[Federal Register Volume 85, Number 208 (Tuesday, October 27, 2020)]
[Notices]
[Pages 68105-68110]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-23778]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. IC-34071; File No. 812-15172]


Goldman Sachs (Malaysia) Sdn. Bhd., et al.; Notice of Application 
and Temporary Order

October 22, 2020.
AGENCY: Securities and Exchange Commission (``Commission'')

ACTION: Temporary order and notice of application for a permanent order 
under section 9(c) of the Investment Company Act of 1940 (``Act'').

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Summary of Application: Applicants have received a temporary order 
(``Temporary Order'') exempting them from section 9(a) of the Act, with 
respect to a guilty plea entered on October 22, 2020 (``Guilty Plea''), 
by Goldman Sachs (Malaysia) Sdn. Bhd. (the ``Pleading Entity'' or ``GS 
Malaysia'') in the United States District Court for the Eastern 
District of New York (the ``District Court'') in connection with a plea 
agreement (``Plea Agreement'') between the Pleading Entity and the 
United States Department of Justice (``DOJ''), until the Commission 
takes final action on an application for a permanent order (the 
``Permanent Order,'' and with the Temporary Order, the ``Orders''). 
Applicants also have applied for a Permanent Order.
    Applicants: GS Malaysia, Goldman Sachs & Co. LLC (``GS&Co.''), 
Goldman Sachs Asset Management, L.P. (``GSAM''), Goldman Sachs Asset 
Management International (``GSAMI'') and GS Investment Strategies, LLC 
(``GSIS'' and collectively, the ``Applicants'').

Filing Date: The application was filed on October 22, 2020.

Hearing or Notification of Hearing: An order granting the requested 
relief will be issued unless the Commission orders a hearing. 
Interested persons may request a hearing by emailing the Commission's 
Secretary at [email protected] and serving applicants with a 
copy of the request, by email. Hearing requests should be received by 
the Commission by 5:30 p.m. on November 16, 2020 and should be 
accompanied by proof of service on the applicants, in the form of an 
affidavit, or for lawyers, a certificate of service. Pursuant to rule 
0-5 under the Act, hearing requests should state the nature of the 
writer's interest, any facts bearing upon the desirability of a hearing 
on the matter, the reason for the request, and the issues contested. 
Persons who wish to be notified of a hearing may request notification 
by emailing the Commission's Secretary at [email protected].

ADDRESSES: The Commission: [email protected]. Applicants: David 
A. Markowitz, The Goldman Sachs Group, Inc., [email protected].

FOR FURTHER INFORMATION CONTACT: Kieran G. Brown, Senior Counsel, at 
(202) 551-6773 or David J. Marcinkus, Branch Chief, at (202) 551-6821

[[Page 68106]]

(Division of Investment Management, Chief Counsel's Office).

SUPPLEMENTARY INFORMATION: The following is a temporary order and a 
summary of the application. The complete application may be obtained 
via the Commission's website by searching for the file number, or an 
applicant using the Company name box, at http://www.sec.gov/search/search.htm, or by calling (202) 551-8090.

Applicants' Representations:

