[Federal Register Volume 86, Number 1 (Monday, January 4, 2021)]
[Notices]
[Pages 131-144]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-29113]



[[Page 131]]

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DEPARTMENT OF LABOR

Employee Benefits Security Administration

[Exemption Application No. D-12030]


Proposed Exemption for Certain Prohibited Transaction 
Restrictions Involving The Goldman Sachs Group, Inc. (Goldman Sachs or 
the Applicant) Located in New York, New York

AGENCY: Employee Benefits Security Administration, Labor.

ACTION: Notice of proposed exemption.

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SUMMARY: This document provides notice of the pendency before the 
Department of Labor (the Department) of a proposed individual exemption 
from certain of the prohibited transaction restrictions of the Employee 
Retirement Income Security Act of 1974 (ERISA or the Act) and/or the 
Internal Revenue Code of 1986 (the Code). If this proposed exemption is 
granted, certain entities with specified relationships to Goldman Sacs 
will not be precluded from relying on the exemptive relief provided by 
Prohibited Transaction Class Exemption 84-14.

DATES: If granted, this proposed exemption will be in effect for five 
years beginning on the Conviction Date. Written comments and requests 
for a public hearing on the proposed exemption should be submitted to 
the Department by February 10, 2021.

ADDRESSES: All written comments and requests for a hearing (at least 
three copies) should be sent to the Employee Benefits Security 
Administration (EBSA), Office of Exemption Determinations, U.S. 
Department of Labor, 200 Constitution Avenue NW, Suite 400, Washington, 
DC 20210, Attention: Application No. D-12030 or via private delivery 
service or courier to the Employee Benefits Security Administration 
(EBSA), Office of Exemption Determinations, U.S. Department of Labor, 
122 C St. NW, Suite 400, Washington, DC 20001. Attention: Application 
No. D-12030. Interested persons may also submit comments and/or hearing 
requests to EBSA via email to <a href="/cdn-cgi/l/email-protection#f693dbb9b3b2b692999ad8919980"><span class="__cf_email__" data-cfemail="dcb9f19399989cb8b3b0f2bbb3aa">[email protected]</span></a> or by FAX to (202) 693-
8474, or online through http://www.regulations.gov. Any such comments 
or requests should be sent by the end of the scheduled comment period. 
The application for exemption and the comments received will be 
available for public inspection in the Public Disclosure Room of the 
Employee Benefits Security Administration, U.S. Department of Labor, 
Room N-1515, 200 Constitution Avenue NW, Washington, DC 20210. See 
SUPPLEMENTARY INFORMATION below for additional information regarding 
comments.

FOR FURTHER INFORMATION CONTACT: Joseph Brennan of the Department at 
(202) 693-8456. (This is not a toll-free number.)

SUPPLEMENTARY INFORMATION: 
    Comments: Comments should state the nature of the person's interest 
in the proposed exemption and the manner in which the person would be 
adversely affected by the exemption, if granted. Any person who may be 
adversely affected by an exemption can request a hearing on the 
exemption. A request for a hearing must state: (1) The name, address, 
telephone number, and email address of the person making the request; 
(2) the nature of the person's interest in the exemption and the manner 
in which the person would be adversely affected by the exemption; and 
(3) a statement of the issues to be addressed and a general description 
of the evidence to be presented at the hearing. The Department will 
grant a request for a hearing made in accordance with the requirements 
above where a hearing is necessary to fully explore material factual 
issues identified by the person requesting the hearing. A notice of 
such hearing shall be published by the Department in the Federal 
Register. The Department may decline to hold a hearing if: (1) The 
request for the hearing does not meet the requirements above; (2) the 
only issues identified for exploration at the hearing are matters of 
law; or (3) the factual issues identified can be fully explored through 
the submission of evidence in written (including electronic) form.
    Warning: All comments received will be included in the public 
record without change and may be made available online at http://www.regulations.gov, including any personal information provided, 
unless the comment includes information claimed to be confidential or 
other information whose disclosure is restricted by statute. If you 
submit a comment, EBSA recommends that you include your name and other 
contact information in the body of your comment, but DO NOT submit 
information that you consider to be confidential, or otherwise 
protected (such as Social Security number or an unlisted phone number) 
or confidential business information that you do not want publicly 
disclosed. However, if EBSA cannot read your comment due to technical 
difficulties and cannot contact you for clarification, EBSA might not 
be able to consider your comment. Additionally, the http://www.regulations.gov website is an ``anonymous access'' system, which 
means EBSA will not know your identity or contact information unless 
you provide it in the body of your comment. If you send an email 
directly to EBSA without going through http://www.regulations.gov, your 
email address will be automatically captured and included as part of 
the comment that is placed in the public record and made available on 
the internet.
    Background: The Department is considering granting an exemption 
under the authority of 408(a) of the Act and section 4975(c)(2) of the 
Code, in accordance with the procedures set forth in 29 CFR part 2570, 
subpart B (76 FR 46637, 66644, October 27, 2011).\1\ If the proposed 
exemption is granted, the Goldman Sachs Affiliated QPAMs and the 
Goldman Sachs Related QPAMs, as defined below, will not be precluded 
from relying on the exemptive relief provided by Prohibited Transaction 
Class Exemption 84-14 (PTE 84-14 or the QPAM Exemption),\2\ 
notwithstanding the judgment of conviction against Goldman Sachs 
(Malaysia) Sdn. Bhd. (Goldman Sachs Malaysia), an indirect, wholly-
owned subsidiary of Goldman (the Goldman Sachs Malaysia FCPA 
Conviction),\3\ for conspiracy to violate the anti-bribery provisions 
of the Foreign Corrupt Practices Act of 1977 (FCPA). This proposed 
exemption will be effective for a period of up to five (5) years, 
beginning on the date a judgment of conviction against Goldman Sachs 
Malaysia, in Cr. No. 20-438 (MKB), is entered in the United States 
District Court for the Eastern District of New York (the Conviction 
Date), provided that the conditions set out below in Section I are 
satisfied.
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    \1\ For purposes of this proposed exemption reference to 
specific provisions of Title I of the Act, unless otherwise 
specified, should be read to refer as well to the corresponding 
provisions of the Code.
    \2\ 49 FR 9494 (March 13, 1984), as corrected at 50 FR 41430 
(October 10, 1985), as amended at 70 FR 49305 (August 23, 2005), and 
as amended at 75 FR 38837 (July 6, 2010).
    \3\ Section I(g) of PTE 84-14 generally provides that 
``[n]either the QPAM nor any affiliate thereof . . . nor any owner . 
. . of a 5 percent or more interest in the QPAM is a person who 
within the 10 years immediately preceding the transaction has been 
either convicted or released from imprisonment, whichever is later, 
as a result of'' certain felonies including violation of the Sherman 
Antitrust Act, Title 15 United States Code, Section 1.

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Summary of Facts and Representations \4\
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    \4\ The Summary of Facts and Representations is based on the 
Applicant's representations, unless indicated otherwise.
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The Applicant

    1. The Goldman Sachs Group, Inc. (Goldman) is a global investment 
banking, securities and investment management firm with approximately 
36,000 employees and offices in over 30 countries. Goldman has a number 
of affiliated asset managers, including: The Goldman Sachs Trust 
Company, N.A.; Goldman Sachs Bank USA; Goldman Sachs & Co. LLC; Goldman 
Sachs Asset Management, L.P.; Goldman Sachs Asset Management 
International; Goldman Sachs Hedge Fund Strategies LLC; GS Investment 
Strategies, LLC; GSAM Stable Value, LLC; The Ayco Company, L.P.; 
Aptitude Investment Management LP; Rocaton Investment Advisors, LLC; 
United Capital Financial Advisers, LLC; and PFE Advisors, Inc. 
(together, the Goldman Sachs Affiliated QPAMs). Goldman may be related 
to, but does not own a controlling interest in, a number of other asset 
managers. Similarly, Goldman Sachs Malaysia may be related to, but does 
not own a controlling interest in, a number of other asset managers 
(the Goldman Sachs Related QPAMs).
    2. The Goldman affiliated asset managers' clients include plans 
subject to Part IV of Title I of ERISA and plans subject to section 
4975 of the Code, with respect to which the Goldman Sachs Affiliated 
QPAMs rely on PTE 84-14, or with respect to which the Goldman Sachs 
Affiliated QPAMs (or a Goldman Sachs affiliate) have expressly 
represented that the managers qualify as a QPAM or rely on the QPAM 
Exemption.\5\ These plans are hereinafter referred to as Covered Plans.
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    \5\ 49 FR 9494 (March 13, 1984), as corrected at 50 FR 41430 
(October 10, 1985), as amended at 70 FR 49305 (August 23, 2005), and 
as amended at 75 FR 38837 (July 6, 2010).
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Relevant ERISA Provisions and PTE 84-14

    3. The rules set forth in section 406 of ERISA and section 
4975(c)(1) of the Code proscribe certain ``prohibited transactions'' 
between plans and related parties with respect to those plans. Under 
ERISA, such parties are known as ``parties in interest.'' Under section 
3(14) of ERISA, parties in interest with respect to a plan include, 
among others, the plan fiduciary, a sponsoring employer of the plan, a 
union whose members are covered by the plan, service providers with 
respect to the plan, and certain of their affiliates.\6\
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    \6\ Under the Code such parties, or similar parties, are 
referred to as ``disqualified persons.''
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    4. The prohibited transaction provisions under section 406(a) of 
ERISA and 4975(c)(1) of the Code prohibit, in relevant part, sales, 
leases, loans or the provision of services between a party in interest 
and a plan (or an entity whose assets are deemed to constitute the 
assets of a plan), as well as the use of plan assets by or for the 
benefit of, or a transfer of plan assets to, a party in interest.\7\ 
Under the authority of section 408(a) of ERISA and section 4975(c)(2) 
of the Code, the Department has the authority to grant exemptions from 
such ``prohibited transactions'' in accordance with the procedures set 
forth in 29 CFR part 2570, subpart B (76 FR 66637, 66644, October 27, 
2011).
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    \7\ The prohibited transaction provisions also include certain 
fiduciary prohibited transactions under section 406(b) of ERISA and 
4975(c)(1)(E) and (F) of the Code. These include transactions 
involving fiduciary self-dealing, fiduciary conflicts of interest, 
and kickbacks to fiduciaries. PTE 84-14 provides only very narrow 
conditional relief for transactions described in Section 406(b) of 
ERISA.
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    5. PTE 84-14 reflects the Department's conclusion that it could 
provide broad relief from the prohibited transaction provisions of 
section 406(a) of ERISA and 4975(c)(1) of the Code, in the 
circumstances set forth in that exemption, only if the commitments and 
the investments of plan assets, and the negotiations leading thereto, 
are the sole responsibility of an independent, discretionary manager.
    6. Section I(g) of PTE 84-14 prevents an entity that may otherwise 
meet the definition of a QPAM from utilizing the exemptive relief 
provided by PTE 84-14, for itself and its client plans, if that entity 
or an ``affiliate'' \8\ thereof or any owner, direct or indirect, of a 
5 percent or more interest in the QPAM has, within 10 years immediately 
preceding the transaction, been either convicted or released from 
imprisonment, whichever is later, as a result of criminal activity 
described in that section.
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    \8\ Section VI(d) of PTE 84-14 defines the term ``affiliate'' 
for purposes of Section I(g) as ``(1) Any person directly or 
indirectly through one or more intermediaries, controlling, 
controlled by, or under common control with the person, (2) Any 
director of, relative of, or partner in, any such person, (3) Any 
corporation, partnership, trust or unincorporated enterprise of 
which such person is an officer, director, or a 5 percent or more 
partner or owner, and (4) Any employee or officer of the person 
who--(A) Is a highly compensated employee (as defined in Section 
4975(e)(2)(H) of the Code) or officer (earning 10 percent or more of 
the yearly wages of such person), or (B) Has direct or indirect 
authority, responsibility or control regarding the custody, 
management or disposition of plan assets.''
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    7. The inclusion of Section I(g) in PTE 84-14 is, in part, based on 
an expectation that QPAMs will maintain a high standard of integrity. 
This expectation extends not only to the QPAM itself, but also to those 
who may be in a position to influence the policies of the QPAM.

