Upload
dealbook
View
228
Download
0
Embed Size (px)
Citation preview
8/9/2019 S.E.C.'s Appellate Brief
http://slidepdf.com/reader/full/secs-appellate-brief 1/55
[LC]KM X]@]KX HA[^] AE @VVK@OXEA^ ]BK ECE]B HC^H[C]
La, 63$06335
XKH[^C]CKX @LM KRHB@LIK HADDCXXCAL/
Vo`cl}cee$@vvkoo`l}/
u,
D@^J H[N@L/
Mkeklm`l}$@vvkookk,
Al @vvk`o E~ad }bk [lc}km X}`}kx Mcx}~ch} Ha{~}ea~ }bk La~}bk~l Mcx}~ch} ae ]kr`x
N^CKE AE ]BK XKH[^C]CKX @LM KRHB@LIK HADDCXXCAL/VO@CL]CEE$@VVKOO@L]
M@UCM D, NKHJK^
Iklk~`o Ha{lxko
D@^J M, H@BLMkv{}s Iklk~`o Ha{lxko
G@HAN B, X]COOD@LXaochc}a~
^@LM@OO Y, P[CLL@xxcx}`l} Iklk~`o Ha{lxko
DCHB@KO O, VAX]Xklca~ Oc}ci`}cal Ha{lxko
Xkh{~c}ckx `lm Krhb`lik Haddcxxcal066 E X}~kk}/ L,K,Y`xbcli}al/ M,H, >6;=3">6># ;;0$;600 "Vax}#
8/9/2019 S.E.C.'s Appellate Brief
http://slidepdf.com/reader/full/secs-appellate-brief 2/55
8/9/2019 S.E.C.'s Appellate Brief
http://slidepdf.com/reader/full/secs-appellate-brief 3/55
]@NOK AE HAL]KL]X
V`ik
X]@]KDKL] KI@^MCLI A^@O @^I[DKL] , , , , , , , , , , , , , , , , , , , , , , , c
]@NOK AE @[]BA^C]CKX , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , cu
X]@]KDKL] AE G[^CXMCH]CAL , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , 0
X]@]KDKL] AE ]BK CXX[KX V^KXKL]KM , , , , , , , , , , , , , , , , , , , , , , , , , , , 0
X]@]KDKL] AE ]BK H@XK , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , >
@, L`}{~k ae }bk H`xk , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , >
N, E`h}x , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , 8
H, V~ahkkmclix cl }bk Mcx}~ch} Ha{~} , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , 5
X[DD@^S AE @^I[DKL] , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , 3
X]@LM@^M AE KUCKY , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , 00
@^I[DKL] , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , 0>
]BK MCX]^CH] HA[^] K^^KM CL BAOMCLI ]B@] ]BK
HADVO@CL] E@COKM @MKP[@]KOS ]A @OOKIKMKHKV]CAL @X ^KP[C^KM [LMK^ XKH]CAL 06"n#@LM [OK 06n$;, , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , 0>
@, H{n`l–x @i~kkdkl} }a Jkkv Clea~d`}cal Halecmkl}c`o
I`uk ^cxk }a ` M{}s La} }a ]~`mk/ `lm Bcx [lmcxhoaxkm]~`mcli Y`x ]bk~kea~k Mkhkv}cuk/ cl Ucao`}cal ae
Xkh}cal 06"n# lm {ok 06n$;, , , , , , , , , , , , , , , , , , , , , , , , , , , , , 08
$cc¤
8/9/2019 S.E.C.'s Appellate Brief
http://slidepdf.com/reader/full/secs-appellate-brief 4/55
]`nok ae Hal}kl}x "hal},# V`ik
0, ]bk dcx`vv~av~c`}cal }bka~s ae clxcmk~ }~`mcli/
`x `mav}km ns }bk X{v~kdk Ha{~}/ v~abcnc}x }~`mclial }bk n`xcx ae d`}k~c`o/ lalv{noch clea~d`}cal cl n~k`hb ae m{}s }a }bk xa{~hk ae }bk clea~d`}cal, , , , , , , , , 08
>, Haddcxxcal ^{ok 06n;$>"n#"0#/ ns c}x vo`cl }k~dx/
xk}x ea~}b ` m{}s al H{n`l {lmk~ Xkh}cal 06"n# `lm ^{ok 06n$; la} }a }~`mk nkh`{xk bk `i~kkm }ad`cl}`cl }bk clea~d`}cal cl halecmklhk, , , , , , , , , , , , , , , , 0;
8, Haddcxxcal ^{ok 06n;$>"n#"0# kdnamckx ` u`ocm
cl}k~v~k}`}cal ae }bk mkhkv}cal ~kp{c~kdkl} ae Xkh}cal 06"n# `lm cx kl}c}okm }a Hbku~al mkek~klhk, , , , , , , 05
`, [lmk~ Xkh}cal 06"n#/ ` m{}s ae }~{x} a~ halecmklhkd`s ~cxk ns i~kkdkl}, , , , , , , , , , , , , , , , , , , , , , , , 02
n, @l `i~kkdkl} }a d`cl}`cl clea~d`}cal cl halecmklhkclho{mkx l i~kkdkl} la} }a }~`mk, , , , , , , , , , , , , , , >0
=, Kukl `v`~} e~ad ^{ok 06n;$>"n#"0#/ {lmcxhoaxkm }~`mcli`e}k~ `i~kkcli }a jkkv clea~d`}cal halecmkl}c`o cx mkhkv}cuk {lmk~ Xkh}cal 06"n# lm ^{ok 06n$;, , , , , , , , , , , 88
N, Cl @ls Kukl}/ }bk Hadvo`cl} @mkp{`}kos @ookikm ]b`}
H{n`l–x Halm{h} Y`x Mkhkv}cuk Nkh`{xk Bk Krvochc}os @i~kkm La} }a ]~`mk `lm ]bkl ]~`mkm N`xkm al }bk Halecmkl}c`o Clea~d`}cal, , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , 8;
HALHO[XCAL , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , =0
@MMKLM[DHK^]CECH@]K AE XK^UCHKHK^]CECH@]K AE HADVOC@LHK
$ccc¤
8/9/2019 S.E.C.'s Appellate Brief
http://slidepdf.com/reader/full/secs-appellate-brief 5/55
]@NOK AE @[]BA^C]CKX
H@XKX V`ik
@xbh~ae} u, Cpn`o/ 0>3 X, H}, 0389 ">663# , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , 00
Nkoo @}o`l}ch Ha~v, u, ]yadnos/ ;;6 [,X, ;== ">669# , , , , , , , , , , , , , , , , , , , , , 00
H`~vkl}k~ u, [lc}km X}`}kx/ =2= [,X, 03 "0329# , , , , , , , , , , , , , , , , , , , , , , , , , , >=
Hbku~al [,X,@,/ Clh, u, L`}{~`o ^kxa{~hkx Mkeklxk Ha{lhco/ Clh,/ =59 [,X, 289 "032=# , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , 06/ 05/09
v`xxcd
Hadv{mslk Ha~v u, Xb`lk/ =;8 E, X{vv, >m 269 "X,M,L,S, >665# , , , , , , , , >9$>2
Mk`~na~l Clm{x}~c`o D`l{e`h}{~cli Ha,/ O]M u, Xa{m~alch Ecl`lw @I/ 0339 YO 0;5;23 "L,M, Coo, @v~co 0/ 0339# , , , , , , , , , , , , , , , , , , , , , , , , , 86
Mc`dalm u, A~k`d{la/ >= L,S,>m =3= "L,S, 0353# , , , , , , , , , , , , , , , , , , , , , , >=
Ko Hadc}k V`~` Ko Ncklkx}`~ mk K`~ocd`~} u, Y`~dk~m`d/ ;83 E,8m 065> "3}b Hc~, >662# , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , >9
Ialw`okw u, J`s/ ;99 E,8m 566 ";}b Hc~, >663#/ vk}c}cal ea~ hk~}, ecokm/ 92 [,X,O,Y, 8>3; "[,X, Ah}, 3/ >663# "La, 63$;=># , , , , , , , , , , , , , , 00/ 85
B`~~cli}al u, X}`}k E`~d Ec~k % H`x{`o}s Ha,/ ;58 E,8m 0=0 ";}b Hc~, >663# , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , 00
Bk~d`l % D`hOk`l u, B{mmokx}al/ =;3 [,X, 89; "0328# , , , , , , , , , , , , , , , , , , 8=
O`liea~m u, ^c}k @cm ae @o`n`d`/ Clh,/ >80 E,8m 0862 "00}b Hc~, >666# , , , , , , , 8=
L`}cal`o H`nok % ]kokhadd{lch`}cal @xxahc`}cal u, N~`lm R Cl}k~lk}Xk~uchkx/ ;=; [,X, 359 ">66;# , , , , , , , , , , , , , , , , , , , , , , , , , , , , 05/ 09/ >>
La~}b @}o`l}ch Clx}~{dkl}x/ Clh, u, B`nk~/ 022 E,8m 82 ">m Hc~, 0333# , , , , , , , , 86
$cu¤
8/9/2019 S.E.C.'s Appellate Brief
http://slidepdf.com/reader/full/secs-appellate-brief 6/55
]`nok ae @{}ba~c}ckx "hal},# V`ik
La~}bvacl} ]khblaoais u, EHH/ =0= E,8m 50 "M,H, Hc~, >66;# , , , , , , , , , , , 05$09
Vc}}x}al Ha`o I~a{v u, Xknnkl/ =22 [,X, 06; "0322# , , , , , , , , , , , , , , , , , , , , , , >2
^kikl}x ae }bk [lcuk~xc}s ae H`ocea~lc` u, H~kmc} X{cxxk Ec~x} Nax}al/ =2> E,8m 89> ";}b Hc~, >669# , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , >6
XKH u, H`vc}`o I`clx ^kxk`~hb N{~k`{/ 89; [,X, 026 "0358# , , , , , , , , , , , , , , , 09
XKH u, H{n`l/ 58= E, X{vv, >m 908 "L,M, ]kr, >663# , , , , , , , , , , , , , , , , , , 8/ 9/ 2v`xxcd
XKH u, Ma~awbja/ ;9= E,8m => ">m Hc~, >663# , , , , , , , , , , , , , , , , , , , , , , , , , , , >0
XKH u, Jc~hb/ >58 E, X{vv, >m 00== "L,M, Coo, >668# , , , , , , , , , , , , , , , , , , , , , , >3
XKH u, Ja~ld`l/ 830 E, X{vv, >m =99 "L,M, ]kr, >66;# , , , , , , , , , , , , , , , >2/ >3
XKH u, La}bk~l/ ;32 E, X{vv, >m 059 "M, D`xx, >663# , , , , , , , , , , , , , , , , , , , , >9
XKH u, S{l/ 8>9 E,8m 0>58 "00}b Hc~, >668# , , , , , , , , , , , , , , , , , , , , , , , , , >5/ >9
XKH u, W`lmea~m/ ;8; [,X, 208 ">66># , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , 09
X}alk~cmik Clukx}dkl} V`~}lk~x OOH u, Xhckl}cech$@}o`l}`/ ;;> [,X, 0=2 ">662# , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , >6
[lc}km X}`}kx u, H`~vkl}k~/ 930 E,>m 06>= ">m Hc~, 0325#/ `ee–m ns kp{`oosmcucmkm ha{~} / =2= [,X, 03 "0329# , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , 8=
[lc}km X}`}kx u, Hbkx}d`l/ 3=9 E,>m ;;0 ">m Hc~, 0330# , , , , , , , , , , , , , >;/ >5/ 8=
[lc}km X}`}kx u, E`ohalk/ >;9 E,8m >>5 ">m Hc~, >660# , , , , , , , , , , , , , , , , , , , , >5
$u¤
8/9/2019 S.E.C.'s Appellate Brief
http://slidepdf.com/reader/full/secs-appellate-brief 7/55
]`nok ae @{}ba~c}ckx "hal},# V`ik
[lc}km X}`}kx u, A–B`i`l/ ;>0 [,X, 5=> "0339# , , , , , , , , , , , , , , , , , , , , 08/ 0=/ 02
v`xxcd
[lc}km X}`}kx u, ask~/ ;=3 E,8m 225 ">m Hc~, >662# , , , , , , , , , , , , , , , , , , , , , , 05
X]@][]KX @LM ^[OKX
Xkh{~c}ckx @h} ae 0388/ 0; [,X,H, 99`/ k} xkp,
Xkh}cal 09"`#/ 0; [,X,H, 99p"`# , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , 8/ 5
Xkh{~c}ckx Krhb`lik @h} ae 038=/ 0; [,X,H, 92`/ k} xkp,
Xkh}cal 06"n#/ 0; [,X,H, 92g"n# , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , 8/ 5/ 9v`xxcd
Xkh}cal >0"m#/ 0; [,X,H, 92{"n# , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , 0 Xkh}cal >0"k#/ 0; [,X,H, 92{"k# , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , 0 Xkh}cal >9/ 0; [,X,H, 92`` , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , 0
^{okx {lmk~ }bk Xkh{~c}ckx Krhb`lik @h} ae 038=/ 09 H,E,^, >=6,6$0
^{ok 06n$;/ 09 H,E,^, © >=6,06n$; , , , , , , , , , , , , , , , , , , , , , , , , , , , , 8/ 5/ 3v`xxcd
^{ok 06n;$>/ 09 H,E,^, © >=6,06n;$> , , , , , , , , , , , , , , , , , , , , , , , , 2/ 0;/ 8>v`xxcd
^{ok 06n;$>"n#"0#/ 09 H,E,^, >=6,06n;$>"n#"0# , , , , , , , , , , , , , , , , 2/ 06/ 0>
v`xxcd^{ok 06n;$>"n#">#/ 09 H,E,^, >=6,06n;$>"n#"># , , , , , , , , , , , , , , , , , , , , , >2^{ok 06n;$>"n#"8#/ 09 H,E,^, >=6,06n;$>"n#"8# , , , , , , , , , , , , , , , , , , , , , >2
^ki{o`}cal EM/ 09 H,E,^, © >=8,066"n#"cc# , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , 8>
>2 [,X,H, 0>30 , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , 0
$uc¤
8/9/2019 S.E.C.'s Appellate Brief
http://slidepdf.com/reader/full/secs-appellate-brief 8/55
]`nok ae @{}ba~c}ckx "hal},# V`ik
Ekmk~`o ^{ok ae Hcuco V~ahkm{~k 3"n# , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , 3
Ekmk~`o {ok ae Hcuco V~ahkm{~k 0>"n#"5# , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , 9
DCXHKOO@LKA[X
N`~n`~` N`mk~ @om`uk/ ‟Dcx`vv~av~c`}cal7 @ Iklk~`o ]bka~s ae Oc`ncoc}sea~ ]~`mcli al Lalv{noch Clea~d`}cal/— 08 Baex}~` O, ^ku, 060"032=# , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , 03
]bk @dk~ch`l Bk~c}`ik Mch}cal`~s ae }bk Kliocxb O`li{`ik/ Ea{~}b Km, "Ba{ib}al Dceeocl >663# , , , , , , , , , , , , , , , , , , , , , , , , , , , , , >>
O`~~s B`~~cx/ ]^@MCLI @LM KRHB@LIKX7 D@^JK] DCH^AX]^[H][^K
EA^ V^@H]C]CALK^X "LS7 Area~m [lcuk~xc}s V~kxx >668# , , , , , , , , , , , , =6
