PUBL~C SO DEe 1994

Our Ref. No. 94-747-CC
 

Global Exempt Certificates
 

of Ownership in NHA MBS


RESPONSE OF THE OFFICE OF CHIEF COUNSEL Securities Inc.
 

DIVISION OF INVESTMENT MAAGEMENT
 File No. 132-3
 

Your letter of November 11, 1994 requests our assurance that
 

we would not recommend enforcement action to the Commission if
 

Global Exempt Certificates of Ownership in NHA MBS Securities Inc.
 

("Global ECONS") issues securities without registering under the


Investment Company Act of 1940 ("1940 Act") in reliance on rule
 

3a-7 thereunder. 1/
 

Global ECONS, a wholly owned Canadian subsidiary of Goldman
 

Sachs Canada, proposes to acquire pools of NHA Mortgage-Backed
 

Securities ("Underlying Securities") that evidence interests in
 

pools of residential mortgages insured by an agency of the Canadian
 

government. Global ECONS will issue and sell in the U. S. and in
 

other countries certificates that provide holders with undivided
 

co-ownership interests in the Underlying Securities


("Certificates") . 

Global ECONS will convey all of its right, title, and interest
 

in a specific pool of Underlying Securities and the right to
 

receive all payments thereon to a trustee ("Trustee") that meets
 the requirements of section 26 (a) (1) of the 1940 Act. As required 

by paragraph (a) (4) (i) of rule 3a-7, the Trustee will not be
 

affiliated with Global ECONS or Goldman Sachs Canada. 1/
 

The Trustee will act in various capacities as agent, nominee,
 

and trustee for and on behalf of the Certificateholders. In its
 

capacity as trustee, the Trustee will hold legal title to and act
 

as the registered holder of the Underlying Securities. Beneficial
 

ownership in the Underlying Securities, however, will be conveyed
 

to the Trustee in its capacity as agent and nominee. Upon this
 

conveyance and the issuance of any Certificates, the
 

certificateholders will hold beneficial ownership in the Underlying
 

Securities as tenants in common, under a co-ownership arrangement
 

between the Trustee as agent and the Certificateholders as
 

principals. You state that the Trustee's ownership interest is
 

valid against third parties and is, in your view, therefore
 

consistent with the requirements and obj ecti ves of 
 paragraph (a) (4) (ii) of rule 3a-7. 

1/ Rule 3a-7 excludes from the definition of "investment


company" certain issuers that pool specified eligible assets
 

and issue securities backed by those assets.
 

1/ Telephone conversation with Alberto G. Santos on
 

December 14, 1994.
 
- 2 ­

The Trustee i s responsibilities are limited under a pooling
 

agreement to holding legal title to the Underlying Securities,
 

receiving payments thereon, and protecting and enforcing its legal
 

title and the rights of Certificateholders against adverse claims
 or actions. Consistent with paragraph (a) (4) (iii) of rule 3a-7, 

the Trustee will maintain a segregated account into which
 

distributions on the Underlying Securities will be deposited. The
 

Trustee will have no other managerial or administrative discretion
 

with respect to the Underlying Securities. You state that, under
 

the pooling. agreement, the Trustee will agree to perform its
 

rights, powers, and duties in accordance with a standard of care
 

substantially consistent with that agreed to by trustees in typical
 

United States structured financings. J/
 

A Canadian bank or trust company will act as co-agent
 

("Agent") for the Certificateholders to carry out ministerial and


administrative functions, including calculating payment amounts due
 

on the Underlying Securities, making distributions to
 

Certificateholders, preparing and sending monthly statements to
 

Certificateholders, and acting as registrar and transfer agent with
 

respect to the Certificates. The Agent will not be affiliated with
 

Global ECONS or Goldman Sachs Canada. !/
 

You state that both the conveyance of beneficial ownership to
 the Trustee as agent and the limitation on the Trustee i s functions 

are necessary under Canadian law to avoid income taxation at the
 

trust level. 2J You further state that, notwithstanding the
 

limitations on the Trustee's functions and the nature of its
 

interest in the Underlying Securities, you have been advised by
 

Canadian counsel that the Trustee will be subject to the fiduciary
 obligations of a trustee. ~ 

J/ You state that this standard of care is substantially


consistent with that imposed on indenture trustees under
 

section 315 of the Trust Indenture Act of 1939.
 

!/ Id.
 

2J In the United States, in contrast, mortgaged-backed


financings may achieve pass-through tax treatment by
 

qualifying as a real estate mortgage investment conduit or a
 

grantor trust.
 

