLWRUV LV UHVSRQVLEOH IRU GHVLJQLQJ DQG SODQQLQJ DQ DXGLW WR GHWHFW PDWHULDO LOOHJDO DFWV DQG IUDXGV"

$ ([WHUQDO DXGLWRUV % ,QWHUQDO DXGLWRUV & *RYHUQPHQWDO DXGLWRUV ' $OO RI WKH DERYH
Q 6 (( !2&!&!E &"" @!!E   %!0  

"& 8Q   9"D  %1 ! " C !!4 ! !@ "  ! 8!  !& 8!  ( A !@  !!!((  !@  98!  "& 8! ( (! "( !! !&!! !@ !2! I 57 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E   %!0  

   9"D  %1 ! " C"   ( 2 !&"(! 9  !&! % %! "4 !2!  %  ( !(! X 57 !4 ! 321 %!0



' $GPRQLWLRQ & 3UHGLFDWLRQ % 6XVSLFLRQ $ 3UHGLFWLRQ VXVSHFWHG 7KH WHUP WKDW PHDQV D UHDVRQ WR EHOLHYH D IUDXG KDV RFFXUUHG LV *HQHUDOO\ IUDXG H[DPLQHUV DUH FDOOHG ZKHQ D IUDXG LV DOUHDG\ NQRZQ RU



)UDXG H[DPLQHUV PXVW EH FRQFHUQHG ZLWK WKH LQWHJULW\ RI WKH HYLGHQFH WKDW WKH\ ILQG 3UHVHUYLQJ WKH HYLGHQFH LV FDOOHG

$ ([SHUW LGHQWLILFDWLRQ % &KDLQ RI FXVWRG\ & (YLGHQFH FRQVHUYDWLRQ ' $GPLVVLELOLW\ RI WHVWLPRQ\
"!"    9"D  %1 ! " C"! 9! 9  ( %!" 9       A !@ !2! R 57 !4 ! 321 %!0 & !# ) ((  !' &"" @!!E   %!0  

)LOO LQ WKH %ODQN 4XHVWLRQV



BBBBBBBBBBBBBBBBBBBB DXGLWLQJ UHIHUV WR WKH VWXG\ RI EXVLQHVV RSHUDWLRQV IRU WKH SXUSRVH RI PDNLQJ UHFRPPHQGDWLRQV DERXW BBBBBBBBBBBBBBBBBBBB DQG BBBBBBBBBBBBBBBBBBBB XVH RI UHVRXUFHV 2SHUDWLRQDO HIILFLHQW HIIHFWLYH 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH



&RPSOLDQFH DXGLWLQJ UHIHUV WR WKH SURFHVV RI HQVXULQJ WKDW D FRPSDQ\ LV RSHUDWLQJ ZLWKLQ BBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBB DQG BBBBBBBBBBBBBBBBBBBBBBBBB ODZV UHJXODWLRQV FRPSDQ\ SROLFLHV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH



$OWKRXJK LQWHUQDO DXGLWRUV DUH DVVRFLDWHG ZLWK WKHLU HPSOR\HUV LQ WKH H\HV RI WKH SXEOLF WKH\ VHHN BBBBBBBBBBBBBBBBBBBB DQG BBBBBBBBBBBBBBBBBBBB LQGHSHQGHQFH RSHUDWLRQDO UHSRUWLQJ 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH



,QWHUQDO DXGLW ILQGLQJV VKRXOG DOZD\V LQFOXGH BBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBB DQG BBBBBBBBBBBBBBBBBBB FRQGLWLRQ FULWHULD FDXVH HIIHFW UHFRPPHQGDWLRQ 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH



*$2 SHUIRUPV WKUHH W\SHV RI JRYHUQPHQW DXGLWV BBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBB DQG BBBBBBBBBBBBBBBBBBBB DXGLWV ILQDQFLDO VWDWHPHQW DWWHVWDWLRQ SHUIRUPDQFH 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH



7KH ,,$ DXGLWLQJ VWDQGDUGV DUH FODVVLILHG LQWR WKUHH PDMRU FDWHJRULHV BBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBB DQG BBBBBBBBBBBBBBBBBBBBBBBBBBBBB DWWULEXWH VWDQGDUGV SHUIRUPDQFH VWDQGDUGV LPSOHPHQWDWLRQ VWDQGDUGV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH



7KH BBBBBBBBBBBBBBBBBBB LV WKH IHGHUDO ODZ WKDW HVWDEOLVKHG XQLIRUP UHTXLUHPHQWV IRU DXGLWV RI IHGHUDO ILQDQFLDO DVVLVWDQFH SURYLGHG WR BBBBBBBBB DQG BBBBBBBBB JRYHUQPHQWV 6LQJOH $XGLW $FW RI  VWDWH ORFDO 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 *RYHUQPHQW SHUIRUPDQFH DXGLWV GHWHUPLQH LI BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB DQG BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB SURJUDPV DUH XVLQJ UHVRXUFHV HIIHFWLYHO\ GHVLUHG RXWFRPHV DUH EHLQJ DFKLHYHG 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 7KH 6LQJOH $XGLW $FW HVWDEOLVKHG DQ DQQXDO DXGLW IRU DOO BBBBBBBBBBBBBBBBBBBB DQG BBBBBBBBBBBBBBBBBBBB XQLWV WKDW VSHQG BBBBBBBBBBBBBBBBBBBBB RU PRUH RI BBBBBBBBBBBBBBBBBBBB IXQGV VWDWH ORFDO   IHGHUDO 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 7KH 6LQJOH $XGLW $FW UHTXLUHV WKH DXGLWRU WR UHSRUW RQ BBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBB DQG BBBBBBBBBBBBBBBBBBB ILQDQFLDO VWDWHPHQWV LQWHUQDO FRQWUROV FRPSOLDQFH 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 &3$V LQ SXEOLF SUDFWLFH PRVW RIWHQ DUH LQYROYHG LQ JRYHUQPHQWDO DXGLWV DV D UHVXOW RI UHVSRQGLQJ WR DQ DJHQF\ V BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB UHTXHVW IRU SURSRVDO 5)3 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 ,QWHUQDO DXGLW UHSRUWV DUH XVXDOO\ FRQVLGHUHG BBBBBBBBBBBBBBBBBBBB XQWLO D BBBBBBBBBBBBBBBBBBBBBBBBB LV SHUIRUPHG RSHQHG IROORZ XS 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 )HZ IUDXG DXGLWRUV EHOLHYH LQ WKH FRQFHSW RI DQ LPPDWHULDO IUDXG EHFDXVH BBBBBBBBBBBBBBBBBBBBBBBB DQG BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB IUDXG JURZV IUDXG LQGLFDWHV D ODFN RI LQWHJULW\ 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 2QFH D IUDXG LV GLVFRYHUHG WKH IRFXV RI WKH DXGLW FKDQJHV WR DQ LQYHVWLJDWLRQ ZLWK WKH SULPDU\ REMHFWLYH RI BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB EXLOGLQJ D FDVH DJDLQVW WKH SHUSHWUDWRU 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 )UDXG H[DPLQDWLRQ UHTXLUHV WKH LQGLYLGXDO WR KDYH H[SHUWLVH LQ BBBBBBBBBBBBBBBBBBBB DQG BBBBBBBBBBBBBBBBBBBBBBBBBBBBBB DXGLW FULPLQDO LQYHVWLJDWLRQ 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 $ IUDXG H[DPLQDWLRQ KDV IRXU PDLQ REMHFWLYHV  GHWHUPLQLQJ ZKHWKHU D IUDXG H[LVWV  GHWHUPLQLQJ BBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB DQG BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB LWV VFRSH LGHQWLI\LQJ WKH SHUSHWUDWRU V  GHWHUPLQLQJ KRZ LW RFFXUUHG 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 $ SHUVRQ WHVWLI\LQJ DERXW ILQGLQJV GXULQJ OLWLJDWLRQ VXSSRUW DSSOLFDWLRQ RI DFFRXQWLQJ SULQFLSOHV RU DSSOLFDWLRQ RI DXGLWLQJ VWDQGDUGV LV FDOOHG D Q BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB H[SHUW ZLWQHVV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 3URVHFXWLRQ RI IUDXG SHUSHWUDWRUV LV DGYLVDEOH EHFDXVH LI QRW SURVHFXWHG WKH\ BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB DQG IDLOXUH WR GR VR BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB ZLOO FRQWLQXH WR VWHDO VHQGV D QHJDWLYH PHVVDJH WR RWKHU HPSOR\HHV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

6KRUW $QVZHU 4XHVWLRQV

 )ROORZLQJ DUH ILYH FDVHV   LOOXVWUDWLQJ GLIIHUHQW W\SHV RI DXGLW HQJDJHPHQWV ,Q  WKH VSDFH SURYLGHG E\ HDFK FDVH LQGLFDWH WKH W\SH RI DXGLW WKDW ZRXOG EH FRQGXFWHG +0 WKH VSHFLILF W\SH RI DXGLWRU ZKR PLJKW SHUIRUP WKH HQJDJHPHQW 0 36 DQG WKH DXGLWLQJ VWDQGDUGV WKDW ZRXOG SUREDEO\ DSSO\ IRU WKH HQJDJHPHQW 6 := 

&DVH  $ &3$ ILUP V UHYLHZ RI WKH HIIHFWLYHQHVV RI D IHGHUDOO\ VXSSRUWHG XQHPSOR\PHQW WUDLQLQJ SURJUDP 6HFXULWLHV $FW RI  RSHUDWLQJ HIIHFWLYHO\ &DVH  $Q DXGLW RI ILQDQFLDO VWDWHPHQWV DV SDUW RI D UHJLVWUDWLRQ XQGHU WKH W &DVH  $ UHYLHZ RI WKH FRPSDQ\ V SODQW VHFXULW\ WR GHWHUPLQH ZKHWKHU LW LV &DVH  $ UHYLHZ RI WKH +XPDQ 5HVRXUFH 'HSDUWPHQW V KLULQJ SUDFWLFHV FRPSHWLWLYH ELG SURJUDP

&DVH  $ VWXG\ RI KRZ WKH 'HSDUWPHQW RI 'HIHQVH FRXOG UHGXFH FRVWV IURP D

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

ZLOO YDU\

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

 !  9"D C" 9!  ! (" !!(   B&!2" 9 !!! 9! H " !  98! B" !! 9! @ A ! " !  A "@ !2! B i BC %C!h "  !  !2! B % ! !( ! 6 57 !4 ! 321 %!0 W G (( 99 &"" @!!E   %$@D    @Q

 )ROORZLQJ DUH ILYH FDVHV   WKDW LOOXVWUDWH GLIIHUHQW W\SHV RI DXGLW HQJDJHPHQWV  ,Q WKH VSDFH SURYLGHG LQGLFDWH WKH W\SH RI DXGLW WKDW ZRXOG EH FRQGXFWHG WKH WKDW ZRXOG SUREDEO\ DSSO\ IRU WKH HQJDJHPHQW UREDEO\ VSHFLILF DXGLWRU ZKR PLJKW XQGHUWDNH WKH HQJDJHPHQW DQG WKH DXGLWLQJ VWDQGDUGV

  !  9"D  !&!4 "T  9"D  !&"(!  F !((Q F &""Q  9"D C   ! & %" 9  B !((! B &""!  !&!!&   (" "( !@  98Q G 57 !4 ! 321 %!0 C" 9!  !&!4 " % ( " ! !(   B&!2" 9 !!! 9! H "  !&!4 " %  98! B"  !! 9! @A ! " !&!4 " % A "@ !2! B i1 T BC %C!h "  !&!4 " % !2! B %  !&!4 " % !( ! )57 !4 ! 321 %!0 C" 9!  ! (" !!(   B&!2" 9 !!! 9! H " !  98! B" !! 9! @ A ! " !  A "@ !2! B i BC %C!h "  ! !2! B % ! !( ! 6 57 !4 ! 321 %!0 W G ((

(VVD\ 4XHVWLRQV

 ([SODLQ EULHIO\ WKH SXUSRVH DQG UHTXLUHPHQWV XQGHU WKH 6LQJOH $XGLW $FW

7KH SXUSRVH RI WKH 6LQJOH $XGLW $FW ZDV WR VLPSOLI\ WKH UHSRUWLQJ UHTXLUHPHQWV IRU VWDWH DQG ORFDO JRYHUQPHQWV WKDW UHFHLYH IHGHUDO DVVLVWDQFH IURP VHYHUDO IHGHUDO DJHQFLHV 7KH\ FDQ QRZ VDWLVI\ WKH UHSRUWLQJ UHTXLUHPHQW E\ SUHSDULQJ D VLQJOH DXGLW UHSRUW IRU WKH XQLW LQVWHDG RI SUHSDULQJ QXPHURXV UHSRUWV E\ YDULRXV DXGLWRUV ,Q D VLQJOH DXGLW DXGLWRUV PXVW GHWHUPLQH DQG UHSRUW ZKHWKHU WKH )LQDQFLDO VWDWHPHQWV DUH SUHVHQWHG LQ DFFRUGDQFH ZLWK *$$3 ,QWHUQDO FRQWURO V\VWHP SURYLGHV UHDVRQDEOH DVVXUDQFH WKDW WKH RUJDQL]DWLRQ LV PDQDJLQJ IHGHUDO DVVLVWDQFH SURJUDPV LQ FRPSOLDQFH ZLWK DSSOLFDEOH ODZV DQG UHJXODWLRQV 2UJDQL]DWLRQ KDV FRPSOLHG ZLWK ODZV DQG UHJXODWLRQV WKDW PD\ KDYH D PDWHULDO HIIHFW RQ LWV ILQDQFLDO VWDWHPHQWV DQG RQ HDFK PDMRU IHGHUDO DVVLVWDQFH SURJUDP

  ! %  9"D C! 9! ( !&!4 " % ("   " "!  V6 ("   ! % !@ !2! V57 !4 ! 321 %!0 & !# ) ((  !' &"" @!!E   %!0  

 :KDW DUH WKH GLIIHUHQW W\SHV RI JRYHUQPHQW DXGLWV"

7KH W\SHV RI JRYHUQPHQW DXGLWV LQFOXGH  ILQDQFLDO VWDWHPHQW DXGLWV WR GHWHUPLQH ZKHWKHU WKH ILQDQFLDO VWDWHPHQWV DUH SUHSDUHG LQ DFFRUGDQFH ZLWK *$$3 DQG WKH HQWLW\ KDV FRPSOLHG ZLWK ODZV DQG UHJXODWLRQV  $WWHVWDWLRQ HQJDJHPHQWV  3HUIRUPDQFH DXGLWV ZKLFK LQFOXGH HFRQRP\ DQG HIILFLHQF\ DXGLWV DQG SURJUDP DXGLWV

 :KDW DUH WKH GLIIHUHQW W\SHV RI LQWHUQDO DXGLWV"

 !&!4 "T  9"D C" 9!  !&!4 " % ( " ! !(   B&!2" 9 !!! 9! H "  !&!4 " %  98! B"  !! 9! @A ! " !&!4 " % A "@ !2! B i1 T BC %C!h "  !&!4 " % !2! B %  !&!4 " % !( ! )57 !4 ! 321 %!0 & !# ) ((  !' &"" @!!E   %!0  

 )LQDQFLDO DXGLWV  &RPSOLDQFH DXGLWV  2SHUDWLRQDO $XGLWV  *RYHUQDQFH $XGLWV

%!0  

 !&!4 "T  9"D C" 9!  !&!4 " % ( " ! !(   B&!2" 9 !!! 9! H "  !&!4 " %  98! B"  !! 9! @A ! " !&!4 " % A "@ !2! B i1 T BC %C!h "  !&!4 " % !2! B %  !&!4 " % !( ! )57 !4 ! 321 %!0 & !# ) ((  !' &"" @!!E   %!0  

 !  9"D C" 9!  ! (" !!(   B&!2" 9 !!! 9! H " !  98! B" !! 9! @ A ! " !  A "@ !2! B i BC %C!h "  ! !2! B % ! !( ! 6 57 !4 ! 321 %!0 & !# ) ((  !2&!&!E &"" @!!E  

 +RZ GR JRYHUQPHQW DXGLWRUV DFKLHYH REMHFWLYLW\"

 $FWXDO UHVXOWV FDQ EH FRPSDUHG WR WKH VWDQGDUGV  8VLQJ PHDVXUHPHQW RI DFWXDO UHVXOWV VR  )LQGLQJ VWDQGDUGV IRU HYDOXDWLRQ DQG *RYHUQPHQW DXGLWRUV DFKLHYH REMHFWLYLW\ E\

 7KH VWDQGDUGV RI WKH ,QVWLWXWH RI ,QWHUQDO $XGLWRUV ,,$ DUH JURXSHG XQGHU WZR EURDG FDWHJRULHV ,GHQWLI\ DQG EULHIO\ H[SODLQ HDFK RI WKH FDWHJRULHV (DFK FDWHJRU\ KDV VSHFLDO VWDQGDUGV ZULWWHQ IRU VSHFLILF W\SHV RI DXGLWV ,GHQWLI\ WKH WZR W\SHV RI VSHFLDO VWDQGDUGV IRU HDFK FDWHJRU\

7KH WZR FDWHJRULHV RI LQWHUQDO DXGLWLQJ VWDQGDUGV DUH  DWWULEXWH VWDQGDUGV WKDW VHW WKH FKDUDFWHULVWLFV RI LQWHUQDO DXGLW GHSDUWPHQWV DQG WKH SURIHVVLRQDO WKDW ZRUN GRQH LQ WKRVH GHSDUWPHQWV DQG  SHUIRUPDQFH VWDQGDUGV WKDW HVWDEOLVK UHTXLUHPHQWV ZKHQ SHUIRUPLQJ DQ HQJDJHPHQW :LWKLQ WKH VWDQGDUGV WKHUH DUH VSHFLILF VWDQGDUGV IRU DWWHVWDWLRQ HQJDJHPHQWV DQG IRU FRQVXOWLQJ HQJDJHPHQWV

0DWFKLQJ 4XHVWLRQV

 !  9"D C" 9!  ! (" !!(   B&!2" 9 !!! 9! H " !  98! B" !! 9! @ A ! " !  A "@ !2! B i BC %C!h "  !  !2! B % ! !( ! 6 57 !4 ! 321 %!0 & !# ) ((  !' &"" @!!E   %!0  

 7KH VWDWH 'HSDUWPHQW RI (GXFDWLRQ QHHGV WR KDYH DXGLWV IRU YDULRXV UHDVRQV )RU HDFK UHDVRQ LQGLFDWH WKH UHODWHG W\SH RI HQJDJHPHQW RU SUDFWLFH WKDW ZRXOG PRVW OLNHO\ EH SHUIRUPHG

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

C" 9!  !&!4 " % ( " ! !(   B&!2" 9 !!! 9! H "  !&!4 " %  98! B"  !! 9! @A ! " !&!4 " % A "@ !2! B i1 T BC %C!h "  !&!4 " % !2! B %  !&!4 " % !( ! )57 !4 ! 321 %!0 & !# ) ((  99 &"" @!!E   %!0  

$XGLWLQJ LQ D &RPSXWHUL]HG (QYLURQPHQW

7UXH  )DOVH 4XHVWLRQV

 ,Q DXGLWLQJ DURXQG WKH FRPSXWHU DXGLW WHDPV UHFRQFLOH VRXUFH GRFXPHQWV LQSXW WR SURFHVVLQJ UHVXOWV 7UXH )DOVH

 ,Q VLPSOH EDWFK SURFHVVLQJ V\VWHPV LW LV QRW SRVVLEOH WR XVH WKH WHFKQLTXH RI DXGLWLQJ DURXQG WKH FRPSXWHU 7UXH )DOVH

 7KH EDVLF FRQFHSW RI WHVW GDWD LV WKDW RQFH D FRPSXWHU LV SURJUDPPHG WR KDQGOH WUDQVDFWLRQV LQ D FHUWDLQ ZD\ HYHU\ WUDQVDFWLRQ ZLOO EH KDQGOHG LQ WKH VDPH ZD\ 7UXH )DOVH

 !&!4 "T  9"D  %1 ! "

0RGXOH +

 :KHQ XVLQJ SDUDOOHO VLPXODWLRQ DXGLW WHDPV SUHSDUH D FRPSXWHU SURJUDP WR GXSOLFDWH WKH ORJLF DQG FRPSXWHU FRQWUROV LQ WKH FOLHQW V FRPSXWHU SURJUDP 7UXH )DOVH

 ,QSXW FRQWUROV DUH RQH RI WKH PDMRU FDWHJRULHV RI JHQHUDO FRQWUROV 7UXH )DOVH

 $ SURJUDP GHVFULSWLRQ VKRXOG FRQWDLQ D SURJUDP IORZFKDUW D OLVW RI WKH SURJUDP VRXUFH FRGH DQG D UHFRUG RI DOO SURJUDP FKDQJHV 7UXH )DOVH

 &RPSXWHU OLEUDULDQV DUH SULPDULO\ UHVSRQVLEOH IRU RSHUDWLQJ WKH FRPSXWHU IRU HDFK DSSOLFDWLRQ V\VWHP 7UXH )DOVH

 ,Q DQ LQWHJUDWHG WHVW IDFLOLW\ VLPXODWHG WUDQVDFWLRQV DUH SURFHVVHG WKURXJK WKH FOLHQW V FRPSXWHUL]HG SURFHVVLQJ V\VWHP DORQJ ZLWK WKH FOLHQW V DFWXDO WUDQVDFWLRQV 7UXH )DOVH

 $Q LPSRUWDQW KDUGZDUH FRQWURO LQFRUSRUDWHG ZLWKLQ FRPSXWHU HTXLSPHQW LV D SDULW\ FKHFN 7UXH )DOVH

 &RPSXWHU RSHUDWRUV VKRXOG KDYH FRPSOHWH DFFHVV WR SURJUDPV DQG DSSOLFDWLRQ GRFXPHQWDWLRQ 7UXH )DOVH

 ,I DQ HQWLW\ V JHQHUDO FRQWUROV DUH LQHIIHFWLYH DXGLW WHDPV ZRXOG OLNHO\ JDLQ DGGLWLRQDO DVVXUDQFH E\ LQFUHDVLQJ WHVWV RI WKHLU DXWRPDWHG DSSOLFDWLRQ FRQWUROV 7UXH )DOVH

 7KH PHWKRG RI DXGLWLQJ DURXQG WKH FRPSXWHU WUHDWV WKH FRPSXWHU V\VWHP DV D EODFN ER[ 7UXH )DOVH

 $Q HPEHGGHG DXGLW PRGXOH FUHDWHV VLPXODWHG GDWD WR EH SURFHVVHG E\ WKH FOLHQW V FRPSXWHUL]HG SURFHVVLQJ V\VWHP 7UXH )DOVH