Gako B`xn~a{hj/ ‟Dk`x{~cli }bk Clea~d`}cal Hal}kl} ae X}ahj ]~ mkx/—
=5 ]bk Ga{~l`o ae Ecl`lhk 093 "0330# , , , , , , , , , , , , , , , , , , , , , , , , , , , , =6
]bad`x Okk B`wkl/ ; O@Y AE XKH[^C]CKX KI[O@]CAL "5}b km,# , , , , , 03
^kx}`}kdkl} "Xkhalm# ae @iklhs "03;2# , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , >=
Xkokh}cuk Mcxhoax{~k `lm Clxcmk~ ]~`mcli/ @mav}cli ^kok`xk/ >666 YO 0>60;;5"@{i, 0;/ >666# , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , 8>
Dk~~c`d$Yknx}k~ Aloclk Mch}cal`~s , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , >>
Yknx}k~–x Lky Ya~om Mch}cal`~s "Ycoks V{nocxbcli/ Clh, >66;# , , , , , , , , , , , , >>
5 YCOOCX]AL AL HAL]^@H]X/ © 0870= "=}b km, >663# , , , , , , , , , , , , , , , , , , , , , >3
$ucc¤
8/9/2019 S.E.C.'s Appellate Brief
http://slidepdf.com/reader/full/secs-appellate-brief 9/55
X]@]KDKL] AE G[^CXMCH]CAL
]bk mcx}~ch} ha{~} b`m g{~cxmch}cal }a bk`~ }bk Haddcxxcal–x ho`cdx {lmk~
Xkh}calx >0"m#/ >0"k#/ `lm >9 ae }bk Xkh{~c}ckx Krhb`lik @h} ae 038=/ 0; [,X,H,
92{"m#/ 92{"k#/ `lm 92``, Ecl`o g{midkl} ae mcxdcxx`o yc}b v~kg{mchk y`x kl}k~km
ea~ }bk mkeklm`l} al @{i{x} 08/ >663/ ^K ]`n 8 "`lm `dklmkm @{i{x} 08/ >663/
^K ]`n =#/ `lm }bk Haddcxxcal }cdkos ecokm c}x la}chk ae `vvk`o al Ah}ank~ 9/
>663/ ^K ]`n >, ]bcx Ha{~} b`x g{~cxmch}cal {lmk~ >2 [,X,H, 0>30,
X]@]KDKL] AE ]BK CXX[KX V^KXKL]KM
]bcx cx `l `vvk`o ns }bk Xkh{~c}ckx `lm Krhb`lik Haddcxxcal e~ad ` ecl`o
g{midkl} cl ` hcuco o`y klea~hkdkl} `h}cal `ookicli clxcmk~ }~`mcli ucao`}calx ae
}bk `l}ce~`{m v~aucxcalx ae }bk ekmk~`o xkh{~c}ckx o`yx, Mkeklm`l} D`~j H{n`l/ `x
`ookikm cl }bk hadvo`cl}/ `i~kkm cl `mu`lhk }a jkkv d`}k~c`o/ lal$v{noch
clea~d`}cal `na{} hadv`ls–x cddclkl} xkh{~c}ckx }~`lx`h}cal halecmkl}c`o, ]bk
hadvo`cl} e{~}bk~ `ookikm }b`} H{n`l/ `e}k~ ~khkcucli }bk halecmkl}c`o clea~d`}cal/
~kxvalmcli/ ‟Ykoo/ lay C–d xh~kykm, C h`l–} xkoo/— `lm ~khkcucli da~k
halecmkl}c`o clea~d`}cal/ xaom bcx x}ahj yc}ba{} mcxhoax{~k }a }bk hadv`ls nkea~k
}bk clea~d`}cal y`x d`mk v{noch/ `uacmcli oaxxkx ae auk~ -9;6/666, ]bk mcx}~ch}
ha{~} mcxdcxxkm }bk hadvo`cl} al }bk i~a{lm }b`} c} mcm la} `mkp{`}kos `ookik }b`}
H{n`l–x }~`mcli y`x mkhkv}cuk, ]bk cxx{kx v~kxkl}km ~k7
0
8/9/2019 S.E.C.'s Appellate Brief
http://slidepdf.com/reader/full/secs-appellate-brief 10/55
0, Ybk}bk~ }bk mcx}~ch} ha{~} k~~km cl e`cocli }a `vvos Haddcxxcal ^{ok 06n;¤
>"n#"0# ‘ v{~x{`l} }a ybchb `l `i~kkdkl} }a jkkv d`}k~c`o/ lal$v{noch clea~d`}cal
halecmkl}c`o icukx ~cxk }a ` m{}s la} }a }~`mk/ x{hb }b`} }~`mcli al }b`} clea~d`}cal
yc}ba{} mcxhoax{~k cx mkhkv}cuk `lm ucao`}kx Xkh}cal 06"n# `lm ^{ok 06n$;,
>, Ybk}bk~/ kukl `v`~} e~ad Haddcxxcal ^{ok 06n;$>"n#"0#/ }~`mcli `e}k~
`i~kkcli }a d`cl}`cl clea~d`}cal cl halecmklhk cx mkhkv}cuk {lmk~ Xkh}cal 06"n#
`lm ^{ok 06n$;,
8, Ybk}bk~/ cl `ls kukl}/ }bk Haddcxxcal–x hadvo`cl} x{eechckl}os `ookikx }b`}
H{n`l krvochc}os `i~kkm la} }a }~`mk/ ybk~k }bk hadvo`cl} `ookikx }b`} "`# H{n`l
`i~kkm }a d`cl}`cl }bk d`}k~c`o/ lalv{noch clea~d`}cal cl halecmklhk `lm }bkl/
`e}k~ bk`~cli }bk lki`}cuk clea~d`}cal/ ~kxvalmkm/ ‟Ykoo/ lay C–d xh~kykm ‘ C
h`l–} xkoo:— `lm "n# H{n`l an}`clkm `mmc}cal`o d`}k~c`o/ lalv{noch clea~d`}cal
e~ad }bk hadv`ls "}b~a{ib c}x `ikl}#/ ybchb ~kockm al H{n`l–x `hjlayokmidkl}
}b`} bk ha{om la} xkoo bcx xb`~kx {l}co `e}k~ }bk v{noch `lla{lhkdkl},
X]@]KDKL] AE ]BK H@XK
@, L`}{~k ae }bk H`xk
]bk Haddcxxcal–x hadvo`cl} `ookikm }b`} mkeklm`l} D`~j H{n`l/ `e}k~
`i~kkcli }a d`cl}`cl }bk clea~d`}cal cl halecmklhk/ y`x kl}~{x}km yc}b d`}k~c`o/
lalv{noch clea~d`}cal ns ` ha~va~`}cal h`ookm D`dd`,had ybkl bk y`x xaochc}km
>
8/9/2019 S.E.C.'s Appellate Brief
http://slidepdf.com/reader/full/secs-appellate-brief 11/55
}a v`~}chcv`}k cl ` v~cu`}k xkh{~c}ckx aeek~cli, ]bk hadvo`cl} e{~}bk~ ookikm }b`} bk
}~`mkm cl }bk d`~jk} al }bk n`xcx ae }bk clea~d`}cal cl n~k`hb ae ` m{}s }a bcx
xa{~hk/ `uacmcli oaxxkx cl krhkxx ae -9;6/666, ]bk hadvo`cl} hb`~ikm H{n`l yc}b
clxcmk~ }~`mcli cl ucao`}cal ae Xkh}cal 09"`# ae }bk Xkh{~c}ckx @h} ae 0388/ 0;
[,X,H, 99p"`#/ Xkh}cal 06"n# ae }bk Xkh{~c}ckx Krhb`lik @h} ae 038=/ 0; [,X,H,
92g"n#/ `lm ^{ok 06n$;/ 09 H,E,^, >=6,06n$;/ }bk~k{lmk~,0
]bk mcx}~ch} ha{~} i~`l}km H{n`l–x da}cal }a mcxdcxx n`xkm al c}x halho{xcal
}b`} }bk Haddcxxcal–x hadvo`cl} e`cokm `mkp{`}kos }a `ookik }b`} H{n`l aykm `
m{}s }a bcx xa{~hk la} }a {xk }bk halecmkl}c`o clea~d`}cal/ `lm }bk~kea~k bcx }~`mcli
y`x la} mkhkv}cuk `x ~kp{c~km ns Xkh}cal 06"n#,
N, E`h}x
Al ` da}cal }a mcxdcxx/ }bk e`h}x `ookikm cl }bk hadvo`cl} `~k `hhkv}km `x
}~{k, ]bk eaooaycli e`h}{`o `hha{l} }bk~kea~k cx m~`yl e~ad }bk Haddcxxcal–x
hadvo`cl},
Cl D`~hb >66=/ mkeklm`l} D`~j H{n`l v{~hb`xkm 566/666 xb`~kx ae
D`dd`,had/ ` 5,8+ x}`jk cl }bk hadv`ls, ^K ]`n 5/ Hadvo, µ 06, Cl }bk xv~cli
ae >66=/ D`dd`,had/ `} }bk x{iikx}cal ae clukx}dkl} n`lj Dk~~cd`l H{~b`l
0 @x }bk mcx}~ch} ha{~} x}`}km/ XKH u, H{n`l/ 58= E, X{vv, >m 908/ 909 l,>"L,M, ]kr, >663#/ }bk v`~}ckx `i~kkm }b`}/ cl }bcx h`xk/ oc`ncoc}s ya{om nk kr`dclkm{lmk~ Xkh}cal 09"`# `hha~mcli }a }bk x`dk x}`lm`~mx `x {lmk~ Xkh}cal 06"n# `lm^{ok 06n$;,
8
8/9/2019 S.E.C.'s Appellate Brief
http://slidepdf.com/reader/full/secs-appellate-brief 12/55
Ea~m % Ha, "‟Dk~~cd`l—#/ mkhcmkm }a ~`cxk h`vc}`o }b~a{ib ` v~cu`}k vo`hkdkl}
jlayl `x ` VCVK "‟v~cu`}k clukx}dkl} cl v{noch kp{c}s—#, Cm, µ 00, D`dd`,had
kli`ikm Dk~~cd`l }a xk~uk `x }bk vo`hkdkl} `ikl} ea~ }bk aeek~cli, Cm,
@} }bk klm ae G{lk >66= `lm `x }bk VCVK v~ai~kxxkm }ay`~m hoaxcli/
D`dd`,had mkhcmkm }a cluc}k H{n`l }a v`~}chcv`}k cl }bk VCVK, Cm, µ 0>, ]bk
hadv`ls–x HKA y`x clx}~{h}km }a cluc}k H{n`l `lm }a ec~x} d`jk x{~k }b`} H{n`l
{lmk~x}aam }b`} bk ya{om b`uk }a jkkv }bk clea~d`}cal `na{} }bk aeek~cli
halecmkl}c`o, Cm, µ 0>, Al G{lk >2/ >66=/ D`dd`,had–x HKA xvajk yc}b H{n`l
ns }kokvbalk ea~ auk~ kcib} dcl{}kx, Cm, µ 08, ]bk HKA v~ke`hkm }bk h`oo ns
clea~dcli H{n`l }b`} bk b`m halecmkl}c`o clea~d`}cal }a haluks }a bcd, Cm, µ 0=,
H{n`l `i~kkm }b`} bk ya{om jkkv cl halecmklhk yb`}kuk~ clea~d`}cal }bk HKA
cl}klmkm }a xb`~k yc}b bcd, Cm, ^koscli al H{n`l–x `i~kkdkl} }a jkkv }bk
clea~d`}cal halecmkl}c`o/ }bk HKA }aom H{n`l `na{} }bk VCVK aeek~cli, Cm, H{n`l
nkh`dk {vxk} `lm `li~s m{~cli }bk haluk~x`}cal/ x`scli/ `dali a}bk~ }bclix/ }b`}
bk mcxocjkm VCVKx nkh`{xk }bks mco{}k x}ahj u`o{k ea~ krcx}cli xb`~kbaomk~x, Cm,
@} }bk klm ae }bk haluk~x`}cal/ H{n`l }aom }bk HKA/ ‟Ykoo/ lay C)d xh~kykm, C
h`l–} xkoo,— Cm,
Xba~}os }bk~k`e}k~/ D`dd`,had–x krkh{}cuk hb`c~d`l kd`cokm a}bk~
D`dd`,had na`~m dkdnk~x {vm`}cli }bkd al VCVK$~ko`}km c}kdx/ clho{mcli }bk
=
8/9/2019 S.E.C.'s Appellate Brief
http://slidepdf.com/reader/full/secs-appellate-brief 13/55
HKA–x haluk~x`}cal yc}b H{n`l, Cm, µ 0;, Bk y~a}k }b`} ‟Z`Tx `l}chcv`}km
ZH{n`lT clc}c`oos ‒eoky aee }bk b`lmok– `lm x`cm bk ya{om xkoo bcx xb`~kx
"~khailcwcli }b`} bk y`x la} `nok }a ma `ls}bcli {l}co yk `lla{lhk }bk kp{c}s# n{}
}bkl `xjkm }a xkk }bk }k~dx `lm halmc}calx , , , ,— Cm,
O`}k~ al G{lk >2/ `i`cl ~koscli al ‟H{n`l–x `hhkv}`lhk ae ` m{}s ae
halecmkl}c`oc}s `lm bcx `hjlayokmidkl} }b`} bk ha{om la} xkoo {l}co `e}k~ }bk v{noch
`lla{lhkdkl}— ae }bk VCVK aeek~cli/ }bk HKA xkl} bcd ` eaooay${v kd`co x}`}cli
‟ZcTe sa{ y`l} da~k mk}`cox `na{} }bk v~cu`}k vo`hkdkl} vok`xk hal}`h} , , ,
ZDk~~cd`lT— `lm v~aucmkm }bk }kokvbalk l{dnk~ ae }bk Dk~~cd`l x`okx
~kv~kxkl}`}cuk, Cm, µ 05, H{n`l h`ookm }bk Dk~~cd`l x`okx ~kv~kxkl}`}cuk }b`}
`e}k~laal `lm xvajk yc}b bcd ea~ kcib} dcl{}kx `na{} }bk VCVK, Cm, µ 09, M{~cli
}b`} h`oo/ }bk x`okxd`l v~aucmkm `mmc}cal`o halecmkl}c`o mk}`cox `na{} }bk VCVK/
`lm/ cl ~kxvalxk }a H{n`l–x p{kx}calx/ }aom bcd }b`} }bk VCVK y`x nkcli xaom `} `
mcxha{l} }a }bk d`~jk} v~chk `lm aeek~km a}bk~ clhkl}cukx ea~ }bk VCVK clukx}a~x,
Cm, Alk dcl{}k `e}k~ b`licli {v yc}b }bk x`okx ~kv~kxkl}`}cuk/ H{n`l h`ookm bcx
n~ajk~ `lm }aom bcd }a ocp{cm`}k bcx kl}c~k 566/666 xb`~k vaxc}cal cl D`dd`,had,
Cm, µ 02,
]bk lkr} m`s/ al G{lk >3/ >66=/ D`dd`,had–x krkh{}cuk hb`c~d`l kd`cokm
}bk na`~m `lm x`cm ‟yk mcm xvk`j }a D`~j H{n`l "Z}b~a{ib a{~ HKAT `lm/
;
8/9/2019 S.E.C.'s Appellate Brief
http://slidepdf.com/reader/full/secs-appellate-brief 14/55
x{nxkp{kl}os/ a{~ clukx}dkl} n`ljk~# }a eclm a{} ce bk b`m `ls cl}k~kx} cl
v`~}chcv`}cli }a }bk kr}kl} ae d`cl}`clcli bcx cl}k~kx}, Bcx `lxyk~x yk~k7 bk ya{om
la} clukx}/ bk makx la} y`l} }bk hadv`ls }a d`jk `hp{cxc}calx/ bk ycoo xkoo bcx
xb`~kx ybchb bk h`l la} ma {l}co `e}k~ yk `lla{lhk,— Cm, µ >6,
@} 5766 v,d, al G{lk >3/ `e}k~ }bk d`~jk}x b`m hoaxkm/ D`dd`,had v{nochos
`lla{lhkm }bk VCVK aeek~cli, Cm, µ >>, ]bk x}ahj v~chk hoaxkm al G{lk 86/ >66=/
`} -00,33/ mayl 2,; + e~ad }bk G{lk >3 hoaxcli v~chk, Cm, µ >8, H{n`l `uacmkm
oaxxkx cl krhkxx ae -9;6/666 ns xkoocli bcx D`dd`,had xb`~kx v~ca~ }a }bk v{noch
`lla{lhkdkl}, Cm, µ >=, H{n`l lkuk~ mcxhoaxkm }a D`dd`,had }b`} bk y`x iacli
}a xkoo bcx xb`~kx v~ca~ }a }bk v{noch `lla{lhkdkl} ae }bk VCVK/ n{} o`}k~ v{nochos
x}`}km }b`} bk b`m xaom bcx xb`~kx nkh`{xk }bk hadv`ls y`x halm{h}cli ` VCVK,
Cm, µ >;,
H, V~ahkkmclix cl }bk Mcx}~ch} Ha{~}
Al Laukdnk~ 09/ >662/ }bk Haddcxxcal ecokm ` hadvo`cl} `i`clx} H{n`l cl
}bk Mcx}~ch} Ha{~} ea~ }bk La~}bkl Mcx}~ch} ae ]kr`x/ `ookicli }b`} bk b`m }~`mkm
n`xkm al d`}k~c`o/ lalv{noch clea~d`}cal cl ucao`}cal ae Xkh}cal 09"`#/ Xkh}cal
06"n#/ `lm {ok 06n$;, Xkk ^K ]`n 5/ Hadvo, µµ >9$88, ]bk hadvo`cl} `ookikm
}b`} H{n`l/ `e}k~ a~`oos `i~kkcli }a d`cl}`cl cl halecmklhk clea~d`}cal bk ok`~lkm
e~ad `l krkh{}cuk `} D`dd`,had/ y`x icukl d`}k~c`o/ lalv{noch clea~d`}cal
5
8/9/2019 S.E.C.'s Appellate Brief
http://slidepdf.com/reader/full/secs-appellate-brief 15/55
~ki`~mcli `l cddclkl} VCVK aeek~cli ns }bk hadv`ls `lm }~`mkm al }bk n`xcx ae
}b`} clea~d`}cal cl n~k`hb ae bcx m{}s ae }~{x} a~ halecmklhk }a D`dd`,had, Xkk/
k,i,/ cm, µ >5, ]bk Haddcxxcal xa{ib} `l clg{lh}cal `i`clx} e{}{~k ucao`}calx/