~ The staff previously declined to interpret the term 

"trustee" to include a bank acting only as custodian. Brown
 

& Wood (pub. avail. Feb. 24, 1994). The staff's position
 

was premised on the absence of a fiduciary relationship
 

between a custodian and its clients.
 
- - - -

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- 3 ­

On the basis - of the facts and representations in your letter -­

and the telephone conversation, we would not recommend enforcement ­

action to the Commission if Global ECONS does not register as an
 

investment company under the 1940 Act in reliance on rule 3a-7.
 

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CLEARY, GOTTLIEB, STEEN & HAMILTON 

ONE LIBERTY PLA NEW YORK, N.Y. 10006 

(212) 225-2000 

GEORGE E. CLEARY (18"0-1"81) 

LEO GOTTLIEB (1."6-188'"
 

MELVIN C. STEEN
 11807-1882) 

"OWLER HAMILTON
 (1811-884) 

GEORGE W. BALL 

LYMAN M. TON DEL, JR.
 JAMES G. JOHNSON, JR. 

JEROME E. HYMAN 

MARK w. F"RAWLEY, JR. 

GEORGE DESIPIO 

WALTER S. ROTHSCHILD 

RICHARD C. PUGH 

THOMAS H. HAGOORT 

PETER S. PAINE, JR. 

COuNaeL 

,...C..MILI: (.1:11 ..S-3...
 

TELDC WUI....S 

Writer's Direct Dial: (212) 225-2422
 

BY HAD 

17ai N STREET, N.W.
 

WASHINGTON, D.C. .oo~.
 

.1. AVENUE Dil ""ICDLAND
 

, aoo. ~.."I. 

RUI DC LA LOI .oJ 

10_0 ."U..I..
 

CITY PLACe Houae 

.a aAlNOHALL aT"CCT
 

LONDON ItCIV al:H 

ULMENaTfI..ii ",.".
 

e03.. P'flNKP'U"T AM MAIN
 

..TH "LOO". MNK 0,. CHINA TOWeR
 

ONE OA"OIEN ROAD 

HONO KONO
 

aHIN KAaUMIOAac,u 8UILDINO
 

3.1, KAaUMIOAE'U 3-CHOME 

CHIYODA-KU. TOKYO 100 

RICHARD W. HULBERT 

GEORGE WEISZ 

NED B. STILES 

ALAN APPELBAUM 

EDWIN B. MISHKIN 

GEORGE M. COHEN 

STEPHEN L. DINCES 

J. SPEED CARROLL 

ANTHONY C. GOOCH 

ROGER W. THOMAS 

GEORGE J' GRUMBACH. JR. 

PETER KARASZ
 

LOUIS KAHN 

MARK A. WALKER 

ALLAN G. SPERLING 

PETER H. DARROW 

JAMES F". MUNSELL 

.ANDRA S. WEIKSNER
 

EVAN A. DAVIS 

J. WEBB MONIZ 

IIOBERT T. GREIG 

ALAN S. DUNNING 

CHRISTOPHER H. LUNDING 

LAURENT ALPEIlT 

BARRY M. F"OX 

VICTOR I. LEWKOW 

LESLIE N. SILVERMAN 

IIOBERT L. TORTORIELLO 

A. RICHAIlD SUSKO 

STEPHEN H. SHALEN 

IIICHARD... ZIEGLER 

LEE C. BUCHHEIT 

JAMES M. PEALEE 

ALAN L. BELLER 

THOMAS J. MOLONEY 

November 11, 1994 

ACT -. c i~ 

SEON 

Office of Chief Counsel RUL '3 (~ - ). 

Division of Investment Management 

Securi ties and Exchange Commission 

PUBLIC 

AVAILABILIT 1:: -~) () .C-ll 

450 Fifth street, N.W. 

Washington, D.C. 20549 

Re: Global Exempt Certificates Of Ownership
 

In NHA MBS Securities Inc.
 