Goldman Sachs Malaysia FCPA Conviction

    8. On October 21, 2020, Goldman Sachs Malaysia entered a guilty 
plea for conspiracy to commit offenses against the United States, in 
violation of the anti-bribery provisions of the Foreign Corrupt 
Practices Act of 1977 (FCPA). The following day, the District Court for 
the Eastern District of New York accepted Goldman Sachs Malaysia's 
guilty plea Goldman Sachs Malaysia FCPA Conviction. For purposes of 
Section I(g) of PTE 84-14, the date Goldman is sentenced is the 
Conviction Date. Therefore Goldman Sachs (Malaysia) Sdn. Bhd. (Goldman 
Sachs Malaysia), and the Goldman Sachs Affiliated and Related QPAMs 
will no longer be able to rely on the relief provided by PTE 84-14 as 
of the date of Goldman Sachs Malaysia's sentencing.

Statement of Facts That Served as the Basis for the Plea Agreement

    9. According to the Plea Agreement's Statement of Facts,\9\ between 
2009 and 2014, Goldman, together with several of its wholly-owned 
subsidiaries and affiliated entities,\10\ through certain of its agents 
and employees including Tim Leissner and Roger Ng, knowingly and 
willfully conspired and agreed with others to corruptly provide 
payments and things of value to, or for the benefit of, certain foreign 
officials and their relatives. The purpose of these payments was to 
induce those foreign officials to influence the decisions of 1Malaysia 
Development Berhad (1MDB), a strategic investment and development 
company wholly owned by the Government of Malaysia through its Ministry 
of Finance; International Petroleum Investment Company (IPIC), an 
investment fund wholly owned by the Government of Abu Dhabi; and Aabar 
Investments PJS (Aabar), a subsidiary of IPIC, to obtain and retain 
business for Goldman, including in positions as an advisor to 1MDB on 
the acquisitions of Malaysian energy assets,

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as underwriter of the 1MDB bonds, and as underwriter of certain other 
1MDB business, including the contemplated initial public offering of 
1MDB's Malaysian energy assets (the Goldman Sachs Malaysia FCPA 
Misconduct).
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    \9\ Plea Agreement entered into between the United States of 
America, by and through the United States Department of Justice, 
Criminal Division, Fraud Section and Money Laundering and Asset 
Recovery Section, and the United States Attorney's Office for the 
Eastern District of New York and Goldman Sachs (Malaysia) Sdn. Bhd., 
Cr. No. 20-438 (MKB), filed Oct. 21, 2020.
    \10\ Goldman Sachs (Malaysia) Sdn. Bhd, Goldman Sachs 
(Singapore) Pte., Goldman Sachs International, Goldman Sachs Bank 
USA, Goldman Sachs & Co. L.L.C. and Goldman Sachs (Asia) L.L.C.
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    10. Tim Leissner (Leissner) was employed by Goldman between 1998 
and 2016, and was a Participating Managing Director between November 
2006 and February 2016. Additionally, he held various senior positions 
in Goldman's Investment Banking Division in Asia between 2011 and 2016, 
including Chairman of Southeast Asia, a region that included Malaysia, 
between July 2014 and February 2016, and he served on the Board of 
Directors for Goldman Malaysia. Leissner's job included obtaining and 
executing business for Goldman.\11\
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    \11\ To the Department's knowledge, on numerous occasions, the 
timing of Goldman's misconduct is uncertain. Therefore, the dates 
herein regarding their misconduct are approximate.
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    Ng Chong Hwa, also known as ``Roger Ng'' (Ng), was employed by 
various Goldman subsidiaries between 2005 and 2014, including Goldman 
Malaysia. Between April 2010 and May 2014, Ng was a Managing Director 
of Goldman. For part of that time, Ng served as Head of Investment 
Banking and on the Board of Directors for Goldman Malaysia, and was 
then employed by another Goldman subsidiary in Malaysia.
    11. The bribes resulted in Goldman being engaged on, among other 
projects, three bond offerings that were related to 1MDB's energy 
acquisitions and that raised a total of approximately $6.5 billion for 
1MDB in 2012 and 2013. The bribes were also intended to help Goldman 
secure a role on an anticipated IPO with respect to 1MDB's energy 
acquisitions. These three bond offerings and a related acquisition, 
along with a transaction involving Jho Low (Low) and IPIC, ultimately 
earned Goldman in excess of $600 million in fees and revenue across its 
divisions, and increased Goldman's stature in Southeast Asia. The 
parties made payments and communications in furtherance of the scheme 
by wire.
    12. Pursuant to Goldman's internal accounting controls, each 1MDB 
bond transaction required Goldman management's general and specific 
authorization. Moreover, because Goldman initially purchased the full 
value of each bond from 1MDB using Goldman's assets, the transactions 
had to be authorized and properly recorded in accordance with Goldman's 
procedures. Goldman's internal accounting controls included the 
Firmwide Capital Committee (FWCC), which Goldman's Chief Executive 
Officer authorized to provide global oversight and approval of bond 
transactions, including those transactions in which Goldman used its 
own assets to purchase financial instruments, such as the 1MDB bonds. 
Goldman's internal accounting controls also included approval of the 
bonds by Goldman's Business Intelligence Group and Compliance Group, 
both of which were represented on the FWCC.\12\
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    \12\ According to the U.S. Securities and Exchange Commission's 
Order Instituting Cease-and-Desist Proceedings In the Matter of the 
Goldman Sachs Group Inc. (Administrative Proceeding File No. 3-
20132), Goldman had a general anti-corruption policy, including both 
a written Statement of Principles Regarding Anti-Bribery and related 
policies and procedures (collectively, the Anti-Bribery Policy) 
applicable to all employees that expressly prohibited improper 
payments to government officials intended to obtain or retain 
business for the company. Goldman's Anti-Bribery Policy was overseen 
and enforced by its compliance function (the Compliance Group) and 
its Business Intelligence Group.
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    13. As detailed in the Plea Agreement's Statement of Facts, Low, an 
individual known to have relationships with high-ranking officials in 
Malaysia and Abu Dhabi, and whom Goldman had rejected as a client 
multiple times because of his unexplained source of wealth, conspired 
with Leissner and Ng to facilitate the bribery scheme. Despite the 
rejections, Leissner, Ng and others at Goldman continued their 
relationship with Low and used him to obtain and retain business for 
Goldman from 1MDB and others. Between 2012 and 2013, Leissner, Ng, 
Employee 1 and other Goldman employees worked with Low to help 1MDB 
raise more than $6.5 billion through three separate bond offering 
transactions, referred to internally at Goldman as ``Project 
Magnolia,'' ``Project Maximus'' and ``Project Catalyze,'' respectively. 
Employee 1 served as a Goldman participating managing director between 
October 2007 and November 2018 and, during the relevant time period, 
held various leadership positions in Goldman's Asia operations.
    14. Leissner, Ng and Employee 1 used Low's connections within the 
Governments of Malaysia and Abu Dhabi to obtain and retain this and 
other business for Goldman and, in turn, concealed Low's involvement in 
the deals from certain employees and agents of Goldman. In total, 
Goldman conspired to provide approximately $1.6077 billion to, or for 
the benefit of, foreign officials and their relatives. Approximately 
$18.1 million was paid from accounts controlled by Leissner.
    15. Certain of Goldman's employees and agents, including Leissner, 
Ng and Employee 1, circumvented Goldman's internal accounting and other 
controls, and other Goldman employees and agents responsible for 
implementing Goldman's internal accounting controls failed to do so in 
connection with the 1MDB bond deals. Specifically, although employees 
serving in Goldman's compliance control functions (i.e., the parts of 
Goldman Sachs responsible for overseeing and enforcing Goldman Sachs' 
compliance with rules designed to ensure that no improper transactions 
have or will occur) knew that any transaction involving Low posed a 
significant risk, and although they were on notice that he was involved 
in the transactions, they did not take reasonable steps to prevent his 
involvement. Additionally, there were significant red flags raised 
during the due diligence process and afterward, including, but not 
limited to, Low's involvement in the deals, that were either ignored or 
only nominally addressed so that the transactions would be approved and 
Goldman could continue to do business with 1MDB.
    16. In February 2012, 1MDB engaged Goldman as its financial advisor 
for its anticipated purchase of a Malaysian energy company (Malaysian 
Energy Company A) through a bond transaction. Low helped secure 
Goldman's role in assisting 1MDB in its pursuit of Malaysian Energy 
Company A. In early 2012, Leissner, Ng, Low and 1MDB officials met in 
Malaysia to discuss obtaining a guarantee from IPIC to Goldman, which 
would purchase all of the bonds initially and then sell the bonds to 
other investors. It is the Department's understanding that the 
guarantee was designed to ensure that Goldman was protected in the 
event the bonds dropped in price between the time the bonds were issued 
and the time the bonds were sold to investors.
    17. In February 2012, Leissner and Ng traveled to London to meet 
with Low and others to discuss the proposed bond transaction. Leissner 
and Ng expended Goldman resources on their travel to London. At that 
meeting, Low explained that government officials from Abu Dhabi and 
Malaysia would have to be bribed to obtain the guarantee from IPIC and 
get the necessary approvals from Malaysia and 1MDB. Low advised that a 
high-ranking official of IPIC and a Malaysian official would have to be 
paid the largest bribes to approve the transaction, and that other 
lower-level officials would need to be bribed as well. Subsequently, 
Leissner and Ng each separately informed Employee 1 about the 
discussion on bribing foreign officials.
    18. Meanwhile, although employees within Goldman's control 
functions