 7KH PDMRU SKDVHV LQ WKH DXGLW WHDP V VWXG\ RI LQWHUQDO FRQWURO DUH WKH VDPH LQ D FRPSXWHUL]HG SURFHVVLQJ HQYLURQPHQW DV WKRVH LQ D PDQXDO SURFHVVLQJ HQYLURQPHQW 7UXH )DOVH

 7KH DXGLW WHDP PD\ XVH LQWHUQDO DXGLWRUV WR GHYHORS DQG UXQ FRPSXWHUDVVLVWHG DXGLWLQJ WHFKQLTXHV XQGHU VXSHUYLVLRQ DQG UHYLHZ RI WKH DXGLW WHDP 7UXH )DOVH

 2QH PDMRU GLIIHUHQFH LQ D FRPSXWHUL]HG SURFHVVLQJ HQYLURQPHQW FRPSDUHG WR D PDQXDO SURFHVVLQJ HQYLURQPHQW LV WKH H[LVWHQFH RI V\VWHPDWLF UDWKHU WKDQ UDQGRP HUURUV 7UXH )DOVH

 +HDGHU DQG WUDLOHU ODEHOV DUH H[DPSOHV RI H[WHUQDO ODEHOV 7UXH )DOVH

 7KH PRVW LPSRUWDQW SUHYHQWLYH FRQWUROV IRU FRPSXWHU IUDXG DUH WKRVH WKDW OLPLW DFFHVV WR FRPSXWHUV 7UXH )DOVH

 :KHQ ZHDNQHVVHV H[LVW WKDW FRXOG OHDG WR FRPSXWHU IUDXG WKH EHVW VWUDWHJ\ LV WR KDYH WKH FOLHQW KHOS DXGLW WHDPV SODQ DQG H[HFXWH WHFKQLFDO SURFHGXUHV WR VWXG\ DQG HYDOXDWH WKH V\VWHP 7UXH )DOVH

 7KH XVH RI WKH V\VWHPV GHYHORSPHQW OLIH F\FOH LV DQ H[DPSOH RI DQ DFFHVV WR SURJUDPV DQG GDWD FRQWURO 7UXH )DOVH

0XOWLSOH &KRLFH 4XHVWLRQV

 :KLFK RI WKH IROORZLQJ FRQWUROV PRVW OLNHO\ ZRXOG HQVXUH WKDW DQ RUJDQL]DWLRQ FDQ UHFRQVWUXFW LWV ILQDQFLDO UHFRUGV"

$ +DUGZDUH FRQWUROV DUH EXLOW LQWR WKH FRPSXWHU E\ WKH FRPSXWHU PDQXIDFWXUHU % %DFNXS ILOHV DUH VWRUHG LQ D ORFDWLRQ VHSDUDWH IURP RULJLQDO FRSLHV & 3HUVRQQHO ZKR DUH LQGHSHQGHQW RI GDWD LQSXW SHUIRUP SDUDOOHO VLPXODWLRQV ' 6\VWHP IORZFKDUWV SURYLGH DFFXUDWH GHVFULSWLRQV RI FRPSXWHU RSHUDWLRQV

 :KHQ DXGLW WHDPV WHVW D FRPSXWHUL]HG SURFHVVLQJ V\VWHP ZKLFK RI WKH IROORZLQJ LV WUXH RI WKH WHVW GDWD DSSURDFK"

$ 6HYHUDO WUDQVDFWLRQV RI HDFK W\SH PXVW EH WHVWHG % 7HVW GDWD DUH SURFHVVHG E\ WKH FOLHQW V FRPSXWHU SURJUDPV XQGHU WKH DXGLW WHDP V FRQWURO & 7HVW GDWD PXVW FRQVLVW RI DOO SRVVLEOH YDOLG DQG LQYDOLG FRPELQDWLRQV ' 7KH FRPSXWHU SURJUDP XVHG WR SURFHVV WHVW GDWD LV GLIIHUHQW IURP WKH SURJUDP XVHG WKURXJKRXW WKH \HDU E\ WKH FOLHQW  ,Q HQGXVHU FRPSXWLQJ HQYLURQPHQWV WKH SURFHVVLQJ FRQWURO SURFHGXUHV ZRXOG RUGLQDULO\ QRW LQFOXGH

$ 7UDQVDFWLRQ ORJV % &RQWURO WRWDOV & &RPSDULQJ LQSXW WR RXWSXW ' 2QOLQH HGLWLQJ DQG VLJKW YHULILFDWLRQ

 :KLFK RI WKH IROORZLQJ LV QRW DQ DSSURSULDWH VWDWHPHQW ZLWK UHJDUG WR FRPSXWHU FRQWURO DFWLYLWLHV"

$ 7KH GXWLHV RI DSSOLFDWLRQ SURJUDPPLQJ FRPSXWHU RSHUDWLRQ DQG FRQWURO RI GDWD ILOHV VKRXOG EH VHSDUDWHG % &RPSXWHU RSHUDWRUV VKRXOG PDLQWDLQ FRQWURO RI DOO VRIWZDUH SURJUDPV & 6SHFLILF SDVVZRUGV VKRXOG EH UHTXLUHG WR DFFHVV RQOLQH ILOHV ' &RPSXWHU SURJUDPPHUV VKRXOG EH SHULRGLFDOO\ URWDWHG DFURVV GLIIHUHQW DSSOLFDWLRQV  :KLFK RI WKH IROORZLQJ HQVXUHV WKDW WKH FRGLQJ RI GDWD GRHV QRW FKDQJH ZKHQ LW LV PRYHG IURP RQH LQWHUQDO VWRUDJH ORFDWLRQ WR DQRWKHU"

$ 3UHYHQWLYH PDLQWHQDQFH % (FKR FKHFN & ,QWHUQDO ODEHO ' 3DULW\ FKHFN

 $Q DXGLW WHDP V DSSURDFK WR HYDOXDWLQJ FRPSXWHUL]HG SURFHVVLQJ V\VWHPV WKDW FRPSDUHV VRXUFH GRFXPHQWV WR WKH FRPSXWHU RXWSXW LV NQRZQ DV DXGLWLQJ

$ $URXQG WKH FRPSXWHU % 7KURXJK WKH FRPSXWHU & :LWKRXW WKH FRPSXWHU ' :LWK WKH FRPSXWHU  7KH UHSURFHVVLQJ RI DFWXDO GDWD XVLQJ SURJUDPV GHYHORSHG E\ WKH DXGLW WHDP WR HYDOXDWH SURJUDP FRQWUROV LV FDOOHG

$ 7HVW GDWD % 7HVW GHFN & *HQHUDOL]HG DXGLW VRIWZDUH ' 3DUDOOHO VLPXODWLRQ  7HFKQLTXHV QHHGHG WR VHOHFW VSHFLILF WUDQVDFWLRQV RI DXGLW LQWHUHVW IRU WHVWLQJ ZRXOG QRW LQFOXGH

$ (PEHGGHG DXGLW PRGXOHV % 0RQLWRULQJ V\VWHP DFWLYLW\ & 6QDSVKRW ' 7HVW GDWD

 &RPSXWHU RSHUDWLRQV FRQWUROV DUH W\SLFDOO\ LPSOHPHQWHG IRU ILOHV DQG GDWD XVHG LQ SURFHVVLQJ 7KH PDMRU REMHFWLYHV RI WKHVH FRQWUROV LQFOXGH HDFK RI WKH IROORZLQJ H[FHSW

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

$ *HQHUDOL]HG DXGLW VRIWZDUH % 3DUDOOHO VLPXODWLRQ & 7HVW GDWD ' 7DJJLQJ WUDQVDFWLRQV

 :KLFK RI WKH IROORZLQJ RUJDQL]DWLRQDO SRVLWLRQV ZRXOG HYDOXDWH WKH H[LVWLQJ V\VWHP DQG GHVLJQ QHZ FRPSXWHUL]HG SURFHVVLQJ V\VWHPV DQG GRFXPHQWDWLRQ"

$ 3URJUDPPHU % 6\VWHPV DQDO\VW & &RPSXWHU RSHUDWRU ' 'DWD FRQYHUVLRQ RSHUDWRU  7KH HIIHFWLYHQHVV RI JHQHUDO FRQWUROV LV DQ LPSRUWDQW FRQVLGHUDWLRQ IRU DXGLW WHDPV ZKHQ DVVHVVLQJ FRQWURO ULVN RQ DQ DXGLW :KLFK PDQDJHPHQW DVVHUWLRQV DUH SULPDULO\ DIIHFWHG E\ JHQHUDO FRQWUROV"

$ &RPSOHWHQHVV DQG DFFXUDF\ % 2FFXUUHQFH DQG ULJKWV DQG REOLJDWLRQV & $FFXUDF\ DQG RFFXUUHQFH ' &RPSOHWHQHVV DQG RFFXUUHQFH  7KH SXUSRVH RI WHVW GDWD LV WR GHWHUPLQH ZKHWKHU

$ 7KH DXGLW WHDP V WHVW GDWD DUH FRQVLVWHQW ZLWK WKH FOLHQW V QRUPDO WUDQVDFWLRQV % &RQWUROV RSHUDWH DV GHVFULEHG LQ UHVSRQVHV WR LQWHUQDO FRQWURO TXHVWLRQQDLUH LWHPV DQG SURJUDP IORZFKDUWV & (YHU\ SRVVLEOH HUURU LV SUHYHQWHG RU GHWHFWHG E\ WKH FOLHQW V FRPSXWHU FRQWUROV ' $OO SRVVLEOH FRPELQDWLRQV RI YDOLG GDWD DUH FRUUHFWO\ SURFHVVHG

 :KLFK RI WKH IROORZLQJ LV DQ H[DPSOH RI D FRPSXWHU RSHUDWLRQV FRQWURO"

$ &RQWURO WRWDOV % %DODQFH RI LQSXW WR RXWSXW & )LOH EDFNXS DQG UHWHQWLRQ ' 7UDQVDFWLRQ ORJV  $XGLW WHDPV ZRXOG OHDVW OLNHO\ XVH FRPSXWHUDVVLVWHG DXGLW WHFKQLTXHV WR

$ $FFHVV FOLHQW GDWD ILOHV % 3UHSDUH VSUHDGVKHHWV & $VVHVV FRQWURO ULVN UHODWHG WR FRPSXWHUL]HG SURFHVVLQJ V\VWHPV ' &RQVWUXFW DQG SHUIRUP SDUDOOHO VLPXODWLRQV  :KLFK RI WKH IROORZLQJ PHWKRGV DOORZ ILFWLWLRXV DQG DFWXDO WUDQVDFWLRQV WR EH SURFHVVHG WRJHWKHU ZLWKRXW FOLHQW RSHUDWLQJ SHUVRQQHO EHLQJ DZDUH RI WKH WHVWLQJ SURFHVV"

$ ,QWHJUDWHG WHVW IDFLOLW\ % ,QSXW FRQWUROV PDWUL[ & 3DUDOOHO VLPXODWLRQ ' 'DWD HQWU\ PRQLWRU

 (DFK RI WKH IROORZLQJ DXWRPDWHG DSSOLFDWLRQ FRQWUROV LV GHVLJQHG WR HQVXUH WKDW WKH LQSXW RI LQGLYLGXDO WUDQVDFWLRQV DQG GDWD LV DFFXUDWH H[FHSW

$ &KHFN GLJLWV % 9DOLG VLJQ WHVWV & 6HTXHQFH WHVWV ' /LPLW DQG UHDVRQDEOHQHVV WHVWV  $XGLW WHDPV ZRXOG PRVW OLNHO\ LQWURGXFH WHVW GDWD LQWR D FRPSXWHUL]HG SD\UROO V\VWHP WR WHVW LQWHUQDO FRQWUROV UHODWHG WR WKH

$ ([LVWHQFH RI XQFODLPHG SD\UROO FKHFNV KHOG E\ VXSHUYLVRUV % (DUO\ FDVKLQJ RI SD\UROO FKHFNV E\ HPSOR\HHV & 'LVFRYHU\ RI LQYDOLG HPSOR\HH LGHQWLILFDWLRQ QXPEHUV ' 3URSHU DSSURYDO RI RYHUWLPH E\ VXSHUYLVRUV

 7R REWDLQ HYLGHQFH WKDW FRQWUROV RYHU DFFHVV WR FRPSXWHU SURJUDPV DUH SURSHUO\ IXQFWLRQLQJ DXGLW WHDPV PRVW OLNHO\ ZRXOG

$ &UHDWH FKHFNSRLQWV DW SHULRGLF LQWHUYDOV DIWHU GDWD SURFHVVLQJ WR WHVW IRU XQDXWKRUL]HG XVH RI WKH V\VWHP % ([DPLQH WKH WUDQVDFWLRQ ORJ WR GLVFRYHU ZKHWKHU DQ\ WUDQVDFWLRQV ZHUH ORVW RU HQWHUHG WZLFH GXH WR D V\VWHP PDOIXQFWLRQ & (QWHU LQYDOLG LGHQWLILFDWLRQ QXPEHUV RU SDVVZRUGV WR DVFHUWDLQ ZKHWKHU WKH V\VWHP UHMHFWV WKHP ' 9RXFK D UDQGRP VDPSOH RI SURFHVVHG WUDQVDFWLRQV WR HQVXUH SURSHU DXWKRUL]DWLRQ  7HVWV RI FRQWUROV LQ DQ DGYDQFHG FRPSXWHUL]HG SURFHVVLQJ V\VWHP

$ &DQ EH SHUIRUPHG XVLQJ RQO\ DFWXDO WUDQVDFWLRQV EHFDXVH WHVWLQJ VLPXODWHG WUDQVDFWLRQV GRHV QRW SURYLGH UHOHYDQW HYLGHQFH % &DQ EH SHUIRUPHG XVLQJ DFWXDO WUDQVDFWLRQV RU VLPXODWHG WUDQVDFWLRQV & ,V LPSUDFWLFDO EHFDXVH PDQ\ SURFHGXUHV ZLWKLQ WKH FRPSXWHUL]HG SURFHVVLQJ V\VWHP OHDYH QR YLVLEOH HYLGHQFH RI KDYLQJ EHHQ SHUIRUPHG ' ,V LQDGYLVDEOH EHFDXVH LW PD\ GLVWRUW WKH HYLGHQFH LQ UHDOWLPH V\VWHPV

 :KLFK RI WKH IROORZLQJ LV D JHQHUDO FRQWURO WKDW ZRXOG PRVW OLNHO\ DVVLVW DQ RUJDQL]DWLRQ ZKRVH V\VWHPV DQDO\VW UHVLJQHG GXULQJ WKH GHYHORSPHQW RI D PDMRU SURMHFW"

$ *UDQGIDWKHUIDWKHUVRQ ILOH UHWHQWLRQ % ,QSXW DQG RXWSXW YDOLGDWLRQ URXWLQHV & 6\VWHPV GRFXPHQWDWLRQ ' &KHFN GLJLW YHULILFDWLRQ  :KLFK RI WKH IROORZLQJ ZRXOG PRVW OLNHO\ EH D ZHDNQHVV LQ WKH LQWHUQDO FRQWURO RI D FOLHQW WKDW XWLOL]HV SRUWDEOH FRPSXWLQJ GHYLFHV UDWKHU WKDQ D ODUJH FRPSXWHU V\VWHP"

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

 :KHQ SURJUDPV RU ILOHV FDQ EH DFFHVVHG IURP WHUPLQDOV XVHUV VKRXOG EH UHTXLUHG WR HQWHU D Q

$ 3DULW\ FKHFN % 3HUVRQDO LGHQWLILFDWLRQ FRGH & 6HOIGLDJQRVLV WHVW ' (FKR FKHFN  :KLFK RI WKH IROORZLQJ FRQWURO SURFHGXUHV PRVW OLNHO\ FRXOG SUHYHQW FRPSXWHU SHUVRQQHO IURP PRGLI\LQJ SURJUDPV WR E\SDVV FRPSXWHU FRQWUROV"

$ 3HULRGLF PDQDJHPHQW UHYLHZ RI FRPSXWHU XWLOL]DWLRQ UHSRUWV DQG V\VWHPV GRFXPHQWDWLRQ % 6HSDUDWLRQ RI GXWLHV IRU FRPSXWHU SURJUDPPLQJ DQG FRPSXWHU RSHUDWLRQV & 3DUWLFLSDWLRQ RI XVHU GHSDUWPHQW SHUVRQQHO LQ GHVLJQLQJ DQG DSSURYLQJ QHZ V\VWHPV ' 3K\VLFDO VHFXULW\ RI FRPSXWHU IDFLOLWLHV LQ OLPLWLQJ DFFHVV WR FRPSXWHU HTXLSPHQW

 :KLFK RI WKH IROORZLQJ LV OLNHO\ WR EH RI OHDVW LPSRUWDQFH WR DXGLW WHDPV ZKHQ REWDLQLQJ DQ XQGHUVWDQGLQJ RI WKH FRPSXWHU FRQWUROV LQ DQ RUJDQL]DWLRQ ZLWK D FRPSXWHUL]HG SURFHVVLQJ V\VWHP"

$ 6HSDUDWLRQ RI GXWLHV ZLWKLQ WKH FRPSXWHU IXQFWLRQ % &RQWUROV RYHU VRXUFH GRFXPHQWV & 'RFXPHQWDWLRQ PDLQWDLQHG IRU DFFRXQWLQJ DSSOLFDWLRQV ' 5HODWLRQVKLS EHWZHHQ FRVWV DQG EHQHILWV RI FRPSXWHU RSHUDWLRQV  $IWHU REWDLQLQJ D SUHOLPLQDU\ XQGHUVWDQGLQJ RI D FOLHQW V FRPSXWHU FRQWUROV DXGLW WHDPV PD\ GHFLGH QRW WR SHUIRUP WHVWV RI FRQWUROV :KLFK RI WKH IROORZLQJ ZRXOG QRW EH D YDOLG UHDVRQ IRU FKRRVLQJ WR RPLW WHVWV RI FRQWUROV"

$ 7KH FOLHQW V FRPSXWHU FRQWUROV GXSOLFDWH PDQXDO FRQWUROV H[LVWLQJ HOVHZKHUH LQ WKH V\VWHP % 7KHUH DSSHDU WR EH PDMRU ZHDNQHVVHV WKDW LQGLFDWH D KLJK OHYHO RI FRQWURO ULVN & 7KH WLPH DQG GROODU FRVWV RI WHVWLQJ FRPSXWHU FRQWUROV H[FHHG WKH WLPH DQG GROODU VDYLQJV LQ VXEVWDQWLYH SURFHGXUHV ' 7KH FOLHQW V FRQWUROV DSSHDU WR IXQFWLRQ DW DQ DGHTXDWH OHYHO WR MXVWLI\ D ORZ DVVHVVPHQW RI FRQWURO ULVN

 :KHQ D UHDOWLPH FRPSXWHUL]HG SURFHVVLQJ V\VWHP LV LQ XVH WKH FRPSXWHU FRQWUROV FDQ EH VWUHQJWKHQHG E\

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

$ 7KH REMHFWLYH RI WKH DXGLW H[DPLQDWLRQ IRFXVHV RQ GHWHFWLRQ RI IUDXG DQG WKHIW WKURXJK WKH FRPSXWHU % 7KH W\SH RI VXEVWDQWLYH SURFHGXUHV SHUIRUPHG E\ WKH DXGLW WHDP FKDQJH EHFDXVH RI WKH XVH RI FRPSXWHUL]HG SURFHVVLQJ & 7KH HIIHFWLYHQHVV RI FRPSXWHU FRQWUROV LPSOHPHQWHG E\ WKH FOLHQW RYHU LWV FRPSXWHUL]HG SURFHVVLQJ PD\ QHHG WR EH HYDOXDWHG E\ DXGLW WHDPV ' 'LIIHUHQW LQGHSHQGHQFH VWDQGDUGV DUH LQWURGXFHG IRU DXGLW WHDPV ZKHQ FOLHQWV XWLOL]H FRPSXWHUL]HG SURFHVVLQJ

 &RPSXWHU FRQWUROV WKDW DUH SHUYDVLYH DQG DSSO\ WR DOO DSSOLFDWLRQV RI D FRPSXWHUL]HG SURFHVVLQJ V\VWHP DUH UHIHUUHG WR DV

$ &RPSXWHU FRQWUROV % (QYLURQPHQW FRQWUROV & $XWRPDWHG DSSOLFDWLRQ FRQWUROV ' *HQHUDO FRQWUROV  :KLFK RI WKH IROORZLQJ LV QRW DQ H[DPSOH RI D JHQHUDO FRQWURO"

$ 7KH RUJDQL]DWLRQ V XVH RI WKH V\VWHPV GHYHORSPHQW OLIH F\FOH ZKHQ LPSOHPHQWLQJ RU PRGLI\LQJ FRPSXWHUL]HG SURFHVVLQJ V\VWHPV % 7KH RUJDQL]DWLRQ V XVH RI FKHFN GLJLWV WR HQVXUH DFFXUDWH LQSXW RI WUDQVDFWLRQ GDWD & 3HULRGLF DQG SUHYHQWDWLYH PDLQWHQDQFH SHUIRUPHG RQ WKH FRPSXWHU DQG UHODWHG HTXLSPHQW ' 7KH H[LVWHQFH RI DSSURSULDWH VHSDUDWLRQ RI GXWLHV ZLWKLQ WKH FRPSXWHU GHSDUWPHQW

 &RPSXWHU FRQWUROV WKDW SURYLGH UHDVRQDEOH DVVXUDQFH WKDW GDWD DUH QRW DOWHUHG RU PRGLILHG DV WKH\ DUH WUDQVPLWWHG WKURXJK WKH V\VWHP DUH UHIHUUHG WR DV

$ *HQHUDO FRQWUROV % +DUGZDUH FRQWUROV & ,QSXW FRQWUROV ' 7UDQVPLVVLRQ FRQWUROV  :KLFK RI WKH IROORZLQJ LV QRW D FRQWURO LQFOXGHG DV SDUW RI WKH V\VWHPV GHYHORSPHQW OLIH F\FOH"

$ (QVXULQJ WKDW DOO VRIWZDUH DFTXLVLWLRQ DQG SURJUDP GHYHORSPHQW HIIRUWV DUH FRQVLVWHQW ZLWK WKH RUJDQL]DWLRQ V QHHGV DQG REMHFWLYHV % 7HVWLQJ DQG YDOLGDWLQJ QHZ SURJUDPV DQG GHYHORSLQJ SURSHU LPSOHPHQWDWLRQ SODQV & 5HTXLULQJ WKDW DOO SURJUDPPLQJ HIIRUWV WDNH SODFH XQGHU WKH FRQWURO RI WKH UHTXHVWLQJ XVHU GHSDUWPHQW ' (QVXULQJ WKDW GDWD DUH FRQYHUWHG FRPSOHWHO\ DQG DFFXUDWHO\ IRU XVH LQ WKH QHZ V\VWHPV