Ladies and Gentlemen:
 

Global Exempt Certificates Of Ownership In NH MBS
 

. Securities Inc., an Ontario corporation ("Global ECONS") and a
 

wholly-owned subsidiary of Goldman Sachs Canada ("GS Canada"),
 

proposes to issue and sell series of securities (the
 "Certif icates" ) representing undivided co-ownerShip interests in 

specified pools of NH Mortgage-Backed Securities (the
 

"Underlying Securities") and the payments thereon. The 

Underlying Securities are fully guaranteed as to timely payment 

of principal and interest by Canada Mortgage and Housing 

Corporation ("CMHC") and carry the full faith and credit of Canada. The Certificates may be distributed in offshore 

transactions pursuant to Regulation S under the Securities Act of
 

1933, as amended, and in private placements in the United States,
 

in each case by or through GS Canada or a syndicate of securities
 

dealers managed by GS Canada. Goldman, Sachs & Co., an affiliate
 

EDWARD D. KLEINBARD 

JONATHAN i. BLACKMAN 

WILLIAM F". GORIN 

MICHAEL L. RYAN 

YAIlON Z. REICH 

IIICHARD S. LINCER 

JAIME A. EL KOURY 

STEVEN G. HOROWITZ 

ANDREA G. PODOLSKY 

STEVEN M. LOEB 

DONALD A. STERN 

CRAIG B. BROD 

JACQUES REDING" 

SHELDON H. ALSTER 

WANDA J. OLSON 

MITCHELL A. LOWENTHAL 

DEBORAH M. BUELL 

EDWARO J. ROSEN 

JAMES E. MILLSTEIN 

LAWRENCE B. F"IIIEDMAN 

NICOLAS GRABAR 

SETH GROSSHANDLER 

WILLIAM A. GROLL 

JANET F". PLACHE 

DANIEL A. BRAVERMAN 

DAVID L. SUGERMAN 

HOWARD ZELBQ 

DAVID E. BRODSKY 

.lic"".ill 0" THE ."USSELS "li ONLY ltEalDINT P'AtlTNCRa
 

SANDRA M. ROCKS 

BRUCE D. GALLANT 

ELLEN M. CREEDE 

.,.leIAL COUNSEL 
Office of Chief Counsel,
 

Division of Investment Management, p. 2
 

of GS Canada and a broker-dealer registered under Section 15 (b) 

of the Securities Exchange Act of 1934, as amended, would act as
 

the agent of GS Canada in the private placement of Certificates
 

sold in the United States.
 

On behalf of Global ECONS and GS Canada, we
 

respectfully request that the Staff of the Division of Investment
 

Management advise us that it will not recommend that the
 

Commission take any enforcement action if Global ECONS issues
 

Certificates as described herein without registering under the
 

Investment Company Act of 1940, as amended (the "Act"), in
 

reliance on rule. 3a-7 thereunder.
 

Global ECONS
 

Global ECONS was incorporated under the laws of the
 

Province of ontario, Canada, by GS Canada on February 11, 1994
 

for the purpose of purchasing NHA Mortgage-Backed Securities and
 

selling securities representing interests in or derived from NHA
 

Mortgage-Backed Securities. GS Canada is the sole owner of the
 

share capital of Global ECONS.
 

The UnderlYing Securities
 

Each Certificate will constitute evidence of the right
 

of the holder thereof in and to an undivided co-ownership
 

interest in the Underlying Securities and the right to receive a
 

specified portion of the payments made thereon. The Underlying
 

Securities, in turn, will evidence undivided co-ownership
 

interests in pools of residential mortgages originated by
 

financial institutions in Canada (the "MBS Issuers") and insured
 

by CMHC, the agent of the Government of Canada with respect to
 

the Canadian housing sector. CMC guarantees the timely payment
 

of principal, interest and penalty interest payments and
 

prepayment bonuses or indemnities payable on each NH Mortgage-


Backed Security. The obligations of CMC carry the full faith
 

and credit of Canada and constitute obligations of and by Canada.
 

Proposed Financina Structure
 

Global ECONS proposes to purchase pools of Underlying
 

Securities from time to time. Pursuant to a pooling agreement
 

relating to a series of Certificates (the "Pooling Agreement"),
 

Global ECONS will convey all of its right, title and interest in
 

a specific pool of Underlying Securities and the right to receive
 

all payments thereon to a corporate trustee (the "Trustee")
 

acting in varying capacities as agent, nominee and trustee for
 

2
 
Office of Chief Counsel,
 

Division of Investment Management, p. 3
 

and on behalf of the holders of the Certificates (the
 

"Certificateholders"). The Trustee, acting in its capacity as
 

trustee, will hold legal title to the Underlying Securities and,
 

as the registered holder thereof, will receive all payments
 

thereon, which it will hold in trust for the benefit of the
 

Certificateholders. Beneficial ownership in the Underlying
 

Securities (as distinct from legal ownership) will be conveyed to
 

the Trustee acting in its capacity as agent and nominee of, for
 

and on behalf of the Certificateholders. Canadian counsel to
 

Global ECONS and GS Canada has advised us that upon conveyance of
 

such beneficial ownership to the Trustee, acting as agent and
 

nominee of the Certificateholders, and the issuance of the
 

Certificates, the beneficial ownership in the Underlying
 

Securities will be owned directly by the Certificateholders, as
 

tenants in common, under a co-ownership arrangement (the "Co-


ownership Arrangement") between the Trustee as agent and the
 Certificateholders as principals.' 