    1. The Pleading Entity is a Malaysia Sendirian Berhad (private 
company limited by shares) that provides asset management and corporate 
finance services to clients in Malaysia and is a wholly-owned indirect 
subsidiary of Goldman Sachs Group, Inc. (``GS Group''). GS Group is a 
bank holding company and a financial holding company regulated by the 
Board of Governors of the Federal Reserve System (``FRB'').
    2. GS&Co., a New York limited liability company, is registered as 
an investment adviser under the Investment Advisers Act of 1940 (the 
``Advisers Act'') and is a direct, wholly-owned subsidiary (as such 
term is defined in the Act) of GS Group. GS&Co. is also registered as a 
broker-dealer under the Securities Exchange Act of 1934 (the ``Exchange 
Act''). GS&Co. serves as principal underwriter to the Funds \1\ and as 
adviser to the ESCs (as defined below) listed in Part 1 of Appendix A 
to the application.
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    \1\ The term ``Funds'' as used herein refers to any registered 
investment company, employees' securities company or investment 
company that has elected to be treated as a business development 
company under the Act for which a Covered Person (as defined below) 
currently or in the future serves as an investment adviser (as 
defined in section 2(a)(20) of the Act) or depositor, or any 
registered open-end investment company, registered unit investment 
trust, or registered face-amount certificate company for which a 
Covered Person currently or in the future serves as principal 
underwriter (as defined in section 2(a)(29) of the Act).
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    3. GSAM, a New York limited partnership, is registered as an 
investment adviser under the Advisers Act and is a wholly-owned 
indirect subsidiary of GS Group. GSAM serves as an adviser or 
subadviser to the Funds listed in Part 2 of Appendix A to the 
application.
    4. GSAMI, a United Kingdom limited company, is registered as an 
investment adviser under the Advisers Act and is a wholly-owned 
indirect subsidiary of GS Group. GSAMI serves as an adviser or 
subadviser to the Funds listed in Part 3 of Appendix A to the 
application.
    5. GSIS, a Delaware limited liability company, is registered as an 
investment adviser under the Advisers Act and is a wholly-owned 
indirect subsidiary of GS Group. GSIS serves as an adviser to the ESCs 
listed in Part 4 of Appendix A to the application.
    6. While no existing company of which the Pleading Entity is an 
``affiliated person'' within the meaning of section 2(a)(3) of the Act 
(``Affiliated Person''), other than GSIS, GS&Co., GSAM and GSAMI 
(together, the ``Fund Servicing Applicants''), currently serves as an 
investment adviser (as defined in section 2(a)(20) of the Act) or 
depositor of any registered investment company, employees' securities 
company (``ESC''), or investment company that has elected to be treated 
as a business development company under the Act, or as principal 
underwriter (as defined in section 2(a)(29) of the Act) for any 
registered open-end investment company (``Open-End Fund''), registered 
unit investment trust (``UIT''), or registered face-amount certificate 
company (``FACC'') (such activities performed on behalf of such 
persons, collectively ``Fund Servicing Activities''), Applicants 
request that any relief granted by the Commission pursuant to the 
application also apply to any other current or future Affiliated Person 
of the Pleading Entity other than GS Group (together with the Fund 
Servicing Applicants, the ``Covered Persons'') with respect to any 
activity contemplated by section 9(a) of the Act.\2\
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    \2\ Covered Persons may, if the Order is granted, in the future 
act in any of the capacities contemplated by section 9(a) of the Act 