 :K\ LV LW LPSRUWDQW WKDW WKH RUJDQL]DWLRQ HVWDEOLVK V\VWHPV GHYHORSPHQW DQG GRFXPHQWDWLRQ VWDQGDUGV"

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

$ $FFHVV WR SURJUDPV DQG GDWD % &RPSXWHU RSHUDWLRQV & 'DWD ILOH FRQWUROV ' +DUGZDUH FRQWUROV

 :KLFK RI WKH IROORZLQJ FRPSXWHU FRQWUROV ZRXOG SURYLGH WKH EHVW HYLGHQFH WKDW XQDXWKRUL]HG XVHUV DUH QRW DFFHVVLQJ VSHFLILF FRPSXWHU SURJUDPV DQG ILOHV"

$ 8VLQJ SDVVZRUGV UHTXLULQJ DFFHVV WR WKRVH SURJUDPV DQG ILOHV % 3HULRGLFDOO\ UHYLHZLQJ DQG FRQILUPLQJ DFFHVV ULJKWV IRU WKH RUJDQL]DWLRQ V XVHUV & 0RQLWRULQJ DFWXDO XVHU DFWLYLW\ WKURXJK D SURJUDP ORJ DQG FRPSDULQJ WKDW DFWLYLW\ WR DXWKRUL]HG OHYHOV ' (QVXULQJ WKDW DFFHVV WR SURJUDPV DQG ILOHV LV UHPRYHG IRU UHFHQWO\ WHUPLQDWHG HPSOR\HHV  :KLFK RI WKH IROORZLQJ HUURU FRQGLWLRQV ZRXOG QRW EH GHWHFWHG WKURXJK WKH XVH RI EDWFK WRWDOV"

$ $ WUDQVSRVLWLRQ RI QXPEHUV LQ D QXPHULF ILHOG % (QWU\ RI DQ XQDXWKRUL]HG WUDQVDFWLRQ VXSSRUWHG E\ GRFXPHQWDU\ HYLGHQFH & )DLOXUH WR HQWHU D YDOLG WUDQVDFWLRQ WKURXJK LQSXW HUURU ' (UURQHRXVO\ HQWHULQJ WKH VDPH WUDQVDFWLRQ WZLFH

 :KLFK RI WKH IROORZLQJ LQSXW FRQWUROV ZRXOG EH OHDVW OLNHO\ WR LGHQWLI\ WKH IDLOXUH RI DQ HPSOR\HH WR LQSXW D WUDQVDFWLRQ IRU ZKLFK GRFXPHQWDU\ HYLGHQFH KDV EHHQ SUHSDUHG"

$ %DWFK WRWDOV % +DVK WRWDOV & 0LVVLQJ GDWD WHVWV ' 6HTXHQFH WHVWV  $XGLWLQJ WKURXJK WKH FRPSXWHU

$ ,V D UHTXLUHG DSSURDFK XQGHU JHQHUDOO\ DFFHSWHG DXGLWLQJ VWDQGDUGV % 5HTXLUHV WKH DXGLW WHDP WR HYDOXDWH WKH RSHUDWLQJ HIIHFWLYHQHVV RI LPSRUWDQW FRPSXWHU FRQWUROV & ,V QRUPDOO\ XWLOL]HG ZKHQ WKH FOLHQW KDV QRW LPSOHPHQWHG VLJQLILFDQW FRPSXWHU FRQWUROV ' )RFXVHV RQ UHFRQFLOLQJ WKH LQSXW GDWD WR WKH UHVXOWV JHQHUDWHG E\ WKH FOLHQW V FRPSXWHUL]HG SURFHVVLQJ V\VWHP

 :KLFK RI WKH IROORZLQJ LV QRW WUXH ZLWK UHVSHFW WR WKH WHVW GDWD DSSURDFK IRU HYDOXDWLQJ FRPSXWHU FRQWUROV"

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

$ 7KH W\SHV RI WUDQVDFWLRQV WKDW DUH SURFHVVHG WKURXJK WKH V\VWHP V  % 7KH VSHFLILF FRQWURO SURFHGXUHV WKDW KDYH EHHQ LPSOHPHQWHG E\ WKH FOLHQW WR SUHYHQW RU GHWHFW PLVVWDWHPHQWV WKDW FRXOG RFFXU EDVHG RQ WKH DXGLW WHDP V DQDO\VLV & 7KH SURJUDPV DQG ILOHV WKDW DUH DFFHVVHG E\ WKH V\VWHP V LQ SURFHVVLQJ WUDQVDFWLRQV ' 7KH W\SH RI RXWSXW WKDW LV FUHDWHG DV D UHVXOW RI SURFHVVLQJ WUDQVDFWLRQV WKURXJK WKH V\VWHP V 

 :KLFK RI WKH IROORZLQJ LQSXW FRQWUROV ZRXOG QRW EH HIIHFWLYH LQ LGHQWLI\LQJ WKH HUURQHRXV LQSXW RI QXPHULF ILHOGV LQ D WUDQVDFWLRQ"

$ %DWFK WRWDOV % +DVK WRWDOV & &KHFN GLJLWV ' 5HFRUG FRXQWV  ,Q D FRPSXWHUL]HG SURFHVVLQJ V\VWHP KDUGZDUH FRQWUROV DUH GHVLJQHG WR

$ $UUDQJH GDWD LQ D ORJLFDO VHTXHQWLDO PDQQHU IRU SURFHVVLQJ SXUSRVHV % &RUUHFW HUURUV LQ WKH FRPSXWHU SURJUDPV & 0RQLWRU DQG GHWHFW HUURUV LQ VRXUFH GRFXPHQWV ' 'HWHFW DQG FRQWURO HUURUV DULVLQJ IURP XVH RI HTXLSPHQW  $Q H[DPSOH RI D SURJUDP LQ ZKLFK WKH DXGLW WHDP ZRXOG EH PRVW LQWHUHVWHG LQ WHVWLQJ DXWRPDWHG DSSOLFDWLRQ FRQWUROV LV D Q

$ 3D\UROO SURFHVVLQJ SURJUDP % 2SHUDWLQJ V\VWHP SURJUDP & 'DWD PDQDJHPHQW V\VWHP VRIWZDUH ' 8WLOLW\ SURJUDP

 :KLFK RI WKH IROORZLQJ ZRXOG UHGXFH WKH HIIHFWLYHQHVV RI LQWHUQDO FRQWURO LQ D FRPSXWHUL]HG SURFHVVLQJ V\VWHP"

$ 7KH FRPSXWHU OLEUDULDQ PDLQWDLQV FXVWRG\ RI FRPSXWHU SURJUDP LQVWUXFWLRQV DQG GHWDLOHG OLVWV % &RPSXWHU RSHUDWRUV KDYH DFFHVV WR RSHUDWRU LQVWUXFWLRQV DQG GHWDLOHG SURJUDP OLVWV & 7KH FRQWURO JURXS LV VROHO\ UHVSRQVLEOH IRU WKH GLVWULEXWLRQ RI DOO FRPSXWHU RXWSXW ' &RPSXWHU SURJUDPPHUV ZULWH DQG GHEXJ SURJUDPV WKDW SHUIRUP URXWLQHV GHVLJQHG E\ WKH V\VWHPV DQDO\VW  :KLFK RI WKH IROORZLQJ LV WUXH ZLWK UHVSHFW WR IUDXG ULVN IDFWRUV LQ D FRPSXWHUL]HG HQYLURQPHQW"

$ (PSOR\HHV LQ D FRPSXWHUL]HG HQYLURQPHQW DUH KLJKO\ VNLOOHG % $XGLW WHDPV FDQQRW HYDOXDWH WKH FRPSXWHUL]HG SURFHVVLQJ V\VWHP GXULQJ WKH \HDU & +LJKHU GROODU DPRXQWV DUH LQYROYHG LQ D FRPSXWHUL]HG HQYLURQPHQW ' (PSOR\HHV KDYH LQFUHDVHG DFFHVV WR SURFHVVLQJ V\VWHPV DQG FRPSXWHU UHVRXUFHV LQ D FRPSXWHUL]HG HQYLURQPHQW

 &RQWUROV XVHG LQ WKH PDQDJHPHQW RI D FRPSXWHU FHQWHU WR PLQLPL]H WKH SRVVLELOLW\ RI XVLQJ DQ LQFRUUHFW ILOH RU SURJUDP DUH

$ &RQWURO WRWDOV % 5HFRUG FRXQWV & /LPLW FKHFNV ' ([WHUQDO ODEHOV  $XGLW WHDPV ZRXOG PRVW OLNHO\ XVH FRPSXWHUDVVLVWHG DXGLW WHFKQLTXHV WR

$ 0DNH FRSLHV RI FOLHQW GDWD ILOHV IRU FRQWUROOHG UHSURFHVVLQJ % &RQVWUXFW D SDUDOOHO VLPXODWLRQ WR WHVW WKH FOLHQW V FRPSXWHU FRQWUROV & 3HUIRUP WHVWV RI D FOLHQW V KDUGZDUH FRQWUROV ' 7HVW WKH RSHUDWLYH HIIHFWLYHQHVV RI D FOLHQW V SDVVZRUG DFFHVV FRQWURO

 :KLFK RI WKH IROORZLQJ FRPSXWHUL]HG SURFHVVLQJ V\VWHPV JHQHUDOO\ FDQ EH DXGLWHG ZLWKRXW H[DPLQLQJ RU GLUHFWO\ WHVWLQJ WKH FRPSXWHU SURJUDPV RI WKH V\VWHP"

$ $ V\VWHP WKDW SHUIRUPV UHODWLYHO\ XQFRPSOLFDWHG SURFHVVHV DQG SURGXFHV GHWDLOHG RXWSXW % $ V\VWHP WKDW DIIHFWV D QXPEHU RI PDVWHU ILOHV DQG SURGXFHV D OLPLWHG RXWSXW & $ V\VWHP WKDW XSGDWHV D IHZ PDVWHU ILOHV DQG SURGXFHV QR RWKHU SULQWHG RXWSXW WKDQ ILQDO EDODQFHV ' $ V\VWHP WKDW SHUIRUPV UHODWLYHO\ FRPSOLFDWHG SURFHVVLQJ DQG SURGXFHV YHU\ OLWWOH GHWDLOHG RXWSXW  7KH FOLHQW V FRPSXWHUL]HG H[FHSWLRQ UHSRUWLQJ V\VWHP KHOSV DXGLW WHDPV FRQGXFW D PRUH HIILFLHQW DXGLW EHFDXVH LW

$ &RQGHQVHV GDWD VLJQLILFDQWO\ % +LJKOLJKWV DEQRUPDO FRQGLWLRQV & 'HFUHDVHV WKH QHFHVVDU\ OHYHO RI WHVWV RI FRPSXWHU FRQWUROV ' ,V DQ HIILFLHQW FRPSXWHU LQSXW FRQWURO

 $XGLW WHDPV XVH WKH WHVW GDWD PHWKRG WR JDLQ FHUWDLQ DVVXUDQFHV ZLWK UHVSHFW WR

$ ,QSXW GDWD % 0DFKLQH FDSDFLW\ & &RQWURO SURFHGXUHV FRQWDLQHG ZLWKLQ WKH SURJUDP ' *HQHUDO FRQWUROV  :KHQ XVLQJ WHVW GDWD ZK\ DUH DXGLW WHDPV UHTXLUHG WR SUHSDUH RQO\ RQH WUDQVDFWLRQ WR WHVW HDFK FRPSXWHU SURFHVVLQJ DOWHUQDWLYH"

$ 7KH VSHHG DQG HIILFLHQF\ RI WKH FRPSXWHU UHVXOWV LQ UHGXFHG VDPSOH VL]HV % 7KH ULVN RI PLVVWDWHPHQW LV W\SLFDOO\ ORZHU LQ D FRPSXWHUL]HG SURFHVVLQJ HQYLURQPHQW & $XGLW WHDPV JHQHUDOO\ SHUIRUP PRUH H[WHQVLYH VXEVWDQWLYH WHVWLQJ LQ D FRPSXWHUL]HG SURFHVVLQJ HQYLURQPHQW UHVXOWLQJ LQ OHVV QHHG WR WHVW SURFHVVLQJ FRQWUROV ' ,Q D FRPSXWHUL]HG SURFHVVLQJ HQYLURQPHQW HDFK WUDQVDFWLRQ LV KDQGOHG LQ DQ LGHQWLFDO PDQQHU

 :KHQ DXGLWLQJ D FRPSXWHUL]HG SURFHVVLQJ V\VWHP ZKLFK RI WKH IROORZLQJ LV QRW WUXH RI WKH WHVW GDWD DSSURDFK"

$ 7KH FOLHQW V FRPSXWHU SURJUDPV SURFHVV WHVW GDWD XQGHU WKH DXGLW WHDP V FRQWURO % 7KH WHVW GDWD PXVW FRQVLVW RI DOO SRVVLEOH YDOLG DQG LQYDOLG FRQGLWLRQV & 7KH WHVW GDWD QHHG FRQVLVW RQO\ RI WKRVH YDOLG DQG LQYDOLG FRQGLWLRQV LQ ZKLFK DXGLW WHDPV DUH LQWHUHVWHG ' 2QO\ RQH WUDQVDFWLRQ RI HDFK W\SH QHHG EH WHVWHG  $XGLW WHDPV FDQQRW WHVW WKH UHOLDEOH RSHUDWLRQ RI FRPSXWHU FRQWURO SURFHGXUHV E\

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

 $XGLW WHDPV FDQ REWDLQ HYLGHQFH RI WKH SURSHU IXQFWLRQLQJ RI SDVVZRUG DFFHVV FRQWURO WR D FRPSXWHUL]HG SURFHVVLQJ V\VWHP E\

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

$ 0DNH FRUURERUDWLYH LQTXLULHV % 2EVHUYH WKH VHSDUDWLRQ RI GXWLHV RI SHUVRQQHO & 5HYLHZ WUDQVDFWLRQV VXEPLWWHG IRU SURFHVVLQJ DQG FRPSDULQJ WKHP WR UHODWHG RXWSXW ' 5HYLHZ WKH UXQ PDQXDO

 :KLFK RI WKH IROORZLQJ VWDWHPHQWV PRVW OLNHO\ UHSUHVHQWV D FRQWURO FRQVLGHUDWLRQ IRU DQ HQWLW\ WKDW SHUIRUPV LWV DFFRXQWLQJ XVLQJ SRUWDEOH FRPSXWLQJ GHYLFHV"

$ ,W LV XVXDOO\ GLIILFXOW WR GHWHFW DULWKPHWLF HUURUV % 8QDXWKRUL]HG SHUVRQV ILQG LW HDV\ WR DFFHVV WKH FRPSXWHU DQG DOWHU WKH GDWD ILOHV & 7UDQVDFWLRQV DUH FRGHG IRU DFFRXQW FODVVLILFDWLRQV EHIRUH WKH\ DUH SURFHVVHG RQ WKH FRPSXWHU ' 5DQGRP HUURUV LQ UHSRUW SULQWLQJ DUH UDUH LQ SDFNDJHG VRIWZDUH V\VWHPV  &RPSXWHUL]HG SURFHVVLQJ SHUIRUPHG FRQFXUUHQWO\ ZLWK D SDUWLFXODU DFWLYLW\ VR WKDW UHVXOWV DUH DYDLODEOH WR LQIOXHQFH D GHFLVLRQ EHLQJ PDGH LV UHIHUUHG WR DV

$ %DWFK SURFHVVLQJ % 5HDOWLPH SURFHVVLQJ & ,QWHJUDWHG GDWD SURFHVVLQJ ' 5DQGRP DFFHVV SURFHVVLQJ

 :KLFK RI WKH IROORZLQJ LV QRW D FKDUDFWHULVWLF RI D EDWFK SURFHVVLQJ V\VWHP"

$ 7KH FROOHFWLRQ RI VLPLODU WUDQVDFWLRQV WKDW DUH VRUWHG DQG SURFHVVHG VHTXHQWLDOO\ DJDLQVW D PDVWHU ILOH % 7KH LQSXW RI WUDQVDFWLRQV SULRU WR SURFHVVLQJ & 7KH SURGXFWLRQ RI QXPHURXV SULQWRXWV ' 7KH SRVWLQJ RI D WUDQVDFWLRQ DV LW RFFXUV WR VHYHUDO ILOHV ZLWKRXW LQWHUPHGLDWH SULQWRXWV  $ FXVWRPHU LQWHQGHG WR RUGHU  XQLWV RI SURGXFW = EXW LQFRUUHFWO\ RUGHUHG SURGXFW = ZKLFK LV QRW DQ DFWXDO SURGXFW :KLFK RI WKH IROORZLQJ FRQWUROV PRVW OLNHO\ ZRXOG GHWHFW WKLV HUURU"

$ &KHFN GLJLW YHULILFDWLRQ % 5HFRUG FRXQW & +DVK WRWDO ' 5HGXQGDQW GDWD FKHFN

 :KLFK RI WKH IROORZLQJ DXWRPDWHG DSSOLFDWLRQ FRQWUROV ZRXOG RIIHU UHDVRQDEOH DVVXUDQFH WKDW LQYHQWRU\ GDWD ZHUH FRPSOHWHO\ DQG DFFXUDWHO\ HQWHUHG"

$ 6HTXHQFH FKHFNLQJ % %DWFK WRWDOV & /LPLW WHVWV ' &KHFN GLJLWV  :KLFK RI WKH IROORZLQJ SHUVRQV LV UHVSRQVLEOH IRU FRQWUROOLQJ DFFHVV WR V\VWHPV GRFXPHQWDWLRQ DQG DFFHVV WR SURJUDP DQG GDWD ILOHV"

$ 3URJUDPPHUV % 'DWD FRQYHUVLRQ RSHUDWRUV & /LEUDULDQV ' &RPSXWHU RSHUDWRUV  7KH HYDOXDWLRQ RI FRPSXWHU FRQWUROV ZLWK VLPXODWHG GDWD SURFHVVHG WKURXJK WKH FOLHQW V FRPSXWHU SURJUDPV LV UHIHUUHG WR DV

$ 3DUDOOHO VLPXODWLRQ % 7HVW GDWD & ,QWHJUDWHG WHVW IDFLOLW\ ' 'DWDEDVH

 $XGLW WHDPV FDQ XVH WKH FRPSXWHU WR WHVW WKH RSHUDWLQJ HIIHFWLYHQHVV RI WKH FOLHQW V FRQWUROV LQ HDFK RI WKH IROORZLQJ FDVHV H[FHSW WR

$ 6HOHFW WUDQVDFWLRQV DQG PDQXDOO\ DXGLW WKH DFWXDO WUDQVDFWLRQ SURFHVVLQJ % (YDOXDWH WKH FRPSXWHU FRQWUROV XVLQJ VLPXODWHG GDWD & &RPSDUH H[WHUQDO GRFXPHQWDWLRQ ZLWK LQWHUQDO GRFXPHQWDWLRQ ' (YDOXDWH WKH FRPSXWHU FRQWUROV XVLQJ DFWXDO GDWD SURFHVVHG WKURXJK WKH FOLHQW V FRPSXWHU SURJUDPV  :KLFK RI WKH IROORZLQJ LV QRW D FDWHJRU\ RI JHQHUDO FRQWUROV"

$ $FFHVV WR SURJUDPV DQG GDWD FRQWUROV % &RPSXWHU RSHUDWLRQV FRQWUROV & 3URFHVVLQJ FRQWUROV ' 3URJUDP FKDQJH FRQWUROV

 7R WHVW WKH RSHUDWLQJ HIIHFWLYHQHVV RI FRPSXWHU FRQWUROV DXGLW WHDPV FDQ XVH HDFK RI WKH IROORZLQJ PHWKRGV H[FHSW

$ &UHDWLQJ D GXPP\ HQWLW\ DQG SURFHVVLQJ VLPXODWHG WUDQVDFWLRQV DORQJ ZLWK DFWXDO WUDQVDFWLRQV % &UHDWLQJ ILFWLWLRXV WUDQVDFWLRQV IRU SURFHVVLQJ WKURXJK WKH FOLHQW V FRPSXWHU SURJUDPV VHSDUDWHO\ IURP DFWXDO FOLHQW WUDQVDFWLRQV & 3URFHVVLQJ DFWXDO FOLHQW WUDQVDFWLRQV WKURXJK DQ DXGLWRUFUHDWHG SURJUDP ' 2EVHUYLQJ WKH VHSDUDWLRQ RI GXWLHV RI FOLHQW SHUVRQQHO  7KH WRROV DQG WHFKQLTXHV DSSOLFDEOH WR DXGLWLQJ LQ D FRPSXWHUL]HG HQYLURQPHQW VKRXOG QRW LQFOXGH WKRVH WKDW

$ 2SHUDWH RQ D UHDOWLPH EDVLV ZLWK DFWXDO GDWD % 8VH VLPXODWHG RU GXPP\ GDWD & $XGLW DURXQG WKH FRPSXWHU ' 8VH SURJUDP DQDO\VLV WHFKQLTXHV

 7KH WHFKQLTXH RI FUHDWLQJ D PLQLFRPSDQ\ ZLWK ILFWLWLRXV PDVWHU ILOH UHFRUGV WR SURFHVV VLPXODWHG GDWD VLPXOWDQHRXVO\ ZLWK DFWXDO FOLHQW GDWD LV UHIHUUHG WR DV D Q

$ 6DPSOH DXGLW UHYLHZ ILOH % ,QWHJUDWHG WHVW IDFLOLW\ & 6\VWHPV FRQWURO DXGLW UHYLHZ ILOH ' 3URJUDP DQDO\VLV VRIWZDUH  :KLFK RI WKH IROORZLQJ LV QRW DQ H[DPSOH RI D FRPSXWHU FRQWURO UHODWHG WR ILOH UHWHQWLRQ DQG VHFXULW\"

$ (FKR FKHFN % 6WRUDJH LQ ILUHSURRI YDXOWV & %DFNXS YHUVLRQV RI ILOHV VWRUHG LQ UHPRWH ORFDWLRQV ' *UDQGIDWKHUIDWKHUVRQ FRQFHSW

 :KLFK RI WKH IROORZLQJ LV QRW D PDMRU GLIIHUHQFH EHWZHHQ D PDQXDO SURFHVVLQJ HQYLURQPHQW DQG D FRPSXWHUL]HG SURFHVVLQJ HQYLURQPHQW"

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

$ %DWFK WRWDO % +DVK WRWDO & &KHFN GLJLW ' 9DOLG FKDUDFWHU WHVW

 7KH PDMRU GLVDGYDQWDJH RI DQ LQWHJUDWHG WHVW IDFLOLW\ LV WKDW

$ 'DWD SURFHVVHG WKURXJK WKH FOLHQW V V\VWHP PXVW EH EDFNHG RXW YHU\ FDUHIXOO\ % 7KH FRVW RI VHWWLQJ XS WKH IDFLOLW\ DGGV WR RYHUKHDG RI WKH V\VWHP & $XGLW WHDPV QHHG H[WHQVLYH NQRZOHGJH RI FRPSXWHU SURJUDPPLQJ ' ,W LV D FRVWO\ XVH RI FRPSXWHU UHVRXUFHV

