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(Provisional Translation)
December 27, 2005
Financial Services Agency

Administrative action on Goldman Sachs Asset Management Co., Ltd.

  • 1. According to the result of the on-site inspection conducted by the Financial Services Agency (hereinafter referred to as '' the FSA '' ) of Goldman Sachs Asset Management Co., Ltd. (hereinafter referred to as '' the Company '') and the report from the Company based on Paragraph 1 of Article 36 of the Law Concerning Regulation, etc. of the Investment Advisory Business Relating Securities, and Paragraph 1 of Article 39 of the Law Concerning Investment Trusts and Investment Corporations, following problems are confirmed.

    (1) Managing the customers' assets on the discretionary investment agreement, the Company intentionally transferred the mis-ordered stocks to other customers' accounts.
    The acts above are violating the Item 5 Paragraph 1 of Article 30-3 ''acts of conducting transactions to affect adversely a certain customer's benefit to look after another customer's benefit between different discretionary investment agreements'' of the Law Concerning Regulation, etc. of Investment Advisory Business Relating Securities.
    (2) As it was necessary to roll-over futures transactions on both a publicly offered investment trust and a privately offered one, the Company made a cross trade between the one's buying position and the other's selling position.
    The acts above are violating the Item 2 Paragraph 1 of Article 15 ''acts of conducting transactions among investment trusts managed by the same investment trust management company'' of the Law Concerning Investment Trusts and Investment Corporations.
    (3) When the Company recommended that the customers to switch their assets from privately offered trusts to new publicly offered ones, the Company made public offerings before the filing of the securities registration statements.
    The acts above are violating the Paragraph 1 of Article 4 of the Securities and Exchange Law.

  • 2. On the basis of the fact of the matters above, the FSA issued the following business improvement order to the Company today, based on Article 37 of the Law Concerning Regulation, etc. of Investment Advisory Business Relating Securities and on Paragraph 1 Article 40 of the Law Concerning Investment Trusts and Investment Corporations.

    Business Improvement Order

    (1) The following measures to strengthen the compliance system and the internal control system relating to investment advisory, investment management and investment trust business must be taken.
     
    i) The proper compliance system must be established including the enhancement of internal check functions.
    ii) Concrete measures must be drawn up and implemented to ensure thorough compliance by officers and employees.
    iii) Measures must be drawn up and implemented to prevent recurrence.
    iv) Locus of responsibility must be clarified.
    (2) The report to the FSA for the implementation of those above measures must be submitted by January 26, 2006.

For further information, please contact:

Securities Business Division
Supervisory Bureau
SA, JAPAN (Tel: 03-3506-6000)
Deputy Director : Masafumi.SUGIBAYASHI (ex.3353)
Section Chief : Shunsuke.FUKUYAMA (ex.3724)

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