Goldman Sachs Asset Management, L.P. and Goldman Sachs Asset Management International - s. 80 of the CFA

Order

Headnote

Section 80 of the Commodity Futures Act (Ontario) -- relief from the adviser registration requirements of subsection 22(1)(b) of the CFA granted to sub-adviser not ordinarily resident in Ontario in respect of advice regarding trades in commodity futures contracts and commodity futures options, subject to certain terms and conditions. Relief mirrors exemption available in section 7.3 of OSC Rule 35-502 -- Non-Resident Advisers made under the Securities Act (Ontario).

Statutes Cited

Commodity Futures Act, R.S.O. 1990, c. C.20, as am., s. 22(1)(b), 80.

Securities Act, R.S.O. 1990, c. S.5, as am. -- Rule 35-502 -- Non Resident Advisers.

IN THE MATTER OF

THE COMMODITY FUTURES ACT

R.S.O. 1990, CHAPTER C.20, AS AMENDED

(the CFA)

AND

IN THE MATTER OF

GOLDMAN SACHS ASSET MANAGEMENT, L.P.

AND

GOLDMAN SACHS ASSET MANAGEMENT

INTERNATIONAL

 

ORDER

(Section 80 of the CFA)

UPON the application (the Application) of Goldman Sachs Asset Management, L.P. (GSAM) and Goldman Sachs Asset Management International (the Sub-Adviser) to the Ontario Securities Commission (the Commission) for an order, pursuant to section 80 of the CFA, that neither the Sub-Adviser nor any of its directors, officers and employees acting on its behalf as an adviser (collectively, the Representatives) shall be subject to the adviser registration requirement in subsection 22(1)(b) of the CFA in respect of advice regarding trades in commodity futures contracts and commodity futures options (the Commodity Futures) .

AND UPON considering the Application and the recommendation of the staff of the Commission;

AND UPON the Sub-Adviser having represented to the Commission the following:

1. The Sub-Adviser is organized under the laws of England and Wales, is registered with the Registrar of Companies for England and Wales and is authorised to conduct investment management business in the United Kingdom as a portfolio manager. The principal office of the Sub-Adviser is located in London, England. The laws of England and Wales, including applicable securities and commodity futures laws, govern the Sub-Adviser.

2. The Sub-Adviser is an indirect wholly-owned subsidiary of The Goldman Sachs Group, Inc. The Goldman Sachs Group, Inc. is a global full-service investment banking, broker-dealer, asset management and financial services organization.

3. GSAM is a limited partnership governed by the laws of the State of Delaware with its head office in New York, New York.

4. The general partner of GSAM is The Goldman Sachs Group, Inc. and the limited partner is Goldman Sachs Global Holdings L.L.C.

5. GSAM is registered under the CFA as a commodity trading manager. GSAM is also registered in Ontario as a non-Canadian adviser (investment counsel and portfolio manager) under Securities Act (Ontario) (the OSA) and in British Columbia, Alberta, Saskatchewan and Manitoba as an international adviser (or its equivalent).

6. GSAM is also registered as an investment adviser with the United States Securities and Exchange Commission.

7. GSAM acts as a commodity trading manager in respect of its clients in Ontario (each, a Client).

8. GSAM will enter into a sub-advisory agreement (the Sub-Advisory Agreement) with the Sub-Adviser, whereby the Sub-Adviser will provide investment advice and portfolio management services to GSAM in respect of purchases and sales of Commodity Futures for the portfolios of the Clients (the Proposed Advisory Services).

9. The Sub-Advisory Agreement will set out the obligations and duties of the Sub-Adviser.

10. Each Client will enter into an investment management agreement (IMA) with GSAM which provides GSAM with complete discretionary authority to purchase and sell Commodity Futures on behalf of the Client, and authorizes GSAM to delegate its discretionary authority over all or a portion of the Client's assets to the Sub-Adviser.

11. GSAM will contractually agree under the IMA to be responsible for any loss that arises out of the failure of the Sub-Adviser:

(i) to exercise its powers and discharge its duties honestly, in good faith and in the best interests of GSAM and the Clients; or

(ii) to exercise the degree of care, diligence and skill that a reasonably prudent person would exercise in the circumstances;

(collectively, the Assumed Obligations).

12. GSAM cannot be relieved by the Clients for any loss that arises out of the failure of the Sub-Adviser to meet the Assumed Obligations.

13. he Sub-Adviser will only provide the Proposed Advisory Services so long as GSAM remains registered under the CFA as an adviser in the category of commodity trading manager.

14. There is presently no rule under the CFA that provides exemption from the adviser registration requirement in paragraph 22(1)(b) of the CFA, for a person or company acting as an adviser to another registered adviser in respect of Commodity Futures that is similar to the exemption in section 7.3 of Commission Rule 35-502, Non-Resident Advisers, from the adviser registration requirement in section 25(1)(b) of the OSA.

AND UPON the Commission being satisfied that it would not be prejudicial to the public interest to do so;

IT IS ORDERED THAT, pursuant to section 80 of the CFA, neither the Sub-Adviser, nor any of its Representatives, shall be subject to the adviser registration requirement in subsection 22(1)(b) of the CFA in respect of the Proposed Advisory Services, provided that:

(a) GSAM is registered under the CFA as an adviser in the category of commodity trading manager;

(b) the Sub-Adviser is registered with the Registrar of Companies for England and Wales and is authorised to conduct investment management business in the United Kingdom as a portfolio manager;

(c) the obligations and duties of the Sub-Adviser are set out in a Sub-Advisory Agreement with GSAM;

(d) GSAM has contractually agreed with each Client to be responsible for any loss that arises out of the failure of the Sub-Adviser to meet the Assumed Obligations;

(e) GSAM cannot be relieved by the Clients for any loss that arises out of the failure of the Sub-Adviser to meet the Assumed Obligations; and

(f) this Order shall terminate three years from the date hereof.

July 11, 2006

"David L. Knight"

"Wendell S.Wigle"