mcxia~ikdkl} ae H{n`l–x `uacmkm oaxxkx/ vo{x v~kg{midkl} cl}k~kx}/ `lm ` hcuco
vkl`o}s, Xkk/ k,i,/ cm, µ 8,
H{n`l daukm }a mcxdcxx }bk hadvo`cl} {lmk~ Ekmk~`o ^{ok ae Hcuco
V~ahkm{~k 0>"n#"5# ea~ e`co{~k }a x}`}k ` ho`cd, Bk `~i{km }b`} }bk Haddcxxcal
b`m la} `mkp{`}kos `ookikm }b`} bcx halm{h} y`x mkhkv}cuk/ `x c} d{x} nk }a xk}
ea~}b ` ho`cd ea~ ucao`}cli Xkh}cal 06"n#, Xkk XKH u, H{n`l/ 58= E, X{vv, >m 908/
902/ 9>0 "L,M, ]kr, >663#, ]bk ha{~} `i~kkm yc}b H{n`l–x iklk~`o hal}kl}cal }b`}
`l `i~kkdkl} }a d`cl}`cl }bk clea~d`}cal cl halecmklhk y`x clx{eechckl} }a x{vva~}
oc`ncoc}s, Xkk cm, } 9>;$>5, ]bk ha{~}/ baykuk~/ mcm la} }`jk }bcx ucky n`xkm al
`ls `~i{dkl} d`mk ns H{n`l, ]bk ha{~} bkom clx}k`m }b`} `l `i~kkdkl} d{x}/
kc}bk~ krvochc}os a~ cdvochc}os/ clho{mk `l {lmk~}`jcli ns }bk ~khcvckl} ae d`}k~c`o/
lalv{noch clea~d`}cal na}b }a jkkv c} cl halecmklhk `lm la} }a }~`mk al c} a~
a}bk~ycxk {xk c} ea~ vk~xal`o nklkec}, Xkk cm, } 9>;, ]bk ha{~} xxk~}km }b`}/ cl }bk
hal}kr} ae clea~d`}cal/ lal$mcxhoax{~k `lm lal${xk ~k oaich`oos mcx}clh}, Xkk cm,
]bk ha{~} bkom }b`} alk yba b`x {lmk~}`jkl }a d`cl}`cl clea~d`}cal cl halecmklhk
b`x `hhkv}km alos ` m{}s ae lal$mcxhoax{~k/ `lm cx e~kk }a {xk }bk clea~d`}cal ea~
9
8/9/2019 S.E.C.'s Appellate Brief
http://slidepdf.com/reader/full/secs-appellate-brief 16/55
vk~xal`o nklkec}, Xkk cm, ]bk ha{~} avclkm }b`} ‟Z`T vk~xal yba ~khkcukx d`}k~c`o/
lal$v{noch clea~d`}cal d`s cl e`h} v~kxk~uk }bk halecmkl}c`oc}s ae }b`} clea~d`}cal
ybcok xcd{o}`lka{xos {xcli c} ea~ bcx ayl i`cl,— Cm, ]bk ha{~} halho{mkm }b`} }bk
Haddcxxcal–x hadvo`cl} e`cokm }a `ookik }bk ‟lal${xk hadvalkl},— Cm, `} 986$80,
]bk ha{~} ~kgkh}km H{n`l–x hal}kl}calx }b`} ` m{}s la} }a }~`mk al d`}k~c`o/
lalv{noch clea~d`}cal d`s la} `~cxk e~ad `i~kkdkl} `oalk/ `lm clx}k`m ~kp{c~kx `
v~kkrcx}cli ecm{hc`~s a~ ecm{hc`~s$ocjk ~ko`}calxbcv/ a~ `l `i~kkdkl} h~k`}cli `
~ko`}calxbcv }b`} nk`~x `oo }bk b`ood`~jx ae ` }~`mc}cal`o ecm{hc`~s ~ko`}calxbcv "x{hb
`x x{vk~ca~c}s/ madcl`lhk/ a~ hal}~ao#/ `lm }b`} }bk krcx}klhk ae ` ecm{hc`~s a~
ecm{hc`~s$ocjk ~ko`}calxbcv cx iauk~lkm krho{xcukos ns x}`}k o`y, Xkk cm, `} 9>0$>9,
]bk ha{~} ~k`xalkm }b`} }bk kxxkl}c`o m{}s cx la} }a {xk }bk clea~d`}cal ea~ vk~xal`o
i`cl `lm }b`} }bk~k cx ‟la `vv`~kl} ~k`xal— ybs }bcx m{}s h`lla} nk {lmk~}`jkl ns
`i~kkdkl}, Cm, `} 9>=,
]bk ha{~} halxcmk~km ybk}bk~ Haddcxxcal ^{ok 06n;$> u`ocmos cdvaxkm `
m{}s la} }a {xk }bk clea~d`}cal, ^{ok 06n;$>"n#"0# v~aucmkx }b`} ‟‒` m{}s ae }~{x}
a~ halecmklhk– krcx}x , , , ZyTbklkuk~ ` vk~xal `i~kkx }a d`cl}`cl clea~d`}cal cl
halecmklhk,— 09 H,E, , >=6,06n;$>"n#"0#, ]bk ha{~} halho{mkm }b`} }bk ^{ok/ ns
c}x }k~dx/ v{~va~}x }a cdvaxk oc`ncoc}s n`xkm al `l `i~kkdkl} }b`} o`hjx }bk
~kp{cxc}k m{}s la} }a }~`mk al a~ a}bk~ycxk {xk }bk halecmkl}c`o clea~d`}cal, Xkk
2
8/9/2019 S.E.C.'s Appellate Brief
http://slidepdf.com/reader/full/secs-appellate-brief 17/55
58= E, X{vv, >m } 986, ]bk ha{~} }bk~kea~k bkom }b`} }a cdvaxk oc`ncoc}s {lmk~ }bk
^{ok ya{om krhkkm }bk `{}ba~c}s i~`l}km }a }bk Haddcxxcal ns Hali~kxx v{~x{`l}
}a Xkh}cal 06"n# }a v~axh~cnk halm{h} }b`} cx mkhkv}cuk, Xkk cm, } 980, ]bk ha{~}
la}km }b`}/ cl ocib} ae c}x halho{xcal al }bcx cxx{k/ }bk~k y`x la lkkm }a `mm~kxx
H{n`l–x `~i{dkl} }b`} }bk ^{ok makx la} `vvos }a bcx n{xclkxx ~ko`}calxbcv yc}b
D`dd`,had nkh`{xk }bk ^{ok cx ocdc}km }a e`dcos `lm a}bk~ vk~xal`o
~ko`}calxbcvx, Xkk cm, } 9>2 l,3, ]bk ha{~} lkuk~}bkokxx x}`}km }b`}/ ce c} yk~k }a
~k`hb }bcx p{kx}cal/ c} ya{om ~kgkh} x{hb ocdc}`}cal al }bk ^{ok, Xkk cm,>
X[DD@^S AE @^I[DKL]
Xkh}cal 06"n# ae }bk Xkh{~c}ckx Krhb`lik @h} `lm ^{ok 06n$; }bk~k{lmk~
v~abcnc} mkhkv}cal cl hallkh}cal yc}b }bk v{~hb`xk a~ x`ok ae xkh{~c}ckx, @ vk~xal
yba an}`clx d`}k~c`o/ lalv{noch clea~d`}cal ns `i~kkcli yc}b }bk xa{~hk ae }bk
clea~d`}cal }a d`cl}`cl }bk clea~d`}cal cl halecmklhk/ `lm }bkl }~`mkx xkh{~c}ckx
n`xkm al }b`} clea~d`}cal yc}ba{} mcxhoax{~k }a }bk xa{~hk/ `x H{n`l mcm bk~k/ e`oox
yc}bcl }bk xhavk ae }bk dcx`vv~av~c`}cal }bka~s ae clxcmk~ }~`mcli/ `x `mav}km ns
}bk X{v~kdk Ha{~}, ]bk mcx}~ch} ha{~} mcxdcxxkm }bk hadvo`cl} al }bk i~a{lm }b`}
c} mcm la} `mkp{`}kos `ookik }b`} H{n`l mkhkcukm }bk xa{~hk ae }bk clea~d`}cal, Cl
> H{n`l `oxa daukm }a mcxdcxx {lmk~ Ekmk~`o ^{ok ae Hcuco V~ahkm{~k 3"n#/ n{} }bk ha{~} ~kgkh}km }bcx `~i{dkl}/ baomcli }b`} ‟}bk hadvo`cl} cx x{eechckl}os v`~}ch{o`~ }a x`}cxes ^{ok 3"n#,— 58= E, X{vv, >m } 903 l,8,
3
8/9/2019 S.E.C.'s Appellate Brief
http://slidepdf.com/reader/full/secs-appellate-brief 18/55
xa macli/ }bk ha{~} d`mk }b~kk k~~a~x/ k`hb ae ybchb v~aucmkx `l clmkvklmkl} n`xcx
ea~ ~kuk~x`o,
Ec~x}/ }bk mcx}~ch} ha{~} halho{mkm/ yc}ba{} hc}`}cal }a `{}ba~c}s/ }b`} `l
`i~kkdkl} }a jkkv clea~d`}cal halecmkl}c`o makx la} klhadv`xx `l `i~kkdkl} la}
}a }~`mk/ `lm }bk~kea~k }~`mcli xkh{~c}ckx kukl `e}k~ `i~kkcli }a jkkv clea~d`}cal
halecmkl}c`o makx la} mkhkcuk }bk xa{~hk ae }bk clea~d`}cal, ]bk mcx}~ch} ha{~}
e`cokm }a icuk v~avk~ mkek~klhk }a Haddcxxcal ^{ok 06n;$>"n#"0#/ ybchb v~aucmkx
}b`} `l `i~kkdkl} }a d`cl}`cl clea~d`}cal cl halecmklhk icukx ~cxk }a ` m{}s }b`}
d`jkx }~`mcli al }bk halecmkl}c`o clea~d`}cal yc}ba{} mcxhoax{~k mkhkv}cuk,
Nkh`{xk }bk }kr} ae Xkh}cal 06"n# `ooayx }bk cl}k~v~k}`}cal ae mkhkv}cal kdnamckm
cl ^{ok 06n;$>"n#"0#/ `lm nkh`{xk }b`} cl}k~v~k}`}cal ae Xkh}cal 06"n# cx
~k`xal`nok/ }bk ^{ok cx kl}c}okm }a Hbku~al mkek~klhk,
Xkhalm/ }bk mcx}~ch} ha{~}–x halho{xcal cx y~ali kukl `v`~} e~ad ^{ok
06n;$>"n#"0#, ]~`mcli al d`}k~c`o/ lalv{noch clea~d`}cal `e}k~ `i~kkcli }a
d`cl}`cl c} cl halecmklhk cx mkhkv}cuk {lmk~ }bk da~k iklk~`o }k~dx ae Xkh}cal
06"n# `lm ^{ok 06n$;,
]bc~m/ cl `ls kukl}/ }bk hadvo`cl} x{eechckl}os `ookikx }b`} H{n`l krvochc}os
`i~kkm la} }a }~`mk/ d`jcli bcx x{nxkp{kl} {lmcxhoaxkm }~`mcli mkhkv}cuk, ]bcx cx
la} alos ` ~k`xal`nok clek~klhk/ n{} }bk dax} ~k`xal`nok clek~klhk }a m~`y e~ad
06
8/9/2019 S.E.C.'s Appellate Brief
http://slidepdf.com/reader/full/secs-appellate-brief 19/55
H{n`l–x x}`}kdkl}‘d`mk `e}k~ `i~kkcli }a jkkv clea~d`}cal halecmkl}c`o `lm }bkl
nkcli }aom }bk clea~d`}cal‘‟Ykoo/ lay C–d xh~kykm, C h`l–} xkoo,— Cl `mmc}cal/ }bk
hadvo`cl} `ookikm }b`} H{n`l ‟`hjlayokmiZkmT }b`} bk ha{om la} xkoo— v~ca~ }a }bk
clea~d`}cal nkcli d`mk v{noch,
X]@LM@^M AE ^KUCKY
]bk i~`l} ae ` da}cal }a mcxdcxx cx ~kuckykm mk laua, Xkk B`~~cli}al u,
X}`}k E`~d Ec~k % H`x, Ha,/ ;58 E,8m 0=0/ 0=9 ";}b Hc~, >663#, Mcxdcxx`o cx
cl`vv~av~c`}k {lokxx ` hadvo`cl}/ halx}~{km yc}b `oo ykoo$vok`mkm e`h}x `hhkv}km `x
}~{k `lm uckykm cl }bk ocib} dax} e`ua~`nok }a }bk vo`cl}cee/ xkk/ k,i,/ Ialw`okw u,
J`s/ ;99 E,8m 566/ 568 ";}b Hc~, >663#/ vk}c}cal ea~ hk~}, ecokm/ 92 [,X,O,Y, 8>3;
"[,X, Ah}, 3/ >663# "La, 63$;=>#/ e`cox ‟}a x}`}k ` ho`cd }a ~kocke }b`} cx vo`{xcnok al
c}x e`hk/— Nkoo @}o, Ha~v, u, ]yadnos/ ;;6 [,X, ;==/ ;96 ">669#, ‟@ ho`cd b`x
e`hc`o vo`{xcncoc}s ybkl }bk vo`cl}cee vok`mx e`h}{`o hal}kl} }b`} `ooayx }bk ha{~} }a
m~`y }bk ~k`xal`nok clek~klhk }b`} }bk mkeklm`l} cx oc`nok ea~ }bk dcxhalm{h}
`ookikm,— @xbh~ae} u, Cpn`o/ 0>3 X, H}, 0389/ 03=3 ">663#,
00
8/9/2019 S.E.C.'s Appellate Brief
http://slidepdf.com/reader/full/secs-appellate-brief 20/55
@^I[DKL]
]BK MCX]^CH] HA[^] K^^KM CL BAOMCLI ]B@] ]BK HADVO@CL]
E@COKM @MKP[@]KOS ]A @OOKIK MKHKV]CAL @X ^KP[C^KM
[LMK^ XKH]CAL 06"n# @LM ^[OK 06n$;,
]bk alos kokdkl} ae `l clxcmk~ }~`mcli ucao`}cal {lmk~ Xkh}cal06"n# `lm
^{ok 06n$; cl mcxv{}k bk~k cx }bk ~kp{c~kdkl} ae ‟mkhkv}cal,— ]bk mcx}~ch} ha{~}
k~~km cl baomcli }b`} }bk hadvo`cl} e`cokm }a `ookik }b`} H{n`l mkhkcukm
D`dd`,had ns }~`mcli al d`}k~c`o/ lalv{noch clea~d`}cal bk b`m `i~kkm }a
d`cl}`cl cl halecmklhk, ]bk hkl}~`o v~kdcxk ae }bk mcx}~ch} ha{~}–x baomcli cx }b`}
}bk~k cx ` ‟oaich`oZT— mceek~klhk nk}ykkl `l `i~kkdkl} }a d`cl}`cl clea~d`}cal cl
halecmklhk `lm `l `i~kkdkl} la} }a }~`mk al c}, 58= E, X{vv, >m `} 9>;,
Haddcxxcal ^{ok 06n;$>"n#"0# krvochc}os cx }a }bk hal}~`~s/ x}`}cli }b`} ` ‟‒m{}s ae
}~{x} a~ halecmklhk– krcx}x , , , ZyTbklkuk~ ` vk~xal `i~kkx }a d`cl}`cl clea~d`}cal
cl halecmklhk,— ]b`} ~{ok cx ` ~k`xal`nok cl}k~v~k}`}cal ae Xkh}cal 06"n# `lm/ x
x{hb/ cx kl}c}okm }a mkek~klhk e~ad }bcx Ha{~}, Kukl cl }bk `nxklhk ae ^{ok
06n;$>"n#"0#/ h`xko`y/ oaich/ `lm krvk~cklhk d`jk hok`~ }b`} `l `i~kkdkl} }a
d`cl}`cl clea~d`}cal cl halecmklhk klhadv`xxkx `l `i~kkdkl} la} }a }~`mk al }bk
clea~d`}cal, @hha~mclios/ }bk hadvo`cl} x{eechckl}os `ookikm }b`} H{n`l aykm `
m{}s }a bcx xa{~hk ae clea~d`}cal la} }a }~`mk/ `lm bcx }~`mcli yc}ba{} mcxhoax{~k }a
bcx xa{~hk y`x }bk~kea~k ` mkhkv}cuk n~k`hb ae }b`} m{}s,
0>
8/9/2019 S.E.C.'s Appellate Brief
http://slidepdf.com/reader/full/secs-appellate-brief 21/55
@, H{n`l–x @i~kkdkl} }a Jkkv Clea~d`}cal Halecmkl}c`o I`uk ^cxk }a `
M{}s La} }a ]~`mk/ `lm Bcx [lmcxhoaxkm ]~`mcli Y`x ]bk~kea~k
Mkhkv}cuk/ cl Ucao`}cal ae Xkh}cal 06"n# `lm ^{ok 06n$;,
0, ]bk dcx`vv~av~c`}cal }bka~s ae clxcmk~ }~`mcli/ `x `mav}km ns }bkX{v~kdk Ha{~}/ v~abcnc}x }~`mcli al }bk n`xcx ae d`}k~c`o/
lalv{noch clea~d`}cal cl n~k`hb ae ` m{}s }a }bk xa{~hk ae }bk
clea~d`}cal,
Cl [lc}km X}`}kx u, A–B`i`l/ ;>0 [,X, 5=> "0339#/ }bk X{v~kdk Ha{~}
~kuckykm }bk o`li{`ik `lm v{~vaxkx ae Xkh}cal 06"n# `lm ^{ok 06n$; `lm `mav}km
}bk dcx`vv~av~c`}cal }bka~s ae clxcmk~ }~`mcli, [lmk~ }bcx }bka~s/ ‟` vk~xal
haddc}x e~`{m ‒cl hallkh}cal yc}b– ` xkh{~c}ckx }~`lx`h}cal/ `lm }bk~kns ucao`}kx
© 06"n# `lm ^{ok 06n$;/ ybkl bk dcx`vv~av~c`}kx halecmkl}c`o clea~d`}cal ea~
xkh{~c}ckx }~`mcli v{~vaxkx/ cl n~k`hb ae ` m{}s aykm }a }bk xa{~hk ae }bk
clea~d`}cal,— ;>0 [,X, } 5;>, A–B`i`l y`x ` v`~}lk~ cl ` o`y ec~d }b`} y`x
bc~km }a ~kv~kxkl} ` hadv`ls halxcmk~cli d`jcli ` }klmk~ aeek~, Xkk cm, `} 5=9,
]bk hockl} hadv`ls xb`~km c}x halecmkl}c`o }klmk~ aeek~ vo`lx yc}b alk ae
A–B`i`l–x v`~}lk~x/ lm }b`} v`~}lk~ xb`~km }bk clea~d`}cal yc}b A–B`i`l, Xkk
