Goldman Sachs Asset Management L.P. - Opportunity to be Heard
IN THE MATTER OF
THE REGISTRATION OF
GOLDMAN SACHS ASSET MANAGEMENT, L.P.
OPPORTUNITY TO BE HEARD BY THE DIRECTOR
SECTION 26(3) OF THE SECURITIES ACT
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Date:
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May 17, 2006
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Director:
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David M. Gilkes
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Manager, Registrant Regulation
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Capital Markets Branch
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Submissions:
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Isabelita Chichioco
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For the staff of the Commission
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Jacob Sadikman
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For Goldman Sachs Asset Management, L.P.
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Background
1. Goldman Sachs Asset Management, L.P. (GSAM) has been registered in Ontario in the categories of Investment Counsel and Portfolio Manager, and Commodity Trading Manager since August 29, 2003.
2. GSAM was due to file its financial statements with the Ontario Securities Commission (OSC) on February 24, 2006. GSAM filed the statements on March 8, 2006.
3. On March 8, 2006 staff of the OSC wrote GSAM indicating that a late filing fee was due and that it had recommended that terms and conditions be imposed on GSAM's registration.
4. On March 10, 2006 GSAM paid the late filing fee and requested an Opportunity to be Heard (OTBH) by the Director pursuant to subsection 26(3) of the Securities Act that states:
(3) Refusal -- The Director shall not refuse to grant, renew, reinstate or amend registration or impose terms and conditions thereon without giving the applicant an opportunity to be heard.5. The OTBH was conducted through written submissions.
Submissions
6. OSC staff focus on three criteria in determining whether an applicant is suitable for registration: proficiency, integrity and financial solvency.
7. The failure to file audited financial statements is an important factor in determining the continuing suitability of a registrant. The experience of OSC staff has been that delays in filing statements can be indicative of a serious underlying financial problem with the registrant.
8. Counsel for GSAM explained that they had received the audited financial statements on February 17, 2006. The delay in filing the statements was a result of GSAM intending to file its revised participation fee calculation forms at the same time as the financial statements. Delays in completing these forms and getting them signed by the co-heads of GSAM led to a delay in filing the financial statements.
9. GSAM does not have systems in place to produce monthly unaudited financial statements as proposed in the terms and conditions. As a result, complying with the terms and conditions would impose a significant financial burden on the firm. Counsel for GSAM also noted that insolvency is not a concern given the size of the firm.
10. GSAM recognizes the importance of filing statements on time. It has taken steps to ensure the fee revision forms and financial statements will be filed within the prescribed time periods in future years.
Decision
11. A registrant with the resources of GSAM should have had the ability to meet the filing requirements of the Securities Act within the prescribed time limits. I understand that there was also some confusion about whether the fee revision forms needed to be filed with the financial statements. In fact, GSAM filed its fee revision forms on March 17, 2006 several days after it filed its financial statements on March 8, 2006.
12. I agree with counsel for GSAM that financial solvency is not an issue in this case. However, an error was made and I believe that staff for GSAM will not make this mistake in the future.
13. Therefore, I am not imposing terms and conditions on the registration of GSAM. GSAM must continue to meet all requirements under the Act that apply to it as a registrant.
May 17, 2006
"David M. Gilkes"