subject to the applicable terms and conditions of the Orders. GS 
Group, the ultimate parent of the Pleading Entity, does not and will 
not serve as an investment adviser, depositor or principal 
underwriter to any registered investment company as it is not a 
Covered Person.
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    7. On October 22, 2020, the DOJ filed a criminal information (the 
``Information'') in the District Court charging the Pleading Entity 
with 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 (``FCPA''), as amended, see Title 15, United 
States Code, Sections 78dd-1 and 78dd-3. According to the Statement of 
Facts that served as the basis for the Plea Agreement (the ``Statement 
of Facts''), between 2009 and 2014, the GS Group (together with its 
wholly-owned subsidiaries and affiliated entities, the ``Company''), 
through certain of its agents and employees, including Tim Leissner 
(``Leissner'') \3\ and Roger Ng (``Ng''),\4\ knowingly and willfully 
conspired with others to provide payments and other things of value to 
or for the benefit of foreign officials to induce the officials to 
influence the decisions of 1Malaysia Development Berhad (``1MDB''), a 
sovereign development company wholly owned by the Government of 
Malaysia, International Petroleum Investment Company (``IPIC'') (an 
investment fund wholly owned by the Government of Abu Dhabi), and Aabar 
Investments PJS (a subsidiary of IPIC) to obtain and retain business 
for the Company (the ``Conduct''), as further described in the 
application, in violation of the FCPA. Leissner, Ng, and another 
employee of the Company referred to in the Statement of Facts as 
Employee 1 (``Employee 1''), also used the connections of an outside 
individual involved in the Conduct (Jho Low) to obtain and retain 
business for the Company and, in turn, concealed that individual's 
involvement in the deals from certain other employees and agents of the 
Company.\5\ In connection with the Plea, the Company expects to enter 
into a deferred prosecution agreement with DOJ (the ``DPA'').
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    \3\ From November 2006 to February 2016, Leissner was a 
Participating Managing Director of the Company and, from 2011 to 
2016, held various senior positions in the Company's investment 
banking division in Asia and served on the board of directors of GS 
Malaysia.
    \4\ From 2010 to 2014, Ng was a Managing Director of the Company 
and, for part of that time, served as Head of Investment Banking 
for, and was on the board of directors of, GS Malaysia.
    \5\ Employee 1 is no longer employed by any Company affiliate.
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    8. Pursuant to the Plea Agreement, the Pleading Entity entered the 
Guilty Plea on October 22, 2020 in the District Court to the charge set 
out in the Information. Applicants state that, according to the Plea 
Agreement, the Pleading Entity agrees as follows: First, the Pleading 
Entity shall cooperate fully with the DOJ and the United States 
Attorney's Office for the Eastern District of New York (collectively, 
the ``Offices'') in any and all matters relating to the conduct 
described in the Plea Agreement and the Statement of Facts and other 
conduct under investigation by the Offices or any other component of 
the DOJ at any time during the term of the DPA (the ``Term'') until the 
later of the date upon which all investigations and prosecutions 
arising out of such conduct are concluded or the end of the Term. 
Second, at the request of the Offices, the Pleading Entity shall also 
cooperate fully with other domestic or foreign law enforcement and 
regulatory authorities and agencies, as well as the Multilateral 
Development Banks in any investigation of the Pleading Entity, GS 
Group, or any of its present or former officers, directors, employees, 
agents, and