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suspected that Low may be involved in the deal, the only step taken by 
the control functions to investigate that suspicion was to ask members 
of the deal team whether Low was involved and to accept their denials 
without reasonable confirmation. For example, during a telephone call 
in March 2012, a high-ranking employee in the Business Intelligence 
Group (BIG), who was a managing director, voiced suspicions that Low 
was involved in Project Magnolia. During this call, Leissner denied 
that Low was involved. Similarly, on April 3, 2012, the day before a 
FWCC meeting to discuss Project Magnolia, a high-ranking executive in 
BIG, who was also an advisor to the FWCC, emailed other members of BIG 
that ``Leissner said Jho Low not involved at all in deal as far as he 
[is] aware but that Low was present when Leissner met an IPIC in Abu 
Dhabi.''
    19. On April 4, 2012, Goldman executives in New York participated 
in an FWCC meeting by phone. During this meeting, Leissner was asked 
whether Low was involved in Project Magnolia and Leissner said that, 
other than arranging a meeting between Leissner and IPIC Official 1, 
Low was not involved. Goldman's compliance control functions accepted 
the statements of the deal team members about Low's involvement at face 
value, rather than taking additional steps that Goldman's compliance 
control functions took in other deals, such as reviewing the electronic 
communications of members of the deal team to look for evidence of 
Low's involvement. Had Goldman conducted a review of Leissner's 
electronic communications at this time, it would have discovered 
multiple messages linking Low to, among others, the bond deal, 1MDB 
officials, Malaysian officials and Abu Dhabi officials, as well as the 
use of personal email addresses by Leissner and Ng to discuss Goldman 
business.
    20. On May 16, 2012, Goldman's committees approved Project Magnolia 
and on May 21, 2012, the $1.75 billion bond issuance closed. Goldman 
purchased the entire bond issuance from 1MDB. On May 22, 2012, Goldman 
caused approximately $907,500,000 in proceeds from Project Magnolia to 
be wired to a 1MDB subsidiary, through a correspondent bank account in 
New York, New York. Goldman booked approximately $192,500,000 in fees 
for this bond transaction and an additional approximately $16,800,000 
in fees for advising on the acquisition of Malaysian Energy Company A. 
Low and others subsequently caused multiple transfers of funds from the 
proceeds of Project Magnolia to various shell companies.
    21. Within weeks of closing Project Magnolia, in May 2012, 1MDB 
sought assistance from Goldman to purchase a second Malaysian energy 
company (Malaysian Energy Company B) and to issue a bond to raise funds 
for the acquisition. In August 2012, 1MDB agreed to purchase Malaysian 
Energy Company B for approximately $814 million and planned to finance 
the purchase with another $1.75 billion bond guaranteed indirectly by 
IPIC.
    22. Once again, Goldman's compliance control functions simply 
accepted at face value the representations of the deal team members and 
failed to further investigate Low's suspected involvement in this bond 
deal. For example, on June 20, 2012, a member of Goldman's control 
functions asked members of the deal team, ``Is Jho Low involve[d] in 
this transaction? Please also keep us posted if there are any other 
politically exposed person involve[d] in this transaction in a non-
official capacity.'' A deal team member responded ``no.''
    23. Additionally, on October 10, 2012, in response to committee 
questions, Leissner told a firmwide committee that neither Low nor any 
intermediary was involved in Project Maximus. Despite their continued 
concern, as evidenced by their repeated questions, Goldman's compliance 
control functions did not engage in electronic surveillance of 
Leissner's correspondence or activities to determine whether Low was 
involved in the deal.
    24. Goldman's continued compliance control failures were further 
compounded when Goldman ignored additional red flags raised by Project 
Maximus, including that 1MDB was seeking to raise additional funds 
within a few months of raising $1.75 billion through Project Magnolia 
without having utilized the full amount from that deal, and was also 
seeking to raise far more than was needed to acquire Malaysian Energy 
Company B. Goldman's compliance control functions also failed to verify 
how Project Magnolia's proceeds were used.
    25. Project Maximus closed on October 19, 2012, and Goldman 
purchased the entire bond issuance from 1MDB. On October 19, 2012, 
Goldman caused approximately $1.64 billion to be transferred by wire 
through correspondent accounts in the United States to another 1MDB 
subsidiary. Goldman booked approximately $110,000,000 in fees in 
connection with Project Maximus. Further, Low and others caused 
multiple transfers of funds from the proceeds of Project Maximus to a 
number of different shell companies.
    26. In November 2012, almost immediately after Project Maximus 
closed, Leissner and Low began working on another bond issuance known 
as Project Catalyze that was purportedly intended to fund 1MDB's 
portion of a joint venture with Aabar. Ultimately, Goldman underwrote 
this third bond issuance that raised an additional $3 billion for 1MDB 
with Goldman acting as arranger and underwriter.
    27. Goldman's compliance control functions had continuing 
suspicions that Low was working on the Project Catalyze bond deal. Once 
again, however, the compliance control functions relied solely on the 
deal team members' denials of Low's involvement without any further 
scrutiny. On April 24, 2013, a senior Goldman executive who was a 
member of Goldman's approval committee located in New York, New York, 
emailed Leissner about ``1MDB,'' asking: ``Is there a story circulating 
about an intermediary on the Magnolia trades??'' Leissner responded, 
``Not that I am aware of . . . There definitely was no intermediary on 
any of the trades. The blogs in Malaysia always try to link a young 
Chinese business man [sic], Jho Low, to 1MDB. That is not the case 
other than he was an advisor alongside other prominent figures to the 
King of Malaysia at the time of the creation of 1MDB.'' There was no 
follow-up by Goldman's compliance control functions about Low.
    28. Goldman also failed to address other red flags that were raised 
by the proposed $3 billion transaction, including, 1MDB raising large 
sums of money with no identified use of proceeds within months of 
Project Magnolia and Project Maximus, and Goldman's failure to verify 
use of past bond proceeds.
    29. Goldman's committees nevertheless approved Project Catalyze on 
March 13, 2013, and the proceeds from Project Catalyze were issued on 
March 19, 2013. Goldman purchased the entire bond issuance from 1MDB 
and booked approximately $279,000,000 in fees on Project Catalyze.
    30. Low and Leissner continued to pay bribes to government 
officials from the bond proceeds. On March 19, 2013, Goldman 
transferred via wire from and through the United States approximately 
$2.7 billion from Project Catalyze to an account for another 1MDB 
subsidiary (1MDB Subsidiary 3) at Foreign Financial Institution A. 
Subsequently, Low caused approximately $1,440,188,045 to be

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transferred through a series of pass-through accounts to accounts 
beneficially owned or controlled by Low and Individual 1. Low then 
directed multiple transfers to various government officials.
    31. After the bond deals were completed, in and between March 2013 
and February 2016, additional red flags were raised in the press and on 
internal phone calls among Goldman's employees and executives about 
Low's involvement in the deals and the possible payment of bribes in 
connection with the deals. Goldman failed to investigate these red 
flags or to perform an internal review of its role in the bond deals 
despite the clear implication that the deals had involved criminal 
wrongdoing. Further, high ranking employees of Goldman failed to 
escalate concerns about bribery and other criminal conduct related to 
the bond deals pursuant to Goldman's escalation policy, which required 
any Goldman employee who became aware of any conduct that could raise, 
among other things, ``a legal, compliance, reputational, ethical, 
accounting, [or] internal accounting control'' issue, to report such 
conduct immediately to a supervisor and to Goldman's compliance control 
functions.
    32. In May 2013, a Goldman participating managing director 
(Employee 3) who had been involved in the 1MDB deals, discussed the 
deals in a series of phone calls with Goldman senior executives that 
were recorded on Goldman phone lines. For example, on May 8, 2013, 
Employee 3 called a senior Goldman executive about, among other things, 
Project Catalyze. Employee 3 stated, ``the main reason for the delay 
for [IPIC] not having funded their three billion into the JV with 1MDB 
is [Abu Dhabi Official 1] is trying to get something on the side in his 
pocket.'' He continued later, ``I think it's quite disturbing to have 
come across this piece of information . . . .'' The senior Goldman 
executive replied, ``What's disturbing about that? It's nothing new, is 
it?'' In response, Employee 3 agreed that the situation was nothing 
new. Employee 3 had at least one substantially similar phone 
conversation with at least one other senior Goldman executive.
    33. Subsequently, in May 2015 and again in October 2015, amid 
negative media reporting linking Low with the 1MDB bond deals and 
Malaysian Official 1, Goldman executives and employees discussed Low's 
involvement in the 1MDB deals. For example, on a recorded call on 
October 13, 2015, Employee 3 told the senior Goldman executive that a 
senior IPIC officer had informed his subordinate that ``there are a 
number of key people who are involved in, let's call it the situation. 
[Abu Dhabi Official 1] is one. Jho Low for sure. He thinks Jho Low is 
the leader of the pack. And he has a very strong view that [Leissner] 
is involved.'' The compliance control functions never took steps to 
address these red flags.
    34. There were also subsequent emails and recorded phone calls 
between Employee 3 and senior Goldman executives in the compliance 
control functions about the disparity between how due diligence and 
risk issues were handled on various deals. In particular, they 
discussed the unusual latitude granted to certain employees, such as 
Leissner and Employee 1.
    35. For example, in January 2016, on a recorded call between 
Employee 2, who had been involved in BIG's review of each of the 
relevant transactions, and Employee 3, they discussed, among other 
things, Leissner's conduct, including Leissner's false statements that 
Low was not involved in the 1MDB deals. Employee 2 then noted that 
there were several similarly ``problematic'' people from a compliance 
perspective at Goldman, and Employee 3 agreed, immediately mentioning 
Employee 1 as an example of a ``problematic'' person. Employee 3 also 
noted the ``double standard'' between the minor repercussions meted out 
to favored employees like Leissner and Employee 1 when they got caught 
trying to circumvent the compliance control functions, and the more 
serious repercussions to other, less favored employees who engaged in 
similar behavior. Employee 2 agreed, stating, ``Yes, double standard, 
and it looks stupid.'' In the course of the call, Employee 2 also noted 
that Leissner's email communications had been searched as part of an 
internal investigation into a separate incident involving the use of an 
intermediary that occurred subsequent to the 1MDB deals, which Employee 
2 stated ``seems to me should have been done ages ago.'' Employee 3 
similarly discussed on a recorded call in February 2016 with a high-
ranking employee in compliance, who was a managing director, how 
repercussions for compliance control function violations varied 
radically between deals.