cm, A–B`i`l }bkl }~ mkm cl }bk xkh{~c}ckx ae }bk }`~ik} hadv`ls n`xkm al }bk
clea~d`}cal ea~ ` vk~xal`o v~aec}, Xkk cm,
]bk Ha{~} la}km }b`} {lmk~ }bk ho`xxch`o }bka~s ae clxcmk~ }~`mcli/ `
ha~va~`}k clxcmk~ cx oc`nok ybkl bk }~`mkx cl }bk xkh{~c}ckx ae bcx ha~va~`}cal al }bk
n`xcx ae d`}k~c`o/ lalv{noch clea~d`}cal, Xkk cm, } 5;0$;>, ]bcx }~`mcli cluaoukx
08
8/9/2019 S.E.C.'s Appellate Brief
http://slidepdf.com/reader/full/secs-appellate-brief 22/55
}bk {xk ae ` ‟mkhkv}cuk mkuchk— yc}bcl }bk dk`lcli ae Xkh}cal 06"n# nkh`{xk
clxcmk~x yc}b `hhkxx }a }bk ha~va~`}cal–x halecmkl}c`o clea~d`}cal `~k cl `
~ko`}calxbcv ae }~{x} `lm halecmklhk yc}b }bk ha~va~`}cal–x xb`~kbaomk~x yc}b
ybad }bks }~`mk, Cm, `} 5;>, ]b`} ~ko`}calxbcv icukx ~cxk }a m{}s kc}bk~ }a
mcxhoaxk }bk clea~d`}cal a~ `nx}`cl e~ad }~`mcli xa `x la} }a }`jk `mu`l}`ik ae
{lclea~dkm xb`~kbaomk~x, Xkk cm,
[lmk~ }bk hadvokdkl}`~s dcx`vv~av~c`}cal }bka~s/ `mav}km cl A–B`i`l/ `
vk~xal haddc}x e~`{m cl hallkh}cal yc}b ` xkh{~c}ckx }~`lx`h}cal ‟ybkl bk
dcx`vv~av~c`}kx halecmkl}c`o clea~d`}cal ea~ xkh{~c}ckx }~`mcli v{~vaxkx/ cl n~k`hb
ae ` m{}s aykm— la} }a }bk vk~xal yc}b ybad bk }~`mkx/ `x {lmk~ }bk ho`xxch`o
}bka~s/ n{} ‟}a }bk xa{~hk ae }bk clea~d`}cal,— Cm, [lmk~ }bcx }bka~s/ }bk
dcx`vv~av~c`}a~ mke~`{mx bcx xa{~hk ae }bk krho{xcuk {xk ae }bk clea~d`}cal, Xkk
cm, `} 5;= "mkkdcli x{hb e~`{m ‟`jcl }a kdnkwwokdkl}—#, ]bk }bka~s }`~ik}x
}~`mcli al }bk n`xcx ae d`}k~c`o/ lalv{noch clea~d`}cal ns `ls ‟a{}xcmk~— }a `
ha~va~`}cal yba }~`mkx ‟cl n~k`hb ae ` m{}s aykm la} }a ` }~`mcli v`~}s/ n{} }a }bk
xa{~hk ae }bk clea~d`}cal , , , yba kl}~{x}km bcd yc}b `hhkxx }a halecmkl}c`o
clea~d`}cal,— Cm, `} 5;>$;8,8
8 ]bk Ha{~} anxk~ukm }b`}/ ‟ZnTkh`{xk }bk mkhkv}cal kxxkl}c`o }a }bkdcx`vv~av~c`}cal }bka~s cluaoukx ekcilcli ecmkoc}s }a }bk xa{~hk ae clea~d`}cal/— ce }bk }~`mk~ e{oos mcxhoaxkx }a }bk xa{~hk }b`} bk vo`lx }a }~`mk al }bk clea~d`}cal/}bk~k cx la ‟mkhkv}cuk mkuchk— lm }b{x la Xkh}cal 06"n# ucao`}cal, Cm, `} 5;;,
0=
8/9/2019 S.E.C.'s Appellate Brief
http://slidepdf.com/reader/full/secs-appellate-brief 23/55
>, Haddcxxcal {ok 06n;$>"n#"0#/ ns c}x vo`cl }k~dx/ xk}x ea~}b `
m{}s al H{n`l {lmk~ Xkh}cal 06"n# `lm ^{ok 06n$; la} }a }~`mk
nkh`{xk bk `i~kkm }a d`cl}`cl }bk clea~d`}cal cl halecmklhk,
Haddcxxcal ^{ok 06n;$>"n#"0# cl}k~v~k}x Xkh}cal 06"n# ae }bk Krhb`lik
@h} `lm cdvokdkl}x }bk dcx`vv~av~c`}cal }bka~s ae clxcmk~ }~`mcli, Xkh}cal 06"n#
v~aucmkx }b`} c} cx {lo`ye{o }a {xk a~ kdvoas/ cl hallkh}cal yc}b }bk v{~hb`xk a~
x`ok ae `ls xkh{~c}s/ `ls d`lcv{o`}cuk a~ mkhkv}cuk mkuchk cl hal}~`ukl}cal ae
Haddcxxcal ~{okx, @x la}km/ mkhkv}cal cx }bk alos kokdkl} ae ` Xkh}cal 06"n#
ucao`}cal `} cxx{k cl }bcx h`xk, ^{ok 06n$;/ 09 H,E,^, >=6,06n$;/ v~aucmkx/ cl
~koku`l} v`~}/ }b`} c} xb`oo nk {lo`ye{o }a kdvoas `ls mkuchk/ xhbkdk/ a~ `~}cechk }a
mke~`{m/ a~ }a kli`ik cl `ls `h} ybchb avk~`}kx `x ` e~`{m al `ls vk~xal,
^{ok 06n;$>/ 09 H,E,^, >=6$06n;$>/ kl}c}okm ‟M{}ckx ae ]~{x} a~ Halecmklhk
cl Dcx`vv~av~c`}cal Clxcmk~ ]~`mcli H`xkx/— x}`}kx }b`} c} `vvockx }a `ls ucao`}cal
ae Xkh}cal 06"n# `lm ^{ok 06n$; }b`} ‟cx n`xkm al }bk v{~hb`xk a~ x`ok ae xkh{~c}ckx
al }bk n`xcx ae/ a~ }bk hadd{lch`}cal ae/ d`}k~c`o lalv{noch clea~d`}cal
dcx`vv~av~c`}km cl n~k`hb ae ` m{}s ae }~{x} a~ halecmklhk,—
]bk ^{ok kl{dk~`}kx hc~h{dx}`lhkx icucli ~cxk }a ` m{}s ae }~{x} a~
halecmklhk, Ae v`~}ch{o`~ ~koku`lhk bk~k/ ^{ok 06n;$>"n#"0# v~aucmkx }b`} ` ‟m{}s
ae }~{x} a~ halecmklhk— krcx}x ‟ZyTbklkuk~ ` vk~xal `i~kkx }a d`cl}`cl clea~d`}cal
cl halecmklhk,—
0;
8/9/2019 S.E.C.'s Appellate Brief
http://slidepdf.com/reader/full/secs-appellate-brief 24/55
Cl }bcx h`xk/ }bk hadvo`cl} `ookikm }b`} H{n`l ‟`i~kkm }b`} bk ya{om jkkv
yb`}kuk~ clea~d`}cal }bk HKA cl}klmkm }a xb`~k yc}b bcd halecmkl}c`o,— ^K ]`n
5/ Hadvo, `} µ 0=, ^{ok 06n;$>"n#"0# }bk~kea~k vvockx bk~k ns c}x vo`cl }k~dx,
V{~x{`l} }a }bk ^{ok/ H{n`l y`x ~kp{c~km kc}bk~ }a `nx}`cl e~ad }~`mcli a~ }a
mcxhoaxk }a D`dd`,had }b`} bk y`x iacli }a }~`mk nkea~k }bk v{noch
`lla{lhkdkl} ae }bk aeek~cli, Ns }~`mcli cl n~k`hb ae }bk m{}s ~cxcli e~ad bcx
`i~kkdkl}/ H{n`l mkhkcukm D`dd`,had `lm ucao`}km Xkh}cal 06"n# `lm ^{ok
06n$;,
8, Haddcxxcal {ok 06n;$>"n#"0# kdnamckx ` u`ocm cl}k~v~k}`}cal ae
}bk mkhkv}cal ~kp{c~kdkl} ae Xkh}cal 06"n# `lm cx kl}c}okm }a
Hbku~al mkek~klhk,
]bk Haddcxxcal–x `mav}cal ae ^{ok 06n;$>"n#"0# cx x{ngkh} }a ~kucky {lmk~
}bk `l`os}ch`o e~`dkya~j xk} a{} cl Hbku~al [,X,@,/ Clh, u, L`}{~`o ^kxa{~hkx
Mkeklxk Ha{lhco/ Clh,/ =59 [,X, 289/ 2=>$== "032=#, Xkk L`}cal`o H`nok %
]kokhadd, @xx–l u, N~`lm R Cl}k~lk} Xk~u,/ ;=; [,X, 359/ 326$20 ">66;#: [lc}km
X}`}kx u, ^ask~/ ;=3 E,8m 225/ 233 ">m Hc~, >662# "icucli Hbku~al mkek~klhk }a
Haddcxxcal ^{ok 06n;$0#, [lmk~ Hbku~al/ ha{~}x d{x} mkek~ }a }bk
Haddcxxcal–x cl}k~v~k}`}cal ae Xkh}cal 06"n# ce Hali~kxx b`x la} ‟{l`dnci{a{xos
ea~ncmmkl Z}bk cl}k~v~k}`}calT `lm c} cx , , , ‒n`xkm al ` vk~dcxxcnok halx}~{h}cal ae
}bk x}`}{}k,–— La~}bvacl} ]khb, u, EHH/ =0= E,8m 50/ 53 "M,H, Hc~, >66;# "p{a}cli
05
8/9/2019 S.E.C.'s Appellate Brief
http://slidepdf.com/reader/full/secs-appellate-brief 25/55
Hbku~al/ =59 [,X, } 2=>$=8#, [lmk~ }bk ec~x} x}kv ae Hbku~al/ ‟ZcTe }bk cl}kl} ae
Hali~kxx cx hok`~/ }b`} cx }bk klm ae }bk d`}}k~: ea~ }bk ha{~}/ `x ykoo `x }bk `iklhs/
d{x} icuk keekh} }a }bk {l`dnci{a{xos krv~kxxkm cl}kl} ae Hali~kxx,— =59 [,X, `}
2=>$=8, ]bk Haddcxxcal–x cl}k~v~k}`}cal v`xxkx }bk ec~x} x}kv ce }bk x}`}{}k–x
‟vo`cl }k~dx— ma la} ‟‒mc~kh}os mm~kxZxT }bk v~khcxk p{kx}cal `} cxx{k,–— N~`lm R/
;=; [,X, `} 325 "p{a}cli Hbku~al/ =59 [,X, `} 2=8#,
[lmk~ }bk xkhalm x}kv ae }bk Hbku~al `l`osxcx/ }bk p{kx}cal cx ybk}bk~ }bk
Haddcxxcal–x cl}k~v~k}`}cal kdnamckm cl ^{ok 06n;$>"n#"0# ae ‟`ls mkhkv}cuk
mkuchk a~ hal}~cu`lhk— cx ` ‟vk~dcxxcnok/— }b`} cx/ ‟~k`xal`nok/— halx}~{h}cal ae
}b`} vb~`xk, Hbku~al/ =59 [,X, `} 2=8$==, @ ha{~} d`s la} xk} `xcmk }bk
Haddcxxcal–x ~k`xal`nok cl}k~v~k}`}cal cl e`ua~ ae `l `o}k~l`}cukos vo`{xcnok "a~
kukl nk}}k~# alk, Xkk N~`lm R/ ;=; [,X, } 326, ]bk Ha{~} xba{om `vvos }bk
Hbku~al `l`osxcx bk~k dclme{o ae }bk X{v~kdk Ha{~}–x ~kvk`}km `mdalc}cal }b`}
Xkh}cal 06"n# xba{om nk halx}~{km ‟‒la} }khblch`oos `lm ~kx}~ch}cukos/ n{} eokrcnos
}a keekh}{`}k c}x ~kdkmc`o v{~vaxkx,–— XKH u, W`lmea~m/ ;8; [,X, 208/ 203 ">66>#
"p{a}cli XKH u, H`vc}`o I`clx ^kxk`~hb N{~k`{/ 89; [,X, 026/ 025 "0358##,
]bk Haddcxxcal–x cl}k~v~k}`}cal ae Xkh}cal 06"n# kdnamckm cl c}x ~{okx
halxcx}x ae }ya v`~}x, Ec~x}/ ^{ok 06n;$>"n#"0# halxcmk~x {lmcxhoaxkm }~`mcli cl
n~k`hb ae ` m{}s }b`} cx {lmk~}`jkl xaokos ns `i~kkdkl} }a nk mkhkv}cuk/ kukl cl
09
8/9/2019 S.E.C.'s Appellate Brief
http://slidepdf.com/reader/full/secs-appellate-brief 26/55
}bk `nxklhk ae v~k$krcx}cli ecm{hc`~s ~ko`}calxbcv, Xkhalm/ ^{ok 06n;$>"n#"0#
halxcmk~x x{hb {lmcxhoaxkm }~`mcli }a nk mkhkv}cuk cl }bk e`hk ae `l `i~kkdkl} }a
d`cl}`cl d`}k~c`o/ lalv{noch clea~d`}cal cl halecmklhk kukl ce }bk `i~kkdkl}
c}xkoe makx la} krvochc}os v~abcnc} }~`mcli, ]bk ^{ok cx u`ocm {lmk~ Hbku~al, K`hb
ae }bkxk `xvkh}x ae }bk Haddcxxcal–x cl}k~v~k}`}cal cx ~k`xal`nok `lm lkc}bk~ cx
{l`dnci{a{xos ea~ncmmkl ns }bk }kr} ae Xkh}cal 06"n#,
`, [lmk~ Xkh}cal 06"n#/ ` m{}s ae }~{x} a~ halecmklhk d`s `~cxk
ns `i~kkdkl},
@x ^{ok 06n;$>"n#"0# v~aucmkx/ ` m{}s ae }~{x} a~ halecmklhk d`s `~cxk ns
`i~kkdkl}/ x{hb }b`} }~`mcli al }bk halecmkl}c`o clea~d`}cal/ ybcok v~k}klmcli }a
e`c}be{oos x`eki{`~m c}/ mkhkcukx }bk xa{~hk ae }bk clea~d`}cal `lm }bk~kea~k
x`}cxeckx }bk ‟mkhkv}cal— ~kp{c~kdkl} ae Xkh}cal 06"n#, ]bcx cl}k~v~k}`}cal cx e{oos
halxcx}kl} yc}b Xkh}cal 06"n#,
]bk X{v~kdk Ha{~} cl A–B`i`l d`mk hok`~ }b`} {lmcxhoaxkm }~`mcli `e}k~
`i~kkcli }a jkkv clea~d`}cal halecmkl}c`o cx ` }svk ae mkhkv}cal yc}bcl }bk xhavk
ae Xkh}cal 06"n#, Ybk}bk~ a~ la} vk~xal yba b`x `i~kkm }a d`cl}`cl clea~d`}cal
cl halecmklhk cx ` ba~lnaaj ecm{hc`~s/ }b`} x}`}{x cx la} kxxkl}c`o }a Xkh}cal 06"n#
a~ }bk }svk ae mkhkv}cal }`~ik}km ns }bk dcx`vv~av~c`}cal }bka~s ~khailcwkm cl
A–B`i`l, Hk~}`clos la}bcli cl }bk }kr} ae Xkh}cal 06"n# c}xkoe ~kp{c~kx ecm{hc`~s
x}`}{x, ]bk A–B`i`l h`xk/ o}ba{ib cluaoucli ` ecm{hc`~s " l `}}a~lks#/ mcm la}
02
8/9/2019 S.E.C.'s Appellate Brief
http://slidepdf.com/reader/full/secs-appellate-brief 27/55
baom }b`} `vvoch`}cal ae }bk dcx`vv~av~c`}cal }bka~s }a ecm{hc`~ckx y`x }bk alos
vk~dcxxcnok halx}~{h}cal ae Xkh}cal 06"n#, @e}k~ hc}cli }a `l ~}chok ns V~aekxxa~
@om`uk xkuk~`o }cdkx cl x{vva~} ae c}x `mav}cal ae }bk dcx`vv~av~c`}cal }bka~s/ }bk
A–B`i`l Ha{~} `vv~auclios p{a}km }bk `~}chok–x x}`}kdkl} }b`} }bk }bka~s n`~x
‟}~`mcli al }bk n`xcx ae clea~d`}cal }b`} }bk y~alimak~ haluk~}km }a bcx ayl {xk
cl ucao`}cal ae xadk ecm{hc`~s/ hal}~`h}{`o/ a~ xcdco`~ anoci`}cal }a }bk aylk~ a~
~cib}e{o vaxxkxxa~ ae }bk clea~d`}cal,— ;>0 [,X, `} 558 "kdvb`xcx `mmkm# "p{a}cli
N`~n`~` N`mk~ @om`uk/ ‟Dcx`vv~av~c`}cal7 @ Iklk~`o ]bka~s ae Oc`ncoc}s ea~
]~`mcli al Lalv{noch Clea~d`}cal/— 08 Baex}~` O, ^ku, 060/ 0>> "032=##,
]bk mcx}~ch} ha{~}/ `e}k~ la}cli }b`} }bk kxxkl}c`o m{}s ea~ dcx`vv~av~c`}cal
oc`ncoc}s cx ` m{}s la} }a {xk }bk clea~d`}cal ea~ vk~xal`o i`cl/ ybchb d`jkx }bk
{lmcxhoaxkm }~`mcli al }bk clea~d`}cal mkhkv}cuk/ ha~~kh}os halho{mkm }b`} }bk~k cx
‟la `vv`~kl} ~k`xal— ybs }bcx m{}s h`lla} nk {lmk~}`jkl ns `i~kkdkl}, H{n`l/
58= E, X{vv, >m `} 9>=, ]bk mcx}~ch} ha{~} `oxa ha~~kh}os x}`}km }b`} }bk~k cx kukl
i~k`}k~ ~k`xal }a cdvaxk ` m{}s ybk~k alk xvkhcech`oos `lm mc~kh}os {lmk~}`jkx c}
ns `i~kkdkl} }b`l ybk~k }bk m{}s clmc~kh}os `~cxkx e~ad ` ecm{hc`~s ~ko`}calxbcv ns
avk~`}cal ae o`y, Xkk cm, } 9>;,=
@lm/ `x }bk mcx}~ch} ha{~} ~khailcwkm/ cdvaxcli `
= Xkk ]bad`x Okk B`wkl/ ; O@Y AE XKH[^C]CKX ^KI[O@]CAL©0=,>> "5}b km,# l,3;,0; "`u`co`nok al Ykx}o`y# "‟Z]Tbk `vvoch`nok x}`}{}a~so`li{`ik ~kp{c~kx mkhkv}cuk halm{h} `lm c} ya{om `vvk`~ }b`} v~adcxcli }a {vbaom` halecmklhk `lm }bkl n~k`hbcli }bk m{}s xa h~k`}km h`l v~avk~os nk hb`~`h}k~cwkm