[[Page 68107]]

consultants, or any other party, in any and all matters relating to the 
conduct described in the Plea Agreement and the Statement of Facts and 
any other conduct under investigation by the Offices or any other 
component of the DOJ. Third, should the Pleading Entity learn during 
the Term of any evidence or any allegations of conduct that may 
constitute a violation of the money laundering laws that involve the 
employees or agents of the Pleading Entity, or should the Pleading 
Entity learn of any evidence or allegation of conduct that may 
constitute a violation of the FCPA's anti-bribery or accounting 
provisions had the conduct occurred within the jurisdiction of the 
United States, the Pleading Entity shall promptly report such evidence 
or allegation to the Offices. Fourth, the Pleading Entity agrees that 
any fine imposed by the District Court will be due and payable as 
specified in Paragraph 19 of the Plea Agreement, and that any 
restitution imposed by the District Court will be due and payable in 
accordance with the District Court's order. Finally, the Pleading 
Entity agrees to commit no further crimes and to work with GS Group in 
fulfilling GS Group's obligations under the DPA.
    9. The Applicants expect that the District Court will enter a 
judgment against the Pleading Entity (the ``Judgment'') that will 
require remedies that are materially the same as set forth in the Plea 
Agreement. The individuals referenced in the Information as responsible 
for the Conduct are no longer employed by the Pleading Entity or any of 
its affiliates.
    10. On October 22, 2020, the SEC instituted cease-and-desist 
proceedings against GS Group relating to the Conduct (the ``SEC 
Order''). In anticipation of the institution of those proceedings, GS 
Group submitted an Offer of Settlement consenting to the entry of such 
order, which the Commission has accepted. The SEC Order includes 
findings that GS Group violated the following sections of the Exchange 
Act: Section 30A (the anti-bribery provisions of the FCPA), section 
13(b)(2)(A) (the books and records provision of the FCPA), and section 
13(b)(2)(B) (requiring Exchange Act registered companies to devise and 
maintain a sufficient system of internal accounting controls).\6\
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    \6\ 15 U.S.C. 78m(b)(2)(A), 78m(b)(2)(B), and 78dd-1.
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    11. GS Group and its affiliates have entered into settlement 
agreements with other U.S. and non-U.S. regulatory or enforcement 
agencies related to the Conduct. The Board of Governors of the Federal 
Reserve System (``FRB'') entered a cease and desist order and order of 
assessment of a civil monetary penalty (the ``FRB Order'') on October 
22, 2020 against GS Group concerning unsafe and unsound banking 
practices relating to the 1MDB transactions that resulted from 
deficient policies, procedures and controls. The New York State 
Department of Financial Services (``DFS'') entered into a consent order 
(the ``DFS Order'') on October 22, 2020 with GS Group as the parent 
company of Goldman Sachs Bank USA (``GS Bank'') (which operates in New 
York State and is licensed and regulated by the DFS) to settle DFS' 
investigations into alleged violations of New York banking law arising 
out of GS Bank's investments in 1MDB-related instruments. GS Group 
entered into a Settlement Agreement with the Government of Malaysia and 
1MDB (the ``Malaysian Settlement Agreement'') on August 18, 2020 to 
resolve all criminal and regulatory proceedings in Malaysia involving 
the Company, including pending criminal proceedings against 
subsidiaries of GS Group and certain of their current and former 
directors, relating to the 1MDB transactions and the Conduct. On 
October 22, 2020, the U.K. Financial Conduct Authority and the U.K. 
