Goldman Can Stay on as Mutual Fund Advisor, Says SEC
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Friday, July 30, 2010

Goldman Can Stay on as Mutual Fund Advisor, Says SEC

The SEC has given the O.K. to Goldman Sachs Asset Management for it to stay on as the investment advisor to the Goldman Sachs Funds. The New York City-based mutual fund advisor applied for the relief after Goldman, Sachs & Co. settled with the SEC on July 14.

Without the SEC's forgiveness, the settlement technically would have barred GSAM from acting as an advisor to an investment company (see MFWire, May 24).

Neither of the two Goldman advisory units granted the exemption -- Goldman Sachs Asset Management, L.P. and Goldman Sachs Asset Management International -- were named in the SEC complaint, nor did the SEC seek any penalties against them or against any employee who is or has been part of GSAM.

Earlier this week, General Electric asked for similar dispensation for its fund advisory arm and fund distribution arm after it made a settlement with the SEC (see MFWire, July 27).

In Goldman's case, the SEC brought allegations on April 16 that the investment bankers at Goldman had made materially misleading statements and omissions in connection with a 2007 private placement of CDO securities sold to two institutional investors. Goldman neither admitted nor denied wrongdoing in July 14 settlement, although it did agree to a record fine. The U.S. District Court approved the settlement on July 20.

The SEC's action grants both GSAM, GS&Co. and certain affiliates temporary exemptive relief to permit them to continue serving as investment adviser and principal underwriter for U.S.-registered mutual funds.

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