The Trustee's responsibilities under the Pooling
 

Agreement, insofar as it is acting in its capacity as trustee,
 

will be limited to certain matters relating to the legal title to
 

the Underlying Securities, the right to receive payments thereon
 

and the responsibility to protect the rights of the Trustee and
 

the Certifica~ ~t ~lders therein. Specifically:
 

(a) the Trustee will be the sole registered holder of
 the Underlying Securities on the transfer books maintained
 

on behalf of the applicable MBS Issuers and CMHC i
 

(b) the Trustee will establish for the exclusive


benefit of Certificateholders a segregated account (the
 

"certificate Account") over which it will have sole dominion
 

and control and into which all monies payable on the
 

Canadian counsel to Global ECONS and GS Canada has further
 

advised us that there must be a conveyance of beneficial
 

ownership in the Underlying Securities to the Trustee as
 

agent in order to create the Co-ownership Arrangement under
 

Canadian law and that such a co-ownership arrangement is
 

necessary to achieve favorable Canadian income tax treatment
 

of the financing, as described below, and favorable Canadian
 

legal investment treatment of an investment in the
 

Certificates. In effect, as a result of the Co-ownership
 

Arrangement, the Certificateholders will be treated for
 

Canadian income tax and legal investment purposes as if they
 

had invested directly in the Underlying Securities.
 

3 
Office of Chief Counsel,
 

Division of Investment Management, p. 4
 

Underlying Securities to the Trustee as registered holder
 

will be deposited; and
 

(c) the Trustee will have the exclusive right to
 protect and enforce its legal title to and the rights of
 

Certificateholders in the Underlying Securities in the event
 

of a payment default on an Underlying Security or the
 

assertion of a claim or the commencement of an action which
 

might adversely affect the rights of the Trustee or the
 

Certificateholders in the Underlying Securities, in each
 

case by an action or proceeding (a "Protective Action") as
 

determined by the Trustee to be most effectual to protect
 

such title or rights.
 

The Trustee will not take any Protective Action without receiving
 

instructions or directions from the certificateholders and the
 

provision of a reasonable indemnity, satisfactory to the Trustee,
 

against any costs or liabilities which may be incurred in the
 

exercise of such power. If, however, the Trustee deems a
 

Protective Action necessary to protect its rights or the rights
 

of Certificateholders in the Underlying securities, it may take
 

such action or proceeding prior to receipt of instructions or
 

indemnity from the Certificateholders. Except as described in
 

the preceding sentence, ~he Trustee will have no managerial,
 

administrative or other discretion with respect to the Underlying
 

Securities or the payments thereon, or any power to deal with


such assets. 

Under the Pooling Agreement, Global ECONS will direct
 

the Trustee to appoint a Canadian bank or trust company to act as
 

a co-agent (the "Agent") for and on behalf of Certificateholders.
 

The Agent will carry out certain customary ministerial and
 

administrati ve functions in connection with the proposed
 

financing. For example, the Agent will calculate the amount of
 

payments on the Underlying Securities distributable to the
 

various classes of Certificateholders; make distributions to
 

Certificateholders from amounts on deposit in the Certificate
 

Account maintained by the Trustee; prepare and send to
 

certificateholders monthly remittance statements; maintain an
 

office where Certificates may be surrendered for registration of
 

transfer or exchange and where notices may be delivered; and act
 

as registrar and transfer agent with respect to the Certificates.
 

The Agent will have no property interest in the Underlying
 

Securities or the proceeds thereof.
 

The proposed financing and the responsibilities of the
 

Trustee and the Agent have been structured to avoid undesirable
 

4
 
Off ice of Chief Counsel,
 

Division of Investment Management, p. 5
 

Canadian tax consequences while permitting Global ECONS to rely
 

on the exemption from registration under the Act available under
 

rule 3a-7. Canadian counsel to Global ECONS and GS Canada has
 

advised us that income of a trust would be subj ect to enti tylevel income taxation in Canada if (a) the beneficial ownership
 

of securities is conveyed to a trustee in trust for designated
 

beneficiaries and such trustee issues certificates of beneficial
 

interest in trust property and (b) significant discretion is
 

granted to the trustee with respect to securities so deposited,
 

beyond the functions of the Trustee described above.2 The
 

imposition of an entity-level tax would require the payment of
 

Canadian income tax by the trust on all income earned by the
 

trust on its assets, in effect resulting in a double layer of
 

taxation on the assets backing the financing, with one layer of
 

tax imposed at the trust level and the other at the investor
 

level. Such additional cost could have the effect of making
 

Canadian structured mortgage financings economically infeasible.
 