Prudential Regulation Authority each entered a warning notice 
(together, the ``U.K. Notices'') against Goldman Sachs International 
(``GSI''), an indirect wholly owned subsidiary of GS Group, relating to 
GSI's failure to assess and manage the risks associated with the 1MDB 
transactions, properly record how GSI committees assessed and managed 
those risks and respond appropriately to allegations of bribery. The 
Hong Kong Securities and Futures Commission issued a Statement of 
Disciplinary Action (the ``SFC Statement'') against Goldman Sachs 
(Asia) L.L.C. (``GS Asia''), an indirect wholly owned subsidiary of GS 
Group, on October 22, 2020, relating to GS Asia's failure to properly 
examine and address red flags in connection with the 1MDB transactions 
and to diligently supervise its senior personnel in connection with 
their participation in the 1MDB transactions. On October 22, 2020, the 
Singapore Commercial Affairs Department, at the direction of the 
Singapore Attorney General's Chambers, issued a Notice of Conditional 
Warning against Goldman Sachs (Singapore) Pte, an indirect wholly owned 
subsidiary of GS Group (``GS Singapore''), relating to the Conduct (the 
``Singapore Notice''). On October 22, 2020, the Monetary Authority of 
Singapore (the ``MAS'') issued a letter of direction (the ``MAS 
Letter'') requiring GS Singapore to appoint an independent auditor to 
review the effectiveness and sustainability of the remedial measures 
implemented by GS Singapore following the MAS' inspection.

Applicants' Legal Analysis

    1. Section 9(a)(1) of the Act provides, in pertinent part, that a 
person may not serve or act as an investment adviser or depositor of 
any registered investment company or as principal underwriter for any 
Open-End Fund, UIT, or FACC, if such person within ten years has been 
convicted of any felony or misdemeanor, including those arising out of 
such person's conduct as a broker, dealer or bank. Section 2(a)(10) of 
the Act defines the term ``convicted'' to include a plea of guilty. 
Section 9(a)(3) of the Act extends the prohibitions of section 9(a)(1) 
to a company, any affiliated person of which has been disqualified 
under the provisions of section 9(a)(1). Section 2(a)(3) of the Act 
defines ``affiliated person'' to include, among others, any person 
directly or indirectly controlling, controlled by, or under common 
control with, the other person. The Pleading Entity is an Affiliated 
Person of each of the other Applicants within the meaning of section 
2(a)(3) of the Act. Therefore, the Applicants state that the Plea 
Agreement would result in a disqualification of each Fund Servicing 
Applicant for ten years under section 9(a)(3) were they to act in any 
of the capacities listed in section 9(a), by effect of a conviction 
described in section 9(a)(1).
    2. Section 9(c) of the Act provides that: ``[t]he Commission shall 
by order grant [an] application [for relief from the prohibitions of 
subsection 9(a)], either unconditionally or on an appropriate temporary 
or other conditional basis, if it is established [i] that the 
prohibitions of subsection 9(a), as applied to such person, are unduly 
or disproportionately severe or [ii] that the conduct of such person 
has been such as not to make it against the public interest or the 
protection of investors to grant such application.'' Applicants have 
filed an application pursuant to section 9(c) seeking a Temporary Order 
and a Permanent Order exempting the Fund Servicing Applicants and other 
Covered Persons from the disqualification provisions of section 9(a) of 
the Act. The Covered Persons may, if the Orders are granted, in the 
future act in any of the capacities contemplated by section 9(a) of the 
Act subject to the applicable terms and conditions of the Orders.