03
8/9/2019 S.E.C.'s Appellate Brief
http://slidepdf.com/reader/full/secs-appellate-brief 28/55
m{}s ns `i~kkdkl} cx e{oos halxcx}kl} yc}b }bk X{v~kdk Ha{~}–x `mdalc}cal }b`} `
m{}s ae mcxhoax{~k cl }bk clxcmk~ }~`mcli hal}kr} makx la} ~{l }a kuk~s v`~}chcv`l} cl
}bk d`~jk}vo`hk/ n{} d{x} `~cxk e~ad ~ko`}calxbcv nk}ykkl }ya v`~}ckx, Xkk cm, `}
9>=$>;, Bk~k/ }bk m{}s ~{lx alos e~ad }bk halecm`l} }{~lkm }~`mk~ }a }bk a}bk~
v`~}s }a }bk halecmkl}c`oc}s `i~kkdkl},
Ecl`oos/ }bcx Ha{~} b`x anxk~ukm/ n`xkm al x}`}kdkl}x cl xkuk~`o X{v~kdk
Ha{~} mkhcxcalx "clho{mcli A–B`i`l#/ }b`} ‟` mkuchk/ x{hb `x ` xhbkdk/ cx la}
‒mkhkv}cuk– {lokxx c} cluaoukx n~k`hb ae xadk m{}s ae h`lmcm mcxhoax{~k,— ^kikl}x
ae }bk [lcu, ae H`oce, u, H~kmc} X{cxxk Ec~x} Nax}al/ =2> E,8m 89>/ 823 ";}b Hc~,
>669#, Yk b`uk x{hb ` n~k`hb ae m{}s bk~k, H{n`l }~`mkm yc}ba{} d`jcli `ls
mcxhoax{~k }a }bk xa{~hk ae }bk clea~d`}cal/ a~ an}`clcli halxkl} }a }~`mk e~ad }bk
xa{~hk, Yk la}k/ lkuk~}bkokxx/ }b`} }bk X{v~kdk Ha{~} b`x d`mk hok`~ cl
X}alk~cmik Clukx}dkl} V`~}lk~x OOH u, Xhckl}cech$@}o`l}`/ ;;> [,X, 0=2 ">662#/
}b`} Xkh}cal 06"n# cx n~a`m kla{ib }a hauk~ mkhkv}cuk halm{h} `nxkl} ` n~k`hb ae
m{}s, Xkk X}alk~cmik/ ;;> [,X, `} 0;2 "~kgkh}cli oayk~ ha{~}–x ucky }b`} mkhkv}cal
{lmk~ Xkh}cal 06"n# cx ocdc}km }a ‟dcxx}`}kdkl}x/ adcxxcalx ns alk yba b`x ` m{}s
"eaa}la}k hal}cl{km ,,,#`x mkhkv}cuk, C} ya{om eaooay }b`} ^{ok 06n;$> cx la} nksalm }bk XKH–x~{okd`jcli `{}ba~c}s, @hha~mclios/ n~k`hb ae ` hal}~`h}{`o halecmkl}c`oc}s`i~kkdkl} h`l ea~d }bk n`xcx ae ` ^{ok 06n$; clxcmk~ }~`mcli ucao`}cal,—#
>6
8/9/2019 S.E.C.'s Appellate Brief
http://slidepdf.com/reader/full/secs-appellate-brief 29/55
8/9/2019 S.E.C.'s Appellate Brief
http://slidepdf.com/reader/full/secs-appellate-brief 30/55
`e}k~ v{noch la}chk `lm haddkl} `lm al }bk n`xcx ae c}x krvk~}cxk cl ~ki{o`}cli }bk
xkh{~c}ckx d`~jk}x ‘ }b`} `l `i~kkdkl} }a d`cl}`cl clea~d`}cal ‟cl halecmklhk—
icukx ~cxk }a ` m{}s ae ‟}~{x} a~ halecmklhk,— ]bk Haddcxxcal–x mk}k~dcl`}cal
bkyx hoaxkos }a }bk oc}k~`o dk`lcli ae ‟halecmklhk,— Clmkkm/ ` ‟halecmklhk— "`
xkh~k}# cx ns mkeclc}cal clea~d`}cal kl}~{x}km ns alk vk~xal }a `la}bk~ cl
‟halecmklhk,—;
]bcx cx halxcx}kl} yc}b A–B`i`l, ]bk Ha{~}/ `x la}km/ mcm la} ocdc} }bk
xhavk ae }bk dcx`vv~av~c`}cal }bka~s }a v~kuca{xos ~khailcwkm }svkx ae ecm{hc`~s
~ko`}calxbcvx,5 ]bk Ha{~} ~k`xalkm }b`} ybk~k alk cx ` ecm{hc`~s `lm `hp{c~kx
halecmkl}c`o clea~d`}cal e~ad bcx v~clhcv`o/ }bk v~clhcv`o cx }bk ~cib}e{o aylk~ ae
}bk clea~d`}cal, ;>0 [,X, `} 558, @x }bk Ha{~} x}`}km/ ‟Z`T hadv`ls–x halecmkl}c`o
;
‟Halecmklhk— halla}kx ‟Z`T }~{x}cli ~ko`}calxbcv:— ‟}~{x} a~ e`c}b cl ` vk~xal , , ,:— ‟Z`T ekkocli ae `xx{~`lhk:— ]bk @dk~ch`l Bk~c}`ik Mch}cal`~s ae }bkKliocxb O`li{`ik/ Ea{~}b Km, "Ba{ib}al Dceeocl >663#: `lm ‟` ~ko`}calxbcv `xhalecm`l}:— Yknx}k~–x Lky Ya~om Mch}cal`~s "Ycoks V{nocxbcli/ Clh, >66;#,‟]~{x}— cx mkeclkm `x ‟`xx{~km ~koc`lhk al }bk hb`~`h}k~/ `ncoc}s/ x}~kli}b/ a~ }~{}bae xadkalk a~ xadk}bcli,— Dk~~c`d$Yknx}k~ Aloclk Mch}cal`~s,
5 Kukl ce }bk A–B`i`l Ha{~} b`m avclkm }b`} mkhkv}cal ~kp{c~kx xadk}bclida~k }b`l `l `i~kkdkl} }a jkkv clea~d`}cal halecmkl}c`o/ }bk Haddcxxcal–xx{nxkp{kl} ~k`xal`nok cl}k~v~k}`}cal hal}~aox, @x }bk X{v~kdk Ha{~} bkom cl
N~`lm R/ ` ha{~}–x v~ca~ halx}~{h}cal ae ` x}`}{}k }~{dvx `l `iklhs halx}~{h}cala}bk~ycxk kl}c}okm }a Hbku~al mkek~klhk alos ce }bk v~ca~ ha{~} mkhcxcal baomx }b`}c}x halx}~{h}cal eaooayx e~ad }bk {l`dnci{a{x }k~dx ae }bk x}`}{}k `lm }b{x ok`ukxla ~aad ea~ `iklhs mcxh~k}cal, N~`lm R/ ;=; [,X, } 32>$2;, A–B`i`l hk~}`closmcm la} baom }b`} ` ~kp{c~kdkl} ae ecm{hc`~s x}`}{x eaooaykm e~ad }bk {l`dnci{a{x}k~dx ae Xkh}cal 06"n#,
>>
8/9/2019 S.E.C.'s Appellate Brief
http://slidepdf.com/reader/full/secs-appellate-brief 31/55
clea~d`}cal , , , p{`oceckx `x v~avk~}s }a ybchb }bk hadv`ls b`x ` ~cib} ae
krho{xcuk {xk,— Cm, `} 5;=, Ce ` ecm{hc`~s {xkx clea~d`}cal ea~ vk~xal`o }~`mcli
v{~vaxkx/ bk cx dcx`vv~av~c`}cli }bk v~clhcv`o–x v~avk~}s `lm makx xa cl n~k`hb ae
bcx m{}ckx ae oas`o}s `lm halecmkl}c`oc}s }a bcx v~clhcv`o,
Xcdco`~os/ ` hadv`ls }b`} kl}~{x}x c}x d`}k~c`o/ lalv{noch clea~d`}cal }a
`la}bk~ cx icucli bcd }bk {xk ae ` ha~va~`}k `xxk}/ ybchb b`x u`o{k cl }bk xkh{~c}ckx
d`~jk}x, ]bk v~adcxk }a d`cl}`cl }bk clea~d`}cal cl halecmklhk cx cl kxxklhk }a
v~kxk~uk }bk khaladch u`o{k ae }bk clea~d`}cal/ ybchb nkhadkx ya~}b okxx "a~
ya~}bokxx# {val v{noch`}cal, ]bk hadv`ls kl}~{x}x }bk clea~d`}cal }a }bk }bc~m
v`~}s/ la} }a icuk y`s }~`mcli v~aec}x/ n{} }a e{~}bk~ ha~va~`}k v{~vaxkx, ]bk
v~aucmk~ }~{x}x }bk ~khcvckl} ae }bk clea~d`}cal la} }a mkx}~as }bk u`o{k ae }bk
clea~d`}cal ns d`jcli c} v{noch `lm la} }a haluk~} }bk clea~d`}cal }a bcx ayl {xk
ns }~`mcli {val c}, Alk h`lla} ~khalhcok l {lmk~}`jcli }a jkkv clea~d`}cal
halecmkl}c`o "}bk~kns v~kxk~ucli c}x u`o{k }a }bk v~aucmk~# `lm }~`mcli ns }bk
~khcvckl} "ybchb `vv~av~c`}kx }bk u`o{k ae }bk clea~d`}cal }a }bk }~`mk~#,
]bk `i~kkdkl} }b{x h~k`}kx ` xvkhc`o ~ko`}calxbcv nk}ykkl }bk }ya v`~}ckx
}b`} cx/ yc}b v`~}ch{o`~ ~kxvkh} }a }bk ~khcvckl}–x `ncoc}s }a {xk }bk clea~d`}cal ea~
bcx vk~xal`o nklkec}/ }bk e{lh}cal`o kp{cu`okl} ae ` }~`mc}cal`o ecm{hc`~s
~ko`}calxbcv, @x }bk X{v~kdk Ha{~} b`x mkho`~km/ ‟‒ZcT} cx ykoo kx}`nocxbkm/ `x `
>8
8/9/2019 S.E.C.'s Appellate Brief
http://slidepdf.com/reader/full/secs-appellate-brief 32/55
iklk~`o v~avaxc}cal/ }b`} ` vk~xal yba `hp{c~kx xvkhc`o jlayokmik a~ clea~d`}cal
ns uc~}{k ae ` halecmkl}c`o a~ ecm{hc`~s ~ko`}calxbcv yc}b `la}bk~ cx la} e~kk }a
krvoac} }b`} jlayokmik a~ clea~d`}cal ea~ bcx ayl vk~xal`o nklkec} n{} d{x}
`hha{l} }a bcx v~clhcv`o ea~ `ls v~aec}x mk~cukm }bk~ke~ad,–— H`~vkl}k~ u, [lc}km
X}`}kx/ =2= [,X, 03/ >9$>2 "0329# "p{a}cli Mc`dalm u, A~k`d{la/ >= L,S,>m =3=/
=39 "L,S, 0353# `lm hc}cli ^kx}`}kdkl} "Xkhalm# ae @iklhs ©© 822 Hd}, h/ 835h#
"03;2##,
Bk~k/ D`dd`,had kl}~{x}km halecmkl}c`o n{xclkxx clea~d`}cal }a H{n`l }a
xaochc} bcx cl}k~kx} cl v`~}chcv`}cli cl c}x xkh{~c}ckx aeek~cli, ]b`} clea~d`}cal y`x
D`dd`,had–x v~avk~}s ‘ ` n{xclkxx a~ khaladch `xxk} }a ybchb c} b`m ` ~cib} ae
krho{xcuk {xk, C} mcm la} mcxhoaxk }bk clea~d`}cal }a icuk H{n`l ` }~`mcli
`mu`l}`ik auk~ a}bk~ d`~jk} v`~}chcv`l}x, C} mcxhoaxkm }bk clea~d`}cal ea~ }bk
ocdc}km n{xclkxx v{~vaxk ae cluc}cli H{n`l }a v`~}chcv`}k cl }bk aeek~cli/ `lm
kl`nocli bcd }a halxcmk~ v`~}chcv`}cli cl }bk aeek~cli/ alos `e}k~ xkh{~cli bcx
haddc}dkl} }a d`cl}`cl }bk clea~d`}cal cl halecmklhk,
Clmkkm/ D`dd`,had `lm H{n`l d{x} b`uk {lmk~x}aam }b`} c} y`x cdva~}`l}
}a D`dd`,had }b`} H{n`l na}b ~ke~`cl e~ad mcxhoaxcli }b`} D`dd`,had y`x
vo`llcli `l aeek~cli/ ybchb ya{om m~cuk mayl }bk u`o{k ae }bk x}ahj "xkk ^K ]`n
5/ Hadvo, µµ >8$>=#/ `lm ~ke~`cl e~ad }~`mcli al }bk clea~d`}cal/ ybchb ya{om
>=
8/9/2019 S.E.C.'s Appellate Brief
http://slidepdf.com/reader/full/secs-appellate-brief 33/55
b`uk ` xcdco`~ "}ba{ib xd`ook~# keekh}, B`ucli xkh{~km H{n`l–x `i~kkdkl} }a
d`cl}`cl }bk halecmkl}c`oc}s ae }bk clea~d`}cal bk ~khkcukm ea~ }bk v{~vaxk ae
halxcmk~cli v`~}chcv`}cli cl }bk aeek~cli/ D`dd`,had aeechc`ox yk~k m{vkm ns
H{n`l–x {lmcxhoaxkm }~`mcli,
L{dk~a{x clxcmk~ }~`mcli h`xkx x{vva~} }bk ucky }b`} `l `i~kkdkl} }a
d`cl}`cl clea~d`}cal cl halecmklhk lkhkxx`~cos clho{mkx `l `i~kkdkl} la} }a }~`mk,
Nkh`{xk `l {lmk~}`jcli ae ` m{}s ae halecmkl}c`oc}s ns `i~kkdkl} cx }svch`oos
k`xcos mk}k~dclkm/ }bk v{nocxbkm h`xkx v~cd`~cos i~`vvok yc}b }bk da~k mceech{o}
cxx{k ae ybkl/ cl }bk `nxklhk ae `l `i~kkdkl}/ ` x{eechckl} m{}s h`l nk cdvockm
e~ad }bk ~ko`}calxbcv nk}ykkl }bk clea~d`}cal v~aucmk~ `lm ~khcvckl}, Ybcok }bcx
da~k cluaoukm `l`osxcx cx la} lkhkxx`~s ybk~k/ `x bk~k/ ` m{}s cx {lmk~}`jkl ns
`i~kkdkl}/ }bk `l`os}ch`o e~`dkya~j kdvoaskm cl }bkxk h`xkx xbayx }b`} `
halecmkl}c`oc}s `i~kkdkl} kx}`nocxbkx ` x{eechckl} m{}s,
]bk ok`mcli v~k$A–B`i`l dcx`vv~av~c`}cal h`xk/ [lc}km X}`}kx u, Hbkx}d`l/
3=9 E,>m ;;0 ">m Hc~, 0330# "kl n`lh#/ ~khailcwkm }b`} ` m{}s h`l nk kx}`nocxbkm
kc}bk~ ns }bk `hhkv}`lhk ae ` m{}s a~ al }bk n`xcx ae ` ecm{hc`~s ~ko`}calxbcv, Cl
Hbkx}d`l/ ` ycek }aom bk~ b{xn`lm `na{} ` vklmcli }klmk~ aeek~ ea~ bk~ e`dcos–x
hadv`ls n{} lkc}bk~ xa{ib} la~ ~khkcukm bk~ b{xn`lm–x `i~kkdkl} }a jkkv }bk
clea~d`}cal halecmkl}c`o, Cm, `} ;;;$;5/ ;90, ]bk ha{~} anxk~ukm }b`} ecm{hc`~s
>;
8/9/2019 S.E.C.'s Appellate Brief
http://slidepdf.com/reader/full/secs-appellate-brief 34/55
x}`}{x ha{om nk kx}`nocxbkm }b~a{ib kc}bk~ ae }ya dk`lx7 ‟` v~k$krcx}cli ecm{hc`~s
~ko`}cal a~ `l krv~kxx `i~kkdkl} ae halecmkl}c`oc}s , , , ,— Cm, `} ;90 "kdvb`xcx
`mmkm#, La}cli }bk ‟`nxklhk ae kucmklhk ae `l krvochc} `hhkv}`lhk ns Z}bk
b{xn`lmT ae ` m{}s ae halecmkl}c`oc}s/— }bk ha{~} }bkl v~ahkkmkm }a halm{h} }bk
da~k mceech{o} `l`osxcx ‘ ybk}bk~/ n`xkm al e`h}a~x x{hb `x ‟~koc`lhk/ `lm mk e`h}a
hal}~ao `lm madcl`lhk/— ` ecm{hc`~s$ocjk ~ko`}calxbcv x{eechckl} }a cdvos ` m{}s
krcx}km nk}ykkl }bk b{xn`lm `lm ycek, Cm, `} ;52$90, B`m }bk b{xn`lm krvochc}os
`hhkv}km ` m{}s ae halecmkl}c`oc}s/ c} cx hok`~ e~ad }bk avclcal }b`} }bk ha{~} ya{om
la} b`uk b`m `ls ahh`xcal }a `l`oswk ybk}bk~ ` m{}s ha{om nk cdvockm e~ad }bkc~
v~k$krcx}cli ~ko`}calxbcv, ]bk `i~kkdkl} ya{om b`uk x{eechkm,
@e}k~ A–B`i`l/ }bk Xkhalm Hc~h{c} `i`cl ~khailcwkm }b`} ` halecmkl}c`oc}s
`i~kkdkl} `oalk kx}`nocxbkx ` x{eechckl} m{}s {lmk~ }bk dcx`vv~av~c`}cal }bka~s,
]bk ha{~} anxk~ukm }b`} ‟` ecm{hc`~s ~ko`}calxbcv/ a~ c}x e{lh}cal`o kp{cu`okl}/
krcx}x alos ybk~k }bk~k cx krvochc} `hhkv}`lhk ae ` m{}s ae halecmkl}c`oc}s a~ ybk~k
x{hb `hhkv}`lhk d`s nk cdvockm e~ad ` xcdco`~ ~ko`}calxbcv ae }~{x} `lm halecmklhk
nk}ykkl }bk v`~}ckx,— [lc}km X}`}kx u, E`ohalk/ >;9 E,8m >>5/ >8= ">m Hc~, >660#
"kdvb`xcx `mmkm#,
]bk Kokukl}b Hc~h{c}/ cl XKH u, S{l/ 8>9 E,8m 0>58 "00}b Hc~, >668#/