By contrast, structured mortgage financings in the United states
 

are customarily structured in a manner which does not result in
 

any material double layer of income taxation.3
 

Consequently, unless Canadian issuers that seek to
 

offer their securities both in Canada and the united states have
 

the flexibility under rule 3a-7 t ~ structure their financings as
 

described above, such issuers could face significant incremental
 

costs compared to United states issuers availing themselves of
 

the REMIC Rules or the Grantor Trust Rules of the Internal
 

Revenue Code. In our opinion, the proposed financing by Global
 

ECONS conforms to the requirements of rule 3a-7. Because the
 

issue is not free from doubt, however, we respectfully request
 

your concurrence in our view.
 

2	 As previously noted, such entity-level taxation would not 

arise if a Canadian co-ownership arrangement is created by 

the conveyance of beneficial ownership of securities to an enti ty acting as agent, rather than as a trustee, of 

security holders.
 

3	 In the United States, structured mortgage financings are 

generally taxed under the rules governing either "real
 

estate mortgage investment conduits" pursuant to Sections
 

860A-860G (the "REMIC RUles") of the Internal Revenue Code
 

of 1986 or "grantor trusts" pursuant to Sections 671-679
 

thereof (the "Grantor Trust Rules"). Such entities are
 

generally not subject to entity-level taxation.
 

5 
Office of Chief Counsel,
 

Division of Investment Management, p. 6
 

Basis for the No-Action Reauest
 

Rule 3a-7 excludes from the definition of "investment
 

company" any issuer that pools certain eligible financial assets
 

and issues securities backed bl these assets in accordance with
 

the requirements of such rule. An issuer relying on rule 3a-7
 

is required by paragraph (a) (4) thereof to (1) appoint a trustee
 

meeting the requirements of clause (i) of such paragraph; (2)
 

take "reasonable steps" to cause the trustee to have a perfected
 

security interest or ownership interest, valid against third
 

parties, in the assets principally generating the cash flow for
 

payment to security holders; and (3) take such actions as are
 

necessary to have the cash flows from the eligible assets
 

deposited periodically in a segregated account maintained or
 controlled by the trustee. 

Trustee aualifications. In the proposed financing, we
 

understand that Global ECONS will appoint a trustee that meets
 

the requirements of Section 26(a) (1) of the Act and otherwise
 

complies with the eligibility criteria for a trustee set forth in
 paragraph (a) (4) (i) of rule 3a-7.5 

OwnershiD of Eligible Assets. Under the proposed
 

financing structure, the Trustee will ha-~~ an ownership interest
 

in the Underlying Securities consistent with the requirements and
 

objective of paragraph (a) (4) (ii) of rule 3a-7. Global ECONS
 

will convey and deliver legal right and title to the Underlying
 

Securi ties to the Trustee. Upon such conveyance and delivery,
 

the Trustee will have the sole ownership interest in the legal
 

right and title to the Underlying Securities, which ownership
 

interest will be valid against third parties. We have been
 

4 In our opinion, the Underlying Securities will constitute 

"eligible assets" within the meaning of paragraph (b) (1) of
 

rule 3a-7. In addition, we understand from Global ECONS
 that the requirements of paragraphs (a) (1), (a) (2) and 

(a) (3) of rule 3a-7 will be met in the proposed financing.
 

5 In Brown & Wood (pub. avail. February 24, 1994), by contrast, the Staff noted that rule 3a-7(a) (4) "specifically 

requires an issuer to appoint a trustee" and concluded that
 

a custodian bank, although performing the same functions as
 

a trustee, would not meet the requirements of the rule.
 

Under the proposed financing structure, certificateholders
 

will have the protection of a trustee appointed by Global
 

ECONS. 

6
 
Office of Chief Counsel,
 

Division of Investment Management, p. 7
 

advised by Canadian counsel that such conveyance and delivery to
 

the Trustee is a transfer in trust for the benefit of the
 

Certificateholders, and that the Trustee will be subject to the
 

fiduciary obligations of a trustee with respect to the property
 

so transferred.6 The Pooling Agreement will provide that
 

Certificateholders may not deal with the Underlying Securities or
 

otherwise control the operation, ownership, disposition or
 

management of the Underlying Securities.
 

