July 22, 2010 

1M Ref. No. 2010791141 

RESPONSE OF THE OFFICE OF CHIEF COUNSEL Goldman, Sachs & Co. 

We would not recommend enforcement action to the United States Securities and 

Exchange Commission ("Commission") under Section 206(4) ofthe Investment Advisers 

Act of 1940 ("Advisers Act") and Rule 206(4)-3 thereunder if any investment adviser 

that is required to be registered pursuant to Section 203 of the Advisers Act pays to 

Goldman, Sachs & Co. (the "Settling Firm") or any of its associated persons, as defined 

in Section 202(a)(l7) ofthe Advisers Act, a cash solicitation fee, directly or indirectly, 

for the solicitation of advisory clients in accordance with Rule 206(4)-3,1 notwithstanding 

an injunctive order issued by the United States District Court for the Southern District of 

New York (the "Judgment") that otherwise would preclude such an investment adviser 

from paying such a fee, directly or indirectly, to the Settling Firm or certain related 

2 

persons. 

Our position is based on the facts and representations in your letter dated July 21, 2010, 

particularly the representations ofthe Settling Firm that: 

(1)	 it will conduct any cash solicitation arrangement entered into with any 

investment adviser required to be registered under Section 203 of the 

Advisers Act in compliance with the terms of Rule 206(4)-3 except for the 

investment adviser's payment of cash solicitation fees, directly or 

indirectly, to the Settling Firm, which is subject to the Judgment; 

(2)	 the Judgment does not bar or suspend the Settling Firm or any person 

currently associated with the Settling Firm from acting in any capacity 

under the federal securities laws;3 

Rule 206(4)-3 prohibits any investment adviser that is required to be registered under the 

Advisers Act from paying a cash fee, directly or indirectly, to any solicitor with respect to 

solicitation activities if, among other things, the solicitor is subject to an order, judgment 

or decree described in Section 203(e)(4) ofthe Advisers Act. 

Securities and Exchange Commission v. Goldman, Sachs & Co. and Fabrice Tourre, No. 

10-CY-3229 (July 20, 2010). 

Section 9(a) of the Investment Company Act of 1940 (the "Investment Company Act") 

provides, in pertinent part, that a person may not serve or act as, among other things, an 

investment adviser or depositor of any investment company registered under the 

Investment Company Act or a principal underwriter for any registered open-end 

investment company or registered unit investment trust if, among other things, that 

person, by reason of any misconduct, is permanently or temporarily enjoined from acting, 

among other things, as an underwriter, broker, dealer or investment adviser, or from 

2 

Effective November 4, 2022, This Letter is Withdrawn. Please consult the following web 

page for more information: 

https://www.sec.gov/divisions/investment/im-modified-withdrawn-staff-statements
(3)	 it will comply with the terms of the Judgment, including, but not limited 

to, the payment of disgorgement and the civil penalty; and 

(4)	 for ten years frbm the date of the entry of the Judgment, the Settling Firm 

or any investment adviser with which it has a solicitation arrangement 

subject to Rule 206(4)-3 will disclose the Judgment in a written document 

that is delivered to each person whom the Settling Firm solicits (a) not less 

than 48 hours before the person enters into a written or oral investment 

advisory contract with the investment adviser or (b) at the time the person 

enters into such a contract, ifthe person has the right to terminate such 

contract without penalty within 5 business days after entering into the 

contract. 

This position applies only to the Judgment and not to any other basis for disqualification 

under Rule 206(4)-3 that may exist or arise with respect to the Settling Firm or any of its 

;;~rn:UJWendy Friedlander 

Senior Counsel 

engaging in or continuing any conduct or practice in connection with any such activity, or 

in connection with the purchase or sale of any security. 

The entry of the Judgment, absent the issuance of an order by the Commission pursuant 

to Section 9(c) ofthe Investment Company Act that exempts the Settling Firm from the 

provisions of Section 9(a) of the Investment Company Act, would effectively prohibit the 

Settling Firm and its affiliated persons from, among other things, acting as an investment 

adviser to any registered investment company. You state that, pursuant to Section 9(c) of 

the Investment Company Act, the Settling Firm and certain affiliated persons, on behalf 

ofthemselves and future affiliated persons, submitted an application to the Commission 

requesting (i) an order oftemporary exemption from Section 9(a) ofthe Investment 

Company Act and (ii) a permanent order exempting the Settling Firm, certain affiliated 

persons and future affiliated persons from the provisions of Section 9(a) of the 

Investment Company Act. 