[[Page 68108]]

    3. Applicants believe they meet the standards for exemption 
specified in section 9(c). Applicants assert that (i) the scope of the 
misconduct was limited and did not involve any of the Applicants acting 
as an investment adviser, depositor or principal underwriter for any 
Fund, or any Fund with respect to which the Fund Servicing Applicants 
engage in Fund Servicing Activities, (ii) application of the statutory 
bar would impose significant hardships on the Funds and their 
shareholders, (iii) the prohibitions of section 9(a), if applied to the 
Fund Servicing Applicants, would be unduly or disproportionately severe 
and (iv) the Conduct did not constitute conduct that would make it 
against the public interest or protection of investors to grant the 
exemption from section 9(a).
    4. Applicants represent that the Conduct did not involve any of 
Applicants acting in the capacity as an investment adviser, depositor 
or principal underwriter for any Fund. Applicants represent that the 
Conduct similarly did not involve any Fund with respect to which the 
Fund Servicing Applicants engage in Fund Servicing Activities.\7\ 
Instead, the Applicants state that the Conduct occurred primarily as a 
result of the actions of a few employees. As discussed above, the 
individuals referenced in the Information as responsible for the 
Conduct are no longer employed by the Pleading Entity or any of its 
affiliates.
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    \7\ The Pleading Entity does not engage, has not engaged, and 
will not engage in in any of the capacities contemplated by section 
9(a) of the Act.
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    5. Applicants acknowledge that the Conduct also reflected failures 
of GS Group control functions and that the Company's control functions 
and committees should have done more to follow up on red flags. The 
application states that five employees identified in the Statement of 
Facts as having been involved in these failures are employed by 
affiliates of the Pleading Entity that are not Covered Persons. 
Applicants represent, however, that none of these five employees has 
been, or will in the future be, employed by a Covered Person relying on 
the Orders or otherwise involved in the Fund Servicing Activities.
    6. Applicants state that one of the employees discussed above was 
employed by a Fund Servicing Applicant before the 1MDB bond 
transactions, but was employed by an affiliate that is not a Fund 
Servicing Applicant at the time of the 1MDB bond transactions. 
Applicants state that this employee did not engage in the Conduct. 
Applicants further state that, after the 1MDB bond transactions were 
completed, the employee became aware of and failed to escalate 
information and concerns about bribery related to the bond 
transactions. Applicants state that this individual currently serves as 
a manager or director of a Fund Servicing Applicant and has had, and in 
the future will have, no day-to-day involvement in Fund Servicing 
Activities. Applicants state that this individual's role includes 
oversight of that Fund Servicing Applicant commensurate with the 
responsibilities of a manager or director.
    7. Applicants state that GS Group is committed to promoting a 
general culture of compliance, including continuing to implement 
significant changes in connection with its relevant practices and 
controls, as summarized below and described in more detail in the 
application. Applicants assert that, in light of the limited scope of 
the Conduct, it would be unduly and disproportionately severe to impose 
a section 9(a) disqualification on the Fund Servicing Applicants. 
Applicants assert that the conduct of the Applicants has not been such 
to make it against the public interest or the protection of investors 
to grant the exemption from section 9(a).
    8. Applicants assert that neither the protection of investors nor 
the public interest would be served by permitting the section 9(a) 
disqualifications to apply to the Fund Servicing Applicants because 
those disqualifications would deprive the Fund of the advisory or sub-
advisory and underwriting services that shareholders expected the Funds 
would receive when they decided to invest in the Funds. Applicants also 
assert that the prohibitions of section 9(a) could operate to the 
financial detriment of the Funds and their shareholders, including by 
causing the Funds to spend time and resources to engage substitute 
advisers, subadvisers, and principal underwriters, which would be an 
unduly and disproportionately severe consequence given that the Conduct 
did not involve any of the Fund Servicing Activities.
    9. Applicants assert that if the Fund Servicing Applicants were 
barred under section 9(a) from providing investment advisory services 
to the Funds and were unable to obtain the requested exemption, the 
effect on their businesses and employees would be severe. Applicants 
state that the Fund Servicing Applicants have committed substantial 
capital and other resources to establishing expertise in advising and 
sub-advising Funds with a view to continuing and expanding this 
business, which Applicants consider strategically important. Similarly, 
Applicants represent that if GS&Co. were barred under section 9(a) from 
continuing to provide underwriting services to the Funds and were 
unable to obtain the requested exemption, the effect on its current 
business and employees would be significant. GS&Co. has committed 
capital and other resources to establish expertise in underwriting the 
securities of the Funds and to establish distribution arrangements for 
Fund shares. Applicants further state that prohibiting the Fund 
Servicing Applicants from engaging in Fund Servicing Activities would 
not only adversely affect their business, but would also adversely 
affect their employees who are involved in these activities.\8\
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    \8\ Applicants represent that GS&Co. acts as transfer agent for 
most of the Funds. Although GS&Co. would retain the authority to act 
in this capacity even if it were prohibited under section 9(a) from 
engaging in Fund Servicing Activities, Applicants represent that as 
a practical matter, it is unlikely that the Funds would continue to 
retain GS&Co. as transfer agent if GS&Co. were unable to perform 
Fund Servicing Activities. Thus, GS&Co. would likely lose another 
significant part of its business. This would also adversely affect 
its employees.
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    10. Applicants represent that: (1) None of the current or former 
directors, officers or employees of Applicants (other than certain 
former personnel of the Pleading Entity and GS&Co.\9\ who were not 
involved in any of the Fund Servicing Applicants' Fund Servicing 
Activities) engaged in the Conduct; (2) no current or former employee 
of the Pleading Entity or any Covered Person who previously has been or 
who subsequently may be identified by the Pleading Entity or any U.S. 
or non-U.S. regulatory or enforcement agencies as having been 
responsible for the Conduct will be an officer, director, or employee 
of any Covered Person; (3) the identified employees have had no, and 
will not have any future, involvement in the Covered Persons' 
activities in any capacity described in section 9(a) of the Act; and 
(4) because the personnel of Applicants (other than certain former 
personnel of the Pleading Entity and GS&Co.\10\ who were not involved 
in any of the Fund Servicing Applicants' Fund Servicing Activities) did 
not engage in the Conduct, shareholders of the Funds were not affected 
any differently than if those Funds had received services from any 
other non-affiliated investment adviser.
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    \9\ One of the employees most extensively involved in and 
responsible for the Conduct (Leissner), was employed by GS&Co. for 
approximately two months immediately prior to his termination in 
February 2016. During this time, the employee had no involvement in 
GS&Co.'s Fund Servicing Activities.
    \10\ See paragraph 6, supra.

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[[Page 68109]]