)LOO LQ WKH %ODQN 4XHVWLRQV

 $XGLWLQJ BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB UHIHUV WR WKH DFWXDO HYDOXDWLRQ RI WKH KDUGZDUH DQG SURJUDPV WR GHWHUPLQH WKH UHOLDELOLW\ RI FRPSXWHU RSHUDWLRQV DQG WHVW WKH RSHUDWLQJ HIIHFWLYHQHVV RI WKH UHODWHG FRQWUROV BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB  $XGLWLQJ BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB FRQVLVWV RI UHFRQFLOLQJ VRXUFH GRFXPHQWV ZLWK FRPSXWHU RXWSXW BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB

 BBBBBBBBBBBBBBBBBBBBBBBBBBBB WHFKQLTXHV DUH VSHFLDO DXGLW PRGXOHV GHVLJQHG DQG FRGHG LQWR FRPSXWHU SURJUDPV WR DOORZ DXGLW WHDPV WR HYDOXDWH YDULRXV VWDJHV RI WUDQVDFWLRQ SURFHVVLQJ BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB  7KH PHWKRG RI WHVWLQJ FRPSXWHU FRQWUROV WKDW UHTXLUHV DXGLW WHDPV WR SUHSDUH D FRPSXWHU SURJUDP WR SURFHVV D FOLHQW V DFWXDO GDWD LV UHIHUUHG WR DV D Q BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB  BBBBBBBBBBBBBBBBBBBBBBBBBBBBBB FRPSDUH WKH FOLHQW V SURFHVVLQJ RI VLPXODWHG WUDQVDFWLRQV WR WKH DXGLW WHDP V PDQXDO SURFHVVLQJ RI WKRVH WUDQVDFWLRQV BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB  &RQWUROV WKDW LQYROYH DOO DSSOLFDWLRQV RI FRPSXWHUL]HG SURFHVVLQJ VXFK DV KDUGZDUH FRQWUROV DUH UHIHUUHG WR DV BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB  $Q LPSRUWDQW FRQWURO RYHU SURJUDP GHYHORSPHQW LV WKH HQWLW\ V XVH RI WKH BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB OLIH F\FOH WR SODQ GHYHORS DQG LPSOHPHQW QHZ FRPSXWHUL]HG V\VWHPV BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB

 BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB FRQWUROV DUH EXLOW LQ WR WKH FRPSXWHU HTXLSPHQW DQG SURYLGH UHDVRQDEOH DVVXUDQFH WKDW GDWD DUH QRW DOWHUHG RU PRGLILHG DV WKH\ DUH WUDQVPLWWHG ZLWKLQ WKH V\VWHP BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB &KHFN GLJLWV UHFRUG FRXQWV DQG VHTXHQFH WHVWV DUH H[DPSOHV RI BBBBBBBBBBBBBBBBBBBBBBBBBBBBB FRQWUROV BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB )RXU PHWKRGV WKDW DUH XVHG E\ DXGLW WHDPV WR WHVW WKH RSHUDWLQJ HIIHFWLYHQHVV RI FRQWUROV LQFOXGH LQTXLU\ REVHUYDWLRQ GRFXPHQWDWLRQ H[DPLQDWLRQ DQG BBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 6HSDUDWLRQ RI LQFRPSDWLEOH IXQFWLRQV LV DQ H[DPSOH RI D BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB FRQWURO BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBB SURFHVVLQJ RFFXUV ZKHQ D JURXS RI VLPLODU WUDQVDFWLRQV LV DFFXPXODWHG DQG SURFHVVHG VLPXOWDQHRXVO\ BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB

BBBBBBBBBBBBBBBBBBBBBBBBBBBBB GHVFULEHV WKH V\VWHP DQG LWV FRQWUROV DQG LV WKH PHDQV RI FRPPXQLFDWLQJ WKH HVVHQWLDO HOHPHQWV RI WKH FRPSXWHUL]HG SURFHVVLQJ V\VWHP WR FXUUHQW DQG SRWHQWLDO XVHUV BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 5HWDLQLQJ SUHYLRXV JHQHUDWLRQV RI ILOHV IRU XVH LQ UHFRQVWUXFWLQJ FXUUHQW JHQHUDWLRQV RI ILOHV LV NQRZQ DV WKH BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB WHFKQLTXH BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBB SUHSDUH IORZFKDUWV DQG FRGH WKH ORJLF RI WKH FRPSXWHU SURJUDPV UHTXLUHG E\ WKH RYHUDOO V\VWHP GHVLJQHG E\ WKH V\VWHPV DQDO\VW BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB UHSUHVHQW FRPSDULVRQV RI WKH QXPEHU RI WUDQVDFWLRQV VXEPLWWHG IRU GDWD FRQYHUVLRQ ZLWK WKH QXPEHU RI WUDQVDFWLRQV DFWXDOO\ HQWHUHG IRU SURFHVVLQJ BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB

BBBBBBBBBBBBBBBBBBBBBBBBBBBBB DQG BBBBBBBBBBBBBBBBBBBBBBBBBBBBB DUH VSHFLDO LQWHUQDO ODEHOV RQ ILOHV WKDW SURYLGH UHDVRQDEOH DVVXUDQFH WKDW WKH FRUUHFW ILOHV DUH XVHG LQ SURFHVVLQJ BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB $ Q BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB LQYROYHV WHVWLQJ WKH FOLHQW V SURFHVVLQJ V\VWHP DQG FRQWUROV E\ FUHDWLQJ D GXPP\ GHSDUWPHQW RU EUDQFK BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB DUH DULWKPHWLF WRWDOV RI ILHOGV WKDW GR QRW KDYH D VLJQLILFDQW PHDQLQJ VXFK DV HPSOR\HH QXPEHUV  BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBB FRPSXWLQJ HQYLURQPHQWV DUH RIWHQ FKDUDFWHUL]HG E\ LQDGHTXDWH VHSDUDWLRQ RI GXWLHV DQG ODFN RI SK\VLFDO FRPSXWHU VHFXULW\ BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB

6KRUW $QVZHU 4XHVWLRQV

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

0DWFK HDFK RI WKH IROORZLQJ JHQHUDO FRQWUROV ZLWK WKH EURDG FDWHJRU\ RI FRQWUROV LQ 0DWFK ZKLFK LW LV LQFOXGHG HDFK FRQWURO ZLOO EH UHODWHG WR RQO\ RQH FDWHJRU\ 

0DWFK HDFK RI WKH DXWRPDWHG DSSOLFDWLRQ FRQWUROV ZLWK WKH HUURU FRQGLWLRQ V WKH\ 0DWFK DUH GHVLJQHG WR SUHYHQW RU GHWHFW HDFK FRQWURO PD\ EH GHVLJQHG WR SUHYHQW RU GHWHFW PRUH WKDQ RQH HUURU FRQGLWLRQ 

(VVD\ 4XHVWLRQV

:KDW LV WKH GLIIHUHQFH EHWZHHQ WKH XVH RI WHVW GDWD DQG SDUDOOHO VLPXODWLRQ"

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

0DWFKLQJ 4XHVWLRQV

0DWFK HDFK RI WKH IROORZLQJ LQSXW FRQWUROV OHWWHUV $. ZLWK WKH GHVFULSWLRQ RU W\SH RI HUURU WKDW PLJKW EH GHWHFWHG E\ WKLV FRQWURO QXPEHUV   (DFK LQSXW FRQWURO UHODWHV WR RQO\ RQH GHVFULSWLRQ RU W\SH RI HUURU

 'DWD ILHOGV KDYH WKH DSSURSULDWH SRVLWLYH RU QHJDWLYH VLJQ  &RPSXWHU PD\ DXWRPDWLFDOO\ JHQHUDWH DQG DXWKRUL]H WUDQVDFWLRQV  'DWD DUH LQDGYHUWHQWO\ LQSXW LQ DQ LQFRUUHFW ILHOG  7KH VXP RI D GDWD ILHOG KDV QXPHULFDO VLJQLILFDQFH VXFK DV WKH WRWDO QXPEHU RI KRXUV ZRUNHG  7KH VXP RI D GDWD ILHOG KDV QR QXPHULFDO VLJQLILFDQFH VXFK DV WKH WRWDO RI HPSOR\HH QXPEHUV  'DWD FRQYHUVLRQ SHUVRQQHO ZLOO QRW IDLO WR HQWHU GDWD LQ D SDUWLFXODU ILHOG  'DWD YDOXHV H[FHHG RU IDOO EHORZ VRPH SUHGHWHUPLQHG OLPLW  'DWD ILHOGV KDYH WKH DSSURSULDWH QXPHULF RU DOSKDEHWLF

/LPLW DQG UHDVRQDEOHQHVV WHVWV BBBB

5HFRUG FRXQW BBBB 9DOLG VLJQ WHVWV BBBB

%DWFK WRWDOV BBBB (UURU FRUUHFWLRQ DQG UHVXEPLVVLRQ SURFHGXUHV BBBB $XWKRUL]DWLRQ DQG DSSURYDO FRQWUROV BBBB &KHFN GLJLW BBBB +DVK WRWDOV BBBB

FKDUDFWHUV  $ QXPHULFDO ILHOG LV DSSHQGHG WR DQRWKHU QXPHULFDO ILHOG WR HQVXUH DFFXUDWH LQSXW RI GDWD  7KH QXPEHU RI SD\UROO WUDQVDFWLRQV UHFHLYHG IRU SURFHVVLQJ LV FRPSDUHG ZLWK WKH QXPEHU RI WUDQVDFWLRQV HQWHUHG LQWR D WUDQVDFWLRQ ILOH  'DWD HQWU\ SHUVRQQHO DUH DEOH WR FRUUHFW GDWD FRQYHUVLRQ HUURUV LQ D WLPHO\ IDVKLRQ 'DWD HQWU\ DQG IRUPDWWLQJ BBBB 0LVVLQJ GDWD WHVWV BBBB 9DOLG FKDUDFWHU WHVWV BBBB

0DWFK HDFK RI WKH IROORZLQJ SURJUDPHPEHGGHG WHFKQLTXHV OHWWHUV $, ZLWK D GHVFULSWLRQ RI WKHVH WHFKQLTXHV QXPEHUV   (DFK WHFKQLTXH UHODWHV WR RQO\ RQH GHVFULSWLRQ

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

SURFHVVLQJ V\VWHP DQG FRPSDULQJ UHVXOWV WR SUHGHWHUPLQHG UHVXOWV  3URYLGLQJ DQ DXGLW WUDLO RI WUDQVDFWLRQV E\ DFFXPXODWLQJ WKH UHVXOWV RI DOO SURFHVVLQJ  3URFHVVLQJ DFWXDO WUDQVDFWLRQV WKURXJK SURJUDPV GHVLJQHG E\ DXGLW WHDPV WR UHSOLFDWH WKH FOLHQW V FRPSXWHUL]HG SURFHVVLQJ V\VWHP  3URFHVVLQJ VLPXODWHG WUDQVDFWLRQV UHODWHG WR D ILFWLWLRXV GHSDUWPHQW RU EUDQFK FUHDWHG E\ WKH DXGLW WHDP 0RQLWRULQJ V\VWHP DFWLYLW\ BBBB 7HVW GDWD BBBB ,QWHJUDWHG WHVW IDFLOLW\ BBBB

 !&"4 Q ! Y! 9&"  " " %!D  9"D C!&"4 ! ! Y! 9&"  "" (" ! &"(! 9 &!  A "@ ( ! X 57W !4 ! 321 %!0 & !# ) ((  !' &"" %""@!D % %!4 !0    %$# "!   %""@!D % %!4 !0      %""@!D 



7UXH  )DOVH 4XHVWLRQV

5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 758( WR SURFHVVLQJ UHVXOWV ,Q DXGLWLQJ DURXQG WKH FRPSXWHU DXGLW WHDPV UHFRQFLOH VRXUFH GRFXPHQWV LQSXW

0RGXOH + $XGLWLQJ LQ D &RPSXWHUL]HG (QYLURQPHQW $QVZHU .H\

!' &"" %""@!D % %!4 !0    %$# "!   %""@!D % %!4 !0      %""@!D 

&! ! Y! 9&"  "" !!T  9"D C&!  %!" 9 ! Y! 9&"  %!" 9 " " ! ! "" !!@ A "@ !  " " !! % (" ! 9& 8! !4 " )57W !4 ! 321 %!0 & !# ) ((  !' &"" %""@!D % %!4 !0    %$# "!   %""@!D % %!4 !0      %""@!D 





5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 758( WUDQVDFWLRQV LQ D FHUWDLQ ZD\ HYHU\ WUDQVDFWLRQ ZLOO EH KDQGOHG LQ WKH VDPH ZD\ 7KH EDVLF FRQFHSW RI WHVW GDWD LV WKDW RQFH D FRPSXWHU LV SURJUDPPHG WR KDQGOH 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH )$/6( DXGLWLQJ DURXQG WKH FRPSXWHU ,Q VLPSOH EDWFK SURFHVVLQJ V\VWHPV LW LV QRW SRVVLEOH WR XVH WKH WHFKQLTXH RI

%$# "!   %""@!D % %!4 !0      %""@!D 

!&"4 Q ! Y! 9&"  " " %!D  9"D C!&"4 ! ! Y! 9&"  "" (" ! &"(! 9 &!  A "@ ( ! X 57W !4 ! 321 %!0 & !# ) ((  !' &"" %""@!D % %!4 !0    %$# "!   %""@!D % %!4 !0      %""@!D 

!&"4 Q ! Y! 9&"  $E "" %!  9"D C!&"4 ! ! Y! 9&"  $ "" !! &!  !@ A "@ !2! V57W !4 ! 321 %!0 & !# ) (( 





5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH ,QSXW FRQWUROV DUH RQH RI WKH PDMRU FDWHJRULHV RI JHQHUDO FRQWUROV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 758( GXSOLFDWH WKH ORJLF DQG FRPSXWHU FRQWUROV LQ WKH FOLHQW V FRPSXWHU SURJUDP :KHQ XVLQJ SDUDOOHO VLPXODWLRQ DXGLW WHDPV SUHSDUH D FRPSXWHU SURJUDP WR )$/6(



!&"4 Q ! Y! 9&"  " " %!D  9"D C!&"4 ! ! Y! 9&"  "" (" ! &"(! 9 &!  A "@ ( ! X 57W !4 ! 321 %!0 & !# ) ((  !' &"" %""@!D % %!4 !0    %$# "!   %""@!D % %!4 !0      %""@!D 

&! ! Y! 9&"  "" " 99 !&"  9"D C&!  %!" 9 ! Y! 9&"  %!" 9 " " !! "" !!@ A "@ !  "" " 99 !&" (" ! 9& 8! !4 " G 57W !4 ! 321 %!0 & !# ) ((  !' &"" %""@!D % %!4 !0   





5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH )$/6( DSSOLFDWLRQ V\VWHP &RPSXWHU OLEUDULDQV DUH SULPDULO\ UHVSRQVLEOH IRU RSHUDWLQJ WKH FRPSXWHU IRU HDFK 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 758( VRXUFH FRGH DQG D UHFRUG RI DOO SURJUDP FKDQJHV $ SURJUDP GHVFULSWLRQ VKRXOG FRQWDLQ D SURJUDP IORZFKDUW D OLVW RI WKH SURJUDP

 !&"4 Q ! Y! 9&"  " " %!D  9"D C!&"4 ! ! Y! 9&"  "" (" ! &"(! 9 &!  A "@ ( ! X 57W !4 ! 321 %!0 & !# ) ((  !' &"" %""@!D % %!4 !0    %$# "!   %""@!D % %!4 !0      %""@!D 

&! ! Y! 9&"  "" !!T  9"D C&!  %!" 9 ! Y! 9&"  %!" 9 " " ! ! "" !!@ A "@ !  " " !! % (" ! 9& 8! !4 " )57W !4 ! 321 %!0 & !# ) ((  !' &"" %""@!D % %!4 !0    %$# "!   %""@!D % %!4 !0      %""@!D



5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 758( WUDQVDFWLRQV FOLHQW V FRPSXWHUL]HG SURFHVVLQJ V\VWHP DORQJ ZLWK WKH FOLHQW V DFWXDO ,Q DQ LQWHJUDWHG WHVW IDFLOLW\ VLPXODWHG WUDQVDFWLRQV DUH SURFHVVHG WKURXJK WKH

!' &"" %""@!D % %!4 !0    %$# "!   %""@!D % %!4 !0      %""@!D 

&! ! Y! 9&"  "" !!T  9"D C&!  %!" 9 ! Y! 9&"  %!" 9 " " ! ! "" !!@ A "@ !  " " !! % (" ! 9& 8! !4 " )57W !4 ! 321 %!0 & !# ) ((  !' &"" %""@!D % %!4 !0    %$# "!   %""@!D % %!4 !0      %""@!D 





5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH )$/6( GRFXPHQWDWLRQ &RPSXWHU RSHUDWRUV VKRXOG KDYH FRPSOHWH DFFHVV WR SURJUDPV DQG DSSOLFDWLRQ 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 758( FKHFN $Q LPSRUWDQW KDUGZDUH FRQWURO LQFRUSRUDWHG ZLWKLQ FRPSXWHU HTXLSPHQW LV D SDULW\

%""@!D 

&! ! Y! 9&"  "" !!T  9"D C&!  %!" 9 ! Y! 9&"  %!" 9 " " ! ! "" !!@ A "@ !  " " !! % (" ! 9& 8! !4 " )57W !4 ! 321 %!0 & !# ) ((  !' &"" %""@!D % %!4 !0    %$# "!   %""@!D % %!4 !0      %""@!D 

&! ! Y! 9&"  "" !!T  9"D C&!  %!" 9 ! Y! 9&"  %!" 9 " " ! ! "" !!@ A "@ !  " " !! % (" ! 9& 8! !4 " )57W !4 ! 321 %!0 & !# ) (( 





)$/6(

5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 758( EODFN ER[ 7KH PHWKRG RI DXGLWLQJ DURXQG WKH FRPSXWHU WUHDWV WKH FRPSXWHU V\VWHP DV D 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH DGGLWLRQDO DVVXUDQFH E\ LQFUHDVLQJ WHVWV RI WKHLU DXWRPDWHG DSSOLFDWLRQ FRQWUROV ,I DQ HQWLW\ V JHQHUDO FRQWUROV DUH LQHIIHFWLYH DXGLW WHDPV ZRXOG OLNHO\ JDLQ

 !&"4 Q ! Y! 9&"  " " %!D  9"D C!&"4 ! ! Y! 9&"  "" (" ! &"(! 9 &!  A "@ ( ! X 57W !4 ! 321 %!0 & !# ) ((  !' &"" %""@!D % %!4 !0    %$# "!   %""@!D % %!4 !0      %""@!D 

!&"4 Q ! Y! 9&"  " " %!D  9"D C!&"4 ! ! Y! 9&"  "" (" ! &"(! 9 &!  A "@ ( ! X 57W !4 ! 321 %!0 & !# ) ((  !' &"" %""@!D % %!4 !0    %$# "!   %""@!D % %!4 !0     



5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH )$/6( FRPSXWHUL]HG SURFHVVLQJ V\VWHP $Q HPEHGGHG DXGLW PRGXOH FUHDWHV VLPXODWHG GDWD WR EH SURFHVVHG E\ WKH FOLHQW V

%""@!D % %!4 !0    %$# "!   %""@!D % %!4 !0      %""@!D 

!&"4 Q ! Y! 9&"  $E "" %!  9"D C!&"4 ! ! Y! 9&"  $ "" !! &!  !@ A "@ !2! V57W !4 ! 321 %!0 & !# ) ((  !' &"" %""@!D % %!4 !0    %$# "!   %""@!D % %!4 !0      %""@!D 





5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 758( DXGLWLQJ WHFKQLTXHV XQGHU VXSHUYLVLRQ DQG UHYLHZ RI WKH DXGLW WHDP 7KH DXGLW WHDP PD\ XVH LQWHUQDO DXGLWRUV WR GHYHORS DQG UXQ FRPSXWHUDVVLVWHG 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 758( HQYLURQPHQW FRPSXWHUL]HG SURFHVVLQJ HQYLURQPHQW DV WKRVH LQ D PDQXDO SURFHVVLQJ 7KH PDMRU SKDVHV LQ WKH DXGLW WHDP V VWXG\ RI LQWHUQDO FRQWURO DUH WKH VDPH LQ D

   %""@!D 

&! %!" ! Y! 9&"  9"D C "& 8!  !@  9& &!  %!" 9 ! Y! 9&" (" ! !@ A "@ ( ! 6 57W !4 ! 321 %!0 & !# ) ((  !' &"" %""@!D % %!4 !0    %$# "!   %""@!D % %!4 !0      %""@!D 

!&"4 Q ! Y! 9&"  " " %!D  9"D C!&"4 ! ! Y! 9&"  "" (" ! &"(! 9 &!  A "@ ( ! X 57W !4 ! 321 %!0 & !# ) ((  !' &""





)$/6( +HDGHU DQG WUDLOHU ODEHOV DUH H[DPSOHV RI H[WHUQDO ODEHOV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 758( HUURUV PDQXDO SURFHVVLQJ HQYLURQPHQW LV WKH H[LVWHQFH RI V\VWHPDWLF UDWKHU WKDQ UDQGRP 2QH PDMRU GLIIHUHQFH LQ D FRPSXWHUL]HG SURFHVVLQJ HQYLURQPHQW FRPSDUHG WR D

5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

  ! 9&"  ! 2 ! 9&"  9"D C  !4 ! 9 " ! !2  @ " " !@   ( ! 9&" !2!  !(! R 57W !4 ! 321 %!0 & !# ) ((  !' &"" %""@!D % %!4 !0    %$# "!   %""@!D % %!4 !0      %""@!D 

&! ! Y! 9&"  "" !!T  9"D C&!  %!" 9 ! Y! 9&"  %!" 9 " " ! ! "" !!@ A "@ !  " " !! % (" ! 9& 8! !4 " )57W !4 ! 321 %!0 & !# ) ((  !' &"" %""@!D % %!4 !0    %$# "!   %""@!D % %!4 !0  



5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH 758( DFFHVV WR FRPSXWHUV 7KH PRVW LPSRUWDQW SUHYHQWLYH FRQWUROV IRU FRPSXWHU IUDXG DUH WKRVH WKDW OLPLW

%""@!D % %!4 !0    %$# "!   %""@!D % %!4 !0      %""@!D 

  ! 9&"  ! 2 ! 9&"  9"D C  !4 ! 9 " ! !2  @ " " !@   ( ! 9&" !2!  !(! R 57W !4 ! 321 %!0 & !# ) ((  !' &"" %""@!D % %!4 !0    %$# "!   %""@!D % %!4 !0      %""@!D 