Exemption Request

    36. On October 15, 2020, the Applicant filed an exemption request 
for Goldman Sachs Affiliated QPAMs and Goldman Sachs Related QPAMs to 
continue to rely on PTE 84-14, notwithstanding the Goldman Sachs 
Malaysia FCPA Conviction they expected would be entered against Goldman 
Sachs Malaysia. As noted above, Section I(g) of PTE 84-14 prevents an 
entity that may otherwise meet the definition of a QPAM from utilizing 
the exemptive relief provided by PTE 84-14, if that entity or an 
``affiliate'' thereof or any owner, direct or indirect, of a 5 percent 
or more interest in the QPAM has, within 10 years immediately preceding 
the transaction, been convicted as a result of criminal activity 
described in that section. Since the Goldman Sachs Affiliated QPAMs are 
affiliated with Goldman Sachs Malaysia as defined in PTE 84-14, the 
Goldman Sachs Affiliated QPAMs will no longer be able to rely on the 
relief provided by PTE 84-14 following the Conviction Date. Further, 
since Goldman Sachs Malaysia may own five or more percent of an asset 
manager that is not otherwise affiliated with Goldman Sachs Malaysia 
(i.e., a Goldman Sachs Related QPAM), the Goldman Sachs Related QPAMs 
will no longer be able to rely on the relief provided by PTE 84-14 
following the Conviction Date.\13\
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    \13\ The Department notes that this proposed exemption requires 
each Goldman Sachs Affiliated QPAM to immediately develop, maintain, 
implement, and follow written policies and procedures (the 
Policies). The Policies must require, and must be reasonably 
designed to ensure, that, among other things: The asset management 
decisions of the Goldman Sachs Affiliated QPAM are conducted 
independently of Goldman's corporate management and business 
activities, and the corporate management and business activities of 
Goldman Sachs Malaysia.
---------------------------------------------------------------------------

    The Applicant represents that the exemption will enable the Covered 
Plans to continue their current investment strategy with their current 
investment manager or trustee. According to the Applicant, if the 
Department denies the requested exemption, Covered Plans could decide 
to find other managers, at significant costs to them. The Applicant 
states that many of the assets of the Covered Plan accounts could be 
difficult to transition, and the interruption of certain investment 
strategies, such as stable value, could create significant disruption 
and liquidation costs for Covered Plans with assets invested in those 
strategies.
    37. The Applicant represents that disqualification from PTE 84-14 
would deprive Covered Plans of the investment management services (some 
of which are highly specialized) that these plans expected to receive 
when they appointed the Goldman Sachs Affiliated or Related Asset 
Manager, and could result in the termination of relationships that the 
fiduciaries of the plans have

[[Page 136]]

determined to be in the best interests of the plans.
    38. The Applicant represents that, with respect to many Covered 
Plan transactions, virtually every counterparty to a Covered Plan may 
be a service provider to that Covered Plan. Transactions between the 
Covered Plan and the party-in-interest service provider would be 
prohibited under one or more provisions of Section 406 of ERISA, absent 
an exemption. The Applicant states that, because counterparties are 
comfortable with the QPAM Exemption, it is generally the most commonly 
used prohibited transaction exemption. The Applicant represents further 
that, with respect to a potential transaction between a Covered Plan 
and a counterparty, the counterparty may provide less advantageous 
pricing with respect to the transaction, or may not bid at all, if the 
Covered Plan's investment manager is not a QPAM, and various strategies 
in which Covered Plans are managed may depend significantly on the QPAM 
Exemption.
    39. The Applicant represents that it would be disruptive and 
expensive to cause plan fiduciaries to reconsider their arrangements 
with their chosen investment manager because of uncertainties relating 
to the QPAM Exemption. This uncertainty, according to the Applicant, 
could disrupt certain investment strategies and could result in 
significant redemptions from pooled funds, which would frustrate 
efforts to effectively manage the pooled funds' assets, harm remaining 
plan investors, and increase the expense ratios of the investment 
funds.

Applicant's Request for an Exemption With a Ten-Year Duration

    40. In its exemption request, the Applicant seeks a ten-year 
exemption term. The Department has determined that, given the 
magnitude, gravity, duration and pervasiveness of the Goldman Sachs 
Malaysia FCPA Misconduct, along with numerous Goldman compliance 
control failures associated with the Goldman Sachs Malaysia FCPA 
Misconduct, limiting relief to five years would be in the interest of, 
and provide more adequate protection for, the Covered Plans. If the 
Applicant seeks additional exemptive relief, it can submit a new 
exemption request before the end of this exemption's five year term, if 
granted. At that time, the Department will review the application, the 
audit reports required by this exemption, and other information it 
deems necessary to determine whether additional relief is warranted.

Other Changes Sought by the Applicant

    41. The Department's most recent QPAM Section I(g) individual 
exemptions contain conditions that are substantially similar to the 
conditions set forth in this proposed exemption.\14\ These conditions 
were carefully designed, after consideration of comments from the 
public, including the applicants to those exemptions, to protect 
Covered Plans. As part of its exemption request, the Applicant 
requested numerous changes to those conditions. Except as described 
below, the Department declines to make the Applicant's requested 
changes. The Applicant did not demonstrate that the requested revisions 
would be in the interest of, or sufficiently protective of, Covered 
Plans. The Department believes that the proposed revisions would 
generally weaken important Covered Plan protections.\15\
---------------------------------------------------------------------------

    \14\ See PTE 2017-03, 82 FR 61816 (December 29, 2017); PTE 2017-
04, 82 FR 61840 (December 29, 2017); PTE 2017-05, 82 FR 61864 
(December 29, 2017); PTE 2017-06, 82 FR 61881 (December 29, 2017); 
PTE 2017.
    \15\ For example, ``(b)ecause GS Malaysia does not exercise (and 
would not exercise) any control over the GS Related QPAMs,'' the 
Applicant requested that the Goldman Sachs Related QPAMs receive a 
ten-year exemption, subject only to the conditions that they did not 
know of or participate in the Goldman Sachs Malaysia FCPA Conduct, 
and did not receive compensation as a result of that conduct. 
Granting this request would permit the Goldman Sachs Related QPAMs 
to be subject to fewer conditions than those set forth in the 
Department's prior exemptions involving Section I(g) criminal 
convictions for entities related by direct or indirect 5% ownership, 
including that: Any failure of the Goldman Sachs Related QPAMs to 
satisfy Section I(g) of PTE 84-14 arose solely from the Goldman 
Sachs Malaysia FCPA Conviction; and the Goldman Sachs Related QPAMs 
did not exercise authority over the assets of any ERISA-covered plan 
or IRA in a manner that it knew or should have known would further 
the criminal conduct that is the subject of the Goldman Sachs 
Malaysia FCPA Conviction, or cause the relevant Related QPAM or its 
affiliates to directly or indirectly profit from the criminal 
conduct that is the subject of the Goldman Sachs Malaysia FCPA 
Conviction. The Department notes that the conditions above are 
consistent with the Department's prior QPAM Section I(g) exemptions, 
the Applicant's representations, and the Department's understanding 
of the facts that gave rise to the Goldman Sachs Malaysia FCPA 
Conviction. Accordingly, the proposed exemption includes these 
additional conditions with respect to Goldman Sachs Related QPAMs.
---------------------------------------------------------------------------

Conditions

    42. In developing administrative exemptions under Section 408(a) of 
ERISA, the Department implements its statutory directive to grant only 
exemptions that are appropriately protective of, and in the interest 
of, affected plans and IRAs. The Department is proposing this exemption 
with a number of protective conditions that would protect Covered Plans 
(and their participants and beneficiaries) and allow them to continue 
to utilize the services of the Goldman Sachs Affiliated and Related 
QPAMs. If this proposed exemption is granted as proposed, it would 
allow these Covered Plans to avoid the costs and expenses that may 
arise if such plans and IRAs are forced on short notice to hire a 
different QPAM because the Goldman asset managers are no longer able to 
rely on the relief provided by PTE 84-14, due to the Goldman Sachs 
Malaysia FCPA Conviction.
    43. It is a material condition of this exemption that, with the 
exception of one individual who worked in a non-fiduciary business 
within a Goldman Sachs Affiliated QPAM, and who had no responsibility 
for, and exercised no authority in connection with, the management of 
plan assets, the Goldman Sachs Affiliated QPAMs and Goldman Sachs 
Related QPAMs: (a) Did not know of, did not have reason to know of, and 
the Goldman Sachs Malaysia FCPA Misconduct; and (b) did not receive 
direct compensation, or knowingly receive indirect compensation, in 
connection with the Goldman Sachs Malaysia FCPA Misconduct.\16\
---------------------------------------------------------------------------

    \16\ For the purposes of this proposed exemption, ``participate 
in'' refers not only to active participation in the Goldman Sachs 
Malaysia FCPA Misconduct, but also to knowing approval of, or 
knowledge of the conduct without taking active steps to prevent the 
Goldman Sachs Malaysia FCPA Misconduct.
---------------------------------------------------------------------------

    44. The protective conditions in this proposed exemption include a 
requirement that the fiduciary and asset management functions of the 
Goldman Sachs Affiliated QPAMs must, at all times, remain isolated from 
the Goldman Sachs Malaysia FCPA Misconduct that underlies the Goldman 
Sachs Malaysia FCPA Conviction. Further, under the proposed exemption's 
conditions, Goldman Sachs Affiliated QPAMs may not employ or knowingly 
engage any of the individuals who participated in the Goldman Sachs 
Malaysia FCPA Misconduct.
    45. This proposed exemption requires that no Goldman Sachs 
Affiliated QPAM may use its authority or influence to direct an 
``investment fund'' (as defined in Section VI(b) of PTE 84-14) that is 
subject to ERISA or the Code to enter into any transaction with Goldman 
Sachs Malaysia, or to engage Goldman Sachs Malaysia to provide any 
service to such investment fund, regardless of whether such transaction 
or service may otherwise be within the scope of relief provided by an 
administrative or statutory exemption. Other than with respect to

[[Page 137]]