On July 21, 2010, the Commission issued an order granting the Settling Firm, certain 

affiliated persons and future affiliated persons a temporary exemption from Section 9(a) 

of the Investment Company Act pursuant to Section 9(c) ofthe Investment Company Act, 

with respect to the Judgment, until the date the Commission takes final action on the 

application for a permanent order. Goldman, Sachs & Co., et al., SEC ReI. No. IC-29366 

(July 21, 2010). Therefore, the Settling Firm, certain affiliated persons and future 

affiliated persons are not currently barred or suspended from acting in any capacity 

specified in section 9(a) of the Investment Company Act as a result ofthe Judgment. 

2
 
SULLIVAN & CROMWELL LLP
 

TELEPHONE: 1,212'558::40QO 

FACSIMIL.E: 1-212'55~k3588 125 r?lJroad dltJ<eet WWW.5ULLCROM.COM JUio o/or,.( ,ACY1000/j~2IA9!1

LOS AfiG£LES -. PALO At.:ro ;,. WASJollNc.TON. O.c~

BE-WING .. HONG~KONG.-T~

MELBOURNE • SYON~

J*I~21,.2010

DoqglasJ,Scheidt,Esq. 

Assbciate"DifeCtOfari(fC:hief'~i:itll1sel,

l)lviSio!lofInvestment.Management,
 

·U.S..~~curiti¢$.and:E:XGh~nge··CominissioIl'
 

IOOP··Street,N'.E"
 

W~$hitlgtgl1,P·C.20~49,

Re:§lE(}' v·~QIQl'tla~,S~(;Qs&:C:;Q;·arid
 

EabriceTourrc (S.D;N.Y:2010)
 

D¢atMr. SClleidt: 

OUf client, Goldman,~achs& Co.. (the"Fi~';),i~}dcfehdant'inthe

aoove..captionedd'vilaction (the. «Action")brought bythe Securities' and Exchange 

Commission (the "COmfuission")in the UnitedStates DistrictGourt for the .Southern 

Disfrictof New York (the "Court"). TheActionrelates toal1egedvioJationsofthe 

fcderaLsecurities laWs bytheFirri1 in connection with its sale of synthetic cOllateralized 

debtobligatioDsto twoinstitlitioilal investors. 

The Finn, a brpker-dealer registcrcdunderSection.15.ofthe Securities 

EXchang~Act of1934, and ari inv~strnent adviseri~gi~tereci underSeclign203 ofthe 

Inve$unent Advisers Act of 1940 (the."Advisers Act'')1seeksthcas$u;ance ofthestaffof 

thfiPivisionofInvestmentManagyrnent("Staff') that it would notrecol1Jrnend any 

enforcement action totheComtnissiotlunder Section 206(4) of the Advisers Act, or.Rtile 

206(4)-3 thereunder (the "Rule"), lfan investment adviser paysthe Firm, or any of its 

associated persons,a cashpaymcntforthe solicitation of advisory clients, 
Dpuglas J.SGl1eidt,Esq. -2­

notwitbstail4}rig thec~i~~¢riceofJheji.ldgfueht (define<fbelow). ;WhiJe:thejudgment does 

pot'9P~ratetQprQhibitorstlspend the Firm or anyof±ts assoCiateaipetsonsfrom,being 

;~sqci~t~dW:itt\or (:eX:c<;pt~WPI"oMiet~g J~Section 9(~)'Qffue Inv~tJpemC<~rnpMY Aot of 

1946 Ctht;."Cdmpan:yAC:t"l~ ffomwHlcliSection reliet~s.sep<lfGltelt~eillgrequcs(~dby

~he fi®)I~p.tlllgasanj,I1Y:~tmeI1taQ.yj.·$~rand does npt relate,tQsQlicitation actiyitieson 

behalfbfin¥¢$trnentasl~i;s~~*'::i,tIIla¥;a:ft~ct the abll~tyof th« fiqn littd 11s associate,'!.'. .peI7S0I1sJPTcceiv¢paynient,s'forsuth:sQlicitation actiYities;TheStaff·iit'many·othet 

.~n$.~~ng~W,li~ .gran~eC:(*¢>-<lctiQI.Vr¢li9,f<tlnCler the·Rule in..sirilUardrcwnstances, 

1heqondllct.,'Of'thcc:pirnNiJ'legedJ.:n.me.'.c,oIDPlaint.in4he,Attloh,·in,volved.. 