~khailcwkm }b`} ` m{}s ae }~{x} `lm halecmklhk h`l nk kx}`nocxbkm kc}bk~ ns
>5
8/9/2019 S.E.C.'s Appellate Brief
http://slidepdf.com/reader/full/secs-appellate-brief 35/55
halecmkl}c`oc}s `i~kkdkl} a~ ` v~k$krcx}cli ecm{hc`~s ~ko`}calxbcv, 8>; E,8m `}
0>98, ]bk ha{~} x}`}km }b`} }bk Haddcxxcal ha{om kx}`nocxb ` m{}s {lmk~ }bk
dcx`vv~av~c`}cal }bka~s ns ‟v~kxkl}ZcliT kucmklhk }b`} Z}bk mkeklm`l}T b`m `i~kkm
cl }bcx v`~}ch{o`~ clx}`lhk }a jkkv }bk clea~d`}cal halecmkl}c`o/— `lm e{~}bk~ x}`}km
}b`} ‟ZaTe ha{~xk/ ` n~k`hb ae `l `i~kkdkl} }a d`cl}`cl n{xclkxx halecmklhkx
ya{om , , , x{eechk— }a sckom clxcmk~ }~`mcli oc`ncoc}s, Cm, ]bk S{l ha{~} la}km }b`}
c}x halho{xcal y`x ‟naox}k~km— ns ^{ok 06n;$>/ ybchb nkh`dk keekh}cuk `e}k~ }bk
halm{h} `} cxx{k, Cm, `} 0>98 l,>8,
Xkuk~`o mcx}~ch} ha{~} mkhcxcalx v~aucmk e{~}bk~ x{vva~}, Cl XKH u, La}bk~l/
;32 E, X{vv, >m 059 "M, D`xx, >663#/ }bk ha{~} krv~kxxos ~kgkh}km }bk `~i{dkl}
}b`} ` halecmkl}c`oc}s `i~kkdkl} h`lla} icuk ~cxk }a ` m{}s ea~ v{~vaxkx ae
dcx`vv~av~c`}cal oc`ncoc}s, Xkk ;32 E, X{vv, >m `} 098$95 "‟Z]Tbk XKH–x
`ooki`}cal }b`} Z}bk }cvvk~T krv~kxxos `i~kkm }a d`cl}`cl }bk halecmkl}c`oc}s ae , , ,
clea~d`}cal cx x{eechckl} }a x}`}k ` ho`cd }b`} bk b`m ` ‒xcdco`~ ~ko`}calxbcv ae }~{x}
`lm halecmklhk– {val ybchb Z}cvvkk–xT dcx`vv~av~c`}cal oc`ncoc}s d`s nk
v~kdcxkm,—#,9 Cl `mmc}cal/ cl Hadv{mslk Ha~v u, Xb`lk / =;8 E, X{vv, >m 269
9 ]bk ha{~} mcm la} ~kos {val ^{ok 06n;$>"n#"0# nkh`{xk }bk mkeklm`l}`~i{km }b`} }bk ^{ok makx la} `vvos }a n{xclkxx ~ko`}calxbcvx/ `lm }bk ha{~}}ba{ib} }bk cxx{k y`x ‟la} kl}c~kos hok`~,— ;32 E, X{vv, >m } 09;, ]bk ^{ok/baykuk~/ makx `vvos }a n{xclkxx ~ko`}calxbcvx, C}x vo`cl o`li{`ik `vvockx }a oo`i~kkdkl}x }a d`cl}`cl clea~d`}cal cl halecmklhk, Xkk Ko Hadc}k V`~` KoNcklkx}`~ mk K`~ocd`~} u, Y`~dk~m`d/ ;83 E,8m 065>/ 0690$9> "3}b Hc~, >662#,
>9
8/9/2019 S.E.C.'s Appellate Brief
http://slidepdf.com/reader/full/secs-appellate-brief 36/55
"X,M,L,S, >665#/ }bk ha{~} halxcmk~km ` da}cal }a mcxdcxx ` hadvo`cl} `ookicli
dcx~kv~kxkl}`}calx cl ucao`}cal ae {ok 06n$;, ]bk mkeklm`l} `ookikmos i~kkm }a
jkkv clea~d`}cal `na{} ` VCVK aeek~cli halecmkl}c`o/ n{} }bkl xhbkdkm }a xkoo
x}ahj cl }bk cxx{k~ xba~} `lm hauk~ }bk xba~} x`okx yc}b x}ahj v{~hb`xkm cl }bk
aeek~cli, ]bk ha{~} anxk~ukm }b`} ‟ZcT} cx `l}c}bk}ch`o }a }bk halhkv} ae jkkvcli
clea~d`}cal v~cu`}k a~ xkh~k} }b`} }bk clea~d`}cal nk {xkm ns }bk vk~xal ~khkcucli
}bk clea~d`}cal ea~ ZbcxT ayl vk~xal`o nklkec} yc}ba{} an}`clcli }bk krv~kxx
`vv~au`o }a xa {xk c},— =;8 E, X{vv, >m } 203, ]bk ha{~} halho{mkm }b`} ‟Z`T
~k`xal`nok ~k`mcli ae Z}bk mkeklm`l}–xT ~kv~kxkl}`}cal Z}b`} xbk ya{om jkkv }bk
clea~d`}cal halecmkl}c`oT cx }b`} xbk halec~dkm }b`} xbk ya{om lkc}bk~ mcxhoaxk }bk
clea~d`}cal la~ {xk c} ea~ bk~ nklkec},— Cm,
Da~kauk~/ cl XKH u, Ja~ld`l/ 830 E, X{vv, >m =99 "L,M, ]kr, >66;#/ cl
`mmc}cal }a halm{h}cli ` e`h}x$`lm$hc~h{dx}`lhkx `l`osxcx ~ki`~mcli }bk
~ko`}calxbcv nk}ykkl }bk mkeklm`l} `lm bcx }ya xa{~hkx/ }bk ha{~} bkom }b`} ‟}bk
"eaa}la}k hal}cl{km ,,,#@o}ba{ib hk~}`cl v`xx`ikx cl }bk Haddcxxcal–x v~avaxcli `lm `mav}cli ~kok`xkxea~ }bk ^{ok mcxh{xx }bk `vvoch`}cal ae }bk ^{ok }a vk~xal`o `lm e`dcos~ko`}calxbcvx/ }baxk x}`}kdkl}x `~k nkx} {lmk~x}aam `x clmch`}cli }bk Haddcxxcal–x
eah{x al ^{okx 06n;$>"n#"># `lm "8#/ ybchb xvkhcech`oos `mm~kxx e`dcos `lm a}bk~ vk~xal`o ~ko`}calxbcvx, Xkk Vc}}x}al Ha`o I~a{v u, Xknnkl/ =22 [,X, 06;/ 00;"0322#, Da~kauk~/ ~kx}~ch}cli {ok 06n;$>"n#"0# }a lal$n{xclkxx ~ko`}calxbcvxya{om nk hal}~`~s }a }bk ^{ok–x auk~`oo v{~vaxk ae v~a}kh}cli clukx}a~x e~ad }bk{le`c~ }~`mcli `mu`l}`ik i`clkm ns vk~xalx yba dcx`vv~av~c`}k d`}k~c`o/lalv{noch clea~d`}cal,
>2
8/9/2019 S.E.C.'s Appellate Brief
http://slidepdf.com/reader/full/secs-appellate-brief 37/55
hadvo`cl} `mkp{`}kos `ookikx }b`} Z}bk `mucxk~T `i~kkm }a x`eki{`~m }bk
halecmkl}c`o clea~d`}cal bk an}`clkm e~ad }bk krkh{}cukx— `lm }b`} }bk `ooki`}calx
‟n~cli }bcx h`xk yc}bcl ^{ok 06n;$>"n#"0#,— 830 E, X{vv, >m `} =36, Ecl`oos/ cl
XKH u, Jc~hb/ >58 E, X{vv, >m 00== "L,M, Coo, >668#/ }bk ha{~} i~`l}km x{dd`~s
g{midkl} ea~ }bk Haddcxxcal `lm bkom }b`}/ nkh`{xk }bk mkeklm`l} `}}klmkm `
v~kxkl}`}cal `} ` HKA ~a{lm}`nok cl ybchb bk y`x }aom }b`} }bk clea~d`}cal xb`~km
y`x halecmkl}c`o `lm nkh`{xk }bk i~a{v b`m ` halecmkl}c`oc}s vaochs/ bk b`m
{lo`ye{oos dcx`vv~av~c`}km }bk v~kxkl}cli HKA–x d`}k~c`o/ lalv{noch clea~d`}cal,
>58 E, X{vv, >m } 00=3$;0, ]bk ha{~} bkom }b`} ‟}bk ^a{lm}`nok ~ko`}calxbcv `lm
}bk hc~h{dx}`lhkx ae }bk ZHKA–xT mcxhoax{~k ae lalv{noch clea~d`}cal {lmk~ x{hb
krv~kxx halecmkl}c`oc}s halx}~`cl}x h`oo ea~ `vvoch`}cal ae }bk ‒dcx`vv~av~c`}cal
}bka~s– bk~k,— Cm, `} 00;6$;0,
U`~ca{x haddal o`y mah}~clkx `oxa x{vva~} }bk ucky }b`} `i~kkcli }a
d`cl}`cl clea~d`}cal cl halecmklhk clho{mkx i~kkcli la} }a }~`mk, Cl }bk hal}kr}
ae dcx`vv~av~c`}cal ae }~`mk xkh~k}x/ alk yba `hp{c~kx jlayokmik ae ` }~`mk xkh~k}
cl ` halecmkl}c`o h`v`hc}s cx {lmk~ `l anoci`}cal la} }a mcxhoaxk a~ {xk c} ea~ bcx
ayl `mu`l}`ik kukl cl }bk `nxklhk ae hal}~`h} }a }b`} keekh}, Xkk iklk~`oos 5
YCOOCX]AL AL HAL]^@H]X/ © 0870= "=}b km, >663#, Da~kauk~/ cl }bk hal}kr} ae
hal}~`h}x/ ha{~}x iklk~`oos cdvos cl}a `l `i~kkdkl} ` haukl`l} ae iaam e`c}b `lm
>3
8/9/2019 S.E.C.'s Appellate Brief
http://slidepdf.com/reader/full/secs-appellate-brief 38/55
e`c~ mk`ocli ybchb v~kho{mkx halm{h} }b`} ku`mkx }bk xvc~c} ae `l `i~kkdkl}, Xkk
Mk`~na~l Clm{x, Dei, Ha,/ O]M u, Xa{m~alch Ecl`lw @I/ 0339 YO 0;5;23/ `} ';
"L,M, Coo, @v~co 0/ 0339# "‟Z@Tls ha{~}/ e`hkm yc}b ` ho`cd }b`} halecmkl}c`o
clea~d`}cal mcxhoaxkm v{~x{`l} }a ` lal$mcxhoax{~k `i~kkdkl} b`m nkkl haluk~}km
a~ dcx`vv~av~c`}km/ ya{om cdvos ` v~abcnc}cal al dcx`vv~av~c`}cal, Ybk}bk~ alk
yk~k }a halho{mk }b`} x}k`ocli halecmkl}c`o clea~d`}cal cx kp{cu`okl} }a mcxhoaxcli
c}/ a~ ybk}bk~ alk yk~k xcdvos }a baom }b`} x{hb ` dcx`vv~av~c`}cal ya{om ucao`}k
}bk cdvockm haukl`l} ae iaam e`c}b `lm e`c~ mk`ocli/ , , , }bcx ha{~} nkockukx }b`} }bk
, , , @i~kkdkl} `} ok`x} cdvochc}os v~abcnc}km , , , }bke} ae , , , halecmkl}c`o `lm
v~av~ck}`~s clea~d`}cal,—#: xkk `oxa La~}b @}o`l}ch Clx}~{dkl}x/ Clh, u, B`nk~/ 022
E,8m 82/ =2 ">m Hc~, 0333# "}bk v~aucxcalx cl `l kdvoasdkl} `i~kkdkl} }b`} `l
kdvoaskk jkkv `lm ~k}`cl h{x}adk~ ocx}x cl }bk ‟x}~ch}kx} halecmklhk— ‟ns c}x uk~s
}k~dx v~kho{mkx {xcli }b`} halecmkl}c`o clea~d`}cal ea~ }bk nklkec} ae ` hadvk}c}a~
n{xclkxx—#,
Ecl`oos/ v{noch vaochs x{vva~}x uckycli `l `i~kkdkl} }a jkkv d`}k~c`o/
lalv{noch clea~d`}cal halecmkl}c`o `x clho{mcli `l i~kkdkl} la} }a }~`mk, ]bk
mcx}~ch} ha{~}–x `vv~a`hb ya{om {lmk~dclk }bk v{~vaxkx ae }bk Krhb`lik @h} `lm
^{ok 06n$; ‟}a clx{~k balkx} xkh{~c}ckx d`~jk}x `lm }bk~kns v~ada}k clukx}a~
halecmklhk,— A–B`i`l/ ;>0 [,X, } 5;2, ]bk A–B`i`l Ha{~} halho{mkm }b`} }bk
86
8/9/2019 S.E.C.'s Appellate Brief
http://slidepdf.com/reader/full/secs-appellate-brief 39/55
dcx`vv~av~c`}cal }bka~s/ `x mkeclkm cl }b`} mkhcxcal/ cx ‟ykoo }{lkm— }a }bkxk
v{~vaxkx, Cm, ]bk Ha{~} ykoo ~khailcwkm }b`} clukx}a~x ya{om nk ~ko{h}`l} }a
‟ukl}{~k }bkc~ h`vc}`o cl ` d`~jk} ybk~k }~`mcli n`xkm al dcx`vv~av~c`}km
lalv{noch clea~d }cal cx {lhbkhjkm ns o`y,— Cm, `} 5;2, @ dcx`vv~av~c`}a~–x
clea~d`}cal`o `mu`l}`ik ‟x}kdx e~ad hal}~cu`lhk— `lm mkhkv}cal/ `lm h`lla} nk
auk~hadk ns a}bk~ clukx}a~x yc}b ~kxk`~hb a~ xjcoo, Cm, `} 5;2$;3: xkk cm, } 5;5,
Halxkp{kl}os/ xadk clukx}a~x ya{om ‟clh{~ hax}x Zkc}bk~T }a `uacm mk`ocli yc}b
x{hb }~`lx`h}a~x a~ ha~~{v}os }a auk~hadk Zx{hb }~`lx`h}a~x–T {lk~am`nok
clea~d`}cal`o `mu`l}`ikx,— Cm, `} 5;3,
]~`mcli n`xkm al dcx`vv~av~c`}km clea~d`}cal ns alk cl H{n`l–x xc}{`}cal
b`~dx clukx}a~x `lm }bk d`~jk}x cl }bcx d`llk~ la okxx }b`l }bk }~`mcli cl
A–B`i`l, H{n`l–x clea~d`}cal`o `mu`l}`ik auk~ a}bk~ clukx}a~x y`x la} n`xkm al
~kxk`~hb a~ xjcoo, ^`}bk~/ bk xkh~k}os {xkm D`dd`,had–x v~avk~}s }a `uacm oaxxkx
uc~}{`oos ~cxj$e~kk }b~a{ib xkh{~c}ckx }~`lx`h}calx, Bcx clea~d`}cal`o `mu`l}`ik
x}kddkm la okxx e~ad hal}~cu`lhk `lm mkhkv}cal xcdvos nkh`{xk bk {lmk~}aaj `
m{}s ae halecmklhk ns `i~kkdkl} yc}b D`dd`,had ~`}bk~ }b`l alk cdvockm e~ad `
~ko`}calxbcv nk}ykkl }bk }ya v`~}ckx,
Da~kauk~/ }bk mcx}~ch} ha{~}–x `vv~a`hb ya{om h`{xk `lad`ockx yc}b ~kxvkh}
}a a}bk~ ekmk~`o xkh{~c}ckx o`y ~kp{c~kdkl}x, Ec~x}/ c} ya{om ~kx{o} cl }bk
80
8/9/2019 S.E.C.'s Appellate Brief
http://slidepdf.com/reader/full/secs-appellate-brief 40/55
v~abcnc}calx al }cvvcli `lm }~`mcli nkhadcli mcxgacl}km, [lmk~ }bcx `vv~a`hb/ alk
cl H{n`l–x xc}{`}cal ha{om la} }cv `la}bk~ vk~xal yba }bkl }~`mkx nkh`{xk }bk }cv
ya{om n~k`hb ` halecmkl}c`oc}s `i~kkdkl}/ n{} ya{om nk e~kk }a }~`mk bcdxkoe,
Xkhalm/ }bk mcx}~ch} ha{~}–x `vv~a`hb ya{om haleoch} yc}b Haddcxxcal ^ki{o`}cal
EM/ ybchb clha~va~`}kx }bk v~clhcvok }b`} ` vk~xal yba `i~kkx }a jkkv clea~d`}cal
halecmkl}c`o h`lla} o`ye{oos {xk }b`} clea~d`}cal ea~ }~ mcli, ^ki{o`}cal EM y`x
`mav}km xcd{o}`lka{xos yc}b ^{ok 06n;$> `x v`~} ae ` n~a`m ~{okd`jcli clc}c`}cuk,
^ki{o`}cal EM v~aucmkx }b`} ‟ybkl `l cxx{k~/ a~ vk~xal `h}cli al c}x nkb`oe/
mcxhoaxkx d`}k~c`o lalv{noch clea~d`}cal }a hk~}`cl kl{dk~`}km vk~xalx "cl
iklk~`o/ xkh{~c}ckx d`~jk} v~aekxxcal`ox `lm baomk~x ae }bk cxx{k~–x xkh{~c}ckx yba
d`s ykoo }~`mk al }bk n`xcx ae }bk clea~d`}cal#/ c} d{x} d`jk v{noch mcxhoax{~k ae
}b`} clea~d`}cal,— Xkokh}cuk Mcxhoax{~k `lm Clxcmk~ ]~`mcli/ @mav}cli ^kok`xk/
>666 YO 0>60;;5/ `} '=> "@{i, 0;/ >666#, Alk krhkv}cal }a ^ki{o`}cal EM–x
iklk~`o ~{ok cx ybk~k `l cxx{k~ mcxhoaxkx d`}k~c`o/ lalv{noch clea~d`}cal }a `
vk~xal yba `i~kkx }a d`cl}`cl }bk clea~d`}cal cl halecmklhk, Xkk 09 H,E,^,
>=8,066"n#"cc#, @x }bk @mav}cli ^kok`xk krvo`clx/ }bk ~k`xal ea~ }b`} krhkv}cal cx
}b`} ‟dcx{xk ae }bk clea~d`}cal ea~ }~`mcli Zns ` vk~xal yba `i~kkm }a jkkv }bk
clea~d`}cal halecmkl}c`oT ya{om , , , nk hauk~km {lmk~ , , , }bk dcx`vv~av~c`}cal