employee benefit plans maintained or sponsored for its own employees or 
the employees of an affiliate, Goldman Sachs Malaysia will not act as a 
fiduciary within the meaning of section 3(21)(A)(i) or (iii) of ERISA, 
or section 4975(e)(3)(A) and (C) of the Code, with respect to ERISA-
covered plan and IRA assets.
    46. Each Goldman Sachs Affiliated QPAM must develop, implement and 
maintain written policies and procedures (the Policies) that are 
reasonably designed to ensure: (a) That the asset management decisions 
of the Goldman Sachs Affiliated QPAMs are conducted independently of 
Goldman and Goldman Sachs Malaysia's corporate management and business 
activities; (b) that the Goldman Sachs Affiliated QPAMs fully comply 
with ERISA's fiduciary duties, and with ERISA's and the Code's 
prohibited transaction provisions; (c) that the Goldman Sachs 
Affiliated QPAMs do not knowingly participate in any other person's 
violation of ERISA or the Code with respect to Covered Plans; (d) that 
any filings or statements made by the Goldman Sachs Affiliated QPAMs to 
regulators on behalf of, or in relation to, Covered Plans are 
materially accurate and complete; (e) that the Goldman Sachs Affiliated 
QPAMs do not make material misrepresentations or omit material 
information in their communications with such regulators, or in their 
communications with Covered Plans; and (f) that the Goldman Sachs 
Affiliated QPAMs comply with the terms of the exemption.
    47. This proposed exemption requires each Goldman Sachs Affiliated 
QPAM to develop, implement and maintain a program of training (the 
Training), to be conducted at least annually, for all relevant asset/
portfolio management, trading, legal, compliance, and internal audit 
personnel. This required Training must, at a minimum, cover the 
Policies, ERISA and Code compliance, ethical conduct, the consequences 
for not complying with the conditions described in this proposal, and 
the requirement for prompt reporting of wrongdoing.
    48. This proposed exemption requires that each Goldman Sachs 
Affiliated QPAM submit to three audits, conducted by an independent 
auditor, to evaluate the adequacy of and compliance with, the Policies 
and Training required by the exemption, as described below. The 
independent auditor must be prudently selected and have appropriate 
technical training and proficiency with ERISA and the Code to perform 
the tasks required by the exemption. The Goldman Sachs Affiliated QPAMs 
must grant the auditor unconditional access to their business, and the 
auditor's engagement must specifically require the auditor to test each 
Goldman Sachs Affiliated QPAM's operational compliance with the 
Policies and Training.
    49. The independent auditor must issue a written audit report (the 
Audit Report) to Goldman and the Goldman Sachs Affiliated QPAM to which 
the audit applies, that describes the procedures performed by the 
auditor in connection with its examination. Further, the Goldman Sachs 
Affiliated QPAMs must promptly address any identified noncompliance, 
and must promptly address or prepare a written plan of action to 
address any determination as to the adequacy of the Policies and 
Training and the auditor's recommendations, if any, with respect to 
strengthening the Policies and Training of the respective Goldman Sachs 
Affiliated QPAM.
    50. This proposed exemption further requires that the General 
Counsel, or one of the three most senior executive officers of the 
Goldman Sachs Affiliated QPAM to which the Audit Report applies, 
certify in writing, under penalty of perjury, that the officer has 
reviewed the Audit Report and the exemption, if granted, and that the 
Goldman Sachs Affiliated QPAM has addressed, corrected, and remedied 
(or has an appropriate written plan to address) any identified instance 
of noncompliance or inadequacy regarding the Policies and Training 
identified in the Audit Report.
    51. With respect to any arrangement, agreement, or contract between 
a Goldman Sachs Affiliated QPAM and a Covered Plan, this proposal 
requires the Goldman Sachs Affiliated QPAMs to agree and warrant: (a) 
To comply with ERISA and the Code, including the standards of prudence 
and loyalty set forth in section 404 of ERISA; (b) to refrain from 
engaging in prohibited transactions that are not otherwise exempt; (c) 
to indemnify and hold harmless the Covered Plan for any actual losses 
resulting directly from, among other things, the Goldman Sachs 
Affiliated QPAM's violation of ERISA's fiduciary duties; (d) with 
narrow exceptions, not to restrict the ability of such Covered Plan to 
terminate or withdraw from its arrangement with the Goldman Sachs 
Affiliated QPAM with respect to any investment in a separately managed 
account or pooled fund subject to ERISA and managed by such QPAM; (e) 
with narrow exceptions, not to impose any fees, penalties, or charges 
for such termination or withdrawal; and (f) not to include exculpatory 
provisions disclaiming or otherwise limiting the liability of the 
Goldman Sachs Affiliated QPAM for a violation of such agreement's 
terms.
    52. Each Goldman Sachs Affiliated QPAM must provide a notice of its 
obligations under this exemption to each Covered Plan. Each Goldman 
Sachs Affiliated QPAM also must provide to each sponsor and beneficial 
owner of a Covered Plan a Federal Register copy of the notice of the 
exemption, a separate summary describing the facts that led to the 
Goldman Sachs Malaysia FCPA Conviction (the Summary), and a prominently 
displayed statement (the Statement) that the Goldman Sachs Malaysia 
FCPA Conviction results in a failure to meet a condition in PTE 84-14.
    53. This proposed exemption requires Goldman to designate a senior 
compliance officer (the Compliance Officer) who will be responsible for 
compliance with the Policies and Training requirements described in 
this exemption. The Compliance Officer must conduct five reviews, one 
for each of the five consecutive twelve month periods that comprise the 
Exemption Period (the Exemption Review), to determine the adequacy and 
effectiveness of the implementation of the Policies and Training, and 
issue a written report (the Exemption Report) on the findings.
    54. This proposal requires Goldman to impose internal procedures, 
controls, and protocols on Goldman Sachs Malaysia to reduce the 
likelihood of any recurrence of conduct that is the subject of the 
Goldman Sachs Malaysia FCPA Conviction.

Statutory Findings

    55. Section 408(a) of ERISA provides, in part, that the Department 
may not grant an exemption unless the Department finds that the 
exemption is administratively feasible, in the interest of affected 
plans and of their participants and beneficiaries, and protective of 
the rights of such participants and beneficiaries. These criteria are 
discussed below.
    56. ``Administratively Feasible.'' The Department has tentatively 
determined that the proposal is administratively feasible since, among 
other things, a qualified independent auditor will be required to 
perform an in-depth audit covering, among other things, each Goldman 
Sachs Affiliated QPAM's compliance with the terms of the exemption, and 
a corresponding written audit report will be provided to the Department 
and available to the public. The independent audit will provide an

[[Page 138]]

incentive for compliance, while reducing the immediate need for review 
and oversight by the Department.
    57. ``In the interest of.'' The Department has tentatively 
determined that the proposed exemption is in the interests of the 
participants and beneficiaries of affected Covered Plans. It is the 
Department's understanding, based on representations from the 
Applicant, that if the requested exemption is denied, Covered Plans 
could decide to find other managers, at significant costs to them. 
According to the Applicant, disqualification from PTE 84-14 would 
deprive the Covered Plans of the investment management services that 
these plans expected to receive when they appointed these managers, and 
could result in the termination of relationships that the fiduciaries 
of the Covered Plans have determined to be in the best interests of 
those plans.\17\
---------------------------------------------------------------------------

    \17\ The Department specifically requests comments on the scope 
and magnitude of any impacts, including any increased costs, that 
Covered Plans and IRAs would sustain if the Department were to deny 
the exemption.
---------------------------------------------------------------------------

    58. ``Protective of.'' The Department has tentatively determined 
that the proposed exemption is protective of the interests of the 
participants and beneficiaries of affected Covered Plans. As described 
above, the proposed exemption is subject to a suite of conditions 
including but not limited to: (a) The development and maintenance of 
the Policies; (b) the implementation of the Training; (c) a robust 
series of audits conducted by a qualified independent auditor; (d) the 
provision of certain agreements and warranties on the part of the 
Goldman Sachs Affiliated QPAMs; (e) specific notices and disclosures 
concerning the circumstances necessitating the need for exemptive 
relief, and the Goldman Sachs Affiliated QPAMS' obligations under this 
proposed exemption; and (f) the designation of a Compliance Officer 
with responsibility to ensure compliance with the Policies and Training 
requirements under this proposed exemption, and the Compliance 
Officer's completion of an annual Exemption Review and corresponding 
Exemption Report. Further, no person, including any person referenced 
in the Department of Justice's Statement of Facts that gave rise to the 
Plea Agreement, who knew of, or should have known of, or participated 
in, any misconduct described in the Statement of Facts, by any party, 
may be involved with various responsibilities required of Goldman by 
the exemption, unless the person took active documented steps to stop 
the misconduct.
    59. Department's Notes: This proposed five-year exemption provides 
relief from certain of the restrictions set forth in sections 406 and 
407 of ERISA. No relief or waiver of a violation of any other law is 
provided by the exemption. The relief in this proposed five-year 
exemption would terminate immediately if, among other things, an entity 
within the Goldman Sachs Malaysia corporate structure is convicted of 
any crime covered by Section I(g) of PTE 84-14 (other than the Goldman 
Sachs Malaysia FCPA Conviction during the effective period of the 
proposed five-year exemption). While such an entity could apply for a 
new exemption in that circumstance, the Department is not obligated to 
grant a requested exemption.
    60. When interpreting and implementing this exemption, the 
Applicant and the Goldman Sachs Affiliated QPAMs should resolve any 
ambiguities in light of the exemption's protective purposes. To the 
extent additional clarification is necessary, these persons or entities 
should contact EBSA's Office of Exemption Determinations, at 202-693-
8540.

Notice to Interested Persons

    Notice of the proposed exemption will be provided to all interested 
persons within seven (7) days of the publication of the notice of 
proposed five-year exemption in the Federal Register. The notice will 
be provided to all interested persons in the manner approved by the 
Department and will contain the documents described therein and a 
supplemental statement, as required pursuant to 29 CFR 2570.43(a)(2). 
The supplemental statement will inform interested persons of their 
right to comment on and to request a hearing with respect to the 
pending exemption. All written comments and/or requests for a hearing 
must be received by the Department within thirty seven (37) days of the 
date of publication of this proposed five-year exemption in the Federal 
Register. All comments will be made available to the public.
    Warning: If you submit a comment, EBSA recommends that you include 
your name and other contact information in the body of your comment, 
but DO NOT submit information that you consider to be confidential, or 
otherwise protected (such as Social Security number or an unlisted 
phone number) or confidential business information that you do not want 
publicly disclosed. All comments may be posted on the internet and can 
be retrieved by most internet search engines.

General Information

    The attention of interested persons is directed to the following:
    (1) The fact that a transaction is the subject of an exemption 
under section 408(a) of the Act and/or section 4975(c)(2) of the Code 
does not relieve a fiduciary or other party in interest or disqualified 
person from certain other provisions of the Act and/or the Code, 
including any prohibited transaction provisions to which the exemption 
does not apply and the general fiduciary responsibility provisions of 
section 404 of the Act, which, among other things, require a fiduciary 
to discharge his duties respecting the plan solely in the interest of 
the participants and beneficiaries of the plan and in a prudent fashion 
in accordance with section 404(a)(1)(b) of the Act; nor does it affect 
the requirement of section 401(a) of the Code that the plan must 
operate for the exclusive benefit of the employees of the employer 
maintaining the plan and their beneficiaries;
    (2) Before an exemption may be granted under section 408(a) of the 
Act and/or section 4975(c)(2) of the Code, the Department must find 
that the exemption is administratively feasible, in the interests of 
the plan and of its participants and beneficiaries, and protective of 
the rights of participants and beneficiaries of the plan;
    (3) The proposed exemption, if granted, will be supplemental to, 
and not in derogation of, any other provisions of the Act and/or the 
Code, including statutory or administrative exemptions and transitional 
rules. Furthermore, the fact that a transaction is subject to an 
administrative or statutory exemption is not dispositive of whether the 
transaction is in fact a prohibited transaction; and
    (4) The proposed exemption, if granted, will be subject to the 
express condition that the material facts and representations contained 
in each application are true and complete, and that each application 
accurately describes all material terms of the transaction which is the 
subject of the exemption.

Proposed Exemption

    The Department is considering granting a five-year exemption under 
the authority of section 408(a) of the Act (or ERISA) and section 
4975(c)(2) of the Internal Revenue Code (or Code), and in accordance 
with the procedures set forth in 29 CFR part 2570, subpart B (76

[[Page 139]]

FR 66637, 66644, October 27, 2011).\18\ Effective December 31, 1978, 
section 102 of Reorganization Plan No. 4 of 1978, 5 U.S.C. App. 1 
(1996), transferred the authority of the Secretary of the Treasury to 
issue exemptions of the type requested to the Secretary of Labor. 
Therefore, this notice of proposed exemption is issued solely by the 
Department.
---------------------------------------------------------------------------

    \18\ For purposes of this proposed five-year exemption, 
references to section 406 of Title I of the Act, unless otherwise 
specified, should be read to refer as well to the corresponding 
provisions of section 4975 of the Code.
---------------------------------------------------------------------------

Section I. Covered Transactions
    If this proposed exemption is granted, the Goldman Sachs Affiliated 
QPAMs and the Goldman Sachs Related QPAMs (as defined in Section II(d) 
and (e)) will not be precluded from relying on the exemptive relief 
provided by Prohibited Transaction Class Exemption 84-14 (PTE 84-14 or 
the QPAM Exemption) \19\ during the Exemption Period, notwithstanding 
the Goldman Sachs Malaysia FCPA Conviction, as defined in Section 
II(a), provided that the following conditions are satisfied:
---------------------------------------------------------------------------

    \19\ 49 FR 9494 (March 13, 1984), as corrected at 50 FR 41430, 
(October 10, 1985), as amended at 70 FR 49305 (August 23, 2005), and 
as amended at 75 FR 38837 (July 6, 2010).
---------------------------------------------------------------------------