    11. Applicants have agreed that none of GS Group, the Applicants or 
any of the other Covered Persons will employ the former employees of an 
affiliate of the Pleading Entity or any other person who subsequently 
may be identified by the Pleading Entity or any U.S. or non-U.S. 
regulatory or enforcement agencies as having been responsible for the 
Conduct in any capacity without first making a further application to 
the Commission pursuant to section 9(c).
    12. Applicants have also agreed that GS Group and each Applicant 
and Covered Person will adopt and implement policies and procedures 
reasonably designed to ensure compliance with the terms and conditions 
of the Orders granted under section 9(c).
    13. In addition, GS Group and each Applicant and Covered Person 
will comply in all material respects with the material terms and 
conditions of the Plea Agreement and with the material terms of the 
DPA, the FRB Order, the DFS Order, the SEC Order, the Malaysian 
Settlement Agreement, the U.K. Notices, the SFC Statement, the 
Singapore Notice, the MAS Letter, and any other orders issued by 
regulatory or enforcement agencies addressing the Conduct. Applicants 
note that in connection with the DPA, GS Group will represent that it 
has implemented and will continue to implement a compliance and ethics 
program designed to prevent and detect violations of the FCPA and other 
anti-corruption laws throughout its operations, including its 
subsidiaries. In addition, GS Group will represent that it has 
undertaken, and will continue to undertake, a review of its existing 
internal accounting controls, policies, and procedures regarding 
compliance with the FCPA and other anti-corruption laws, and modify 
them where necessary to ensure that it maintains (i) an effective 
system of internal accounting controls, and (ii) a rigorous anti-
corruption compliance program designed to effectively detect and deter 
violations of the FCPA and other applicable anti-corruption laws. The 
DPA will require GS Group to provide an initial report to DOJ within 
one year describing its remediation efforts to date, and to undertake 
two annual follow-up reviews and reports to DOJ.\11\
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    \11\ The required remedial steps with respect to GS Group's 
Corporate Compliance Program are described in Attachment C to the 
DPA, and the reporting requirements are described in Attachment D to 
the DPA.
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    14. Applicants further state that GS Group and its affiliates have 
undertaken certain other remedial measures, as described in greater 
detail in the application. These remedial measures include: Enhancing 
the scrutiny of senior personnel in high-risk areas and products, 
heightening the firm's focus on accountability when employee red flags 
are identified, and taking steps to ensure that employees are hearing 
about compliance expectations from the firm's executive management. 
Applicants state that GS Group has also been strengthening processes to 
heighten attention to potential red flags identified by deal teams and 
committees, increasing representation of the firm's control functions 
in key vetting groups and committees, and reviewing transactions 
earlier in the life cycle to reduce the possibility that later momentum 
in the deals could inappropriately carry them over the line for 
approval. Applicants also state that the firm has been continually 
improving its electronic surveillance to take advantage of recent 
technological advances and has increased its commitment to spending on 
compliance efforts and headcount in order to maintain the efficacy of 
the enhancements described above and to continue improving the firm's 
controls and systems.
    15. As a result of the foregoing, the Applicants submit that absent 
relief, the prohibitions of section 9(a) would be unduly or 
disproportionately severe, and that the Conduct did not constitute 
conduct that would make it against the public interest or protection of 
investors to grant the exemption.
    16. To provide further assurance that the exemptive relief being 
requested in the application would be consistent with the public 
interest and the protection of the investors, the Applicants agree that 
they will, as soon as reasonably practical, with respect to each of the 
Funds for which a Fund Servicing Applicant is the primary adviser, 
distribute to the boards of directors or trustees of the Funds 
(``Board'') written materials describing the circumstances that led to 
the Plea Agreement, as well as any effects on the Funds and the 
application. The written materials will include an offer to discuss the 
materials at an in-person meeting with the Board, including the 
directors who are not ``interested persons'' of the Funds as defined in 
section 2(a)(19) of the Act and their ``independent legal counsel'' as 
defined in rule 0-1(a)(6) under the Act, if any. With respect to each 
of the Funds for which a Fund Servicing Applicant is not the primary 
investment adviser, the relevant Fund Servicing Applicant will provide 
such materials to the Fund's primary investment adviser and offer to 
discuss the materials with such primary investment adviser. The 
Applicants undertake to provide the Boards with all information 
concerning the Plea Agreement and the application as necessary for 
those Funds to fulfill their disclosure and other obligations under the 
U.S. federal securities laws and will provide them a copy of the 
Judgment as entered by the District Court.
    17. Certain Fund Servicing Applicants, as well as certain of their 
affiliates, have previously applied for exemptive orders under section 
9(c) of the Act, as described in greater detail in the application. 
Applicants, however, note that none of the conduct underlying the 
previous section 9(c) orders granted to Fund Servicing Applicants 
involved the provision of Fund Servicing Activities.