5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH )$/6( SURJUDPV DQG GDWD FRQWURO 7KH XVH RI WKH V\VWHPV GHYHORSPHQW OLIH F\FOH LV DQ H[DPSOH RI DQ DFFHVV WR 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH )$/6( DQG HYDOXDWH WKH V\VWHP KDYH WKH FOLHQW KHOS DXGLW WHDPV SODQ DQG H[HFXWH WHFKQLFDO SURFHGXUHV WR VWXG\ :KHQ ZHDNQHVVHV H[LVW WKDW FRXOG OHDG WR FRPSXWHU IUDXG WKH EHVW VWUDWHJ\ LV WR

"" "! 91 ! 9&"  9"D   ! " C&!  %!" 9 ! Y! 9&"  %!" 9 " " ! ! "" !!@ A "@ !  " " !! % (" ! 9& 8! !4 " )57W !4 ! 321 %!0 W G (( 99 &"" %""@!D % %!4 !0    %""@!D % %!4 !0   %""@!D

&! ! Y! 9&"  "" !!T  9"D C&!  %!" 9 ! Y! 9&"  %!" 9 " " ! ! "" !!@ A "@ !  " " !! % (" ! 9& 8! !4 " )57W !4 ! 321 %!0 & !# ) ((  !' &""



0XOWLSOH &KRLFH 4XHVWLRQV

' 6\VWHP IORZFKDUWV SURYLGH DFFXUDWH GHVFULSWLRQV RI FRPSXWHU RSHUDWLRQV & 3HUVRQQHO ZKR DUH LQGHSHQGHQW RI GDWD LQSXW SHUIRUP SDUDOOHO VLPXODWLRQV % %DFNXS ILOHV DUH VWRUHG LQ D ORFDWLRQ VHSDUDWH IURP RULJLQDO FRSLHV $ +DUGZDUH FRQWUROV DUH EXLOW LQWR WKH FRPSXWHU E\ WKH FRPSXWHU PDQXIDFWXUHU UHFRQVWUXFW LWV ILQDQFLDO UHFRUGV" :KLFK RI WKH IROORZLQJ FRQWUROV PRVW OLNHO\ ZRXOG HQVXUH WKDW DQ RUJDQL]DWLRQ FDQ



:KHQ DXGLW WHDPV WHVW D FRPSXWHUL]HG SURFHVVLQJ V\VWHP ZKLFK RI WKH IROORZLQJ LV WUXH RI WKH WHVW GDWD DSSURDFK"

$ 6HYHUDO WUDQVDFWLRQV RI HDFK W\SH PXVW EH WHVWHG % 7HVW GDWD DUH SURFHVVHG E\ WKH FOLHQW V FRPSXWHU SURJUDPV XQGHU WKH DXGLW WHDP V FRQWURO & 7HVW GDWD PXVW FRQVLVW RI DOO SRVVLEOH YDOLG DQG LQYDOLG FRPELQDWLRQV ' 7KH FRPSXWHU SURJUDP XVHG WR SURFHVV WHVW GDWD LV GLIIHUHQW IURP WKH SURJUDP XVHG WKURXJKRXW WKH \HDU E\ WKH FOLHQW
!D  9"D   ! " C!&"4 ! ! Y! 9&"  "" (" ! &"(! 9 &!  A "@ ( ! X 57W !4 ! 321 %!0 & !# ) ((  !' &"" %""@!D % %!4 !0    %""@!D % %!4 !0   %""@!D



,Q HQGXVHU FRPSXWLQJ HQYLURQPHQWV WKH SURFHVVLQJ FRQWURO SURFHGXUHV ZRXOG RUGLQDULO\ QRW LQFOXGH

$ 7UDQVDFWLRQ ORJV % &RQWURO WRWDOV & &RPSDULQJ LQSXW WR RXWSXW ' 2QOLQH HGLWLQJ DQG VLJKW YHULILFDWLRQ
%""@!D % %!4 !0   %""@!D

"" "! 91 ! 9&"  9"D  %1 ! " C&!  %!" 9 ! Y! 9&"  %!" 9 " " ! ! "" !!@ A "@ !  "" !! % (" ! 9& 8! !4 " )57W !4 ! 321 %!0 & !# ) ((  !' &"" %""@!D % %!4 !0    %""@!D % %!4 !0   %""@!D

" " %!"  9"D  %1 ! " C !&"4 ! % 9&" !@ "  !7 ! @ A ! " ! " "  !@ !@ !2! I 57W !4 ! 321 %!0 Q 6 (( !2&!&!E &"" %""@!D % %!4 !0   



' &RPSXWHU SURJUDPPHUV VKRXOG EH SHULRGLFDOO\ URWDWHG DFURVV GLIIHUHQW & 6SHFLILF SDVVZRUGV VKRXOG EH UHTXLUHG WR DFFHVV RQOLQH ILOHV % &RPSXWHU RSHUDWRUV VKRXOG PDLQWDLQ FRQWURO RI DOO VRIWZDUH SURJUDPV $ 7KH GXWLHV RI DSSOLFDWLRQ SURJUDPPLQJ FRPSXWHU RSHUDWLRQ DQG FRQWURO RI :KLFK RI WKH IROORZLQJ LV QRW DQ DSSURSULDWH VWDWHPHQW ZLWK UHJDUG WR FRPSXWHU FRQWURO DFWLYLWLHV" GDWD ILOHV VKRXOG EH VHSDUDWHG

DSSOLFDWLRQV

!2&!&!E &"" %""@!D % %!4 !0    %""@!D % %!4 !0   %""@!D

" " !A W  9"D  %1 ! " C&!  %!" 9 ! Y! 9&"  %!" 9 " " ! ! "" !!@ A "@ !  " " !! % (" ! 9& 8! !4 " )57W !4 ! 321 %!0 Q 6 (( !2&!&!E &"" %""@!D % %!4 !0    %""@!D % %!4 !0   %""@!D





PRYHG IURP RQH LQWHUQDO VWRUDJH ORFDWLRQ WR DQRWKHU"

' :LWK WKH FRPSXWHU & :LWKRXW WKH FRPSXWHU % 7KURXJK WKH FRPSXWHU $ $URXQG WKH FRPSXWHU FRPSDUHV VRXUFH GRFXPHQWV WR WKH FRPSXWHU RXWSXW LV NQRZQ DV DXGLWLQJ $Q DXGLW WHDP V DSSURDFK WR HYDOXDWLQJ FRPSXWHUL]HG SURFHVVLQJ V\VWHPV WKDW ' 3DULW\ FKHFN & ,QWHUQDO ODEHO % (FKR FKHFN $ 3UHYHQWLYH PDLQWHQDQFH :KLFK RI WKH IROORZLQJ HQVXUHV WKDW WKH FRGLQJ RI GDWD GRHV QRW FKDQJH ZKHQ LW LV

"& !  9"D  %1 ! " C!&"4 ! ! Y! 9&"  "" (" ! &"(! 9 &!  A "@ ( ! X 57W !4 ! 321 %!0 Q 6 (( !2&!&!E &"" %""@!D % %!4 !0    %""@!D % %!4 !0   %""@!D

%  " !@" 99  9"D  %1 ! " C!&"4 ! ! Y! 9&"  "" (" ! &"(! 9 &!  A "@ ( ! X 57W !4 ! 321 %!0 Q 6 ((



' 3DUDOOHO VLPXODWLRQ & *HQHUDOL]HG DXGLW VRIWZDUH % 7HVW GHFN $ 7HVW GDWD HYDOXDWH SURJUDP FRQWUROV LV FDOOHG 7KH UHSURFHVVLQJ RI DFWXDO GDWD XVLQJ SURJUDPV GHYHORSHG E\ WKH DXGLW WHDP WR



7HFKQLTXHV QHHGHG WR VHOHFW VSHFLILF WUDQVDFWLRQV RI DXGLW LQWHUHVW IRU WHVWLQJ ZRXOG QRW LQFOXGH

$ (PEHGGHG DXGLW PRGXOHV % 0RQLWRULQJ V\VWHP DFWLYLW\ & 6QDSVKRW ' 7HVW GDWD
%  " !@" 99  9"D  %1 ! " C!&"4 ! ! Y! 9&"  "" (" ! &"(! 9 &!  A "@ ( ! X 57W !4 ! 321 %!0 Q 6 (( !2&!&!E &"" %""@!D % %!4 !0    %""@!D % %!4 !0   %""@!D



&RPSXWHU RSHUDWLRQV FRQWUROV DUH W\SLFDOO\ LPSOHPHQWHG IRU ILOHV DQG GDWD XVHG LQ SURFHVVLQJ 7KH PDMRU REMHFWLYHV RI WKHVH FRQWUROV LQFOXGH HDFK RI WKH IROORZLQJ H[FHSW

$ (QVXUH WKDW DSSURSULDWH ILOHV DUH XVHG LQ FRPSXWHUL]HG SURFHVVLQJ % (QVXUH UHVWULFWHG DFFHVV WR WKH FRPSXWLQJ HQYLURQPHQW & (QVXUH WKDW ILOHV DUH DSSURSULDWHO\ VHFXUHG DQG SURWHFWHG IURP ORVV ' (QVXUH WKDW ILOHV FDQ EH UHFRQVWUXFWHG IURP HDUOLHU YHUVLRQV RI LQIRUPDWLRQ XVHG LQ SURFHVVLQJ
%""@!D % %!4 !0   %""@!D

"& !  9"D  %1 ! " C!&"4 ! ! Y! 9&"  "" (" ! &"(! 9 &!  A "@ ( ! X 57W !4 ! 321 %!0 & !# ) ((  !' &"" %""@!D % %!4 !0    %""@!D % %!4 !0   %""@!D

"" "! 91 ! 9&"  9"D  %1 ! " C&!  %!" 9 ! Y! 9&"  %!" 9 " " ! ! "" !!@ A "@ !  " " !! % (" ! 9& 8! !4 " )57W !4 ! 321 %!0 & !# ) ((  !' &"" %""@!D % %!4 !0   



' 7DJJLQJ WUDQVDFWLRQV & 7HVW GDWD % 3DUDOOHO VLPXODWLRQ $ *HQHUDOL]HG DXGLW VRIWZDUH WKDW RI WKH FOLHQW V V\VWHP 7KLV DXGLW WHFKQLTXH ZRXOG EH FRQVLGHUHG SURFHVV DFWXDO FOLHQW GDWD 7KH RXWSXW RI WKH VHFXUHG SURJUDP ZDV FRPSDUHG WR DXGLW 6HYHUDO WLPHV GXULQJ WKH DXGLW WKH WHDP XVHG WKLV FRS\ RI WKH SURJUDP WR 7KH DXGLW WHDP PDGH D FRS\ RI WKH FOLHQW V VDOHV DQG ELOOLQJ SURJUDP HDUO\ LQ WKH



:KLFK RI WKH IROORZLQJ RUJDQL]DWLRQDO SRVLWLRQV ZRXOG HYDOXDWH WKH H[LVWLQJ V\VWHP DQG GHVLJQ QHZ FRPSXWHUL]HG SURFHVVLQJ V\VWHPV DQG GRFXPHQWDWLRQ"

$ 3URJUDPPHU % 6\VWHPV DQDO\VW & &RPSXWHU RSHUDWRU ' 'DWD FRQYHUVLRQ RSHUDWRU
"" "! 91 ! 9&"  9"D  %1 ! " C&!  %!" 9 ! Y! 9&"  %!" 9 " " ! ! "" !!@ A "@ !  " " !! % (" ! 9& 8! !4 " )57W !4 ! 321 %!0 Q 6 (( !2&!&!E &"" %""@!D % %!4 !0    %""@!D % %!4 !0   %""@!D



7KH HIIHFWLYHQHVV RI JHQHUDO FRQWUROV LV DQ LPSRUWDQW FRQVLGHUDWLRQ IRU DXGLW WHDPV ZKHQ DVVHVVLQJ FRQWURO ULVN RQ DQ DXGLW :KLFK PDQDJHPHQW DVVHUWLRQV DUH SULPDULO\ DIIHFWHG E\ JHQHUDO FRQWUROV"

$ &RPSOHWHQHVV DQG DFFXUDF\ % 2FFXUUHQFH DQG ULJKWV DQG REOLJDWLRQV & $FFXUDF\ DQG RFFXUUHQFH ' &RPSOHWHQHVV DQG RFFXUUHQFH
 $E    %$@D    

 !D  9"D  %1 ! " C!&"4 ! ! Y! 9&"  "" (" ! &"(! 9 &!  A "@ ( ! X 57W !4 ! 321 %!0 & !# ) ((  !' &"" %""@!D % %!4 !0    %""@!D % %!4 !0   %""@!D

"" !!T  9"D  %1 ! " C&!  %!" 9 ! Y! 9&"  %!" 9 " " ! ! "" !!@ A "@ !  " " !! % (" ! 9& 8! !4 " )57W !4 ! 321 %!0 & !# ) ((  !' &""



' $OO SRVVLEOH FRPELQDWLRQV RI YDOLG GDWD DUH FRUUHFWO\ SURFHVVHG & (YHU\ SRVVLEOH HUURU LV SUHYHQWHG RU GHWHFWHG E\ WKH FOLHQW V FRPSXWHU FRQWUROV % &RQWUROV RSHUDWH DV GHVFULEHG LQ UHVSRQVHV WR LQWHUQDO FRQWURO TXHVWLRQQDLUH $ 7KH DXGLW WHDP V WHVW GDWD DUH FRQVLVWHQW ZLWK WKH FOLHQW V QRUPDO WUDQVDFWLRQV 7KH SXUSRVH RI WHVW GDWD LV WR GHWHUPLQH ZKHWKHU LWHPV DQG SURJUDP IORZFKDUWV

  ! " C!&"4 ! ! Y! 9&"  "" (" ! &"(! 9 &!  A "@ ( ! X 57W !4 ! 321 %!0 & !# ) ((  !' &"" %""@!D % %!4 !0    %""@!D % %!4 !0   %""@!D

"" "! 91 ! 9&"  9"D  %1 ! " C&!  %!" 9 ! Y! 9&"  %!" 9 " " ! ! "" !!@ A "@ !  " " !! % (" ! 9& 8! !4 " )57W !4 ! 321 %!0 Q 6 (( !2&!&!E &"" %""@!D % %!4 !0    %""@!D % %!4 !0   %""@!D





' &RQVWUXFW DQG SHUIRUP SDUDOOHO VLPXODWLRQV & $VVHVV FRQWURO ULVN UHODWHG WR FRPSXWHUL]HG SURFHVVLQJ V\VWHPV % 3UHSDUH VSUHDGVKHHWV $ $FFHVV FOLHQW GDWD ILOHV $XGLW WHDPV ZRXOG OHDVW OLNHO\ XVH FRPSXWHUDVVLVWHG DXGLW WHFKQLTXHV WR ' 7UDQVDFWLRQ ORJV & )LOH EDFNXS DQG UHWHQWLRQ % %DODQFH RI LQSXW WR RXWSXW $ &RQWURO WRWDOV :KLFK RI WKH IROORZLQJ LV DQ H[DPSOH RI D FRPSXWHU RSHUDWLRQV FRQWURO"



:KLFK RI WKH IROORZLQJ PHWKRGV DOORZ ILFWLWLRXV DQG DFWXDO WUDQVDFWLRQV WR EH SURFHVVHG WRJHWKHU ZLWKRXW FOLHQW RSHUDWLQJ SHUVRQQHO EHLQJ DZDUH RI WKH WHVWLQJ SURFHVV"

$ ,QWHJUDWHG WHVW IDFLOLW\ % ,QSXW FRQWUROV PDWUL[ & 3DUDOOHO VLPXODWLRQ ' 'DWD HQWU\ PRQLWRU
 !D !  %!  9"D   ! " C!&"4 ! ! Y! 9&"  "" (" ! &"(! 9 &!  A "@ ( ! X 57W !4 ! 321 %!0 Q 6 (( !2&!&!E &"" %""@!D % %!4 !0    %""@!D % %!4 !0   %""@!D



(DFK RI WKH IROORZLQJ DXWRPDWHG DSSOLFDWLRQ FRQWUROV LV GHVLJQHG WR HQVXUH WKDW WKH LQSXW RI LQGLYLGXDO WUDQVDFWLRQV DQG GDWD LV DFFXUDWH H[FHSW

$ &KHFN GLJLWV % 9DOLG VLJQ WHVWV & 6HTXHQFH WHVWV ' /LPLW DQG UHDVRQDEOHQHVV WHVWV
%""@!D % %!4 !0   %""@!D

!D  9"D

 !D  9"D   ! " C!&"4 ! ! Y! 9&"  "" (" ! &"(! 9 &!  A "@ ( ! X 57W !4 ! 321 %!0 W G (( 99 &"" %""@!D % %!4 !0    %""@!D % %!4 !0   %""@!D

""  9  9"D  %1 ! " C&!  %!" 9 ! Y! 9&"  %!" 9 " " !! "" !!@ A "@ !  "" " 99 !&" (" ! 9& 8! !4 " G 57W !4 ! 321 %!0 W G (( 99 &"" %""@!D % %!4 !0   



' 3URSHU DSSURYDO RI RYHUWLPH E\ VXSHUYLVRUV & 'LVFRYHU\ RI LQYDOLG HPSOR\HH LGHQWLILFDWLRQ QXPEHUV % (DUO\ FDVKLQJ RI SD\UROO FKHFNV E\ HPSOR\HHV $ ([LVWHQFH RI XQFODLPHG SD\UROO FKHFNV KHOG E\ VXSHUYLVRUV V\VWHP WR WHVW LQWHUQDO FRQWUROV UHODWHG WR WKH $XGLW WHDPV ZRXOG PRVW OLNHO\ LQWURGXFH WHVW GDWD LQWR D FRPSXWHUL]HG SD\UROO



7R REWDLQ HYLGHQFH WKDW FRQWUROV RYHU DFFHVV WR FRPSXWHU SURJUDPV DUH SURSHUO\ IXQFWLRQLQJ DXGLW WHDPV PRVW OLNHO\ ZRXOG

$ &UHDWH FKHFNSRLQWV DW SHULRGLF LQWHUYDOV DIWHU GDWD SURFHVVLQJ WR WHVW IRU XQDXWKRUL]HG XVH RI WKH V\VWHP % ([DPLQH WKH WUDQVDFWLRQ ORJ WR GLVFRYHU ZKHWKHU DQ\ WUDQVDFWLRQV ZHUH ORVW RU HQWHUHG WZLFH GXH WR D V\VWHP PDOIXQFWLRQ & (QWHU LQYDOLG LGHQWLILFDWLRQ QXPEHUV RU SDVVZRUGV WR DVFHUWDLQ ZKHWKHU WKH V\VWHP UHMHFWV WKHP ' 9RXFK D UDQGRP VDPSOH RI SURFHVVHG WUDQVDFWLRQV WR HQVXUH SURSHU DXWKRUL]DWLRQ
""  & %" " !  9"D   ! " C&!  %!" 9 ! Y! 9&"  %!" 9 " " !! "" !!@ A "@ !  " " !! % (" ! 9& 8! !4 " )57W !4 ! 321 %!0 W G (( 99 &"" %""@!D % %!4 !0    %""@!D % %!4 !0   %""@!D



7HVWV RI FRQWUROV LQ DQ DGYDQFHG FRPSXWHUL]HG SURFHVVLQJ V\VWHP

$ &DQ EH SHUIRUPHG XVLQJ RQO\ DFWXDO WUDQVDFWLRQV EHFDXVH WHVWLQJ VLPXODWHG WUDQVDFWLRQV GRHV QRW SURYLGH UHOHYDQW HYLGHQFH % &DQ EH SHUIRUPHG XVLQJ DFWXDO WUDQVDFWLRQV RU VLPXODWHG WUDQVDFWLRQV & ,V LPSUDFWLFDO EHFDXVH PDQ\ SURFHGXUHV ZLWKLQ WKH FRPSXWHUL]HG SURFHVVLQJ V\VWHP OHDYH QR YLVLEOH HYLGHQFH RI KDYLQJ EHHQ SHUIRUPHG ' ,V LQDGYLVDEOH EHFDXVH LW PD\ GLVWRUW WKH HYLGHQFH LQ UHDOWLPH V\VWHPV
%  " !@" 99  9"D   ! " C!&"4 ! ! Y! 9&"  "" (" ! &"(! 9 &!  A "@ ( ! X 57W !4 ! 321 %!0 & !# ) ((  !' &"" %""@!D % %!4 !0    %""@!D % %!4 !0   %""@!D



:KLFK RI WKH IROORZLQJ LV D JHQHUDO FRQWURO WKDW ZRXOG PRVW OLNHO\ DVVLVW DQ RUJDQL]DWLRQ ZKRVH V\VWHPV DQDO\VW UHVLJQHG GXULQJ WKH GHYHORSPHQW RI D PDMRU SURMHFW"

$ *UDQGIDWKHUIDWKHUVRQ ILOH UHWHQWLRQ % ,QSXW DQG RXWSXW YDOLGDWLRQ URXWLQHV & 6\VWHPV GRFXPHQWDWLRQ ' &KHFN GLJLW YHULILFDWLRQ
%""@!D % %!4 !0   %""@!D



C !&"4 ! % 9&" !@ "  !7 ! @ A ! " ! ""  !@ !@ !2! I 57W !4 ! 321 %!0 W G (( !4 Q &"" %""@!D % %!4 !0    %""@!D % %!4 !0   %""@!D

" " ! %@ & %"  9"D   ! " C&!  %!" 9 ! Y! 9&"  %!" 9 " " ! ! "" !!@ A "@ !  " " !! % (" ! 9& 8! !4 " )57W !4 ! 321 %!0 & !# ) ((  !' &"" %""@!D % %!4 !0   

:KLFK RI WKH IROORZLQJ ZRXOG PRVW OLNHO\ EH D ZHDNQHVV LQ WKH LQWHUQDO FRQWURO RI D FOLHQW WKDW XWLOL]HV SRUWDEOH FRPSXWLQJ GHYLFHV UDWKHU WKDQ D ODUJH FRPSXWHU V\VWHP"

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

""  & %" " !  9"D   ! " C&!  %!" 9 ! Y! 9&"  %!" 9 " " ! ! "" !!@ A "@ !  "" !! % (" ! 9& 8! !4 " )57W !4 ! 321 %!0 & !# ) ((  !' &"" %""@!D % %!4 !0    %""@!D % %!4 !0   %""@!D

" !" ""  9"D   ! "



' (FKR FKHFN & 6HOIGLDJQRVLV WHVW % 3HUVRQDO LGHQWLILFDWLRQ FRGH $ 3DULW\ FKHFN UHTXLUHG WR HQWHU D Q :KHQ SURJUDPV RU ILOHV FDQ EH DFFHVVHG IURP WHUPLQDOV XVHUV VKRXOG EH



