SEC Division of Investment Management staff letter: Goldman, Sachs & Co.

Morgan, Lewis & Bockius LLP
1111 Pennsylvania Avenue, NW Morgan Lewis Washington, DC 20004 COUNSELORS AT LAW Tel: 202.739.3000 Fax: 202.739.3001 www.morganlewis.com Steven W. Stone Partner 202.739.5453 sstone@morganlewis.com Associate Director and Chief Counsel United States Securities and Exchange Commission 100 F Street NE Washington, DC 20549 Re: Goldman, Sachs & Co. — "Constructive Delivery" of Subadviser Brochures Dear Mr. Scheidt:
On behalf of Goldman, Sachs & Co. ("GS&Co."), we request that the staff of the Division of Investment Management confirm that it will not recommend enforcement action to the Securities and Exchange Commission ("SEC") under Rule 204-3 under the Investment Advisers Act of 1940 ("Advisers Act") against any unaffiliated registered investment adviser ("subadviser") selected by GS&Co. to manage client assets if the subadviser delivers its Form ADV Part 2 to GS&Co., rather than the client, where GS&Co. acts as investment adviser and agent for the client, including for the management of client assets and the receipt of such disclosures. Below we outline the proposed guidance, review how the proposed guidance is grounded in common law and consistent with SEC precedents, and then explain the rationale behind the proposed guidance. By way of background, GS&Co. is an investment adviser registered under the Advisers Act. GS&Co. sponsors wrap-fee or managed account programs or arrangements under which clients grant GS&Co. discretionary authority over their accounts, including the discretionary authority to select subadvisers to manage client assets. Currently, GS&Co. includes within its programs and arrangements more than 40 subadvisers. Typically, GS&Co. would, in essence, act as a manager of managers, and the number and types of subadvisers could vary. Each subadviser is an "investment adviser" as defined in Section 202(a)(11) of the Advisers Act, and currently is registered as an "investment adviser" under the Advisers Act. While, depending on the program or arrangement, GS&Co. might have the discretionary authority to manage client assets directly, GS&Co. generally would hire and allocate (and reallocate) client assets across multiple subadvisers on behalf of a client. Where a subadviser manages assets of a client (and, therefore, may have an investment advisory relationship with the Almaty Beijing Boston Brussels Chicago Dallas Frankfurt Harrisburg Houston Irvine London Los Angeles Miami Moscow New York Palo Alto Paris Philadelphia Pittsburgh Princeton San Francisco Tokyo Washington Wilmington DB1/ 68633534