Applicants' Conditions

    Applicants agree that any order granted by the Commission pursuant 
to the application will be subject to the following conditions:
    1. Any temporary exemption granted pursuant to the application will 
be without prejudice to, and will not limit the Commission's rights in 
any manner with respect to, any Commission investigation of, or 
administrative proceedings involving or against, Covered Persons, 
including, without limitation, the consideration by the Commission of a 
permanent exemption from section 9(a) of the Act requested pursuant to 
the application or the revocation or removal of any temporary 
exemptions granted under the Act in connection with the application.
    2. None of GS Group, the Applicants or any of the other Covered 
Persons will employ the former employees of an affiliate of the 
Pleading Entity or any other person who subsequently may be identified 
by the Pleading Entity or any U.S. or non-U.S. regulatory or 
enforcement agencies as having been responsible for the Conduct in any 
capacity without first making a further application to the Commission 
pursuant to section 9(c).
    3. GS Group and each Applicant and Covered Person will adopt and 
implement policies and procedures reasonably designed to ensure that it 
will comply with the terms and conditions of the Orders within 60 days 
of the date of the Permanent Order or, with respect to condition four, 
such later date or dates as may be contemplated by the Plea Agreement, 
the DPA, the FRB Order, the DFS Order, the SEC Order, the Malaysian 
Settlement Agreement, the U.K. Notices, the SFC Statement, the 
Singapore Notice, the MAS Letter or any other

[[Page 68110]]

orders issued by regulatory or enforcement agencies addressing the 
Conduct.
    4. GS Group and each Applicant and Covered Person will comply in 
all material respects with the material terms and conditions of the 
Plea Agreement and with the material terms of the DPA, the FRB Order, 
the DFS Order, the SEC Order, the Malaysian Settlement Agreement, the 
U.K. Notices, the SFC Statement, the Singapore Notice, the MAS Letter 
and any other orders issued by regulatory or enforcement agencies 
addressing the Conduct. In addition, within 30 days of each anniversary 
of the Permanent Order (until and including the third such 
anniversary), GS Group will submit a certification signed by its chief 
executive officer and its global head of regulatory affairs, confirming 
that the Pleading Entity has complied with the terms and conditions of 
the Plea Agreement in all material respects and that GS Group has 
complied with the terms and conditions of the DPA in all material 
respects. Each such certification will be submitted to the Chief 
Counsel of the Commission's Division of Investment Management with a 
copy to the Chief Counsel of the Commission's Division of Enforcement.
    5. Applicants will provide written notification to the Chief 
Counsel of the Commission's Division of Investment Management with a 
copy to the Chief Counsel of the Commission's Division of Enforcement 
of a material violation of the terms and conditions of the Orders 
within 30 days of discovery of the material violation. In addition, GS 
Group will submit to the Chief Counsel of the Commission's Division of 
Investment Management, with a copy to the Chief Counsel of the 
Commission's Division of Enforcement, a copy of each report submitted 
to the Department of Justice pursuant to Paragraph 14 and Attachments C 
and D of the DPA within five days of the submission of each report to 
the Department of Justice. GS Group's first such report will be signed 
by its chief executive officer and global head of regulatory affairs.

Temporary Order

    The Commission has considered the matter and finds that Applicants 
have made the necessary showing to justify granting a temporary 
exemption.
    Accordingly,
    It is hereby ordered, pursuant to section 9(c) of the Act, that the 
Applicants and any other Covered Persons are granted a temporary 
exemption from the provisions of section 9(a), effective as the date of 
the Guilty Plea, solely with respect to the Guilty Plea entered into 
pursuant to the Plea Agreement, subject to the representations and 
conditions in the application, until the Commission takes final action 
on their application for a permanent order.

    By the Commission.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-23778 Filed 10-26-20; 8:45 am]
BILLING CODE 8011-01-P