:~rrtlf:tc~f~i~~~~~~~i:~~~~~~~~~:e~~~};g;~i~fB;'~i:ll~1~::ri~~~~~~~tr;:a~
 :i)1sti~tiqn:alb~Y~fs.in.reliance.onJhe:~xeInptionfroIn,r~~istratiomunderthe. Secwitics 

Act'p,rgvi4ed bY:I{ule'lA4J} thyr~gn~let·~riqto .• n{)p-'y,.~·!pers()Jl~:;Il·!¢lial1qedrttn~$,@~

"harbQrfrQInregi$tratiQnprovided,bx~¢gUlationS·thereundeJ" .. 'Specifically,'the ....' ' 

:1!~i~!~~~ii!~1~iliij~~~!;g:~
 Iitcol1negtigD ""itl;imy?pcrve.;cil.ptipne:ci.:.prQceedlhgi;'tl1e·fifrrl atlQ,Jll¢, 

Division. QfEnfQrcement·teaChedan'agJ:eement.iJ:rprinciple>tosettlc,ifie'Action'as'; 

·described·.belo\v;and theFipn hasexe¢lJtCdaconsenU9thecIltry.dfajudgmentbythe 

'Court(the"Judgment')withoutadmittin:~ror deny{ogthe mattqrssetfortllin'the 

.Commis.sion:~$..:coIIlplaintin;tbe,ActiQnXexceptastQthejurisd1ction. ofthe Court). 

In,tllc JJ:l,dgm~l1t~ Ctiltccl J:riJY~'o; 2QJ.Q.,·;4;ie.cQurtpe~an«QtJy'.resv.ain:; and 

.enjoins tile Fitm2 from viofatirtgSectiort:17(a) ofthe Securities Attin lheoffcrorsale of 

.any security. The Juqgment:decrees thal the Einnisljable for'disgQrgem¢nt of ,$15 . 

The Firm andceftain affiliates,pursuant to ~ection9(c) of the Company Act, are separaielyfiling 

an. applkationf~questing(i). a t~llIpgr~ry6fderexell1Pting the FirIIlandc;~rtainaJfiliat~sfrom :the 

provisions ofSection9(a)ofthpCQrnpi!,TiyActpending thedeterrniflatiOnofthe Comrnission on 

an appli'cationfofIJfrnianentexempli6h ~iid(ii)ape(manentordetexemptingthe Firm and certain 

affiliatesfrom IhepT;o.;isibnsofSectioIi9(a) ofthe Company Act. .. . 

The injUnction also applies to the Firm's agents,servants, empioyees, attorneys andaHpers()ns in 

active concert or partid'pation with them who receive actual not{cc ofthe Judgrnent. 

.1 
DOligJasJ. SGpeidt;Esq.	 '-3­

million and a,civil penalty inilieamouIlt'of$535 million. Finally, tl:ieJurlgmentrequites 

the Birm to cO,hlPl}:witll certai1.i\lndert~I'\gs.r~1~ti,l1g,to.(i)thevettill&anq •. apPJ;9v<u 

process fotofferings of resident1al~IIlortgage~reiatc<i$ecuri~es,(li)r~\,iew';ohnilrketing

WilXerif.1JS!Jsed,inconnection' wlthresjdentitil mortg(.\ge~reJatedsecWiti~s.offerings by the 

FitrnrsItg~!?'¢pai'4ne,nt an4GqiJ:@iMce I)ep,@tfleilt, (m)<lIl!nhl.li"{lteJfl~laudit:s of the 

review ofsuchmarketing,matenals, (iv) 'wherethe.firtrlislhe leadunclerwrtterof an 

qfferind~()fre~identialJIlortgage~r~lgt~dsecwitiesandretainsOlltsigecQunSel to advise on 

theofferingireview ofthetelatedofferingriX~t¢ri}iiSby out$ideeol!ris'¢l'and:';(:v), equcaticm 

andfraining of:,personsinvolved.in thestrUCtID-ing· or marketingofteSid~mti.aI:In6qgage".• 

te.lateqsetUritjesof[erings.' . 

=~~~~~i~~S~~ie!~=~~!fi~!!::t6t
 '~::i~~a~:lE:-~:~=£~~~~~~iW:l~:X::~~~t!>~:tid~¢r!~~irl~s~~i~~~~dbn
 reli~f,.the lFii;m:may by,l;lnabl~ fQ~t:cef:ive:casb'payment~f()I:;th~s91iciJ~ti()n<ofadvisQry

cHetlls?	 . 