Deposit of cash flows. All monies distributed on the
 

Underlying Securities will be deposited promptly after receipt in
 

the Certificate Account, which is a segregated account that will
 

be maintained and controlled by the Trustee, consistent with
 

paragraph (a) (4) (iii) of rule 3a-7.
 

Based on the foregoing, it is our view that the
 

proposed financing structure adequately protects investors with
 

respect to the safekeeping of the Underlying Securities, thereby
 

serving the purposes intended by rule 3a-7 with respect to the
 

appointment of an independent trustee. See Exclusion from the
 

Definition of Investment Company for structured Financings,
 

Investment Company Act, Release No. IC-19105, 57 Fed. Reg.
 

56,248, at 56,255 (November 27, 1992) (the "Issuing Release").
 

The Trustee's functions are consistent with the T- ~C;J1iirements of
 

paragraph (a) (4) of rule 3a-7 and not contrary in Gny material
 

respect to market practice in structured financings in the United
 

States.7 The Certificateholders in the proposed financing, as
 

in the case of typical U.S. structured financings, will be
 

afforded the protection that the Trustee may act if its legal
 

right and title to the Underlying Securities is challenged or if
 

there is a default in payment with respect to the Underlying
 

Securities. Under the Pooling Agreement, the Trustee will agree
 

to perform its rights, powers and duties in accordance with a
 

standard of care substantially consistent with that agreed to by
 

6	 Property which is the subject matter of a trust may consist 

of either a legal or equitable interest or both. See Austin 

W. Scott & William F. Fratcher, The Law of Trusts S 2.6
 

(1987) . 

7	 In a typical structured financing in the United States for 

"pass-through" securities, all legal title and beneficial
 

rights in assets backing the securities are transferred to a
 

trustee, in its capacity as trustee, and the trustee in turn
 

issues securities evidencing the security holders'
 

beneficial ownership of the assets so transferred.
 

7 
._._.- ..... _..­ - - -- . - -:-r- ._-­

_._-----_._-_.

.. ._----- ._.. ....­ '-_..' ."'- -_.. ~.­

- .- _. _. -- . - .
 

Off ice of Chief Counsel,
 

Division of Investment Management, p. 8
 

trustees in typical U. S. structured f inancings. 8
 

Certificateholders will have the added protection that the
 

Certificates will not be issued unless they are rated investment-


grade by at least one nationally recognized statistical rating
 

organization. To obtain such rating, the rating organization
 

~=-.;--õ:'--~~=--. __::ill closely evaluate the functions and responsibilities of the Trustee and the safekeeping arrangements for the underlying


assets. 

We note that the staff observed in the Issuing Release
 

that, in proposing rule 3a-7, one of the Commission's objectives
 

was "to accommodate future innovations in the structured finance
 

market, consistent with investor protection." Issuing Release at
 

56,249. In accordance with such goal, the proposed financing
 

would enable united states investors to invest in securitizations
 

backed by Canadian government-guaranteed mortgage assets without
 

subjecting investors to additional structural risk.
 

Conclusion 

For the reasons set forth above, we respectfully
 

request the concurrence of the Staff in our opinion that the
 

appointment of the Trustee in the manner contemplated in the
 

proposed financing complies with the requirements of para~rdph


(a) (4) of rule 3a-7. 

8 Such standard of care is also sUbstantially consistent with
 

that imposed on indenture trustees under Section 315 of the
 

Trust Indenture Act of 1939, as amended.
 

8 
Office of Chief Counsel,
 

Division of Investment Management, p. 9
 

Global ECONS would like the flexibility to proceed with
 

the offering of certificates as contemplated hereby at the
 

earliest possible time, and would therefore appreciate your
 

earliest consideration of this matter. If for any reason you do
 

not concur in our conclusion, we respectfully request a
 

conference with the Staff prior to any adverse written response
 

to this letter. If you would like to discuss any issues raised
 

in the foregoing, or would like further clarification, please do
 

not hesitate to call David L. Sugerman of this firm at (212)
 

225-2890 or the undersigned at (212) 225-2422.
 

Very truly yours,
 - - I . 

¡lA-~ ( K­

~7Perto G. Santos
 

cc: Monica L. Parry, Esq.
 

Jennifer G. Cooperman (Goldman, Sachs & Co.)
 

9