    (a) Other than Tim Leissner, who worked for a non-fiduciary 
business within a Goldman Sachs Affiliated QPAM, and who had no 
responsibility for, and exercised no authority in connection with, the 
management of plan assets, the Goldman Sachs Affiliated QPAMs and 
Goldman Sachs Related QPAMs (including their officers, directors, 
agents (other than Goldman Sachs Malaysia), and the employees of the 
Goldman Sachs Affiliated QPAMs and Goldman Sachs Related QPAMs) did not 
know of, did not have reason to know of, or did not participate in the 
criminal conduct of Goldman Sachs Malaysia that is the subject of the 
Goldman Sachs Malaysia FCPA Conviction. Further, any other party 
engaged on behalf of the Goldman Sachs Affiliated QPAMs and Goldman 
Sachs Related QPAMs who had responsibility for, or exercised authority 
in connection with the management of plan assets did not know of, did 
not have reason to know of, or participate in the criminal conduct of 
Goldman Sachs Malaysia that is the subject of the Goldman Sachs 
Malaysia FCPA Conviction. For purposes of this proposed exemption, 
``participate in'' refers not only to active participation in the 
criminal conduct that is the subject of the Goldman Sachs Malaysia FCPA 
Conviction, but also to knowing approval of the criminal conduct, or 
knowledge of such conduct without taking active steps to prohibit such 
conduct, including reporting the conduct to such individual's 
supervisors, and to the Board of Directors;
    (b) Other than Tim Leissner, who worked for a non-fiduciary 
business within a Goldman Sachs Affiliated QPAM, and who had no 
responsibility for, and exercised no authority in connection with, the 
management of plan assets, the Goldman Sachs Affiliated QPAMs and the 
Goldman Sachs Related QPAMs (including their officers, directors, 
agents (other than Goldman Sachs Malaysia), and employees of such 
Goldman Sachs Affiliated QPAMs) did not receive direct compensation, or 
knowingly receive indirect compensation, in connection with the 
criminal conduct of Goldman Sachs Malaysia that is the subject of the 
Goldman Sachs Malaysia FCPA Conviction. Further, any other party 
engaged on behalf of the Goldman Sachs Affiliated QPAMs and the Goldman 
Sachs Related QPAMs who had responsibility for, or exercised authority 
in connection with the management of plan assets did not receive direct 
compensation, or knowingly receive indirect compensation, in connection 
with the criminal conduct of Goldman Sachs Malaysia that is the subject 
of the Goldman Sachs Malaysia FCPA Conviction;
    (c) The Goldman Sachs Affiliated QPAMs do not currently and will 
not in the future employ or knowingly engage any of the individuals who 
participated in the criminal conduct of Goldman Sachs Malaysia that is 
the subject of the Goldman Sachs Malaysia FCPA Conviction;
    (d) At all times during the Exemption Period, no Goldman Sachs 
Affiliated QPAM will use its authority or influence to direct an 
``investment fund'' (as defined in Section VI(b) of PTE 84-14) that is 
subject to ERISA or the Code and managed by such Goldman Sachs 
Affiliated QPAM with respect to one or more Covered Plans (as defined 
in Section II(b)) to enter into any transaction with Goldman Sachs 
Malaysia or to engage Goldman Sachs Malaysia to provide any service to 
such investment fund, for a direct or indirect fee borne by such 
investment fund, regardless of whether such transaction or service may 
otherwise be within the scope of relief provided by an administrative 
or statutory exemption;
    (e) Any failure of a Goldman Sachs Affiliated QPAM or a Goldman 
Sachs Related QPAM to satisfy Section I(g) of PTE 84-14 arose solely 
from the Goldman Sachs Malaysia FCPA Conviction;
    (f) A Goldman Sachs Affiliated QPAM or a Goldman Sachs Related QPAM 
did not exercise authority over the assets of any plan subject to Part 
4 of Title I of ERISA (an ERISA-covered plan) or section 4975 of the 
Code (an IRA) in a manner that it knew or should have known would 
further the criminal conduct that is the subject of the Goldman Sachs 
Malaysia FCPA Conviction; or cause the Goldman Sachs Affiliated QPAM, 
Related QPAM or its affiliates to directly or indirectly profit from 
the criminal conduct that is the subject of the Goldman Sachs Malaysia 
FCPA Conviction;
    (g) Other than with respect to employee benefit plans maintained or 
sponsored for its own employees or the employees of an affiliate, 
Goldman Sachs Malaysia will not act as a fiduciary within the meaning 
of section 3(21)(A)(i) or (iii) of ERISA, or section 4975(e)(3)(A) and 
(C) of the Code, with respect to ERISA-covered plan and IRA assets; 
provided, however, that Goldman Sachs Malaysia will not be treated as 
violating the conditions of this exemption, if granted, solely because 
they acted as an investment advice fiduciary within the meaning of 
section 3(21)(A)(ii) of ERISA or section 4975(e)(3)(B) of the Code;
    (h)(1) Within four months of the effective date of this five-year 
exemption, each Goldman Sachs Affiliated QPAM must immediately develop, 
maintain, implement, and follow written policies and procedures (the 
Policies). The Policies must require, and must be reasonably designed 
to ensure that:
    (i) The asset management decisions of the Goldman Sachs Affiliated 
QPAM are conducted independently of Goldman's corporate management and 
business activities, and the corporate management and business 
activities of Goldman Sachs Malaysia. This condition does not preclude 
a Goldman Sachs Affiliated QPAM from receiving publicly available 
research and other widely available information from Goldman Sachs 
Malaysia;
    (ii) The Goldman Sachs Affiliated QPAM fully complies with ERISA's 
fiduciary duties, and with ERISA and the Code's prohibited transaction 
provisions, in each case as applicable with respect to each Covered 
Plan, and does not knowingly participate in any violation of these 
duties and provisions with respect to Covered Plans;
    (iii) The Goldman Sachs Affiliated QPAM does not knowingly 
participate in any other person's violation of ERISA

[[Page 140]]

or the Code with respect to Covered Plans;
    (iv) Any filings or statements made by the Goldman Sachs Affiliated 
QPAM to regulators, including, but not limited to, the Department, the 
Department of the Treasury, the Department of Justice, and the Pension 
Benefit Guaranty Corporation, on behalf of or in relation to Covered 
Plans, are materially accurate and complete, to the best of such QPAM's 
knowledge at that time;
    (v) To the best of its knowledge at that time, the Goldman Sachs 
Affiliated QPAM does not make material misrepresentations or omit 
material information in its communications with such regulators with 
respect to Covered Plans, or make material misrepresentations or omit 
material information in its communications with Covered Plans; and
    (vi) The Goldman Sachs Affiliated QPAM complies with the terms of 
this five-year exemption;
    (2) Any violation of, or failure to comply with an item in 
subparagraphs (h)(1)(ii) through (vi), is corrected as soon as 
reasonably possible upon discovery, or as soon after the QPAM 
reasonably should have known of the noncompliance (whichever is 
earlier), and any such violation or compliance failure not so corrected 
is reported, upon the discovery of such failure to so correct, in 
writing. This report must be made to the head of compliance and the 
general counsel (or their functional equivalent) of the relevant 
Goldman Sachs Affiliated QPAM that engaged in the violation or failure, 
and the independent auditor responsible for reviewing compliance with 
the Policies. A Goldman Sachs Affiliated QPAM will not be treated as 
having failed to develop, implement, maintain, or follow the Policies, 
provided that it corrects any instance of noncompliance as soon as 
reasonably possible upon discovery, or as soon as reasonably possible 
after the Goldman Sachs Affiliated QPAM reasonably should have known of 
the noncompliance (whichever is earlier), and provided that it adheres 
to the reporting requirements set forth in this subparagraph (2);
    (3) Within six months of the effective date of the exemption, each 
Goldman Sachs Affiliated QPAM must immediately develop, maintain, 
adjust (to the extent necessary) and implement a program of training 
during the Exemption Period, to be conducted at least annually, for all 
relevant Goldman Sachs Affiliated QPAM asset/portfolio management, 
trading, legal, compliance, and internal audit personnel. The Training 
must:
    (i) At a minimum, cover the Policies, ERISA and Code compliance 
(including applicable fiduciary duties and the prohibited transaction 
provisions), ethical conduct, the consequences for not complying with 
the conditions of this exemption (including any loss of exemptive 
relief provided herein), and the requirement for prompt reporting of 
wrongdoing; and
    (ii) Be conducted by a professional who has been prudently selected 
and who has appropriate technical training and proficiency with ERISA 
and the Code to perform the tasks required by this exemption, if 
granted;
    (i)(1) Each Goldman Sachs Affiliated QPAM submits to three audits 
conducted by an independent auditor, who has been prudently selected 
and who has appropriate technical training and proficiency with ERISA 
and the Code, to evaluate the adequacy of, and each Goldman Sachs 
Affiliated QPAM's compliance with, the Policies and Training described 
herein. The audit requirement must be incorporated in the Policies. The 
first audit must cover the twelve month period that ends on the date 
that is two years following the date of the Goldman Sachs Malaysia FCPA 
Conviction, and must be completed within sixty days thereafter. The 
second audit must cover the twelve month period that ends on the date 
that is four years following the date of the Goldman Sachs Malaysia 
FCPA Conviction, and must be within completed sixty days thereafter. 
The third audit must cover the fifth year covered by this exemption, 
and must be completed within sixty days thereafter. The corresponding 
certified Audit Reports must be submitted to the Department no later 
than 45 days following the completion of the audit.
    (2) Within the scope of the audit and to the extent necessary for 
the auditor, in its sole opinion, to complete its audit and comply with 
the conditions for relief described herein, and only to the extent such 
disclosure is not prevented by state or federal statute, or involves 
communications subject to attorney-client privilege, each Goldman Sachs 
Affiliated QPAM and, if applicable, Goldman, will grant the auditor 
unconditional access to its business, including, but not limited to: 
Its computer systems; business records; transactional data; workplace 
locations; training materials; and personnel. Such access is limited to 
information relevant to the auditor's objectives as specified by the 
terms of this exemption;
    (3) The auditor's engagement must specifically require the auditor 
to determine whether each Goldman Sachs Affiliated QPAM has developed, 
implemented, maintained, and followed the Policies in accordance with 
the conditions of this five-year exemption, and has developed and 
implemented the Training, as required herein;
    (4) The auditor's engagement must specifically require the auditor 
to test each Goldman Sachs Affiliated QPAM's operational compliance 
with the Policies and Training. In this regard, the auditor must test, 
for each Goldman Sachs Affiliated QPAM, a sample of such Goldman Sachs 
Affiliated QPAM's transactions involving Covered Plans, sufficient in 
size and nature to afford the auditor a reasonable basis to determine 
such Goldman Sachs Affiliated QPAM's operational compliance with the 
Policies and Training;
    (5) For each audit, on or before the end of the relevant period 
described in Section I(i)(1) for completing the audit, the auditor must 
issue a written report (the Audit Report) to Goldman and the Goldman 
Sachs Affiliated QPAM to which the audit applies that describes the 
procedures performed by the auditor in connection with its examination. 
The auditor, at its discretion, may issue a single consolidated Audit 
Report that covers all the Goldman Sachs Affiliated QPAMs. The Audit 
Report must include the auditor's specific determinations regarding:
    (i) The adequacy of each Goldman Sachs Affiliated QPAM's Policies 
and Training; each Goldman Sachs Affiliated QPAM's compliance with the 
Policies and Training; the need, if any, to strengthen such Policies 
and Training; and any instance of the respective Goldman Sachs 
Affiliated QPAM's noncompliance with the written Policies and Training 
described in Section I(h) above. The Goldman Sachs Affiliated QPAM must 
promptly address any noncompliance. The Goldman Sachs Affiliated QPAM 
must promptly address or prepare a written plan of action to address 
any determination as to the adequacy of the Policies and Training and 
the auditor's recommendations (if any) with respect to strengthening 
the Policies and Training of the respective Goldman Sachs Affiliated 
QPAM. Any action taken or the plan of action to be taken by the 
respective Goldman Sachs Affiliated QPAM must be included in an 
addendum to the Audit Report (such addendum must be completed prior to 
the certification described in Section I(i)(7) below). In the event 
such a plan of action to address the auditor's recommendation regarding 
the adequacy of the Policies and Training is not completed by the time 
of submission of the Audit Report, the