'DISCUSSION 

',' Xn';tne;teIea.se,adopting the Rule, lhe'Col1lITlissjonstatedth~tit';'would

entertain, .ahd,pep~pated tograntirtappropriate ~irc'llm~taTlC~s,reques~s'f9r'pcrroission

to engage.asa~pliCitof. ·apersop.suqJeet1o a.sta.tuiorybar" f We.resp<:<etf~llysubmit that 

the., eire,UW,,;'$tal1cespresentin this case, ate pre¢iselythe sortthatwarrarifa,:graritofno­ ,-. - ,"	 , '. . , - '. -_ .. 

actiQIlrelief. 

Tl1eRule's proposing and (l(iopting releases explain, th<:<CQmrnission's 

purpose iniricllJelirig tlw disqualifiCa~iori prov~srops in the Rule. The purpOse was to 

pn:~"entanjIl;Yestm:entadYiser fromhiring;Jlsa,soiicitor a persQRwhom theadvjset was. 

)	 The Fiirii hasobtaiiled similarno-actionreIiefin the past. SeelllthiMarrer ojClrtaiii·liiuial 

Publi6,Of!eriftgAllbCiitions, SEC No-ActioJil.euer (puK avaiL,February 23; 2005); In ilzeMatter 

.ojCertain Analyst Conflicts oj IMerest, SEC No-AdibriLetter'(pub:avaiJ. OCt. 3 (2003); III the 

MatterojCert41n MimicipalBolidRejiiTldings, SEC No-AdionLelter (pub. avaiL Apr.. 13,2000). 

SeeRequirenrents'GovemiogPaymertts ofCash Referral Fees bylnvesttnent Advisers, lov. AM. 

ActRcL No. 688 (Jtily12, 1979),nS.E.c. Docket (CCH) 1293,1295, ai HarelO. . 
Dougl<l.sJ.Scheidt, Esq. -4­

not pennittedlo'hireas.an employee, thus doingindirectly what the advisercol.lldTlotdo 

directly. In the proposingrelease, the Commission stated that: 

[b]f;cause itwoJild1?einappr()priateJoran ..1IJyestmcntadviser toby 

~eI'mittedtoemplo)'indifect1)',asasolicitof~someonewhomif:tn.iglltTl()t

·beabletohireas. al1employee,theRll!eprohibits·paymentofarefe111l1·fee 

to someone wh() ..,.,h~seIigag¥iI1311yottllecoijdtlctset fortli inSectioIJ 

203(c2Qfthe[Advisers) Act ..• andtherefore could be thesubjeclof a 

COII1rillssi()n<:)J:derbarringoT.susp~ndiJlgtheIight ofsuch perSon to'..\)6 

associated\'/lthan inVestment adviser. 5 

.'flleJlldgrnetlt does .• not?(ll",$~sgetld, •. ?rl~trrittheFinTl0r .anY8er~?Il

ctntentIY<l§sociatydWit .. .,Einnfr()Px~ctingin.~I!ypapasity· .•under.. t!te.fegeml.J~~ptitiEic;~

laws (excqpta.sprovided., ..,.ectio? 9(~}Of.the.lnvestmentColIlgany.AC9.~'~heJ3inIlhas

not1?een.,sancti?nedinconnectionWith theActi?n.,foraGtiYiti~sJ.:elatingtoits.agti'Vities.·••as 

an. investmentadviseroritssolititationof advisoryclie:nts} .Accordingly;co~slstent with 

the CptUlflissiou'sreasoninp' th~e.doer;nota~pearto.beanYJ.'cason to .prQhibitau,aOviser 

frompayingth.e. Finn .oritsass.oci~teOpersons·forengaging in solicitation·.•.ac:tivities.·.u.nder 

the Rule. 

Ihe.•. StaffRrt}vioJJ&lyhas~Wtt:e~·nu~~~()~SJequestsf9r •.no-actionr~lief

frbrh··the·disqualification prpvisions···of•. the RuJetoindividuals•.and eIltities,fptlIldby·the•••. 

Commissiontohave violated a wide raIlge offederalsecurities Iaws>andrulesihereunder 

andSROtules ·ofpetii1a.nel1t1yenjoil1~dQycq\,lIts of£pmpete.nljurisclictionfroITI·. 

engagitlginor continuingal1Y conductorpractice inconrtection with thcpl.lrchasco[sal¢ 

ofanysecurity.s 

5 See ReqlliremclltsGoveming PaymentsofCashRefclTal Fees by Investment Adviscrs, Inv. Adv. 

ACtReL No. 615 (Feb. 2, 1978),J4S£C:Docket(CCH)89,91. 