}bka~s ae clxcmk~ }~`mcli,— >666 YO 0>60;;5/ `} '2, Cl xba~}/ nkh`{xk }bk
8>
8/9/2019 S.E.C.'s Appellate Brief
http://slidepdf.com/reader/full/secs-appellate-brief 41/55
Haddcxxcal {lmk~x}aam }b`} `l cxx{k~–x mcxhoax{~k ae d`}k~c`o/ lalv{noch
clea~d`}cal }a ` vk~xal yba `i~kkm }a jkkv }bk clea~d`}cal halecmkl}c`o ya{om la}
`ooay }bk ~khcvckl} oki`oos }a }~`mk/ }bk Haddcxxcal mcm la} nkockuk c} lkhkxx`~s }a
cdvaxk }bk ^ki{o`}cal EM v~abcnc}cal `i`clx} xkokh}cuk mcxhoax{~k cl }b`} xc}{`}cal,
=, Kukl `v`~} e~ad ^{ok 06n;$>"n#"0#/ {lmcxhoaxkm }~`mcli `e}k~
`i~kkcli }a jkkv clea~d`}cal halecmkl}c`o cx mkhkv}cuk {lmk~
Xkh}cal 06"n# `lm ^{ok 06n$;,
Kukl `v`~} e~ad ^{ok 06n;$>"n#"0#/ }bk Haddcxxcal–x hadvo`cl} `mkp{`}kos
`ookikm mkhkv}cal {lmk~ Xkh}cal 06"n# `lm {ok 06n$;, ]bk hadvo`cl} ookikm }b`}
H{n`l `i~kkm }a jkkv }bk clea~d`}cal v~aucmkm }a bcd ns D`dd`,had
halecmkl}c`o, @x mcxh{xxkm cl mk}`co `nauk/ x{v~` Xkh}cal @,8,n,/ `i~kkcli }a jkkv
clea~d`}cal halecmkl}c`o dk`lx `i~kkcli la} }a }~`mk, Clmkkm/ l{dk~a{x h`xkx
xbay }b`} ` m{}s }a mcxhoaxk nkea~k }~`mcli cx aykm ns alk yba b`x {lmk~}`jkl `
m{}s ae halecmkl}c`oc}s ns `i~kkdkl}, ]b`} }~`mcli cl n~k`hb ae }b`} m{}s cx
mkhkv}cuk,
]bk h`xko`y makx la} ~kp{c~k/ `x H{n`l `~i{km nkoay "xkk 58= E, X{vv, >m
`} 9>0$>>#/ }b`} ]kr`x o`y xaokos mk}k~dclkx ybk}bk~ ` m{}s krcx}x x{eechckl} ea~
oc`ncoc}s {lmk~ }bk dcx`vv~av~c`}cal }bka~s, Nkh`{xk }bk Krhb`lik @h} cx ` ekmk~`o
x}`}{}k/ }bk p{kx}cal ybk}bk~ }bk mkeklm`l} b`x n~k`hbkm ` m{}s cx ekmk~`o `lm makx
la} }{~l al }bk `vvoch`}cal ae `ls alk x}`}k–x o`y, C} b`x oali nkkl kx}`nocxbkm }b`}
88
8/9/2019 S.E.C.'s Appellate Brief
http://slidepdf.com/reader/full/secs-appellate-brief 42/55
}bk `l}ce~`{m v~aucxcalx ae }bk xkh{~c}ckx o`yx `~k la}hakr}klxcuk yc}b haddal o`y mah}~clkx ae e~`{m,Clmkkm/ `l cdva~}`l} v{~vaxk ae }bk ekmk~`o xkh{~c}ckxx}`}{}kx y`x }a ~kh}ces vk~hkcukm mkechcklhckx cl }bk
`u`co`nok haddal o`y v~a}kh}calx ns kx}`nocxbclibcibk~ x}`lm`~mx ae halm{h} cl }bk xkh{~c}ckx clm{x}~s,
Bk~d`l % D`hOk`l u, B{mmokx}al/ =;3 [,X, 89;/ 822$23 "0328# "eaa}la}k
adc}}km#, @hha~mclios/ ha{~}x `vvoscli }bk dcx`vv~av~c`}cal }bka~s ma la} n`xk
}bkc~ mkhcxcalx al }bk v~khcxk hal}a{~x ae v`~}ch{o`~ x}`}kx– haddal o`y mah}~clkx,
Clx}k`m/ }bks kc}bk~ `xx{dk }bk krcx}klhk ae ` m{}s cl xc}{`}calx ybk~k c} cx
{lcuk~x`oos ~khailcwkm/ xkk/ k,i,/ A–B`i`l/ ;>0 [,X, `} 5;8 "kdvoaskk$kdvoask~/
`}}a~lks$hockl}#: [lc}km X}`}kx u, H`~vkl}k~/ 930 E,>m 06>=/ 06>2 % l,; ">m Hc~,
0325# "kdvoaskk$kdvoask~/ `ikl}$v~clhcv`o#/ `ee–m ns kp{`oos mcucmkm ha{~}/ =2=
[,X, 03 "0329#/ a~ koxk `muk~} iklk~`oos }a }bk haddal o`y `x ` {xke{o x}`~}cli
vacl}, Xkk/ k,i,/ Hbkx}d`l/ 3=9 E,>m `} ;59$96, Xkk `oxa O`liea~m u, c}k @cm ae
@o`n`d`/ Clh,/ >80 E,8m 0862/ 0808 "00}b Hc~, >666# "‟Cl krvoa~cli }bk p{kx}cal
ae ybk}bk~ ` m{}s }a mcxhoaxk krcx}x cl ` v`~}ch{o`~ xc}{`}cal/ ekmk~`o ha{~}x d{x} ia
nksalm x}`}k haddal o`y/ `lm halm{h} `l clp{c~s cl}a ~koku`l} ekmk~`o xa{~hkx ae
`{}ba~c}s—# "hc}cli h`xkx#,2
2 Da~kauk~/ H{n`l–x x}`}k$o`y$alos `vv~a`hb/ ce `mav}km/ ya{om ~kx{o} cl `l{lmkxc~`nok o`hj ae {lcea~dc}s/ yc}b x}`lm`~mx ea~ oc`ncoc}s {lmk~ ekmk~`o o`y ‘ Xkh}cal 06"n# `lm ^{ok 06n$; ‘ mkvklmcli al }bk o`y ae ece}s x}`}kx,
8=
8/9/2019 S.E.C.'s Appellate Brief
http://slidepdf.com/reader/full/secs-appellate-brief 43/55
N, Cl @ls Kukl}/ }bk Hadvo`cl} @mkp{`}kos @ookikm ]b`} H{n`l–x
Halm{h} Y`x Mkhkv}cuk Nkh`{xk Bk Krvochc}os @i~kkm La} }a
]~`mk `lm ]bkl ]~`mkm N`xkm al }bk Halecmkl}c`o Clea~d`}cal,
]bk hadvo`cl} `mkp{`}kos `ookikm }b`} H{n`l krvochc}os `i~kkm la} }a }~`mk/
`lm bcx x{nxkp{kl} }~`mcli n`xkm al }bk halecmkl}c`o clea~d`}cal }bk~kea~k y`x
mkhkv}cuk,3 @} }bk nkicllcli ae }bk h`oo yc}b }bk D`dd`,had HKA/ H{n`l `i~kkm
}a jkkv yb`}kuk~ clea~d`}cal bk ok`~lkm halecmkl}c`o, @e}k~ ok`~lcli }bk clc}c`o
clea~d`}cal `na{} }bk VCVK aeek~cli/ ybchb {vxk} bcd `lm ybchb bk avvaxkm
nkh`{xk c} ya{om mco{}k krcx}cli xb`~kbaomk~x ocjk bcdxkoe/ bk x}`}km/ ‟Ykoo/ lay
C–d xh~kykm ‘ C h`l–} xkoo,— H{n`l–x krv~kxx `lm hal}kdva~`lka{x ~khailc}cal
}b`} bk ha{om la} xkoo kucmklhkx bcx {lmk~x}`lmcli }b`} bk b`m `i~kkm `} }bk
nkicllcli ae }bk h`oo }a `nx}`cl e~ad }~`mcli al }bk n`xcx ae }bk halecmkl}c`o
clea~d`}cal, Hk~}`clos c} cx ` ~k`xal`nok clek~klhk e~ad H{n`l–x x}`}kdkl} }b`} bk
b`m `i~kkm `} }bk nkicllcli ae }bk h`oo la} }a }~`mk,
N`xkm al H{n`l–x `i~kkdkl} }a }~k`} }bk clea~d`}cal halecmkl}c`oos `lm la}
xkoo/ }bk hadv`ls y`x clm{hkm }a haluks kukl da~k lalv{noch halecmkl}c`o
clea~d`}cal }a bcd, ]bk hadvo`cl} d`jkx `l krvochc} `ooki`}cal halhk~lcli
H{n`l–x ‟C h`l–} xkoo— x}`}kdkl} ybchb }bk mcx}~ch} ha{~} cila~km, ]bk hadvo`cl}
3 Ybcok }bcx h`xk cluaoukx `l krvochc} `i~kkdkl} la} }a }~`mk/ }bk mcx}~ch}ha{~} ha~~kh}os ~khailcwkm }b`} `l cdvochc} `i~kkdkl} la} }a }~`mk ya{om nkx{eechckl}, H{n`l/ 58= E, X{vv, >m `} 9>;/ 9>9$>2/ 980,
8;
8/9/2019 S.E.C.'s Appellate Brief
http://slidepdf.com/reader/full/secs-appellate-brief 44/55
`ookikx }b`} ‟cl ~koc`lhk al H{n`l–x `hhkv}`lhk ae ` m{}s ae halecmkl}c`oc}s `lm bcx
`hjlayokmidkl} }b`} bk ha{om la} xkoo {l}co `e}k~ }bk v{noch `lla{lhkdkl}/— }bk
HKA v~aucmkm Dk~~cd`l hal}`h} clea~d`}cal }a H{n`l }a an}`cl e{~}bk~ mk}`cox
`na{} }bk aeek~cli, ^K ]`n 5/ Hadvo, µ 05 "kdvb`xcx `mmkm#, Cl ~kxvalxk }a
H{n`l–x p{kx}calx/ }bk Dk~~cd`l vo`hkdkl} `ikl} v~aucmkm H{n`l `mmc}cal`o
halecmkl}c`o mk}`cox `na{} }bk aeek~cli/ clho{mcli }b`} }bk aeek~cli y`x nkcli xaom
`} ` mcxha{l} }a }bk d`~jk} v~chk `lm }b`} c} clho{mkm a}bk~ clhkl}cukx ea~ clukx}a~x,
]b{x/ kukl ce H{n`l yk~k la} uckykm `x b`ucli `i~kkm la} }a }~`mk `} }bk
nkicllcli ae }bk h`oo yc}b }bk HKA/ }bk hadvo`cl} x{eechckl}os `ookikx }b`} bk b`m
`l {lmk~x}`lmcli ns }bk klm ae }b`} h`oo "ybchb bk `hjlayokmikm }a }bk HKA# }b`}
bk b`m {lmk~}`jkl la} }a }~`mk {l}co }bk v{noch `lla{lhkdkl}, B`ucli
`hjlayokmikm }b`} {lmk~x}`lmcli }a D`dd`,had/ bk }bkl an}`clkm e{~}bk~
halecmkl}c`o clea~d`}cal e~ad D`dd`,had–x `ikl} `lm `oxa {xkm }b`} clea~d`}cal
ea~ }~`mcli,
]bk mcx}~ch} ha{~} y`x ~kp{c~km }a ucky }bk `ooki`}calx cl }bk ocib} dax}
e`ua~`nok }a }bk Haddcxxcal `lm }a i~`l} }bk Haddcxxcal ~k`xal`nok clek~klhkx
e~ad }bk `ooki`}calx, Xkk/ k,i,/ Ialw`okw/ ;99 E,8m `} 568, Ns halho{mcli }b`} }bk
`ooki`}calx yk~k clx{eechckl}/ baykuk~/ }bk mcx}~ch} ha{~} keekh}cukos halho{mkm }b`}
c} y`x {l~k`xal`nok }a clek~ e~ad }bk `ooki`}calx }b`} H{n`l b`m `i~kkm la} }a
85
8/9/2019 S.E.C.'s Appellate Brief
http://slidepdf.com/reader/full/secs-appellate-brief 45/55
}~`mk al }bk clea~d`}cal, ]bcx y`x ~kuk~xcnok k~~a~, C} ya{om nk mceech{o} }a
hadv~kbklm ybs/ ce H{n`l b`m la} cl}klmkm }a `i~kk }a ~ke~`cl e~ad }~`mcli/ bk
ya{om b`uk halxcmk~km bcdxkoe ‟xh~kykm— `lm {l`nok }a xkoo, Clmkkm/ }bk dax}
~k`xal`nok clek~klhk cx }b`} H{n`l b`m {lmk~}`jkl "`lm ~khailcwkm }b`} bk b`m
{lmk~}`jkl# ` m{}s la} }a }~`mk al }bk clea~d`}cal,
]bk mcx}~ch} ha{~} ~k`hbkm }bk halho{xcal c} mcm alos ns cdv~avk~os
xvkh{o`}cli `na{} vaxxcnok clek~klhkx cl e`ua~ ae }bk mkeklm`l}, ]bk ha{~}
nkockukm }b`} H{n`l–x ‟ZlTay C–d xh~kykmZT C h`l–} xkoo— x}`}kdkl} krv~kxxkm bcx
‟nkocke/ `} ok`x} `} }b`} }cdk/ }b`} c} ya{om nk cooki`o ea~ bcd }a xkoo , , , ,— H{n`l/
58= E, X{vv, >m `} 9>2, Cl a}bk~ ya~mx/ }bk mcx}~ch} ha{~} bsva}bkxcwkm }b`} H{n`l
nkockukm bk ha{om la} xkoo/ la} nkh`{xk bk b`m `i~kkm la} }a }~`mk/ n{} nkh`{xk bk
dcx}`jklos halho{mkm }b`} bcx `i~kkdkl} }a jkkv }bk clea~d`}cal halecmkl}c`o y`x
kla{ib ea~ oc`ncoc}s, ]bk mcx}~ch} ha{~}–x uk~xcal ae kukl}x/ }bk~kea~k/ cx `x eaooayx7
"0# H{n`l `i~kkx }a jkkv }bk clea~d`}cal halecmkl}c`o n{} makx la} `i~kk la} }a
}~`mk: "># H{n`l/ `} ok`x} `} }b`} }cdk/ makx la} ~k`ocwk }b`} ` halecmkl}c`oc}s
`i~kkdkl} `oalk cx clx{eechckl} }a mcx`nok bcd e~ad }~`mcli `lm nkockukx c} ya{om
nk cooki`o ea~ bcd }a xkoo: "8# H{n`l `hha~mclios x}`}kx }b`} bk cx ‟lay , , ,
xh~kykm— `lm h`l–} xkoo: "=# H{n`l/ ` xba~} }cdk o`}k~ }b`} x`dk m`s/ xadkbay
~k`ocwkx }b`} c} ya{om `h}{`oos nk o`ye{o ea~ bcd }a xkoo `lm v~ahkkmx }a xkoo, ]bk
89
8/9/2019 S.E.C.'s Appellate Brief
http://slidepdf.com/reader/full/secs-appellate-brief 46/55
cdvo`{xcncoc}s ae }bcx uk~xcal ae kukl}x cx alos e{~}bk~ `vv`~kl} e~ad }bk mcx}~ch}
ha{~}–x ayl ~khailc}cal }b`} c} y`x }bk ec~x} ha{~} }a halxcmk~ ybk}bk~ `
halecmkl}c`oc}s `i~kkdkl} d{x} hal}`cl ` v`~}ch{o`~cwkm lal${xk hadvalkl}, Xkk
cm, `} 9>5 "‟@o}ba{ib la ha{~} `vvk`~x }a b`uk `l`oswkm }bk v~khcxk p{kx}cal }b`}
}bcx ha{~} kr`dclkx , , , ,—#,
E{~}bk~da~k/ }bk hadvo`cl} d`mk `ooki`}calx ~ki`~mcli }ya kd`cox xkl}
yc}bcl D`dd`,had }b`} e{~}bk~ x{vva~} `l clek~klhk }b`} H{n`l b`m `i~kkm la} }a
}~`mk al }bk clea~d`}cal, Cl `mmc}cal/ }bkxk ooki`}calx clmch`}k }b`} D`dd`,had
xb`~km H{n`l–x {lmk~x}`lmcli }b`} bk b`m `i~kkm la} }a }~`mk, Xba~}os `e}k~ }bk
h`oo e~ad }bk HKA }a H{n`l al G{lk >2/ D`dd`,had–x krkh{}cuk hb`c~d`l xkl}
`l kd`co }a a}bk~ D`dd`,had na`~m dkdnk~x {vm`}cli }bkd al VCVK$~ko`}km
c}kdx/ clho{mcli }bk HKA–x haluk~x`}cal yc}b H{n`l, Bk x}`}km cl }bk kd`co }b`}
‟Z`Tx `l}chcv`}km ZH{n`lT clc}c`oos ‒eoky aee }bk b`lmok– `lm x`cm bk ya{om xkoo bcx
xb`~kx "~khailcwcli }b`} bk y`x la} `nok }a ma `ls}bcli {l}co yk `lla{lhk }bk
kp{c}s# n{} }bkl `xjkm }a xkk }bk }k~dx `lm halmc}calx , , , ,— ^K ]`n 5/ Hadvo,
µ 0; "kdvb`xcx `mmkm#, Al G{lk >3/ >66=/ D`dd`,had–x krkh{}cuk hb`c~d`l
y~a}k `l kd`co }a }bk na`~m }b`} x`cm ‟yk mcm xvk`j }a D`~j H{n`l "Z}b~a{ib a{~
HKAT `lm/ x{nxkp{kl}os/ a{~ clukx}dkl} n`ljk~# }a eclm a{} ce bk b`m `ls cl}k~kx}
cl v`~}chcv`}cli }a }bk kr}kl} ae d`cl}`clcli bcx cl}k~kx}, Bcx `lxyk~x yk~k7 bk
82
8/9/2019 S.E.C.'s Appellate Brief
http://slidepdf.com/reader/full/secs-appellate-brief 47/55
ya{om la} clukx}/ bk makx la} y`l} }bk hadv`ls }a d`jk `hp{cxc}calx/ bk ycoo xkoo
bcx xb`~kx ybchb bk h`l la} ma {l}co `e}k~ yk `lla{lhk,— Cm, µ >6 "kdvb`xcx
`mmkm#,
]bk ha{~} mcxdcxxkm }bkxk `ooki`}calx `x ~koku`l} alos }a }bk cxx{k ybk}bk~