:KLFK RI WKH IROORZLQJ FRQWURO SURFHGXUHV PRVW OLNHO\ FRXOG SUHYHQW FRPSXWHU SHUVRQQHO IURP PRGLI\LQJ SURJUDPV WR E\SDVV FRPSXWHU FRQWUROV"

$ 3HULRGLF PDQDJHPHQW UHYLHZ RI FRPSXWHU XWLOL]DWLRQ UHSRUWV DQG V\VWHPV GRFXPHQWDWLRQ % 6HSDUDWLRQ RI GXWLHV IRU FRPSXWHU SURJUDPPLQJ DQG FRPSXWHU RSHUDWLRQV & 3DUWLFLSDWLRQ RI XVHU GHSDUWPHQW SHUVRQQHO LQ GHVLJQLQJ DQG DSSURYLQJ QHZ V\VWHPV ' 3K\VLFDO VHFXULW\ RI FRPSXWHU IDFLOLWLHV LQ OLPLWLQJ DFFHVV WR FRPSXWHU HTXLSPHQW
" " ! %@ & %"  9"D   ! " C&!  %!" 9 ! Y! 9&"  %!" 9 " " ! ! "" !!@ A "@ !  " " !! % (" ! 9& 8! !4 " )57W !4 ! 321 %!0 W G (( !4 Q &"" %""@!D % %!4 !0    %""@!D % %!4 !0   %""@!D



:KLFK RI WKH IROORZLQJ LV OLNHO\ WR EH RI OHDVW LPSRUWDQFH WR DXGLW WHDPV ZKHQ REWDLQLQJ DQ XQGHUVWDQGLQJ RI WKH FRPSXWHU FRQWUROV LQ DQ RUJDQL]DWLRQ ZLWK D FRPSXWHUL]HG SURFHVVLQJ V\VWHP"

$ 6HSDUDWLRQ RI GXWLHV ZLWKLQ WKH FRPSXWHU IXQFWLRQ % &RQWUROV RYHU VRXUFH GRFXPHQWV & 'RFXPHQWDWLRQ PDLQWDLQHG IRU DFFRXQWLQJ DSSOLFDWLRQV ' 5HODWLRQVKLS EHWZHHQ FRVWV DQG EHQHILWV RI FRPSXWHU RSHUDWLRQV
" " (" %!' % 21  9"D  %1 ! " C!&"4 ! ! Y! 9&"  $ "" !! &!  !@ A "@ !2! V57W !4 ! 321 %!0 & !# ) ((  !' &""  $E    %$@D    



$IWHU REWDLQLQJ D SUHOLPLQDU\ XQGHUVWDQGLQJ RI D FOLHQW V FRPSXWHU FRQWUROV DXGLW WHDPV PD\ GHFLGH QRW WR SHUIRUP WHVWV RI FRQWUROV :KLFK RI WKH IROORZLQJ ZRXOG QRW EH D YDOLG UHDVRQ IRU FKRRVLQJ WR RPLW WHVWV RI FRQWUROV"

$ 7KH FOLHQW V FRPSXWHU FRQWUROV GXSOLFDWH PDQXDO FRQWUROV H[LVWLQJ HOVHZKHUH LQ WKH V\VWHP % 7KHUH DSSHDU WR EH PDMRU ZHDNQHVVHV WKDW LQGLFDWH D KLJK OHYHO RI FRQWURO ULVN & 7KH WLPH DQG GROODU FRVWV RI WHVWLQJ FRPSXWHU FRQWUROV H[FHHG WKH WLPH DQG GROODU VDYLQJV LQ VXEVWDQWLYH SURFHGXUHV ' 7KH FOLHQW V FRQWUROV DSSHDU WR IXQFWLRQ DW DQ DGHTXDWH OHYHO WR MXVWLI\ D ORZ DVVHVVPHQW RI FRQWURO ULVN
"" (" !D  9"D  %1 ! " C!&"4 ! ! Y! 9&"  $ "" !! &!  !@ A "@ !2! V57W !4 ! 321 %!0 W G (( 99 &""  $E    %$@D    



:KHQ D UHDOWLPH FRPSXWHUL]HG SURFHVVLQJ V\VWHP LV LQ XVH WKH FRPSXWHU FRQWUROV FDQ EH VWUHQJWKHQHG E\

$ 3URYLGLQJ IRU WKH VHSDUDWLRQ RI GXWLHV EHWZHHQ GDWD LQSXW DQG HUURU OLVWLQJ RSHUDWLRQV % 8VLQJ D V\VWHPV GHYHORSPHQW OLIH F\FOH IRU DXWKRUL]DWLRQ XVHU LQYROYHPHQW DQG WHVWLQJ RI SURJUDP PRGLILFDWLRQV & 3UHSDULQJ EDWFK WRWDOV WR SURYLGH DVVXUDQFH WKDW ILOH XSGDWHV DUH PDGH IRU WKH HQWLUH JURXS RI WUDQVDFWLRQV ' 3HUIRUPLQJ D YDOLGLW\ FKHFN RI DQ LGHQWLILFDWLRQ QXPEHU EHIRUH D XVHU FDQ REWDLQ DFFHVV WR WKH FRPSXWHU ILOHV
""  & %" " !  9"D  %1 ! " C&!  %!" 9 ! Y! 9&"  %!" 9 " " ! ! "" !!@ A "@ !  " " !! % (" ! 9& 8! !4 " )57W !4 ! 321 %!0 W G (( !4 Q &"" %""@!D % %!4 !0    %""@!D % %!4 !0   %""@!D



:KLFK RI WKH IROORZLQJ VWDWHPHQWV EHVW GHVFULEHV WKH LPSDFW RQ DQ DXGLW ZKHQ D FOLHQW XVHV FRPSXWHUL]HG SURFHVVLQJ RI WUDQVDFWLRQV"

$ 7KH REMHFWLYH RI WKH DXGLW H[DPLQDWLRQ IRFXVHV RQ GHWHFWLRQ RI IUDXG DQG WKHIW WKURXJK WKH FRPSXWHU % 7KH W\SH RI VXEVWDQWLYH SURFHGXUHV SHUIRUPHG E\ WKH DXGLW WHDP FKDQJH EHFDXVH RI WKH XVH RI FRPSXWHUL]HG SURFHVVLQJ & 7KH HIIHFWLYHQHVV RI FRPSXWHU FRQWUROV LPSOHPHQWHG E\ WKH FOLHQW RYHU LWV FRPSXWHUL]HG SURFHVVLQJ PD\ QHHG WR EH HYDOXDWHG E\ DXGLW WHDPV ' 'LIIHUHQW LQGHSHQGHQFH VWDQGDUGV DUH LQWURGXFHG IRU DXGLW WHDPV ZKHQ FOLHQWV XWLOL]H FRPSXWHUL]HG SURFHVVLQJ
 !@ " %!" ! Y! 9&" ( " !((Q  9"D  %1 ! " C "& 8!  !@  9& &!  %!" 9 ! Y! 9&" (" ! !@ A "@ ( ! 6 57W !4 ! 321 %!0 & !# ) ((  !' &"" %""@!D % %!4 !0    %""@!D % %!4 !0   %""@!D

"" !!T  9"D  %1 ! " C&!  %!" 9 ! Y! 9&"  %!" 9 " " ! ! "" !!@ A "@ !  " " !! % (" ! 9& 8! !4 " )57W !4 ! 321 %!0 Q 6 (( !2&!&!E &"" %""@!D % %!4 !0    %""@!D % %!4 !0   %""@!D



' *HQHUDO FRQWUROV & $XWRPDWHG DSSOLFDWLRQ FRQWUROV % (QYLURQPHQW FRQWUROV $ &RPSXWHU FRQWUROV FRPSXWHUL]HG SURFHVVLQJ V\VWHP DUH UHIHUUHG WR DV &RPSXWHU FRQWUROV WKDW DUH SHUYDVLYH DQG DSSO\ WR DOO DSSOLFDWLRQV RI D



:KLFK RI WKH IROORZLQJ LV QRW DQ H[DPSOH RI D JHQHUDO FRQWURO"

$ 7KH RUJDQL]DWLRQ V XVH RI WKH V\VWHPV GHYHORSPHQW OLIH F\FOH ZKHQ LPSOHPHQWLQJ RU PRGLI\LQJ FRPSXWHUL]HG SURFHVVLQJ V\VWHPV % 7KH RUJDQL]DWLRQ V XVH RI FKHFN GLJLWV WR HQVXUH DFFXUDWH LQSXW RI WUDQVDFWLRQ GDWD & 3HULRGLF DQG SUHYHQWDWLYH PDLQWHQDQFH SHUIRUPHG RQ WKH FRPSXWHU DQG UHODWHG HTXLSPHQW ' 7KH H[LVWHQFH RI DSSURSULDWH VHSDUDWLRQ RI GXWLHV ZLWKLQ WKH FRPSXWHU GHSDUWPHQW
"" !!T  9"D  %1 ! " C&!  %!" 9 ! Y! 9&"  %!" 9 " " ! ! "" !!@ A "@ !  " " !! % (" ! 9& 8! !4 " )57W !4 ! 321 %!0 Q 6 (( !2&!&!E &"" %""@!D % %!4 !0    %""@!D % %!4 !0   %""@!D

" " !A W  9"D  %1 ! " C&!  %!" 9 ! Y! 9&"  %!" 9 " " ! ! "" !!@ A "@ !  "" !! % (" ! 9& 8! !4 " )57W !4 ! 321 %!0 Q 6 (( !2&!&!E &"" %""@!D % %!4 !0    %""@!D % %!4 !0   %""@!D



' 7UDQVPLVVLRQ FRQWUROV & ,QSXW FRQWUROV % +DUGZDUH FRQWUROV $ *HQHUDO FRQWUROV PRGLILHG DV WKH\ DUH WUDQVPLWWHG WKURXJK WKH V\VWHP DUH UHIHUUHG WR DV &RPSXWHU FRQWUROV WKDW SURYLGH UHDVRQDEOH DVVXUDQFH WKDW GDWD DUH QRW DOWHUHG RU



:KLFK RI WKH IROORZLQJ LV QRW D FRQWURO LQFOXGHG DV SDUW RI WKH V\VWHPV GHYHORSPHQW OLIH F\FOH"

$ (QVXULQJ WKDW DOO VRIWZDUH DFTXLVLWLRQ DQG SURJUDP GHYHORSPHQW HIIRUWV DUH FRQVLVWHQW ZLWK WKH RUJDQL]DWLRQ V QHHGV DQG REMHFWLYHV % 7HVWLQJ DQG YDOLGDWLQJ QHZ SURJUDPV DQG GHYHORSLQJ SURSHU LPSOHPHQWDWLRQ SODQV & 5HTXLULQJ WKDW DOO SURJUDPPLQJ HIIRUWV WDNH SODFH XQGHU WKH FRQWURO RI WKH UHTXHVWLQJ XVHU GHSDUWPHQW ' (QVXULQJ WKDW GDWD DUH FRQYHUWHG FRPSOHWHO\ DQG DFFXUDWHO\ IRU XVH LQ WKH QHZ V\VWHPV
"" !& 9"!4 ! & %"  9"D  %1 ! " C&!  %!" 9 ! Y! 9&"  %!" 9 " " ! ! "" !!@ A "@ !  " " !! % (" ! 9& 8! !4 " )57W !4 ! 321 %!0 & !# ) ((  !' &"" %""@!D % %!4 !0    %""@!D % %!4 !0   %""@!D



:K\ LV LW LPSRUWDQW WKDW WKH RUJDQL]DWLRQ HVWDEOLVK V\VWHPV GHYHORSPHQW DQG GRFXPHQWDWLRQ VWDQGDUGV"

$ 7KHVH VWDQGDUGV HQDEOH WKH RUJDQL]DWLRQ WR XQGHUVWDQG WKH SURJUDPPLQJ ORJLF XQGHUO\LQJ UHFHQWO\ GHYHORSHG SURJUDPV % 7KHVH VWDQGDUGV HQVXUH WKDW WKH SURJUDP FRQWUROV DQG GRFXPHQWDWLRQ LQFOXGHG LQ UHFHQWO\ GHYHORSHG SURJUDPV LV DGHTXDWH & 7KH DEVHQFH RI WKHVH VWDQGDUGV ZRXOG FRQVWLWXWH D PDWHULDO ZHDNQHVV LQ LQWHUQDO FRQWURO ' 7KHVH VWDQGDUGV HQVXUH WKH DSSURSULDWH VHSDUDWLRQ RI GXWLHV RI FRPSXWHU SHUVRQQHO
"" !& 9"!4 ! & %"  9"D  %1 ! " C&!  %!" 9 ! Y! 9&"  %!" 9 " " ! ! "" !!@ A "@ !  " " !! % (" ! 9& 8! !4 " )57W !4 ! 321 %!0 & !# ) ((  !' &"" %""@!D % %!4 !0    %""@!D % %!4 !0   %""@!D

""  & %" " !  9"D  %1 ! " C&!  %!" 9 ! Y! 9&"  %!" 9 " " ! ! "" !!@ A "@ !  " " !! % (" ! 9& 8! !4 " )57W !4 ! 321 %!0 Q 6 (( !2&!&!E &"" %""@!D % %!4 !0    %""@!D % %!4 !0   %""@!D



' +DUGZDUH FRQWUROV & 'DWD ILOH FRQWUROV % &RPSXWHU RSHUDWLRQV $ $FFHVV WR SURJUDPV DQG GDWD UHFRYHU\ WHFKQLTXHV IRU GDWD DQG UHODWHG SURJUDPV" :KLFK RI WKH IROORZLQJ FDWHJRULHV RI JHQHUDO FRQWUROV LQFOXGHV UHWHQWLRQ DQG



:KLFK RI WKH IROORZLQJ FRPSXWHU FRQWUROV ZRXOG SURYLGH WKH EHVW HYLGHQFH WKDW XQDXWKRUL]HG XVHUV DUH QRW DFFHVVLQJ VSHFLILF FRPSXWHU SURJUDPV DQG ILOHV"

$ 8VLQJ SDVVZRUGV UHTXLULQJ DFFHVV WR WKRVH SURJUDPV DQG ILOHV % 3HULRGLFDOO\ UHYLHZLQJ DQG FRQILUPLQJ DFFHVV ULJKWV IRU WKH RUJDQL]DWLRQ V XVHUV & 0RQLWRULQJ DFWXDO XVHU DFWLYLW\ WKURXJK D SURJUDP ORJ DQG FRPSDULQJ WKDW DFWLYLW\ WR DXWKRUL]HG OHYHOV ' (QVXULQJ WKDW DFFHVV WR SURJUDPV DQG ILOHV LV UHPRYHG IRU UHFHQWO\ WHUPLQDWHG HPSOR\HHV
""  & %" " !  9"D  %1 ! " C&!  %!" 9 ! Y! 9&"  %!" 9 " " ! ! "" !!@ A "@ !  " " !! % (" ! 9& 8! !4 " )57W !4 ! 321 %!0 W G (( !4 Q &"" %""@!D % %!4 !0    %""@!D % %!4 !0   %""@!D



:KLFK RI WKH IROORZLQJ HUURU FRQGLWLRQV ZRXOG QRW EH GHWHFWHG WKURXJK WKH XVH RI EDWFK WRWDOV"

$ $ WUDQVSRVLWLRQ RI QXPEHUV LQ D QXPHULF ILHOG % (QWU\ RI DQ XQDXWKRUL]HG WUDQVDFWLRQ VXSSRUWHG E\ GRFXPHQWDU\ HYLGHQFH & )DLOXUH WR HQWHU D YDOLG WUDQVDFWLRQ WKURXJK LQSXW HUURU ' (UURQHRXVO\ HQWHULQJ WKH VDPH WUDQVDFWLRQ WZLFH
""  9  9"D  %1 ! " C&!  %!" 9 ! Y! 9&"  %!" 9 " " !! "" !!@ A "@ !  "" " 99 !&" (" ! 9& 8! !4 " G 57W !4 ! 321 %!0 W G (( 99 &"" %""@!D % %!4 !0    %""@!D % %!4 !0   %""@!D



:KLFK RI WKH IROORZLQJ LQSXW FRQWUROV ZRXOG EH OHDVW OLNHO\ WR LGHQWLI\ WKH IDLOXUH RI DQ HPSOR\HH WR LQSXW D WUDQVDFWLRQ IRU ZKLFK GRFXPHQWDU\ HYLGHQFH KDV EHHQ SUHSDUHG"

$ %DWFK WRWDOV % +DVK WRWDOV & 0LVVLQJ GDWD WHVWV ' 6HTXHQFH WHVWV
%""@!D % %!4 !0    %""@!D % %!4 !0   %""@!D

%  " !@" 99  9"D  %1 ! " C!&"4 ! ! Y! 9&"  "" (" ! &"(! 9 &!  A "@ ( ! X 57W !4 ! 321 %!0 & !# ) ((  !' &"" %""@!D % %!4 !0    %""@!D % %!4 !0   %""@!D

""  9  9"D  %1 ! " C&!  %!" 9 ! Y! 9&"  %!" 9 " " !! "" !!@ A "@ !  "" " 99 ! &" (" ! 9& 8! !4 " G 57W !4 ! 321 %!0 W G (( 99 &""



' )RFXVHV RQ UHFRQFLOLQJ WKH LQSXW GDWD WR WKH UHVXOWV JHQHUDWHG E\ WKH FOLHQW V & ,V QRUPDOO\ XWLOL]HG ZKHQ WKH FOLHQW KDV QRW LPSOHPHQWHG VLJQLILFDQW FRPSXWHU % 5HTXLUHV WKH DXGLW WHDP WR HYDOXDWH WKH RSHUDWLQJ HIIHFWLYHQHVV RI LPSRUWDQW $ ,V D UHTXLUHG DSSURDFK XQGHU JHQHUDOO\ DFFHSWHG DXGLWLQJ VWDQGDUGV $XGLWLQJ WKURXJK WKH FRPSXWHU FRQWUROV FRPSXWHU FRQWUROV

FRPSXWHUL]HG SURFHVVLQJ V\VWHP



:KLFK RI WKH IROORZLQJ LV QRW WUXH ZLWK UHVSHFW WR WKH WHVW GDWD DSSURDFK IRU HYDOXDWLQJ FRPSXWHU FRQWUROV"

$ 7KH WHVW GDWD DUH FUHDWHG IRU D VHSDUDWH HQWLW\ DQG DUH UXQ VLPXOWDQHRXVO\ ZLWK WKH FOLHQW V DFWXDO GDWD % 2QO\ RQH RI HDFK W\SH RI HUURU WUDQVDFWLRQ QHHGV WR EH LQFOXGHG LQ WKH WHVW GDWD & 7KH PDQXDO UHVXOWV RI SURFHVVLQJ WKH WHVW GDWD DUH FRPSDUHG WR WKH UHVXOWV RI SURFHVVLQJ WKHVH GDWD WKURXJK WKH FOLHQW V FRPSXWHUL]HG SURFHVVLQJ V\VWHP ' $XGLW WHDPV FRQVLGHU SRWHQWLDO HUURUV DQG FRQGLWLRQV RI LQWHUHVW LQ JHQHUDWLQJ WKH WHVW GDWD
!D  9"D  %1 ! " C!&"4 ! ! Y! 9&"  "" (" ! &"(! 9 &!  A "@ ( ! X 57W !4 ! 321 %!0 & !# ) ((  !' &"" %""@!D % %!4 !0    %""@!D % %!4 !0   %""@!D



$V SDUW RI DVVHVVLQJ WKH ULVN RI PDWHULDO PLVVWDWHPHQW WKH DXGLW WHDP PXVW DVVHVV WKH FRQWURO ULVN LQ WKH FRPSXWHUL]HG SURFHVVLQJ V\VWHP V  ,QLWLDOO\ WKH DXGLW WHDP PXVW LGHQWLI\ WKH RYHUDOO SURFHVVLQJ VFRSH RI WKH V\VWHP V ZKLFK ZRXOG LQFOXGH HDFK RI WKH IROORZLQJ FRQVLGHUDWLRQV H[FHSW

$ 7KH W\SHV RI WUDQVDFWLRQV WKDW DUH SURFHVVHG WKURXJK WKH V\VWHP V  % 7KH VSHFLILF FRQWURO SURFHGXUHV WKDW KDYH EHHQ LPSOHPHQWHG E\ WKH FOLHQW WR SUHYHQW RU GHWHFW PLVVWDWHPHQWV WKDW FRXOG RFFXU EDVHG RQ WKH DXGLW WHDP V DQDO\VLV & 7KH SURJUDPV DQG ILOHV WKDW DUH DFFHVVHG E\ WKH V\VWHP V LQ SURFHVVLQJ WUDQVDFWLRQV ' 7KH W\SH RI RXWSXW WKDW LV FUHDWHG DV D UHVXOW RI SURFHVVLQJ WUDQVDFWLRQV WKURXJK WKH V\VWHP V 
!&!# (" $E  9"D  %1 ! " C!&"4 ! ! Y! 9&"  $ "" !! &!  !@ A "@ !2! V57W !4 ! 321 %!0 & !# ) ((  !' &"" %""@!D % %!4 !0    %""@!D % %!4 !0   %""@!D



:KLFK RI WKH IROORZLQJ LQSXW FRQWUROV ZRXOG QRW EH HIIHFWLYH LQ LGHQWLI\LQJ WKH HUURQHRXV LQSXW RI QXPHULF ILHOGV LQ D WUDQVDFWLRQ"

$ %DWFK WRWDOV % +DVK WRWDOV & &KHFN GLJLWV ' 5HFRUG FRXQWV
""  9  9"D  %1 ! " C&!  %!" 9 ! Y! 9&"  %!" 9 " " !! "" !!@ A "@ !  "" " 99 !&" (" ! 9& 8! !4 " G 57W !4 ! 321 %!0 W G (( 99 &"" %""@!D % %!4 !0    %""@!D % %!4 !0   %""@!D



,Q D FRPSXWHUL]HG SURFHVVLQJ V\VWHP KDUGZDUH FRQWUROV DUH GHVLJQHG WR

$ $UUDQJH GDWD LQ D ORJLFDO VHTXHQWLDO PDQQHU IRU SURFHVVLQJ SXUSRVHV % &RUUHFW HUURUV LQ WKH FRPSXWHU SURJUDPV & 0RQLWRU DQG GHWHFW HUURUV LQ VRXUFH GRFXPHQWV ' 'HWHFW DQG FRQWURO HUURUV DULVLQJ IURP XVH RI HTXLSPHQW 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

%""@!D % %!4 !0   %""@!D

!!T  9"D  %1 ! " C&!  %!" 9 ! Y! 9&"  %!" 9 " " !! "" !!@ A "@ !  "" " 99 ! &" (" ! 9& 8! !4 " G 57W !4 ! 321 %!0 Q 6 (( !2&!&!E &"" %""@!D % %!4 !0    %""@!D % %!4 !0   %""@!D