6 See footnote l. 

TheFirma.dditionallynotes that the Aetibndoes notallege.that it has violated, or aidedancJ 

abetted another person in violation of,. theRnle; 

g See; e.g., Gerzeral ELectric Company, SEC NocActipn Letter (pub. aV<tiL Aug, 12, 2009); Bane of 

AmericaSecurities LLC, SEeNo~ActionLetter (puO.avail. June 10,2009); .Citigroup Global 

Markets, Inc, SEC No-Action Letter (pub. avaiL l)~. 23;2008)~ PrudentiaL FinG/lcial, Inc., SEC 

No"ActionLetter(pub.·avail. Sept. 5,2008); .BarcLays BankPLC; SEC. No"Action Letter (pub. 

avaiL June 6, 2007): Emanuel l. Friedman alld ElF CapitaL LLC. SECNo-Action Letter (pub. 

avail. Jan. 16,2007); Aineriprise Financial Sen'iceslnc:, SECNo-AcrionLetter(pub. avail. Apr. 

..5, 2006)~MiJl?nium Partners, LP.,etaL, SEC No"Action Letter (pub. avail. MaL9,2006)(no~
Douglas]. Scheidt, Esq. '-5­

fu· conncctionwitnthis.re'lue.st;the,:Fitmundertakes: 

1.'tocondnctanycash solidtationarrangemenrenteredlntowlthany 

inV~sth)eIlt.il.Qy~s~~t¢<lW:tetitQn.e'f~mstetee;l·uiid¢fSectj611 ..• 2~3 .. ()ftneAcl¥is.~is •.Acfin 

coIIlPliance wiihtheJetmSofRule206(4).,:3,:,exc~pt·.for theinvestfilentadviser'spayment 

6fgtishsolicitritipQ fe~s, ,diteptlyorindirettIy,:;tQtlleI3jTIl1~ WhiQllis subjecttQ.Jhe: ludgment; ... ... 

:2.· :10 complywiih:the telTIlS of:ihe·Jud,gmcnf",:llldu<.!ing!bti(;hot 

~lJmlt~g.~o,·th~Yp*y.w~ij(;'Qfqi~gQig~m~~t·~Ii<f;~M:qNmIi~1i~lw};~~ , , 

s!~~E!f.f1iil~4il!11~ theperson enters irttc)"such:aconttact, if'lh'e persorthas the;iigh~totetmiriate;~\1gh,

¢onttaQhwith()l,1tpemilt:y.·withi1l5b\lsln.ess,~d~ys;llfterentering ..1rilOllie contra,Qt~ ... 

'We,respectfdily'requesttheS'taf{to:'adVise'us that'lt·wili'not,teco!Jltriertd 

}entotGeinertt.aGt:i,()l)fq;m~<@iimfflissic>n··.m~h,MiY¢~t:ili'¢rtt·ad0:;erim~tis"rcqQir~qtQ'pe

tcgisteted'.with·the,Gdmmlssiofipays·the.·Firtn,bt..artyof·itsassoc!<ite,d p#r§on~)atash

paymentfor the'spUq1tfl,tion'OfadVisQrydients,notwithstandingthe Judgment.' . 

actiOllrequc:s! <lnQ relidencompassed paluril ~~sons); AllwicanintemaiiollutfJtoup, 'Illp., ?EC 

Nc>- AcfiOf\,t-ettcI' (IJub. av~iLF~lJ.21 ,2,Qo?);Ql,Pe:11ello,i fn~t CClfllpany,'$)~c.N'O·ASlion . 

Letter(pub;' a-vaii. Feb. 24;200,5);Goldman; 'SaChs'&' Co, >. SECNo-Action 4~ter{pub,'avaii, Feb. 

23, 2005);andMorgall Stanley & Co: lllcorporafed; SEC'No-Action Letter (pllb.,avail.Feb. 4, 

2005). 
DouglasJ.S,cheidt, Esq; 

Ifyouhavean:y,questiQIiSr~gardingthis requcst"plei:l.se contact the·. 

undersig1J¢Q.;at (2].2) S58-497i,J.. 

~~1&~~:;~~~j~:~' (Qj'vlsionofEnfOrcemeIlt)