[[Page 141]]

following period's Audit Report must state whether the plan was 
satisfactorily completed. Any determination by the auditor that a 
Goldman Sachs Affiliated QPAM has implemented, maintained, and followed 
sufficient Policies and Training must not be based solely or in 
substantial part on an absence of evidence indicating noncompliance. In 
this last regard, any finding that a Goldman Sachs Affiliated QPAM has 
complied with the requirements under this subparagraph must be based on 
evidence that the particular Goldman Sachs Affiliated QPAM has actually 
implemented, maintained, and followed the Policies and Training 
required by this exemption, if granted. Furthermore, the auditor must 
not solely rely on the Exemption Report created by the Compliance 
Officer, as described in Section I(m) below, as the basis for the 
auditor's conclusions in lieu of independent determinations and testing 
performed by the auditor as required by Section I(i)(3) and (4) above; 
and
    (ii) The adequacy of the Exemption Review described in Section 
I(m);
    (6) The auditor must notify the respective Goldman Sachs Affiliated 
QPAM of any instance of noncompliance identified by the auditor within 
five (5) business days after such noncompliance is identified by the 
auditor, regardless of whether the audit has been completed as of that 
date;
    (7) With respect to each Audit Report, the general counsel or one 
of the three most senior executive officers of the Goldman Sachs 
Affiliated QPAM to which the Audit Report applies, must certify in 
writing, under penalty of perjury, that the officer has reviewed the 
Audit Report and this exemption, if granted; that, to the best of such 
officer's knowledge at the time, the Goldman Sachs Affiliated QPAM has 
addressed, corrected, and remedied any noncompliance and inadequacy or 
has an appropriate written plan to address any inadequacy regarding the 
Policies and Training identified in the Audit Report. This 
certification must also include the signatory's determination that, to 
the best of the officer's knowledge at the time, the Policies and 
Training in effect at the time of signing are adequate to ensure 
compliance with the conditions of this exemption, if granted, and with 
the applicable provisions of ERISA and the Code. Notwithstanding the 
above, no person, including any person referenced in the Department of 
Justice's Statement of Facts that gave rise to the Plea Agreement, who 
knew of, or should have known of, or participated in, any misconduct 
described in the Statement of Facts, by any party, may provide the 
certification required by this exemption, unless the person took active 
documented steps to stop the misconduct;
    (8) The Goldman Sachs Board of Directors is provided a copy of the 
Audit Report; and a senior executive officer of the Audit Committee 
established by the Goldman Sachs Board of Directors must review the 
Audit Report for each Goldman Sachs QPAM and must certify in writing, 
under penalty of perjury, that such officer has reviewed the Audit 
Report. Notwithstanding the above, no person, including any person 
referenced in the Department of Justice's Statement of Facts that gave 
rise to the Plea Agreement, who knew of, or should have known of, or 
participated in, any misconduct described in the Statement of Facts, by 
any party, may provide the certification required by this exemption, 
unless such person took active documented steps to prohibit the 
misconduct;
    (9) Each Goldman Sachs Affiliated QPAM provides its certified Audit 
Report, by regular mail to: Office of Exemption Determinations (OED), 
200 Constitution Avenue NW, Suite 400, Washington, DC 20210. This 
delivery must take place no later than 45 days following completion of 
the Audit Report. The Audit Reports will be made part of the public 
record regarding this five-year exemption. Furthermore, each Goldman 
Sachs Affiliated QPAM must make its Audit Reports unconditionally 
available, electronically or otherwise, for examination upon request by 
any duly authorized employee or representative of the Department, other 
relevant regulators, and any fiduciary of a Covered Plan;
    (10) Any engagement agreement with an auditor to perform the audit 
required by this exemption must be submitted to OED no later than two 
months after the execution of such agreement;
    (11) The auditor must provide the Department, upon request, for 
inspection and review, access to all the workpapers created and used in 
connection with the audit, provided such access and inspection is 
otherwise permitted by law; and
    (12) Goldman or a Goldman Sachs Affiliated QPAM must notify the 
Department of a change in the independent auditor no later than two 
months after the engagement of a substitute or subsequent auditor and 
must provide an explanation for the substitution or change including a 
description of any material disputes involving the terminated auditor;
    (j) As of the effective date of this five-year exemption, with 
respect to any arrangement, agreement, or contract between a Goldman 
Sachs Affiliated QPAM and a Covered Plan, the Goldman Sachs Affiliated 
QPAM agrees and warrants to Covered Plans:
    (1) To comply with ERISA and the Code, as applicable with respect 
to such Covered Plan; to refrain from engaging in prohibited 
transactions that are not otherwise exempt (and to promptly correct any 
inadvertent prohibited transactions); and to comply with the standards 
of prudence and loyalty set forth in section 404 of ERISA with respect 
to each such ERISA-covered plan and IRA to the extent that section 404 
is applicable;
    (2) To indemnify and hold harmless the Covered Plan for any actual 
losses resulting directly from: A Goldman Sachs Affiliated QPAM's 
violation of ERISA's fiduciary duties, as applicable, and of the 
prohibited transaction provisions of ERISA and the Code, as applicable; 
a breach of contract by the QPAM; or any claim arising out of the 
failure of such Goldman Sachs Affiliated QPAM to qualify for the 
exemptive relief provided by PTE 84-14 as a result of a violation of 
Section I(g) of PTE 84-14, other than the Goldman Sachs Malaysia FCPA 
Conviction. This condition applies only to actual losses caused by the 
Goldman Sachs Affiliated QPAM's violations.
    (3) Not to require (or otherwise cause) the Covered Plan to waive, 
limit, or qualify the liability of the Goldman Sachs Affiliated QPAM 
for violating ERISA or the Code or engaging in prohibited transactions;
    (4) Not to restrict the ability of such Covered Plan to terminate 
or withdraw from its arrangement with the Goldman Sachs Affiliated QPAM 
with respect to any investment in a separately managed account or 
pooled fund subject to ERISA and managed by such QPAM, with the 
exception of reasonable restrictions, appropriately disclosed in 
advance, that are specifically designed to ensure equitable treatment 
of all investors in a pooled fund in the event such withdrawal or 
termination may have adverse consequences for all other investors. In 
connection with any such arrangements involving investments in pooled 
funds subject to ERISA entered into after the effective date of this 
exemption, the adverse consequences must relate to a lack of liquidity 
of the underlying assets, valuation issues, or regulatory reasons that 
prevent the fund from promptly redeeming an ERISA-covered plan's or 
IRA's investment, and such restrictions must be applicable to all such 
investors and be effective no longer than reasonably necessary to avoid 
the adverse consequences;

[[Page 142]]

    (5) Not to impose any fees, penalties, or charges for such 
termination or withdrawal with the exception of reasonable fees, 
appropriately disclosed in advance, that are specifically designed to 
prevent generally recognized abusive investment practices or 
specifically designed to ensure equitable treatment of all investors in 
a pooled fund in the event such withdrawal or termination may have 
adverse consequences for all other investors, provided that such fees 
are applied consistently and in a like manner to all such investors; 
and
    (6) Not to include exculpatory provisions disclaiming or otherwise 
limiting liability of the Goldman Sachs Affiliated QPAM for a violation 
of such agreement's terms. To the extent consistent with Section 410 of 
ERISA, however, this provision does not prohibit disclaimers for 
liability caused by an error, misrepresentation, or misconduct of a 
plan fiduciary or other party hired by the plan fiduciary who is 
independent of Goldman and its affiliates, or damages arising from acts 
outside the control of the Goldman Sachs Affiliated QPAM;
    (7) Within four (4) months of the effective date of this five-year 
exemption, each Goldman Sachs Affiliated QPAM must provide a notice of 
its obligations under this Section I(j) to each Covered Plan. For 
Covered Plans that enter into a written asset or investment management 
agreement with a Goldman Sachs Affiliated QPAM on or after the 
effective date of this exemption, if granted, the Goldman Sachs 
Affiliated QPAM must agree to its obligations under this Section I(j) 
in an updated investment management agreement between the Goldman Sachs 
Affiliated QPAM and such clients, or other written contractual 
agreement. Notwithstanding the above, a Goldman Sachs Affiliated QPAM 
will not violate the condition solely because a Plan or IRA refuses to 
sign an updated investment management agreement.
    (k) Within 60 days of the effective date of this five-year 
exemption, each Goldman Sachs Affiliated QPAM will provide a Federal 
Register copy of the notice of the exemption, along with a separate 
summary describing the facts that led to the Goldman Sachs Malaysia 
FCPA Conviction (the Summary), which has been submitted to the 
Department, and a prominently displayed statement (the Statement) that 
the Goldman Sachs Malaysia FCPA Conviction results in a failure to meet 
a condition in PTE 84-14, to each sponsor and beneficial owner of a 
Covered Plan that has entered into a written asset or investment 
management agreement with a Goldman Sachs Affiliated QPAM, or the 
sponsor of an investment fund in any case where a Goldman Sachs 
Affiliated QPAM acts as a sub-advisor to the investment fund in which 
such ERISA-covered plan and IRA invests. All Covered Plan clients that 
enter into a written asset or investment management agreement with a 
Goldman Sachs Affiliated QPAM after that date must receive a copy of 
the notice of the exemption, the Summary, and the Statement prior to, 
or contemporaneously with, the Covered Plan's receipt of a written 
asset or investment management agreement from the Goldman Sachs 
Affiliated QPAM. The notices may be delivered electronically (including 
by an email that has a link to the five-year exemption);
    (l) The Goldman Sachs Affiliated QPAMs must comply with each 
condition of PTE 84-14, as amended, with the sole exception of the 
violation of Section I(g) of PTE 84-14 that is attributable to the 
Goldman Sachs Malaysia FCPA Conviction. If, during the Exemption 
Period, an entity within the Goldman corporate structure is convicted 
of a crime described in Section I(g) of PTE 84-14 (other than the 
Goldman Sachs Malaysia FCPA Conviction), relief in this exemption, if 
granted, would terminate immediately;
    (m)(1) Within 60 days of the effective date of this exemption, 
Goldman must designate a senior compliance officer (the Compliance 
Officer) who will be responsible for compliance with the Policies and 
Training requirements described herein. Notwithstanding the above, no 
person, including any person referenced in the Department of Justice's 
Statement of Facts that gave rise to the Plea Agreement, who knew of, 
or should have known of, or participated in, any misconduct described 
in the Statement of Facts, by any party, may be involved with the 
designation or responsibilities required by this condition, unless the 
person took active documented steps to stop the misconduct. The 
Compliance Officer must conduct a review of each twelve month period of 
the Exemption Period (the Exemption Review), to determine the adequacy 
and effectiveness of the implementation of the Policies and Training. 
With respect to the Compliance Officer, the following conditions must 
be met:
    (i) The Compliance Officer must be a professional who has extensive 
experience with, and knowledge of, the regulation of financial services 
and products, including under ERISA and the Code; and
    (ii) The Compliance Officer must have a direct reporting line 
within Goldmans' Audit Committee and a direct reporting line to the 
highest ranking corporate officer in charge of compliance for the 
applicable Goldman Sachs Affiliated QPAM;
    (2) With respect to the Exemption Review, the following conditions 
must be met:
    (i) The Exemption Review includes a review of the Goldman Sachs 
Affiliated QPAMs' compliance with and effectiveness of the Policies and 
Training and of the following: Any compliance matter related to the 
Policies or Training that was identified by, or reported to, the 
Compliance Officer or the Audit Committee, during the previous year; 
the most recent Audit Report issued pursuant to this exemption, if 
granted; any material change in the relevant business activities of the 
Goldman Sachs Affiliated QPAMs; and any change to ERISA, the Code, or 
regulations related to fiduciary duties and the prohibited transaction 
provisions that may be applicable to the activities of the Goldman 
Sachs Affiliated QPAMs;
    (ii) The Compliance Officer prepares a written report for the 
Exemption Review (an Exemption Report) that (A) summarizes his or her 
material activities during the prior year; (B) sets forth any instance 
of noncompliance discovered during the prior year, and any related 
corrective action; (C) details any change to the Policies or Training 
to guard against any similar instance of noncompliance occurring again; 
and (D) makes recommendations, as necessary, for additional training, 
procedures, monitoring, or additional and/or changed processes or 
systems, and management's actions on such recommendations;
    (iii) In the Exemption Report, the Compliance Officer must certify 
in writing that to the best of his or her knowledge at the time: (A) 
The report is accurate; (B) the Policies and Training are working in a 
manner which is reasonably designed to ensure that the Policies and 
Training requirements described herein are met; (C) any known instance 
of noncompliance during the prior year and any related correction taken 
to date have been identified in the Exemption Report; and (D) the 
Goldman Sachs Affiliated QPAMs have complied with the Policies and 
Training, and/or corrected (or are correcting) any known instances of 
noncompliance in accordance with Section I(h) above;
    (iv) The Exemption Report must be provided to appropriate corporate 
officers of Goldman and Goldman Sachs Affiliated QPAM to which such 
report relates, and to the head of compliance and the general counsel 
(or their