" " !A W  9"D  %1 ! " C&!  %!" 9 ! Y! 9&"  %!" 9 " " ! ! "" !!@ A "@ !  " " !! % (" ! 9& 8! !4 " )57W !4 ! 321 %!0 Q 6 (( !2&!&!E &"" %""@!D % %!4 !0   



5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN ' 8WLOLW\ SURJUDP & 'DWD PDQDJHPHQW V\VWHP VRIWZDUH % 2SHUDWLQJ V\VWHP SURJUDP $ 3D\UROO SURFHVVLQJ SURJUDP WHVWLQJ DXWRPDWHG DSSOLFDWLRQ FRQWUROV LV D Q $Q H[DPSOH RI D SURJUDP LQ ZKLFK WKH DXGLW WHDP ZRXOG EH PRVW LQWHUHVWHG LQ



:KLFK RI WKH IROORZLQJ ZRXOG UHGXFH WKH HIIHFWLYHQHVV RI LQWHUQDO FRQWURO LQ D FRPSXWHUL]HG SURFHVVLQJ V\VWHP"

$ 7KH FRPSXWHU OLEUDULDQ PDLQWDLQV FXVWRG\ RI FRPSXWHU SURJUDP LQVWUXFWLRQV DQG GHWDLOHG OLVWV % &RPSXWHU RSHUDWRUV KDYH DFFHVV WR RSHUDWRU LQVWUXFWLRQV DQG GHWDLOHG SURJUDP OLVWV & 7KH FRQWURO JURXS LV VROHO\ UHVSRQVLEOH IRU WKH GLVWULEXWLRQ RI DOO FRPSXWHU RXWSXW ' &RPSXWHU SURJUDPPHUV ZULWH DQG GHEXJ SURJUDPV WKDW SHUIRUP URXWLQHV GHVLJQHG E\ WKH V\VWHPV DQDO\VW 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

"" "! 91 ! 9&"  9"D  %1 ! " C&!  %!" 9 ! Y! 9&"  %!" 9 " " ! ! "" !!@ A "@ !  " " !! % (" ! 9& 8! !4 " )57W !4 ! 321 %!0 W G (( !4 Q &"" %""@!D % %!4 !0    %""@!D % %!4 !0   %""@!D



:KLFK RI WKH IROORZLQJ LV WUXH ZLWK UHVSHFW WR IUDXG ULVN IDFWRUV LQ D FRPSXWHUL]HG HQYLURQPHQW"

$ (PSOR\HHV LQ D FRPSXWHUL]HG HQYLURQPHQW DUH KLJKO\ VNLOOHG % $XGLW WHDPV FDQQRW HYDOXDWH WKH FRPSXWHUL]HG SURFHVVLQJ V\VWHP GXULQJ WKH \HDU & +LJKHU GROODU DPRXQWV DUH LQYROYHG LQ D FRPSXWHUL]HG HQYLURQPHQW ' (PSOR\HHV KDYH LQFUHDVHG DFFHVV WR SURFHVVLQJ V\VWHPV DQG FRPSXWHU UHVRXUFHV LQ D FRPSXWHUL]HG HQYLURQPHQW 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

!&"4 Q %!" ! Y! 9&"  !!!((  9"D  %1 ! " C "& 8!  !@  9& &!  %!" 9 ! Y! 9&" (" ! !@ A "@ ( ! 6 57W !4 ! 321 %!0 & !# ) ((  !' &""  $E    %$@D    %""@!D

"" "! 91 ! 9&"  9"D  %1 ! " C&!  %!" 9 ! Y! 9&"  %!" 9 " " ! ! "" !!@ A "@ !  "" !! % (" ! 9& 8! !4 " )57W !4 ! 321 %!0 Q 6 (( !2&!&!E &"" %""@!D % %!4 !0    %""@!D % %!4 !0   %""@!D



5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN ' ([WHUQDO ODEHOV & /LPLW FKHFNV % 5HFRUG FRXQWV $ &RQWURO WRWDOV RI XVLQJ DQ LQFRUUHFW ILOH RU SURJUDP DUH &RQWUROV XVHG LQ WKH PDQDJHPHQW RI D FRPSXWHU FHQWHU WR PLQLPL]H WKH SRVVLELOLW\



$XGLW WHDPV ZRXOG PRVW OLNHO\ XVH FRPSXWHUDVVLVWHG DXGLW WHFKQLTXHV WR

$ 0DNH FRSLHV RI FOLHQW GDWD ILOHV IRU FRQWUROOHG UHSURFHVVLQJ % &RQVWUXFW D SDUDOOHO VLPXODWLRQ WR WHVW WKH FOLHQW V FRPSXWHU FRQWUROV & 3HUIRUP WHVWV RI D FOLHQW V KDUGZDUH FRQWUROV ' 7HVW WKH RSHUDWLYH HIIHFWLYHQHVV RI D FOLHQW V SDVVZRUG DFFHVV FRQWURO 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

"& !  9"D  %1 ! " C!&"4 ! ! Y! 9&"  "" (" ! &"(! 9 &!  A "@ ( ! X 57W !4 ! 321 %!0 & !# ) ((  !' &"" %""@!D % %!4 !0    %""@!D % %!4 !0   %""@!D



:KLFK RI WKH IROORZLQJ FRPSXWHUL]HG SURFHVVLQJ V\VWHPV JHQHUDOO\ FDQ EH DXGLWHG ZLWKRXW H[DPLQLQJ RU GLUHFWO\ WHVWLQJ WKH FRPSXWHU SURJUDPV RI WKH V\VWHP"

$ $ V\VWHP WKDW SHUIRUPV UHODWLYHO\ XQFRPSOLFDWHG SURFHVVHV DQG SURGXFHV GHWDLOHG RXWSXW % $ V\VWHP WKDW DIIHFWV D QXPEHU RI PDVWHU ILOHV DQG SURGXFHV D OLPLWHG RXWSXW & $ V\VWHP WKDW XSGDWHV D IHZ PDVWHU ILOHV DQG SURGXFHV QR RWKHU SULQWHG RXWSXW WKDQ ILQDO EDODQFHV ' $ V\VWHP WKDW SHUIRUPV UHODWLYHO\ FRPSOLFDWHG SURFHVVLQJ DQG SURGXFHV YHU\ OLWWOH GHWDLOHG RXWSXW 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

%  " !@" 99  9"D  %1 ! " C!&"4 ! ! Y! 9&"  "" (" ! &"(! 9 &!  A "@ ( ! X 57W !4 ! 321 %!0 W G (( !4 Q &"" %""@!D % %!4 !0    %""@!D % %!4 !0   %""@!D



7KH FOLHQW V FRPSXWHUL]HG H[FHSWLRQ UHSRUWLQJ V\VWHP KHOSV DXGLW WHDPV FRQGXFW D PRUH HIILFLHQW DXGLW EHFDXVH LW

$ &RQGHQVHV GDWD VLJQLILFDQWO\ % +LJKOLJKWV DEQRUPDO FRQGLWLRQV & 'HFUHDVHV WKH QHFHVVDU\ OHYHO RI WHVWV RI FRPSXWHU FRQWUROV ' ,V DQ HIILFLHQW FRPSXWHU LQSXW FRQWURO 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

" 9!E " 9!8Q  9"D  %1 ! " C "& 8!  !@  9& &!  %!" 9 ! Y! 9&" (" ! !@ A "@ ( ! 6 57W !4 ! 321 %!0 & !# ) ((  !' &"" %""@!D % %!4 !0    %""@!D % %!4 !0   %""@!D

 !D  9"D  %1 ! " C!&"4 ! ! Y! 9&"  "" (" ! &"(! 9 &!  A "@ ( ! X 57W !4 ! 321 %!0 & !# ) ((  !' &"" %""@!D % %!4 !0    %""@!D % %!4 !0   %""@!D



5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN ' *HQHUDO FRQWUROV & &RQWURO SURFHGXUHV FRQWDLQHG ZLWKLQ WKH SURJUDP % 0DFKLQH FDSDFLW\ $ ,QSXW GDWD $XGLW WHDPV XVH WKH WHVW GDWD PHWKRG WR JDLQ FHUWDLQ DVVXUDQFHV ZLWK UHVSHFW WR



:KHQ XVLQJ WHVW GDWD ZK\ DUH DXGLW WHDPV UHTXLUHG WR SUHSDUH RQO\ RQH WUDQVDFWLRQ WR WHVW HDFK FRPSXWHU SURFHVVLQJ DOWHUQDWLYH"

$ 7KH VSHHG DQG HIILFLHQF\ RI WKH FRPSXWHU UHVXOWV LQ UHGXFHG VDPSOH VL]HV % 7KH ULVN RI PLVVWDWHPHQW LV W\SLFDOO\ ORZHU LQ D FRPSXWHUL]HG SURFHVVLQJ HQYLURQPHQW & $XGLW WHDPV JHQHUDOO\ SHUIRUP PRUH H[WHQVLYH VXEVWDQWLYH WHVWLQJ LQ D FRPSXWHUL]HG SURFHVVLQJ HQYLURQPHQW UHVXOWLQJ LQ OHVV QHHG WR WHVW SURFHVVLQJ FRQWUROV ' ,Q D FRPSXWHUL]HG SURFHVVLQJ HQYLURQPHQW HDFK WUDQVDFWLRQ LV KDQGOHG LQ DQ LGHQWLFDO PDQQHU 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

!D  9"D  %1 ! " C!&"4 ! ! Y! 9&"  "" (" ! &"(! 9 &!  A "@ ( ! X 57W !4 ! 321 %!0 & !# ) ((  !' &"" %""@!D % %!4 !0    %""@!D % %!4 !0   %""@!D



:KHQ DXGLWLQJ D FRPSXWHUL]HG SURFHVVLQJ V\VWHP ZKLFK RI WKH IROORZLQJ LV QRW WUXH RI WKH WHVW GDWD DSSURDFK"

$ 7KH FOLHQW V FRPSXWHU SURJUDPV SURFHVV WHVW GDWD XQGHU WKH DXGLW WHDP V FRQWURO % 7KH WHVW GDWD PXVW FRQVLVW RI DOO SRVVLEOH YDOLG DQG LQYDOLG FRQGLWLRQV & 7KH WHVW GDWD QHHG FRQVLVW RQO\ RI WKRVH YDOLG DQG LQYDOLG FRQGLWLRQV LQ ZKLFK DXGLW WHDPV DUH LQWHUHVWHG ' 2QO\ RQH WUDQVDFWLRQ RI HDFK W\SH QHHG EH WHVWHG 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

!D  9"D  %1 ! " C!&"4 ! ! Y! 9&"  "" (" ! &"(! 9 &!  A "@ ( ! X 57W !4 ! 321 %!0 & !# ) ((  !' &"" %""@!D % %!4 !0    %""@!D % %!4 !0   %""@!D



$XGLW WHDPV FDQQRW WHVW WKH UHOLDEOH RSHUDWLRQ RI FRPSXWHU FRQWURO SURFHGXUHV E\

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

%  " !@" 99  9"D  %1 ! " C!&"4 ! ! Y! 9&"  "" (" ! &"(! 9 &!  A "@ ( ! X 57W !4 ! 321 %!0 W G (( 99 &"" %""@!D % %!4 !0    %""@!D % %!4 !0   %""@!D



$XGLW WHDPV FDQ REWDLQ HYLGHQFH RI WKH SURSHU IXQFWLRQLQJ RI SDVVZRUG DFFHVV FRQWURO WR D FRPSXWHUL]HG SURFHVVLQJ V\VWHP E\

$ :ULWLQJ D FRPSXWHU SURJUDP WKDW VLPXODWHV WKH ORJLF RI D JRRG SDVVZRUG FRQWURO V\VWHP % 6HOHFWLQJ D UDQGRP VDPSOH RI WKH FOLHQW V FRPSOHWHG WUDQVDFWLRQV WR FKHFN WKH H[LVWHQFH RI SURSHU DXWKRUL]DWLRQ & $WWHPSWLQJ WR VLJQ RQ WR WKH FRPSXWHUL]HG SURFHVVLQJ V\VWHP ZLWK D IDOVH SDVVZRUG ' 2EWDLQLQJ UHSUHVHQWDWLRQV IURP WKH FOLHQW V FRPSXWHU SHUVRQQHO WKDW WKH SDVVZRUG FRQWURO SUHYHQWV XQDXWKRUL]HG HQWU\ 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

"" (" !D  9"D  %1 ! " C!&"4 ! ! Y! 9&"  "" (" ! &"(! 9 &!  A "@ ( ! X 57W !4 ! 321 %!0 W G (( 99 &"" %""@!D % %!4 !0    %""@!D % %!4 !0   %""@!D



:KHQ SURFHVVLQJ FRQWUROV ZLWKLQ WKH FRPSXWHUL]HG SURFHVVLQJ V\VWHP PD\ QRW OHDYH YLVLEOH HYLGHQFH WKDW FRXOG EH LQVSHFWHG E\ DXGLW WHDPV WKH WHDPV VKRXOG

$ 0DNH FRUURERUDWLYH LQTXLULHV % 2EVHUYH WKH VHSDUDWLRQ RI GXWLHV RI SHUVRQQHO & 5HYLHZ WUDQVDFWLRQV VXEPLWWHG IRU SURFHVVLQJ DQG FRPSDULQJ WKHP WR UHODWHG RXWSXW ' 5HYLHZ WKH UXQ PDQXDO 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

! 9&" !@ " %  9"D  %1 ! " C!&"4 ! ! Y! 9&"  "" (" ! &"(! 9 &!  A "@ ( ! X 57W !4 ! 321 %!0 W G (( 99 &"" %""@!D % %!4 !0    %""@!D % %!4 !0   %""@!D



:KLFK RI WKH IROORZLQJ VWDWHPHQWV PRVW OLNHO\ UHSUHVHQWV D FRQWURO FRQVLGHUDWLRQ IRU DQ HQWLW\ WKDW SHUIRUPV LWV DFFRXQWLQJ XVLQJ SRUWDEOH FRPSXWLQJ GHYLFHV"

$ ,W LV XVXDOO\ GLIILFXOW WR GHWHFW DULWKPHWLF HUURUV % 8QDXWKRUL]HG SHUVRQV ILQG LW HDV\ WR DFFHVV WKH FRPSXWHU DQG DOWHU WKH GDWD ILOHV & 7UDQVDFWLRQV DUH FRGHG IRU DFFRXQW FODVVLILFDWLRQV EHIRUH WKH\ DUH SURFHVVHG RQ WKH FRPSXWHU ' 5DQGRP HUURUV LQ UHSRUW SULQWLQJ DUH UDUH LQ SDFNDJHG VRIWZDUH V\VWHPV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

" !" ""  9"D  %1 ! " C !&"4 ! % 9&" !@ "  !7 ! @ A ! " ! ""  !@ !@ !2! I 57W !4 ! 321 %!0 & !# ) ((  !' &"" %""@!D % %!4 !0    %""@!D % %!4 !0   %""@!D

"" "! 91 ! 9&"  9"D  %1 ! " C&!  %!" 9 ! Y! 9&"  %!" 9 " " ! ! "" !!@ A "@ !  "" !! % (" ! 9& 8! !4 " )57W !4 ! 321 %!0 Q 6 (( !2&!&!E &"" %""@!D % %!4 !0    %""@!D % %!4 !0   %""@!D



5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN ' 5DQGRP DFFHVV SURFHVVLQJ & ,QWHJUDWHG GDWD SURFHVVLQJ % 5HDOWLPH SURFHVVLQJ $ %DWFK SURFHVVLQJ UHVXOWV DUH DYDLODEOH WR LQIOXHQFH D GHFLVLRQ EHLQJ PDGH LV UHIHUUHG WR DV &RPSXWHUL]HG SURFHVVLQJ SHUIRUPHG FRQFXUUHQWO\ ZLWK D SDUWLFXODU DFWLYLW\ VR WKDW



:KLFK RI WKH IROORZLQJ LV QRW D FKDUDFWHULVWLF RI D EDWFK SURFHVVLQJ V\VWHP"

$ 7KH FROOHFWLRQ RI VLPLODU WUDQVDFWLRQV WKDW DUH VRUWHG DQG SURFHVVHG VHTXHQWLDOO\ DJDLQVW D PDVWHU ILOH % 7KH LQSXW RI WUDQVDFWLRQV SULRU WR SURFHVVLQJ & 7KH SURGXFWLRQ RI QXPHURXV SULQWRXWV ' 7KH SRVWLQJ RI D WUDQVDFWLRQ DV LW RFFXUV WR VHYHUDO ILOHV ZLWKRXW LQWHUPHGLDWH SULQWRXWV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN

"" "! 91 ! 9&"  9"D  %1 ! " C&!  %!" 9 ! Y! 9&"  %!" 9 " " ! ! "" !!@ A "@ !  " " !! % (" ! 9& 8! !4 " )57W !4 ! 321 %!0 & !# ) ((  !' &"" %""@!D % %!4 !0    %""@!D % %!4 !0   %""@!D

""  9  9"D  %1 ! " C&!  %!" 9 ! Y! 9&"  %!" 9 " " !! "" !!@ A "@ !  " " " 99 !&" (" ! 9& 8! !4 " G 57W !4 ! 321 %!0 W G (( !4 Q &"" %""@!D % %!4 !0    %""@!D % %!4 !0   %""@!D



5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN ' 5HGXQGDQW GDWD FKHFN & +DVK WRWDO % 5HFRUG FRXQW $ &KHFN GLJLW YHULILFDWLRQ PRVW OLNHO\ ZRXOG GHWHFW WKLV HUURU" SURGXFW = ZKLFK LV QRW DQ DFWXDO SURGXFW :KLFK RI WKH IROORZLQJ FRQWUROV $ FXVWRPHU LQWHQGHG WR RUGHU  XQLWV RI SURGXFW = EXW LQFRUUHFWO\ RUGHUHG

""  9  9"D  %1 ! " C&!  %!" 9 ! Y! 9&"  %!" 9 " " !! "" !!@ A "@ !  "" " 99 !&" (" ! 9& 8! !4 " G 57W !4 ! 321 %!0 W G (( !4 Q &"" %""@!D % %!4 !0    %""@!D % %!4 !0   %""@!D



5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN ' &KHFN GLJLWV & /LPLW WHVWV % %DWFK WRWDOV $ 6HTXHQFH FKHFNLQJ DVVXUDQFH WKDW LQYHQWRU\ GDWD ZHUH FRPSOHWHO\ DQG DFFXUDWHO\ HQWHUHG" :KLFK RI WKH IROORZLQJ DXWRPDWHG DSSOLFDWLRQ FRQWUROV ZRXOG RIIHU UHDVRQDEOH

"" "! 91 ! 9&"  9"D  %1 ! " C&!  %!" 9 ! Y! 9&"  %!" 9 " " ! ! "" !!@ A "@ !  " " !! % (" ! 9& 8! !4 " )57W !4 ! 321 %!0 Q 6 (( !2&!&!E &"" %""@!D % %!4 !0    %""@!D % %!4 !0   %""@!D



5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ WH[WERRN ' &RPSXWHU RSHUDWRUV & /LEUDULDQV % 'DWD FRQYHUVLRQ RSHUDWRUV $ 3URJUDPPHUV GRFXPHQWDWLRQ DQG DFFHVV WR SURJUDP DQG GDWD ILOHV" :KLFK RI WKH IROORZLQJ SHUVRQV LV UHVSRQVLEOH IRU FRQWUROOLQJ DFFHVV WR V\VWHPV

 !D  9"D  %1 ! " C!&"4 ! ! Y! 9&"  "" (" ! &"(! 9 &!  A "@ ( ! X 57W !4 ! 321 %!0 Q 6 (( !2&!&!E &"" %""@!D % %!4 !0    %""@!D % %!4 !0   %""@!D



5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH ' 'DWDEDVH & ,QWHJUDWHG WHVW IDFLOLW\ % 7HVW GDWD $ 3DUDOOHO VLPXODWLRQ FOLHQW V FRPSXWHU SURJUDPV LV UHIHUUHG WR DV 7KH HYDOXDWLRQ RI FRPSXWHU FRQWUROV ZLWK VLPXODWHG GDWD SURFHVVHG WKURXJK WKH



$XGLW WHDPV FDQ XVH WKH FRPSXWHU WR WHVW WKH RSHUDWLQJ HIIHFWLYHQHVV RI WKH FOLHQW V FRQWUROV LQ HDFK RI WKH IROORZLQJ FDVHV H[FHSW WR

$ 6HOHFW WUDQVDFWLRQV DQG PDQXDOO\ DXGLW WKH DFWXDO WUDQVDFWLRQ SURFHVVLQJ % (YDOXDWH WKH FRPSXWHU FRQWUROV XVLQJ VLPXODWHG GDWD & &RPSDUH H[WHUQDO GRFXPHQWDWLRQ ZLWK LQWHUQDO GRFXPHQWDWLRQ ' (YDOXDWH WKH FRPSXWHU FRQWUROV XVLQJ DFWXDO GDWD SURFHVVHG WKURXJK WKH FOLHQW V FRPSXWHU SURJUDPV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

%  " !@" 99  9"D  %1 ! " C!&"4 ! ! Y! 9&"  "" (" ! &"(! 9 &!  A "@ ( ! X 57W !4 ! 321 %!0 W G (( 99 &""  $E    %$@D    

"" !!T  9"D  %1 ! " C&!  %!" 9 ! Y! 9&"  %!" 9 " " ! ! "" !!@ A "@ !  " " !! % (" ! 9& 8! !4 " )57W !4 ! 321 %!0 Q 6 (( !2&!&!E &"" %""@!D % %!4 !0    %""@!D % %!4 !0   %""@!D



5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH ' 3URJUDP FKDQJH FRQWUROV & 3URFHVVLQJ FRQWUROV % &RPSXWHU RSHUDWLRQV FRQWUROV $ $FFHVV WR SURJUDPV DQG GDWD FRQWUROV :KLFK RI WKH IROORZLQJ LV QRW D FDWHJRU\ RI JHQHUDO FRQWUROV"



7R WHVW WKH RSHUDWLQJ HIIHFWLYHQHVV RI FRPSXWHU FRQWUROV DXGLW WHDPV FDQ XVH HDFK RI WKH IROORZLQJ PHWKRGV H[FHSW

$ &UHDWLQJ D GXPP\ HQWLW\ DQG SURFHVVLQJ VLPXODWHG WUDQVDFWLRQV DORQJ ZLWK DFWXDO WUDQVDFWLRQV % &UHDWLQJ ILFWLWLRXV WUDQVDFWLRQV IRU SURFHVVLQJ WKURXJK WKH FOLHQW V FRPSXWHU SURJUDPV VHSDUDWHO\ IURP DFWXDO FOLHQW WUDQVDFWLRQV & 3URFHVVLQJ DFWXDO FOLHQW WUDQVDFWLRQV WKURXJK DQ DXGLWRUFUHDWHG SURJUDP ' 2EVHUYLQJ WKH VHSDUDWLRQ RI GXWLHV RI FOLHQW SHUVRQQHO 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