D`dd`,had b`m ` {lco`}k~`o krvkh}`}cal }b`} H{n`l ya{om ~ke~`cl e~ad }~`mcli
al }bk clea~d`}cal, C} cx }~{k }b`} ` {lco`}k~`o krvkh}`}cal al }bk v`~} ae }bk
v~aucmk~ ae clea~d`}cal cx clx{eechckl} }a h~k`}k ` v~kmch`}k m{}s ea~
dcx`vv~av~c`}cal oc`ncoc}s, Bk~k/ baykuk~/ }bk `ooki`}calx mcm la} g{x} x{vva~} `l
clek~klhk }b`} D`dd`,had krvkh}km H{n`l la} }a }~`mk/ n{}/ `x la}km/ yk~k
~koku`l} }a }bk xhavk ae H{n`l–x `h}{`o `i~kkdkl} `lm D`dd`,had–x
{lmk~x}`lmcli ae H{n`l–x h}{`o `i~kkdkl}, ]bk ha{~} koxkybk~k cl c}x avclcal
~khailcwkm }bk cdva~}`l} mceek~klhk nk}ykkl ` dk~k {lco`}k~`o krvkh}`}cal ae lal¤
{xk `lm ` ‟okic}cd`}k `lm g{x}cec`nok krvkh}`}cal,— Hadv`~k H{n`l/ 58= E, X{vv,
>m `} 9>;$>5 yc}b cm, } 9>2, C} cx {lhok`~/ baykuk~/ ybs }bk ha{~} ocdc}km c}x
halxcmk~`}cal ae }bk ~koku`lhk ae }bkxk ooki`}calx cl }bk hadvo`cl}, ]b{x/ c} h`l
nk ~k`xal`nos clek~~km e~ad }bk hadvo`cl} }b`} H{n`l krvochc}os `i~kkm la} }a }~`mk
83
8/9/2019 S.E.C.'s Appellate Brief
http://slidepdf.com/reader/full/secs-appellate-brief 48/55
al }bk clea~d`}cal/ `lm mkhkv}cukos n~k`hbkm bcx ~kx{o}cli m{}s ns xkoocli bcx
kl}c~k x}`jk yc}ba{} mcxhoaxcli }a D`dd`,had bcx vo`lx }a }~`mk,06
06 Cl `ls kukl}/ c} cx ` ~k`xal`nok clek~klhk e~ad }bk hadvo`cl} }b`} H{n`l/
ns }~`mcli ` o`~ik noahj ae x}ahj "da~k }b`l 5+ ae D`dd`,had–x a{}x}`lmclixb`~kx#/ hadd{lch`}km clea~d`}cal `na{} D`dd`,had/ cl n~k`hb ae bcx `i~kkdkl}}a jkkv }bk clea~d`}cal `na{} }bk hadv`ls halecmkl}c`o, ]~`mcli hadd{lch`}kxclea~d`}cal }a }bk d`~jk}, Xkk/ k,i,/ O`~~s B`~~cx/ ]^@MCLI @LM KRHB@LIKX7D@^JK] DCH^AX]^[H][^K EA^ V^@H]C]CALK^X/ >>= "LS7 Area~m [lcuk~xc}sV~kxx >668# "‟Clea~dkm }~`mk~x/ ocjk `oo a}bk~ }~`mk~x/ ae}kl xcilcech`l}os cdv`h}
v~chkx ybkl }bks }~ mk, ]bkc~ n{scli }klmx }a v{xb v~chkx {v/ `lm }bkc~ xkoocli}klmx }a v{xb v~chkx mayl,—#: Gako B`xn~a{hj/ ‟Dk`x{~cli }bk Clea~d`}calHal}kl} ae X}ahj ]~`mkx/— =5 ]bk Ga{~l`o ae Ecl`lhk 093 "0330#"‟Hkl}~`o }a }bk`l`osxcx ae d`~jk} dch~ax}~{h}{~k cx }bk la}cal }b`} cl ` d`~jk} yc}b`xsddk}~ch`oos clea~dkm `ikl}x/ }~`mkx haluks clea~d`}cal `lm }bk~kea~k h`{xk `
vk~xcx}kl} cdv`h} al }bk xkh{~c}s v~chk,—#,
=6
8/9/2019 S.E.C.'s Appellate Brief
http://slidepdf.com/reader/full/secs-appellate-brief 49/55
HALHO[XCAL
Ea~ }bk ea~kiacli ~k`xalx/ }bk g{midkl} ae }bk mcx}~ch} ha{~} xba{om nk
~kuk~xkm,
^kxvkh}e{oos x{ndc}}km/
M@UCM D, NKHJK^ Iklk~`o Ha{lxko
D@^J M, H@BLMkv{}s Iklk~`o Ha{lxko
G@HAN B, X]COOD@LXaochc}a~
QQ!x!QQQQQQQQQQQQQQQQQQQQQQQQQQ ^@LM@OO Y, P[CLL@xxcx}`l} Iklk~`o Ha{lxko
QQ!x!QQQQQQQQQQQQQQQQQQQQQQQQQQ DCHB@KO O, VAX]
Xklca~ Oc}ci`}cal Ha{lxko
Xkh{~c}ckx `lm Krhb`lik Haddcxxcal066 E X}~kk}/ L,K,Y`xbcli}al/ M,H, >6;=3
G`l{`~s >606 ">6># ;;0$;600 "Vax}#
=0
8/9/2019 S.E.C.'s Appellate Brief
http://slidepdf.com/reader/full/secs-appellate-brief 50/55
@ M M K L M [ D
8/9/2019 S.E.C.'s Appellate Brief
http://slidepdf.com/reader/full/secs-appellate-brief 51/55
]@NOK AE HAL]KL]X
V`ik
Xkh}cal 09"`# ae }bk Xkh{~c}ckx @h} ae 0388/0; [,X,H, 99p"`# , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , @0
Xkh}cal 06"n# ae }bk Krhb`lik @h} ae 038=/0; [,X,H, 92g"n# , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , @0
^{ok 06n$;/ 09 H,E,^, >=6,06n$; , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , @0
^{ok 06n;$>/ 09 H,E,^, >=6,06n;$> , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , @>
8/9/2019 S.E.C.'s Appellate Brief
http://slidepdf.com/reader/full/secs-appellate-brief 52/55
E^@[M[OKL] CL]K^X]@]K ]^@LX@H]CALX
Xkh}cal 09, Z99pT "`# [xk ae cl}k~x}`}k haddk~hk ea~ v{~vaxk ae e~`{m a~ mkhkc}$$C} xb`oo
nk {lo`ye{o ea~ `ls vk~xal cl }bk aeek~ a~ x`ok ae `ls xkh{~c}ckx a~ `ls xkh{~c}s$n`xkm xy`v
`i~kkdkl} "`x mkeclkm cl xkh}cal >65N ae }bk I~`dd$Ok`hb$Nocoks @h}# ns }bk {xk ae `ls dk`lxa~ clx}~{dkl}x ae }~`lxva~}`}cal a~ hadd{lch`}cal cl cl}k~x}`}k haddk~hk a~ ns {xk ae }bk d`cox/
mc~kh}os a~ clmc~kh}os‘
"0# }a kdvoas `ls mkuchk/ xhbkdk/ a~ `~}cechk }a mke~`{m/ a~
"># }a an}`cl dalks a~ v~avk~}s ns dk`lx ae `ls {l}~{k x}`}kdkl} ae ` d`}k~c`o e`h} a~ `ls
adcxxcal }a x}`}k ` d`}k~c`o e`h} lkhkxx`~s cl a~mk~ }a d`jk }bk x}`}kdkl}x d`mk/ cl ocib} ae }bk
hc~h{dx}`lhkx {lmk~ ybchb }bks yk~k d`mk/ la} dcxok`mcli: a~
"8# }a kli`ik cl `ls }~`lx`h}cal/ v~`h}chk/ a~ ha{~xk ae n{xclkxx ybchb avk~`}kx a~ ya{om
avk~`}k `x ` e~`{m a~ mkhkc} {val }bk v{~hb`xk~, ' ' ' '
D@LCV[O@]CUK @LM MKHKV]CUK MKUCHKX
Xkh}cal 06, Z92gT C} xb`oo nk {lo`ye{o ea~ `ls vk~xal/ mc~kh}os a~ clmc~kh}os/ ns }bk {xk ae
`ls dk`lx a~ clx}~{dkl}`oc}s ae cl}k~x}`}k haddk~hk a~ ae }bk d`cox/ a~ ae `ls e`hcoc}s ae `ls
l`}cal`o xkh{~c}ckx krhb`lik$$ ' ' '
"n# ]a {xk a~ kdvoas/ cl hallkh}cal yc}b }bk v{~hb`xk a~ x`ok ae `ls xkh{~c}s ~kicx}k~km
al ` l`}cal`o xkh{~c}ckx krhb`lik a~ `ls xkh{~c}s la} xa ~kicx}k~km/ a~ `ls xkh{~c}ckx$n`xkm xy`v
`i~kkdkl} "`x mkeclkm cl xkh}cal >65N ae }bk I~`dd$Ok`hb$Nocoks @h}#/ `ls d`lcv{o`}cuk a~ mkhkv}cuk mkuchk a~ hal}~cu`lhk cl hal}~`ukl}cal ae x{hb ~{okx `lm ~ki{o`}calx `x }bk
Haddcxxcal d`s v~kxh~cnk `x lkhkxx`~s a~ `vv~av~c`}k cl }bk v{noch cl}k~kx} a~ ea~ }bk v~a}kh}cal
ae clukx}a~x, ' ' ' '
KDVOASDKL] AE D@LCV[O@]CUK @LM MKHKV]CUK MKUCHKX
09 H,E,^, © >=6,06n$;
C} xb`oo nk {lo`ye{o ea~ `ls vk~xal/ mc~kh}os a~ clmc~kh}os/ ns }bk {xk ae `ls dk`lx a~
clx}~{dkl}`oc}s ae cl}k~x}`}k haddk~hk/ a~ ae }bk d`cox a~ ae `ls e`hcoc}s ae `ls l`}cal`o xkh{~c}ckx
krhb`lik/
"`# ]a kdvoas `ls mkuchk/ xhbkdk/ a~ `~}cechk }a mke~`{m/
@0
8/9/2019 S.E.C.'s Appellate Brief
http://slidepdf.com/reader/full/secs-appellate-brief 53/55
"n# ]a d`jk `ls {l}~{k x}`}kdkl} ae ` d`}k~c`o e`h} a~ }a adc} }a x}`}k ` d`}k~c`o e`h}
lkhkxx`~s cl a~mk~ }a d`jk }bk x}`}kdkl}x d`mk/ cl }bk ocib} ae }bk hc~h{dx}`lhkx {lmk~ ybchb
}bks yk~k d`mk/ la} dcxok`mcli/ a~
£# ]a kli`ik cl `ls `h}/ v~`h}chk/ a~ ha{~xk ae n{xclkxx ybchb avk~`}kx a~ ya{om avk~`}k
`x ` e~`{m a~ mkhkc} {val `ls vk~xal/ cl hallkh}cal yc}b }bk v{~hb`xk a~ x`ok ae `ls xkh{~c}s,
M[]CKX AE ]^[X] A^ HALECMKLHK CL DCX@VV^AV^C@]CAL
CLXCMK^ ]^@MCLI H@XKX,
09 H,E,^, © >=6,06n;$>
V~kocdcl`~s La}k }a © >=6,06n;$>7 ]bcx xkh}cal v~aucmkx ` lal$krho{xcuk mkeclc}cal ae
hc~h{dx}`lhkx cl ybchb ` vk~xal b`x ` m{}s ae }~{x} a~ halecmklhk ea~ v{~vaxkx ae }bk
‟dcx`vv~av~c`}cal— }bka~s ae clxcmk~ }~`mcli {lmk~ Xkh}cal 06"n# ae }bk @h} `lm ^{ok 06n$;, ]bk
o`y ae clxcmk~ }~`mcli cx a}bk~ycxk mkeclkm ns g{mchc`o avclcalx halx}~{cli ^{ok 06n$;/ `lm ^{ok06n;$> makx la} damces }bk xhavk ae clxcmk~ }~`mcli o`y cl `ls a}bk~ ~kxvkh},
"`# Xhavk ae ^{ok, ]bcx xkh}cal xb`oo `vvos }a `ls ucao`}cal ae Xkh}cal 06"n# ae }bk @h} "0;
[,X,H, 92g"n## `lm © >=6,06n$; }bk~k{lmk~ }b`} cx n`xkm al }bk v{~hb`xk a~ x`ok ae xkh{~c}ckx al
}bk n`xcx ae/ a~ }bk hadd{lch`}cal ae/ d`}k~c`o lalv{noch clea~d`}cal dcx`vv~av~c`}km cl n~k`hb
ae ` m{}s ae }~{x} a~ halecmklhk,
"n# Kl{dk~`}km ‟m{}ckx ae }~{x} a~ halecmklhk,— Ea~ v{~vaxkx ae }bcx xkh}cal/ ` ‟m{}s ae }~{x} a~
halecmklhk— krcx}x cl }bk eaooaycli hc~h{dx}`lhkx/ `dali a}bk~x7
"0# Ybklkuk~ ` vk~xal `i~kkx }a d`cl}`cl clea~d`}cal cl halecmklhk:
"># Ybklkuk~ }bk vk~xal hadd{lch`}cli }bk d`}k~c`o lalv{noch clea~d`}cal `lm }bk
vk~xal }a ybad c} cx hadd{lch`}km b`uk ` bcx}a~s/ v`}}k~l/ a~ v~`h}chk ae xb`~cli
halecmklhkx/ x{hb }b`} }bk ~khcvckl} ae }bk clea~d`}cal jlayx a~ ~k`xal`nos xba{om jlay
}b`} }bk vk~xal hadd{lch`}cli }bk d`}k~c`o lalv{noch clea~d`}cal krvkh}x }b`} }bk
~khcvckl} ycoo d`cl}`cl c}x halecmkl}c`oc}s: a~
"8# Ybklkuk~ ` vk~xal ~khkcukx a~ an}`clx d`}k~c`o lalv{noch clea~d`}cal e~ad bcx a~ bk~
xva{xk/ v`~kl}/ hbcom/ a~ xcnocli: v~aucmkm/ baykuk~/ }b`} }bk vk~xal ~khkcucli a~ an}`clcli
}bk clea~d`}cal d`s mkdalx}~`}k }b`} la m{}s ae }~{x} a~ halecmklhk krcx}km yc}b ~kxvkh}
}a }bk clea~d`}cal/ ns kx}`nocxbcli }b`} bk a~ xbk lkc}bk~ jlky la~ ~k`xal`nos xba{om b`uk
jlayl }b`} }bk vk~xal yba y`x }bk xa{~hk ae }bk clea~d`}cal krvkh}km }b`} }bk vk~xal
ya{om jkkv }bk clea~d`}cal halecmkl}c`o/ nkh`{xk ae }bk v`~}ckx) bcx}a~s/ v`}}k~l/ a~
v~`h}chk ae xb`~cli `lm d`cl}`clcli halecmklhkx/ `lm nkh`{xk }bk~k y`x la `i~kkdkl} a~
{lmk~x}`lmcli }a d`cl}`cl }bk halecmkl}c`oc}s ae }bk clea~d`}cal,
@>
8/9/2019 S.E.C.'s Appellate Brief
http://slidepdf.com/reader/full/secs-appellate-brief 54/55
HK^]CECH@]K AE XK^UCHK
XKH u, H{n`l "63$06335#
C bk~kns hk~}ces }b`}/ al G`l{`~s >>/ >606/ C h`{xkm }bk N~cke ae }bkXkh{~c}ckx `lm Krhb`lik Haddcxxcal/ Vo`cl}cee$@vvkoo`l} }a nk xkl} ns kokh}~alchd`co/ ns y~c}}kl halxkl}/ }a
Osok ^ank~}xMkyks % OkNak{e OOV0060 Lky Sa~j @uk,/ L,Y,Y`xbcli}al/ MH >666;o~ank~}xFmkyksoknak{e,had
`lm xkukl havckx ae }bk N~cke ae }bk Xkh{~c}ckx `lm Krhb`lik Haddcxxcal/Vo`cl}cee$@vvkoo`l} `lm `l kokh}~alch uk~xcal ae }bk n~cke }a nk xkl} ns lkr}$
n{xclkxx$m`s mkocuk~s }a
Hb`~okx ^, E{on~{ik/ CCCHok~j ae Ha{~}
[,X, Ha{~} ae @vvk`ox ea~ }bk Ece}b Hc~h{c}566 X, D`kx}~c Vo`hk
Lky A~ok`lx/ O@ 96086$68=62
QQ!x!QQQQQQQQQQQQQQQQQQQQQQQQQQ Dchb`ko O, Vax}Xklca~ Oc}ci`}cal Ha{lxkoXkh{~c}ckx `lm Krhb`lik Haddcxxcal066 E X}~kk}/ L,K,
Y`xbcli}al/ M,H, >6;=3">6># ;;0$;600
8/9/2019 S.E.C.'s Appellate Brief
http://slidepdf.com/reader/full/secs-appellate-brief 55/55
HK^]CECH@]K AE HADVOC@LHK
XKH u, H{n`l "63$06335#
C bk~kns hk~}ces }b`} }bcx n~cke hadvockx yc}b }bk }svk$uao{dk ocdc}`}calx ae
Ekm, ^, @vv, V, >3"m# `lm Ekm, ^, @vv, V, >2,0"k#">#"N# nkh`{xk }bcx n~cke hal}`clx3/>;= ya~mx/ krho{mcli }bk v`~}x ae }bk n~cke krkdv}km ns EKM, ^, @VV, V,8>"`#"9#"N#"ccc#,
C `oxa hk~}ces }b`} }bcx n~cke hadvockx yc}b }bk }svke`hk ~kp{c~kdkl}x ae Ekm,^, @vv, V, 8>"`#";# `lm }bk }svk x}sok ~kp{c~kdkl}x ae Ekm, ^, @vv, V, 8>"`#"5#
nkh`{xk }bcx n~cke b`x nkkl v~kv`~km cl ` v~ava~}cal`oos xv`hkm }svke`hk {xcli
Ya~mVk~ekh} 00 cl 0= vacl} ]cdkx Lky ^ad`l }svk,
QQ!x!QQQQQQQQQQQQQQQQQQQQQQQQQQ Dchb`ko O, Vax}Xklca~ Oc}ci`}cal Ha{lxkoXkh{~c}ckx `lm Krhb`lik Haddcxxcal066 E X}~kk} L,K,
Y`xbcli}al/ M,H, >6;=3">6># ;;0$;600