[[Page 143]]

functional equivalent) of the relevant Goldman Sachs Affiliated QPAM; 
and the report must be made unconditionally available to the 
independent auditor described in Section I(i) above;
    (v) The first Exemption Review, including the Compliance Officer's 
written Exemption Report, must cover the twelve month period beginning 
on the date of the Goldman Sachs Malaysia FCPA Conviction. The next 
four Exemption Reviews and Exemption Reports must each cover a twelve 
month period that begins on the date that follows the end of a prior 
Exemption Review coverage period. Each Annual Review, including the 
Compliance Officer's written Annual Report, must be completed within 
three months following the end of the period to which it relates;
    (n) Goldman imposes its internal procedures, controls, and 
protocols on Goldman Sachs Malaysia to reduce the likelihood of any 
recurrence of conduct that is the subject of the Goldman Sachs Malaysia 
FCPA Conviction;
    (o) Goldman complies in all material respects with the requirements 
imposed by a U.S regulatory authority in connection with the Goldman 
Sachs Malaysia FCPA Conviction;
    (p) Each Goldman Sachs Affiliated QPAM will maintain records 
necessary to demonstrate that the conditions of this exemption have 
been met for six years following the date of any transaction for which 
such Goldman Sachs Affiliated QPAM relies upon the relief in this 
exemption;
    (q) During the Exemption Period, Goldman must: (1) Immediately 
disclose to the Department any Deferred Prosecution Agreement (a DPA) 
or Non-Prosecution Agreement (an NPA) with the U.S. Department of 
Justice, entered into by The Goldman Sachs Group, Inc. or any of its 
affiliates (as defined in Section VI(d) of PTE 84-14) in connection 
with conduct described in Section I(g) of PTE 84-14 or section 411 of 
ERISA; and (2) immediately provide the Department any information 
requested by the Department, as permitted by law, regarding the 
agreement and/or conduct and allegations that led to the agreement;
    (r) Within 60 days of the effective date of the five-year 
exemption, each Goldman Sachs Affiliated QPAM, in its agreements with, 
or in other written disclosures provided to Covered Plans, will clearly 
and prominently inform Covered Plan clients of their right to obtain a 
copy of the Policies or a description (Summary Policies) which 
accurately summarizes key components of the Goldman Sachs Affiliated 
QPAM's written Policies developed in connection with this exemption. If 
the Policies are thereafter changed, each Covered Plan client must 
receive a new disclosure within six months following the end of the 
calendar year during which the Policies were changed.\20\ With respect 
to this requirement, the description may be continuously maintained on 
a website, provided that such website link to the Policies or Summary 
Policies is clearly and prominently disclosed to each Covered Plan; and
---------------------------------------------------------------------------

    \20\ In the event the Applicant meets this disclosure 
requirement through Summary Policies, changes to the Policies shall 
not result in the requirement for a new disclosure unless, as a 
result of changes to the Policies, the Summary Policies are no 
longer accurate.
---------------------------------------------------------------------------

    (s) A Goldman Sachs Affiliated QPAM will not fail to meet the terms 
of this five-year exemption, if granted, solely because a different 
Goldman Sachs Affiliated QPAM fails to satisfy a condition for relief 
described in Sections I(c), (d), (h), (i), (j), (k), (l), (p) or (r); 
or if the independent auditor described in Section I(i) fails a 
provision of the exemption other than the requirement described in 
Section I(i)(11), provided that such failure did not result from any 
actions or inactions of Goldman.
Section II. Definitions
    (a) The term ``Goldman Sachs Malaysia FCPA Conviction'' means the 
judgment of conviction against Goldman Sachs Malaysia in connection 
with a U.S. plea by Goldman Sachs Malaysia to one count of conspiracy 
to commit offenses against the United States, in violation of Title 18, 
United States Code, Section 371, that is, to violate the anti-bribery 
provisions of the Foreign Corrupt Practices Act of 1977, as amended, 
see Title 15, United States Code, Sections 78dd-1 and 78dd-3.
    (b) The term ``Covered Plan'' means a plan subject to Part IV of 
Title I of ERISA (an ``ERISA-covered plan'') or a plan subject to 
section 4975 of the Code (an ``IRA''), in each case, with respect to 
which a Goldman Sachs Affiliated QPAM relies on PTE 84-14, or with 
respect to which a Goldman Sachs Affiliated QPAM (or any Goldman Sachs 
affiliate) has expressly represented that the manager qualifies as a 
QPAM or relies on the QPAM class exemption (PTE 84-14). A Covered Plan 
does not include an ERISA-covered plan or IRA to the extent the Goldman 
Sachs Affiliated QPAM has expressly disclaimed reliance on QPAM status 
or PTE 84-14 in entering into a contract, arrangement, or agreement 
with the ERISA-covered plan or IRA.
    (c) The term ``Goldman'' means The Goldman Sachs Group, Inc.
    (d) The term ``Goldman Sachs Affiliated QPAMs'' means The Goldman 
Sachs Trust Company, N.A.; Goldman Sachs Bank USA; Goldman Sachs & Co. 
LLC; Goldman Sachs Asset Management, L.P.; Goldman Sachs Asset 
Management International; Goldman Sachs Hedge Fund Strategies LLC; GS 
Investment Strategies, LLC; GSAM Stable Value, LLC; The Ayco Company, 
L.P.; Aptitude Investment Management LP; Rocaton Investment Advisors, 
LLC; United Capital Financial Advisers, LLC; and PFE Advisors, Inc., 
and any future ``affiliate'' of Goldman (as defined in Part VI(d) of 
PTE 84-14) that qualifies as a ``qualified professional asset manager'' 
(as defined in Section VI(a) of PTE 84-14) \21\ and that relies on the 
relief provided by PTE 84-14. The term ``Goldman Sachs Affiliated 
QPAMs'' excludes Goldman Sachs Malaysia.
---------------------------------------------------------------------------

    \21\ In general terms, a QPAM is an independent fiduciary that 
is a bank, savings and loan association, insurance company, or 
investment adviser that meets certain equity or net worth 
requirements and other licensure requirements and that has 
acknowledged in a written management agreement that it is a 
fiduciary with respect to each plan that has retained the QPAM.
---------------------------------------------------------------------------

    (e) The term ``Goldman Sachs Related QPAMs'' means any current or 
future ``qualified professional asset manager'' (as defined in Section 
VI(a) of PTE 84-14) that relies on the relief provided by PTE 84-14, 
and with respect to which Goldman Sachs Malaysia owns a direct or 
indirect five (5) percent or more interest, but with respect to which 
Goldman Sachs Malaysia is not an ``affiliate'' (as defined in section 
VI(d)(1) of PTE 84-14). The term ``Goldman Sachs Related QPAMs'' 
excludes Goldman Sachs Malaysia.
    (f) The term ``Goldman Sachs Malaysia'' means Goldman Sachs 
(Malaysia) Sdn. Bhd.
    (g) The term ``Exemption Period'' means the five-year period 
beginning on the date Goldman Sachs Malaysia is sentenced for one count 
of conspiracy to commit offenses against the United States, in 
violation of Title 18, United States Code, Section 371, that is, to 
violate the anti-bribery provisions of the Foreign Corrupt Practices 
Act of 1977, as amended, see Title 15, United States Code, Sections 
78dd-1 and 78dd-3.
    (h) The term ``Plea Agreement'' means the Plea Agreement entered 
into between the United States of America, by and through the United 
States Department of Justice, Criminal Division, Fraud Section and 
Money Laundering and Asset Recovery Section, and the United States 
Attorney's Office

[[Page 144]]

for the Eastern District of New York and Goldman Sachs (Malaysia) Sdn. 
Bhd. Cr. No. 20-438 (MKB), filed October 21, 2020.
    (i) The term ``Conviction Date'' means the date that a judgment of 
conviction against Goldman Sachs (Malaysia) Sdn. Bhd., in Cr. No. 20-
438 (MKB), is entered in the United States District Court for the 
Eastern District of New York.
    Effective Date: This exemption will be in effect for a period of 
five years beginning on the Conviction Date.

    Signed at Washington, DC, this 29th day of December, 2020.
Christopher Motta,
Chief, Division of Individual Exemptions, Office of Exemption 
Determinations, Employee Benefits Security Administration, U.S. 
Department of Labor.
[FR Doc. 2020-29113 Filed 12-31-20; 8:45 am]
BILLING CODE P


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