%  " !@" 99  9"D  %1 ! " C!&"4 ! ! Y! 9&"  "" (" ! &"(! 9 &!  A "@ ( ! X 57W !4 ! 321 %!0 W G (( 99 &"" %""@!D % %!4 !0    %""@!D % %!4 !0   %""@!D



7KH WRROV DQG WHFKQLTXHV DSSOLFDEOH WR DXGLWLQJ LQ D FRPSXWHUL]HG HQYLURQPHQW VKRXOG QRW LQFOXGH WKRVH WKDW

$ 2SHUDWH RQ D UHDOWLPH EDVLV ZLWK DFWXDO GDWD % 8VH VLPXODWHG RU GXPP\ GDWD & $XGLW DURXQG WKH FRPSXWHU ' 8VH SURJUDP DQDO\VLV WHFKQLTXHV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

%  " !@" 99  9"D  %1 ! " C!&"4 ! ! Y! 9&"  "" (" ! &"(! 9 &!  A "@ ( ! X 57W !4 ! 321 %!0 & !# ) ((  !' &"" %""@!D % %!4 !0    %""@!D % %!4 !0   %""@!D



7KH WHFKQLTXH RI FUHDWLQJ D PLQLFRPSDQ\ ZLWK ILFWLWLRXV PDVWHU ILOH UHFRUGV WR SURFHVV VLPXODWHG GDWD VLPXOWDQHRXVO\ ZLWK DFWXDO FOLHQW GDWD LV UHIHUUHG WR DV DQ

$ 6DPSOH DXGLW UHYLHZ ILOH % ,QWHJUDWHG WHVW IDFLOLW\ & 6\VWHPV FRQWURO DXGLW UHYLHZ ILOH ' 3URJUDP DQDO\VLV VRIWZDUH 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 !D !  %!  9"D  %1 ! " C!&"4 ! ! Y! 9&"  " " (" ! &"(! 9 &!  A "@ ( ! X 57W !4 ! 321 %!0 Q 6 (( !2&!&!E &"" %""@!D % %!4 !0    %""@!D % %!4 !0   %""@!D

"" "! 91 ! 9&"  9"D  %1 ! " C&!  %!" 9 ! Y! 9&"  %!" 9 " " ! ! "" !!@ A "@ !  " " !! % (" ! 9& 8! !4 " )57W !4 ! 321 %!0 & !# ) ((  !' &"" %""@!D % %!4 !0    %""@!D % %!4 !0   %""@!D



5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH ' *UDQGIDWKHUIDWKHUVRQ FRQFHSW & %DFNXS YHUVLRQV RI ILOHV VWRUHG LQ UHPRWH ORFDWLRQV % 6WRUDJH LQ ILUHSURRI YDXOWV $ (FKR FKHFN :KLFK RI WKH IROORZLQJ LV QRW DQ H[DPSOH RI D FRPSXWHU FRQWURO UHODWHG WR ILOH UHWHQWLRQ DQG VHFXULW\"



:KLFK RI WKH IROORZLQJ LV QRW D PDMRU GLIIHUHQFH EHWZHHQ D PDQXDO SURFHVVLQJ HQYLURQPHQW DQG D FRPSXWHUL]HG SURFHVVLQJ HQYLURQPHQW"

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

!&"4 Q %!" ! Y! 9&"  !!!((  9"D  %1 ! " C "& 8!  !@  9& &!  %!" 9 ! Y! 9&" (" ! !@ A "@ ( ! 6 57W !4 ! 321 %!0 & !# ) ((  !' &"" %""@!D % %!4 !0    %""@!D % %!4 !0   %""@!D

""  9  9"D  %1 ! " C&!  %!" 9 ! Y! 9&"  %!" 9 " " !! "" !!@ A "@ !  "" " 99 !&" (" ! 9& 8! !4 " G 57W !4 ! 321 %!0 Q 6 (( !2&!&!E &"" %""@!D % %!4 !0    %""@!D % %!4 !0   %""@!D



5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH ' 9DOLG FKDUDFWHU WHVW & &KHFN GLJLW % +DVK WRWDO $ %DWFK WRWDO FRQWURO LV D Q $ QXPHULFDO ILHOG DSSHQGHG WR DQ LGHQWLILFDWLRQ QXPEHU WKDW VHUYHV DV DQ LQSXW



7KH PDMRU GLVDGYDQWDJH RI DQ LQWHJUDWHG WHVW IDFLOLW\ LV WKDW

$ 'DWD SURFHVVHG WKURXJK WKH FOLHQW V V\VWHP PXVW EH EDFNHG RXW YHU\ FDUHIXOO\ % 7KH FRVW RI VHWWLQJ XS WKH IDFLOLW\ DGGV WR RYHUKHDG RI WKH V\VWHP & $XGLW WHDPV QHHG H[WHQVLYH NQRZOHGJH RI FRPSXWHU SURJUDPPLQJ ' ,W LV D FRVWO\ XVH RI FRPSXWHU UHVRXUFHV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

)LOO LQ WKH %ODQN 4XHVWLRQV

 !D !  %!  9"D  %1 ! " C!&"4 ! ! Y! 9&"  "" (" ! &"(! 9 &!  A "@ ( ! X 57W !4 ! 321 %!0 & !# ) ((  !' &"" %""@!D % %!4 !0    %""@!D % %!4 !0   %""@!D



$XGLWLQJ BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB UHIHUV WR WKH DFWXDO HYDOXDWLRQ RI WKH KDUGZDUH DQG SURJUDPV WR GHWHUPLQH WKH UHOLDELOLW\ RI FRPSXWHU RSHUDWLRQV DQG WHVW WKH RSHUDWLQJ HIIHFWLYHQHVV RI WKH UHODWHG FRQWUROV WKURXJK WKH FRPSXWHU 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH



$XGLWLQJ BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB FRQVLVWV RI UHFRQFLOLQJ VRXUFH GRFXPHQWV ZLWK FRPSXWHU RXWSXW DURXQG WKH FRPSXWHU 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH



BBBBBBBBBBBBBBBBBBBBBBBBBBBB WHFKQLTXHV DUH VSHFLDO DXGLW PRGXOHV GHVLJQHG DQG FRGHG LQWR FRPSXWHU SURJUDPV WR DOORZ DXGLW WHDPV WR HYDOXDWH YDULRXV VWDJHV RI WUDQVDFWLRQ SURFHVVLQJ 3URJUDPHPEHGGHG 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH



7KH PHWKRG RI WHVWLQJ FRPSXWHU FRQWUROV WKDW UHTXLUHV DXGLW WHDPV WR SUHSDUH D FRPSXWHU SURJUDP WR SURFHVV D FOLHQW V DFWXDO GDWD LV UHIHUUHG WR DV D Q BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB SDUDOOHO VLPXODWLRQ 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH



BBBBBBBBBBBBBBBBBBBBBBBBBBBBBB FRPSDUH WKH FOLHQW V SURFHVVLQJ RI VLPXODWHG WUDQVDFWLRQV WR WKH DXGLW WHDP V PDQXDO SURFHVVLQJ RI WKRVH WUDQVDFWLRQV 7HVW GDWD 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH



&RQWUROV WKDW LQYROYH DOO DSSOLFDWLRQV RI FRPSXWHUL]HG SURFHVVLQJ VXFK DV KDUGZDUH FRQWUROV DUH UHIHUUHG WR DV BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB JHQHUDO FRQWUROV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH



$Q LPSRUWDQW FRQWURO RYHU SURJUDP GHYHORSPHQW LV WKH HQWLW\ V XVH RI WKH BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB OLIH F\FOH WR SODQ GHYHORS DQG LPSOHPHQW QHZ FRPSXWHUL]HG V\VWHPV V\VWHPV GHYHORSPHQW 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH



BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB FRQWUROV DUH EXLOW LQ WR WKH FRPSXWHU HTXLSPHQW DQG SURYLGH UHDVRQDEOH DVVXUDQFH WKDW GDWD DUH QRW DOWHUHG RU PRGLILHG DV WKH\ DUH WUDQVPLWWHG ZLWKLQ WKH V\VWHP +DUGZDUH 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 &KHFN GLJLWV UHFRUG FRXQWV DQG VHTXHQFH WHVWV DUH H[DPSOHV RI BBBBBBBBBBBBBBBBBBBBBBBBBBBBB FRQWUROV LQSXW 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 )RXU PHWKRGV WKDW DUH XVHG E\ DXGLW WHDPV WR WHVW WKH RSHUDWLQJ HIIHFWLYHQHVV RI FRQWUROV LQFOXGH LQTXLU\ REVHUYDWLRQ GRFXPHQWDWLRQ H[DPLQDWLRQ DQG BBBBBBBBBBBBBBBBBBBBBB UHSHUIRUPDQFH 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 6HSDUDWLRQ RI LQFRPSDWLEOH IXQFWLRQV LV DQ H[DPSOH RI D BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB FRQWURO FRPSXWHU RSHUDWLRQV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 BBBBBBBBBBBBBBBBBBBBBBBBBBBBB SURFHVVLQJ RFFXUV ZKHQ D JURXS RI VLPLODU WUDQVDFWLRQV LV DFFXPXODWHG DQG SURFHVVHG VLPXOWDQHRXVO\ %DWFK 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 BBBBBBBBBBBBBBBBBBBBBBBBBBBBB GHVFULEHV WKH V\VWHP DQG LWV FRQWUROV DQG LV WKH PHDQV RI FRPPXQLFDWLQJ WKH HVVHQWLDO HOHPHQWV RI WKH FRPSXWHUL]HG SURFHVVLQJ V\VWHP WR FXUUHQW DQG SRWHQWLDO XVHUV 'RFXPHQWDWLRQ 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 5HWDLQLQJ SUHYLRXV JHQHUDWLRQV RI ILOHV IRU XVH LQ UHFRQVWUXFWLQJ FXUUHQW JHQHUDWLRQV RI ILOHV LV NQRZQ DV WKH BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB WHFKQLTXH JUDQGIDWKHUIDWKHUVRQ 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 BBBBBBBBBBBBBBBBBBBBBBBBBBBBB SUHSDUH IORZFKDUWV DQG FRGH WKH ORJLF RI WKH FRPSXWHU SURJUDPV UHTXLUHG E\ WKH RYHUDOO V\VWHP GHVLJQHG E\ WKH V\VWHPV DQDO\VW 3URJUDPPHUV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB UHSUHVHQW FRPSDULVRQV RI WKH QXPEHU RI WUDQVDFWLRQV VXEPLWWHG IRU GDWD FRQYHUVLRQ ZLWK WKH QXPEHU RI WUDQVDFWLRQV DFWXDOO\ HQWHUHG IRU SURFHVVLQJ 5HFRUG FRXQWV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 BBBBBBBBBBBBBBBBBBBBBBBBBBBBB DQG BBBBBBBBBBBBBBBBBBBBBBBBBBBBB DUH VSHFLDO LQWHUQDO ODEHOV RQ ILOHV WKDW SURYLGH UHDVRQDEOH DVVXUDQFH WKDW WKH FRUUHFW ILOHV DUH XVHG LQ SURFHVVLQJ +HDGHUV WUDLOHUV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 $ Q BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB LQYROYHV WHVWLQJ WKH FOLHQW V SURFHVVLQJ V\VWHP DQG FRQWUROV E\ FUHDWLQJ D GXPP\ GHSDUWPHQW RU EUDQFK LQWHJUDWHG WHVW IDFLOLW\ 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB DUH DULWKPHWLF WRWDOV RI ILHOGV WKDW GR QRW KDYH D VLJQLILFDQW PHDQLQJ VXFK DV HPSOR\HH QXPEHUV  +DVK WRWDOV 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

 BBBBBBBBBBBBBBBBBBBBBBBBBBBBB FRPSXWLQJ HQYLURQPHQWV DUH RIWHQ FKDUDFWHUL]HG E\ LQDGHTXDWH VHSDUDWLRQ RI GXWLHV DQG ODFN RI SK\VLFDO FRPSXWHU VHFXULW\ (QGXVHU 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH

6KRUW $QVZHU 4XHVWLRQV

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

"" !!T ( " ! 9D  9"D  %1 ! " C&!  %!" 9 ! Y! 9&"  %!" 9 " " ! ! "" !!@ A "@ !  " " !! % (" ! 9& 8! !4 " )57W !4 ! 321 %!0 & !# ) ((  !' &"" %""@!D % %!4 !0    %""@!D % %!4 !0   %""@!D

 '  $  (  %  &  '  %  $  '  &

 ,GHQWLI\ ZKHWKHU HDFK RI WKH IROORZLQJ VWDWHPHQWV LV DSSURSULDWH IRU DXGLWLQJ DURXQG WKH FRPSXWHU $ DXGLWLQJ WKURXJK WKH FRPSXWHU 7 RU DXGLWLQJ ERWK DURXQG DQG WKURXJK WKH FRPSXWHU %  BBBB  ,W LV PRUH OLNHO\ WR EH XWLOL]HG ZKHQ WKH FOLHQW V FRPSXWHUL]HG SURFHVVLQJ V\VWHPV DUH UHODWLYHO\ VLPSOH BBBB  7KH PHWKRG LV SHUPLWWHG XQGHU JHQHUDOO\ DFFHSWHG DXGLWLQJ VWDQGDUGV BBBB  ,W UHTXLUHV DXGLW WHDPV WR HYDOXDWH DQG WHVW WKH RSHUDWLQJ HIIHFWLYHQHVV RI FRPSXWHU FRQWUROV BBBB  ,W SULPDULO\ FRQFHUQV FRUUHVSRQGHQFH EHWZHHQ LQSXW DQG RXWSXW BBBB  7KH XVH RI WHVW GDWD DQG SDUDOOHO VLPXODWLRQ DUH H[DPSOHV RI WKLV DSSURDFK BBBB  ,W VKRXOG EH XVHG ZLWK PRUH FRPSOH[ FRPSXWHUL]HG SURFHVVLQJ V\VWHPV BBBB  $XGLW WHDPV FDQ GHVLJQ HUURU FRQGLWLRQV WR HYDOXDWH KRZ WKHVH FRQGLWLRQV DUH SURFHVVHG BBBB  $XGLW WHDPV DUH UHTXLUHG WR FRQVLGHU LPSRUWDQW FRPSXWHU FRQWUROV WKDW KDYH EHHQ LPSOHPHQWHG E\ WKH FOLHQW RYHU FRPSXWHUL]HG SURFHVVLQJ RI WUDQVDFWLRQV BBBB  ,W LV PRUH OLNHO\ WR EH XVHG ZKHQ FOLHQWV KDYH QRW LPSOHPHQWHG H[WHQVLYH FRPSXWHU FRQWUROV BBBB  ,W FDQ EH XVHG WR SURYLGH DXGLW WHDPV ZLWK D EDVLV IRU DVVHVVLQJ FRQWURO ULVN

 $  %  7  $  7  7  7  7  $  %

 0DWFK HDFK RI WKH IROORZLQJ JHQHUDO FRQWUROV ZLWK WKH EURDG FDWHJRU\ RI FRQWUROV LQ

)HHGEDFN 5HIHUHQFH 4XHVWL DOVR IRXQG LQ VWXG\ JXLGH 4XHVWLRQ  %  (  '  &  '  $  '  & ZKLFK LW LV LQFOXGHG HDFK FRQWURO ZLOO EH UHODWHG WR RQO\ RQH FDWHJRU\ 

 0DWFK HDFK RI WKH DXWRPDWHG DSSOLFDWLRQ FRQWUROV ZLWK WKH HUURU FRQGLWLRQ V WKH\

)HHGEDFN 5HIHUHQFH 4XHVWLRQ DOVR IRXQG LQ VWXG\ JXLGH '  $  '  '  '  '  $  % & '  $ % & '  $ % & '  $  $  $  %  $ '  $ GHWHFW PRUH WKDQ RQH HUURU FRQGLWLRQ  DUH GHVLJQHG WR SUHYHQW RU GHWHFW HDFK FRQWURO PD\ EH GHVLJQHG WR SUHYHQW RU

(VVD\ 4XHVWLRQV

 :KDW LV WKH GLIIHUHQFH EHWZHHQ WKH XVH RI WHVW GDWD DQG SDUDOOHO VLPXODWLRQ"

7KH SULPDU\ GLIIHUHQFHV EHWZHHQ WKH XVH RI WHVW GDWD DQG SDUDOOHO VLPXODWLRQ DUH WKH QDWXUH RI WKH GDWD XVHG DQG WKH V\VWHP XVHG WR SURFHVV WKH GDWD 7KH WHVW GDWD DSSURDFK XVHV VLPXODWHG GDWD FUHDWHG E\ WKH DXGLW WHDP WKDW LV SURFHVVHG WKURXJK WKH FOLHQW V FRPSXWHUL]HG SURFHVVLQJ V\VWHP 3DUDOOHO VLPXODWLRQ LQYROYHV FRPSDULQJ WKH UHVXOWV RI VHSDUDWH SURFHVVLQJ RI DFWXDO QRW VLPXODWHG GDWD WKURXJK WKH FOLHQW V FRPSXWHUL]HG SURFHVVLQJ V\VWHP DQG WKURXJK D SURJUDP SUHSDUHG E\ WKH DXGLW WHDP

"& !  !D  9"D  %1 ! " C!&"4 ! ! Y! 9&"  "" (" ! &"(! 9 &!  A "@ ( ! X 57W !4 ! 321 %!0 Q 6 (( !2&!&!E &"" %""@!D % %!4 !0    %""@!D % %!4 !0   %""@!D

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

FRQWUROV

D  7KH REMHFWLYH RI LQSXW FRQWUROV LV WR SURYLGH UHDVRQDEOH DVVXUDQFH WKDW GDWD UHFHLYHG IRU SURFHVVLQJ E\ WKH FRPSXWHU GHSDUWPHQW KDYH EHHQ SURSHUO\ DXWKRUL]HG DQG DFFXUDWHO\ HQWHUHG RU FRQYHUWHG IRU SURFHVVLQJ  7KH REMHFWLYH RI SURFHVVLQJ FRQWUROV LV WR SURYLGH UHDVRQDEOH DVVXUDQFH WKDW GDWD SURFHVVLQJ KDV EHHQ SHUIRUPHG DFFXUDWHO\ DQG ZLWKRXW DQ\ RPLVVLRQ RU GXSOLFDWH SURFHVVLQJ RI WUDQVDFWLRQV  7KH REMHFWLYH RI RXWSXW FRQWUROV LV WR SURYLGH UHDVRQDEOH DVVXUDQFH WKDW RQO\ DXWKRUL]HG SHUVRQV UHFHLYH RXWSXW RU KDYH DFFHVV WR ILOHV SURGXFHG E\ WKH V\VWHP E  ([DPSOHV RI LQSXW FRQWUROV LQFOXGH 'DWD HQWU\ DQG IRUPDWWLQJ FRQWUROV $XWKRUL]DWLRQ DQG DSSURYDO FRQWUROV &KHFN GLJLWV 5HFRUG FRXQWV %DWFK WRWDOV +DVK WRWDOV 9DOLG FKDUDFWHU WHVWV

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

 %1 !" C&!  %!" 9 ! Y! 9&"  %!" 9 " " !! "" !!@ A "@ !  "" " 99 !&" (" ! 9& 8! !4 " G 57W !4 ! 321 %!0 & !# ) ((  !' &"" %""@!D % %!4 !0    %""@!D % %!4 !0   %""@!D

"" "  99 !&" ( " ! 9D  9"D

0DWFKLQJ 4XHVWLRQV

 0DWFK HDFK RI WKH IROORZLQJ LQSXW FRQWUROV OHWWHUV $. ZLWK WKH GHVFULSWLRQ RU W\SH RI HUURU WKDW PLJKW EH GHWHFWHG E\ WKLV FRQWURO QXPEHUV   (DFK LQSXW FRQWURO UHODWHV WR RQO\ RQH GHVFULSWLRQ RU W\SH RI HUURU

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

""  9  9"D  %1 ! " C&!  %!" 9 ! Y! 9&"  %!" 9 " " !! "" !!@ A "@ !  "" " 99 ! &" (" ! 9& 8! !4 " G 57W !4 ! 321 %!0 W G (( !4 Q &"" %""@!D % %!4 !0    %""@!D % %!4 !0   %""@!D

LQ D WLPHO\ IDVKLRQ WR FRUUHFW GDWD FRQYHUVLRQ HUURUV  'DWD HQWU\ SHUVRQQHO DUH DEOH LQWR D WUDQVDFWLRQ ILOH QXPEHU RI WUDQVDFWLRQV HQWHUHG SURFHVVLQJ LV FRPSDUHG ZLWK WKH WUDQVDFWLRQV UHFHLYHG IRU  7KH QXPEHU RI SD\UROO DFFXUDWH LQSXW RI GDWD DQRWKHU QXPHULFDO ILHOG WR HQVXUH

'DWD HQWU\ DQG 0LVVLQJ GDWD WHVWV  WHVWV

IRUPDWWLQJ 

 0DWFK HDFK RI WKH IROORZLQJ SURJUDPHPEHGGHG WHFKQLTXHV OHWWHUV $, ZLWK D GHVFULSWLRQ RI WKHVH WHFKQLTXHV QXPEHUV   (DFK WHFKQLTXH UHODWHV WR RQO\ RQH GHVFULSWLRQ

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

UHVXOWV WR SUHGHWHUPLQHG UHVXOWV  3URYLGLQJ DQ DXGLW WUDLO RI WUDQVDFWLRQV E\ DFFXPXODWLQJ WKH UHVXOWV RI DOO SURFHVVLQJ  3URFHVVLQJ DFWXDO WUDQVDFWLRQV WKURXJK SURJUDPV GHVLJQHG E\ DXGLW WHDPV WR UHSOLFDWH WKH FOLHQW V FRPSXWHUL]HG SURFHVVLQJ V\VWHP  3URFHVVLQJ VLPXODWHG WUDQVDFWLRQV UHODWHG WR D ILFWLWLRXV GHSDUWPHQW RU EUDQFK FUHDWHG E\ WKH DXGLW WHDP 0RQLWRULQJ V\VWHP DFWLYLW\  7HVW GDWD  ,QWHJUDWHG WHVW IDFLOLW\ 

! S@!D !!2&Q7 & %"  9"D  %1 ! " C!&"4 ! ! Y! 9&"  "" (" ! &"(! 9 &!  A "@ ( ! X 57W !4 ! 321 %!0 Q 6 (( !2&!&!E &"" %""@!D % %!4 !0    %""@!D % %!4 !0   %""@!D